PILOT FUNDS, 485BPOS, 1996-11-12

PILOT FUNDS
485BPOS, 1996-11-12

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<PAGE> 1
1933 Act Registration No. 2-78440
1940 Act Registration No. 811-3517

As filed with the Securities and Exchange Commission on November 12, 1996

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

--------

FORM N-1A
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933 [ ]

Post-Effective Amendment No. 33 [X]

and

REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [ ]

Amendment No. 34 [X]

(Check appropriate box or boxes)

--------

THE PILOT FUNDS
(Exact name of Registrant as specified in charter)

3435 Stelzer Road
Columbus, Ohio 43219
(Address of principal executive offices)

Registrant's Telephone Number, Including Area Code
800-717-4568

--------

Copy to:
George O. Martinez, Esq. Philip H. Newman, Esq.
BISYS Fund Services, Inc. Goodwin, Procter & Hoar LLP
3435 Stelzer Road Exchange Place
Columbus, Ohio 43219 Boston, Massachusetts 02109
(Name and Address of Agent for Service of Process)

--------

It is proposed that this filing will become effective (check appropriate box)

[ ] immediately upon filing pursuant to paragraph (b)
[X] on January 2, 1997 pursuant to paragraph (b)
[ ] 60 days, after filing pursuant to paragraph (a)
[ ] on ____________________ pursuant to paragraph (a) of Rule 485
[ ] 75 days after filing pursuant to paragraph (a) (2).

REGISTRANT HAS REGISTERED AN INDEFINITE NUMBER OF SHARES UNDER THE SECURITIES
ACT OF 1933 PURSUANT TO RULE 24F-2. REGISTRANT FILED A RULE 24F-2 NOTICE FOR THE
FISCAL YEAR ENDED AUGUST 31, 1996 ON OCTOBER 30, 1996. PURSUANT TO RULE
485(d)(2)(ii)(B), THIS POST-EFFECTIVE AMENDMENT REDESIGNATES AS JANUARY 2, 1997
THE EFFECTIVE DATE OF REGISTRANT'S POST-EFFECTIVE AMENDMENT NO. 32 FILED UNDER
RULE 485(a)(1) ON NOVEMBER 1, 1996.

THE TOTAL NUMBER OF PAGES IS _______. THE EXHIBIT INDEX IS ON PAGE ________.
<PAGE> 2
THE PILOT FUNDS

Pilot Small Capitalization 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

--------

FORM N-1A

CROSS REFERENCE SHEET

<TABLE>
<CAPTION>
ITEM NUMBER IN PART A PROSPECTUS CAPTION
--------------------- ------------------
<S> <C>
1. Cover Page.......................................... Cover Page

2. Synopsis............................................ Not Applicable

3. Condensed Financial Information..................... Financial Highlights

4. General Description of Registrant................... Cover Page; Investment Objectives; Risk Factors;
The Pilot Family of Funds

5. Management of the Fund.............................. The Business of the Fund - Fund Management

5A. Management's Discussion of Fund Performance......... Not Applicable

6. Capital Stock and Other Securities.................. Investing in The Pilot Funds - Dividends and
Distributions; The Pilot Family of Funds; The
Business of the Fund - Tax Implications

7. Purchase of Securities Being Offered................ Investing in The Pilot Funds - How to Buy Shares;
Investing in The Pilot Funds - Explanation of Sales
Price; Investing in The Pilot Funds - Exchange
Privileges

8. Redemption or Repurchase............................ Investing in The Pilot Funds - How to Sell Shares;
Investing in The Pilot Funds - Exchange Privilege

9. Pending Legal Proceedings........................... Not Applicable
</TABLE>

2
<PAGE> 3

Financial
Direction

January 2, 1997
[PILOT LOGO]

PILOT DIVERSIFIED
BOND 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 Shares
THE
PILOT
FUNDS
Prospectus enclosed
<PAGE> 4

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
EXPENSE SUMMARY.................................................................................... 3
FINANCIAL HIGHLIGHTS............................................................................... 5
INVESTMENT OBJECTIVES, POLICIES AND RISK FACTORS................................................... 7
Pilot Diversified Bond Income Fund............................................................ 7
Pilot Intermediate U.S. Government Securities Fund and Pilot U.S. Government Securities
Fund......................................................................................... 7
Pilot Intermediate Municipal Bond Fund and Pilot Municipal Bond Fund.......................... 8
PORTFOLIO INSTRUMENTS AND PRACTICES.............................................................. 9
RISK FACTORS..................................................................................... 15
FUNDAMENTAL LIMITATIONS.......................................................................... 15
INVESTING IN THE PILOT FUNDS....................................................................... 16
HOW TO BUY SHARES................................................................................ 16
HOW TO SELL SHARES............................................................................... 16
DIVIDENDS AND DISTRIBUTIONS...................................................................... 17
EXCHANGE PRIVILEGE................................................................................. 18
THE PILOT FAMILY OF FUNDS.......................................................................... 18
THE BUSINESS OF THE FUND........................................................................... 19
FUND MANAGEMENT.................................................................................. 19
TAX IMPLICATIONS................................................................................. 21
MEASURING PERFORMANCE............................................................................ 22
</TABLE>
<PAGE> 5

THE PILOT FUNDS

LOGO

PROSPECTUS FOR PILOT SHARES OF PILOT DIVERSIFIED BOND INCOME,
PILOT INTERMEDIATE U.S. GOVERNMENT SECURITIES, PILOT U.S. GOVERNMENT SECURITIES,
PILOT INTERMEDIATE MUNICIPAL BOND AND PILOT MUNICIPAL BOND FUNDS

January 2, 1997
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
PILOT FUND GOAL FOR INVESTORS WHO WANT
- ------------------ ------------------------------------- -------------------------------------
<S> <C> <C>
DIVERSIFIED BOND Current income consistent with Current income from debt securities
INCOME preservation of capital by investing and are willing to accept
primarily in debt securities. The fluctuations in price and yield.
Fund seeks total return as a
secondary objective and will have an
average weighted maturity of from
five to fifteen years.
- ----------------------------------------------------------------------------------------------------
INTERMEDIATE U.S. Total return and preservation of Capital appreciation over the long
GOVERNMENT capital by investing primarily in term as well as current income from
SECURITIES U.S. Government securities and U.S. Government securities and less
repurchase agreements. The Fund will principal volatility than normally
emphasize the capital appreciation associated with a long-term fund.
component of total return. The Fund
will generally have an average
weighted maturity of from three to
ten years.
- ----------------------------------------------------------------------------------------------------
U.S. GOVERNMENT Total return and preservation of Capital appreciation over the long
SECURITIES capital by investing primarily in term as well as current income from
U.S. Government securities and U.S. Government securities and are
repurchase agreements. The Fund will willing to accept fluctuations in
emphasize the capital appreciation price and yield.
component of total return. The Fund
will generally have an average
weighted maturity of from five to
thirty years.
- ----------------------------------------------------------------------------------------------------
INTERMEDIATE Current income free of federal income Current income that is free from
MUNICIPAL BOND tax as is consistent with regular federal income tax and less
preservation of capital through principal volatility than normally
investments primarily in investment associated with a long-term fund.
grade municipal obligations. The Fund
will generally have an average
weighted maturity of from three to
ten years.
- ----------------------------------------------------------------------------------------------------
MUNICIPAL BOND Current income free of federal income Current income that is free from
tax as is consistent with regular federal income tax and are
preservation of capital through willing to accept fluctuations in
investments primarily in investment price and yield.
grade municipal obligations. The Fund
will generally have an average
weighted maturity of from five to
thirty years.
- ----------------------------------------------------------------------------------------------------
</TABLE>

1
<PAGE> 6

FUND SHARES ARE NOT BANK DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, BOATMEN'S TRUST COMPANY OR ANY OF ITS AFFILIATES AND ARE NOT FEDERALLY
INSURED BY, GUARANTEED BY OR OBLIGATIONS OF, OR OTHERWISE SUPPORTED BY THE U.S.
GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER GOVERNMENTAL AGENCY. INVESTMENT IN THE FUNDS INVOLVES INVESTMENT
RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. IN ADDITION, THE AMOUNT OF
DIVIDENDS PAID BY A FUND WILL GO UP AND DOWN. BOATMEN'S TRUST COMPANY SERVES AS
INVESTMENT ADVISER TO THE FUNDS, IS PAID A FEE FOR ITS SERVICES, AND IS NOT
AFFILIATED WITH PILOT FUNDS DISTRIBUTORS, INC., THE FUNDS' DISTRIBUTOR.

This Prospectus describes Pilot Shares of the Pilot Diversified Bond Income,
Pilot Intermediate U.S. Government Securities, Pilot U.S. Government Securities,
Pilot Intermediate Municipal Bond and Pilot Municipal Bond Funds. Pilot Shares
are sold by Pilot Funds Distributors, Inc. and selected broker-dealers to
Boatmen's Trust Company, St. Louis, Missouri ("Boatmen's") and its affiliated
banks acting on behalf of themselves and persons maintaining qualified trust,
agency or custodial accounts at such banks. Pilot Shares are sold and redeemed
without payment of any purchase or redemption charge imposed by the Funds,
although Boatmen's and its affiliated banks may charge their customer accounts
for services provided in connection with the purchase or redemption of shares.
This Prospectus describes concisely the information about the Funds that you
should know before investing. Please read it carefully and keep it for future
reference.

More information about the Funds is contained in a Statement of Additional
Information that has been filed with the Securities and Exchange Commission. The
Statement of Additional Information can be obtained free upon request by calling
800/71-PILOT. The Statement of Additional Information, as it may be revised from
time to time, is dated January 2, 1997 and is incorporated by reference into
(considered a part of ) the Prospectus.

LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------

2
<PAGE> 7

EXPENSE SUMMARY

SHAREHOLDER TRANSACTION EXPENSES are charges you pay when buying or selling
shares of a Fund.

ANNUAL FUND OPERATING EXPENSES are paid out of a Fund's assets and include fees
for portfolio management, maintenance of shareholder accounts, general Fund
administration, accounting and other services.

Below is information regarding the Funds' shareholder transaction expenses and
the operating expenses which the Funds expect to incur during the current fiscal
year on their Pilot Shares. Examples based on this information are also
provided.

PILOT SHARES

<TABLE>
<CAPTION>
INTERMEDIATE
DIVERSIFIED U.S. U.S.
BOND GOVERNMENT GOVERNMENT INTERMEDIATE
INCOME SECURITIES SECURITIES MUNICIPAL MUNICIPAL
FUND FUND FUND BOND FUND BOND FUND
----------- ----------- ----------- ------------ ---------
<S> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Front End Sales Charge Imposed on Purchases
(as a percentage of offering price)...... None None None None None
Sales Charge Imposed on Reinvested
Dividends................................ None None None None None
Deferred Sales Charge....................... None None None None None
ANNUAL FUND OPERATING EXPENSES AFTER FEE WAIVERS
AND EXPENSE REIMBURSEMENTS (as a percentage of
average net assets):
Management Fees (after waivers)(1).......... 0.40% 0.35% 0.40% 0.40% 0.45%
Distribution Payments....................... 0.00% 0.00% 0.00% 0.00% 0.00%
Other Expenses (after expense
reimbursements)(1)....................... 0.25% 0.22% 0.22% 0.18% 0.22%
----------- ----------- ----------- ------ ---------
Total Fund Operating Expenses After Fee
Waivers
and Expense Reimbursements(1)............ 0.65% 0.57% 0.62% 0.58% 0.67%
======= ===== ===== ========= ========
</TABLE>

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

(1) This expense information is provided to help you understand the expenses you
would bear either directly (as with the transaction expenses) or indirectly
(as with the annual operating expenses) as a shareholder of one of the
Funds. Without waivers by the Adviser, investment management fees as a
percentage of net assets would be .55% for the Pilot Diversified Bond
Income, Pilot Intermediate U.S. Government Securities, Pilot U.S. Government
Securities, Pilot Intermediate Municipal Bond and Pilot Municipal Bond
Funds. Other Expenses also reflect reimbursements by the Adviser and
Administrator. Absent reimbursement, Other Expenses would be 0.77%, 0.23%,
0.27%, 0.24%, and 0.25% for Pilot Diversified Bond 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, respectively. Absent waivers and expense reimbursements, the
total operating expenses for Pilot Shares of the Funds would be 1.32% for
the Pilot Diversified Bond Income Fund; 0.78% for the Pilot Intermediate
U.S. Government Securities Fund; 0.82% for the Pilot U.S. Government
Securities Fund; 0.79% for the Pilot Intermediate Municipal Bond Fund; and
0.80% for the Pilot Municipal Bond Fund. These waivers and reimbursements
are voluntary and may be terminated at any time with respect to any Fund at
the discretion of the Adviser or Administrator and without the consent of
the Funds except that the Adviser has voluntarily agreed to limit the total
operating expenses of the Pilot Shares of Pilot Diversified Bond Income Fund
to 0.65% of the Fund's average net assets until February 1, 1998.

3
<PAGE> 8

EXAMPLE: Assume that the annual return on each of the Funds is 5%, and that
their operating expenses are as described above. For every $1,000 you invested
in a particular Fund, after the periods shown below, you would have paid this
much in expenses during such periods:

<TABLE>
<CAPTION>
1 3 5 10
YEAR YEARS YEARS YEARS
AFTER AFTER AFTER AFTER
PURCHASE PURCHASE PURCHASE PURCHASE
---- ---- ---- ----
<S> <C> <C> <C> <C>
PILOT DIVERSIFIED BOND INCOME FUND
Pilot Shares.......................... $ 7 $ 21 $ 36 $ 81
PILOT INTERMEDIATE U.S. GOVERNMENT
SECURITIES FUND
Pilot Shares.......................... $ $ $ $
PILOT U.S. GOVERNMENT SECURITIES FUND
Pilot Shares.......................... $ $ $ $
PILOT INTERMEDIATE MUNICIPAL BOND FUND
Pilot Shares.......................... $ $ $ $
PILOT MUNICIPAL BOND FUND
Pilot Shares.......................... $ $ $ $
</TABLE>

The Example shown above should not be considered a representation of future
investment returns or operating expenses. Pilot Diversified Bond Income Fund is
new and actual investment returns and operating expenses may be more or less
than shown for the Fund.

4
<PAGE> 9

THE PILOT FUNDS
FINANCIAL HIGHLIGHTS

The following data with respect to a Share of the Pilot Intermediate U.S.
Government Securities Fund, Pilot U.S. Government Securities Fund, Pilot
Intermediate Municipal Bond Fund and Pilot Municipal Bond Fund outstanding
during the periods indicated have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report incorporated by
reference and attached to the Statement of Additional Information, and should be
read in conjunction with the financial statements and related notes incorporated
by reference and attached to the Statement of Additional Information. The
following data with respect to a Share of the Pilot Diversified Bond Income Fund
outstanding during the period indicated is unaudited.

THE PILOT FUNDS
- --------------------------------------------------------------------------------

Financial Highlights
Selected Data for a Share Outstanding Throughout the Period
- --------------------------------------------------------------------------------
Pilot Diversified Bond Income Fund
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS
----------------------------------------
NET REALIZED TOTAL
AND UNREALIZED INCOME DIVIDENDS DIVIDENDS NET ASSET
NET ASSET VALUE NET GAIN ON FROM FROM NET FROM NET VALUE AT
AT BEGINNING INVESTMENT INVESTMENT INVESTMENT INVESTMENT REALIZED END OF
OF PERIOD INCOME TRANSACTIONS OPERATIONS INCOME GAINS PERIOD
--------------- ---------- -------------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
FOR THE PERIOD ENDED OCTOBER 22,
- --------------------------------
1996--Pilot Shares(b).......... $ $ $ $ $ $ $
1996--Class A Shares(b)........
1996--Class B Shares(b)........

<CAPTION>
RATIO INFORMATION ASSUMING
NO FEE WAIVER OR EXPENSE
REIMBURSEMENT
RATIO OF NET -------------------------- RATIO OF NET
RATIO OF INVESTMENT NET ASSETS RATIO OF INVESTMENT
EXPENSES INCOME PORTFOLIO AT END OF EXPENSES TO INCOME
TOTAL TO AVERAGE TO AVERAGE TURNOVER PERIOD AVERAGE TO AVERAGE
RETURN(C) NET ASSETS(D) NET ASSETS(D) RATE (IN 000'S) NET ASSETS(D) NET ASSETS(D)
--------- ------------- ------------- --------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
FOR THE PERIOD ENDED OCTOBER 22,
- --------------------------------
1996--Pilot Shares(b).......... % % % % $ % %
1996--Class A Shares(b)........
1996--Class B Shares(b)........
</TABLE>

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

Pilot Intermediate U.S. Government Securities Fund
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
FOR THE YEAR ENDED AUGUST 31,
- -------------------------------
1996--Pilot Shares............. $ 10.44 $ 0.59 $(0.23) $ 0.36 $(0.59) $ (0.05) $ 10.16
1996--Class A Shares........... 10.44 0.57 (0.23) 0.34 (0.57) (0.05) 10.16
1995--Pilot Shares(g).......... 10.00 0.56 0.44 1.00 (0.56) 10.44
1995--Class A Shares(f)........ 9.98 0.45 0.46 0.91 (0.45) 10.44

<CAPTION>
FOR THE YEAR ENDED AUGUST 31,
- -------------------------------
1996--Pilot Shares............. 3.52% 0.57% 5.68% 73% $230,030 0.78% 5.47%

1996--Class A Shares........... 3.33 0.72 5.45 73 932 1.03 5.14

1995--Pilot Shares(g).......... 10.21 0.57 6.65 87 165,441 0.87 6.35

1995--Class A Shares(f)........ 9.31 0.72 6.27 87 499 1.12 5.87

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

<TABLE>
<S> <C>
(a) Class A share activity commenced February 7, 1995.
(b) Share activity commenced October 21, 1996.
(c) Assumes investment at net asset value at the beginning of the period, reinvestment of all dividends and distributions, a
complete redemption of the investment at the net asset value at the end of the period and no sales charge. Total return would
be reduced if sales charge were taken for Class A or Class B shares. Total return is not annualized.
(d) Annualized.
(e) Class B share activity commenced November 11, 1994.
(f) Class A share activity commenced December 21, 1994.
(g) Pilot share activity commenced November 7, 1994.
</TABLE>

5
<PAGE> 10
THE PILOT FUNDS
- --------------------------------------------------------------------------------

Financial Highlights (continued)
- --------------------------------------------------------------------------------
Pilot U.S. Government Securities Fund
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS
----------------------------------------
NET REALIZED TOTAL
NET ASSET AND UNREALIZED INCOME DIVIDENDS IN EXCESS DIVIDENDS
VALUE AT NET GAIN ON FROM FROM NET OF NET FROM NET
BEGINNING INVESTMENT INVESTMENT INVESTMENT INVESTMENT INVESTMENT REALIZED
OF PERIOD INCOME TRANSACTIONS OPERATIONS INCOME INCOME GAINS
--------- ---------- -------------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
FOR THE YEAR ENDED AUGUST 31,
- -----------------------------
1996--Pilot Shares................. $ 11.20 $ 0.61 $(0.22) $ 0.39 $(0.61) $ -- $ (0.45)
1996--Class A Shares............... 11.19 0.59 (0.20) 0.39 (0.59) -- (0.45)
1996--Class B Shares............... 11.19 0.51 (0.22) 0.29 (0.51) -- (0.45)
1995--Pilot Shares(g).............. 10.00 0.56 1.20 1.76 (0.56) -- --
1995--Class A Shares(a)............ 10.48 0.37 0.71 1.08 (0.37) -- --
1995--Class B Shares(b)............ 10.05 0.46 1.14 1.60 (0.46) -- --

<CAPTION>
RATIO OF NET
NET ASSET INVESTMENT NET ASSETS
VALUE AT RATIO OF EXPENSES INCOME TO PORTFOLIO AT END OF
END OF TOTAL TO AVERAGE NET AVERAGE NET TURNOVER PERIOD
PERIOD RETURN(c) ASSETS(d) ASSETS(d) RATE (IN 000'S)
--------- --------- ----------------- ------------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
FOR THE YEAR ENDED AUGUST 31,
- -----------------------------
1996--Pilot Shares................. $ 10.53 3.46% 0.65% 5.61% 87% $145,066
1996--Class A Shares............... 10.54 3.44 0.85 5.44 87 632
1996--Class B Shares............... 10.52 2.43 1.65 4.60 87 1,237
1995--Pilot Shares(g).............. 11.20 18.03 0.62 6.45 132 137,261
1995--Class A Shares(a)............ 11.19 10.41 0.82 5.76 132 87
1995--Class B Shares(b)............ 11.19 16.19 1.62 5.19 132 146

<CAPTION>
RATIO INFORMATION ASSUMING NO
FEE WAIVER OR EXPENSE
REIMBURSEMENT
--------------------------------
RATIO OF NET
INVESTMENT
RATIO OF EXPENSES INCOME TO
TO AVERAGE NET AVERAGE NET
ASSETS(c) ASSETS(c)
----------------- ------------
<S> <C> <C>
FOR THE YEAR ENDED AUGUST 31,
- -----------------------------
1996--Pilot Shares................. 0.82% 5.44%
1996--Class A Shares............... 1.07 5.22
1996--Class B Shares............... 1.82 4.43
1995--Pilot Shares(g).............. 0.87 6.20
1995--Class A Shares(a)............ 1.12 5.46
1995--Class B Shares(b)............ 1.87 4.94
</TABLE>

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

Pilot Intermediate Municipal Bond Fund
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS
----------------------------------------
NET REALIZED TOTAL
NET ASSET AND UNREALIZED INCOME DIVIDENDS IN EXCESS DIVIDENDS
VALUE AT NET GAIN ON FROM FROM NET OF NET FROM NET
BEGINNING INVESTMENT INVESTMENT INVESTMENT INVESTMENT INVESTMENT REALIZED
OF PERIOD INCOME TRANSACTIONS OPERATIONS INCOME INCOME GAINS
--------- ---------- -------------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1996--Pilot Shares................. $ 10.49 $ 0.48 $(0.13) $ 0.35 $(0.48) $ -- $ (0.02)
1996--Class A Shares............... 10.49 0.46 (0.11) 0.35 (0.46) -- (0.02)
1995--Pilot Shares(g).............. 10.00 0.41 0.49 0.90 (0.41) -- --
1995--Class A Shares(e)............ 9.88 0.37 0.61 0.98 (0.37) -- --

<CAPTION>
RATIO OF NET
NET ASSET INVESTMENT NET ASSETS
VALUE AT RATIO OF EXPENSES INCOME TO PORTFOLIO AT END OF
END OF TOTAL TO AVERAGE NET AVERAGE NET TURNOVER PERIOD
PERIOD RETURN(c) ASSETS(d) ASSETS(d) RATE (IN 000'S)
--------- --------- ----------------- ------------- --------- ----------
<S> <C> <C>
1996--Pilot Shares................. $ 10.34 3.43% 0.63% 4.60% 12% $218,902
1996--Class A Shares............... 10.36 3.45 0.78 4.38 12 764
1995--Pilot Shares(g).............. 10.49 9.16 0.58 4.90 8 196,209
1995--Class A Shares(e)............ 10.49 10.03 0.73 4.60 8 232

<CAPTION>
RATIO INFORMATION ASSUMING NO
FEE WAIVER OR EXPENSE
REIMBURSEMENT
--------------------------------
RATIO OF NET
INVESTMENT
RATIO OF EXPENSES INCOME TO
TO AVERAGE NET AVERAGE NET
ASSETS(c) ASSETS(c)
----------------- ------------
<S> <C> <C>
1996--Pilot Shares................. 0.79% 4.44%
1996--Class A Shares............... 1.03 4.13
1995--Pilot Shares(g).............. 0.81 4.67
1995--Class A Shares(e)............ 1.06 4.27
</TABLE>

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

Pilot Municipal Bond Fund
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS
----------------------------------------
NET REALIZED TOTAL
NET ASSET AND UNREALIZED INCOME DIVIDENDS IN EXCESS DIVIDENDS
VALUE AT NET GAIN ON FROM FROM NET OF NET FROM NET
BEGINNING INVESTMENT INVESTMENT INVESTMENT INVESTMENT INVESTMENT REALIZED
OF PERIOD INCOME TRANSACTIONS OPERATIONS INCOME INCOME GAINS
--------- ---------- -------------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1996--Pilot Shares................. $ 10.70 $ 0.57 $ 0.01 $ 0.58 $(0.56) $(0.01) $ (0.03)
1996--Class A Shares............... 10.70 0.54 0.01 0.55 (0.53) (0.01) (0.03)
1996--Class B Shares............... 10.65 0.45 -- 0.45 (0.44) (0.01) (0.03)
1995--Pilot Shares(g).............. 10.00 0.48 0.70 1.18 (0.48) -- --
1995--Class A Shares(a)............ 10.37 0.34 0.33 0.64 (0.34) -- --
1995--Class B Shares(f)............ 10.02 0.33 0.63 0.95 (0.33) -- --

<CAPTION>
RATIO OF NET
NET ASSET INVESTMENT NET ASSETS
VALUE AT RATIO OF EXPENSES INCOME TO PORTFOLIO AT END OF
END OF TOTAL TO AVERAGE NET AVERAGE NET TURNOVER PERIOD
PERIOD RETURN(c) ASSETS(d) ASSETS(d) RATE (IN 000'S)
--------- --------- ----------------- ------------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
1996--Pilot Shares................. $ 10.68 5.44% 0.69% 5.20% 18% $187,939
1996--Class A Shares............... 10.68 5.23 0.92 4.91 18 1,755
1996--Class B Shares............... 10.62 4.31 1.68 4.16 18 1,259
1995--Pilot Shares(g).............. 10.70 12.00 0.67 5.63 10 150,934
1995--Class A Shares(a)............ 10.70 6.54 0.87 5.26 10 340
1995--Class B Shares(f)............ 10.65 9.62 1.67 4.48 10 448

<CAPTION>
RATIO INFORMATION ASSUMING NO
FEE WAIVER OR EXPENSE
REIMBURSEMENT
--------------------------------
RATIO OF NET
INVESTMENT
RATIO OF EXPENSES INCOME TO
TO AVERAGE NET AVERAGE NET
ASSETS(c) ASSETS(c)
----------------- ------------
<S> <C> <C>
1996--Pilot Shares................. 0.80% 5.09%
1996--Class A Shares............... 1.08 4.75
1996--Class B Shares............... 1.79 4.05
1995--Pilot Shares(g).............. 0.86 5.44
1995--Class A Shares(a)............ 1.11 5.02
1995--Class B Shares(f)............ 1.86 4.29
</TABLE>

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

(a) Class A share activity commenced February 7, 1995.

(b) Class B share activity commenced November 10, 1994.

(c) Assumes investment at net asset value at the beginning of the period,
reinvestment of all dividends and distributions, a complete redemption of
the investment at the net asset value at the end of the period and no sales
charge. Total return would be reduced if sales charge were taken for Class A
or Class B shares. Total return is not annualized.

(d) Annualized.

(e) Class A share activity commenced November 18, 1994.

(f) Class B share activity commenced December 27, 1994.

(g) Pilot share activity commenced November 7, 1994.

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<PAGE> 11

INVESTMENT OBJECTIVES, POLICIES
AND RISK FACTORS

The Pilot Funds uses a variety of different investments and investment
techniques in seeking to achieve a Fund's investment objective. Each Fund does
not use all of the investments and investment techniques described below, which
involve various risks, and which are also described in the following sections.
You should consider which Funds best meet your investment goals. Although each
Fund will attempt to attain its investment objective, there can be no assurance
it will be successful. Shareholder approval is not required to change the
investment objective of a Fund. However, shareholders will be given at least 30
days' prior written notice in the event of a change in a Fund's investment
objective. If there is a change in a Fund's investment objective, shareholders
should consider whether the Fund remains an appropriate investment in light of
their then current financial position and needs. Unless otherwise stated, each
investment policy described below may be changed at any time by The Pilot Funds'
Board of Trustees without shareholder approval.

Pilot Diversified Bond Income Fund

Pilot Diversified Bond Income Fund offers investors a means of participating in
the fixed income securities market.

The investment objective of Pilot Diversified Bond Income Fund is to seek
current income consistent with preservation of capital by investing primarily in
debt securities. The Fund seeks total return as a secondary objective. While
there are no restrictions on the maturity of individual securities on the
maturity of individual securities selected by the Fund, the Fund's average
weighted maturity will be between five and fifteen years except during temporary
defensive periods or unusual market conditions.

The Fund will purchase only those debt securities rated A or better by at least
one Nationally Recognized Statistical Rating Organization ("NRSRO") or, if
unrated, determined by the Adviser to be of comparable quality. If a portfolio
security ceases to be rated at least A or if the Adviser determines that an
unrated security held by the Fund is no longer of comparable quality, the Fund
may continue to hold that security so long as the security is rated at least BBB
(or its equivalent) by at least one NRSRO or, if unrated, is determined by the
Adviser to be of comparable quality. The value of such downgraded securities
will not exceed 35% of the Fund's total assets.

The Fund may also invest in futures contracts and options. From time to time,
the Fund may also hold uninvested cash reserves which do not earn income. For a
further description of the Fund's policies with respect to foreign securities
and other instruments, see "Portfolio Instruments and Practices" and "Risk
Factors" below.

The value of the Fund's portfolio (and consequently its shares) is expected to
fluctuate inversely in relation to changes in the direction of interest rates.

Pilot Intermediate U.S. Government Securities Fund and Pilot U.S. Government
Securities Fund

The Pilot Intermediate U.S. Government Securities Fund and the Pilot U.S.
Government Securities Fund (sometimes referred to together as the "Government
Funds") offer investors two alternatives for participating in the fixed income
securities market with a concentration in U.S. Government securities. The
average weighted maturity of the Pilot Intermediate U.S. Government Securities
Fund is normally expected to be shorter than that of the Pilot U.S. Government
Securities Fund.

The investment objective of each Fund is to seek total return and preservation
of capital by investing primarily in U.S. Government securities and repurchase
agreements collateralized by such securities. Each Fund will emphasize the
capital appreciation component of total return. While the maturity of individual
securities will not be restricted, except during temporary defensive periods or
unusual market conditions, the average weighted maturity of the Pilot
Intermediate U.S. Government Securities Fund will be between three and ten years
and the average weighted maturity of the Pilot U.S. Government Securities Fund
will be between five and thirty years.

Each Fund invests at least 65% of its total assets in U.S. Government securities
and repurchase agreements

7
<PAGE> 12

collateralized by such securities. Each Fund may invest in a variety of U.S.
Government securities, including U.S. Treasury bonds, notes and bills, and
obligations of a number of U.S. Government agencies and instrumentalities. Each
Fund may also invest in interests in the foregoing securities, including
collateralized mortgage obligations issued or guaranteed by a U.S. Government
agency or instrumentality. Securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities have historically had a very low
risk of loss of principal if held to maturity. The Funds, however, can give no
assurance that the U.S. Government would provide financial support to its
agencies or instrumentalities if it were not legally required to do so.

Each Fund may also invest up to 35% of its total assets in debt securities of
U.S. and foreign corporate and foreign government issuers, ADRs and EDRs, zero
coupon bonds and cash equivalents. See "Pilot Diversified Bond Income Fund"
above for a description of ADRs and EDRs and cash equivalents. The Funds will
purchase only those investments which are rated investment grade by at least one
NRSRO or, if unrated, are determined by the Adviser to be of comparable quality.
If a portfolio security held by a Fund ceases to be rated investment grade by at
least one NRSRO or if the Adviser determines that an unrated portfolio security
held by a Fund is no longer of comparable quality to an investment grade
security, the security will be sold in an orderly manner as quickly as possible.
Obligations in the lowest of the top four rating categories ("BBB" or "Baa")
have certain speculative characteristics and are subject to more credit and
market risk than securities with higher ratings.

Additionally, each Fund may also invest in futures contracts and options. From
time to time, each Fund may also hold uninvested cash reserves which do not earn
income. For a further description of the Funds' policies with respect to foreign
securities and other instruments, see "Portfolio Instruments and Practices" and
"Risk Factors" below.

The value of each Fund's portfolio (and consequently its shares) is expected to
fluctuate inversely in relation to changes in the direction of interest rates.

Pilot Intermediate Municipal Bond Fund
and Pilot Municipal Bond Fund

The Pilot Intermediate Municipal Bond Fund and the Pilot Municipal Bond Fund
(sometimes referred to together as the "Municipal Bond Funds") offer investors
two alternatives for participating in the municipal securities market. The
average weighted maturity of the Pilot Intermediate Municipal Bond Fund is
normally expected to be shorter than the average weighted maturity of the Pilot
Municipal Bond Fund.

The investment objective of each Fund is to seek current income free of federal
income tax as is consistent with preservation of capital. Each Fund seeks to
attain its objective by investing its assets primarily in debt obligations of
states, territories and possessions of the United States, the District of
Columbia and of their agencies, authorities, instrumentalities and political
sub-divisions ("Municipal Obligations") that are rated investment grade or above
by one or more NRSROs at the time of purchase. Obligations purchased by a Fund
that have not been assigned a rating will be determined by the Adviser to be of
comparable quality. See "Pilot Growth and Income Fund and Pilot Equity Income
Fund" above for a description of the risks of investing in securities with the
lowest investment grade ratings. If a portfolio security ceases to be rated
investment grade by at least one NRSRO or if the Adviser determines that an
unrated portfolio security held by a Fund is no longer of comparable quality to
an investment grade security, the security will be sold in an orderly manner as
quickly as possible. While each Fund has the flexibility to invest in Municipal
Obligations with short, medium or long term maturities, except during temporary
defensive periods or unusual market conditions, the average weighted maturity of
the Pilot Intermediate Municipal Bond Fund will be between three and ten years,
and the average weighted maturity of the Pilot Municipal Bond Fund will be
between five and thirty years.

Under normal market and economic conditions, each Fund will invest at least 80%
of its net assets in Municipal Obligations the interest on which is exempt from
regular federal income tax. In addition, under normal market conditions each
Fund may invest up to 20% of its net assets in taxable instruments, including
zero coupon bonds, cash equivalents and certain so-called private activity
bonds, which are a type of obligation that, although exempt from regular federal
income tax, may be subject to the federal alternative minimum tax. See "Pilot
Diversified Bond Income Fund" above for a description of cash equivalents. The
Funds may also invest in futures contracts and options. From time to time, each
Fund may also hold uninvested cash reserves that do not earn income. For a
further description of the Funds' policies with respect to Municipal Obligations
and other instruments, see "Portfolio Instruments and Practices" and "Risk
Factors" below.

Although the MUNICIPAL BOND FUNDS do not presently intend to do so on a regular
basis, either Fund may

8
<PAGE> 13

invest more than 25% of its total assets in Municipal Obligations the interest
on which comes solely from revenues of similar projects. When a Fund's assets
are concentrated in obligations payable from revenues of similar projects or
issued by issuers located in the same state, or in industrial development bonds,
the Fund will be subject to the particular risks (including legal and economic
conditions) relating to such securities to a greater extent than if its assets
were not so concentrated. Payment on Municipal Obligations held by a Municipal
Bond Fund relating to certain projects may be secured by mortgages or deeds of
trust. In the event of a default, enforcement of a mortgage or deed of trust
will be subject to statutory enforcement procedures and limitations on obtaining
deficiency judgments. Should a foreclosure occur, collection of the proceeds
from that foreclosure may be delayed and the amount of the proceeds received may
not be enough to pay the principal or accrued interest on the defaulted
Municipal Obligation.

The value of each Fund's portfolio (and consequently its shares) is expected to
fluctuate inversely in relation to changes in the direction of interest rates.

PORTFOLIO INSTRUMENTS AND PRACTICES

- --U.S. Government Obligations. EACH FUND may invest in securities issued or
guaranteed by the U.S. Government, as well as in obligations issued or
guaranteed by U.S. Government agencies and instrumentalities. Securities issued
or guaranteed by the U.S. Government or its agencies and instrumentalities
include U.S. Treasury securities, which differ only in their interest rates,
maturities and times of issuance: Treasury Bills have initial maturities of one
year or less; Treasury Notes have initial maturities of one to ten years; and
Treasury Bonds generally have initial maturities of greater than ten years. Some
obligations issued or guaranteed by certain U.S. Government agencies and
instrumentalities, such as the Government National Mortgage Association, are
supported by the U.S. Treasury; others, like the Export-Import Bank, are
supported by the issuer's right to borrow from the Treasury; others, including
the Federal National Mortgage Association, are backed by the discretionary
ability of the U.S. Government to purchase the entity's obligations; and still
others, like the Student Loan Marketing Association, are backed solely by the
issuer's credit. U.S. Government obligations also include U.S. Government-backed
trusts that hold obligations of foreign governments and are guaranteed or backed
by the full faith and credit of the United States. There is no assurance that
the U.S. Government would support a U.S. Government-sponsored entity were it not
required to do so by law.

- --Asset-Backed and Mortgage-Backed Securities. EACH FUND may invest in
asset-backed securities (i.e., securities backed by installment sale contracts,
credit card receivables or other assets). In addition, each Fund may make
significant investments in U.S. Government securities that are backed by
adjustable or fixed rate mortgage loans. The rate of prepayments on asset-backed
instruments and hence the life of the security, will be primarily a function of
current market rates and current conditions in the relevant market. In
calculating the average weighted maturity of a Fund's portfolio, the maturity of
asset-backed instruments will be based on estimates of average life. The
relationship between prepayments and interest rates may give some high-yielding
asset-backed securities less potential for growth in value than conventional
bonds with comparable maturities. In addition, in periods of falling interest
rates, the rate of prepayment tends to increase. During such periods, the
reinvestment of prepayment proceeds by a Fund will generally be at lower rates
than the rates that were carried by the obligations that have been prepaid.
Because of these and other reasons, an asset-backed security's total return may
be difficult to predict precisely. To the extent a Fund purchases asset-backed
securities at a premium, prepayments (which often may be made at any time
without penalty) may result in some loss of a Fund's principal investment to the
extent of any premiums paid.

The timely payment of principal and interest on mortgage-backed securities
issued or guaranteed by the Government National Mortgage Association ("GNMA") is
backed by GNMA and the full faith and credit of the U.S. Government. These
guarantees, however, do not apply to the market value or yield of
mortgage-backed securities or the value of a Fund's shares. Also, GNMA and other
mortgage-backed securities may be purchased at a premium over the maturity value
of the underlying mortgages. This premium is not guaranteed and will be lost if
prepayment occurs. Each Fund may also invest in mortgage-backed securities of
other issuers, such as the Federal National Mortgage Association, which are not
guaranteed by the U.S. Government. Moreover, each Fund may invest in debt
securities which are secured with collateral consisting of mortgage-backed
securities and in other types of mortgage-related securities. Unscheduled or
early payments on the underlying mortgage may shorten the effective maturities
of mortgage-backed securities and lessen their growth potential. A Fund may
agree to purchase or sell these securities with payment and delivery taking
place at a future date. A decline in interest rates may lead to a

9
<PAGE> 14

faster rate of repayment of the underlying mortgages and expose a Fund to a
lower rate of return on reinvestment. To the extent that such mortgage-backed
securities are held by a Fund, the prepayment right of mortgagors may limit the
increase in net asset value of the Fund because the value of the mortgage-backed
securities held by the Fund does not appreciate as rapidly as the price of
non-callable debt securities.

- --Municipal Obligations. Each of the MUNICIPAL BOND FUNDS will invest primarily
in Municipal Obligations. The two principal classifications of Municipal
Obligations are "general obligation" securities (which are secured by the
issuer's pledge of its full faith, credit and taxing power for the payment of
principal and interest) and "revenue" securities (which are payable only from
revenues received from the operation of a particular facility or class of
facilities or, in some cases, from the proceeds of a special excise tax or other
specific revenue source). A third type of Municipal Obligation, normally issued
by special purpose public authorities, is known as a "moral obligation" security
because if the issuer cannot meet its obligations it then draws on a reserve
fund, the restoration of which is a moral commitment but not a legal requirement
of the state or municipality which created the issuer. Private activity bonds
(such as bonds issued by industrial development authorities) are usually revenue
securities issued by or for public authorities to finance a privately operated
facility and are not payable from the unrestricted revenues of the issuer.
Consequently, the credit quality of such private activity bonds is usually
directly related to the credit standing of the corporate user of the facility
involved.

Within the principal classifications described above there are a variety of
categories including municipal leases and certificates of participation.
Municipal lease obligations are issued by state and local governments or
authorities to finance the acquisition of equipment and facilities. Certain
municipal lease obligations may include "non-appropriation" clauses which
provide that the municipality has no obligation to make lease or installment
purchase payments in future years unless money is appropriated for such purpose
on a yearly basis. Municipal leases (and participations in such leases) present
the risk that a municipality will not appropriate funds for the lease payments.
The Adviser, under the supervision of the Board of Trustees, will determine the
credit quality of any unrated municipal leases on an on-going basis, including
an assessment of the likelihood that the lease will not be canceled.

Securities acquired by each of the Municipal Bond Funds may be in the form of
custodial receipts evidencing rights to receive a specific future interest
payment, principal payment or both on certain Municipal Obligations. Such
Obligations are held in custody by a bank on behalf of holders of the receipts.
These custodial receipts are known by various names, including "Municipal
Receipts," "Municipal Certificates of Accrual on Tax-Exempt Securities"
("M-CATs") and "Municipal Zero-Coupon Receipts." The Funds may also purchase
from time to time participation interests in debt securities held by trusts or
financial institutions. A participation interest gives a Fund an undivided
interest in the security or securities involved. Participation interests may
have fixed, floating or variable rates of interest (although securities held by
the issuer may have longer maturities). If a participation interest is unrated,
the Adviser will have determined that the interest is of comparable quality to
those instruments in which the Fund may invest. For certain participation
interests, a Fund will have the right to demand payment for all or any part of
the Fund's participation interest, plus accrued interest. As to these
instruments, each Fund intends to exercise its right to demand payment as needed
to provide liquidity, to maintain or improve the quality of its investment
portfolio or upon a default (if permitted under the terms of the instrument).

In addition, each Municipal Bond Fund may also hold other tax-exempt derivative
instruments, which may be in the form of tender options bonds, participations,
custodial receipts and bonds that have interest rates that re-set inversely to
changing short-term rates and/or have imbedded interest rate floors and caps.
Many of these derivative instruments are proprietary products that have been
recently developed by investment banking firms, and it is uncertain how these
instruments will perform under different economic and interest-rate scenarios.
In addition, because certain of these instruments are leveraged, their market
values may be more volatile than other types of Municipal Obligations and may
present greater potential for capital gain or loss. In some cases it may be
difficult to determine the fair value of a derivative instrument because of a
lack of reliable objective information and an established secondary market for
some instruments may not exist.

In many cases, the Internal Revenue Service has not ruled on whether the
interest received on a tax-exempt derivative instrument or other types of
Municipal Obligations is tax-exempt and, accordingly, purchases of such
securities are based on the opinion of counsel to the sponsors of the
instruments. The Pilot Funds and the Adviser rely on these opinions and do not
intend to review the bases for them.

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<PAGE> 15

Municipal Obligations purchased by the Funds may be backed by letters of credit
or guarantees issued by domestic or foreign banks and other financial
institutions which are not subject to federal deposit insurance. Adverse
developments affecting the banking industry generally or a particular bank or
financial institution that has provided its credit or a guarantee with respect
to a Municipal Obligation held by a Fund could have an adverse effect on a
Fund's portfolio and the value of its shares. As described below under "Risk
Factors-Foreign Securities," foreign letters of credit and guarantees involve
certain risks in addition to those of domestic obligations.

- --Corporate Obligations. EACH FUND may purchase corporate bonds and cash
equivalents that meet a Fund's quality and maturity limitations. These
investments may include obligations issued by Canadian corporations and Canadian
counterparts of U.S. corporations, Eurobonds, which are U.S. dollar-denominated
obligations of foreign issuers, and Yankee bonds, which are U.S. dollar-
denominated bonds issued by foreign issuers in the U.S., and equipment trust
certificates. Each of the GOVERNMENT FUNDS may also purchase obligations issued
by foreign corporations. Corporate bonds are subject to call risk during periods
of falling interest rates. Securities with high stated interest rates may be
prepaid (or called) prior to maturity, requiring a Fund to invest the proceeds
at generally lower interest rates.

Cash equivalents, such as commercial paper and other similar obligations
purchased by a Fund that have an original maturity of thirteen months or less,
will either have short-term ratings at the time of purchase in the top two
categories by one or more NRSROs or be issued by issuers with such ratings.
Unrated instruments of these types purchased by a Fund will be determined by the
Adviser to be of comparable quality.

- --Repurchase Agreements. EACH FUND, except the MUNICIPAL BOND FUNDS, may enter
into repurchase agreements which involve a purchase of portfolio securities
subject to the seller's agreement to repurchase them at an agreed upon time and
price. The Funds will enter into repurchase agreements only with financial
institutions (such as banks and broker-dealers) deemed to be creditworthy by the
Adviser, pursuant to guidelines established by the Board of Trustees. The term
of these agreements is usually from overnight to one week and in any event, the
Funds intend that such agreements will not have maturities longer than 60 days.

A repurchase agreement may be viewed as a fully collateralized loan of money by
a Fund to the seller. During the term of any repurchase agreement, the Adviser
will monitor the creditworthiness of the seller, and the seller must maintain
the value of the securities subject to the agreement in an amount that is
greater than the repurchase price. Default or bankruptcy of the seller would,
however, expose a Fund to possible loss because of adverse market action or
delays connected with the disposition of the underlying obligations. Because of
the seller's repurchase obligation, the securities subject to repurchase
agreements do not have maturity limitations.

- --Reverse Repurchase Agreements. EACH FUND is authorized to make limited
borrowings for temporary purposes by entering into reverse repurchase
agreements. Under such an agreement a Fund sells portfolio securities to
financial institutions (such as banks and broker-dealers) and then buys them
back later at an agreed-upon time and price. When a Fund enters into a reverse
repurchase agreement it will place in a separate custodial account liquid assets
that have a value equal to or more than the price a Fund must pay when it buys
back the securities, and the account will be continuously monitored by the
Adviser to make sure the appropriate value is maintained. Reverse repurchase
agreements involve the possible risk that the value of portfolio securities a
Fund relinquishes may decline below the price a Fund must pay when the
transaction closes. Interest paid by a Fund in a reverse repurchase or other
borrowing transaction will reduce a Fund's income. The Funds will only enter
into reverse repurchase agreements to avoid the need to sell portfolio
securities to meet redemption requests during unfavorable market conditions.

- --Variable and Floating Rate Instruments. EACH FUND may purchase variable and
floating rate instruments. These instruments may include variable amount master
demand notes, which are instruments under which the indebtedness represented by
the instrument as well as its interest rate may vary. Because of the absence of
a market in which to resell variable or floating rate instruments, a Fund might
have trouble selling an instrument should the issuer default or during periods
when a Fund is not permitted by agreement to demand payment of the instrument,
and for this or other reasons a loss could occur with respect to the instrument.

11
<PAGE> 16

that, unlike bonds which pay interest throughout the period to maturity, a Fund
will realize no cash until the cash payment date and, if the issuer defaults,
the Fund may obtain no return at all on its investment.

A Fund will be required to include in income daily portions of original issue
discount accrued which will cause the Fund to be required to make distributions
of such amounts to shareholders annually, even if no payment is received before
the distribution date. These distributions must be made from the Fund's cash
assets or, if necessary, from the proceeds of sales of portfolio securities. The
Fund will not be able to purchase additional income producing securities with
cash used to make such distributions and its current income ultimately may be
reduced as a result.

- --Stripped Securities. EACH FUND may invest in instruments known as "stripped"
securities. These instruments include U.S. Treasury bonds and notes and federal
agency obligations on which the unmatured interest coupons have been separated
from the underlying obligation. These obligations are usually issued at a
discount to their "face value," and because of the manner in which principal and
interest are returned may exhibit greater price volatility than more
conventional debt securities. Each Fund may invest in "interest only" stripped
securities that have been issued by a federal instrumentality known as the
Resolution Funding Corporation and other stripped securities issued or
guaranteed by the U.S. Government, where the principal and interest components
are traded independently under the Separate Trading of Registered Interest and
Principal Securities program ("STRIPS"). Each Fund may also invest in
instruments that have been stripped by their holder, typically a custodian bank
or investment brokerage firm, and then resold in a custodian receipt program
under names such as TIGRS (Treasury Income Growth Receipts) and CATS
(Certificates of Accrual on Treasuries).

In addition, EACH FUND may purchase stripped mortgage-backed securities ("SMBS")
issued by the U.S. Government (or a U.S. Government agency or instrumentality)
or by private issuers such as banks and other institutions. SMBS, in particular,
may exhibit greater price volatility than ordinary debt securities because of
the manner in which their principal and interest are returned to investors.

- --Participations and Trust Receipts. EACH FUND may purchase from domestic
financial institutions and trusts created by such institutions participation
interests and trust receipts in high quality debt securities. A participation
interest or receipt gives a Fund an undivided interest in the security in the
proportion that a Fund's participation interest or receipt bears to the total
principal amount of the security. Each Fund intends only to purchase
participations and trust receipts from an entity or syndicate, and do not intend
to serve as a co-lender in any such activity.

- --When-Issued Purchases, Forward Commitments and Delayed Settlements. EACH FUND
may purchase securities on a "when-issued" basis and purchase or sell securities
on a "forward commitment" basis. Additionally, the Funds may purchase or sell
securities on a "delayed settlement" basis.

When-issued and forward commitment transactions, which involve a commitment by a
Fund to purchase or sell particular securities with payment and delivery taking
place at a future date (perhaps one or two months later), permit a Fund to
lock-in a price or yield on a security it intends to purchase or sell,
regardless of future changes in interest rates. Delayed settlement refers to a
transaction in the secondary market that will settle some time in the future.
These transactions involve the risk that the price or yield obtained may be less
favorable than the price or yield available when the delivery takes place.
When-issued purchases, forward commitments and delayed settlement transactions
are not expected to exceed 25% of the value of a Fund's total assets under
normal circumstances. In the event a Fund's when-issued purchases, forward
commitments and delayed settlement transactions ever exceeded 25% of the value
of its total assets, a Fund's liquidity and the ability of the Adviser to manage
the Fund might be adversely affected. These transactions will not be entered
into for speculative purposes but only in furtherance of a Fund's investment
objective.

- --Stand-by Commitments. Each of the MUNICIPAL BOND FUNDS may acquire stand-by
commitments under which a dealer agrees to purchase certain Municipal
Obligations at the Fund's option at a price equal to amortized cost plus
interest. These commitments will be used only to assist in maintaining the
liquidity of the Funds, and not for trading purposes.

- --Other Investment Companies. EACH FUND may invest in the securities of other
mutual funds that invest in the particular instruments in which a Fund itself
may invest subject to requirements of applicable securities laws. The Trust, on
behalf of each of the Funds, has obtained relief from the SEC to permit each
Fund to invest any uninvested cash reserves in an amount not to exceed 25% of
its total assets in affiliated money market funds. When a Fund invests in
another mutual fund, it pays a pro rata portion of the advisory and other
expenses of that fund as a shareholder of that fund. These expenses are in
addition to the advisory and other expenses a

12
<PAGE> 17

Fund pays in connection with its own operations. The Adviser may waive its
advisory fee on that portion of any Fund's assets which are invested in the
securities of affiliated money market funds managed by the Adviser or any of its
affiliates.

- --Securities Lending. EACH FUND may lend securities held in its portfolio to
financial institutions (such as banks and broker-dealers) as a means of earning
additional income. These loans present risks of delay in receiving additional
collateral or in recovering the securities loaned or even a loss of rights in
the collateral should the borrower of the securities fail financially. However,
securities loans will be made only to financial institutions the Adviser deems
to be of good standing, and will only be made if the Adviser thinks the possible
rewards from such loan justify the possible risks. A loan will not be made if,
as a result, the total amount of a Fund's outstanding loans exceeds 33 1/3% of
its total assets. Securities loans will be fully collateralized.

- --Mortgage Rolls. Each of the GOVERNMENT FUNDS may enter into transactions known
as "mortgage dollar rolls" in which a Fund sells mortgage-backed securities for
current delivery and simultaneously contracts to repurchase substantially
similar securities in the future at a specified price which reflects an interest
factor and other adjustments. During the roll period, a Fund does not receive
principal and interest on the mortgage-backed securities but it does earn
interest on the cash proceeds of the initial sale. In addition, a Fund is paid a
fee as consideration for entering into the commitment to purchase. Unless a roll
has been structured so that it is "covered," meaning that there exists an
offsetting cash or cash-equivalent security position that will mature at least
by the time of settlement of the roll transaction, liquid assets in the amount
of the future purchase commitment will be set apart for the Fund involved in a
separate account at the custodian. Mortgage rolls are not a primary investment
technique for any of the Funds, and it is expected that, under normal market
conditions, a Fund's commitments under mortgage rolls will not exceed 10% of the
value of its total assets.

- --Options. EACH FUND may write covered call options, buy put options, buy call
options and sell, or "write," secured put options on particular securities or
various securities indices. A call option for a particular security gives the
purchaser of the option the right to buy, and a writer the obligation to sell,
the underlying security at the stated exercise price at any time prior to the
expiration of the option, regardless of the market price of the security. The
premium paid to the writer is the consideration for undertaking the obligations
under the option contract. A put option for a particular security gives the
purchaser the right to sell the underlying security at the stated exercise price
at any time prior to the expiration date of the option, regardless of the market
price of the security. In contrast to an option on a particular security, an
option on a securities index provides the holder with the right to make or
receive a cash settlement upon exercise of the option.

Options purchased by a Fund will not exceed 5%, and options written by a Fund
will not exceed 25%, of its net assets. All options will be listed on a national
securities exchange and issued by the Options Clearing Corporation.

OPTIONS TRADING IS A HIGHLY SPECIALIZED ACTIVITY AND MAY CARRY GREATER THAN
ORDINARY INVESTMENT RISK. Purchasing options may result in the complete loss of
the amounts paid as premiums to the writer of the option. In writing a covered
call option, a Fund gives up the opportunity to profit from an increase in the
market price of the underlying security above the exercise price (except to the
extent the premium represents such a profit). Moreover, it will not be able to
sell the underlying security until the covered call option expires or is
exercised or a Fund closes out the option. In writing a secured put option, a
Fund assumes the risk that the market value of the security will decline below
the exercise price of the option. The Funds may use options to manage their
exposure to changing interest rates and/or security prices. The use of covered
call and secured put options will not be a primary investment technique of any
Fund.

- --Futures and Related Options. EACH FUND may enter into futures contracts and
options on such futures contracts as a hedge against anticipated interest rate
fluctuations. Such fluctuations could have an effect on securities that a Fund
holds in its portfolio or intends to sell. Futures contracts obligate a Fund, at
maturity, to take or make delivery of certain securities or the cash value of a
securities index. A Fund may not purchase or sell a futures contract (or related
option) except for bona fide hedging purposes unless immediately after any such
transaction the sum of the aggregate amount of margin deposits on its existing
futures positions and the amount of premiums paid for related options is 5% or
less of its total assets (after taking into account certain technical
adjustments).

13
<PAGE> 18

becomes obligated to purchase or sell a futures contract if the option is
exercised. In anticipation of a market advance, a Fund may purchase call options
on futures contracts as a substitute for the purchase of futures contracts to
hedge against a possible increase in the price of securities which a Fund
intends to purchase. Similarly, if the value of a Fund's portfolio securities is
expected to decline, the Fund might purchase put options or sell call options on
futures contracts rather than sell futures contracts.

More information regarding futures contracts and related options can be found in
the Statement of Additional Information, which is available upon request.

- --Forward Foreign Currency Exchange Contracts. Because DIVERSIFIED BOND INCOME
FUND and the GOVERNMENT FUNDS may each buy and sell securities and receive
dividend and interest proceeds in currencies other than the U.S. dollar, these
Funds may from time to time enter into forward foreign currency exchange
contracts ("forward contracts"). A forward contract involves an obligation to
purchase or sell a specific currency for an agreed price at a future date, which
may be any fixed number of days from the date of the contract.

The purpose of entering into these contracts is to minimize the risk to the
Funds from adverse changes in the relationship between the U.S. dollar and
foreign currencies. At the same time, such contracts may limit potential gain
from a positive change in the relationship between the U.S. dollar and foreign
currencies. The use of currency transactions can result in a Fund incurring
losses as a result of a number of factors, including the imposition of exchange
controls, suspension of settlements, or the inability to deliver or receive a
specified currency. Unanticipated changes in currency prices may result in
poorer overall performance for a Fund than the performance it would have had if
it had not engaged in forward contracts.

- --Liquidity Considerations. An illiquid investment is any investment that cannot
be disposed of within seven days in the normal course of business at
approximately the amount at which it is valued by a Fund. Disposing of illiquid
investments may involve time-consuming negotiations and legal expenses, and it
may be difficult or impossible to dispose of such investments promptly at an
acceptable price. Additionally, the absence of a trading market can make it
difficult to value a security. For these and other reasons a FUND WILL NOT
KNOWINGLY INVEST MORE THAN 15% OF ITS NET ASSETS IN ILLIQUID SECURITIES.
Illiquid securities include repurchase agreements, securities loans and time
deposits that do not permit a Fund to terminate them after seven days notice,
certain certificates of participation, trust receipts, tax-exempt derivative
instruments, stripped mortgage-backed securities issued by private issuers and
securities that are not registered under the securities laws. Certain securities
that might otherwise be considered illiquid, however, such as some issues of
commercial paper and variable amount master demand notes with maturities of nine
months or less and securities for which the Adviser has determined pursuant to
guidelines adopted by the Board of Trustees that a liquid trading market exists
(including certain securities that may be purchased by institutional investors
under SEC Rule 144A), are not subject to this 15% limitation.

- --Portfolio Turnover. EACH FUND may engage in short-term trading to achieve its
investment objective. The annual portfolio turnover rates for the Funds are not
expected to exceed 100% during the next twelve months. Portfolio turnover will
not be a limiting factor in making investment decisions. Portfolio turnover may
occur for a variety of reasons, including the appearance of a more favorable
investment opportunity. Turnover may require payment of brokerage commissions,
impose other transaction costs and could increase the amount of income received
by a Fund that constitutes taxable capital gains. To the extent capital gains
are realized, distributions from the gains may be ordinary income for federal
tax purposes (see "The Business of the Fund-- Tax Implications").

- --Other Information. Certain brokers who are affiliated with The Pilot Funds may
act as broker for the Funds on exchange portfolio transactions, subject,
however, to procedures adopted by the Board of Trustees. Commissions, fees or
other remuneration paid to an affiliated broker must be at least as favorable as
those which the Trustees believe to be charged by other brokers in connection
with comparable transactions involving similar securities being purchased or
sold on a securities exchange during a comparable period of time. A transaction
will not be placed with an affiliated broker if a Fund would have to pay a
commission rate less favorable than the affiliated broker's contemporaneous
charges for comparable transactions for its other most favored, but
unaffiliated, customers, except for accounts for which the affiliated broker
acts as a clearing broker for another brokerage firm, and any customers of the
affiliated broker not comparable to The Pilot Funds as determined by the Board
of Trustees.

14
<PAGE> 19

which may be invested in any single offering. Because of the active role which
may be played by affiliated brokers in the underwriting of securities, a Fund's
ability to purchase securities in the primary market may from time to time be
limited.

RISK FACTORS

- --Foreign Securities. There are risks and costs involved in investing in
securities of foreign issuers (including foreign governments), which are in
addition to the usual risks inherent in U.S. investments. Investments in foreign
securities may involve higher costs than investments in U.S. securities,
including higher transaction costs as well as the imposition of additional taxes
by foreign governments. In addition, foreign investments may involve further
risks associated with the level of currency exchange rates, less complete
financial information about the issuer, less market liquidity and political
instability. Future political and economic developments, the possible imposition
of withholding taxes on interest income, the possible seizure or nationalization
of foreign holdings, the possible establishment of exchange controls or the
adoption of other governmental restrictions might adversely affect the payment
of principal and interest on foreign obligations. Additionally, foreign banks
and foreign branches of domestic banks may be subject to less stringent reserve
requirements, and to different accounting, auditing and recordkeeping
requirements.

- --Other Risk Considerations. As with an investment in any mutual fund, an
investment in the Funds entails market and economic risks associated with
investments generally. However, there are certain specific risks of which you
should be aware.

Generally, the market value of fixed income securities in the Funds can be
expected to vary inversely to changes in prevailing interest rates. You should
be aware that in periods of declining interest rates the market value of
investment portfolios comprised primarily of fixed income securities will tend
to increase, and in periods of rising interest rates the market value will tend
to decrease. You should also be aware that in periods of declining interest
rates, the yields of investment portfolios comprised primarily of fixed income
securities will tend to be higher than prevailing market rates and, in periods
of rising interest rates, yields will tend to be somewhat lower. The Funds may
purchase zero-coupon bonds (i.e., discount debt obligations that do not make
periodic interest payments). Zero-coupon bonds are subject to greater market
fluctuations from changing interest rates than debt obligations of comparable
maturities which make current distributions of interest. Debt securities with
longer maturities, which tend to produce higher yields, are subject to
potentially greater capital appreciation and depreciation than obligations with
shorter maturities. Changes in the financial strength of an issuer or changes in
the ratings of any particular security may also affect the value of these
investments. Fluctuations in the market value of fixed income securities
subsequent to their acquisition will not affect cash income from such securities
but will be reflected in a Fund's net asset value.

FUNDAMENTAL LIMITATIONS

Certain of the investment policies of each Fund may not be changed without a
vote of the holders of a majority of the Fund's outstanding shares. Policies
requiring such a vote to effect a change are known as "fundamental." Some of
these fundamental limitations are summarized below, and all of the Funds'
fundamental limitations are set out in full in the Statement of Additional
Information, which is available upon request.

1. A Fund may not invest 25% or more of its total assets in one or more issuers
conducting their principal business activities in the same industry (with
certain limited exceptions described in the Statement of Additional
Information).

2. A Fund may not invest (with certain limited exceptions, including U.S.
Government obligations, as described in the Statement of Additional Information)
more than 5% of its total assets in the securities of a single issuer or subject
to puts from any one issuer, except that up to 25% of the total assets of each
Fund can be invested without regard to the 5% limitation. A Fund may not
purchase more than 10% of the outstanding voting securities of any issuer
subject, however, to the foregoing 25% exception.

3. A Fund may not borrow money except as a temporary measure for extraordinary
or emergency purposes or except in connection with reverse repurchase agreements
and mortgage rolls; provided that the Fund will maintain asset coverage of 300%
for all borrowings.

4. A Fund may not make loans, except that it may invest in debt securities,
enter into repurchase agreements and lend its portfolio securities.

If a percentage limitation is met at the time an investment is made, a
subsequent change in that percentage that is the result of a change in value of
a Fund's portfolio securities does not mean that the limitation has been
violated.

15
<PAGE> 20

INVESTING IN THE PILOT FUNDS

HOW TO BUY SHARES

Pilot Shares are sold on a continuous basis by Pilot Funds Distributors, Inc.
(the "Distributor").

Pilot Shares are sold to Boatmen's Trust Company (referred to as "Boatmen's" or
the "Adviser") and its affiliates (Boatmen's and such affiliates being sometimes
referred to herein individually as an "Institution" and collectively as
"Institutions") acting on behalf of themselves or their customers who maintain
qualified trust, agency or custodial accounts ("Customers"). Customers may
include individuals, trusts, partnerships, institutions and corporations. All
share purchases are effected through a Customer's account at an Institution
through procedures established in connection with the requirements of the
account, and confirmations of share purchases and redemptions will be sent to
the Institution involved. Institutions (or their nominees) will normally be the
holders of record of Pilot Shares acting on behalf of their Customers, and will
reflect their Customers' beneficial ownership of shares in the account
statements provided by them to their Customers. The exercise of voting rights
and the delivery to Customers of shareholder communications from the Funds will
be governed by the Customers' account agreements with the Institutions.

Pilot Shares are sold at the net asset value per share next determined after
receipt of a purchase order from an Institution by the Fund's transfer agent.
The minimum initial investment in a Fund for an Institution is $500,000 with no
minimum subsequent investment. Institutions may establish different minimum
investment requirements for their Customers and may charge their Customers
certain account fees depending on the type of account a Customer has established
with the Institution. These fees may include, for example, account maintenance
fees, compensating balance requirements or fees based upon account transactions,
assets or income. Information concerning these minimum account requirements,
services and any charges should be obtained from the Institutions before a
customer authorizes the purchase of Fund shares, and this Prospectus should be
read in conjunction with any information so obtained.

Purchase orders placed by an Institution for Pilot Shares must be received by
the Funds' transfer agent before the close of regular trading hours (currently
3:00 p.m. Central time) on the New York Stock Exchange (the "Exchange") on a day
when the Exchange is open for trading (a "Business Day"), which is Monday
through Friday except for holidays (scheduled Exchange holidays for 1997 are New
Years Day (observed), President's Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day). Payment for shares must be
made by Institutions in federal funds or other funds immediately available to
the Funds' custodian no later than 3:00 p.m. (Central time) on the Business Day
immediately following placement of the purchase order. On those days when the
Exchange closes early as a result of such day being a partial holiday or
otherwise, the right is reserved to advance the time on that day by which
purchase and redemption requests must be received.

It is the responsibility of Institutions to transmit orders for purchases by
their Customers promptly to the Funds in accordance with their agreements with
their Customers, and to deliver required investments on a timely basis. If
federal funds are not received within the period described, the order will be
canceled, notice will be given, and the Institution will be responsible for any
loss to The Pilot Funds or its beneficial shareholders. Payments for shares of a
Fund may, at the discretion of the Adviser, be made in the form of securities
that are permissible investments for that Fund. For further information see
"In-Kind Purchases" in the Statement of Additional Information.

Purchase orders must include the purchasing Institution's tax identification
number. The Pilot Funds reserves the right to reject any purchase order or to
waive the minimum initial investment requirement. Payment for orders which are
not received or accepted will be returned after prompt notice. The issuance of
shares is recorded in the shareholder records of the Funds, and share
certificates will not be issued.

HOW TO SELL SHARES

Redemption orders are effected at the net asset value per share next determined
after receipt of the order from an Institution by The Pilot Funds' transfer
agent. The Pilot Funds imposes no charges when Pilot Shares are redeemed.
Institutions may charge fees to their Customers for their services in connection
with the instructions and limitations pertaining to the account at the
Institution.

The Funds may suspend the right of redemption or postpone the date of payment
upon redemption (as well as suspend the recordation of the transfer of its
shares) for such periods as permitted under the Investment Company Act of 1940.

The Pilot Funds intends to pay cash for all shares redeemed, but in unusual
circumstances may make payment wholly or partly in readily marketable portfolio

16
<PAGE> 21

securities at their then market value equal to the redemption price if it
appears appropriate to do so in light of the Funds' responsibilities under the
Investment Company Act of 1940. See the Statement of Additional Information
("Additional Purchase and Redemption Information") for examples of when such
redemptions might be appropriate. In those cases, an investor may incur
brokerage costs in converting securities to cash. The Funds may also redeem
shares involuntarily if the balance has fallen below the minimum level due to
shareholder redemptions and not as a result of market fluctuations.

It is the responsibility of the Institutions to provide their customers with
statements of account with respect to transactions made for their accounts at
the Institutions.

Share balances may be redeemed pursuant to arrangements between Institutions and
their Customers. It is the responsibility of an Institution to transmit
redemption orders to The Pilot Funds' transfer agent and to credit its
Customers' accounts with the redemption proceeds on a timely basis. The
redemption proceeds for all Funds are normally wired to the redeeming
Institution the following Business Day after receipt of the order by the
transfer agent. The Pilot Funds reserves the right, however, to delay the wiring
of redemption proceeds for up to seven days after receipt of a redemption order
if, in the judgment of the Adviser, an earlier payment could adversely affect a
Fund.

With respect to telephone transactions, The Pilot Funds and its service
contractors will employ reasonable procedures to ensure that instructions
communicated by phone are genuine; if these procedures are not followed, The
Pilot Funds or its service contractors may be liable for any losses due to
unauthorized or fraudulent instructions. These procedures include recording all
phone conversations, sending confirmation to shareholders within 72 hours of a
telephone transaction, verifying the account name and a shareholder's account
number or tax identification number, and sending redemption proceeds only to the
address of record or to a previously authorized bank account. Each party who
establishes an account directly with The Pilot Funds automatically has the
ability to engage in telephone transactions unless that party elects otherwise.

The net asset value of shares that are redeemed may be more or less than their
original cost, depending on a Fund's current net asset value.

Explanation of Sales Price

Pilot Shares of the Funds are sold at net asset value. NET ASSET VALUE PER SHARE
is determined on each Business Day (as defined above) at 3:00 p.m. (Central
time) with respect to each Fund by adding the value of a Fund's investments,
cash and other assets attributable to its Pilot Shares, subtracting the Fund's
liabilities attributable to those shares, and then dividing the result by the
number of Pilot Shares in the Fund that are outstanding. The assets of the Funds
are valued at market value or, if market quotes cannot be readily obtained, fair
value is used as determined by the Board of Trustees. Debt securities held by
these Funds that have sixty days or less until they mature are valued at
amortized cost, which generally approximates market value. More information
about valuation can be found in the Funds' Statement of Additional Information,
which is available upon request.

DIVIDENDS AND DISTRIBUTIONS

Where do your dividends and distributions come from?

Dividends for each Fund are derived from its net investment income. For the
Government and Municipal Bond Funds, it comes from the interest on the bonds and
other investments that they hold in their portfolios. For the Equity Funds, net
investment income is made up of dividends received from the stocks they hold, as
well as interest accrued on convertible securities, money market instruments and
other debt obligations held in their portfolios.

The Funds realize capital gains when they sell a security for more than its
cost. Each Fund may make distributions of its net realized capital gains, if
any, after any reductions for capital loss carryforwards.

What are your dividend and distribution options?

Shareholders of record receive dividends and net capital gain distributions.
Dividends and distributions will be paid in cash unless you specifically elect
to receive payment in additional shares of the same share class of a Fund for
which the dividend or distribution was declared. Your election and any
subsequent change should be made in writing to your Institution.

Your election is effective for dividends and distributions with record dates
(with respect to the Equity Funds) or payment dates (with respect to the
Government and Municipal Bond Funds) after the date the Institution receives the
election.

When are dividends and distributions declared and paid?

Dividends are declared daily and paid monthly. Shares of the Funds begin earning
dividends the first Business Day after acceptance of the purchase order for
which

17
<PAGE> 22

The Pilot Funds' custodian has received payment and stop earning dividends the
Business Day such shares are redeemed. If all of the Pilot Shares held by an
Institution in such a Fund are redeemed, the Fund will make a cash payment of
any accrued dividends within five business days after redemption.

Net capital gain distributions for each of the Funds, if any, are distributed at
least annually after any reductions for capital loss carryforwards.

EXCHANGE PRIVILEGE

If you wish, Pilot Shares of a Fund may be exchanged for Class A Shares of the
same Fund without payment of a sales charge in connection with the distribution
of assets held in a qualified trust, agency or custodial account maintained with
Boatmen's or its affiliates. Similarly, a Customer may exchange Class A Shares
for Pilot Shares of the same Fund if the shares are to be held in such a
qualified trust, agency or custodial account. Pilot Shares of a Fund may also be
exchanged for Pilot Shares of any of the other investment portfolios of The
Pilot Funds. Class A Shares are subject to the same shareholder transaction
expenses as Pilot Shares except that purchases of Class A Shares (other than by
exchange) may be subject to a front-end sales charge. Class A Shares are subject
to the same annual fund operating expenses as Pilot Shares except that Class A
Shares are subject to annual Rule 12b-1 Distribution Payments of 0.25% of
average net assets. In addition, the procedures for effecting transactions in
Fund shares and other features related to the servicing and maintenance of Fund
accounts may differ for Class A Shares from those applicable to Pilot Shares
depending on whether a shareholder chooses to hold the account containing Class
A Shares directly with the Funds or through a broker/dealer or other
intermediary institution (a "Service Organization"). For more information on
holding Class A Shares of a Fund, please see the prospectus for Class A and B
Shares which can be obtained by calling 1/800 71-PILOT and, where appropriate,
consult the Service Organization through which the Class A Shares of the Fund
received by exchange will be held. The particular class of shares or Fund you
are exchanging into must be registered for sale in your state. The exchange
privilege may be modified or terminated at any time. At least 60 days' notice
will be given to shareholders of any material modification or termination of the
exchange privilege except where notice is not required by the Securities and
Exchange Commission.

THE PILOT FAMILY OF FUNDS

The Pilot Funds was organized on July 15, 1982 as a Massachusetts business trust
under the name Centerland Fund. On June 1, 1994, its name was changed to The
Pilot Funds. The Pilot Funds is a mutual fund of the type known as an "open-end
management investment company." A mutual fund permits an investor to pool his or
her assets with those of others in order to achieve economies of scale, take
advantage of professional money managers and enjoy other advantages
traditionally reserved for large investors. The Agreement and Declaration of
Trust permits the Board of Trustees of The Pilot Funds to create separate series
or portfolios of shares. To date, fourteen portfolios have been established. The
Agreement and Declaration of Trust also permits the Board of Trustees to
classify or reclassify any series or portfolio of shares into one or more
classes. The Trustees have authorized the issuance of an unlimited number of
shares in each of three share classes (Pilot Shares, Class A Shares and Class B
Shares) in the Funds. Each Fund is classified as a diversified company.
Information regarding The Pilot Funds' other portfolios may be obtained by
contacting The Pilot Funds or the Distributor.

The Pilot Shares of the Funds are described in this prospectus. The Funds also
offer Class A and Class B Shares. Class A Shares are sold with a maximum 4.5%
(4.0% for Diversified Bond Income Fund, Intermediate U.S. Government Securities
Fund and Intermediate Municipal Bond Fund) front-end sales charge, and Class B
Shares are sold with a maximum 4.5% (4.0% for Diversified Bond Income Fund,
Intermediate U.S. Government Securities Fund and Intermediate Municipal Bond
Fund) contingent deferred sales charge. Pilot, Class A and Class B Shares bear
their pro rata portion of all operating expenses paid by the Funds. In addition,
Class A and Class B Shares bear all payments under the Funds' Distribution Plans
(the "Plans"). Under the Plans the Distributor receives fees for distribution
and shareholder support services.

18
<PAGE> 23

Class A Shares may not exceed .25% (on an annual basis) of the average daily net
asset value of outstanding Class A Shares. Payments under the Distribution Plan
for Class B Shares may not exceed 1.00% (on an annual basis) of the average
daily net asset value of outstanding Class B Shares. Distribution payments under
the Distribution Plans are subject to the requirements of a rule under the
Investment Company Act of 1940 known as Rule 12b-1.

The Pilot Funds offers various services and privileges in connection with its
Class A and Class B Shares that are not offered in connection with its Pilot
Shares, including an automatic investment plan and an automatic withdrawal plan.
Class B Shares convert automatically to Class A Shares eight years after the
beginning of the calendar month in which the shares were purchased. Persons
selling or servicing Class A and Class B Shares of the Funds may receive
different compensation with respect to one particular class of shares over
another in the same Fund.

SHAREHOLDERS ARE ENTITLED TO ONE VOTE FOR EACH FULL SHARE HELD AND PROPORTIONATE
FRACTIONAL VOTES FOR FRACTIONAL SHARES HELD. Shares of all The Pilot Fund
portfolios vote together and not by class, unless otherwise required by law or
permitted by the Board of Trustees. All shareholders of a particular Fund will
vote together as a single class on matters relating to the Fund's investment
advisory agreement and fundamental investment policies. Only Class A
shareholders, however, will vote on matters relating to the Distribution Plan
for Class A Shares and only Class B shareholders will vote on matters relating
to the Distribution Plan for Class B Shares.

THE PILOT FUNDS IS NOT REQUIRED TO AND DOES NOT CURRENTLY EXPECT TO HOLD ANNUAL
MEETINGS OF SHAREHOLDERS, ALTHOUGH SPECIAL MEETINGS MAY BE CALLED FOR PURPOSES
SUCH AS ELECTING OR REMOVING TRUSTEES OR OTHER PURPOSES.

THE BUSINESS OF THE FUND

FUND MANAGEMENT

THE BUSINESS AFFAIRS OF THE PILOT FUNDS ARE MANAGED UNDER THE GENERAL
SUPERVISION OF THE BOARD OF TRUSTEES.

SERVICE PROVIDERS

Adviser: BOATMEN'S TRUST COMPANY (referred to as "Boatmen's" or the "Adviser")
manages the investment portfolio of each Fund, selecting the investments and
making purchase and sale orders. Its principal offices are located at 100 North
Broadway, St. Louis, Missouri 63178-4737.

Administrator: BISYS FUND SERVICES LIMITED PARTNERSHIP (referred to as "BISYS"),
is responsible for coordinating the Fund's efforts and generally overseeing the
operation of the Fund's business. BISYS' principal offices are located at 3435
Stelzer Road, Columbus, Ohio 43219-3035.

Distributor: Each Fund's shares are sold on a continuous basis by the
Distributor, PILOT FUNDS DISTRIBUTORS, INC. (referred to as the "Distributor"),
a registered broker-dealer whose ultimate corporate parent is The BISYS Group,
Inc., is located at 3435 Stelzer Road, Columbus, Ohio 43219-3035.

Custodian: BOATMEN'S TRUST COMPANY (referred to as "Boatmen's") is responsible
for holding the investments purchased by each Fund. Boatmen's is located at 100
N. Broadway, St. Louis, Missouri 63178.

Transfer Agent: BISYS FUND SERVICES, INC. (referred to as the "Transfer Agent")
is the transfer and dividend disbursing agent of the Funds. It maintains the
account records of all shareholders and administers the distribution of all
income earned as a result of investing in the Funds. The Transfer Agent is
located at 3435 Stelzer Road, Columbus, Ohio 43219-3035.

MORE ABOUT 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 June 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).

Boatmen's Bancshares, Inc., Boatmen's parent, ("Bancshares") is a registered
bank holding company which owns substantially all of the outstanding capital
stock of numerous commercial banks Boatmen's, and more than fifty banks and
trust companies located in Arkansas, Illinois, Iowa, Kansas, Missouri, New
Mexico, Oklahoma, Tennessee and Texas, a mortgage banking company, a credit life
insurance company and a credit card bank.

19
<PAGE> 24

approval by the appropriate regulatory authorities and by the shareholders of
both Bancshares and NationsBank. If the proposed merger is consummated,
Boatmen's will become a wholly owned subsidiary of NationsBank.

Pilot Intermediate Municipal Bond Fund, Pilot Municipal Bond Fund, and Pilot
Intermediate Municipal Bond Fund each commenced operations on November 7, 1994
upon the transfer to each Fund of a portion of assets of a common trust fund of
Boatman's Trust Company (the "Commingled Funds") having corresponding investment
objectives, policies and limitations in exchange for shares of such Fund. Each
Fund's portfolio of investments on November 7, 1994 was substantially the same
as the portfolio of the corresponding Commingled Fund immediately prior to the
transfer.

Because each Commingled Fund constitutes a "predecessor" of its corresponding
Fund, each corresponding Fund calculates the performance for each of its classes
for periods commencing prior to the transfer of Commingled Fund assets to the
Fund by including its Commingled Fund predecessor's total return adjusted to
reflect the deduction of estimated fees and expenses applicable to that class as
stated in the expense table of the Fund's initial prospectus.

The quoted performance data includes the performance of the Commingled Funds for
periods before their corresponding Funds' commencement of operations including
periods when the Commingled Funds were managed by the Adviser's predecessor in
interest or affiliate. The Commingled Funds have not been and are not currently
registered under the 1940 Act or subject to the investment restrictions imposed
by the 1940 Act. If the Commingled Funds had been registered under the 1940 Act,
the Commingled Funds' performance might have been adversely affected. The
performance information set forth below reflects past performance and is not
necessarily indicative of the future performance of the Funds, or any of the
other investment portfolios of The Pilot Funds. Performance will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than their
original cost.

Average Annual Total Returns for the period ended September 30, 1996.

<TABLE>
<CAPTION>
1 YEAR
PILOT SHARES
------------
<S> <C>
Pilot Intermediate Municipal Bond Fund and its
predecessor %
Pilot Intermediate U.S. Government Securities Fund
and its predecessor %
Pilot Municipal Bond Fund and its predecessor %
</TABLE>

<TABLE>
<CAPTION>
3 YEARS
PILOT SHARES
------------
<S> <C>
Pilot Intermediate Municipal Bond Fund and its
predecessor %
Pilot Intermediate U.S. Government Securities Fund
and its predecessor %
Pilot Municipal Bond Fund and its predecessor %
</TABLE>

<TABLE>
<CAPTION>
5 YEARS
PILOT SHARES
------------
<S> <C>
Pilot Intermediate Municipal Bond Fund and its
predecessor %
Pilot Intermediate U.S. Government Securities Fund
and its predecessor %
Pilot Municipal Bond Fund and its predecessor %
</TABLE>

<TABLE>
<CAPTION>
10 YEARS
(OR SINCE INCEPTION)
PILOT SHARES
------------
<S> <C>
Pilot Intermediate Municipal Bond Fund and its
predecessor %
Pilot Intermediate U.S. Government Securities Fund
and its predecessor %
Pilot Municipal Bond Fund and its predecessor %
</TABLE>

The average annual total returns are calculated in conformity with Securities
and Exchange Commission guidelines. In addition, these returns are adjusted to
reflect the performance that the Commingled Fund would have experienced if
operating expenses applicable to the Pilot Shares (as estimated at commencement
of operations) had been incurred during the periods shown.

The Fixed Income Committee of Boatmen's is primarily responsible for the
day-to-day management of the investment portfolio of each of the Government
Funds and Municipal Bond Funds.

Although expected to be infrequent, Boatmen's may consider the amount of Fund
shares sold by broker-dealers and others (including those who may be connected
with Boatmen's) in allocating orders for purchases and sales of portfolio
securities. This allocation may involve the payment of brokerage commissions or
dealer concessions. Boatmen's will not engage in this practice unless the
execution capability of and the amount received by such broker-dealer or other
company is believed to be comparable to what another qualified firm could offer.

20
<PAGE> 25

preparation of reports to shareholders, calculating or providing for the
calculation of the net asset values of Fund shares and dividends and capital
gain distributions to shareholders, and performing other administrative
functions necessary for the smooth operation of the Funds. Certain officers of
The Pilot Funds, namely Messrs. Martin Dean, W. Eugene Spurbeck, George O.
Martinez, William J. Tomko and Bruce Treff are also employees and/or officers of
BISYS, the Distributor or an affiliate.

EXPENSES. In order to support the services described above, as well as other
matters essential to the operation of the Funds, the Funds incur certain
expenses. Expenses are paid out of a Fund's assets, and thus are reflected in
the Fund's dividends and net asset value, but they are not billed directly to
you or deducted from your account.

Boatmen's is entitled to advisory fees that are calculated daily and payable
monthly at the annual rate of 0.55% of Pilot Diversified Bond Income Fund's
average daily net assets, 0.55% of the Pilot Intermediate U.S. Government
Securities Fund's average daily net assets, 0.55% of the Pilot U.S. Government
Securities Fund's average daily net assets, 0.55% of the Pilot Intermediate
Municipal Bond Fund's average daily net assets, and 0.55% of the Pilot Municipal
Bond Fund's average daily net assets. For the fiscal year ended August 31, 1996,
the funds paid advisory fees in the amount of 0.35%, 0.40%, 0.40% and 0.45% for
Pilot Intermediate U.S. Government Securities Fund, Pilot U.S. Government
Securities Fund, Pilot Intermediate Municipal Bond Fund and Pilot Municipal Bond
Fund, respectively. Pilot Diversified Bond Income Fund commenced operations on
October 21, 1996.

Additionally, BISYS is entitled to an administration fee from The Pilot Funds
which is calculated based on the net assets of all of the investment portfolios
of The Pilot Funds combined. Under the Administration Agreement, each Fund pays
its pro-rata share of an annual fee to BISYS, computed daily and payable
monthly, of .115 of 1% of The Pilot Funds' average net assets up to $1.5
billion, .110 of 1% of The Pilot Funds' average net assets on the next $1.5
billion and .1075 of 1% of The Pilot Funds' average net assets in excess of $3
billion. For the fiscal year ended August 31, 1996, the Pilot Funds paid
administration fees to BISYS in the amount of $217,071, $133,452, $219,483 and
$166,741 for Pilot Intermediate U.S. Government Securities Fund, Pilot U.S.
Government Securities Fund Pilot Intermediate Municipal Bond Fund and Pilot
Municipal Bond Fund, respectively. For the fiscal period ended August 31, 1995,
The Pilot Funds paid administration fees to BISYS in the amount of $28,065,
$11,784, $52,366 and $23,572 for Pilot Intermediate U.S. Government Securities
Fund, Pilot U.S. Government Securities Fund, Pilot Intermediate Municipal Bond
Fund and Pilot Municipal Bond Fund, respectively.

Operating expenses borne by the Funds include taxes; interest; fees and expenses
of trustees and officers who are not also officers, directors, employees or
holders of 5% or more of the outstanding voting securities of the Adviser, BISYS
or any of their affiliates; Securities and Exchange Commission fees; state
securities registration and qualification fees; advisory fees; administration
fees; charges of the custodian and of the transfer and dividend disbursing
agent; certain insurance premiums; outside auditing and legal expenses; costs of
preparing and printing prospectuses for regulatory purposes and for distribution
to shareholders; costs of shareholder reports and meetings; and any
extraordinary expenses. Each Fund also pays any brokerage fees, commissions and
other transaction charges (if any) incurred in connection with the purchase and
sale of its portfolio securities.

FEE WAIVERS. Expenses can be reduced by voluntary fee waivers and expense
reimbursements by Boatmen's and the Funds' other service providers. However, as
to any amounts voluntarily waived or reimbursed, the service providers retain
the ability to be reimbursed by a Fund for such amounts prior to fiscal year
end. These waivers and reimbursements would increase the yield to investors when
made but would decrease yields if a Fund were required to reimburse a service
provider.

TAX IMPLICATIONS

As with any investment, you should consider the tax implications of an
investment in the Funds. The following is only a short summary of the important
tax considerations generally affecting the Funds and their shareholders. You
should consult your tax adviser with specific reference to your own tax
situation.

YOU WILL BE ADVISED AT LEAST ANNUALLY REGARDING THE FEDERAL INCOME TAX TREATMENT
OF DIVIDENDS AND DISTRIBUTIONS MADE TO YOU.

FEDERAL TAXES. Each Fund intends to qualify as a "regulated investment company"
under the Internal Revenue Code (called the "Code"), meaning that to the extent
a Fund's earnings are passed on to shareholders as required by the Code, the
Fund itself generally will not be required to pay federal income taxes.

In order to so qualify, each Fund intends to pay as dividends at least 90% of
its investment company

21
<PAGE> 26

taxable income. Investment company taxable income includes taxable interest,
dividends and gains attributable to market discount on taxable as well as
tax-exempt securities. To the extent you receive such a dividend based on either
investment company taxable income or the excess of net short-term capital gain
over net long-term capital loss, you would treat that dividend as ordinary
income in determining your gross income for tax purposes, whether you received
it in the form of cash or additional shares. Unless you are exempt from federal
income taxes, the dividends you receive from each Fund, other than the "exempt
interest dividends" from the Municipal Bond Funds, will be taxable to you as
ordinary income. Also, to the extent that a Fund's income consists of dividends
paid by U.S. corporations, a portion of the dividends paid by the Fund may be
eligible for the corporate dividends-received deduction.

In addition, each Municipal Bond Fund intends to pay at least 90% of its net
exempt-interest income as dividends known as "exempt-interest dividends". These
dividends may be treated by you as excludable from your gross income (unless the
exclusion would be disallowed because of your particular situation). You should
note that income that is not subject to federal income taxes may nonetheless
have to be considered along with other adjusted gross income in determining
whether any Social Security payments received by you are subject to federal
income taxes.

If a Municipal Bond Fund holds certain so-called "private activity bonds" issued
after August 7, 1986 shareholders will need to include as an item of tax
preference for purposes of the federal alternative minimum tax that portion of
the dividends paid by the Fund derived from interest received on such bonds. The
maximum federal alternative minimum tax rate is 28% for individuals. In
addition, corporations will need to take into account all exempt-interest
dividends paid by these Funds in determining certain adjustments for the federal
alternative minimum tax and the environmental tax.

Any distribution you receive of net long-term capital gain over net short-term
capital loss will be taxed as a long-term capital gain, no matter how long you
have held Fund shares. If you hold shares for six months or less, and during
that time receive a distribution that is taxable as a long-term capital gain,
any loss you might realize on the sale of those shares will be treated as a
long-term loss to the extent of the earlier capital gain distribution.

Before you purchase shares of a Fund, you should consider the effect of any
capital gain distributions that are expected to be declared or that have been
declared, but not yet paid. When a Fund makes these payments, its share price
will be reduced by the amount of the payment, so that you will in effect have
paid full price for the shares and then received a portion of your price back as
a taxable distribution or dividend.

Any dividends declared by a Fund in October, November or December of a
particular year and payable to shareholders during those months will be deemed
to have been paid by the Fund and received by shareholders on December 31 of
that year, so long as the dividends are actually paid in January of the
following year.

Shareholders in the Funds may realize a taxable gain or loss when redeeming,
transferring or exchanging shares of a Fund, generally depending on the
difference in the prices at which the shareholder purchased and sold the shares.
This gain or loss will be long-term or short-term, generally depending on how
long the shareholder held the shares.

Each Fund may be required to withhold federal income tax at the rate of 31% of
all taxable distributions payable to shareholders who fail to provide the Fund
with their correct taxpayer identification number or to make required
certifications, or who have been notified by the Internal Revenue Service that
they are subject to backup withholding. Backup withholding is not an additional
tax. Any amounts withheld may be credited against the shareholder's federal
income tax liability.

Further information relating to tax consequences is contained in the Statement
of Additional Information.

STATE AND LOCAL TAXES GENERALLY. Because your state and local taxes may be
different than the federal taxes described above, you should see your tax
adviser regarding these taxes. In particular, except as stated below, dividends
paid by the Government Funds and the Municipal Bond Funds may be taxable under
state or local law as dividend income, even though all or part of those
dividends come from interest on obligations that would be free of such income
taxes if held by you directly.

MEASURING PERFORMANCE

22
<PAGE> 27

class of shares of a Fund is calculated separately from the performance of the
Fund's other classes of shares.

Understanding performance measures:

TOTAL RETURN for each Fund may be calculated on an AVERAGE ANNUAL TOTAL RETURN
basis or an AGGREGATE TOTAL RETURN basis. Average annual total return reflects
the average annual percentage change in value of an investment over the
measuring period. Aggregate total return reflects the total percentage change in
value of an investment over the measuring period. Both measures assume the
reinvestment of dividends and distributions.

YIELDS for the Funds are calculated for a specified 30-day (or one-month) period
by dividing the net income for the period by the maximum offering price on the
last day of the period, and annualizing the result on a semi-annual basis. Net
income used in yield calculations may be different than net income used for
accounting purposes.

TAX-EQUIVALENT YIELDS for the Municipal Bond Funds show the amount of taxable
yield needed to produce an after-tax equivalent of a tax-free yield, and are
calculated by increasing the yield (as calculated above) by the amount necessary
to reflect the payment of federal income taxes at a stated rate.

Performance comparisons:

The Funds may compare their yields and total returns to those of mutual funds
with similar investment objectives and to bond, stock or other relevant indices
or to rankings prepared by independent services or other financial or industry
publications that monitor mutual fund performance.

Total return and yield data as reported in national financial publications such
as Money, Forbes, Barron's, The Wall Street Journal and The New York Times, as
well as in publications of a local or regional nature, may be used for
comparison.

The performance of the Funds may also be compared to data prepared by Lipper
Analytical Services, Inc., Mutual Fund Forecaster, Wiesenberger Investment
Companies Services, Morningstar or CDA Investment Technologies, Inc., and total
returns for these Funds may be compared to indices such as the Dow Jones
Industrial Average, the Standard & Poor's 500 Stock Index, the Lehman Brothers
Bond Index, the Merrill Lynch Bond Index, the Wilshire 5000 Equity Index or the
Consumer Price Index.

PERFORMANCE QUOTATIONS WILL FLUCTUATE, AND YOU SHOULD NOT CONSIDER QUOTATIONS TO
BE REPRESENTATIVE OF FUTURE PERFORMANCE. YOU SHOULD ALSO REMEMBER THAT
PERFORMANCE IS GENERALLY A FUNCTION OF THE KIND AND QUALITY OF INVESTMENTS HELD
IN A PORTFOLIO, PORTFOLIO MATURITY, OPERATING EXPENSES AND MARKET CONDITIONS.
FEES THAT BOATMEN'S INVESTMENT SERVICES, INC. OR ANOTHER SERVICE ORGANIZATION
MAY CHARGE DIRECTLY TO ITS CUSTOMER ACCOUNTS IN CONNECTION WITH AN INVESTMENT IN
THE FUNDS WILL NOT BE INCLUDED IN THE FUNDS' CALCULATIONS OF TOTAL RETURN AND
YIELD.

INQUIRIES REGARDING THE FUNDS MAY BE DIRECTED TO THE DISTRIBUTOR AT 3435 STELZER
ROAD, COLUMBUS, OHIO 43219-3035.

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE STATEMENT OF
ADDITIONAL INFORMATION RELATING TO THE FUNDS INCORPORATED IN THIS PROSPECTUS BY
REFERENCE, IN CONNECTION WITH THE OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE FUNDS OR THEIR DISTRIBUTOR. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFERING BY THE FUNDS OR BY THEIR DISTRIBUTOR IN ANY JURISDICTION
IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
- ---------------------------------------------------------------

23
<PAGE> 28

- ----- Financial
Direction
LOGO

January 2, 1997

The
Pilot
Funds

PILOT DIVERSIFIED BOND
INCOME FUND

PILOT U.S. GOVERNMENT
SECURITIES FUND

PILOT INTERMEDIATE U.S.
GOVERNMENT SECURITIES FUND

PILOT MUNICIPAL
BOND FUND

PILOT INTERMEDIATE
MUNICIPAL BOND FUND

Class A Shares and
Class B Shares

PROSPECTUS ENCLOSED
<PAGE> 29

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
EXPENSE SUMMARY................................................................................... 3
FINANCIAL HIGHLIGHTS.............................................................................. 6
INVESTMENT OBJECTIVES, POLICIES AND RISK FACTORS.................................................. 8
Pilot Diversified Bond Income Fund........................................................... 8
Pilot Intermediate U.S. Government Securities Fund........................................... 8
Pilot U.S. Government Securities Fund........................................................ 8
Pilot Intermediate Municipal Bond Fund....................................................... 9
Pilot Municipal Bond Fund.................................................................... 9
PORTFOLIO INSTRUMENTS AND PRACTICES............................................................. 10
RISK FACTORS.................................................................................... 16
FUNDAMENTAL LIMITATIONS......................................................................... 16
INVESTING IN THE PILOT FUNDS...................................................................... 17
HOW TO BUY SHARES............................................................................... 19
HOW TO SELL SHARES.............................................................................. 23
TRANSACTION RULES............................................................................... 24
SHAREHOLDER SERVICES............................................................................ 26
DIVIDENDS AND DISTRIBUTIONS..................................................................... 29
DISTRIBUTION AND SERVICE ARRANGEMENTS............................................................. 30
THE PILOT FAMILY OF FUNDS......................................................................... 31
THE BUSINESS OF THE FUND.......................................................................... 31
FUND MANAGEMENT................................................................................. 31
TAX IMPLICATIONS................................................................................ 34
MEASURING PERFORMANCE........................................................................... 35
</TABLE>
<PAGE> 30

THE PILOT FUNDS

LOGO

PROSPECTUS FOR CLASS A SHARES AND CLASS B SHARES OF PILOT DIVERSIFIED BOND
INCOME, PILOT INTERMEDIATE U.S. GOVERNMENT SECURITIES, PILOT U.S. GOVERNMENT
SECURITIES, PILOT INTERMEDIATE MUNICIPAL BOND AND PILOT MUNICIPAL BOND FUNDS

January 2, 1997

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

<TABLE>
<CAPTION>
PILOT FUND GOAL FOR INVESTORS WHO WANT
- -------------------------- ------------------------------------ ------------------------------------
<S> <C> <C>
DIVERSIFIED BOND INCOME Current income consistent with Current income from debt securities
preservation of capital by investing and are willing to accept
primarily in debt securities. The fluctuations in price and yield.
Fund seeks total return as a
secondary objective and will have an
average weighted maturity of from
five to fifteen years.
- ----------------------------------------------------------------------------------------------------------
INTERMEDIATE U.S. Total return and preservation of The Fund will emphasize the capital
GOVERNMENT SECURITIES capital by investing primarily in appreciation component of total
U.S. Government securities and return. U.S. Government securities
repurchase agreements. The Fund will and less principal volatility than
generally have an average weighted normally associated with a long-term
maturity of from three to ten years. fund.
- ----------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT SECURITIES Total return and preservation of Capital appreciation over the long
capital by investing in U.S. term as well as current income from
Government securities and repurchase U.S. Government securities and are
agreements. Capital appreciation willing to accept fluctuations in
over the long term as well as price and yield.
current income from the Fund will
generally have an average weighted
maturity of from five to thirty
years.
- ----------------------------------------------------------------------------------------------------------
INTERMEDIATE MUNICIPAL Current income free of federal Current income that is free from
BOND income tax as is consistent with regular federal income tax and less
preservation of capital through principal volatility than normally
investments primarily in investment associated with a long-term fund.
grade municipal obligations. The
Fund will generally have an average
weighted maturity of from three to
ten years.
- ----------------------------------------------------------------------------------------------------------
MUNICIPAL BOND Current income free of federal Current income that is free from
income tax as is consistent with regular federal income tax and are
preservation of capital through willing to accept fluctuations in
investments primarily in investment price and yield.
grade municipal obligations. The
Fund will generally have an average
weighted maturity of from five to
thirty years.
- ----------------------------------------------------------------------------------------------------------
</TABLE>

1
<PAGE> 31

This Prospectus describes two classes of shares from which investors may choose
in Pilot Diversified Bond Income, Pilot Intermediate U.S. Government Securities,
Pilot U.S. Government Securities, Pilot Intermediate Municipal Bond and Pilot
Municipal Bond Funds. Class A Shares are sold with a front-end sales charge;
Class B shares are sold with a deferred sales charge. This Prospectus describes
concisely the information about the Funds that you should know before investing.
Please read it carefully and keep it for future reference.

2
<PAGE> 32

EXPENSE SUMMARY

SHAREHOLDER TRANSACTION EXPENSES are charges you pay when buying or selling
shares of a Fund.

ANNUAL FUND OPERATING EXPENSES are paid out of the Fund's assets and include
fees for portfolio management, maintenance of shareholder accounts, general Fund
administration, accounting and other services.

Below is information regarding the Funds' shareholder transaction expenses and
the operating expenses which the Funds expect to incur during the current fiscal
year on their Class A and Class B Shares. Examples based on this information are
also provided.

<TABLE>
<CAPTION>
DIVERSIFIED INTERMEDIATE
BOND INCOME U.S. GOVERNMENT
FUND SECURITIES FUND
--------------- ---------------
CLASS CLASS CLASS CLASS
A B A B
---- ---- ---- ----
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Front End Sales Charge Imposed on Purchases
(as a percentage of offering price)............................... 4.00%(1) None 4.00%(1) None
Sales Charge Imposed on Reinvested Dividends........................ None None None None
Deferred Sales Charge (as a percentage of original purchase price or
redemption proceeds, whichever is lower).......................... None 4.00%(2) None 4.00%(3)
Exchange Fee........................................................ None None None None
ANNUAL FUND OPERATING EXPENSES AFTER FEE WAIVERS AND EXPENSE
REIMBURSEMENTS (as a percentage of average net assets):
Management Fees (after waivers)(4).................................. 0.40% 0.50% 0.35% 0.35%
Rule 12b-1/Distribution Payments.................................... 0.25% 1.00% 0.25% 1.00%
Other Expenses (after reimbursements)(4)............................ 0.25% 0.25% 0.22% 0.22%
---- ---- ---- ----
Total Fund Operating Expenses After Fee Waivers and Expense
Reimbursements(4)................................................. .90% 1.75% 0.82% 1.57%
===== ===== ===== =====
</TABLE>

<TABLE>
<CAPTION>
INTERMEDIATE
U.S. GOVERNMENT MUNICIPAL BOND MUNICIPAL BOND
SECURITIES FUND FUND FUND
--------------- --------------- ---------------
CLASS CLASS CLASS CLASS CLASS CLASS
A B A B A B
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Front End Sales Charge Imposed on Purchases
(as a percentage of offering price)......... 4.50%(1) None 4.00%(1) None 4.50%(1) None
Sales Charge Imposed on Reinvested
Dividends................................... None None None None None None
Deferred Sales Charge (as a percentage of
original purchase price or redemption
proceeds, whichever is lower)............... None 4.50%(2) None 4.00%(3) None 4.50%(2)
Exchange Fee.................................. None None None None None None
ANNUAL FUND OPERATING EXPENSES AFTER FEE WAIVERS
AND EXPENSE REIMBURSEMENTS (as a percentage of
average net assets):
Management Fees (after waivers)(4)............ 0.40% 0.40% 0.40% 0.40% 0.45% 0.45%
Rule 12b-1/Distribution Payments.............. 0.25% 1.00% 0.25% 1.00% 0.25% 1.00%
Other Expenses (after reimbursements)(4)...... 0.22% 0.22% 0.18% 0.18% 0.22% 0.22%
---- ---- ---- ---- ---- ----
Total Fund Operating Expenses After Fee
Waivers and Expense Reimbursements(4)....... 0.87% 1.62% 0.83% 1.58% 0.92% 1.67%
===== ===== ===== ===== ===== =====
</TABLE>

- ------------
(1) Reduced sales charges may be available. See "Shareholder Services--Front-End
Sales Charge Reductions."
(2) This amount applies to redemptions during the first year. The charge
decreases .50% annually to 2.50% for redemptions made during the fifth year
and then decreases .75% to 1.75% for redemptions made during the sixth year.
No deferred sales charge is charged for redemptions made after the sixth
year. See "How to Buy Shares-- Explanation of Sales Price."

3
<PAGE> 33

(4) This expense information is provided to help you understand the expenses you
would bear either directly (as with the transaction expenses) or indirectly
(as with the annual operating expenses) as a shareholder of one of the
Funds. Without waivers by the Adviser, investment management fees as a
percentage of net assets would be 0.55%, 0.55%, 0.55%, 0.55% and 0.55% for
the Pilot Diversified Bond Income, Pilot Intermediate U.S. Government
Securities, Pilot U.S. Government Securities, Pilot Intermediate Municipal
Bond and Pilot Municipal Bond Funds, respectively. Other Expenses also
reflect reimbursements by the Adviser and Administrator. Absent
reimbursement, Other Expenses would be 0.77% and 0.77% for the Class A and
Class B Shares, respectively, of Pilot Diversified Bond Income Fund; %
and % for the Class A and Class B Shares, respectively, of Pilot
Intermediate U.S. Government Securities Fund; % and % for the
Class A and Class B Shares, respectively, of Pilot U.S. Government
Securities Fund; be % and % for the Class A and Class B Shares,
respectively, of; % and % for the Class A and Class B Shares,
respectively, of Pilot Intermediate Municipal Bond Fund; and % and
% for the Class A and Class B Shares, respectively, of Pilot Municipal
Bond Fund. Absent waivers and expense reimbursements, the total operating
expenses for the Funds would be % and % for Class A Shares and
Class B Shares, respectively, of the Pilot Diversified Bond Income Fund;
1.12% and 1.87% for Class A Shares and Class B Shares, respectively, of the
Pilot Intermediate U.S. Government Securities Fund; 1.12% and 1.87% for
Class A Shares and Class B Shares, respectively, of the Pilot U.S.
Government Securities Fund; 1.06% and 1.81% for Class A Shares and Class B
Shares, respectively, of the Pilot Intermediate Municipal Bond Fund; and
1.11% and 1.86% for Class A Shares and Class B Shares, respectively, of the
Pilot Municipal Bond Fund. These waivers and reimbursements are voluntary
and may be terminated at any time with respect to any Fund at the discretion
of the Adviser or Administrator and without the consent of the Funds. The
Adviser has voluntarily agreed to limit the total operating expenses of the
Pilot Shares of Pilot Diversified Bond Income Fund to 0.65% of the Fund's
average net assets until February 1, 1998 which will have the effect of
limiting the expenses of Class A and Class B shares of the Fund to 0.90% and
1.65%, respectively, of the Fund's average net assets for the same period.
You should note that any fees that are charged by the Funds' Adviser, its
affiliates or any other institutions directly to their customer accounts for
services related to an investment in the Funds are in addition to and not
reflected in the fees and expenses described above.

BECAUSE OF THE DISTRIBUTION PAYMENTS PAID BY THE FUNDS AS SHOWN IN THE ABOVE
TABLE, LONG-TERM SHAREHOLDERS MAY PAY MORE THAN THE ECONOMIC EQUIVALENT OF THE
MAXIMUM FRONT-END SALES CHARGE PERMITTED BY THE NATIONAL ASSOCIATION OF
SECURITIES DEALERS, INC.

4
<PAGE> 34

<TABLE>
<CAPTION>
1 3 5 10
YEAR YEARS YEARS YEARS
AFTER AFTER AFTER AFTER
PURCHASE PURCHASE PURCHASE PURCHASE
---- ---- ----- -----
<S> <C> <C> <C> <C>
PILOT DIVERSIFIED BOND INCOME FUND
Class A Shares(1)................... $ 49 $ 68 $ 88 $ 146
Class B Shares
Assuming complete redemption at
end of period(2)............. $ 57 $ 82 $ 110 $ 195
Assuming no redemption......... $ 17 $ 52 $ 90 $ 195
PILOT INTERMEDIATE U.S. GOVERNMENT
SECURITIES FUND
Class A Shares(1)................... $ $ $ $
Class B Shares
Assuming complete redemption at
end of period(2)............. $ $ $ $
Assuming no redemption......... $ $ $ $
PILOT U.S. GOVERNMENT SECURITIES FUND
Class A Shares(1)................... $ $ $ $
Class B Shares
Assuming complete redemption at
end of period(2)............. $ $ $ $
Assuming no redemption......... $ $ $ $
PILOT INTERMEDIATE MUNICIPAL BOND FUND
Class A Shares(1)................... $ $ $ $
Class B Shares
Assuming complete redemption at
end of period(2)............. $ $ $ $
Assuming no redemption......... $ $ $ $
PILOT MUNICIPAL BOND FUND
Class A Shares(1)................... $ $ $ $
Class B Shares
Assuming complete redemption at
end of period(2)............. $ $ $ $
Assuming no redemption......... $ $ $ $
</TABLE>

- ------------
(1) Assumes deduction at time of purchase of maximum applicable front-end sales
charge.
(2) Assumes deduction of maximum applicable contingent deferred sales charge.

The Example shown above should not be considered a representation of future
investment returns or operating expenses.

Pilot Diversified Bond Income Fund is new and actual investment returns and
operating expenses may be more or less than shown for the Fund.

5
<PAGE> 35

THE PILOT FUNDS
FINANCIAL HIGHLIGHTS

The following data with respect to a Share of the Pilot Diversified Bond 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 outstanding during the periods indicated have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report
incorporated by reference and attached to the Statement of Additional
Information, and should be read in conjunction with the financial statements and
related notes incorporated by reference and attached to the Statement of
Additional Information.

THE PILOT FUNDS
- --------------------------------------------------------------------------------

Financial Highlights
Selected Data for a Share Outstanding Throughout the Period
- --------------------------------------------------------------------------------

Pilot Diversified Bond Income Fund

<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS
----------------------------------------
NET REALIZED TOTAL
AND UNREALIZED INCOME DIVIDENDS DIVIDENDS NET ASSET
NET ASSET VALUE NET GAIN ON FROM FROM NET FROM NET VALUE AT
AT BEGINNING INVESTMENT INVESTMENT INVESTMENT INVESTMENT REALIZED END OF
OF PERIOD INCOME TRANSACTIONS OPERATIONS INCOME GAINS PERIOD
--------------- ---------- -------------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
FOR THE PERIOD ENDED OCTOBER 22,
- -------------------------------
1996--Pilot Shares(b).......... $ 10.00 $ -- $(0.04) $(0.04) $ -- $ -- $ 9.96
1996--Class A Shares(b)........ 10.00 -- (0.04) (0.04) -- -- 9.96
1996--Class B Shares(b)........ 10.00 -- (0.04) (0.04) -- -- 9.96

RATIO INFORMATION ASSUMING
NO FEE WAIVER OR EXPENSE
REIMBURSEMENT
RATIO OF NET -------------------------- RATIO OF NET
RATIO OF INVESTMENT NET ASSETS RATIO OF INVESTMENT
EXPENSES INCOME PORTFOLIO AT END OF EXPENSES TO INCOME
TOTAL TO AVERAGE TO AVERAGE TURNOVER PERIOD AVERAGE TO AVERAGE
RETURN(c) NET ASSETS NET ASSETS RATE (IN 000'S) NET ASSETS(d) NET ASSETS(d)
--------- ------------- ------------- --------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
FOR THE PERIOD ENDED OCTOBER 22,
- -------------------------------
1996--Pilot Shares(b)........... -0.40% 0.65%(d) 5.59%(d) 31.89% $123,670 0.65%(d) 5.59%(d)
1996--Class A Shares(b)......... -0.40 0.65 (d) 5.59 (d) 31.89 0.65 (d) 5.59 (d)
1996--Class B Shares(b)......... -0.40 0.65 (d) 5.59 (d) 31.89 0.65 (d) 5.59 (d)

</TABLE>

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

Pilot Intermediate U.S. Government Securities Fund

<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
1996--Pilot Shares............. $ 10.44 $ 0.59 $(0.23) $ 0.36 $ (0.58) $ (0.05) $ 10.16
1996--Class A Shares........... 10.44 0.57 (0.23) 0.34 (0.57) (0.05) 10.16
1995--Pilot Shares(g).......... 10.00 0.56 0.44 1.00 (0.56) -- 10.44
1995--Class A Shares(f)........ 9.98 0.45 0.46 0.91 (0.45) -- 10.44

1996--Pilot Shares............. 3.52% 0.57%(d) 5.68%(d) 73% $230,030 0.78%(d) 5.47%(d)
1996--Class A Shares........... 3.33 0.72 (d) 5.45 (d) 73 932 1.03 (d) 5.14 (d)
1995--Pilot Shares(g).......... 10.21 0.57 (d) 6.65 (d) 87 165,441 0.87 (d) 6.35 (d)
1995--Class A Shares(f)........ 9.31 0.72 (d) 6.27 (d) 87 499 1.12 (d) 5.87 (d)

- ------------
(a) Class A share activity commenced February 7, 1995.
(b) Class B share activity commenced January 12, 1995.
(c) Assumes investment at net asset value at the beginning of the period, reinvestment of all dividends and distributions, a
complete redemption of the investment at the net asset value at the end of the period and no sales charge. Total return would
be reduced if sales charge were taken for Class A or Class B shares. Total return is not annualized.
(d) Annualized.
(e) Class B share activity commenced November 11, 1994.
(f) Class A share activity commenced December 21, 1994.
(g) Pilot share activity commenced November 7, 1994.
</TABLE>

6
<PAGE> 36

THE PILOT FUNDS
- --------------------------------------------------------------------------------

Financial Highlights (continued)
- --------------------------------------------------------------------------------
Pilot U.S. Government Securities Fund

<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS
----------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET REALIZED TOTAL
AND UNREALIZED INCOME DIVIDENDS DIVIDENDS NET ASSET
NET ASSET VALUE NET GAIN ON FROM FROM NET FROM NET VALUE AT
AT BEGINNING INVESTMENT INVESTMENT INVESTMENT INVESTMENT REALIZED END OF
OF PERIOD INCOME TRANSACTIONS OPERATIONS INCOME GAINS PERIOD
--------------- ---------- -------------- ---------- ---------- -------------- ---------

<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
FOR THE YEAR ENDED AUGUST
31,
- --------------------------
1996--Pilot Shares........ $ 11.20 $ 0.61 $(0.22) $ 0.39 $(0.61) $(0.45) $ 10.53
1996--Class A Shares...... 11.19 0.59 (0.22) 0.39 (0.59) (0.45) 10.54
1996--Class B Shares...... 11.19 0.59 (0.22) 0.39 (0.51) (0.45) 10.52
1995--Pilot Shares(g)..... 10.00 0.56 1.20 1.76 (0.56) 11.20
1995--Class A Shares(a)... 10.48 0.37 0.71 1.08 (0.37) 11.19
1995--Class B Shares(b)... 10.05 0.46 1.14 1.60 (0.46) 11.19

RATIO INFORMATION ASSUMING NO

FEE WAIVER OR EXPENSE

REIMBURSEMENT
-----------------------------

<S> <C> <C> <C> <C> <C> <C> <C>
RATIO OF NET RATIO OF NET

RATIO OF INVESTMENT NET ASSETS RATIO OF INVESTMENT

EXPENSES TO INCOME PORTFOLIO AT END OF EXPENSES TO INCOME

TOTAL AVERAGE TO AVERAGE TURNOVER PERIOD AVERAGE TO AVERAGE

RETURN(C) NET ASSETS NET ASSETS RATE (IN 000'S) NET ASSETS NET ASSETS

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

<S> <C> <C> <C> <C> <C> <C> <C>
FOR THE YEAR ENDED AUGUST
31,
- --------------------------
1996--Pilot Shares........ 3.46% 0.65% 5.61% 87% $145,066 0.82% 5.44%

1996--Class A Shares...... 3.44 0.85 5.44 87 632 1.07 5.22

1996--Class B Shares...... 2.43 1.65 4.60 87 1,237 1.82 4.43

1995--Pilot Shares(g)..... 18.03 0.62(d) 6.45(d) 132 137,261 0.87(d) 6.20(d)

1995--Class A Shares(a)... 10.41 0.82(d) 5.76(d) 132 87 1.12(d) 5.46(d)

1995--Class B Shares(b)... 16.19 1.62(d) 5.19(d) 132 146 1.87(d) 4.94(d)

</TABLE>

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

Pilot Intermediate Municipal Bond Fund

<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
1996--Pilot Shares........ $ 10.49 $ 0.48 $ (0.13 ) $ 0.35 $ (0.48 ) $(0.02) $ 10.34
1996--Class A Shares...... 10.49 0.46 (0.11) 0.35 (0.46) (0.02) 10.36
1995--Pilot Shares(g)..... 10.00 0.41 0.49 0.90 (0.41) 10.49
1995--Class A Shares(e)... 9.88 0.37 0.61 0.98 (0.37) 10.49

<CAPTION>
1996--Pilot Shares........ 3.43% 0.63%(d) 4.60%(d) 12% $218,902 0.79% 4.44%

<S> <C> <C> <C> <C> <C> <C> <C>
1996--Class A Shares...... 3.45 0.78 4.38 12 764 1.03 4.13

1995--Pilot Shares(g)..... 9.16 0.58(d) 4.90(d) 8 196,209 0.81(d) 4.67(d)

1995--Class A Shares(e)... 10.03 0.73(d) 4.60(d) 8 232 1.06(d) 4.27(d)

</TABLE>

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

Pilot Municipal Bond Fund

<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
1996--Pilot Shares........ $ 10.70 $ 0.57 $ 0.01 $ 0.58 $(0.56) $(0.01) $(0.03) $10.68
1996--Class A Shares...... 10.70 0.54 0.01 0.55 (0.53 ) (0.01) (0.03) 10.68
1996--Class B Shares...... 10.65 0.45 0.45 (0.44) (0.01) (0.03) 10.62
1995--Pilot Shares(g)..... 10.00 0.48 0.70 1.18 (0.48) 10.70
1995--Class A Shares(a)... 10.37 0.34 0.33 0.67 (0.34) 10.70
1995--Class B Shares(f)... 10.02 0.33 0.63 0.96 (0.33) 10.65

<CAPTION>
1996--Pilot Shares........ 5.44% 0.69%(d) 5.20%(d) 18% $187,939 0.80% 5.09%

<S> <C> <C> <C> <C> <C> <C> <C>
1996--Class A Shares...... 5.23 0.92 4.91 18 1,755 1.80(d) 4.75

1996--Class B Shares...... 4.31 1.68 4.16 18 1,259 1.79 4.05

1995--Pilot Shares(g)..... 12.00 0.67(d) 5.63(d) 10 150,934 0.86(d) 5.44(d)

1995--Class A Shares(a)... 6.54 0.87(d) 5.26(d) 10 340 1.11(d) 5.02(d)

1995--Class B Shares(f)... 9.62 1.67(d) 4.48(d) 10 448 1.86(d) 4.29(d)

</TABLE>

- ---------------
(a) Class A share activity commenced February 7, 1995.
(b) Class B share activity commenced November 10, 1994.
(c) Assumes investment at net asset value at the beginning of the period,
reinvestment of all dividends and distributions, a complete redemption of
the investment at the net asset value at the end of the period and no sales
charge. Total return would be reduced if sales charge were taken for Class A
or Class B shares. Total return is not annualized.
(d) Annualized.
(e) Class A share activity commenced November 18, 1994.
(f) Class B share activity commenced December 27, 1994.
(g) Pilot share activity commenced November 7, 1994.

7
<PAGE> 37

INVESTMENT OBJECTIVES, POLICIES AND RISK FACTORS

The Pilot Funds use a variety of different investments and investment techniques
in seeking to achieve a Fund's investment objective. Each Fund does not use all
of the investments and investment techniques described below, which involve
various risks, and which are also described in the following sections. You
should consider which Funds best meet your investment goals. Although each Fund
will attempt to attain its investment objective, there can be no assurance it
will be successful. Shareholder approval is not required to change the
investment objective of a Fund. However, shareholders will be given at least 30
days' prior written notice in the event of a change in a Fund's investment
objective. If there is a change in investment objective, shareholders should
consider whether a Fund remains an appropriate investment in light of their
current financial position and needs. Unless otherwise stated, each investment
policy described below may be changed at any time by The Pilot Funds' Board of
Trustees without shareholder approval.

Pilot Diversified Bond Income Fund

Pilot Diversified Bond Income Fund offers investors a means of participating in
the fixed income securities market.

The investment objective of Pilot Diversified Bond Income Fund is to seek
current income consistent with preservation of capital by investing primarily in
debt securities. The Fund seeks total return as a secondary objective. While
there are no restrictions on the maturity of individual securities selected by
the Fund, the Fund's average weighted maturity will be between five and fifteen
years except during temporary defensive periods or unusual market conditions.

Under normal circumstances, Pilot Diversified Bond Income Fund invests at least
65% of its total assets in "bonds," which term refers to instruments identified
as bonds as well as other debt securities, such as debentures, notes,
asset-backed and mortgage-backed securities, variable and floating rate
instruments, zero coupon and stripped securities, participations and trust
receipts, American Depository Receipts ("ADRs") and European Depository Receipts
("EDRs"), and cash equivalents, and includes obligations of U.S. and foreign
corporate and government issuers. ADRs are receipts typically issued by a United
States bank or trust company, and EDRs are receipts issued by a European
financial institution evidencing ownership of the underlying foreign securities.
ADRs, in registered form, are designed for use in the United States securities
markets, while EDRs, in bearer form, are generally designed for use in the
European securities markets. These securities may not be denominated in the same
currency as the securities they represent. The Fund does currently intend to
invest more than 5% of its total assets in foreign securities. "Cash
equivalents" include commercial paper (which is unsecured promissory notes
issued by corporations); certificates of deposit, bankers' acceptances, notes
and time deposits issued or supported by U.S. or foreign banks and savings
institutions; repurchase agreements; variable or floating rate notes; U.S.
Government obligations; and money market mutual fund shares.

The value of the Fund's portfolio (and consequently its shares) is expected to
fluctuate inversely in relation to changes in the direction of interest rates.

Pilot Intermediate U.S. Government Securities Fund and Pilot U.S. Government
Securities Fund

8
<PAGE> 38

Securities Fund is normally expected to be shorter than that of the Pilot U.S.
Government Securities Fund.

Each Fund invests at least 65% of its total assets in U.S. Government securities
and repurchase agreements collateralized by such securities. Each Fund may
invest in a variety of U.S. Government securities, including U.S. Treasury
bonds, notes and bills, and obligations of a
number of U.S. Government agencies and instrumentalities. Each Fund may also
invest in interests in the foregoing securities, including collateralized
mortgage obligations issued or guaranteed by a U.S. Government agency or
instrumentality. Securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities have historically had a very low risk of loss of
principal if held to maturity. The Funds, however, can give no assurance that
the U.S. Government would provide financial support to its agencies or
instrumentalities if it were not legally required to do so.

The value of each Fund's portfolio (and consequently its shares) is expected to
fluctuate inversely in relation to changes in the direction of interest rates.

Pilot Intermediate Municipal Bond Fund and Pilot Municipal Bond Fund

The investment objective of each Fund is to seek current income free of federal
income tax as is consistent with preservation of capital. Each Fund seeks to
attain its objective by investing its assets primarily in debt obligations of
states, territories and possessions of the United States, the District of
Columbia and of their agencies, authorities, instrumentalities and political
sub-divisions ("Municipal Obligations") that are rated investment grade or above
by one or more NRSROs at the time of purchase. Obligations purchased by a Fund
that have not been assigned a rating will be determined by the Adviser to be of
comparable quality. If a portfolio security ceases to be rated investment grade
by at least one NRSRO or if the Adviser determines that an unrated portfolio
security held by a Fund is no longer of comparable quality to an investment
grade security, the security will be sold in an orderly manner as quickly as
possible. While each Fund has the flexibility to invest in Municipal Obligations
with short, medium or long term maturities, except during temporary defensive
periods or unusual market conditions, the average weighted maturity of the Pilot
Intermediate Municipal Bond Fund will be between three and ten years, and the
average weighted maturity of the Pilot Municipal Bond Fund will be between five
and thirty years.

Under normal market and economic conditions, each Fund will invest at least 80%
of its net assets in Municipal Obligations the interest on which is exempt from
regular

9
<PAGE> 39

federal income tax. In addition, under normal market conditions each Fund may
invest up to 20% of its net assets in taxable instruments, including zero coupon
bonds, cash equivalents and certain so-called private activity bonds, which are
a type of obligation that, although exempt from regular federal income tax, may
be subject to the federal alternative minimum tax. See "Pilot Diversified Bond
Income Fund" above for a description of cash equivalents. The Funds may also
invest in futures contracts and options. From time to time, each Fund may also
hold uninvested cash reserves that do not earn income. For a further description
of the Funds' policies with respect to Municipal Obligations and other
instruments, see "Portfolio Instruments and Practices" and "Risk Factors" below.

Although the MUNICIPAL BOND FUNDS do not presently intend to do so on a regular
basis, either Fund may invest more than 25% of its total assets in Municipal
Obligations the interest on which comes solely from revenues of similar
projects. When a Fund's assets are concentrated in obligations payable from
revenues of similar projects or issued by issuers located in the same state, or
in industrial development bonds, the Fund will be subject to the particular
risks (including legal and economic conditions) relating to such securities to a
greater extent than if its assets were not so concentrated. Payment on Municipal
Obligations held by a Municipal Bond Fund relating to certain projects may be
secured by mortgages or deeds of trust. In the event of a default, enforcement
of a mortgage or deed of trust will be subject to statutory enforcement
procedures and limitations on obtaining deficiency judgments. Should a
foreclosure occur, collection of the proceeds from that foreclosure may be
delayed and the amount of the proceeds received may not be enough to pay the
principal or accrued interest on the defaulted Municipal Obligation.

The value of each Fund's portfolio (and consequently its shares) is expected to
fluctuate inversely in relation to changes in the direction of interest rates.

PORTFOLIO INSTRUMENTS AND
PRACTICES

- --Asset-Backed and Mortgage-Backed Securities. EACH FUND may invest in
asset-backed securities (i.e. securities backed by installment sale contracts,
credit card receivables or other assets.) In addition, each Fund may make
significant investments in U.S. Government securities that are backed by
adjustable or fixed rate mortgage loans. The rate of prepayments on asset-backed
instruments and hence the life of the security, will be primarily a function of
current market rates and current conditions in the relevant market. In
calculating the average weighted maturity of a Fund's portfolio, the maturity of
asset-backed instruments will be based on estimates of average life. The
relationship between prepayments and interest rates may give some high-yielding
asset-backed securities less potential for growth in value than conventional
bonds with comparable maturities. In addition, in periods of falling interest
rates, the rate of prepayment tends to increase. During such periods, the
reinvestment of prepayment proceeds by a Fund will generally be at lower rates
than the rates that were carried by the obligations that have been prepaid.
Because of these and other reasons, an asset-backed security's total return may
be difficult to predict precisely. To the extent a Fund purchases asset-backed
securities at a premium, prepayments (which often may be made at any time
without penalty) may result in some loss of a Fund's principal investment to the
extent of any premiums paid.

The timely payment of principal and interest on mortgage-backed securities
issued or guaranteed by the Government

10
<PAGE> 40

National Mortgage Association ("GNMA") is backed by GNMA and the full faith and
credit of the U.S. Government. These guarantees, however, do not apply to the
market value or yield of mortgage-backed securities or the value of a Fund's
shares. Also, GNMA and other mortgage-backed securities may be purchased at a
premium over the maturity value of the underlying mortgages. This premium is not
guaranteed and will be lost if prepayment occurs. Each Fund may also invest in
mortgage-backed securities of other issuers, such as the Federal National
Mortgage Association, which are not guaranteed by the U.S. Government. Moreover,
each Fund may invest in debt securities which are secured with collateral
consisting of mortgage-backed securities and in other types of mortgage-related
securities. Unscheduled or early payments on the underlying mortgage may shorten
the effective maturities of mortgage-backed securities and lessen their growth
potential. A Fund may agree to purchase or sell these securities with payment
and delivery taking place at a future date. A decline in interest rates may lead
to a faster rate of repayment of the underlying mortgages and expose a Fund to a
lower rate of return on reinvestment. To the extent that such mortgage-backed
securities are held by a Fund, the prepayment right of mortgagors may limit the
increase in net asset value of the Fund because the value of the mortgage-backed
securities held by the Fund does not appreciate as rapidly as the price of
non-callable debt securities.

Securities acquired by each of the Municipal Bond Funds may be in the form of
custodial receipts evidencing rights to receive a specific future interest
payment, principal payment or both on certain Municipal Obligations. Such
Obligations are held in custody by a bank on behalf of holders of the receipts.
These custodial receipts are known by various names, including "Municipal
Receipts", "Municipal Certificates of Accrual on Tax-Exempt Securities"
("M-CATs") and "Municipal Zero--Coupon Receipts". The Funds may also purchase
from time to time participation interests in debt securities held by trusts or
financial institutions. A participation interest gives a Fund an undivided
interest in the security or securities involved. Participation interests may
have fixed, floating or variable rates of interest (although securities held by
the issuer may have longer maturities). If a participation interest is unrated,
the Adviser will have determined that the interest is of comparable quality to
those instruments in which the Fund may invest. For certain participation
interests, a Fund will have the right to demand payment for all or any part of
the Fund's participation interest, plus accrued interest. As to these
instruments, each Fund intends to exercise its right to demand payment as needed
to provide liquidity, to maintain or improve the quality of its investment
portfolio or upon a default (if permitted under the terms of the instrument).

11
<PAGE> 41

imbedded interest rate floors and caps. Many of these derivative instruments are
proprietary products that have been recently developed by investment banking
firms, and it is uncertain how these instruments will perform under different
economic and interest-rate scenarios. In addition, because certain of these
instruments are leveraged, their market values may be more volatile than other
types of Municipal Obligations and may present greater potential for capital
gain or loss. In some cases it may be difficult to determine the fair value of a
derivative instrument because of a lack of reliable objective information and an
established secondary market for some instruments may not exist.

Municipal Obligations purchased by the Funds may be backed by letters of credit
or guarantees issued by domestic or foreign banks and other financial
institutions which are not subject to federal deposit insurance. Adverse
developments affecting the banking industry generally or a particular bank or
financial institution that has provided its credit or a guarantee with respect
to a Municipal Obligation held by a Fund could have an adverse effect on a
Fund's portfolio and the value of its shares. As described below under "Risk
Factors--Foreign Securities", foreign letters of credit and guarantees involve
certain risks in addition to those of domestic obligations.

- --Reverse Repurchase Agreements. EACH FUND is authorized to make limited
borrowings for temporary purposes by entering into reverse repurchase
agreements. Under such an agreement a Fund sells portfolio securities to
financial institutions (such as banks and broker-dealers) and then buys them
back later at an agreed-upon time and price. When a Fund enters into a reverse
repurchase agreement it will place in a separate custodial account either liquid
assets or high grade debt securities that have a value equal to or more than the
price a Fund must pay when it buys back the securities, and the account will be
continuously monitored by the Adviser to make sure the appropriate value is
maintained. Reverse repurchase agreements involve the possible risk that the
value of portfolio securities a Fund relinquishes may decline below the price a
Fund must pay when the transaction closes. Interest paid by a Fund in a reverse
repurchase or other borrowing transaction will reduce a Fund's income. The

12
<PAGE> 42

Funds will only enter into reverse repurchase agreements to avoid the need to
sell portfolio securities to meet redemption requests during unfavorable market
conditions.

- --Zero Coupon Securities. EACH FUND may invest in zero coupon securities. Zero
coupon securities are debt obligations which do not entitle the holder to any
periodic payments of interest prior to maturity or a specified date when the
securities begin paying current interest (the "cash payment date") and therefore
are issued and traded at a discount from their face amounts or par value. Such
bonds carry an additional risk in that, unlike bonds which pay interest
throughout the period to maturity, a Fund will realize no cash until the cash
payment date and, if the issuer defaults, the Fund may obtain no return at all
on its investment.

- --Stripped Securities. EACH FUND may invest in instruments known as "stripped"
securities. These instruments include U.S. Treasury bonds and notes and federal
agency obligations on which the unmatured interest coupons have been separated
from the underlying obligation. These obligations are usually issued at a
discount to their "face value", and because of the manner in which principal and
interest are returned may exhibit greater price volatility than more
conventional debt securities. Each Fund may invest in "interest only" stripped
securities that have been issued by a federal instrumentality known as the
Resolution Funding Corporation and other stripped securities issued or
guaranteed by the U.S. Government, where the principal and interest components
are traded independently under the Separate Trading of Registered Interest and
Principal Securities program ("STRIPS"). Each Fund may also invest in
instruments that have been stripped by their holder, typically a custodian bank
or investment brokerage firm, and then resold in a custodian receipt program
under names such as TIGRS (Treasury Income Growth Receipts) and CATS
(Certificates of Accrual on Treasuries).

13
<PAGE> 43

circumstances. In the event a Fund's when-issued purchases, forward commitments
and delayed settlement transactions ever exceeded 25% of the value of its total
assets, a Fund's liquidity and the ability of the Adviser to manage the Fund
might be adversely affected. These transactions will not be entered into for
speculative purposes but only in furtherance of a Fund's investment objective.

14
<PAGE> 44

covered call option expires or is exercised or a Fund closes out the option. In
writing a secured put option, a Fund assumes the risk that the market value of
the security will decline below the exercise price of the option. The Funds may
use options to manage their exposure to changing interest rates and/or security
prices. The use of covered call and secured put options will not be a primary
investment technique of any Fund.

EACH FUND may also purchase and sell call and put options on futures contracts
traded on an exchange or board of trade. When a Fund purchases an option on a
futures contract, it has the right to assume a position as a purchaser or seller
of a futures contract at a specified exercise price at any time during the
option period. When a Fund sells an option on a futures contract, it becomes
obligated to purchase or sell a futures contract if the option is exercised. In
anticipation of a market advance, a Fund may purchase call options on futures
contracts as a substitute for the purchase of futures contracts to hedge against
a possible increase in the price of securities which a Fund intends to purchase.
Similarly, if the value of a Fund's portfolio securities is expected to decline,
the Fund might purchase put options or sell call options on futures contracts
rather than sell futures contracts.

More information regarding futures contracts and related options can be found in
the Statement of Additional Information, which is available upon request.

15
<PAGE> 45

payment of brokerage commissions, impose other transaction costs and could
increase the amount of income received by a Fund that constitutes taxable
capital gains. To the extent capital gains are realized, distributions from the
gains may be ordinary income for federal tax purposes (see "The Business of the
Fund--Tax Implications").

The Pilot Funds has also adopted certain procedures which enable a Fund to
purchase certain instruments during the existence of an underwriting or selling
syndicate of which an affiliated broker is a member. These procedures establish
certain limitations on the amount of securities which can be purchased in any
single offering and on the amount of a Fund's assets which may be invested in
any single offering. Because of the active role which may be played by
affiliated brokers in the underwriting of securities, a Fund's ability to
purchase securities in the primary market may from time to time be limited.

RISK FACTORS

FUNDAMENTAL LIMITATIONS

Certain of the investment policies of each Fund may not be changed without a
vote of the holders of a majority of the Fund's outstanding shares. Policies
requiring such a vote

16
<PAGE> 46

to effect a change are known as "fundamental". Some of these fundamental
limitations are summarized below, and all of the Funds' fundamental limitations
are set out in full in the Statement of Additional Information, which is
available upon request.

4. A Fund may not make loans, except that it may invest in debt securities,
enter into repurchase agreements and lend its portfolio securities.

INVESTING IN THE PILOT FUNDS

Getting Your Investment Started

Investing in The Pilot Funds is quick and convenient. Fund Shares may be
purchased either through the account you maintain with Boatmen's Investment
Services, Inc., another broker-dealer or certain other institutions or from The
Pilot Funds directly. Fund shares are distributed by Pilot Funds Distributors,
Inc. (the "Distributor"). The Distributor is located at 3435 Stelzer Road,
Columbus, Ohio 43219-3035.

You may choose to invest through your Boatmen's Investment Services account
where an Account Representative can advise you in selecting among The Pilot
Funds. Whether you currently have a Boatmen's Investment Services account or
wish to open one, your Pilot Funds investment can be executed within a few
minutes by telephone or, if you prefer, during a consultation with an Investment
Officer of Boatmen's Investment Services, Inc. Call The Pilot Funds at
800/71-PILOT to arrange a consultation scheduled at your convenience.

Clients of Boatmen's Investment Services, Inc. and other institutions (such as
broker-dealers) that have entered into agreements with the Distributor ("Service
Organizations") may purchase shares through their accounts at their Service
Organization and should contact the Service Organization directly for
appropriate purchase instructions. Share purchases (and redemptions) made
through Boatmen's Investment Services, Inc. or another Service Organization are
effected only on days the particular institution and the Fund involved are open
for business. When shares are purchased through Boatmen's Investment Services,
Inc. or another Service Organization, a fee may be charged by those institutions
for providing administrative services in connection with your investment.

Should you wish to establish an account directly with The Pilot Funds, please
refer to the purchase options described under "Opening and Adding to Your Pilot
Funds Account".

Payments for Fund shares must normally be in U.S. dollars and in order to avoid
fees and delays should be drawn on a U.S. bank. Please remember that The Pilot
Funds retains the right to reject any purchase order.

Your Alternative Purchase Options

Your purchases of Fund shares are subject to either a front-end or back-end
sales charge. You may elect to have the sales charge deducted at the time of
your investment--on the "front-end"--or choose to defer the sales charge until
your investment is redeemed--on the "back-end". This back-end sales charge
declines over time and is known as a "contingent deferred sales charge." If you
decide to pay the sales charge at the time you make your investment, your
purchase will be made in Class A Shares, whereas if you prefer to pay the sales
charge when you redeem your investment, your purchase will be made in Class B
Shares. Once you have held Class B Shares for six years, you do not pay the
contingent deferred sales charge when you redeem those shares.

17
<PAGE> 47

Characteristics of Class A Shares and Class B Shares

Class A Shares and Class B Shares differ primarily in their sales charge
structures and distribution arrangements, including ongoing distribution fees.
The classes may also have differing transfer agency and other fees, although the
Funds currently do not intend to allocate such fees on a class basis. You should
understand that the purpose and function of the sales charge structures and
distribution arrangements for both Class A Shares and Class B Shares are the
same.

Class A Shares: Class A Shares are sold at their net asset value plus a
front-end sales charge of up to 4.50% (4.00% for Pilot Diversified Bond Income
Fund, Pilot Intermediate U.S. Government Securities Fund and Pilot Intermediate
Municipal Bond Fund). (See "How to Buy Shares--Explanation of Sales Price".)
This front-end sales charge may be reduced or waived in some cases. (See
"Transaction Rules" and "Shareholder Services--Front-End Sales Charge
Reductions.") Class A Shares are subject to ongoing distribution fees at an
annual rate of up to 0.25% of a Fund's average daily net assets attributable to
its Class A Shares.

Class B Shares: Class B Shares are sold at net asset value without an initial
sales charge. Normally, however, a deferred sales charge is paid if the shares
are redeemed within six years of investment. (See "How to Buy Shares--
Explanation of Sales Price".) Class B Shares are subject to ongoing distribution
fees at an annual rate of up to 1.00% of a Fund's average daily net assets
attributable to its Class B Shares. These ongoing fees, which are higher than
those charged on Class A Shares, will cause Class B Shares to have a higher
expense ratio and pay lower dividends than Class A Shares.

Eight years after purchase, Class B Shares will convert automatically to Class A
Shares. The conversion relieves a shareholder of Class B Shares of the higher
ongoing expenses charged to those shares, after enough time has passed to allow
the Distributor to recover approximately the amount it would have received if a
front-end sales charge had been charged.

The conversion from Class B Shares to Class A Shares takes place at net asset
value, so you receive dollar-for-dollar the same value of Class A Shares as you
had of Class B Shares. The conversion occurs eight years after the beginning of
the calendar month in which the shares are purchased. As a result of the
conversion, the converted shares are relieved of the distribution fees borne by
Class B Shares, although they are subject to the distribution fees borne by
Class A Shares.

Class B Shares of a Fund acquired through a reinvestment of dividends or
distributions from that Fund (as discussed under "Dividends and Distributions")
are also converted at the earlier of two dates--eight years after the beginning
of the calendar month in which the reinvestment occurred or the date of
conversion of the most recently purchased Class B Shares that were not acquired
through reinvestment of dividends or distributions. For example, if you make a
one-time purchase of Class B Shares of a particular Fund, and subsequently
acquire additional Class B Shares of that Fund only through reinvestment of
dividends and/or distributions from that Fund, all of your Class B Shares in
that Fund, including those acquired through reinvestment, will convert to Class
A Shares of that Fund on the same date.

Considerations In Choosing Between Class A And
Class B Shares

The decision as to which share class may be more beneficial for you depends, in
part, on the amount and intended length of your investment. Due to the lower
ongoing distribution fees on Class A Shares, the dividends for those shares will
be higher than the Class B Shares. However, since a front-end sales charge is
deducted from your purchase at the time of your investment, not all of your
purchase amount will purchase shares. Thus, the same initial investment will
purchase more Class B Shares than Class A Shares of the same Fund. In addition,
Class B Shares are subject to a contingent deferred sales charge.

Since large investors may qualify for a reduced front-end sales charge (see
"Shareholder Services--Front-End Sales Charge Reductions"), such investors
should consider making their purchase in Class A Shares.

Because of these possible front-end sales charge reductions, purchases in excess
of $100,000 may be more advantageous to you if made in Class A Shares rather
than Class B Shares. In any event The Pilot Funds will not accept any order of
$250,000 or more for Class B Shares. In addition, regardless of whether you
qualify for a reduced front-end sales charge, if you expect to hold your
investment for an extended period of time, you might still consider purchasing
Class A Shares because the accumulated higher ongoing expenses, together with
the contingent deferred sales charge, of the Class B Shares will exceed the
amount of the front-end sales charge and ongoing distribution fees related to
Class A Shares.

On the other hand, you might decide, because you would be subject to higher
front-end charges or for other reasons, that it would be more advantageous for
you to

18
<PAGE> 48

have all of your purchase amount invested immediately in Fund shares, even
though you would also be subject to higher ongoing distribution fees. These
higher ongoing fees might be offset by any return you receive from the
additional shares you originally purchased as a result of not having to pay a
front-end sales charge. You should note however, that a Fund's future returns
cannot be predicted, and that there is no assurance that such returns, if any,
would compensate for those higher ongoing expenses. You should also remember
that you would be subject to any applicable contingent deferred sales charge
during the first six years of your investment in Class B Shares.

If You Have Questions

If you are investing in The Pilot Funds through an account with Boatmen's
Investment Services, Inc. or another Service Organization, you should speak
directly with your assigned Account Representative or contact person at such
organization. If you are a direct investor with The Pilot Funds and need
assistance with your account, a Pilot Funds service representative is available
to answer your questions by calling the appropriate toll-free numbers listed
below.
- ---------------------------------------------------------------

<TABLE>
<CAPTION>
CALL FOR INFORMATION
- -------------- ------------------------------------
<S> <C>
800/71-PILOT Regarding the Funds' investment
8:00 am to objectives and policies or for
7:00 pm information about opening an account
Central time (including information regarding the
Funds' alternative purchase
options). Information on changing
your Pilot Funds' services, and
Statements of Additional
Information, are also available at
this number.
- ----------------------------------------------------
800/227-3654 To obtain your account balance or to
7:30 am to request a telephone transaction.
4:00 pm
Central time
- ----------------------------------------------------
</TABLE>

The Pilot Funds will send you the following statements and reports to provide
you with current information on the status of your account:

<TABLE>
<S> <C>
Confirmation Statements After every transaction
(other than an Automatic
Investment Plan transaction
or dividend credit) that
affects your account
balance or your account
registration.
Account Statements On a quarterly basis
detailing year to date
activity for each of your
accounts.
Financial Reports Every six months. To reduce
The Pilot Funds' expenses,
only one copy of most Fund
reports will be mailed to
your household, even if you
have more than one account
in a Fund.
</TABLE>

HOW TO BUY SHARES

This section provides you with pertinent information on how to buy Fund shares.
Further information can be found under "Transaction Rules". Before investing you
will need to decide whether to purchase Class A Shares (which are sold with a
front-end sales charge) or Class B Shares (which are sold without a front-end
sales charge but are subject to a contingent deferred sales charge). See "Your
Alternative Purchase Options".

19
<PAGE> 49

<TABLE>
<CAPTION>
MINIMUM INVESTMENT
-----------------------------
TO OPEN ADDITIONAL
ACCOUNT INVESTMENTS
------------- -------------
<S> <C> <C>
Regular Account........ $1,000 $100
Automatic Investment
Plan................. $100 $100
Employee*--Regular
Accounts............. $500 $100
Employee*--Automatic
Investment Plan...... $100 $50
Tax-Sheltered
Retirement Plans..... $500 $50
Exchange
Transactions......... $1,000 $500
</TABLE>

- ------------
*Applies to employees of the Adviser and its affiliates.

OPENING AND ADDING TO YOUR PILOT FUNDS ACCOUNT

As described above under "Getting Your Investment Started," you may purchase
Fund shares through Boatmen's Investment Services, Inc. or another Service
Organization. Direct investments in The Pilot Funds may also be made in a number
of different ways, as shown in the following chart. Simply choose the method
that is most convenient for you. Any questions you have can be answered by
calling the appropriate toll-free number indicated above under "If You Have
Questions".

20
<PAGE> 50

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

<TABLE>
<CAPTION>
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT
DIRECTLY WITH THE PILOT FUNDS HELD DIRECTLY WITH THE PILOT FUNDS
--------------------------------------- ---------------------------------------
<S> <C> <C>
By Mail to: --Complete an Account Application and --Make your check payable to the
The Pilot Funds, mail it, along with a check payable particular Fund in which you are
c/o BISYS Fund Services to the Fund in which you are investing and mail it to the address
Dept. L-1709 investing, to the address on the on the left.
Columbus, OH 43260-1709 left. --Please include your account number
on your check.
--Or use the convenient form attached
to your regular Fund statement.
- -------------------------------------------------------------------------------------------------------------
</TABLE>

Consult your bank for information on remitting funds by
wire and associated bank charges.
- -------------------------------------------------------------------------------------------------------------
Automatic Investment --You must first complete an Account --Call 800/71-PILOT to find out how to
(allows regular investment Application and select the Automatic set up this service.
without ongoing paperwork) Investment Plan option. --Additional purchases will then
--Call 800/71-PILOT for more automatically be made as directed by
information. you.
- -------------------------------------------------------------------------------------------------------------
</TABLE>

21
<PAGE> 51

Explanation of Sales Price

The public offering price for each class of shares is based upon net asset value
per share plus, in the case of Class A Shares, a front-end sales charge. Net
asset value per share for each class of each Fund will be determined by adding
the value of the Fund's investments, cash and other assets attributable to the
class, subtracting the Fund's liabilities attributable to that class, and then
dividing the result by the number of shares in the class that are outstanding.
The assets of each Fund are valued at market value or, if market quotes cannot
be readily obtained, fair value is used as determined by the Board of Trustees.
Debt securities held by these Funds that have sixty days or less until they
mature are valued at amortized cost, which generally approximates market value.
The per share net asset values of Class A Shares and Class B Shares will diverge
due to the different distribution expenses borne by the classes. More
information about valuation can be found in the Funds' Statement of Additional
Information, which is available upon request.

Net asset value is computed as of 3:00 P.M., Central time, on all days the New
York Stock Exchange (the "Exchange") is open for trading, which is Monday
through Friday except for holidays (scheduled Exchange holidays for 1997 are New
Years Day (observed), President's Day, Good Friday, Memorial Day, Independence
Day (observed), Labor Day, Thanksgiving Day and Christmas Day (observed)). On
those days when the Exchange closes early as a result of such day being a
partial holiday or otherwise, the right is reserved to advance the time on that
day by which purchase and redemption requests must be received.

CLASS A SHARES: THE FRONT-END SALES CHARGE OPTION. The front-end sales charge
for Class A Shares of the Funds begins at 4.50% (4.00% for the Pilot
Intermediate U.S. Government Securities Fund and Pilot Intermediate Municipal
Bond Fund) and may decrease as the amount you invest in Class A Shares
increases, as shown in the following two charts:

<TABLE>
<CAPTION>
PILOT U.S. GOVERNMENT
SECURITIES FUND
PILOT MUNICIPAL BOND FUND
---------------------------
PER SHARE DEALERS
AS A REALLOWANCE
PERCENTAGE OF AS A
---------------- PERCENTAGE
NET OF
OFFERING ASSET OFFERING
AMOUNT OF TRANSACTION PRICE VALUE PRICE
- --------------------------- ----- ----- -----
<S> <C> <C> <C>
Less than $100,000......... 4.50 4.71 4.00
$100,000 to $249,999....... 3.75 3.90 3.25
$250,000 to $499,999....... 3.00 3.09 2.50
$500,000 to $999,999....... 2.00 2.04 1.75
$1,000,000 to $2,499,999... 1.00 1.01 0.90
$2,500,000 and over........ 0.00 0.00 0.00
</TABLE>

<TABLE>
<CAPTION>
PILOT DIVERSIFIED BOND INCOME
FUND
PILOT INTERMEDIATE U.S.
GOVERNMENT SECURITIES FUND
PILOT INTERMEDIATE MUNICIPAL
BOND FUND
-----------------------------
PER SHARE DEALERS
AS A REALLOWANCE
PERCENTAGE OF AS A
---------------- PERCENTAGE
NET OF
OFFERING ASSET OFFERING
AMOUNT OF TRANSACTION PRICE VALUE PRICE
- --------------------------- ----- ----- -----
<S> <C> <C> <C>
Less than $100,000....... 4.00 4.17 3.50
$100,000 to $249,999..... 3.25 3.36 2.75
$250,000 to $499,999..... 2.50 2.56 2.00
$500,000 to $999,999..... 1.50 1.52 1.25
$1,000,000 to
$2,499,999.............. 1.00 1.01 0.90
$2,500,000 and over...... 0.00 0.00 0.00
</TABLE>

It is possible that the dealers reallowance shown in the tables above may change
over time. Further reductions in the sales charges shown above are also
possible--please see "Shareholder Services--Sales Charge Reductions".

CLASS B SHARES: THE CONTINGENT DEFERRED SALES CHARGE OPTION. Although you pay no
front-end sales charge on Class B Shares, if you redeem those shares within six
years after the date you purchased them, the shares will be subject to a
contingent deferred sales charge at the rates set forth in the charts below. The
sales charge is charged on the lesser of the net asset value on the redemption
date or the original cost of the shares being redeemed. As a result, no sales
charge is charged on any increase in the principal value of your shares.

The amount of any contingent deferred sales charge will be different depending
on the number of years that elapse between the time you pay for Class B Shares
and the time those shares are redeemed. Solely for purposes of determining the
number of years from the time of payment for your share purchase, all payments
during a

22
<PAGE> 52

month will be aggregated and deemed to have been made on the first day of the
month.

<TABLE>
<CAPTION>
PILOT U.S. GOVERNMENT SECURITIES FUND
PILOT MUNICIPAL BOND FUND
- ---------------------------------------------------------------
CONTINGENT DEFERRED
SALES CHARGE
(AS A PERCENTAGE OF
NUMBER OF YEARS DOLLAR AMOUNT SUBJECT
ELAPSED SINCE PURCHASE TO THE CHARGE)
- ------------------------------- -------------------------------
<S> <C>
One............................ 4.50%
Two............................ 4.00%
Three.......................... 3.50%
Four........................... 3.00%
Five........................... 2.50%
Six............................ 1.75%
After Six Years................ 0.00%
</TABLE>

<TABLE>
<CAPTION>
PILOT DIVERSIFIED BOND INCOME FUND
PILOT INTERMEDIATE U.S. GOVERNMENT SECURITIES FUND
PILOT INTERMEDIATE MUNICIPAL BOND FUND
- ---------------------------------------------------------------
CONTINGENT DEFERRED
SALES CHARGE
(AS A PERCENTAGE OF
NUMBER OF YEARS DOLLAR AMOUNT SUBJECT
ELAPSED SINCE PURCHASE TO THE CHARGE)
- ------------------------------- -------------------------------
<S> <C>
One............................ 4.00%
Two............................ 3.50%
Three.......................... 3.00%
Four........................... 2.50%
Five........................... 2.00%
Six............................ 1.25%
After Six Years................ 0.00%
</TABLE>

When you sell your Class B Shares, your order is processed to minimize the
amount of the contingent deferred sales charge that will be charged. Class B
Shares are redeemed first from those shares that are not subject to a contingent
deferred sales charge (i.e., shares held longer than six years and shares that
were acquired through reinvestment of dividends or distributions or that qualify
for other deferred sales charge waivers) and after that from the Class B Shares
you have held the longest.

For example, assume you purchased 100 Class B Shares at $10 a share (for a total
cost of $1,000), three years later the shares have a net asset value of $12 per
share and during that time you acquired 10 additional shares through dividend
reinvestment. If you then make your first redemption of 50 shares (resulting in
proceeds of $600, 50 shares x $12 per share), the first 10 shares redeemed will
not be subject to the contingent deferred sales charge because they were
acquired through reinvestment of dividends. With respect to the remaining 40
shares redeemed, the contingent deferred sales charge is charged at $10 per
share (because the original purchase price of $10 per share is lower than the
current net asset value of $12 per share). Therefore, only $400 of the $600 you
received from selling your shares will be subject to the contingent deferred
sales charge, at a rate of 3.50% (3.00% for the Pilot Intermediate U.S.
Government Securities Fund and Pilot Intermediate Municipal Bond Fund), the
applicable rate in the third year after purchase. The proceeds from the
contingent deferred sales charge that you may pay upon redemption go to the
Distributor, which may use such amounts to defray the expenses associated with
the distribution-related services involved in selling Class B Shares. The
contingent deferred sales charge, along with the ongoing distribution fees paid
with respect to Class B Shares, enables those shares to be purchased without the
imposition of a front-end sales charge.

HOW TO SELL SHARES

The Pilot Funds makes it easy to sell, or "redeem" your shares. If you purchased
your shares through an account at Boatmen's Investment Services, Inc. or another
Service Organization, you may redeem shares in accordance with the instructions
pertaining to that account. If you purchased your shares through an account at
Boatmen's Investment Services, Inc. or another Service Organization and you,
yourself, appear on The Pilot Funds' books as the shareholder of record, you may
redeem shares by mail, phone or hand delivery as described below; however, you
must contact Boatmen's Investment Services, Inc. or your other Service
Organization if you wish to redeem your shares by another method. If you
purchased your shares directly from The Pilot Funds, you have the ability to
redeem shares by any of the methods described below. Requests must be signed by
you and by each other owner of the account (for joint accounts). Except for a
contingent deferred sales charge that may be charged on Class B shares, The
Pilot Funds imposes no charges when you redeem shares.

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

23
<PAGE> 53

<TABLE>
<CAPTION>
HOW TO REDEEM SHARES ADDITIONAL LIMITATIONS
------------------------------------ ------------------------------------
<S> <C> <C>
By Mail to: --Send a signed request (each --Requests greater than $50,000 per
The Pilot Funds, owner, including each joint owner, day must be signature guaranteed.
c/o BISYS Fund Services must sign) to the Transfer Agent
Dept. L-1709 at the address on the left. --You should refer to "Transaction
Columbus, OH 43260-1709 Rules" below for additional
--Be sure to include both the name limitations.
of the particular Fund whose shares
you are selling and your account
number.
</TABLE>

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

<TABLE>
<S> <C> <C>
By Wire: --After you have signed up for wire --The Transfer Agent may act upon
redemption privileges on the such a request from any person
Account Application, you may representing himself or herself to
instruct the Transfer Agent to be you and reasonably believed by
wire your redemption proceeds to the Transfer Agent to be genuine.
your bank account by sending a
request in writing or by phone --The transaction amount must be a
(800/844-1235). $1,000 minimum.
--This privilege may be subject to
limits regarding frequency and
overall amount.
</TABLE>

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

<TABLE>
<S> <C> <C>
In Person to: --Deliver your written request --Requests must be signed by each
BISYS Fund Services directly to the Transfer Agent at owner, including each joint owner.
3435 Stelzer Road the address on the left.
Columbus, OH 43219-3035 --Requests greater than $50,000 per
day must be signature guaranteed.
</TABLE>

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

<TABLE>
<S> <C> <C>
Automatic Withdrawal --Withdrawals begin after you have --Your account must have a total
(permits automatic signed up for this service (either net asset value of at least $5,000.
withdrawal on the account application or in a
of pre-arranged amount) subsequent letter to the Transfer --The transaction amount must be at
Agent). least a $50 minimum.
--Call 800/71-PILOT for more
information.
</TABLE>

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

Redemption requests are processed when received in proper form by The Pilot
Funds at the net asset value per share next determined after such receipt
(subject to the contingent deferred sales charge for Class B Shares).

TRANSACTION RULES

THE PURCHASE PROCEDURES differ depending on whether you place your order
directly with The Pilot Funds or use Boatmen's Investment Services, Inc. or
another Service Organization.

IF YOU PLACE AN ORDER FOR FUND SHARES directly with the Fund, in proper form and
accompanied by payment, it will be processed upon receipt by the Transfer Agent.
An order in proper form will also be processed upon receipt by the Transfer
Agent where Boatmen's Investment Services, Inc. or another Service Organization
undertakes to pay for the order in immediately available funds wired to the
Transfer Agent by the close of business the next Business Day. If the Transfer
Agent receives your order and, where required, payment by 3 p.m., Central time,
your shares will be purchased at the public offering price calculated on that
day. Otherwise, your shares will be purchased at the public offering price
determined as of 3 p.m., Central time, on the next Business Day.

IF YOU PLACE AN ORDER FOR FUND SHARES THROUGH BOATMEN'S INVESTMENT SERVICES,
INC. OR ANOTHER SERVICE ORGANIZATION, and you place your order in proper form on
any Business Day in accordance with their procedures, your purchase will be
processed at the public offering price calculated at 3 p.m. Central time on that
day, if Boatmen's Investment Services, Inc. or your other Service Organization
then sends your order to the Transfer Agent before the end of its Business Day
(which is normally 4 p.m. Central time). Boatmen's Investment Services, Inc. or
your other Service Organization must promise to send to the Transfer Agent
immediately available funds in the amount of the purchase price within five
business days.

24
<PAGE> 54

WIRE PURCHASES AND REDEMPTIONS. If you purchase shares by wire, you must file an
Account Application before any of those shares can be redeemed. You should
contact your bank (which will need to be a commercial bank that is a member of
the Federal Reserve System) for information about sending and receiving funds by
wire, including any charges by your bank for these services. The Pilot Funds may
decide at any time to no longer permit wire redemptions.

MISCELLANEOUS PURCHASE INFORMATION. You must specify at the time of investment
whether you are purchasing Class A Shares or Class B Shares. Federal regulations
require that you provide a certified taxpayer identification number whenever you
open or reopen an account. Share certificates will not be issued. If your check
does not clear, a fee may be imposed by the Transfer Agent. The minimum initial
investment in the Fund by employees of Boatmen's or its affiliates is $500. The
minimum amount required for subsequent investments is $100, except in connection
with certain investment programs.

MISCELLANEOUS REDEMPTION INFORMATION. The Pilot Funds usually makes payment for
the shares that you redeem within Three Business Days after it receives your
request in proper form. SHARES PURCHASED BY CHECK FOR WHICH A REDEMPTION REQUEST
HAS BEEN RECEIVED WILL NOT BE REDEEMED UNLESS THE CHECK PAYMENT USED FOR
INVESTMENT HAS CLEARED, WHICH MAY TAKE UP TO SEVEN BUSINESS DAYS.

When redeeming shares in the Funds, you should indicate whether you are
redeeming Class A Shares or Class B Shares. If you own Class A Shares and Class
B Shares of the same Fund, Class A Shares will be redeemed first unless you
request otherwise.

Certain types of redemption requests will need to include a signature guarantee
for each name in which the account is registered. Signature guarantees must
accompany redemption requests for: (i) an amount in excess of $50,000 per day,
(ii) any amount if the redemption proceeds are to be sent elsewhere than the
address of record on The Pilot Funds' books, or (iii) an amount of $50,000 or
less if the address of record has been on The Pilot Funds' books for less than
sixty days, although the Transfer Agent reserves the right to require signature
guarantees on all redemptions. Signature guarantees are designed to protect both
you and The Pilot Funds from fraud. To obtain a signature guarantee you should
visit a bank, trust company, credit union, savings association, broker-dealer or
other member of a national securities exchange, or other eligible guarantor
institution. (Notaries public cannot provide signature guarantees.) Guarantees
must be signed by an authorized person at one of these institutions, and be
accompanied by the words "Signature Guarantee".

If you experience difficulty in contacting the Transfer Agent to redeem shares
by phone, for example because of unusual market activity, you are urged to
consider redeeming your shares by mail or in person.

THE VALUE OF SHARES THAT ARE REDEEMED IN A FUND may be more or less than their
original cost, depending on the Fund's current net asset value. In addition, if
you are redeeming Class B Shares you may be subject to a contingent deferred
sales charge, which will be deducted from the proceeds of your redemption.

THE PILOT FUNDS RESERVES THE RIGHT TO INVOLUNTARILY REDEEM AN ACCOUNT (other
than a tax-sheltered retirement plan account) if, after thirty days' written
notice, the account's net asset value falls and remains below a $1,000 minimum
due to share redemptions and not market fluctuations.

In unusual circumstances The Pilot Funds may make payment in readily marketable
portfolio securities at their market value equal to the redemption price.

25
<PAGE> 55

"Shareholder Services", (8) under certain circumstances, any purchase of Fund
shares with the proceeds from a recent redemption of shares of any other
non-money market investment portfolio of another investment company, provided
that any purchase must be made within 60 days of such redemption and that a copy
of the account statement showing such redemption must accompany the purchase
request, (9) any purchase of shares offered through a registered broker-dealer
as part of a wrap product, (10) exchanges where the shares being exchanged are
non-money market fund shares that came from the distribution of assets held in a
qualified trust agency or custodian account maintained with the trust department
of Boatmen's or its affiliates, (11) any purchase of Fund shares by a
shareholder who purchased Pilot Class A Shares of the Pilot International Equity
Fund for an account prior to June 1, 1994 and who qualified for a reduced sales
charge on its purchases made prior to that date, and who has continuously held
shares of the Fund, and (12) any purchase of Fund shares by a shareholder who
was a record or beneficial holder of shares of Kleinwort Benson International
Equity Fund, a series of Kleinwort Benson Investment Strategies, on July 12,
1993, and who became directly or indirectly a beneficial owner of the Pilot
International Equity Fund (the "Fund") as a result of a reorganization between
the two funds (the "Reorganization"), and who has continuously held shares of
the Pilot International Equity Fund. For more information or to determine
eligibility for any of these waivers, contact The Pilot Funds at 800/71-PILOT.

CERTAIN TYPES OF REDEMPTIONS MAY ALSO QUALIFY FOR AN EXEMPTION FROM THE
CONTINGENT DEFERRED SALES CHARGE. To receive one of the first three exemptions
listed below, you must explain the status of your redemption at the time you
redeem your shares. The contingent deferred sales charge with respect to Class B
Shares is not charged on (1) exchanges described under "Shareholder Services--
Exchange Privileges"; (2) redemptions in connection with minimum required
distributions from IRA, 403(b)(7) and Qualified Plan accounts due to the
shareholder reaching age 70 1/2; (3) redemptions in connection with a
shareholder's death or disability (as defined in the Internal Revenue Code); and
(4) involuntary redemptions as a result of an account's net asset value
remaining below $1,000 after thirty days' written notice. In addition, no
contingent deferred sales charge is charged on shares acquired through the
reinvestment of dividends or distributions.

YOUR PILOT FUND ACCOUNT

SHAREHOLDER SERVICES

The Pilot Funds provides a variety of ways to make managing your investments
more convenient. Some of these methods require you to request them on your
Account Application or you may request them after opening an account by sending
a signature guaranteed letter of instruction to the Transfer Agent.

Tax-Sheltered Retirement Plans

The Funds are available for investment by tax-sheltered retirement plans,
including Individual Retirement Accounts although the Municipal Bond Funds may
not be appropriate investments for such plans. See your Account Representative
for details on eligibility and other information. Consult your tax adviser with
specific reference to your own situation. No minimum initial investment or
additional investment requirement applies to purchases in connection with
tax-sheltered retirement plans.

EXCHANGE PRIVILEGES AMONG THE PILOT FUNDS

If you have purchased shares directly from The Pilot Funds, you may sell your
Fund shares and buy other shares of The Pilot Funds by calling the Transfer
Agent at 800/71-PILOT or sending a written exchange request to the Transfer
Agent at The Pilot Funds, c/o BISYS Fund Services, Dept. L-1705, Columbus, OH
43260-1709. If you have purchased shares through an account at Boatmen's
Investment Services, Inc., or another Service Organization, you may sell your
fund shares and buy shares of the other Pilot Funds in accordance with the
procedures applicable to your account. Specifically, Class A Shares of a Fund
may be exchanged for Class A Shares of any other Fund and Class B Shares of a
Fund may be exchanged for Class B Shares of any other Fund. Class A Shares
purchased with a front-end sales charge may be exchanged without the need to pay
any additional front-end charge on the shares acquired through the exchange.
Class B Shares may be exchanged without the payment of any contingent deferred
sales charge at the time the exchange is made. In determining the holding period
for calculating the contingent deferred sales charge payable on redemption of
Class B Shares, the holding period of the shares originally held will be added
to the holding period of the shares acquired through exchange.

If you have a qualified trust, agency or custodian account with Boatmen's or its
affiliates, and your shares are to be held in that account, you may also
exchange your current Class A Shares in a Fund for Pilot Shares in the same
Fund. Pilot Shares are subject to the same shareholder

26
<PAGE> 56

transaction expenses as Class A Shares except that Pilot Shares are not subject
to a front-end sales charge. Pilot Shares are subject to the same annual fund
operating expenses as those for Class A Shares except that Pilot Shares make no
annual Rule 12b-1 Distribution payments. In addition, the procedures for
effecting transactions in Fund shares and other features related to the
servicing and maintenance of a Fund account may differ for Pilot Shares of the
Fund from those applicable to Class A Shares depending on the terms of the
shareholder's qualified trust, agency, or custodian relationship with Boatmen's
or its affiliate. For more information on holding Pilot Shares of the Funds,
please see the prospectus for Pilot Shares which can be obtained by calling
1/800 71-PILOT and consult the institution (Boatmen's or an affiliate) which
will maintain the account holding the Pilot Shares received by exchanging Class
A Shares.

For investors holding their shares directly, a minimum initial investment of
$1,000 must be made to establish an account into which exchange proceeds will be
invested.

The minimum amount required for any subsequent exchanges into the newly
established account is $100. Exchanges may have tax consequences. Please consult
your tax adviser for further information.

If you are opening a new account in a different Fund by exchange, the shares
being exchanged must be at least equal in value to the minimum investment for
the Fund in which the account is being opened. The particular class of shares
you are exchanging into must be registered for sale in your state.

Additional information regarding exchanges can be obtained by reading the
Statement of Additional Information. The Exchange Privilege may be modified or
terminated at any time. At least 60 days' notice will be given to shareholders
of any material modification or termination of the Exchange Privilege except
where notice is not required by the Securities and Exchange Commission.

A shareholder who purchased Class A Shares of the Pilot International Equity
Fund (the "International Equity Fund") as part of a wrap fee program and who has
continuously held shares of the International Equity Fund, may exchange Class A
Shares in the International Equity Fund for Class A shares of any other fund in
the Pilot Family of Funds without paying any front-end sales charge on the
shares acquired through the exchange.

A shareholder who purchased Class A Shares of the Fund for an account prior to
June 1, 1994 and who qualified for a sales charge exemption or waiver on its
purchases made prior to that date, and who has continuously held shares of the
Fund, may exchange Class A Shares in the International Equity Fund for Class A
shares of any other fund in the Pilot Family of Funds without paying any
front-end sales charge on the shares acquired through the exchange after such
date so long as (i) such account remains open on the books of the Trust or (ii)
such investor continues to qualify for one of the sales load exemptions
described above.

A shareholder who was a record or beneficial holder of shares of Kleinwort
Benson International Equity Fund, a series of Kleinwort Benson Investment
Strategies, and who become directly or indirectly a beneficial owner of shares
of the Pilot International Equity Fund (the "Fund") as a result of a
reorganization between the two funds, and who has continuously held shares of
the Fund, may exchange Class A Shares or Class A shares of any fund in the Pilot
Family of Funds for Class A Shares or Class A shares of any other fund without
paying a front-end sales charge on the shares acquired through the exchange
after July 12, 1993 so long as such account remains open on the books of the
Trust.

AUTOMATIC INVESTMENT PLAN
(requires your request)

One easy way to pursue your financial goals is to invest money regularly. The
Pilot Funds offers the Automatic Investment Plan--a convenient service that lets
you transfer money from your bank account into your Fund account automatically,
on a schedule of your choice.

At your option, your bank account will be debited in a particular amount that
you have specified, and Fund shares will be automatically purchased at regular
intervals. Your bank account must be a checking, NOW or bank money market
account maintained at a domestic financial institution which is an Automated
Clearing House member. Your institution must also permit automated withdrawals
(which may be subject to a fee by that institution). A minimum initial
investment of $100 is required for Automatic Investment Plans and the minimum
amount required for subsequent investments is $100. The minimum amount required
for subsequent investments as part of the Plan for employees of Boatmen's or its
affiliates is $50.

27
<PAGE> 57

shares during periods of higher prices. In order to be effective, Dollar Cost
Averaging should usually be followed on a sustained, consistent basis. You
should be aware, however, that shares bought using Dollar Cost Averaging are
made without regard to their price on the day of investment or to market trends.
While regular investment plans do not guarantee a profit and will not protect
you against loss in a declining market, they can be a good way to invest for
retirement, a home, educational expenses and other long-term financial goals.

You may cancel your Automatic investments or change the amount of purchase at
any time by mailing written notification to the Transfer Agent at The Pilot
Funds, c/o BISYS Fund Services, Dept. L-1709, Columbus, OH 43260-1709. You may
also implement the Dollar Cost Averaging method on your own initiative. The
Pilot Funds may modify or terminate the Automatic Investment Plan at any time or
charge a service fee, although no such fee currently is contemplated.

AUTOMATIC WITHDRAWAL PLAN
(requires your request)

The Pilot Funds offers a convenient way of withdrawing funds from your
investment portfolio. You may request regular monthly, quarterly, semi-annual or
annual withdrawals in any amount above $50 provided the particular Fund account
you are withdrawing from has a minimum current balance of at least $5,000. The
automatic withdrawal will be made on the first or fifteenth day of the month.
Purchases of additional shares concurrently with withdrawals are ordinarily not
advantageous for share classes that charge a sales charge. Use of the Plan may
also be disadvantageous for Class B Shares during the first six years a share is
held, due to the potential need to pay a contingent deferred sales charge.

FRONT-END SALES CHARGE REDUCTIONS

YOU MAY BE ENTITLED TO LOWER FRONT-END SALES CHARGES ON CLASS A SHARES OF THE
FUNDS THROUGH RIGHT OF ACCUMULATION, STATEMENT OF INTENTION AND QUANTITY
DISCOUNTS.

Right of Accumulation. When buying Class A Shares, your current aggregate
investment determines the amount of any front-end sales charge that you pay. If
your current aggregate investment in Class A Shares accumulates to $100,000 or
beyond, the sales percentage charged to you on subsequent investments is
decreased as shown in the Section entitled "Class A Shares: The Front-End Sales
Charge Option". Your current aggregate investment is the accumulated combination
of your immediate investment along with the shares that you beneficially own in
any Fund on which you paid a front-end sales charge (including shares that carry
no front-end sales charge but were obtained through an exchange and can be
traced back to shares that were acquired with such a charge).

EXAMPLE

If you beneficially own Class A Shares of the Funds or shares of The Pilot
Funds' money market funds that can be traced back to the purchase of shares
carrying a front-end sales charge (or any combination of such shares) with an
aggregate value of $90,000 and then buy Class A Shares of the Pilot U.S.
Government Securities Fund with a current value of $10,000, you would pay a
front-end sales charge of 3.75% (the charge applicable to a $100,000 purchase)
on your $10,000 purchase.

To qualify for a reduced front-end sales charge, you or your Service
Organization must notify the Transfer Agent at the time of investment. The
reduced sales charge is subject to confirmation of your holdings through a check
of appropriate records.

Statement of Intention. This Statement provides the means for you to receive a
reduced front-end sales charge on all of your investments in Class A Shares,
whether they are made in one or more transactions. The Statement of Intention is
your commitment to acquire an aggregate investment for $100,000 or more. You
should read the Statement of Intention, which you can obtain by calling
800/71-PILOT, as you will be bound by its terms.

While signing a Statement of Intention does not bind you to purchase, or The
Pilot Funds to sell, the full amount indicated at the front-end sales charge in
effect at the time of signing, you must complete the intended purchase to obtain
the reduced sales charge.

When you sign a Statement of Intention, the Transfer Agent is authorized to hold
in escrow a sufficient number of shares which can be redeemed to make up any
difference in the sales load on the amount actually invested. After the terms of
the Statement of Intention are fulfilled, the escrow will be released.

Within a 13-month period beginning up to 90 days prior to the date of its
execution, the Class A Shares you purchase may be used as a credit toward the
completion of the Statement of Intention. The investments you make during the
period receive the discounted sales charge based on the full amount of your
investment commitment. A shareholder may include the value of all Class A Pilot
Funds shares on which a sales load has previously been paid as an "accumulation
credit" toward the completion of the Statement, but a price readjustment will be
made to reflect any reduced front-end sales charge applicable to shares
purchased only during the 90-day period prior to the submission of your
Statement of Intention.

28
<PAGE> 58

If your aggregate investment exceeds the amount indicated in your Statement, an
adjustment will be made to reflect any further reduced sales charge applicable
to your excess investment. The adjustment will be in the form of additional
Class A Shares credited to your account at the then current offering price
applicable to a single purchase of the total amount of the total purchase.

Quantity Discounts. As you can see by looking at the table in the Section
entitled "Class A Shares: The Front-End Sales Charge Option", larger purchases
in Class A Shares may result in lower front-end sales charges to you. If
requested, purchases by you, your spouse and your minor children will be
combined when computing the applicable front-end sales charge.

CROSS-REINVESTMENT PRIVILEGE

You may want to have your dividends received from a Fund automatically invested
in shares of any other Fund or any of The Pilot Funds' other investment
portfolios. Investments will be made at a price equal to the net asset value of
the acquired shares next determined after receipt of the distribution proceeds
by the Transfer Agent. No sales load will be charged on such investments. In
order to qualify for the Cross-Reinvestment Privilege, the value of your account
in the acquired fund must equal or exceed the acquired fund's minimum initial
investment requirement. There are no subsequent investment requirements for
amounts to which dividends are directed nor are service fees currently charged
for effecting these transactions. The election to cross-reinvest dividends will
not affect the tax treatment of such dividends, which will be treated as
received by you and then used to purchase shares of the acquired fund.

REINSTATEMENT PRIVILEGE

If you are a Class A shareholder in a Fund, you may reinvest all or any portion
of your redemption proceeds in Class A shares of any other Fund without paying a
sales load. Shares so acquired will be purchased at a price equal to the net
asset value next determined after the Transfer Agent receives a reinstatement
request and payment. If you wish to use this privilege, you must submit a
written reinstatement request to the Transfer Agent stating that you are
eligible to use the privilege. The reinstatement request and payment must be
received within 90 days of the trade date of the redemption and the shares
redeemed must have been held for at least 30 days before the redemption. The
reinstatement privilege may be exercised once annually by a Class A shareholder,
except that there is no such limit as to the availability of this privilege in
connection with transactions the sole purpose of which is to reinvest the
proceeds at net asset value in a tax-sheltered retirement plan.

Generally, exercising the reinstatement privilege will not affect the character
of any gain or loss realized on a redemption for federal income tax purposes.
However, if a redemption results in a loss, the reinstatement may result in the
loss being disallowed under IRS "wash sale" rules. Also in certain instances,
shareholders may not be permitted to take into account sales charges incurred on
the original purchase of shares in computing their taxable gain or loss. Consult
your tax adviser for additional information.

DIVIDENDS AND DISTRIBUTIONS

Where do your dividends and distributions come from?

Dividends for each Fund are derived from its net investment income from the
interest on the bonds and other investments that they hold in their portfolios.

What are your dividend and distribution options?

Shareholders of record receive dividends and net capital gain distributions. You
will automatically receive dividends and distributions in additional shares of
the same share class of a Fund for which the dividend or distribution was
declared, unless you specifically elect to receive payments in cash or elect the
Cross-Reinvestment Privilege described above under "Shareholder Services". Your
election and any subsequent change should be made in writing to: The Pilot Funds
[name of Fund, including Class A or Class B Shares, as applicable], c/o BISYS
Fund Services, Dept. L-1709, Columbus, OH 43260-1709.

Your election is effective for dividends and distributions with payment dates
after the date the Transfer Agent receives the election.

When are dividends and distributions declared and paid?

Dividends are declared daily and paid monthly. Shares of the Funds begin earning
dividends the first Business Day after acceptance of the purchase order for
which The Pilot Funds' custodian has received payment and stop earning dividends
the Business Day such shares are redeemed. Of all of an investor's shares in a
particular share class are redeemed, the Fund will make a cash payment of any
accrued dividends within five business days after redemption.

Net capital gain distributions for each of the Funds, if any, are distributed at
least annually after any reductions for capital loss carryforwards.

The dividends and distributions paid by each Fund on its Class A and Class B
Shares are calculated in the same manner, but because of the differing
distribution expenses

29
<PAGE> 59

borne by the different share classes, the dividends on those classes are
expected to differ.

DISTRIBUTION AND SERVICE
ARRANGEMENTS

The Pilot Funds has adopted Distribution Plans for its Class A and Class B
Shares.

UNDER THESE PLANS THE DISTRIBUTOR RECEIVES PAYMENTS FOR DISTRIBUTION AND SUPPORT
SERVICES. The Distribution Plan for Class A Shares authorizes payments to the
Distributor and Service Organizations for personal services provided to Class A
shareholders and/or the maintenance of shareholder accounts. Payments under the
Distribution Plan for Class B Shares will also be used to pay for sales
commissions and other fees payable to the Distributor and to Service
Organizations and other broker-dealers who sell Class B Shares, and may include
interest on such amounts that are not initially repaid by The Pilot Funds.

PAYMENTS UNDER THE DISTRIBUTION PLAN FOR CLASS A SHARES MAY NOT EXCEED 0.25% (on
an annual basis) of the average daily net asset value of the shares to which
such Plan relates. If more money is due the Distributor than it can collect in
any month because of this limitation, the unpaid amount may be carried forward
until it can be paid. Similarly, if in any month the Distributor does not expend
the entire amount to which it would otherwise be entitled, this amount may be
used as a credit and drawn upon to permit the payment of expenses in the future.
Neither of these amounts, however, is payable beyond the fiscal year in which
they accrue.

DISTRIBUTION PAYMENTS UNDER THE DISTRIBUTION PLAN FOR CLASS B SHARES MAY NOT
EXCEED 1.00% (on an annual basis) of the average daily net asset value of the
Class B Shares. Not more than 0.25% of such value will be used to compensate
Service Organizations for personal services provided to Class B shareholders
and/or the maintenance of shareholder accounts. Not more than 0.75% of such
value will be paid to the Distributor as reimbursement for commissions and
transaction fees of up to 4.00% (which amount may change over time) of the net
asset value per share of the Class B Shares purchased by clients of the
Distributor, Service Organizations and other broker-dealers who sell such Shares
as well as expenses related to other promotional and distribution activities.
The distribution payments under this Plan have been structured to provide you
the option of purchasing Fund shares without the need to pay a front-end sales
charge. The purpose and function of the contingent deferred sales charge and
distribution fee for Class B Shares is the same as the front-end sales charge
and distribution fee for Class A Shares. In both cases the sales charge and
distribution fee are used to pay and provide compensation for the distribution
of Fund shares.

Actual distribution expenses paid by the Distributor with respect to Class B
Shares for any given year may exceed the distribution fees and contingent
deferred sales charges received with respect to those Shares. These excess
expenses may be reimbursed by a Fund or its Class B shareholders out of
contingent deferred sales charges and distribution payments in future years as
long as the Distribution Plan for Class B Shares is in effect.

Distribution payments under the Plans are subject to the requirements of a rule
under the Investment Company Act of 1940 known as Rule 12b-1. The distribution
fee and any sales charge applicable to a particular class will not be used to
assist the distribution of any other class.

From time to time, the Distributor, at its expense, will also provide additional
compensation to dealers in connection with sales of Shares of any of the Funds
and other Funds of the Group. Compensation may include tickets to sporting and
other entertainment events, gifts of merchandise, and financial assistance to
dealers in connection with conferences, sales or training programs for their
employees, seminars for the public, advertising campaigns regarding one or more
Funds of the Group, and/or other dealer-sponsored special events. In some
instances, this compensation may be made available only to certain dealers whose
representatives have sold or are expected to sell a significant amount of such
shares. Compensation may include payment for travel expenses, including lodging,
incurred in connection with trips taken by invited registered representatives
and members of their families to exotic locations within or outside of the
United States for meetings or seminars of a business nature. The Distributor, at
its expense, currently conducts an annual sales contest for dealers in
connection with their sales of Shares of the Funds. Dealers may not use sales of
a Fund's Shares to qualify for this compensation to the extent such may be
prohibited by the laws of any state or any self-regulatory agency, such as the
National Association of Securities Dealers, Inc.

30
<PAGE> 60

all of the services and privileges described may not be available to you).
Boatmen's Investment Services, Inc. and the other Service Organizations have the
responsibility of transmitting purchase orders and required funds, and of
crediting their customers' accounts following redemptions, in a timely manner in
accordance with their customer agreements and this Prospectus.

Investors may note that federal banking laws currently limit the securities
activities of banks. It is possible that a bank might be prohibited from acting
as a Service Organization in the future. If this were to happen, the bank's
shareholder clients would be permitted by the Funds to remain shareholders. The
Funds' method of operations might, however, change and such shareholders might
not be able to avail themselves of the services provided by their banks. No
adverse financial consequences are expected to occur to these shareholders from
any such event.

THE PILOT FAMILY OF FUNDS

The Pilot Funds was organized on July 15, 1982 as a Massachusetts business trust
under the name Centerland Fund. On June 1, 1994, its name was changed to The
Pilot Funds. The Pilot Funds is a mutual fund of the type known as an "open-end
management investment company." A mutual fund permits an investor to pool his or
her assets with those of others in order to achieve economies of scale, take
advantage of professional money managers and enjoy other advantages
traditionally reserved for large investors. The Agreement and Declaration of
Trust permits the Board of Trustees of The Pilot Funds to create separate series
or portfolios of shares. To date, fourteen portfolios have been established. The
Agreement and Declaration of Trust also permits the Board of Trustees to
classify or reclassify any series or portfolio of shares into one or more
classes. The Trustees have authorized the issuance of an unlimited number of
shares in each of three share classes (Class A Shares, Class B Shares and Pilot
Shares) in the Funds. Each Fund is classified as a diversified company.
Information regarding The Pilot Funds' other portfolios may be obtained by
contacting The Pilot Funds or the Distributor.

Class A and Class B Shares of the Funds are described in this prospectus. These
Funds also offer Pilot Shares solely to Boatmen's and its affiliated banks,
acting on behalf of themselves and their customers. Pilot Shares are sold
without a front-end or contingent deferred sales charge to qualified
shareholders. For more information on Pilot Shares, call 800/71-PILOT. Shares of
each class bear their pro rata portion of all operating expenses paid by the
Funds, except certain payments under the Funds' Distribution Plans applicable
only to Class A or Class B Shares.

Persons selling or servicing different classes of shares of the Funds may
receive different compensation with respect to one particular class of shares as
opposed to another in the same Fund.

SHAREHOLDERS ARE ENTITLED TO ONE VOTE FOR EACH FULL SHARE HELD AND PROPORTIONATE
FRACTIONAL VOTES FOR FRACTIONAL SHARES HELD. Shares of all the Pilot Fund
portfolios vote together and not by class, unless otherwise required by law or
permitted by the Board of Trustees. All shareholders of a particular Fund will
vote together as a single class on matters relating to the Fund's investment
advisory agreement and fundamental investment policies. Only Class A
shareholders, however, will vote on matters relating to the Distribution Plan
for Class A Shares and only Class B shareholders will vote on matters relating
to the Distribution Plan for Class B Shares.

THE BUSINESS OF THE FUND

FUND MANAGEMENT

THE BUSINESS AFFAIRS OF THE PILOT FUNDS ARE MANAGED UNDER THE GENERAL
SUPERVISION OF THE BOARD OF TRUSTEES.

SERVICE PROVIDERS

Distributor: Each Fund's shares are sold on a continuous basis by the
Distributor, PILOT FUNDS DISTRIBUTORS, INC. (referred to as the "Distributor"),
a registered broker-dealer and a wholly-owned subsidiary of Concord that is
located at 3435 Stelzer Road, Columbus, Ohio 43219-3035.

Custodian: BOATMEN'S TRUST COMPANY (referred to as "Boatmen's") is responsible
for holding the investments purchased by each Fund. Boatmen's is located at 100
N. Broadway, St. Louis, Missouri 63178.

31
<PAGE> 61

distribution of all income earned as a result of investing in the Funds. The
Transfer Agent is located at 3435 Stelzer Road, Columbus, OH 43219-3035.

MORE ABOUT 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 June 30, 1995, Boatmen's and its affiliates managed nearly
$83 billion in assets ($45 billion over which they had investment discretion and
$38 billion over which they did not have investment discretion).

Boatmen's Bancshares, Inc., Boatmen's parent, is a registered bank holding
company which owns substantially all of the outstanding capital stock of
numerous commercial banks located in Arkansas, Illinois, Iowa, Kansas, Missouri,
New Mexico, Oklahoma, Tennessee and Texas, a mortgage banking company, a credit
life insurance company and a credit card bank.

On August 30, 1996, Bancshares and NationsBank Corporation ("NationsBank")
announced that they have entered into an agreement pursuant to which Bancshares
will merge into NationsBank. The proposed merger, which is currently expected to
take place in January 1997, is subject to a number of conditions, including
approval by the appropriate regulatory authorities and by the shareholders of
both Bancshares and NationsBank. If the proposed merger is consummated,
Boatmen's will become a wholly owned subsidiary of NationsBank.

MORE ABOUT BISYS. BISYS Fund Services Limited Partnership ("BISYS") is a
subsidiary of The BISYS Group, Inc., 150 Clove Road, Little Falls, New Jersey
07424, a publicly owned company engaged in information processing, loan
servicing and 401(k) administration and recordkeeping services to and through
banking and other financial organizations. Under its Administration Agreement
with the Fund, BISYS provides a wide range of such services to the Funds,
including maintaining the Funds' offices, providing statistical and research
data, coordinating the preparation of reports to shareholders, calculating or
providing for the calculation of the net asset values of Fund shares and
dividends and capital gain distributions to shareholders, and performing other
administrative functions necessary for the smooth operation of the Funds.
Certain officers of The Pilot Funds, namely Messrs. Marvin Dean, W. Eugene
Spurbeck, George O. Martinez, William J. Tomko and Bruce Treff are also
employees and/or officers of BISYS, the Distributor or an affiliate.

Pilot Intermediate Municipal Bond Fund, Pilot Municipal Bond Fund, and Pilot
Intermediate Municipal Bond Fund each commenced operations on November 7, 1994
upon the transfer to each Fund of a portion of the assets of the common trust
fund of Boatmen's Trust Company (the "Commingled Funds") having corresponding
investment objectives, policies and limitations in exchange for shares of such
Fund. Each Fund's portfolio of investments on November 7, 1994 was substantially
the same as the portfolio of the corresponding Commingled Fund immediately prior
to the transfer.

The quoted performance data includes the performance of the Commingled Funds for
periods before their corresponding Funds' commencement of operations including
periods when the Commingled Funds were managed by the Adviser's predecessor in
interest or other affiliate. The Commingled Funds have not been and are not
currently registered under the 1940 Act or subject to the investment
restrictions imposed by the 1940 Act. If the Commingled Funds had been
registered under the 1940 Act, the Commingled Funds' performance might have been
adversely affected. The performance information set forth below reflects past
performance and is not necessarily indicative of the future performance of the
Funds, or any of the other investment portfolios of The Pilot Funds. Performance
will fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost.

Average Annual Total Returns for the period ended September 30, 1996.

<TABLE>
<CAPTION>
1 YEAR
CLASS A CLASS B
------- -------
<S> <C> <C>
Pilot Intermediate Municipal Bond Fund and
its predecessor % %
Pilot Intermediate U.S. Government
Securities Fund and its predecessor % %
Pilot Municipal Bond Fund and its
predecessor % %
</TABLE>

32
<PAGE> 62

<TABLE>
<CAPTION>
3 YEARS
CLASS A CLASS B
------- -------
<S> <C> <C>
Pilot Intermediate Municipal Bond Fund and
its predecessor % %
Pilot Intermediate U.S. Government
Securities Fund and its predecessor % %
Pilot Municipal Bond Fund and its
predecessor % %
</TABLE>

<TABLE>
<CAPTION>
5 YEARS
CLASS A CLASS B
------- -------
<S> <C> <C>
Pilot Intermediate Municipal Bond Fund and
its predecessor % %
Pilot Intermediate U.S. Government
Securities Fund and its predecessor % %
Pilot Municipal Bond Fund and its
predecessor % %
</TABLE>

<TABLE>
<CAPTION>
10 YEARS
(OR SINCE INCEPTION)
CLASS A CLASS B
------- -------
<S> <C> <C>
Pilot Intermediate Municipal Bond Fund and
its predecessor % %
Pilot Intermediate U.S. Government
Securities Fund and its predecessor % %
Pilot Municipal Bond Fund and its
predecessor % %
</TABLE>

The average annual total returns are calculated in conformity with Securities
and Exchange Commission guidelines. In addition, these returns are adjusted to
reflect the performance that the Commingled Fund would have experienced if Class
A and Class B shareholder transaction expenses and operating expenses applicable
to the Class A and Class B Shares (as estimated at commencement of operations)
had been incurred during the periods shown.

The Fixed Income Committee of Boatmen's is primarily responsible for the
day-to-day management of the investment portfolio of each of the Government
Funds and Municipal Bond Funds.

Boatmen's is entitled to advisory fees that are calculated daily and payable
monthly at the annual rate of 0.55% of the Pilot Diversified Bond Income Fund's
average daily net assets, 0.55% of the Pilot Intermediate U.S. Government
Securities Fund's average daily net assets, 0.55% of the Pilot U.S. Government
Securities Fund's average daily net assets, 0.55% of the Pilot Intermediate
Municipal Bond Fund's average daily net assets, and 0.55% of the Pilot Municipal
Bond Fund's average daily net assets. For the fiscal year ended August 31, 1996,
The Funds paid advisory fees in the amount of 0.35%, 0.40%, 0.40% and 0.45% for
Pilot Intermediate U.S. Government Securities Fund, Pilot U.S. Government
Securities Fund, Pilot Intermediate Municipal Bond Fund and Pilot Municipal Bond
Fund, respectively. Pilot Diversified Bond Income Fund commenced operations on
October 21, 1996.

Additionally, BISYS is entitled to an administration fee from The Pilot Funds
which is calculated based on the net assets of all of the investment portfolios
of The Pilot Funds combined. Under the Administration Agreement, each Fund pays
its pro-rata share of an annual fee to BISYS, computed daily and payable
monthly, of .115 of 1% of The Pilot Funds' average net assets up to $1.5
billion, .110 of 1% of The Pilot Funds' average net assets on the next $1.5
billion and .1075 of 1% of The Pilot Funds' average net assets in excess of $3
billion. For the fiscal year ended August 31, 1996, The Pilot Funds paid
administration fees to BISYS in the amount of [ ], [ ], [ ], [ ]
and [ ] for The Pilot Growth and Income Fund, Pilot Equity Income Fund,
Pilot Intermediate U.S. Government Securities Fund, Pilot Intermediate Municipal
Bond Fund and Pilot Municipal Bond Fund, respectively. For the fiscal period
ended August 31, 1995, The Pilot Funds paid administration fees to BISYS in the
amount of $0, $0, $28,065, $11,784, $52,366 and $23,572 for the 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, respectively.

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<PAGE> 63

transaction charges (if any) incurred in connection with the purchase and sale
of its portfolio securities.

TAX IMPLICATIONS

YOU WILL BE ADVISED AT LEAST ANNUALLY REGARDING THE FEDERAL INCOME TAX TREATMENT
OF DIVIDENDS AND DISTRIBUTIONS MADE TO YOU.

In order to so qualify, each Fund intends to pay as dividends at least 90% of
its investment company taxable income. Investment company taxable income
includes taxable interest, dividends and gains attributable to market discount
on taxable as well as tax-exempt securities. To the extent you receive such a
dividend based on either investment company taxable income or the excess of net
short-term capital gain over net long-term capital loss, you would treat that
dividend as ordinary income in determining your gross income for tax purposes,
whether you received it in the form of cash or additional shares. Unless you are
exempt from federal income taxes, the dividends you receive from each Fund,
other than the "exempt interest dividends" from the Municipal Bond Funds, will
be taxable to you as ordinary income. Also, to the extent that a Fund's income
consists of dividends paid by U.S. corporations, a portion of the dividends paid
by the Fund may be eligible for the corporate dividends-received deduction.

34
<PAGE> 64

withholding. Backup withholding is not an additional tax. Any amounts withheld
may be credited against the shareholder's federal income tax liability.

Further information relating to tax consequences is contained in the Statement
of Additional Information.

MEASURING PERFORMANCE

Performance information provides you with a method of measuring and monitoring
your investments. Each Fund may quote its performance in advertisements or
shareholder communications. The performance for each class of shares of a Fund
is calculated separately from the performance of the Fund's other classes of
shares.

Understanding performance measures:

The Funds may provide quotes of total returns and yields WITHOUT REFLECTING A
FRONT-END SALES CHARGE, which quotations will, of course, be higher than
quotations that do reflect such a sales charge.

Performance comparisons:

The performance of the Funds may also be compared to data prepared by Lipper
Analytical Services, Inc., Mutual Fund Forecaster, Wiesenberger Investment
Companies Services, Morningstar or CDA Investment Technologies, Inc., and total
returns for these Funds may be compared to indices such as the Dow Jones
Industrial Average, the Standard & Poor's 500 Stock Index, the Lehman Brothers
Bond Indexes, the Merrill Lynch Bond Indexes, the Wilshire 5000 Equity Indexes
or the Consumer Price Index.

Special information for investors in the Municipal Bond Funds:

You may find it particularly useful to compare the tax-free yields of the Funds
to the equivalent yields from taxable investments. For an investor in a low tax
bracket, it may not be helpful to invest in a tax-exempt investment if a higher
after-tax yield can be achieved from a taxable instrument.

The following table illustrates the differences between hypothetical tax-free
yields and tax-equivalent yields for different tax brackets. You should be
aware, however, that tax brackets can change over time and that your tax adviser
should be

35
<PAGE> 65

consulted for specific yield calculations. (The federal tax brackets and rates
below are those currently available for 1996.)
<TABLE>
<CAPTION>
TAX EXEMPT YIELD
----------------------------------------------------------
TAXABLE INCOME 4.00% 4.50% 5.00%
- ---------------------------------------------------------- ---------------- ---------------- ----------------
FEDERAL
SINGLE RETURN JOINT RETURN BRACKET EQUIVALENT TAXABLE YIELD
- ----------------- ----------------- ---------------- ----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Not over $22,750 Not over $38,000 15.000% 4.71% 5.29% 5.88%
22,751- 55,100 38,001- 91,850 28.000% 5.56% 6.25% 6.94%
55,101-115,000 91,851-140,000 31.000% 5.80% 6.52% 7.25%
115,001-250,000 140,001-250,000 36.000% 6.25% 7.03% 7.81%
Over 250,000 Over 250,000 39.600% 6.62% 7.45% 8.28%

<CAPTION>
5.50% 6.00% 6.50% 7.00% 7.50%
---------------- ---------------- ---------------- ---------------- ----------------
SINGLE RETURN
- -----------------
<S> <C> <C> <C> <C> <C>
Not over $22,750 6.47% 7.06% 7.65% 8.24% 8.82%
22,751- 55,100 7.64% 8.33% 9.03% 9.72% 10.42%
55,101-115,000 7.97% 8.70% 9.42% 10.14% 10.87%
115,001-250,000 8.59% 9.38% 10.16% 10.94% 11.72%
Over 250,000 9.11% 9.93% 10.76% 11.59% 12.42%

<CAPTION>
8.00%
----------------
SINGLE RETURN
- -----------------
<S> <C>
Not over $22,750 9.41%
22,751- 55,100 11.11%
55,101-115,000 11.59%
115,001-250,000 12.50%
Over 250,000 13.25%
</TABLE>

These yields are for illustrative purposes only. The tax brackets do not take
into account the effect of reductions in the deductibility of itemized
deductions for taxpayers with adjusted gross income over $111,800 or the
possible effect of the federal alternative minimum tax. Additionally, effective
brackets and equivalent taxable yields could be higher than those shown.

INQUIRIES REGARDING THE FUNDS MAY BE DIRECTED TO THE DISTRIBUTOR AT 3435 STELZER
ROAD, COLUMBUS, OHIO 43219-3035.

36
<PAGE> 66

- ----- Financial
Direction January 2, 1997

LOGO

The
Pilot
Funds

PROSPECTUS ENCLOSED

PILOT EQUITY
INCOME FUND

PILOT GROWTH
AND INCOME FUND

PILOT GROWTH FUND

PILOT SMALL
CAPITALIZATION
EQUITY FUND

Class A Shares and
Class B Shares
<PAGE> 67

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
EXPENSE SUMMARY................................................................................... 2
FINANCIAL HIGHLIGHTS.............................................................................. 5
INVESTMENT OBJECTIVES, POLICIES AND RISK FACTORS.................................................. 7
Pilot Growth and Income Fund................................................................. 7
Pilot Equity Income Fund..................................................................... 7
Pilot Growth Fund............................................................................ 8
Pilot U.S. Small Capitalization Equity Fund.................................................. 9
PORTFOLIO INSTRUMENTS AND PRACTICES............................................................. 9
RISK FACTORS.................................................................................... 14
FUNDAMENTAL LIMITATIONS......................................................................... 15
INVESTING IN THE PILOT FUNDS...................................................................... 15
HOW TO BUY SHARES............................................................................... 18
HOW TO SELL SHARES.............................................................................. 21
TRANSACTION RULES............................................................................... 22
SHAREHOLDER SERVICES............................................................................ 23
DIVIDENDS AND DISTRIBUTIONS..................................................................... 26
DISTRIBUTION AND SERVICE ARRANGEMENTS............................................................. 27
THE PILOT FAMILY OF FUNDS......................................................................... 28
THE BUSINESS OF THE FUND.......................................................................... 29
FUND MANAGEMENT................................................................................. 29
TAX IMPLICATIONS................................................................................ 32
MEASURING PERFORMANCE........................................................................... 32
</TABLE>
<PAGE> 68

THE PILOT FUNDS

LOGO

PROSPECTUS FOR CLASS A SHARES AND CLASS B SHARES OF THE PILOT GROWTH AND INCOME,
PILOT EQUITY INCOME, PILOT GROWTH AND PILOT SMALL CAPITALIZATION EQUITY FUNDS

January 2, 1997

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
PILOT FUND GOAL FOR INVESTORS WHO WANT
---------- ---- ----------------------
<S> <C> <C>
GROWTH AND INCOME Capital appreciation and current Capital appreciation over the long
income through investments primarily term as well as current income and
in common stocks of U.S. companies. are willing to accept the relative
risks associated with equity
investments.
- ----------------------------------------------------------------------------------------------------------
EQUITY INCOME Current income and, secondarily, Current income with the possibility
capital appreciation through of some price appreciation and are
investments primarily in common willing to accept the relative risks
stocks of above average financial associated with equity investments.
quality and securities convertible
into common stock.
- ----------------------------------------------------------------------------------------------------------
GROWTH Long-term capital growth through Capital growth over the long term
investments primarily in equity and are willing to accept the
securities. relative risks associated with
equity investments.
- ----------------------------------------------------------------------------------------------------------
SMALL CAPITALIZATION Long-term capital growth by Capital growth over the long term
EQUITY investing primarily in equity and are willing to accept the
securities relatively greater risks associated
with investments in small
capitalization equity securities.
- ----------------------------------------------------------------------------------------------------------
</TABLE>

This Prospectus describes two classes of shares from which investors may choose
in the Pilot Growth and Income, Pilot Equity Income, Pilot Growth and Pilot
Small Capitalization Equity Funds. Class A Shares are sold with a front-end
sales charge; Class B shares are sold with a deferred sales charge. This
Prospectus describes concisely the information about the Funds that you should
know before investing. Please read it carefully and keep it for future
reference.

1
<PAGE> 69

EXPENSE SUMMARY

SHAREHOLDER TRANSACTION EXPENSES are charges you pay when buying or selling
shares of a Fund.

<TABLE>
<CAPTION>
GROWTH EQUITY
AND INCOME INCOME
FUND FUND
--------------- ---------------
CLASS A CLASS B CLASS A CLASS B
------- ------- ------- -------
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Front End Sales Charge Imposed on Purchases
(as a percentage of offering price)................................. 4.50%(1) None 4.50%(1) None
Sales Charge Imposed on Reinvested Dividends.......................... None None None None
Deferred Sales Charge (as a percentage of original purchase price or
redemption proceeds, whichever is lower)............................. None 4.50%(2) None 4.50%(2)
Exchange Fee.......................................................... None None None None
ANNUAL FUND OPERATING EXPENSES AFTER FEE WAIVERS AND EXPENSE
REIMBURSEMENTS (as a percentage of average net assets):
Management Fees (after waivers)(4).................................... 0.50% 0.50% 0.50% 0.50%
Rule 12b-1/Distribution Payments...................................... 0.25% 1.00% 0.25% 1.00%
Other Expenses (after reimbursements)(4).............................. 0.25% 0.25% 0.25% 0.25%
---- ---- ---- ----
Total Fund Operating Expenses After Fee Waivers and Expense
Reimbursements(4).................................................... 1.00% 1.75% 1.00% 1.75%
===== ===== ===== =====
</TABLE>

<TABLE>
<CAPTION>
SMALL
GROWTH CAPITALIZATION
FUND EQUITY FUND
--------------- ---------------
CLASS A CLASS B CLASS A CLASS B
------- ------- ------- -------
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Front End Sales Charge Imposed on Purchases
(as a percentage of offering price)................................. 4.50%(1) None 4.00%(1) None
Sales Charge Imposed on Reinvested Dividends.......................... None None None None
Deferred Sales Charge (as a percentage of original purchase price or
redemption proceeds, whichever is lower)............................. None 4.50%(2) None 4.00%(3)
Exchange Fee.......................................................... None None None None
ANNUAL FUND OPERATING EXPENSES AFTER FEE WAIVERS AND EXPENSE
REIMBURSEMENTS (as a percentage of average net assets):
Management Fees (after waivers)(4).................................... 0.75% 0.75% 0.75% 0.75%
Rule 12b-1/Distribution Payments...................................... 0.25% 1.00% 0.25% 1.00%
Other Expenses (after reimbursements)(4).............................. 0.25% 0.25% 0.25% 0.25%
---- ---- ---- ----
Total Fund Operating Expenses After Fee Waivers and Expense
Reimbursements(4).................................................... 1.25% 2.00% 1.25% 2.00%
===== ===== ===== =====
</TABLE>

2
<PAGE> 70

(3) This amount applies to redemptions during the first year. The charge
decreases .50% annually to 2.00% for redemptions made during the fifth year
and then decreases .75% to 1.25% for redemptions made during the sixth year.
No deferred sales charge is charged for redemptions made after the sixth
year. See "How to Buy Shares-- Explanation of Sales Price."
(4) This expense information is provided to help you understand the expenses you
would bear either directly (as with the transaction expenses) or indirectly
(as with the annual operating expenses) as a shareholder of one of the
Funds. Without waivers by the Adviser, investment management fees as a
percentage of net assets would be 0.75%, 0.75%, and 1.00% for the Pilot
Growth and Income, Pilot Equity Income, and Pilot Small Capitalization
Equity Funds, respectively. Other Expenses also reflect reimbursements by
the Adviser and Administrator. Absent reimbursement, Other Expenses would be
0.26% for the Class A and Class B Shares of Pilot Growth and Income Fund;
0.29% for the Class A and Class B Shares of Pilot Equity Income Fund; %
for the Class A and Class B Shares of Pilot Growth Fund; and 0.35% for the
Class A and Class B Shares, respectively, of Pilot Small Capitalization
Equity Fund. Absent waivers and expense reimbursements, the total operating
expenses for the Funds would be 1.26% and 2.01% for Class A Shares and Class
B Shares, respectively, of the Pilot Growth and Income Fund; 1.29% and 2.04%
for Class A Shares and Class B Shares, respectively, of the Pilot Equity
Income Fund; and 1.65% and 2.44% for Class A Shares and Class B Shares,
respectively, of the Pilot Small Capitalization Equity Fund. These waivers
and reimbursements are voluntary and may be terminated at any time with
respect to any Fund at the discretion of the Adviser or Administrator and
without the consent of the Funds except that the Adviser has voluntarily
agreed to limit the total operating expenses of the Pilot Shares of Pilot
Growth and Income Fund and Pilot Growth Fund to 0.75% and 1.00% of each
Fund's average net assets until February 1, 1998 which will have the effect
of limiting the expenses of Class A and Class B shares of Pilot Growth and
Income Fund to 1.00% and 1.75%, respectively, and the expenses of Class A
and Class B shares of Pilot Growth Fund to 1.75% and 2.00%, respectively, of
each Fund's average net assets for the same period. You should note that any
fees that are charged by the Funds' Adviser, its affiliates or any other
institutions directly to their customer accounts for services related to an
investment in the Funds are in addition to and not reflected in the fees and
expenses described above.

3
<PAGE> 71

<TABLE>
<CAPTION>
1 3 5 10
YEAR YEARS YEARS YEARS
AFTER AFTER AFTER AFTER
PURCHASE PURCHASE PURCHASE PURCHASE
-------- -------- -------- --------
<S> <C> <C> <C> <C>
PILOT GROWTH AND INCOME FUND
Class A Shares(1)................... $ 55 $ 75 $ 98 $ 162
Class B Shares
Assuming complete redemption at
end of period(2)............. $ 63 $ 90 $ 120 $ 206
Assuming no redemption......... $ 18 $ 55 $ 95 $ 206
PILOT EQUITY INCOME FUND
Class A Shares(1)................... $ 55 $ 75 $ 98 $ 162
Class B Shares
Assuming complete redemption at
end of period(2)............. $ 63 $ 90 $ 120 $ 206
Assuming no redemption......... $ 18 $ 55 $ 95 $ 206
PILOT GROWTH FUND
Class A Shares(1)................... $ 57 $ 83 $ 111 $ 189
Class B Shares
Assuming complete redemption at
end of period(2)............. $ 65 $ 98 $ 133 $ 233
Assuming no redemption......... $ 20 $ 63 $ 108 $ 233
PILOT SMALL CAPITALIZATION EQUITY FUND
Class A Shares(1)................... $ 57 $ 83 $ 111 $ 189
Class B Shares
Assuming complete redemption at
end of period(2)............. $ 65 $ 98 $ 133 $ 233
Assuming no redemption......... $ 20 $ 63 $ 108 $ 233
</TABLE>

- ------------
(1) Assumes deduction at time of purchase of maximum applicable front-end sales
charge.
(2) Assumes deduction of maximum applicable contingent deferred sales charge.

The Example shown above should not be considered a representation of future
investment returns or operating expenses. Pilot Growth Fund is new and actual
investment returns and operating expenses may be more or less than shown for the
Fund.

4
<PAGE> 72

THE PILOT FUNDS
FINANCIAL HIGHLIGHTS

The following data with respect to a Share of the Pilot Growth and Income Fund,
Pilot Equity Income Fund, and Pilot Small Capitalization Equity Fund outstanding
during the periods indicated have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report incorporated by
reference and attached to the Statement of Additional Information, and should be
read in conjunction with the financial statements and related notes incorporated
by reference and attached to the Statement of Additional Information. The
following data with respect to a share of the Pilot Growth Fund Outstanding
during the period indicated are unaudited.

THE PILOT FUNDS
- --------------------------------------------------------------------------------
Financial Highlights
Selected Data for a Share Outstanding Throughout the Period
- --------------------------------------------------------------------------------
Pilot Growth & Income Fund
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS
--------------------------------------
NET REALIZED TOTAL
AND UNREALIZED INCOME DIVIDENDS DIVIDENDS
NET ASSET VALUE NET GAIN ON FROM FROM NET FROM NET
AT BEGINNING INVESTMENT INVESTMENT INVESTMENT INVESTMENT REALIZED
OF PERIOD INCOME TRANSACTIONS OPERATIONS INCOME GAINS
--------------- ---------- -------------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
FOR THE YEAR ENDED AUGUST 31,
- ---------------------------------------------
1996--Pilot Shares........................... $ 11.59 $ 0.22 $ 1.59 $ 1.81 $(0.22) $(0.28)
1996--Class A Shares......................... 11.58 0.18 1.60 1.78 (0.18) (0.28)
1996--Class B Shares......................... 11.59 0.09 1.60 1.69 (0.09) (0.28)
1995--Pilot Shares(g)........................ 10.00 0.17 1.59 1.76 (0.17)
1995--Class A Shares(a)...................... 10.44 0.09 1.14 1.23 (0.09)
1995--Class B Shares(e)...................... 10.08 0.08 1.51 1.59 (0.08)

<CAPTION>
RATIO
INFORMATION
ASSUMING
NO FEE
WAIVER OR
EXPENSE
REIMBURSEMENT
RATIO OF NET ----------
NET ASSET RATIO OF INVESTMENT NET ASSETS
VALUE AT EXPENSES INCOME PORTFOLIO AT END OF
END OF TOTAL TO AVERAGE TO AVERAGE TURNOVER PERIOD
PERIOD RETURN(C) NET ASSETS(D) NET ASSETS(D) RATE (IN 000'S)
--------- --------- ------------- ------------- --------- ----------
FOR THE YEAR ENDED AUGUST 31,
- ---------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1996--Pilot Shares........................... $ 12.90 15.79% 0.74% 1.76% 37% $182,379
1996--Class A Shares......................... 12.90 15.57 0.99 1.52 37 4,667
1996--Class B Shares......................... 12.91 14.75 1.74 0.76 37 3,818
1995--Pilot Shares(g)........................ 11.59 17.72 0.75 1.98 28 109,423
1995--Class A Shares(a)...................... 11.58 11.78 1.00 1.65 28 697
1995--Class B Shares(e)...................... 11.59 15.85 1.75 0.94 28 661

RATIO OF NET
RATIO OF INVESTMENT
EXPENSES TO INCOME
AVERAGE TO AVERAGE
NET ASSETS(D) NET ASSETS(D)
------------- -------------
FOR THE YEAR ENDED AUGUST 31,
- ---------------------------------------------
<S> <C> <C>
1996--Pilot Shares........................... 1.01% 1.49%
1996--Class A Shares......................... 1.26 1.25
1996--Class B Shares......................... 2.01 0.49
1995--Pilot Shares(g)........................ 1.15 1.58
1995--Class A Shares(a)...................... 1.40 1.25
1995--Class B Shares(e)...................... 2.15 0.54
</TABLE>

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

<TABLE>
Pilot Equity Income Fund
<S> <C> <C> <C> <C> <C> <C>
1996--Pilot Shares........................... $ 11.29 $ 0.46 $ 1.38 $ 1.84 $(0.45) $(0.28)
1996--Class A Shares......................... 11.36 0.41 1.40 1.81 (0.41) (0.28)
1996--Class B Shares......................... 11.34 0.33 1.39 1.72 (0.32) (0.28)
1995--Pilot Shares(g)........................ 10.00 0.35 1.29 1.64 (0.35)
1995--Class A Shares(a)...................... 10.24 0.18 1.12 1.30 (0.18)
1995--Class B Shares(b)...................... 9.85 0.18 1.49 1.67 (0.18)

<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
1996--Pilot Shares........................... $ 12.38 16.49% 0.75% 3.78% 34% $130,278
1996--Class A Shares......................... 12.46 16.10 1.00 3.53 34 1,640
1996--Class B Shares......................... 12.44 15.31 1.75 2.79 34 3,200
1995--Pilot Shares(g)........................ 11.29 16.69 0.75 4.12 37 98,607
1995--Class A Shares(a)...................... 11.36 12.78 1.00 3.70 37 311
1995--Class B Shares(b)...................... 11.34 17.36 1.25 2.88 37 713

<CAPTION>
<S> <C> <C>
1996--Pilot Shares........................... 1.04% 3.44%
1996--Class A Shares......................... 1.29 3.24
1996--Class B Shares......................... 2.04 2.50
1995--Pilot Shares(g)........................ 1.14 3.73
1995--Class A Shares(a)...................... 1.39 3.31
1995--Class B Shares(b)...................... 2.14 2.49
</TABLE>

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

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

<TABLE>
<S> <C>
(a) Class A share activity commenced February 7, 1995.
(b) Class B share activity commenced January 12, 1995.
(c) Assumes investment at net asset value at the beginning of the period, reinvestment of all dividends and distributions, a
complete redemption of the investment at the net asset value at the end of the period and no sales charge. Total return would
be reduced if sales charge were taken for Class A or Class B shares. Total return is not annualized.
(d) Annualized.
(e) Class B share activity commenced November 11, 1994.
(f) Class A share activity commenced December 12, 1996.
(g) Pilot share activity commenced November 7, 1994.
(h) Share activity commenced October 21, 1996.
</TABLE>

5
<PAGE> 73

THE PILOT FUNDS
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
Pilot Small Capitalization Equity Fund
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS
--------------------------------------
NET REALIZED TOTAL
AND UNREALIZED INCOME DIVIDENDS NET ASSET
NET ASSET VALUE NET GAIN ON FROM FROM NET VALUE AT
AT BEGINNING INVESTMENT INVESTMENT INVESTMENT INVESTMENT END OF TOTAL
OF PERIOD INCOME TRANSACTIONS OPERATIONS INCOME PERIOD RETURN(C)
--------------- ---------- -------------- ---------- ---------- --------- ---------
FOR THE PERIOD ENDED AUGUST 31,
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1996--Pilot Shares(f).................. $ 10.00 $ 0.09 $ 0.64 $ 0.73 $(0.08) $-- $ 10.65
1996--Class A Shares(f)................ $ 10.00 0.05 0.64 0.69 (0.05) -- $ 10.64
1996--Class B Shares(f)................ $ 10.00 0.01 0.65 0.66 (0.01) -- $ 10.65

RATIO INFORMATION ASSUMING
NO FEE WAIVER OR EXPENSE
REIMBURSEMENT
----------------------------
RATIO OF NET RATIO OF NET
RATIO OF INVESTMENT NET ASSETS RATIO OF INVESTMENT
EXPENSES TO INCOME PORTFOLIO AT END OF EXPENSES TO INCOME
AVERAGE TO AVERAGE TURNOVER PERIOD AVERAGE TO AVERAGE
NET ASSETS(D) NET ASSETS(D) RATE (IN 000'S) NET ASSETS(C) NET ASSETS(C)
------------- ------------- --------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
FOR THE PERIOD ENDED AUGUST 31,
- ---------------------------------------
1996--Pilot Shares(f).................. 7.37% 1.00%(c) 1.06%(c) 30.67% $70,483 1.54%(c)
1996--Class A Shares(f)................ 6.88% 1.25%(c) 0.66%(c) 30.67% $ 2,611 1.65%(c)
1996--Class B Shares(f)................ 6.65% 2.01%(c) (0.07%)(c) 30.67% $ 1,878 2.44%(c)

FOR THE PERIOD ENDED AUGUST 31,
- ---------------------------------------
<S> <C>
1996--Pilot Shares(f).................. 0.52%(c)
1996--Class A Shares(f)................ 0.26%(c)
1996--Class B Shares(f)................ (0.50%)(c)
</TABLE>

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

Pilot Growth Fund
For the Period Ended October 22,
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
1996--Pilot Shares.....................
1996--Class A Shares...................
1996--Class B Shares...................

<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1996--Pilot Shares.....................
1996--Class A Shares...................
1996--Class B Shares...................

<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1996--Pilot Shares.....................
1996--Class A Shares...................
1996--Class B Shares...................
</TABLE>

6
<PAGE> 74

INVESTMENT OBJECTIVES, POLICIES AND RISK FACTORS

Pilot Growth and Income Fund and
Pilot Equity Income Fund

The Pilot Growth and Income Fund and the Pilot Equity Income Fund (sometimes
referred to together as the "Equity Funds") offer investors two alternatives for
participating in the equity securities market.

The investment objective of the Pilot Growth and Income Fund is to seek capital
appreciation and current income by investing primarily in common stocks of U.S.
companies. The Fund invests primarily in common stocks which demonstrate
favorable prospects for either capital growth or current dividend income. In
making investment decisions, the Adviser assesses factors such as current and
future earnings potential, existing resources and assets, trading liquidity,
marketing valuation and profitability. The Fund will invest, during normal
market and economic conditions, at least 65% of its total assets in common
stocks, preferred stocks and debt instruments convertible into common stock of
U.S. companies.

The investment objective of the Pilot Equity Income Fund is to seek current
income and, secondarily, capital appreciation through investments primarily in
common stocks of above average financial quality and securities convertible into
common stock. Under normal market and economic conditions, the Fund will invest
at least 65% of its total assets in common stocks, preferred stocks and
securities convertible into common stock of companies believed by the Adviser to
demonstrate sound management, future growth potential and the ability to pay
dividends. The Fund will attempt to achieve a yield that is greater than the
published composite yield of the securities comprising the Standard and Poor's
500 Composite Stock Index1 (the "S & P 500 Index"), a broad-based unmanaged
index of 500 companies listed on the New York Stock Exchange and which is
typically used as a performance benchmark for equity investments.

Each Fund may also acquire debt obligations, including both convertible and
non-convertible corporate and government bonds, debentures, zero coupon bonds
and cash equivalents. "Cash equivalents" include commercial paper (which is
unsecured promissory notes issued by corporations); certificates of deposit,
bankers' acceptances, notes and time deposits issued or supported by U.S. or
foreign banks and savings institutions; repurchase
agreements; variable or floating rate notes; U.S. Government obligations; and
money market mutual fund shares. Each Fund will purchase only those debt
obligations which are rated investment grade by at least one Nationally
Recognized Statistical Rating Organization ("NRSRO") or, if unrated, are
determined by the Adviser to be of comparable quality. (A description of
applicable ratings is attached to the Statement of Additional Information as
Appendix A.) Obligations in the lowest of the top four rating categories ("BBB"
or "Baa") have certain speculative characteristics and are subject to more
credit and market risk than securities with higher ratings. If a debt obligation
held by a Fund ceases to be rated investment grade by at least one NRSRO or if
the Adviser determines that an unrated debt obligation held by a Fund is no
longer of comparable quality to an investment grade debt obligation, the
obligation will be sold in an orderly manner as quickly as possible.

The convertible securities in which a Fund may invest include bonds, notes and
preferred stock that may be converted into common stock either at a stated price
or within a specified period of time. In investing in convertibles, a Fund is
looking for the opportunity, through the conversion feature, to participate in
the capital appreciation of the common stock into which the securities are
convertible, while earning higher current income than is available from the
common stock.

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

1 "Standard and Poor's(R)", "S & P(R)" and "Standard and Poor's 500 Index(R)"
are registered trademarks of Standard and Poor's Corporation.

7
<PAGE> 75

Additionally, each Fund may invest up to 20% of the value of its total assets in
the securities of foreign issuers, either directly in the securities of such
issuers or indirectly through American Depository Receipts ("ADRs") and European
Depository Receipts ("EDRs"). ADRs are receipts typically issued by a United
States bank or trust company, and EDRs are receipts issued by a European
financial institution evidencing ownership of the underlying foreign securities.
ADRs, in registered form, are designed for use in the United States securities
markets, while EDRs, in bearer form, are generally designed for use in the
European securities markets. These securities may not be denominated in the same
currency as the securities they represent.

Each Fund may also invest in futures contracts and options. From time to time,
the Funds may hold cash reserves that do not earn income. For a further
description of the Funds' policies with respect to convertible securities,
foreign securities and other instruments, see "Portfolio Instruments and
Practices" and "Risk Factors" below.

Each Fund reserves the right to invest up to 100% of its assets in cash, cash
equivalents and debt obligations when the Adviser believes such a position is
advisable for temporary defensive purposes during periods of unusual market or
economic activity.

PILOT GROWTH FUND

Pilot Growth Fund offers investors a means of participating in the equity
securities market.

The investment objective of Pilot Growth Fund is to provide long-term capital
growth by investing primarily in equity securities. Under normal circumstances,
the Fund will invest at least 65% of its total assets in common stock, warrants,
and options to purchase common stock.

In making investment decisions for the Fund, the Adviser classifies
approximately 1000 companies by market value and growth characteristics on a
quarterly basis. Due to the number of possible growth stock investments, the
Adviser uses a selection process employing advanced quantitative techniques to
identify buy and sell candidates in an effort to select and hold those companies
which appear able to consistently achieve superior returns by reinvesting
profits into attractive new projects and products. Dividend income is,
therefore, incidental and not an objective of the Fund. The Adviser's
sophisticated investment approach uses an internally designed valuation process
which measures the persistence of future cash flows, the acceleration of
profitability, and evaluates a company's revenue generation relative to its
stock price. The goal of this investment process is to identify businesses where
superior growth appears sustainable and avoid or sell companies where growth is
beginning to deteriorate. The Fund will concentrate on long-term growth
industries where market leaders produce superior products and/or services and
demonstrate a competitive advantage.

Pilot Growth Fund may also require debt obligations, including both convertible
and non-convertible corporate and government bonds, debentures, zero coupon
bonds and cash equivalents. "Cash equivalents" include commercial paper (which
is unsecured promissory notes issued by corporations); certificates of deposit,
bankers' acceptances, notes and time deposits issued or supported by U.S. or
foreign banks and savings institutions; repurchase agreements; variable or
floating rate notes; U.S. Government obligations; and money market mutual fund
shares. Under normal conditions, the Fund will not invest more than 10% of its
total assets in debt obligations, unless the Fund assumes a temporary defensive
position as discussed below. The Fund will purchase only those debt obligations
which are rated AA or better by at least one Nationally Recognized Statistical
Rating Organization ("NRSRO") or, if unrated, are determined by the Adviser to
be of comparable quality. (A description of applicable ratings is attached to
the Statement of Additional Information as Appendix A.)

The Fund may invest in the securities of foreign issuers, either directly in the
securities of such issuers or indirectly through American Depository Receipts
("ADRs") and European Depository Receipts ("EDRs"). ADRs are receipts typically
issued by a United States bank or trust company, and EDRs are receipts issued by
a European financial institution evidencing ownership of the underlying foreign
securities. ADRs, in registered form, are designed for use in the United States
securities markets, while EDRs, in bearer form, are generally designed for use
in the European securities markets. These securities may not be denominated in
the same currency as the securities they represent. The Fund will not invest
more than 5% of its total assets in foreign securities.

The Fund may also invest in futures contracts and options. From time to time,
the Funds may hold cash reserves that do not earn income. For a further
description of the Fund's policies with respect to convertible securities,
foreign securities and other instruments, see "Portfolio Instruments and
Practices" and "Risk Factors" below.

The Fund reserves the right to invest up to 100% of its assets in cash, cash
equivalents and debt obligations when

8
<PAGE> 76

the Adviser believes such a position is advisable for temporary defensive
purposes during periods of unusual market or economic activity.

PILOT SMALL CAPITALIZATION
EQUITY FUND

The investment objective of the Fund is to provide long-term capital growth by
investing primarily in equity securities. Under normal circumstances, the fund
will invest at least 65% of its total assets in equity securities, including
securities convertible into equity securities. In addition, under normal
circumstances, the Fund will invest at least 65% of its total assets in
companies with a market capitalization of $1 billion or less.

In making investment decisions for the Fund, the Adviser on a quarterly basis,
classifies approximately 6,000 companies by market value and eliminates the
largest 20%. The remaining companies constitute the Fund's small-capitalization
universe and generally represents only one-tenth of the aggregate U.S. equity
market capitalization. Due to the large number of small stocks to choose from,
the Adviser's selection process uses advanced quantitative techniques to
identify buy and sell candidates in a timely and objective manner. The strategy
is to own those investments offering both attractive fundamental valuation and
relative earnings improvement. Typically, two types of companies are purchased:
(i) mature companies which may have fallen from a larger market value due to
business difficulties, but which now exhibit improving prospects; and (ii)
smaller or younger companies which are experiencing strong trends in earnings
growth, but remain reasonably valued and therefore offer premium growth at a
discount in comparison to other companies.

The Adviser's internally designed investment approach uses a sophisticated
valuation process which measures changes in current earnings estimates and
longer-term growth trends, compares recent earnings results with market
expectations, and evaluates a company's earnings power relative to its stock
price. Companies become purchase candidates based upon a composite ranking of
these factors, and the top 20% are further evaluated on additional criteria.
Candidates for investment must also possess a sound financial structure and
demonstrate consistent factor rankings before being added to the Fund's
portfolio.

The Fund's weighted median capitalization generally is not expected to exceed
125% of the weighted median capitalization of the Russell 2000 as measured on a
quarterly basis, although this may vary from time to time. Furthermore, a stock
may be sold if the composite rank falls into the bottom 20% of the universe,
financial quality weakens significantly, or if individual factors demonstrate
patterns of deterioration.

The Fund may invest up to 35% of its total assets in securities of issuers with
a market capitalization greater than $1 billion and in debt securities. However,
the Fund will not invest more than 10% of its total assets in debt securities,
unless the Fund assumes a temporary defensive position as discussed below. Debt
securities, if any, purchased by the Fund will be rated AA or above by Standard
and Poor's Corporation ("S & P") or Aa or above by Moody's Investor Services,
Inc. ("Moody's") or, if unrated, determined by the Adviser to be of comparable
quality. For temporary defensive purposes, the Fund may invest up to 100% of its
assets in debt securities. Debt securities in which the fund may invest include
short-term and intermediate-term obligations of corporations, the U.S. and
foreign governments and international organizations [such as the International
Bank for Reconstruction and Development (the "World Bank")], including money
market instruments.

Investments and investment techniques in which the Fund may invest include
common stocks (including securities convertible into common stocks) of foreign
issuers and rights to purchase common stock, options and futures contracts on
securities, securities indexes and foreign currencies, securities lending and
repurchase agreements. The Fund currently intends to limit any investment in
foreign securities to 5% of total assets. These and other securities in which
the Fund may invest are further described below.

PORTFOLIO INSTRUMENTS AND
PRACTICES

9
<PAGE> 77

the Government National Mortgage Association, are supported by the U.S.
Treasury; others, like the Export-Import Bank, are supported by the issuer's
right to borrow from the Treasury; others, including the Federal National
Mortgage Association, are backed by the discretionary ability of the U.S.
Government to purchase the entity's obligations; and still others, like the
Student Loan Marketing Association, are backed solely by the issuer's credit.
U.S. Government obligations also include U.S. Government-backed trusts that hold
obligations of foreign governments and are guaranteed or backed by the full
faith and credit of the United States. There is no assurance that the U.S.
Government would support a U.S. Government-sponsored entity were it not required
to do so by law.

- --Corporate Obligations. EACH FUND may purchase corporate bonds and cash
equivalents that meet a Fund's quality and maturity limitations. These
investments may include obligations issued by Canadian corporations and Canadian
counterparts of U.S. corporations, Eurobonds, which are U.S. dollar-denominated
obligations of foreign issuers, and Yankee bonds, which are U.S. dollar-
denominated bonds issued by foreign issuers in the U.S., and equipment trust
certificates. Each FUND may also purchase obligations issued by foreign
corporations. Corporate bonds are subject to call risk during periods of falling
interest rates. Securities with high stated interest rates may be prepaid (or
called) prior to maturity, requiring a Fund to invest the proceeds at generally
lower interest rates.

10
<PAGE> 78

Funds will enter into repurchase agreements only with financial institutions
(such as banks and broker-dealers) deemed to be creditworthy by the Adviser,
pursuant to guidelines established by the Board of Trustees. The term of these
agreements is usually from overnight to one week and in any event, the Funds
intend that such agreements will not have maturities longer than 60 days.

- --Stripped Securities. EACH FUND may invest in instruments known as "stripped"
securities. These instruments include U.S. Treasury bonds and notes and federal
agency obligations on which the unmatured interest coupons have been separated
from the underlying obligation. These obligations are usually issued at a
discount to their "face value", and because of the manner in which principal and
interest are returned may exhibit greater price volatility than more
conventional debt securities. Each Fund may invest in "interest only" stripped
securities that have been issued by a federal instrumentality known as the
Resolution Funding Corporation and other stripped securities issued or
guaranteed by the U.S. Government, where the principal and interest components
are traded independently under the Separate Trading of Registered Interest and
Principal Securities program ("STRIPS"). Each Fund may also invest in
instruments that have been stripped by their holder, typically a custodian bank
or investment brokerage firm, and then resold in a custodian receipt program
under names such as TIGRS (Treasury Income Growth Receipts) and CATS
(Certificates of Accrual on Treasuries).

In addition, EACH FUND may purchase stripped mortgage-backed securities ("SMBS")
issued by the U.S. Government

11
<PAGE> 79

(or a U.S. Government agency or instrumentality) or by private issuers such as
banks and other institutions. SMBS, in particular, may exhibit greater price
volatility than ordinary debt securities because of the manner in which their
principal and interest are returned to investors.

When-issued and forward commitment transactions, which involve a commitment by a
Fund to purchase or sell particular securities with payment and delivery taking
place at a future date (perhaps one or two months later), permit a Fund to
lock-in a price or yield on a security it intends to purchase or sell,
regardless of future changes in interest rates. Delayed settlement refers to a
transaction in the secondary market that will settle some time in the future.
These transactions involve the risk that the price or yield obtained may be less
favorable than the price or yield available when the delivery takes place. When-
issued purchases, forward commitments and delayed settlement transactions are
not expected to exceed 25% of the value of a Fund's total assets under normal
circumstances. In the event a Fund's when-issued purchases, forward commitments
and delayed settlement transactions ever exceeded 25% of the value of its total
assets, a Fund's liquidity and the ability of the Adviser to manage the Fund
might be adversely affected. These transactions will not be entered into for
speculative purposes but only in furtherance of a Fund's investment objective.

OPTIONS TRADING IS A HIGHLY SPECIALIZED ACTIVITY AND MAY CARRY GREATER THAN
ORDINARY INVESTMENT RISK. Purchasing

12
<PAGE> 80

options may result in the complete loss of the amounts paid as premiums to the
writer of the option. In writing a covered call option, a Fund gives up the
opportunity to profit from an increase in the market price of the underlying
security above the exercise price (except to the extent the premium represents
such a profit). Moreover, it will not be able to sell the underlying security
until the covered call option expires or is exercised or a Fund closes out the
option. In writing a secured put option, a Fund assumes the risk that the market
value of the security will decline below the exercise price of the option. The
Funds may use options to manage their exposure to changing interest rates and/or
security prices. The use of covered call and secured put options will not be a
primary investment technique of any Fund.

More information regarding futures contracts and related options can be found in
the Statement of Additional Information, which is available upon request.

- --Forward Foreign Currency Exchange Contracts. EACH FUND may buy and sell
securities and receive dividend and interest proceeds in currencies other than
the U.S. dollar, these Funds may from time to time enter into forward foreign
currency exchange contracts ("forward contracts"). A forward contract involves
an obligation to purchase or sell a specific currency for an agreed price at a
future date, which may be any fixed number of days from the date of the
contract.

- --Portfolio Turnover. EACH FUND may engage in short-term trading to achieve its
investment objective. The annual portfolio turnover rates for Pilot Equity
Income

13
<PAGE> 81

Fund, Pilot Growth and Income Fund, and Pilot Growth Fund are not expected to
exceed 100% during the next twelve months. Portfolio turnover will not be a
limiting factor in making investment decisions. Portfolio turnover may occur for
a variety of reasons, including the appearance of a more favorable investment
opportunity. Turnover may require payment of brokerage commissions, impose other
transaction costs and could increase the amount of income received by a Fund
that constitutes taxable capital gains. To the extent capital gains are
realized, distributions from the gains may be ordinary income for federal tax
purposes (see "The Business of the Fund--Tax Implications").

RISK FACTORS

- --General Risk Considerations. As with an investment in any mutual fund, an
investment in the Funds entails market and economic risks associated with
investments generally. However, there are certain specific risks of which you
should be aware. The value of equity securities held by the Funds can be
expected to vary in response to a variety of factors. Stock values fluctuate in
response to the activities of individual companies and in response to general
market and economic conditions. In general, equity securities are subject to
greater fluctuations in value than fixed income securities. Therefore, while a
fund investing primarily in equity securities is likely to have greater
potential for total return over the long term than a fund investing in
fixed-income securities whose value will vary inversely with interest rate
fluctuations, it also presents greater risk of loss.

- --Small Capitalization Companies. Each Fund may invest in smaller, lesser-known
companies which the Adviser believes offer greater growth potential than larger,
more mature, better-known firms. PILOT SMALL CAPITALIZATION EQUITY FUND will
focus on these securities. Investing in the securities of such companies,
however, may also involve greater risk and the possibility of greater portfolio
price volatility. Among the reasons for the greater price volatility of these
small company and unseasoned stocks are the less certain growth prospects of
smaller firms, the lower degree of liquidity in the markets for such stocks and
the greater sensitivity of small companies to changing economic conditions. For
example, these companies are associated with higher investment risk than that
normally associated with larger firms due to the greater business risks of small
size and limited product lines, markets, distribution channels and financial and
managerial resources.

14
<PAGE> 82

stringent reserve requirements, and to different accounting, auditing and
recordkeeping requirements.

- --Convertible Securities. In general, the market value of a convertible security
is the higher of its "investment value" (i.e., its value as a fixed-income
security) or its "conversion value" (i.e., the value of the underlying shares of
common stock if the security is converted). As a fixed-income security, the
market value of a convertible security generally increases when interest rates
decline and generally decreases when interest rates rise. However, the price of
a convertible security also is influenced by the market value of the security's
underlying common stock. Thus, the price of a convertible security generally
increases as the market value of the underlying stock increases, and generally
decreases as the market value of the underlying stock declines.

FUNDAMENTAL LIMITATIONS

Certain of the investment policies of each Fund may not be changed without a
vote of the holders of a majority of the Fund's outstanding shares. Policies
requiring such a vote to effect a change are known as "fundamental". Some of
these fundamental limitations are summarized below, and all of the Funds'
fundamental limitations are set out in full in the Statement of Additional
Information, which is available upon request.

2. A Fund may not invest (with certain limited exceptions, including U.S.
Government obligations as described in the Statement of Additional Information)
more than 5% of its total assets in the securities of a single issuer or subject
to puts from any one issuer, except that up to 25% of the total assets of each
Fund can be invested without regard to the 5% limitation. A Fund may not
purchase more than 10% of the outstanding voting securities of any issuer
subject, however, to the foregoing 25% exception.

4. A Fund may not make loans, except that it may invest in debt securities,
enter into repurchase agreements and lend its portfolio securities.

INVESTING IN THE PILOT FUNDS

Getting Your Investment Started

Should you wish to establish an account directly with The Pilot Funds, please
refer to the purchase options described

15
<PAGE> 83

under "Opening and Adding to Your Pilot Funds Account".

Your Alternative Purchase Options

Characteristics of Class A Shares and Class B Shares

Class A Shares: Class A Shares are sold at their net asset value plus a
front-end sales charge of up to 4.50%. (See "How to Buy Shares--Explanation of
Sales Price".) This front-end sales charge may be reduced or waived in some
cases. (See "Transaction Rules" and "Shareholder Services--Front-End Sales
Charge Reductions.") Class A Shares are subject to ongoing distribution fees at
an annual rate of up to 0.25% of a Fund's average daily net assets attributable
to its Class A Shares.

Considerations In Choosing Between Class A And
Class B Shares

16
<PAGE> 84

same Fund. In addition, Class B Shares are subject to a contingent deferred
sales charge.

On the other hand, you might decide, because you would be subject to higher
front-end charges or for other reasons, that it would be more advantageous for
you to have all of your purchase amount invested immediately in Fund shares,
even though you would also be subject to higher ongoing distribution fees. These
higher ongoing fees might be offset by any return you receive from the
additional shares you originally purchased as a result of not having to pay a
front-end sales charge. You should note however, that a Fund's future returns
cannot be predicted, and that there is no assurance that such returns, if any,
would compensate for those higher ongoing expenses. You should also remember
that you would be subject to any applicable contingent deferred sales charge
during the first six years of your investment in Class B Shares.

If You Have Questions

17
<PAGE> 85

The Pilot Funds will send you the following statements and reports to provide
you with current information on the status of your account:

Account Statements On a quarterly basis
detailing year to date
activity for each of your
accounts.

Financial Reports Every six months. To reduce
The Pilot Funds' expenses,
only one copy of most Fund
reports will be mailed to
your household, even if you
have more than one account
in a Fund.
</TABLE>

HOW TO BUY SHARES

- ------------
*Applies to employees of the Adviser and its affiliates.

OPENING AND ADDING TO YOUR PILOT FUNDS ACCOUNT

18
<PAGE> 86

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

<TABLE>
<CAPTION>
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT
DIRECTLY WITH THE PILOT FUNDS HELD DIRECTLY WITH THE PILOT FUNDS
--------------------------------------- ---------------------------------------
<S> <C> <C>
By Mail to: -- Complete an Account Application and -- Make your check payable to the
The Pilot Funds, mail it, along with a check payable particular Fund in which you are
c/o BISYS Fund Services to the Fund in which you are investing and mail it to the address
Dept. L-1709 investing, to the address on the on the left.
Columbus, OH 43260-1709 left. -- Please include your account number
on your check.
-- Or use the convenient form attached
to your regular Fund statement.
- -------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<S> <C> <C>
In Person to: -- Deliver the Account Application and -- Deliver your check payable to the
BISYS Fund Services your check payable to the particular particular Fund in which you are
3435 Stelzer Road Fund in which you are investing to investing to the address on the left.
Columbus, OH 43219-3035 the address on the left. -- Please include your account number
on your check.
- -------------------------------------------------------------------------------------------------------------
By Wire to: -- Ask your bank to send immediately -- Ask your bank to wire immediately
Call 1-800/71-PILOT available funds by wire. available funds as described at left,
for Wire Instructions -- The wire should say that you are except that the wire should note that
opening a new Fund account (if an it is to make a subsequent purchase
Account Application Form is not rather than to open a new account.
received for a new account within 30 -- Please include your Fund account
days after the wire is received, number.
dividends and redemption proceeds from
the account will be subject to back-up
withholding). The wire should say that
the purchase is to be in your name.
-- Include your name, address and
taxpayer identification number.
Indicate the name of the Fund in
which you are investing. Investors
should also indicate share class
selection.
Consult your bank for information on remitting funds by
wire and associated bank charges.
- -------------------------------------------------------------------------------------------------------------
Automatic Investment -- You must first complete an Account -- Call 800/71-PILOT to find out how to
(allows regular investment Application and select the Automatic set up this service.
without ongoing paperwork) Investment Plan option. -- Additional purchases will then
-- Call 800/71-PILOT for more automatically be made as directed by
information. you.
- -------------------------------------------------------------------------------------------------------------
</TABLE>

19
<PAGE> 87

Explanation of Sales Price

The per share net asset values of Class A Shares and Class B Shares will diverge
due to the different distribution expenses borne by the classes. More
information about valuation can be found in the Funds' Statement of Additional
Information, which is available upon request.

CLASS A SHARES: THE FRONT-END SALES CHARGE OPTION. The front-end sales charge
for Class A Shares of the Funds begins at 4.50% and may decrease as the amount
you invest in Class A Shares increases, as shown in the following two charts:

<TABLE>
<CAPTION>
PILOT GROWTH AND INCOME
FUND
PILOT EQUITY INCOME FUND
PILOT SMALL CAPITALIZATION
EQUITY FUND
PILOT GROWTH FUND
---------------------------
<S> <C> <C> <C>
PER SHARE
AS A DEALERS
PERCENTAGE OF REALLOWANCE
------------- AS A
NET PERCENTAGE
OFFERING ASSET OF OFFERING
AMOUNT OF TRANSACTION PRICE VALUE PRICE
- --------------------------- ---- ---- -----------
Less than $100,000......... 4.50 4.71 4.00
$100,000 to $249,999....... 3.75 3.90 3.25
$250,000 to $499,999....... 3.00 3.09 2.50
$500,000 to $999,999....... 2.00 2.04 1.75
$1,000,000 to $2,499,999... 1.00 1.01 0.90
$2,500,000 and over........ 0.00 0.00 0.00
</TABLE>

<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE
(AS A PERCENTAGE OF
NUMBER OF YEARS DOLLAR AMOUNT SUBJECT
ELAPSED SINCE PURCHASE TO THE CHARGE)
- ------------------------------- -------------------------------
<S> <C>
One............................ 4.50%
Two............................ 4.00%
Three.......................... 3.50%
Four........................... 3.00%
Five........................... 2.50%
Six............................ 1.75%
After Six Years................ 0.00%
</TABLE>

20
<PAGE> 88

applicable rate in the third year after purchase. The proceeds from the
contingent deferred sales charge that you may pay upon redemption go to the
Distributor, which may use such amounts to defray the expenses associated with
the distribution-related services involved in selling Class B Shares. The
contingent deferred sales charge, along with the ongoing distribution fees paid
with respect to Class B Shares, enables those shares to be purchased without the
imposition of a front-end sales charge.

HOW TO SELL SHARES

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
HOW TO REDEEM SHARES ADDITIONAL LIMITATIONS
------------------------------------ ------------------------------------
<S> <C> <C>
By Mail to: -- Send a signed request (each -- Requests greater than $50,000 per
The Pilot Funds, owner, including each joint owner, day must be signature guaranteed.
c/o BISYS Fund Services must sign) to the Transfer Agent
Dept. L-1709 at the address on the left. -- You should refer to "Transaction
Columbus, OH 43260-1709 Rules" below for additional
-- Be sure to include both the name limitations.
of the particular Fund whose shares
you are selling and your account
number.
- -----------------------------------------------------------------------------------------------------------
By Wire: -- After you have signed up for wire -- The Transfer Agent may act upon
redemption privileges on the such a request from any person
Account Application, you may representing himself or herself to
instruct the Transfer Agent to be you and reasonably believed by
wire your redemption proceeds to the Transfer Agent to be genuine.
your bank account by sending a
request in writing or by phone -- The transaction amount must be a
(800/844-1235). $1,000 minimum.
-- This privilege may be subject to
limits regarding frequency and
overall amount.
</TABLE>

<TABLE>
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
In Person to: -- Deliver your written request -- Requests must be signed by each
BISYS Fund Services directly to the Transfer Agent at owner, including each joint owner.
3435 Stelzer Road the address on the left.
Columbus, OH 43219-3035 -- Requests greater than $50,000 per
day must be signature guaranteed.
</TABLE>

<TABLE>
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Automatic Withdrawal -- Withdrawals begin after you have -- Your account must have a total
(permits automatic signed up for this service (either net asset value of at least $5,000.
withdrawal on the account application or in a
of pre-arranged amount) subsequent letter to the Transfer -- The transaction amount must be at
Agent). least a $50 minimum.
-- Call 800/71-PILOT for more
information.

- -----------------------------------------------------------------------------------------------------------
</TABLE>

21
<PAGE> 89

TRANSACTION RULES

THE PURCHASE PROCEDURES differ depending on whether you place your order
directly with The Pilot Funds or use Boatmen's Investment Services, Inc. or
another Service Organization.

THE PILOT FUNDS RESERVES THE RIGHT TO INVOLUNTARILY REDEEM AN ACCOUNT (other
than a tax-sheltered retirement plan account) if, after thirty days' written
notice, the account's

22
<PAGE> 90

net asset value falls and remains below a $1,000 minimum due to share
redemptions and not market fluctuations.

In unusual circumstances The Pilot Funds may make payment in readily marketable
portfolio securities at their market value equal to the redemption price.

In certain situations or for certain individuals or entities, the front-end
sales charge for Class A Shares of the Funds may be waived either because of the
nature of the investor or the reduced sales efforts required to attract such
investments. In order to receive the sales charge waiver, you must explain the
status of your investment at the time of purchase. No sales charge is charged on
reinvested dividends or distributions. Likewise, there is no front-end sales
charge on (1) any purchase by Boatmen's, BISYS, any of their affiliates or their
respective officers, partners, directors or employees (including retired
employees), any Trustee or officer of The Pilot Funds and designated family
members of any of the above individuals, (2) any purchase by any registered
representative or full-time employee of broker-dealers or Service Organizations
having agreements with the Distributor pertaining to the sale and/or servicing
of Fund shares (and their spouses and minor children) to the extent permitted by
such organizations, (3) any purchase by any state, county or city, or any
instrumentality, department, authority or agency thereof, which is prohibited by
applicable investment laws from paying a sales load or commission, (4) any
purchase by a registered investment adviser who is purchasing shares for its own
account or for accounts for which it is authorized to make investment decisions
(i.e., a discretionary account), (5) any shares issued in connection with
reorganizations with or acquisitions of the assets of other organizations, (6)
under certain circumstances, any purchase of shares pursuant to the
Reinstatement Privilege described below under "Shareholder Services", (7) under
certain circumstances, any purchase of shares as a result of the Cross-
Reinvestment Privilege described below under "Shareholder Services", (8) under
certain circumstances, any purchase of Fund shares with the proceeds from a
recent redemption of shares of any other non-money market investment portfolio
of another investment company, provided that any purchase must be made within 60
days of such redemption and that a copy of the account statement showing such
redemption must accompany the purchase request, (9) any purchase of shares
offered through a registered broker-dealer as part of a wrap product, (10)
exchanges where the shares being exchanged are non-money market fund shares that
came from the distribution of assets held in a qualified trust agency or
custodian account maintained with the trust department of Boatmen's or its
affiliates, (11) any purchase of Fund shares by a shareholder who purchased
Pilot Class A Shares of the Pilot International Equity Fund for an account prior
to June 1, 1994 and who qualified for a reduced sales charge on its purchases
made prior to that date, and who has continuously held shares of the Fund, and
(12) any purchase of Fund shares by a shareholder who was a record or beneficial
holder of shares of Kleinwort Benson International Equity Fund, a series of
Kleinwort Benson Investment Strategies, on July 12, 1993, and who became
directly or indirectly a beneficial owner of the Pilot International Equity Fund
(the "Fund") as a result of a reorganization between the two funds (the
"Reorganization"), and who has continuously held shares of the Pilot
International Equity Fund. For more information or to determine eligibility for
any of these waivers, contact The Pilot Funds at 800/71-PILOT.

YOUR PILOT FUND ACCOUNT

SHAREHOLDER SERVICES

Tax-Sheltered Retirement Plans

The Funds are available for investment by tax-sheltered retirement plans,
including Individual Retirement Accounts. See your Account Representative for
details on eligibility and other information. Consult your tax adviser with
specific reference to your own situation. No

23
<PAGE> 91

minimum initial investment or additional investment requirement applies to
purchases in connection with tax-sheltered retirement plans.

EXCHANGE PRIVILEGES AMONG THE PILOT FUNDS

If you have purchased shares directly from The Pilot Funds, you may sell your
Fund shares and buy other shares of The Pilot Funds by calling the Transfer
Agent at 800/71-PILOT or sending a written exchange request to the Transfer
Agent at The Pilot Funds, c/o BISYS Fund Services, Dept. L-1709, Columbus, OH
43260-1709. If you have purchased shares through an account at Boatmen's
Investment Services, Inc. or another Service Organization, you may sell your
Fund shares and buy shares of the other Pilot Funds in accordance with the
procedures applicable to your account. Specifically, Class A Shares of a Fund
may be exchanged for Class A Shares of any other Fund and Class B Shares of a
Fund may be exchanged for Class B Shares of any other Fund. Class A Shares
purchased with a front-end sales charge may be exchanged without the need to pay
any additional front-end charge on the shares acquired through the exchange.
Class B Shares may be exchanged without the payment of any contingent deferred
sales charge as the time the exchange is made. In determining the holding period
for calculating the contingent deferred sales charge payable on redemption of
Class B Shares, the holding period of the shares originally held will be added
to the holding period of the shares acquired through exchange.

If you have a qualified trust, agency or custodian account with Boatmen's or its
affiliates, and your shares are to be held in their account, you may also
exchange your current Class A Shares in a Fund for Pilot Shares in the same
Fund. Pilot Shares are subject to the same shareholder transaction expenses as
Class A Shares except that Pilot Shares are not subject to a front end sales
charge. Pilot Shares are subject to the same annual fund operating expenses as
those for Class A Shares except that Pilot Shares make no annual Rule 12b-1
Distribution payments. In addition, the procedures for effecting transactions in
Fund shares and other features related to the servicing and maintenance of a
Fund account may differ for Pilot Shares of the Fund from those applicable to
Class A Shares depending on the terms of the shareholder's qualified trust,
agency, or custodian relationship with Boatmen's or its affiliate. For more
information on holding Pilot Shares of the Funds, please see the prospectus for
Pilot Shares which can be obtained by calling 1/800 71-PILOT and consult the
institution (Boatmen's or an affiliate) which will maintain the account holding
the Pilot Shares received by exchanging Class A Shares.

For investors holding their shares directly, a minimum initial investment of
$1,000 must be made to establish an account into which exchange proceeds will be
invested. The minimum amount required for any subsequent exchanges into the
newly established account is $100. Exchanges may have tax consequences. Please
consult your tax adviser for further information.

24
<PAGE> 92

sales charge on the shares acquired through the exchange after July 12, 1993 so
long as such account remains open on the books of the Trust.

AUTOMATIC INVESTMENT PLAN
(requires your request)

The Automatic Investment Plan is one means by which you may use "DOLLAR COST
AVERAGING" in making investments. Dollar Cost Averaging can be useful in
investing in portfolios such as the Funds whose price per share fluctuates.
Instead of trying to time market performance, a fixed dollar amount is invested
in Fund shares at predetermined intervals. This may help you to reduce your
average cost per share because the agreed upon fixed investment amount allows
more shares to be purchased during periods of lower share prices and fewer
shares during periods of higher prices. In order to be effective, Dollar Cost
Averaging should usually be followed on a sustained, consistent basis. You
should be aware, however, that shares bought using Dollar Cost Averaging are
made without regard to their price on the day of investment or to market trends.
While regular investment plans do not guarantee a profit and will not protect
you against loss in a declining market, they can be a good way to invest for
retirement, a home, educational expenses and other long-term financial goals.

AUTOMATIC WITHDRAWAL PLAN
(requires your request)

FRONT-END SALES CHARGE REDUCTIONS

YOU MAY BE ENTITLED TO LOWER FRONT-END SALES CHARGES ON CLASS A SHARES OF THE
FUNDS THROUGH RIGHT OF ACCUMULATION, STATEMENT OF INTENTION AND QUANTITY
DISCOUNTS.

EXAMPLE

If you beneficially own Class A Shares of the Funds or shares of The Pilot
Funds' money market funds that can be traced back to the purchase of shares
carrying a front-end sales charge (or any combination of such shares) with an
aggregate value of $90,000 and then buy Class A Shares of the Pilot Growth and
Income Fund with a current value of $10,000, you would pay a front-end sales
charge of 3.75% (the charge applicable to a $100,000 purchase) on your $10,000
purchase.

To qualify for a reduced front-end sales charge, you or your Service
Organization must notify the Transfer Agent

25
<PAGE> 93

at the time of investment. The reduced sales charge is subject to confirmation
of your holdings through a check of appropriate records.

CROSS-REINVESTMENT PRIVILEGE

REINSTATEMENT PRIVILEGE

DIVIDENDS AND DISTRIBUTIONS

Where do your dividends and distributions come from?

Dividends for each Fund are derived from its net investment income. Net
investment income is made up of dividends received from the stocks they hold, as
well as interest

26
<PAGE> 94

accrued on convertible securities, money market instruments and other debt
obligations held in their portfolios.

What are your dividend and distribution options?

Your election is effective for dividends and distributions with record dates
after the date the Transfer Agent receives the election.

When are dividends and distributions declared and paid?

Dividends are declared monthly and paid monthly.

Net capital gain distributions for each of the Funds, if any, are distributed at
least annually after any reductions for capital loss carryforwards.

The dividends and distributions paid by each Fund on its Class A and Class B
Shares are calculated in the same manner, but because of the differing
distribution expenses borne by the different share classes, the dividends on
those classes are expected to differ.

DISTRIBUTION AND SERVICE
ARRANGEMENTS

The Pilot Funds has adopted Distribution Plans for its Class A and Class B
Shares.

From time to time the Distributor, at its expense, will also provide additional
compensation to dealers in connection with sales of Shares of any of the Funds
and other Funds of the Group. Compensation may include tickets to sporting and
other entertainment events, gifts of merchandise, and financial assistance to
dealers in

27
<PAGE> 95

connection with conferences, sales or training programs for their employees,
seminars for the public, advertising campaigns regarding one or more Funds of
the Group, and/or other dealer-sponsored special events. In some instances, this
compensation may be made available only to certain dealers whose representatives
have sold or are expected to sell a significant amount of such shares.
Compensation may include payment for travel expenses, including lodging,
incurred in connection with trips taken by invited registered representatives
and members of their families to exotic locations within or outside of the
United States for meetings or seminars of a business nature. The Distributor, at
its expense, currently conducts an annual sales contest for dealers in
connection with their sales of Shares of the Funds. Dealers may not use sales of
a Fund's Shares to qualify for this compensation to the extent such may be
prohibited by the laws of any state or any self-regulatory agency, such as the
National Association of Securities Dealers, Inc.

IF YOU ARE A CLIENT OF BOATMEN'S INVESTMENT SERVICES, INC. OR ANOTHER SERVICE
ORGANIZATION, YOU SHOULD NOTE that they may charge you a separate fee for
administrative services in connection with investments in Fund shares and may
impose minimum customer account and other requirements. These fees and
requirements would be in addition to those imposed by the Funds under the Plans
or otherwise. If you are investing through Boatmen's Investment Services, Inc.
or another Service Organization, please refer to their program materials for any
additional special provisions or conditions that may be different from those
described in this Prospectus (for example, some or all of the services and
privileges described may not be available to you). Boatmen's Investment
Services, Inc. and the other Service Organizations have the responsibility of
transmitting purchase orders and required funds, and of crediting their
customers' accounts following redemptions, in a timely manner in accordance with
their customer agreements and this Prospectus.

THE PILOT FAMILY OF FUNDS

The Pilot Funds was organized on July 15, 1982 as a Massachusetts business trust
under the name Centerland Fund. On June 1, 1994, its name was changed to The
Pilot Funds. The Pilot Funds is a mutual fund of the type known as an "open-end
management investment company." A mutual fund permits an investor to pool his or
her assets with those of others in order to achieve economies of scale, take
advantage of professional money managers and enjoy other advantages
traditionally reserved for large investors. The Agreement and Declaration of
Trust permits the Board of Trustees of The Pilot Funds to create separate series
or portfolios of shares. To date, fourteen portfolios have been established. The
Agreement and Declaration of Trust also permits the Board of Trustees to
classify or reclassify any series or portfolio of shares into one or more
classes. The Trustees have authorized the issuance of an unlimited number of
shares in each of three share classes (Class A Shares, Class B Shares and Pilot
Shares) in the Funds. Each Fund is classified as a diversified company.
Information regarding The Pilot Funds' other portfolios may be obtained by
contacting The Pilot Funds or the Distributor.

Persons selling or servicing different classes of shares of the Funds may
receive different compensation with respect to one particular class of shares as
opposed to another in the same Fund.

28
<PAGE> 96

THE BUSINESS OF THE FUND

FUND MANAGEMENT

THE BUSINESS AFFAIRS OF THE PILOT FUNDS ARE MANAGED UNDER THE GENERAL
SUPERVISION OF THE BOARD OF TRUSTEES.

SERVICE PROVIDERS

Distributor: Each Fund's shares are sold on a continuous basis by the
Distributor, PILOT FUNDS DISTRIBUTORS, INC. (referred to as the "Distributor"),
a registered broker-dealer and a wholly-owned subsidiary of Concord that is
located at 3435 Stelzer Road, Columbus, Ohio 43219-3035.

Custodian: BOATMEN'S TRUST COMPANY (referred to as "Boatmen's") is responsible
for holding the investments purchased by each Fund. Boatmen's is located at 100
N. Broadway, St. Louis, Missouri 63178.

MORE ABOUT 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 June 30, 1996, Boatmen's and its affiliates managed nearly
$ billion in assets ($ billion over which they had investment discretion and
$ billion over which they did not have investment discretion).

Boatmen's utilizes a team approach in managing each of the Equity Funds.

Randall L. Yoakum, a Chartered Financial Analyst, is the team member primarily
responsible for managing the day-to-day investment operations of the Pilot
Growth and Income Fund. Mr. Yoakum is a Senior Vice President and Director of
Equity and Balanced Portfolio Management with Boatmen's. Mr. Yoakum is
responsible for overseeing all institutional equity and balanced portfolios. In
addition to serving as a member of Boatmen's Investment Policy Committee, Mr.
Yoakum manages the Value Plus collective fund and the Pilot Growth and Income
mutual fund. Prior to joining Boatmen's Trust, he served most recently as a
senior vice president and chief equity officer for Composite Research &
Management. Mr. Yoakum has over a decade of investment experience, and he is
presently a member of both the Association for

29
<PAGE> 97

Investment Management and Research (AIMR) and the St. Louis Society of Financial
Analysts. He has earned the Chartered Financial Analyst designation as well as a
bachelor's degree in political science and finance from Pacific Lutheran
University and an MBA from Arizona State University.

Mr. Michael E. Kenneally, a Chartered Financial Analyst, is a Senior Vice
President and Director of Research for Boatmen's and is part of the team
responsible for the day to day management of Pilot Growth and Pilot Small
Capitalization Equity Funds' day to day investment activities. Mr. Kenneally
currently oversees Boatmen's fundamental and quantitative research efforts as
well as passive and quantitative investment management. His additional
responsibilities include investment product development, international equity
investment, and equity derivative strategies. Mr. Kenneally holds both a
bachelor's degree in economics and an MBA in finance from the University of
Missouri. He joined Boatmen's in 1983 as an equity analyst, later became a
quantitative analyst, and subsequently worked as both a fixed-income portfolio
manager and an equity portfolio manager. Mr. Kenneally is also a member of the
Association for Investment Management and Research (AIMR) the St. Louis Society
of Financial Analysts, the Chicago Quantitative Alliance, and the Society of
Quantitative Analysts.

Mr. Daniel N. Ginsparg, Senior Portfolio Manager and Manager of Quantitative
Research is part of the team responsible for the day to day management of Pilot
Growth and Pilot Small Capitalization Equity Funds' investments activities. Mr.
Ginsparg is responsible for quantitative research applications and is involved
in the management of Boatmen's Small Capitalization Equity Fund. Mr. Ginsparg
received both his bachelor's degree and MBA from the University of Missouri. He
joined Boatmen's in 1989 and is a member of the Chinese Quantitative Alliance,
the Society of Quantitative Analyses, and the St. Louis Society of Financial
Analysts.
David W. Papendick, a Chartered Financial Analyst, is the team member primarily
responsible for the day-to-day investment operations of the Pilot Equity Income
Fund. Mr. Papendick has been associated with Boatmen's since 1973 and is
responsible for the management of pooled equity investment funds with current
assets of over $360 million. He also oversees Boatmen's equity analyst training
program and is a member of Boatmen's Investment Policy Committee. Prior to
joining Boatmen's, Mr. Papendick was associated with two regional brokerage and
investment management firms. Mr. Papendick earned his bachelor's degree from
Washington University.

Pilot Equity Income Fund and Pilot Growth and Income Fund each commenced
operations on November 7, 1994 upon the transfer to each Fund a portion of the
assets of the a common trust fund of Boatmen's Trust Company (the "Commingled
Funds") having corresponding investment objectives, policies and limitations in
exchange for shares of such Fund. Each Fund's portfolio of investments on
November 7, 1994 was substantially the same as the portfolio of the
corresponding Commingled Fund immediately prior to the transfer.

Because each Commingled Fund constitutes a "predecessor" of its corresponding
Fund, each corresponding Fund calculates the performance for each of its classes
for periods commencing prior to the transfer of Commingled Fund assets to the
Fund by including its Commingled Fund predecessor's total return adjusted to
reflect the deduction of estimated fees and expenses applicable to that Class as
stated in the expense table of the Fund's initial prospectus.

The quoted performance data includes the performance of the Commingled Funds for
periods before their corresponding Funds' commencement of operations including
periods when the Commingled Funds were managed by the Adviser's predecessor in
interest or other affiliate. The Commingled Funds have not been and are not
currently registered under the 1940 Act or subject to the investment
restrictions imposed by the 1940 Act. If the Commingled Funds had been
registered under the 1940 Act, the Commingled Funds performance might have been
adversely affected. The performance information set forth below reflects past
performance and is not necessarily indicative of the future performance of the
Funds, or any of the other investment portfolios of The Pilot Funds. Performance
will fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost.

Average Annual Total Returns for the period ended September 30, 1996.

<TABLE>
<CAPTION>
1 YEAR
PILOT SHARES
------------
<S> <C>
Pilot Equity Income Fund and its predecessor %
Pilot Growth and Income Fund and its predecessor %
</TABLE>

<TABLE>
<CAPTION>
3 YEARS
PILOT SHARES
------------
<S> <C>
Pilot Equity Income Fund and its predecessor %
Pilot Growth and Income Fund and its predecessor %
</TABLE>

<TABLE>
<CAPTION>
5 YEARS
PILOT SHARES
------------
<S> <C>
Pilot Equity Income Fund and its predecessor %
Pilot Growth and Income Fund and its predecessor %
</TABLE>

30
<PAGE> 98

<TABLE>
<CAPTION>
10 YEARS
(OR SINCE INCEPTION)
PILOT SHARES
------------
<S> <C>
Pilot Equity Income Fund and its predecessor %
Pilot Growth and Income Fund and its predecessor %
</TABLE>

MORE ABOUT BISYS. BISYS Fund Services Limited Partnership ("BISYS") is a
subsidiary of The BISYS Group, Inc., 150 Clove Road, Little Falls, New Jersey
07424, a publicly owned company engaged in information processing, loan
servicing and 401(k) administration and recordkeeping services to and through
banking and other financial organizations. Under its Administration Agreement
with the Fund, BISYS provides a wide range of such services to the Funds,
including maintaining the Funds' offices, providing statistical and research
data, coordinating the preparation of reports to shareholders, calculating or
providing for the calculation of the net asset values of Fund shares and
dividends and capital gain distributions to shareholders, and performing other
administrative functions necessary for the smooth operation of the Funds.
Certain officers of The Pilot Funds, namely Messrs. Martin Dean, W. Eugene
Spurbeck, George O. Martinez, William J. Tomko and Bruce Treff are also
employees and/or officers of BISYS, the Distributor or an affiliate.

Boatmen's is entitled to advisory fees that are calculated daily and payable
monthly at the annual rate of 0.75% of Pilot Growth and Income Fund's average
daily net assets, 0.75% of Pilot Equity Income Fund's average daily net assets,
0.75% of Pilot Growth Fund's average daily net assets, and 1.00% of the Pilot
Small Capitalization Equity Fund's average daily net assets. For the fiscal year
ended August 31, 1996, The Funds paid advisory fees in the amount of 0.50%,
0.50% and 0.75% for Pilot Growth and Income Fund, Pilot Equity Income Fund, and
Pilot Small Capitalization Equity Fund, respectively. Pilot Growth Fund
commenced operations on October 21, 1996.

Additionally, BISYS is entitled to an administration fee from The Pilot Funds
which is calculated based on the net assets of all of the investment portfolios
of The Pilot Funds combined. Under the Administration Agreement, each Fund pays
its pro-rata share of an annual fee to BISYS, computed daily and payable
monthly, of .115 of 1% of The Pilot Funds' average net assets up to $1.5
billion, .110 of 1% of The Pilot Funds' average net assets on the next $1.5
billion and .1075 of 1% of The Pilot Funds' average net assets in excess of $3
billion. For the fiscal year ended August 31, 1996, The Pilot Funds paid
administration fees to BISYS in the amount of $146,786, $73,059 and $0 for The
Pilot Growth and Income Fund, Pilot Equity Income Fund, Intermediate U.S.
Government Securities Fund, Pilot and Pilot Small Capitalization Equity Fund,
respectively. For the fiscal period ended August 31, 1995, The Pilot Funds paid
administration fees to BISYS in the amount of $0, $0, and $23,572 for Pilot
Growth and Income Fund, Pilot Equity Income Fund, and Pilot Small Capitalization
Equity Fund, respectively.

31
<PAGE> 99

when made but would decrease yields if a Fund were required to reimburse a
service provider.

TAX IMPLICATIONS

YOU WILL BE ADVISED AT LEAST ANNUALLY REGARDING THE FEDERAL INCOME TAX TREATMENT
OF DIVIDENDS AND DISTRIBUTIONS MADE TO YOU.

In order to so qualify, each Fund intends to pay as dividends at least 90% of
its investment company taxable income. Investment company taxable income
includes taxable interest, dividends and gains attributable to market discount
on taxable as well as tax-exempt securities. To the extent you receive such a
dividend based on either investment company taxable income or the excess of net
short-term capital gain over net long-term capital loss, you would treat that
dividend as ordinary income in determining your gross income for tax purposes,
whether you received it in the form of cash or additional shares. Unless you are
exempt from federal income taxes, the dividends you receive from each Fund, will
be taxable to you as ordinary income. Also, to the extent that a Fund's income
consists of dividends paid by U.S. corporations, a portion of the dividends paid
by the Fund may be eligible for the corporate dividends-received deduction.

Before you purchase shares of a Fund, you should consider the effect of both
dividends and capital gain distributions that are expected to be declared or
that have been declared, but not yet paid. When a Fund makes these payments, its
share price will be reduced by the amount of the payment, so that you will in
effect have paid full price for the shares and then received a portion of your
price back as a taxable distribution or dividend.

Further information relating to tax consequences is contained in the Statement
of Additional Information.

STATE AND LOCAL TAXES GENERALLY. Because your state and local taxes may be
different than the federal taxes described above, you should see your tax
adviser regarding these taxes.

MEASURING PERFORMANCE

Understanding performance measures:

YIELDS for the Funds are calculated for a specified 30-day (or one-month) period
by dividing the net income for the period by the maximum offering price on the
last day of

32
<PAGE> 100

the period, and annualizing the result on a semi-annual basis. Net income used
in yield calculations may be different than net income used for accounting
purposes.

The Funds may provide quotes of total returns and yields WITHOUT REFLECTING A
FRONT-END SALES CHARGE, which quotations will, of course, be higher than
quotations that do reflect such a sales charge.

Performance comparisons:

The performance of the Funds may also be compared to data prepared by Lipper
Analytical Services, Inc., Mutual Fund Forecaster, Wiesenberger Investment
Companies Services, Morningstar or CDA Investment Technologies, Inc., and total
returns for these Funds may be compared to indices such as the Dow Jones
Industrial Average, the Standard & Poor's 500 Stock Index, the Lehman Brothers
Bond Indexes, the Merrill Lynch Bond Indexes, the Wilshire 5000 Equity Indexes
or the Consumer Price Index.

INQUIRIES REGARDING THE FUNDS MAY BE DIRECTED TO THE DISTRIBUTOR AT 3435 STELZER
ROAD, COLUMBUS, OHIO 43219-3035.

33
<PAGE> 101

- ----- Financial
Direction January 2, 1997
LOGO

The
Pilot
Funds

PROSPECTUS ENCLOSED
PILOT EQUITY
INCOME FUND

PILOT GROWTH
AND INCOME FUND

PILOT
GROWTH FUND

PILOT
SMALL CAPITALIZATION
EQUITY FUND

Pilot Shares
<PAGE> 102

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
EXPENSE SUMMARY.................................................................................... 3
FINANCIAL HIGHLIGHTS............................................................................... 5
INVESTMENT OBJECTIVES, POLICIES AND RISK FACTORS................................................... 7
Pilot Growth and Income Fund and Pilot Equity Income Fund..................................... 7
Pilot Growth Fund............................................................................. 8
Pilot Small Capitalization Equity Fund........................................................ 9
PORTFOLIO INSTRUMENTS AND PRACTICES.............................................................. 9
RISK FACTORS..................................................................................... 14
FUNDAMENTAL LIMITATIONS.......................................................................... 15
INVESTING IN THE PILOT FUNDS....................................................................... 15
HOW TO BUY SHARES................................................................................ 15
HOW TO SELL SHARES............................................................................... 16
DIVIDENDS AND DISTRIBUTIONS...................................................................... 17
EXCHANGE PRIVILEGE................................................................................. 17
THE PILOT FAMILY OF FUNDS.......................................................................... 17
THE BUSINESS OF THE FUND........................................................................... 18
FUND MANAGEMENT.................................................................................. 18
TAX IMPLICATIONS................................................................................. 21
MEASURING PERFORMANCE............................................................................ 22
</TABLE>
<PAGE> 103

THE PILOT FUNDS

LOGO

PROSPECTUS FOR PILOT SHARES OF THE PILOT GROWTH AND INCOME, PILOT EQUITY INCOME,
PILOT GROWTH AND PILOT SMALL CAPITALIZATION EQUITY FUNDS

January 2, 1997

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
PILOT FUND GOAL FOR INVESTORS WHO WANT
- ------------------ ------------------------------------- -------------------------------------
<S> <C> <C>
GROWTH AND INCOME Capital appreciation and current Capital appreciation over the long
income through investments primarily term as well as current income and
in common stocks of U.S. companies. are willing to accept the relative
risks associated with equity
investments.
- ----------------------------------------------------------------------------------------------------
EQUITY INCOME Current income and, secondarily, Current income with the possibility
capital appreciation through of some price appreciation and are
investments primarily in common willing to accept the relative risks
stocks of above average financial associated with equity investments.
quality and securities convertible
into common stock.
- ----------------------------------------------------------------------------------------------------
GROWTH Long-term capital growth through Capital growth over the long term and
investments primarily in equity are willing to accept the relative
securities. risks associated with equity
investments.
- ----------------------------------------------------------------------------------------------------
SMALL Long-term capital growth by investing Capital growth over the long term and
CAPITALIZATION primarily in equity securities. are willing to accept the relatively
EQUITY FUND greater risks associated with
investments in small capitalization
equity securities.
- ----------------------------------------------------------------------------------------------------
</TABLE>

1
<PAGE> 104

This Prospectus describes Pilot Shares of the Pilot Growth and Income, Pilot
Equity Income, Pilot Growth and Pilot Small Capitalization Equity Funds. Pilot
Shares are sold by Pilot Funds Distributors, Inc. and selected broker-dealers to
Boatmen's Trust Company, St. Louis, Missouri ("Boatmen's") and its affiliated
banks acting on behalf of themselves and persons maintaining qualified trust,
agency or custodial accounts at such banks. Pilot Shares are sold and redeemed
without payment of any purchase or redemption charge imposed by the Funds,
although Boatmen's and its affiliated banks may charge their customer accounts
for services provided in connection with the purchase or redemption of shares.
This Prospectus describes concisely the information about the Funds that you
should know before investing. Please read it carefully and keep it for future
reference.

2
<PAGE> 105

EXPENSE SUMMARY

SHAREHOLDER TRANSACTION EXPENSES are charges you pay when buying or selling
shares of a Fund.

PILOT SHARES

<TABLE>
<CAPTION>
GROWTH
AND EQUITY SMALL
INCOME INCOME CAPITALIZATION
FUND FUND GROWTH FUND EQUITY FUND
------ ------ ----------- --------------
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Front End Sales Charge Imposed on Purchases (as a percentage of
offering price)................................................. None None None None
Sales Charge Imposed on Reinvested Dividends....................... None None None None
Deferred Sales Charge.............................................. None None None None
ANNUAL FUND OPERATING EXPENSES AFTER FEE WAIVERS AND EXPENSE
REIMBURSEMENTS (as a percentage of average net assets):
Management Fees (after waivers)(1)................................. 0.50% 0.50% 0.75% 0.75%
Distribution Payments.............................................. 0.00% 0.00% 0.00% 0.00%
Other Expenses (after expense reimbursements)...................... 0.25% 0.25% 0.25% 0.25%
---- ---- ---- ----
Total Fund Operating Expenses After Fee Waivers and Expense
Reimbursements(1)................................................ 0.75% 0.75% 1.00% 1.00%
==== ==== ==== ====
</TABLE>

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

(1) This expense information is provided to help you understand the expenses you
would bear either directly (as with the transaction expenses) or indirectly
(as with the annual operating expenses) as a shareholder of one of the
Funds. Without waivers by the Adviser, investment management fees as a
percentage of net assets would be .75%, .75%, and 1.00% for the Pilot Growth
and Income, Pilot Equity Income, and Pilot Small Capitalization Equity
Funds, respectively. Other Expenses also reflect reimbursements by the
Adviser and Administrator. Absent reimbursement, Other Expenses would be
.26%, .29%, %, and .54% for Pilot Growth and Income Fund, Pilot Equity
Income Fund, Pilot Growth Fund, and Pilot Small Capitalization Equity Fund,
respectively. Absent waivers and expense reimbursements, the total operating
expenses for Pilot Shares of the Funds would be 1.01% for Pilot Growth and
Income Fund; 1.04% for Pilot Equity Income Fund; 1.54% for the Pilot Small
Capitalization Equity Fund; and 1.52% for the Pilot Growth Fund. These
waivers and reimbursements are voluntary and may be terminated at any time
with respect to any Fund at the discretion of the Adviser or Administrator
and without the consent of the Funds except that the Adviser has voluntarily
agreed to limit the total operating expenses of the Pilot Shares of Pilot
Growth and Income Fund and Pilot Growth Fund to .75% and 1.00%, respectively
of each Fund's average net assets until February 1, 1998.

3
<PAGE> 106

<TABLE>
<CAPTION>
1 3 5 10
YEAR YEARS YEARS YEARS
AFTER AFTER AFTER AFTER
PURCHASE PURCHASE PURCHASE PURCHASE
---- ---- ---- ----
<S> <C> <C> <C> <C>
PILOT GROWTH AND INCOME FUND
Pilot Shares.......................... $ 8 $ 24 $ 42 $ 93
PILOT EQUITY INCOME FUND
Pilot Shares.......................... $ 8 $ 24 $ 42 $ 93
PILOT GROWTH FUND
Pilot Shares.......................... $ 8 $ 24 $ 42 $ 93
PILOT SMALL CAPITALIZATION EQUITY FUND
Pilot Shares.......................... $ 6 $ 20 $ 35 $ 77
</TABLE>

The Example shown above should not be considered a representation of future
investment returns or operating expenses. The Funds are new and actual
investment returns and operating expenses may be more or less than those shown.
Pilot Growth Fund is new and actual investment returns and operating expenses
may be more or less than shown for the Fund.

4
<PAGE> 107

THE PILOT FUNDS
FINANCIAL HIGHLIGHTS

The following data with respect to a Share of the Pilot Growth and Income Fund,
Pilot Equity Income Fund, Pilot Small Capitalization Equity Fund and Pilot
Growth Fund outstanding during the periods indicated have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report
incorporated by reference and attached to the Statement of Additional
Information, and should be read in conjunction with the financial statements and
related notes incorporated by reference and attached to the Statement of
Additional Information. The following data with respect to a share of the Pilot
Growth Fund Outstanding during the period indicated are unaudited.

THE PILOT FUNDS
- --------------------------------------------------------------------------------

Financial Highlights
Selected Data for a Share Outstanding Throughout the Period
- --------------------------------------------------------------------------------
Pilot Growth & Income Fund

<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS
--------------------------------------
NET REALIZED TOTAL
AND UNREALIZED INCOME DIVIDENDS DIVIDENDS NET ASSET
NET ASSET VALUE NET GAIN ON FROM FROM NET FROM NET VALUE AT
AT BEGINNING INVESTMENT INVESTMENT INVESTMENT INVESTMENT REALIZED END OF
OF PERIOD INCOME TRANSACTIONS OPERATIONS INCOME GAINS PERIOD
--------------- ---------- -------------- ---------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FOR THE YEAR ENDED AUGUST 31,
- ---------------------------------
1996--Pilot Shares............... $ 11.59 $ 0.22 $ 1.59 $ 1.81 $(0.22) $(0.28) $ 12.90
1996--Class A Shares............. 11.58 0.18 1.60 1.78 (0.18) (0.28) 12.90
1996--Class B Shares............. 11.59 0.09 1.60 1.69 (0.09) (0.28) 12.91
1995--Pilot Shares(g)............ 10.00 0.17 1.59 1.76 (0.17) 11.59
1995--Class A Shares(a).......... 10.44 0.09 1.14 1.23 (0.09) 11.58
1995--Class B Shares(e).......... 10.08 0.08 1.51 1.59 (0.08) 11.59

RATIO INFORMATION
ASSUMING NO FEE WAIVER OR
EXPENSE REIMBURSEMENT
RATIO OF NET ------------------------- RATIO OF NET
RATIO OF INVESTMENT NET ASSETS RATIO OF INVESTMENT
EXPENSES INCOME PORTFOLIO AT END OF EXPENSES TO INCOME
TOTAL TO AVERAGE TO AVERAGE TURNOVER PERIOD AVERAGE TO AVERAGE
RETURN(C) NET ASSETS NET ASSETS RATE (IN 000'S) NET ASSETS NET ASSETS
--------- ------------- ------------- --------- ---------- ------------- -------------
<S> <C>
FOR THE YEAR ENDED AUGUST 31,
- ---------------------------------
1996--Pilot Shares............... 15.79% 0.74% 1.76% 37% $182,379 1.01% 1.49%
1996--Class A Shares............. 15.57 0.99 1.52 37 4,667 1.26 1.25
1996--Class B Shares............. 14.75 1.74 0.76 37 3,818 2.01 0.49
1995--Pilot Shares(g)............ 17.72 0.75(d) 1.98(d) 28 109,423 1.15(d) 1.58(d)
1995--Class A Shares(a).......... 11.78 1.00(d) 1.65(d) 28 697 1.40(d) 1.25(d)
1995--Class B Shares(e).......... 15.85 1.75(d) 0.94(d) 28 661 2.15(d) 0.54(d)

AVERAGE
COMMISSION
RATE
----------
FOR THE YEAR ENDED AUGUST 31,
- ---------------------------------
1996--Pilot Shares............... $.0539
1996--Class A Shares............. .0539
1996--Class B Shares............. .0539
1995--Pilot Shares(g)............
1995--Class A Shares(a)..........
1995--Class B Shares(e)..........
</TABLE>

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

Pilot Equity Income Fund

<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996--Pilot Shares............... $ 11.29 $ 0.46 $ 1.38 $ 1.84 $(0.45) $(0.30) $ 12.38
1996--Class A Shares............. 11.36 0.41 1.40 1.81 (0.41) (0.30) 12.46
1996--Class B Shares............. 11.34 0.33 1.39 1.72 (0.32) (0.30) 12.44
1995--Pilot Shares(g)............ 10.00 0.35 1.29 1.64 (0.35) 11.29
1995--Class A Shares(a).......... 10.24 0.18 1.12 1.30 (0.18) 11.36
1995--Class B Shares(b).......... 9.85 0.18 1.49 1.67 (0.18) 11.34

<CAPTION>
1996--Pilot Shares............... 16.49% 0.75% 3.78% 34% $130,278 1.04% 3.49%
<S> <C>
1996--Class A Shares............. 16.10 1.00 3.53 34 1,640 1.29 3.24
1996--Class B Shares............. 15.31 1.75 2.79 34 3,200 2.04 2.50
1995--Pilot Shares(g)............ 16.69 0.75(d) 4.12(d) 37 98,607 1.14(d) 3.73(d)
1995--Class A Shares(a).......... 12.78 1.00(d) 3.70(d) 37 311 1.39(d) 3.31(d)
1995--Class B Shares(b).......... 17.36 1.75(d) 2.88(d) 37 713 2.14(d) 2.49(d)

<CAPTION>
1996--Pilot Shares............... $.0629
1996--Class A Shares............. .0629
1996--Class B Shares............. .0629
1995--Pilot Shares(g)............
1995--Class A Shares(a)..........
1995--Class B Shares(b)..........
</TABLE>

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

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

<TABLE>
<S> <C>
(a) Class A share activity commenced February 7, 1995.
(b) Class B share activity commenced January 12, 1995.
(c) Assumes investment at net asset value at the beginning of the period, reinvestment of all dividends and distributions, a
complete redemption of the investment at the net asset value at the end of the period and no sales charge. Total return would
be reduced if sales charge were taken for Class A or Class B shares. Total return is not annualized.
(d) Annualized.
(e) Class B share activity commenced November 11, 1994.
(f) Pilot Class and Class B share activity commenced December 12, 1996.
(g) Pilot share activity commenced November 7, 1994.
(h) Share activity commenced October 21, 1996.
</TABLE>

5
<PAGE> 108

THE PILOT FUNDS
- --------------------------------------------------------------------------------

Financial Highlights (continued)
- --------------------------------------------------------------------------------

Pilot Small Capitalization Equity Fund

<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS
--------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET REALIZED TOTAL
AND UNREALIZED INCOME DIVIDENDS NET ASSET
NET ASSET VALUE NET GAIN ON FROM FROM NET VALUE AT
AT BEGINNING INVESTMENT INVESTMENT INVESTMENT INVESTMENT END OF TOTAL
OF PERIOD INCOME TRANSACTIONS OPERATIONS INCOME PERIOD RETURN(C)
--------------- ---------- -------------- ---------- ---------- --------- -------------

<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
FOR THE PERIOD ENDED AUGUST 31,
- ------------------------------------
1996--Pilot Shares(f)............... $ 10.00 $ 0.09 $ 0.64 $ 0.73 $(0.08) $ 10.65 7.37%
1996--Class A Shares(f)............. $ 10.00 0.05 0.64 0.69 (0.05) $ 10.64 6.88%
1996--Class B Shares(f)............. $ 10.00 0.01 0.65 0.66 (0.01) $ 10.65 6.65%

RATIO INFORMATION ASSUMING

NO FEE WAIVER OR EXPENSE
REIMBURSEMENT
----------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
RATIO OF
NET
INVESTMENT
INCOME RATIO OF NET
RATIO OF TO NET ASSETS RATIO OF INVESTMENT
EXPENSES TO AVERAGE PORTFOLIO AT END OF EXPENSES TO INCOME AVERAGE

AVERAGE NET TURNOVER PERIOD AVERAGE TO AVERAGE COMMISSION

NET ASSETS(D) ASSETS(D) RATE (IN 000'S) NET ASSETS(C) NET ASSETS(C) RATE

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

<S> <C> <C> <C> <C> <C> <C> <C>
FOR THE PERIOD ENDED AUGUST 31,
- ------------------------------------
1996--Pilot Shares(f)............... 1.00%(c) 1.06%(c) 30.67% $70,483 1.54%(c) 0.52%(c) $.0340

1996--Class A Shares(f)............. 1.25%(c) 0.66%(c) 30.67% $ 2,611 1.65%(c) 0.26%(c) .0340

1996--Class B Shares(f)............. 2.01%(c) (0.07%)(c) 30.67% $ 1,878 2.44%(c) (0.50%)(c) .0340

</TABLE>

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

Pilot Growth Fund

For the Period Ended October 22,

<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
1996--Pilot Shares..................
1996--Class A Shares................
1996--Class B Shares................

<CAPTION>
1996--Pilot Shares..................
<S> <C> <C> <C> <C> <C> <C> <C>
1996--Class A Shares................
1996--Class B Shares................
</TABLE>

6
<PAGE> 109

INVESTMENT OBJECTIVES, POLICIES
AND RISK FACTORS

Pilot Growth and Income Fund and
Pilot Equity Income Fund

The investment objective of the Pilot Equity Income Fund is to seek current
income and, secondarily, capital appreciation through investments primarily in
common stocks of above average financial quality and securities convertible into
common stock. Under normal market and economic conditions, the Fund will invest
at least 65% of its total assets in common stocks, preferred stocks and
securities convertible into common stock of companies believed by the Adviser to
demonstrate sound management, future growth potential and the ability to pay
dividends. The Fund will attempt to achieve a yield that is greater than the
published composite yield of the securities comprising the Standard and Poor's
500 Composite Stock Index(1) (the "S & P 500 Index"), a broad-based unmanaged
index of 500 companies listed on the New York Stock Exchange and which is
typically used as a performance benchmark for equity investments.

Each Fund may also acquire debt obligations, including both convertible and
non-convertible corporate and government bonds, debentures, zero coupon bonds
and cash equivalents. "Cash equivalents" include commercial paper (which is
unsecured promissory notes issued by corporations); certificates of deposit,
bankers' acceptances, notes and time deposits issued or supported by U.S. or
foreign banks and savings institutions; repurchase agreements; variable or
floating rate notes; U.S. Government obligations; and money market mutual fund
shares. Each Fund will purchase only those debt obligations which are rated
investment grade by at least one Nationally Recognized Statistical Rating
Organization ("NRSRO") or, if unrated, are determined by the Adviser to be of
comparable quality. (A description of applicable ratings is attached to the
Statement of Additional Information as Appendix A.) Obligations in the lowest of
the top four rating categories ("BBB" or "Baa") have certain speculative
characteristics and are subject to more credit and market risk than securities
with higher ratings. If a debt obligation held by a Fund ceases to be rated
investment grade by at least one NRSRO or if the Adviser determines that an
unrated debt obligation held by a Fund is no longer of comparable quality to an
investment grade debt obligation, the obligation will be sold in an orderly
manner as quickly as possible.

- ---------------
1 "Standard and Poor's(R)," "S & P(R)" and Standard and Poor's 500 Index(R)" are
registered trademarks of Standard and Poor's Corporation.

7
<PAGE> 110

("ADRs") and European Depository Receipts ("EDRs"). ADRs are receipts typically
issued by a United States bank or trust company, and EDRs are receipts issued by
a European financial institution evidencing ownership of the underlying foreign
securities. ADRs, in registered form, are designed for use in the United States
securities markets, while EDRs, in bearer form, are generally designed for use
in the European securities markets. These securities may not be denominated in
the same currency as the securities they represent.

Pilot Growth Fund

Pilot Growth Fund offers investors a means of participating in the equity
securities market.

In making investment decisions for the Fund, the Adviser classifies
approximately 1,000 companies by market value and growth characteristics on a
quarterly basis. Due to the number of possible growth stock investments, the
Adviser uses a selection process employing advanced quantitative techniques to
identify buy and sell candidates in an effort to select and hold those companies
which appear able to consistently achieve superior returns by reinvesting
profits into attractive new projects and products. Dividend income is,
therefore, incidental and not an objective of the Fund. The Adviser's
sophisticated investment approach uses an internally designed valuation process
which measures the persistence of future cash flows, the acceleration of
profitability, and evaluates a company's revenue generation relative to its
stock price. The goal of this investment process is to identify businesses where
superior growth appears sustainable and avoid or sell companies where growth is
beginning to deteriorate. The Fund will concentrate on long-term growth
industries where market leaders produce superior products and/or services and
demonstrate a competitive advantage.

Pilot Growth Fund may also acquire debt obligations, including both convertible
and non-convertible corporate and government bonds, debentures, zero coupon
bonds and cash equivalents. "Cash equivalents" include commercial paper (which
is unsecured promissory notes issued by corporations); certificates of deposit,
bankers' acceptances, notes and time deposits issued or supported by U.S. or
foreign banks and savings institutions; repurchase agreements; variable or
floating rate notes; U.S. Government obligations; and money market mutual fund
shares. Under normal conditions, the Fund will not invest more than 10% of its
total assets in debt obligations, unless the Fund assumes a temporary defensive
position as discussed below. The Fund will purchase only those debt obligations
which are rated AA or better by at least one Nationally Recognized Statistical
Rating Organization ("NRSRO") or, if unrated, are determined by the Adviser to
be of comparable quality. (A description of applicable ratings is attached to
the Statement of Additional Information as Appendix A.)

The Fund reserves the right to invest up to 100% of its assets in cash, cash
equivalents and debt obligations when the Adviser believes such a position is
advisable

8
<PAGE> 111

for temporary defensive purposes during periods of unusual market or economic
activity.

Pilot Small Capitalization Equity Fund

The investment objective of the Fund is to provide long-term capital growth by
investing primarily in equity securities. Under normal circumstances, the Fund
will invest at least 65% of its total assets in equity securities, including
securities convertible into equity securities. In addition, under normal
circumstances, the Fund will invest at least 65% of its total assets in
companies with a market capitalization of $1 billion or less.

The Fund may invest up to 35% of its total assets in securities of issuers with
a market capitalization greater than $1 billion and in debt securities. However,
the Fund will not invest more than 10% of its total assets in debt securities,
unless the Fund assumes a temporary defensive position as discussed below. Debt
securities, if any, purchased by the Fund will be rated AA or above by Standard
and Poor's Corporation ("S&P") or Aa or above by Moody's Investor Services, Inc.
("Moody's") or, if unrated, determined by the Adviser to be of comparable
quality. For temporary defensive purposes, the Fund may invest up to 100% of its
assets in debt securities. Debt securities in which the Fund may invest include
short-term and intermediate-term obligations of corporations, the U.S. and
foreign governments and international organizations (such as the International
Bank for Reconstruction and Development (the "World Bank")), including money
market instruments.

PORTFOLIO INSTRUMENTS AND PRACTICES

9
<PAGE> 112

ability of the U.S. Government to purchase the entity's obligations; and still
others, like the Student Loan Marketing Association, are backed solely by the
issuer's credit. U.S. Government obligations also include U.S. Government-backed
trusts that hold obligations of foreign governments and are guaranteed or backed
by the full faith and credit of the United States. There is no assurance that
the U.S. Government would support a U.S. Government-sponsored entity were it not
required to do so by law.

- --Corporate Obligations. EACH FUND may purchase corporate bonds and cash
equivalents that meet a Fund's quality and maturity limitations. These
investments may include obligations issued by Canadian corporations and Canadian
counterparts of U.S. corporations, Eurobonds, which are U.S. dollar-denominated
obligations of foreign issuers, and Yankee bonds, which are U.S. dollar-
denominated bonds issued by foreign issuers in the U.S., and equipment trust
certificates. Each Fund may also purchase obligations issued by foreign
corporations. Corporate bonds are subject to call risk during periods of falling
interest rates. Securities with high stated interest rates may be prepaid (or
called) prior to maturity, requiring a Fund to invest the proceeds at generally
lower interest rates.

- --Repurchase Agreements. EACH FUND may enter into repurchase agreements which
involve a purchase of portfolio securities subject to the seller's agreement to
repurchase them at an agreed upon time and price. The Funds will enter into
repurchase agreements only with financial institutions (such as banks and
broker-dealers) deemed to be creditworthy by the Adviser, pursuant to guidelines
established by the Board of Trustees. The term of these agreements is usually
from overnight to one week and in any event, the Funds intend that such
agreements will not have maturities longer than 60 days.

A repurchase agreement may be viewed as a fully collateralized loan of money by
a Fund to the seller.

10
<PAGE> 113

During the term of any repurchase agreement, the Adviser will monitor the
creditworthiness of the seller, and the seller must maintain the value of the
securities subject to the agreement in an amount that is greater than the
repurchase price. Default or bankruptcy of the seller would, however, expose a
Fund to possible loss because of adverse market action or delays connected with
the disposition of the underlying obligations. Because of the seller's
repurchase obligation, the securities subject to repurchase agreements do not
have maturity limitations.

11
<PAGE> 114

undivided interest in the security in the proportion that a Fund's participation
interest or receipt bears to the total principal amount of the security. Each
Fund intends only to purchase participations and trust receipts from an entity
or syndicate, and do not intend to serve as a co-lender in any such activity.

12
<PAGE> 115

and/or security prices. The use of covered call and secured put options will not
be a primary investment technique of any Fund.

More information regarding futures contracts and related options can be found in
the Statement of Additional Information, which is available upon request.

- --Portfolio Turnover. EACH FUND may engage in short-term trading to achieve its
investment objective. The annual portfolio turnover rates for PILOT EQUITY
INCOME FUND, PILOT GROWTH AND INCOME FUND, AND PILOT GROWTH FUND are not
expected to exceed 100% during the next twelve months. The turnover rate for
PILOT SMALL CAPITALIZATION EQUITY FUND is not expected to exceed 125% for the
same period. Portfolio turnover will not be a limiting factor in making
investment decisions. Portfolio turnover may occur for a variety of reasons,
including the appearance of a more favorable investment opportunity. Turnover
may require payment of brokerage commissions, impose other transaction costs and
could increase the amount of income received by a Fund that constitutes taxable
capital gains. To the extent capital gains are realized, distributions from the
gains

13
<PAGE> 116

may be ordinary income for federal tax purposes (see "The Business of the
Fund--Tax Implications").

RISK FACTORS

- --General Risk Considerations. As with an investment in any mutual fund, an
investment in the Funds entails market and economic risks associated with
investments generally. However, there are certain specific risks of which you
should be aware. The value of equity securities held by the Funds can be
expected to vary in response to a variety of factors. Stock values fluctuate in
response to the activities of individual companies and in response to general
market and economic conditions. In general, equity securities are subject to
greater fluctuations in value than fixed income securities. Therefore, while a
fund investing primarily in equity securities is likely to have greater
potential for total return over the long term than a fund investing in fixed-
income securities whose value will vary inversely with interest rate
fluctuations, it also presents greater risk of loss.

- --Small Capitalization Companies. EACH FUND may invest in smaller, lesser-known
companies which the Adviser believes offer greater growth potential than larger,
more mature, better-known firms. PILOT SMALL CAPITALIZATION EQUITY FUND will
focus on these securities. Investing in the securities of such companies,
however, may also involve greater risk and the possibility of greater portfolio
price volatility. Among the reasons for the greater price volatility of these
small company and unseasoned stocks are the less certain growth prospects of
smaller firms, the lower degree of liquidity in the markets for such stocks and
the greater sensitivity of small companies to changing economic conditions. For
example, these companies are associated with higher investment risk than that
normally associated with larger firms due to the greater business risks of small
size and limited product lines, markets, distribution channels and financial and
managerial resources.

14
<PAGE> 117

decreases as the market value of the underlying stock declines.

FUNDAMENTAL LIMITATIONS

4. A Fund may not make loans, except that it may invest in debt securities,
enter into repurchase agreements and lend its portfolio securities.

INVESTING IN THE PILOT FUNDS

HOW TO BUY SHARES

Pilot Shares are sold on a continuous basis by Pilot Funds Distributors, Inc.
(the "Distributor").

15
<PAGE> 118

time on that day by which purchase and redemption requests must be received.

HOW TO SELL SHARES

The Pilot Funds intends to pay cash for all shares redeemed, but in unusual
circumstances may make payment wholly or partly in readily marketable portfolio
securities at their then market value equal to the redemption price if it
appears appropriate to do so in light of the Funds' responsibilities under the
Investment Company Act of 1940. See the Statement of Additional Information
("Additional Purchase and Redemption Information") for examples of when such
redemptions might be appropriate. In those cases, an investor may incur
brokerage costs in converting securities to cash. The Funds may also redeem
shares involuntarily if the balance has fallen below the minimum level due to
shareholder redemptions and not as a result of market fluctuations.

It is the responsibility of the Institutions to provide their customers with
statements of account with respect to transactions made for their accounts at
the Institutions.

The net asset value of shares that are redeemed may be more or less than their
original cost, depending on a Fund's current net asset value.

Explanation of Sales Price

16
<PAGE> 119

less until they mature are valued at amortized cost, which generally
approximates market value. More information about valuation can be found in the
Funds' Statement of Additional Information, which is available upon request.

DIVIDENDS AND DISTRIBUTIONS

Where do your dividends and distributions come from?

Dividends for each Fund are derived from its net investment income. Net
investment income is made up of dividends received from the stocks they hold, as
well as interest accrued on convertible securities, money market instruments and
other debt obligations held in their portfolios.

What are your dividend and distribution options?

Your election is effective for dividends and distributions with record dates
after the date the Institution receives the election.

When are dividends and distributions declared and paid?

Dividends are declared and paid monthly.

Net capital gain distributions for each of the Funds, if any, are distributed at
least annually after any reductions for capital loss carryforwards.

EXCHANGE PRIVILEGE

If you wish, Pilot Shares of a Fund may be exchanged for Class A Shares of the
same Fund without payment of a sales charge in connection with the distribution
of assets held in a qualified trust, agency or custodial account maintained with
Boatmen's or its affiliates. Similarly, a Customer may exchange Class A Shares
for Pilot Shares of the same Fund if the shares are to be held in such a
qualified trust, agency or custodial account. Pilot Shares of a Fund may also be
exchanged for Pilot Shares of any of the other investment portfolios of The
Pilot Funds. Class A Shares are subject to the same shareholder transaction
expenses as Pilot Shares except that purchases of Class A Shares (other than by
exchange) may be subject to a front end sales charge. Class A Shares are subject
to the same annual fund operating expenses as Pilot Shares except that Class A
Shares are subject to annual Rule 12b-1 Distribution payments of 0.25% of
average net assets. In addition, the procedures for effecting transactions in
Fund shares and other features related to the servicing and maintenance of Fund
accounts may differ for Class A Shares from those applicable to Pilot Shares
depending on whether a shareholder chooses to hold the account containing Class
A Shares directly with the Funds or through a broker/dealer or other
intermediary institution (a "Service Organization"). For more information on
holding Class A Shares of a Fund, please see the prospectus for Class A and B
Shares which can be obtained by calling 1/800 71-PILOT and, where appropriate,
consult the Service Organization through which the Class A Shares of the Fund
received by exchange will be held.

THE PILOT FAMILY OF FUNDS

The Pilot Shares of the Funds are described in this prospectus. The Funds also
offer Class A and Class B Shares. Class A Shares are sold with a maximum 4.5%
front-end sales charge, and Class B Shares are sold with a maximum 4.5%
contingent deferred sales charge. Pilot, Class A and Class B Shares bear their
pro rata portion of all operating expenses paid by the Funds. In

17
<PAGE> 120

addition, Class A and Class B Shares bear all payments under the Funds'
Distribution Plans (the "Plans"). Under the Plans the Distributor receives fees
for distribution and shareholder support services.

Payments under the Distribution Plan for Class A Shares may be made for payments
to broker-dealers and financial institutions under agreements with those
organizations for personal services provided to Class A shareholders and/or the
maintenance of Class A shareholder accounts. Payments under the Distribution
Plan for Class B Shares, in addition to being used for the same purposes as
payments under the Distribution Plan for Class A Shares, may be used to
reimburse sales commissions and other fees paid to broker-dealers who sell Class
B Shares and may also be used for advertising and marketing. Payments under the
Distribution Plan for Class A Shares may not exceed .25% (on an annual basis) of
the average daily net asset value of outstanding Class A Shares. Payments under
the Distribution Plan for Class B Shares may not exceed 1.00% (on an annual
basis) of the average daily net asset value of outstanding Class B Shares.
Distribution payments under the Distribution Plans are subject to the
requirements of a rule under the Investment Company Act of 1940 known as Rule
12b-1.

THE BUSINESS OF THE FUND

FUND MANAGEMENT

THE BUSINESS AFFAIRS OF THE PILOT FUNDS ARE MANAGED UNDER THE GENERAL
SUPERVISION OF THE BOARD OF TRUSTEES.

SERVICE PROVIDERS

Distributor: Each Fund's shares are sold on a continuous basis by the
Distributor, PILOT FUNDS DISTRIBUTORS, INC. (referred to as the "Distributor"),
a registered broker-dealer whose ultimate corporate parent is the BISYS Group,
Inc., is located at 3435 Stelzer Road, Columbus, Ohio 43219-3035.

Custodian: BOATMEN'S TRUST COMPANY (referred to as "Boatmen's") is responsible
for holding the investments purchased by each Fund. Boatmen's is located at 100
N. Broadway, St. Louis, Missouri 63170.

MORE ABOUT 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 June 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).

18
<PAGE> 121

Boatmen's Bancshares, Inc., Boatmen's parent, is a registered bank holding
company which owns substantially all of the outstanding capital stock of
numerous commercial banks Boatmen's, and more than fifty banks and trust
companies located in Arkansas, Illinois, Iowa, Kansas, Missouri, New Mexico,
Oklahoma, Tennessee and Texas; a mortgage banking company, a credit life
insurance company and a credit card bank.

Boatmen's utilizes a team approach in managing each of the Equity Funds.

Mr. Michael E. Kenneally, a Chartered Financial Analyst, is a Senior Vice
President and Director of Research for Boatmen's and is part of the team
responsible for the day to day management of Pilot Growth and Pilot Small
Capitalization Equity Funds' day to day investment activities. Mr. Kenneally
currently oversees Boatmen's fundamental and quantitative research efforts as
well as passive and quantitative investment management. His additional
responsibilities include investment product development, international equity
investment, and equity derivative strategies. Mr. Kenneally holds both a
bachelor's degree in economics and an MBA in finance from the University of
Missouri. He joined Boatmen's in 1983 as an equity analyst, later became a
quantitative analyst, and subsequently worked as both a fixed-income portfolio
manager and an equity portfolio manager. Mr. Kenneally is also a member of the
Association for Investment Management and Research (AIMR), the St. Louis Society
of Financial Analysts, the Chicago Quantitative Alliance, and the Society of
Quantitative Analysts.

David W. Papendick, a Chartered Financial Analyst, is the team member primarily
responsible for the day-to-day investment operations of the Pilot Equity Income
Fund. Mr. Papendick has been associated with Boatmen's since 1973 and is
responsible for the management of pooled equity investment funds with current
assets of over $360 million. He also oversees Boatmen's equity analyst training
program and is a member of Boatmen's Investment Policy Committee. Prior to
joining Boatmen's, Mr. Papendick was associated with two regional brokerage and
investment management firms. Mr. Papendick earned his bachelor's degree from
Washington University.

Pilot Equity Income Fund and Pilot Growth and Income Fund each commenced
operations on November 7, 1994 upon the transfer to each Fund of a portion of
the assets of a common trust fund of Boatmen's Trust Company (the "Commingled
Funds") having corresponding investment objectives, policies and limitations in
exchange for shares of such Fund. Each Fund's portfolio of investments on
November 7, 1994 was substantially the same as the portfolio of the
corresponding Commingled Fund immediately prior to the transfer.

Because each Commingled Fund constitutes a "predecessor" of its corresponding
Fund, each corresponding Fund calculates the performance for each

19
<PAGE> 122

of its classes for periods commencing prior to the transfer of Commingled Fund
assets to the Fund by including its Commingled Fund predecessor's total return
adjusted to reflect the deduction of estimated fees and expenses applicable to
that class as stated in the expense table of the Fund's initial prospectus.

The quoted performance data includes the performance of the Commingled Funds for
periods before their corresponding Funds' commencement of operations including
periods when the Commingled Funds were managed by the Advisor's predecessor in
interest on affiliates. The Commingled Funds have not been and are not currently
registered under the 1940 Act or subject to the investment restrictions imposed
by the 1940 Act. If the Commingled Funds had been registered under the 1940 Act,
the performance of the Commingled Funds might have been adversely affected. The
performance information set forth below reflects past performance and is not
necessarily indicative of the future performance of the Funds, or any of the
other investment portfolios of The Pilot Funds. Performance will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than their
original cost.

Average Annual Total Returns for the period ended September 30, 1996.

<TABLE>
<CAPTION>
1 YEAR PILOT
SHARES
<S> <C>
Pilot Equity Income Fund and its predecessor %
Pilot Growth and Income Fund and its predecessor %
</TABLE>

<TABLE>
<CAPTION>
3 YEARS PILOT
SHARES
<S> <C>
Pilot Equity Income Fund and its predecessor %
Pilot Growth and Income Fund and its predecessor %
</TABLE>

<TABLE>
<CAPTION>
5 YEARS PILOT
SHARES
<S> <C>
Pilot Equity Income Fund and its predecessor %
Pilot Growth and Income Fund and its predecessor %
</TABLE>

<TABLE>
<CAPTION>
10 YEARS (OR SHARES INCEPTION) PILOT
SHARES
<S> <C>
Pilot Equity Income Fund and its predecessor %
Pilot Growth and Income Fund and its predecessor %
</TABLE>

Average Annual Total Returns for the period ended September 30, 1996.

<TABLE>
<CAPTION>
1 YEAR
CLASS A CLASS B
------- -------
<S> <C> <C>
Pilot Equity Income Fund and its predecessor % %
Pilot Growth and Income Fund and its
predecessor % %
</TABLE>

<TABLE>
<CAPTION>
3 YEARS
CLASS A CLASS B
------- -------
<S> <C> <C>
Pilot Equity Income Fund and its predecessor % %
Pilot Growth and Income Fund and its
predecessor % %
</TABLE>

<TABLE>
<CAPTION>
5 YEARS
CLASS A CLASS B
------- -------
<S> <C> <C>
Pilot Equity Income Fund and its predecessor % %
Pilot Growth and Income Fund and its
predecessor % %
</TABLE>

<TABLE>
<CAPTION>
10 YEARS
(OR SINCE INCEPTION)
CLASS A CLASS B
------- -------
<S> <C> <C>
Pilot Equity Income Fund and its predecessor % %
Pilot Growth and Income Fund and its
predecessor % %
</TABLE>

The average annual total returns are calculated in conformity with Securities
and Exchange Commission guidelines. In addition, these returns are adjusted to
reflect the performance that the Commingled Fund would have experienced if Class
A and Class B shareholder transaction expenses and operating expenses applicable
to the Class A and Class B Shares (as estimated at commencement of operations)
had been incurred during the periods shown.

20
<PAGE> 123

providing statistical and research data, coordinating the preparation of reports
to shareholders, calculating or providing for the calculation of the net asset
values of Fund shares and dividends and capital gain distributions to
shareholders, and performing other administrative functions necessary for the
smooth operation of the Funds. Certain officers of The Pilot Funds, namely
Messrs. Martin Dean, W. Eugene Spurbeck, George O. Martinez, William J. Tomko
and Bruce Treff are also employees and/or officers of BISYS, the Distributor or
an affiliate.

Boatmen's is entitled to advisory fees that are calculated daily and payable
monthly at the annual rate of 0.75% of Pilot Growth and Income Fund's average
daily net assets, 0.75% of Pilot Equity Income Fund's average daily net assets,
0.75% of Pilot Growth Fund's average daily net assets, and 1.00% of the Pilot
Small Capitalization Equity Fund's average daily net assets. For the fiscal year
ended August 31, 1996, the funds paid advisory fees in the amount of 0.50%,
0.50% and 0.75%, for Pilot Growth and Income Fund, Pilot Equity Income Fund, and
Pilot Small Capitalization Equity Fund, respectively. Pilot Growth Fund
commenced operations on October 21, 1996.

FEE WAIVERS. Expenses can be reduced by voluntary fee waivers and expense
reimbursements by Boatmen's and the Funds' other service providers, as well as
by certain mandatory expense limits imposed by some state securities regulators.
However, as to any amounts voluntarily waived or reimbursed, the service
providers retain the ability to be reimbursed by a Fund for such amounts prior
to fiscal year end. These waivers and reimbursements would increase the yield to
investors when made but would decrease yields if a Fund were required to
reimburse a service provider.

TAX IMPLICATIONS

YOU WILL BE ADVISED AT LEAST ANNUALLY REGARDING THE FEDERAL INCOME TAX TREATMENT
OF DIVIDENDS AND DISTRIBUTIONS MADE TO YOU.

21
<PAGE> 124

federal income taxes, the dividends you receive from each Fund, will be taxable
to you as ordinary income. Also, to the extent that a Fund's income consists of
dividends paid by U.S. corporations, a portion of the dividends paid by the Fund
may be eligible for the corporate dividends-received deduction.

Further information relating to tax consequences is contained in the Statement
of Additional Information.

STATE AND LOCAL TAXES GENERALLY. Because your state and local taxes may be
different than the federal taxes described above, you should see your tax
adviser regarding these taxes.

MEASURING PERFORMANCE

Understanding performance measures:

Performance comparisons:

22
<PAGE> 125

Index, the Wilshire 5000 Equity Index or the Consumer Price Index.

INQUIRIES REGARDING THE FUNDS MAY BE DIRECTED TO THE DISTRIBUTOR AT 3435 STELZER
ROAD, COLUMBUS, OHIO 43219-3035.

23
<PAGE> 126
THE PILOT FUNDS

--------

FORM N-1A

CROSS REFERENCE SHEET

<TABLE>
<CAPTION>
STATEMENT OF ADDITIONAL
ITEM NUMBER IN PART B INFORMATION CAPTION
--------------------- -----------------------
<S> <C>
10. Cover Page.......................................... Cover Page

11. Table of Contents................................... Table of Contents

12. General Information and History..................... Organization and Capitalization

13. Investment Objectives and Policies.................. Investment Policies and Practices of the Fund;
Investment Restrictions

14. Management of the Fund.............................. Trustees and Officers

15. Control Persons and Principal Holders of
Securities.......................................... Trustees and Officers; Organization and
Capitalization

16. Investment Advisory and Other Services.............. Investment Adviser, Administrator, Distributor
and Transfer Agent; Matters Relating to Class A
Shares and Class B Shares; Portfolio
Transactions; Custodian and Subcustodian;
Independent Accountants and Counsel

17. Brokerage Allocation................................ Portfolio Transactions

18. Capital Stock and Other Securities.................. Organization and Capitalization; Matters Relating
to Class A Shares and Class B Shares

19. Purchase, Redemption and Pricing of Securities
Being Offered....................................... Net Asset Value; Matters Relating to Class A
Shares and Class B Shares; Additional Purchase
and Redemption Information

20. Tax Status.......................................... Tax Information

21. Underwriters........................................ Investment Adviser, Administrator, Distributor
and Transfer Agent

22. Calculation of Performance Data..................... Calculation of Performance Quotations

23. Financial Statements................................ Financial Statements
</TABLE>

3
<PAGE> 127
THE PILOT FUNDS
3435 Stelzer Road
Columbus, Ohio 43219

STATEMENT OF ADDITIONAL INFORMATION
January 2, 1997
PILOT SHARES, CLASS A SHARES AND CLASS B SHARES

The Pilot Funds (the "Trust") is an open-end, management investment
company (or mutual fund) consisting of fourteen portfolios, five of which
portfolios (the "Funds") are offered hereby. The Funds are:

Pilot Diversified Bond 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.

Boatmen's Trust Company ("Boatmen's") serves as the investment adviser
to each Fund. Pilot Funds Distributors, Inc. serves as each Fund's distributor,
and its affiliate, BISYS Fund Services Limited Partnership ("BISYS"), serves as
each Fund's administrator.

This Statement of Additional Information is not a Prospectus, should be
read in conjunction with the Prospectuses dated January 2, 1997 with respect
to Pilot Shares, Class A Shares and Class B Shares of the Funds and is
incorporated by reference in its entirety into such Prospectuses. Because this
Statement of Additional Information is not itself a Prospectus, no investment in
Pilot Shares, Class A Shares or Class B Shares of the Funds should be made
solely upon the information contained herein. Copies of the Prospectuses may be
obtained without charge by writing to Pilot Funds Distributors, Inc., 3435
Stelzer Road, Columbus, Ohio 43219-3035.

B-1
<PAGE> 128
TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
<S> <C>
Investment Policies And Practices Of The Funds..................... B -

Investment Restrictions............................................ B -

Trustees And Officers.............................................. B -

Investment Adviser, Administrator, Distributor And Transfer Agent B -

Portfolio Transactions............................................. B -

Net Asset Value.................................................... B -

Matters Relating to Class A Shares and Class B Shares.............. B -

Additional Purchase and Redemption Information..................... B -

Calculation Of Performance Quotations.............................. B -

Tax Information.................................................... B -

Organization And Capitalization.................................... B -

Custodian.......................................................... B -

Independent Accountants And Counsel................................ B -

Miscellaneous...................................................... B -

Appendix........................................................... A - 1

Financial Statements............................................... F - 1
</TABLE>

B-2
<PAGE> 129
INVESTMENT POLICIES AND PRACTICES OF THE FUNDS

The following discussion elaborates on the description of each Fund's
investment policies and practices contained in the Prospectuses. Except as set
forth below, the investment policies and limitations described in this Statement
of Additional Information are not fundamental and may be changed without
Shareholder consent.

U.S. GOVERNMENT OBLIGATIONS

Each Fund may invest in U.S. Government obligations. Examples of the
types of U.S. Government obligations that may be held by the Funds include, in
addition to U.S. Treasury bonds, notes and bills, the obligations of the Federal
Home Loan Banks, Federal Farm Credit Banks, Federal Land Banks, Federal Housing
Administration, Farmers Home Administration, Export-Import Bank of the United
States, Small Business Administration, Government National Mortgage Association,
Federal National Mortgage Association, General Services Administration, Student
Loan Marketing Association, Central Bank for Cooperatives, Federal Home Loan
Mortgage Corporation, Federal Intermediate Credit Banks, Tennessee Valley
Authority, Resolution Funding Corporation and Maritime Administration.
Obligations guaranteed as to principal or interest by the U.S. Government, its
agencies, authorities or instrumentalities are deemed to include (a) securities
for which the payment of principal and interest is backed by an irrevocable
letter of credit issued by the U.S. Government, its agencies, authorities or
instrumentalities and (b) participations in loans made to foreign governments or
their agencies that are so guaranteed. The secondary market for certain of these
participations is limited. If such participations are illiquid they will not be
purchased.

U.S. Government obligations include principal and interest components
of securities issued or guaranteed by the U.S. Treasury if the components are
traded independently under the Separate Trading of Registered Interest and
Principal of Securities program. Obligations issued or guaranteed as to
principal or interest by the U.S. Government, its agencies, authorities or
instrumentalities may also be acquired in the form of custodial receipts. These
receipts evidence ownership of future interest payments, principal payments or
both on certain notes or bonds issued by the U.S. Government, its agencies,
authorities or instrumentalities.

CUSTODIAL RECEIPTS

Each Fund may also acquire custodial receipts that evidence ownership
of future interest payments, principal payments or both on certain U.S.
Government notes or bonds. Such notes and bonds are held in custody by a bank on
behalf of the owners. These custodial receipts are known by various names,
including "Treasury Receipts," "Treasury Investors Growth Receipts" and
"Certificates of Accrual on Treasury Securities." Although custodial receipts
are not considered U.S. Government securities, they are indirectly issued or
guaranteed as to principal and interest by the U.S. Government, its agencies,
authorities or instrumentalities. The Pilot Intermediate Municipal Bond Fund and
Pilot Municipal Bond Fund (the "Municipal Bond Funds") may acquire custodial
receipts that evidence ownership of future interest payments, principal payments
or both on certain municipal notes and bonds. Custodial receipts will be treated
as illiquid securities.

CORPORATE DEBT SECURITIES

Each Fund may invest in corporate debt securities of domestic issuers
of all types and maturities, such as bonds, debentures, notes and commercial
paper. Corporate debt securities may involve equity features, such as conversion
or exchange rights or warrants for the acquisition of stock of the same or a
different issuer; participation based on revenue, sales or profits; or the
purchase of common stock or warrants in a unit transaction (where corporate debt
obligations and

B-3
<PAGE> 130
common stock are offered as a unit). Each Fund except the Municipal Bond Funds
may also invest in corporate debt securities of foreign issuers.

U.S. AND FOREIGN BANK OBLIGATIONS

These obligations include negotiable certificates of deposit, banker's
acceptances and fixed time deposits. Each Fund limits its investments in
domestic bank obligations to banks having total assets in excess of $1 billion
and subject to regulation by the U.S. Government. Each Fund may also invest in
certificates of deposit issued by members of the Federal Deposit Insurance
Corporation ("FDIC") having total assets of less than $1 billion, provided that
the Fund will at no time own more than $100,000 principal amount of certificates
of deposit (or any higher principal amount which in the future may be fully
covered by FDIC insurance) of any one of those issuers. Fixed time deposits are
obligations which are payable at a stated maturity date and bear a fixed rate of
interest. Generally, fixed time deposits may be withdrawn on demand by a Fund,
but they may be subject to early withdrawal penalties which vary depending upon
market conditions and the remaining maturity of the obligation. Although fixed
time deposits do not have a market, there are no contractual restrictions on a
Fund's right to transfer a beneficial interest in the deposit to a third party.

Each Fund limits its investments in foreign bank obligations (i.e.,
obligations of foreign branches and subsidiaries of domestic banks, and domestic
and foreign branches and agencies of foreign banks) to obligations of banks
which at the time of investment are branches or subsidiaries of domestic banks
which meet the criteria in the preceding paragraphs or are branches or agencies
of foreign banks which (i) have more than $10 billion, or the equivalent in
other currencies, in total assets; (ii) in terms of assets are among the 75
largest foreign banks in the world; (iii) have branches or agencies in the
United States; and (iv) in the opinion of Boatmen's, pursuant to criteria
established by the Board of Trustees of the Trust, are of an investment quality
comparable to obligations of domestic banks which may be purchased by a Fund.
These obligations may be general obligations of the parent bank in addition to
the issuing branch or subsidiary, but the parent bank's obligations may be
limited by the terms of the specific obligation or by governmental regulation.
Each Fund also limits its investments in foreign bank obligations to banks,
branches and subsidiaries located in Western Europe (United Kingdom, France,
Germany, Belgium, The Netherlands, Italy and Switzerland), Scandinavia (Denmark
and Sweden), Australia, Japan, the Cayman Islands, the Bahamas and Canada. Each
Fund will limit its investment in securities of foreign banks to not more than
20% of total assets at the time of investment subject to any other applicable
limitations with respect to investments in foreign securities.

Each Fund may also make interest-bearing savings deposits in commercial
and savings banks in amounts not in excess of 5% of the total assets of the
Fund.

MUNICIPAL OBLIGATIONS

Each of the Municipal Bond Funds generally invests in Municipal
Obligations. Municipal Obligations are issued by or on behalf of states,
territories and possessions of the United States and their political
subdivisions, agencies, authorities and instrumentalities and the District of
Columbia to obtain funds for various public purposes. The interest on most of
these obligations is generally exempt from regular federal income tax. The two
principal classifications of Municipal Obligations are "notes" and "bonds."

NOTES. Municipal notes are generally used to provide for short-term
capital needs and generally have maturities of one year or less. Municipal notes
include tax anticipation notes, revenue anticipation notes, bond anticipation
notes, tax and revenue anticipation notes, construction loan notes, tax-exempt
commercial paper and certain receipts for Municipal Obligations.

Tax and revenue anticipation notes are sold to finance working capital
needs of municipalities. Tax anticipation notes are generally payable from
specific tax revenues expected to be received at a

B-4
<PAGE> 131
future date. They are usually general obligations of the issuer. Revenue
anticipation notes are issued in expectation of receipt of other types of
revenue such as state aid to be received by a local issuer. They are not usually
general obligations of the issuer. Tax anticipation notes and revenue
anticipation notes are generally issued in anticipation of various seasonal
revenues such as income, sales, use and business taxes as well as
intergovernmental aid. Bond anticipation notes are sold to provide interim
financing. These notes are generally issued in anticipation of long-term
financing in the market. In most cases, these monies provide for the repayment
of the notes and the notes are not secured by any other source. Construction
loan notes are sold to provide construction financing. These notes are secured
by mortgage notes insured by the Federal Housing Authority; however, the
proceeds from the issuance may be less than the economic equivalent of the
payment of principal and interest on the mortgage notes if there had been a
default. Tax-exempt commercial paper consists of short-term unsecured promissory
notes issued by a state or local government or an authority or agency thereof.

Each Fund may also acquire securities in the form of custodial receipts
which evidence ownership of future interest payments, principal payments or both
on certain state and local governmental and authority obligations when, in the
opinion of bond counsel, interest payments with respect to such custodial
receipts are exempt from federal income taxes. Such obligations are held in
custody by a bank on behalf of the holders of the receipts. These custodial
receipts are known by various names, including "Municipal Receipts" ("MRs") and
"Municipal Certificates of Accrual on Tax-Exempt Securities" ("M-CATS").

There are a number of other types of notes issued for different
purposes and secured differently from those described above.

BONDS. Municipal bonds, which generally meet longer term capital needs
and have maturities of more than one year when issued, have two principal
classifications, "general obligation" bonds and "revenue" bonds.

General obligation bonds are issued by entities such as states,
counties, cities, towns and regional districts and are used to fund a wide range
of public projects including the construction or improvement of schools,
highways and roads, water and sewer systems and a variety of other public
purposes. The basic security of general obligation bonds is the issuer's pledge
of its faith, credit and taxing power for the payment of principal and interest.
The taxes that can be levied for the payment of debt service may be limited or
unlimited as to rate or amount or special assessments.

Revenue bonds have been issued to fund a wide variety of capital
projects, including electric, gas, water and sewer systems; highways, bridges
and tunnels; port and airport facilities; colleges and universities; and
hospitals. The principal security for a revenue bond is generally the net
revenues derived from a particular facility or group of facilities or, in some
cases, from the proceeds of a special excise tax or other specific revenue
source. Although the principal security behind these bonds varies widely, many
issuers provide additional security in the form of a debt service reserve fund
whose monies may also be used to make principal and interest payments on the
issuer's obligations. Housing finance authorities have a wide range of security
including partially or fully insured, rent subsidized mortgages, collateralized
mortgages, and the net revenues from housing or other public projects. In
addition to a debt service reserve fund, some authorities provide further
security in the form of a state's ability (without obligation) to make up
deficiencies in the debt service reserve fund. Lease rental revenue bonds issued
by a state or local authority for capital projects are secured by annual lease
rental payments from the state or locality to the authority sufficient to cover
debt service on the authority's obligations. Such obligations shall be treated
as illiquid securities, unless the Board of Trustees determines that they are
liquid.

Private activity bonds, a term that includes certain types of bonds,
the proceeds of which are used to a specified extent for the benefit of persons
other than governmental units, although nominally issued by municipal
authorities, are generally secured not by the taxing power of the municipality
but

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<PAGE> 132
by the revenues of the authority derived from payments by the industrial user.
Each of the Municipal Bond Funds may invest in private activity bonds. The
interest from such bonds would be an item of tax preference to shareholders
under the federal alternative minimum tax.

Generally, the Municipal Obligations that may be purchased by Pilot
Intermediate Municipal Bond Fund will have remaining effective maturities
between three and ten years. Each Municipal Bond Fund may also purchase
long-term bonds (sometimes referred to as "Put Bonds"), which are subject to a
Fund's commitment to put the bond back to the issuer at par at a designated time
and the issuer's commitment to so purchase the bond at such price and time. For
purposes of computing Pilot Intermediate Municipal Bond Fund's average weighted
maturity, an instrument will be treated as having a maturity earlier than its
stated maturity date if the instrument has technical features (such as puts or
demand features) or a variable rate of interest which, in the judgment of
Boatmen's, will result in the instrument being valued in the market as though it
has the earlier maturity.

Each of the Municipal Bond Funds may purchase long-term fixed-rate
bonds that have been coupled with an option granted by a third party financial
institution allowing the Fund, at periodic intervals (usually every six months,
but in no event more than every twelve months), to tender (or "put") its bonds
to the institution and receive the face value thereof. The Fund may be assessed
"tender fees" for each tender period at a rate equal to the difference between
the bonds' fixed coupon rate and the rate, as determined by a remarketing or
similar agent, that would cause the bonds coupled with the tender option to
trade at par on the date of such determination.

In addition to the instruments described above, there are a variety of
hybrid and special types of Municipal Obligations as well as numerous
differences in the security of Municipal Obligations both within and between the
two principal classifications above.

Each of the Municipal Bond Funds may purchase Municipal Obligations
that are backed by letters of credit issued by domestic banks or foreign banks
that have a branch, agency or subsidiary in the United States. See "Foreign
Securities" for information concerning credit risks of foreign bank obligations.

Certain Municipal Obligations may be insured at the time of issuance as
to the timely payment of principal and interest. The insurance policies will
usually be obtained by the issuer of the Municipal Obligations at the time of
its original issuance. In the event that the issuer defaults on an interest or
principal payment, the insurer of the obligation is required to make payment to
the bondholders upon proper notification. There is, however, no guarantee that
the insurer will meet its obligations. In addition, such insurance will not
protect against market fluctuations caused by changes in interest rates and
other factors. Each of the Municipal Bond Funds may, from time to time, invest
more than 25% of its total assets in Municipal Obligations covered by insurance
policies.

For the purpose of the investment restrictions of each Fund, the
identification of the "issuer" of Municipal Obligations that are not general
obligation bonds is made by Boatmen's on the basis of the characteristics of the
obligation as described above, the most significant of which is the source of
funds for the payment of principal of and interest on such obligations.

An entire issue of Municipal Obligations may be purchased by one or a
small number of institutional investors such as one of the Municipal Bond Funds.
Unlike securities that must be registered under the Securities Act of 1933 prior
to offer and sale, unless an exemption from such registration is available,
Municipal Obligations that are not publicly offered may nevertheless be readily
marketable. A secondary market exists for Municipal Obligations that were not
publicly offered initially.

Securities purchased for each of the Municipal Bond Funds are subject
to the policy on holdings of securities that are not readily marketable.
Boatmen's determines whether a Municipal Obligation is readily marketable based
on whether it may be sold in a reasonable time consistent with the customs

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<PAGE> 133
of the municipal markets (usually seven days) at a price (or interest rate)
which accurately reflects its value. Boatmen's believes that the quality
standards applicable to the Funds' investments enhance marketability. In
addition, standby commitments and demand obligations also enhance marketability.

Yields on Municipal Obligations depend on a variety of factors,
including municipal bond market conditions, the size of a particular offering,
the maturity of the obligation and the quality of the issue. Higher quality
Municipal Obligations tend to have a lower yield than lower quality obligations.
Municipal Obligations are subject to the provisions of bankruptcy, insolvency
and other laws affecting the rights and remedies of creditors, such as the
Federal Bankruptcy Code, and laws, if any, that may be enacted by Congress or
state legislatures extending the time for payment of principal or interest, or
both, or imposing other constraints upon enforcement of such obligations or
municipalities' power to levy taxes. Litigation or other conditions may
materially affect the power or ability of any issuer to pay when due principal
of and interest on its Municipal Obligations.

Each of the Municipal Bond Funds may also purchase resource recovery
bonds. The viability of the resource recovery project, environmental protection
regulations and project operator tax incentives may affect the value and credit
quality of resource recovery bonds.

Neither Municipal Bond Fund currently intends to invest in taxable
obligations; however, each Fund may from time to time invest a portion of its
assets in fixed-income obligations whose interest payments are subject to
federal income tax. Each Fund may invest in taxable obligations pending the
investment or reinvestment in Municipal Obligations of proceeds from sales of
Fund Shares or sales of portfolio securities. Each Fund may also invest in
highly liquid, taxable obligations to avoid the necessity of liquidating
portfolio investments to meet redemption requests by Fund Shareholders.

From time to time, proposals have been introduced before Congress for
the purpose of restricting or eliminating the federal income tax exemption for
the interest on Municipal Obligations.
For example, pursuant to federal tax legislation passed in 1986, interest on
certain private activity bonds must be included in an investor's federal
alternative minimum taxable income, and corporate investors must include all
tax-exempt interest in their federal alternative minimum taxable income. The
Trust cannot, of course, predict what legislation, if any, may be proposed in
the future as regards the income tax status of interest on Municipal
Obligations, or which proposals, if any, might be enacted. Such proposals, while
pending or if enacted, might materially and adversely affect the availability of
Municipal Obligations for investment by the Municipal Bond Funds and the
liquidity and value of those Funds' portfolios. In such an event, the Trust
would reevaluate the investment objectives and policies of the Municipal Bond
Funds and consider possible changes in their structure or possible dissolution.

STANDBY COMMITMENTS

In order to enhance the liquidity, stability or quality of Municipal
Obligations, each of the Municipal Bond Funds may acquire the right to sell a
security to another party at a guaranteed price and date. Such a right to resell
may be referred to as a put, demand feature or "standby commitment," depending
on its characteristics. The aggregate price that a Fund pays for securities with
standby commitments may be higher than the price that the Fund otherwise would
pay for the securities.

Standby commitments may involve letters of credit issued by domestic or
foreign banks supporting the other party's ability to purchase the security from
a Fund. The right to sell may be exercisable on demand or at specified
intervals, and may form part of a security or be acquired separately by the
Fund. In considering whether a security meets a Fund's quality standards,
Boatmen's will look to the creditworthiness of the party providing the Fund with
the right to sell as well as to the quality of the security itself.

No value is assigned to the standby commitments for purposes of
determining the Fund's net asset value. The cost of a standby commitment is
carried as unrealized depreciation from the time of

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<PAGE> 134
purchase until it is exercised or expires. Because the value of a standby
commitment is dependent on the ability of the standby commitment writer to meet
its obligation to repurchase, each Fund's policy is to enter into standby
commitment transactions only with banks, brokers or dealers that represent a
minimal risk of default. The duration of standby commitments will not be a
factor in determining the average weighted maturity of a Fund. There is no
assurance that standby commitments will be available to a Fund, nor have the
Funds assumed that such commitments would continue to be available under all
market conditions.

WHEN-ISSUED SECURITIES, FORWARD COMMITMENTS AND DELAYED SETTLEMENTS

Each Fund may purchase securities on a when-issued basis or purchase or
sell securities on a forward commitment or delayed settlement basis. These
transactions involve a commitment by a Fund to purchase or sell securities at a
future date. The price of the underlying securities (usually expressed in terms
of yield) and the date on which the securities will be delivered and paid for
(the settlement date) are fixed at the time the transaction is negotiated.
When-issued purchases and forward commitment and delayed settlement transactions
are negotiated directly with the other party, and such commitments are not
traded on exchanges.

A Fund will purchase securities on a when-issued basis or purchase or
sell securities on a forward commitment or delayed settlement basis only with
the intention of completing the transaction and actually purchasing or selling
the securities. If deemed advisable as a matter of investment strategy, however,
a Fund may dispose of or renegotiate a commitment after entering into it. A Fund
also may sell securities it has committed to purchase before those securities
are delivered to the Fund on the settlement date. A Fund may realize a capital
gain or loss in connection with these transactions.

When a Fund purchases securities on a when-issued, forward commitment
or delayed settlement basis, the Fund's custodian or subcustodian will maintain
in a segregated account liquid assets having a value (determined daily) at least
equal to the amount of the Fund's purchase commitments. In the case of a forward
commitment or delayed settlement transaction to sell portfolio securities
subject to such commitment, the custodian or subcustodian will hold the
portfolio securities themselves in a segregated account while the commitment is
outstanding. These procedures are designed to ensure that a Fund will maintain
sufficient assets at all times to cover its obligations under when-issued
purchases, forward commitments and delayed settlements.

CONVERTIBLE SECURITIES

Pilot Diversified Bond Income Fund may invest in convertible
securities, such as bonds, notes, debentures, preferred stocks and other
securities that may be converted into common stock. All convertible securities
purchased by the Fund will be rated at least A or its equivalent by an NRSRO or,
if unrated, determined by Boatmen's to be of comparable quality. Investments in
convertible securities can provide income through interest and dividend payments
as well as an opportunity for capital appreciation by virtue of their conversion
or exchange features.

The convertible securities in which the Fund may invest include
fixed-income and zero coupon debt securities, and preferred stock that may be
converted or exchanged at a stated or determinable exchange ratio into
underlying shares of common stock. The exchange ratio for any particular
convertible security may be adjusted from time to time due to stock splits,
dividends, spin-offs, other corporate distributions or scheduled changes in the
exchange ratio. Convertible debt securities and convertible preferred stocks,
until converted, have general characteristics similar to both debt and equity
securities. Although to a lesser extent than with debt securities generally, the
market value of convertible securities tends to decline as interest rates
increase and, conversely, tends to increase as interest rates decline. In
addition, because of the conversion or exchange feature, the market value of
convertible securities typically changes as the market value of the underlying
common stock changes, and, therefore, also tends to follow movements in the
general market for equity securities.

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A unique feature of convertible securities is that as the market price of the
underlying common stock declines, convertible securities tend to trade
increasingly on a yield basis, and so may not experience market value declines
to the same extent as the underlying common stock. When the market price of the
underlying common stock increases, the price of a convertible security tends to
rise as a reflection of the value of the underlying common stock, although
typically not as much as the price of the underlying common stock. While no
securities investments are without risk, investments in convertible securities
generally entail less risk than investments in common stock of the same issuer.

As debt securities, convertible securities are investments which
provide for a stream of income or, in the case of zero coupon securities,
accretion of income with generally higher yields than common stocks. Of course,
like all debt securities, there can be no assurance of income or principal
payments because the issuers of the convertible securities may default on their
obligations. Convertible securities generally offer lower yields than
non-convertible securities of similar quality because of their conversion or
exchange features.

Convertible securities generally are subordinated to other similar but
non-convertible securities of the same issuer, although convertible bonds, as
corporate debt obligations, are senior in right of payment to all equity
securities, and convertible preferred stock is senior to common stock, of the
same issuer. However, convertible bonds and convertible preferred stock
typically have lower coupon rates than similar non-convertible securities.

Convertible securities may be issued as fixed income obligations that
pay current income or as zero coupon notes and bonds, including Liquid Yield
Option Notes ("LYONs"). Zero coupon securities pay no cash income and are sold
at substantial discounts from their value at maturity. When held to maturity,
their entire income, which consists of accretion of discount, comes from the
difference between the issue price and their value at maturity. Zero coupon
convertible securities offer the opportunity for capital appreciation because
increases (or decreases) in the market value of such securities closely follow
the movements in the market value of the underlying common stock. Zero coupon
convertible securities generally are expected to be less volatile than the
underlying common stocks because they usually are issued with short maturities
(15 years or less) and are issued with options and/or redemption features
exercisable by the holder of the obligation entitling the holder to redeem the
obligation and receive a defined cash payment.

FOREIGN SECURITIES

Pilot Intermediate U.S. Government Securities Fund and Pilot U.S.
Government Securities Fund (the "Government Funds") and Pilot Diversified Bond
Income Fund may invest in foreign securities either directly or indirectly
through American Depository Receipts ("ADRs"), which are receipts issued by an
American bank or trust company evidencing ownership of underlying securities
issued by a foreign issuer, or through European Depository Receipts ("EDRs"),
which are receipts issued by European financial institutions evidencing
ownership of underlying securities issued by a foreign issuer. ADRs may be
listed on a national securities exchange or may trade in the over-the-counter
market. ADR prices are denominated in United States dollars while EDR prices are
generally denominated in foreign currencies. The securities underlying an ADR or
EDR will normally be denominated in a foreign currency. The underlying
securities may be subject to foreign government taxes which could reduce the
yield on such securities.

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Stock Exchange (the "Exchange"), and securities of some foreign companies are
less liquid and more volatile than securities of domestic companies. Similarly,
volume and liquidity in most foreign bond markets is less than in United States
markets and at times, volatility of price can be greater than in United States
markets. Further, foreign markets have different clearance and settlement
procedures and in certain markets there have been times when settlements have
not kept pace with the volume of securities transactions making it difficult to
conduct such transactions. Delays in settlement could result in temporary
periods when assets of each Fund are uninvested and no return is earned thereon.
Also, delivery of securities before payment may be required in some countries.
The inability of a Fund to make intended security purchases due to settlement
problems could cause a Fund to miss attractive investment opportunities.
Inability to dispose of portfolio securities due to settlement problems could
result either in losses to a Fund due to subsequent declines in value of the
portfolio security or, if the Fund has entered into a contract to sell the
security, in possible liability to the purchaser. Fixed commissions on some
foreign stock exchanges are generally higher than negotiated commissions on U.S.
exchanges, although a Fund will endeavor to achieve the most favorable net
results on its portfolio transactions. Further, a Fund may encounter
difficulties or be unable to pursue legal remedies and obtain judgments in
foreign courts. There is generally less government supervision and regulation of
business and industry practices, stock exchanges, brokers and listed companies
in foreign countries than in the United States. Communications between the
United States and foreign countries may be less reliable than within the United
States, thus increasing the risk of delayed settlements of portfolio
transactions or loss of certificates for portfolio securities. In addition, with
respect to certain foreign countries, there is the possibility of expropriation
or confiscatory taxation, political or social instability, or diplomatic
developments, which could affect United States investments in those countries.
Moreover, individual foreign economies may differ favorably or unfavorably from
the United States economy in such respects as growth of gross national product,
rate of inflation, capital reinvestment, resource self-sufficiency and balance
of payments position. Each Fund seeks to mitigate the risks associated with the
foregoing considerations through diversification and continuous professional
management.

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS

Pilot Diversified Bond Income Fund and the Government Funds may invest
in forward foreign currency exchange contracts ("forward contracts") for hedging
and to seek to increase total return. A forward contract involves an obligation
to purchase or sell a specific currency at a future date, which may be any fixed
number of days from the date of the contract agreed upon by the parties, at a
price set at the time of the contract. These contracts are individually
negotiated and privately traded in the interbank market by currency traders
(usually large commercial banks) and their customers. A forward contract
generally has no deposit requirement, and no commissions are charged at any
stage for trades.

The maturity date of a forward contract may be any fixed number of days
from the date of the contract agreed upon by the parties, rather than a
predetermined date in a given month, and forward contracts may be in any amounts
agreed upon by the parties rather than predetermined amounts. Closing purchase
transactions with respect to forward contracts are usually effected with the
currency trader who is a party to the original forward contract. A Fund may be
required to segregate liquid assets to cover forward contracts that require it
to purchase foreign currency.

When the Adviser believes that the currency of a specific country may
deteriorate against another currency, it may enter into a forward contract to
sell the less attractive currency and buy the more attractive one. This practice
is referred to as "cross-hedging." The amount in question could be less than or
equal to the value of a Fund's securities denominated in the less attractive
currency.

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attractive currency. For example, if the Austrian Schilling is linked to the
German Deutsche Mark (the "D-mark"), the Fund holds securities denominated in
Austrian Schillings and Boatmen's believes that the value of Schillings will
decline against the British Pound, the Fund may enter into a contract to sell
D-marks and buy Pounds. This practice is referred to as "proxy hedging." Proxy
hedging involves the risk that the amount of currencies involved may not equal
the value of the Fund's securities denominated in the currency expected to
deteriorate and improperly anticipated currency movements could result in losses
to the Fund. Further, there is the risk that the linkage between various
currencies may change or be eliminated.

The Fund's activities involving forward contracts may be limited by the
requirements of Subchapter M of the Internal Revenue Code for qualification as a
regulated investment company.

ASSET-BACKED AND MORTGAGE-BACKED SECURITIES

Each Fund may invest in securities backed by installment contracts,
credit card receivables and other assets. These asset-backed securities
represent interests in pools of assets in which payment of both interest and
principal on the securities are made monthly, thus in effect passing through
(net of fees paid to the issuer or guarantor of the securities) the monthly
payments made by the individual borrowers on the assets that underlie the
asset-backed securities. Each Fund may also make significant investments in U.S.
Government securities that are backed by adjustable or fixed-rate mortgage
loans.

The average life of an asset-backed or mortgage-backed instrument
varies with the maturities of the underlying instruments. In the case of
mortgages, maturities may be a maximum of forty years. The average life of an
asset-backed or mortgage-backed instrument is likely to be substantially less
than the original maturity of the asset or mortgage pools underlying the
security as the result of scheduled principal payments and prepayments. This may
be particularly true for mortgage-backed securities.

Non-mortgage asset-backed securities involve certain risks that are not
presented by mortgage-backed securities. Primarily, these securities do not have
the benefit of the same security interest in the underlying collateral. Credit
card receivables are generally unsecured and the debtors are entitled to the
protection of a number of state and federal consumer credit laws, many of which
have given debtors the right to set off certain amounts owed on the credit
cards, thereby reducing the balance due. Most issuers of automobile receivables
permit the servicers to retain possession of the underlying obligations. If the
servicer were to sell these obligations to another party, there is a risk that
the purchaser would acquire an interest superior to that of the holders of the
related automobile receivables. In addition, because of the large number of
vehicles involved in a typical issuance and technical requirements under state
laws, the trustee for the holders of the automobile receivables may not have an
effective security interest in all of the obligations backing such receivables.
Therefore, there is a possibility that recoveries on repossessed collateral may
not, in some cases, be able to support payments on these securities.

Presently there are several types of mortgage-backed securities issued
or guaranteed by U.S. Government agencies, including guaranteed mortgage
pass-through certificates, which provide the holder with a pro rata interest in
the underlying mortgages, and collateralized mortgage obligations ("CMOs"),
which provide the holder with a specified interest in the cash flow of a pool of
underlying mortgages or other mortgage-backed securities. Issuers of CMOs
frequently elect to be taxed as a pass-through entity known as real estate
mortgage investment conduits, or REMICs. CMOs are issued in multiple classes,
each with a specified fixed or floating interest rate and a final distribution
date. Although the relative payment rights of these classes can be structured in
a number of different ways, most often payments of principal are applied to the
CMO classes in the order of their respective stated maturities.

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CMO classes may include accrual certificates (also known as "Z-Bonds"),
which only accrue interest at a specified rate until other specified classes
have been retired and are converted thereafter to interest-paying securities.
They may also include planned amortization classes ("PAC") which generally
require, within certain limits, that specified amounts of principal be applied
on each payment date, and generally exhibit less yield and market volatility
than other classes. The Funds will not purchase "residual" CMO interests, which
normally exhibit the greatest price volatility.

CMOs may expose a Fund to more volatility and interest rate risk than
other types of mortgage-backed obligations.

REPURCHASE AGREEMENTS

Each Fund may enter into repurchase agreements with selected
brokers-dealers, banks or other financial institutions. A repurchase agreement
is an arrangement under which the purchaser (i.e., a Fund) purchases a U.S.
Government or other high quality short-term debt obligation (the "Obligation")
and the seller agrees at the time of sale to repurchase the Obligation at a
specified time and price.

Custody of the Obligation will be maintained by the Fund's custodian or
subcustodian. The repurchase price may be higher than the purchase price, the
difference being income to the Fund, or the purchase and repurchase prices may
be the same, with interest at a stated rate due to the Fund together with the
repurchase price on repurchase. In either case, the income to the Fund is
unrelated to the interest rate on the Obligation subject to the repurchase
agreement.

Repurchase agreements pose certain risks for all entities, including
the Funds, that utilize them. Such risks are not unique to the Funds but are
inherent in repurchase agreements. The Funds seek to minimize such risks by,
among others, the means indicated below, but because of the inherent legal
uncertainties involved in repurchase agreements, such risks cannot be
eliminated.

For purposes of the Investment Company Act of 1940 (the "1940 Act"), a
repurchase agreement is deemed to be a loan from the Fund to the seller of the
Obligation. It is not clear whether for other purposes a court would consider
the Obligation purchased by the Fund subject to a repurchase agreement as being
owned by the Fund or as being collateral for a loan by the Fund to the seller.

If in the event of bankruptcy or insolvency proceedings against the
seller of the Obligation, a court holds that the Fund does not have a perfected
security interest in the Obligation, the Fund may be required to return the
Obligation to the seller's estate and be treated as an unsecured creditor of the
seller. As an unsecured creditor, a Fund would be at risk of losing some or all
of the principal and income involved in the transaction. To minimize this risk,
the Funds utilize custodians and subcustodians that Boatmen's believes follow
customary securities industry practice with respect to repurchase agreements,
and Boatmen's analyzes the creditworthiness of the obligor, in this case the
seller of the Obligation. But because of the legal uncertainties, this risk,
like others associated with repurchase agreements, cannot be eliminated.

Also, in the event of commencement of bankruptcy or insolvency
proceedings with respect to the seller of the Obligation before repurchase of
the Obligation under a repurchase agreement, the Fund may encounter delay and
incur costs before being able to sell the security. Such a delay may involve
loss of interest or a decline in price of the Obligation.

Apart from risks associated with bankruptcy or insolvency proceedings,
there is also the risk that the seller may fail to repurchase the security.
However, if the market value of the Obligation subject to the repurchase
agreement becomes less than the repurchase price (including accrued interest),
the Fund will direct the seller of the Obligation to deliver additional
securities so that the

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market value of all securities subject to the repurchase agreement equals or
exceeds the repurchase price.

Certain repurchase agreements which provide for settlement in more than
seven days can be liquidated before the nominal fixed term on seven days or less
notice. Such repurchase agreements will be regarded as illiquid instruments.

Each Fund may also enter into repurchase agreements with any party
deemed creditworthy by Boatmen's including foreign banks and broker-dealers, if
the transaction is entered into for investment purposes and the counterparty's
creditworthiness is at least equal to that of issuers of securities which a Fund
may purchase.

REVERSE REPURCHASE AGREEMENTS

At the time a Fund enters into a reverse repurchase agreement (an
agreement under which a Fund sells portfolio securities and agrees to repurchase
them at an agreed-upon date and price), it will place in a segregated custodial
account liquid assets having a value equal to or greater than the repurchase
price (including accrued interest) and will subsequently monitor the account to
ensure that such value is maintained. Reverse repurchase agreements involve the
risk that the market value of the securities sold by a Fund may decline below
the price of the securities it is obligated to repurchase. Reverse repurchase
agreements are considered to be borrowings under the 1940 Act.

VARIABLE AND FLOATING RATE INSTRUMENTS

With respect to the variable and floating rate instruments that may be
acquired by the Funds as described in the Prospectuses, Boatmen's will consider
the earning power, cash flows and other liquidity ratios of the issuers and
guarantors of such instruments and, if the instrument is subject to a demand
feature, will monitor their financial status to meet payment on demand.

In determining a Fund's average weighted portfolio maturity, an
instrument will usually be deemed to have a maturity equal to the longer of the
period remaining until the next regularly scheduled interest rate adjustment or
the time the Fund involved can recover payment of principal as specified in the
instrument. Such instruments which are U.S. Government obligations and certain
variable rate instruments having a nominal maturity of 397 days or less when
purchased by the Fund involved, however, will be deemed to have maturities equal
to the period remaining until the next interest rate adjustment.

LENDING OF PORTFOLIO SECURITIES

When a Fund lends its securities, it continues to receive interest on
the securities loaned and may simultaneously earn interest on the investment of
the cash loan collateral which will be invested in readily marketable,
high-quality, short-term obligations. Although voting rights, or rights to
consent, attendant to securities on loan pass to the borrower, such loans will
be called so that the securities may be voted by a Fund if a material event
affecting the investment is to occur. Portfolio loans will be continuously
secured by collateral equal at all times in value to at least the market value
of the securities loaned plus accrued interest. Collateral for such loans may
include cash, U.S. Government securities, securities of U.S. Government agencies
and instrumentalities or an irrevocable letter of credit issued by a bank which
meets the investment standards of a Fund for short-term instruments. There may
be risks of delay in receiving additional collateral or in recovering the
securities loaned or even a loss of rights in the collateral should the borrower
of the securities fail financially.

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OTHER INVESTMENT COMPANIES

In seeking to attain its investment objective, each Fund may invest in
securities issued by other investment companies within the limits prescribed by
the 1940 Act. Each Fund currently intends to limit its investments so that, as
determined immediately after a securities purchase is made: (a) not more than 5%
of the value of its total assets will be invested in the securities of any one
investment company; (b) not more than 10% of the value of its total assets will
be invested in the aggregate in securities of investment companies as a group;
and (c) not more than 3% of the outstanding voting stock of any one investment
company will be owned by the Fund or by the Trust as a whole.

The Pilot Funds has received exemptive relief from the Securities and
Exchange Commission to permit each Fund to use cash reserves not invested in
portfolio securities to purchase shares of one or more of any existing or future
series of the Trust which holds itself out to the public as a money market fund
and is subject to the requirements of Rule 2a-7 under the Investment Company Act
of 1940, as amended (a "Money Market Fund"), and to permit each Money Market
Fund to sell and redeem its shares in transactions with each Fund. Pursuant to
this exemptive relief, each Fund may purchase shares of a Money Market Fund
without regard to the limits in the preceding paragraph provided the Fund's
aggregate investment in Money Market Funds does not exceed 25% of the Fund's
total assets. In addition, each Fund's investment in Money Market Funds will be
disregarded in determining compliance with the limitations in the preceding
paragraph.

As a shareholder of another investment company, each Fund bears, along
with other shareholders, its pro rata portion of the other investment company's
expenses, including advisory fees. These expenses are in addition to the
advisory and other expenses that the Fund bears in connection with its own
operations.

"STRIPPED SECURITIES"

Each Fund may purchase stripped securities issued or guaranteed by the
U.S. Government, where the principal and interest components are traded
independently under the Separate Trading of Registered Interest and Principal of
Securities program ("STRIPS"). Under STRIPS, the principal and interest
components are individually numbered and separately issued by the U.S. Treasury
at the request of depository financial institutions, which then trade the
component parts independently.

In addition, each Fund may purchase stripped mortgage-backed securities
("SMBS") issued by the U.S. Government (or a U.S. Government agency or
instrumentality) or by private issuers such as banks and other institutions. If
the underlying obligations experience greater than anticipated prepayments of
principal, a Fund may fail to fully recover its initial investment. The market
value of the class consisting entirely of principal payments can be extremely
volatile in response to changes in interest rates. The yields on a class of SMBS
that receives all or most of the interest are generally higher than prevailing
market yields on other mortgage-backed obligations because their cash flow
patterns are also volatile and there is a greater risk that the initial
investment will not be full recovered. SMBS issued by the U.S. Government (or a
U.S. Government agency or instrumentality) may be considered liquid under
guidelines established by the Trust's Board of Trustees if they can be disposed
of promptly in the ordinary course of business at a value reasonably close to
that used in the calculation of a Fund's per share net asset value.

Although "stripped" securities may not pay interest to holders prior to
maturity, federal income tax regulations require a Fund to recognize as interest
income a portion of the bond's discount each year. This income must then be
distributed to shareholders along with other income earned by the Fund. To the
extent that any shareholders in a Fund elect to receive their dividends in cash
rather than reinvest such dividends in additional Fund shares, cash to make
these distributions will have to be provided from the assets of the Fund or
other sources such as proceeds of sales of Fund shares and/or sales of portfolio
securities. In such cases, the Fund will not be able to purchase additional

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income-producing securities with cash used to make such distributions and its
current income may ultimately be reduced as a result.

PARTICIPATION INTERESTS AND TRUST RECEIPTS

Each Fund may purchase from domestic financial institutions and trusts
created by such institutions participation interests and trust receipts in high
quality debt securities. A participation interest or receipt gives a Fund an
undivided interest in the security in the proportion that a Fund's participation
interest or receipt bears to the total principal amount of the security. As to
certain instruments for which a Fund will be able to demand payment, a Fund
intends to exercise its right to do so only upon a default under the terms of
the security, as needed to provide liquidity, or to maintain or improve the
quality of its investment portfolio. It is possible that a participation
interest or trust receipt may be deemed to be an extension of credit by a Fund
to the issuing financial institution rather than to the obligor of the
underlying security and may not be directly entitled to the protection of any
collateral security provided by the obligor. In such event, the ability of a
Fund to obtain repayment could depend on the issuing financial institution.

Participation interests and trust receipts may have fixed, floating or
variable rates of interest, and will have remaining maturities of thirteen
months or less (as defined by the Securities and Exchange Commission). If a
participation interest or trust receipt is unrated, Boatmen's will have
determined that the interest or receipt is of comparable quality to those
instruments in which the Fund involved may invest pursuant to guidelines
approved by the Board of Trustees. For certain participation interests or trust
receipts a Fund will have the right to demand payment, on not more than 30 days'
notice, for all or any part of the Fund's participation interest or trust
receipt in the securities involved, plus accrued interest.

OPTIONS ON SECURITIES AND INDICES

Each Fund may purchase and sell (write) both call and put options
listed on a national securities exchange and issued by the Options Clearing
Corporation as well as over-the-counter or OTC options (options not traded on
exchanges). Such options may relate to particular securities or to various
indices.

An option on a security (or index) is a contract that gives the holder
of the option, in return for a premium paid, the right to buy from (in the case
of a call) or sell to (in the case of a put) the seller ("writer") of the option
the security underlying the option (or the cash value of the index) at a
specified exercise price at any time during the term of the option. The writer
of an option on a security has the obligation upon exercise of the option to
deliver the underlying security upon payment of the exercise price or to pay the
exercise price upon delivery of the underlying security. Upon exercise, the
writer of an option on an index is obligated to pay the difference between the
closing price of the index and the exercise price of the option, expressed in
dollars, times a specified multiple (the "multiplier"). (An index is designed to
reflect specified facets of a particular financial or securities market, a
specified group of financial instruments or securities, or certain economic
indicators.) Unlike exchange-traded options, which are standardized with respect
to the underlying instrument, expiration date, contract size, and strike price,
the terms of over-the-counter ("OTC") options generally are established through
negotiation with the other party to the option contract. Although this type of
arrangement allows a Fund greater flexibility to tailor an option to its needs,
OTC options generally involve greater credit risk than exchange-traded options,
which are guaranteed by the clearing organization of the exchanges where they
are traded.

If an option written by a Fund expires, the Fund realizes a capital
gain equal to the premium received at the time the option was written. If an
option purchased by a Fund expires unexercised, the Fund realizes a capital loss
equal to the premium paid.

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Prior to the earlier of exercise or expiration, an option may be closed
out by an offsetting purchase or sale of an option of the same series (type,
exchange, underlying security or index, exercise price and expiration) or, in
the case of some OTC options, by fulfilling the terms of an agreement with the
common party permitting the Fund to close out the option. There can be no
assurance, however, that a closing purchase or sale transaction can be effected
when a Fund desires.

A Fund will realize a capital gain from a closing purchase transaction
if the cost of the closing option is less than the premium received from writing
the option and will realize a capital loss if it is more. If the premium
received from a closing sale transaction is more than the premium paid to
purchase the option, the Fund will realize a capital gain, or if it is less, the
Fund will realize a capital loss. The principal factors affecting the market
value of a put or a call option include supply and demand, interest rates, the
current market price of the underlying security or index in relation to the
exercise price of the option, the volatility of the underlying security or
index, and the time remaining until the expiration date.

There are several risks associated with transactions in options on
securities and on indices. For example, there are significant differences
between the securities and options markets that could result in an imperfect
correlation between these markets, causing a given transaction not to achieve
its objectives.

There can be no assurance that a liquid market will exist when a Fund
seeks to close out an option position. If the Fund were unable to close out an
option it had purchased on a security, it would have to exercise the option to
realize any profit or the option may expire worthless. If a Fund were unable to
close out a covered call option it had written on a security, it would not be
able to sell the underlying security unless the option expired without exercise.
As a writer of a covered call option, the Fund foregoes, during the option's
life, the opportunity to profit from increases in the market value of the
security covering the call option above the sum of the premium and the exercise
price of the call.

If trading were suspended in an option purchased by a Fund, the Fund
would not be able to close out the option. If restrictions on exercise were
imposed, the Fund might be unable to exercise an option it had purchased. Except
to the extent that a call option on an index written by a Fund is covered by an
option on the same index purchased by the Fund, movements in the index may
result in a loss to the Fund; however, such losses may be mitigated by changes
in the value of the Fund's securities during the period the option was
outstanding.

FUTURES CONTRACTS

Each Fund may enter into futures contracts on securities and futures
contracts based on securities indices, which futures are traded on exchanges
that are licensed and regulated by the Commodity Futures Trading Commission
("CFTC"). Each Fund will do so to hedge against anticipated changes in
securities values that would otherwise have an adverse effect upon the value of
portfolio securities or upon securities to be acquired. Futures contracts and
related options entered into by the Funds will be entered into consistent with
CFTC regulations.

Each Fund may take a "short" position in the futures markets by selling
contracts for the future delivery of securities in order to hedge against an
anticipated decline in stock prices. Such futures contracts may include
contracts for the future delivery of securities held by a Fund or securities
with price-fluctuation characteristics similar to those of its portfolio
securities. If, in the opinion of Boatmen's, there is a sufficient degree of
correlation between price trends for a Fund's securities and futures contracts
based on indices, a Fund may also enter into such futures contracts as part of
its hedging strategy. When hedging of this character is successful, any
depreciation in the value of a Fund's securities will substantially be offset by
appreciation in the value of the futures position. On other occasions a Fund may
take a "long" position by purchasing futures contracts. This would be done, for
example, when a Fund anticipates the purchase of particular securities in the
future, but

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expects the price then available in the securities market to be less favorable
than prices that are currently available in the futures markets. Each Fund
expects that, in the normal course, it will terminate the long futures position
when it makes the anticipated purchase; under unusual market conditions,
however, a long futures position may be terminated without the corresponding
purchase of securities.

Futures contracts involve brokerage costs, which may be less than 1% of
the contract price, and require parties to the contract to make "margin"
deposits to secure performance of the contract. Each Fund will be required to
deposit as margin into a segregated custodial account (held subject to the
claims of the Fund's futures broker) an amount of cash or liquid securities
equal to approximately 2% to 5% of the value of each futures contract. This
initial margin is in the nature of a performance bond or good faith deposit on
the contract. Each Fund's position in the futures market will be marked-
to-market on a daily basis; the Funds may subsequently be required to make
"variation" margin payments depending upon whether its futures position declines
or rises in value.

Positions taken in the futures markets are not usually held until the
expiration of the contract but, instead, are normally liquidated through
offsetting transactions, which may result in a profit or a loss. Nevertheless, a
Fund may instead make or take delivery of the underlying securities whenever it
appears economically advantageous for it to do so. A clearing corporation
associated with the exchange on which futures contracts are traded assumes
responsibility for closing out contracts and guarantees that, if the contract is
still open, the sale or purchase of securities will be performed on the
settlement date.

Futures contracts on securities indices do not require the physical
delivery of securities, but merely provide for profits and losses resulting from
changes in the market value of a contract to be credited or debited at the close
of each trading day to the respective accounts of the parties to the contract.
On the contract's expiration date a final cash settlement occurs and the futures
positions are simply closed out. Changes in the market value of a particular
futures contract reflect changes in the value of the securities comprising the
index on which the futures contract is based. Futures contracts based on
securities indices currently are actively traded on the Chicago Board of Trade,
the Chicago Mercantile Exchange, the New York Futures Exchange and the Kansas
City Board of Trade.

OPTIONS ON FUTURES CONTRACTS

Each Fund may also purchase and sell (write) call and put options on
futures contracts, which options are traded on exchanges that are licensed and
regulated by the CFTC. A "call" option on a futures contract gives the purchaser
the right, in return for the premium paid, to buy a futures contract (assume a
long position) at a specified exercise price, by exercising the option at any
time before the option expires. A "put" option gives the purchaser the right, in
return for the premium paid, to sell a futures contract (assume a "short"
position), for a specified exercise price, by exercising the option at any time
before the option expires.

Upon the exercise of a call, the writer of the option is obligated to
sell the futures contract (to deliver a "long" position to the option holder) at
the option exercise price, which will presumably be lower than the then current
market price of the contract in the futures market. Upon exercise of a put, the
writer of the option is obligated to purchase the futures contract (deliver a
"short" position to the option holder) at the option exercise price, which will
presumably be higher than the then current market price of the contract in the
futures market. When a person exercises an option and assumes a long futures
position, in the case of a call, or a short futures position, in the case of a
put, his gain will be credited to his futures margin account, while the loss
suffered by the writer of the option will be debited to his account. However, as
with the trading of futures contracts, most participants in the options markets
do not seek to realize their gains or losses by exercising their option rights.
Instead, the holder of an option will usually realize a gain or loss by buying
or selling an offsetting option at a market price that will reflect an increase
or a decrease from the premium originally paid.

B-17
<PAGE> 144
Options on futures contracts can be used by a Fund to hedge the same
risks as might be addressed by the direct purchase or sale of the underlying
futures contracts. If the Fund purchases an option on a futures contract, it may
obtain benefits similar to those that would result if it held the futures
position itself. But, in contrast to a futures transaction in which only
transaction costs are involved, benefits received in an option transaction in
the event of a favorable market movement will be reduced by the amount of the
premium paid as well as by transaction costs. In the event of an adverse market
movement, however, in contrast to the full market risk of a futures position,
the Fund will not be subject to a risk of loss on the option transaction beyond
the amount of the premium it paid plus its transaction costs. Consequently, the
Fund may benefit from an increase in the value of its portfolio that would have
been more completely offset if the hedge had been effected through the use of a
futures contract.

If a Fund writes options on futures contracts, it will receive a
premium but will assume a risk of adverse movement in the price of the
underlying futures contract comparable to that involved in holding a futures
position. If the option is not exercised, the Fund will gain the amount of the
premium, which may partially offset unfavorable changes in the value of its
portfolio securities held in, or to be acquired for, the Fund. If the option is
exercised, the Fund will incur a loss in the option transaction, which will be
reduced by the amount of the premium it has received. Such loss may partially
offset favorable changes in the value of its portfolio securities.

A Fund will not purchase or sell (write) options on futures contracts
unless, in the opinion of Boatmen's, the market for such options has sufficient
liquidity that the risks associated with such options transactions are at
acceptable levels.

LIMITATIONS ON USE OF FUTURES TRANSACTIONS AND RISK CONSIDERATIONS

Each Fund will incur brokerage fees in connection with its futures
transactions, and each will be required to deposit and maintain funds with its
broker as margin to guarantee performance of its futures obligations. In
addition, while futures contracts will be traded to reduce certain risks,
futures trading itself entails certain other risks. Thus, while a Fund may
benefit from the use of such contracts, unanticipated changes in securities may
result in a poorer overall performance from the Fund than if it had not entered
into any futures contracts. Some futures contracts may not have a broad and
liquid market, in which case the contracts may not be able to be closed at a
fair price and a Fund may lose in excess of the initial margin deposit.
Moreover, in the event of an imperfect correlation between the futures contract
and the portfolio position that is intended to be protected, the desired
protection may not be obtained and a Fund may be exposed to risk of loss.

Tax-related requirements may limit the extent to which a Fund may
engage in futures and related options transactions. (See "Tax Information.")

RESTRICTED AND OTHER ILLIQUID SECURITIES

A Fund may purchase securities that are not registered under the
Securities Act of 1933 or have some other legal or contractual restrictions on
resale in the principal market where the security is traded ("restricted
securities"), but can be offered and sold to "qualified institutional buyers"
under Rule 144A under the Securities Act of 1933. However, a Fund will not
invest more than 15% of the value of its net assets in illiquid securities,
including restricted securities, unless the Trust's Board of Trustees
determines, based upon a continuing review of the trading markets for the
specific Rule 144A security, that such restricted security is liquid. The
Trustees may adopt guidelines and delegate to Boatmen's the daily function of
determining and monitoring liquidity of securities. The Trustees may also
delegate to its Valuation Committee valuation decisions. The Trustees, however,
will retain sufficient oversight and be ultimately responsible for the
determinations. Because it is not possible to predict with assurance exactly how
this market for restricted securities sold and offered under Rule 144A will
develop, the Trustees will carefully monitor each Fund's investments in these
securities,

B-18
<PAGE> 145
focusing on such important factors, among others, as valuation, liquidity and
availability of information. This investment practice could have the effect of
increasing the level of illiquidity in a Fund to the extent that qualified
institutional buyers become for a time uninterested in purchasing these
restricted securities.

COMBINED TRANSACTIONS

A Fund may enter into multiple transactions, including multiple options
transactions, multiple futures transactions, multiple forward foreign currency
exchange contracts and any combination of futures, options and forward foreign
currency exchange contracts ("component" transactions), instead of a single
transaction, as part of a single hedging strategy when, in the opinion of
Boatmen's, it is in the best interest of a Fund to do so and where underlying
hedging strategies are permitted by a Fund's investment policies. A combined
transaction, while part of a single hedging strategy, may contain elements of
risk that are present in each of its component transactions. (See above for the
risk characteristics of certain transactions.)

USE OF SEGREGATED AND OTHER SPECIAL ACCOUNTS

Options, futures and forward foreign currency contracts that obligate a
Fund to provide cash, securities or currencies to complete such transactions
will entail that Fund either segregating assets in an account with, or on the
books of, the Trust's custodian, or otherwise "covering" the transaction as
described below. For example, a call option written by a Fund will require the
Fund to hold the securities subject to the call (or securities convertible into
the needed securities without additional consideration) or liquid assets
sufficient to meet the obligation by purchasing and delivering the securities if
the call is exercised. A call option written on an index will require that Fund
to have portfolio securities that correlate with the index. A put option written
by a Fund also will require that Fund to have available assets sufficient to
purchase the securities the Fund would be obligated to buy if the put is
exercised.

A forward foreign currency contract that obligates a Fund to provide
currencies will require the Fund to hold currencies or liquid assets denominated
in a foreign currency which will equal the Fund's obligations. Such a contract
requiring the purchase of currencies also requires segregation.

Unless a segregated account consists of the securities, cash or
currencies that are the subject of the obligation, a Fund will hold liquid
assets in a segregated account. These assets cannot be transferred while the
obligation is outstanding unless replaced with other suitable assets. In the
case of an index-based transaction, a Fund could own securities substantially
replicating the movement of the particular index.

In the case of a futures contract, a Fund must deposit initial margin
and variation margin, as often as daily if the position moves adversely,
sufficient to meet its obligation to purchase or provide securities or
currencies, or to pay the amount owed at the expiration of an index-based
futures contract. Similarly, options on futures contracts require a Fund to
deposit margin to the extent necessary to meet the Fund's commitments.

In lieu of such assets, such transactions may be covered by other means
consistent with applicable regulatory policies. A Fund may enter into offsetting
transactions so that its combined position, coupled with any segregated assets,
equals its net outstanding obligation in related options and hedging
transactions. For example, a Fund could purchase a put option if the strike
price of that option is the same or higher than the strike price of a put option
sold by that Fund. Moreover, instead of segregating assets if a Fund held a
futures or forward contract, it could purchase a put option on the same futures
or forward contract with a strike price as high or higher than the price of the
contract held. Of course, the offsetting transaction must terminate at the time
of or after the primary transaction.

B-19
<PAGE> 146
INVESTMENT RESTRICTIONS

The Trust, on behalf of each Fund, has adopted fundamental investment
restrictions numbered 1 through 12 which may not be changed with respect to a
Fund without the approval of the holders of a majority of that Fund's
outstanding voting shares. Investment restrictions numbered 13 through 15 are
not fundamental policies and may be changed at any time by vote of a majority of
the Trustees of the Trust.

As used in this Statement of Additional Information, with respect to
matters required by the provisions of the 1940 Act to be submitted to
shareholders, the term "majority of the outstanding shares" of either the Trust
or the Fund means the vote of the lesser of: (i) 67% or more of the shares of
the Trust or Fund present at a meeting, if the holders of more than 50% of the
outstanding shares of the Trust or Fund are present or represented by proxy, or
(ii) more than 50% of the outstanding shares of the Trust or Fund.

As a matter of fundamental policy, each Fund may not:

(1) Purchase or sell real estate, except that each Fund may
purchase securities of issuers which deal in real estate and
may purchase securities which are secured by interests in real
estate and except that each Fund reserves freedom of action to
hold and to sell real estate acquired as a result of the
Fund's ownership of securities.

(2) Acquire any other investment company or investment company
security except in connection with a merger, consolidation,
reorganization or acquisition of assets or where otherwise
permitted by the 1940 Act.

(3) Act as an underwriter of securities within the meaning of the
Securities Act of 1933 except to the extent that the purchase
of obligations directly from the issuer thereof in accordance
with the Fund's investment objective(s), policies and
limitations may be deemed to be underwriting and except to the
extent that it may be deemed an underwriter in connection with
the disposition of the Fund's portfolio securities.

(4) Borrow money, except as a temporary measure for extraordinary
or emergency purposes or except in connection with reverse
repurchase agreements and mortgage rolls; provided that the
Fund maintains asset coverage of 300% for all borrowings.

(5) Issue senior securities, except as appropriate to evidence
indebtedness which it is permitted to incur and except for
shares of the separate classes or series of the Fund provided
that collateral arrangements with respect to currency-related
contracts, futures contracts, options or other permitted
investments, including deposits of initial and variation
margin, are not considered to be the issuance of senior
securities for purposes of this restriction.

(6) Purchase or sell commodity contracts.

(7) Make loans, except that each Fund may purchase and hold debt
instruments and enter into repurchase agreements in accordance
with its investment objective(s) and policies and may lend
portfolio securities.

Pilot Intermediate U.S. Government Securities Fund, Pilot U.S.
Government Securities Fund, Pilot Intermediate Municipal Bond Fund, and Pilot
Municipal Bond Fund may not:

(8) Purchase securities of companies for the purpose of exercising
control.

B-20
<PAGE> 147
All Funds may not:

(9) Purchase securities of any one issuer (other than securities
issued or guaranteed by the U.S. Government, its agencies or
instrumentalists or certificates of deposit for any such
securities) if, immediately after such purchase, more than 5%
of the value of the Fund's total assets would be invested in
the securities of such issuer, or more than 10% of the
issuer's outstanding voting securities would be owned by the
Fund or the Trust; except that up to 25% of the value of a
Fund's total assets may be invested without regard to the
foregoing limitations. For purposes of this limitation, (a) a
security is considered to be issued by the entity (or
entities) whose assets and revenues back the security, and (b)
a guarantee of a security shall not be deemed to be a security
issued by the guarantor when the value of securities issued
and guaranteed by the guarantor, and owned by the Fund, does
not exceed 10% of the value of the Fund's total assets.

The Municipal Bond Funds may not:

(10) Purchase any securities which would cause 25% or more of the
value of the Fund's total assets at the time of purchase to be
invested in the securities of one or more issuers conducting
their principal business activities in the same industry,
provided that (a) there is no limitation with respect to (i)
instruments issued or guaranteed by the United States, any
state, territory or possession of the United States, the
District of Columbia or any of their authorities, agencies,
instrumentalities or political subdivisions, (ii) instruments
issued by domestic branches of U.S. banks and (iii) repurchase
agreements secured by the instruments described in clauses (i)
and (ii); (b) wholly-owned finance companies will be
considered to be in the industries of their parents if their
activities are primarily related to financing the activities
of the parents; and (c) utilities will be divided according to
their services, for example, gas, gas transmission, electric
and gas, electric and telephone will each be considered a
separate industry.

Each Municipal Bond Fund may not:

(11) Invest less than 80% of its net assets in securities the
interest on which is exempt from federal income tax, except
during defensive periods or during periods of unusual market
conditions. For purposes of this fundamental policy, Municipal
Obligations that are subject to federal alternative minimum
tax are considered taxable.

Pilot Diversified Bond Income Fund and the Government Funds may not:

(12) Purchase any securities which would cause 25% or more of the
value of the Fund's total assets at the time of purchase to be
invested in the securities of one or more issuers conducting
their principal business activities in the same industry,
provided that (a) there is no limitation with respect to (i)
instruments issued (as defined with respect to fundamental
policy No. 9 above) or guaranteed by the United States, any
state, territory or possession of the United States, the
District of Columbia or any of their authorities, agencies,
instrumentalities or political subdivisions and (ii)
repurchase agreements secured by the instruments described in
clause (i); (b) wholly-owned finance companies will be
considered to be in the industries of their parents if their
activities are primarily related to financing the activities
of the parents; and (c) utilities will be divided according to
their services, for example, gas, gas transmission, electric
and gas, electric and telephone will each be considered a
separate industry.

B-21
<PAGE> 148
As a matter of non-fundamental policy, each Fund may not:

(13) Purchase securities on margin, make short sales of securities
or maintain a short position, except that (a) this investment
limitation shall not apply to a Fund's transactions in futures
contracts and related options, and (b) a Fund may obtain
short-term credit as may be necessary for the clearance of
purchases and sales of portfolio securities.

(14) Lend its securities if collateral values are not continuously
maintained at no less than 100% by market to market daily.

(15) Purchase any security while borrowings in excess of 5% of net
assets are outstanding.

For purposes of the foregoing limitations, any limitation that involves
a maximum percentage shall not be considered violated unless an excess over the
percentage occurs immediately after, and is caused by, an acquisition or
encumbrance of securities or assets of, or borrowings on behalf of, a Fund.

TRUSTEES AND OFFICERS

Information pertaining to the Trustees and officers of the Trust is set
forth below. Trustees and officers deemed to be "interested persons" of the
Trust for purposes of the 1940 Act are indicated by an asterisk.

<TABLE>
<CAPTION>
Principal Occupation(s)
Name and Address Position(s) with Trust During Past 5 Years
- ---------------- ---------------------- -------------------
<S> <C> <C>
J. Hord Armstrong, III (55) Trustee Chairman and CEO, D&K
8000 Maryland Avenue Wholesale Drug, Inc., a
Suite 1190 distributor of pharmaceutical
St. Louis, Missouri 63105 products, since 1987.

Lee F. Fetter (43) Chairman Chief Operating and Financial
660 S. Euclid, Box 8003 Officer of Washington
St. Louis, Missouri 63110 University School of Medicine
since 1983.

Henry O. Johnston (59) Trustee President of Fordyce Four,
9650 Clayton Road Incorporated, a corporation
St. Louis, Missouri 63124 engaged in the acquisition and
management of personal
investments.

L. White Matthews, III (50) Trustee Executive Vice President of
Eighth and Eaton Avenues Finance since 1987, Union
Bethlehem, Pennsylvania 18018 Pacific Corporation, a company
engaged in transportation,
exploration and refining of
hydrocarbons, mining and real
estate.
</TABLE>

B-22
<PAGE> 149
<TABLE>
<CAPTION>
Principal Occupation(s)
Name and Address Position(s) with Trust During Past 5 Years
- ---------------- ---------------------- -------------------
<S> <C> <C>
Nicholas G. Penniman, IV (58) Trustee Publisher, St. Louis Post-
900 N. Tucker Boulevard Dispatch since 1986. Senior
St. Louis, Missouri 63101 Vice President of Pulitzer
Publishing Company since
1986.

William J. Tomko (37) President Senior Vice President, BISYS
3435 Stelzer Road Fund Services, Inc.
Columbus, Ohio 43219

W. Eugene Spurbeck (40) Vice President Manager, BISYS Fund Services,
3435 Stelzer Road Inc.
Columbus, Ohio 43219

Martin R. Dean (33) Treasurer Manager, Mutual Fund
3435 Stelzer Road Accounting, BISYS Fund
Columbus, Ohio 43219 Services, Inc. since May 1994.
Prior thereto, Senior Manager,
KPMG Peat Marwick.

GEORGE O. MARTINEZ (37) Secretary Senior Vice President and
3435 STELZER ROAD Director of Legal and
COLUMBUS, OHIO 43219 Compliance Services of BISYS
Fund Services, Inc. since April
1995. Prior thereto, Vice
President and Associate
General Counsel of Alliance
Capital Management, L.P.

Sheldon A. Jones (58) Assistant Secretary Partner of the law firm of
Ten Post Office Square South Dechert Price & Rhoads.
Boston, Massachusetts 02109

Alaina Metz (28) Assistant Secretary Employee of BISYS Fund
3435 Stelzer Road Services Limited Partnership
Columbus, Ohio 43219 since June 1995; prior thereto,
supervisor, Alliance Capital
Management, L.P.

Bruce Treff (30) Assistant Secretary Counsel, BISYS Fund Services,
3435 Stelzer Road Inc. since September 1995.
Columbus, Ohio 43219 Prior thereto, Manager, Alliance
Capital Management, L.P.
</TABLE>

B-23
<PAGE> 150
supervision, advisory and administration services and duties, and also including
distribution, custodian, transfer and dividend disbursing agency, shareholder
servicing and accounting services and duties, (b) a Trustee shall be liable for
his own willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office, and for nothing else, and
shall not be liable for errors of judgment or mistakes of fact or law, and (c)
subject to the preceding clause, the Trustees are not responsible or liable for
any neglect or wrongdoing of any officer or any person referred to in clause
(a).

Certain of the Trustees and officers and the organizations
with which they are associated have had in the past, and/or may have in the
future, transactions with Boatmen's, its parent, [as of __________________ ,
NationsBank Corporation], Kleinwort Benson Investment Management Americas Inc.
(investment manager to Pilot International Equity Fund), BISYS and their
respective affiliates. The Trust has been advised by such Trustees and officers
that all such transactions have been and are expected to be ordinary
transactions, and that the terms of such transactions, including all loans and
loan commitments by such persons, have been and are expected to be
substantially the same as the prevailing terms of comparable transactions with
other customers.

Each officer holds comparable positions with certain other investment
companies for which BISYS and its affiliates serve as administrator and/or
distributor.

The following table provides information relating to the aggregate
compensation to be received by the Trustees from the Registrant for the fiscal
year ended August 31, 1996.

COMPENSATION TABLE

<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)

TOTAL COMPENPENSION
PENSION OR ESTIMATED PENSION FROM
AGGREGATE RETIREMENT ANNUAL REGISTRANT AND
NAME OF COMPENSATION BENEFITS UPON BENEFITS UPON FUND COMPLEX
PERSON, POSITION FROM REGISTRANT RETIREMENT RETIREMENT PAID TO PERSONS
<S> <C> <C> <C> <C>
J. Hord Armstrong, III $26,000 0 0 $26,000
Lee F. Fetter (Chairman) $28,000 0 0 $28,000
Henry O. Johnston* $26,000 0 0 $26,000
L. White Matthews, III $26,000 0 0 $26,000
Nicholas G. Penniman, IV $26,000 0 0 $26,000
</TABLE>

* "Interested person" of the Funds for purposes of the 1940 Act.

Each of the Trustees who is not an "interested person" of the Funds for
purposes of the 1940 Act (the "non-interested Trustees") is compensated by the
Funds for his services as such. The compensation paid to the non-interested
Trustees other than the Chairman is $13,000 per year and $2,000 for each Trustee
meeting attended. Each of the non-interested Trustees is entitled to
reimbursement for out-of-pocket expenses. Compensation paid to the Trustees who
are considered interested persons is paid directly by the investment adviser.
Trustees' fees during the period ended August 31, 1996 distributed to or accrued
for the account of the non-interested Trustees (four persons) amounted to
approximately $106,000, which amount represented the total compensation paid by
the Funds to the Trustees during that year.

B-24
<PAGE> 151
INVESTMENT ADVISER, ADMINISTRATOR, DISTRIBUTOR AND TRANSFER AGENT

THE ADVISER

Boatmen's Trust Company, [a wholly-owned subsidiary of Nations Bank
Corporation as of ___________________], P.O. Box 14737, 100 North Broadway, St.
Louis, Missouri 63178-4737, acts as investment adviser to each Fund pursuant to
separate Investment Advisory Agreements (the "Advisory Agreements") between the
Trust, on behalf of each Fund, and Boatmen's. As adviser, Boatmen's is
responsible for the management of each Fund's assets, subject to the supervision
of the Trustees of the Trust.

The Trust has no present intention of purchasing any securities issued
by Boatmen's, NationsBank Corporation or any of its affiliates. Mr. Henry O.
Johnston, a Trustee of the Trust, owns shares amounting to less than one-tenth
of one percent (.001%) of the outstanding shares of common stock of Boatmen's
Bancshares, Inc.

Each Advisory Agreement provides that, subject to Section 36 of the
1940 Act, Boatmen's will not be liable for any error of judgment or mistake of
law or for any loss suffered by the Trust, except liability to the Trust or its
Shareholders to which Boatmen's would otherwise be subject by reason of its
willful misfeasance, bad faith or gross negligence in the performance of, or its
reckless disregard of, its obligations and duties under the Agreement. Each
Agreement provides that the Trust will indemnify Boatmen's against certain
liabilities, including liabilities under the Federal securities laws, or, in
lieu thereof, contribute to resulting losses.

As compensation for the services rendered to the Trust by Boatmen's as
investment adviser, and the assumption by Boatmen's of the expenses related
thereto, Boatmen's is entitled to a fee, computed daily and payable monthly, at
an annual rate equal to .55 of 1% of the average daily net assets of each of
Pilot Diversified Bond 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. Boatmen's has made additional
voluntary undertakings to waive their fees. For the periods ended August 31,
1996 and August 31, 1995, respectively, Boatman's received advisory fees (net of
waivers) in the amounts of $717,666, $555,098, $832,165 and $761,069,
and $340,310, $415,164, $547,737, and $498,166 for Pilot Intermediate U.S.
Government Securities Fund, Pilot U.S. Government Securities Fund, Pilot
Intermediate Municipal Bond Fund and Pilot Municipal Bond Fund, respectively.
For the same periods, Boatmen's waived fees and reimbursed expenses in the
amounts of $410,522, $215,525, $312,402 and $170,236, and $215,601,
$155,704, $225,063, and $109,745 for the same respective Funds. Pilot
Diversified Bond Income Fund commenced operations on October 21, 1996.

In connection with the foregoing services, Boatmen's bears all costs
incurred by it in connection with the performance of its duties, other than the
cost (including taxes and brokerage commission, if any) of securities purchased
for each Fund.

The Trust is responsible for all expenses incurred by the Funds, other
than those expressly borne by Boatmen's, the Distributor, BISYS and the Transfer
Agent under the Advisory, Distribution, Administration or Transfer Agency
Agreements. Such expenses include, without limitation, the fees payable to
Boatmen's, BISYS and the Transfer Agent, fees and expenses incurred in
connection with membership in investment company organizations, the fees and
expenses of the Trust's custodian and fund accounting agent, brokerage fees and
commissions, any portfolio losses, filing fees for the registration or
qualification of Trust shares under federal or state securities laws, expenses
of the organization of the Trust, 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 Trust for violation of any law, legal and auditing and tax fees and
expenses, expenses of preparing and setting in type prospectuses, statements of
additional information, proxy

B-25
<PAGE> 152
material, reports and notices and the printing and distributing of the same to
the Trust's shareholders and regulatory authorities, compensation and expenses
of its Trustees and extraordinary expenses incurred by the Trust.

The Advisory Agreements for the Funds were approved by the Trustees,
including the "non-interested" Trustees, on October 22, 1996 and by the
shareholders of each Fund on December 18, 1996. Each Advisory Agreement will
remain in effect until May 31, 1997 and will continue in effect thereafter only
if such continuance is specifically approved at least annually: (1) by the vote
of a majority of the outstanding shares of each Fund (as defined under
"Investment Restrictions") or by the Trustees of the Trust, and by the vote of a
majority of the "non-interested" Trustees. Each Advisory Agreement will
terminate automatically if assigned (as defined in the 1940 Act), and is
terminable at any time without penalty by the Trustees of the Trust or by vote
of a majority of the outstanding Shares of the Fund affected thereby (as defined
under "Investment Restrictions") on 60 days' written notice to Boatmen's, and by
Boatmen's on 60 days' written notice to the Trust.

Banking laws and regulations currently prohibit a bank holding company
registered under the Federal Bank Holding Company Act of 1956 or any bank or
non-bank affiliate thereof from sponsoring, organizing, controlling or
distributing the shares of a registered open-end investment company continuously
engaged in the issuance of its shares, but such banking laws and regulations do
not prohibit such a holding company or affiliate or banks generally from acting
as investment adviser, transfer agent or custodian to such an investment
company, or from purchasing shares of such a company as agent for and upon the
order of customers. Boatmen's is a state-chartered trust company. Boatmen's
believes that it may perform the services contemplated by its agreement with the
Trust without violation of such banking laws or regulations, which are
applicable to it. It should be noted, however, that future changes in either
Federal or state statutes and regulations relating to the permissible activities
of banks and their subsidiaries or affiliates, as well as future judicial or
administrative decisions or interpretations of current and future statutes and
regulations, could prevent Boatmen's from continuing to perform such services
for the Trust.

Should future legislative, judicial or administrative action prohibit
or restrict the activities of Boatmen's in connection with the provision of
services on behalf of the Trust, the Trust might be required to alter materially
or discontinue its arrangements with Boatmen's and change its method of
operations. It is not anticipated, however, that any change in the Trust's
method of operations would affect the net asset value per share of any Fund or
result in a financial loss to any shareholder. Moreover, if current restrictions
preventing a bank from legally sponsoring, organizing, controlling or
distributing shares of an open-end investment company were relaxed, the Trust
expects that Boatmen's would consider the possibility of offering to provide
some or all of the services now provided by BISYS and the Distributor. It is not
possible, of course, to predict whether or in what form such restrictions might
be relaxed or the terms upon which Boatmen's might offer to provide services for
consideration by the Trustees.

THE ADMINISTRATOR

BISYS, a wholly-owned subsidiary of The BISYS Group, Inc., which has
its principal offices at 3435 Stelzer Road, Columbus, Ohio 43219, provides
administrative services for the Funds as described in their Prospectuses
pursuant to an Administration Agreement dated as of June 1, 1996. The Agreement
will continue in effect with respect to each Fund until June 1, 1997 and
thereafter will be automatically extended as to a particular Fund for successive
periods of one year, provided that such continuance is specifically approved:
(a) by a vote of a majority of those members of the Board of Trustees of the
Trust who are not parties to the Agreement or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the Board of Trustees of the Trust or by vote of a majority
of the outstanding voting securities of such Fund (as defined under "Investment
Restrictions"). The Agreement is terminable by the Board of Trustees of the
Trust with regard to any Fund, without the payment of any penalty, at any time
if for cause.

B-26
<PAGE> 153
"Cause" shall mean a material breach by BISYS of its obligations under the
Agreement which shall not have been cured within 60 days after the date on which
BISYS shall have received written notice setting forth in detail the facts
alleged to give rise to the breach.

For its services under the Administration Agreement, BISYS is entitled
to receive an administration fee from the Trust, which is calculated based on
the net assets of all investment portfolios of the Trust combined. Under the
Administration Agreement, each Fund pays its pro rata share of an annual fee to
BISYS, computed daily and payable monthly, of .115 of 1% of the Trust's average
net assets up to $1.5 billion, .110 of 1% of the Trust's average net assets on
the next $1.5 billion, and .1075 of 1% of the Trust's average net assets in
excess of $3 billion. From time to time, BISYS may voluntarily waive fees or
reimburse the Trust for expenses. For the period ended August 31, 1996, BISYS
voluntarily waived fees in the amounts of $10,698, $22,148, $10,387 and
$20,332, for Pilot Intermediate U.S. Government Securities Fund, Pilot U.S.
Government Securities Fund, Pilot Intermediate Municipal Bond Fund and Pilot
Municipal Bond Fund, respectively; and for the period ended August 31, 1995,
Concord Holding Corporation, an affiliate of BISYS and the Trust's former
Administrator, voluntarily waived fees in the amounts of $84,789, $103,393,
$103,532, and $100,185 for the same respective Funds. Pilot Diversified Bond
Income Fund commenced operations on October 21, 1996.

BISYS will bear all expenses in connection with the performance of its
services under the Administration Agreement for the Trust with the exception of
fees for certain fund accounting services which are borne by the Funds.

The Administration Agreement provides that BISYS shall not be liable
for any error of judgment or mistake of law or any loss suffered by any Fund in
connection with the matters to which the Agreement relates except a loss
resulting from willful misfeasance, bad faith or negligence in the performance
of BISYS' duties or from the reckless disregard by BISYS of its obligations and
duties thereunder.

THE DISTRIBUTOR

Pilot Funds Distributors Inc. (referred to as the "Distributor"), is a
registered broker-dealer and a wholly-owned subsidiary of The BISYS Group, Inc.,
located at 3435 Stelzer Road, Columbus, Ohio 43219.

The Distribution Agreement with the Distributor will continue in effect
with respect to each Fund until June 1, 1997 and thereafter will be
automatically extended for successive terms of one year, provided that such
continuance is specifically approved: (a) by a majority of those members of the
Board of Trustees who are not interested persons of the Trust and who have no
direct or indirect financial interest in the operation of any plan that has been
adopted by the Trust pursuant to Rule 12b-1 under the 1940 Act ("Plan") or in
any agreement entered into in connection with such plans ("Disinterested
Trustees"), pursuant to a vote cast in person at a meeting called for the
purpose of voting on such approval, and (b) by the Board of Trustees of the
Trust or by vote of a majority of the outstanding voting securities of the Trust
(as defined under "Investment Restrictions"). The Agreement is terminable by the
Trust at any time with regard to any class of its shares, without the payment of
any penalty, by vote of a majority of the Disinterested Trustees or by vote of a
majority of the outstanding voting securities of such class (as defined under
"Investment Restrictions") on 60 days' written notice to the Distributor, or by
the Distributor at any time, without payment of any penalty, on 60 days' written
notice to the Trust. For the Funds' fiscal periods ended August 31, 1996 and
August 31, 1995, respectively, Pilot Funds Distributors, Inc. received
$143,860 and $6,349 in underwriting commissions and retained $0
and $0.

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<PAGE> 154
THE TRANSFER AGENT

BISYS Fund Services, Inc. (the "Transfer Agent"), a wholly-owned
subsidiary of The BISYS Group, Inc., located at 3435 Stelzer Road, Columbus,
Ohio 43219, serves as the Funds' transfer agent and dividend disbursing agent.
Under its Transfer Agency Agreement with the Trust, the Transfer Agent, has
undertaken with the Trust to: (i) record the issuance, transfer and redemption
of shares, (ii) provide confirmations of purchases and redemptions, or monthly
statements in lieu thereof, as well as certain other statements, (iii) provide
certain information to the Trust's custodian and any relevant sub-custodian in
connection with redemptions, (iv) provide dividend crediting and certain
disbursing agent services, (v) maintain shareholder accounts, (vi) provide
certain state Blue Sky and other information, (vii) provide shareholders and
certain regulatory authorities with tax related information, (viii) respond to
shareholder inquiries, and (ix) render certain other miscellaneous services. For
the fiscal year ended August 31, 1996, the Transfer Agent received a fee of
$294,880 in its capacity as transfer agent. For the fiscal year September 1,
1994 through August 31, 1995, Primary Funds Service Corp., the Fund's former
transfer agent, received a fee of $178,800 for its services as transfer agent.

PORTFOLIO TRANSACTIONS

As investment adviser, Boatmen's is responsible for decisions to buy
and sell securities for each Fund, the selection of brokers and dealers to
effect the transactions and the negotiation of brokerage commissions, if any.
Purchases and sales of securities on a securities exchange are effected through
brokers who charge a negotiated commission for their services. Orders may be
directed to any broker including, to the extent and in the manner permitted by
applicable law.

In the over-the-counter market, securities are generally traded on a
"net" basis with dealers acting as principal for their own accounts without
stated commissions, although the price of a security usually includes a profit
to the dealer. In underwritten offerings, securities are purchased at a fixed
price that includes an amount of compensation to the underwriter, generally
referred to as the underwriter's concession or discount. On occasion, certain
money market instruments may be purchased directly from an issuer, in which case
no commissions or discounts are paid.

In placing orders for portfolio securities of a Fund, Boatmen's is
required to give primary consideration to obtaining the most favorable price and
efficient execution. This means that Boatmen's will seek to execute each
transaction at a price and commission, if any, which provide the most favorable
total cost or proceeds reasonably attainable in the circumstances. In seeking
such execution, Boatmen's will use its best judgment in evaluating the terms of
a transaction, and will give consideration to various relevant factors,
including, without limitation, the size and type of the transaction, the nature
and character of the market for the security, the confidentiality, speed and
certainty of effective execution required for the transaction, the general
execution and operational capabilities of the broker-dealer, the reputation,
reliability, experience and financial condition of the firm, the value and
quality of the services rendered by the firm in this and other transactions, and
the reasonableness of the spread or commission, if any.

While Boatmen's generally seeks reasonably competitive spreads or
commissions, a Fund will not necessarily be paying the lowest spread or
commission available. Within the framework of this policy, Boatmen's will
consider research and investment services provided by brokers or dealers who
effect or are parties to portfolio transactions of a Fund, Boatmen's, or its
other clients. Such research and investment services are those which brokerage
houses customarily provide to institutional investors and include statistical
and economic data and research reports on particular companies and industries.
Such services are used by Boatmen's in connection with all of its investment
activities, and some of such services obtained in connection with the execution
of transactions for a Fund may be used in managing other investment accounts.
Conversely, brokers furnishing such services may be selected

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<PAGE> 155
for the execution of transactions of such other accounts, whose aggregate assets
are far larger than those of a Fund; and the services furnished by such brokers
may be used by Boatmen's in providing investment advisory and investment
management services for the Trust.

Commission rates are established pursuant to negotiations with the
broker based on the quality and quantity of execution services provided by the
broker in the light of generally prevailing rates. The allocation of orders
among brokers and the commission rates paid are reviewed periodically by the
Trustees of the Trust.

In certain instances there may be securities which are suitable for
more than one Fund as well as for one or more of the other clients of Boatmen's.
Investment decisions for each Fund and for Boatmen's other clients are made with
a view toward achieving their respective investment objectives. It may happen
that a particular security is bought or sold for only one client even though it
might be held by, or bought or sold for, other clients. Likewise, a particular
security may be bought for one or more client when one or more other clients are
selling that same security. Some simultaneous transactions are inevitable when
several clients receive investment advice from the same investment adviser,
particularly when the same security is suitable for the investment objectives of
more than one client. When two or more clients are simultaneously engaged in the
purchase or sale of the same security, the securities are allocated among
clients in a manner believed to be equitable to each. It is recognized that in
some cases this system could have a detrimental effect on the price or volume of
the security in a particular transaction as far as a Fund is concerned. The
Trust believes that over time its ability to participate in volume transactions
will produce superior executions for the Funds.

The portfolio turnover rate for each Fund is calculated by dividing the
lesser of purchases or sales of portfolio securities for the reporting period by
the monthly average value of the portfolio securities owned during the reporting
period. The calculation excludes all securities, including options, whose
maturities or expiration dates at the time of acquisition are one year or less.
Portfolio turnover may vary greatly from year to year as well as within a
particular year, and may be affected by cash requirements for redemption of
shares and by requirements which enable the Funds to receive favorable tax
treatment. Portfolio turnover will not be a limiting factor in making portfolio
decisions. For the fiscal years ended August 31, 1996 and August 31, 1995,
respectively, the portfolio turnover rates for the Funds were 73%, 87%, 12%, and
18%, and 87%, 132%, 8% and 10% for Pilot Intermediate U.S. Government Securities
Fund, Pilot U.S. Government Securities Fund, Pilot Intermediate Municipal Bond
Fund and Pilot Municipal Bond Fund, respectively. Pilot Diversified Bond Income
Fund commenced operations on October 31, 1996.

B-29
<PAGE> 156
For the fiscal years ended August 31, 1996 and August 31, 1995,
respectively, the brokerage commissions paid by the Funds were as follows:

<TABLE>
<CAPTION>
Total Amount of Brokerage
Total Total Brokerage Transactions on Commissions
Brokerage Commissions Which Paid to Brokers
Commissions Paid to Affiliated Commissions Providing
Paid Persons (1) Were Paid (2) Research
---- ----------- ------------- --------
<S> <C> <C> <C> <C>
Intermediate U.S.
Government
Securities Fund
- 1996 $ $ $ $

- 1995 $0 $0 $0 $0

Intermediate
Municipal Bond Fund
- 1996 $ $ $ $

- 1995 $0 $0 $0 $0

Municipal Bond Fund
- 1996 $ $ $ $

- 1995 $0 $0 $0 $0
</TABLE>

(1) Percentage of total commissions paid.

(2) Percentage of total amount of transactions involving the payment of
commissions effected through affiliated persons.

Pilot Diversified Bond Income Fund commenced operations on October 21,
1996.

NET ASSET VALUE

The net asset value per Share of each Fund is determined by the Funds'
custodian at 3:00 p.m., Central time (4:00 p.m., Eastern time), on each Business
Day as defined in the Prospectuses. In the event that the New York Stock
Exchange or the national securities exchange on which stock options are traded
adopt different trading hours on either a permanent or temporary basis, the
Trustees of the Trust will reconsider the time at which net asset value is
computed. In addition, each Trust may compute its net asset value as of any time
permitted pursuant to any exemption, order or statement of the Securities and
Exchange Commission or its staff.

B-30
<PAGE> 157
sale price on the market prior to the Trust's valuation time where any such
option or futures contract is principally traded; (e) forward foreign currency
exchange contracts are valued at their respective current fair market values
supplied by a dealer in such contracts prior to the Trust's valuation time
determined on the basis of prices supplied by a dealer in such contracts; and
(f) all other securities and other assets, including debt securities, for which
prices are supplied by a pricing agent but are not deemed by Boatmen's to be
representative of market values, but excluding money market instruments with a
remaining maturity of sixty days or less and including restricted securities and
securities for which no market quotation is available, are valued at fair value
as determined in good faith pursuant to procedures established by the Trustees
of the Trust, including use of a Valuation Committee. Money market instruments
held by a Fund with a remaining maturity of sixty days or less will be valued by
the amortized cost method.

Portfolio securities traded on more than one United States national
securities exchange or foreign securities exchange are valued at the last sale
price on each business day prior to the Trust's valuation time on the exchange
representing the principal market for such securities. The value of all assets
and liabilities expressed in foreign currencies will be converted into U.S.
dollar values at the rates of such currencies against U.S. dollars last quoted
by any major bank between the buying and selling rates of such currencies
against U.S. dollars last quoted by any major bank. If such quotations are not
available, the rate of exchange will be determined in good faith by or under
procedures established by the Trustees of the Trust.

Trading in securities on European and Far Eastern securities exchanges
and on over-the-counter markets is normally completed well before the close of
business on each business day of the Trust. In addition, European or Far Eastern
securities trading generally or in a particular country or countries may not
take place on all business days in the United States. Furthermore, trading takes
place in various foreign markets on days which are not business days in the
United States and on days on which a Fund's net asset value is not calculated.
Such calculation does not take place contemporaneously with the determination of
the prices of the majority of the portfolio securities used in such calculation.
Events affecting the values of portfolio securities that occur between the time
their prices are determined and the Trust's valuation time will not be reflected
in a Fund's calculation of net asset values unless Boatmen's deems that the
particular event would materially affect net asset value, in which case an
adjustment will be made.

The proceeds received by the Funds and each additional portfolio
established by the Trustees of the Trust for each issue or sale of its shares,
and all net investment income, realized and unrealized gain and proceeds
thereof, subject only to the rights of creditors, will be specifically allocated
to such Fund and constitute the underlying assets of that Fund. The underlying
assets of each Fund will be segregated on the books of account, and will be
charged with the liabilities of such Fund and a share of the general liabilities
of the Trust. Expenses with respect to the Funds are generally allocated in
proportion to the net asset values of the respective portfolios except where
allocations of direct expenses can otherwise be fairly made. In addition,
certain distribution and service fees will be borne exclusively by the class to
which they relate.

MATTERS RELATING TO CLASS A SHARES AND CLASS B SHARES

As distributor, the Distributor pays the cost of printing and
distributing prospectuses to persons who are not shareholders of the Funds
(excluding preparation and printing expenses necessary for the continued
registration of the Funds' shares) and of printing and distributing all sales
literature. The Distributor is entitled to the payment of a front-end sales
charge on the sale of Class A Shares of the Funds as described in the Prospectus
for such Shares. The Distributor is also entitled to the payment of a contingent
deferred sales charge upon redemption of Class B Shares of the Funds as
described in the Prospectus for such Shares.

B-31
<PAGE> 158
The Distributor is also entitled to payment by the Trust for
distribution in addition to the sales charges described in the Prospectuses.
Under the Trust's Distribution Plan for Class A Shares, the Trust pays fees for
the provision of services by Service Organizations (which may include the
Distributor itself), persons ("Clients") for whom the Service Organization is
the dealer of record or holder of record or with whom the Service Organization
has a servicing relationship. Under the Trust's Distribution Plan for Class B
Shares of the Funds, the Trust may pay the Distributor for (a) expenses incurred
in connection with advertising and marketing shares of the Funds, including but
not limited to any advertising or marketing via radio, television, newspapers,
magazines, telemarketing or direct mail solicitations; (b) fees for services
rendered with respect to Class B Shares similar to those services described
above with respect to Class A Shares; (c) expenses incurred in preparing,
printing and distributing Prospectuses (except those used for regulatory
purposes or for distribution to existing shareholders) and in implementing and
operating the Distribution Plan; and (d) interest on amounts expended by the
Distributor that are not immediately repaid by the Trust (to the extent approved
by the Board of Trustees and permitted by published positions of the Securities
and Exchange Commission).

Services provided by Service Organizations pursuant to the Distribution
Plans may include, among other things: (i) establishing and maintaining accounts
and records relating to Clients that beneficially own Class A or Class B Shares;
(ii) processing dividend and distribution payments on behalf of Clients; (iii)
providing information periodically to Clients regarding their Share positions;
(iv) arranging for bank wires; (v) responding to Client inquiries concerning
their investments in Shares; (vi) providing the information to the Funds
necessary for accounting or subaccounting; (vii) if required by law, forwarding
shareholder communications from the Funds (such as proxies, shareholder reports,
annual and semi-annual financial statements and dividend, distribution and tax
notices) to Clients; (viii) assisting in processing exchange and redemption
requests from Clients; (ix) assisting Clients in changing dividend options,
account designations and addresses; and (x) providing other similar services.

The Distribution Plan for Class A Shares provides that the Distributor
is entitled to receive distribution payments on a monthly basis at an annual
rate not exceeding .25% of the average daily net assets during such month of the
outstanding Shares to which a particular Plan relates. If in any month the
Distributor expends or is due more monies than can be immediately paid due to
this percentage limitation, the unpaid amount is carried forward from month to
month while the Distribution Plan is in effect until such time, if ever, when it
can be paid in accordance with such percentage limitation. Conversely, if in any
month the Distributor does not expend the entire amount then available under a
Plan, and assuming that no unpaid amounts have been carried forward and remain
unpaid, then the amount not expended will be a credit to be drawn upon by the
Distributor to permit future payment. However, any unpaid amounts or credits due
under a Distribution Plan may not be "carried forward" beyond the end of the
fiscal year in which such amounts or credits due are accrued.

The Distribution Plan for Class B Shares provides that the Distributor
is entitled to receive distribution payments on a monthly basis at an annual
rate not exceeding 1.00% of the average daily net assets during such month of
the outstanding Shares to which such Plan relates. Not more than 0.25% of such
net assets will be used to compensate Service Organizations for personal
services provided to Class B Shareholders and/or the maintenance of such
shareholders' accounts and not more than .75% of such net assets will be used
for promotional and other primary distribution activities.

Payments made out of or charged against the assets of a particular
class of Shares of a particular Fund must be in payment for expenses incurred on
behalf of that class. (The Distribution Plans permit, however, joint
distribution financing by the Funds or other investment portfolios or companies
that are affiliated persons of the Funds, affiliated persons of such a person,
or affiliated persons of the Distributor, in accordance with applicable
regulations of the Securities and Exchange Commission.)

B-32
<PAGE> 159
Payments for distribution expenses under a particular Distribution Plan
are subject to Rule 12b-1 (the "Rule") under the 1940 Act. Payments under the
Distribution Plans are also subject to the conditions imposed by Rule 18f-3
under the 1940 Act and a Rule 18f-3 Multiple Class Plan which has been adopted
by the Trustees of the Trust for the benefit of the Fund. The Rule defines
distribution expenses to include the cost of "any activity which is primarily
intended to result in the sale of [Trust] shares." The Rule provides, among
other things, that an investment company may bear such expenses only pursuant to
a plan adopted in accordance with the Rule. In accordance with the Rule, the
Plans provide that a report of the amounts expended under the respective Plans,
and the purposes for which such expenditures were incurred, will be made to the
Board of Trustees for its review at least quarterly. The Distribution Plans for
Class A Shares and Class B Shares provide that they may not be amended to
increase materially the costs which Class A or Class B Shares of the Fund may
bear for distribution pursuant to the respective Distribution Plans without
shareholder approval, and both Plans provide that any other type of material
amendment must be approved by a majority of the Board of Trustees, and by a
majority of the Trustees who are neither "interested persons" (as defined in the
1940 Act) of the Trust nor have any direct or indirect financial interest in the
operation of the Plan being amended or in any related agreements, by vote cast
in person at a meeting called for the purpose of considering such amendments
(the "Disinterested Trustees"). In addition, as long as the Distribution Plans
for the respective Share classes are in effect, the nomination of the Trustees
who are not interested persons of the Trust (as defined in the 1940 Act) must be
committed to the non-interested Trustees.

The Board of Trustees of the Trust has concluded that there is a
reasonable likelihood that the respective Plans will benefit the Funds and Class
A and Class B Shareholders, respectively. The Plans are subject to annual
re-approval by a majority of the Disinterested Trustees of the Trust and are
terminable at any time with respect to any Fund by a vote of a majority of such
Trustees or, with respect to the Distribution Plans, by vote of the holders of a
majority of the applicable Shares of the Fund involved. Any agreement entered
into pursuant to the respective Distribution Plans with a Service Organization
is terminable with respect to any Fund without penalty, at any time, by vote of
a majority of the Disinterested Trustees, by vote of the holders of a majority
of the applicable Shares of such Fund, by the Distributor or by the Service
Organization. An agreement will also terminate automatically in the event of its
assignment.

Banks may act as Service Organizations and receive payments under the
Distribution Plans as described. The Glass-Steagall Act and other applicable
laws, among other things, prohibit banks from engaging in the business of
underwriting securities. If a bank were prohibited from acting as a Service
Organization, changes in the operation of the Funds might occur and a
shareholder serviced by such bank might no longer be able to avail himself or
herself of any automatic investment or other services than being provided by the
bank. It is not expected that shareholders would suffer any adverse financial
consequences as a result of these occurrences.

The Trust understands that Boatmen's and its affiliates and/or some
Service Organizations may charge their clients a direct fee for services in
connection with their investments in the Funds. These fees would be in addition
to any amounts which might be received under the respective Plans. Small,
inactive long-term accounts involving such additional charges may not be in the
best interest of shareholders.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

B-33
<PAGE> 160
affiliates and Service Organizations may impose minimum customer account and
other requirements in addition to those imposed by the Trust and described in
the Prospectuses. Depending on the terms of the particular account, these
entities may charge their customers fees for automatic investment, redemption
and other services. Such fees may include, for example, account maintenance
fees, compensating balance requirements or fees based upon account transactions,
assets or income. Boatmen's and its affiliates and Service Organizations are
responsible for providing information concerning these services and any charges
to any customer who must authorize the purchase of shares prior to such
purchase.

Purchase orders will be effected only on business days. Persons wishing
to purchase shares through their accounts at a Service Organization (for Class A
Shares and Class B Shares, or at Boatmen's or its affiliates (for Pilot Shares),
should contact such entity directly for appropriate instructions.

Class A Shares of each Fund are sold with a front-end sales charge. As
described in the Prospectus for Class A Shares of the Funds, a front-end sales
charge will not be imposed on certain types of transactions and/or investors
(provided the status of the investment is explained at the time of investment).
These exemptions to the imposition of a front-end sales charge are due to the
nature of the investors and/or the reduced sales efforts that will be needed in
obtaining such investments.

Class B Shares of each of the Funds are sold without a front-end sales
charge, but are subject to a contingent deferred sales charge. As described in
the Prospectus for Class B Shares, the contingent deferred sales charge is not
charged on certain types of redemptions. You must explain the status of your
redemption at the time you redeem your shares in order to receive the sales
charge exemption.

Boatmen's and/or the Distributor may charge certain fees for acting as
Custodian for IRAs or 401k retirement plans, payment of which could require the
liquidation of shares. Consult the appropriate form for a description of these
fees. Purchases for IRA accounts or 401k retirement plans will be effective only
when payments received by the Transfer Agent are converted into federal funds.
Purchases for these plans may not be made in advance of receipt of funds.
Supplementary Redemption Information

An investor whose shares are purchased through accounts at Boatmen's or
its affiliates or a Service Organization may redeem all or part of his or her
shares in accordance with instructions pertaining to such accounts. Shares in a
Fund for which orders placed by Boatmen's or its affiliates, a Service
Organization or individual investor for wire redemption are received on a
business day before the close of regular trading hours on the New York Stock
Exchange (currently 3:00 p.m. Central time) will be redeemed as of the close of
regular trading on such Exchange and the proceeds of redemption (less any
applicable contingent deferred sales charge) will normally be wired in federal
funds on the next business day to the commercial bank specified by the
individual investor on the Account Application (or other bank of record on the
investor's file with the Transfer Agent), or to the Service Organization through
which the investment was made. To qualify to use the wire redemption privilege
with the Trust, the payment for shares must be drawn on, and redemption proceeds
paid to, the same bank and account as designated on the Account Application (or
other bank of record as described above). If the proceeds of a particular
redemption are to be wired to another bank, the request must be in writing and
signature guaranteed. Shares in the Funds for which orders for wire redemption
are received by the Trust after the close of regular trading hours on the New
York Stock Exchange or on a non-business day will be redeemed as of the close of
regular trading on such Exchange on the next day on which shares of the
particular Fund are priced and the proceeds (less any applicable contingent
deferred sales charge) will normally be wired in federal funds on the next
business day thereafter. Redemption proceeds (less any applicable contingent
deferred sales charge) will be wired to a correspondent member bank if the
investor's designated bank is not a member of the Federal Reserve System.
Immediate notification by the correspondent bank to the investor's bank is
necessary to avoid

B-34
<PAGE> 161
a delay in crediting the funds to the investor's bank account. Proceeds of less
than $1,000 will be mailed to the investor's address.

To change the commercial bank or account designated to receive
redemption proceeds from Class A Shares or Class B Shares a written request must
be sent to The Pilot Funds, c/o BISYS Fund Services, Inc., 3435 Stelzer Road,
Columbus, Ohio 43219. Such request must be signed by each shareholder, with each
signature guaranteed as described in the Funds' Prospectuses. Guarantees must be
signed by an authorized signatory and "signature guaranteed" must appear with
the signature.

For processing redemptions or to change wiring instructions with the
Trust, the Transfer Agent may request further documentation from corporations,
executors, administrators, trustees or guardians. The Transfer Agent will accept
other suitable verification arrangements from foreign investors, such as
consular verification.

EXCHANGE PRIVILEGE

The Trust offers an exchange privilege whereby investors may exchange
all or part of their Class A Shares for Class A Shares of other portfolios of
the Trust; Class B Shares for Class B Shares of the other Funds; and Pilot
Shares for Pilot Shares of the other Funds and the other investment portfolios
of the Trust. By use of this exchange privilege, the investor authorizes the
Transfer Agent to act on telephonic or written exchange instructions from any
person representing himself or herself to be the investor and believed by the
Transfer Agent to be genuine. The Transfer Agent's records of such instructions
are binding. The exchange privilege may be modified or terminated at any time
subject to applicable regulatory restrictions. For federal income tax purposes,
exchange transactions are treated as sales on which a purchaser will realize a
capital gain or loss depending on whether the value of the shares exchanged is
more or less than his or her basis in such shares at the time of the
transaction.

Exchange transactions described in Paragraphs A, B and C below will be
made on the basis of the relative net asset values per share of the investment
portfolios involved in the transaction. Paragraphs A, B and C relate only to
whether a front-end sales charge will be imposed, not to whether a particular
exchange transaction is permissible or impermissible.

A. Class A Shares, as well as additional shares acquired through
reinvestment of dividends or distributions on such shares, may be
exchanged without a front-end sales charge for Class A Shares of any
non-money market investment portfolio of the Trust.

B. Shares of any investment portfolio of the Trust acquired by a previous
exchange transaction involving shares on which a front-end sales charge
has directly or indirectly been paid (e.g., Class A Shares issued in
connection with an exchange transaction involving Class A Shares), as
well as additional shares acquired through reinvestment of dividends or
distributions on such shares, may be exchanged without a front-end
sales charge for Class A Shares of any other non-money market
investment portfolio of the Trust. To accomplish an exchange
transaction under the provisions of this Paragraph, investors must
notify the Transfer Agent of their prior ownership of shares and their
account number.

C. Class A Shares of any non-money market portfolio acquired in connection
with the distribution of assets held in a qualified trust, agency or
custodial account maintained with Boatmen's or its affiliates may be
exchanged without a front-end sales charge for Class A Shares of any
non-money market investment portfolio of the Trust.

B-35
<PAGE> 162
determining the holding period for calculating the contingent deferred sales
charge payable on redemption of Class B Shares, the holding period of the shares
originally held will be added to the holding period of the shares acquired
through exchange.

In addition, as described in the Prospectuses, under certain
circumstances exchange transactions between Class A Shares and Pilot Shares in
the same Fund may be permitted without the payment of a front-end sales charge.

Except as stated above, a front-end sales charge will be imposed when
shares of any investment portfolio of the Trust that were purchased or otherwise
acquired without a front-end sales charge are exchanged for shares of a
non-money market investment portfolio of the Trust subject to such a front-end
charge.

Exchange requests received on a business day prior to the time shares
of the investment portfolios involved in the request are priced will be
processed on the date of receipt. "Processing" a request means that shares in
the investment portfolios from which the shareholder is withdrawing an
investment will be redeemed at the net asset value per share next determined on
the date of receipt. Shares of the new investment portfolio into which the
shareholder is investing will also normally be purchased at the net asset value
per share next determined coincident to or after the time of redemption.
Exchange requests received on a business day after the time shares of the
investment portfolios involved in the request are priced will be processed on
the next business day in the manner described above.

RIGHT OF ACCUMULATION AND STATEMENT OF INTENTION

For the purpose of applying the Right of Accumulation or Statement of
Intention privileges available to certain Class A Share investors in the Funds
as described in the Prospectus, the scale of sales charges applies to purchases
of Class A Shares made by any "purchaser," which term includes an individual
and/or spouse purchasing securities for his, her or their own account or for the
account of any minor children; or a trustee or other fiduciary account
(including a pension, profit-sharing or other employee benefit trust created
pursuant to a plan qualified under Section 401 of the Internal Revenue Code)
although more than one beneficiary is involved; or "a qualified group" which has
been organized for the purpose of buying redeemable securities of a registered
investment company at a discount, provided that the purchases are made through a
central administrator or a single dealer, or by other means which result in
economy of sales effort or expense. A "qualified group" must have more than 10
members, must be available to arrange for group meetings between representatives
of the Funds and the members, and must be able to arrange for mailings to
members at reduced or no cost to the Distributor.

MISCELLANEOUS

Certificates for shares will not be issued.

With respect to the Funds, a "business day" is a day on which the New
York Stock Exchange is open for trading, and includes Martin Luther King, Jr.
Day, Columbus Day and Veterans Day. The scheduled 1997 holidays on which the New
York Stock Exchange is closed are: New Year's Day (observed), President's Day,
Good Friday, Memorial Day, Independence Day (observed), Labor Day, Thanksgiving
Day and Christmas Day (observed).

B-36
<PAGE> 163
practicable, (iii) as the SEC may by order permit for the protection of the
shareholders of the Funds, or (iv) at any other time when the Funds may, under
applicable laws and regulations, suspend payment on the redemption of its
shares. The Trust may also suspend or postpone the recordation of the transfer
of its shares under any of the foregoing circumstances.

The Trust reserves the right to require a shareholder to redeem
involuntarily shares in an account (other than an IRA or Qualified Retirement
Plan account) if the balance held of record by the shareholder drops below
$1,000 and such shareholder does not increase such balance to $1,000 or more
upon 30 days' notice. The Trust will not require a shareholder to redeem shares
of a Fund if the balance held of record by the shareholder is less than $1,000
solely because of a decline in the net asset value of the Fund's shares or
because the shareholder has made an initial investment in a lower amount as
provided for in the Funds' Prospectuses. The Trust may also redeem shares
involuntarily if such redemption is appropriate to carry out the Trust's
responsibilities under the 1940 Act.

The Trust may redeem shares involuntarily to reimburse a Fund for any
loss sustained by reason of the failure of a shareholder to make full payment
for shares purchased by the shareholder or to collect any charge relating to a
transaction effected for the benefit of a shareholder which is applicable to
Fund shares as provided in the Funds' Prospectuses from time to time.

IN KIND PURCHASES

Payment for shares of a Fund may, in the discretion of Boatmen's, be
made in the form of securities that are permissible investments for the Fund as
described in the Prospectuses. For further information about this form of
payment, contact Boatmen's. In connection with an in-kind securities payment, a
Fund will require, among other things, that the securities be valued on the day
of purchase in accordance with the pricing methods used by the Fund and that the
Fund receive satisfactory assurances that it will have good and marketable title
to the securities received by it; that the securities be in proper form for
transfer to the Fund; and that adequate information be provided concerning the
basis and other tax matters relating to the securities.

REDEMPTIONS IN KIND

If the Board of Trustees determines that conditions exist which make
payment of redemptions proceeds wholly in cash unwise or undesirable, the Trust
may make payment wholly or partly in securities or other property. Such
redemptions will only be made in "readily marketable" securities. In such an
event, a shareholder would incur transaction costs in selling the securities or
other property. Each Fund may commit that it will pay all redemption requests by
a shareholder of record in cash, limited in amount with respect to each
shareholder during any ninety-day period to the lesser of $250,000 or 1% of the
net asset value of the Fund at the beginning of such period.

CALCULATION OF PERFORMANCE QUOTATIONS

From time to time, the yields and the total returns of the Funds may be
quoted in advertisements, shareholder reports or other communications to
shareholders. Performance information with respect to the Funds is generally
available by calling (800) 71-PILOT. Yields and total returns as reported in the
following publications may be used to compare the performance of the Funds or
any one of them to that of other mutual funds with similar investment objectives
and to stock and other relevant indices or to rankings prepared by independent
services or other financial or industry publications that monitor the
performance of mutual funds: Lipper Analytical Services, Incorporated,
Weisenberger Investment Companies Service, Donoghue's Money Fund Report,
Barron's, Business Week, Changing Times, Financial World, Forbes, Money,
Personal Investor, Sylvia Porter's Personal Finance and The Wall Street Journal.

B-37
<PAGE> 164
From time to time, the Funds may include general comparative
information, such as statistical data regarding inflation, securities indices or
the features or performance of alternative investments, in advertisements, sales
literature and reports to shareholders. The Funds may also include calculations,
such as hypothetical compounding examples, which describe hypothetical
investment results in such communications. Such performance examples will be
based on an express set of assumptions and are not indicative of the performance
of any Fund.

In addition, in such communication, Boatmen's may offer opinions on
current economic conditions.

YIELD CALCULATION

The yields for the respective share classes of a Fund are calculated
separately by dividing the net investment income per share (as described below)
earned by the Fund during a 30-day (or one month) period by the maximum offering
price per share (including the maximum front-end sales charge of 4.50% for Class
A Shares (4.00% for Pilot Diversified Bond Income Fund, Pilot Intermediate
Government Securities and Pilot Intermediate Municipal Bond Funds)) on the last
day of the period and annualizing the result on a semi-annual basis by adding
one to the quotient, raising the sum to the power of six, subtracting one from
the result and then doubling the difference. The Fund's net investment income
per share earned during the period with respect to a particular class is based
on the average daily number of shares outstanding in the class during the period
entitled to receive dividends and includes dividends and interest earned during
the period attributable to that class minus expenses accrued for the period
attributable to the class, net of reimbursements. This calculation can be
expressed as follows:

a-b
Yield = 2 [ ( - - - - + 1)6 - 1].
cd

Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends.
d = maximum offering price per share on the last day of the period.

For the purpose of determining net investment income earned during the
period (variable "a" in the formula), dividend income on equity securities held
by a Fund is recognized by accruing 1/360 of the stated dividend rate of the
security each day that the security is in the Fund. Except as noted below,
interest earned on debt obligations held by a Fund is calculated by computing
the yield to maturity of each obligation held by the Fund based on the market
value of the obligation (including actual accrued interest) at the close of
business on the last business day of each month, or, with respect to obligations
purchased during the month, the purchase price (plus actual accrued interest),
and dividing the result by 360 and multiplying the quotient by the market value
of the obligation (including actual accrued interest) in order to determine the
interest income on the obligation for each day of the subsequent month that the
obligation is held by the Fund. For purposes of this calculation, it is assumed
that each month contains 30 days. The maturity of an obligation with a call
provision is the next call date on which the obligation reasonably may be
expected to be called or, if none, the maturity date. With respect to debt
obligations purchased at a discount or premium, the formula generally calls for
amortization of the discount or premium. The amortization schedule will be
adjusted monthly to reflect changes in the market values of such debt
obligations.

B-38
<PAGE> 165
which have discounts based on current market value that exceed the
then-remaining portion of the original issue discount (market discount), the
yield to maturity is the imputed rate based on the original issue discount
calculation. On the other hand, in the case of tax-exempt obligations that are
issued with original issue discount but which have the discounts based on
current market value that are less than the then-remaining portion of the
original issue discount (market premium), the yield to maturity is based on the
market value.

With respect to mortgage or other receivables-backed obligations which
are expected to be subject to monthly payments of principal and interest ("pay
downs"), (a) gain or loss attributable to actual monthly pay downs are accounted
for as an increase or decrease to interest income during the period; and (b) a
Fund may elect either (i) to amortize the discount and premium on the remaining
security, based on the cost of the security, to the weighted average maturity
date, if such information is available, or to the remaining term of the
security, if any, if the weighted average maturity date is not available, or
(ii) not to amortize discount or premium on the remaining security.

Undeclared earned income will be subtracted from the maximum offering
price per share (variable "d" in the formula). Undeclared earned income is the
net investment income which, at the end of the base period, has not been
declared as a dividend, but is reasonably expected to be and is declared and
paid as a dividend shortly thereafter.

The 30-day yield for each Fund as of August 31, 1996 was as follows:

<TABLE>
<CAPTION>
Class A Shares Class B Shares Pilot Shares
<S> <C> <C> <C>
Pilot U.S. Government Securities Fund 5.26% 4.68% 5.76%
Pilot Intermediate U.S. Government 5.27% N/A 5.74%
Securities Fund
Pilot Municipal Bond Fund 4.37% 3.82% 4.83%
Pilot Intermediate Municipal Bond Fund 3.53% N/A 3.93%
</TABLE>

The "tax-equivalent" yield of each Municipal Bond Fund for a particular
share class is computed by (a) dividing the portion of the Fund's yield for a
particular class (calculated as above) that is exempt from federal income taxes
by one minus a stated federal income tax rate; and (b) adding the quotient to
that portion, if any, of such yield that is not exempt from federal income tax.

The tax-equivalent yield for each Fund as of August 31, 1996 was as
follows:

<TABLE>
<CAPTION>
Class A Shares Class B Shares Pilot Shares
<S> <C> <C> <C>
Pilot Municipal Bond Fund 7.24% 6.34% 8.00%
Pilot Intermediate Municipal Bond 5.88% N/A 6.51%
Fund
</TABLE>

TOTAL RETURN CALCULATIONS

Each Fund computes its average annual total return separately for its
separate share classes by determining the average annual compounded rates of
return during specified periods that equate the initial amount invested in a
particular share class to the ending redeemable value of such investment in the
class. This is done by dividing the ending redeemable value of a hypothetical
$1,000 initial payment by $1,000 and raising the quotient to a power equal to
one divided by the number of years (or fractional portion thereof) covered by
the computation and subtracting one from the result. This calculation can be
expressed as follows:

B-39
<PAGE> 166
ERV
T = [ ( - - - - ) 1/n - 1]
P

Where: T = average annual total return.

ERV = ending redeemable value at the end of
the period covered by the computation of a
hypothetical $1,000 payment made at the beginning
of the period.

P = hypothetical initial payment of $1,000.

n = period covered by the computation, expressed in
terms of years.

Each Fund computes its aggregate total returns separately for its
separate share classes by determining the aggregate rates of return during
specified periods that likewise equate the initial amount invested in a
particular share class to the ending redeemable value of such investment in the
class. The formula for calculating aggregate total return is as follows:

ERV
aggregate total return = [ ( - - - - - 1 )].
P

The calculations of average annual total return and aggregate total
return assume the reinvestment of all dividends and capital gain distributions
on the reinvestment dates during the period. The ending redeemable value
(variable "ERV" in each formula) is determined by assuming complete redemption
of the hypothetical investment and the deduction of all nonrecurring charges at
the end of the period covered by the computations. In addition, a Fund's average
annual total return and aggregate total return quotations reflect the deduction
of the maximum front-end sales charge in connection with the purchase of Class A
Shares and the deduction of any applicable contingent deferred sales charge with
respect to Class B Shares.

Each Fund may also advertise total return data without reflecting sales
charges in accordance with the rules of the Securities and Exchange Commission.
Quotations that do not reflect such sales charges will, of course, be higher
than quotations that do.

Unlike bank deposits or other investments that pay a fixed yield or
return for a stated period of time, the return for a Fund will fluctuate from
time to time and does not provide a basis for determining future returns. Return
is a function of portfolio quality, composition, maturity and market conditions,
as well as the expenses allocated to each Fund. The return of a Fund may not be
readily comparable to other investment alternatives because of differences in
the foregoing variables and the methods used to value portfolio securities,
compute expenses and calculate return.

Average annual total return, aggregate total return, yield and tax
equivalent yield are calculated separately for Pilot Shares, Class A Shares and
Class B Shares. Pilot Shares, Class A Shares and Class B Shares are subject to
different fees and expenses and may have different performance for the same
period.

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<PAGE> 167
The aggregate total return for each of the Funds since its inception as
of August 31, 1996 was as follows:

<TABLE>
<CAPTION>
Class A Shares Class B Shares Pilot Shares
<S> <C> <C> <C>
Pilot U.S. Government Securities 9.11% 15.01% 22.11%
Fund

Pilot Intermediate U.S. Government 8.38% N/A 14.10%
Securities Fund

Pilot Municipal Bond Fund 7.05% 10.34% 18.10%

Pilot Intermediate Municipal Bond 9.29% N/A 12.91%
Fund
</TABLE>

TAX INFORMATION

Each Fund intends to elect to be treated as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"). Such qualification does not involve supervision of management or
investment practices by any governmental agency or bureau.

In order to qualify as a regulated investment company, each Fund must,
among other things: (a) derive at least 90% of its annual gross income from
dividends, interest, payments with respect to securities loans and gains from
the sale or other disposition of stock or securities or foreign currencies, or
other income (such as gains from options, futures or forward contracts) derived
with respect to its business of investing in such stock, securities or
currencies; (b) derive less than 30% of its annual gross income from the sale or
other disposition of: (i) stock or securities, (ii) options, futures or forward
contracts (other than options, futures or forward contracts on foreign
currencies), or (iii) foreign currencies (or foreign currency options, futures
or forward contracts) not directly related to the Fund's principal business of
investing in stock or securities (or options and futures with respect to stocks
or securities), held less than three months (the "30% Limitation"); and (c)
diversify its holdings so that, at the end of each quarter of its taxable year:
(i) at least 50% of the market value of the Fund's total assets is represented
by cash and (ii) not more than 25% of the value of the Fund's total assets is
invested in the securities (other than U.S. Government securities and securities
of other regulated investment companies) of any one issuer.

Each Fund, as a regulated investment company, generally should not be
subject to federal income tax on its investment company taxable income (which
includes, among other items, dividends, interest and net short-term capital
gains in excess of net long-term capital losses) and net capital gains (the
excess of net long-term capital gains over net short-term capital losses) which
are distributed to Shareholders in any taxable year, provided that the Fund
distributes at least 90% of its investment company taxable income and its net
tax-exempt interest income, if any, each taxable year. In order to avoid a 4%
federal excise tax, each Fund must distribute (or be deemed to have distributed)
by December 31 of each calendar year at least 98% of its ordinary income (not
taking into account any capital gains or loss) for such year, at least 98% of
the excess of its capital gains over its capital losses (adjusted for certain
ordinary losses) computed on the basis of the one-year period ending on October
31 of such year, and any ordinary income and capital gains for previous years
that were not distributed during those years. A distribution, including an
"exempt-interest dividend," will be treated as having been paid on December 31
of the current calendar year if it is declared by a Fund in October, November or
December with a record date in such a month and paid during January of the
following calendar year. Such distributions will be taxable to shareholders in
the calendar year in which the distributions are declared.

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<PAGE> 168
The Trust intends that the Municipal Bond Funds will each qualify under
the Code to pay "exempt-interest dividends" to their respective shareholders. A
Municipal Bond Fund will be so qualified if, at the close of each quarter of its
taxable year, at least 50% of the value of its total assets consists of
securities on which the interest payments are exempt from federal income tax. To
the extent that dividends distributed by a Fund to each of its shareholders are
derived from interest income exempt from federal income tax and are designated
as "exempt-interest dividends" by the Fund, they will be excludable from the
gross income of the shareholders for federal income tax purposes.
"Exempt-interest dividends," however, must be taken into account by shareholders
in determining whether their total income is large enough to result in taxation
of up to one-half (85%, for taxable years beginning after 1993) of their social
security benefits and certain railroad retirement benefits. It should also be
noted that tax-exempt interest on private activity bonds in which each of the
Municipal Bond Funds may invest generally is treated as a tax preference item
for purposes of the alternative minimum tax for corporate and individual
shareholders. Each Municipal Bond Fund will inform its respective shareholders
annually as to the portion of the distributions from the Fund which constituted
"exempt-interest dividends."

Dividends paid out of a Fund's investment company taxable income will
be treated as ordinary income in the hands of shareholders. If a portion of a
Fund's income consists of dividends paid by U.S. corporations, a portion of the
dividends paid by the Fund may qualify for the corporate dividends-received
deduction. Distributions of net capital gains, if any, which are designated as
capital gain dividends are taxable to shareholders as long-term capital gain,
regardless of the length of time the shares of a Fund have been held by such
shareholders, and are not eligible for the corporate dividends-received
deduction. Net capital gains for a taxable year are computed by taking into
account any capital loss carry-forward of a Fund.

Distributions of investment company taxable income and net capital
gains will be taxable as described above, whether received in additional shares
or in cash. Shareholders electing to receive distributions in the form of
additional shares will have a cost basis in each share so received equal to the
net asset value of such share on the reinvestment date.

Investments by a Fund in zero coupon securities (other than tax-exempt
zero coupon securities) will result in income to the Fund equal to a portion of
the excess of the face value of the securities over their issue price (the
"original issue discount") each year that the securities are held, even though
the Fund receives no cash interest payments. This income is included in
determining the amount of income which a Fund must distribute to maintain its
status as a regulated investment company and to avoid the payment of federal
income tax and the 4% excise tax. Similarly, investments in tax-exempt zero
coupon securities will result in a Fund accruing tax-exempt income each year
that the securities are held, even though the Fund receives no cash payments of
tax-exempt interest. This tax-exempt income is included in determining the
amount of net tax-exempt interest income which a Fund must distribute to
maintain its status as a regulated investment company.

Gain derived by a Fund from the disposition of any market discount
bonds (i.e., bonds purchased other than at original issue, where the face value
of the bonds exceeds their purchase price), including tax-exempt market discount
bonds, held by the Fund will be taxed as ordinary income to the extent of the
accrued market discount on the bonds, unless the Fund elects to include the
market discount in income as it accrues.

B-42
<PAGE> 169
gain or loss will be a capital gain or loss, and will be long-term or short-term
depending upon the holding period of the security. With respect to a put or call
option that is purchased by a Fund, if the option is sold, any resulting gain or
loss will be a capital gain or loss, and will be long-term or short-term,
depending upon the holding period of the option. If the option expires, the
resulting loss is a capital loss and is long-term or short-term, depending upon
the holding period of the option. If the option is exercised, the cost of the
option, in the case of a call option, is added to the basis of the purchased
security and, in the case of a put option, reduces the amount realized on the
underlying security in determining gain or loss.

Certain options, futures contracts and forward contracts in which a
Fund may invest are "section 1256 contracts." Gains or losses on section 1256
contracts generally are considered 60% long-term and 40% short-term capital
gains or losses ("60/40"); however, foreign currency gains or losses (as
discussed below) arising from certain section 1256 contracts may be treated as
ordinary income or loss. Also, section 1256 contracts held by a Fund at the end
of each taxable year (and, generally, for purposes of the 4% excise tax, on
October 31 of each year) are "marked-to-market" (that is, treated as sold at
fair market value), resulting in unrealized gains or losses being treated as
though they were realized.

Generally, the hedging transactions undertaken by a Fund may result in
"straddles" for U.S. federal income tax purposes. The straddle rules may affect
the character of gains (or losses) realized by a Fund. In addition, losses
realized by a Fund on positions that are part of a straddle may be deferred
under the straddle rules, rather than being taken into account in calculating
the taxable income for the taxable year in which the losses are realized.
Because only a few regulations implementing the straddle rules have been
promulgated, the tax consequences to the Funds of engaging in hedging
transactions are not entirely clear. Hedging transactions may increase the
amount of short-term capital gain realized by a Fund which is taxed as ordinary
income when distributed to its shareholders.

Each Fund may make one or more of the elections available under the
Code which are applicable to straddles. If a Fund makes any of the elections,
the amount, character and timing of the recognition of gains or losses from the
affected straddle positions will be determined under rules that vary according
to the election(s) made. The rules applicable under certain of the elections may
operate to accelerate the recognition of gains or losses from the affected
straddle position.

Because the straddle rules may affect the character of gains or losses,
defer losses and/or accelerate the recognition of gains or losses from the
affected straddle positions, the amount which may be distributed to
shareholders, and which will be taxed to them as ordinary income or long-term
capital gain, may be increased or decreased as compared to a Fund that did not
engage in such hedging transactions.

The 30% Limitation and the diversification requirements applicable to
each Fund's assets may limit the extent to which the Fund will be able to engage
in transactions in options, futures contracts and forward contracts.

Under the Code, gains or losses attributable to fluctuations in
exchange rates which occur between the time a Fund accrues receivables, or
liabilities denominated in a foreign currency and the time the Fund actually
collects such receivables, or pays such liabilities, generally are treated as
ordinary income or ordinary loss. Similarly, on disposition of debt securities
denominated in a foreign currency and on disposition of certain futures
contracts, forward contracts and options, gains or losses attributable to
fluctuations in the value of foreign currency between the date of acquisition of
the security or contract and the date of disposition also are treated as
ordinary gain or loss. These gains or losses, referred to under the Code as
"section 988" gains or losses, may increase or decrease the amount of a Fund's
investment company taxable income to be distributed to its shareholders as
ordinary income.

B-43
<PAGE> 170
If a Fund invests in stock of certain foreign investment companies, the
Fund may be subject to U.S. federal income taxation on a portion of any "excess
distribution" with respect to, or gain from the disposition of, such stock. The
tax would be determined by allocating such distribution or gain ratably to each
day of the Fund's holding period for the stock. The distribution or gain so
allocated to any taxable year of the Fund, other than the taxable year of the
excess distribution or disposition, would be taxed to the Fund at the highest
ordinary income rate in effect for such year, and the tax would be further
increased by an interest charge to reflect the value of the tax deferral deemed
to have resulted from the ownership of the foreign company's stock. Any amount
of distribution or gain allocated to the taxable year of the distribution or
disposition would be included in the Fund's investment company taxable income
and, accordingly, would not be taxable to the Fund to the extent distributed by
the Fund as a dividend to its shareholders.

Each Fund which invests in foreign equity securities may be able to
make an election, in lieu of being taxable in the manner described above, to
include annually in income its pro rata share of the ordinary earnings and net
capital gain of the foreign investment company, regardless of whether it
actually received any distributions from the foreign company. These amounts
would be included in the Fund's investment company taxable income and net
capital gain which, to the extent distributed by the Fund as ordinary or capital
gain dividends, as the case may be, would not be taxable to the Fund. In order
to make this election, the Fund would be required to obtain certain annual
information from the foreign investment companies in which it invests, which in
many cases may be difficult to obtain. Alternatively, a Fund may be able to
elect to mark to market its foreign investment company stock, resulting in the
stock being treated as sold at fair market value on the last business day of
each taxable year. Any resulting gain would be reported as ordinary income, and
any resulting loss would not be recognized.

Any gain or loss realized by a shareholder upon the sale or other
disposition of shares, or upon receipt of a distribution in complete liquidation
of a Fund, generally will be a capital gain or loss which will be long-term or
short-term, generally depending upon the shareholder's holding period for the
shares. Any loss realized on a sale or exchange will be disallowed to the extent
the shares disposed of are replaced (including shares acquired pursuant to a
dividend reinvestment plan) within a period of 61 days beginning 30 days before
and ending 30 days after disposition of the shares. In such a case, the basis of
the shares acquired will be adjusted to reflect the disallowed loss. Any loss
realized by a shareholder on a disposition of shares held by the shareholder for
six months or less will be treated as a long-term capital loss to the extent of
any distributions of net capital gains received by the shareholder with respect
to such shares. Furthermore, a loss realized by a shareholder on the redemption,
sale or exchange of shares in each of the Municipal Bond Funds with respect to
which exempt-interest dividends have been paid will, to the extent of such
exempt-interest dividends, be disallowed if such shares have been held by the
shareholders for less than six months.

Under the Code, a shareholder may not deduct that portion of interest
on indebtedness incurred or continued to purchase or carry shares of an
investment company paying exempt-interest dividends (such as the shares of each
of the Municipal Bond Funds) which bears the same ratio to the total of such
interest as the exempt-interest dividends bear to the total dividends (excluding
net capital gain dividends) received by the shareholder. In addition, under
rules issued by the Internal Revenue Service for determining when borrowed funds
are considered to be used to purchase or carry particular assets, the purchase
of shares may be considered to have been made with borrowed funds even though
the borrowed funds are not directly traceable to such purchase.

B-44
<PAGE> 171
deduction on their federal income tax returns for their pro rata portion of
qualified taxes paid by that Fund in foreign countries. In the event such an
election is made, shareholders would be required to include their pro rata
portion of such taxes in gross income and may be entitled to claim a foreign tax
credit or deduction for the taxes, subject to certain limitations under the
Code. Shareholders who are precluded from taking such credits or deductions will
nevertheless be taxed on their pro rata share of the foreign taxes included in
their gross income, unless they are otherwise exempt from federal income taxes.
It is not expected, however, that more than 50% of any Fund's total assets will
consist of stock or securities of foreign corporations and, consequently, it is
not expected that shareholders will be eligible to claim a foreign tax credit or
deduction with respect to foreign taxes paid by any Fund.

Each Fund will be required to report to the Internal Revenue Services
(the "IRS") all taxable distributions (except in the case of certain exempt
shareholders). Under the backup withholding provisions of Code Section 3406, all
such distributions may be subject to withholding of federal income tax at the
rate of 31%. This tax generally would be withheld if: (a) the payee fails to
furnish a Fund with the payee's taxpayer identification number ("TIN") under
penalties of perjury, (b) the IRS notifies a Fund that the TIN furnished by the
payee is incorrect, (c) the IRS notifies a Fund that the payee has failed to
properly report interest or dividend income to the IRS, or (d) when required to
do so, the payee fails to certify under penalties of perjury that it is not
subject to backup withholding. An individual's TIN is his or her social security
number. The Trust may refuse to accept an application that does not contain any
required TIN or certification that the number provided is correct. If the
withholding provisions are applicable, any distributions, whether taken in cash
or reinvested in shares, will be reduced by the amounts required to be withheld.
Backup withholding is not an additional tax. Any amounts withheld may be
credited against the shareholder's U.S. federal income tax liability. Investors
may wish to consult their tax advisors about the applicability of the backup
withholding provisions.

All distributions, whether received in shares or cash, must be reported
by each shareholder on his or her federal income tax return. Each shareholder
should consult his or her own tax adviser to determine the state and local tax
consequences of an investment in a Fund.

The foregoing discussion relates solely to U.S. federal income tax law
as it applies to U.S. persons (i.e., U.S. citizens and residents and U.S.
corporations, partnerships, trusts and estates). Each shareholder who is not a
U.S. person should consult his or her tax adviser regarding the U.S. and non-
U.S. tax consequences of ownership of shares of a Fund, including the
possibility that such a shareholder may be subject to a U.S. withholding tax at
a rate of 30% (or a lower rate under an applicable U.S. income tax treaty) on
certain distributions.

STATE AND LOCAL

The Funds may be subject to state or local taxes in jurisdictions in
which the Funds may be deemed to be doing business. In addition, in those states
or localities which have income tax laws, the treatment of the Trust and its
shareholders under such laws may differ from their treatment under Federal
income tax laws. Also, an investment in the Funds may have different tax
consequences for shareholders than would a direct investment in the securities
held by the Funds. Shareholders should consult their own tax advisers concerning
these matters. For example, in such states or localities, it may be appropriate
for shareholders to review with their tax advisers the state income tax
consequences of investment by the Funds in securities issued or guaranteed as to
principal and interest by the U.S. Government or its various agencies or
instrumentalities, portfolio repurchase agreements, and securities loans.

In certain states, distributions made by each of the Municipal Bond
Funds which are derived from interest on obligations of that state or any
municipality or political subdivision thereof may be exempt from taxation.

B-45
<PAGE> 172
Shareholders are advised to consult their own tax advisers with respect
to the particular tax consequences to them of an investment in a Fund. Persons
who may be "substantial users" or "related persons" of substantial users) of
facilities financed by industrial development bonds should consult their tax
advisers before purchasing units of the Municipal Bond Funds. The term
"substantial user" generally includes any "non-exempt person" who regularly uses
in his or her trade or business a part of a facility financed by industrial
development bonds. Generally, an individual will not be a "related person" of a
substantial user under the Code unless the person or his or her immediate family
owns directly or indirectly in the aggregate more than a 50% equity interest in
the substantial user.

ORGANIZATION AND CAPITALIZATION

The Trust is a Massachusetts business trust established under the laws
of the Commonwealth of Massachusetts by an Agreement and Declaration of Trust
dated July 15, 1982, as amended (the "Declaration of Trust") under the name
Centerland Fund. On June 1, 1994, the name of the Trust was changed to The Pilot
Funds. Each shareholder is deemed to have expressly assented and agreed to the
terms of the Declaration of Trust and is deemed to be a party thereto. The
authorized capital of the Trust consists of an unlimited number of units of
beneficial interest which are referred to as "shares" in this Statement of
Additional Information. The Trustees have authority under the Declaration of
Trust to create and classify shares of beneficial interest in separate series
("Funds") without further action by shareholders. The Trustees have established
fourteen Funds, five of which are offered herein and known as Pilot Diversified
Bond 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 share of each Fund has a par value of $.001. It
represents an equal proportionate interest in that Fund with each other share,
and is entitled to such distributions out of the income belonging to the Fund as
are declared by the Trustees. Upon the liquidation of a Fund, shareholders
thereof are entitled to share pro rata in the net assets belonging to that Fund
available for distribution. The Declaration of Trust further authorizes the
Trustees to classify or reclassify any series or Fund of shares into one or more
classes. The Trustees have authorized the issuance of three classes of each of
the Funds: Pilot Shares, Class A Shares and Class B Shares.

Except as noted above with respect to the Distribution Plans for Class
A Shares and Class B Shares, shares of the Funds bear the same types of ongoing
expenses with respect to the Fund to which they belong. In addition, Class A
Shares are subject to a front-end sales charge and Class B Shares are subject to
a contingent deferred sales charge as described in the Prospectuses. The Classes
also have different exchange privileges, and Class B Shares are subject to
conversion as described in the Prospectus for those shares. In the event of a
liquidation or dissolution of the Trust or an individual Fund, shareholders of a
particular Fund would be entitled to receive the assets available for
distribution belonging to the Fund, and a proportionate distribution, based upon
the relative net asset values of the Trust's respective investment portfolios,
of any general assets not belonging to any particular portfolio which are
available for distribution. Shareholders of a Fund are entitled to participate
in the net distributable assets of the particular Fund involved on liquidation,
based on the number of shares of the Fund that are held by each shareholder,
except that Class A Shares of a particular Fund will be solely responsible for
that Fund's payments pursuant to the Distribution Plan for those Shares and
Class B Shares of a particular Fund will be solely responsible for that Fund's
payments pursuant to the Distribution Plan for those shares.

B-46
<PAGE> 173
now or hereafter offered by the Trust, will vote together in the aggregate and
not separately on a Fund-by-Fund basis, except as otherwise required by law or
when permitted by the Board of Trustees. Rule 18f-2 under the 1940 Act provides
that any matter required to be submitted to the holders of the outstanding
voting securities of an investment company such as the Trust shall not be deemed
to have been effectively acted upon unless approved by the holders of a majority
of the outstanding shares of each Fund affected by the matter. A Fund is
affected by a matter unless it is clear that the interests of each Fund in the
matter are substantially identical or that the matter does not affect any
interest of the Fund. Under the Rule, the approval of an investment advisory
agreement or change in a fundamental investment policy would be effectively
acted upon with respect to a Fund only if approved by a majority of the
outstanding shares of such Fund. However, the Rule also provides that the
ratification of the appointment of independent accountants, the approval of
principal underwriting contracts and the election of Trustees may be effectively
acted upon by shareholders of the Trust voting together in the aggregate without
regard to particular investment portfolios.

Shares have neither cumulative voting rights nor any preemptive rights
and only such conversion and exchange rights as the Board of Trustees may grant
in its discretion. When issued for payment as described in the Prospectuses,
shares will be fully paid and nonassessable, except as expressly set forth
below.

The Trust Agreement provides for shareholder voting only for the
election or removal of one or more Trustees, if a meeting is called for that
purpose, and for certain other designated matters. Each Trustee serves until the
next meeting of shareholders, if any, called for the purpose of considering the
election or reelection of the Trustee or successor thereto, and until the
election and qualification of his successor, if any, elected at that meeting, or
until the Trustee sooner dies, resigns, retires or is removed by the
shareholders or two-thirds of the Trustees.

As of the date of this Statement of Additional Information, the
Trustees and officers of the Trust owned beneficially less than 1% of the
outstanding shares of the Funds. [CHECK W/ERIC]

SHAREHOLDER AND TRUSTEE LIABILITY

The Trust is an entity of the type commonly known as a "Massachusetts
business trust," which is the form in which many mutual funds are organized.
Shareholders of such a trust may, under certain circumstances, be held
personally liable as partners for the obligations of the trust. The Declaration
of Trust contains an express disclaimer of shareholder liability for acts or
obligations of the Trust. Notice of such disclaimer will normally be given in
each agreement, obligation or instrument entered into or executed by the Trust
or the Trustees. The Declaration of Trust provides for indemnification by the
relevant Fund for any loss suffered by a shareholder as a result of an
obligation of the Fund. The Declaration of Trust also provides that the Trust
shall, upon request, assume the defense of any claim made against a shareholder
for any act or obligation of the Trust, and satisfy any judgment thereon. Thus,
the risk of a shareholder incurring financial loss on account of shareholder
liability is limited to circumstances in which a Fund is unable to meet its
obligations. The Trustees believe that, in view of the above, the risk of
personal liability of shareholders is not material.

B-47
<PAGE> 174
other cases, their conduct was at least not opposed to the best interest of the
Trust (and that, in the case of any criminal proceeding, they had no reasonable
cause to believe that the conduct was unlawful). However, nothing in the
Declaration of Trust or the By-Laws protects or indemnifies Trustees or officers
against any liability to which they would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of their office.

No series of the Trust is liable for the liabilities or obligations of
any other series of the Trust.

CUSTODIAN

Boatmen's Trust Company, 100 North Broadway, St. Louis, Missouri
63178-4737 is the custodian of the Funds' assets.

INDEPENDENT ACCOUNTANTS AND COUNSEL

Arthur Andersen LLP, independent public accountants, One International
Place, Boston, Massachusetts 02110, have been selected as auditors of the Funds.
In addition to providing audit services, Arthur Andersen LLP prepares the
Trust's federal and state tax returns and provides consultation and assistance
on accounting, internal control and related matters.

Goodwin, Procter & Hoar LLP, Exchange Place, Boston, Massachusetts
02109, serves as general counsel to the Trust.

MISCELLANEOUS

The following table indicates each additional person known by the Fund
to own beneficially 5% or more of each Pilot Fund listed below as of October 23,
1996.

<TABLE>
<CAPTION>
Name and Address Percent of Total Outstanding Shares
---------------- -----------------------------------
<S> <C>
PILOT U.S. GOVERNMENT SECURITIES FUND -
Sovers Charitable Trust 9.67%
c/o Boatmen's Trust Company
100 North Broadway
St. Louis, Missouri 63178

PILOT DIVERSIFIED BOND INCOME FUND -
Boatmen's Bancshares Ret. Pl. 7.36%
100 North Broadway
St. Louis, Missouri 63178
</TABLE>

B-48
<PAGE> 175
PILOT MUNICIPAL BOND FUND -
Boatmen's Trust Company Investment 7.72%
100 North Broadway
St. Louis, Missouri 63178

B-49
<PAGE> 176
APPENDIX

DESCRIPTION OF SECURITIES RATINGS(1)

MOODY'S INVESTORS SERVICE, INC.

AAA: Bonds which are rated Aaa are judged to be the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.

AA: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which made the long-term risks appear somewhat larger than with Aaa securities.

A: Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.

BAA: Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Moody's applies numerical modifiers, 1, 2, and 3 in the Aa, A and Baa
categories. The modifier 1 indicates that the security ranks in the higher end
of the applicable category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower end of the category.

Moody's ratings for state and municipal and other short-term obligations
will be designated Moody's Investment Grade ("MIG"). The distinction is in
recognition of the differences between short-term credit risk and long-term
risk. Factors affecting the liquidity of the borrower are upper most in
importance in short-term borrowing, while various factors of the first
importance in long-term borrowing risk are of lesser importance in the short
run. Symbols used will be as follows:

MIG-1--Notes bearing this designation are of the best quality enjoying
strong protection from established cash flows of funds for their servicing or
from established and broad-based access to the market for refinancing, or both.

- --------
(1) The ratings indicated herein are believed to be the most recent
ratings available at the date of this Statement of Additional
Information for the securities listed. Ratings are generally given to
securities at the time of issuance. While the rating agencies may from
time to time revise such ratings, they undertake no obligation to do
so, and the ratings indicated do not necessarily represent ratings
which will be given to these securities on the date of the Funds'
taxable year ends.

A-1
<PAGE> 177
MIG-2--Notes bearing this designation are of favorable quality, with all
security elements accounted for, but lacking the undeniable strength of the
preceding grade. Market access for refinancing, in particular, is likely to be
less well-established.

A short-term rating may also be assigned on an issue having a demand
feature. Such ratings will be designated as VMIG to reflect such characteristics
as payment upon periodic demand rather than fixed maturity dates and payment
relying on external liquidity. Additionally, investors should be alert to the
fact that the source of payment may be limited to the external liquidity with no
or limited legal recourse to the issuer in the event the demand is not met.
VMIG-1, VMIG-2 and VMIG-3 ratings carry the same definitions as MIG-1, MIG-2 and
MIG-3, respectively.

STANDARD & POOR'S CORPORATION(2)

AAA: Debt rated AAA has the highest rating assigned by Standard & Poor's.
This rating indicates an extremely strong capacity to pay and interest and repay
principal.

AA: Debt rated AA also has a very strong capacity to pay interest and repay
principal, and in the majority of instances it differs from AAA issues only in
small degree. The ratings in AA may be modified by the addition of a plus ("+")
or minus ("-") sign to show relative standing within the major rating
categories.

A: Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.

BBB: Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.

Municipal notes issued since July 29, 1984 are rated "SP-1," "SP-2," and
"SP-3." The designation SP-1 indicates a very strong capacity to pay principal
and interest. A plus ("+") sign is added to those issues determined to possess
overwhelming safe characteristics. An SP-2 designation indicates a satisfactory
capacity to pay principal and interest, while an SP-3 designation indicates
speculative capacity to pay principal and interest.

DUFF & PHELPS

AAA: Instruments rated AAA are of the highest credit quality. The risk
factors are negligible, being only slightly more than for risk-free U.S.
Treasury debt.

AA+, AA, AA-: Instruments bearing these designations are of high credit
quality. Protection factors are strong. Risk is modest but may vary slightly
from time to time because of economic conditions.

A+, A, A-: Protection factors for instruments bearing these designations
are average but adequate. However, risk factors are more variable and greater in
period of economic stress.

- --------
(2) Rates all governmental bodies having $1,000,000 or more of debt
outstanding, unless adequate information is not available.

A-2
<PAGE> 178
BBB+, BBB, BBB-: Protection factors for instruments bearing these
designations are below average but still considered sufficient for prudent
investment. There is considerable variability in risk during economic cycles.

Preferred stocks are rated on the same scale as bonds but the preferred
rating gives weight to its more junior position in the capital structure.
Structured Financings are also rated on this scale.

FITCH INVESTORS SERVICE, INC.

AAA: Bonds rated AAA are considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by reasonably
foreseeable events.

AA: Bonds rated AA are considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay principal is
very strong, although not quite as strong as bonds rated "AAA." Because bonds
rated in the "AAA" and "AA" categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is generally
rated "F-1+."

A: Bonds rated A are considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is considered
to be strong, but may be more vulnerable to adverse changes in economic
conditions and circumstances than bonds with higher ratings.

BBB: Bonds rated BBB are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and repay
principal is considered to be adequate. Adverse changes in economic conditions
and circumstances, however, are more likely to have adverse impact on these
bonds, and therefor impair timely payment. The likelihood that the ratings of
these bonds will fall below investment grade is higher than for bonds with
higher ratings.

Plus ("+") and minus ("-") signs are used with a rating symbol to indicate
the relative position of a credit within the rating category. Plus and minus
signs, however, are not used within the "AAA" category. Ratings are placed on
FitchAlert to notify investors of an occurrence that is likely to result in a
rating change and the likely direction of such change. These are designated as
"Positive," indicating a potential upgrade, "Negative," for potential downgrade,
or "Evaluating," where ratings may be raised or lowered. FitchAlert is
relatively short-term and should be resolved within 12 months.

IBCA, INC.

AAA: Obligations rated AAA are obligations for which there is the lowest
expectation of investment risk. Capacity for timely repayment of principal and
interest is substantial such that adverse changes in business, economic, or
financial conditions are likely to increase investment risk significantly.

AA: Obligations rated AA are obligations for which there is a very low
expectation of investment risk. Capacity for timely repayment of principal and
interest is substantial. Adverse changes in business, economic, or financial
conditions may increase investment risk albeit not very significantly.

A: Obligations rated A are obligations for which there is a low expectation
of investment risk. Capacity for timely repayment of principal and interest is
strong, although adverse changes in business, economic, or financial conditions
may lead to increased investment risk.

A-3
<PAGE> 179
BBB: Obligations rated BBB are obligations for which there is currently a
low expectation of investment risk. Capacity for timely repayment of principal
and interest is adequate, although adverse changes in business, economic or
financial conditions are more likely to lead to increased investment risk than
for obligations in higher categories.

"+" or "-" may be appended to denote relative status within major rating
categories. Rating Watch highlights an emerging situation which may materially
affect the profile of a rated corporation.

A-4
<PAGE> 180
DESCRIPTION OF COMMERCIAL PAPER RATINGS

MOODY'S INVESTORS SERVICES, INC.

P-1: Issuers have a superior capacity for repayment of short-term
promissory obligations. Prime-1 or P-1 repayment capacity will normally be
evidenced by the following characteristics: Leading market positions in
well-established industries.

High rates of return on funds employed.

Conservative capitalization structures with moderate reliance on debt and
ample asset protection.

Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.

Well-established access to a range of financial markets and assured sources
of alternate liquidity.

P-2: Issuers have a strong capacity for repayment of short-term promissory
obligations. This will normally be evidenced by many of the characteristics
cited above but to a lesser degree. Earnings trends and coverage ratios, while
sound, will be more subject to variation. Capitalization characteristics, while
still appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.

P-3: Issuers have an acceptable ability for repayment of senior short-term
obligations. The effect of industry characteristics and market compositions may
be more pronounced. Variability in earnings and profitability may result in
changes in the level of debt protection measurements and may require relatively
high financial leverage. Adequate alternate liquidity is maintained.

STANDARD & POOR'S CORPORATION

A-1: Standard & Poor's Commercial Paper ratings are current assessments of
the likelihood of timely payment of debts having an original maturity of no more
than 365 days. The A-1 designation indicates the degree of safety regarding
timely payment is very strong. Those issues determined to possess overwhelming
safety characteristics will be denoted with a plus ("+") sign designation.

A-2: Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues designated
"A-1."

DUFF & PHELPS

DUFF 1 PLUS: These instruments bear the highest certainty of timely
payment. Short-term liquidity including internal operating factors and/or ready
access to alternative sources of funds, is clearly outstanding, and safety is
just below risk-free U.S. Treasury short-term obligations.

DUFF 1: These instruments bear very high certainty of timely payment.
Liquidity factors are excellent and supported by strong fundamental protection
factors. Risk factors are minor.

DUFF 1 MINUS: These instruments bear high certainty of timely payment.
Liquidity factors are strong and supported by good fundamental protection
factors. Risk factors are very small.

DUFF 2: These instruments bear good certainty of timely payment. Liquidity
factors and company fundamentals are sound. Although ongoing internal funds
needs may enlarge total financing requirements, access to capital markets is
good. Risk factors are small.

A-5
<PAGE> 181
DUFF 3: These instruments bear satisfactory liquidity and other protection
factors which qualify an issue as to investment grade. Risk factors are larger
and subject to more variation. Nevertheless, timely payment is expected.

No ratings are issued for companies whose paper is not deemed to be of
investment grade.

FITCH INVESTORS SERVICE, INC.

F-1+: Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.

F-1: Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
"F-1+."

F-2: Good Credit Quality. Issues assigned this rating have a satisfactory
degree of assurance for timely payment, but the margin of safety is not as great
as for issues assigned "F-1+" and "F-1" ratings.

F-3: Fair Credit Quality. Issues assigned this rating have characteristics
suggesting that the degree of assurance for timely payment is adequate, however,
near-term adverse changes could cause these securities to be rated below
investment grade.

LOC: The symbol LOC indicates that the rating is based on a letter of
credit issued by a commercial bank.

IBCA, INC.

A1+: Obligations supported by the highest capacity for timely repayment.

A1: Obligations supported by a very strong capacity for timely repayment.

A2: Obligations supported by a strong capacity for timely repayment,
although such capacity may be susceptible to adverse changes in business,
economic, or financial conditions.

B1: Obligations supported by an adequate capacity for timely repayment.
Such capacity is more susceptible to adverse changes in business, economic, or
financial conditions than for obligations in higher categories.

"+" or "-" may be appended to denote relative status within major rating
categories. Rating Watch highlights an emerging situation which may materially
affect the profile of a rated corporation.

A-6
<PAGE> 182
THE PILOT FUNDS
3435 Stelzer Road
Columbus, Ohio 43219

STATEMENT OF ADDITIONAL INFORMATION
January 2, 1997
PILOT SHARES, CLASS A SHARES AND CLASS B SHARES

The Pilot Funds (the "Trust") is an open-end, management investment
company (or mutual fund) consisting of fourteen portfolios, four of which
portfolios (the "Funds") are offered hereby. The Funds are:

Pilot Growth and Income Fund;

Pilot Equity Income Fund;

Pilot Growth Fund; and

Pilot Small Capitalization Fund.

Boatmen's Trust Company ("Boatmen's") serves as the investment adviser
to each Fund. Pilot Funds Distributors, Inc. serves as each Fund's distributor,
and its affiliate, BISYS Fund Services L.P. ("BISYS"), serves as each Fund's
administrator.

B-1
<PAGE> 183
TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
<S> <C>
Investment Policies And Practices Of The Funds...................... B -

Investment Restrictions............................................. B -

Trustees And Officers............................................... B -

Investment Adviser, Administrator, Distributor And Transfer Agent .. B -

Portfolio Transactions.............................................. B -

Net Asset Value..................................................... B -

Matters Relating to Class A Shares and Class B Shares............... B -

Additional Purchase and Redemption Information...................... B -

Calculation Of Performance Quotations............................... B -

Tax Information..................................................... B -

Organization And Capitalization..................................... B -

Custodian........................................................... B -

Independent Accountants And Counsel................................. B -

Miscellaneous....................................................... B -

Appendix............................................................ A - 1

Financial Statements................................................ F - 1
</TABLE>

B-2
<PAGE> 184
INVESTMENT POLICIES AND PRACTICES OF THE FUNDS

U.S. GOVERNMENT OBLIGATIONS

CUSTODIAL RECEIPTS

Each Fund may also acquire custodial receipts that evidence ownership
of future interest payments, principal payments or both on certain U.S.
Government notes or bonds. Such notes and bonds are held in custody by a bank on
behalf of the owners. These custodial receipts are known by various names,
including "Treasury Receipts," "Treasury Investors Growth Receipts" and
"Certificates of Accrual on Treasury Securities." Although custodial receipts
are not considered U.S. Government securities, they are indirectly issued or
guaranteed as to principal and interest by the U.S. Government, its agencies,
authorities or instrumentalities. Custodial receipts will be treated as illiquid
securities.

CORPORATE DEBT SECURITIES

B-3
<PAGE> 185
U.S. AND FOREIGN BANK OBLIGATIONS

Each Fund may also make interest-bearing savings deposits in commercial
and savings banks in amounts not in excess of 5% of the total assets of the
Fund.

WHEN-ISSUED SECURITIES, FORWARD COMMITMENTS AND DELAYED SETTLEMENTS

When a Fund purchases securities on a when-issued, forward commitment
or delayed settlement basis, the Fund's custodian or subcustodian will maintain
in a segregated account liquid

B-4
<PAGE> 186
assets having a value (determined daily) at least equal to the amount of the
Fund's purchase commitments. In the case of a forward commitment or delayed
settlement transaction to sell portfolio securities subject to such commitment,
the custodian or subcustodian will hold the portfolio securities themselves in a
segregated account while the commitment is outstanding. These procedures are
designed to ensure that a Fund will maintain sufficient assets at all times to
cover its obligations under when-issued purchases, forward commitments and
delayed settlements.

CONVERTIBLE SECURITIES

The Funds may invest in convertible securities, such as bonds, notes,
debentures, preferred stocks and other securities that may be converted into
common stock. All convertible securities purchased by the Growth and Income and
Equity Income Funds will be rated at least investment grade by an NRSRO or, if
unrated, determined by Boatmen's to be of comparable quality. Investments in
convertible securities can provide income through interest and dividend payments
as well as an opportunity for capital appreciation by virtue of their conversion
or exchange features.

The convertible securities in which the Equity Funds may invest include
fixed-income and zero coupon debt securities, and preferred stock that may be
converted or exchanged at a stated or determinable exchange ratio into
underlying shares of common stock. The exchange ratio for any particular
convertible security may be adjusted from time to time due to stock splits,
dividends, spin-offs, other corporate distributions or scheduled changes in the
exchange ratio. Convertible debt securities and convertible preferred stocks,
until converted, have general characteristics similar to both debt and equity
securities. Although to a lesser extent than with debt securities generally, the
market value of convertible securities tends to decline as interest rates
increase and, conversely, tends to increase as interest rates decline. In
addition, because of the conversion or exchange feature, the market value of
convertible securities typically changes as the market value of the underlying
common stock changes, and, therefore, also tends to follow movements in the
general market for equity securities. A unique feature of convertible securities
is that as the market price of the underlying common stock declines, convertible
securities tend to trade increasingly on a yield basis, and so may not
experience market value declines to the same extent as the underlying common
stock. When the market price of the underlying common stock increases, the price
of a convertible security tends to rise as a reflection of the value of the
underlying common stock, although typically not as much as the price of the
underlying common stock. While no securities investments are without risk,
investments in convertible securities generally entail less risk than
investments in common stock of the same issuer.

B-5
<PAGE> 187
securities closely follow the movements in the market value of the underlying
common stock. Zero coupon convertible securities generally are expected to be
less volatile than the underlying common stocks because they usually are issued
with short maturities (15 years or less) and are issued with options and/or
redemption features exercisable by the holder of the obligation entitling the
holder to redeem the obligation and receive a defined cash payment.

FOREIGN SECURITIES

Each Fund may invest in foreign securities either directly or
indirectly through American Depository Receipts ("ADRs"), which are receipts
issued by an American bank or trust company evidencing ownership of underlying
securities issued by a foreign issuer, or through European Depository Receipts
("EDRs"), which are receipts issued by European financial institutions
evidencing ownership of underlying securities issued by a foreign issuer. ADRs
may be listed on a national securities exchange or may trade in the
over-the-counter market. ADR prices are denominated in United States dollars
while EDR prices are generally denominated in foreign currencies. The securities
underlying an ADR or EDR will normally be denominated in a foreign currency. The
underlying securities may be subject to foreign government taxes which could
reduce the yield on such securities.

Investors should recognize that investing in foreign securities
involves certain special considerations which are not typically associated with
investing in United States securities and which may favorably or unfavorably
affect a Fund's performance. Because foreign companies generally are not subject
to uniform accounting and auditing and financial reporting standards, practices
and requirements comparable to those applicable to domestic companies, there may
be less publicly available information about a foreign company than about a
domestic company. Many foreign stock markets, while growing in volume of trading
activity, have substantially less volume than the New York Stock Exchange (the
"Exchange"), and securities of some foreign companies are less liquid and more
volatile than securities of domestic companies. Similarly, volume and liquidity
in most foreign bond markets is less than in United States markets and at times,
volatility of price can be greater than in United States markets. Further,
foreign markets have different clearance and settlement procedures and in
certain markets there have been times when settlements have not kept pace with
the volume of securities transactions making it difficult to conduct such
transactions. Delays in settlement could result in temporary periods when assets
of each Fund are uninvested and no return is earned thereon. Also, delivery of
securities before payment may be required in some countries. The inability of a
Fund to make intended security purchases due to settlement problems could cause
a Fund to miss attractive investment opportunities. Inability to dispose of
portfolio securities due to settlement problems could result either in losses to
a Fund due to subsequent declines in value of the portfolio security or, if the
Fund has entered into a contract to sell the security, in possible liability to
the purchaser. Fixed commissions on some foreign stock exchanges are generally
higher than negotiated commissions on U.S. exchanges, although a Fund will
endeavor to achieve the most favorable net results on its portfolio
transactions. Further, a Fund may encounter difficulties or be unable to pursue
legal remedies and obtain judgments in foreign courts. There is generally less
government supervision and regulation of business and industry practices, stock
exchanges, brokers and listed companies in foreign countries than in the United
States. Communications between the United States and foreign countries may be
less reliable than within the United States, thus increasing the risk of delayed
settlements of portfolio transactions or loss of certificates for portfolio
securities. In addition, with respect to certain foreign countries, there is the
possibility of expropriation or confiscatory taxation, political or social
instability, or diplomatic developments, which could affect United States
investments in those countries. Moreover, individual foreign economies may
differ favorably or unfavorably from the United States economy in such respects
as growth of gross national product, rate of inflation, capital reinvestment,
resource self-sufficiency and balance of payments position. Each Fund seeks to
mitigate the risks associated with the foregoing considerations through
diversification and continuous professional management.

B-6
<PAGE> 188
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS

Each Fund may invest in forward foreign currency exchange contracts
("forward contracts") for hedging and to seek to increase total return. A
forward contract involves an obligation to purchase or sell a specific currency
at a future date, which may be any fixed number of days from the date of the
contract agreed upon by the parties, at a price set at the time of the contract.
These contracts are individually negotiated and privately traded in the
interbank market by currency traders (usually large commercial banks) and their
customers. A forward contract generally has no deposit requirement, and no
commissions are charged at any stage for trades.

A Fund may also enter into a forward contract to sell a currency that
is linked to a currency that Boatmen's believes to be less attractive and buy a
currency that Boatmen's believes to be more attractive (or a currency that is
linked to currency that Boatmen's believes to be more attractive). The amount in
question would not exceed the value of the Fund's securities denominated in the
less attractive currency. For example, if the Austrian Schilling is linked to
the German Deutsche Mark (the "D-mark"), the Fund holds securities denominated
in Austrian Schillings and Boatmen's believes that the value of Schillings will
decline against the British Pound, the Fund may enter into a contract to sell
D-marks and buy Pounds. This practice is referred to as "proxy hedging." Proxy
hedging involves the risk that the amount of currencies involved may not equal
the value of the Fund's securities denominated in the currency expected to
deteriorate and improperly anticipated currency movements could result in losses
to the Fund. Further, there is the risk that the linkage between various
currencies may change or be eliminated.

The Fund's activities involving forward contracts may be limited by the
requirements of Subchapter M of the Internal Revenue Code for qualification as a
regulated investment company.

ASSET-BACKED AND MORTGAGE-BACKED SECURITIES

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Non-mortgage asset-backed securities involve certain risks that are not
presented by mortgage-backed securities. Primarily, these securities do not have
the benefit of the same security interest in the underlying collateral. Credit
card receivables are generally unsecured and the debtors are entitled to the
protection of a number of state and federal consumer credit laws, many of which
have given debtors the right to set off certain amounts owed on the credit
cards, thereby reducing the balance due. Most issuers of automobile receivables
permit the servicers to retain possession of the underlying obligations. If the
servicer were to sell these obligations to another party, there is a risk that
the purchaser would acquire an interest superior to that of the holders of the
related automobile receivables. In addition, because of the large number of
vehicles involved in a typical issuance and technical requirements under state
laws, the trustee for the holders of the automobile receivables may not have an
effective security interest in all of the obligations backing such receivables.
Therefore, there is a possibility that recoveries on repossessed collateral may
not, in some cases, be able to support payments on these securities.

CMO classes may include accrual certificates (also known as "Z-Bonds"),
which only accrue interest at a specified rate until other specified classes
have been retired and are converted thereafter to interest-paying securities.
They may also include planned amortization classes ("PAC") which generally
require, within certain limits, that specified amounts of principal be applied
on each payment date, and generally exhibit less yield and market volatility
than other classes. The Funds will not purchase "residual" CMO interests, which
normally exhibit the greatest price volatility.

CMOs may expose a Fund to more volatility and interest rate risk than
other types of mortgage-backed obligations.

REPURCHASE AGREEMENTS

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For purposes of the Investment Company Act of 1940 (the "1940 Act"), a
repurchase agreement is deemed to be a loan from the Fund to the seller of the
Obligation. It is not clear whether for other purposes a court would consider
the Obligation purchased by the Fund subject to a repurchase agreement as being
owned by the Fund or as being collateral for a loan by the Fund to the seller.

REVERSE REPURCHASE AGREEMENTS

VARIABLE AND FLOATING RATE INSTRUMENTS

B-9
<PAGE> 191
In determining a Fund's average weighted portfolio maturity, an
instrument will usually be deemed to have a maturity equal to the longer of the
period remaining until the next regularly scheduled interest rate adjustment or
the time the Fund involved can recover payment of principal as specified in the
instrument. Such instruments which are U.S. Government obligations and certain
variable rate instruments having a nominal maturity of 397 days or less when
purchased by the Fund involved, however, will be deemed to have maturities equal
to the period remaining until the next interest rate adjustment.

LENDING OF PORTFOLIO SECURITIES

When a Fund lends its securities, it continues to receive interest (and
dividends with respect to the Equity Funds) on the securities loaned and may
simultaneously earn interest on the investment of the cash loan collateral which
will be invested in readily marketable, high-quality, short-term obligations.
Although voting rights, or rights to consent, attendant to securities on loan
pass to the borrower, such loans will be called so that the securities may be
voted by a Fund if a material event affecting the investment is to occur.
Portfolio loans will be continuously secured by collateral equal at all times in
value to at least the market value of the securities loaned plus accrued
interest. Collateral for such loans may include cash, U.S. Government
securities, securities of U.S. Government agencies and instrumentalities or an
irrevocable letter of credit issued by a bank which meets the investment
standards of a Fund for short-term instruments. There may be risks of delay in
receiving additional collateral or in recovering the securities loaned or even a
loss of rights in the collateral should the borrower of the securities fail
financially.

OTHER INVESTMENT COMPANIES

"STRIPPED SECURITIES"

B-10
<PAGE> 192
interest components are individually numbered and separately issued by the U.S.
Treasury at the request of depository financial institutions, which then trade
the component parts independently.

PARTICIPATION INTERESTS AND TRUST RECEIPTS
Each Fund may purchase from domestic financial institutions and trusts
created by such institutions participation interests and trust receipts in high
quality debt securities. A participation interest or receipt gives a Fund an
undivided interest in the security in the proportion that a Fund's participation
interest or receipt bears to the total principal amount of the security. As to
certain instruments for which a Fund will be able to demand payment, a Fund
intends to exercise its right to do so only upon a default under the terms of
the security, as needed to provide liquidity, or to maintain or improve the
quality of its investment portfolio. It is possible that a participation
interest or trust receipt may be deemed to be an extension of credit by a Fund
to the issuing financial institution rather than to the obligor of the
underlying security and may not be directly entitled to the protection of any
collateral security provided by the obligor. In such event, the ability of a
Fund to obtain repayment could depend on the issuing financial institution.

WARRANTS

Warrants are privileges issued by corporations enabling the owner to
subscribe to and purchase a specified number of shares of the corporation at a
specified price during a specified period of time. The prices of warrants do not
necessarily correlate with the prices of the underlying securities. The

B-11
<PAGE> 193
purchase of warrants involves the risk that the purchaser could lose the
purchase value of the warrant if the right to subscribe to additional shares is
not exercised prior to the warrant's expiration. Also, the purchase of warrants
involves the risk that the effective price paid for the warrant added to the
subscription price of the related security may exceed the value of the
subscribed security's market price such as when there is no movement in the
level of the underlying security.

OPTIONS ON SECURITIES AND INDICES

Prior to the earlier of exercise or expiration, an option may be closed
out by an offsetting purchase or sale of an option of the same series (type,
exchange, underlying security or index, exercise price and expiration) or, in
the case of some OTC options, by fulfilling the terms of an agreement with the
counterparty permitting the Fund to close out the option. There can be no
assurance, however, that a closing purchase or sale transaction can be effected
when a Fund desires.

B-12
<PAGE> 194
There can be no assurance that a liquid market will exist when a Fund
seeks to close out an option position. If the Fund were unable to close out an
option it had purchased on a security, it would have to exercise the option to
realize any profit or the option may expire worthless. If a Fund were unable to
close out a covered call option it had written on a security, it would not be
able to sell the underlying security unless the option expired without exercise.
As a writer of a covered call option, the Fund foregoes, during the option's
life, the opportunity to profit from increases in the market value of the
security covering the call option above the sum of the premium and the exercise
price of the call.

FUTURES CONTRACTS

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<PAGE> 195
guarantees that, if the contract is still open, the sale or purchase of
securities will be performed on the settlement date.

OPTIONS ON FUTURES CONTRACTS

Options on futures contracts can be used by a Fund to hedge the same
risks as might be addressed by the direct purchase or sale of the underlying
futures contracts. If the Fund purchases an option on a futures contract, it may
obtain benefits similar to those that would result if it held the futures
position itself. But, in contrast to a futures transaction in which only
transaction costs are involved, benefits received in an option transaction in
the event of a favorable market movement will be reduced by the amount of the
premium paid as well as by transaction costs. In the event of an adverse market
movement, however, in contrast to the full market risk of a futures position,
the Fund will not be subject to a risk of loss on the option transaction beyond
the amount of the premium it paid plus its transaction costs. Consequently, the
Fund may benefit from an increase in the value of its portfolio that would have
been more completely offset if the hedge had been effected through the use of a
futures contract.

B-14
<PAGE> 196
A Fund will not purchase or sell (write) options on futures contracts
unless, in the opinion of Boatmen's, the market for such options has sufficient
liquidity that the risks associated with such options transactions are at
acceptable levels.

LIMITATIONS ON USE OF FUTURES TRANSACTIONS AND RISK CONSIDERATIONS

Tax-related requirements may limit the extent to which a Fund may
engage in futures and related options transactions. (See "Tax Information.")

RESTRICTED AND OTHER ILLIQUID SECURITIES

COMBINED TRANSACTIONS

USE OF SEGREGATED AND OTHER SPECIAL ACCOUNTS

Options, futures and forward foreign currency contracts that obligate a
Fund to provide cash, securities or currencies to complete such transactions
will entail that Fund either segregating assets

B-15
<PAGE> 197
in an account with, or on the books of, the Trust's custodian, or otherwise
"covering" the transaction as described below. For example, a call option
written by a Fund will require the Fund to hold the securities subject to the
call (or securities convertible into the needed securities without additional
consideration) or liquid assets sufficient to meet the obligation by purchasing
and delivering the securities if the call is exercised. A call option written on
an index will require that Fund to have portfolio securities that correlate with
the index. A put option written by a Fund also will require that Fund to have
available assets sufficient to purchase the securities the Fund would be
obligated to buy if the put is exercised.

INVESTMENT RESTRICTIONS

B-16
<PAGE> 198
As a matter of fundamental policy, each Fund may not:

As a matter of fundamental policy, Equity Income Fund, Growth and
Income Fund, and Growth Fund may not:

(6) Purchase or sell commodity contracts.

As a matter of fundamental policy, Small Capitalization Equity Fund may
not:

(7) Purchase or sell commodity contracts (except to the extent
permitted by the Fund's investment objectives and policies).

(8) Make loans, except that each Fund may purchase and hold debt
instruments and enter into repurchase agreements in accordance
with its investment objective(s) and policies and may lend
portfolio securities.

As a matter of fundamental policy, Equity Income Fund, Growth and
Income Fund, and Small Capitalization Equity Fund may not:

(9) Purchase securities of companies for the purpose of exercising
control.

As a matter of fundamental policy, each Fund may not:

(10) Purchase securities of any one issuer (other than securities
issued or guaranteed by the U.S. Government, its agencies or
instrumentalists or certificates of deposit for any such
securities) if, immediately after such purchase, more than 5%
of the value of the Fund's total assets would be invested in
the securities of such issuer, or more than 10% of the
issuer's outstanding voting securities would be owned by the
Fund or the

B-17
<PAGE> 199
Trust; except that up to 25% of the value of a Fund's total
assets may be invested without regard to the foregoing
limitations. For purposes of this limitation, (a) a security
is considered to be issued by the entity (or entities) whose
assets and revenues back the security, and (b) a guarantee of
a security shall not be deemed to be a security issued by the
guarantor when the value of securities issued and guaranteed
by the guarantor, and owned by the Fund, does not exceed 10%
of the value of the Fund's total assets.

As a matter of fundamental policy, Equity Income Fund, Growth and
Income Fund, and Small Capitalization Equity Fund may not:

(11) Purchase any securities which would cause 25% or more of the
value of the Fund's total assets at the time of purchase to be
invested in the securities of one or more issuers conducting
their principal business activities in the same industry,
provided that (a) there is no limitation with respect to (i)
instruments issued (as defined with respect to fundamental
policy No. 10 above) or guaranteed by the United States, any
state, territory or possession of the United States, the
District of Columbia or any of their authorities, agencies,
instrumentalities or political subdivisions and (ii)
repurchase agreements secured by the instruments described in
clause (i); (b) wholly-owned finance companies will be
considered to be in the industries of their parents if their
activities are primarily related to financing the activities
of the parents; and (c) utilities will be divided according to
their services, for example, gas, gas transmission, electric
and gas, electric and telephone will each be considered a
separate industry.

(12) Purchase any securities which would cause 25% or more of the
value of the Fund's total assets at the time of purchase to be
invested in the securities of one or more issuers conducting
their principal business activities in the same industry,
provided that (a) there is no limitation with respect to (i)
instruments issued or guaranteed by the United States, any
state, territory or possession of the United States, the
District of Columbia or any of their authorities, agencies,
instrumentalities or political subdivisions, (ii) instruments
issued by domestic branches of U.S. banks and (iii) repurchase
agreements secured by the instruments described in clauses (i)
and (ii); (b) wholly-owned finance companies will be
considered to be in the industries of their parents if their
activities are primarily related to financing the activities
of the parents; and (c) utilities will be divided according to
their services, for example, gas, gas transmission, electric
and gas, electric and telephone will each be considered a
separate industry.

As a matter of non-fundamental policy, each Fund may not:

(14) Lend its securities if collateral values are not continuously
maintained at no less than 100% by market to market daily.

(15) Purchase any security while borrowings in excess of 5% of net
assets are outstanding.

B-18
<PAGE> 200
TRUSTEES AND OFFICERS

Lee F. Fetter (43) Chairman Chief Operating and Financial
660 S. Euclid, Box 8003 Officer of Washington
St. Louis, Missouri 63110 University School of Medicine
since 1983.

Henry O. Johnston (59) Trustee President of Fordyce Four,
9650 Clayton Road Incorporated, a corporation
St. Louis, Missouri 63124 engaged in the acquisition and
management of personal
investments.

Nicholas G. Penniman, IV (58) Trustee Publisher, St. Louis Post-
900 N. Tucker Boulevard Dispatch since 1986. Senior
St. Louis, Missouri 63101 Vice President of Pulitzer
Publishing Company since
1986.

William J. Tomko (37) President Senior Vice President, BISYS
3435 Stelzer Road Fund Services, Inc.
Columbus, Ohio 43219

W. Eugene Spurbeck (40) Vice President Manager, BISYS Fund Services,
3435 Stelzer Road Inc.
Columbus, Ohio 43219

Martin R. Dean (33) Treasurer Manager, Mutual Fund
3435 Stelzer Road Accounting, BISYS Fund
Columbus, Ohio 43219 Services, Inc. since May 1994.
Prior thereto, Senior Manager,
KPMG Peat Marwick.
</TABLE>

B-19
<PAGE> 201
<TABLE>
<CAPTION>
Principal Occupation(s)
Name and Address Position(s) with Trust During Past 5 Years
- ---------------- ---------------------- -------------------
<S> <C> <C>
George O. Martinez (37) Secretary Senior Vice President and
3435 Stelzer Road Director of Legal and
Columbus, Ohio 43219 Compliance Services of BISYS
Fund Services, Inc. since April
1995. Prior thereto, Vice
President and Associate
General Counsel of Alliance
Capital Management, L.P.

Sheldon A. Jones (58) Assistant Secretary Partner of the law firm of
Ten Post Office Square South Dechert Price & Rhoads.
Boston, Massachusetts 02109

Bruce Treff (30) Assistant Secretary Counsel, BISYS Fund Services,
3435 Stelzer Road Inc. since September 1995.
Columbus, Ohio 43219 Prior thereto, Manager, Alliance
Capital Management, L.P.
</TABLE>

The Agreement and Declaration of Trust of the Trust (the "Trust
Agreement") provides that, subject to its provisions, the business of the Trust
shall be managed by the Trustees. The Trust Agreement provides that: (a) the
Trustees may enter into agreements with other persons to provide for the
performance and assumption of various services and duties, including, subject to
their general supervision, advisory and administration services and duties, and
also including distribution, custodian, transfer and dividend disbursing agency,
shareholder servicing and accounting services and duties, (b) a Trustee shall be
liable for his own willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office, and for nothing
else, and shall not be liable for errors of judgment or mistakes of fact or law,
and (c) subject to the preceding clause, the Trustees are not responsible or
liable for any neglect or wrongdoing of any officer or any person referred to in
clause (a).

Certain of the Trustees and officers and the organizations with which
they are associated have had in the past, and/or may have in the future,
transactions with Boatmen's, its parent, [as of , NationsBank Corporation],
Kleinwort Benson Investment Management Americas Inc. (investment manager to
Pilot International Equity Fund), BISYS and their respective affiliates. The
Trust has been advised by such Trustees and officers that all such transactions
have been and are expected to be ordinary transactions, and that the terms of
such transactions, including all loans and loan commitments by such persons,
have been and are expected to be substantially the same as the prevailing terms
of comparable transactions with other customers.

Each officer holds comparable positions with certain other investment
companies for which BISYS and its affiliates serve as administrator and/or
distributor.

B-20
<PAGE> 202
The following table provides information relating to the aggregate
compensation to be received by the Trustees from the Registrant for the fiscal
year ended August 31, 1996.

COMPENSATION TABLE

(1) (2) (3) (4) (5)

TOTAL COMPENPENSION
PENSION OR ESTIMATED FROM
AGGREGATE RETIREMENT ANNUAL PENSION OR REGISTRANT AND
NAME OF COMPENSATION BENEFITS UPON BENEFITS UPON FUND COMPLEX
PERSON, POSITION FROM REGISTRANT RETIREMENT RETIREMENT PAID TO PERSONS
<S> <C> <C> <C> <C>
J. Hord Armstrong, III $26,000 0 0 $26,000
Lee F. Fetter (Chairman) $28,000 0 0 $28,000
Henry O. Johnston* $26,000 0 0 $26,000
L. White Matthews, III $26,000 0 0 $26,000
Nicholas G. Penniman, IV $26,000 0 0 $26,000
</TABLE>

* "Interested person" of the Funds for purposes of the 1940 Act.

INVESTMENT ADVISER, ADMINISTRATOR, DISTRIBUTOR AND TRANSFER AGENT

THE ADVISER

Boatmen's Trust Company, [a wholly-owned subsidiary of NationsBank
Corporation as of ], P.O. Box 14737, 100 North Broadway, St. Louis,
Missouri 63178-4737, acts as investment adviser to each Fund pursuant to
separate Investment Advisory Agreements (the "Advisory Agreements") between the
Trust, on behalf of each Fund, and Boatmen's. As adviser, Boatmen's is
responsible for the management of each Fund's assets, subject to the supervision
of the Trustees of the Trust.

The Trust has no present intention of purchasing any securities issued
by Boatmen's, [NationsBank Corporation], or any of its affiliates. Mr. Henry O.
Johnston, a Trustee of the Trust, owns shares amounting to less than one-tenth
of one percent (.001%) of the outstanding shares of common stock of Boatmen's
Bancshares, Inc.

B-21
<PAGE> 203
indemnify Boatmen's against certain liabilities, including liabilities under the
Federal securities laws, or, in lieu thereof, contribute to resulting losses.

As compensation for the services rendered to the Trust by
Boatmen's as investment adviser, and the assumption by Boatmen's of the
expenses related thereto, Boatmen's is entitled to a fee, computed daily and
payable monthly, at an annual rate equal to .75 of 1% of the average daily net
assets of each of Pilot Small Capitalization Equity Fund, Pilot Growth Fund,
Pilot Growth and Income Fund and Pilot Equity Income Fund. Boatmen's has made
additional voluntary undertakings to waive their fees. For the period ended
August 31, 1995, Boatman's received advisory fees (net of waivers) in the
amounts of [$325,447] for Pilot Growth and Income Fund and [$331,383] for Pilot
Equity Income Fund, and for the fiscal period ended August 31, 1996, it
received $310,841, $1,184,210, and $910,255 for Pilot Small Capitalization
Equity Fund, Pilot Growth and Income Fund, and Pilot Equity Income Fund,
respectively. For the fiscal period ended August 31, 1996 Boatmen's waived and
reimbursed $131,964, $395,403 and $314,789 for Pilot Small Capitalization
Equity Fund, Pilot Growth and Income Fund and Pilot Equity Income Fund
respectively. For the fiscal period ended August 31, 1995, Boatmen's waived
fees and reimbursed expenses in the amounts of [$211,618] and [$198,417] for
Pilot Growth and Income Fund and Pilot Equity Income Fund respectively. Pilot
Growth Fund and Pilot Small Capitalization Equity Fund commenced operations on
October 21, 1996 and December 12, 1995, respectively.

The Trust is responsible for all expenses incurred by the Funds, other
than those expressly borne by Boatmen's, the Distributor, BISYS and the Transfer
Agent under the Advisory, Distribution, Administration or Transfer Agency
Agreements. Such expenses include, without limitation, the fees payable to
Boatmen's, BISYS and the Transfer Agent, fees and expenses incurred in
connection with membership in investment company organizations, the fees and
expenses of the Trust's custodian and fund accounting agent, brokerage fees and
commissions, any portfolio losses, filing fees for the registration or
qualification of Trust Shares under federal or state securities laws, expenses
of the organization of the Trust, 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 Trust for violation of any law, legal and auditing and tax fees and
expenses, expenses of preparing and setting in type prospectuses, statements of
additional information, proxy material, reports and notices and the printing and
distributing of the same to the Trust's Shareholders and regulatory authorities,
compensation and expenses of its Trustees and extraordinary expenses incurred by
the Trust.

B-22
<PAGE> 204
transfer agent or custodian to such an investment company, or from purchasing
shares of such a company as agent for and upon the order of customers. Boatmen's
is a state-chartered trust company. Boatmen's believes that it may perform the
services contemplated by its agreement with the Trust without violation of such
banking laws or regulations, which are applicable to it. It should be noted,
however, that future changes in either Federal or state statutes and regulations
relating to the permissible activities of banks and their subsidiaries or
affiliates, as well as future judicial or administrative decisions or
interpretations of current and future statutes and regulations, could prevent
Boatmen's from continuing to perform such services for the Trust.

THE ADMINISTRATOR

BISYS, a wholly-owned subsidiary of The BISYS Group, Inc., which has
its principal offices as 3435 Stelzer Road, Columbus, Ohio 43219, provides
administrative services for the Funds as described in their Prospectuses
pursuant to an Administration Agreement dated as of June 1, 1996. The Agreement
will continue in effect with respect to each Fund until June 1, 1997 and
thereafter will be automatically extended as to a particular Fund for successive
periods of one year, provided that such continuance is specifically approved:
(a) by a vote of a majority of those members of the Board of Trustees of the
Trust who are not parties to the Agreement or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the Board of Trustees of the Trust or by vote of a majority
of the outstanding voting securities of such Fund (as defined under "Investment
Restrictions"). The Agreement is terminable by the Board of Trustees of the
Trust with regard to any Fund, without the payment of any penalty, at any time
if for cause. "Cause" shall mean a material breach by BISYS of its obligations
under the Agreement which shall not have been cured within 60 days after the
date on which BISYS shall have received written notice setting forth in detail
the facts alleged to give rise to the breach.

For its services under the Administration Agreement, BISYS is entitled
to receive an administration fee from the Trust, which is calculated based on
the net assets of all investment portfolios of the Trust combined. Under the
Administration Agreement, each Fund pays its pro rata share of an annual fee to
BISYS, computed daily and payable monthly, of .115 of 1% of the Trust's average
net assets up to $1.5 billion, .110 of 1% of the Trust's average net assets on
the next $1.5 billion, and .1075 of 1% of the Trust's average net assets in
excess of $3 billion. From time to time, BISYS may voluntarily waive fees or
reimburse the Trust for expenses. For the period ended August 31, 1996, BISYS
voluntarily waived fees in the amounts of [$34,284], [$28,203] and [$40,985],
for Pilot Small Capitalization Equity Fund, Pilot Growth and Income Fund, and
Pilot Equity Income Fund, respectively; and for the period ended August 31,
1995, Concord Holding Corporation, an affiliate of BISYS and the Trust's former
Administrator, voluntarily waived fees in the amounts of $79,443, and $78,905
for Pilot Growth and Income Fund and Pilot Equity Income Fund, respectively.
Pilot Growth Fund and Pilot Small Capitalization Equity Fund commenced
operations on October 21, 1996 and December 12, 1995, respectively.

B-23
<PAGE> 205
BISYS will bear all expenses in connection with the performance of its
services under the Administration Agreement for the Trust with the exception of
fees for certain fund accounting services which are borne by the Funds.

THE DISTRIBUTOR

The Distribution Agreement with the Distributor will continue in effect
with respect to each Fund until June 1, 1997 and thereafter will be
automatically extended for successive terms of one year, provided that such
continuance is specifically approved: (a) by a majority of those members of the
Board of Trustees who are not interested persons of the Trust and who have no
direct or indirect financial interest in the operation of any plan that has been
adopted by the Trust pursuant to Rule 12b-1 under the 1940 Act ("Plan") or in
any agreement entered into in connection with such plans ("Disinterested
Trustees"), pursuant to a vote cast in person at a meeting called for the
purpose of voting on such approval, and (b) by the Board of Trustees of the
Trust or by vote of a majority of the outstanding voting securities of the Trust
(as defined under "Investment Restrictions"). The Agreement is terminable by the
Trust at any time with regard to any class of its shares, without the payment of
any penalty, by vote of a majority of the Disinterested Trustees or by vote of a
majority of the outstanding voting securities of such class (as defined under
"Investment Restrictions") on 60 days' written notice to the Distributor, or by
the Distributor at any time, without payment of any penalty, on 60 days' written
notice to the Trust. For the Funds' fiscal periods ended August 31, 1996 and
August 31, 1995, respectively, Pilot Funds Distributors, Inc. received [$_____]
and $6,349 in underwriting commissions and retained [$_____] and $0.

THE TRANSFER AGENT

BISYS Fund Services, Inc. (the "Transfer Agent"), a wholly-owned
subsidiary of The BISYS Group, Inc., located at 3435 Stelzer Road, Columbus,
Ohio 43219, serves as the Funds' transfer agent and dividend disbursing agent.
Under its Transfer Agency Agreement with the Trust, the Transfer Agent, has
undertaken with the Trust to: (i) record the issuance, transfer and redemption
of shares, (ii) provide confirmations of purchases and redemptions, or monthly
statements in lieu thereof, as well as certain other statements, (iii) provide
certain information to the Trust's custodian and any relevant sub-custodian in
connection with redemptions, (iv) provide dividend crediting and certain
disbursing agent services, (v) maintain shareholder accounts, (vi) provide
certain state Blue Sky and other information, (vii) provide shareholders and
certain regulatory authorities with tax related information, (viii) respond to
shareholder inquiries, and (ix) render certain other miscellaneous services. For
the fiscal year ended August 31, 1996, the Transfer Agent received a fee of
[$215,939] in its capacity as transfer agent. For the fiscal year September 1,
1994 through August 31, 1995, Primary Funds Service Corp., the Fund's former
transfer agent, received a fee of $178,800 for its services as transfer agent.

B-24
<PAGE> 206
PORTFOLIO TRANSACTIONS

B-25
<PAGE> 207
security, the securities are allocated among clients in a manner believed to be
equitable to each. It is recognized that in some cases this system could have a
detrimental effect on the price or volume of the security in a particular
transaction as far as a Fund is concerned. The Trust believes that over time its
ability to participate in volume transactions will produce superior executions
for the Funds.

The portfolio turnover rate for each Fund is calculated by dividing the
lesser of purchases or sales of portfolio securities for the reporting period by
the monthly average value of the portfolio securities owned during the reporting
period. The calculation excludes all securities, including options, whose
maturities or expiration dates at the time of acquisition are one year or less.
Portfolio turnover may vary greatly from year to year as well as within a
particular year, and may be affected by cash requirements for redemption of
shares and by requirements which enable the Funds to receive favorable tax
treatment. Portfolio turnover will not be a limiting factor in making portfolio
decisions. For the fiscal year ended August 31, 1995, the portfolio turnover
rates were 28% for Pilot Growth and Income Fund and 37% for Pilot Equity
Income Fund and for the fiscal year ended August 31, 1996, portfolio turnover
rates were 31%, 37%, and 34% for Pilot Small Capitalization Equity Fund,
Pilot Growth and Income Fund, and Pilot Equity Income Fund, respectively.
Pilot Growth Fund and Pilot Small Capitalization Equity Fund commenced
operations on October 21, 1996 and December 12, 1995, respectively.

For the fiscal years ended August 31, 1996 and August 31, 1995,
respectively, the brokerage commissions paid by the Funds were as follows:

- 1995 $97,007 $0 $78,300,728 $42,089

Equity Income Fund
- 1996 $ $ $ $

- 1995 $88,938 $0 $59,960,082 $21,034

Small Capitalization
Equity Fund
- 1996 $ $ $ $

</TABLE>

(1) Percentage of total commissions paid.
(2) Percentage of total amount of transactions involving the payment of
commissions effected through affiliated persons.

Pilot Growth Fund and Pilot Small Capitalization Equity Fund commenced
operations on October 21, 1996 and December 12, 1995, respectively.

B-26
<PAGE> 208
NET ASSET VALUE

Portfolio securities of each Fund are valued as follows: (a) securities
that are traded on any U.S. or foreign stock exchange or the National
Association of Securities Dealers NASDAQ System ("NASDAQ") are valued at the
last sale price on that exchange or NASDAQ prior to the Trust's valuation time;
if no sale occurs, securities traded on a U.S. exchange or NASDAQ are valued at
the mean between the closing bid and closing asked price and securities traded
on a foreign exchange will be valued at the official bid price; (b)
over-the-counter stocks not quoted on NASDAQ are valued at the last sale price
prior to the Trust's valuation time or, if no sale occurs, at the mean between
the last bid and asked price; (c) debt securities are valued by a pricing
service selected by Boatmen's and approved by the Trustees of the Trust, which
prices reflect broker/dealer supplied valuations and electronic data processing
techniques if those prices are deemed by Boatmen's to be representative of
market values at the Trust's valuation time; (d) options and futures contracts
are valued at the last sale price on the market prior to the Trust's valuation
time where any such option or futures contract is principally traded; (e)
forward foreign currency exchange contracts are valued at their respective
current fair market values supplied by a dealer in such contracts prior to the
Trust's valuation time determined on the basis of prices supplied by a dealer in
such contracts; and (f) all other securities and other assets, including debt
securities, for which prices are supplied by a pricing agent but are not deemed
by Boatmen's to be representative of market values, but excluding money market
instruments with a remaining maturity of sixty days or less and including
restricted securities and securities for which no market quotation is available,
are valued at fair value as determined in good faith pursuant to procedures
established by the Trustees of the Trust, including use of a Valuation
Committee. Money market instruments held by a Fund with a remaining maturity of
sixty days or less will be valued by the amortized cost method.

B-27
<PAGE> 209
The proceeds received by the Funds and each additional portfolio
established by the Trustees of the Trust for each issue or sale of its shares,
and all net investment income, realized and unrealized gain and proceeds
thereof, subject only to the rights of creditors, will be specifically allocated
to such Fund and constitute the underlying assets of that Fund. The underlying
assets of each Fund will be segregated on the books of account, and will be
charged with the liabilities of such Fund and a share of the general liabilities
of the Trust. Expenses with respect to the Funds are generally allocated in
proportion to the net asset values of the respective portfolios except where
allocations of direct expenses can otherwise be fairly made. In addition,
certain distribution and service fees will be borne exclusively by the class to
which they relate.

MATTERS RELATING TO CLASS A SHARES AND CLASS B SHARES

The Distributor is also entitled to payment by the Trust for
distribution in addition to the sales charges described in the Prospectuses.
Under the Trust's Distribution Plan for Class A Shares, the Trust pays fees for
the provision of services by Service Organizations (which may include the
Distributor itself), persons ("Clients") for whom the Service Organization is
the dealer of record or holder of record or with whom the Service Organization
has a servicing relationship. Under the Trust's Distribution Plan for Class B
Shares of the Funds, the Trust may pay the Distributor for (a) expenses incurred
in connection with advertising and marketing shares of the Funds, including but
not limited to any advertising or marketing via radio, television, newspapers,
magazines, telemarketing or direct mail solicitations; (b) fees for services
rendered with respect to Class B Shares similar to those services described
above with respect to Class A Shares; (c) expenses incurred in preparing,
printing and distributing Prospectuses (except those used for regulatory
purposes or for distribution to existing shareholders) and in implementing and
operating the Distribution Plan; and (d) interest on amounts expended by the
Distributor that are not immediately repaid by the Trust (to the extent approved
by the Board of Trustees and permitted by published positions of the Securities
and Exchange Commission).

B-28
<PAGE> 210
limitation. Conversely, if in any month the Distributor does not expend the
entire amount then available under a Plan, and assuming that no unpaid amounts
have been carried forward and remain unpaid, then the amount not expended will
be a credit to be drawn upon by the Distributor to permit future payment.
However, any unpaid amounts or credits due under a Distribution Plan may not be
"carried forward" beyond the end of the fiscal year in which such amounts or
credits due are accrued.

Payments for distribution expenses under a particular Distribution Plan
are subject to Rule 12b-1 (the "Rule") under the 1940 Act. Payments under the
Distribution Plans are also subject to the conditions imposed by Rule 18f-3
under the 1940 Act and a Rule 18f-3 Multiple Class Plan which has been adopted
by the Trustees of the Trust for the benefit of the Fund. The Rule defines
distribution expenses to include the cost of "any activity which is primarily
intended to result in the sale of [Trust] shares." The Rule provides, among
other things, that an investment company may bear such expenses only pursuant to
a plan adopted in accordance with the Rule. In accordance with the Rule, the
Plans provide that a report of the amounts expended under the respective Plans,
and the purposes for which such expenditures were incurred, will be made to the
Board of Trustees for its review at least quarterly. The Distribution Plans for
Class A Shares and Class B Shares provide that they may not be amended to
increase materially the costs which Class A or Class B Shares of the Fund may
bear for distribution pursuant to the respective Distribution Plans without
shareholder approval, and both Plans provide that any other type of material
amendment must be approved by a majority of the Board of Trustees, and by a
majority of the Trustees who are neither "interested persons" (as defined in the
1940 Act) of the Trust nor have any direct or indirect financial interest in the
operation of the Plan being amended or in any related agreements, by vote cast
in person at a meeting called for the purpose of considering such amendments
(the "Disinterested Trustees"). In addition, as long as the Distribution Plans
for the respective Share classes are in effect, the nomination of the Trustees
who are not interested persons of the Trust (as defined in the 1940 Act) must be
committed to the non-interested Trustees.

B-29
<PAGE> 211
Organization, changes in the operation of the Funds might occur and a
shareholder serviced by such bank might no longer be able to avail himself or
herself of any automatic investment or other services than being provided by the
bank. It is not expected that shareholders would suffer any adverse financial
consequences as a result of these occurrences.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

As described in the Prospectuses for such Shares, Class A Shares and
Class B Shares may be purchased directly from the Distributor or by Clients of
certain financial institutions such as broker-dealers that have entered into
selling and/or servicing agreements with the Distributor ("Service
Organizations"). Pilot Shares may be purchased by Boatmen's and its affiliates
acting on behalf of themselves and persons maintaining qualified accounts at
such institutions, as described in the Prospectus for such Shares. Individuals
may not purchase Pilot Shares directly. Boatmen's and its affiliates and Service
Organizations may impose minimum customer account and other requirements in
addition to those imposed by the Trust and described in the Prospectuses.
Depending on the terms of the particular account, these entities may charge
their customers fees for automatic investment, redemption and other services.
Such fees may include, for example, account maintenance fees, compensating
balance requirements or fees based upon account transactions, assets or income.
Boatmen's and its affiliates and Service Organizations are responsible for
providing information concerning these services and any charges to any customer
who must authorize the purchase of shares prior to such purchase.

B-30
<PAGE> 212
An investor whose shares are purchased through accounts at Boatmen's or
its affiliates or a Service Organization may redeem all or part of his or her
shares in accordance with instructions pertaining to such accounts. Shares in a
Fund for which orders placed by Boatmen's or its affiliates, a Service
Organization or individual investor for wire redemption are received on a
business day before the close of regular trading hours on the New York Stock
Exchange (currently 3:00 p.m. Central time) will be redeemed as of the close of
regular trading on such Exchange and the proceeds of redemption (less any
applicable contingent deferred sales charge) will normally be wired in federal
funds on the next business day to the commercial bank specified by the
individual investor on the Account Application (or other bank of record on the
investor's file with the Transfer Agent), or to the Service Organization through
which the investment was made. To qualify to use the wire redemption privilege
with the Trust, the payment for shares must be drawn on, and redemption proceeds
paid to, the same bank and account as designated on the Account Application (or
other bank of record as described above). If the proceeds of a particular
redemption are to be wired to another bank, the request must be in writing and
signature guaranteed. Shares in the Funds for which orders for wire redemption
are received by the Trust after the close of regular trading hours on the New
York Stock Exchange or on a non-business day will be redeemed as of the close of
regular trading on such Exchange on the next day on which shares of the
particular Fund are priced and the proceeds (less any applicable contingent
deferred sales charge) will normally be wired in federal funds on the next
business day thereafter. Redemption proceeds (less any applicable contingent
deferred sales charge) will be wired to a correspondent member bank if the
investor's designated bank is not a member of the Federal Reserve System.
Immediate notification by the correspondent bank to the investor's bank is
necessary to avoid a delay in crediting the funds to the investor's bank
account. Proceeds of less than $1,000 will be mailed to the investor's address.

EXCHANGE PRIVILEGE

B-31
<PAGE> 213
A. Class A Shares, as well as additional shares acquired through
reinvestment of dividends or distributions on such shares, may be
exchanged without a front-end sales charge for Class A Shares of any
non-money market investment portfolio of the Trust.

Class B Shares acquired pursuant to an exchange transaction will
continue to be subject to a contingent deferred sales charge. However, Class B
Shares may be exchanged for other Class B Shares without the payment of a
contingent deferred sales charge at the time of exchange. In determining the
holding period for calculating the contingent deferred sales charge payable on
redemption of Class B Shares, the holding period of the shares originally held
will be added to the holding period of the shares acquired through exchange.

RIGHT OF ACCUMULATION AND STATEMENT OF INTENTION

B-32
<PAGE> 214
discount, provided that the purchases are made through a central administrator
or a single dealer, or by other means which result in economy of sales effort or
expense. A "qualified group" must have more than 10 members, must be available
to arrange for group meetings between representatives of the Funds and the
members, and must be able to arrange for mailings to members at reduced or no
cost to the Distributor.

MISCELLANEOUS

Certificates for shares will not be issued.

The Trust may suspend the right of redemption of shares of any Fund and
may postpone payment for any period: (i) during which the New York Stock
Exchange is closed other than customary weekend and holiday closings or during
which trading on the New York Stock Exchange is restricted by applicable rules
and regulations of the Securities and Exchange Commission, (ii) when the SEC
determines that a state of emergency exists which may make payment or transfer
not reasonably practicable, (iii) as the SEC may by order permit for the
protection of the shareholders of the Funds, or (iv) at any other time when the
Funds may, under applicable laws and regulations, suspend payment on the
redemption of its shares. The Trust may also suspend or postpone the recordation
of the transfer of its shares under any of the foregoing circumstances.

IN KIND PURCHASES

B-33
<PAGE> 215
REDEMPTIONS IN KIND

CALCULATION OF PERFORMANCE QUOTATIONS

From time to time, the Funds may include general comparative
information, such as statistical data regarding inflation, securities indices or
the features or performance of alternative investments, in advertisements, sales
literature and reports to shareholders. The Funds may also include calculations,
such as hypothetical compounding examples, which describe hypothetical
investment results in such communications. Such performance examples will be
based on an express set of assumptions and are not indicative of the performance
of any Fund.

In addition, in such communication, Boatmen's may offer opinions on
current economic conditions.

YIELD CALCULATION

The yields for the respective share classes of a Fund are calculated
separately by dividing the net investment income per share (as described below)
earned by the Fund during a 30-day (or one month) period by the maximum offering
price per share (including the maximum front-end sales charge of 4.50% for Class
A Shares) on the last day of the period and annualizing the result on a
semi-annual basis by adding one to the quotient, raising the sum to the power of
six, subtracting one from the result and then doubling the difference. The
Fund's net investment income per share earned during the period with respect to
a particular class is based on the average daily number of shares outstanding in
the class during the period entitled to receive dividends and includes dividends
and interest earned during the period attributable to that class minus expenses
accrued for the period attributable to the class, net of reimbursements. This
calculation can be expressed as follows:

a-b
Yield = 2 [ ( - - - - + 1)6 - 1].
cd

B-34
<PAGE> 216
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends.
d = maximum offering price per share on the last day of the period.

Interest earned on tax-exempt obligations that are issued without
original issue discount and have a current market discount is calculated by
using the coupon rate of interest instead of the yield to maturity. In the case
of tax-exempt obligations that are issued with original issue discount but which
have discounts based on current market value that exceed the then-remaining
portion of the original issue discount (market discount), the yield to maturity
is the imputed rate based on the original issue discount calculation. On the
other hand, in the case of tax-exempt obligations that are issued with original
issue discount but which have the discounts based on current market value that
are less than the then-remaining portion of the original issue discount (market
premium), the yield to maturity is based on the market value.

The 30-day yield for each Fund as of August 31, 1996 was as follows:

<TABLE>
<CAPTION>
Class A Shares Class B Shares Pilot Shares
<S> <C> <C> <C>
Pilot Small Capitalization Equity Fund 0.71% 0.01% 0.99%
Pilot Equity Income Fund 2.92% 2.29% 3.32%
Pilot Growth and Income Fund 1.40% 0.73% 1.72%
</TABLE>

B-35
<PAGE> 217
TOTAL RETURN CALCULATIONS

ERV
T = [ ( - - - - ) 1/n - 1]
P

Where: T = average annual total return.
ERV = ending redeemable value at the end of
the period covered by the computation of a
hypothetical $1,000 payment made at the beginning
of the period.

P = hypothetical initial payment of $1,000.
n = period covered by the computation, expressed in
terms of years.

ERV
aggregate total return = [ ( - - - - - 1 )].
P

B-36
<PAGE> 218
The aggregate total return for each of the Funds since its inception as
of August 31, 1996 was as follows:

<TABLE>
<CAPTION>
Class A Shares Class B Shares Pilot Shares
<S> <C> <C> <C>
Pilot Growth and Income Fund 23.29% 28.24% 36.30%
Pilot Equity Income Fund 25.06% 31.34% 35.93%
Pilot Small Capitalization Equity Fund 2.09% 2.15% 7.37%
</TABLE>

TAX INFORMATION

Each Fund, as a regulated investment company, generally should not be
subject to federal income tax on its investment company taxable income (which
includes, among other items, dividends, interest and net short-term capital
gains in excess of net long-term capital losses) and net capital gains (the
excess of net long-term capital gains over net short-term capital losses) which
are distributed to shareholders in any taxable year, provided that the Fund
distributes at least 90% of its investment company taxable income and its net
tax-exempt interest income, if any, each taxable year. In order to avoid a 4%
federal excise tax, each Fund must distribute (or be deemed to have distributed)
by December 31 of each calendar year at least 98% of its ordinary income (not
taking into account any capital gains or loss) for such year, at least 98% of
the excess of its capital gains over its capital losses (adjusted for certain
ordinary losses) computed on the basis of the one-year period ending on October
31 of such year, and any ordinary income and capital gains for previous years
that were not distributed during those years. A distribution, including an
"exempt-interest dividend," will be treated as having been paid on December 31
of the current calendar year if it is declared by a Fund in October, November or
December with a record date in such a month and paid during January of the
following calendar year. Such distributions will be taxable to shareholders in
the calendar year in which the distributions are declared.

The Trust intends that the Municipal Bond Funds will each qualify under
the Code to pay "exempt-interest dividends" to their respective shareholders. A
Municipal Bond Fund will be so qualified if, at the close of each quarter of its
taxable year, at least 50% of the value of its total assets consists of
securities on which the interest payments are exempt from federal income tax. To
the extent that dividends distributed by a Fund to each of its shareholders are
derived from interest income

B-37
<PAGE> 219
exempt from federal income tax and are designated as "exempt-interest dividends"
by the Fund, they will be excludable from the gross income of the shareholders
for federal income tax purposes. "Exempt-interest dividends," however, must be
taken into account by shareholders in determining whether their total income is
large enough to result in taxation of up to one-half (85%, for taxable years
beginning after 1993) of their social security benefits and certain railroad
retirement benefits. It should also be noted that tax-exempt interest on private
activity bonds in which each of the Municipal Bond Funds may invest generally is
treated as a tax preference item for purposes of the alternative minimum tax for
corporate and individual shareholders. Each Municipal Bond Fund will inform its
respective shareholders annually as to the portion of the distributions from the
Fund which constituted "exempt-interest dividends."

The taxation of equity options and over-the-counter options on debt
securities is governed by Code Section 1234. Pursuant to Code Section 1234, the
premium received by a Fund for selling a put or call option is not included in
income at the time of receipt. If the option expires, the premium is short-term
capital gain to the Fund. If the Fund enters into a closing transaction, the
difference between the amount paid to close out its position and the premium
received is short-term capital gain or loss. If a call option written by a Fund
is exercised, thereby requiring the Fund to sell the underlying security, the
premium will increase the amount realized upon the sale of such security and any
resulting gain or loss will be a capital gain or loss, and will be long-term or
short-term depending upon the holding period of the security. With respect to a
put or call option that is purchased by a Fund, if the option is sold, any
resulting gain or loss will be a capital gain or loss, and will be long-term or
short-term, depending upon the holding period of the option. If the option
expires, the resulting loss is a capital loss and is long-term or short-term,
depending upon the holding period of the option. If the

B-38
<PAGE> 220
option is exercised, the cost of the option, in the case of a call option, is
added to the basis of the purchased security and, in the case of a put option,
reduces the amount realized on the underlying security in determining gain or
loss.

If a Fund invests in stock of certain foreign investment companies, the
Fund may be subject to U.S. federal income taxation on a portion of any "excess
distribution" with respect to, or gain from the disposition of, such stock. The
tax would be determined by allocating such distribution or gain ratably to each
day of the Fund's holding period for the stock. The distribution or gain so
allocated to any taxable year of the Fund, other than the taxable year of the
excess distribution or disposition,

B-39
<PAGE> 221
would be taxed to the Fund at the highest ordinary income rate in effect for
such year, and the tax would be further increased by an interest charge to
reflect the value of the tax deferral deemed to have resulted from the ownership
of the foreign company's stock. Any amount of distribution or gain allocated to
the taxable year of the distribution or disposition would be included in the
Fund's investment company taxable income and, accordingly, would not be taxable
to the Fund to the extent distributed by the Fund as a dividend to its
shareholders.

Each Fund which invests in foreign securities may be subject to foreign
withholding taxes on its investments in such securities. These taxes may be
reduced under the terms of applicable tax treaties, and each Fund intends to
satisfy any procedural requirements to qualify for benefits under these
treaties. In the unlikely event that more than 50% of the value of its total
assets at the close of a taxable year is composed of stock or securities of
foreign corporations, a Fund may make an election under Code Section 853 to
permit its shareholders (subject to limitations) to claim a credit or deduction
on their federal income tax returns for their pro rata portion of qualified
taxes paid by that Fund in foreign countries. In the event such an election is
made, shareholders would be required to include their pro rata portion of such
taxes in gross income and may be entitled to claim a foreign tax credit or
deduction for the taxes, subject to certain limitations under the Code.
Shareholders who are precluded from taking such credits or deductions will
nevertheless be taxed on their pro rata share of

B-40
<PAGE> 222
the foreign taxes included in their gross income, unless they are otherwise
exempt from federal income taxes. It is not expected, however, that more than
50% of any Fund's total assets will consist of stock or securities of foreign
corporations and, consequently, it is not expected that shareholders will be
eligible to claim a foreign tax credit or deduction with respect to foreign
taxes paid by any Fund.

STATE AND LOCAL

ORGANIZATION AND CAPITALIZATION

B-41
<PAGE> 223
to create and classify shares of beneficial interest in separate series
("Funds") without further action by shareholders. The Trustees have established
fourteen Funds, four of which are offered herein and known as Pilot Growth and
Income Fund, Pilot Equity Income Fund, Pilot Growth Fund and Pilot Small
Capitalization Equity Fund. Each share of each Fund has a par value of $.001. It
represents an equal proportionate interest in that Fund with each other share,
and is entitled to such distributions out of the income belonging to the Fund as
are declared by the Trustees. Upon the liquidation of a Fund, shareholders
thereof are entitled to share pro rata in the net assets belonging to that Fund
available for distribution. The Declaration of Trust further authorizes the
Trustees to classify or reclassify any series or Fund of shares into one or more
classes. The Trustees have authorized the issuance of three classes of each of
the Funds: Pilot Shares, Class A Shares and Class B Shares.

Except as noted above with respect to the Distribution Plans for Class
A Shares and Class B Shares, shares of the Funds bear the same types of ongoing
expenses with respect to the Fund to which they belong. In addition, Class A
Shares are subject to a front-end sales charge and Class B Shares are subject to
a contingent deferred sales charge as described in the Prospectuses. The Classes
also have different exchange privileges, and Class B Shares are subject to
conversion as described in the Prospectus for those shares. In the event of a
liquidation or dissolution of the Trust or an individual Fund, shareholders of a
particular Fund would be entitled to receive the assets available for
distribution belonging to the Fund, and a proportionate distribution, based upon
the relative net asset values of the Trust's respective investment portfolios,
of any general assets not belonging to any particular portfolio which are
available for distribution. Shareholders of a Fund are entitled to participate
in the net distributable assets of the particular Fund involved on liquidation,
based on the number of shares of the Fund that are held by each shareholder,
except that Class A Shares of a particular Fund will be solely responsible for
that Fund's payments pursuant to the Distribution Plan for those shares and
Class B Shares of a particular Fund will be solely responsible for that Fund's
payments pursuant to the Distribution Plan for those shares.

Each Pilot Share, Class A Share and Class B Share is entitled to one
vote. Fractional shares are entitled to proportionate fractional votes. Holders
of all outstanding shares of a particular Fund will vote together in the
aggregate and not by class on all matters, except that only Class A Shares of a
Fund will be entitled to vote on matters submitted to a vote of shareholders
pertaining to such Fund's Distribution Plan for Class A Shares and only Class B
Shares of a Fund will be entitled to vote on matters submitted to a vote of
shareholders pertaining to such Fund's Distribution Plan for Class B Shares.
Further, shareholders of all of the Funds, as well as those of any other
investment portfolio now or hereafter offered by the Trust, will vote together
in the aggregate and not separately on a Fund-by-Fund basis, except as
otherwise required by law or when permitted by the Board of Trustees. Rule 18f-2
under the 1940 Act provides that any matter required to be submitted to the
holders of the outstanding voting securities of an investment company such as
the Trust shall not be deemed to have been effectively acted upon unless
approved by the holders of a majority of the outstanding shares of each Fund
affected by the matter. A Fund is affected by a matter unless it is clear that
the interests of each Fund in the matter are substantially identical or that the
matter does not affect any interest of the Fund. Under the Rule, the approval of
an investment advisory agreement or change in a fundamental investment policy
would be effectively acted upon with respect to a Fund only if approved by a
majority of the outstanding shares of such Fund. However, the Rule also provides
that the ratification of the appointment of independent accountants, the
approval of principal underwriting contracts and the election of Trustees may be
effectively acted upon by shareholders of the Trust voting together in the
aggregate without regard to particular investment portfolios.

B-42
<PAGE> 224
The Trust Agreement provides for shareholder voting only for the
election or removal of one or more Trustees, if a meeting is called for that
purpose, and for certain other designated matters. Each Trustee serves until the
next meeting of shareholders, if any, called for the purpose of considering the
election or reelection of the Trustee or successor thereto, and until the
election and qualification of his successor, if any, elected at that meeting, or
until the Trustee sooner dies, resigns, retires or is removed by the
shareholders or two-thirds of the Trustees.

As of the date of this Statement of Additional Information, the
Trustees and officers of the Trust owned beneficially less than 1% of the
outstanding shares of the Funds. [CHECK W/ERIC WHO TO SPEAK WITH IN TA TO VERIFY
THIS SENTENCE]

SHAREHOLDER AND TRUSTEE LIABILITY

The Declaration of Trust provides that the Trustees of the Trust shall
not be liable for any action taken by them in good faith, and that they shall be
fully protected in relying in good faith upon the records of the Trust and upon
reports made to the Trust by persons selected in good faith by the Trustees as
qualified to make such reports. The Declaration of Trust further provides that
the Trustees will not be liable for errors of judgment or mistakes of fact or
law. The Declaration of Trust provides that the Trust will indemnify Trustees
and officers of the Trust against liabilities and expenses reasonably incurred
in connection with litigation in which they may be involved because of their
positions with the Trust, unless it is determined, in the manner provided in the
Declaration of Trust, that they have not acted in good faith in the reasonable
belief that, in the case of conduct in their official capacity with the Trust,
their conduct was in the best interests of the Trust and that, in all other
cases, their conduct was at least not opposed to the best interest of the Trust
(and that, in the case of any criminal proceeding, they had no reasonable cause
to believe that the conduct was unlawful). However, nothing in the Declaration
of Trust or the By-Laws protects or indemnifies Trustees or officers against any
liability to which they would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of their office.

No series of the Trust is liable for the liabilities or obligations of
any other series of the Trust.

CUSTODIAN

Boatmen's Trust Company, 100 North Broadway, St. Louis, Missouri
63178-4737 is the custodian of the Funds' assets.

B-43
<PAGE> 225
INDEPENDENT ACCOUNTANTS AND COUNSEL

Goodwin, Procter & Hoar LLP, Exchange Place, Boston, Massachusetts
02109, serves as general counsel to the Trust.

MISCELLANEOUS

The following table indicates each additional person known by the Fund
to own beneficially 5% or more of each Pilot Fund listed below as of October 23,
1996.

Name and Address Percent of Total Outstanding Shares of Class
---------------- --------------------------------------------

PILOT GROWTH FUND

BOATMEN'S BANKSHARES RET PL 7.30%

PILOT GROWTH AND INCOME FUND

(NONE)

PILOT EQUITY INCOME FUND

(NONE)

PILOT SMALL CAPITALIZATION EQUITY FUND

S WOODS TRUST FOR

MRS. McCLENDON 6.24%

B-44
<PAGE> 226
APPENDIX

DESCRIPTION OF SECURITIES RATINGS(1)

MOODY'S INVESTORS SERVICE, INC.

A-1
<PAGE> 227
MIG-2--Notes bearing this designation are of favorable quality, with all
security elements accounted for, but lacking the undeniable strength of the
preceding grade. Market access for refinancing, in particular, is likely to be
less well-established.

STANDARD & POOR'S CORPORATION(2)

AAA: Debt rated AAA has the highest rating assigned by Standard & Poor's.
This rating indicates an extremely strong capacity to pay and interest and repay
principal.

DUFF & PHELPS

AAA: Instruments rated AAA are of the highest credit quality. The risk
factors are negligible, being only slightly more than for risk-free U.S.
Treasury debt.

AA+, AA, AA-: Instruments bearing these designations are of high credit
quality. Protection factors are strong. Risk is modest but may vary slightly
from time to time because of economic conditions.

A+, A, A-: Protection factors for instruments bearing these designations
are average but adequate. However, risk factors are more variable and greater in
period of economic stress.

- --------

(2) Rates all governmental bodies having $1,000,000 or more of debt
outstanding, unless adequate information is not available.

A-2
<PAGE> 228
BBB+, BBB, BBB-: Protection factors for instruments bearing these
designations are below average but still considered sufficient for prudent
investment. There is considerable variability in risk during economic cycles.

Preferred stocks are rated on the same scale as bonds but the preferred
rating gives weight to its more junior position in the capital structure.
Structured Financings are also rated on this scale.

FITCH INVESTORS SERVICE, INC.

IBCA, INC.

BBB: Obligations rated BBB are obligations for which there is currently a
low expectation of investment risk. Capacity for timely repayment of principal
and interest is adequate, although adverse

A-3
<PAGE> 229
changes in business, economic or financial conditions are more likely to lead to
increased investment risk than for obligations in higher categories.

"+" or "-" may be appended to denote relative status within major rating
categories. Rating Watch highlights an emerging situation which may materially
affect the profile of a rated corporation.

A-4
<PAGE> 230
DESCRIPTION OF COMMERCIAL PAPER RATINGS

MOODY'S INVESTORS SERVICES, INC.

P-1: Issuers have a superior capacity for repayment of short-term promissory
obligations. Prime-1 or P-1 repayment capacity will normally be evidenced by the
following characteristics: Leading market positions in well-established
industries.

High rates of return on funds employed.

Conservative capitalization structures with moderate reliance on debt and
ample asset protection.

Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.

Well-established access to a range of financial markets and assured sources
of alternate liquidity.

STANDARD & POOR'S CORPORATION

A-2: Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues designated
"A-1."

DUFF & PHELPS

DUFF 1 PLUS: These instruments bear the highest certainty of timely payment.
Short-term liquidity including internal operating factors and/or ready access to
alternative sources of funds, is clearly outstanding, and safety is just below
risk-free U.S. Treasury short-term obligations.

DUFF 1: These instruments bear very high certainty of timely payment.
Liquidity factors are excellent and supported by strong fundamental protection
factors. Risk factors are minor.

DUFF 1 MINUS: These instruments bear high certainty of timely payment.
Liquidity factors are strong and supported by good fundamental protection
factors. Risk factors are very small.

A-5
<PAGE> 231
DUFF 3: These instruments bear satisfactory liquidity and other protection
factors which qualify an issue as to investment grade. Risk factors are larger
and subject to more variation. Nevertheless, timely payment is expected.

No ratings are issued for companies whose paper is not deemed to be of
investment grade.

FITCH INVESTORS SERVICE, INC.

F-1+: Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.

F-1: Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
"F-1+."

LOC: The symbol LOC indicates that the rating is based on a letter of
credit issued by a commercial bank.

IBCA, INC.

A1+: Obligations supported by the highest capacity for timely repayment.

A1: Obligations supported by a very strong capacity for timely repayment.

A2: Obligations supported by a strong capacity for timely repayment,
although such capacity may be susceptible to adverse changes in business,
economic, or financial conditions.

"+" or "-" may be appended to denote relative status within major rating
categories. Rating Watch highlights an emerging situation which may materially
affect the profile of a rated corporation.

A-6
<PAGE> 232
Portfolio of Investments
October 22, 1996
(Unaudited)

<TABLE>
<CAPTION>
PILOT DIVERSIFIED BOND INCOME

U.S. TREASURY NOTES
<S> <C> <C> <C>
3,100,000 U.S. TREASURY NOTES 6.250
6.25%, 2/15/03
1,150,000 U.S. TREASURY NOTES 5.750
5.75%, 8/15/03
DTD 8/15/93
4,500,000 U.S. TREASURY NOTES 6.750
6.75%, 5/31/99
10,000,000 U.S. TREASURY NOTES 6.500
6.50%, 8/15/97
5,500,000 U.S. TREASURY NOTES 7.870
7.875%, 11/15/04
550,000 U.S. TREASURY NOTES 7.750
7.75%, 12/31/99
9,550,000 U.S. TREASURY NOTES 7.120
7.125%, 2/29/00
11,900,000 U.S. TREASURY NOTES 6.120
6.125%, 5/15/98
1,600,000 U.S. TREASURY NOTES 6.500
6.50%, 5/15/05
2,000,000 U. S. TREASURY NOTES 5.870
5.875%, 7/31/97
1,000,000 U.S. TREASURY NOTES 6.500
6.50%, 8/15/05
2,000,000 U.S. TREASURY NOTES 8.870
8.875%, 11/15/98

TOTAL U.S. TREASURY NOTES

U.S. TREASURY BONDS
24,100,000 U.S. TREASURY BONDS 7.500
7.50%, 11/15/16

TOTAL U.S TREASURY BONDS

US GOVERNMENT AGENCIES
US GOVERNMENT AGENCY - NON-DISCOUNT
2,000,000 FEDERAL NATIONAL MORTGAGE ASSOCIATION 7.270
MEDIUM TERM NOTES
7.27%, 7/27/2026

TOTAL US GOVERNMENT AGENCY - NON-DISCOUNT

US GOVERNMENT AGENCY - DISCOUNT
2,000,000 FEDERAL FARM CREDIT BANKS 6.040
</TABLE>

<PAGE> 233

MEDIUM TERM NOTES
6.04%, 1/19/2006

<TABLE>
<CAPTION>
TOTAL US GOVERNMENT AGENCY - DISCOUNT

TOTAL US GOVERNMENT AGENCIES

CORPORATE BONDS
AUTOMOTIVE FINANCE
<S> <C> <C> <C>
2,500,000 FORD MOTOR CREDIT CO. 6.250
6.25%, 2/26/98
3,000,000 GENERAL MOTORS ACCEPTANCE CORP. 7.870
7.875, 2/28/97

TOTAL AUTOMOTIVE FINANCE

BANKING
1,000,000 ABN AMRO BANK NV 7.550
7.55%, 6/28/2006
DTD: 6/28/96, PAYS SEMI-ANNUALLY
3,500,000 NATIONSBANK CORP. 7.500
7.50%, 2/15/97

TOTAL BANKING

ELECTRIC UTILITY
4,500,000 NATIONAL RURAL UTILITY 6.500
6.50%, 9/15/02

TOTAL ELECTRIC UTILITY

FINANCIAL SERVICES
3,500,000 ASSOCIATION CORP. N.A. 7.500
7.50%, 5/15/99
300,000 DEAN WITTER DISCOVERY & CO. 6.250
6.25%, 3/15/00
2,500,000 DEAN WITTER DISCOVER 6.750
6.75%, 8/15/00
1,000,000 GENERAL ELECTRIC CAPITAL CORP. 8.500
8.50%, 7/24/2008
DTD: 7/24/90, PAYS SEMI-ANNUALLY
1,000,000 MERRILL LYNCH 7.000
7.00%, 3/15/2006
DTD: 3/18/96, PAYS SEMI-ANNUALLY

TOTAL FINANCIAL SERVICES

INDUSTRIAL GOODS AND SERVICES
1,000,000 COLUMBIA/HCA HEALTHCARE NOTES 7.250
7.25%, 5/20/2008
DTD: 5/20/96, PAYS SEMIANNUALLY

</TABLE>

<S> <C> <C>
1,000,000 MAY DEPARTMENT STORES 7.150
7.15%, 8/15/2004
DTD: 8/15/95, PAYS SEMI-ANNUALLY
1,000,000 SEARS ROEBUCK ACCEPTANCE CORPORATION 6.750
6.75%, 9/15/2005
DTD: 9/12/95, PAYS SEMI-ANNUALLY

TOTAL INDUSTRIAL GOODS AND SERVICES

OIL & EXPLOR PROD & SER
700,000 SHELL OIL CO. 6.700
6.70%, 8/15/02

TOTAL OIL & EXPLOR PROD & SER

RETAIL STORES
4,000,000 J.C. PENNEY & CO. 6.870
6.875%, 6/15/99
3,500,000 WAL-MART STORES 8.620
8.625%, 4/1/01
550,000 WAL-MART STORES 5.500
5.50%, 3/1/98

TOTAL RETAIL STORES

TELECOMMUNICATIONS
1,000,000 SOUTHWESTERN BELL TELEPHONE 6.620
6.625%, 4/1/2005
DTD: 4/1/93, PAYS SEMI-ANNUALLY

TOTAL TELECOMMUNICATIONS

TOTAL CORPORATE BONDS

MONEY MARKET MUTUAL FUNDS
1,415,970 FEDERATED PRIME OBLIGATIONS #10

TOTAL MONEY MARKET MUTUAL FUNDS

TOTAL COST-$ 001204938668
</TABLE>

<PAGE> 235

Portfolio of Investments
October 22, 1996
(Unaudited)
<TABLE>
<CAPTION>

PILOT GROWTH FUND
<S> <C> <C> <C>

COMMON STOCKS
UNCLASSIFIED
2,000 ALLEGIANCE CORP.

TOTAL UNCLASSIFIED

AEROSPACE
16,000 ORBITAL SCIENCES CORP.

TOTAL AEROSPACE

AEROSPACE & MILITARY TECHNOLOGY
10,500 LOCKHEED MARTIN CORP. 1.600
5,500 NORTHROP GRUMMAN CORP. 1.600

TOTAL AEROSPACE & MILITARY TECHNOLOGY

AUTO PARTS
13,100 KAYDON CORP. 0.480
COMMON STOCK

TOTAL AUTO PARTS

BROADCASTING/CABLE
18,700 INFINITY BROADCASTING
COMMON STOCK

TOTAL BROADCASTING/CABLE

CHEMICALS
54,800 CABOT CORP. 0.360
30,750 MONSANTO CO. 0.600
7,700 MORTON INTERNATIONAL, INC. 0.600

TOTAL CHEMICALS

COMPUTER HARDWARE
4,700 CISCO SYSTEMS, INC.
COMMON STOCK
3,050 INTEL CORP. 0.200

TOTAL COMPUTER HARDWARE

COMPUTER SOFTWARE
16,500 COMPUTER ASSOCIATES INTERNATIONAL, INC. 0.090
COMMON STOCK
13,560 SUN MICROSYSTEMS, INC.

TOTAL COMPUTER SOFTWARE

CONSTRUCTION
12,200 CENTEX CORP. 0.200
COMMON STOCK
</TABLE>
<PAGE> 236
<TABLE>
<CAPTION>

TOTAL CONSTRUCTION

CONSUMER GOODS & SERVICES
<S> <C> <C> <C>
3,500 GILLETTE CO. 0.720
COMMON STOCK
22,800 LIZ CLAIBORNE 0.450
14,200 NIKE, INC. 0.300
CLASS B
BEVERAGES AND TOBACCO
5,624 PHILLIP MORRIS COMPANIES, INC. 4.800

TOTAL CONSUMER GOODS & SERVICES

DEFENSE
20,340 ROCKWELL INTERNATIONAL CORP. 1.160

TOTAL DEFENSE

DIVERSIFIED
6,900 DOVER CORP. 0.680

TOTAL DIVERSIFIED

ELECTRICAL & ELECTRONIC
30,000 COMPAQ COMPUTER CORP.
5,500 DIEBOLD INC. 0.680

TOTAL ELECTRICAL & ELECTRONIC

ELECTRICAL EQUIPMENT
27,590 KEMET CORP.
COMMON STOCK
6,700 SCI SYSTEMS INC.

TOTAL ELECTRICAL EQUIPMENT

ELECTRONIC COMPONENTS/ INSTRUMENTS
21,825 ANALOG DEVICES INC.

TOTAL ELECTRONIC COMPONENTS/ INSTRUMENTS

ENERGY
INTEGRATED OIL
25,000 AMOCO CORP. 2.600

TOTAL ENERGY

ENTERTAINMENT
8,441 WALT DISNEY CO. 0.440

TOTAL ENTERTAINMENT
</TABLE>
<PAGE> 237
<TABLE>
<CAPTION>

FINANCIAL SERVICES
<S> <C> <C> <C>
6,900 CMAC INVESTMENT CORP. 0.240
40,000 COMDISCO INCORPORATED 0.280
39,000 FEDERAL NATIONAL MORTGAGE ASSOC. 0.760

TOTAL FINANCIAL SERVICES

FOOD PRODUCTS & SERVICES
9,340 CAMPBELL SOUP CO. 1.380
11,200 HERSHEY FOODS CORP. 0.800

TOTAL FOOD PRODUCTS & SERVICES

HEALTH CARE
10,000 BAXTER INTERNATIONAL, INC. 1.210
10,000 HEALTH CARE & RETIREMENT CORP.
14,000 JOHNSON & JOHNSON 0.760
11,000 UNITED HEALTHCARE CORP. 0.030
COMMON STOCK
PHARMACEUTICALS
23,500 MERCK & COMPANY, INC. 1.600
COMMON STOCK

TOTAL HEALTH CARE

INSURANCE
18,300 FREMONT GENERAL CORP. 0.600
17,140 MERCURY GENERAL CORPORATION 0.960
7,900 VESTA INSURANCE GROUP, INC. 0.150

TOTAL INSURANCE

INVESTMENT COMPANY
33,888 S&P DEPOSITARY RECEIPT 1.400

TOTAL INVESTMENT COMPANY

LEISURE
33,560 COLEMAN
COMMON STOCK

TOTAL LEISURE

MACHINERY & EQUIPMENT
13,200 BLACK AND DECKER CORP. 0.480
24,700 CASE CORP. 0.200
COMMON STOCK
8,800 IDEX CORP. 0.640
4,300 ILLINOIS TOOL WORKS 0.760
</TABLE>
<PAGE> 238
<TABLE>
<CAPTION>

TOTAL MACHINERY & EQUIPMENT

MANUFACTURED HOUSING
<S> <C> <C> <C>
69,000 CLAYTON HOMES INC. 0.080

TOTAL MANUFACTURED HOUSING

MISC. MATERIALS & COMMODITIES
10,000 CALENERGY INC.
COMMON STOCK

TOTAL MISC. MATERIALS & COMMODITIES

MEDICAL EQUIPMENT & SUPPLIES
25,600 AMGEN, INC.
COMMON STOCK
14,340 BECTON DICKINSON & CO. 0.460
COMMON STOCK

TOTAL MEDICAL EQUIPMENT & SUPPLIES

OFFICE EQUIPMENT & SERVICES
6,800 HEWLETT PACKARD 0.480
10,000 SUNGUARD DATA SYSTEMS

TOTAL OFFICE EQUIPMENT & SERVICES

OIL & GAS EXPLOR PROD & SER
46,000 BAKERS HUGHES 0.460
COMMON STOCK
7,000 BURLINGTON 0.550
8,000 HALLIBURTON CO. 1.000
9,600 HELMERICH & PAYNE, INC. 0.520
COMMON STOCK
7,500 PENNZOIL CO. 1.000
14,000 TOSCO CORP 0.640
9,800 WESTERN ATLAS

TOTAL OIL & GAS EXPLOR PROD & SER

PHARMACEUTICALS
13,300 SCHERING PLOUGH 1.320

TOTAL PHARMACEUTICALS

PRINTING & PUBLISHING
16,900 TIME WARNER, INC. 0.360
COMMON STOCK

TOTAL PRINTING & PUBLISHING
</TABLE>
<PAGE> 239
<TABLE>
<CAPTION>

RETAIL STORES/CATALOG
<S> <C> <C> <C>
7,200 ALBERTSONS, INC. 0.600
COMMON STOCK
33,500 CORPORATE EXPRESS, INC.
59,900 PETSMART INC.
COMMON STOCK
8,000 UNOCAL 0.800

TOTAL RETAIL STORES/CATALOG

RETAIL - SPECIAL LINE
22,070 TIFFANY & COMPANY 0.200

TOTAL RETAIL - SPECIAL LINE

TECHNOLOGY
14,000 INTERNATIONAL GAME TECHNOLOGIES 0.120

TOTAL TECHNOLOGY

TELECOMMUNICATIONS
23,500 SBC COMMUNICATIONS, INC. 1.720

TOTAL TELECOMMUNICATIONS

TELECOMMUNICATIONS-SERVICES AND EQUIPMENT
1,000 TELLABS, INC.
COMMON STOCK

TOTAL TELECOMMUNICATIONS-SERVICES AND EQUIPMENT

UTILITY
COMMUNICATIONS
7,400 GTE CORP. 1.880

TOTAL UTILITY

WHOLESALE DISTRIBUTION
9,620 CARDINAL HEALTH, INC. 0.120

TOTAL WHOLESALE DISTRIBUTION

TOTAL COMMON STOCKS

REPURCHASE AGREEMENTS
622,154 FEDERATED PRIME OBLIGATION 5.240

TOTAL REPURCHASE AGREEMENTS

TOTAL COST-$ 000431712273
</TABLE>
<PAGE> 240
THE PILOT FUNDS
Statements of Assets and Liabilities
October 22, 1996
(Unaudited)
<TABLE>
<CAPTION>

Diversified
Bond Income Growth
Fund Fund
------------- ------------
<S> <C> <C>
ASSETS,
Investments, at value (Cost $120,493,867 and $43,171,227,
respectively) $ 120,762,630 $ 53,505,151
------------- ------------

Interest receivable 2,083,115 25,957
Receivable for investments sold 32,150,098 924,449
Unamortized organization costs 26,182 13,091
------------- ------------
Total Assets 155,022,025 54,468,648
------------- ------------
LIABILITIES:
Dividends payable 38,986 --
Cash overdraft 923,829 393,911
Payable for investments purchased 30,305,025 1,995,655
Accrued expenses and other payables:
Investment advisory fees 22,582 18,981
Administration fees 11,874 4,676
Transfer agent fees 3,022 2,320
Legal and audit fees 18,577 6,987
Printing costs 15,763 5,149
Other 12,968 5,739
------------- ------------
Total Liabilities 31,352,124 2,433,418
------------- ------------
Net Assets $ 123,669,901 $ 52,035,230
------------- ------------

Outstanding units of beneficial interest (shares) 12,413,213 5,262,605
============= ============
Net asset value - offering price
per share $ 9.96 $ 9.89
============= ============
COMPOSITION OF NET ASSETS:
Capital $ 124,139,036 $ 52,626,335
Undistributed net investment loss -- (2,784)
Net unrealized appreciation from investments 268,763 10,333,924
Accumulated undistributed net realized losses
from investment transactions (737,898) (10,922,245)
------------- ------------
Net Assets $ 123,669,901 $ 52,035,230
============= ============
</TABLE>

See notes to financial statements.

<PAGE> 241

THE PILOT FUNDS
Statements of Operations
For the period ended October 22, 1996(a)
(Unaudited)

<TABLE>
<CAPTION>
Diversified
Bond Growth
Fund Fund
----------- ------------
<S> <C> <C>
INVESTMENT INCOME:
Interest income $ 43,501 $ --
Dividend income -- 89
--------- ------------
Total Income 43,501 89
--------- ------------
EXPENSES:
Investment advisory fees 2,870 2,173
Administration fees 768 318
Custodian and accounting fees 310 121
Audit fees 132 172
Trustees' fees and expenses 38 16
Transfer agent fees 140 74
Registration and filing fees 316 316
Printing costs -- 32
Other 28 18
--------- ------------
Total expenses before expenses voluntarily reduced 4,622 3,240

Expenses voluntarily reduced (107) (367)
--------- ------------
Total Expenses 4,515 2,873
--------- ------------
Net Investment Income (Loss) 38,986 (2,784)
--------- ------------
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS:
Net realized losses from investment transactions (737,898) (10,922,245)
Net change in unrealized appreciation from investments 268,763 10,333,924
--------- ------------
Net realized/unrealized losses from investments (469,135) (588,321)
--------- ------------
Change in net assets resulting
from operations $(430,149) $ (591,105)
========= ============
<FN>
(a) For the period October 21, 1996 (commencement of
operations) to October 22, 1996.

</TABLE>

See notes to financial statements.
<PAGE> 242

THE PILOT FUNDS
Statements of Changes in Not Assets
For the period ended October 22, 1996(a)
(Unaudited)
<TABLE>
<CAPTION>

Diversified Bond
Income Fund Growth Fund
---------------- -------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ 38,986 $ (2,784)
Net realized losses from investment
transactions (737,898) (10,922,245)
Net change in unrealized appreciation
from investments 268,763 10,333,924
------------- ------------
Change in net assets
resulting from operations (430,149) (591,105)
------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (38,986) --
------------- ------------
PORTFOLIO SHARE TRANSACTIONS:
Proceeds from shares issued 131,197,884 52,912,525
Dividends reinvested -- --
Cost of shares redeemed (7,068,848) (286,190)
------------- ------------
Net increase in net assets
from Portfolio share transactions 124,139,036 52,626,335
------------- ------------
Total Increase 123,669,901 52,035,230
NET ASSETS:
Beginning of period -- --
------------- ------------
End of period $ 123,689,901 $ 52,035,230
============= ============

SHARE TRANSACTIONS:
Issued 13,119,804 5,291,252
Reinvested -- --
Redeemed (706,591) (28,647)
------------- ------------
Change in shares 12,413,113 5,262,605
============= ============

<FN>
(a) For the period October 21, 1996 (commencement of operations) to
October 22, 1996.

</TABLE>

See notes to financial statements.
<PAGE> 243
THE PILOT FUNDS
- --------------------------------------------------------------------------------

Notes to Financial Statements
October 22, 1996 (Unaudited)
- --------------------------------------------------------------------------------

1. GENERAL

The Pilot Growth Fund and Pilot Diversified Bond Income Fund are separate
portfolios (individually, a "Portfolio"; collectively, the "Portfolios") of The
Pilot Funds (the "Fund"). The Fund is a Massachusetts business trust registered
under the Investment Company Act of 1940, as amended (the 1940 Act), as an
open-end management investment company. Both of the Portfolios are diversified.
The Fund currently offers fourteen Portfolios. The accompanying financial
statements are those of the two Portfolios only.

The Portfolios each offer three classes of shares: Pilot Shares, Class A Shares,
and Class B Shares. Each class of shares is substantially the same, except that
Class A Shares and Class B Shares bear the fees payable under the Fund's
Distribution Plan. As of October 22, 1996, the Growth Fund and the Diversified
Bond Income Fund only offer Pilot Shares.

The Fund entered into an Agreement and Plan of Reorganization (the
"Reorganization Agreement") with FUNDS IV Trust ("FUNDS IV"), a Massachusetts
business trust. The agreement contemplated that each of six investment
portfolios of FUNDS IV will transfer substantially all of the assets and
liabilities of FUNDS IV to a corresponding Portfolio of the Fund. The Board of
Trustees of FUNDS IV and the FUNDS IV shareholders, at a special shareholder
meeting held September 17, 1996, each approved the Reorganization Agreement
which became effective October 21, 1996. Pursuant to the Reorganization
Agreement, the Aggressive Stock Appreciation Fund of FUNDS IV transferred
substantially all of its assets and liabilities to the Pilot Growth Fund; and
the Bond Income Fund and Intermediate Bond Income Fund of FUNDS IV transferred
substantially of their assets and liabilities to the Pilot Diversified Bond
Income Fund. All such transfers were in exchange for Pilot Shares of each
respective Portfolio.

The investment objective of the Growth Fund is to provide long-term capital
growth through investments primarily in equity securities, and the Diversified
Bond Income Fund seeks current income consistent with preservation of capital by
investing primarily in debt securities. The Diversified Bond Income Fund seeks
total return as a secondary objective.

Boatmen's Trust Company ("Boatmen's") serves as the Fund's investment adviser
and custodian. BISYS Fund Services Limited Partnership ("BISYS") serves as the
Fund's administrator and Pilot Funds Distributor Inc. (the "Distributor"), an
affiliate of BISYS, serves as the distributor of the Fund's shares. BISYS is a
wholly-owned subsidiary of The BISYS Group, Inc.

2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of the significant accounting policies consistently
followed by the Portfolios in the preparation of their financial statements. The
policies are in conformity with generally accepted accounting principles. The
preparation of financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of income and expenses
for the period. Actual results could differ from those estimates.

<PAGE> 244

A. Investment Valuation

Portfolio securities are valued as follows: (a) securities that are traded on
any U.S. or foreign stock exchange or the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") are valued at the last sale price
on that exchange or NASDAQ prior to the Portfolio's valuation time; if no sale
occurs, securities traded on a U.S. exchange or NASDAQ are valued at the mean
between the closing bid and closing asked price and securities traded on a
foreign exchange will be valued at the official bid price; (b) over-the-counter
stocks not quoted on NASDAQ are valued at the last sale price prior to the
Portfolio's valuation time or, if no sale occurs, at the mean between the last
bid and asked price; (c) debt securities are valued by a pricing service
selected by Boatmen's and approved by the Trustees of the Fund; these prices
reflect broker/dealer supplied valuations and electronic data processing
techniques if those prices are deemed by Boatmen's to be representative of
market values at the Portfolio's valuation time; and (d) all other securities
and assets, for which quotations supplied are not representative of current
market values or for which quotations are not readily available, are valued at
fair value as determined in good faith pursuant to procedures established by the
Trustees of the Fund. Money market instruments held by a Portfolio with a
remaining maturity of sixty days or less are valued at amortized cost which
approximates market value.

B. Repurchase Agreements

The custodian for the Portfolios and other banks acting in a subcustodian
capacity take possession of the collateral pledged for investments in repurchase
agreements. The underlying collateral is valued daily on a mark-to-market basis
to determine that the value, including accrued interest, is not less than 102%
of the repurchase price, including accrued interest. In the event of the
seller's default of the obligation to repurchase, the Portfolios have the right
to liquidate the collateral and apply the proceeds in satisfaction of the
obligation. Under certain circumstances, in the event of default or bankruptcy
by the other party to the agreement, realization and/or retention of the
collateral may be subject to legal proceedings.

C. Securities Transactions and Investment Income

Securities transactions are recorded on the trade date. Realized gains and
losses from sales of investments are calculated on the identified cost basis.
Dividend income is recorded on the ex-dividend date. Interest income, including
accretion of discounts and amortization of premiums on investments, is accrued
daily. Investment income of each Portfolio is allocated to the separate classes
of shares based upon their relative net assets.

D. Dividends to Shareholders

Dividends of Growth Fund are declared monthly and paid monthly and dividends of
Diversified Bond Income Fund are declared daily and paid monthly. Distributions
of net realized gains, if any, will be paid at least annually. However, to the
extent that net realized gains of a Portfolio can be offset by capital loss
carryovers, such gains will not be distributed. Dividends and distributions are
recorded by the Portfolios on the ex-dividend date.

E. Federal Taxes

It is each Portfolio's policy to comply or continue to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute each year substantially all of its investment
company taxable and tax-exempt income to its shareholders. Accordingly, no
federal tax provisions are required.

<PAGE> 245

F. Organizational Expenses

Costs incurred by the Fund in connection with its organization and registration
of shares have been deferred and are amortized using the straight line method
over a period not to exceed five years from the commencement of the public
offering of shares of the Portfolios.

G. Expenses

Expenses incurred by the Fund that do not specifically relate to an individual
portfolio of the Fund are allocated to the portfolios based on each portfolio's
relative net assets. The expenses of each Portfolio (other than expenses
incurred pursuant to the Distribution Plans) are allocated to the separate
classes of shares based upon their relative net assets.

3. AGREEMENTS AND TRANSACTIONS WITH AFFILIATES

A. Advisory Agreement

Boatmen's is the investment adviser for each Portfolio pursuant to separate
Investment Advisory Agreements and is responsible for managing the investment
operations of the Portfolios. For its services, Boatmen's is entitled to a fee,
accrued daily and paid monthly, at an annual rate equal to 0.75% of the average
daily net assets of the Growth Fund and 0.55% of the Diversified Bond Income
Fund. For the period ended October 22, 1996, Boatmen's voluntarily waived a
portion of its fees as investment adviser. The fee waivers were $194 for the
Growth Fund and $107 for the Diversified Bond Income Fund for the period from
October 21, 1996 (commencement of operations) to October 22, 1996.

B. Administration Agreement

The Portfolios have entered into an Administration Agreement with BISYS.
Pursuant to the terms of this agreement, BISYS is responsible for assisting in
all aspects of the operations of each of the Portfolios. For its services, BISYS
is entitled to a fee, accrued daily and paid monthly, at an annual rate of
0.115% of the first $1.5 billion of the aggregate average net assets of all of
the portfolios constituting the Fund, plus 0.11% of the next $1.5 billion of
such assets, plus 0.1075% of such assets in excess of $3.0 billion. For the
period ended October 22, 1996, BISYS did not voluntarily waive any fees as
administrator.

C. Distribution Agreement

Pilot Funds Distributors, Inc. (the "Distributor") sells shares on a continuous
basis as a registered broker-dealer. The Portfolios did not incur fees and
expenses for the distribution services as of October 22, 1996.

D. Transfer Agent Agreement

BISYS Fund Services, Inc. (the "Transfer Agent"), a wholly-owned subsidiary of
The BISYS Group, Inc. is the transfer agent for all classes of the Portfolios.
The Portfolios incurred fees and expenses in total of $214 for the transfer
agent services provided.

E. Custodian Agreement

Boatmen's is the custodian responsible for holding the investments purchased by
the Portfolios. In connection

<PAGE> 246

with the Custodian Agreement with Boatmen's, the Portfolios incurred expenses in
total of $136.

4. SECURITIES TRANSACTIONS

For the period from October 21, 1996 (commencement of operations) to October 22,
1996, the cost of purchases and the proceeds from sales of maturities of
portfolio securities (excluding short-term investments) were $54,429,600 and
$924,449 for the Growth Fund and $159,272,328 and $38,509,698 for the
Diversified Bond Income Fund, respectively.

At October 22, 1996, the cost of each Portfolio's securities for federal income
tax purposes was substantially the same as for financial reporting purposes.
Accordingly, the Portfolios had the following amounts of net unrealized
appreciation and depreciation:
<TABLE>
<CAPTION>
Appreciation Depreciation Net
------------ ------------ ---
<S> <C> <C> <C>
Growth Fund $10,986,703 ($652,779) $10,333,924
Diversified Bond Income Fund $897,369 ($628,606) $268,763
</TABLE>

<PAGE> 247

THE PILOT FUNDS
Financial Highlights
For the Period Ended October 22, 1996
(Unaudited)
<TABLE>
<CAPTION>
Diversified Bond
Income Fund Growth Fund
---------------- ----------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00 $ 10.00
-------------- ----------------
Investment Activities
Net investment income -- --
Net realized and unrealized gains (losses)
from investments (0.04) (0.11)
-------------- ----------------
Total from Investment Activities (0.04) (0.11)
-------------- ----------------
Distributions
Net investment income -- --
Net realized gains -- --
-------------- ----------------
Total Distributions -- --
-------------- ----------------
NET ASSET VALUE, END OF PERIOD $ 9.96 $ 9.89
============== ================

Total Return -0.40%(b) -1.10% (b)

RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 123,670 $ 52,035
Ratio of expenses to
average net assets 0.65%(a) 1.00% (a)
Ratio of net investment income (loss)
to average net assets 5.59%(a) -0.97% (a)
Ratio of expenses to
average net assets** 0.66%(a) 1.13% (a)
Ratio of net investment income (loss)
to average net assets** 5.58%(a) -1.10% (a)

Portfolio Turnover 31.89% 1.73%

Average commission rate paid (c) $ -- $ 0.0679

<FN>
* For the period October 21, 1996 (commencement of operations) to
October 22, 1996.

** During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated:

(a) Annualized.

(b) Not annualized.

(c) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of shares purchased and sold by the
Portfolio for which commissions were charged.
</TABLE>

See note to financial statements.

<PAGE> 248
PART C

OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.

(A) FINANCIAL STATEMENTS

The Financial Statements for the Pilot Diversified Bond
Income Fund and the Pilot Growth Fund filed as part of this Registration
Statement are as follows:

Included in the Prospectus:

- Financial Highlights

Included in the Statements of Additional Information:
- Portfolio of Investments for the period ended
October 22, 1996

- Statements of Assets and Liabilities for the
period ended October 22, 1996

- Statements of Operations for the period ended
October 22, 1996

- Statements of Changes in Net Assets for the
period ended October 22, 1996

- Notes to Financial Statements for the period
ended October 22, 1996

(B) EXHIBITS

The following exhibits are incorporated herein by reference
unless otherwise noted or are not required to be filed:

1(a). Agreement and Declaration of Trust, dated July 15, 1982,
filed as Exhibit 1 to Registrant's Registration Statement on
Form N-1A.

1(b). Amendment to Agreement and Declaration of Trust, dated
August 4, 1982, filed as Exhibit 1(b) to Post-Effective
Amendment No. 29 to Registrant's Registration Statement on
Form N-1A.

1(c). Amendment to Agreement and Declaration of Trust, dated
October 27, 1989, filed as Exhibit 1(b) to Post-Effective
Amendment No. 10 to Registrant's Registration Statement on
Form N-1A.

1(d). Amendment to Agreement and Declaration of Trust, dated
January 2, 1991, filed as Exhibit 1(d) to Post-Effective
Amendment No. 29 to Registrant's Registration Statement on
Form N-1A.

1(e). Amendment to Agreement and Declaration of Trust to
Establish and Designate Shares of the Short-Term Tax-Exempt
Portfolio, filed as Exhibit 1(f) to Post-Effective Amendment
No. 15 to Registrant's Registration Statement on Form N-1A.

1(f). Amendment to Agreement and Declaration of Trust to
Permit Trustees to Establish a Mandatory Retirement Age for
Trustees, dated July 2, 1991, filed as Exhibit 1(f) to
Post-Effective Amendment No. 29 to Registrant's Registration
Statement on Form N-1A.

1(g). Amendment to Agreement and Declaration of Trust to
Establish and Designate Units of the Taxable Bond Portfolio,
Intermediate-Term Tax-Exempt Portfolio, Tax-Exempt Portfolio,
Equity

4
<PAGE> 249
Income Portfolio and International Equity Portfolio, filed as
Exhibit 1(g) to Post-Effective Amendment No. 29 to
Registrant's Registration Statement on Form N-1A.

1(h). Amendment to Agreement and Declaration of Trust to
Redesignate Units of the Taxable Bond Portfolio,
Intermediate-Term Tax-Exempt Portfolio, Tax-Exempt Portfolio,
filed as Exhibit 1(h) to Post-Effective Amendment No. 18 to
Registrant's Registration Statement on Form N-1A.

1(i). Amendment to Agreement and Declaration of Trust to
Establish and Designate Shares of the Short-Term Tax-Exempt
Diversified Portfolio, filed as Exhibit 1(i) to Post-Effective
Amendment No. 18 to Registrant's Registration Statement on
Form N-1A.

1(j). Amendment to Agreement and Declaration of Trust to
Redesignate Shares of the International Equity Portfolio,
filed as Exhibit 1(j) to Post-Effective Amendment No. 19 to
Registrant's Registration Statement on Form N-1A.

1(k). Amendment to Agreement and Declaration of Trust, dated
May 27, 1994, to Change the Name of the Trust and to
Redesignate Shares and Classes, filed as Exhibit 1(k) to
Post-Effective Amendment No. 22 to Registrant's Registration
Statement on Form N-1A.

1(m). Redesignation of Series, Designation of New Series and
Designation of New Classes, filed as Exhibit 1(m) to
Post-Effective Amendment No. 23 to Registrant's Registration
Statement on Form N-1A.

1(n). Amendment to Agreement and Declaration of Trust to
Redesignate Shares of the Pilot Short-Term Tax-Exempt Fund to
be known as Shares of the Pilot Missouri Short-Term Tax-Exempt
Fund - filed as Exhibit 1(n) to Post-Effective Amendment No.
29 to Registrant's Registration Statement on Form N-1A.

1(o). Amendment to Agreement and Declaration of Trust to
designate Shares of Small Capitalization Equity Fund, filed as
Exhibit 1(o) to Post-Effective Amendment No. 29 to
Registrant's Registration Statement on Form N-1A.

2(a). By-Laws, filed as Exhibit 2 to Registrant's Registration
Statement on Form N-1A.

2(b). Amendment to Section 6.3 of the By-Laws, filed as
Exhibit 2(a) to Post-Effective Amendment No. 3 to Registrant's
Registration Statement on Form N-1A.

2(c). Amendment to Section 3.7 of the By-Laws, filed as
Exhibit 2(b) to Post-Effective Amendment No. 8 to Registrant's
Registration Statement on Form N-1A.

2(d). Amendment to the By-Laws adding Section 3.10, filed as
Exhibit 2(d) to Post-Effective Amendment No. 29 to
Registrant's Registration Statement on Form N-1A.

3. Not applicable.

5(a). Investment Advisory Agreement dated June 1, 1994 between
Registrant, on behalf of the Short-Term Diversified Assets
Portfolio, and Boatmen's Trust Company, filed as Exhibit 5(a)
to Post-Effective Amendment No. 22 to Registrant's
Registration Statement on Form N-1A.

5(b). Investment Advisory Agreement dated June 1, 1994 between
Registrant, on behalf of the Short-Term U.S. Treasury
Portfolio, and Boatmen's Trust Company, filed as Exhibit 5(b)
to Post-Effective Amendment No. 22 to Registrant's
Registration Statement on Form N-1A.

5(c). Advisory Agreement between Registrant, on behalf of the
Centerland Kleinwort Benson International Equity Portfolio,
and Boatmen's Trust Company, filed as Exhibit 5(h) to Post-
Effective Amendment No. 21 to Registrant's Registration
Statement on Form N-1A.

5
<PAGE> 250
5(d). Investment Management Agreement among Registrant, on
behalf of the Centerland Kleinwort Benson International Equity
Portfolio, Boatmen's Trust Company and Kleinwort Benson
International Investment Limited, filed as Exhibit 5(i) to
Post-Effective Amendment No. 21 to Registrant's Registration
Statement on Form N-1A.

5(e). Investment Advisory Agreement between Registrant on
behalf of the Pilot Small Capitalization Equity Fund, and
Boatmen's Trust Company - filed as Exhibit 5(e) to
Post-Effective Amendment No. 32 to Registrant's Registration
on Form N-1A.

5(f). Form of Investment Advisory Agreement between
Registrant on behalf of the Pilot Growth Fund, and Boatmen's
Trust Company, filed as Exhibit 5(f) to Post-Effective
Amendment No. 31 to Registrant's Registration Statement on
Form N-1A.

5(g). Form of Investment Advisory Agreement between
Registrant on behalf of the Pilot Diversified Bond Income
Fund, and Boatmen's Trust Company, filed as Exhibit 5(g) to
Post- Effective Amendment No. 31 to Registrant's Registration
Statement on Form N-1A.

6. Distribution Agreement dated as of June 1, 1996 between
Registrant and Pilot Funds Distributors, Inc. - filed as
Exhibit 6 to Post-Effective Amendment No. 32 to Registrant's
Registration Statement on Form N-1A.

7. Not applicable.

8(a). Custodian Agreement dated May 4, 1996 between
Registrant and Boatmen's Trust Company - filed as Exhibit
8(a) to Post-Effective Amendment No. 32 to Registrant's
Registration Statement on Form N-1A.

9(a). Transfer Agency Agreement dated as of December 18, 1995
between Registrant and BISYS Fund Services, Inc. - filed
as Exhibit 9(a) to Post-Effective Amendment No. 32 to
Registrant's Registration Statement on Form N-1A.

9(b). Administration Plan of Registrant with respect to the
Administration Class of shares dated May 19, 1991, as revised
October 13, 1992, as further revised March 4, 1994 to be
effective March 31, 1994, filed as Exhibit 9(e) to
Post-Effective Amendment No. 22 to Registrant's Registration
Statement on Form N-1A.

9(c). Form of Agreement between Registrant and Service
Organizations with respect to the Administration Plan, filed
as Exhibit 9(f) to Post-Effective Amendment No. 22 to
Registrant's Registration Statement on Form N-1A.

9(d). Form of Agreement and Plan of Reorganization between
Registrant, Kleinwort Benson Investment Strategies Fund and
Kleinwort Benson International Investment Limited, filed as
Exhibit 9(e) to Post-Effective Amendment No. 19 to
Registrant's Registration Statement on Form N-1A.

10(a). Opinions of Goodwin, Procter & Hoar LLP, Counsel to
Registrant, filed with Registrant's Notice pursuant to Rule
24f-2 on October 30, 1996 and Registrant's Registration
Statement on Form N-14 filed July 5, 1996-incorporated by
reference.

10. Opinion of Goodwin Procter & Hoar - Not applicable.

11. a. Consents of Arthur Andersen LLP - Filed herewith.

b. Consent of Goodwin, Procter & Hoar LLP -
Filed herewith.

12. Not applicable.

13. Not applicable.

15(a). Service Plan of Registrant with respect to the Service
Class of Shares dated May 1, 1991, as revised effective July
1, 1993, as further revised March 4, 1994 to be effective
March 31, 1994, filed as Exhibit 15(a) to Post-Effective
Amendment No. 22 to Registrant's Registration Statement on
Form N-1A.

6
<PAGE> 251
15(b). Form of Agreement between Registrant and Service
Organizations with respect to the Service Plan, filed as
Exhibit 15(b) to Post-Effective Amendment No. 22 to
Registrant's Registration Statement on Form N-1A.

15(c). Distribution Plan for Class A Shares adopted July 25,
1994, filed as Exhibit 15(c) to Post-Effective Amendment No.
22 to Registrant's Registration Statement on Form N-1A.

15(d). Agreement between Concord Financial Group, Inc. and
Service Organizations with respect to the Distribution Plan
for Class A Shares, filed as Exhibit 15(d) to Post-Effective
Amendment No. 22 to Registrant's Registration Statement on
Form N-1A.

15(e). Distribution Plan for Class B Shares adopted July 25,
1994, filed as Exhibit 15(e) to Post-Effective Amendment No.
22 to Registrant's Registration Statement on Form N-1A.

15(f). Form of Agreement between Concord Financial Group, Inc.
and Service Organizations with respect to the Distribution
Plan for Class B Shares, filed as Exhibit 15(f) to
Post-Effective Amendment No. 22 to Registrant's Registration
Statement on Form N-1A.

17. Financial Data Schedule for Registrant's fiscal year
ended August 31, 1996 - filed as Exhibit 17 to Post-
Effective Amendment No. 32 to Registrant's Registration
Statement on Form N-1A.

18. Rule 18f-3 Multiple Class Plan - filed as Exhibit 6(b)
to Post-Effective Amendment No. 25 to Registrant's
Registration Statement on Form N-1A.

ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT

None.

ITEM 26. NUMBER OF HOLDERS OF SECURITIES AS OF OCTOBER 15, 1996

<TABLE>
<CAPTION>
Fund Name Total Active Shareholders
--------- -------------------------
<S> <C>
Municipal Bond
Pilot Shares 6
Class A Shares 48
Class B Shares 36

Intermediate Municipal Bond
Pilot Shares 6
Class A Shares 18
Class B Shares 0

U.S. Government Securities
Pilot Shares 4
Class A Shares 39
Class B Shares 54

Intermediate U.S. Government Securities
Pilot Shares 16
Class A Shares 56
Class B Shares 0

Equity Income
Pilot Shares 6
Class A Shares 206
Class B Shares 236
</TABLE>

7
<PAGE> 252
<TABLE>
<CAPTION>
<S> <C>
Growth & Income
Pilot Shares 18
Class A Shares 617
Class B Shares 335

Short-Term Diversified Assets Fund
Pilot Shares 23
Administration Shares 568
Investor Shares 546

Short-Term U.S. Treasury Fund
Pilot Shares 5
Administration Shares 558
Investor Shares 1,020

Missouri Tax-Exempt Fund
Pilot Shares 343
Administration Shares 25
Investor Shares 84

Short-Term Tax-Exempt Diversified Fund
Pilot Shares 2
Administration Shares 27
Investor Shares 18

International Equity Fund
Pilot Shares 19
Class A Shares 1,231
Class B Shares 45

Small Capitalization Equity Fund
Pilot Shares 14
Class A Shares 546
Class B Shares 244

Growth Fund
Pilot Shares 0
Class A Shares 0
Class B Shares 0

Diversified Bond Income Fund
Pilot Shares 0
Class A Shares 0
Class B Shares 0

Total: 7,019
</TABLE>

ITEM 27. INDEMNIFICATION.

Article VI of the Registrant's Agreement and Declaration of Trust
provides for indemnification of the Registrant's Trustees and officers under
certain circumstances. A copy of such Agreement and Declaration of Trust was
filed as Exhibit 1 to Registrant's Registration Statement on Form N-1A.

Paragraph 8 of each Investment Advisory Agreement between the
Registrant and Boatmen's Trust Company (other than the Advisory Agreement with
respect to the Pilot International Equity Fund) provides for indemnification of
Boatmen's Trust Company or, in lieu thereof, contribution by the Registrant,
under certain circumstances. Copies of the Advisory Agreements for the
Short-Term Diversified Assets, Short-Term U.S.

8
<PAGE> 253
Treasury, Short-Term Tax-Exempt Diversified, and Short-Term Tax-Exempt were
filed as Exhibits 5(a), 5(b), 5(c), 5(d), to Post-Effective Amendment No. 22 to
the Registrant's Registration Statement on Form N-1A. A copy of the Investment
Advisory Agreement for the Growth and Income, Equity Income, Intermediate U.S.
Government Securities, U.S. Government Securities, Intermediate Municipal Bond
and Municipal Bond Portfolios are to be filed in a Post-Effective Amendment to
the Registrant's Registration Statement on Form N-1A. A form of the Investment
Advisory Agreements for the Growth Fund and Diversified Bond Income Fund were
filed in Post-Effective Amendment No. 31 to the Registrant's Registration
Statement on Form N-1A.

Paragraph 7 of the Advisory Agreement between the Registrant and
Boatmen's Trust Company with respect to the Pilot Kleinwort Benson International
Equity Fund provides for indemnification of Boatmen's Trust Company or, in lieu
thereof, contribution by the Registrant, under certain circumstances. A copy of
the Advisory Agreement was filed as Exhibit 5(h) to Post-Effective Amendment No.
21 to the Registrant's Registration Statement on Form N-1A.

Kleinwort Benson International Equity Fund, Boatmen's Trust Company and
Kleinwort Benson Investment Management Americas Inc. (formerly Kleinwort Benson
International Investment Limited) provide for indemnification of Kleinwort
Benson Investment Management Americas Inc. or, in lieu thereof, contribution by
the Registrant, under certain circumstances. A copy of the Investment Management
Agreement was filed as Exhibit 5(i) to Post-Effective Amendment No. 21 to
Registrant's Registration Statement on Form N-1A.

Section 1.11 of the Distribution Agreement between Registrant and Pilot
Funds Distributors, Inc. provides for the indemnification of Pilot Funds
Distributors, Inc. under certain circumstances. A copy of the Distribution
Agreement was filed as Exhibit 6 to Post-Effective Amendment No. 32 to
Registrant's Registration Statement on Form N-1A.

Investment Company Professional Liability Policy purchased jointly by
Registrant and Pilot Funds Distributors, Inc. insure such entities and their
respective trustees, directors, officers and employees, subject to the policies'
coverage limits and exclusions and varying deductibles, against loss under
certain circumstances.

Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISERS.

The business and other connections of the directors and officers of
Kleinwort Benson Investment Management Americas Inc. formerly Kleinwort Benson
International Investment Limited ("KBI") are listed in the Form ADV of Kleinwort
Benson Investment Management Americas, Inc. as currently on file with the
Commission (File No. 801-15027), the text of which is hereby incorporated by
reference.

The business and other connections of the directors and certain
senior executive officers of Boatmen's Trust Company are:

<TABLE>
<CAPTION>
NAME POSITION WITH POSITION AND 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
</TABLE>

9
<PAGE> 254
<TABLE>
<CAPTION>
<S> <C> <C>
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 Square
211 N. Broadway, Suite 3600
St. Louis, Missouri 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

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
</TABLE>

10
<PAGE> 255
<TABLE>
<CAPTION>
<S> <C> <C>
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 3200
St. Louis, Missouri 63131

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 Enterprises, Inc., and consultant to
Anheuser-Busch Companies, Inc.
1401 Clark Avenue
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 Company 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. Weekly Director President
Janet McAfee Inc. Real Estate
9889 Clayton Road
St. Louis, Missouri 63124

Gordon B. Wells Director Retired
3121 West 67th Terrace
Shawnee Mission, Kansas 66208
</TABLE>

11
<PAGE> 256
<TABLE>
<CAPTION>
<S> <C> <C>
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

Eugene F. Williams, Jr. Director Retired
515 Olive Street, Suite 1505
St. Louis, Missouri 63101
</TABLE>

ITEM 29. PRINCIPAL UNDERWRITERS

(a) Pilot Funds Distributors, Inc., which is located at 3435
Stelzer Road, Columbus, Ohio 43219-3035, will act as exclusive
distributor for the Registrant. The distributor is registered
with the Securities and Exchange Commission as a broker-dealer
and is a member of the National Association of Securities
Dealers.

(b) To the best of Registrant's knowledge, the directors and
officers of PFD are as follows:

<TABLE>
<CAPTION>
NAMES POSITIONS AND OFFICES WITH POSITIONS AND
PRINCIPAL BUSINESS ADDRESS PILOT FUND DISTRIBUTORS, INC. OFFICES WITH REGISTRANT
- -------------------------- ----------------------------- -----------------------
<S> <C> <C>
Lynn J. Mangum Chairman None
150 Clove Road
Little Falls, New Jersey 07424

Robert J. McMullan Executive Vice President None
150 Clove Road
Little Falls, New Jersey 07424

Steven Mintos Executive Vice President and None
3435 Stelzer Road Chief Operating Officer
Columbus, Ohio 43219

George Martinez Senior Vice President Secretary
3435 Stelzer Road
Columbus, Ohio 43219

Richard Galloway Regional Vice President None
3435 Stelzer Road
Columbus, Ohio 43219

Michael Burns Vice President/Compliance None
3435 Stelzer Road
Columbus, Ohio 43219

Dennis Sheehan Vice President None
150 Clove Road
Little Falls, New Jersey 07424

Dale Smith Vice President and None
3435 Stelzer Road Chief Financial Officer
Columbus, Ohio 43219
</TABLE>

12
<PAGE> 257
<TABLE>
<CAPTION>
<S> <C> <C>
William J. Tomko Vice President President
3435 Stelzer Road
Columbus, Ohio 43219

Annamarie Porcaro Assistant Secretary None
150 Clove Road
Little Falls, New Jersey 07424

Robert Tuch Assistant Secretary None
3435 Stelzer Road
Columbus, Ohio 43219
</TABLE>

(1) Pilot Funds Distributors, Inc., 3435 Stelzer Road, Columbus,
Ohio 43219-3035 (records relating to the Distributor).

(2) Boatmen's Trust Company, 100 North Broadway, St. Louis,
Missouri 63102 (records relating to Adviser, Subadviser and
Custodian).

(3) Kleinwort Benson Investment Management Americas Inc., 200 Park
Avenue, New York, New York 10166 (records relating to
Investment Manager).

(4) BISYS Fund Services, Inc., 3435 Stelzer Road, Columbus, Ohio
43219 (records relating to Transfer Agent).

ITEM 31. MANAGEMENT SERVICES.

Not applicable.

ITEM 32. UNDERTAKINGS.

Registrant hereby undertakes to furnish each person to whom a
prospectus for the Registrant is delivered with a copy of the
most recent annual report to shareholders for the series of
the Registrant offered by that prospectus upon request and
without charge.

13
<PAGE> 258

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Amendment to its Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has
duly caused this Post-Effective Amendment to its Registration Statement to be
signed on its behalf by the undersigned, thereto duly authorized, in the City
of Columbus and State of Ohio on the 12th day of November, 1996.

THE PILOT FUNDS

By: /s/ William J. Tomko
-------------------------------
William J. Tomko, President

Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the date indicated.

<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<S> <C> <C>
/s/ William J. Tomko
- ----------------------------------- President November 12, 1996
William J. Tomko, President (Principal Executive Officer)

/s/ Martin R. Dean Treasurer November 12, 1996
- ----------------------------------- (Principal Accounting Officer)
Martin R. Dean and Principal Financial Officer)

J. HORD ARMSTRONG, III* Trustee November 12, 1996
- -----------------------------------
J. Hord Armstrong, III

LEE F. FETTER* Trustee November 12, 1996
- -----------------------------------
Lee F. Fetter

HENRY O. JOHNSTON* Trustee November 12, 1996
- -----------------------------------
Henry O. Johnston

L. WHITE MATTHEWS, III* Trustee November 12, 1996
- -----------------------------------
L. White Matthews, III

NICHOLAS G. PENNIMAN* Trustee November 12, 1996
- -----------------------------------
Nicholas G. Penniman

/s/ William J. Tomko
- -----------------------------------
*William J. Tomko, Attorney-in-fact
</TABLE>

<PAGE> 1
Exhibit 11(b)

[Goodwin, Procter & Hoar LLP letterhead]

November 12, 1996

The Pilot Funds
3435 Stelzer Road
Columbus, OH 43219

Ladies and Gentlemen:

We hereby consent to the incorporation by reference in Post-Effective
Amendment No. 33 (the "Amendment") to the Registration Statement (No. 2-78440)
on Form N-1A of The Pilot Funds (the "Registrant"), a Massachusetts business
trust, of our opinion with respect to the legality of the shares of the
Registrant representing interests in the Pilot Intermediate U.S. Government
Securities Fund, Pilot U.S. Government Securities Fund, Pilot Intermediate
Municipal Bond Fund, Pilot Municipal Bond Fund, Pilot Equity Income Fund, Pilot
Growth and Income Fund and Pilot Small Capitalization Equity Fund series of the
Registrant (the "Funds"), which opinion was filed with the Registrant's Annual
Notice on Form 24F-2 on October 30, 1996, and our opinion with respect to the
legality of the shares of the Registrant representing interests in the Pilot
Diversified Bond Income Fund and Pilot Growth Fund series of the Registrant
(also "Funds"), which opinion was filed with the Registrant's Registration
Statement on Form N-14 on July 5, 1996.

We also hereby consent to the reference to this firm in the Statements
of Additional Information for the Funds under the heading "Independent
Accountants and Counsel" which form a part of the Amendment and to the filing
of this consent as an exhibit to the Amendment.

Very truly yours,

GOODWIN, PROCTER & HOAR LLP

<ARTICLE> 6
<CIK> 0000704178
<NAME> THE PILOT FUNDS
<SERIES>
<NUMBER> 13
<NAME> PILOT GROWTH FUND

<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-START> OCT-21-1996
<PERIOD-END> OCT-22-1996
<INVESTMENTS-AT-COST> 43171227
<INVESTMENTS-AT-VALUE> 53505151
<RECEIVABLES> 950406
<ASSETS-OTHER> 13091
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 54468648
<PAYABLE-FOR-SECURITIES> 1995655
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 437763
<TOTAL-LIABILITIES> 2433418
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 52626335
<SHARES-COMMON-STOCK> 5262605
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<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 10922245
<ACCUM-APPREC-OR-DEPREC> 10333924
<NET-ASSETS> 52035230
<DIVIDEND-INCOME> 89
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 2873
<NET-INVESTMENT-INCOME> (2784)
<REALIZED-GAINS-CURRENT> (10922245)
<APPREC-INCREASE-CURRENT> 10333924
<NET-CHANGE-FROM-OPS> (591105)
<EQUALIZATION> 0
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<DISTRIBUTIONS-OTHER> 0
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<NUMBER-OF-SHARES-REDEEMED> 28647
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 52035230
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<AVERAGE-NET-ASSETS> 52445707
<PER-SHARE-NAV-BEGIN> 10.000
<PER-SHARE-NII> 0.000
<PER-SHARE-GAIN-APPREC> (0.110)
<PER-SHARE-DIVIDEND> 0.000
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<PER-SHARE-NAV-END> 9.890
<EXPENSE-RATIO> 1.000
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<CIK> 0000704178
<NAME> THE PILOT FUNDS
<SERIES>
<NUMBER> 14
<NAME> PILOT DIVERSIFIED BOND INCOME FUND

<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-START> OCT-21-1996
<PERIOD-END> OCT-22-1996
<INVESTMENTS-AT-COST> 120493867
<INVESTMENTS-AT-VALUE> 120762630
<RECEIVABLES> 34233213
<ASSETS-OTHER> 26182
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 155022025
<PAYABLE-FOR-SECURITIES> 30305025
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1047099
<TOTAL-LIABILITIES> 31352124
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 124139036
<SHARES-COMMON-STOCK> 12413213
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 737898
<ACCUM-APPREC-OR-DEPREC> 268763
<NET-ASSETS> 123669901
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 43501
<OTHER-INCOME> 0
<EXPENSES-NET> 4515
<NET-INVESTMENT-INCOME> 38986
<REALIZED-GAINS-CURRENT> (737898)
<APPREC-INCREASE-CURRENT> 268763
<NET-CHANGE-FROM-OPS> (430149)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 38986
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 13119804
<NUMBER-OF-SHARES-REDEEMED> 706591
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 123669901
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2870
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4622
<AVERAGE-NET-ASSETS> 127262355
<PER-SHARE-NAV-BEGIN> 10.000
<PER-SHARE-NII> 0.000
<PER-SHARE-GAIN-APPREC> (0.040)
<PER-SHARE-DIVIDEND> 0.000
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 9.960
<EXPENSE-RATIO> 0.650
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>