<PAGE> 1
FUNDS IV TRUST
AGGRESSIVE STOCK APPRECIATION FUND
VALUE STOCK APPRECIATION FUND
STOCK APPRECIATION FUND
BOND INCOME FUND
INTERMEDIATE BOND INCOME FUND
CASH RESERVE MONEY MARKET FUND
237 PARK AVENUE
NEW YORK, NEW YORK 10017
August 9, 1996
Dear FUNDS IV Shareholder:
A Special Meeting of Shareholders of FUNDS IV has been called for September
17, 1996 to address matters that are important to you.
As you may be aware, Boatmen's Bancshares, Inc. ("Bancshares") completed a
merger with Fourth Financial Corporation on January 31, 1996. As a result, the
new organization has since taken steps to consolidate mutual fund investment
advisory activities. Bank IV, National Association (now a wholly-owned
subsidiary of Bancshares) currently provides investment advisory services to
FUNDS IV Trust. Boatmen's Trust Company (also a wholly owned subsidiary of
Bancshares) currently provides investment advisory services to The Pilot Funds.
As the next step in the consolidation process, you are being asked to
consider and approve a proposed Agreement and Plan of Reorganization (the
"Reorganization Agreement"). The Reorganization Agreement provides that each of
six investment portfolios of FUNDS IV Trust will transfer substantially all of
its assets and its stated liabilities to a corresponding portfolio of The Pilot
Funds. The transaction is currently expected to occur on or about October 1,
1996. The Trustees have approved a Plan of Liquidation for the other operating
portfolio of FUNDS IV Trust, which Plan is separately being submitted for
approval by shareholders of that Fund.
The Board of Trustees of FUNDS IV Trust has considered a variety of factors
and unanimously approved the Reorganization Agreement and transactions
contemplated thereby. The reorganizations are expected to benefit shareholders
because:
- Shareholders will have a broader array of investment options available to
them.
- Immediately following the reorganizations, shareholders will experience
lower actual total expense ratios.
- Boatmen's has made a voluntary commitment that through January 31, 1998
the actual total expense ratio for such surviving portfolio shall be no
greater than the actual total expense ratio of the applicable series of
FUNDS IV Trust as of January 31, 1996.
You should consider the following in connection with the proposed
reorganizations:
- The value of your investment will not change as a result of any
reorganization transaction.
- The reorganization transactions will be tax-free and will not involve any
sales loads, commissions or transaction charges.
- The investment policies and objectives of the corresponding portfolio(s)
of The Pilot Funds are substantially similar to the objective(s) and
policies of your current portfolio(s) of FUNDS IV Trust, except as stated
in the enclosed Combined Proxy Statement/Prospectus.
The Reorganization Agreement and other related matters are discussed in
detail in the enclosed Combined Proxy Statement/Prospectus, which you should
read carefully.
<PAGE> 2
VOTING INSTRUCTIONS
Enclosed is a proxy card for the meeting. We urge you to read the enclosed
Combined Proxy Statement/Prospectus and to vote by completing, signing and
returning the enclosed proxy ballot form(s) in the prepaid envelope. If you are
a shareholder of more than one Funds IV Fund, you will receive a proxy card for
each of your Funds IV Funds. Please vote and return each proxy card you receive.
Every vote counts.
We are excited about the reorganization and the potential benefits it
provides to shareholders who invest with Funds IV Trust. Hopefully, you will
agree by voting "yes" and returning your proxy card as soon as possible.
Sincerely,
/s/ JOHN J. PILEGGI
----------------------------
John J. Pileggi
President
2
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FUNDS IV TRUST
AGGRESSIVE STOCK APPRECIATION FUND
VALUE STOCK APPRECIATION FUND
STOCK APPRECIATION FUND
BOND INCOME FUND
INTERMEDIATE BOND INCOME FUND
CASH RESERVE MONEY MARKET FUND
237 PARK AVENUE, NEW YORK, NEW YORK 10017
-----------------------------------------------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 17, 1996
-----------------------------------------------------------------
NOTICE IS HEREBY GIVEN THAT a Special Meeting of the Shareholders of
Aggressive Stock Appreciation Fund, Value Stock Appreciation Fund, Stock
Appreciation Fund, Bond Income Fund, Intermediate Bond Income Fund, and Cash
Reserve Money Market Fund, each a series of FUNDS IV Trust (each a "Funds IV
Fund") will be held at the offices of Furman Selz LLC at 237 Park Avenue, New
York, New York, Suite 910 on September 17, 1996, at 10:00 a.m. Eastern Time for
the following purposes:
ITEM 1. With respect to each Funds IV Fund:
To consider and act upon a proposal to approve an Agreement and Plan
of Reorganization and the transactions contemplated thereby, including (a)
the transfer of substantially all of the assets and stated liabilities of
such Funds IV Fund to a corresponding series of The Pilot Funds (each a
"Pilot Fund" and collectively, the "Pilot Funds") in exchange for shares of
the Pilot Shares class of the corresponding Pilot Fund (the "Pilot
Shares"); and (b) the distribution of the Pilot Shares so received to
shareholders of such Funds IV Fund.
ITEM 2. With respect to each Funds IV Fund:
To transact such other business as may properly come before the
Special Meeting or any adjournment(s) thereof.
The proposed reorganizations and related matters are described in the
attached Combined Proxy Statement/Prospectus. Appendix A to the Combined
Proxy Statement/Prospectus is a copy of the Agreement and Plan of
Reorganization. Copies of the Prospectuses for the relevant Pilot Funds are
included with this Combined Proxy Statement/Prospectus.
Shareholders of record of each Funds IV Fund as of the close of business on
August 2, 1996 are entitled to notice of, and to vote at, the Special Meeting or
any adjournments thereof.
SHAREHOLDERS OF EACH FUNDS IV FUND ARE REQUESTED TO EXECUTE AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE THE ACCOMPANYING PROXY CARD WHICH IS BEING
SOLICITED BY FUNDS IV TRUST'S BOARD OF TRUSTEES. THIS ACTION WILL HELP ENSURE A
QUORUM AT THE SPECIAL MEETING. PROXIES MAY BE REVOKED AT ANY TIME BEFORE THEY
ARE EXERCISED BY SUBMITTING TO FUNDS IV TRUST A WRITTEN NOTICE OF REVOCATION OR
A SUBSEQUENTLY EXECUTED PROXY OR BY ATTENDING THE SPECIAL MEETING AND VOTING IN
PERSON.
By Order of the Trustees,
/s/ JOAN V. FIORE
---------------------------------
Joan V. Fiore,
Secretary
FUNDS IV TRUST
August 9, 1996
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<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<S> <C>
Summary
Background.......................................................................... 7
Summary of the Reorganization Agreement............................................. 7
Federal Income Tax Consequences..................................................... 8
Overview of the Funds IV Funds and the Pilot Funds.................................. 8
Principal Risk Factors................................................................ 19
Information Relating to the Proposed Reorganizations.................................. 20
Description of the Reorganization Agreement......................................... 20
Capitalization...................................................................... 22
Federal Income Tax Consequences..................................................... 24
Comparison of Investment Policies and Risk Factors.................................... 25
Aggressive Stock Appreciation Fund and Pilot Growth Fund............................ 25
Value Stock Appreciation Fund and Pilot Growth and Income Fund...................... 25
Stock Appreciation Fund and Pilot Growth and Income Fund............................ 26
Bond Income Fund and Pilot Diversified Bond Income Fund............................. 26
Intermediate Bond Income Fund and Pilot Diversified Bond Income Fund................ 27
Cash Reserve Money Market Fund and Pilot Short-Term Diversified Assets Fund......... 27
Comparison of the Trusts.............................................................. 28
Information Relating to Voting Matters................................................ 30
General Information................................................................. 30
Solicitation of Proxies............................................................. 30
Voting Securities and Principal Holders Thereof..................................... 31
Appraisal Rights.................................................................... 33
Quorum.............................................................................. 33
Additional Information................................................................ 35
Financial Highlights.................................................................. 35
Other Business........................................................................ 43
Shareholder Inquiries................................................................. 43
Appendix A -- Agreement and Plan of Reorganization.................................... A-1
Appendix B -- Additional Investment Restrictions...................................... B-1
</TABLE>
4
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COMBINED PROXY STATEMENT/PROSPECTUS
DATED AUGUST 9, 1996
FUNDS IV TRUST
237 PARK AVENUE
SUITE 910
NEW YORK, NEW YORK 10017
(800) 557-3768
THE PILOT FUNDS
3435 STELZER ROAD
COLUMBUS, OHIO 43219
(800) 717-4568
This Combined Proxy Statement/Prospectus is furnished in connection with
the solicitation of proxies by the Board of Trustees of FUNDS IV Trust ("Funds
IV Trust") in connection with a Special Meeting (the "Meeting") of Shareholders
of Aggressive Stock Appreciation Fund, Value Stock Appreciation Fund, Stock
Appreciation Fund, Bond Income Fund, Intermediate Bond Income Fund, and Cash
Reserve Money Market Fund, each a series of the Trust (each, a "Funds IV Fund"
and collectively, the "Funds IV Funds"), to be held on September 17, 1996 at
10:00 a.m. Eastern Time at the offices of Furman Selz LLC ("Furman Selz"), 237
Park Avenue, New York, NY, Suite 910, at which shareholders of each Funds IV
Fund will be asked to consider and approve a proposed Agreement and Plan of
Reorganization dated May 21, 1996 (the "Reorganization Agreement") by and
between Funds IV Trust and The Pilot Funds, as further described below.
Funds IV Trust and The Pilot Funds are registered, open-end, management
investment companies. Bank IV, National Association ("Bank IV") currently
provides investment advisory services to all of the Funds IV Funds, except for
Cash Reserve Money Market Fund, for which AMR Investment Services, Inc. ("AMR")
serves as investment adviser. Boatmen's Trust Company ("Boatmen's") provides
investment advisory services to The Pilot Funds. Bank IV and Boatmen's are each
wholly owned subsidiaries of Boatmen's Bancshares, Inc.
The Reorganization Agreement provides that each Funds IV Fund noted below
(each, a "Reorganizing Fund" and collectively, the "Reorganizing Funds") will
transfer substantially all its assets and its stated liabilities to the series
of The Pilot Funds (each, a "Pilot Fund" or an "Acquiring Fund" and
collectively, the "Pilot Funds" or the "Acquiring Funds") identified below
opposite its name:
<TABLE>
<CAPTION>
REORGANIZING FUNDS CORRESPONDING ACQUIRING FUNDS
- ------------------------------------------------------ -----------------------------------------
<S> <C>
Aggressive Stock Appreciation Fund Pilot Growth Fund
Value Stock Appreciation Fund Pilot Growth and Income Fund
Stock Appreciation Fund Pilot Growth and Income Fund
Bond Income Fund Pilot Diversified Bond Income Fund
Intermediate Bond Income Fund Pilot Diversified Bond Income Fund
Cash Reserve Money Market Fund Pilot Short-Term Diversified Assets Fund
</TABLE>
In exchange for the transfers of these assets and liabilities pursuant to
the Reorganization Agreement, The Pilot Funds will simultaneously issue shares
of each Acquiring Fund to its corresponding Reorganizing Fund according to the
pairings shown in the table above. Each Reorganizing Fund will then distribute
shares of the corresponding Acquiring Fund to its shareholders, in liquidation
of the Reorganizing Fund. As a result, upon completion of each transaction, the
Reorganizing Fund will cease to operate and its shareholders will be
shareholders of the corresponding Acquiring Fund.
Each of the Pilot Funds, except Pilot Short-Term Diversified Assets Fund,
offers the following three classes of shares -- Class A, Class B, and Pilot
Shares. Pilot Short-Term Diversified Assets Fund ("Diversified Assets Fund")
offers the following three classes of shares -- Pilot Shares, Administration
Shares, and
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<PAGE> 6
Investor Shares. Each of the Funds IV Funds currently offers only Service Class
shares. All outstanding shares of the Premium Class of the Funds IV Funds are
held by Furman Selz, which provides certain administrative services to the Funds
IV Funds, and will be redeemed prior to the effectiveness of the proposed
reorganization transactions (each, a "Reorganization"). As part of each of the
Reorganizations, each Funds IV Fund will receive shares of the Pilot Shares
class of its corresponding Pilot Fund. Each Reorganization is a separate
transaction and is not contingent upon any other Reorganization. For additional
information on the other classes of The Pilot Funds, see "The Pilot Family of
Funds" in the Prospectuses for Pilot Growth Fund, Pilot Growth and Income Fund,
Pilot Diversified Bond Income Fund, and Pilot Short-Term Diversified Assets
Fund.
This Combined Proxy Statement/Prospectus sets forth the information that a
Shareholder of a Funds IV Fund should know before voting on the Reorganization
Agreement (and each Reorganization), and should be retained for future
reference. The Prospectuses dated December 29, 1995 for Pilot Growth and Income
Fund, May 10, 1996, as supplemented August 5, 1996 for Pilot Growth Fund and
Pilot Diversified Bond Income Fund, and December 29, 1995 for Pilot Short-Term
Diversified Assets Fund are included with this Combined Proxy
Statement/Prospectus and are incorporated herein by reference. The Statements of
Additional Information relating to Pilot Growth and Income Fund dated December
29, 1995, to Pilot Growth Fund and Pilot Diversified Bond Income Fund dated May
10, 1996, as supplemented August 5, 1996, and to Pilot Short-Term Diversified
Assets Fund dated December 29, 1995 and to this Combined Proxy
Statement/Prospectus dated August 9, 1996, and the Prospectus and Statement of
Additional Information relating to the Funds IV Funds dated January 30, 1996 are
on file with the Securities and Exchange Commission (the "SEC"), and are
available without charge upon oral or written request by writing or calling
either Funds IV Trust at the address and telephone number indicated above or
Pilot Funds Distributor, Inc. at 3435 Stelzer Road, Columbus, OH 43219
(1-800-717-4568). The above mentioned Prospectuses and Statements of Additional
Information are incorporated herein by reference.
This Combined Proxy Statement/Prospectus constitutes the proxy statement of
Funds IV Fund for its meeting of shareholders and The Pilot Funds' prospectus
for shares of the Acquiring Funds that have been registered with the SEC and are
being issued in connection with the Reorganizations. This Combined Proxy
Statement/Prospectus is expected to first be sent to shareholders on or about
August 9, 1996.
THE SECURITIES OF THE PILOT FUNDS 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 COMBINED PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS COMBINED PROXY
STATEMENT/PROSPECTUS AND IN THE MATERIALS EXPRESSLY INCORPORATED HEREIN BY
REFERENCE AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY FUNDS IV TRUST OR THE PILOT
FUNDS.
SHARES OF THE PILOT FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, BOATMEN'S TRUST COMPANY OR ANY OF ITS AFFILIATES. SHARES OF THE
PILOT FUNDS ARE NOT FEDERALLY INSURED BY, GUARANTEED BY, 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 RETURN AND PRINCIPAL VALUE WILL VARY AS A RESULT OF MARKET CONDITIONS
OR OTHER FACTORS SO THAT SHARES OF THE PILOT FUNDS, WHEN REDEEMED, MAY BE WORTH
MORE OR LESS THAN THEIR ORIGINAL COST. AN INVESTMENT IN THE PILOT FUNDS INVOLVES
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED. IN
ADDITION, THE AMOUNT OF DIVIDENDS PAID BY A FUND WILL INCREASE AND DECREASE.
THERE IS NO ASSURANCE THAT THE PILOT SHORT-TERM DIVERSIFIED ASSETS FUND WILL BE
ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
6
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SUMMARY
The following is a summary of certain information relating to the proposed
Reorganizations, related transactions, and the parties thereto, and is qualified
by reference to the more complete information contained elsewhere in this
Combined Proxy Statement/Prospectus, the Prospectuses and Statements of
Additional Information of the Funds IV Funds and The Pilot Funds, and the
Reorganization Agreement attached to this Combined Proxy Statement/Prospectus as
Appendix A.
BACKGROUND
On January 31, 1996, Fourth Financial Corporation ("Fourth Financial")
merged with and into a wholly owned subsidiary of Boatman's Bancshares, Inc.
("Bancshares"). As a consequence, Bank IV, National Association ("Bank IV"), the
investment adviser to various series of Funds IV Trust and a wholly owned
subsidiary of Fourth Financial, became a wholly owned subsidiary of Bancshares.
Boatmen's, the investment adviser to each of the Pilot Funds, is also a wholly
owned subsidiary of Bancshares. Since the effectiveness of the merger, and as a
result of Bank IV and Boatmen's being under the common control of Bancshares,
the portfolio managers of the Funds IV Funds (except for Cash Reserve Money
Market Fund, which is advised by AMR) and the Pilot Funds have shared common
investment research and reported within a common line of supervision. After
careful consideration of the investment portfolios of the funds and their
respective performance, the multi-class structures of and distribution functions
performed for the funds, the shareholder servicing requirements of each fund,
compliance functions and other factors relating to the operation of Funds IV
Trust and The Pilot Funds, Boatmen's and Bank IV concluded that certain series
of Funds IV Trust and The Pilot Funds could achieve significant operating
efficiencies and would benefit from being managed and marketed on a coordinated
basis.
Accordingly, Bank IV recommended to the Trustees of Funds IV Trust that
they approve the Reorganizations and submit the Reorganizations to the
shareholders of the Reorganizing Funds for approval. Likewise, Boatmen's
recommended to the Trustees of The Pilot Funds that they approve the
Reorganizations. At a meeting held on May 10, 1996, after due consideration of
the information presented to them concerning the Reorganizations, the Trustees
of Funds IV Trust (a) determined that each Reorganization was in the best
interests of the Reorganizing Fund, and that the interests of shareholders would
not be diluted thereby, (b) approved the Reorganization Agreement and each
Reorganization, and (c) authorized the submission of each Reorganization to
shareholders of the applicable Reorganizing Fund for their approval. At a
meeting held on May 21, 1996, after consideration of information substantially
similar to that presented to the Trustees of Funds IV Trust, the Trustees of The
Pilot Funds (a) determined, on the basis of information provided by Boatmen's
that each Reorganization was in the best interests of the Acquiring Fund and
that the interests of shareholders would not be diluted thereby and (b) approved
the Reorganization Agreement and each Reorganization.
SUMMARY OF THE REORGANIZATION AGREEMENT.
Each Reorganization will be effected pursuant to an Agreement and Plan of
Reorganization (the "Reorganization Agreement"), a copy of which is included as
Appendix A. The Reorganization Agreement contemplates that the assets of each
Reorganizing Fund will be acquired by the corresponding Acquiring Fund in a
tax-free exchange for shares issued by the Acquiring Fund and the assumption by
the Acquiring Fund of the stated liabilities of the Reorganizing Fund. Each
Reorganizing Fund is shown opposite its corresponding Acquiring Fund in the
table below.
7
<PAGE> 8
<TABLE>
<CAPTION>
REORGANIZING FUND ACQUIRING FUND
- ------------------------------------------------------ -----------------------------------------
<S> <C>
Aggressive Stock Appreciation Fund Pilot Growth Fund
Value Stock Appreciation Fund Pilot Growth and Income Fund
Stock Appreciation Fund Pilot Growth and Income Fund
Bond Income Fund Pilot Diversified Bond Income Fund
Intermediate Bond Income Fund Pilot Diversified Bond Income Fund
Cash Reserve Money Market Fund Pilot Short-Term Diversified Assets Fund
</TABLE>
Immediately following such transfer and exchange, the shares of the
Acquiring Fund then held by the Reorganizing Fund will be distributed to the
Reorganizing Fund's shareholders. Upon consummation of the Reorganization, each
holder of Service Shares in the applicable Reorganizing Fund will receive full
and fractional shares of the Pilot Shares class ("Pilot Class") of the
corresponding Acquiring Fund equal in value to the value of the investor's
shares of the Reorganizing Fund immediately prior to the transaction. In this
manner, each Acquiring Fund will succeed to the assets and stated liabilities
formerly held by the corresponding Reorganizing Fund, and the Reorganizing
Fund's shareholders will become shareholders of the Acquiring Fund.
Each Reorganization is a separate and distinct transaction and is not
contingent upon the approval or effectiveness of any other Reorganization. A
Reorganization will not be effected until certain conditions are satisfied.
These conditions include: the approval of the shareholders of the Reorganizing
Fund, the receipt by Funds IV Trust and The Pilot Funds of certain opinions of
legal counsel, the receipt from the SEC of certain exemptive relief, the
redemption of all Premium Shares of the Funds IV Funds held by Furman Selz, the
accuracy of various representations and warranties made in the Reorganization
Agreement, and the parties' performance of their agreements and undertakings
made in the Reorganization Agreement. See "Information Relating to the Proposed
Reorganizations."
FEDERAL INCOME TAX CONSEQUENCES.
Shareholders of each Reorganizing Fund will recognize no gain or loss for
federal income tax purposes on their receipt of shares of the corresponding
Acquiring Fund. Shareholders of each Acquiring Fund will experience no tax
consequences from the Reorganizations. A Reorganizing Fund will incur no federal
tax liability as a result of a Reorganization, and the corresponding Acquiring
Fund will recognize no gain or loss for federal tax purposes on its issuance of
shares in the Reorganization. See "Information Relating to the Proposed
Reorganizations -- Federal Income Tax Consequences" for more information.
OVERVIEW OF THE FUNDS IV FUNDS AND THE PILOT FUNDS.
INVESTMENT OBJECTIVES. Each Reorganizing Fund and its corresponding
Acquiring Fund have similar investment objectives and policies and comparable
investment portfolios. The discussion below sets forth the investment objective
for each Reorganizing Fund and its corresponding Acquiring Fund.
Aggressive Stock Appreciation Fund and Pilot Growth Fund.
- Pilot Growth Fund's objective is to seek long-term capital growth by
investing primarily in equity securities.
- Aggressive Stock Appreciation Fund's objective is to aggressively seek
long-term capital appreciation through investment in a diversified
portfolio of common stock (and securities convertible into common stock)
of domestic companies.
Value Stock Appreciation Fund and Pilot Growth and Income Fund.
- Pilot Growth and Income Fund's objective is to seek capital appreciation
and current income by investing primarily in common stocks of U.S.
companies.
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<PAGE> 9
- Value Stock Appreciation Fund's objective is to seek long-term capital
appreciation and dividend income through investment in a diversified
portfolio of common stock (and securities convertible into common stock)
of domestic companies.
Stock Appreciation Fund and Pilot Growth and Income Fund.
- Pilot Growth and Income Fund's objective is to seek capital appreciation
and current income by investing primarily in common stocks of U.S.
companies.
- Stock Appreciation Fund's objective is to seek long-term capital
appreciation through investment in a diversified portfolio of common
stock (and securities convertible into common stock) of domestic
companies.
Bond Income Fund and Pilot Diversified Bond Income Fund.
- Pilot Diversified Bond Income Fund's investment objective 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.
- Bond Income Fund's investment objective is to provide as high a level of
current income as is consistent with managing for total return by
investing at least 65% of its total assets in fixed income securities.
Intermediate Bond Income Fund and Pilot Diversified Bond Income Fund.
- Pilot Diversified Bond Income Fund's investment objective 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.
- Intermediate Bond Income Fund's investment objective is to provide as
high a level of current income as is consistent with managing for total
return by investing at least 65% of its total assets in fixed income
securities.
Cash Reserve Money Market Fund and Pilot Short-Term Diversified Assets
Fund.
- Pilot Short-Term Diversified Assets Fund's objective is to maximize
current income to the extent consistent with preservation of capital and
the maintenance of liquidity by investing exclusively in high quality
money market instruments.
- Cash Reserve Money Market Fund's objectives are current income, liquidity
and the maintenance of a stable $1.00 net asset value per share by
investing in high quality, U.S. dollar-denominated short-term obligations
which are determined by the investment adviser to present minimal credit
risks.
See "Comparison of Investment Policies and Risk Factors" below, for further
information on the similarities and differences between the investment
objectives and policies of each Reorganizing Fund and its corresponding
Acquiring Fund. Additional information is also set forth in the Acquiring Funds'
Prospectuses, which are included with this Combined Prospectus/Proxy Statement,
the Reorganizing Funds' Prospectus, which is available upon request (as noted
above), and the Statements of Additional Information for the Acquiring and
Reorganizing Funds, which are also available upon request (as noted above).
CERTAIN ARRANGEMENTS WITH SERVICE PROVIDERS.
Funds IV Funds. Bank IV serves as investment adviser to each Reorganizing
Fund (except for Cash Reserve Money Market Fund for which AMR serves as
investment adviser). Bank IV and AMR are entitled to receive advisory fees from
each Fund they advise, computed daily, at a fixed annual rate, expressed as a
percentage of average daily net assets. Bank IV also serves as the custodian of
each Funds IV Fund's assets.
Funds IV has entered into an Administrative Services Contract with Furman
Selz LLC ("Furman Selz") pursuant to which Furman Selz provides certain
management and administrative services necessary for the operation of the Funds
IV Funds. Pursuant to Services and Fund Accounting Agreements with Funds IV
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<PAGE> 10
Trust, Furman Selz also assists the Funds IV Funds with certain transfer and
dividend disbursing agent and fund accounting functions. In addition, the Funds
IV Funds may pay fees to various service organizations which provide them with
other administrative services, such as maintaining shareholder accounts and
records.
FUNDS IV Distributor, Inc. ("FFD"), an affiliate of Furman Selz, serves as
the distributor of shares of the Funds IV Funds. Each Fund has adopted a Rule
12b-1 Distribution Plan and Agreement pursuant to which it may reimburse FFD on
a monthly basis for costs and expenses FFD incurs in connection with the
marketing and distribution of Fund shares.
See "Management of the Funds" in the Funds IV Prospectus, which is
incorporated herein and available upon request, for more information on the
Funds' arrangements with service providers.
Pilot Funds. Boatmen's serves as investment adviser to each Acquiring Fund
and is entitled to receive advisory fees from the Fund, computed daily and paid
monthly, at a fixed annual rate, expressed as a percentage of average daily net
assets. Boatmen's also serves as the custodian of each Pilot Fund's assets.
The Pilot Funds have entered into an Administrative Agreement with BISYS
Fund Services Limited Partnership ("BISYS") pursuant to which BISYS provides the
Pilot Funds with a range of management and administrative services necessary for
the operation of the Funds. BISYS Fund Services, Inc. (the "Transfer Agent"), an
affiliate of BISYS, acts as transfer and dividend disbursing agent and fund
accountant for the Pilot Funds. The distributor for the Pilot Funds is Pilot
Funds Distributors, Inc., an affiliate of both BISYS and the Transfer Agent. The
Pilot Class is not subject to any Rule 12b-1 plan or agreement and does not bear
distribution costs.
See "The Business of the Fund -- Fund Management" in the Pilot Funds'
Prospectuses, which are included with this Combined Proxy Statement/Prospectus,
for more information on the Acquiring Fund's arrangements with service
providers.
PURCHASE AND REDEMPTION PROCEDURES, DISTRIBUTIONS AND EXCHANGE PRIVILEGE.
Funds IV Funds. Shares may be purchased through an authorized broker,
investment adviser, or service organization or through participation in certain
fund or trust accounts managed by Bank IV. Orders for purchases of the Funds are
executed at the net asset value per share next determined after the order is
received by FFD subject to the requirement that orders for non-money market fund
shares must be received prior to the close of business, currently 5:00 p.m.
Eastern Time, and orders for money market fund shares must be received prior to
12:00 noon, in order to become effective that day. Subject to certain limited
exceptions, the minimum initial purchase amount is $1,000 for non-IRA accounts
and $250 for IRA accounts. The minimum subsequent investment is $50.
Shares may be redeemed in whole or in part on any business day. Redemption
will occur at the net asset value next determined after a redemption request in
good order has been received by the applicable Fund. Shares may be redeemed
through an authorized broker, investment advisor, or service organizations, or
personally by mail or telephone, or, for the money market funds, by writing a
check. Funds IV reserves the right to redeem, on not less than 30 days' notice,
an account reduced by a shareholder to $500 or less.
Each Fund which is not a money market or bond fund pays dividends at least
once annually. Money market and bond funds declare dividends daily and pay them
monthly. Each Fund intends to distribute, at least annually, substantially all
net capital gains, if any. Shareholders may elect to receive dividends in
additional shares or cash.
Shareholders may exchange from one Funds IV Fund to another either by mail
or telephone. Funds IV may terminate or amend the terms of the exchange
privilege at any time.
The Pilot Funds. Shares of the Pilot Class ("Pilot Shares") which
Reorganizing Fund shareholders will receive in each Reorganization may be
purchased through qualified trust, agency or custodian accounts with Boatmen's
or any of its affiliates, including Bank IV (each, an "Institution"), which may
charge fees in connection with shareholder activity and account maintenance. All
share purchases are effected through a shareholder's account at an Institution
through procedures established in connection with the requirements of
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<PAGE> 11
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 the shareholders they
service (each, a "Customer"), 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.
For non-money market funds, Pilot Shares are sold at the net asset value
per share next determined after receipt of a purchase request in good order from
an Institution by the Pilot Fund's transfer agent; and purchase orders received
before the close of regular trading hours, currently 3:00 p.m. Central Time, on
a day when the New York Stock Exchange is open for trading (a "Business Day")
will be processed that day if payment in the proper form is made by 3:00 p.m. on
the following Business Day. For money market funds (including Diversified Assets
Fund), Pilot Shares are sold at the net asset value per share next determined
after receipt of a purchase request in good order by the transfer agent and
payment in federal funds to the Fund's custodian; and purchase orders received
by 2:00 p.m. Central Time, on a day when the New York Stock Exchange and the
custodian are open for business are effective on that day if Federal Funds are
received by the Custodian by 3:00 p.m. Central Time, that same day. Minimum
initial and subsequent purchase amounts are determined by the Institutions.
Shares may be redeemed in whole or in part on any business day. Redemption
will occur at the net asset value determined after a redemption request in good
order from an Institution has been received by the transfer agent. For the
Diversified Assets Fund, if a redemption request is received by 2:00 p.m.
Central Time, on a business day for the Fund, the shares to be redeemed do not
earn income that day, but the proceeds of redemption will be available to the
redeeming shareholder at its Institution; if a redemption request is received
after that time, the shares to be redeemed will earn income on that day but
redemption proceeds will not be available until the following business day.
Shareholders of the Diversified Assets Fund may also redeem by check provided
certain conditions are met.
Pilot Growth Fund and Pilot Growth and Income Fund declare and pay
dividends monthly. Pilot Diversified Bond Income Fund and Diversified Assets
Fund declare dividends daily and pay them monthly. All Pilot Funds declare and
pay capital gains, if any, at least once annually. Each fund intends to
distribute, at least, annually, substantially all net capital gains.
Shareholders may elect to receive dividends and capital gains in additional
shares or cash.
Shareholders may exchange from one Pilot Fund to another within the same
class of shares. The Pilot Funds retain the right to terminate or modify the
exchange privilege in accordance with relevant regulatory restrictions.
See "The Business of the Fund -- Fund Management" in the Pilot Funds'
Prospectuses incorporated in and accompanying this Combined Proxy/Prospectus for
additional information on the Pilot Funds' purchase and redemption procedures
and exchange privilege.
COMPARATIVE FEE TABLES. The tables below are designed to assist an
investor in understanding the various direct and indirect costs and expenses
associated with an investment in the relevant class of shares of each
Reorganizing Fund and its corresponding Acquiring Fund; each table also includes
pro forma information for the combined Fund resulting from the Reorganization
assuming the Reorganization took place on February 29, 1996 and after adjusting
such information to reflect current fees. The expense information for each
Reorganizing Fund and each Acquiring Fund is based upon expenses for the fiscal
year ended June 30, 1995 and expenses for the fiscal year ended August 31, 1995,
respectively, restated to reflect current fees, except that for Pilot
Diversified Bond Income Fund and Pilot Growth Fund, expense information is based
on estimated expenses for each Fund's first year of operations. Pilot Growth
Fund and Pilot Diversified Bond Income Fund have not commenced operations as of
the date of this Combined Proxy Statement/Prospectus.
As indicated in the tables below, immediately upon consummation of the
Reorganizations, the "Total Fund Operating Expenses" for each Pro Forma Combined
Fund are expected to be lower than the "Total Fund Operating Expenses" for the
corresponding Funds IV Funds based on the information for the respective
11
<PAGE> 12
periods presented. In addition, Boatmen's has voluntarily agreed to limit each
Combined Fund's actual total operating expense ratio through January 31, 1998 to
the actual total operating expense ratio of the corresponding Funds IV Fund as
of January 31, 1996. Subject to the foregoing, the applicable fee waivers and
expense reimbursements may be reduced or discontinued in the future.
AGGRESSIVE STOCK APPRECIATION FUND
AND PILOT GROWTH FUND
<TABLE>
<CAPTION>
AGGRESSIVE STOCK PILOT PRO FORMA
APPRECIATION FUND GROWTH FUND COMBINED FUND
----------------- ----------- -------------
SERVICE PILOT PILOT
CLASS CLASS CLASS
----------------- ----------- -------------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases...... None None None
Maximum Sales Load Imposed on Reinvested
Dividends................................. None None None
Contingent Deferred Sales Charge............. None None None
Redemption Fee............................... None(4) None None
Exchange Fee................................. None None None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees/Advisory Fees................ 0.74% 0.75% 0.75%
12b-1 Fees (after waivers)................... None(1) None None
Other Expenses (after expense
reimbursements)........................... 0.49% 0.25%(2) 0.25%
Total Operating Expenses (after fee waivers
and/or expense reimbursements)............ 1.23%(3) 1.00%(3) 1.00%
</TABLE>
- ---------------
(1) 12b-1 Fees For Aggressive Stock Appreciation Fund have been reduced to
reflect the voluntary waiver of fees by the distributor. The Fund can pay up
to 0.25% of its average daily net assets as a 12b-1 fee to its distributor.
The fee waiver may be discontinued at any time. Absent the waiver, 12b-1
Fees would be 0.25%.
(2) Other Expenses for Pilot Growth Fund reflect the voluntary reimbursement of
expenses by the administrator and investment adviser. Absent the
reimbursement, Other Expenses would be 0.77%.
(3) Absent the voluntary waivers and expense reimbursements explained above,
Total Operating Expenses would be 1.48% for Aggressive Stock Appreciation
Fund and 1.52% for Pilot Growth Fund. The fee waivers and reimbursements
reflected in Total Operating Expenses may be reduced or discontinued at any
time after the Reorganization, except to the extent that Boatmen's has
voluntarily agreed to limit the Combined Fund's actual total operating
expense ratio through January 31, 1998 to the actual total operating
expenses of the corresponding Funds IV Fund as of January 31, 1996.
(4) Shareholders may be charged a wire redemption fee by their bank for
receiving a wire payment.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return, and (2) redemption at the end of the following
periods:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Aggressive Stock Appreciation Fund Service Class............. $13 $39 $68 $149
Pilot Growth Fund Pilot Shares............................... $10 $32 $55 $122
Pro Forma Combined Fund Pilot Shares......................... $10 $32 $55 $122
</TABLE>
The example above should not be considered as representative of past or
future returns or expenses. Actual returns or expenses may be greater or less
than those shown.
12
<PAGE> 13
VALUE STOCK APPRECIATION FUND
AND PILOT GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
PRO FORMA
VALUE STOCK PILOT GROWTH COMBINED FUND(5)
APPRECIATION FUND AND INCOME FUND ---------------------------
------------------ --------------- PILOT PILOT
SERVICE PILOT CLASS CLASS
CLASS CLASS (FUNDS SHOWN) (ALL FUNDS)
------------------ --------------- ------------- -----------
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on
Purchases........................... None None None None
Maximum Sales Load Imposed on
Reinvested Dividends................ None None None None
Contingent Deferred Sales Charge....... None None None None
Redemption Fee......................... None(6) None None None
Exchange Fee........................... None None None None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees/Advisory Fees
(after fee waivers)................. 0.65% 0.50%(1) 0.75% 0.75%
12b-1 Fees (after waivers)............. None(2) None None None
Other Expenses
(after expense reimbursements)...... 0.53% 0.25%(3) 0.25% 0.20%
Total Operating Expenses (after fee
waivers and/or expense
reimbursements)..................... 1.18%(4) 0.75%(4) 1.00% 0.95%
</TABLE>
- ---------------
(1) The Management Fees/Advisory Fees for Pilot Growth and Income Fund shown
reflect the fact that the adviser has currently agreed to waive a portion of
its management fee, which waiver may be discontinued at any time. Absent the
waiver, Management Fees/Advisory Fees would be 0.75%.
(2) 12b-1 Fees for Value Stock Appreciation Fund have been reduced to reflect
the voluntary waiver of fees by the distributor. The Fund can pay up to
0.25% of its average daily net assets as a 12b-1 fee to its distributor. The
fee waiver may be discontinued at any time. Absent the waiver, 12b-1 Fees
would be 0.25%.
(3) Other Expenses for Pilot Growth and Income Fund have been reduced to reflect
the voluntary reimbursement of expenses by the administrator and investment
adviser. Absent the reimbursement, Other Expenses would be 0.40%.
(4) Absent the voluntary waivers and expense reimbursements explained above,
Total Operating Expenses would be 1.43% for Value Stock Appreciation Fund
and 1.15% for Pilot Growth and Income Fund.
(5) The third column reflects pro forma combined expenses resulting from the
Reorganization of Value Stock Appreciation Fund and Pilot Growth and Income
Fund. Because it is contemplated that Stock Appreciation Fund will also be
reorganized into Pilot Growth and Income Fund, the fourth column reflects
pro form combined expenses in the event that both of these Reorganizations
were effected. It should be noted, however, that each Reorganization
transaction is independent and not contingent upon the other. The fee
waivers and reimbursements reflected in Total Operating Expenses may be
reduced or discontinued at any time after the Reorganization, except to the
extent that Boatmen's has voluntarily agreed to limit the Combined Fund's
actual total operating expense ratio through January 31, 1998 to the actual
total operating expenses of the corresponding Funds IV Fund (or the lesser
of the actual total operating expenses of each Fund if both Funds IV Funds
reorganize into the Acquiring Fund) as of January 31, 1996.
(6) Shareholders may be charged a wire redemption fee by their bank for
receiving a wire payment.
13
<PAGE> 14
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return, and (2) redemption at the end of the following
periods:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Value Stock Appreciation Fund Service Class.................. $12 $37 $65 $143
Pilot Growth and Income Fund Pilot Shares.................... $ 8 $24 $42 $ 93
Pro Forma Combined Fund Pilot Shares (Funds Shown)........... $10 $32 $55 $122
Pro Forma Combined Fund Pilot Shares (All Funds)............. $10 $30 $53 $117
</TABLE>
The example above should not be considered as representative of past or
future returns or expenses. Actual returns or expenses may be greater or less
than those shown.
STOCK APPRECIATION FUND
AND PILOT GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
PRO FORMA
STOCK PILOT GROWTH COMBINED FUND(5)
APPRECIATION FUND AND INCOME FUND ---------------------------
----------------- --------------- PILOT PILOT
SERVICE PILOT CLASS CLASS
CLASS CLASS (FUNDS SHOWN) (ALL FUNDS)
----------------- --------------- ------------- -----------
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on
Purchases........................... None None None None
Maximum Sales Load Imposed on
Reinvested Dividends................ None None None None
Contingent Deferred Sales Charge....... None None None None
Redemption Fee......................... None(6) None None None
Exchange Fee........................... None None None None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees/Advisory Fees (after
fee waivers)........................ 0.65% 0.50%(1) 0.75% 0.75%
12b-1 Fees (after waivers)............. None(2) None None None
Other Expenses
(after expense reimbursements)...... 0.35% 0.25%(3) 0.20% 0.20%
Total Operating Expenses (after fee
waivers and/or expense
reimbursements)..................... 1.00%(4) 0.75%(4) 0.95% 0.95%
</TABLE>
- ---------------
(1) The Management Fees/Advisory Fees for Pilot Growth and Income Fund shown
reflect the fact that the adviser has currently agreed to waive a portion of
its management fee, which waiver may be discontinued at any time. Absent the
waiver, Management Fees/Advisory Fees would be 0.75%.
(2) 12b-1 Fees for Stock Appreciation Fund have been reduced to reflect the
voluntary waiver of fees by the distributor. The Fund can pay up to 0.25% of
its average daily net assets as a 12b-1 fee to its distributor. The fee
waiver may be discontinued at any time. Absent the waiver, 12b-1 Fees would
be 0.25%.
(3) Other Expenses for Pilot Growth and Income Fund have been reduced to reflect
the voluntary reimbursement of expenses by the Fund's administrator and
investment adviser. Absent the reimbursement, Other Expenses would be 0.40%.
(4) Absent the voluntary waivers and expense reimbursements explained above,
Total Operating Expenses would be 1.25% for Stock Appreciation Fund and
1.15% for Pilot Growth and Income Fund.
(5) The third column reflects pro forma combined expenses resulting from the
Reorganization of Stock Appreciation Fund and Pilot Growth and Income Fund.
Because it is contemplated that Value Stock Appreciation Fund will also be
reorganized into Pilot Growth and Income Fund, the fourth column reflects
pro form combined expenses in the event that both of these Reorganizations
were effected. It
14
<PAGE> 15
should be noted, however, that each Reorganization transaction is
independent and not contingent upon the other. The fee waivers and
reimbursements reflected in Total Operating Expenses may be reduced or
discontinued at any time after the Reorganization, except to the extent that
Boatmen's has voluntarily agreed to limit the Combined Fund's actual total
operating expense ratio through January 31, 1998 to the actual total
operating expenses of the corresponding Funds IV Fund (or the lesser of the
actual total operating expenses of each Fund if both Funds IV Funds
reorganize into the Acquiring Fund) as of January 31, 1996.
(6) Shareholders may be charged a wire redemption fee by their bank for
receiving a wire payment.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return, and (2) redemption at the end of the following
periods:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Stock Appreciation Fund Service Class........................ $10 $32 $55 $122
Pilot Growth and Income Fund Pilot Shares.................... $ 8 $24 $42 $ 93
Pro Forma Combined Fund Pilot Shares (Funds Shown)........... $10 $30 $53 $117
Pro Forma Combined Fund Pilot Shares (All Funds)............. $10 $30 $53 $117
</TABLE>
The example above should not be considered as representative of past or
future returns or expenses. Actual returns or expenses may be greater or less
than those shown.
BOND INCOME FUND AND
PILOT DIVERSIFIED BOND INCOME FUND
<TABLE>
<CAPTION>
PILOT
DIVERSIFIED PRO FORMA
BOND INCOME COMBINED FUND(5)
BOND INCOME FUND FUND ---------------------------
----------------- --------------- PILOT PILOT
SERVICE PILOT CLASS CLASS
CLASS CLASS (FUNDS SHOWN) (ALL FUNDS)
----------------- --------------- ------------- -----------
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on
Purchases........................... None None None None
Maximum Sales Load Imposed on
Reinvested Dividends................ None None None None
Contingent Deferred Sales Charge....... None None None None
Redemption Fee......................... None(6) None None None
Exchange Fee........................... None None None None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees/Advisory Fees.......... 0.40% 0.40%(1) 0.40%(1) 0.40%(1)
12b-1 Fees (after waivers)............. None(2) None None None
Other Expenses
(after expense reimbursements)...... 0.56% 0.25%(3) 0.25% 0.25%
Total Operating Expenses (after fee
waivers and/or expense
reimbursements)(4).................. 0.96% 0.65% 0.65% 0.65%
</TABLE>
- ---------------
(1) The Management Fees/Advisory Fees for Pilot Diversified Bond Income Fund
shown reflect the fact that the adviser has currently agreed to waive a
portion of its management fee, which waiver may be discontinued at any time.
Absent, the waiver, Management Fees/Advisory Fees would be 0.55% for Pilot
Diversified Bond Income Fund, 0.55% for Pilot Diversified Bond Income Fund
on a pro forma combined basis resulting from the Reorganization of Pilot
Diversified Bond Income Fund and Bond Income Fund, and 0.55% for Pilot
Diversified Bond Income Fund on a pro forma combined basis resulting from
the Reorganization of Pilot Diversified Bond Income Fund, Bond Income Fund,
and Intermediate Bond Income Fund.
15
<PAGE> 16
(2) 12b-1 Fees for Bond Income Fund have been reduced to reflect the voluntary
waiver of fees by the distributor. The Fund can pay up to 0.25% of its
average daily net assets as a 12b-1 fee to its distributor. The fee waiver
may be discontinued at any time. Absent the waiver, 12b-1 Fees would be
0.25%.
(3) Other Expenses for Pilot Diversified Bond Income Fund have been reduced to
reflect the voluntary reimbursement of expenses by the administrator and
investment adviser. Absent the reimbursement, Other Expenses would be 0.77%.
(4) Absent the voluntary waivers and expense reimbursements explained above,
Total Operating Expenses would be 1.21% for Bond Income Fund, 1.32% for
Pilot Diversified Bond Income Fund, 0.80% for Pilot Diversified Bond Income
Fund on a pro forma combined basis resulting from the Reorganization of
Pilot Diversified Bond Income Fund and Bond Income Fund, and 0.80% for Pilot
Diversified Bond Income Fund on a pro forma combined basis resulting from
the Reorganization of Pilot Diversified Bond Income Fund, Bond Income Fund,
and Intermediate Bond Income Fund. See note (5) below.
(5) The third column reflects pro forma combined expenses resulting from the
Reorganization of Bond Income Fund and Pilot Diversified Bond Income Fund.
Because it is contemplated that Intermediate Bond Income Fund will also be
reorganized into Pilot Diversified Bond Income Fund, the fourth column
reflects pro form combined expenses in the event that both of these
Reorganizations were effected. It should be noted, however, that each
Reorganization transaction is independent and not contingent upon the other.
The fee waivers and reimbursements reflected in Total Operating Expenses may
be reduced or discontinued at any time after the Reorganization, except to
the extent that Boatmen's has voluntarily agreed to limit the Combined
Fund's actual total operating expense ratio through January 31, 1998 to the
actual total operating expenses of the corresponding Funds IV Fund (or the
lesser of the actual total operating expenses of each Fund if both Funds IV
Funds reorganize into the Acquiring Fund) as of January 31, 1996.
(6) Shareholders may be charged a wire redemption fee by their bank for
receiving a wire payment.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Bond Income Fund Service Class.................................. $10 $31 $53 $118
Pilot Diversified Bond Income Fund Pilot Shares................. $ 7 $21 $36 $ 81
Pro Forma Combined Fund Pilot Shares (Funds Shown).............. $ 7 $21 $36 $ 81
Pro Forma Combined Fund Pilot Shares (All Funds)................ $ 7 $21 $36 $ 81
</TABLE>
The example above should not be considered as representative of past or
future returns or expenses. Actual returns or expenses may be greater or less
than those shown.
16
<PAGE> 17
INTERMEDIATE BOND INCOME FUND
AND PILOT DIVERSIFIED BOND INCOME FUND
<TABLE>
<CAPTION>
PRO FORMA
INTERMEDIATE BOND PILOT DIVERSIFIED COMBINED FUND(5)
INCOME FUND BOND INCOME FUND ---------------------------
----------------- ----------------- PILOT PILOT
SERVICE PILOT CLASS CLASS
CLASS CLASS (FUNDS SHOWN) (ALL FUNDS)
----------------- ----------------- ------------- -----------
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed
on Purchases......................... None None None None
Maximum Sales Load Imposed on Reinvested
Dividends............................ None None None None
Contingent Deferred Sales Charge........ None None None None
Redemption Fee.......................... None(6) None None None
Exchange Fee............................ None None None None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees/Advisory Fees (after fee
waivers)............................. 0.40% 0.40%(1) 0.40%(1) 0.40%(1)
12b-1 Fees (after waivers).............. None(2) None None None
Other Expenses
(after expense reimbursements)....... 0.35% 0.25%(3) 0.25% 0.25%
Total Operating Expenses (after fee
waivers and/or expense
reimbursements)(4)................... 0.75% 0.65% 0.65% 0.65%
</TABLE>
- ---------------
(1) The Management Fees/Advisory Fees for Pilot Diversified Bond Income Fund
shown reflect the fact that the adviser has currently agreed to waive a
portion of its management fee, which waiver may be discontinued at any time.
Absent, the waiver, Management Fees/Advisory Fees would be 0.55% for Pilot
Diversified Bond Income Fund 0.55% for Pilot Diversified Bond Income Fund on
a pro forma combined basis resulting from the Reorganization of Pilot
Diversified Bond Income Fund and Intermediate Bond Income Fund, and 0.55%
for Pilot Diversified Bond Income Fund on a pro forma combined basis
resulting from the Reorganization of Pilot Diversified Bond Income Fund,
Bond Income Fund, Bond Income Fund, and Intermediate Bond Income Fund.
(2) 12b-1 Fees for Intermediate Bond Income Fund have been reduced to reflect
the voluntary waiver of fees by the distributor. The Fund can pay up to
0.25% of its average daily net assets as a 12b-1 fee to its distributor. The
fee waiver may be discontinued at any time. Absent the waiver, 12b-1 Fees
would be 0.25%.
(3) Other Expenses for Pilot Diversified Bond Income Fund have been reduced to
reflect the voluntary reimbursement of expenses by the administrator and
investment adviser. Absent the reimbursement, Other Expenses would be 0.77%.
(4) Absent the voluntary waivers and expense reimbursements explained above,
Total Operating Expenses would be 1.00% for Intermediate Bond Income Fund,
1.32% for Pilot Diversified Bond Income Fund, 0.80% for Pilot Diversified
Bond Income Fund on a pro forma combined basis resulting from the
Reorganization of Pilot Diversified Bond Income Fund and Intermediate Bond
Income Fund, and 0.80% for Pilot Diversified Bond Income Fund on a pro forma
combined basis resulting from the Reorganization of Pilot Diversified Bond
Income Fund, Intermediate Bond Income Fund, and Bond Income Fund. See note
(5) below.
(5) The third column reflects pro forma combined expenses resulting from the
Reorganization of Intermediate Bond Income Fund and Pilot Diversified Bond
Income Fund. Because it is contemplated that Bond Income Fund will also be
reorganized into Pilot Diversified Bond Income Fund, the fourth column
reflects pro form combined expenses in the event that both of these
Reorganizations were effected. It should be noted, however, that each
Reorganization transaction is independent and not contingent upon
17
<PAGE> 18
the other. The fee waivers and reimbursements reflected in Total Operating
Expenses may be reduced or discontinued at any time after the
Reorganization, except to the extent that Boatmen's has voluntarily agreed
to limit the Combined Fund's actual total operating expense ratio through
January 31, 1998 to the actual total operating expenses of the corresponding
Funds IV Fund (or the lesser of the actual total operating expenses of each
Fund if both Funds IV Funds reorganize into the Acquiring Fund) as of
January 31, 1996.
(6) Shareholders may be charged a wire redemption fee by their bank for
receiving a wire payment.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return, and (2) redemption at the end of the following
periods:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Intermediate Bond Income Fund Service Class.............. $8 $24 $42 $93
Pilot Diversified Bond Income Fund Pilot Shares.......... $7 $21 $36 $81
Pro Forma Combined Fund Pilot Shares (Funds Shown)....... $7 $21 $36 $81
Pro Forma Combined Fund Pilot Shares (All Funds)......... $7 $21 $36 $81
</TABLE>
The example above should not be considered as representative of past or
future returns or expenses. Actual returns or expenses may be greater or less
than those shown.
CASH RESERVE MONEY MARKET FUND
AND PILOT SHORT-TERM DIVERSIFIED
ASSETS FUND
<TABLE>
<CAPTION>
CASH RESERVE PILOT SHORT-TERM PRO FORMA
MONEY MARKET FUND DIVERSIFIED ASSETS FUND COMBINED FUND
----------------- ----------------------- -------------
SERVICE PILOT PILOT
CLASS CLASS CLASS
----------------- ----------------------- -------------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed
on Purchases..................... None None None
Maximum Sales Load Imposed on
Reinvested Dividends............. None None None
Contingent Deferred Sales Charge.... None None None
Redemption Fee...................... None(3) None None
Exchange Fee........................ None None None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net
assets)
Management Fees/Advisory Fees....... 0.20% 0.15% 0.15%
12b-1 Fees (after waivers).......... None(1) None None
Other Expenses...................... 0.30% 0.13% 0.13%
Total Operating Expenses
(after fee waivers).............. 0.50%(2) 0.28% 0.28%
</TABLE>
- ---------------
(1) 12b-1 Fees for Cash Reserve Money Market Fund have been reduced to reflect
the voluntary waiver of fees by the distributor. The Fund can pay up to
0.25% of its average daily net assets as a 12b-1 fee to its distributor. The
fee waivers may be discontinued at any time. Absent the waiver, 12b-1 Fees
would be 0.25%.
(2) Absent the voluntary waivers explained above, Total Operating Expenses would
be 0.75% for Cash Reserve Money Market Fund.
(3) Shareholders may be charged a wire redemption fee by their bank for
receiving a wire payment.
18
<PAGE> 19
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return, and (2) redemption at the end of the following
periods:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Cash Reserve Money Market Fund Service Class................. $5 $16 $28 $63
Pilot Short-Term Diversified Assets Fund Pilot Shares........ $3 $ 9 $16 $36
Pro Forma Combined Fund Pilot Shares......................... $3 $ 9 $16 $36
</TABLE>
The example above should not be considered as representative of past or
future returns or expenses. Actual returns or expenses may be greater or less
than those shown.
PRINCIPAL RISK FACTORS
The investment objectives and policies of the Reorganizing and Acquiring
Funds are substantially similar. As a result, the risks associated with an
investment in each Acquiring Fund are substantially similar to those associated
with an investment in the corresponding Reorganizing Fund. These investment
risks are those typically associated with an investment in a managed portfolio
of the specific types of securities and other investments in which each fund
invests. The following highlights the principal differences between the risk
factors associated with an investment in each Reorganizing Fund as contrasted
with those associated with its corresponding Acquiring Fund and is qualified in
its entirety by the more extensive discussion of risk factors in "Comparison of
Investment Policies and Risk Factors" below and in Appendix B and the discussion
of risks in the Prospectus and Statements of Additional Information for the
Reorganizing Funds and Acquiring Funds.
The risks associated with investing in Pilot Growth Fund (and its
corresponding Reorganizing Fund, Aggressive Stock Appreciation Fund) and Pilot
Growth and Income Fund (and its corresponding Reorganizing Funds, Value Stock
Appreciation Fund and Stock Appreciation Fund) are those generally associated
with investing in a portfolio emphasizing diversified U.S. equity investments.
Stock values fluctuate in response to the activities of individual companies and
in response to general market and economic conditions. In general, equity
securities tend to fluctuate in value more than fixed income securities. In
addition, equity securities specifically selected for their ability to produce
dividends are typically less volatile than those which would be chosen for their
potential for capital appreciation; accordingly, a fund emphasizing solely
growth or capital appreciation as stock selection criteria may fluctuate in
value to a greater extent than a fund with a relatively greater emphasis on
stocks chosen for their dividend production capability. Because Pilot Growth
Fund (and Aggressive Stock Appreciation Fund) emphasizes growth potential as a
factor in selecting investments, its portfolio may be more volatile than one
with, for example, a greater emphasis on dividend income, such as Pilot Growth
and Income Fund. It should be noted that Stock Appreciation Fund seeks only
capital appreciation, while its corresponding Acquiring Fund, Pilot Growth and
Income Fund, seeks both capital appreciation and dividend income.
The value of the portfolio of Pilot Diversified Bond Income Fund (and the
portfolios of its corresponding Reorganizing Funds, Bond Income Fund and
Intermediate Bond Income Fund) can be expected to vary inversely to changes in
prevailing interest rates. In addition, fixed income securities with longer
maturities, which tend to produce higher yields, are generally subject to
greater fluctuation in value than those with shorter maturities. Because the
average maturity of Pilot Diversified Bond Income Fund (like Bond Income Fund)
will not exceed fifteen years, compared to ten years for Intermediate Bond
Income Fund, the share price of Pilot Diversified Bond Income Fund may fluctuate
more in response to interest rate changes than that of Intermediate Bond Income
Fund.
An investment in Pilot Short-Term Diversified Assets Fund (and Cash Reserve
Money Market Fund) involves risks typically associated with investing in a
portfolio of high quality, short-term money market instruments. Each Fund will
concentrate its investments in obligations of banks.
19
<PAGE> 20
INFORMATION RELATING TO THE PROPOSED REORGANIZATIONS
DESCRIPTION OF THE REORGANIZATION AGREEMENT. The following summary of the
Reorganization Agreement is qualified in its entirety by reference to the
Reorganization Agreement attached to this Prospectus/Proxy Statement as Appendix
A. The Reorganization Agreement provides that an Acquiring Fund will acquire all
or substantially all of the assets of the corresponding Reorganizing Fund in
exchange for shares of the corresponding Acquiring Fund and the assumption by
the Acquiring Fund of certain stated liabilities of the Reorganizing Fund on the
Closing Date (as defined in the Reorganization Agreement) or such later date as
the parties may require provided for in the Reorganization Agreement.
<TABLE>
<CAPTION>
REORGANIZING FUND ACQUIRING FUND
- -------------------------------------------- --------------------------------------------
<S> <C>
Aggressive Stock Appreciation Fund Pilot Growth Fund
Value Stock Appreciation Fund Pilot Growth and Income Fund
Stock Appreciation Fund Pilot Growth and Income Fund
Bond Income Fund Pilot Diversified Bond Income Fund
Intermediate Bond Income Fund Pilot Diversified Bond Income Fund
Cash Reserve Money Market Fund Pilot Short-Term Diversified Assets Fund
</TABLE>
The number of full and fractional shares of the Acquiring Fund to be issued
to shareholders of the corresponding Reorganizing Fund will be determined on the
basis of the relative net asset values per share and the aggregate net assets of
the Acquiring Fund computed as of the time on the Closing Date at which the
Acquiring Fund ordinarily determines it net asset values (2:00 P.M. Central Time
in the case of Diversified Assets Fund and 3:00 p.m. Central Time for all other
Acquiring Funds). The net asset value per share for the Acquiring Fund and the
Reorganizing Fund will be determined by dividing each fund's respective assets,
less liabilities, by the total number of its respective outstanding shares. The
assets of the Acquiring Fund and the Reorganizing Fund will be valued in
accordance with the current valuation practices of the Acquiring Fund using the
valuation procedures described under "Purchase of Shares" in the current
prospectuses of the Acquiring Funds, which accompany this Combined Proxy
Statement/Prospectus.
Prior to the Closing Date, each Reorganizing Fund will endeavor to
discharge all of its known liabilities and obligations. To the extent there are
unamortized organization costs for any Reorganizing Fund, such costs will be
accrued in accordance with past practice and paid in full by the Reorganizing
Fund through the Closing Date. On the Closing Date, Boatmen's will pay any
remaining unamortized organization costs of the Reorganizing Funds. An Acquiring
Fund will assume only those liabilities, expenses, costs, charges and reserves
reflected on an unaudited statement of assets and liabilities of the
corresponding Reorganizing Fund as of the time on the Closing Date at which the
Acquiring Fund ordinarily determines its net asset values (2:00 p.m. Central
Time in the case of Diversified Assets Fund and 3:00 p.m. Central Time for all
other Acquiring Funds) prepared by Furman Selz, as administrator of the
Reorganizing Fund, in accordance with generally accepted accounting principles
consistently applied from the prior audited period. The Acquiring Fund will
assume only those liabilities of the Reorganizing Fund reflected in that
unaudited statement of assets and liabilities and will not assume any other
liabilities, whether absolute or contingent.
At or prior to the Closing Date, each Reorganizing Fund will declare one or
more dividends which, together with all previous such dividends, will have the
effect of distributing to the Reorganizing Fund's shareholders all of the
Reorganizing Fund's taxable income for the taxable year ending on or prior to
the Closing Date (computed without regard to any deduction for dividends paid)
and all of its net capital gains realized in the taxable year ending on or prior
to the Closing Date (after reductions for any capital loss carryforward).
As soon after the Closing Date as practicable, each Reorganizing Fund will
liquidate and distribute pro rata to its shareholders of record as of the close
of business on the Closing Date the full and fractional shares of the
corresponding Acquiring Fund received by the Reorganizing Fund. Such liquidation
and distribution will be accomplished by the establishment of accounts in the
name of the Reorganizing Fund's shareholders on the share records of the
Acquiring Fund's transfer agent. Each account will represent the respective pro
rata number of full and fractional shares of the Acquiring Fund due to such
Reorganizing Fund's shareholders.
20
<PAGE> 21
The consummation of the transactions contemplated by the Reorganization
Agreement is subject to the conditions set forth in the Reorganization
Agreement, including the condition that the parties shall have received
exemptive relief from the SEC with respect to the issues raised by Section 17(a)
of the 1940 Act and concerning the applicability of Rule 17a-8 of the 1940 Act.
On July 25, 1996, an application was filed for an exemption that, if granted,
would permit the Reorganizations to be completed as described in this Combined
Proxy Statement/Prospectus. There can be no assurance that the relief sought
will be obtained, although the type of relief sought has been obtained by others
in similar situations. The Reorganizing Funds and the Acquiring Funds do not
currently intend to proceed with the Reorganizations unless the relief requested
from the SEC has been obtained. The Reorganization Agreement may be terminated
and one or more Reorganizations abandoned prior to January 1, 1997 by mutual
consent of the Boards of Trustees of Funds IV Trust and The Pilot Funds and
after that date, by either party upon written notice to the other. In addition,
either party may terminate if any condition set forth in the Reorganization
Agreement has not been fulfilled or waived by the party entitled to its benefits
any time before the Closing Date.
The obligations of Funds IV Trust and The Pilot Funds under the
Reorganization Agreement with respect to each Reorganization are also subject to
various other conditions provided therein, including the approval of the
Reorganization Agreement by the shareholders of such Reorganizing Fund, certain
opinions of legal counsel (including an opinion regarding the Federal income tax
consequences of the Reorganizations to be provided by Goodwin, Procter & Hoar
LLP, counsel to The Pilot Funds), the receipt from the SEC of the regulatory
relief described above, the redemption of all Premium Shares of the Funds IV
Funds held by Furman Selz, the accuracy of various representations and
warranties made therein and the parties' performance of their agreements and
undertakings made in the Reorganization Agreement.
The expenses of the transactions contemplated by the Reorganization,
including the cost of proxy solicitation, will be borne by Boatmen's. No portion
of such expenses will be paid by any Reorganizing Fund or Acquiring Fund.
Boatmen's has also undertaken in the Reorganization Agreement to bear the costs
of providing insurance for the independent Trustees of Funds IV Trust for a
period of six years following the Reorganizations, which will provide coverage
for claims relating to their services as Trustees of Funds IV Trust prior to the
Reorganizations.
Approval of the Reorganization Agreement with respect to any Reorganizing
Fund will require the affirmative vote of a majority of the outstanding voting
securities, as defined in the 1940 Act, of that Reorganizing Fund, which means
the lesser of: (i) 67% or more of the voting securities of the Reorganizing Fund
present at the Meeting, if the holders of more than 50% of the outstanding
voting securities are present or represented by proxy or (ii) more than 50% of
the outstanding voting securities of the Reorganizing Fund. If the
Reorganization Agreement is not approved by a Reorganizing Fund, the Board of
Trustees of Funds IV Trust will consider the possible courses of action,
including submission to shareholders of a proposal to liquidate the Reorganizing
Fund.
In its consideration and approval of the Reorganization at a meeting on May
10, 1996, the Board of Trustees of Funds IV Trust considered the effect of the
recent merger of Fourth Financial with and into Bancshares and the fact that
since the merger the portfolio managers of the Reorganizing Funds and the
Acquiring Fund have shared investment research and reported within a common line
of supervision (except to the extent portfolio management is performed by AMR);
the recommendation of Bank IV and Boatmen's with respect to the proposed
Reorganization; the investment objectives, policies, and portfolios of the funds
and their respective performance, the multi-class structures of and distribution
functions performed for the funds, the shareholder servicing requirements of
each fund, compliance functions and other factors relating to the operation of
Funds IV Trust and The Pilot Funds; the fact that each Reorganization would
constitute a tax-free Reorganization; and that interests of shareholders would
not be diluted as a result of each Reorganization.
The Trustees of Funds IV Trust also considered the fact that certain
undertakings had been made in connection with the merger of Fourth Financial
with and into Bancshares (and resulting change in control of Bank IV) as of
January 31, 1996, consistent with the provisions of Section 15(f) of the 1940
Act. Section 15(f) of the 1940 Act provides that when a change in the control of
an investment adviser occurs, the
21
<PAGE> 22
investment adviser or any of its affiliated persons may receive any amount or
benefit in connection therewith as long as, among other things, no "unfair
burden" is imposed on the investment company as a result of the transaction
relating to the change of control, or any express or implied terms, conditions
or understandings applicable thereto. The term "unfair burden" as defined in the
1940 Act includes any arrangement during the two-year period after the
transaction whereby the investment adviser (or predecessor or successor
adviser), or any "interested person" of any such adviser, receives or is
entitled to receive any compensation, directly or indirectly, from the
investment company or its security holders (other than fees for bona fide
investment advisory or other services) or from any person in connection with the
purchase or sale of securities or other property to, from or on behalf of the
investment company (other than fees for bona fide principal underwriting
services).
Through January 31, 1999, (the three-year period immediately following the
merger of Fourth Financial with and into Bancshares), Bank IV has agreed to use
its best efforts to ensure that at least 75% of the Board of Trustees of The
Pilot Funds will not be "interested persons" of Bank IV or Boatmen's within the
meaning of the 1940 Act. Boatmen's has advised the Board of Trustees of Funds IV
Trust that the Board of Trustees of The Pilot Funds will continue to meet this
requirement following the Reorganizations. In addition, Boatmen's has
voluntarily agreed to limit each Combined Fund's actual total operating expense
ratio through January 31, 1998 to the actual total operating expense ratio of
the corresponding Funds IV Fund as of January 31, 1996.
After consideration of all of the foregoing factors, together with certain
other factors and information considered to be relevant, Funds IV Trust's Board
of Trustees unanimously approved the Reorganization Agreement and directed that
it be submitted to shareholders of each Reorganizing Fund for approval. Funds IV
Trust's Board of Trustees recommends that shareholders vote "FOR" approval of
the Reorganization Agreement.
Shareholders of each Reorganizing Fund must approve the Reorganization
Agreement as a condition for their Fund's Reorganization. The failure of
shareholders of any Reorganizing Fund to approve the Reorganization Agreement
will not affect the Reorganization of any other Fund. The Board of Trustees of
Funds IV Trust has not determined what action it will take in the event the
shareholders of any Reorganizing Fund fail to approve the Reorganization
Agreement or for any reason any Reorganization is not consummated. If a
Reorganization is not consummated for any reason, the Trustees may choose to
consider approval of a new investment advisory agreement with Boatmen's,
alternative dispositions of the Reorganizing Fund's assets, including the sale
of assets to, or merger with, another investment company, or the possible
liquidation of such Fund.
At a meeting held on May 21, 1996, the Board of Trustees of The Pilot Funds
considered the proposed Reorganizations with respect to the Acquiring Fund.
Based upon their evaluation of the relevant information provided to them, and in
light of their fiduciary duties under federal and state law, the Board of
Trustees unanimously determined, on the basis of information provided by
Boatmen's, that the proposed Reorganizations were in the best interests of the
Acquiring Funds and their respective shareholders and that the interests of
existing shareholders of the Acquiring Funds would not be diluted as a result of
effecting the Reorganizations.
Although no formal action has been taken, it is contemplated that if (a)
shareholders approve all of the Reorganizations proposed in this Combined Proxy
Statement/Prospectus, (b) the shareholders of Short-Term Treasury Income Fund
(an additional operating series of Funds IV Trust not party to any
Reorganization) approve that Fund's liquidation at a separate meeting of that
series, and (c) as currently contemplated, the liquidation is consummated prior
to the Reorganizations, then, following the Reorganizations, Funds IV Trust's
affairs will be wound up, and its existence will be terminated under state law.
CAPITALIZATION. Because each Reorganizing Fund will be combined in the
Reorganization with its corresponding Acquiring Fund, the total capitalization
of the corresponding Acquiring Fund after the Reorganization is expected to be
greater than its current capitalization or that of its corresponding
Reorganizing Fund except where the Acquiring Fund has had little or no
operations prior to the Reorganization. The following table sets forth as of
February 29, 1996, (i) the capitalization of each Reorganizing Fund, (ii) the
capitalization of its corresponding Acquiring Fund, and (iii) the pro forma
capitalization of the
22
<PAGE> 23
corresponding Acquiring Fund giving effect to the Reorganization. At the time
each Reorganization is completed, the resulting capitalization of the Acquired
Fund is likely to differ from the pro forma capitalization shown in the table
because of the effects of shareholder activity and market price fluctuations in
the interim on the funds involved in the Reorganization(s).
<TABLE>
<CAPTION>
AGGRESSIVE STOCK PILOT PRO FORMA
APPRECIATION FUND GROWTH FUND COMBINED
----------------- ----------- -----------
<S> <C> <C> <C>
Total Net Assets................................ $59,081,469 -- $59,074,419
Service Class/Pilot Class..................... $59,074,419 -- $59,074,419
Shares Outstanding.............................. 4,819,274 -- 4,818,699
Service Class/Pilot Class..................... 4,818,699 -- 4,818,699
Net Asset Value per Share
Service Class/Pilot Class..................... $ 12.26 -- $ 12.26
</TABLE>
<TABLE>
<CAPTION>
PRO FORMA
COMBINED FUND(1)
VALUE STOCK PILOT GROWTH ----------------------------
APPRECIATION FUND AND INCOME FUND (FUNDS SHOWN) (ALL FUNDS)
----------------- --------------- ------------- ------------
<S> <C> <C> <C> <C>
Total Net Assets................... $26,231,853 $160,278,040 $186,509,817 $351,528,095
Service Class/Pilot Class........ $26,231,777 $156,537,553 $ 1,762,540 $347,787,608
Shares Outstanding................. 2,125,432 12,680,734 14,755,715 27,812,269
Service Class/Pilot Class........ 2,125,426 12,384,869 139,471 27,516,404
Net Asset Value Per Share
Service Class/Pilot Class........ $ 12.34 $ 12.64 $ 12.64 $ 12.64
</TABLE>
<TABLE>
<CAPTION>
PRO FORMA
COMBINED FUND(2)
STOCK PILOT GROWTH ----------------------------
APPRECIATION FUND AND INCOME FUND (FUNDS SHOWN) (ALL FUNDS)
----------------- --------------- ------------- ------------
<S> <C> <C> <C> <C>
Total Net Assets................... $165,025,702 $160,278,040 $325,296,318 $351,528,095
Service Class/Pilot Class........ $165,018,278 $156,537,553 $321,555,831 $347,787,608
Shares Outstanding................. 12,803,900 12,680,734 25,737,288 27,812,269
Service Class/Pilot Class........ 12,803,324 12,384,869 25,441,423 27,516,404
Net Asset Value Per Share
Service Class/Pilot Class........ $ 12.89 $ 12.64 $ 12.64 $ 12.64
</TABLE>
<TABLE>
<CAPTION>
PRO FORMA
COMBINED FUND(3)
BOND PILOT DIVERSIFIED ----------------------------
INCOME FUND BOND INCOME FUND (FUNDS SHOWN) (ALL FUNDS)
----------- ----------------- ------------- ------------
<S> <C> <C> <C> <C>
Total Net Assets....................... $32,670,790 -- $32,664,389 $155,928,876
Service Class/Pilot Class............ $32,664,389 -- $32,664,389 $155,928,876
Shares Outstanding..................... 3,116,919 -- 3,116,308 15,214,591
Service Class/Pilot Class............ 3,116,308 -- 3,116,308 15,214,591
Net Asset Value Per Share
Service Class/Pilot Class............ $ 10.48 -- $ 10.48 $ 10.25
</TABLE>
<TABLE>
<CAPTION>
PRO FORMA
COMBINED FUND(4)
INTERMEDIATE PILOT DIVERSIFIED ----------------------------
BOND INCOME FUND BOND INCOME FUND (FUNDS SHOWN) (ALL FUNDS)
---------------- ----------------- ------------- ------------
<S> <C> <C> <C> <C>
Total Net Assets................... $123,270,751 -- $123,264,487 $155,928,876
Service Class/Pilot Class........ $123,264,487 -- $123,264,487 $155,928,876
Shares Outstanding................. 12,028,967 -- 12,028,356 15,214,591
Service Class/Pilot Class........ 12,028,356 -- 12,028,356 15,214,591
Net Asset Value Per Share
Service Class/Pilot Class........ $ 10.25 -- $ 10.25 $ 10.25
</TABLE>
23
<PAGE> 24
<TABLE>
<CAPTION>
CASH RESERVE PILOT SHORT-TERM PRO FORMA
MONEY MARKET FUND DIVERSIFIED ASSETS FUND COMBINED
----------------- ----------------------- --------------
<S> <C> <C> <C>
Total Net Assets..................... $344,883,750 $1,550,166,375 $1,895,044,055
Service Class/Pilot Class.......... $344,877,680 $1,276,431,740 $1,621,309,420
Shares Outstanding................... 344,883,169 1,550,040,634 1,894,917,733
Service Class/Pilot Class.......... 344,877,099 1,276,305,999 1,621,183,098
Net Asset Value Per Share
Service Class/Pilot Class.......... $ 1.00 $ 1.00 $ 1.00
</TABLE>
- ---------------
(1) The third column reflects pro forma combined information resulting from the
Reorganization of Pilot Growth and Income Fund and Value Stock Appreciation
Fund. It is contemplated that Stock Appreciation Fund will also be
reorganized into Pilot Growth and Income Fund; the fourth column reflects
pro forma combined information in the event that both Reorganizations take
place. It should be noted, however, that each Reorganization is independent
of and not contingent on the other.
(2) The third column reflects pro forma combined information resulting from the
reorganization of Pilot Growth and Income Fund and Stock Appreciation Fund.
It is contemplated that Value Stock Appreciation Fund will also be
reorganized into Pilot Growth and Income Fund; the fourth column reflects
pro forma combined information in the event that both Reorganizations take
place. It should be noted, however, that each Reorganization is independent
of and not contingent on the other.
(3) The third column reflects pro forma combined information resulting from the
Reorganization of Pilot Diversified Bond Income Fund and Bond Income Fund.
It is contemplated that Intermediate Bond Income Fund will also be
reorganized into Pilot Diversified Bond Income Fund; the fourth column
reflects pro forma combined information in the event that both
Reorganizations take place. It should be noted, however, that each
Reorganization is independent of and not contingent on the other.
(4) The third column reflects pro forma combined information resulting from the
Reorganization of Pilot Diversified Bond Income Fund and Intermediate Bond
Income Fund. It is contemplated that Bond Income Fund will also be
reorganized into Pilot Diversified Bond Income Fund; the fourth column
reflects pro forma combined information in the event that both
Reorganizations take place. It should be noted, however, that each
Reorganization is independent of and not contingent on the other.
FEDERAL INCOME TAX CONSEQUENCES. Each reorganization transaction should be
a tax-free transaction from the standpoint of the Reorganizing and Acquiring
Fund and their shareholders, which means that: (1) no gain or loss will be
recognized by a Reorganizing Fund upon the transfer of its assets and
liabilities to an Acquiring Fund; (2) the tax basis of the assets of the
Reorganizing Fund in the hands of the Acquiring Fund will be the same as the tax
basis of such assets in the hands of the Reorganizing Fund immediately prior to
the transfer; (3) the Acquiring Fund's holding period of the assets of the
Reorganizing Fund will include the period during which such assets were held by
a Reorganizing Fund; (4) no gain or loss will be recognized by the Acquiring
Fund upon the receipt of the assets of the Reorganizing Fund in exchange for
shares of the Acquiring Fund and the assumption by the Acquiring Fund of the
liabilities and obligations of the Reorganizing Fund; (5) no gain or loss will
be recognized by the shareholders of the Reorganizing Fund upon the receipt of
shares of the Acquiring Fund in exchange for shares of the Reorganizing Fund;
(6) the basis of the shares of the Acquiring Fund received by the shareholders
of the Reorganizing Fund will be the same as the basis of the shares of the
Reorganizing Fund exchanged therefor; and (7) the holding period of the shares
of the Acquiring Fund received by the shareholders of the Reorganizing Fund will
include the holding period of the shares of the Reorganizing Fund exchanged
therefor, provided that, at the time of the exchange, the shares of the
Reorganizing Fund were held as capital assets. Pursuant to the Reorganization
Agreement, as a condition to the consummation of each Reorganization, the
Reorganizing Fund and Acquiring Fund must receive a favorable opinion of
Goodwin, Procter & Hoar LLP, counsel to The Pilot Funds, as to the foregoing tax
consequences.
Funds IV Trust and The Pilot Funds have not sought a tax ruling from the
Internal Revenue Service (the "IRS"), but intend to act in reliance upon the
opinion of counsel discussed in the previous paragraph. That
24
<PAGE> 25
opinion will not be binding on the IRS and will not preclude the IRS from
adopting a contrary position. Shareholders should consult their own advisers
concerning the potential tax consequences to them, including those arising under
state and local law.
COMPARISON OF INVESTMENT POLICIES AND RISK FACTORS
The investment objectives and policies of each Reorganizing Fund are
substantially similar to those of its corresponding Acquiring Fund. There are,
however, certain differences. The following discussion summarizes some of the
more significant similarities and differences in the investment policies and
risk factors for each Reorganizing Fund and its corresponding Acquiring Fund.
Additional investment restrictions and policies of the Reorganizing and
Acquiring Funds appear in Appendix B. Both the discussion below and the
information in Appendix B are qualified in its entirety by the discussion
elsewhere herein, and in the Prospectuses and Statements of Additional
Information for the Reorganizing Funds and the Acquiring Funds.
The investment objectives of each Acquiring Fund are not fundamental and
may be changed without shareholder vote although shareholders must receive 30
days notice of any change in an Acquiring Fund's investment objective. The
investment objective of each Reorganizing Fund, however, is fundamental and may
be changed only with the approval of shareholders.
Aggressive Stock Appreciation Fund and Pilot Growth Fund.
The Acquiring Fund and the Reorganizing Fund have substantially similar
objectives: Pilot Growth Fund's objective is to seek long-term capital growth by
investing primarily in equity securities; Aggressive Stock Appreciation Fund's
objective is to aggressively seek long-term capital appreciation through
investment in a diversified portfolio of common stock (and securities
convertible into common stock) of domestic companies and the fund may also
invest, to a far lesser extent, in securities of foreign companies, primarily
through securities represented by American Depositary Receipts (ADRs). Although
Pilot Growth Fund currently expects that its investment in foreign securities
will not exceed 5% of total assets, this policy is not fundamental. On the other
hand, Aggressive Stock Appreciation Fund's objective, which focusses the Fund's
investment on "domestic companies," is fundamental. Consequently Pilot Growth
Fund's policy with respect to foreign securities may be changed without
shareholder approval whereas a significant change in Aggressive Stock
Appreciation Fund's level of investment in foreign securities would require
shareholder approval. See "Risk Factors -- Foreign Securities" below for a
discussion of the risks associated with foreign securities.
In terms of investment style, Pilot Growth Fund focusses on growth stocks
using a quantitatively based approach to security selection. Aggressive Stock
Appreciation Fund emphasizes growth as a selection factor and may use various
quantitative measures to assess growth potential, but retains the flexibility to
consider all available evidence in choosing securities with the potential to
appreciate in value. Aggressive Stock Appreciation Fund generally expects its
portfolio to include a broad array of large capitalization stocks but may also
hold mid cap stocks and to a lesser extent small capitalization stocks. Pilot
Growth Fund, on the other hand, has no stated policy with regard to portfolio
weighting based on market capitalization. Because of its emphasis on growth
stocks, Pilot Growth Fund may choose to purchase stocks of issuers with smaller
capitalizations, which often exhibit growth characteristics, to a greater extent
than Aggressive Stock Appreciation Fund. The share prices of issuers with
smaller capitalizations tend to be more volatile than those of larger
capitalization issuers.
Value Stock Appreciation Fund and Pilot Growth and Income Fund.
The Acquiring Fund and Reorganizing Fund have substantially similar
objectives: Pilot Growth and Income Fund's objective is to seek capital
appreciation and current income by investing primarily in common stocks of U.S.
companies; Value Stock Appreciation Fund's objective is to seek long-term
capital appreciation and dividend income through investment in a diversified
portfolio of common stock (and securities convertible into common stock) of
domestic companies and the fund may also invest, to a far lesser extent, in
securities of foreign companies, primarily through securities represented by
American Depositary Receipts (ADRs). Although Pilot Growth and Income Fund
currently intends to limit its investment in foreign securities to 5% of
25
<PAGE> 26
total assets, neither this policy nor the aspect of the Fund's objective
focussing its investment on U.S. companies is fundamental. On the other hand,
Value Stock Appreciation Fund's objective, which focusses the Fund's investment
on "domestic companies," is fundamental. Consequently Pilot Growth and Income
Fund's policy with respect to foreign securities may be changed without
shareholder approval whereas a significant change in Value Stock Appreciation
Fund's level and means of investment in foreign securities would require
shareholder approval. Pilot Growth and Income Fund has not historically invested
more than 5% of its total assets in foreign securities. See "Risk
Factors -- Foreign Securities" below for a discussion of the risks associated
with foreign securities.
Stock Appreciation Fund and Pilot Growth and Income Fund.
The Acquiring Fund and the Reorganizing Fund have substantially similar
objectives: Pilot Growth and Income Fund's objective is to seek capital
appreciation and current income by investing primarily in common stocks of U.S.
companies; Stock Appreciation Fund's objective is to seek long-term capital
appreciation through investment in a diversified portfolio of common stock (and
securities convertible into common stock) of domestic companies and the fund may
also invest, to a far lesser extent, in securities of foreign companies,
primarily through securities represented by American Depositary Receipts (ADRs).
Pilot Growth and Income Fund's investment portfolio may tend to fluctuate less
in value than Stock Appreciation Fund's because, in addition to purchasing
common stocks with the potential for capital growth, Pilot Growth and Income
Fund also invests in common stocks which demonstrate favorable prospects for
current dividend income. Stocks chosen for their dividend producing qualities
generally are less volatile than those favored for capital appreciation, the
primary focus of Stock Appreciation Fund's investment program.
Although Pilot Growth and Income Fund currently intends to limit its
investment in foreign securities to 5% of total assets, neither this policy nor
the aspect of the Fund's objective focussing its investment on U.S. companies is
fundamental. On the other hand, Stock Appreciation Fund's objective, which
focusses the Fund's investment on "domestic companies," is fundamental.
Consequently Pilot Growth and Income Fund's policy with respect to foreign
securities may be changed without shareholder approval whereas a significant
change in Stock Appreciation Fund's level and means of investment in foreign
securities would require shareholder approval. Pilot Growth and Income Fund has
not historically invested more than 5% of its total assets in foreign
securities. See "Risk Factors -- Foreign Securities" below for a discussion of
the risks associated with foreign securities.
Bond Income Fund and Pilot Diversified Bond Income Fund.
The Acquiring Fund and the Reorganizing Fund have substantially similar
objectives: Pilot Diversified Bond Income Fund's investment objective is to seek
current income consistent with preservation of capital by investing primarily in
debt securities and seeks total return as a secondary objective; Bond Income
Fund's investment objective is to provide as high a level of current income as
is consistent with managing for total return by investing at least 65% of its
total assets in fixed income securities.
Pilot Diversified Bond Income Fund and Bond Income Fund have substantially
similar credit quality criteria. Pilot Diversified Bond Income Fund will
purchase only debt securities rated at least A or better or, if unrated, of
comparable quality; the Fund may retain a security if its rating or, if unrated,
its credit quality falls to BBB, but the value of such downgraded assets may not
exceed 35% of its total assets. For Bond Income Fund a minimum of 65% of its
total assets must consist of securities rated A or better. Bond Income Fund will
seek to maintain a minimum average rating of AA with all securities rated at
least BBB or better at the time of purchase; securities downgraded below BBB may
be retained when deemed by the adviser to be in the best interests of the Fund.
The combination of these credit quality policies has the effect of permitting
the Bond Income Fund to acquire securities rated BBB at the time of purchase but
limits the Fund's holdings of such securities (together with holdings of
securities downgraded to BBB) to 35% of its total assets.
Pilot Diversified Bond Income Fund currently intends to limit its
investment in foreign securities to 5% of total assets. Bond Income Fund has no
limitation on the amount of its investment in the debt of foreign
26
<PAGE> 27
governments and corporations. Foreign securities entail special risks which are
discussed under "Risk Factors -- Foreign Securities" below.
The Funds' average maturity policies are also substantially similar.
Average maturity provides a general indication of share price sensitivity to
interest rate fluctuations. Pilot Diversified Bond Income Fund's average
maturity will be between five and fifteen years. Bond Income Fund's average
maturity generally ranges between seven and fifteen years. As a general rule,
the greater a fund's average maturity the greater the fluctuation of its net
asset value in response to interest rate changes.
Intermediate Bond Income Fund and Pilot Diversified Bond Income Fund.
The Acquiring Fund and the Reorganizing Fund have substantially similar
objectives. Pilot Diversified Bond Income Fund's investment objective is to seek
current income consistent with preservation of capital by investing primarily in
debt securities and to seek total return as a secondary objective; Intermediate
Bond Income Fund's investment objective is to provide as high a level of current
income as is consistent with managing for total return by investing at least 65%
of its total assets in fixed income securities.
Pilot Diversified Bond Income Fund and Intermediate Bond Income Fund have
substantially similar credit quality criteria. Pilot Diversified Bond Income
Fund will purchase only debt securities rated at least A or better or, if
unrated, of comparable quality; the Fund may retain a security if its rating or,
if unrated, its credit quality falls to BBB, but the value of such downgraded
assets may not exceed 35% of its total assets. Pilot Diversified Bond Income
Fund has no policy regarding average rating. For Intermediate Bond Income Fund a
minimum of 65% of its total assets must consist of securities rated A or better.
Intermediate Bond Income Fund will seek to maintain a minimum average rating of
AA with all securities rated at least BBB or better at the time of purchase;
securities downgraded below BBB may be retained when deemed by Bank IV to be in
the best interests of the Fund. The combination of these credit quality policies
has the effect of permitting Intermediate Bond Income Fund to acquire securities
rated BBB at the time of purchase but limits the Fund's holdings of such
securities (together with holdings of securities downgraded to BBB) to 35% of
its total assets.
Pilot Diversified Bond Income Fund currently expects that its investment in
foreign securities will not exceed 5% of total assets. Intermediate Bond Income
Fund has no limitation on the amount of its investment in the debt of foreign
governments and corporations. Foreign securities entail special risks which are
discussed under "Risk Factors -- Foreign Securities" below.
Pilot Diversified Bond Income Fund's average maturity will be between five
and fifteen years. Intermediate Bond Income Fund's average maturity generally
ranges between three and ten years. Because its policy permits higher average
maturities, Pilot Diversified Bond Income Fund's share price may be expected to
fluctuate more in response to changes in interest rates than the share price of
Intermediate Bond Income Fund.
Cash Reserve Money Market Fund and Pilot Short-Term Diversified Assets Fund
The Acquiring Fund and the Reorganizing Fund have substantially similar
objectives. Diversified Assets Fund's objective is to maximize current income to
the extent consistent with preservation of capital and the maintenance of
liquidity by investing exclusively in high quality money market instruments.
Cash Reserve Money Market Fund's objectives are current income, liquidity and
the maintenance of a stable $1.00 net asset value per share by investing in high
quality, U.S. dollar-denominated short-term obligations which are determined by
the investment adviser to present minimal credit risks. Both Funds concentrate
in (i.e., will invest more than 25% of total assets in) the banking industry.
Both Funds operate as money market mutual funds in compliance with the
requirements of Rule 2a-7 under the 1940 Act.
The Acquiring Fund and the Reorganizing Fund differ in the credit quality
standards applicable to their investments. Specifically, Diversified Assets Fund
may purchase (i) securities rated (or issued by an issuer that is rated with
respect to a class of short-term debt obligations or an appropriately comparable
security within that class) in the highest short-term rating category by at
least two Nationally Recognized Statistical
27
<PAGE> 28
Rating Organizations ("NRSROs"), (ii) securities rated by only one NRSRO and
rated in the highest category by that NRSRO, or (iii) unrated securities found
to be of quality comparable to the securities described in (i) or (ii) ("First
Tier Securities"). In addition to First Tier Securities, Diversified Assets Fund
may purchase (i) securities rated in the top two short-term rating categories by
at least two NRSROs, but which are not rated in the highest short-term rating
category by two or more NRSROs, (ii) securities rated by one NRSRO and rated in
the second highest short-term category by that NRSRO, or (iii) unrated
securities found to be of quality comparable to the securities described in (i)
or (ii) ("Second Tier Securities"). Consistent with the requirements of Rule
2a-7, Diversified Assets Fund may not invest more than the greater of (i) 1% of
its total assets; or (ii) one million dollars in the securities of a single
issuer which were Second Tier Securities at acquisition and may not invest more
than 5% of its total assets in securities which were Second Tier Securities at
acquisition.
Cash Reserve Money Market Fund invests only in issuers or instruments that
at the time of purchase (1) have received the highest short-term rating by at
least two NRSROs; (2) are rated by only one NRSRO and have received the highest
short-term rating by that NRSRO (and provided the purchase is approved or
ratified by the Board of Trustees); or (3) are unrated, but are determined to be
of quality comparable to the securities described in (1) and (2) by AMR pursuant
to guidelines approved by the Board. Cash Reserve Money Market Fund may not
invest in Second Tier Securities.
Diversified Assets Fund's policies with respect to the credit quality of
commercial paper it purchases are no different from those noted above for its
other investments. All commercial paper purchased by Cash Reserve Money Market
Fund must, however, meet either qualification (1) or (2) shown in the
description of that Fund's credit quality restrictions above.
The combined effect of the policies noted above is to permit the Acquiring
Fund to purchase money market instruments of lesser quality (though still
meeting the credit quality requirements of Rule 2a-7 under the Investment
Company Act of 1940, as amended, which restricts the credit quality of money
market fund investments) than the Reorganizing Fund. Lower quality instruments
typically offer higher yields but may be more volatile in price and generally
have a higher probability of default by the issuer. The Acquiring Fund has not
historically purchased Second Tier Securities in material amounts and has no
current intention to do so.
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.
COMPARISON OF THE TRUSTS
General. Funds IV Trust and The Pilot Funds are each open-end management
investment companies registered under the 1940 Act. Funds IV Trust is organized
as a business trust under the laws of Delaware; The Pilot Funds is organized as
a business trust under the laws of the Commonwealth of Massachusetts. Funds IV
Trust and The Pilot Funds are governed by a Trust Instrument and an Agreement
and Declaration of Trust, respectively (each a "Trust Agreement"), By-Laws and
Boards of Trustees.
Term of Trustees. The term of office of each Trustee of The Pilot Funds or
Funds IV Trust is unlimited as to duration unless the Trustees themselves adopt
a limited term. Assuming that the term remains of
28
<PAGE> 29
unlimited duration, a person serving as a Trustee of The Pilot Funds or Funds IV
Trust will continue as Trustee until the person resigns, dies or is removed by a
written instrument signed by at least two-thirds of the Trustees, by vote of the
shareholders holding not less than two-thirds of the shares then outstanding in
person or by proxy at any meeting called for the purpose, or by a written
declaration signed by shareholders holding not less than two-thirds of the
shares then outstanding. Vacancies on either Board may be filled by a majority
of the Trustees remaining in office.
Liability of Trustees. A Trustee of The Pilot Funds or Funds IV Trust will
be personally liable only for his or her own willful malfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
the office of Trustee. Under the Trust Agreements for The Pilot Funds and Funds
IV Trust, Trustees and officers will be indemnified for the expenses of
litigation against them unless it is determined that the person did not act in
good faith in the reasonable belief that the person's actions were in or not
opposed to the best interests of the trust or his or her conduct is determined
to constitute willful misfeasance, bad faith, gross negligence or reckless
disregard of his or her duties.
Shareholder Liability. Although, as discussed below, the likelihood is
remote, it is possible that, under Massachusetts law, shareholders of a
Massachusetts business trust could, under certain circumstances, be held
personally liable for the obligations of The Pilot Funds. However, the Trust
Agreement of The Pilot Funds disclaims shareholder liability for acts or
obligations of the Trust and requires that notice of such disclaimer be given in
each agreement, obligation or instrument entered into or executed by the Trust
or the Trustees. The Trust Agreement also provides for indemnification out of
The Pilot Funds property for all losses and expenses of any shareholder held
personally liable for the obligations of the Trust. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
considered remote since it is limited to circumstances in which a disclaimer is
inoperative and The Pilot Funds itself would be unable to meet its obligations.
Under Delaware law, stockholders of a Delaware Business Trust such as Funds IV
Trust do not have such potential remote liability. A substantial number of
mutual funds in the United States are organized as Massachusetts business
trusts.
Voting. On each matter submitted to a vote of the shareholders of The
Pilot Funds or Funds IV Trust, each holder of a share of one of the funds is
entitled to one vote for each whole share and to a proportionate fractional vote
for each fractional share outstanding in the shareholder's name on the books of
the respective Trusts. Generally, shares of each of the Acquiring Fund and
Reorganizing Fund vote on a fund-by-fund basis on all matters except (1) matters
affecting only the interests of one or more of the funds, in which case only
shares of the affected fund or funds would be entitled to vote or (2) when the
1940 Act requires that shares of the Funds be voted in the aggregate. There are
ordinarily no meetings of shareholders of the Funds IV Trust or The Pilot Funds.
Liquidation or Dissolution. In the event of the liquidation or dissolution
of The Pilot Funds or any of the funds, the shareholders of the funds are
entitled to receive, when, and as declared by the Trustees, the excess of the
assets belonging to the funds over the liabilities belonging to the funds. In
either case, the assets so distributable to shareholders of the funds will be
distributed among the shareholders in proportion to the number of shares of the
funds held by them and recorded on the books of the Acquiring Fund. Under the
Trust Agreement of the Funds IV Trust, any proposal to liquidate or dissolve the
Reorganizing Fund requires approval of shareholders. Such action may be taken
with respect to The Pilot Funds by action of the Board of Trustees, without
shareholder approval.
Shareholder Meetings. Neither The Pilot Funds nor Funds IV Trust are
required to hold annual meetings of their shareholders. However, if the Trustees
of The Pilot Funds fail to call or give notice of any meeting of shareholders
for a period of 75 days after written request by shareholders of a majority of
the shares then outstanding and entitled to vote of any portfolio or class
entitled to vote upon a matter requiring shareholder action pursuant to the
Trust Instrument that a meeting be called to consider action on such matter,
then shareholders holding at least a majority of the shares then outstanding and
entitled to vote of such portfolio or class may call and give notice of such
meeting. In addition, special meetings of Funds IV Trust may be called upon
written request of shareholders owning at least one-tenth of the outstanding
shares entitled to vote.
29
<PAGE> 30
Rights of Inspection. Shareholders of The Pilot Funds have the same rights
to inspect the records, accounts and books of The Pilot Funds as are permitted
shareholders of a Massachusetts corporation under the Massachusetts corporation
law. Currently, each shareholder of a Massachusetts corporation is permitted to
inspect the articles, bylaws, stock records, and minutes of shareholder
meetings. Under Delaware law, a shareholder is entitled to inspect all books and
records including stock records. In either jurisdiction a court may order
discovery of all information relevant to a litigation claim.
The foregoing is only a summary of certain characteristics of the
operations of The Pilot Funds and Funds IV Trust, the Trust Agreements, By-Laws
and Massachusetts and Delaware law. The foregoing is not a complete description
of the documents cited. Shareholders should refer to the provisions of the
relevant Trust Agreement, By-Laws and state law directly for a more complete
description.
INFORMATION RELATING TO VOTING MATTERS
GENERAL INFORMATION. This Combined Proxy Statement/Prospectus is being
furnished in connection with the solicitation of proxies by Funds IV Trust's
Board of Trustees in connection with the Special Meeting. Only shareholders of
record at the close of business on August 2, 1996 will be entitled to vote at
the Meeting. On that date there were outstanding and entitled to be voted the
following numbers of shares:
<TABLE>
<CAPTION>
REORGANIZING FUND SHARES OUTSTANDING
------------------------------------------------------------ ------------------
<S> <C>
Aggressive Stock Appreciation Fund.......................... 4,396,581.994
Value Stock Appreciation Fund............................... 2,044,866.794
Stock Appreciation Fund..................................... 12,075,437.626
Bond Income Fund............................................ 3,271,532.487
Intermediate Bond Income Fund............................... 10,852,188.972
Cash Reserve Money Market Fund.............................. 257,600,607.150
</TABLE>
SOLICITATION OF PROXIES. Proxy solicitations will be made primarily by
mail, but proxy solicitations may also be made by telephone, telegraph or
personal solicitations conducted by officers and employees of Bank IV or their
affiliates or other representatives of the Funds (who will not be paid for their
solicitation activities). Automatic Data Processing ("ADP") has been engaged by
Bank IV to assist in soliciting proxies, and may contact certain shareholders of
the Funds by telephone. Shareholders who are contacted by ADP may be asked to
cast their vote by telephonic proxy. Such proxies will be recorded in accordance
with the procedures set forth below. Bank IV believes these procedures are
reasonably designed to ensure that the identity of the shareholders casting the
vote is accurately determined and that the voting instructions of the
shareholder are accurately reflected.
In all cases where a telephonic proxy is solicited, the ADP representative
will ask you for your full name, address, social security or employer
identification number, title (if you are authorized to act on behalf of an
entity, such as a corporation), and number of shares owned. If the information
solicited agrees with the information provided to ADP by Bank IV, then the ADP
representative will explain the process, read the Proposals listed in the proxy
card and ask for your instructions on each Proposal. The ADP representative,
although he or she will answer questions about the process, will not recommend
to you how you should vote, other than to read the recommendations set forth in
this Proxy Statement. Within 72 hours, ADP will send you a letter or mailgram to
confirm your vote and asking you to call ADP immediately if your instructions
are not correctly reflected in the confirmation.
If you wish to participate in the Meeting and any adjournments thereof, but
do not wish to give your proxy by telephone, you may still submit the proxy card
included with this Proxy Statement or attend the Meeting in person. Any proxy
given by you, whether in writing or by telephone may be revoked at any time
before it is voted by a written instruction received by the Secretary of Funds
IV Trust by properly executing a later-dated proxy or by attending the Special
Meeting and voting in person.
The cost of the solicitation, including the Meeting and the cost of
pricing, assembling and mailing proxy materials will be borne by Boatmen's.
30
<PAGE> 31
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF. Based on holdings and
total shares outstanding as of June 28, 1996, the Trustees and officers of Funds
IV Trust owned as a group less than 1% of the outstanding voting securities of
each Reorganizing Fund. If the Reorganizations were consummated as of February
29, 1996, the Trustees and officers of Funds IV Trust would own less than 1% of
the outstanding voting securities of each resulting pro forma Combined Fund
based on their holdings and total shares outstanding as of June 28, 1996. Based
on holdings and total shares outstanding as of June 28, 1996, and assuming
consummation of the Reorganizations shown on February 29, 1996, the following
persons would own beneficially or of record 5% or more of the outstanding shares
of a Reorganizing Fund or pro forma Combined Fund as indicated:
AGGRESSIVE STOCK APPRECIATION FUND
- --------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE OF CLASS
OWNED OF
CLASS AND AMOUNT OF PERCENTAGE OF CLASS COMBINED FUND
SHARES OWNED AND OWNED AS OF (PRO FORMA -- REORG. WITH
NAME AND ADDRESS TYPE OF OWNERSHIP JUNE 28, 1996 PILOT GROWTH FUND)
- --------------------------------------- ------------------- ------------------- --------------------------
<S> <C> <C> <C>
Fourth Financial Corporation 279,481 6.1% 5.8%
100 North Broadway Service Class
Wichita, Kansas 67202 (beneficial)
</TABLE>
VALUE STOCK APPRECIATION FUND
- ----------------------------------
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF
CLASS OWNED OF CLASS OWNED OF
COMBINED FUND COMBINED FUND
CLASS AND PERCENTAGE OF (PRO FORMA -- (PRO FORMA --
AMOUNT OF CLASS OWNED REORG. WITH REORG. WITH
SHARES OWNED AS OF PILOT GROWTH STOCK APPRECIATION
AND TYPE OF JUNE 28, AND INCOME FUND AND PILOT GROWTH
NAME AND ADDRESS OWNERSHIP 1996 FUND) AND INCOME FUND
- ------------------------------ ------------- ------------- ------------------------ ------------------------
<S> <C> <C> <C> <C>
Explorer Retirement Plan 202,070 9.4% 1.4% 0.7%
Explorer Pipeline Company Service Class
P.O. Box 2650 (beneficial)
Tulsa, Oklahoma 74101
McElroy Manufacturing 143,322 6.6% 1.0% 0.5%
Money Purchase Pension Plan Service Class
McElroy Manufacturing Co. (beneficial)
833 N. Fulton St.
Tulsa, Oklahoma 74112
Chandler (U.S.A.), Inc. 126,566 5.9% 0.9% 0.5%
401k Profit Sharing Plan Service Class
P.O. Drawer 9 (beneficial)
Chandler, Oklahoma 74834
</TABLE>
31
<PAGE> 32
STOCK APPRECIATION FUND
- --------------------------
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF
CLASS OWNED CLASS OWNED OF
OF COMBINED FUND
COMBINED FUND (PRO FORMA --
CLASS AND (PRO FORMA -- REORG. WITH
AMOUNT OF PERCENTAGE OF REORG. WITH VALUE STOCK
SHARES OWNED CLASS OWNED PILOT GROWTH APPRECIATION FUND
AND TYPE OF AS OF JUNE 28, AND INCOME AND PILOT GROWTH
NAME AND ADDRESS OWNERSHIP 1996 FUND) AND INCOME FUND
- -------------------------------------- ------------- -------------- ------------- -----------------
<S> <C> <C> <C> <C>
Bank IV 401k Plan 1,235,455 9.8% 4.8% 4.4%
100 North Broadway Service Class
St. Louis, Missouri 63178 (beneficial)
Fourth Financial Corporation 785,374 6.2% 3.1% 2.8%
100 North Broadway Service Class
Wichita, Kansas 67202 (beneficial)
</TABLE>
BOND INCOME FUND
- --------------------
<TABLE>
<CAPTION>
PERCENTAGE OF
CLASS OWNED OF
COMBINED FUND
(PRO FORMA --
REORG. WITH
PERCENTAGE OF INTERMEDIATE
CLASS OWNED OF BOND
CLASS AND COMBINED FUND INCOME FUND AND
AMOUNT OF PERCENTAGE OF (PRO FORMA -- PILOT
SHARES OWNED CLASS OWNED REORG. WITH DIVERSIFIED
AND TYPE OF AS OF JUNE 28, PILOT DIVERSIFIED BOND INCOME
NAME AND ADDRESS OWNERSHIP 1996 BOND INCOME FUND) FUND)
- -------------------------------------- ------------- -------------- ----------------- ----------------
<S> <C> <C> <C> <C>
Fourth Financial Corporation 309,568 9.3% 9.9% 2.0%
100 North Broadway Service Class
Wichita, Kansas 67202 (beneficial)
Asbury-Salina Regional 235,255 7.1% 7.5% 1.5%
Medical Center Service Class
Money Purchase Pension Plan (beneficial)
400 S. Santa Fe
Salina, Kansas 67401
Wichita Surgical Specialists 180,106 5.4% 5.8% 1.2%
Money Purchase Pension Plan Service Class
818 N. Emporia, Suite 200 (beneficial)
Wichita, Kansas 67214
NCRA Savings and 176,343 5.3% 5.7% 1.2%
Retirement Trust Service Class
100 North Broadway (beneficial)
Wichita, Kansas 67202
</TABLE>
INTERMEDIATE BOND INCOME FUND
- ----------------------------------
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF
CLASS OWNED OF CLASS OWNED OF
COMBINED FUND COMBINED FUND
(PRO FORMA -- (PRO FORMA --
CLASS AND PERCENTAGE OF REORG. WITH REORG. WITH
AMOUNT OF CLASS OWNED PILOT BOND INCOME FUND
SHARES OWNED AS OF JUNE DIVERSIFIED AND PILOT
AND TYPE OF 28, BOND INCOME DIVERSIFIED BOND
NAME AND ADDRESS OWNERSHIP 1996 FUND) INCOME FUND)
- -------------------------------- ------------- ------------- ---------------- ------------------------
<S> <C> <C> <C> <C>
Bank IV 401k Plan 662,382 5.7% 5.5% 4.4%
100 North Broadway Service Class
St. Louis, Missouri 63178 (beneficial)
</TABLE>
Bank IV holds Fund shares in a variety of capacities. Bank IV has advised
Funds IV Trust that it currently anticipates it will vote shares held in trust
or other fiduciary accounts over which it has voting power
32
<PAGE> 33
as follows: (a) with respect to Fund shares held in any trust or other fiduciary
account over which Bank IV shares voting power as a co-fiduciary, Bank IV will
not participate in any decision by the other fiduciaries of such account with
regard to the proposals presented in this Combined Proxy Statement/Prospectus;
(b) with respect to Fund shares held in any trust or other fiduciary account for
which Bank IV has sole voting power, Bank IV will pass voting power through to
an owner, plan sponsor or independent third party fiduciary to the extent such
action is permissible; and (c) with respect to all other fiduciary accounts,
Bank IV will vote Fund shares in the same manner and proportion as all other
Fund shares are voted.
The Pilot Funds. Based on holdings and total shares outstanding as of June
28, 1996, the Trustees and officers of The Pilot Funds owned as a group less
than 1% of the outstanding voting securities of each Acquiring Fund. If the
Reorganizations were consummated as of February 29, 1996, the Trustees and
officers of The Pilot Funds would own less than 1% of the outstanding voting
securities of each resulting pro forma Combined Fund based on their holdings and
total shares outstanding as of June 28, 1996. Based on holdings and total shares
outstanding as of June 28, 1996, and assuming consummation of the
Reorganizations on February 29, 1996, the following persons would own
beneficially or of record 5% or more of the outstanding shares of an Acquiring
Fund or pro forma Combined Fund (in addition to those noted above for each pro
forma Combined Fund)
PILOT GROWTH AND INCOME FUND
- ---------------------------------
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF
CLASS OWNED CLASS OWNED
OF OF PERCENTAGE OF
COMBINED FUND COMBINED FUND CLASS OWNED
CLASS AND PERCENTAGE OF (PRO FORMA -- (PRO FORMA -- OF
AMOUNT OF CLASS OWNED REORG. WITH REORG. WITH COMBINED FUND
SHARES OWNED AS OF JUNE VALUE STOCK STOCK (PRO FORMA --
AND TYPE OF 28, APPRECIATION APPRECIATION REORG. WITH
NAME AND ADDRESS OWNERSHIP 1996 FUND) FUND BOTH FUNDS)
- ------------------------- ----------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
CNOM & Co c/o 10,050,779,476 72.2% 68.1% 39.1% 36.1%
Boatmen's Trust Co. Pilot Class
P.O. Box 409-F (record)
St. Louis, Missouri
63150-0409
</TABLE>
PILOT SHORT-TERM DIVERSIFIED ASSETS FUND
- --------------------------------------------
<TABLE>
<CAPTION>
CLASS AND
AMOUNT OF PERCENTAGE OF PERCENTAGE OF
SHARES OWNED CLASS OWNED CLASS OWNED OF
AND TYPE OF AS OF JUNE 28, COMBINED FUND
NAME AND ADDRESS OWNERSHIP 1995 (PRO FORMA)
- -------------------------------------------- ----------------- ------------------- -------------------
<S> <C> <C> <C>
CNOM & Co c/o 1,126,130,624 79.2% 59.4%
Boatmen's Trust Co. Pilot Class
100 N Broadway (record)
St. Louis, Missouri 63102
</TABLE>
Nature of Ownership. Except with respect to certain defined benefit plans
sponsored by Boatmen's, Bank IV and their affiliates, (a) none of Boatmen's,
Bank IV or any of their affiliates has any economic interest in any of the
shares held of record by them and (b) all such shares are held by them for the
benefit of others in a trust, agency or other fiduciary or representative
capacity.
APPRAISAL RIGHTS. Shareholders are not entitled to any rights of share
appraisal under Funds IV Trust's Agreement or under the laws of the State of
Delaware in connection with a Reorganization. Shareholders have, however, the
right to redeem their Reorganizing Fund shares at net asset value until the
applicable Reorganization transaction with respect to their Fund, and thereafter
former Funds IV shareholders may redeem the Acquiring Fund shares acquired by
them in the Reorganization at net asset value as in effect from time to time.
QUORUM. Shareholders of each Reorganizing Fund will vote separately to
approve or reject the Reorganization with respect to it and its corresponding
Acquiring Fund. The vote of the shareholders of each Acquiring Fund is not being
solicited because their approval or consent is not necessary for the
Reorganization
33
<PAGE> 34
to be consummated with respect to an Acquiring Fund. Each share of each
Reorganizing Fund is entitled to one vote and each fractional share thereof is
entitled to a fractional vote, on each matter submitted to a vote of its
shareholders of their fund at the Meeting; no shares have cumulative voting
rights. Shares held by two or more persons (whether joint tenants,
co-fiduciaries or otherwise) will be voted as follows unless a written
instrument or court order providing to the contrary has been filed with the
Secretary of Funds IV Trust: (1) if only one votes, his or her vote will bind
all; (2) if more than one votes, the vote of the majority will bind all; and (3)
if more than one votes and the vote is evenly divided, the shares will be voted
in accordance with the determination of a majority of such persons and any
person appointed to act by a court of competent jurisdiction, or in the absence
of such appointment, the vote will be cast proportionately.
Shares represented by duly appointed proxies in the form included with this
Combined Proxy Statement/Prospectus will be voted in accordance with the
specifications made. If no specification is made, shares will be voted in
accordance with the recommendations of the Trustees of Funds IV Trust. Proxies
may be revoked at any time before they are voted by a written revocation
received by the Secretary of Funds IV Trust, by properly executing a later-dated
proxy or by attending the Meeting and voting in person. Funds IV Trust will
request broker-dealer firms, custodians, nominees and fiduciaries to forward
proxy material to the beneficial owners of the shares of record held by such
persons.
Approval of each Reorganization requires, with respect to the Reorganizing
Fund, the affirmative vote of (i) 67% or more of the shares of the fund present
at the Meeting or represented by proxy, if holders of more than 50% of the
shares of the fund outstanding on the Record Date are present, in person or by
proxy, or (ii) more than 50% of the outstanding shares of the fund on the Record
Date, whichever is less. If any other business comes before the Meeting, the
persons named as proxies intend to take such actions as they consider to be in
the best interests of the shareholders of each Reorganizing Fund.
A quorum for the transaction of business at the Meeting is constituted with
respect to a Reorganizing Fund by the presence in person or by proxy of the
holders of not less than one-third of the outstanding shares of such fund
entitled to vote at the Meeting. If, by the time scheduled for the Meeting, a
quorum of shareholders of a Reorganizing Fund is not present or if a quorum of a
Fund's shareholders is present but sufficient votes in favor of the
Reorganization are not received, the persons named as proxies may propose one or
more adjournments of the Meeting with respect to that fund to permit further
solicitation of proxies from shareholders. Any such adjournment will require the
affirmative vote of a majority of the shares of the fund with respect to which
the Meeting is being adjourned present in person or represented by proxy at the
session of the Meeting to be adjourned. The persons named as proxies will vote
in favor of any such adjournment if they determine that such adjournment and
additional solicitation are reasonable and in the interests of the Reorganizing
Fund's shareholders. Notice of adjournment of the Meeting with respect to a Fund
to another time and place need not be given, if the time and place are announced
at the Meeting being adjourned and reasonable notice is given to persons present
at the Meeting and the adjourned Meeting with respect to the fund is held within
a reasonable time after the date set for the original Meeting.
In tallying shareholder votes, abstentions and broker non-votes (i.e.,
proxies sent in by brokers and other nominees which cannot be voted on a
proposal because instructions have not been received from the beneficial owners)
will be counted for purposes of determining whether a quorum is present for the
purposes of convening the Meeting. If a proposal must be approved by a
percentage of "votes cast" on the proposal, abstentions and broker non-votes
will not be counted as "votes cast" on the proposal and will have no effect on
the result of the vote. If a proposal must be approved by (i) a percentage of
voting securities present at the Meeting, or (ii) a majority of the shares
issued and outstanding (i.e. the Reorganization), abstentions and broker
non-votes will be considered to be both present and issued and outstanding and,
as a result, will have the effect of as votes against such proposal.
If the accompanying form of proxy is properly executed and returned in time
to be voted at the Meeting, the shares covered thereby will be voted in
accordance with the instructions marked thereon by the shareholder. Executed
proxies that are unmarked will be voted FOR each proposal submitted to a vote of
the shareholders.
34
<PAGE> 35
ADDITIONAL INFORMATION
Information about The Pilot Funds is included in the Prospectuses
accompanying this Combined Proxy Statement/Prospectus. Additional information
about these Funds is included in their Statements of Additional Information
dated May 10, 1996, as supplemented August 5, 1996 for Pilot Growth Fund and
Pilot Diversified Bond Income Fund, dated December 29, 1995 for Pilot Growth and
Income Fund and Pilot Short-Term Diversified Assets Fund which have been filed
with the SEC. The financial statements for Pilot Growth and Income Fund and
Pilot Short-Term Diversified Assets Fund for the year ended August 31, 1995 are
incorporated by reference in the Funds' Statements of Additional Information;
the Funds' unaudited financial statements for the six month period ended
February 29, 1996 are incorporated by reference in the Statement of Additional
Information for this Combined Proxy Statement/Prospectus. Copies of the
Statements of Additional Information and financial statements may be obtained
without charge by writing to Pilot Funds Distributors, Inc., 3435 Stelzer Road,
Columbus, Ohio 43219, or by calling The Pilot Funds at 1-800-717-4568. The Pilot
Funds are subject to the informational requirements of the Securities Exchange
Act of 1934 and the 1940 Act, as applicable, and, in accordance with such
requirements, file proxy materials, reports and other information with the SEC.
These materials can be inspected and copied at the Public Reference Facilities
maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the offices of The Pilot Funds listed above and at the SEC's Regional Offices at
7 World Trade Center, Suite 1300, New York, New York 10048 and 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can also be
obtained from the Public Reference Branch, Office of Consumer Affairs and
Information Services, Securities and Exchange Commission, Washington, D.C.
20549, at prescribed rates.
Information about Funds IV Trust is incorporated herein by reference from
its Prospectus and Combined Statement of Additional Information, each dated
January 30, 1996. The financial statements for the Reorganizing Funds for the
period ended June 30, 1995 is incorporated by reference in the Funds' Statement
of Additional Information; the Funds' unaudited financial statements for the six
month period ended December 31, 1995 are incorporated by reference into the
Statement of Additional Information to this Combined Proxy Statement/Prospectus.
Copies of the Reorganizing Funds' Prospectus, Statement of Additional
Information, and financial statements may be obtained without charge by writing
or calling Funds IV at the address and telephone number shown on the cover page
of this Combined Proxy Statement/Prospectus. Reports and other information filed
by Funds IV can be inspected and copied at the Public Reference Facilities
maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, and
copies of such material can be obtained from the Public Reference Branch, office
of Consumer Affairs and Information Services, Securities and Exchange
Commission, Washington, D.C. 20549, at prescribed rates.
FINANCIAL HIGHLIGHTS
FUNDS IV FINANCIAL HIGHLIGHTS. The tables set forth below present
financial information for the Service Shares of the Aggressive Stock
Appreciation Fund, Value Stock Appreciation Fund, Stock Appreciation Fund, Bond
Income Fund, Intermediate Bond Income Fund, and Cash Reserve Money Market Fund.
This information is derived from the Funds IV Trust unaudited financial
statements for the six-month period ended December 31, 1995. The data should be
read in conjunction with the unaudited financial statements and related notes,
which are included in the Statement of Additional Information related to this
Combined Proxy Statement/Prospectus. The financial highlights for Funds IV Trust
for prior periods are contained in Funds IV Trust's Prospectus dated January 30,
1996, and the financial statements for the Funds IV Trust for prior periods are
contained in Funds IV's Annual Report to Shareholders and are incorporated by
reference into Funds IV Trust's Combined Statement of Additional Information
dated January 30, 1996, which Prospectus and Combined Statement of Additional
Information are incorporated herein by reference.
35
<PAGE> 36
AGGRESSIVE STOCK APPRECIATION FUND
FUNDS IV TRUST
FINANCIAL HIGHLIGHTS (UNAUDITED)
For a share of beneficial interest outstanding throughout each period
<TABLE>
<CAPTION>
SIX MONTHS ENDED PERIOD ENDED
DECEMBER 31, 1995 JUNE 30, 1995*
------------------- -------------------
SERVICE PREMIUM SERVICE PREMIUM
CLASS CLASS CLASS CLASS
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.............. $ 10.87 $10.87 $ 10.00 $10.00
------ ----- ------ -----
Income from Investment Operations:
Net investment income........................... 0.02 0.02 0.10 0.10
Net realized and unrealized gain on
securities................................... 0.94 0.94 0.87 0.87
------ ----- ------ -----
Total from Investment Operations................ 0.96 0.96 0.97 0.97
------ ----- ------ -----
Less Distributions From:
Net investment income........................... (0.02) (0.02 ) (0.10) (0.10 )
Net realized capital gains...................... (0.14) (0.14 ) -- --
------ ----- ------ -----
Total Distributions............................. (0.16) (0.16 ) (0.10) (0.10 )
------ ----- ------ -----
Net Asset Value, End of Period.................... $ 11.67 $11.67 $ 10.87 $10.87
====== ===== ====== =====
Total Return**.................................... 8.89% 8.89% 9.81% 9.81%
Ratios/Supplemental Data:
Net Assets, End of Period (in thousands)........ $55,939 $ 6 $44,205 $ 6
Ratios of Net Expenses to Average Net Assets+... 1.19% 1.19% 1.23% 1.23%
Ratios of Expenses Before Effect of Waivers+.... 1.19% 1.69% 1.23% 1.73%
Ratios of Net Investment Income to
Average Net Assets+.......................... 0.25% 0.25% 1.27% 1.27%
Portfolio Turnover Rate......................... 42.91% 42.91% 72.11% 72.11%
</TABLE>
- ---------------
* Fund commenced operations on August 26, 1994.
** Total return not annualized.
+ Annualized.
36
<PAGE> 37
VALUE STOCK APPRECIATION FUND
FUNDS IV TRUST
FINANCIAL HIGHLIGHTS (UNAUDITED)
For a share of beneficial interest outstanding throughout each period
<TABLE>
<CAPTION>
SIX MONTHS ENDED PERIOD ENDED
DECEMBER 31, 1995 JUNE 30, 1995*
------------------- -------------------
SERVICE PREMIUM SERVICE PREMIUM
CLASS CLASS CLASS CLASS
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.............. $ 10.93 $10.93 $ 10.00 $10.00
------ ----- ------ -----
Income from Investment Operations:
Net investment income........................... 0.13 0.13 0.10 0.10
Net realized and unrealized gain on
securities................................... 1.25 1.25 0.93 0.93
------ ----- ------ -----
Total from Investment Operations................ 1.38 1.38 1.03 1.03
------ ----- ------ -----
Less Distributions From:
Net investment income........................... (0.13) (0.13 ) (0.10) (0.10 )
Net realized capital gains...................... (0.17) (0.17 ) -- --
------ ----- ------ -----
Total Distributions............................. (0.30) (0.30 ) (0.10) (0.10 )
------ ----- ------ -----
Net Asset Value, End of Period.................... $ 12.01 $12.01 $ 10.93 $10.93
====== ===== ====== =====
Total Return**.................................... 12.64% 12.64% 10.32% 10.32%
Ratios/Supplemental Data:
Net Assets, End of Period (in thousands)........ $26,100 -- $20,690 --
Ratios of Net Expenses to Average Net Assets+... 1.15% 1.15% 1.18% 1.18%
Ratios of Expenses Before Effect of Waivers+.... 1.24% 1.74% 1.33% 1.83%
Ratios of Net Investment Income to
Average Net Assets+.......................... 2.17% 2.17% 2.52% 2.52%
Portfolio Turnover Rate......................... 19.38% 19.38% 16.74% 16.74%
</TABLE>
- ---------------
* Fund commenced operations on February 10, 1995.
** Total return not annualized.
+ Annualized.
37
<PAGE> 38
STOCK APPRECIATION FUND
FUNDS IV TRUST
FINANCIAL HIGHLIGHTS (UNAUDITED)
For a share of beneficial interest outstanding throughout each period
<TABLE>
<CAPTION>
SIX MONTHS ENDED PERIOD ENDED
DECEMBER 31, 1995 JUNE 30, 1995*
-------------------- --------------------
SERVICE PREMIUM SERVICE PREMIUM
CLASS CLASS CLASS CLASS
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period............ $ 11.05 $11.05 $ 10.00 $10.00
------- ----- ------- -----
Income from Investment Operations:
Net investment income......................... 0.07 0.07 0.16 0.16
Net realized and unrealized gain on
securities................................. 1.27 1.27 1.05 1.05
------- ----- ------- -----
Total from Investment Operations.............. 1.34 1.34 1.21 1.21
------- ----- ------- -----
Less Distributions From:
Net investment income......................... (0.07) (0.07 ) (0.16) (0.16 )
Net realized capital gains.................... (0.06) (0.16 ) -- --
------- ----- ------- -----
Total Distributions........................... (0.13) (0.13 ) (0.16) (0.16 )
------- ----- ------- -----
Net Asset Value, End of Period.................. $ 12.26 $12.26 $ 11.05 $11.05
======= ===== ======= =====
Total Return**.................................. 12.11% 12.11% 12.19% 12.19%
Ratios/Supplemental Data:
Net Assets, End of Period (in thousands)...... $155,768 $ 7 $131,239 $ 6
Ratios of Net Expenses to Average Net
Assets+.................................... 0.98% 0.98% 1.00% 1.00%
Ratios of Expenses Before Effect of
Waivers+................................... 0.98% 1.48% 1.02% 1.52%
Ratios of Net Investment Income to
Average Net Assets+........................ 1.12% 1.12% 1.89% 1.89%
Portfolio Turnover Rate....................... 35.63% 35.63% 46.37% 46.37%
</TABLE>
- ---------------
* Fund commenced operations on August 26, 1994.
** Total return not annualized.
+ Annualized.
38
<PAGE> 39
BOND INCOME FUND
FUNDS IV TRUST
FINANCIAL HIGHLIGHTS (UNAUDITED)
For a share of beneficial interest outstanding throughout each period
<TABLE>
<CAPTION>
SIX MONTHS ENDED PERIOD ENDED
DECEMBER 31, 1995 JUNE 30, 1995*
------------------- -------------------
SERVICE PREMIUM SERVICE PREMIUM
CLASS CLASS CLASS CLASS
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................ $ 10.35 $10.35 $ 10.00 $10.00
------- ------ ------- ------
Income from Investment Operations:
New investment income............................. 0.29 0.29 0.52 0.52
Net realized and unrealized gain on securities.... 0.40 0.40 0.35 0.35
------- ------ ------- ------
Total from Investment Operations.................. 0.69 0.69 0.87 0.87
------- ------ ------- ------
Less Distributions:
Dividends from net investment income.............. (0.29) (0.29 ) (0.52) (0.52 )
------- ------ ------- ------
Net Asset Value, End of Period...................... $ 10.75 $10.75 $ 10.35 $10.35
======= ====== ======= ======
Total Return**...................................... 6.80% 6.80 % 9.05% 9.05 %
Ratios/Supplemental Data:
Net Assets, End of Period (in thousands).......... $29,760 $ 6 $12,977 $ 6
Ratios of Net Expenses to Average Net Assets+..... 0.91% 0.91 % 0.96% 0.96 %
Ratios of Expenses Before Effect of Waiverst+..... 1.00% 1.50 % 1.11% 1.61 %
Ratios of Net Investment Income to
Average Net Assets+............................ 5.51% 5.51 % 6.21% 6.21 %
Portfolio Turnover Rate........................... 76.67% 76.67 % 149.36% 149.36 %
</TABLE>
- ---------------
* Fund commenced operations on August 26, 1994.
** Total return not annualized.
+ Annualized.
39
<PAGE> 40
INTERMEDIATE BOND INCOME FUND
FUNDS IV TRUST
FINANCIAL HIGHLIGHTS (UNAUDITED)
For a share of beneficial interest outstanding throughout each period
<TABLE>
<CAPTION>
SIX MONTHS ENDED PERIOD ENDED
DECEMBER 31, 1995 JUNE 30, 1995*
-------------------- --------------------
SERVICE PREMIUM SERVICE PREMIUM
CLASS CLASS CLASS CLASS
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.............. $ 10.19 $10.19 $ 10.00 $ 10.00
-------- ------ -------- ------
Income from Investment Operations:
New investment income........................... 0.30 0.30 0.51 0.51
Net realized and unrealized gains on
securities................................... 0.20 0.20 0.19 0.19
-------- ------ -------- ------
Total from Investment Operations................ 0.50 0.50 0.70 0.70
-------- ------ -------- ------
Less Distributions:
Dividends from net investment income............ (0.30) (0.30 ) (0.51) (0.51)
-------- ------ -------- ------
Net Asset Value, End of Period.................... $ 10.39 $10.39 $ 10.19 $ 10.19
======== ====== ======== ======
Total Return**.................................... 5.02% 5.02 % 7.26% 7.26%
Ratios/Supplemental Data:
Net Assets, End of Period (in thousands)........ $130,365 $ 6 $129,317 $ 6
Ratios of Net Expenses to Average Net Assets+... 0.75% 0.75 % 0.75% 0.75%
Ratios of Expenses Before Effect of Waivers+.... 0.75% 1.25 % 0.77% 1.27%
Ratios of Net Investment Income to
Average Net Assets+.......................... 5.89% 5.89 % 6.10% 6.10%
Portfolio Turnover Rate......................... 71.77% 71.77 % 107.54% 107.54%
</TABLE>
- ---------------
* Fund commenced operations on August 26, 1994.
** Total return not annualized.
+ Annualized.
40
<PAGE> 41
CASH RESERVE MONEY MARKET FUND
FUNDS IV TRUST
FINANCIAL HIGHLIGHTS (UNAUDITED)
For a share of beneficial interest outstanding throughout each period
<TABLE>
<CAPTION>
SIX MONTHS ENDED PERIOD ENDED
DECEMBER 31, 1995 JUNE 30, 1995*
-------------------- --------------------
SERVICE PREMIUM SERVICE PREMIUM
CLASS CLASS CLASS CLASS
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.............. $ 1.00 $1.00 $ 1.00 $1.00
-------- ----- -------- -----
Income from Investment Operations:
Net investment income........................... 0.03 0.03 0.05 0.05
-------- ----- -------- -----
Less Distributions:
Dividends from net investment income............ (0.03) (0.03) (0.05) (0.05)
-------- ----- -------- -----
Net Asset Value, End of Period.................... $ 1.00 $1.00 $ 1.00 $1.00
======== ===== ======== =====
Total Return**.................................... 2.80% 2.80% 4.74% 4.74%
Ratios/Supplemental Data:
Net Assets, End of Period (in thousands)........ $291,797 $ 6 $274,663 $ 6
Ratios of Net Expenses to Average Net Assets+... 0.49% 0.49% 0.50% 0.50%
Ratios of Expenses Before Effect of Waivers+.... 0.49% 0.99% 0.54% 1.04%
Ratios of Net Investment Income to
Average Net Assets+.......................... 5.51% 5.51% 5.40% 5.40%
</TABLE>
- ---------------
* Fund commenced operations on August 19, 1994.
** Total return not annualized.
+ Annualized.
41
<PAGE> 42
THE PILOT FUNDS' FINANCIAL HIGHLIGHTS. The tables set forth below present
financial information for the Pilot Class of Pilot Growth and Income Fund and
Pilot Short-Term Diversified Assets Fund. This information is derived from The
Pilot Funds' audited financial statements for the six months ended February 29,
1996. The data should be read in conjunction with the audited financial
statements and related notes which are incorporated by reference in the
Statement of Additional Information related to this Combined Proxy
Statement/Prospectus. Financial information for The Pilot Funds for prior
periods (i) is contained in Prospectuses dated December 29, 1995 for Pilot
Growth and Income Fund and Pilot Short-Term Diversified Assets Fund, which
accompany this Combined Proxy Statement/Prospectus and are incorporated herein
by reference, and (ii) is incorporated by reference from the Annual Reports to
Shareholders for Pilot Growth and Income Fund and Pilot Short-Term Diversified
Assets Fund into the Statements of Additional Information dated December 29,
1995 for Pilot Growth and Income Fund and Pilot Short-Term Diversified Assets
Fund, which are incorporated herein by reference. Pilot Growth Fund and Pilot
Diversified Bond Income Fund have not commenced operations as of the date of
this Combined Proxy Statement/Prospectus; accordingly, financial information for
these funds is not included.
THE PILOT FUNDS
FINANCIAL HIGHLIGHTS
PILOT GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
SIX MONTHS ENDED PERIOD ENDED
FEBRUARY 29, 1996 AUGUST 31, 1995
-------------------------------- -------------------------------------
PILOT CLASS A CLASS B PILOT CLASS A CLASS B
SHARES SHARES SHARES SHARES(a) SHARES(b) SHARES(c)
-------- ------- ------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.......... $ 11.59 $11.58 $11.59 $ 10.00 $ 10.44 $ 10.08
-------- ------ ------ -------- --------- ------- --
Investment Activities
Net investment income....................... 0.10 0.09 0.04 0.17 0.09 0.08
Net realized and unrealized gains
from investments.......................... 1.33 1.34 1.34 1.59 1.14 1.51
-------- ------ ------ -------- --------- ------- --
Total from Investment Activities............ 1.43 1.43 1.38 1.76 1.23 1.59
Distributions
From net investment income.................. (0.10) (0.09 ) (0.04 ) (0.17 ) (0.09) (0.08)
From net realized gains..................... (0.28) (0.28 ) (0.28 ) -- -- --
-------- ------ ------ -------- --------- ------- --
Total distributions......................... (0.38) (0.37 ) (0.32 ) (0.17 ) (0.09) (0.08)
-------- ------ ------ -------- --------- ------- --
Net Asset Value, End of Period................ $ 12.64 $12.64 $12.65 $ 11.59 $ 11.58 $ 11.59
======== ====== ====== ======== ========= =========
Total Return(d)............................... 12.44% 12.38% 11.97% 17.72% 11.78% 15.85%
Ratios/Supplemental Data:
Net Assets at end of period (000)........... $156,538 $1,763 $1,978 $109,423 $697 $661
Ratio of expense to average net assets...... 0.74%(e) 0.99%(e) 1.74%(e) 0.75%(e) 1.00%(e) 1.75%(e)
Ratio of net investment income to
average net assets........................ 1.70%(e) 1.43%(e) 0.66%(e) 1.98%(e) 1.65%(e) 0.94%(e)
Ratio of expenses to average net assets
assuming no waiver or expense
reimbursement............................. 1.03%(e) 1.27%(e) 2.02%(e) 1.15%(e) 1.40%(e) 2.15%(e)
Ratio of net investment income to average
net assets assuming no waiver or expense
reimbursement............................. 1.41%(e) 1.15%(e) 0.38%(e) 1.58%(e) 1.25%(e) 0.54%(e)
Portfolio turnover rate(f).................. 26.13% 26.13% 26.13% 28.00% 28.00% 28.00%
</TABLE>
- ---------------
(a) Pilot Shares commenced activity November 7, 1994.
(b) Class A Shares commenced activity February 7, 1995.
(c) Class B Shares commenced activity November 11, 1994.
(d) Total return excludes sales charge of Class A Shares and Class B Shares,
would have been lower had certain expenses not been reduced during the
periods presented, and is not annualized.
(e) Annualized.
(f) Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing among the classes of shares issued.
42
<PAGE> 43
PILOT SHORT-TERM DIVERSIFIED ASSETS FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS ENDED FEBRUARY 29, 1996 YEAR ENDED AUGUST 31, 1995
----------------------------------------- --------------------------------------
PILOT ADMINISTRATION INVESTOR PILOT ADMINISTRATION INVESTOR
SHARES SHARES SHARES SHARES SHARES SHARES
----------- -------------- -------- ---------- -------------- --------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- -------- -------- ---------- -------- --------
Investment Activities
Net investment income......... 0.0274 0.0262 0.0249 0.0554 0.0529 0.0504
Net realized gains from
investment transactions..... -- -- -- -- -- --
---------- -------- -------- ---------- -------- --------
Total from Investment
Activities............. 0.0274 0.0262 0.0249 0.0554 0.0529 0.0504
Distributions to shareholders... (0.0274) (0.0262) (0.0249) (0.0554) (0.0529) (0.0504)
---------- -------- -------- ---------- -------- --------
Net Asset Value, End of
Period........................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ======== ======== ========== ======== ========
Total Return(a)................. 2.78% 2.65% 2.52% 5.68% 5.42% 5.15%
Ratios/Supplemental Data:
Net Assets at end of period
(000)....................... $ 1,276,403 $235,433 $ 38,330 $1,056,624 $231,688 $ 33,948
Ratio of expenses to average
net assets(b)............... 0.26%(c) 0.51%(c) 0.76%(c) 0.23% 0.48% 0.73%
Ratio of net investment income
to average net assets(b).... 5.51%(c) 5.26%(c) 5.01%(c) 5.56% 5.22% 5.00%
Ratio of expenses to average
net assets assuming no
waiver or expense
reimbursement(b)............ 0.30%(c) 0.55%(c) 0.80%(c) 0.24% 0.49% 0.74%
Ratio of net investment income
to average net assets
assuming no waiver or
expense reimbursement(b).... 5.47%(c) 5.22%(c) 4.97%(c) 5.55% 5.21% 4.99%
</TABLE>
- ---------------
(a) Total return would have been lower had certain expenses not been reduced
during the periods presented and is not annualized.
(b) Does not reflect the fee which may be charged by Boatmen's directly to its
customers' accounts at an annual rate not to exceed 0.25% of the average
daily balance of Pilot Shares in the customers' account.
(c) Annualized.
OTHER BUSINESS
The Board of Trustees of Funds IV Trust knows of no other business to be
brought before the Meeting. However, if any other matters come before the
Meeting, proxies which do not contain specific restrictions to the contrary will
be voted on such matters in accordance with the judgment of the persons named in
the enclosed form of proxy.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to Funds IV Trust in writing at the
address on the cover page of this Combined Proxy Statement/Prospectus or by
telephoning 1-800-557-3768.
* * *
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING ARE REQUESTED
TO DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE. NO
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
43
<PAGE> 44
APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this 21st day of May, 1996, by and between FUNDS IV Trust, a Delaware business
trust, with its principal place of business at 237 Park Avenue, New York, New
York 10017 ("Funds IV Trust"), and The Pilot Funds, a Massachusetts business
trust, with its principal place of business at 3435 Stelzer Road, Columbus, Ohio
43219 ("The Pilot Funds").
The Pilot Funds consists of twelve separate series, four of which are the
subject of this Agreement and are set forth in the table below (hereinafter,
collectively the "Acquiring Funds" or individually the "Acquiring Fund"). Funds
IV Trust consists of eleven separate series, six of which are the subject of
this Agreement and are set forth in the table below (hereinafter, collectively
the "Acquired Funds" or individually the "Acquired Fund").
This Agreement governs the proposed issuance of shares of a specific
Acquiring Fund in exchange for all of the assets of the specific Acquired Fund
set forth opposite the name of that Acquiring Fund in the table below.
<TABLE>
<CAPTION>
ACQUIRING FUNDS OF THE PILOT FUNDS ACQUIRED FUNDS OF FUNDS IV TRUST
- -------------------------------------------- --------------------------------------------
<S> <C>
Pilot Growth Fund Aggressive Stock Appreciation Fund
Pilot Growth and Income Fund Stock Appreciation Fund
Pilot Growth and Income Fund Value Stock Appreciation Fund
Pilot Short-Term Diversified Assets Fund Cash Reserve Money Market Fund
Pilot Diversified Bond Income Fund Bond Income Fund
Pilot Diversified Bond Income Fund Intermediate Bond Income Fund
</TABLE>
This Agreement is intended to be and is adopted as a plan of reorganization
and liquidation within the meaning of Section 368 (a)(1)(C) of the United States
Internal Revenue Code of 1986, as amended (the "Code"). Each reorganization (a
"Reorganization") will consist of the transfer of all or substantially all of
the assets of an Acquired Fund in exchange solely for shares of beneficial
interest, $.001 par value per share, of the Pilot Shares class (the "Pilot
Class") of the corresponding Acquiring Fund (the "Acquiring Funds' Shares" or an
"Acquiring Fund's Shares") and the assumption by the Acquiring Fund of certain
liabilities of the corresponding Acquired Fund and the distribution, after the
closing date provided in paragraph 3.1 (the "Closing Date"), of the Acquiring
Funds' Shares to the shareholders of the corresponding Acquired Funds in
liquidation of the Acquired Funds as provided herein, all upon the terms and
conditions hereinafter set forth in this Agreement. Shareholders of an Acquired
Fund's Service Class shall receive only shares of the corresponding Acquiring
Fund's Pilot Class.
WHEREAS, The Pilot Funds and Funds IV Trust are open-end, registered
investment companies of the management type and each Acquired Fund owns
securities which generally are assets of the character in which the
corresponding Acquiring Fund is permitted to invest;
WHEREAS, both The Pilot Funds and Funds IV Trust are authorized to issue
shares of beneficial interest;
WHEREAS, the Board of Trustees of The Pilot Funds has determined that the
exchange of all or substantially all of the assets of each Acquired Fund for the
corresponding Acquiring Fund's Shares and the assumption of the liabilities of
the corresponding Acquired Fund is in the best interests of each Acquiring
Fund's shareholders and that the interests of the existing shareholders of each
Acquiring Fund would not be diluted as a result of this transaction; and
WHEREAS, the Board of Trustees of Funds IV Trust has determined that the
exchange of all of the assets and certain of the liabilities of each Acquired
Fund for the corresponding Acquiring Fund's Shares and the assumption of such
liabilities by the corresponding Acquiring Fund is in the best interests of each
A-1
<PAGE> 45
Acquired Fund's shareholders and that the interests of the existing shareholders
of each Acquired Fund would not be diluted as a result of this transaction.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. TRANSFER OF ASSETS, ASSUMPTION OF LIABILITIES AND TERMINATION
1.1 Subject to the requisite approval of the shareholders of each Acquired
Fund and to the other terms and conditions herein set forth and on the basis of
the representations and warranties contained herein, Funds IV Trust shall
transfer to The Pilot Funds, and The Pilot Funds shall acquire from Funds IV
Trust, at the Closing Date, all or substantially all of the Assets (as such term
is hereinafter defined) (i) of the Aggressive Stock Appreciation Fund in
exchange for that number of Shares of Pilot Growth Fund determined in accordance
with Section 2.1 hereof, and the assumption by the Pilot Growth Fund of the
Liabilities (as such term is hereinafter defined) of the Aggressive Stock
Appreciation Fund, (ii) of the Stock Appreciation Fund in exchange for that
number of Shares of Pilot Growth and Income Fund determined in accordance with
Section 2.1 hereof, and the assumption by the Pilot Growth and Income Fund of
the Liabilities of the Stock Appreciation Fund, (iii) of the Value Stock
Appreciation Fund in exchange for that number of Shares of Pilot Growth and
Income Fund determined in accordance with Section 2.1 hereof, and the assumption
by Pilot Growth and Income Fund of the Liabilities of Value Stock Appreciation,
(iv) of the Cash Reserve Money Market Fund in exchange for that number of Shares
of Pilot Short-Term Diversified Assets Fund determined in accordance with
Section 2.1 hereof, and the assumption by Pilot Short-Term Diversified Assets
Fund of the Liabilities of the Cash Reserve Money Market Fund, (v) of the Bond
Income Fund in exchange for that number of Shares of Pilot Diversified Bond
Income determined in accordance with Section 2.1 hereof, and the assumption by
Pilot Diversified Bond Income Fund of the Liabilities of the Bond Income Fund,
and (vi) of the Intermediate Bond Income Fund in exchange for that number of
Shares of Pilot Diversified Bond Income determined in accordance with Section
2.1 hereof, and the assumption by Pilot Diversified Bond Income Fund of the
Liabilities of the Intermediate Bond Income Fund. Such transactions shall take
place at the closing provided for in paragraph 3.1 (the "Closing").
Funds IV Trust will (i) pay or cause to be paid to The Pilot Funds on
behalf of the appropriate Acquiring Fund any interest received on or after the
Closing Date with respect to the Assets of each Acquired Fund and (ii) transfer
to The Pilot Funds on behalf of the appropriate Acquiring Fund any
distributions, rights, stock dividends or other property received by Funds IV
Trust after the Closing Date as distributions on or with respect to the Assets
of each Acquired Fund. Any such interest, distributions, rights, stock dividends
or other property so paid or transferred, or received directly by The Pilot
Funds, shall be allocated by The Pilot Funds to the account of the Acquiring
Fund that acquired the Assets to which such property relates.
1.2 The Assets of the Acquired Funds to be acquired by the Acquiring Funds
(the "Assets") shall consist of all property, including without limitation, all
cash, securities, commodities and futures interests and dividends or interest
receivables which are owned by the Acquired Funds on the Closing Date, but shall
not include corporate books, records or minutes of the Acquired Funds. Funds IV
Trust has provided The Pilot Funds with a list of all the Assets of each of the
Acquired Funds as of the date of execution of this Agreement.
1.3 The Acquired Funds will endeavor to discharge all of their known
liabilities and obligations prior to the Closing Date. Each Acquiring Fund shall
assume all liabilities, expenses, costs, charges and reserves reflected on
unaudited Statements of Assets and Liabilities of the corresponding Acquired
Funds prepared by Furman Selz LLC ("Furman Selz"), as administrator of the
Acquired Funds, as of the Valuation Date (as defined in paragraph 2.1), in
accordance with generally accepted accounting principles consistently applied
from the prior audited period. The Acquiring Funds shall assume only those
liabilities of the Acquired Funds reflected in those unaudited statements of
assets and liabilities and shall not assume any other liabilities, whether
absolute or contingent (the "Liabilities").
1.4 As provided in paragraph 3.4, as soon after the Closing Date as is
practicable (the "Liquidation Date"), Funds IV Trust will effect the liquidation
of each Acquired Fund in the manner provided in its Trust Instrument and in
accordance with applicable law, and on and after the Closing Date it shall not
conduct any
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business on behalf of the Acquired Funds except in connection with their
liquidation and termination. Each Acquired Fund shall distribute pro rata to its
shareholders of record determined as of the close of business on the Closing
Date (the "Acquired Fund's Shareholders") the Acquiring Fund's Shares received
by each Acquired Fund pursuant to paragraph 1.1. Shareholders of an Acquired
Fund's Service Class shall receive only shares of the corresponding Acquiring
Fund's Pilot Class. As of the date hereof all of the outstanding shares of
beneficial interest in each Acquired Fund's Premium Class are held beneficially
and of record by Furman Selz and as of the Closing Date there will be no
outstanding shares of beneficial interest in any Acquired Fund's Premium Class.
Such liquidation and distribution will be accomplished by the transfer of the
Acquiring Fund's Shares then credited to the account of such Acquired Fund on
the books of the Acquiring Fund to open accounts on the share records of the
Acquiring Fund in the name of the Acquired Fund's Shareholders and representing
the respective pro rata number and class of the Acquiring Fund's Shares due such
shareholders. All issued and outstanding shares of each Acquired Fund will
simultaneously be canceled on the books of the Acquired Fund, although after the
closing any share certificates representing interests in an Acquired Fund will
be deemed to represent the number of the applicable Acquiring Fund's Shares as
may be determined in accordance with Section 2.3. The Pilot Funds shall not
issue certificates representing the Acquiring Funds' Shares in connection with
such exchange.
1.5 Ownership of each Acquiring Fund's Shares will be shown on the books of
each Acquiring Fund's transfer agent. Shares of each Acquiring Fund will be
issued in the manner described in such Acquiring Funds' current prospectus and
statement of additional information.
1.6 Any transfer taxes payable upon issuance of each Acquiring Fund's
Shares in a name other than the registered holder of the Acquired Fund's shares
on the books of the Acquired Fund as of that time shall, as a condition of such
issuance and transfer, be paid by the person to whom such Acquiring Fund's
Shares are to be issued and transferred.
1.7 Any reporting responsibility of the Acquired Funds is and shall remain
the responsibility of Funds IV Trust up to and including the Closing Date and
such later dates on which Funds IV Trust is dissolved and deregistered.
2. VALUATION
2.1 The value of the Assets and Liabilities of each Acquired Fund shall be
the value of such assets, less liabilities, computed on the Closing Date, using
the valuation procedures (including applicable times) set forth in The Pilot
Funds' Trust Agreement and then current prospectus or statement of additional
information applicable to the Pilot Class of the applicable Acquiring Fund.
2.2 The net asset value of each Acquiring Fund's Shares shall be the net
asset value per share of the Pilot Class computed on the Closing Date, using the
valuation procedures (including applicable times) set forth in The Pilot Funds'
Trust Agreement and then current prospectus or statement of additional
information applicable to the Pilot Class of such Acquiring Fund.
2.3 The number of an Acquiring Fund's Shares to be issued (including
fractional shares, if any) in exchange for the net assets of each Acquired Fund
and the assumption of its liabilities shall be determined by dividing the value
of the net assets of the Acquired Fund determined by using the same valuation
procedures referred to in paragraph 2.1 by the net asset value of an Acquiring
Fund's Share determined in accordance with paragraph 2.2.
2.4 All computations of value shall be made by BISYS Fund Services, Inc. in
accordance with its regular practices as custodian for The Pilot Funds.
3. CLOSING AND CLOSING DATE
3.1. The Closing Date shall be the next Friday that is a full business day
following satisfaction of all of the conditions set forth in Section 6, 7 and 8
of this Agreement (other than those conditions which may by their terms be
satisfied only at the Closing), or such later date as the parties may agree in
writing. All acts taking place at the Closing shall be deemed to take place
simultaneously on the Closing Date at 3 p.m.
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(Central time) for each Reorganization, except that all acts relating to or in
connection with the Reorganization of Cash Reserve Money Market Fund and Pilot
Short-Term Diversified Assets Fund shall be deemed to take place simultaneously
on the Closing Date at 2 p.m. (Central time), all unless otherwise provided. The
Closing shall be held at such time on the Closing Date at the offices of
Goodwin, Procter & Hoar LLP in Boston, Massachusetts or at such other time(s)
and/or place as the parties may agree.
3.2 Bank IV, National Association, as custodian for Funds IV Trust (the
"Custodian"), shall deliver at the Closing a certificate of an authorized
officer stating that: (a) each Acquired Fund's portfolio securities, cash and
any other assets shall have been presented for examination to the corresponding
Acquiring Fund prior to the Closing Date and shall have been delivered in proper
form to the corresponding Acquiring Fund on the Closing Date and (b) all
necessary taxes including all applicable federal and state stock transfer
stamps, if any, shall have been paid, or provision for payment shall have been
made, in conjunction with the delivery of portfolio securities.
3.3 In the event that on the Closing Date (a) the New York Stock Exchange
or another primary trading market for portfolio securities of an Acquiring Fund
or an Acquired Fund shall be closed to trading or trading thereon shall be
restricted or (b) trading or the reporting of trading on said Exchange or
elsewhere shall be disrupted so that accurate appraisal of the value of the net
assets of an Acquiring Fund or an Acquired Fund is impracticable, the Closing
Date with respect to the Reorganization involving such Acquired Fund or
Acquiring Fund shall be postponed until the first business day after the day
when trading shall have been fully resumed and reporting shall have been
restored.
3.4 Funds IV Trust shall cause Furman Selz, as transfer agent for Funds IV
Trust, to deliver at the Closing a certificate of an authorized officer stating
that its records contain the names and addresses of each Acquired Fund's
Shareholders and the number, class and percentage ownership of outstanding
shares owned by each such shareholder immediately prior to the Closing. The
Pilot Funds shall issue and deliver a confirmation evidencing each Acquiring
Fund's Shares to be credited on the Closing Date to the Secretary of Funds IV
Trust, or provide evidence satisfactory to Funds IV Trust that such Acquiring
Fund's Shares have been credited to each Acquired Fund's accounts on the books
of the relevant Acquiring Fund. At the Closing each party shall deliver to the
other such bills of sale, checks, assignments, share certificates, if any,
receipts or other documents as such other party or its counsel may reasonably
request.
4. REPRESENTATIONS AND WARRANTIES
4.1 Funds IV Trust, on behalf of each of the Acquired Funds, represents and
warrants to The Pilot Funds, on behalf of each of the Acquiring Funds, as
follows:
(a) Funds IV Trust is a voluntary association with transferable shares
of the type commonly referred to as a Delaware business trust, duly
organized, validly existing under the laws of the State of Delaware;
(b) Funds IV Trust is a registered investment company classified as a
management company of the open-end type, and its registration with the
Securities and Exchange Commission (the "Commission") as an investment
company under the 1940 Act is in full force and effect;
(c) The current prospectus and statement of additional information of
Funds IV Trust with respect to each of the Acquired Funds conform in all
material respects to the applicable requirements of the Securities Act of
1933, as amended (the "1933 Act"), and the 1940 Act and the rules and
regulations of the Commission thereunder and do not include any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not materially misleading;
(d) Funds IV Trust is not, and the execution, delivery and performance
of this Agreement will not result, in material violation of its Trust
Instrument or By-Laws, as each may have been amended to the date hereof or
of any agreement, indenture, instrument, contract, lease or other
undertaking with respect to the Acquired Funds to which Funds IV Trust is a
party or by which it or any of its series is bound;
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<PAGE> 48
(e) Neither Funds IV Trust nor any of its series has any material
contracts or other commitments which will be terminated with liability to
Funds IV Trust or any series thereof prior to the Closing Date;
(f) Except as otherwise disclosed in writing to and accepted by The
Pilot Funds, no litigation or administrative proceeding or investigation of
or before any court or governmental body is presently pending or to its
knowledge threatened against Funds IV Trust or any of its series with
respect to an Acquired Fund or any of the Acquired Fund's properties or
assets which if adversely determined would materially and adversely affect
its financial condition or the conduct of its business. Funds IV Trust
knows of no facts which might form the basis for the institution of such
proceedings and is not a party to or subject to the provisions of any
order, decree or judgment of any court or governmental body which
materially or adversely affects its business or its ability to consummate
the transactions herein contemplated;
(g) The Statements of Assets and Liabilities of each of the Acquired
Funds as of June 30, 1995 (collectively, the "1995 Statements") have been
audited by Price Waterhouse LLP, independent public accountants, and are
and will be in accordance with generally accepted accounting principles
consistently applied, and the 1995 Statements (copies of which have been
furnished to The Pilot Funds) fairly and accurately reflect the financial
condition of each Acquired Fund as of such dates, and there are no known
contingent liabilities of the Acquired Funds as of such dates not disclosed
therein;
(h) Since June 30, 1995 there has not been any material adverse change
with respect to the Acquired Funds' financial condition, assets,
liabilities or business other than changes occurring in the ordinary course
of business, or any incurrence by the Acquired Funds of indebtedness
maturing more than one year from the date that such indebtedness was
incurred, provided that for the purposes of this subparagraph (h), a
decline in net asset value per share of any of the Acquired Funds shall not
constitute a material adverse change;
(i) At the Closing Date, all federal and other tax returns and reports
of the Acquired Funds required by law to have been filed by such dates
shall have been filed, and all federal and other taxes shall have been paid
so far as due, or provision shall have been made for the payment thereof
and, to the best of Funds IV Trust's knowledge, no such return is currently
under audit and no assessment has been asserted with respect to such
returns;
(j) For each fiscal year of its operation, each of the Acquired Funds
has met the requirements of Subchapter M of the Code for qualification and
treatment as a regulated investment company;
(k) All issued and outstanding shares of each of the Acquired Funds
are, and at the Closing Date will be, duly and validly issued and
outstanding, fully paid and non-assessable with no personal liability
attaching to the ownership thereof (recognizing that, under Delaware law,
each Acquired Fund's Shareholders could, under certain circumstances, be
held personally liable for obligations of the respective Acquired Fund) by
Funds IV Trust. All of the issued and outstanding shares of each Acquired
Fund will, at the time of Closing, be held by the persons and in the
amounts set forth in the records of the transfer agent as provided in
paragraph 3.4. The Acquired Funds do not have outstanding any options,
warrants or other rights to subscribe for or purchase any of the Acquired
Funds' Shares, nor is there outstanding any security convertible into any
of the Acquired Funds' Shares;
(l) At the Closing Date, Funds IV Trust, on behalf of the Acquired
Funds, will have good and marketable title to the Assets and full right,
power and authority to sell, assign, transfer and deliver such Assets
hereunder and, upon delivery and payment for such Assets, The Pilot Funds,
on behalf of the Acquiring Funds, will acquire good and marketable title
thereto, subject to no restrictions on the full transfer thereof, including
such restrictions as might arise under the 1933 Act, other than as
disclosed to the Acquiring Funds;
(m) The execution, delivery and performance of this Agreement has been
duly authorized as of the date hereof by all necessary action on the part
of Funds IV Trust's Board of Trustees, and, subject to the receipt of any
necessary exemptive relief or no-action assurances requested from the
Commission or its Staff with respect to Section 17(a) and 17(d) of the 1940
Act and Rule 17d-1 thereunder, this
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Agreement will constitute a valid and binding obligation of Funds IV Trust
on behalf of each of the respective Acquired Funds, enforceable in
accordance with its terms, subject as to enforcement to bankruptcy,
insolvency, reorganization, moratorium and other laws relating to or
affecting creditors' fights and to general principles of equity;
(n) The information to be furnished by Funds IV Trust on behalf of the
Acquired Funds for use in no-action requests, applications for orders,
registration statements, proxy materials and other documents which may be
necessary in connection with the transactions contemplated hereby shall be
accurate and complete in all material respects and shall comply in all
material respects with federal securities and other laws and regulations
thereunder applicable thereto;
(o) The proxy statement of Funds IV Trust (the "Proxy Statement") to
be included in the Registration Statement referred to in paragraph 5.7
(only insofar as it relates to Funds IV Trust and the Acquired Funds) will,
on the effective date of the Registration Statement and on the Closing
Date, (i) comply in all material respects with the applicable provisions of
the 1933 Act, the Securities Exchange Act of 1934, as amended (the "1934
Act"), and the 1940 Act and the regulations thereunder, and (ii) not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which such statements were
made, not materially misleading;
(p) Funds IV Trust has no authorized series other than the Acquired
Funds, the Short-Term Treasury Income Fund, the U.S. Treasury Reserve Money
Market Fund, the International Equity Fund, the Kansas Intermediate Tax
Exempt Fund and the U.S. Intermediate Tax Exempt Fund and none of the U.S.
Treasury Reserve Money Market Fund, the International Equity Fund, the
Kansas Intermediate Tax Exempt Fund or the U.S. Intermediate Tax Exempt
Fund has had any operations or has any assets;
(q) The Acquired Funds have no authorized classes other than the
Service Class and the Premium Class and all of the issued and outstanding
shares of the Premium Classes are, as of the date of this Agreement, held
by Furman Selz.
4.2 The Pilot Funds, on behalf of each of the Acquiring Funds,
represents and warrants to Funds IV Trust, on behalf of each of the
Acquired Funds, as follows:
(a) The Pilot Funds is a voluntary association with transferable
shares of the type commonly referred to as a Massachusetts business trust,
duly organized and validly existing under the laws of the Commonwealth of
Massachusetts;
(b) The Pilot Funds is registered as an investment company classified
as a management company of the open-end type, and its registration with the
Commission as an investment company under the 1940 Act is in full force and
effect;
(c) The current prospectus and statement of additional information of
The Pilot Funds with respect to each of the Acquiring Funds conform in all
material respects to the applicable requirements of the 1933 Act and the
1940 Act and the rules and regulations of the Commission thereunder and do
not include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not materially misleading;
(d) The Pilot Funds is not, and the execution, delivery and
performance of this Agreement will not result, in material violation of its
Trust Agreement or By-Laws, as each may have been amended to the date
hereof or of any agreement, indenture, instrument, contract, lease or other
undertaking with respect to the Acquiring Funds to which The Pilot Funds is
a party or by which it is bound;
(e) Except as otherwise disclosed in writing to and accepted by Funds
IV Trust, no litigation or administrative proceeding or investigation of or
before any court or governmental body is presently pending or threatened
against The Pilot Funds with respect to the Acquiring Funds or any of the
Acquiring Funds' properties or assets which if adversely determined would
materially and adversely affect their financial condition or the conduct of
their business. The Pilot Funds knows of no facts which might
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form the basis for the institution of such proceedings and is not a party
to or subject to the provisions of any order, decree or judgment of any
court or governmental body which materially and adversely affects its
business or its ability to consummate the transactions contemplated herein;
(f) The Statement of Assets and Liabilities of Pilot Growth and Income
Fund for the year ended August 31, 1995 and the Statements of Assets and
Liabilities of Pilot Short-Term Diversified Assets Fund for the fiscal
years ended August 31, 1995 and August 31, 1994, have been audited by
Arthur Andersen LLP, independent public accountants, and are in accordance
with generally accepted accounting principles consistently applied, and
such statements (copies of which have been furnished to Funds IV Trust),
fairly and accurately reflect the financial condition of each Acquiring
Fund as of such dates, and there are no known contingent liabilities of the
Acquiring Funds as of such dates not disclosed therein;
(g) Since August 31, 1995, there has not been any material adverse
change with respect to the Acquiring Funds' financial condition, assets,
liabilities or business other than changes occurring in the ordinary course
of business, or any incurrence by the Acquiring Funds of indebtedness
maturing more than one year from the date that such indebtedness was
incurred, except as otherwise disclosed to and accepted by Funds IV Trust,
provided that for the purposes of this subparagraph (g), a decline in net
asset value per share of any of the Acquiring Funds shall not constitute a
material adverse change;
(h) At the Closing Date, all federal and other tax returns and reports
of the Acquiring Funds required by law to have been filed by such dates
shall have been filed, and all federal and other taxes shall have been paid
so far as due, or provision shall have been made for the payment thereof
and, to the best of The Pilot Funds' knowledge, no such return is currently
under audit and no assessment has been asserted with respect to such
returns;
(i) For each of the last two fiscal years of its operation, Pilot
Short-Term Diversified Assets Fund and for the last fiscal year of its
operations, Pilot Growth and Income Fund, has met the requirements of
Subchapter M of the Code for qualification and treatment as a regulated
investment company;
(j) All issued and outstanding shares of each of the Acquiring Funds
are, and at the Closing Date will be, duly and validly issued and
outstanding, fully paid and non-assessable with no personal liability
attaching to ownership thereof (recognizing that, under Massachusetts law,
each Acquiring Fund's Shareholders could, under certain circumstances, be
held personally liable for obligations of the respective Acquiring Fund) by
The Pilot Funds. The Acquiring Funds do not have outstanding any options,
warrants or other rights to subscribe for or purchase any of the Acquiring
Funds' Shares, nor is there outstanding any security convertible into any
of the Acquiring Funds' Shares;
(k) The execution, delivery and performance of this Agreement has been
duly authorized as of the date hereof by all necessary action on the part
of The Pilot Funds' Board of Trustees, and, subject to receipt of any
necessary exemptive relief or no-action assurances requested from the
Commission or its Staff with respect to Section 17(a) and 17(d) of the 1940
Act and Rule 17d-1 thereunder, this Agreement will constitute a valid and
binding obligation of The Pilot Funds on behalf of each of the respective
Acquiring Funds, enforceable in accordance with its terms, subject as to
enforcement to bankruptcy, insolvency, reorganization, moratorium and other
laws relating to or affecting creditors' rights and to general principles
of equity;
(l) The information to be furnished by The Pilot Funds for use in
no-action requests, application for orders, registration statements, proxy
materials and other documents which may be necessary in connection with the
transactions contemplated hereby shall be accurate and complete in all
material respects and shall comply in all material respects with federal
securities and other laws and regulations applicable thereto; and
(m) The Proxy Statement (only insofar as it relates to The Pilot Funds
and the Acquiring Funds) will, on the effective date of the Registration
Statement and on the Closing Date, (i) comply in all material respects with
the applicable provisions of the 1933 Act, the 1934 Act and the 1940 Act
and the regulations thereunder, and (ii) not contain any untrue statement
of a material fact or omit to state a
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material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which such
statements were made, not materially misleading.
5. COVENANTS OF THE PILOT FUNDS AND FUNDS IV TRUST
5.1 The Pilot Funds and Funds IV Trust will operate the businesses of the
Acquiring Funds and the Acquired Funds, respectively, in the ordinary course
between the date hereof and the Closing Date, it being understood that such
ordinary course of business will include the declaration and payment of
customary dividends and distributions.
5.2 Funds IV Trust will call a meeting of each of the Acquired Funds'
shareholders to consider and act upon this Agreement and to take all other
action necessary to obtain approval of the transactions contemplated herein.
5.3 Funds IV Trust covenants that each Acquiring Fund's Shares to be issued
hereunder are not being acquired for the purpose of making any distribution
thereof other than in accordance with the terms of this Agreement.
5.4 Funds IV Trust will assist The Pilot Funds in obtaining such
information as The Pilot Funds reasonably requests concerning the beneficial
ownership of each of the Acquired Funds' shares.
5.5 Subject to the provisions of this Agreement, The Pilot Funds and Funds
IV Trust each will take, or cause to be taken, all action, and do or cause to be
done, all things reasonably necessary, proper or advisable to consummate and
make effective the transactions contemplated by this Agreement.
5.6 As promptly as practicable, but in any case within sixty days after the
Closing Date, Funds IV Trust shall furnish The Pilot Funds, in such form as is
reasonably satisfactory to The Pilot Funds, statements of the earnings and
profits of each Acquired Fund for federal income tax purposes which will be
carried over to each respective Acquiring Fund as a result of Section 381 of the
Code, and which will be certified by Funds IV Trust's President and its
Treasurer.
5.7 Funds IV Trust will provide The Pilot Funds with information reasonably
necessary for the preparation of a prospectus (the "Prospectus") which will
include the Proxy Statement referred to in paragraph 4.1(o), all to be included
in a Registration Statement on Form N-14 of The Pilot Funds (the "Registration
Statement"), in compliance with the 1933 Act, the 1934 Act and the 1940 Act, in
connection with the meeting of the Acquired Funds' Shareholders to consider
approval of this Agreement and the transactions contemplated herein.
5.8 The Pilot Funds, on behalf of each of the Acquiring Funds, agrees to
use all reasonable efforts to obtain the approvals and authorizations required
by the 1933 Act, the 1940 Act and such of the state Blue Sky or securities laws
as it may deem appropriate in order to continue its operations after the Closing
Date.
5.9 Funds IV Trust will cause the Statements of Assets and Liabilities of
each of the Acquired Funds for the period from July 1, 1995 to June 30, 1996
(the "1996 Statements") to be prepared and to be audited by Price Waterhouse
LLP, independent accountants, in accordance with generally accepted accounting
principles, applied consistently, including consistently with the 1995
Statements. Within two (2) business days after receipt thereof, Funds IV Trust
will deliver to The Pilot Funds (a) copies of the 1996 Statements, together with
the report of Price Waterhouse LLP with respect thereto and (b) a certificate
executed by its President or Vice President and its Treasurer or Assistant
Treasurer, in form and substance satisfactory to The Pilot Funds and dated as of
the date of the report with respect to the 1996 Statements, to the effect that
(i) the 1996 Statements have been prepared and have been audited by Price
Waterhouse LLP, independent accountants, in accordance with generally accepted
accounting standards, applied consistently, including consistently with the 1995
Statements, (ii) the 1996 Statements fairly and accurately reflect the financial
condition of each Acquired Fund as of June 30, 1996 and (iii) there are no known
contingent liabilities of any Acquired Fund as of such dates not disclosed
therein.
5.10 Subject to the satisfaction of the condition set forth in Section 8.7
of this Agreement, at or immediately prior to the Closing Boatmen's Trust
Company shall pay each Acquired Fund the aggregate
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amount of all unamortized organizational costs and expenses of such Acquired
Fund outstanding as of the Closing Date.
5.11 From and after the date of this Agreement, Funds IV Trust will not
issue any additional shares of the Premium Class of any Acquired Fund. As
contemplated by Section 1.4, each Acquired Fund shall redeem all of its shares
of the Premium Class held by Furman Selz immediately prior to the Closing with
respect to such Acquired Fund.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF FUNDS IV TRUST
The obligations of Funds IV Trust to consummate the transactions provided
for herein shall be subject, at its election, to the performance by The Pilot
Funds of all of the obligations to be performed by it hereunder on or before the
Closing Date and, in addition thereto, the following further conditions:
6.1 All representations and warranties of The Pilot Funds contained in this
Agreement shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated by
this Agreement, as of the Closing Date with the same force and effect as if made
on and as of the Closing Date;
6.2 The Pilot Funds shall have delivered to Funds IV Trust a certificate
executed in its name by its President or the President and in Treasurer or
Assistant Treasurer, in a form reasonably satisfactory to Funds IV Trust and
dated as of the Closing Date, to the effect that the representations and
warranties of The Pilot Funds made in this Agreement are true and correct at and
as of the Closing Date, except as they may be affected by the transactions
contemplated by this Agreement and as to such other matters as Funds IV Trust
shall reasonably request; and
6.3 Funds IV Trust shall have received on the Closing Date a favorable
opinion from Goodwin, Procter & Hoar LLP, counsel to The Pilot Funds, dated as
of be Closing Date, in a form reasonably satisfactory to Baker & McKenzie,
counsel to Funds IV Trust, that:
(a) The Pilot Funds is a voluntary association with transferable
shares of the type commonly referred to as a Massachusetts business trust
organized pursuant to its Trust Agreement and validly existing under the
laws of the Commonwealth of Massachusetts with legal power to own all of
its properties and assets and to carry on its business, including that of
each Acquiring Fund, as presently conducted.
(b) The Agreement has been duly authorized, executed and delivered by
The Pilot Funds on behalf of the Acquiring Funds and, assuming that the
Registration Statement complies with the 1933 Act, the 1934 Act and the
rules and regulations thereunder, is a valid and binding obligation of The
Pilot Funds enforceable against The Pilot Funds in accordance with its
terms, subject as to enforcement to bankruptcy, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors' rights
generally and to general principles of equity.
(c) The Acquiring Funds' Shares to be issued and delivered to Funds IV
Trust, which Funds IV Trust will thereafter transfer to the shareholders of
the corresponding Acquired Funds, all as provided by the Agreement, are
duly authorized and upon such delivery will be validly issued and
outstanding and fully paid and nonassessable by The Pilot Funds, and no
shareholder of The Pilot Funds has any preemptive right to subscription or
purchase in respect thereof.
(d) The execution and delivery of the Agreement did not, and the
consummation of the transactions contemplated therein will not, violate The
Pilot Funds' Trust Agreement or By-Laws, or any material provision of any
material agreement known to such counsel to which The Pilot Funds is a
party or by which it is bound with respect to the Acquiring Funds or, to
such counsel's knowledge, result in the acceleration of any obligation or
the imposition of any penalty, under any material agreement, judgment or
decree to which The Pilot Funds is a party or by which it is bound with
respect to the Acquiring Funds.
(e) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by The Pilot Funds
of the transactions contemplated in the Agreement, except
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<PAGE> 53
such as have been obtained under the 1933 Act, the 1934 Act, and be 1940
Act, and such as may be required under state securities laws.
(f) The descriptions in the Proxy Statement of statutes, legal and
governmental proceedings and contracts and other documents, if any, only
insofar as they relate to The Pilot Funds or each Acquiring Fund, are
accurate and fairly present the information required to be shown.
(g) The Registration Statement has become effective under the 1933 Act
and, to such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending or
contemplated under the 1933 Act.
(h) To such counsel's knowledge (A) no legal or governmental
proceedings existing on or before the date of mailing the Proxy Statement,
only insofar as they relate to The Pilot Funds or the Acquiring Funds, are
required to be described in the Proxy Statement which are not described as
required and (B) there are no contracts or documents, only insofar as they
relate to The Pilot Funds or the Acquiring Funds, of a character required
to be described in the Proxy Statement to be as exhibits to the
Registration Statement which are not described or filed as required.
(i) The Pilot Funds is a duly registered investment company and, to
such counsel's knowledge, its registration with the Commission as an
investment company under the 1940 Act is in full force and effect.
(j) To such counsel's knowledge (A) no litigation or administrative
proceeding or investigation of or before any court or governmental body is
presently pending or threatened as to The Pilot Funds or any of its
properties or assets and (B) The Pilot Funds is not a party to or subject
to the provisions of any order, decree or judgment of any court or
governmental body which materially and adversely affects its business.
6.4 The Trustees of Funds IV Trust who are not "interested persons" (within
the meaning of the 1940 Act) of Funds IV Trust shall have received evidence
reasonably satisfactory to them that, with respect to potential claims relating
to their service as Trustees of Funds IV Trust prior to and including the
Closing Date, they will be covered for a period of six (6) years following the
Closing Date by directors and officers insurance (or comparable indemnification
or contractual protection) substantially equivalent in scope to the director and
officers insurance coverage provided to them with respect to such matters as of
the date of this Agreement.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PILOT FUNDS
The obligations of The Pilot Funds to complete the transactions provided
for herein shall be subject, at its election, to the performance by Funds IV
Trust of all the obligations to be performed by it hereunder on or before the
Closing Date and, in addition thereto, the Following conditions:
7.1 All representations and warranties of Funds IV Trust contained in this
Agreement shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated by
this Agreement, as of the Closing Date with the same force and effect as if made
on and as of the Closing Date;
7.2 Funds IV Trust shall have delivered to The Pilot Funds the 1996
Statements and related report and certificate as and when contemplated by
Section 5.9 and statements of assets and liabilities of each of the Acquired
Funds together with lists of each Acquired Fund's portfolio securities showing
the tax costs of such securities by lot and the holding periods of such
securities, as of the Closing Date, certified by the Treasurer or Assistant
Treasurer of Funds IV Trust;
7.3 Funds IV Trust shall have delivered to The Pilot Funds on the Closing
Date a certificate executed in its name by its President or Vice President and
its Treasurer or Assistant Treasurer, in form and substance satisfactory to The
Pilot Funds and dated as of the Closing Date, to the effect that the
representations and warranties of Funds IV Trust made in this Agreement and in
the certificate contemplated by Section 5.9 are true and correct at and as of
the Closing Date, except as they may be affected by the transactions
contemplated by this Agreement, and as to such other matters as The Pilot Funds
shall reasonably request;
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<PAGE> 54
7.4 The Pilot Funds shall have received on the Closing Date a favorable
opinion of Baker & McKenzie, counsel to Funds IV Trust, in a form satisfactory
to Goodwin, Procter & Hoar LLP, counsel to The Pilot Funds, that:
(a) Funds IV Trust is a voluntary association with transferable shares
of the type commonly referred to as a Delaware business trust organized
pursuant to its Master Trust Agreement and validly existing and in good
standing under the laws of the State of Delaware with legal power to own
all of its properties and assets and to carry on its business, including
that of each Acquired Fund, as presently conducted.
(b) The Agreement has been duly authorized, executed and delivered by
Funds IV Trust on behalf of the Acquired Funds and, assuming that the
Registration Statement complies with the 1933 Act, the 1934 Act and the
rules and regulations thereunder, is a valid and binding obligation of
Funds IV Trust enforceable against Funds IV Trust in accordance with its
terms, subject as to enforcement to bankruptcy, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors' rights
generally and to general principles of equity.
(c) The execution and delivery of the Agreement did not, and the
consummation of the transactions contemplated therein will not, violate
Funds IV Trust's Trust Instrument or By-Laws, as each may have been amended
to the date hereof, or any material provision of any material agreement
known to such counsel to which Funds IV Trust is a party or by which it is
bound with respect to the Acquired Funds or, to such counsel's knowledge,
result in the acceleration of any obligation or the imposition of any
penalty, under any material agreement, judgment, or decree to which Funds
IV Trust is a party or by which it is bound with respect to the Acquired
Funds.
(d) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by Funds IV Trust
of the transactions contemplated in the Agreement, except such as have been
obtained under the 1933 Act, the 1934 Act, and the 1940 Act, and such as
may be required under state securities laws.
(e) The descriptions in the Proxy Statement of statutes, legal and
governmental proceedings and contracts and other documents, if any, only
insofar as they relate to Funds IV Trust or each acquired Fund, are
accurate and fairly present the information required to be shown.
(f) To such counsel's knowledge (A) no legal or governmental
proceedings existing on or before the date of mailing the Proxy Statement,
only insofar as they relate to Funds IV Trust or the Acquired Funds, are
required to be described in the Proxy Statement which are not described as
required and (B) there are no contracts or documents, only insofar as they
relate to Funds IV Trust or the Acquired Funds, of a character required to
be described in the Proxy Statement or to be filed as exhibits to the
Registration Statement which are not described and filed as required.
(g) Funds IV Trust is a duly registered investment company and, to
such counsel's knowledge, its registration with the Commission as an
investment company under the 1940 Act is in full force and effect.
(h) To such counsel's knowledge (A) no litigation or administrative
proceeding or investigation of or before any court or governmental body is
presently pending or threatened as to Funds IV Trust or any of its
properties or assets and (B) Funds IV Trust is not a party to or subject to
the provisions of any order, decree or judgment of any court or
governmental body which materially and adversely affects its business.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PILOT FUNDS AND FUNDS IV
TRUST
If any of the conditions set forth below have not been satisfied on or
before the Closing Date with respect to Funds IV Trust or The Pilot Funds, the
other party to this Agreement shall, at its option, not be required to
consummate the transactions contemplated by this Agreement; provided, however,
that if the conditions set
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<PAGE> 55
forth below have been satisfied for one or more of the Reorganizations
contemplated herein, the parties shall be required to consummate the
Reorganizations for which such conditions have been satisfied.
8.1 The Agreement and the transactions contemplated herein shall have been
approved by the requisite vote of the holders of the outstanding shares of the
Acquired Fund in accordance with the provisions of Funds IV Trust's Trust
Instrument and the 1940 Act and certified copies of the resolutions evidencing
such approval shall have been delivered to The Pilot Funds. Notwithstanding
anything herein to the contrary, neither The Pilot Funds nor Funds IV Trust may
waive the conditions set forth in this paragraph 8.1;
8.2 On the Closing Date, no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain damages or other relief in connection with, this
Agreement or the transactions contemplated herein;
8.3 (a) The parties shall have received (i) an Order from the Commission on
an Application Pursuant to Section 17(b) of the 1940 Act for an Order Exempting
Proposed Transactions from Section 17(a) of the Act and pursuant to Section
17(d) of the Act and Rule 17d-1 thereunder or, alternatively, (ii) an opinion of
counsel reasonably satisfactory to all parties that such an order is not
required;
(b) All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities (including those
of the Commission and of state Blue Sky and securities authorities,
including "no-action" positions of and exemptive orders from such federal
and state authorities) deemed necessary by The Pilot Funds or Funds IV
Trust to permit consummation, in all material respects, of the transactions
contemplated hereby shall have been obtained, except where failure to
obtain any such consent, order or permit would not involve a risk of a
material adverse effect on the assets or properties of The Pilot Funds or
Funds IV Trust, provided that either party hereto may for itself waive any
of such conditions;
8.4 The Registration Statement shall have become effective under the 1933
Act, and no stop orders suspending the effectiveness thereof shall have been
issued, and, to the best knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be pending, threatened
or contemplated under the 1933 Act;
8.5 Except to the extent prohibited by Rule 19b-1 promulgated under the
1940 Act, each Acquired Fund shall have declared a dividend or dividends which,
together with all previous such dividends, shall have the effect of distributing
to the Acquired Fund's Shareholders all of the Acquired Fund's investment
company taxable income for all taxable years ending on or prior to the Closing
Date (computed without regard to any deduction for dividends paid) and all of
its net capital gain realized in all taxable years ending on or prior to the
Closing Date (after reduction for any capital loss carry forward);
8.6 The parties shall have received a favorable opinion of Goodwin, Procter
& Hoar LLP, addressed to The Pilot Funds and Funds IV Trust, substantially to
the effect that for federal income tax purposes:
(a) The transfer of all or substantially all of the Acquired Fund's
assets in exchange solely for the corresponding Acquiring Fund's Shares and
the assumption by each Acquiring Fund of certain identified liabilities of
the corresponding Acquired Fund will constitute a "reorganization" within
the meaning of Section 368(a)(1)(C) of the Code, and The Pilot Funds and
Funds IV Trust are each a "party to a reorganization" within the meaning of
Section 368(b) of the Code;
(b) No gain or loss will be recognized by an Acquired Fund upon the
transfer of the Acquired Fund's Assets to the corresponding Acquiring Fund
in exchange for the Acquiring Fund's Shares and the assumption by the
Acquiring Fund of certain identified liabilities of the Acquired Fund or
upon the distribution (whether actual or constructive) of the Acquiring
Fund's Shares to the corresponding Acquired Fund's Shareholders in exchange
for their shares of the Acquired Fund;
(c) The tax basis of each Acquired Fund's assets acquired by an
Acquiring Fund will be the same as the tax basis of such assets to the
Acquired Fund immediately prior to the Reorganization, and the holding
period of the assets of each Acquired Fund in the hands of the
corresponding Acquiring Fund will include the period during which those
assets were held by the Acquired Fund;
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<PAGE> 56
(d) No gain or loss will be recognized by an Acquiring Fund upon the
receipt of the assets of an Acquired Fund solely in exchange for the
corresponding Acquiring Fund's Shares and the assumption by the Acquiring
Fund of certain identified liabilities of the Acquired Fund;
(e) No gain or loss will be recognized by shareholders of any Acquired
Fund upon the issuance of the corresponding Acquiring Fund's Shares to such
shareholders; and
(f) The aggregate tax basis for the Acquiring Fund's Shares received
by each shareholder of each Acquired Fund pursuant to the Reorganization
will be the same as the aggregate tax basis of the Acquired Fund's Shares
held by such shareholder immediately prior to the Reorganization, and the
holding period of the Acquiring Fund's Shares to be received by each
shareholder of each Acquired Fund will include the period during which the
Acquired Fund's Shares exchanged therefor were held by such shareholder
(provided that the Acquired Fund's Shares were held as capital assets on
the date of the Reorganization).
Notwithstanding anything herein to the contrary, neither The Pilot Funds
nor Funds IV Trust may waive the conditions set forth in this paragraph 8.6
unless the Board of Trustees of either The Pilot Funds or Funds IV Trust
(including the Trustees who are not "interested persons" thereof), shall have
determined that the waiver thereof would not materially affect the shareholders
of any Acquired Fund or Acquiring Fund.
8.7 Through the Closing Date, Funds IV Trust shall continue to amortize all
organizational costs and expenses of Funds IV Trust that have previously been
capitalized, all in accordance with past practices and in accordance with the
amortization schedule in effect on December 31, 1995.
9. INDEMNIFICATION
9.1 Each Acquired Fund will indemnify and hold harmless the relevant
Acquiring Fund, its trustees and its officers (for purposes of this paragraph
9.1, the "Indemnified Parties") against any and all expenses, losses, claims,
damages and liabilities at any time imposed upon or reasonably incurred by any
one or more of the Indemnified Parities in connection with, arising out of, or
resulting from any claim, action, suit or proceeding in which any one or more of
the Indemnified Parties may be involved or with which any one or more of the
Indemnified Parties may be threatened by reason of any untrue statement or
alleged untrue statement of a material fact relating to the Acquired Fund
contained in the Registration Statement, the Prospectus or the Proxy Statement
or any amendment or supplement to any of the foregoing, or arising out of or
based upon the omission or alleged omission to state in any of the foregoing a
material fact relating to the Acquired Fund required to be stated therein or
necessary to make the statements relating to the Acquired Fund therein not
misleading, including, without limitation, any amounts paid by any one or more
of the Indemnified Parties in a reasonable compromise or settlement of any such
claim, action, suit or proceeding, or threatened claim, action, suit or
proceeding made with the consent of the Acquired Fund. The Indemnified Parties
will notify the Acquired Fund in writing within ten days after the receipt by
any one or more of the Indemnified Parties of any notice of legal process or any
suit brought against or claim made against such Indemnified Parties as to any
matters covered by this paragraph 9.1. The Acquired Fund shall be entitled to
participate as is own expense in the defense of any claim, action, suit or
proceeding covered by this paragraph 9.1, or, if it so elects, to assume at its
expense by counsel satisfactory to the Indemnified Parties the defense of any
such claim, action, suit or proceeding, and if the Acquired Fund dead to assume
such defense, the Indemnified Parties shall be entitled to participate in the
defense of any such claim, action, suit or proceeding at their expense. The
Acquired Fund's obligation under this paragraph 9.1 to indemnify and hold
harmless the Indemnified Parties shall constitute a guarantee of payment so that
the Acquired Fund will pay in the first instance any expenses, losses, claims,
damages and liabilities required to be paid by it under this paragraph 9.1
without the necessity of the Indemnified Parties' first paying the same.
9.2 Each Acquiring Fund will indemnify and hold harmless, out of its assets
but no other assets, the relevant Acquired Fund, its trustees and its officers
(for purposes of this paragraph 9.2, the "Indemnified Parties") against any and
all expenses, losses, claims, damages and liabilities at any time imposed upon
or reasonably incurred by any one or more of the Indemnified Parities in
connection with, arising out of, or resulting from any claim, action, suit or
proceeding in which any one or more of the Indemnified Parties may
A-13
<PAGE> 57
be involved or with which any one or more of the Indemnified Parities may be
threatened by reason of any untrue statement or alleged untrue statement of a
material fact relating to the Acquiring Fund contained in the Registration
Statement, the Prospectus or the Proxy Statement, or any amendment or supplement
to any thereof, or arising out of, or based upon, the omission or alleged
omission to state in any of the foregoing a material fact relating to the
Acquiring Fund required to be stated therein or necessary to make the statements
relating to the Acquiring Fund therein not misleading, including without
limitation any amounts paid by any one or more of the Indemnified Parties in a
reasonable compromise or settlement of any such claim, action, suit or
proceeding, or threatened claim, action, suit or proceeding made with the
consent of the Acquiring Fund. The Indemnified Parties will notify the Acquiring
Fund in writing within ten days after the receipt by any one or more of the
Indemnified Parties of any notice of legal process or any suit brought against
or claim made against such Indemnified Party as to any matters covered by this
paragraph 9.2. The Acquiring Fund shall be entitled to participate at its own
expense in the defense of any claim, action, suit or proceeding covered by this
paragraph 9.2, or, if it so elects, to assume at its expense by counsel
satisfactory to the Indemnified Parties the defense of any such claim, action,
suit or proceeding, and, if the Acquiring Fund elects to assume such defense,
the Indemnified Parties shall be entitled to participate in the defense of any
such claim, action, suit or proceeding at their own expense. The Acquiring
Fund's obligation under this paragraph 9.2 to indemnify and hold harmless the
Indemnified Parties shall constitute a guarantee of payment so that the
Acquiring Fund will pay in the first instance any expenses, losses, claim,
damages and liabilities required to be paid by it under this paragraph 9.2
without the necessity of the Indemnified Parties' first paying the same.
10. BROKERAGE FEES AND EXPENSES
10.1 The Pilot Funds and Funds IV Trust each represents and warrants to the
other that there are no brokers or finders entitled to receive any payments in
connection with the transactions provided for herein.
10.2 Except as otherwise provided herein, all expenses of the Acquiring
Funds and the Acquired Funds contemplated by this Agreement will be borne by
Boatmen's Trust Company. Such expenses include, without limitation: (i) expenses
incurred in connection with the entering into and the carrying out of the
provisions of this Agreement; (ii) expenses associated with the preparation and
filing of the Registration Statement under the 1933 Act covering the Acquiring
Funds' Shares to be issued pursuant to the provisions of this Agreement; (iii)
registration or qualification fees and expenses of preparing and filing such
forms as are necessary under applicable state securities laws to qualify the
Acquiring Funds' Shares to be issued in connection herewith in each state in
which the Acquired Funds' Shareholders are resident as of the date of the
mailing of the Proxy Statement to such shareholders; (iv) postage in connection
with the Registration Statement/Proxy Statement; (v) printing in connection with
the Registration Statement/Proxy Statement; (vi) accounting fees in connection
with the transactions; (vii) legal fees in connection with the transactions; and
(viii) solicitation costs of the transactions.
11. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
11.1 The Pilot Funds and Funds IV Trust agree that neither party has made
any representation, warranty or covenant not set forth herein and that this
Agreement constitutes the entire agreement between the parties.
11.2 The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in correction herewith
shall survive the consummation of the transactions contemplated hereunder.
12. TERMINATION
12.1 On or prior to December 31, 1996, this Agreement may be terminated by
the mutual agreement of The Pilot Funds and Funds IV Trust with respect to any
one or more Reorganization(s) contemplated herein. After that date, either Funds
IV Trust or The Pilot Funds may terminate this Agreement with respect to any one
or more Reorganization(s) contemplated herein upon written notice to the other
party. In addition, either
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<PAGE> 58
The Pilot Funds or Funds IV Trust may at its option terminate this Agreement at
or prior to the Closing Date, with respect to any one or more Reorganization(s)
contemplated herein because:
(a) of a material breach by the other of any representation, warranty
or agreement contained herein to be performed at or prior to the Closing
Date; or
(b) a condition herein expressed to be precedent to the obligations of
the terminating party has not been met and it reasonably appears that it
will not or cannot be met.
12.2 In the event of any such termination, there shall be no liability for
damages on the part of either The Pilot Funds or Funds IV Trust or their
respective Directors, Trustees or officers, to the other party.
13. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner as
may be mutually agreed upon in writing by Funds IV Trust and The Pilot Funds;
provided, however, that following the meeting of the Acquired Funds'
shareholders called by Funds IV Trust pursuant to paragraph 5.2 of this
Agreement, no such amendment may have the effect of changing the provisions for
determining the number of an Acquiring Fund's Shares to be issued to the
corresponding Acquired Fund's Shareholders under this Agreement to the detriment
of such shareholders without their further approval.
14. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by prepaid
telegraph, telecopy or certified mail addressed to The Pilot Funds, 3435 Stelzer
Road, Columbus, Ohio 43219 (with a copy to Goodwin, Procter & Hoar LLP, Exchange
Place, Boston, Massachusetts 02109, Attention: Philip H. Newman, Esq.), or to
Funds IV Trust, 237 Park Avenue, New York, New York 10017 (with a copy to Baker
& McKenzie, 805 Third Avenue, New York, New York 10022, Attention: Steven R.
Howard, Esq.).
15. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF LIABILITY
15.1 The Article and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
15.2 This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
15.3 This Agreement shall be governed by and construed in accordance with
the laws of The Commonwealth of Massachusetts.
15.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of this
Agreement.
15.5 (a) It is expressly agreed that the obligations of the Acquiring Funds
hereunder shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of The Pilot Funds personally, but bind only the
trust property of The Pilot Funds and the Acquiring Funds, as provided in the
Trust Agreement of The Pilot Funds. The execution and delivery of this Agreement
have been authorized by the Trustees of The Pilot Funds and executed by
authorized officers of The Pilot Funds on behalf of the Acquiring Funds, acting
as such, and neither such authorization by such Trustees nor such execution and
delivery by such officers shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the trust property of the Acquiring Funds as provided in the Trust
Agreement of The Pilot Funds.
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<PAGE> 59
(b) It is expressly agreed that the obligations of the Acquired Funds
hereunder shall not be binding upon any of the trustees, shareholders,
nominees, officers, agents or employees of Funds IV Trust personally, but
bind only the trust property of Funds IV Trust and the Acquiring Funds, as
provided in the Trust Instrument of Funds IV Trust. The execution and
delivery of this Agreement have been authorized by the Trustees of Funds IV
Trust and executed by authorized officers of Funds IV Trust on behalf of
the Acquired Funds, acting as such, and neither such authorization by such
Trustees nor such execution and delivery by such officers shall be deemed
to have been made by any of them individually or to impose any liability on
any of them personally, but shall bind only the property of the Acquired
Funds as provided in the Trust Instrument of Funds IV Trust.
(c) With respect to the obligations of The Pilot Funds on behalf of
any Acquiring Fund or of Funds IV Trust on behalf of any Acquired Fund
arising out of this Agreement, the parties hereto shall look for payment or
satisfaction of such obligation solely to the assets of property of the
Acquiring Fund or Acquired Funds (as applicable) to which such obligation
relates as through such Acquiring Fund or Acquired Fund (as applicable) had
contracted separately, hereunder. No Acquired Fund shall have any liability
for the obligations of any other Acquired Fund hereunder and no Acquiring
Fund shall have any liability for the obligation of any other Acquiring
Fund hereunder.
[Remainder of Page Intentionally Left Blank]
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<PAGE> 60
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by its Chairman of the Board, President or Vice President and its
seal to be affixed thereto and attested by its Secretary or Assistant Secretary.
THE PILOT FUNDS
on behalf of each Acquiring Fund
Attest:
/s/ George O. Martinez
Secretary
By: /s/ William J. Tomko
Name: William J. Tomko
Title: President
FUNDS IV TRUST
on behalf of each Acquired Fund
Attest:
/s/ Joan V. Fiore
Secretary
By: /s/ John J. Pileggi
Name: John J. Pileggi
Title: President
Agreed and Acknowledged as to Sections 5.10, 10.2 and 11.2:
BOATMEN'S TRUST COMPANY
By: /s/ David F. Toth
Name: David F. Toth
Title: Senior Vice President
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<PAGE> 61
APPENDIX B
ADDITIONAL INVESTMENT RESTRICTIONS. Both the Reorganizing and Acquiring
Funds have investment policies restricting the scope of their investments in
addition to those discussed in the body of this Combined Proxy
Statement/Prospectus. Neither the Reorganizing Funds nor their corresponding
Acquiring Funds may change fundamental investment policies without the
affirmative vote of the holders of a majority of the outstanding shares (as
defined in the 1940 Act) of the particular Reorganizing or corresponding
Acquiring Fund. However, investment policies that are not fundamental may be
changed by the Board of Trustees without shareholder approval. The formal
investment restrictions of the Reorganizing Funds and their corresponding
Acquiring Funds are similar, but not identical. The tables below presents a
comparison of certain fundamental and non-fundamental formal investment
restrictions of the Reorganizing Fund and corresponding Acquiring Fund
participating in each Reorganization. Where two Reorganizing Funds have the same
corresponding Acquiring Fund, the comparison of restrictions appears in a single
table. Fundamental policies are followed by an (F); non-fundamental policies are
followed by an (nf).
AGGRESSIVE STOCK APPRECIATION FUND -- PILOT GROWTH FUND
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
AGGRESSIVE STOCK APPRECIATION
SUBJECT MATTER OF FUND PILOT GROWTH FUND
RESTRICTION
<S> <C> <C>
- --------------------------------------------------------------------------------------------------
Real Estate The Fund may not invest in real The Fund may not purchase or sell real
property (including limited estate, except that it may purchase
partnership interests but securities of issuers which deal in
excluding real estate investment real estate and may purchase securities
trusts and master limited which are secured by interests in real
partnerships). (F) estate and except that the Fund
reserves freedom of action to hold and
to sell real estate acquired as a
result of its ownership of securities.
(F)
The Fund may not purchase or sell real
estate, or real estate limited
partnership interests. (nf)
- --------------------------------------------------------------------------------------------------
Other Investment The Fund may not invest more The Fund may not acquire any other
Companies than 10% of its net assets in investment company or investment
shares of other investment company security except in connection
companies. (F) with a merger, consolidation,
reorganization or acquisition of assets
or where otherwise permitted by the
1940 Act. (F)
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Underwriting The Fund may not engage in the The Fund may not act as an underwriter
business of underwriting of securities within the meaning of the
securities of other issuers, Securities Act of 1933 except to the
except to the extent that the extent that the purchase of obligations
disposal of an investment directly from the issuer thereof in
position may technically cause accordance with the Fund's investment
it to be considered an objective(s), policies and limitations
underwriter as that term is may be deemed to be underwriting and
defined under the Securities Act except to the extent that it may be
of 1933. (F) deemed an underwriter in connection
with the disposition of the Fund's
portfolio securities. (F)
- --------------------------------------------------------------------------------------------------
</TABLE>
B-1
<PAGE> 62
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
AGGRESSIVE STOCK APPRECIATION
SUBJECT MATTER OF FUND PILOT GROWTH FUND
RESTRICTION
<S> <C> <C>
- --------------------------------------------------------------------------------------------------
Senior Securities The Fund may not issue senior The Fund may not issue senior
securities, except insofar as it securities, except as appropriate to
may be deemed to have issued a evidence indebtedness which it is
senior security in connection permitted to incur and except for
with any repurchase agreement shares of the separate classes or
or any permitted borrowing. (F) 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. (F)
- --------------------------------------------------------------------------------------------------
Commodities The Fund may not invest in The Fund may not purchase or sell
commodities or commodity commodity contracts. (F)
contracts. (F) (This limitation does not prevent the
(This limitation does not Fund from purchasing and selling
prevent the Fund from engaging financial futures contracts, options
in transactions in financial thereon, and similar financial
futures contracts or options instruments to the extent otherwise
thereon.) permissible.)
- --------------------------------------------------------------------------------------------------
Lending The Fund may not make loans, The Fund may not make loans, except
except loans of portfolio that it may purchase and hold debt
securities and except that it instruments and enter into repurchase
may enter into repurchase agreements in accordance with its
agreements with respect to its investment objective(s) and policies
portfolio securities and may and may lend portfolio securities. (F)
purchase the types of debt The Fund may not lend its securities if
instruments described in its collateral values are not continuously
Prospectus or Statement of maintained at no less than 100% by
Additional Information. (F) market to market daily. (nf)
The Fund may lend its portfolio
securities in an amount up to
33 1/3 of its total assets to
brokers, dealers and financial
institutions, provided certain
regulatory conditions are met.
(nf)
- --------------------------------------------------------------------------------------------------
Control The Fund may not invest in The Fund may not purchase securities of
companies for the purpose of companies for the purpose of exercising
exercising management or control. (nf)
control. (F)
- --------------------------------------------------------------------------------------------------
</TABLE>
B-2
<PAGE> 63
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
AGGRESSIVE STOCK APPRECIATION
SUBJECT MATTER OF FUND PILOT GROWTH FUND
RESTRICTION
<S> <C> <C>
- --------------------------------------------------------------------------------------------------
Borrowing The Fund may not borrow money or The Fund may not borrow money, except
pledge, mortgage or hypothecate as a temporary measure for
its assets, except that it may extraordinary or emergency purposes or
enter into reverse repurchase except in connection with reverse
agreements or borrow from banks repurchase agreements and mortgage
up to 10% of the current value rolls; provided that the Fund maintains
of its net assets for temporary asset coverage of 300% for all
or emergency purposes and those borrowings. (F)
borrowings may be secured by the
pledge of not more than 15% of
the current value of its
total net assets (but
investments
may not be purchased by the Fund
while any such borrowings
exist). (F)
- --------------------------------------------------------------------------------------------------
Diversification The Fund will not, with respect The Fund may not purchase securities of
to 75% of its total assets, any one issuer (other than securities
invest more than 5% of its total issued or guaranteed by the U.S.
assets in the securities of any Government, its agencies or
one issuer (except for U.S. instrumentalists or certificates of
Government securities), or deposit for any such securities) if,
purchase more than 10% of the immediately after such purchase, more
outstanding voting securities of than 5% of the value of the Fund's
any such issuer. (F) 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 the 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. (F)
- --------------------------------------------------------------------------------------------------
</TABLE>
B-3
<PAGE> 64
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
AGGRESSIVE STOCK APPRECIATION
SUBJECT MATTER OF FUND PILOT GROWTH FUND
RESTRICTION
<S> <C> <C>
- --------------------------------------------------------------------------------------------------
Futures and Options The Fund may not write, purchase The Fund may not purchase, write or
or sell puts, calls or sell put options, call options,
combinations thereof, except straddles, spreads, or any combination
that the Fund may purchase or thereof, except for transactions in
sell puts and calls as otherwise options on securities, securities
described in the Prospectus or indices, futures contracts and options
Statement of Additional on futures contracts. (nf)
Information; however, the Fund Purchased options may not exceed 5% of
will not invest more than 5% of net assets; written options may not
its total assets in these exceed 25% of net assets. (nf)
classes of securities for
purposes other than bona fide
hedging. (F)
- --------------------------------------------------------------------------------------------------
Industry Concentration The Fund may not purchase a The Fund may not purchase any
security if, as a result, more securities which would cause 25% or
than 25% of the value of its more of the value of the Fund's total
total assets would be invested assets at the time of purchase to be
in securities of one or more invested in the securities of one or
issuers conducting their more issuers conducting their principal
principal business activities in business activities in the same
the same industry, provided that industry, provided that (a) there is no
(a) this limitation shall not limitation with respect to (i)
apply to obligations issued or instruments issued (as defined with
guaranteed by the U.S. respect to the diversification policy)
Government or its agencies and or guaranteed by the United States, any
instrumentalities; (b) wholly state, territory or possession of the
owned finance companies will be United States, the District of Columbia
considered to be in the or any of their authorities, agencies,
industries of their parents; and instrumentalities or political
(c) utilities will be divided subdivisions and (ii) repurchase
according to their services. For agreements secured by the instruments
example, gas, gas transmission, described in clause (i); (b)
electric and gas, electric, and wholly-owned finance companies will be
telephone will each be considered to be in the industries of
considered a separate industry. their parents if their activities are
(F) 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. (F)
- --------------------------------------------------------------------------------------------------
</TABLE>
B-4
<PAGE> 65
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
AGGRESSIVE STOCK APPRECIATION
SUBJECT MATTER OF FUND PILOT GROWTH FUND
RESTRICTION
<S> <C> <C>
- --------------------------------------------------------------------------------------------------
Margin and Short Sales The Fund may not purchase The Fund may not purchase securities on
securities on margin, except margin, make short sales of securities
that the Fund may obtain such or maintain a short position, except
short-term credits as may be that (a) this investment limitation
necessary for the clearance of shall not apply to the Fund's
purchases and sales of transactions in futures contracts and
securities. (F) related options, and (b) the Fund may
The Fund may not sell securities obtain short-term credit as may be
short, except to the extent that necessary for the clearance of
the Fund contemporaneously owns purchases and sales of portfolio
or has the right to acquire at securities. (nf)
no additional cost securities
identical to those sold short.
(F)
- --------------------------------------------------------------------------------------------------
Oil & Gas The Fund may not invest in oil, The Fund may not invest in oil, gas or
gas and other mineral resource, mineral exploration or development
exploration, development, lease programs, or related leases. (nf)
or arbitrage transactions. (F)
- --------------------------------------------------------------------------------------------------
Unseasoned Issuers The Fund may not invest more Pilot Growth Fund may not purchase
than 5% of the current value of securities of unseasoned issuers which,
its total assets in the including predecessors, at the time of
securities of companies which, purchase have been in operation for
including predecessors, have a less than three years if the value of
record of less than three years' the Fund's aggregate investment in such
continuous operation. (F) securities would exceed 5% of its total
assets. (nf)
- --------------------------------------------------------------------------------------------------
</TABLE>
B-5
<PAGE> 66
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
AGGRESSIVE STOCK APPRECIATION
SUBJECT MATTER OF FUND PILOT GROWTH FUND
RESTRICTION
<S> <C> <C>
- --------------------------------------------------------------------------------------------------
Illiquid Securities/ The Fund may not invest more The Fund will not invest more than 15%
Restricted Securities than 15% of the value of its net of the value of its net assets in
assets in investments which are illiquid securities, including
illiquid (including repurchase restricted securities, unless the
agreements having maturities of Trust's Board of Trustees determines,
more than seven calendar days, based upon a continuing review of the
variable and floating rate trading markets for the specific Rule
demand and master demand notes 144A security, that such restricted
not requiring receipt of security is liquid. (nf)
principal note amount within The Fund may not purchase equity
seven days notice and securities securities of issuers that are not
of foreign issuers which are not readily marketable if the value of the
listed on a recognized domestic Fund's aggregate investment in such
or foreign securities exchange). securities will exceed 5% of its total
(F) assets. (nf)
(The adviser will monitor the The Fund may not purchase securities of
purchase of Rule 144A securities issuers restricted as to disposition if
to assure that the total of all the value of its aggregate investment
Rule 144A securities held by a in such classes of securities will
Fund does not exceed 10% of the exceed 10% of its total assets. (nf)
Fund's average daily net assets.
Rule 144A securities which are
determined to be liquid based
upon their trading markets will
not, however, be required to be
included among the securities
considered to be illiquid for
purposes of the Fund's
fundamental policy regarding
illiquid securities.)
- --------------------------------------------------------------------------------------------------
Warrants The Fund may not invest more The Fund may not invest more than 5% of
than 5% of its net assets in its net assets in warrants, valued at
warrants which are unattached to lower of cost or market. In addition
securities, included within that the Trust on behalf of the Fund, will
amount, no more than 2% of the not invest more than 2% of its net
value of the Fund's net assets, assets in warrants not listed on the
may be warrants which are not New York or American Stock Exchange.
listed on the New York or (nf)
American Stock Exchanges. (F)
- --------------------------------------------------------------------------------------------------
Interest-bearing -- The Fund may also make interest-bearing
Savings Deposits savings deposits in commercial and
savings banks in amounts not in excess
of 5% of the total assets of the Fund.
(nf)
- --------------------------------------------------------------------------------------------------
</TABLE>
B-6
<PAGE> 67
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
AGGRESSIVE STOCK APPRECIATION
SUBJECT MATTER OF FUND PILOT GROWTH FUND
RESTRICTION
<S> <C> <C>
- --------------------------------------------------------------------------------------------------
Pledging The Fund may not borrow money or --
pledge, mortgage or hypothecate
its assets, except that the Fund
may enter into reverse
repurchase agreements or borrow
from banks up to 10% of the
current value of its net assets
for temporary or emergency
purposes and those borrowings
may be secured by the pledge of
not more than 15% of the current
value of its total net assets
(but investments may not be
purchased by the Fund while any
such borrowings exist). (F)
- --------------------------------------------------------------------------------------------------
Issuers Held by The Fund may not purchase or --
Directors, Officers, retain the securities of any
or Affiliates issuer, if those individual
officers and Trustees of the
Trust, BANK IV or AMR, Furman
Selz LLC, or Funds IV
Distributor Inc., each owning
beneficially more than 1/2 of
1% of the securities of such
issuer, together own more than
5% of the securities of such
issuer. (F)
- --------------------------------------------------------------------------------------------------
Cash Equivalents & All commercial paper purchased Cash equivalents, such as commercial
Commercial Paper by the Fund is, at the time of paper and other similar obligations
investment, rated in one of the purchased by the Fund that have an
top two rating categories of at original maturity of thirteen months or
least one NRSRO, or, if not less, will either have short-term
rated is, in the opinion of Bank ratings at the time of purchase in the
IV or AMR, of an investment top two categories by one or more
quality comparable to rated NRSROs or be issued by issuers with
commercial paper in which the such ratings. Unrated instruments of
Fund may invest. (nf) these types purchased by the Fund will
be determined by the Adviser to be of
comparable quality. (nf)
- --------------------------------------------------------------------------------------------------
Amount of Equity Under normal conditions, the Under normal conditions, the Fund must
Securities Fund must maintain 65% of its maintain at least 65% of its total
total assets in common stock. assets in common stock, warrants and
(nf) options to purchase common stock. (nf)
- --------------------------------------------------------------------------------------------------
Amount of Debt -- Under normal conditions, the Fund will
Securities not invest more than 10% of its total
assets in debt obligations. (nf)
- --------------------------------------------------------------------------------------------------
</TABLE>
B-7
<PAGE> 68
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
AGGRESSIVE STOCK APPRECIATION
SUBJECT MATTER OF FUND PILOT GROWTH FUND
RESTRICTION
<S> <C> <C>
- --------------------------------------------------------------------------------------------------
Debt Securities-Credit The Fund will only invest in The Fund will only invest in debt rated
Quality debt rated in or of quality or, if unrated, of quality equivalent
equivalent to the top three to AA or better. (nf)
rating categories. (nf)
- --------------------------------------------------------------------------------------------------
Domestic & Foreign Bank The Fund limits its investment The Fund limits its investments in
Obligations in United States bank domestic banks to banks having total
obligations to obligations of assets in excess of $1 billion and
United States banks including subject to regulation by the U.S.
foreign branches). (nf) Government. The Fund may also invest in
The Fund limits its investment certificates of deposit issued by
in foreign bank obligations to members of the Federal Deposit
United States dollar denominated Insurance Corporation ("FDIC") having
obligations of foreign banks total assets of less than $1 billion,
(including United States provided that the Fund will at no time
branches of foreign banks) which own more than $100,000 principal amount
in the opinion of BANK IV or of certificates of deposit (or any
AMR, are of an investment higher principal amount which in the
quality comparable to future may be fully covered by FDIC
obligations of United States insurance) of any one of those issuers.
banks which may be purchased by (nf)
the Fund. There is no limitation
on the amount of the Fund's The Fund limits its investments in
assets which may be invested in foreign bank obligations (i.e.,
obligations of foreign banks obligations of foreign branches and
which meet these conditions. subsidiaries of domestic banks, and
(nf) 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
paragraph 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 the
Fund. (nf)
The Fund 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. (nf)
The Fund will limit its investment in
securities of foreign banks to not more
than 10% of total assets at the time of
investment. (nf)
- --------------------------------------------------------------------------------------------------
</TABLE>
B-8
<PAGE> 69
VALUE STOCK APPRECIATION FUND AND STOCK APPRECIATION FUND --
PILOT GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
SUBJECT MATTER OF VALUE STOCK APPRECIATION FUND
RESTRICTION AND STOCK APPRECIATION FUND PILOT GROWTH AND INCOME FUND
<S> <C> <C>
- --------------------------------------------------------------------------------------------------
Real Estate The Fund may not invest in real The Fund may not purchase or sell real
property (including limited estate, except that it may purchase
partnership interests but securities of issuers which deal in
excluding real estate investment real estate and may purchase securities
trusts and master limited which are secured by interests in real
partnerships). (F) estate and except that the Fund
reserves freedom of action to hold and
to sell real estate acquired as a
result of its ownership of securities.
(F)
The Fund may not purchase or sell real
estate, or real estate limited
partnership interests. (nf)
- --------------------------------------------------------------------------------------------------
Other Investment The Fund may not invest more The Fund may not acquire any other
Companies than 10% of its net assets in investment company or investment
shares of other investment company security except in connection
companies. (F) with a merger, consolidation,
reorganization or acquisition of assets
or where otherwise permitted by the
1940 Act. (F)
- --------------------------------------------------------------------------------------------------
Underwriting The Fund may not engage in the The Fund may not act as an underwriter
business of underwriting of securities within the meaning of the
securities of other issuers, Securities Act of 1933 except to the
except to the extent that the extent that the purchase of obligations
disposal of an investment directly from the issuer thereof in
position may technically cause accordance with the Fund's investment
it to be considered an objective(s), policies and limitations
underwriter as that term is may be deemed to be underwriting and
defined under the Securities Act except to the extent that it may be
of 1933. (F) deemed an underwriter in connection
with the disposition of the Fund's
portfolio securities. (F)
- --------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
Senior Securities The Fund may not issue senior The Fund may not issue senior
securities, except insofar as it securities, except as appropriate to
may be deemed to have issued a evidence indebtedness which it is
senior security in connection permitted to incur and except for
with any repurchase agreement or shares of the separate classes or
any permitted borrowing. (F) 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. (F)
- --------------------------------------------------------------------------------------------------
</TABLE>
B-9
<PAGE> 70
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
SUBJECT MATTER OF VALUE STOCK APPRECIATION FUND
RESTRICTION AND STOCK APPRECIATION FUND PILOT GROWTH AND INCOME FUND
<S> <C> <C>
- --------------------------------------------------------------------------------------------------
Commodities The Fund may not invest in The Fund may not purchase or sell
commodities or commodity commodity contracts. (F)
contracts. (F)
(For Pilot Growth and Income Fund, this
(This limitation does not limitation does not prevent the Fund
prevent the Fund from engaging from purchasing and selling financial
in transactions in financial futures contracts, options thereon, and
futures contracts or options similar financial instruments to the
thereon.) extent otherwise permissible.)
- --------------------------------------------------------------------------------------------------
Lending The Fund may not make loans, The Fund may not make loans, except
except loans of portfolio that it may purchase and hold debt
securities and except that it instruments and enter into repurchase
may enter into repurchase agreements in accordance with its
agreements with respect to its investment objective(s) and policies
portfolio securities and may and may lend portfolio securities. (F)
purchase the types of debt The Fund may not lend its securities if
instruments described in its collateral values are not continuously
Prospectus or Statement of maintained at no less than 100% by
Additional Information. (F) market to market daily. (nf)
The Fund may lend its portfolio
securities in an amount up to
33 1/3 of its total assets to
brokers, dealers and financial
institutions, provided certain
regulatory conditions are met.
(nf)
- --------------------------------------------------------------------------------------------------
Control The Fund may not invest in The Fund may not purchase securities of
companies for the purpose of companies for the purpose of exercising
exercising management or control. (nf)
control. (F)
- --------------------------------------------------------------------------------------------------
Borrowing The Fund may not borrow money or The Fund may not borrow money, except
pledge, mortgage or hypothecate as a temporary measure for
its assets, except that it may extraordinary or emergency purposes or
enter into reverse repurchase except in connection with reverse
agreements or borrow from banks repurchase agreements and mortgage
up to 10% of the current value rolls; provided that the Fund maintains
of its net assets for temporary asset coverage of 300% for all
or emergency purposes and those borrowings. (F)
borrowings may be secured by the
pledge of not more than 15% of
the current value of its total
net assets (but investments may
not be purchased by the Fund
while any such borrowings
exist). (F)
- --------------------------------------------------------------------------------------------------
</TABLE>
B-10
<PAGE> 71
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
SUBJECT MATTER OF VALUE STOCK APPRECIATION FUND
RESTRICTION AND STOCK APPRECIATION FUND PILOT GROWTH AND INCOME FUND
<S> <C> <C>
- --------------------------------------------------------------------------------------------------
Diversification The Fund will not, with respect The Fund may not purchase securities of
to 75% of its total assets, any one issuer (other than securities
invest more than 5% of its total issued or guaranteed by the U.S.
assets in the securities of any Government, its agencies or
one issuer (except for U.S. instrumentalists or certificates of
Government securities), or deposit for any such securities) if,
purchase more than 10% of the immediately after such purchase, more
outstanding voting securities of than 5% of the value of the Fund's
any such issuer. (F) 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 the 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. (F)
- --------------------------------------------------------------------------------------------------
Futures and Options The Fund may not write, purchase The Fund may not purchase, write or
or sell puts, calls or sell put options, call options,
combinations thereof, except straddles, spreads, or any combination
that the Fund may purchase or thereof, except for transactions in
sell puts and calls as otherwise options on securities, securities
described in the Prospectus or indices, futures contracts and options
Statement of Additional on futures contracts. (nf)
Information; however, the Fund Purchased options may not exceed 5% of
will not invest more than 5% of net assets; written options may not
its total assets in these exceed 25% of net assets. (nf)
classes of securities for
purposes other than bona fide
hedging. (F)
- --------------------------------------------------------------------------------------------------
</TABLE>
B-11
<PAGE> 72
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
SUBJECT MATTER OF VALUE STOCK APPRECIATION FUND
RESTRICTION AND STOCK APPRECIATION FUND PILOT GROWTH AND INCOME FUND
<S> <C> <C>
- --------------------------------------------------------------------------------------------------
Industry Concentration The Fund may not purchase a The Fund may not purchase any
security if, as a result, more securities which would cause 25% or
than 25% of the value of its more of the value of the Fund's total
total assets would be invested assets at the time of purchase to be
in securities of one or more invested in the securities of one or
issuers conducting their more issuers conducting their principal
principal business activities in business activities in the same
the same industry, provided that industry, provided that (a) there is no
(a) this limitation shall not limitation with respect to (i)
apply to obligations issued or instruments issued (as defined with
guaranteed by the U.S. respect to the diversification policy)
Government or its agencies and or guaranteed by the United States, any
instrumentalities; (b) wholly state, territory or possession of the
owned finance companies will be United States, the District of Columbia
considered to be in the or any of their authorities, agencies,
industries of their parents; and instrumentalities or political
(c) utilities will be divided subdivisions and (ii) repurchase
according to their services. For agreements secured by the instruments
example, gas, gas transmission, described in clause (i); (b)
electric and gas, electric, and wholly-owned finance companies will be
telephone will each be considered to be in the industries of
considered a separate industry. their parents if their activities are
(F) 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. (F)
- --------------------------------------------------------------------------------------------------
Margin and Short Sales The Fund may not purchase The Fund may not purchase securities on
securities on margin, except margin, make short sales of securities
that the Fund may obtain such or maintain a short position, except
short-term credits as may be that (a) this investment limitation
necessary for the clearance of shall not apply to the Fund's
Purchases and sales of transactions in futures contracts and
securities. (F) related options, and (b) the Fund may
The Fund may not sell securities obtain short-term credit as may be
short, except to the extent that necessary for the clearance of
the Fund contemporaneously owns purchases and sales of portfolio
or has the right to acquire at securities. (nf)
no additional cost securities
identical to those sold short.
(F)
- --------------------------------------------------------------------------------------------------
Oil & Gas The Fund may not invest in oil, The Fund may not invest in oil, gas or
gas and other mineral resource, mineral exploration or development
exploration, development, lease programs, or related leases. (nf)
or arbitrage transactions. (F)
- --------------------------------------------------------------------------------------------------
</TABLE>
B-12
<PAGE> 73
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
SUBJECT MATTER OF VALUE STOCK APPRECIATION FUND
RESTRICTION AND STOCK APPRECIATION FUND PILOT GROWTH AND INCOME FUND
<S> <C> <C>
- --------------------------------------------------------------------------------------------------
Unseasoned Issuers The Fund may not invest more The Fund may not purchase securities of
than 5% of the current value of unseasoned issuers which, including
its total asset in the predecessors, at the time of purchase
securities of companies which, have been in operation for less than
including predecessors, have a three years. (nf)
record of less than three years'
continuous operation. (F)
- --------------------------------------------------------------------------------------------------
Illiquid Securities/ The Fund may not invest more The Fund will not invest more than 15%
Restricted Securities than 15% of the value of its net of the value of its net assets in
assets in investments which are illiquid securities, including
illiquid (including repurchase restricted securities, unless the
agreements having maturities of Trust's Board of Trustees determines,
more than seven calendar days, based upon a continuing review of the
variable and floating rate trading markets for the specific Rule
demand and master demand notes 144A security, that such restricted
not requiring receipt of security is liquid. (nf)
principal note amount within The Fund may not purchase equity
seven days notice and securities securities of issuers that are not
of foreign issuers which are not readily marketable if the value of the
listed on a recognized domestic Fund's aggregate investment in such
or foreign securities exchange). securities will exceed 5% of its total
(F) assets. (nf)
(The adviser will monitor the The Fund may not purchase securities of
purchase of Rule 144A securities issuers restricted as to disposition if
to assure that the total of all the value of its aggregate investment
Rule 144A securities held by a in such classes of securities will
Fund does not exceed 10% of the exceed 10% of its total assets. (nf)
Fund's average daily net assets.
Rule 144A securities which are
determined to be liquid based
upon their trading markets will
not, however, securities
considered to be illiquid for
purposes of the Fund's
fundamental policy regarding
illiquid securities.)
- --------------------------------------------------------------------------------------------------
Warrants The Fund may not invest more The Fund may not invest more than 5% of
than 5% of its net assets in its net assets in warrants, valued at
warrants which are unattached to lower of cost or market. In addition
securities, included within that the Trust on behalf of the Fund, will
amount, no more than 2% of the not invest more than 2% of its net
value of the Fund's net assets, assets in warrants not listed on the
may be warrants which are not New York or American Stock Exchange.
listed on the New York or (nf)
American Stock Exchange. (nf)
- --------------------------------------------------------------------------------------------------
</TABLE>
B-13
<PAGE> 74
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
SUBJECT MATTER OF VALUE STOCK APPRECIATION FUND
RESTRICTION AND STOCK APPRECIATION FUND PILOT GROWTH AND INCOME FUND
<S> <C> <C>
- --------------------------------------------------------------------------------------------------
Interest-bearing -- The Fund may also make interest-bearing
Savings Deposits savings deposits in commercial and
savings banks in amounts not in excess
of 5% of the total assets of the Fund.
(nf)
- --------------------------------------------------------------------------------------------------
Pledging The Fund may not borrow money or --
pledge, mortgage or hypothecate
its assets, except that the Fund
may enter into reverse
repurchase agreements or borrow
from banks up to 10% of the
current value of its net assets
for temporary or emergency
purposes and those borrowings
may be secured by the pledge of
not more than 15% of the current
value of its total net assets
(but investments may not be
purchased by the Fund while any
such borrowings exist). (F)
- --------------------------------------------------------------------------------------------------
Issuers Held by The Fund may not purchase or --
Directors, Officers, retain the securities of any
or Affiliates issuer, if those individual
officers and Trustees of the
Trust, BANK IV or AMR, Furman
Selz LLC, or Funds IV
Distributor Inc., each owning
beneficially more than 1/2 of
1% of the securities of such
issuer, together own more than
5% of the securities of such
issuer. (F)
- --------------------------------------------------------------------------------------------------
Cash Equivalents & All commercial paper purchased Cash equivalents, such as commercial
Commercial Paper by the Fund is, at the time of paper and other similar obligations
investment, rated in one of the purchased by the Fund that have an
top two rating categories of at original maturity of thirteen months or
least one NRSRO, or, if not less, will either have short-term
rated is, in the opinion of Bank ratings at the time of purchase in the
IV or AMR, of an investment top two categories by one or more
quality comparable to rated NRSROs or be issued by issuers with
commercial paper in which the such ratings. Unrated instruments of
Fund may invest. (nf) these types purchased by the Fund will
be determined by the Adviser to be of
comparable quality. (nf)
- --------------------------------------------------------------------------------------------------
</TABLE>
B-14
<PAGE> 75
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
SUBJECT MATTER OF VALUE STOCK APPRECIATION FUND
RESTRICTION AND STOCK APPRECIATION FUND PILOT GROWTH AND INCOME FUND
<S> <C> <C>
- --------------------------------------------------------------------------------------------------
Amount of Debt/ Value Stock Appreciation Fund Under normal conditions the Fund must
Equity Securities has no stated numerical maintain 65% of its assets in common
requirements as to the amount of stock, preferred stock and convertible
debt or equity securities it securities of U.S. companies. There is
must hold. no limit on investment in debt
Under normal conditions, Stock securities. (nf)
Appreciation Fund must maintain
65% of its assets in common
stock. There is no other limit
on investment in debt
securities. (nf)
- --------------------------------------------------------------------------------------------------
Credit Quality of Debt/ The Fund may only purchase debt The Fund may only purchase debt and
Convertible rated in or of quality convertible securities rated or, if
Securities equivalent to the top three unrated, of quality equivalent to
rating categories. (nf) investment grade. (nf)
- --------------------------------------------------------------------------------------------------
</TABLE>
B-15
<PAGE> 76
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
SUBJECT MATTER OF VALUE STOCK APPRECIATION FUND
RESTRICTION AND STOCK APPRECIATION FUND PILOT GROWTH AND INCOME FUND
<S> <C> <C>
- --------------------------------------------------------------------------------------------------
Domestic & Foreign Bank The Fund limits its investment The Fund limits its investment in
Obligations in United States bank domestic banks to banks having total
obligations to obligations of assets in excess of $1 billion and
United States banks (including subject to regulation by the U.S.
foreign branches). (nf) Government. The Fund may also invest in
The Fund limits its investment certificates of deposit issued by
in foreign bank obligations to members of the Federal Deposit
United States dollar denominated Insurance Corporation ("FDIC") having
obligations of foreign banks total assets of less than $1 billion,
(including United States provided that the Fund will at no time
branches of foreign banks) which own more than $100,000 principal amount
in the opinion of BANK IV or of certificates of deposit (or any
AMR, are of an investment higher principal amount which in the
quality comparable to future may be fully covered by FDIC
obligations of United States insurance) of any one of those issuers.
banks which may be purchased by (nf)
the Fund. There is no limitation The Fund limits its investments in
on the amount of the Fund's foreign bank obligations (i.e.,
assets which may be invested in obligations of foreign branches and
obligations of foreign banks subsidiaries of domestic banks, and
which meet these conditions. domestic and foreign branches and
(nf) 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
paragraph 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 the
Fund. (nf)
The Fund 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. (nf)
Pilot Growth and Income Fund will limit
its investment in securities of foreign
banks to not more than 20% of total
assets at the time of investment. (nf)
- --------------------------------------------------------------------------------------------------
</TABLE>
B-16
<PAGE> 77
BOND INCOME FUND AND INTERMEDIATE BOND INCOME FUND --
DIVERSIFIED BOND INCOME FUND
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
BOND INCOME FUND AND
SUBJECT MATTER OF INTERMEDIATE
RESTRICTION BOND INCOME FUND PILOT DIVERSIFIED BOND INCOME FUND
<S> <C> <C>
- --------------------------------------------------------------------------------------------------
Real Estate The Fund may not invest in real The Fund may not purchase or sell real
property (including limited estate, except that the Fund may
partnership interests but purchase securities of issuers which
excluding real estate investment deal in real estate and may purchase
trusts and master limited securities which are secured by
partnerships). (F) interests in real estate and
except that the Fund reserves freedom
of action to hold and to sell real
estate acquired as a result of the
Fund's ownership of securities. (F)
The Fund may not purchase or sell real
estate, or real estate limited
partnership interests. (nf)
- --------------------------------------------------------------------------------------------------
Other Investment The Fund may not invest more The Fund may not acquire any other
Companies than 10% of its net assets in investment company or investment
shares of other investment company security except in connection
companies. (F) with a merger, consolidation,
reorganization or acquisition of assets
or where otherwise permitted by the
1940 Act. (F)
- --------------------------------------------------------------------------------------------------
Underwriting The Fund may not engage in the The Fund may not act as an underwriter
business of underwriting of securities within the meaning of the
securities of other issuers, Securities Act of 1933 except to the
except to the extent that the extent that the purchase of obligations
disposal of an investment directly from the issuer thereof in
position may technically cause accordance with the Fund's investment
it to be considered an objective(s), policies and limitations
underwriter as that term is may be deemed to be underwriting and
defined under the Securities Act except to the extent that it may be
of 1933. (F) deemed an underwriter in connection
with the disposition of the Fund's
portfolio securities. (F)
- --------------------------------------------------------------------------------------------------
Senior Securities The Fund may not issue senior The Fund may not issue senior
securities, except insofar as a securities, except as appropriate to
Fund may be deemed to have evidence indebtedness which it is
issued a senior security in permitted to incur and except for
connection with any repurchase shares of the separate classes or
agreement or any permitted series of the Fund provided that
borrowing. (F) 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. (F)
- --------------------------------------------------------------------------------------------------
</TABLE>
B-17
<PAGE> 78
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
BOND INCOME FUND AND
INTERMEDIATE
SUBJECT MATTER OF BOND INCOME FUND PILOT DIVERSIFIED BOND INCOME FUND
RESTRICTION
<S> <C> <C>
- --------------------------------------------------------------------------------------------------
Commodities The Fund may not invest in The Fund may not purchase or sell
commodities or commodity commodity contracts. (F)
contracts. (F) (This limitation does not prevent the
(This limitation does not Fund from purchasing and selling
prevent the Fund from engaging financial futures contracts, options
in financial futures contracts thereon, and similar financial
and options thereon.) instruments to the extent otherwise
permissible).
- --------------------------------------------------------------------------------------------------
Lending The Fund may not make loans, The Fund may not make loans, except
except loans of portfolio that the Fund may purchase and hold
securities and except that the debt instruments and enter into
Fund may enter into repurchase repurchase agreements in accordance
agreements with respect to its with its investment objective(s) and
portfolio securities and may policies and may lend portfolio
purchase the types of debt securities. (F)
instruments described in its The Fund may not lend its securities if
Prospectus or the Statement of collateral values are not continuously
Additional Information. (F) maintained at no less than 100% by
The Fund may lend its portfolio market to market daily. (nf)
securities in an amount up to
33 1/3 of its total assets to
brokers, dealers and financial
institutions, provided certain
regulatory conditions are met.
(nf)
- --------------------------------------------------------------------------------------------------
Control The Fund may not invest in The Fund may not purchase securities of
companies for the purpose of companies for the purpose of exercising
exercising control or control. (nf)
management. (F)
- --------------------------------------------------------------------------------------------------
Borrowing The Fund may not borrow money or The Fund may not borrow money, except
pledge, mortgage or hypothecate as a temporary measure for
its assets, except that the Fund extraordinary or emergency purposes or
may enter into reverse except in connection with reverse
repurchase agreements or borrow repurchase agreements and mortgage
from banks up to 10% of the rolls; provided that the Fund maintains
current value of its net assets asset coverage of 300% for all
for temporary or emergency borrowings. (F)
purposes and those borrowings
may be secured by the pledge of
not more than 15% of the current
value of its total net assets
(but investments may not be
purchased by the Fund while any
such borrowings exist). (F)
- --------------------------------------------------------------------------------------------------
</TABLE>
B-18
<PAGE> 79
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
BOND INCOME FUND AND
INTERMEDIATE
SUBJECT MATTER OF BOND INCOME FUND PILOT DIVERSIFIED BOND INCOME FUND
RESTRICTION
<S> <C> <C>
- --------------------------------------------------------------------------------------------------
Diversification The Fund will not, with respect The Fund may not purchase securities of
to 75% of its total assets, any one issuer (other than securities
invest more than 5% of its total issued or guaranteed by the U.S.
assets in the securities of any Government, its agencies or
one issuer (except for U.S. instrumentalists or certificates of
Government securities), or deposit for any such securities) if,
purchase more than 10% of the immediately after such purchase, more
outstanding voting securities of than 5% of the value of the Fund's
any such issuer. (F) 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. (F)
- --------------------------------------------------------------------------------------------------
Futures and Options The Fund may not write, purchase The Fund may not purchase, write or
or sell puts, calls or sell put options, call options,
combinations thereof, except straddles, spreads, or any combination
that the Fund may purchase or thereof, except for transactions in
sell puts and calls as otherwise options on securities, securities
described in the Prospectus or indices, futures contracts and options
Statement of Additional on futures contracts. (nf)
Information; however, the Fund Purchased options may not exceed 5% of
will not invest more than 5% of net assets; written options may not
its total assets in these exceed 25% of net assets. (nf)
classes of securities for
purposes other than bona fide
hedging. (F)
- --------------------------------------------------------------------------------------------------
</TABLE>
B-19
<PAGE> 80
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
BOND INCOME FUND AND
INTERMEDIATE
SUBJECT MATTER OF BOND INCOME FUND PILOT DIVERSIFIED BOND INCOME FUND
RESTRICTION
<S> <C> <C>
- --------------------------------------------------------------------------------------------------
Industry Concentration The Fund may not purchase a The Fund may not purchase any
security if, as a result, more securities which would cause 25% or
than 25% of the value of its more of the value of the Fund's total
total assets would be invested assets at the time of purchase to be
in securities of one or more invested in the securities of one or
issuers conducting their more issuers conducting their principal
principal business activities in business activities in the same
the same industry, provided that industry, provided that (a) there is no
(a) this limitation shall not limitation with respect to (i)
apply to obligations issued or instruments issued (as defined with
guaranteed by the U.S. respect to the diversification policy)
Government or its agencies and or guaranteed by the United States, any
instrumentalities; (b) wholly state, territory or possession of the
owned finance companies will be United States, the District of Columbia
considered to be in the or any of their authorities, agencies,
industries of their parents; and instrumentalities or political
(c) utilities will be divided subdivisions and (ii) repurchase
according to their services. For agreements secured by the instruments
example, gas, gas transmission, described in clause (i); (b)
electric and gas, electric, and wholly-owned finance companies will be
telephone will each be considered to be in the industries of
considered a separate industry. their parents if their activities are
(F) 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. (F)
- --------------------------------------------------------------------------------------------------
Margin and Short Sales The Fund may not purchase The Fund may not purchase securities on
securities on margin, except margin, make short sales of securities
that the Fund may obtain such or maintain a short position, except
short-term credits as may be that (a) this investment limitation
necessary for the clearance of shall not apply to the Fund's
purchases and sales of transactions in futures contracts and
securities. (F) related options, and (b) the Fund may
The Fund may not sell securities obtain short-term credit as may be
short, except to the extent that necessary for the clearance of
the Fund contemporaneously owns purchases and sales of portfolio
or has the right to acquire at securities. (nf)
no additional cost securities
identical to those sold short.
(F)
- --------------------------------------------------------------------------------------------------
</TABLE>
B-20
<PAGE> 81
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
BOND INCOME FUND AND
INTERMEDIATE
SUBJECT MATTER OF BOND INCOME FUND PILOT DIVERSIFIED BOND INCOME FUND
RESTRICTION
<S> <C> <C>
- --------------------------------------------------------------------------------------------------
Oil & Gas The Fund may not invest in oil, The Fund may not invest in oil, gas or
gas and other mineral resource, mineral exploration or development
exploration, development, lease programs, or related leases. (nf)
or arbitrage transactions. (F)
- --------------------------------------------------------------------------------------------------
Unseasoned Issuers The Fund may not invest more The Fund may not purchase securities of
than 5% of the current value of unseasoned issuers which, including
its total asset in the predecessors, at the time of purchase
securities of companies which, have been in operation for less than
including predecessors, have a three years if the value of the Fund's
record of less than three years' investment in such securities would
continuous operation. (F) exceed 5% of its total assets. (nf)
- --------------------------------------------------------------------------------------------------
Illiquid Securities/ The Fund may not invest more The Fund will not invest more than 15%
Restricted Securities than 15% of the value of its net of the value of its net assets in
assets in investments which are illiquid securities, including
illiquid (including repurchase restricted securities, unless the
agreements having maturities of Trust's Board of Trustees determines,
more than seven calendar days, based upon a continuing review of the
variable and floating rate trading markets for the specific Rule
demand and master demand notes 144A security, that such restricted
not requiring receipt of security is liquid. (nf)
principal note amount within The Fund may not purchase equity
seven days notice and securities securities of issuers that are not
of foreign issuers which are readily marketable if the value of a
not listed on a recognized Fund's aggregate investment in such
domestic or foreign securities securities will exceed 5% of its total
exchange). (F) assets. (nf)
(The adviser will monitor the The Fund may not purchase securities of
purchase of Rule 144A securities issuers restricted as to disposition if
to assure that the total of all the value of its aggregate investment
Rule 144A securities held by a in such classes of securities will
Fund does not exceed 10% of the exceed 10% of its total assets. (nf)
Fund's average daily net assets.
Rule 144A securities which are
determined to be liquid based
upon their trading markets will
not, however, be required to be
included among the securities
considered to be illiquid for
purposes of the Fund's
fundamental policy regarding
illiquid securities.)
- --------------------------------------------------------------------------------------------------
</TABLE>
B-21
<PAGE> 82
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
BOND INCOME FUND AND
INTERMEDIATE
SUBJECT MATTER OF BOND INCOME FUND PILOT DIVERSIFIED BOND INCOME FUND
RESTRICTION
<S> <C> <C>
- --------------------------------------------------------------------------------------------------
Warrants The Fund may not invest The Fund may not invest more than 5% of
more than 5% of its net assets its net assets in warrants, valued at
in warrants which are lower of cost or market. In addition
unattached to securities, the Trust on behalf of the Fund, will
included within that amount, no not invest more than 2% of its net
more than 2% of the assets in warrants not listed on the
value of the Fund's net New York or American Stock Exchange.
assets, may be warrants (nf)
which are not listed on the New
York or American Stock
Exchanges. (F)
- --------------------------------------------------------------------------------------------------
Interest-bearing -- The Fund may also make interest-bearing
Savings Deposits savings deposits in commercial and
savings banks in amounts not in excess
of 5% of the total assets of the Fund.
(nf)
- --------------------------------------------------------------------------------------------------
Pledging The Fund may not borrow money or --
pledge, mortgage or hypothecate
its assets, except that the Fund
may enter into reverse
repurchase agreements or borrow
from banks up to 10% of the
current value of its net assets
for temporary or emergency
purposes and those borrowings
may be secured by the pledge of
not more than 15% of the current
value of its total net assets
(but investments may not be
purchased by the Fund while any
such borrowings exist). (F)
- --------------------------------------------------------------------------------------------------
Issuers Held by The Fund may not purchase or --
Directors, Officers, retain the securities of any
or Affiliates issuer, if those individual
officers and Trustees of the
Trust, BANK IV or AMR, Furman
Selz LLC, or Funds IV
Distributor Inc., each owning
beneficially more than 3/3 of 1%
of the securities of such
issuer, together own more than
5% of the securities of such
issuer. (F)
- --------------------------------------------------------------------------------------------------
</TABLE>
B-22
<PAGE> 83
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
BOND INCOME FUND AND
INTERMEDIATE
SUBJECT MATTER OF BOND INCOME FUND PILOT DIVERSIFIED BOND INCOME FUND
RESTRICTION
<S> <C> <C>
- --------------------------------------------------------------------------------------------------
Cash Equivalents & All commercial paper purchased Cash equivalents, such as commercial
Commercial Paper by the Fund is, at the time of paper and other similar obligations
investment, rated in one of the purchased by the Fund that have an
top two rating categories of at original maturity of thirteen months or
least one NRSRO, or, if not less, will either have short-term
rated is, in the opinion of Bank ratings at the time of purchase in the
IV or AMR, of an investment top two categories by one or more
quality comparable to rated NRSROs or be issued by issuers with
commercial paper in which the such ratings. Unrated instruments of
Fund may invest. (nf) these types purchased by the Fund will
Investments in municipal be determined by the Adviser to be of
commercial paper are limited to comparable quality. (nf)
commercial paper which is rated
at the date of purchase: (i)
"P-1" by Moody's and "A-1" or
"A-1+" by S&P "P-2" (Prime-2) or
better by Moody's and "A-2" or
better by S&P or (ii) in a
comparable rating category by
any two of the NRSROs that have
rated commercial paper or (iii)
in a comparable rating category
by only one such organization if
it is the only organization that
has rated the commercial paper
or (iv) if not rated, if, in the
opinion of BANK IV, of
comparable investment quality
and within the credit quality
policies and guidelines
established by the Board of
Trustees. (nf)
- --------------------------------------------------------------------------------------------------
Domestic & Foreign Bank The Fund limits its investment The Fund limits its investments in
Obligations in United States bank domestic banks to banks having total
obligations to obligations of assets in excess of $1 billion and
United States banks (including subject to regulation by the U.S.
foreign branches). (nf) Government. The 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.
(nf)
- --------------------------------------------------------------------------------------------------
</TABLE>
B-23
<PAGE> 84
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
BOND INCOME FUND AND
INTERMEDIATE
SUBJECT MATTER OF BOND INCOME FUND PILOT DIVERSIFIED BOND INCOME FUND
RESTRICTION
<S> <C> <C>
- --------------------------------------------------------------------------------------------------
The Fund limits its investment The Fund limits its investments in
in foreign bank obligations to foreign bank obligations (i.e.,
United States dollar denominated obligations of foreign branches and
obligations of foreign banks subsidiaries of domestic banks, and
(including United States domestic and foreign branches and
branches of foreign banks) which agencies of foreign banks) to
in the opinion of BANK IV or obligations of banks which at the time
AMR, are of an investment of investment are branches or
quality comparable to subsidiaries of domestic banks which
obligations of United States meet the criteria in the preceding
banks which may be purchased by paragraph or are branches or agencies
the Fund. There is no limitation of foreign banks which (i) have more
on the amount of the Fund's than $10 billion, or the equivalent in
assets which may be invested in other currencies, in total assets; (ii)
obligations of foreign in terms of assets are among the 75
banks which meet these largest foreign banks in the world;
conditions. (nf) (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 the
Fund. (nf)
The Fund 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. (nf)
The Fund will limit its investment in
securities of foreign banks to not more
than 10% of total assets at the time of
investment. (nf)
- --------------------------------------------------------------------------------------------------
</TABLE>
B-24
<PAGE> 85
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
BOND INCOME FUND AND
INTERMEDIATE
SUBJECT MATTER OF BOND INCOME FUND PILOT DIVERSIFIED BOND INCOME FUND
RESTRICTION
<S> <C> <C>
- --------------------------------------------------------------------------------------------------
Municipal Notes Investments in municipal notes --
are limited to notes which are
rated at the date of purchase:
(i) MIG 1 or MIG 2 by Moody's
and in a comparable rating
category by at least one other
nationally recognized
statistical rating organization
that has rated the notes, or
(ii) in a comparable rating
category by only one such
organization, including Moody's,
if it is the only organization
that has rated the notes, or
(iii) if not rated, are, in the
opinion of BANK IV, of
comparable investment quality
and within the credit quality
policies and guidelines
established by the Board of
Trustees. (nf)
- --------------------------------------------------------------------------------------------------
Preferred Stock/ Preferred Stock and convertible The Fund does not currently intend to
Convertible securities are subject to a 35% purchase preferred stock or expect to
Securities of total assets limitation to invest more than 5% of net assets in
the extent that they do not convertible securities. (nf)
qualify as fixed income
securities for purposes of the
requirement that at least 65% of
the Fund's total assets be
invested in fixed income
securities. (nf)
</TABLE>
B-25
<PAGE> 86
CASH RESERVE MONEY MARKET FUND --
PILOT SHORT TERM DIVERSIFIED ASSETS FUND
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
PILOT SHORT-TERM DIVERSIFIED ASSETS
SUBJECT MATTER OF CASH RESERVE MONEY MARKET FUND FUND
RESTRICTION
<S> <C> <C>
- --------------------------------------------------------------------------------------------------
Industry Concentration The Fund may not purchase a The Fund may not purchase securities of
security if, as a result, more any issuer if immediately after such
than 25% of the value of its purchase the value of the Fund's
total assets would be invested investments in issuers conducting their
in securities of one or more principal business activity in any one
issuers conducting their industry would exceed 25% of the value
principal business activities in of the Fund's total assets, provided
the same industry (except that that: (a) the gas, electric, water and
the Fund may concentrate its telephone businesses will be considered
investments in obligations separate industries, (b) the personal
issued by the banking industry), credit and business credit businesses
provided that (a) this will be considered separate industries,
limitation shall not apply to (c) wholly- owned finance companies
obligations issued or guaranteed will be considered to be in the
by the U.S. Government or its industry of their parents if their
agencies and instrumentalities; activities are primarily related to
(b) wholly-owned finance financing the activity of their
companies will be considered to parents, (d) there is no limitation
be in the industries of their with respect to or arising out of
parents; and (c) utilities will investments in obligations issued or
be divided according to their guaranteed by the U.S. Government, its
services. For example, gas, gas agencies and instrumentalities or by
transmission, electric and gas, banks and (e) the Fund will invest more
electric, and telephone will than 25% of the value of its total
each be considered a separate assets in bank obligations (whether
industry. (F) foreign or domestic) except that if
adverse economic conditions prevail in
the banking industry the Fund may, for
defensive purposes, temporarily invest
less than 25% of the value of its total
assets in bank obligations (for the
purposes of this restriction, state and
municipal governments and their
agencies or authorities are not deemed
to be industries). (F)
(For purposes of this investment
restriction, each foreign government
will be considered a separate
industry.)
- --------------------------------------------------------------------------------------------------
</TABLE>
B-26
<PAGE> 87
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
PILOT SHORT-TERM DIVERSIFIED ASSETS
SUBJECT MATTER OF CASH RESERVE MONEY MARKET FUND FUND
RESTRICTION
<S> <C> <C>
- --------------------------------------------------------------------------------------------------
Lending The Fund may not make loans, The Fund may not make loans, except to
except loans of portfolio the extent that the purchase of debt
securities and except that the obligations in accordance with the
Fund may enter into repurchase Fund's investment objective and
agreements with respect to its policies and repurchase agreements with
portfolio securities and may banks, brokers, dealers and other
purchase the types of debt financial institutions may be deemed to
instruments described in its be loans. (F)
Prospectus or the Statement of
Additional Information. (F)
The Fund may lend its portfolio
securities in an amount up to
33 1/3% of its total assets to
brokers, dealers and financial
institutions, provided certain
regulatory conditions are met.
(nf)
- --------------------------------------------------------------------------------------------------
Borrowing The Fund may not borrow money or The Fund may not borrow money, except:
pledge, mortgage or hypothecate (a) as a temporary measure, and then
its assets, except that the Fund only in amounts not exceeding 5% of the
may enter into reverse value of the Fund's total assets, or
repurchase agreements or borrow (b) from banks, provided that
from banks up to 10% of the immediately after any such borrowing
current value of its net assets all borrowings of the Fund do not
for temporary or emergency exceed one-third of the Fund's total
purposes and those borrowings assets. While the Fund has borrowings
may be secured by the pledge of outstanding in an amount exceeding 5%
not more than 15% of the current of its total assets, it will not make
value of its total net assets any purchases of portfolio instruments.
(but investments may not be The Fund may not borrow money from
purchased by the Fund while any Boatmen's Bancshares, Inc. or any
such borrowings exist). (F) majority-owned subsidiary thereof. (F)
(The exceptions with regard to
borrowing are not for investment
leverage purposes, but are solely for
extraordinary or emergency purposes and
to facilitate management of the Fund by
enabling the Fund to meet redemption
requests when the liquidation of
portfolio instruments is deemed to be
disadvantageous or not possible. If,
due to market fluctuations or other
reasons, the net assets of the Fund
fall below 300% of its borrowings, the
Fund will promptly reduce its
borrowings in accordance with the 1940
Act.)
- --------------------------------------------------------------------------------------------------
</TABLE>
B-27
<PAGE> 88
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
PILOT SHORT-TERM DIVERSIFIED ASSETS
SUBJECT MATTER OF CASH RESERVE MONEY MARKET FUND FUND
RESTRICTION
<S> <C> <C>
- --------------------------------------------------------------------------------------------------
Real Estate, Oil and The Fund may not invest in real The Fund may not purchase or sell real
Gas, and Commodities property (including limited estate (except securities secured by
partnership interests but real estate or interests therein),
excluding real estate investment commodities, commodity contracts or oil
trusts and master limited and gas interests, or purchase any
partnerships), commodities, voting securities or invest in
commodity contracts, or oil, gas companies for the purpose of exercising
and other mineral resource, control or management. (F)
exploration, development, lease
or arbitrage transactions. (F)
- --------------------------------------------------------------------------------------------------
Underwriting and The Fund may not engage in the The Fund may not act as an underwriter
Short Sales business of underwriting of securities (except as the Fund may
securities of other issuers, be deemed to be an underwriter under
except to the extent that the the Securities Act of 1933 in
disposal of an investment connection with the purchase and sale
position may technically cause of instruments in accordance with its
it to be considered an investment objective and portfolio
underwriter as that term is management policies), make short sales
defined under the Securities Act of securities, or maintain a short
of 1933. (F) position. (F)
The Fund may not sell securities
short, except to the extent that
the Fund contemporaneously owns
or has the right to acquire at
no additional cost securities
identical to those sold short.
(F)
- --------------------------------------------------------------------------------------------------
Pledging The Fund may not borrow money or The Fund may not mortgage, pledge or
pledge, mortgage or hypothecate hypothecate any assets, except to
its assets, except that the Fund secure permitted borrowings. (F)
may enter into reverse
repurchase agreements or borrow
from banks up to 10% of the
current value of its net assets
for temporary or emergency
purposes and those borrowings
may be secured by the pledge of
not more than 15% of the current
value of its total net assets
(but investments may not be
purchased by the Fund while any
such borrowings exist). (F)
</TABLE>
B-28
<PAGE> 89
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
PILOT SHORT-TERM DIVERSIFIED ASSETS
SUBJECT MATTER OF CASH RESERVE MONEY MARKET FUND FUND
RESTRICTION
<S> <C> <C>
- --------------------------------------------------------------------------------------------------
Diversification The Fund will not, with respect The Fund may not purchase the
to 75% of its total assets, securities of any issuer other than the
invest more than 5% of its total U.S. Government, its agencies or
assets in the securities of any instrumentalities, if immediately after
one issuer (except for U.S. such purchase, more than 5% of the
Government securities), or value of the Fund's total assets would
purchase more than 10% of the be invested in any one issuer except
outstanding voting securities of that: (a) up to 25% of the value of its
any such issuer. (F) total assets may be invested without
(The Fund is subject to further regard to such 5% limitation, and (b)
diversification requirements such 5% limitation shall not apply to
(Rule 2a-7) with respect to 100% repurchase agreements collateralized by
of its assets. See the separate obligations of the U.S. Government, its
discussion of the Fund's agencies or instrumentalities. (F)
investment objective and (The Fund is subject to further
policies.) diversification requirements (Rule
2a-7) with respect to 100% of its
assets. See the separate discussion of
the Fund's investment objective and
policies.)
(For purposes of this restriction, a
guaranty of an instrument will be
considered a separate security (subject
to certain exclusions allowed under the
1940 Act).)
- --------------------------------------------------------------------------------------------------
Issuers Held by The Fund may not purchase or So long as it remains a policy of the
Directors, Officers, retain the securities of any Ohio Division of Securities, the Fund
or Affiliates (OH) issuer, if those individual may not purchase or retain the
officers and Trustees of the securities of an issuer if, to the
Trust, BANK IV or AMR, Furman Fund's knowledge, those officers,
Selz LLC, or Funds IV directors or Trustees of the Fund or
Distributor Inc., each owning its investment advisers, who
beneficially more than 1/2 of individually own beneficially more than
1% of the securities of such 0.5% of the outstanding securities of
issuer, together own more than such issuer together own beneficially
5% of the securities of such more than 5% of such outstanding
issuer. (F) securities. (nf)
- --------------------------------------------------------------------------------------------------
Unseasoned Issuers (OH) The Fund may not invest more So long as it remains a restriction of
than 5% of the current value of the Ohio Division of Securities, the
its total asset in the Fund will not purchase securities of
securities of companies which, any issuer with a record of less than
including predecessors, have a three years' continuous operations,
record of less than three years' including predecessors, except U.S.
continuous operation. (F) Government securities and obligations
issued or guaranteed by any foreign
government or its agencies or
instrumentalities, if such purchase
would cause the investments of the Fund
in all such Issuers to exceed 10% of
the Fund's total assets. (nf)
</TABLE>
B-29
<PAGE> 90
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
PILOT SHORT-TERM DIVERSIFIED ASSETS
SUBJECT MATTER OF CASH RESERVE MONEY MARKET FUND FUND
RESTRICTION
<S> <C> <C>
- --------------------------------------------------------------------------------------------------
Options The Fund may not write, purchase The Fund will not invest in or write
or sell puts, calls or puts, calls or combinations thereof
combinations thereof. (F) (except that the Fund may acquire puts
in connection with the acquisition of a
debt instrument). (nf)
- --------------------------------------------------------------------------------------------------
Margin The Fund may not purchase The Fund will not purchase securities
securities on margin, except on margin (except for delayed delivery
that the Fund may obtain such or when- issued transactions or such
short-term credits as may be short-term credits as are necessary for
necessary for the clearance of the clearance of transactions). (nf)
purchases and sales of
securities. (F)
- --------------------------------------------------------------------------------------------------
Illiquid Securities/ The Fund may not invest more The Fund may purchase securities that
Restricted Securities than 10% of the value of its net are not registered ("restricted
assets in investments which are securities") under the Securities Act
illiquid (including repurchase of 1933, including restricted
agreements having maturities of securities offered and sold to
more than seven calendar days, "qualified institutional buyers" under
variable and floating rate Rule 144A under the Securities Act of
demand and master demand notes 1933. However, the Fund will not invest
not requiring receipt of more than 10% of the value of its net
principal note amount within assets in securities which are
seven days notice and securities illiquid, which may include restricted
of foreign issuers which are not securities, unless the Board of
listed on a recognized domestic Trustees determines, based upon a
or foreign securities exchange). continuing review of the trading
(F) markets for the specific restricted
(The adviser and AMR will security, that such estricted
monitor the purchase of Rule securities are liquid. (nf)
144A securities to assure that
the total of all Rule 144A
securities held by the Fund does
not exceed 10% of the Fund's
average daily net assets. Rule
144A securities which are
determined to be liquid based
upon their trading markets will
not, however, be required to be
included among the securities
considered to be illiquid for
purposes of the Fund's
fundamental policy regarding
illiquid securities.)
- --------------------------------------------------------------------------------------------------
</TABLE>
B-30
<PAGE> 91
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
PILOT SHORT-TERM DIVERSIFIED ASSETS
SUBJECT MATTER OF CASH RESERVE MONEY MARKET FUND FUND
RESTRICTION
<S> <C> <C>
- --------------------------------------------------------------------------------------------------
Senior Securities The Fund may not issue senior --
securities, except insofar as
the Fund may be deemed to have
issued a senior security in
connection with any repurchase
agreement or any permitted
borrowing. (F)
- --------------------------------------------------------------------------------------------------
Other Investment The Fund may not invest more --
Companies than 10% of its net assets in
shares of other investment
companies. (F)
- --------------------------------------------------------------------------------------------------
Warrants The Fund may not invest more
than 5% of its net assets in
warrants which are unattached to
securities, included within that
amount, no more than 2% of the
value of the Fund's
net assets, may be warrants
which are not listed on the
New York or American Stock
Exchanges. (F)
- --------------------------------------------------------------------------------------------------
Loan Participations -- The Fund may only purchase a
participation interest if it is issued
by bank in the United States with
assets exceeding $1 billion. (nf)
- --------------------------------------------------------------------------------------------------
Control/Voting The Fund may not invest in The Fund may not purchase any voting
Securities companies for the purpose of securities or invest in companies for
exercising control or the purpose of exercising control or
management. (F) management. (F)
- --------------------------------------------------------------------------------------------------
</TABLE>
B-31
<PAGE> 92
THE PILOT FUNDS
3435 STELZER ROAD
COLUMBUS, OHIO 43219-3035
(800) 817-4568
STATEMENT OF ADDITIONAL INFORMATION
RELATING TO SPECIAL MEETING OF
SHAREHOLDERS OF THE FUNDS IV TRUST
This Statement of Additional Information is not a prospectus but should
be read in conjunction with the Combined Proxy Statement/Prospectus dated August
9, 1996 for the Special Meeting of Shareholders of Aggressive Stock
Appreciation Fund, Value Stock Appreciation Fund, Stock Appreciation Fund, Bond
Income Fund, Intermediate Bond Income Fund, and Cash Reserve Money Market Fund
(collectively the "Funds IV Funds" or the "Reorganizing Funds" each a "Funds IV
Fund" or a "Reorganizing Fund"), each a series of FUNDS IV Trust ("Funds IV
Trust"), to be held on September 17, 1996. Copies of the Combined Proxy
Statement/Prospectus may be obtained at no charge by calling Pilot Funds
Distributors, Inc. at 1-800-817-4568 (1-800-81-PILOT).
Unless otherwise indicated, capitalized terms used herein and not
otherwise defined have the same meanings as are given to them in the Combined
Proxy Statement/Prospectus.
The audited financial statements including notes and the report of the
accountants thereon contained in the Annual Reports dated August 31, 1995 and
the audited financial statements including notes and the report of the
accountants thereon contained in the Semi-Annual Reports dated February 29,
1996, for Pilot Growth and Income Fund and Pilot Short-Term Diversified Assets
Fund are hereby incorporated herein by reference and included herewith. Pilot
Growth Fund and Pilot Diversified Bond Income Fund were not operational as of
February 29, 1996. No other parts of the Annual Reports or Semi-Annual Reports
are incorporated herein by reference.
Further information about the Reorganizing Funds is contained in and
incorporated by reference to Funds IV Trust's Statement of Additional
Information dated January 30, 1996, which is included herewith. The audited
financial statements for the Reorganizing Funds contained in their Annual
Report, dated June 30, 1995 and their unaudited financial statements contained
in their Semi-Annual Report dated December 31, 1995 are incorporated herein by
reference and included herewith. No other parts of the Annual Report or
Semi-Annual Report are incorporated herein by reference.
Further information about The Pilot Funds is contained in, and
incorporated herein by reference to, the Statements of Additional Information
for Pilot Growth Fund, Pilot Growth and Income Fund, Pilot Diversified Bond
Income Fund, and Pilot Short-Term Diversified Assets Fund (each an "Acquiring
Fund" and collectively, the "Acquiring Funds"), which are included herewith.
The date of this Statement of Additional Information is August 9, 1996.
1
<PAGE> 93
TABLE OF CONTENTS
<TABLE>
<S> <C>
General Information................................................................. 3
Pro Forma Financial Statements...................................................... 4
</TABLE>
2
<PAGE> 94
GENERAL INFORMATION
The shareholders of the Funds IV Funds are being asked to consider and
approve an Agreement and Plan of Reorganization (the "Reorganization Agreement")
by and between Funds IV Trust and The Pilot Funds and the transactions
contemplated thereby.
The Reorganization Agreement provides that each Reorganizing Fund will
transfer substantially all its assets and its stated liabilities corresponding
Acquiring Fund identified below opposite its name:
REORGANIZING FUNDS CORRESPONDING ACQUIRING FUNDS
- ------------------ -----------------------------
Aggressive Stock Appreciation Fund Pilot Growth Fund
Value Stock Appreciation Fund Pilot Growth and Income Fund
Stock Appreciation Fund Pilot Growth and Income Fund
Bond Income Fund Pilot Diversified Bond Income Fund
Intermediate Bond Income Fund Pilot Diversified Bond Income Fund
Cash Reserve Money Market Fund Pilot Short-Term Diversified Assets Fund
In exchange for the transfers of these assets and liabilities pursuant
to the Reorganization Agreement, The Pilot Funds will simultaneously issue
shares of each Acquiring Fund to its corresponding Reorganizing Fund according
to the pairings shown in the table above. Each Reorganizing Fund will then
distribute shares of the corresponding Acquiring Fund to its shareholders, in
liquidation of the Reorganizing Fund. As a result upon effectiveness of each
reorganization, the Reorganizing Fund will cease to exist and its shareholders
will be shareholders of the corresponding Acquiring Fund.
The Special Shareholders Meeting of Funds IV Trust to consider the
Reorganization Agreement and the related transactions will be held at the
offices of Furman Selz LLC, 237 Park Avenue, New York, New York, Suite 910, on
September 17, 1996 at 10:00 a.m. Eastern Time.
For further information about these transactions, see the Combined Proxy
Statement/Prospectus.
3
<PAGE> 95
FUNDS IV TRUST
AGGRESSIVE STOCK APPRECIATION FUND
VALUE STOCK APPRECIATION FUND
STOCK APPRECIATION FUND
BOND INCOME FUND
INTERMEDIATE BOND INCOME FUND
CASH RESERVE MONEY MARKET FUND
THE PILOT FUNDS
PILOT GROWTH FUND
PILOT GROWTH AND INCOME FUND
PILOT DIVERSIFIED BOND INCOME FUND
PILOT SHORT-TERM DIVERSIFIED ASSETS FUND
INTRODUCTION TO PROPOSED FUND MERGERS
The accompanying unaudited Pro Forma Combined Statements of Assets and
Liabilities, Statements of Operations and Schedules of Portfolio Investments
reflect the accounts of Funds IV Trust -- including Aggressive Stock
Appreciation Fund, Value Stock Appreciation Fund, Stock Appreciation Fund, Bond
Income Fund, Intermediate Bond Income Fund and Cash Reserve Money Market Fund
- -- and The Pilot Funds -- including Pilot Growth Fund, Pilot Growth and Income
Fund, Pilot Diversified Bond Income Fund and Pilot Short-Term Diversified
Assets Fund -- as of and for the year ended February 29, 1996. These statements
have been derived from books and records utilized in calculating daily net
asset value at February 29, 1996.
<PAGE> 96
<TABLE>
Pilot Growth Fund
Pro Forma Combined Statement of Assets and Liabilities
February 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------------
(Unaudited)
<CAPTION>
Funds IV Trust The Pilot Funds
Aggressive Stock Pilot Growth Pro Forma Pro Forma
Appreciation Fund Fund Adjustments Combined
----------------- --------------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Investment in securities, at value (cost $49,428,753;
$49,428,753; respectively) $59,103,651 $59,103,651
Cash $ (7,050) (7,050)
Dividends receivable 59,252 59,252
Interest receivable 15,669 15,669
Deferred organization costs and other assets 18,155 18,155
- ---------------------------------------------------------------------------------------------------------------------------------
Total Assets 59,196,727 - (7,050) 59,189,677
- ---------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Advisory fees payable 34,762 34,762
Administration fees payable 6,999 6,999
Funds IV shareholder services payable 2,333 2,333
Other accrued expenses 71,164 71,164
- ---------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 115,258 - - 115,258
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets $59,081,469 $ - $ (7,050) $59,074,419
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER
SHARE (UNLIMITED NUMBER OF SHARES AUTHORIZED):
PILOT SHARES:
Net assets $ 59,074,419 $59,074,419
Shares of beneficial interest issued and outstanding 4,818,699 4,818,699
Net asset value $ 12.26
- ---------------------------------------------------------------------------------------------------------------------------------
SERVICE SHARES:
Net assets $59,074,419 $(59,074,419) $ -
Shares of beneficial interest issued and outstanding 4,818,699 (4,818,699) -
Net asset value $ 12.26
- ---------------------------------------------------------------------------------------------------------------------------------
PREMIUM SHARES:
Net assets $ 7,050 $ (7,050) $ -
Shares of beneficial interest issued and outstanding 575 (575) -
Net asset value $ 12.26
- ---------------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS:
Paid-in capital $49,076,981 $ (7,050) $49,069,931
Undistributed net investment income (665,107) (665,107)
Accumulated undistributed net realized gains from
investment transactions 994,697 994,697
Net unrealized appreciation from investments 9,674,898 9,674,898
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets, February 29, 1996 $ 59,081,469 $ - $ (7,050) $59,074,419
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
See Notes to Pro Forma Combined Financial Statements.
</TABLE>
<PAGE> 97
<TABLE>
Pilot Growth Fund
Pro Forma Combined Statement of Operations
For the year ended February 29, 1996
(Unaudited)
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
Funds IV Trust The Pilot Funds
Aggressive Stock Pilot Pro Forma Pro Forma
Appreciation Fund Growth Fund Adjustments Combined
----------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 688,238 $ 688,238
Interest 116,722 116,722
- -------------------------------------------------------------------------------------------------------------------
TOTAL INCOME 804,960 - - 804,960
- -------------------------------------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 367,403 2,466 369,869
Administration fees 73,974 (17,261) 56,713
Shareholder servicing fees 24,658 (24,658) -*
Custodian fees and expenses 14,794 (2,564) 12,230
Accounting fees 37,316 (4,241) 33,075
Audit fees 25,038 25,038
Transfer agent fees and expenses 3,568 3,568
Reports to shareholders 6,596 6,596
Registration fees 9,664 9,664
Amortization of organization expenses 4,527 4,527
Legal fees 8,409 8,409
Trustees' fees 4,290 4,290
Insurance expenses 2,629 2,629
Other expenses 4,387 4,387
- -------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES 587,253 - (46,258) 565,653
- -------------------------------------------------------------------------------------------------------------------
Less: Fee waivers and expense reimbursements
by advisor, administrator, and distributor - (63,553) (88,211)
- -------------------------------------------------------------------------------------------------------------------
NET EXPENSES 587,253 - (109,811) 477,442
- -------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 217,707 - 109,811 327,518
- -------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAINS (LOSSES)
FROM INVESTMENTS:
Net realized gains from investment
and futures transactions 906,293 906,293
Net change in unrealized appreciation
from investments and futures 13,688,402 13,688,402
- -------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAINS FROM INVESTMENT 14,594,695 - - 14,594,695
- -------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $14,812,402 $- $ 109,811 $14,922,213
===================================================================================================================
<FN>
* Upon exchanging into Pilot Shares pursuant to the reorganization, Funds
IV Trust Service Shares will not participate in the shareholder servicing plan,
and will incur no shareholder servicing fees as a direct result of the
reorganization.
</TABLE>
- --------------------------------------------------------------
See Notes to Pro Forma Combined Financial Statements.
<PAGE> 98
<TABLE>
PILOT GROWTH FUND
- -------------------------------------------------------------------------------------------------------
PRO FORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 29, 1996
(Unaudited)
- -------------------------------------------------------------------------------------------------------
<CAPTION>
Shares Security Description Value
- -------------------------------------------------------------------------------------------------------
Funds IV Trust The Pilot Pro Forma Funds IV Trust The Pilot Pro Forma
Agressive Funds Agressive Funds
Stock Stock
Appreciation Pilot Growth Combined Appreciation Pilot Growth Combined
Fund Fund Fund Fund
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
COMMON STOCKS--93.8%
CONSUMER CYCLICAL--10.1%
AUTO & TRUCKS--1.1%
20,500 20,500 Ford Motor Co. $ 640,625 $ $ 640,625
--------- ---------
HOMEBUILDERS--2.2%
69,000 69,000 Clayton Homes, Inc. 1,302,375 1,302,375
--------- ---------
MEDIA--6.8%
60,500 60,500 Bowne & Co., Inc. 1,134,375 1,134,375
80,000 80,000 Heritage Media Corp. 2,890,000 2,890,000
--------- ---------
4,024,375 4,024,375
--------- ---------
CONSUMER GOODS & STAPLES--3.9%
CONSUMER NON-DURABLE--2.6%
24,000 24,000 Nike Inc. Class B 1,557,000 1,557,000
--------- ---------
TOBACCO--1.3%
7,500 7,500 Philip Morris Cos., Inc. 742,500 742,500
--------- ---------
ENERGY--6.1%
OIL / GAS--4.0%
25,000 25,000 Amoco Corp. 1,737,500 1,737,500
14,000 14,000 Tosco Corp. 624,750 624,750
--------- ---------
2,362,250 2,362,250
--------- ---------
OIL / GAS EQUIPMENT--2.1%
46,000 46,000 Baker Hughes, Inc. 1,213,250 1,213,250
--------- ---------
FINANCE--14.9%
BANKING--6.1%
11,300 11,300 First Interstate Bancorp 1,846,138 1,846,138
</TABLE>
<PAGE> 99
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
10,500 10,500 Mellon Bank Corp. 586,687 586,687
26,000 26,000 State Street Boston Corp. 1,176,500 1,176,500
--------- ---------
3,609,325 3,609,325
--------- ---------
FINANCE-BROKERS--3.9%
34,000 34,000 Donaldson Lufkin &
Jenrette, Inc. 1,062,500 1,062,500
51,000 51,000 Lehman Brothers Holding, Inc. 1,262,250 1,262,250
--------- ---------
2,324,750 2,324,750
--------- ---------
FINANCIAL SERVICES--4.3%
18,000 18,000 American Express Co. 828,000 828,000
54,000 54,000 Federal National Mortgage
Association 1,707,750 1,707,750
--------- ---------
2,535,750 2,535,750
--------- ---------
INSURANCE--0.6%
6,800 6,800 ITT Hartford Group, Inc. 350,200 350,200
--------- ---------
HEALTH CARE--10.0%
MEDICAL SERVICES--1.9%
20,180 20,180 Columbia /HCA Healthcare Corp. 1,104,855 1,104,855
--------- ---------
PHARMACEUTICALS--8.1%
7,000 7,000 Allergan, Inc. 260,750 260,750
25,600 25,600 Amgen, Inc. 1,529,600 1,529,600
7,000 7,000 Johnson & Johnson 654,500 654,500
35,500 35,500 Merck & Co., Inc. 2,351,875 2,351,875
--------- ---------
4,796,725 4,796,725
--------- ---------
INDUSTRIAL GOODS AND SERVICES--18.5%
AEROSPACE / DEFENSE--2.6%
7,000 7,000 Lockheed Martin Corp. 533,750 533,750
18,100 18,100 Rockwell International Corp. 1,031,700 1,031,700
--------- ---------
1,565,450 1,565,450
--------- ---------
CHEMICALS--7.6%
10,000 10,000 Air Products & Chemicals, Inc. 532,500 532,500
27,400 27,400 Cabot Corp. 1,657,700 1,657,700
36,000 36,000 IMC Global, Inc. 1,485,000 1,485,000
6,150 6,150 Monsanto Co. 827,944 827,944
--------- ---------
4,503,144 4,503,144
--------- ---------
ELECTRICAL EQUIPMENT--0.9%
25,200 25,200 Baldor Electric Co. 548,100 548,100
--------- ---------
ELECTRONICS--0.2%
6,000 6,000 Teradyne, Inc. 122,250 122,250
--------- ---------
METALS, MINING, IRON--1.9%
34,000 34,000 Kennametal Inc. 1,100,750 1,100,750
--------- ---------
</TABLE>
<PAGE> 100
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
MINING--3.7%
72,000 72,000 Barrick Gold Corp. 2,178,000 2,178,000
--------- ---------
RAW MATERIALS--1.6%
16,500 16,500 Aluminum Company of America 936,375 936,375
--------- ---------
LEISURE--6.4%
ENTERTAINMENT--3.5%
31,500 31,500 Grand Casinos, Inc. 1,004,063 1,004,063
6,800 6,800 ITT Corp. 410,550 410,550
10,045 10,045 The Walt Disney Co. 657,947 657,947
--------- ---------
2,072,560 2,072,560
--------- ---------
RECREATION--1.9%
25,000 25,000 Coleman Co., Inc. 1,093,750 1,093,750
--------- ---------
TOYS--1.0%
17,812 17,812 Mattel, Inc. 592,249 592,249
--------- ---------
MANUFACTURING--2.8%
MACHINERY--2.5%
14,900 14,900 Atchinson Casting Corp. 178,800 178,800
24,700 24,700 Case Corp. 1,312,188 1,312,188
--------- ---------
1,490,988 1,490,988
--------- ---------
MANUFACTURING--0.3%
6,800 6,800 ITT Industries, Inc. 178,500 178,500
--------- ---------
MATERIALS & PROCESSING--1.1%
FOREST PRODUCTS & PAPERS--1.1%
16,000 16,000 Champion International Corp. 640,000 640,000
--------- ---------
RETAILING--4.5%
RETAIL-SPECIALTY LINE--4.5%
33,500 33,500 Corporate Express, Inc. 996,625 996,625
28,000 28,000 OfficeMax, Inc. 602,000 602,000
29,950 29,950 PetSmart, Inc. 1,040,762 1,040,762
--------- ---------
2,639,387 2,639,387
--------- ---------
TECHNOLOGY--12.6%
COMPUTER EQUIPMENT--7.1%
75,000 75,000 Comdisco, Inc. 1,537,500 1,537,500
46,000 46,000 Compaq Computer Corp. 2,328,750 2,328,750
</TABLE>
<PAGE> 101
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
3,400 3,400 Hewlett Packard Co. 342,550 342,550
--------- ---------
4,208,800 4,208,800
--------- ---------
COMPUTER SOFTWARE & SERVICES--1.3%
11,000 11,000 Computer Associates
International, Inc. 756,250 756,250
--------- ---------
TELECOMMUNICATIONS--4.2%
30,000 30,000 Equifax, Inc. 622,500 622,500
11,000 11,000 Motorola, Inc. 596,750 596,750
23,500 23,500 SBC Communications, Inc. 1,289,562 1,289,562
--------- ---------
2,508,812 2,508,812
--------- ---------
UTILITIES--2.9%
ELECTRIC--2.9%
43,000 43,000 California Energy Co., Inc. 956,750 956,750
5,500 5,500 Cilcorp, Inc. 236,500 236,500
16,000 16,000 Unicom Corp. 512,000 512,000
--------- ---------
1,705,250 1,705,250
----------------------------------------------------------------------
TOTAL COMMON STOCKS
(COST $45,729,697) 55,404,595 55,404,595
----------------------------------------------------------------------
MONEY MARKET ACCOUNT--6.2%
2,450,000 2,450,000 Federated Prime Obligation
Trust #10 2,450,000 2,450,000
1,249,056 1,249,056 Government Obligation Trust #5 1,249,056 1,249,056
----------------------------------------------------------------------
TOTAL MONEY MARKET ACCOUNTS
(COST $3,699,056) 3,699,056 3,699,056
----------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS--100.0%
(COST $49,428,753) 59,103,651 59,103,651
LIABILITIES IN EXCESS
OF OTHER ASSETS--0.0% (22,182) (29,232)
---------------------------------------------------------------------
NET ASSETS--100.0% $59,081,469 $59,074,419
- --------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 102
<TABLE>
Pilot Growth and Income Fund
Pro Forma Combined Statement of Assets and Liabilities
February 29, 1996
(Unaudited)
- ------------------------------------------------------------------------------------------------------------
<CAPTION>
Funds IV Trust Funds IV Trust The Pilot Funds
Value Stock Stock Pilot Growth and Income
Appreciation Fund Appreciation Fund Fund
----------------- ----------------- -----------------------
<S> <C> <C> <C>
ASSETS
Investment in securities, at value (cost $22,046,329;
$137,435,705; $129,847,775; $289,329,809;
respectively) $26,304,082 $164,198,903 $151,795,271
Repurchase agreements, at cost - - 9,241,000
-----------------------------------------------
26,304,082 164,198,903 161,036,271
Cash - 65,724 233
Dividends receivable 70,889 346,169 297,705
Interest receivable 2,028 27,762 1,373
Receivable for Portfolio shares sold - - 574,237
Receivable from brokers from investments sold - 516,081 -
Deferred organization costs and other assets 31,405 21,750 72,694
- -------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 26,408,404 165,176,389 161,982,513
- -------------------------------------------------------------------------------------------------------------
LIABILITIES
Advisory fees payable 36,325 85,229 62,732
Administration fees payable 3,184 19,668 13,860
Distribution expenses payable (Class A Shares) 1,198
Distribution expenses payable (Class B Shares) 2,967
Funds IV shareholder services fees payable 1,061 6,556
Payable to brokers for investments purchased - - 1,292,275
Dividends payable - - 190,958
Payable for Portfolio shares redeemed - - 69,361
Other accrued expenses 135,981 39,234 71,122
- -------------------------------------------------------------------------------------------------------------
Total Liabilities 176,551 150,687 1,704,473
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
NET ASSETS $26,231,853 $165,025,702 $160,278,040
- -------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER
SHARE (UNLIMITED NUMBER OF SHARES AUTHORIZED):
PILOT SHARES:
Net assets $156,537,553
Shares of beneficial interest issued and outstanding 12,384,869
Net asset value $ 12.64
- -------------------------------------------------------------------------------------------------------------
SERVICE /CLASS A SHARES:
Net assets $26,231,777 $165,018,278 $ 1,762,540
Shares of beneficial interest issued and outstanding 2,125,426 12,803,324 139,471
Net asset value $ 12.34 $ 12.89 $ 12.64
- -------------------------------------------------------------------------------------------------------------
Sales charge-0.00%, 0.00%, 4.50%,
and 4.50%, respectively, of offering price $ - $ - $ 0.60
- -------------------------------------------------------------------------------------------------------------
Maximum offering price $ 12.34 $ 12.89 $ 13.24
- -------------------------------------------------------------------------------------------------------------
PREMIUM /CLASS B SHARES:
Net assets $ 76 $ 7,424 $ 1,977,947
Shares of beneficial interest issued and outstanding 6 576 156,394
Net asset value $ 12.34 $ 12.89 $ 12.65
- -------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS:
Paid-in capital $21,742,653 $129,674,889 $133,821,616
Undistributed net investment income 82,579 308,407 -
Accumulated undistributed net realized gains from
investment transactions 148,868 8,279,208 4,508,928
Net unrealized appreciation from investments 4,257,753 26,763,198 21,947,496
- -------------------------------------------------------------------------------------------------------------
Net Assets, February 29, 1996 $26,231,853 $165,025,702 $160,278,040
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
Pro Forma Pro Forma
Adjustments Combined
<S> <C> <C>
ASSETS
Investment in securities, at value (cost $22,046,329;
$137,435,705; $289,329,809; respectively) $ 342,298,256
Repurchase agreements, at cost 9,241,000
--------------------------------
- 351,539,256
Cash $ (7,500) 58,457
Dividends receivable 714,763
Interest receivable 31,163
Receivable for Portfolio shares sold 574,237
Receivable from brokers from investments sold 516,081
Deferred organization costs and other assets 125,849
- ----------------------------------------------------------------------------------------------
TOTAL ASSETS (7,500) 353,559,806
- ----------------------------------------------------------------------------------------------
LIABILITIES
Advisory fees payable 184,286
Administration fees payable 36,712
Distribution expenses payable (Class A Shares) 1,198
Distribution expenses payable (Class B Shares) 2,967
Funds IV shareholder services fees payable 7,617
Payable to brokers for investments purchased 1,292,275
Dividends payable 190,958
Payable for Portfolio shares redeemed 69,361
Other accrued expenses 246,337
- ----------------------------------------------------------------------------------------------
Total Liabilities - 2,031,711
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
NET ASSETS $ (7,500) $351,528,095
- ----------------------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER
SHARE (UNLIMITED NUMBER OF SHARES AUTHORIZED):
PILOT SHARES:
Net assets $ 191,250,055 $347,787,608
Shares of beneficial interest issued and outstanding 15,131,535 27,516,404
Net asset value $ 12.64
- ----------------------------------------------------------------------------------------------
SERVICE/CLASS A SHARES:
Net assets $(191,250,055) $ 1,762,540
Shares of beneficial interest issued and outstanding (14,928,750) 139,471
Net asset value $ 12.64
- ----------------------------------------------------------------------------------------------
Sales charge-0.00%, 0.00%, 4.50%,
and 4.50%, respectively, of offering price $ 0.60
- ----------------------------------------------------------------------------------------------
Maximum offering price $ 13.24
- ----------------------------------------------------------------------------------------------
PREMIUM/CLASS B SHARES:
Net assets $ (7,500) $ 1,977,947
Shares of beneficial interest issued and outstanding (582) 156,394
Net asset value $ 12.65
- ----------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS:
Paid-in capital $ (7,500) $285,231,658
Undistributed net investment income 390,986
Accumulated undistributed net realized gains from -
investment transactions 12,937,004
Net unrealized appreciation from investments 52,968,447
- ----------------------------------------------------------------------------------------------
Net Assets, February 29, 1996 $ (7,500) $351,528,095
- ----------------------------------------------------------------------------------------------
</TABLE>
See Notes to Pro Forma Combined Financial Statements.
<PAGE> 103
<TABLE>
Pilot Growth and Income Fund
Pro Forma Combined Statement of Assets and Liabilities
February 29, 1996
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Funds IV Trust The Pilot Funds
Value Stock Pilot Growth and Income Pro Forma Pro Forma
Appreciation Fund Fund Adjustments Combined
----------------- ----------------------- ----------- -------------
<S> <C> <C> <C> <C>
ASSETS
Investment in securities, at value (cost $22,046,329;
$129,847,775; $151,894,104; respectively) $26,304,082 $151,795,271 $178,099,353
Repurchase agreements, at cost - 9,241,000 9,241,000
------------------------------------------------------------------------
26,304,082 161,036,271 - 187,340,353
Cash - 233 $ (76) 157
Dividends receivable 70,889 297,705 368,594
Interest receivable 2,028 1,373 3,401
Receivable for Portfolio shares sold - 574,237 574,237
Receivable from brokers from investments sold - - -
Deferred organization costs and other assets 31,405 72,694 104,099
- ------------------------------------------------------------------------------------------------------------------------------------
Total Assets 26,408,404 161,982,513 (76) 188,390,841
- ------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Advisory fees payable 36,325 62,732 99,057
Administration fees payable 3,184 13,860 17,044
Distribution expenses payable (Class A Shares) 1,198 1,198
Distribution expenses payable (Class B Shares) 2,967 2,967
Funds IV shareholder services payable 1,061 1,061
Payable to brokers for investments purchased - 1,292,275 1,292,275
Dividends payable - 190,958 190,958
Payable for Portfolio shares redeemed - 69,361 69,361
Other accrued expenses 135,981 71,122 207,103
- ------------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 176,551 1,704,473 - 1,881,024
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets $26,231,853 $160,278,040 $ (76) $186,509,817
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER
SHARE (UNLIMITED NUMBER OF SHARES AUTHORIZED):
PILOT SHARES:
Net assets $156,537,553 $ 26,231,778 $182,769,331
Shares of beneficial interest issued and outstanding 12,384,869 2,074,981 14,459,850
Net asset value $ 12.64 $ 12.64
- ------------------------------------------------------------------------------------------------------------------------------------
SERVICE/CLASS A SHARES:
Net assets $26,231,778 $ 1,762,540 $(26,231,778) $ 1,762,540
Shares of beneficial interest issued and outstanding 2,125,426 139,471 (2,125,426) 139,471
Net asset value $ 12.34 $ 12.64 $ 12.64
- ------------------------------------------------------------------------------------------------------------------------------------
Sales charge-0.00%, 4.50%,
and 4.50%, respectively, of offering price $ - $ 0.60 $ 0.60
- ------------------------------------------------------------------------------------------------------------------------------------
Maximum offering price $ 12.34 $ 13.24 $ 13.24
- ------------------------------------------------------------------------------------------------------------------------------------
PREMIUM/CLASS B SHARES:
Net assets $ 76 $ 1,977,947 $ (76) $ 1,977,947
Shares of beneficial interest issued and outstanding 6 156,394 (6) 156,394
Net asset value $ 12.34 $ 12.65 $ 12.65
- ------------------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS:
Paid-in capital $21,742,653 $133,821,616 $ (76) $155,564,193
Undistributed net investment income 82,579 82,579
Accumulated undistributed net realized gains from -
investment transactions 148,868 4,508,928 4,657,796
Net unrealized appreciation from investments 4,257,753 21,947,496 26,205,249
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets, February 29, 1996 $26,231,853 $160,278,040 $ (76) $186,509,817
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Pro Forma Combined Financial Statements.
<PAGE> 104
<TABLE>
Pilot Growth and Income Fund
Pro Forma Combined Statement of Assets and Liabilities
February 29, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Funds IV Trust The Pilot Funds
Stock Pilot Growth and Income Pro Forma Pro Forma
Appreciation Fund Fund Adjustments Combined
----------------- ----------------------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Investment in securities, at value (cost $137,435,705;
$129,847,775; $267,283,480; respectively) $164,198,903 $151,795,271 $315,994,174
Repurchase agreements, at cost - 9,241,000 9,241,000
------------------------------------------------------------------------
164,198,903 161,036,271 - 325,235,174
Cash 65,724 233 $ (7,424) 58,533
Dividends receivable 346,169 297,705 643,874
Interest receivable 27,762 1,373 29,135
Receivable for Portfolio shares sold - 574,237 574,237
Receivable from brokers from investments sold 516,081 - 516,081
Deferred organization costs and other assets 21,750 72,694 94,444
- ------------------------------------------------------------------------------------------------------------------------------------
Total Assets 165,176,389 161,982,513 (7,424) 327,151,478
- ------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Advisory fees payable 85,229 62,732 147,961
Administration fees payable 19,668 13,860 33,528
Distribution expenses payable (Class A Shares) 1,198 1,198
Distribution expenses payable (Class B Shares) 2,967 2,967
Funds IV shareholder services fees payable 6,556 6,556
Payable to brokers for investments purchased - 1,292,275 1,292,275
Dividends payable - 190,958 190,958
Payable for Portfolio shares redeemed - 69,361 69,361
Other accrued expenses 39,234 71,122 110,356
- ------------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 150,687 1,704,473 - 1,855,160
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets $165,025,702 $160,278,040 $ (7,424) $325,296,318
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER
SHARE (UNLIMITED NUMBER OF SHARES AUTHORIZED):
PILOT SHARES:
Net assets $156,537,553 $ 165,018,278 $321,555,831
Shares of beneficial interest issued and outstanding 12,384,869 13,056,554 25,441,423
Net asset value $ 12.64 $ 12.64
- ------------------------------------------------------------------------------------------------------------------------------------
SERVICE /CLASS A SHARES:
Net assets $165,018,278 $ 1,762,540 $(165,018,278) $ 1,762,540
Shares of beneficial interest issued and outstanding 12,803,324 139,471 (12,803,324) 139,471
Net asset value $ 12.89 $ 12.64 $ 12.64
- ------------------------------------------------------------------------------------------------------------------------------------
Sales charge-0.00%, 4.50%,
and 4.50%, respectively, of offering price $ - $ 0.60 $ 0.60
- ------------------------------------------------------------------------------------------------------------------------------------
Maximum offering price $ 12.89 $ 13.24 $ 13.24
- ------------------------------------------------------------------------------------------------------------------------------------
PREMIUM /CLASS B SHARES:
Net assets $ 7,424 $ 1,977,947 $ (7,424) $ 1,977,947
Shares of beneficial interest issued and outstanding 576 156,394 (576) 156,394
Net asset value $ 12.89 $ 12.65 $ 12.65
- ------------------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS:
Paid-in capital $129,674,889 $133,821,616 $ (7,424) $263,489,081
Undistributed net investment income 308,407 308,407
Accumulated undistributed net realized gains from -
investment transactions 8,279,208 4,508,928 12,788,136
Net unrealized appreciation from investments 26,763,198 21,947,496 48,710,694
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets, February 29, 1996 $165,025,702 $160,278,040 $ (7,424) $325,296,318
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Pro Forma Combined Financial Statements.
<PAGE> 105
<TABLE>
Pilot Growth and Income Fund
Pro Forma Combined Statement of Operations
For the year ended February 29, 1996
(Unaudited)
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Funds IV Trust Funds IV Trust The Pilot Funds
Value Stock Stock Pilot Growth and Income Pro Forma Pro Forma
Appreciation Fund Appreciation Fund Fund Adjustments Combined
----------------- ----------------- ----------------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign taxes of $15,031) $ 572,946 $ 2,802,004 $ 2,742,940 $ - $ 6,117,890
Interest 168,595 326,201 281,311 776,107
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME 741,541 3,128,205 3,024,251 - 6,893,997
- -----------------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 145,204 910,706 895,128 162,448 2,113,486
Administration fees 33,508 210,163 131,420 (56,857) 318,234
Shareholder servicing fees 11,169 70,055 - (81,224) -*
Distribution expenses (Class A Shares) 1,835 1,835*
Distribution expenses (Class B Shares) 8,685 8,685*
Custodian fees and expenses 20,558 42,032 69,323 (42,236) 89,677
Accounting fees 3,754 38,686 - (23,474) 18,966
Audit fees 6,702 26,621 52,509 85,832
Transfer agent fees and expenses 33,340 9,889 34,120 77,349
Reports to shareholders 2,307 16,590 22,880 41,777
Registration fees 9,153 30,327 49,701 89,181
Amortization of organization expenses 4,491 4,527 18,195 27,213
Legal fees 2,628 20,630 4,068 27,326
Trustees' fees 945 10,654 1,761 (11,599) 1,761
Insurance expenses 456 7,446 - 7,902
Other expenses 4,875 3,860 9,368 18,103
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES 279,090 1,402,186 1,298,993 (52,942) 2,927,327
- -----------------------------------------------------------------------------------------------------------------------------------
Less: Fee waivers and expense reimbursements
by advisor, administrator, and distributor (23,774) (19,024) (404,849) 19,372 (428,275)
- -----------------------------------------------------------------------------------------------------------------------------------
NET EXPENSES 255,316 1,383,162 894,144 (33,570) 2,499,052
- -----------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 486,225 1,745,043 2,130,107 33,570 4,394,945
- -----------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAINS (LOSSES)
FROM INVESTMENTS:
Net realized gains from investment
and futures transactions 521,724 11,837,933 7,042,824 19,402,481
Net change in unrealized appreciation
from investments and futures 5,462,557 38,264,383 16,667,921 60,394,861
- -----------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAINS FROM
INVESTMENTS S5,984,281 50,102,316 23,710,745 - 79,797,342
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $6,470,506 $51,847,359 $25,840,852 $ 33,570 $84,192,287
===================================================================================================================================
<FN>
* Upon exchanging into Pilot Shares pursuant to the reorganization, Funds
IV Trust Service Shares will not participate in the distribution or shareholder
servicing plans, and will incur neither distribution nor shareholder servicing
fees as a direct result of the reorganization. Further, the reorganization will
not affect distribution fees of Class A and Class B Shares.
</TABLE>
- ----------------------------------------------------
See Notes to Pro Forma Combined Financial Statements.
<PAGE> 106
<TABLE>
Pilot Growth and Income Fund
Pro Forma Combined Statement of Operations
For the year ended February 29, 1996
(Unaudited)
- ------------------------------------------------------------------------------------------------------------------
Funds IV Trust The Pilot Funds
Value Stock Pilot Growth and Income Pro Forma Pro Forma
Appreciation Fund Fund Adjustments Combined
----------------- ----------------------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign taxes of $15,031) $ 572,946 $ 2,742,940 $ - $ 3,315,886
Interest 168,595 281,311 449,906
- --------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME 741,541 3,024,251 - 3,765,792
- --------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 145,204 895,128 22,339 1,062,671
Administration fees 33,508 131,420 (7,819) 157,109
Shareholder servicing fees 11,169 - (11,169) -*
Distribution expenses (Class A Shares) - 1,835 1,835*
Distribution expenses (Class B Shares) - 8,685 8,685*
Custodian fees and expenses 6,702 69,323 (5,808) 70,217
Accounting fees 33,340 - (2,457) 30,883
Audit fees 20,558 52,509 73,067
Transfer agent fees and expenses 3,754 34,120 37,874
Reports to shareholders 2,307 22,880 25,187
Registration fees 9,153 49,701 58,854
Amortization of organization expenses 4,491 18,195 22,686
Legal fees 2,628 4,068 6,696
Trustees' fees 945 1,761 (945) 1,761
Insurance expenses 456 - 456
Other expenses 4,875 9,368 14,243
- --------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES 279,090 1,298,993 (5,859) 1,572,224
- --------------------------------------------------------------------------------------------------------------------------
Less: Fee waivers and expense reimbursements
by advisor, administrator, and distributor (23,774) (404,849) 2,144 (426,479)
- --------------------------------------------------------------------------------------------------------------------------
NET EXPENSES 255,316 894,144 (3,715) 1,145,745
- --------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 486,225 2,130,107 3,715 2,620,047
- --------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAINS (LOSSES)
FROM INVESTMENTS:
Net realized gains from investment
and futures transactions 521,724 7,042,824 7,564,548
Net change in unrealized appreciation
from investments and futures 5,462,557 16,667,921 - 22,130,478
- --------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAINS FROM INVESTMENTS 5,984,281 23,710,745 - 29,695,026
- --------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $6,470,506 $25,840,852 $ 3,715 $32,315,073
==========================================================================================================================
<FN>
* Upon exchanging into Pilot Shares pursuant to the reorganization, Funds
IV Trust Service Shares will not participate in the distribution or shareholder
servicing plans, and will incur neither distribution nor shareholder servicing
fees as a direct result of the reorganization. Further, the reorganization will
not affect distribution fees of Class A and Class B Shares.
</TABLE>
- -----------------------------------------------------
See Notes to Pro Forma Combined Financial Statements.
<PAGE> 107
<TABLE>
Pilot Growth and Income Fund
Pro Forma Combined Statement of Operations
For the year ended February 29, 1996
(Unaudited)
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Funds IV Trust The Pilot Funds
Stock Pilot Growth and Income Pro Forma Pro Forma
Appreciation Fund Fund Adjustments Combined
----------------- ----------------------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign taxes of $15,031) $ 2,802,004 $ 2,742,940 $ - $ 5,544,944
Interest 326,201 281,311 607,512
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME 3,128,205 3,024,251 - 6,152,456
- ---------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 910,706 895,128 140,109 1,945,943
Administration fees 210,163 131,420 (49,038) 292,545
Shareholder servicing fees 70,055 - (70,055) -*
Distribution expenses (Class A Shares) - 1,835 1,835*
Distribution expenses (Class B Shares) - 8,685 8,685*
Custodian fees and expenses 42,032 69,323 (36,428) 74,927
Accounting fees 38,686 - (21,016) 17,670
Audit fees 26,621 52,509 79,130
Transfer agent fees and expenses 9,889 34,120 44,009
Reports to shareholders 16,590 22,880 39,470
Registration fees 30,327 49,701 80,028
Amortization of organization expenses 4,527 18,195 22,722
Legal fees 20,630 4,068 24,698
Trustees' fees 10,654 1,761 (10,654) 1,761
Insurance expenses 7,446 7,446
Other expenses 3,860 9,368 13,228
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES 1,402,186 1,298,993 (47,083) 2,654,096
- ---------------------------------------------------------------------------------------------------------------------------
Less: Fee waivers and expense reimbursements
by advisor, administrator, and distributor (19,024) (404,849) 17,229 (406,644)
- ---------------------------------------------------------------------------------------------------------------------------
NET EXPENSES 1,383,162 894,144 (29,854) 2,247,452
- ---------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 1,745,043 2,130,107 29,854 3,905,004
- ---------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAINS (LOSSES)
FROM INVESTMENTS:
Net realized gains from investment
and futures transactions 11,837,933 7,042,824 18,880,757
Net change in unrealized appreciation
from investments and futures 38,264,383 16,667,921 - 54,932,304
- ---------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAINS FROM INVESTMENTS 50,102,316 23,710,745 - 73,813,061
- ---------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $51,847,359 $25,840,852 $ 29,854 $77,718,065
===========================================================================================================================
<FN>
* Upon exchanging into Pilot Shares pursuant to the reorganization, Funds
IV Trust Service Shares will not participate in the distribution or shareholder
servicing plans, and will incur neither distribution nor shareholder servicing
fees as a direct result of the reorganization. Further, the reorganization will
not affect distribution fees of Class A and Class B Shares.
</TABLE>
- ----------------------------------------------------
See Notes to Pro Forma Combined Financial Statements.
<PAGE> 108
PILOT GROWTH and INCOME FUND
<TABLE>
PRO FORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS
February 29, 1996
(unaudited)
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Shares Security Description
- ----------------------------------------------------------------------------------------------------------------
The Pilot Funds
Funds IV Trust Funds IV Trust Pilot Growth and
Value Stock Stock Income Pro Forma
Appreciation Fund Appreciation Fund Fund Combined
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMON STOCKS
CONSUMER CYCLICAL
AUTOMOTIVE
155,000 155,000 310,000 Ford Motor Co.
20,000 20,000 General Motors Corp.
19,020 19,020 Genuine Parts Co.
ENTERTAINMENT
26,000 26,000 ITT Corp.
40,550 40,550 The Walt Disney Co.
HOUSING & FURNISHING
70,000 70,000 Owens Corning Fiberglass Corp.
HOMEBUILDERS
75,000 75,000 Clayton Homes, Inc.
MEDIA
215,000 215,000 Tele-Communications, Inc., Class A
PUBLISHING & PRINTING
11,610 11,610 Dun & Bradstreet
21,805 21,805 John H. Harland Co.
RECREATION
32,000 32,000 Coleman Co., Inc.
RESTAURANT
9,804 9,804 McDonald's Corp.
TEXTILES
9,400 9,400 VF Corp.
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Security Description Value
- ---------------------------------------------------------------------------------------------------------------
The Pilot Funds
Funds IV Trust Funds IV Trust Pilot Growth and
Value Stock Stock Income Pro Forma
Appreciation Fund Appreciation Fund Fund Combined
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMON STOCKS
CONSUMER CYCLICAL
AUTOMOTIVE
Ford Motor Co. $ -- $4,843,750 $4,843,750 $ 9,687,500
General Motors Corp. 1,025,000 1,025,000
Genuine Parts Co. 813,105 813,105
---------- ---------- ---------- -----------
813,105 5,868,750 4,843,750 11,525,605
---------- ---------- ---------- -----------
ENTERTAINMENT
ITT Corp. 1,569,750 1,569,750
The Walt Disney Co. 2,656,025 2,656,025
---------- ---------- ---------- -----------
4,225,775 4,225,775
---------- ---------- ---------- -----------
HOUSING & FURNISHING
Owens Corning Fiberglass Corp. 2,843,750 2,843,750
---------- ---------- ---------- -----------
HOMEBUILDERS
Clayton Homes, Inc. 1,415,625 1,415,625
---------- ---------- ---------- -----------
MEDIA
Tele-Communications, Inc.,
Class A 4,515,000 4,515,000
---------- ---------- ---------- -----------
PUBLISHING & PRINTING
Dun & Bradstreet 734,333 734,333
John H. Harland Co. 487,887 487,887
---------- ---------- ---------- -----------
1,222,220 1,222,220
---------- ---------- ---------- -----------
RECREATION
Coleman Co., Inc. 1,400,000 1,400,000
---------- ---------- ---------- -----------
RESTAURANT
McDonald's Corp. 490,200 490,200
---------- ---------- ---------- -----------
TEXTILES
VF Corp. 505,250 505,250
---------- ---------- ---------- -----------
</TABLE>
<PAGE> 109
PILOT GROWTH and INCOME FUND
<TABLE>
PRO FORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS
February 29, 1996
(unaudited)
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Shares Security Description
- ----------------------------------------------------------------------------------------------------------------
The Pilot Funds
Funds IV Trust Funds IV Trust Pilot Growth and
Value Stock Stock Income Pro Forma
Appreciation Fund Appreciation Fund Fund Combined
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TOYS
14,500 14,500 Mattel, Inc.
CONSUMER STAPLES
BEVERAGE & TOBACCO
10,345 65,000 75,345 Anheuser Busch Cos., Inc.
8,095 38,000 46,095 Coca-Cola Co.
14,000 14,000 Pepsico, Inc.
11,560 47,000 45,000 103,560 Philip Morris Cos., Inc.
23,410 23,410 UST, Inc.
FOOD PROCESSING
240,000 240,000 Archer Daniels Midland Co.
14,390 14,390 General Mills, Inc.
50,000 50,000 Sara Lee Corp.
ENERGY
INTEGRATED OIL
44,000 44,000 Amoco Corp.
20,775 20,775 Ashland, Inc.
4,713 40,000 44,713 Atlantic Richfield Co.
75,000 80,000 155,000 Chevron Corp.
8,452 39,000 47,452 Exxon Corp.
8,000 8,000 Mobil Corp.
4,635 8,000 44,000 56,635 Royal Dutch Petroleum Co. (ADR)
16,600 16,600 Tosco Corp.
FINANCE
BANKING
65,000 65,000 BankAmerica Corp.
75,000 75,000 Chemical Banking Corp.
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Security Description Value
- ---------------------------------------------------------------------------------------------------------------
The Pilot Funds
Funds IV Trust Funds IV Trust Pilot Growth and
Value Stock Stock Income Pro Forma
Appreciation Fund Appreciation Fund Fund Combined
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TOYS
Mattel, Inc. 482,125 482,125
---------- ---------- ---------- -----------
CONSUMER STAPLES
BEVERAGE & TOBACCO
Anheuser Busch Cos., Inc. 696,994 4,379,375 5,076,369
Coca-Cola Co. 653,671 3,068,500 3,722,171
Pepsico, Inc. 885,500 885,500
Philip Morris Cos., Inc. 1,144,440 4,653,000 4,455,000 10,252,440
UST, Inc. 831,055 831,055
---------- ---------- ---------- -----------
3,326,160 8,607,000 8,834,375 20,767,535
---------- ---------- ---------- -----------
FOOD PROCESSING
Archer Daniels Midland Co. 4,620,000 4,620,000
General Mills, Inc. 827,425 827,425
Sara Lee Corp. 1,618,750 1,618,750
---------- ---------- ---------- -----------
827,425 1,618,750 4,620,000 7,066,175
---------- ---------- ---------- -----------
ENERGY
INTEGRATED OIL
Amoco Corp. 3,058,000 3,058,000
Ashland, Inc. 760,884 760,884
Atlantic Richfield Co. 516,074 4,380,000 4,896,074
Chevron Corp. 4,171,875 4,450,000 8,621,875
Exxon Corp. 671,934 3,100,500 3,772,434
Mobil Corp. 877,000 877,000
Royal Dutch Petroleum Co. (ADR) 638,471 1,102,000 6,061,000 7,801,471
Tosco Corp. 740,775 740,775
---------- ---------- ---------- -----------
2,587,363 13,050,150 14,891,000 30,528,513
---------- ---------- ---------- -----------
FINANCE
BANKING
BankAmerica Corp. 4,631,250 4,631,250
Chemical Banking Corp. 5,371,875 5,371,875
</TABLE>
<PAGE> 110
PILOT GROWTH and INCOME FUND
<TABLE>
PRO FORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS
February 29, 1996
(unaudited)
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Shares Security Description
- ----------------------------------------------------------------------------------------------------------------
The Pilot Funds
Funds IV Trust Funds IV Trust Pilot Growth and
Value Stock Stock Income Pro Forma
Appreciation Fund Appreciation Fund Fund Combined
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
12,500 12,500 Mellon Bank Corp.
BROKERS
26,000 26,000 Donaldson Lufkin & Jenrette, Inc.
50,000 50,000 Lehman Brothers Holding, Inc.
FINANCIAL SERVICES
69,000 69,000 American Express Co.
20,000 20,000 Citicorp
52,000 52,000 Federal Home Loan Mortgage Corp.
25,640 82,000 107,640 Federal National Mortgage Association
10,160 36,000 46,160 J.P. Morgan & Co.
30,315 37,500 67,815 MBNA Corp.
HOLDING COMPANIES
70,000 70,000 Temple Inland, Inc.
INSURANCE
20,000 20,000 Aetna Life and Casualty Co.
8,438 34,100 42,538 American International Group, Inc.
7,070 7,070 Chubb Corp.
11,200 28,000 39,200 General RE Corp.
26,000 26,000 ITT Hartford Group, Inc.
50,000 50,000 Marsh & McClennan Companies, Inc.
HEALTHCARE
MEDICAL SERVICES
45,000 45,000 Columbia/HCA Healthcare Corp.
MEDICAL SUPPLIES & SERVICES
105,000 105,000 U.S. Healthcare, Inc.
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Security Description Value
- ---------------------------------------------------------------------------------------------------------------
The Pilot Funds
Funds IV Trust Funds IV Trust Pilot Growth and
Value Stock Stock Income Pro Forma
Appreciation Fund Appreciation Fund Fund Combined
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mellon Bank Corp. 698,438 698,438
---------- ---------- ---------- -----------
698,438 10,003,125 10,701,563
---------- ---------- ---------- -----------
BROKERS
Donaldson Lufkin & Jenrette, Inc. 812,500 812,500
Lehman Brothers Holding, Inc. 1,237,500 1,237,500
---------- ---------- ---------- -----------
2,050,000 2,050,000
---------- ---------- ---------- -----------
FINANCIAL SERVICES
American Express Co. 3,174,000 3,174,000
Citicorp 1,560,000 1,560,000
Federal Home Loan Mortgage
Corp. 4,290,000 4,290,000
Federal National Mortgage
Association 810,865 2,593,250 3,404,115
J.P. Morgan & Co. 831,850 2,947,500 3,779,350
MBNA Corp. 856,399 1,059,375 1,915,774
---------- ---------- ---------- -----------
2,499,114 11,334,125 4,290,000 18,123,239
---------- ---------- ---------- -----------
HOLDING COMPANIES
Temple Inland, Inc. 2,817,500 2,817,500
---------- ---------- ---------- -----------
INSURANCE
Aetna Life and Casualty Co. 1,512,500 1,512,500
American International Group, Inc. 815,322 3,294,913 4,110,235
Chubb Corp. 686,674 686,674
General RE Corp. 1,611,400 4,028,500 5,639,900
ITT Hartford Group, Inc. 1,339,000 1,339,000
Marsh & McClennan Companies, Inc. 4,856,250 4,856,250
---------- ---------- ---------- -----------
1,501,996 6,245,313 10,397,250 18,144,559
---------- ---------- ---------- -----------
HEALTHCARE
MEDICAL SERVICES
Columbia/HCA Healthcare Corp. 2,463,750 2,463,750
---------- ---------- ---------- -----------
MEDICAL SUPPLIES & SERVICES
U.S. Healthcare, Inc. 5,118,750 5,118,750
</TABLE>
<PAGE> 111
PILOT GROWTH and INCOME FUND
<TABLE>
PRO FORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS
February 29, 1996
(unaudited)
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Shares Security Description
- ----------------------------------------------------------------------------------------------------------------
The Pilot Funds
Funds IV Trust Funds IV Trust Pilot Growth and
Value Stock Stock Income Pro Forma
Appreciation Fund Appreciation Fund Fund Combined
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PERSONAL CARE
10,500 10,500 Proctor & Gamble Co.
12,300 12,300 Tambrands, Inc.
PHARMACEUTICALS
13,775 13,775 Abbott Laboratories
10,000 10,000 Amgen, Inc.
26,000 26,000 Eli Lily & Co.
12,000 12,000 Johnson & Johnson
14,545 102,000 64,576 181,121 Merck & Co., Inc.
11,500 11,500 Pfizer, Inc.
13,500 54,000 67,500 Schering-Plough Corp.
85,000 85,000 Smithkline Beecham
INDUSTRIAL GOODS & SERVICES
AEROSPACE
30,000 30,000 Boeing Co.
46,000 40,000 86,000 Lockheed Martin Corp.
16,674 51,000 100,000 167,674 Raytheon Co.
14,395 14,395 Rockwell Intl. Corp.
CHEMICALS
28,500 28,500 Cabot Corp.
22,700 22,700 Du Pont (E.I.) de Nemours & Co.
21,500 21,500 Morton International, Inc.
COMMERICAL SERVICES
145,000 145,000 WMX Technologies, Inc.
ELECTRONICS
11,030 22,000 33,030 General Electric Co.
13,695 13,695 Intel Corp.
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Security Description Value
- ---------------------------------------------------------------------------------------------------------------
The Pilot Funds
Funds IV Trust Funds IV Trust Pilot Growth and
Value Stock Stock Income Pro Forma
Appreciation Fund Appreciation Fund Fund Combined
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PERSONAL CARE
Proctor & Gamble Co. 861,000 861,000
Tambrands, Inc. 593,475 593,475
---------- ---------- ---------- -----------
593,475 861,000 1,454,475
---------- ---------- ---------- -----------
PHARMACEUTICALS
Abbott Laboratories 575,106 575,106
Amgen, Inc. 597,500 597,500
Eli Lily & Co. 1,573,000 1,573,000
Johnson & Johnson 1,122,000 1,122,000
Merck & Co., Inc. 963,606 6,757,500 4,278,160 11,999,266
Pfizer, Inc. 757,562 757,562
Schering-Plough Corp. 757,688 3,030,750 3,788,438
Smithkline Beecham 4,653,750 4,653,750
---------- ---------- ---------- -----------
1,538,712 11,565,250 11,962,660 25,066,622
---------- ---------- ---------- -----------
INDUSTRIAL GOODS & SERVICES
AEROSPACE
Boeing Co. 2,433,750 2,433,750
Lockheed Martin Corp. 3,507,500 3,050,000 6,557,500
Raytheon Co. 835,784 2,556,375 5,012,500 8,404,659
Rockwell Intl. Corp. 820,515 820,515
---------- ---------- ---------- -----------
1,656,299 8,497,625 8,062,500 18,216,424
---------- ---------- ---------- -----------
CHEMICALS
Cabot Corp. 1,724,250 1,724,250
Du Pont (E.I.) de Nemours & Co. 1,736,550 1,736,550
Morton International, Inc. 814,313 814,313
---------- ---------- ---------- -----------
4,275,113 4,275,113
---------- ---------- ---------- -----------
COMMERICAL SERVICES
WMX Technologies, Inc. 4,132,500 4,132,500
---------- ---------- ---------- -----------
ELECTRONICS
General Electric Co. 832,765 1,661,000 2,493,765
Intel Corp. 805,437 805,437
</TABLE>
<PAGE> 112
PILOT GROWTH and INCOME FUND
<TABLE>
PRO FORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS
February 29, 1996
(unaudited)
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Shares Security Description
- ----------------------------------------------------------------------------------------------------------------
The Pilot Funds
Funds IV Trust Funds IV Trust Pilot Growth and
Value Stock Stock Income Pro Forma
Appreciation Fund Appreciation Fund Fund Combined
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
18,000 18,000 Teradyne, Inc.
ELECTRICAL EQUIPMENT
45,135 45,135 Baldor Electric Co.
GLASS
10,460 10,460 PPG Industries, Inc.
MACHINERY
75,000 75,000 Case Corp.
14,500 14,500 Caterpillar, Inc.
30,000 30,000 Deere & Co.
METAL & PLASTIC
75,000 75,000 Cooper Industries, Inc.
107,000 107,000 Crown Cork & Seal, Inc.
TRANSPORTATION
17,518 17,518 Alexander & Baldwin, Inc.
10,000 10,000 Conrail, Inc.
MANUFACTURING
CONSUMER PRODUCTS
15,000 15,000 Gillette Co.
57,000 57,000 Kimberly Clark Corp.
INDUSTRIAL
26,000 26,000 ITT Industries, Inc.
HOUSEHOLD PRODUCTS
9,085 9,085 Minnesota Mining & Manufacturing Co.
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Security Description Value
- ---------------------------------------------------------------------------------------------------------------
The Pilot Funds
Funds IV Trust Funds IV Trust Pilot Growth and
Value Stock Stock Income Pro Forma
Appreciation Fund Appreciation Fund Fund Combined
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Teradyne, Inc. 366,750 366,750
---------- ---------- ---------- -----------
1,638,202 2,027,750 3,665,952
---------- ---------- ---------- -----------
ELECTRICAL EQUIPMENT
Baldor Electric Co. 981,686 981,686
---------- ---------- ---------- -----------
GLASS
PPG Industries, Inc. 485,082 485,082
---------- ---------- ---------- -----------
MACHINERY
Case Corp. 3,984,375 3,984,375
Caterpillar, Inc. 969,687 969,687
Deere & Co. 1,173,750 1,173,750
---------- ---------- ---------- -----------
6,127,812 6,127,812
---------- ---------- ---------- -----------
METAL & PLASTIC
Cooper Industries, Inc. 2,896,875 2,896,875
Crown Cork & Seal, Inc. 5,042,375 5,042,375
---------- ---------- ---------- -----------
7,939,250 7,939,250
---------- ---------- ---------- -----------
TRANSPORTATION
Alexander & Baldwin, Inc. 411,673 411,673
Conrail, Inc. 721,250 721,250
---------- ---------- ---------- -----------
411,673 721,250 1,132,923
---------- ---------- ---------- -----------
MANUFACTURING
CONSUMER PRODUCTS
Gillette Co. 811,875 811,875
Kimberly Clark Corp. 4,353,375 4,353,375
---------- ---------- ---------- -----------
811,875 4,353,375 5,165,250
---------- ---------- ---------- -----------
INDUSTRIAL
ITT Industries, Inc. 682,500 682,500
---------- ---------- ---------- -----------
HOUSEHOLD PRODUCTS
Minnesota Mining & Manufacturing
Co. 591,661 591,661
</TABLE>
<PAGE> 113
PILOT GROWTH and INCOME FUND
<TABLE>
PRO FORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS
February 29, 1996
(unaudited)
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Shares Security Description
- ----------------------------------------------------------------------------------------------------------------
The Pilot Funds
Funds IV Trust Funds IV Trust Pilot Growth and
Value Stock Stock Income Proforma
Appreciation Fund Appreciation Fund Fund Combined
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MATERIALS & PROCESSING
PAPER & FOREST PRODUCTS
8,000 20,000 28,000 Bristol-Myers Squibb Co.
15,000 15,000 Champion International Corp.
77,000 77,000 International Paper Co.
10,500 10,500 Union Camp Co.
MINING
105,000 105,000 Barrick Gold Corp.
RETAILING
56,000 56,000 Dayton Hudson Corp.
18,246 42,380 60,626 May Department Stores Co.
19,345 32,000 51,345 Wal-mart Stores, Inc.
DRUG STORES
14,000 14,000 Walgreen Co.
SPECIALTY STORES
145,000 145,000 Toys R Us
65,000 65,000 OfficeMax, Inc.
9,750 9,750 PETsMART, Inc.
TECHNOLOGY
COMPUTERS & OFFICE EQUIPMENT
100,000 100,000 Apple Computer
84,000 84,000 Comdisco, Inc.
80,000 80,000 Compaq Computer Corp.
8,500 8,500 Hewlett Packard Co.
9,000 9,000 Microsoft Corp.
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Security Description Value
- ---------------------------------------------------------------------------------------------------------------
The Pilot Funds
Funds IV Trust Funds IV Trust Pilot Growth and
Value Stock Stock Income Pro Forma
Appreciation Fund Appreciation Fund Fund Combined
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MATERIALS & PROCESSING
PAPER & FOREST PRODUCTS
Bristol-Myers Squibb Co. 681,000 1,702,500 2,383,500
Champion International Corp. 600,000 600,000
International Paper Co. 2,743,125 2,743,125
Union Camp Co. 489,563 489,563
---------- ---------- ---------- -----------
1,170,563 2,302,500 2,743,125 6,216,188
---------- ---------- ---------- -----------
MINING
Barrick Gold Corp. 3,176,250 3,176,250
---------- ---------- ---------- -----------
RETAILING
Dayton Hudson Corp. 4,165,000 4,165,000
May Department Stores Co. 850,720 1,975,968 2,826,688
Wal-mart Stores, Inc. 411,081 680,000 1,091,081
---------- ---------- ---------- -----------
1,261,801 680,000 6,140,968 8,082,769
---------- ---------- ---------- -----------
DRUG STORES
Walgreen Co. 462,000 462,000
---------- ---------- ---------- -----------
SPECIALTY STORES
Toys R Us 3,461,875 3,461,875
OfficeMax, Inc. 1,397,500 1,397,500
PETsMART, Inc. 338,812 338,812
---------- ---------- ---------- -----------
1,736,312 3,461,875 5,198,187
---------- ---------- ---------- -----------
TECHNOLOGY
COMPUTERS & OFFICE EQUIPMENT
Apple Computer 2,750,000 2,750,000
Comdisco, Inc. 1,722,000 1,722,000
Compaq Computer Corp. 4,050,000 4,050,000
Hewlett Packard Co. 856,375 856,375
Microsoft Corp. 888,188 888,188
---------- ---------- ---------- -----------
7,516,563 2,750,000 10,266,563
</TABLE>
<PAGE> 114
PILOT GROWTH and INCOME FUND
<TABLE>
PRO FORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS
February 29, 1996
(unaudited)
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Shares Security Description
- ----------------------------------------------------------------------------------------------------------------
The Pilot Funds
Funds IV Trust Funds IV Trust Pilot Growth and
Value Stock Stock Income Proforma
Appreciation Fund Appreciation Fund Fund Combined
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SOFTWARE & SERVICES
117,000 117,000 Automatic Data Processing, Inc.
TELECOMMUNICATIONS
30,000 30,000 Equifax, Inc.
16,995 97,000 113,995 GTE Corp.
27,000 27,000 Motorola, Inc.
8,975 76,000 84,975 SBC Communications, Inc.
25,000 25,000 Telecommunications, Inc. Class A
UTILITIES
COMMUNICATION
40,000 92,000 132,000 AT&T Corp.
94,940 94,940 Heritage Media Corp.
170,000 170,000 MCI Communications Corp.
57,000 57,000 Motorola Inc.
ELECTRIC POWER
28,445 38,445 Central & South West Corp.
215,000 215,000 PacificCorp
125,000 130,000 255,000 Unicom Corp
GAS
16,869 16,869 Consolidated Natural Gas Co.
------------------------------------------
Total Common Stocks
------------------------------------------
U.S. TREASURY BILLS
------------------------------------------
20,000,000 20,000,000 U.S. Treasury Bills, 3/7/96
------------------------------------------
Total Treasury Bills
------------------------------------------
MONEY MARKET MUTUAL FUNDS
447,902 7,500,000 7,947,902 Federated Prime Obligation Trust
3,912,951 3,912,951 Federated Government Obligation Trust
------------------------------------------
Total Money Market Mutual Funds
------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Security Description Value
- ---------------------------------------------------------------------------------------------------------------
The Pilot Funds
Funds IV Trust Funds IV Trust Pilot Growth and
Value Stock Stock Income Pro Forma
Appreciation Fund Appreciation Fund Fund Combined
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SOFTWARE & SERVICES
Automatic Data Processing, Inc. 4,533,750 4,533,750
---------- ---------- ---------- -----------
TELECOMMUNICATIONS
Equifax, Inc. 622,500 622,500
GTE Corp. 728,661 4,158,875 4,887,536
Motorola, Inc. 1,464,750 1,464,750
SBC Communications, Inc. 492,503 4,170,500 4,663,003
Telecommunications, Inc. Class A 525,000 525,000
---------- ---------- ---------- -----------
1,221,164 10,941,625 12,162,789
---------- ---------- ---------- -----------
UTILITIES
COMMUNICATION
AT&T Corp. 2,545,000 5,854,768 8,399,768
Heritage Media Corp. 3,429,707 3,429,707
MCI Communications Corp. 4,972,500 4,972,500
Motorola Inc. 3,092,250 3,092,250
---------- ---------- ---------- -----------
5,974,707 13,919,518 19,894,225
---------- ---------- ---------- -----------
ELECTRIC POWER
Central & South West Corp. 789,349 789,349
PacificCorp 4,461,250 4,461,250
Unicom Corp 4,000,000 4,160,000 8,160,000
---------- ---------- ---------- -----------
789,349 4,000,000 8,621,250 13,410,599
---------- ---------- ---------- -----------
GAS
Consolidated Natural Gas Co. 725,366 725,366
- ----------------------------------------------------------------------------------------------------------
Total Common Stocks 25,856,180 132,801,619 151,795,271 310,453,070
- ----------------------------------------------------------------------------------------------------------
U.S. TREASURY BILLS
- ----------------------------------------------------------------------------------------------------------
U.S. Treasury Bills, 3/7/96 19,984,333 19,984,333
- ----------------------------------------------------------------------------------------------------------
Total Treasury Bills 19,984,333 19,984,333
- ----------------------------------------------------------------------------------------------------------
MONEY MARKET MUTUAL FUNDS
Federated Prime Obligation Trust 447,902 7,500,000 7,947,902
Federated Government Obligation
Trust 3,912,951 3,912,951
- ----------------------------------------------------------------------------------------------------------
Total Money Market Mutual Funds 447,902 11,412,951 11,860,853
- ----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 115
PILOT GROWTH and INCOME FUND
<TABLE>
PROFORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS
February 29, 1996
(unaudited)
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Shares or Principal Security Description
- ----------------------------------------------------------------------------------------------------------------
The Pilot Funds
Funds IV Trust Funds IV Trust Pilot Growth and
Value Stock Stock Income Proforma
Appreciation Fund Appreciation Fund Fund Combined
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REPURCHASE AGREEMENT
9,241,000 9,241,000 Repurchase agreement with State Street
Bank and Trust, 5.35%, dated 2/29/96
due 3/1/96
- ----------------------------------------------------------------------------------------------------------------
968,391 34,162,926 3,357,197 38,488,513 Total Investments--(cost $289,329,809)
Liabilities in excess of Other assets--
------------------------------------------
NET ASSETS
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Security Description Value
- ---------------------------------------------------------------------------------------------------------------
The Pilot Funds
Funds IV Trust Funds IV Trust Pilot Growth and
Value Stock Stock Income Pro Forma
Appreciation Fund Appreciation Fund Fund Combined
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Repurchase agreement with State Street
Bank and Trust, 5.35%, dated 2/29/96
due 3/1/96 9,241,000 9,241,000
- -------------------------------------------------------------------------------------------------------------------
Total Investments--(cost $289,329,809)--100% 26,304,082 164,198,903 161,036,271 351,539,256
Liabilities in exess of other assets -- 0.0% (72,229) 826,799 (758,231) (11,161)
- -------------------------------------------------------------------------------------------------------------------
NET ASSETS--100% $26,231,853 $165,025,702 $160,278,040 $351,528,095
- -------------------------------------------------------------------------------------------------------------------
<FN>
ADR - American Depository Receipt
* Non-income producing
- ----------
See Notes to Pro Forma Combined Financial Statements
- ----------
</TABLE>
<PAGE> 116
<TABLE>
PILOT GROWTH and INCOME FUND
- ---------------------------------------------------------------------------------------------------------------------------------
PRO FORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS
February 29, 1996
(Unaudited)
- ---------------------------------------------------------------------------------------------------------------------------------
Shares Security Description Value
- ---------------------------------------------------------------------------------------------------------------------------------
The Pilot Funds The Pilot Funds
Funds IV Trust Pilot Growth and Funds IV Trust Pilot Growth and
Value Stock Income Proforma Value Stock Income Pro Forma
Appreciation Fund Fund Combined Appreciation Fund Fund Combined
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
CONSUMER CYCLICAL
AUTOMOTIVE
155,000 155,000 Ford Motor Co. $ $4,843,750 $ 4,843,750
General Motors Corp.
19,020 19,020 Genuine Parts Co. 813,105 813,105
---------- ---------- -----------
813,105 4,843,750 5,656,855
---------- ---------- -----------
HOUSING & FURNISHING
70,000 70,000 Owens Corning Fiberglass Corp. 2,843,750 2,843,750
---------- ---------- -----------
MEDIA
215,000 215,000 Tele-Communications, Inc., Class A 4,515,000 4,515,000
---------- ---------- -----------
PUBLISHING & PRINTING
11,610 11,610 Dun & Bradstreet Corp. 734,333 734,333
21,805 21,805 John H. Harland Co. 487,887 487,887
---------- ---------- -----------
1,222,220 1,222,220
---------- ---------- -----------
RESTAURANT
9,804 9,804 McDonald's Corp. 490,200 490,200
---------- ---------- -----------
TEXTILES
9,400 9,400 V F Corp. 505,250 505,250
---------- ---------- -----------
CONSUMER STAPLES
BEVERAGE & TOBACCO
10,345 65,000 75,345 Anheuser Busch Cos., Inc. 696,994 4,379,375 5,076,369
8,095 8,095 Coca-Cola Co. 653,671 653,671
11,560 45,000 56,560 Philip Morris Cos., Inc. 1,144,440 4,455,000 5,599,440
23,410 23,410 UST, Inc. 831,055 831,055
---------- ---------- -----------
3,326,160 8,834,375 12,160,535
---------- ---------- -----------
FOOD PROCESSING
240,000 240,000 Archer Daniels Midland Co. 4,620,000 4,620,000
14,390 14,390 General Mills, Inc. 827,425 827,425
---------- ---------- -----------
</TABLE>
<PAGE> 117
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
827,425 4,620,000 5,447,425
--------- ---------- ----------
ENERGY
INTEGRATED OIL
20,775 20,775 Ashland, Inc. 760,884 760,884
4,713 40,000 44,713 Atlantic Richfield Co. 516,074 4,380,000 4,896,074
80,000 80,000 Chevron Corp. 4,450,000 4,450,000
8,452 8,452 Exxon Corp. 671,934 671,934
4,635 44,000 48,635 Royal Dutch Petroleum Co. (ADR) 638,471 6,061,000 6,699,471
--------- ---------- ----------
2,587,363 14,891,000 17,478,363
--------- ---------- ----------
FINANCE
BANKING
65,000 65,000 BankAmerica Corp. 4,631,250 4,631,250
75,000 75,000 Chemical Banking Corp. 5,371,875 5,371,875
--------- ---------- ----------
10,003,125 10,003,125
--------- ---------- ----------
FINANCIAL SERVICES
52,000 52,000 Federal Home Loan Mortgage Corp. 4,290,000 4,290,000
25,640 25,640 Federal National Mortgage Association 810,865 810,865
10,160 10,160 J.P. Morgan & Co. 831,850 831,850
30,315 30,315 MBNA Corp. 856,399 856,399
--------- ---------- ----------
2,499,114 4,290,000 6,789,114
--------- ---------- ----------
HOLDING COMPANIES
70,000 70,000 Temple Inland, Inc. 2,817,500 2,817,500
--------- ---------- ----------
INSURANCE
20,000 20,000 Aetna Life and Casualty Co. 1,512,500 1,512,500
8,438 8,438 American International Group, Inc. 815,322 815,322
7,070 7,070 Chubb Corp. 686,674 686,674
28,000 28,000 General RE Corp. 4,028,500 4,028,500
50,000 50,000 Marsh & McClennan Companies, Inc. 4,856,250 4,856,250
--------- ---------- ----------
1,501,996 10,397,250 11,899,246
--------- ---------- ----------
MEDICAL SUPPLIES & SERVICES
105,000 105,000 U.S. Healthcare, Inc. 5,118,750 5,118,750
--------- ---------- ----------
PERSONAL CARE
12,300 12,300 Tambrands, Inc. 593,475 593,475
--------- ---------- ----------
593,475 593,475
--------- ---------- ----------
PHARMACEUTICALS
13,775 13,775 Abbott Laboratories 575,106 575,106
14,545 64,576 79,121 Merck & Co., Inc. 963,606 4,278,160 5,241,766
</TABLE>
<PAGE> 118
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
54,000 54,000 Schering-Plough Corp. 3,030,750 3,030,750
85,000 85,000 Smithkline Beecham 4,653,750 4,653,750
--------- ---------- ----------
1,538,712 11,962,660 13,501,372
--------- ---------- ----------
INDUSTRIAL GOODS & SERVICES
AEROSPACE
40,000 40,000 Lockheed Martin Corp. 3,050,000 3,050,000
16,674 100,000 116,674 Raytheon Co. 835,784 5,012,500 5,848,284
14,395 14,395 Rockwell Intl. Corp. 820,515 820,515
--------- ---------- ----------
1,656,299 8,062,500 9,718,799
--------- ---------- ----------
COMMERCIAL SERVICES
145,000 145,000 WMX Technologies, Inc. 4,132,500 4,132,500
--------- ---------- ----------
ELECTRONICS
11,030 11,030 General Electric Co. 832,765 832,765
13,695 13,695 Intel Corp. 805,437 805,437
--------- ---------- ----------
1,638,202 1,638,202
--------- ---------- ----------
GLASS
10,460 10,460 PPG Industries, Inc. 485,082 485,082
--------- ---------- ----------
METAL & PLASTIC
75,000 75,000 Cooper Industries, Inc. 2,896,875 2,896,875
107,000 107,000 Crown Cork & Seal, Inc. 5,042,375 5,042,375
--------- ---------- ----------
7,939,250 7,939,250
--------- ---------- ----------
TRANSPORTATION
17,518 17,518 Alexander & Baldwin, Inc. 411,673 411,673
--------- ---------- ----------
411,673 411,673
--------- ---------- ----------
MANUFACTURING
CONSUMER PRODUCTS
57,000 57,000 Kimberly Clark Corp. 4,353,375 4,353,375
--------- ---------- ----------
4,353,375 4,353,375
--------- ---------- ----------
HOUSEHOLD PRODUCTS
9,085 9,085 Minnesota Mining & Manufacturing Co. 591,661 591,661
--------- ---------- ----------
MATERIALS & PROCESSING
PAPER & FOREST PRODUCTS
8,000 8,000 Bristol-Myers Squibb Co. 681,000 681,000
77,000 77,000 International Paper Co. 2,743,125 2,743,125
10,500 10,500 Union Camp Corp. 489,563 489,563
--------- ---------- ----------
1,170,563 2,743,125 3,913,688
</TABLE>
<PAGE> 119
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
---------- ----------- -----------
RETAILING -
DEPARTMENT STORES -
56,000 56,000 Dayton Hudson Corp. 4,165,000 4,165,000
18,246 42,380 60,626 May Department Stores Co. 850,720 1,975,968 2,826,688
19,345 19,345 Wal-mart Stores, Inc. 411,081 411,081
---------- ----------- -----------
1,261,801 6,140,968 7,402,769
---------- ----------- -----------
SPECIALTY STORES -
145,000 145,000 Toys R Us 3,461,875 3,461,875
---------- ----------- -----------
3,461,875 3,461,875
---------- ----------- -----------
TECHNOLOGY -
COMPUTERS & OFFICE EQUIPMENT -
100,000 100,000 Apple Computer 2,750,000 2,750,000
---------- ----------- -----------
2,750,000 2,750,000
---------- ----------- -----------
SOFTWARE & SERVICES -
117,000 117,000 Automatic Data Processing, Inc. 4,533,750 4,533,750
---------- ----------- -----------
TELECOMMUNICATIONS -
16,995 16,995 GTE Corp. 728,661 728,661
8,975 8,975 SBC Communications, Inc. 492,503 492,503
---------- ----------- -----------
1,221,164 1,221,164
---------- ----------- -----------
UTILITIES -
92,000 92,000 AT & T Corp. 5,854,768 5,854,768
170,000 170,000 MCI Communications Corp. 4,972,500 4,972,500
57,000 57,000 Motorola Inc. 3,092,250 3,092,250
---------- ----------- -----------
13,919,518 13,919,518
---------- ----------- -----------
ELECTRIC POWER
28,445 28,445 Central & South West Corp. 789,349 789,349
215,000 215,000 PacificCorp 4,461,250 4,461,250
130,000 130,000 Unicom Corp. 4,160,000 4,160,000
---------- ----------- -----------
789,349 8,621,250 9,410,599
---------- ----------- -----------
GAS -
16,869 16,869 Consolidated Natural Gas Co. 725,366 725,366
------------------------------------------------------------------------------------
TOTAL COMMON STOCKS 25,856,180 151,795,271 177,651,451
------------------------------------------------------------------------------------
MONEY MARKET MUTUAL FUNDS -
447,902 447,902 Federated Prime Obligation Trust 447,902 447,902
------------------------------------------------------------------------------------
Total Money Market Mutual Funds 447,902 447,902
------------------------------------------------------------------------------------
REPURCHASE AGREEMENT
</TABLE>
<PAGE> 120
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
9,241,000 9,241,000 Repurchase agreement with State Street -
Bank and Trust, 5.35%, dated 2/29/96 -
due 3/1/96 -
9,241,000 9,241,000
- --------------------------------------------------------------------------------------------------------------------------------
968,391 3,357,197 4,325,588 Total Investments--(cost $151,894,104)--100.4% 26,304,082 161,036,271 187,340,353
Liabilities in excess of other assets--<0.4%> (72,229) (758,231) (830,536)
-------------------------------------------------------------------------------------------
NET ASSETS 100% 26,231,853 160,278,040 186,509,817
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------------
See Notes to Pro Forma Combined Financial Statements.
- ---------------------
<PAGE> 121
<TABLE>
PILOT GROWTH AND INCOME FUND
- -----------------------------------------------------------------------------------------------------------------------------------
PRO FORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS
February 29, 1996
(Unaudited)
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Shares Security Description Value
- -----------------------------------------------------------------------------------------------------------------------------------
The Pilot Funds The Pilot Funds
Funds IV Trust Pilot Growth and Funds IV Trust Pilot Growth and
Stock Income Proforma Stock Income Pro Forma
Appreciation Fund Fund Combined Appreciation Fund Fund Combined
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CONSUMER CYCLICAL
AUTOMOTIVE
155,000 155,000 310,000 Ford Motor Co. $4,843,750 $4,843,750 9,687,500
20,000 20,000 General Motors Corp. 1,025,000 1,025,000
---------- ---------- ----------
5,868,750 4,843,750 10,712,500
---------- ---------- ----------
ENTERTAINMENT
26,000 26,000 ITT Corp. 1,569,750 1,569,750
40,550 40,550 The Walt Disney Co. 2,656,025 2,656,025
---------- ---------- ----------
4,225,775 4,225,775
---------- ---------- ----------
HOUSING & FURNISHING
70,000 70,000 Owens Corning Fiberglass Corp. 2,843,750 2,843,750
---------- ---------- ----------
HOMEBUILDERS
75,000 75,000 Clayton Homes, Inc. 1,415,625 1,415,625
---------- ---------- ----------
MEDIA
215,000 215,000 Tele-Communications, Inc., Class A 4,515,000 4,515,000
---------- ---------- ----------
RECREATION
32,000 32,000 Coleman Co., Inc. 1,400,000 1,400,000
---------- ---------- ----------
RESTAURANT
14,500 14,500 Mattel, Inc. 482,125 482,125
---------- ---------- ----------
CONSUMER STAPLES
BEVERAGE & TOBACCO
65,000 65,000 Anheuser Busch Cos., Inc. 4,379,375 4,379,375
38,000 38,000 Coca-Cola Co. 3,068,500 3,068,500
14,000 14,000 Pepsico, Inc. 885,500 885,500
47,000 45,000 92,000 Philip Morris Cos., Inc. 4,653,000 4,455,000 9,108,000
---------- ---------- ----------
8,607,000 8,834,375 17,441,375
---------- ---------- ----------
</TABLE>
<PAGE> 122
<TABLE>
PILOT GROWTH AND INCOME FUND
- ------------------------------------------------------------------------------------------------------------------------------------
PRO FORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS
February 29, 1996
(Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Shares Security Description Value
- ------------------------------------------------------------------------------------------------------------------------------------
The Pilot Funds The Pilot Funds
Funds IV Trust Pilot Growth and Funds IV Trust Pilot Growth and
Stock Income Proforma Stock Income Pro Forma
Appreciation Fund Fund Combined Appreciation Fund Fund Combined
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FOOD PROCESSING
240,000 240,000 Archer Daniels Midland Co. 4,620,000 4,620,000
50,000 50,000 Sara Lee Corp. 1,618,750 1,618,750
---------- ---------- ----------
1,618,750 4,620,000 6,238,750
---------- ---------- ----------
ENERGY
INTEGRATED OIL
44,000 44,000 Amoco Corp. 3,058,000 3,058,000
40,000 40,000 Atlantic Richfield Co. 4,380,000 4,380,000
75,000 80,000 155,000 Chevron Corp. 4,171,875 4,450,000 8,621,875
39,000 39,000 Exxon Corp. 3,100,500 3,100,500
8,000 8,000 Mobil Corp. 877,000 877,000
8,000 44,000 52,000 Royal Dutch Petroleum Co. (ADR) 1,102,000 6,061,000 7,163,000
16,600 16,600 Tosco Corp. 740,775 740,775
---------- ---------- ----------
13,050,150 14,891,000 27,941,150
---------- ---------- ----------
FINANCE
BANKING
65,000 65,000 BankAmerica Corp. 4,631,250 4,631,250
75,000 75,000 Chemical Banking Corp. 5,371,875 5,371,875
12,500 12,500 Mellon Bank Corp. 698,438 698,438
---------- ---------- ----------
698,438 10,003,125 10,701,563
---------- ---------- ----------
BROKERS
26,000 26,000 Donaldson Lufkin & Jenrette, Inc. 812,500 812,500
50,000 50,000 Lehman Brothers Holding, Inc. 1,237,500 1,237,500
---------- ---------- ----------
2,050,000 2,050,000
---------- ---------- ----------
FINANCIAL SERVICES
69,000 69,000 American Express Co. 3,174,000 3,174,000
20,000 20,000 Citicorp 1,560,000 1,560,000
52,000 52,000 Federal Home Loan Mortgage Corp. 4,290,000 4,290,000
82,000 82,000 Federal National Mortgage Association 2,593,250 2,593,250
36,000 36,000 J.P. Morgan & Co. 2,947,500 2,947,500
37,500 37,500 MBNA Corp. 1,059,375 1,059,375
---------- ---------- ----------
</TABLE>
<PAGE> 123
<TABLE>
PILOT GROWTH AND INCOME FUND
- -----------------------------------------------------------------------------------------------------------------------------------
PRO FORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS
February 29, 1996
(Unaudited)
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Shares Security Description Value
- -----------------------------------------------------------------------------------------------------------------------------------
The Pilot Funds The Pilot Funds
Funds IV Trust Pilot Growth and Funds IV Trust Pilot Growth and
Stock Income Proforma Stock Income Pro Forma
Appreciation Fund Fund Combined Appreciation Fund Fund Combined
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
11,334,125 4,290,000 15,624,125
---------- ---------- ----------
Holding Companies
70,000 70,000 Temple Inland, Inc. 2,817,500 2,817,500
---------- ---------- ----------
INSURANCE
20,000 20,000 Aetna Life and Casualty Co. 1,512,500 1,512,500
34,100 34,100 American International Group, Inc. 3,294,913 3,294,913
11,200 28,000 39,200 General RE Corp. 1,611,400 4,028,500 5,639,900
26,000 26,000 ITT Hartford Group, Inc. 1,339,000 1,339,000
50,000 50,000 Marsh & McClennan Companies, Inc. 4,856,250 4,856,250
---------- ---------- ----------
6,245,313 10,397,250 16,642,563
---------- ---------- ----------
HEALTH CARE
MEDICAL SERVICES
45,000 45,000 Columbia/HCA Healthcare Corp. 2,463,750 2,463,750
---------- ---------- ----------
MEDICAL SUPPLIES & SERVICES
105,000 105,000 U.S. Healthcare, Inc. 5,118,750 5,118,750
---------- ---------- ----------
PERSONAL CARE
10,500 10,500 Proctor & Gamble Co. 861,000 861,000
---------- ---------- ----------
861,000 861,000
---------- ---------- ----------
PHARMACEUTICALS
Abbott Laboratories
10,000 10,000 Amgen, Inc. 597,500 597,500
26,000 26,000 Eli Lilly & Co. 1,573,000 1,573,000
12,000 12,000 Johnson & Johnson 1,122,000 1,122,000
102,000 64,576 166,576 Merck & Co., Inc. 6,757,500 4,278,160 11,035,660
11,500 11,500 Pfizer, Inc. 757,562 757,562
13,500 54,000 67,500 Schering-Plough Corp. 757,688 3,030,750 3,788,438
85,000 85,000 Smithkline Beecham 4,653,750 4,653,750
---------- ---------- ----------
11,565,250 11,962,660 23,527,910
---------- ---------- ----------
INDUSTRIAL GOODS & SERVICES
AEROSPACE
</TABLE>
<PAGE> 124
<TABLE>
PILOT GROWTH AND INCOME FUND
- ------------------------------------------------------------------------------------------------------------------------------------
PRO FORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS
February 29, 1996
(Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Shares Security Description Value
- ------------------------------------------------------------------------------------------------------------------------------------
The Pilot Funds The Pilot Funds
Funds IV Trust Pilot Growth and Funds IV Trust Pilot Growth and
Stock Income Proforma Stock Income Pro Forma
Appreciation Fund Fund Combined Appreciation Fund Fund Combined
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
30,000 30,000 Boeing Co. 2,433,750 2,433,750
46,000 40,000 86,000 Lockheed Martin Corp. 3,507,500 3,050,000 6,557,500
51,000 100,000 151,000 Raytheon Co. 2,556,375 5,012,500 7,568,875
--------- --------- ----------
8,497,625 8,062,500 16,560,125
--------- --------- ----------
CHEMICALS
28,500 28,500 Cabot Corp. 1,724,250 1,724,250
22,700 22,700 Du Pont (E.I.) de Nemours & Co. 1,736,550 1,736,550
21,500 21,500 Morton International, Inc. 814,313 814,313
--------- --------- ----------
4,275,113 4,275,113
--------- --------- ----------
COMMERCIAL SERVICES
145,000 145,000 WMX Technologies, Inc. 4,132,500 4,132,500
--------- --------- ----------
ELECTRONICS
22,000 22,000 General Electric Co. 1,661,000 1,661,000
18,000 18,000 Teradyne, Inc. 366,750 366,750
--------- --------- ----------
2,027,750 2,027,750
--------- --------- ----------
ELECTRICAL EQUIPMENT
45,135 45,135 Baldor Electric Co. 981,686 981,686
--------- --------- ----------
MACHINERY
75,000 75,000 Case Corp. 3,984,375 3,984,375
14,500 14,500 Caterpillar, Inc. 969,687 969,687
30,000 30,000 Deere & Co. 1,173,750 1,173,750
--------- --------- ----------
6,127,812 6,127,812
--------- --------- ----------
METAL & PLASTIC
75,000 75,000 Cooper Industries, Inc. 2,896,875 2,896,875
107,000 107,000 Crown Cork & Seal, Inc. 5,042,375 5,042,375
--------- --------- ----------
7,939,250 7,939,250
--------- --------- ----------
TRANSPORTATION
10,000 10,000 Conrail, Inc. 721,250 721,250
--------- --------- ----------
721,250 721,250
--------- --------- ----------
</TABLE>
<PAGE> 125
<TABLE>
PILOT GROWTH AND INCOME FUND
- ----------------------------------------------------------------------------------------------------------------------------------
PRO FORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS
February 29, 1996
(Unaudited)
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Shares Security Description Value
- ----------------------------------------------------------------------------------------------------------------------------------
The Pilot Funds The Pilot Funds
Funds IV Trust Pilot Growth and Funds IV Trust Pilot Growth and
Stock Income Proforma Stock Income Pro Forma
Appreciation Fund Fund Combined Appreciation Fund Fund Combined
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MANUFACTURING
CONSUMER PRODUCTS
15,000 15,000 Gillette Co. 811,875 811,875
57,000 57,000 Kimberly Clark Corp. 4,353,375 4,353,375
--------- --------- ---------
811,875 4,353,375 5,165,250
--------- --------- ---------
INDUSTRIAL
26,000 26,000 ITT Industries, Inc. 682,500 682,500
--------- --------- ---------
MATERIALS & PROCESSING
PAPER & FOREST PRODUCTS
20,000 20,000 Bristol-Myers Squibb Co. 1,702,500 1,702,500
15,000 15,000 Champion International Corp. 600,000 600,000
77,000 77,000 International Paper Co. 2,743,125 2,743,125
--------- --------- ---------
2,302,500 2,743,125 5,045,625
--------- --------- ---------
MINING
105,000 105,000 Barrick Gold Corp. 3,176,250 3,176,250
--------- --------- ---------
RETAILING
DEPARTMENT STORES
56,000 56,000 Dayton Hudson Corp. 4,165,000 4,165,000
42,380 42,380 May Department Stores Co. 1,975,968 1,975,968
32,000 32,000 Wal-mart Stores, Inc. 680,000 680,000
--------- --------- ---------
680,000 6,140,968 6,820,968
--------- --------- ---------
DRUG STORES
14,000 14,000 Walgreen Co. 462,000 462,000
--------- --------- ---------
SPECIALTY STORES
145,000 145,000 Toys R Us 3,461,875 3,461,875
65,000 65,000 OfficeMax, Inc. 1,397,500 1,397,500
9,750 9,750 PETsMART, Inc. 338,812 338,812
--------- --------- ---------
1,736,312 3,461,875 5,198,187
--------- --------- ---------
</TABLE>
<PAGE> 126
<TABLE>
PILOT GROWTH AND INCOME FUND
- ----------------------------------------------------------------------------------------------------------------------------------
PRO FORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS
February 29, 1996
(Unaudited)
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Shares Security Description Value
- ----------------------------------------------------------------------------------------------------------------------------------
The Pilot Funds The Pilot Funds
Funds IV Trust Pilot Growth and Funds IV Trust Pilot Growth and
Stock Income Proforma Stock Income Pro Forma
Appreciation Fund Fund Combined Appreciation Fund Fund Combined
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
TECHNOLOGY
COMPUTERS & OFFICE EQUIPMENT
100,000 100,000 Apple Computer 2,750,000 2,750,000
84,000 84,000 Comdisco, Inc. 1,722,000 1,722,000
80,000 80,000 Compaq Computer Corp. 4,050,000 4,050,000
8,500 8,500 Hewlett Packard Co. 856,375 856,375
9,000 9,000 Microsoft Corp. 888,188 888,188
----------- ----------- -----------
7,516,563 2,750,000 10,266,563
----------- ----------- -----------
SOFTWARE & SERVICES
117,000 117,000 Automatic Data Processing, Inc. 4,533,750 4,533,750
----------- ----------- -----------
TELECOMMUNICATIONS
30,000 30,000 Equifax, Inc. 622,500 622,500
97,000 97,000 GTE Corp. 4,158,875 4,158,875
27,000 27,000 Motorola, Inc. 1,464,750 1,464,750
76,000 76,000 SBC Communications, Inc. 4,170,500 4,170,500
25,000 25,000 Telecommunicatons, Inc. Class A 525,000 525,000
----------- ----------- -----------
10,941,625 10,941,625
----------- ----------- -----------
UTILITIES
COMMUNICATION
40,000 92,000 132,000 AT & T Corp. 2,545,000 5,854,768 8,399,768
94,940 94,940 Heritage Media Corp. 3,429,707 3,429,707
170,000 170,000 MCI Communications Corp. 4,972,500 4,972,500
57,000 57,000 Motorola Inc. 3,092,250 3,092,250
----------- ----------- -----------
5,974,707 13,919,518 19,894,225
----------- ----------- -----------
ELECTRIC POWER
215,000 215,000 PacificCorp 4,461,250 4,461,250
125,000 130,000 255,000 Unicom Corp. 4,000,000 4,160,000 8,160,000
----------- ----------- -----------
4,000,000 8,621,250 12,621,250
----------- ----------- -----------
GAS
Consolidated Natural Gas Co.
--------------------------------------------------------------------------------------
Total Common Stocks 132,801,619 151,795,271 284,596,890
--------------------------------------------------------------------------------------
U.S. TREASURY BILLS
</TABLE>
<PAGE> 127
<TABLE>
PILOT GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------------------------------------------------------
PRO FORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS
February 29, 1996
(Unaudited)
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Shares or Principal Security Description Value
- --------------------------------------------------------------------------------------------------------------------------------
The Pilot Funds The Pilot Funds
Funds IV Trust Pilot Growth and Funds IV Trust Pilot Growth and
Stock Income Proforma Stock Income Pro Forma
Appreciation Fund Fund Combined Appreciation Fund Fund Combined
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
20,000,000 20,000,000 U.S. Treasury Bills, 3/7/96 19,984,333 19,984,333
------------------------------------------------------------------------------------
Total U.S. Treasury Bills 19,984,333 19,984,333
------------------------------------------------------------------------------------
MONEY MARKET MUTUAL FUNDS
7,500,000 7,500,000 Federated Prime Obligation Trust 7,500,000 7,500,000
3,912,951 3,912,951 Federated Government Obligation Trust 3,912,951 3,912,951
------------------------------------------------------------------------------------
Total Money Market Mutual Funds 11,412,951 11,412,951
------------------------------------------------------------------------------------
REPURCHASE AGREEMENT
9,241,000 9,241,000 Repurchase agreement with State Street
Bank and Trust, 5.35%, dated 2/29/96
due 3/1/96
9,241,000 9,241,000
- -----------------------------------------------------------------------------------------------------------------------------------
34,162,926 3,357,197 37,520,123 Total Investments--(cost $267,283,480)
--100.0% 164,198,903 161,036,271 325,235,174
Other assets in excess of liabilities--0.0% 826,799 (758,231) 61,144
------------------------------------------------------------------------------------
NET ASSETS--100.0% 165,025,702 160,278,040 325,296,318
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
ADR - American Depository Receipt
* Non-income producing security.
</TABLE>
- ------------------
See Notes to Pro Forma Combined Financial Statements.
- ------------------
<PAGE> 128
<TABLE>
- ------------------------------------------------------------------------------------------------------------------
Pilot Diversified Bond Fund
Pro Forma Combined Statement of Assets and Liabilities
February 29, 1996
(Unaudited)
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
Funds IV Trust Funds IV Trust The Pilot Funds
Bond Intermediate Bond Pilot Diversified Bond
Income Fund Income Fund Fund
-------------- ----------------- ----------------------
<S> <C> <C> <C>
ASSETS
Investment in securities, at value (cost $32,009,258;
$119,943,896; and $151,953,154; respectively) $ 32,483,564 $ 122,397,004 $ -
Cash 453
Dividends receivable
Interest receivable 351,026 2,015,631
Receivable for Portfolio shares sold
Receivable from brokers from investments sold
Deferred organization costs and other assets 16,691 21,303
- ------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 32,851,734 124,433,938 -
- ------------------------------------------------------------------------------------------------------------------
LIABILITIES
Advisory fees payable 22,869 40,100
Administration fees payable 4,134 15,038
Distribution expenses payable (Class A Shares)
Distribution expenses payable (Class B Shares)
Funds IV shareholder services payable 1,275 5,013
Payable to brokers for investments purchased
Dividends payable 131,534 567,909
Payable for Portfolio shares redeemed -
Other accrued expenses 21,132 535,127
- ------------------------------------------------------------------------------------------------------------------
Total Liabilities 180,944 1,163,187 -
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
NET ASSETS $ 32,670,790 $ 123,270,751 $ -
- ------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER
SHARE (UNLIMITED NUMBER OF SHARES AUTHORIZED):
PILOT SHARES:
Net assets
Shares of beneficial interest issued and outstanding
Net asset value
- ------------------------------------------------------------------------------------------------------------------
SERVICE SHARES:
Net assets $ 32,664,389 $ 123,264,487
Shares of beneficial interest issued and outstanding 3,116,308 12,028,356
Net asset value $ 10.48 $ 10.25
- ------------------------------------------------------------------------------------------------------------------
PREMIUM SHARES:
Net assets $ 6,401 $ 6,264
Shares of beneficial interest issued and outstanding 611 $ 611
Net asset value $ 10.48 $ 10.25
- ------------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS:
PAID-in capital 32,031,521 119,803,691
Accumulated undistributed net realized gains from -
investment and futures transactions 164,963 1,013,952
Net unrealized appreciation from investments and futures 474,306 2,453,108
- ------------------------------------------------------------------------------------------------------------------
Net Assets, February 29, 1996 $ 32,670,790 $ 123,270,751 $ -
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
Pro Forma Pro Forma
Adjustments Combined
------------- -------------
<S> <C> <C>
ASSETS
Investment in securities, at value (cost $32,009,258;
$119,943,896; and $151,953,154; respectively) $154,880,568
Cash $ (12,665) (12,212)
Dividends receivable -
Interest receivable 2,366,657
Receivable for Portfolio shares sold -
Receivable from brokers from investments sold -
Deferred organization costs and other assets 37,994
- ----------------------------------------------------------------------------------------------
TOTAL ASSETS (12,665) 157,273,007
- ----------------------------------------------------------------------------------------------
LIABILITIES
Advisory fees payable 62,969
Administration fees payable 19,172
Distribution expenses payable (Class A Shares) -
Distribution expenses payable (Class B Shares) -
Funds IV shareholder services payable 6,288
Payable to brokers for investments purchased -
Dividends payable 699,443
Payable for Portfolio shares redeemed -
Other accrued expenses 556,259
- ----------------------------------------------------------------------------------------------
Total Liabilities - 1,344,131
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
NET ASSETS $ (12,665) $155,928,876
- ----------------------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER
SHARE (UNLIMITED NUMBER OF SHARES AUTHORIZED):
PILOT SHARES:
Net assets $ 155,928,876 $ 155,928,876
Shares of beneficial interest issued and outstanding 15,214,591 15,214,591
Net asset value $ 10.25
- ----------------------------------------------------------------------------------------------
SERVICE SHARES:
Net assets $(155,928,876)
Shares of beneficial interest issued and outstanding (15,144,664)
Net asset value
- ----------------------------------------------------------------------------------------------
PREMIUM SHARES:
Net assets $ (12,665)
Shares of beneficial interest issued and outstanding (1,222)
Net asset value
- ----------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS:
Paid-in capital (12,665) $151,822,547
Accumulated undistributed net realized gains from -
investment and futures transactions 1,178,915
Net unrealized appreciation from investments and futures 2,927,414
- ----------------------------------------------------------------------------------------------
Net Assets, February 29, 1996 $ (12,665) $155,928,876
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
</TABLE>
See Notes to Pro Forma Combined Financial Statements.
<PAGE> 129
- -------------------------------------------------------------------------------
<TABLE>
Pilot Diversified Bond Fund
Pro Forma Combined Statement of Assets and Liabilities
February 29, 1996
- ----------------------------------------------------------------------------------------------------------------------------
(Unaudited)
<CAPTION>
Funds IV Trust The Pilot Funds
Bond Pilot Diversified Pro Forma Pro Forma
Income Fund Bond Fund Adjustments Combined
-------------- ----------------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Investment in securities, at value (cost $32,009,258;
$32,009,258; respectively) $32,483,564 $- $32,483,564
Cash 453 $ (6,401) (5,948)
Interest receivable 351,026 351,026
Deferred organization costs and other assets 16,691 16,691
- ----------------------------------------------------------------------------------------------------------------------------
Total Assets 32,851,734 - (6,401) 32,845,333
- ----------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Advisory fees payable 22,869 22,869
Administration fees payable 4,134 4,134
Funds IV shareholder services payable 1,275 1,275
Dividends payable 131,534 131,534
Other accrued expenses 21,132 21,132
- ----------------------------------------------------------------------------------------------------------------------------
Total Liabilities 180,944 - - 180,944
============================================================================================================================
Net Assets $32,670,790 $- $ (6,401) $32,664,389
============================================================================================================================
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER
SHARE (UNLIMITED NUMBER OF SHARES AUTHORIZED):
PILOT SHARES:
Net assets $ 32,664,389 $32,664,389
Shares of beneficial interest issued and outstanding 3,116,308 3,116,308
Net asset value $ 10.48
============================================================================================================================
SERVICE SHARES:
Net assets $32,664,389 $(32,664,389) $ -
Shares of beneficial interest issued and outstanding 3,116,308 (3,116,308) -
Net asset value $ 10.48
============================================================================================================================
PREMIUM SHARES:
Net assets $ 6,401 $ (6,401) $ -
Shares of beneficial interest issued and outstanding 611 (611) -
Net asset value $ 10.48
============================================================================================================================
COMPOSITION OF NET ASSETS:
Paid-in capital 32,031,521 $ (6,401) $32,025,120
Accumulated undistributed net realized gains from -
investment and futures transactions 164,963 164,963
Net unrealized appreciation from investments and futures 474,306 474,306
============================================================================================================================
Net Assets, February 29, 1996 $32,670,790 $- $ (6,401) $32,664,389
============================================================================================================================
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Pro Forma Combined Financial Statements.
<PAGE> 130
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
Pilot Diversified Bond Fund
Pro Forma Combined Statement of Assets and Liabilities
February 29, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
(Unaudited)
<CAPTION>
Funds IV Trust The Pilot Funds
Intermediate Bond Pilot Diversified Bond Pro Forma Pro Forma
Income Fund Fund Adjustments Combined
----------------- ----------------------- --------------- ---------
<S> <C> <C> <C> <C>
ASSETS
Investment in securities, at value (cost $119,943,896;
$119,943,896; respectively) $122,397,004 $- $122,397,004
Cash $ (6,264) (6,264)
Interest receivable 2,015,631 2,015,631
Deferred organization costs and other assets 21,203 21,203
- -----------------------------------------------------------------------------------------------------------------------------------
Total Assets 124,433,938 - (6,264) 124,427,674
- -----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Advisory fees payable 40,100 40,100
Administration fees payable 15,038 15,038
Funds IV shareholder services payable 5,013 5,013
Dividends payable 567,909 567,909
Other accrued expenses 535,127 535,127
- -----------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 1,163,187 - - 1,163,187
===================================================================================================================================
Net Assets $123,270,751 $- $ (6,264) $123,264,487
===================================================================================================================================
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER
SHARE (UNLIMITED NUMBER OF SHARES AUTHORIZED):
PILOT SHARES:
Net assets $ 123,264,487 $123,264,487
Shares of beneficial interest issued and outstanding 12,028,356 12,028,356
Net asset value $ 10.25
===================================================================================================================================
SERVICE SHARES:
Net assets $123,264,487 $(123,264,487) $ -
Shares of beneficial interest issued and outstanding 12,028,356 (12,028,356) -
Net asset value $ 10.25
===================================================================================================================================
PREMIUM SHARES:
Net assets $ 6,264 $ (6,264) $ -
Shares of beneficial interest issued and outstanding 611 (611) -
Net asset value $ 10.25
===================================================================================================================================
COMPOSITION OF NET ASSETS:
Paid-in capital $119,803,691 $ (6,264) $119,797,427
Accumulated undistributed net realized gains from
investment and futures transactions 1,013,952 1,013,952
Net unrealized appreciation from investments and futures 2,453,108 2,453,108
===================================================================================================================================
Net Assets, February 29, 1996 $123,270,751 $- $ (6,264) $123,264,487
===================================================================================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Pro Forma Combined Financial Statements.
<PAGE> 131
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------------------
Pilot Diversified Bond Fund
Pro Forma Combined Statement of Operations
For the year ended February 29, 1996
- ------------------------------------------------------------------------------------------------------------------------------
(Unaudited)
<CAPTION>
Funds IV Trust Funds IV Trust The Pilot Funds
Bond Intermediate Bond Pilot Diversified Bond Pro Forma Pro Forma
Income Fund Income Fund Fund Adjustments Combined
-------------- ---------------- ---------------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $1,299,267 $ 8,644,207 $- $ - $ 9,943,474
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME 1,299,267 8,644,207 - - 9,943,474
- -----------------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 79,918 515,811 223,398 819,127
Administration fees 29,970 193,429 (52,126) 171,273
Shareholder servicing fees 9,990 64,476 (74,466) -
Custodian fees and expenses 5,994 38,685 (38,722) 5,957
Accounting fees 35,929 39,239 (21,891) 53,277
Audit fees 21,460 28,000 49,460
Transfer agent fees and expenses 825 6,215 7,040
Reports to shareholders 2,103 16,147 18,250
Registration fees 3,739 29,694 33,433
Amortization of organization expenses 4,527 4,527 9,054
Legal fees 2,562 21,829 24,391
Trustees' fees 1,520 10,594 (1,520) 10,594
Insurance expenses 998 7,629 8,627
Other expenses 1,237 4,889 6,126
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES 200,772 981,164 - 34,672 1,216,608
- -----------------------------------------------------------------------------------------------------------------------------------
Less: Fee waivers and expense reimbursements
by advisor, administrator, and distributor (16,265) (15,904) (222,954) (255,123)
- -----------------------------------------------------------------------------------------------------------------------------------
NET EXPENSES 184,507 965,260 - (188,282) 961,485
- -----------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 1,114,760 7,678,947 - 188,282 8,981,989
- -----------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAINS (LOSSES)
FROM INVESTMENTS:
Net realized gains from investment
transactions 283,991 1,229,135 1,513,126
Net change in unrealized appreciation
from investments 1,014,151 6,094,008 - 7,108,159
- -----------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAINS FROM INVESTME 1,298,142 7,323,143 - - 8,621,285
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $2,412,902 $15,002,090 $- $ 188,282 $17,603,274
====================================================================================================================================
</TABLE>
- -------------------------------------------------------------
See Notes to Pro Forma Combined Financial Statements.
<PAGE> 132
- ------------------------------------------------------------------
<TABLE>
Pilot Diversified Bond Fund
Pro Forma Combined Statement of Operations
For the year ended February 29, 1996
(Unaudited)
- ----------------------------------------------------------------------------------------------------------------
<CAPTION>
Funds IV Trust The Pilot Funds
Bond Pilot Diversified Bond Pro Forma Pro Forma
Income Fund Fund Adjustments Combined
--------------- ---------------------- ----------- ---------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $1,299,267 $- $ - $1,299,267
- ----------------------------------------------------------------------------------------------------------------------
TOTAL INCOME 1,299,267 - - 1,299,267
- ----------------------------------------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 79,918 29,969 109,887
Administration fees 29,970 (6,933) 22,977
Shareholder servicing fees 9,990 (9,990) -*
Custodian fees and expenses 5,994 (5,195) 799
Accounting fees 35,929 (1,259) 34,670
Audit fees 21,460 21,460
Transfer agent fees and expenses 825 825
Reports to shareholders 2,103 2,103
Registration fees 3,739 3,739
Amortization of organization expenses 4,527 4,527
Legal fees 2,562 2,562
Trustees' fees 1,520 1,520
Insurance expenses 998 998
Other expenses 1,237 1,237
- ----------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES 200,772 - 6,533 207,305
- ----------------------------------------------------------------------------------------------------------------------
Less: Fee waivers and expense reimbursements
by advisor, administrator, and distributor (16,265) (66,133) (82,378)
- ----------------------------------------------------------------------------------------------------------------------
NET EXPENSES 184,507 - (59,580) 124,927
- ----------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 1,114,760 - 59,580 1,174,340
- ----------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAINS (LOSSES)
FROM INVESTMENTS:
Net realized gains from investment
transactions 283,991 283,991
Net change in unrealized appreciation
from investments 1,014,151 - 1,014,151
- ----------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAINS FROM INVESTMENTS 1,298,142 - - 1,298,142
- ----------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $2,412,902 $- $ 59,580 $2,472,482
======================================================================================================================
<FN>
* Upon exchanging into Pilot Shares pursuant to the reorganization, Funds
IV Trust Service Shares will not participate in the shareholder servicing plan,
and will incur no shareholder servicing fees as a direct result of the
reorganization.
</TABLE>
- ------------------------------------------------------------------
See Notes to Pro Forma Combined Financial Statements.
<PAGE> 133
- --------------------------------------------------------------------------------
<TABLE>
Pilot Diversified Bond Fund
Pro Forma Combined Statement of Operations
For the year ended February 29, 1996
(Unaudited)
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
Funds IV Trust The Pilot Funds
Bond Pilot Diversified Bond Pro Forma Pro Forma
Income Fund Fund Adjustments Combined
-------------- ---------------------- ----------- ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 8,644,207 $- $ - $ 8,644,207
- -----------------------------------------------------------------------------------------------------------------------
TOTAL INCOME 8,644,207 - - 8,644,207
- -----------------------------------------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 515,811 193,429 709,240
Administration fees 193,429 (45,133) 148,296
Shareholder servicing fees 64,476 (64,476) -
Custodian fees and expenses 38,685 (33,528) 5,157
Accounting fees 39,239 (24,501) 14,738
Audit fees 28,000 28,000
Transfer agent fees and expenses 6,215 6,215
Reports to shareholders 16,147 16,147
Registration fees 29,694 29,694
Amortization of organization expenses 4,527 4,527
Legal fees 21,829 21,829
Trustees' fees 10,594 10,594
Insurance expenses 7,629 7,629
Other expenses 4,889 4,889
- -----------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES 981,164 - 25,791 1,006,955
- -----------------------------------------------------------------------------------------------------------------------
LESS: FEE WAIVERS AND EXPENSE REIMBURSEMENTS
BY ADVISOR, ADMINISTRATOR, AND DISTRIBUTOR (15,904) (337,489) (353,393)
- -----------------------------------------------------------------------------------------------------------------------
NET EXPENSES 965,260 - (311,699) 653,561
- -----------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 7,678,947 - 311,699 7,990,646
- -----------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAINS (LOSSES)
FROM INVESTMENTS:
Net realized gains from investment
transactions 1,229,135 1,229,135
Net change in unrealized appreciation
from investments 6,094,008 - 6,094,008
- -----------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAINS FROM INVESTMENTS 7,323,143 - - 7,323,143
- -----------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $15,002,090 $- $ 311,699 $15,313,789
=======================================================================================================================
</TABLE>
- ------------------------------------------------------------------
See Notes to Pro Forma Combined Financial Statements.
<PAGE> 134
<TABLE>
PILOT DIVERSIFIED BOND FUND
- -----------------------------------------------------------------------------------------------------
PRO FORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS
February 29, 1996
(Unaudited)
- -----------------------------------------------------------------------------------------------------
<CAPTION>
Principal
Amount
- -----------------------------------------------------------------------------------------------------
Funds IV Trust Funds IV Trust The Pilot Funds
Bond Intermediate Bond Pilot Diversified Pro Forma
Income Fund Income Fund Bond Fund Combined
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE BONDS - 36.3%
AEROSPACE / DEFENSE - 2.5%
3,500,000 3,500,000 International Lease Finance Corp.
AUTO & TRUCKS - 1.1%
1,500,000 1,500,000 Ford Motor Co.
BANKING - 2.3%
500,000 3,000,000 3,500,000 Nationsbank Corp.
CONSUMER NON-DURABLE - 2.6%
500,000 3,500,000 4,000,000 J.C. Penney & Co.
FINANCIAL SERVICES - 19.8%
500,000 3,000,000 3,500,000 Associates Corp. N.A.
500,000 3,500,000 4,000,000 AT&T Capital Corporation MTN
500,000 500,000 Capital Holding Corp.
300,000 300,000 Dean Witter Discover & Co.
2,500,000 2,500,000 Dean Witter Discover & Co.
500,000 2,000,000 2,500,000 Ford Motor-Global Bond
500,000 4,500,000 5,000,000 GE Capital Corporation MTN
3,000,000 3,000,000 General Motors Acceptance Corp.
4,000,000 4,000,000 Household Finance Corp.
500,000 4,000,000 4,500,000 National Rural Utilities
500,000 500,000 Texaco Capital
OIL / GAS - 0.5%
700,000 700,000 Shell Oil Co.
RETAIL - 2.8%
550,000 550,000 Wal-mart Stores, Inc.
500,000 3,000,000 3,500,000 Wal-mart Stores, Inc.
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Maturity
Rate Date Value
- ------------------------------------------------------------------------------------------------------------------------
Funds IV Trust Funds IV Trust The Pilot Funds
Bond Intermediate Bond Pilot Diversified Pro Forma
Income Fund Income Fund Bond Fund Combined
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CORPORATE BONDS - 36.3%
AEROSPACE / DEFENSE - 2.5%
International Lease Finance Corp. 8.26% 2/15/05 $ - $ 3,845,625 $ - $ 3,845,625
------------------------------------------------------------
AUTO & TRUCKS - 1.1%
Ford Motor Co. 9.00% 9/15/01 1,687,500 1,687,500
------------------------------------------------------------
BANKING - 2.3%
Nationsbank Corp. 7.50% 2/15/97 508,750 3,052,500 3,561,250
------------------------------------------------------------
CONSUMER NON-DURABLE - 2.6%
J.C. Penney & Co. 6.88% 6/15/99 511,875 3,583,125 4,095,000
------------------------------------------------------------
FINANCIAL SERVICES - 19.8%
Associates Corp. N.A. 7.50% 5/15/99 521,875 3,131,250 3,653,125
AT&T Capital Corporation MTN 7.59% 1/31/97 510,045 3,570,315 4,080,360
Capital Holding Corp. 8.90% 10/20/99 541,875 541,875
Dean Witter Discover & Co. 6.25% 3/15/00 300,375 300,375
Dean Witter Discover & Co. 6.75% 8/15/00 2,559,375 2,559,375
Ford Motor-Global Bond 6.25% 2/26/98 504,375 2,017,500 2,521,875
GE Capital Corporation MTN 7.85% 1/17/97 510,865 4,597,785 5,108,650
General Motors Acceptance Corp. 7.88% 2/28/97 3,071,639 3,071,639
Household Finance Corp. 6.38% 6/30/00 4,020,000 4,020,000
National Rural Utilities 6.50% 9/15/02 507,500 4,060,000 4,567,500
Texaco Capital 9.00% 11/15/96 511,875 511,875
------------------------------------------------------------
2,855,035 28,081,614 30,936,649
------------------------------------------------------------
OIL / GAS - 0.5%
Shell Oil Co. 6.70% 8/15/02 718,375 718,375
------------------------------------------------------------
RETAIL - 2.8%
Wal-mart Stores, Inc. 5.50% 3/1/98 547,250 547,250
Wal-mart Stores, Inc. 8.63% 4/1/01 554,375 3,326,250 3,880,625
------------------------------------------------------------
554,375 3,873,500 4,427,875
------------------------------------------------------------
</TABLE>
<PAGE> 135
<TABLE>
PILOT DIVERSIFIED BOND FUND
- -----------------------------------------------------------------------------------------------------
PRO FORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS
February 29, 1996
(Unaudited)
- -----------------------------------------------------------------------------------------------------
<CAPTION>
Principal
Amount
- --------------------------------------------------------------------------------------------------
Funds IV Trust Funds IV Trust The Pilot Funds
Bond Intermediate Bond Pilot Diversified Pro Forma
Income Fund Income Fund Bond Fund Combined
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TELECOMMUNICATIONS - 4.7%
3,500,000 3,500,000 BellSouth Telecom
4,000,000 4,000,000 GTE North, Inc., Debt Series A
- -----------------------------------------------------------------------------------------------------
TOTAL CORPORATE BONDS
- -----------------------------------------------------------------------------------------------------
U.S. TREASURY SECURITIES- 62.6%
U.S. TREASURY BONDS - 3.7%
2,750,000 2,750,000 U.S. Treasury Bonds
1,000,000 1,000,000 U.S. Treasury Bonds
1,500,000 1,500,000 U.S. Treasury Bonds
U.S. TREASURY NOTES - 58.8%
2,000,000 2,000,000 U.S. Treasury Notes
1,000,000 6,000,000 7,000,000 U.S. Treasury Notes
3,000,000 7,000,000 10,000,000 U.S. Treasury Notes
7,000,000 7,000,000 U.S. Treasury Notes
10,000,000 10,000,000 U.S. Treasury Notes
8,000,000 8,000,000 U.S. Treasury Notes
1,000,000 1,000,000 U.S. Treasury Notes
3,000,000 3,000,000 U.S. Treasury Notes
500,000 4,000,000 4,500,000 U.S. Treasury Notes
1,000,000 2,000,000 3,000,000 U.S. Treasury Notes
5,000,000 5,000,000 U.S. Treasury Notes
2,000,000 8,000,000 10,000,000 U.S. Treasury Notes
1,500,000 1,500,000 U.S. Treasury Notes
2,000,000 7,000,000 9,000,000 U.S. Treasury Notes
1,750,000 1,750,000 U.S. Treasury Notes
1,000,000 1,000,000 U.S. Treasury Notes
500,000 4,000,000 4,500,000 U.S. Treasury Notes
TOTAL U.S. TREASURY SECURITIES
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Maturity
Rate Date Value
- -----------------------------------------------------------------------------------------------------------------------
Funds IV Trust Funds IV Trust The Pilot Funds
Bond Intermediate Bond Pilot Diversified Pro Forma
Income Fund Income Fund Bond Fund Combined
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
TELECOMMUNICATIONS - 4.7%
BellSouth Telecom 6.40% 6/15/04 3,486,875 $ 3,486,875
GTE North, Inc., Debt Series A 6.00% 1/15/04 3,895,000 3,895,000
-----------------------------------------------------------
7,381,875 7,381,875
- -----------------------------------------------------------------------------------------------------------------------
TOTAL CORPORATE BONDS 5,148,410 51,505,739 56,654,149
- -----------------------------------------------------------------------------------------------------------------------
U.S. TREASURY SECURITIES- 62.6%
U.S. TREASURY BONDS - 3.7%
U.S. Treasury Bonds 7.25% 5/15/16 2,950,695 2,950,695
U.S. Treasury Bonds 8.13% 8/15/19 1,175,260 1,175,260
U.S. Treasury Bonds 7.63% 2/15/25 1,701,600 1,701,600
-----------------------------------------------------------
5,827,555 5,827,555
-----------------------------------------------------------
U.S. TREASURY NOTES - 58.8%
U.S. Treasury Notes 5.90% 7/31/97 2,014,560 2,014,560
U.S. Treasury Notes 5.13% 3/31/98 994,600 5,967,599 6,962,199
U.S. Treasury Notes 6.13% 5/15/98 3,042,480 7,099,119 10,141,599
U.S. Treasury Notes 8.88% 11/15/98 7,578,060 7,578,060
U.S. Treasury Notes 6.75% 5/31/99 10,336,200 10,336,200
U.S. Treasury Notes 7.50% 10/31/99 8,491,200 8,491,200
U.S. Treasury Notes 7.75% 12/31/99 1,071,710 1,071,710
U.S. Treasury Notes 7.13% 2/29/00 3,155,160 3,155,160
U.S. Treasury Notes 6.25% 5/31/00 510,380 4,083,040 4,593,420
U.S. Treasury Notes 5.25% 1/31/01 980,880 1,961,760 2,942,640
U.S. Treasury Notes 7.75% 2/15/01 5,430,150 5,430,150
U.S. Treasury Notes 6.38% 8/15/02 2,051,379 8,205,518 10,256,897
U.S. Treasury Notes 5.75% 8/15/03 1,477,665 1,477,665
U.S. Treasury Notes 7.88% 11/15/04 2,233,879 7,818,579 10,052,458
U.S. Treasury Notes 6.50% 5/15/05 1,792,350 1,792,350
U.S. Treasury Notes 6.50% 8/15/05 1,024,050 1,024,050
U.S. Treasury Notes 5.88% 11/15/05 490,005 3,920,040 4,410,045
-----------------------------------------------------------
20,839,098 70,891,265 91,730,363
- -----------------------------------------------------------------------------------------------------------------------
TOTAL U.S. TREASURY SECURITIES 26,666,653 70,891,265 97,557,918
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 136
<TABLE>
PILOT DIVERSIFIED BOND FUND
- ----------------------------------------------------------------------------------------------------------
PRO FORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS
February 29, 1996
(Unaudited)
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
Principal
Amount
- -------------------------------------------------------------------------------------------------------------
Funds IV Trust Funds IV Trust The Pilot Funds
Bond Intermediate Bond Pilot Diversified Pro Forma
Income Fund Income Fund Bond Fund Combined
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MONEY MARKET MUTUAL FUNDS - 0.4%
668,501 668,501 FEDERATED PRIME OBLIGATION TRUST
-----------------------------------------------
TOTAL MONEY MARKET MUTUAL FUNDS
-----------------------------------------------
TOTAL INVESTMENTS - 99.3% (COST $151,953,154)
OTHER ASSETS IN EXCESS OF LIABILITIES - 0.7%
-----------------------------------------------
NET ASSETS - 100%
-----------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Maturity
Rate Date Value
- ------------------------------------------------------------------------------------------------------------------------------
Funds IV Trust Funds IV Trust The Pilot Funds
Bond Intermediate Bond Pilot Diversified Pro Forma
Income Fund Income Fund Bond Fund Combined
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MONEY MARKET MUTUAL FUNDS - 0.4%
FEDERATED PRIME OBLIGATION TRUST 668,501 $668,501
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL MONEY MARKET MUTUAL FUNDS 668,501 668,501
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS - 99.3% (COST $151,953,154) 32,483,564 122,397,004 $154,880,568
OTHER ASSETS IN EXCESS OF LIABILITIES - 0.7% 187,226 873,747 1,048,308
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSETS - 100% $32,670,790 $123,270,751 $ -- $155,928,876
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Pro Forma Combined Financial Statements.
<PAGE> 137
PILOT DIVERSIFIED BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
PRO FORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS
February 29, 1996
(Unaudited)
<CAPTION>
- --------------------------------------------------------------------------------
Principal
Amount
- --------------------------------------------------------------------------------
Funds IV Trust The Pilot Funds
Bond Pilot Diversified Pro Forma
Income Fund Bond Fund Combined
- --------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE BONDS - 15.8%
BANKING - 1.6%
500,000 500,000 Nationsbank Corp.
CONSUMER NON-DURABLE - 1.6%
500,000 500,000 Penney J.C. & Co.
FINANCIAL SERVICES - 8.7%
500,000 500,000 Associates Corp. N.A.
500,000 500,000 AT&T Capital Corporation MTN.
300,000 300,000 Dean Witter Discover & Co.
500,000 500,000 Ford Motor-Global Bond
500,000 500,000 GE Capital Corporation MTN
500,000 500,000 National Rural Utilities
OIL / GAS - 2.2%
700,000 700,000 Shell Oil Co.
RETAIL - 1.7%
500,000 500,000 Wal-mart Stores, Inc.
- --------------------------------------------------------------------------------
TOTAL CORPORATE BONDS
- --------------------------------------------------------------------------------
U.S. TREASURY - 81.6%
U.S. TREASURY BONDS - 17.8%
2,750,000 2,750,000 U.S. Treasury Bonds
1,000,000 1,000,000 U.S. Treasury Bonds
1,500,000 1,500,000 U.S. Treasury Bonds
</TABLE>
<TABLE>
<CAPTION>
Maturity
Rate Date Value
- ---------------------------------------------------------------------------------------------------------
Funds IV Trust The Pilot Funds
Bond Pilot Diversified Pro Forma
Income Fund Bond Fund Combined
- ---------------------------------------------------------------------------------------------------------
CORPORATE BONDS - 15.8%
BANKING - 1.6%
<S> <C> <C> <C> <C> <C>
Nationsbank Corp. 7.50% 2/15/97 $ 508,750 $ - $ 508,750
----------------------------------------
CONSUMER NON-DURABLE - 1.6%
Penney J.C. & Co. 6.88% 6/15/99 511,875 511,875
----------------------------------------
FINANCIAL SERVICES - 8.7%
Associates Corp. N.A. 7.50% 5/15/99 521,875 521,875
AT&T Capital Corporation MTN. 7.59% 1/31/97 510,045 510,045
Dean Witter Discover & Co. 6.25% 3/15/00 300,375 300,375
Ford Motor-Global Bond 6.25% 2/26/98 504,375 504,375
GE Capital Corporation MTN 7.85% 1/17/97 510,865 510,865
National Rural Utilities 6.50% 9/15/02 507,500 507,500
----------------------------------------
2,855,035 2,855,035
----------------------------------------
OIL / GAS - 2.2%
Shell Oil Co. 6.70% 8/15/02 718,375 718,375
----------------------------------------
RETAIL - 1.7%
Wal-mart Stores, Inc. 8.70% 4/1/01 554,375 554,375
- ------------------------------------------------------------------------------------------------
TOTAL CORPORATE BONDS 5,148,410 5,148,410
- ------------------------------------------------------------------------------------------------
U.S. TREASURY - 81.6%
U.S. TREASURY BONDS - 17.8%
U.S. Treasury Bonds 7.25% 5/15/16 2,950,695 2,950,695
U.S. Treasury Bonds 8.13% 8/15/19 1,175,260 1,175,260
U.S. Treasury Bonds 7.63% 2/15/25 1,701,600 1,701,600
----------------------------------------
5,827,555 5,827,555
----------------------------------------
</TABLE>
<PAGE> 138
PILOT DIVERSIFIED BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
PRO FORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS
February 29, 1996
(Unaudited)
<CAPTION>
- --------------------------------------------------------------------------------
Principal
Amount
- --------------------------------------------------------------------------------
Funds IV Trust The Pilot Funds
Bond Pilot Diversified Pro Forma
Income Fund Bond Fund Combined
- --------------------------------------------------------------------------------
<S> <C> <C>
U.S. TREASURY NOTES - 63.8%
2,000,000 2,000,000 U.S. Treasury Notes
1,000,000 1,000,000 U.S. Treasury Notes
3,000,000 3,000,000 U.S. Treasury Notes
1,000,000 1,000,000 U.S. Treasury Notes
3,000,000 3,000,000 U.S. Treasury Notes
500,000 500,000 U.S. Treasury Notes
1,000,000 1,000,000 U.S. Treasury Notes
2,000,000 2,000,000 U.S. Treasury Notes
1,500,000 1,500,000 U.S. Treasury Notes
2,000,000 2,000,000 U.S. Treasury Notes
1,750,000 1,750,000 U.S. Treasury Notes
1,000,000 1,000,000 U.S. Treasury Notes
500,000 50,000 U.S. Treasury Notes
- ---------------------------------------------------------------------------------------
TOTAL U.S. TREASURY
- ---------------------------------------------------------------------------------------
MONEY MARKET MUTUAL FUNDS - 2.1%
668,501 668,501 Federated Prime Obligation Trust
----------------------------------------------
TOTAL MONEY MARKET MUTUAL FUNDS
----------------------------------------------
TOTAL INVESTMENTS - 99.5% (COST $32,009,258)
OTHER ASSETS IN EXCESS OF LIABILITIES - 0.5%
----------------------------------------------
NET ASSETS - 100%
==============================================
</TABLE>
<TABLE>
<CAPTION>
Maturity
Rate Date Value
- ---------------------------------------------------------------------------------------------------------
Funds IV Trust The Pilot Funds
Bond Pilot Diversified Pro Forma
Income Fund Bond Fund Combined
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S. TREASURY NOTES - 63.8%
U.S. Treasury Notes 5.90% 7/31/97 $ 2,014,560 $ $ 2,014,560
U.S. Treasury Notes 5.13% 3/31/98 994,600 994,600
U.S. Treasury Notes 6.13% 5/15/98 3,042,480 3,042,480
U.S. Treasury Notes 7.75% 12/31/99 1,071,710 1,071,710
U.S. Treasury Notes 7.13% 2/29/00 3,155,160 3,155,160
U.S. Treasury Notes 6.25% 5/31/00 510,380 510,380
U.S. Treasury Notes 5.25% 1/31/01 980,880 980,880
U.S. Treasury Notes 6.38% 8/15/02 2,051,379 2,051,379
U.S. Treasury Notes 5.75% 8/15/03 1,477,665 1,477,665
U.S. Treasury Notes 7.88% 11/15/04 2,233,879 2,233,879
U.S. Treasury Notes 6.50% 5/15/05 1,792,350 1,792,350
U.S. Treasury Notes 6.50% 8/15/05 1,024,050 1,024,050
U.S. Treasury Notes 5.88% 11/15/05 490,005 490,005
-----------------------------------------
20,839,098 20,839,098
- -------------------------------------------------------------------------------------------------
TOTAL U.S. TREASURY 26,666,653 26,666,653
- -------------------------------------------------------------------------------------------------
MONEY MARKET MUTUAL FUNDS - 2.1
Federated Prime Obligation Trust 668,501 668,501
- -------------------------------------------------------------------------------------------------
TOTAL MONEY MARKET MUTUAL FUNDS 668,501 668,501
- -------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS - 99.5% (COST $32,009,258) $32,483,564 $ - $32,483,564
OTHER ASSETS IN EXCESS OF LIABILITIES - 0.5% 187,226 180,825
- -------------------------------------------------------------------------------------------------
NET ASSETS - 100% $32,670,790 $ - $32,664,389
- -------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Pro Forma Combined Financial Statements.
<PAGE> 139
<TABLE>
PILOT DIVERSIFIED BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
PRO FORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS
February 29, 1996
(Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
Principal Maturity
Amount Rate Date Value
- -----------------------------------------------------------------------------------------------------------------------------------
The Pilot Funds The Pilot Funds
Funds IV Trust Pilot Funds IV Trust Pilot
Intermediate Diversified Pro Forma Intermediate Diversified Pro Forma
Bond Income Fund Bond Fund Combined Bond Income Fund Bond Fund Combined
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CORPORATE BONDS - 41.8%
AEROSPACE / DEFENSE - 3.1%
3,500,000 3,500,000 International Lease Finance Corp. 8.26% 2/15/05 $ 3,845,625 $ - $ 3,845,625
-----------------------------------
AUTO & TRUCKS - 1.4%
1,500,000 1,500,000 Ford Motor Co. 9.00% 9/15/01 1,687,500 1,687,500
-----------------------------------
BANKING - 2.5%
3,000,000 3,000,000 Nationsbank Corp. 7.50% 2/15/97 3,052,500 3,052,500
-----------------------------------
CONSUMER NON-DURABLE - 2.9%
3,500,000 3,500,000 Penney J.C. & Co. 6.88% 6/15/99 3,583,125 3,583,125
-----------------------------------
FINANCIAL SERVICES - 22.8%
Associates Corp. N.A. 7.50% 5/15/99
3,000,000 3,000,000 Associates Corp. N.A. 7.50% 5/15/99 3,131,250 3,131,250
3,500,000 3,500,000 AT&T Capital Corporation MTN. 7.59% 1/31/97 3,570,315 3,570,315
500,000 500,000 Capital Holding Corp. 8.90% 10/20/99 541,875 541,875
2,500,000 2,500,000 Dean Witter Discover & Co. 6.75% 8/15/00 2,559,375 2,559,375
2,000,000 2,000,000 Ford Motor-Global Bond 6.25% 2/26/98 2,017,500 2,017,500
4,500,000 4,500,000 GE Capital Corporation MTN 7.85% 1/17/97 4,597,785 4,597,785
3,000,000 3,000,000 General Motors Acceptance Corp. 7.88% 2/28/97 3,071,639 3,071,639
4,000,000 4,000,000 Household Finance Corp. 6.38% 6/30/00 4,020,000 4,020,000
4,000,000 4,000,000 National Rural Utilities 6.50% 9/15/02 4,060,000 4,060,000
500,000 500,000 Texaco Capital 9.00% 11/15/96 511,875 511,875
-----------------------------------
28,081,614 28,081,614
-----------------------------------
RETAIL - 3.1%
550,000 550,000 Wal-mart Stores, Inc. 5.50% 3/1/98 547,250 547,250
3,000,000 3,000,000 Wal-mart Stores, Inc. 8.60% 4/1/01 3,326,250 3,326,250
-----------------------------------
3,873,500 3,873,500
-----------------------------------
</TABLE>
<PAGE> 140
<TABLE>
PILOT DIVERSIFIED BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
PRO FORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS
February 29, 1996
(Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Principal Maturity
Amount Rate Date Value
- ------------------------------------------------------------------------------------------------------------------------------------
Funds IV Trust The Pilot Funds Funds IV Trust The Pilot Funds
Intermediate Bond Pilot Diversified Pro Forma Intermediate Bond Pilot Diversified Pro Forma
Income Fund Bond Fund Combined Income Fund Bond Fund Combined
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
TELECOMMUNICATIONS - 6.0%
3,500,000 3,500,000 BellSouth Telecom 6.40% 6/15/04 $ 3,486,875 $ - $ 3,486,875
4,000,000 4,000,000 GTE North, Inc., Debt Series A 6.00% 1/15/04 3,895,000 3,895,000
--------------------------------------
7,381,875 7,381,875
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL CORPORATE BONDS 51,505,739 51,505,739
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY - 57.5%
U.S. TREASURY NOTES
6,000,000 6,000,000 U.S. Treasury Notes 5.13% 3/31/98 5,967,599 5,967,599
7,000,000 7,000,000 U.S. Treasury Notes 6.13% 5/15/98 7,099,119 7,099,119
7,000,000 7,000,000 U.S. Treasury Notes 8.88% 11/15/98 7,578,060 7,578,060
10,000,000 10,000,000 U.S. Treasury Notes 6.75% 5/31/99 10,336,200 10,336,200
8,000,000 8,000,000 U.S. Treasury Notes 7.50% 10/31/99 8,491,200 8,491,200
4,000,000 4,000,000 U.S. Treasury Notes 6.25% 5/31/00 4,083,040 4,083,040
2,000,000 2,000,000 U.S. Treasury Notes 5.25% 1/31/01 1,961,760 1,961,760
5,000,000 5,000,000 U.S. Treasury Notes 7.75% 2/15/01 5,430,150 5,430,150
8,000,000 8,000,000 U.S. Treasury Notes 6.38% 8/15/02 8,205,518 8,205,518
7,000,000 7,000,000 U.S. Treasury Notes 7.88% 11/15/04 7,818,579 7,818,579
4,000,000 4,000,000 U.S. Treasury Notes 5.88% 11/15/05 3,920,040 3,920,040
----------------------------------------------------------------------------------------
TOTAL U.S. TREASURY 70,891,265 70,891,265
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS - 99.3% (COST $119,943,896) $122,397,004 $ - $122,397,004
OTHER ASSETS IN EXCESS OF LIABILITIES - 0.7% 873,747 867,483
----------------------------------------------------------------------------------------
NET ASSETS - 100% $ 123,270,751 $ - $123,264,487
========================================================================================
</TABLE>
See Notes to Pro Forma Combined Financial Statements.
<PAGE> 141
<TABLE>
Pilot Short-Term Diversified Assets Fund
Pro Forma Combined Statement of Assets and Liabilities
February 29, 1996
- --------------------------------------------------------------------------------
(Unaudited)
<CAPTION>
Funds IV Trust The Pilot Funds
Cash Reserve Pilot Short-Term
Money Market Diversified Pro Forma Pro Forma
Fund Assets Fund Adjustments Combined
-------------- ---------------- ----------- ---------
ASSETS
<S> <C> <C> <C> <C>
Investment in securities, at amortized cost $358,275,298 $1,265,521,529 $1,623,796,827
Repurchase agreements, at cost 310,316,415 310,316,415
- ---------------------------------------------------------------------------------------------------------------------------
Total 358,275,298 1,575,837,944 $1,934,113,242
Receivable from brokers for investements sold -
Cash 697,353 $ (6,070) 691,283
Interest receivable 1,781,849 5,242,638 7,024,487
Deferred organization costs and other assets 27,617 125,372 152,989
- ---------------------------------------------------------------------------------------------------------------------------
Total Assets 360,084,764 1,581,903,307 (6,070) 1,941,982,001
- ---------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Advisory fees payable 46,187 144,619 190,806
Administration fees payable 34,640 138,859 173,499
Service fees payable (Pilot Administration Shares) 43,124 43,124
Service fees payable (Pilot Investor Shares) 15,660 15,660
Shareholder services payable (Service Shares) 11,547 11,547
Payable to brokers for investements purchased 13,819,307 24,951,172 38,770,479
Dividends payable 1,213,014 6,201,977 7,414,991
Other accrued expenses 76,319 241,521 317,840
- ---------------------------------------------------------------------------------------------------------------------------
Total Liabilities 15,201,014 31,736,932 - 46,937,946
===========================================================================================================================
Net Assets $344,883,750 $1,550,166,375 $ (6,070) $1,895,044,055
===========================================================================================================================
SHARES OUTSTANDING (UNLIMITED NUMBER OF SHARES
AUTHORIZED):
Pilot Shares - 1,276,305,999 344,877,099 1,621,183,098
Pilot Administration Shares - 235,407,954 235,407,954
Pilot Investor Shares - 38,326,681 38,326,681
Service Shares 344,877,099 - (344,877,099) -
Premium Shares 6,070 - (6,070) -
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL SHARES OUTSTANDING 344,883,169 1,550,040,634 (6,070) 1,894,917,733
- ---------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Offering Price and Redemption Price
per Share $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS:
Paid-in capital $344,883,169 $1,550,040,634 $ (6,070) $1,894,917,733
Accumulated undistributed net realized gains(losses) -
from investment transactions 581 125,741 126,322
- ---------------------------------------------------------------------------------------------------------------------------
Net Assets, February 29, 1996 $344,883,750 $1,550,166,375 $ (6,070) $1,895,044,055
===========================================================================================================================
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Pro Forma Combined Financial Statements
<PAGE> 142
<TABLE>
Pilot Short-Term Diversified Assets Fund
Pro Forma Combined Statement of Operations
For the period ended February 29, 1996
(Unaudited)
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Funds IV Trust The Pilot Funds
Cash Reserve Pilot Short-Term
Money Market Diversified Pro Forma Pro Forma
Fund Assets Fund Adjustments Combined
-------------- ---------------- ----------- ---------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $17,590,619 $81,857,795 $99,448,414
- ----------------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 579,146 1,722,498 $(144,787) 2,156,858
Administration fees 434,360 1,533,491 (101,351) 1,866,500
Administration Service Fees (Pilot Administration Shares) 587,412 587,412*
Investor Service Fees (Pilot Investor Shares) 174,116 174,116*
Shareholder service fees (Service Shares) 144,787 (144,787) -*
Custodian fees and expenses 86,872 190,103 (75,289) 201,686
Audit fees 39,297 38,366 77,663
Transfer agent fees and expenses (5,286) 15,217 9,931
Reports to shareholders 34,004 54,462 88,466
Registration fees 96,768 73,473 170,241
Amortization of organization expenses 4,721 28,719 33,440
Legal fees 50,994 92,986 143,980
Trustees' fees 21,326 31,612 52,938
Other expenses 43,552 44,660 88,212
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES 1,530,541 4,587,115 (466,213) 5,651,443
- ----------------------------------------------------------------------------------------------------------------------------------
Less fee waived by distributor (91,401) (423,534) 46,928 (468,007)
- ----------------------------------------------------------------------------------------------------------------------------------
NET EXPENSES 1,439,140 4,163,581 (419,285) 5,183,436
- ----------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 16,151,479 77,694,214 419,285 92,264,978
- ----------------------------------------------------------------------------------------------------------------------------------
NET REALIZED GAINS (LOSSES) FROM INVESTMENTS 581 36,388 - 36,969
- ----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS $16,152,060 $77,730,602 $ 419,285 $94,301,947
==================================================================================================================================
<FN>
* Upon exchanging into Pilot Shares pursuant to the reorganization, Funds
IV Trust Service Shares will not participate in the shareholder servicing
plans, and will incur no shareholder servicing fees as a direct result of the
reorganization. Further, the reorganization will not affect distribution fees
of Administration Shares and Investor Shares.
</TABLE>
- ---------------------------------------------------------------
See Notes to Pro Forma Combined Financial Statements.
<PAGE> 143
<TABLE>
PILOT SHORT-TERM DIVERSIFIED ASSETS FUND
- ------------------------------------------------------------------------------------------------------------------------------------
PRO FORMA COMBINED SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 29, 1996
(Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Principal Amount (000) Security Description Amortized Cost
- ------------------------------------------------------------------------------------------------------------------------------------
Funds IV Trust The Pilot Funds Funds IV Trust The Pilot Funds
Cash Reserve Pilot Short-Term Cash Reserve Pilot Short-Term
Money Market Diversified Pro Forma Maturity Money Market Diversified Pro forma
Fund Assets Fund Combined Rate Date Fund Assets Fund Combined
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BANKERS ACCEPTANCE--4.1%
$ 4,000 $ $ 4,000 Bank of Tokyo, NY 5.26% 5/17/96 $ 3,955,682 $ - $ 3,955,682
10,000 10,000 Bank of Tokyo, NY 5.54% 6/3/96 9,858,739 9,858,739
2,000 2,000 Bank of Tokyo, NY 5.26% 7/1/96 1,964,959 1,964,959
10,000 10,000 Dai-ichi Kangyo, LA 5.91% 4/15/96 9,927,750 9,927,750
5,000 5,000 Dai-ichi Kangyo, LA 5.86% 5/20/96 4,936,667 4,936,667
2,000 2,000 IBJ NY 5.88% 4/30/96 1,980,900 1,980,900
14,000 14,000 International Bank of Japan LA 5.35% 5/28/96 13,819,307 13,819,307
6,000 6,000 Mitsubishi Bank 6.04% 4/4/96 5,966,794 5,966,794
10,000 10,000 Mitsubishi Bank NY 5.80% 5/22/96 9,871,533 9,871,533
9,000 9,000 Sanwa Bank NY 5.23% 6/26/96 8,849,655 8,849,655
2,000 2,000 Sanwa Bank NY 5.25% 7/16/96 1,960,803 1,960,803
5,000 5,000 Sanwa Bank NY 5.18% 8/22/96 4,877,958 4,877,958
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL BANKERS ACCEPTANCE
79,000 79,000 77,970,747 77,970,747
- ------------------------------------------------------------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT--5.0%
20,000 20,000 Abbey National PLC London 5.47% 4/9/96 19,999,891 19,999,891
20,000 20,000 Royal Bank of Canada 6.32% 12/13/96 19,987,190 19,987,190
35,000 35,000 Societe Generale 5.40% 4/5/96 35,000,820 35,000,820
20,000 20,000 National Westminister Bank PLC 5.50% 3/12/96 20,000,121 20,000,121
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL CERTIFICATES OF DEPOSIT
95,000 95,000 94,988,022 94,988,022
- ------------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER--31.0%
3,000 3,000 AB Spintab 5.79% 4/17/96 2,977,871 2,977,871
20,000 20,000 AKZO America, Inc. 5.17% 4/22/96 19,850,645 19,850,645
15,000 15,000 Bear Stearns Co., Inc. 5.64% 3/15/96 14,967,100 14,967,100
25,000 25,000 Browning Ferris Industries, Inc. 5.21% 3/11/96 24,963,820 24,963,820
20,000 20,000 Ciesco, Inc. 5.30% 4/4/96 19,899,889 19,899,889
50,000 50,000 CIT Group Holdings, Inc. 5.15% 4/26/96 49,599,444 49,599,444
25,000 25,000 CPC International, Inc. 5.66% 4/4/96 24,866,361 24,866,361
14,000 14,000 Chrysler Financial Corp. 5.25% 5/31/96 13,816,685 13,816,685
30,000 30,000 Ciesco LP 5.19% 4/24/96 29,768,700 29,768,700
25,000 25,000 CommerzBank 5.66% 3/14/96 25,001,007 25,001,007
50,000 50,000 Eiger Capital Corp. 5.25% 4/3/96 49,759,375 49,759,375
25,000 25,000 Fleet Funding Corp. 5.25% 4/11/96 24,850,521 24,850,521
25,000 25,000 Ford Motor Credit Corp. 5.46% 3/20/96 24,927,958 24,927,958
1,900 1,900 General Electric Capital Corp. 5.45% 4/4/96 1,890,220 1,890,220
10,000 10,000 Hanson Finance UK PLC 5.65% 3/4/96 9,995,292 9,995,292
35,000 35,000 Hanson Finance UK PLC 5.20% 4/30/96 34,696,667 34,696,667
</TABLE>
<PAGE> 144
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
50,000 50,000 IBM Credit Corp. 5.27% 3/6/96 49,963,403 49,963,403
25,000 25,000 Merrill Lynch & Co., Inc. 5.17% 4/26/96 24,798,944 24,798,944
50,000 50,000 Morgan Stanley Group, Inc. 5.32% 4/22/96 49,615,778 49,615,778
20,000 20,000 NBD Bancorp., Inc. 5.20% 4/2/96 19,907,484 19,907,484
4,000 4,000 NationsBank, Corp. 4.75% 8/15/96 3,980,298 3,980,298
25,000 25,000 PNC Funding Corp. 5.19% 5/3/96 25,000,735 25,000,735
16,000 16,000 PaineWebber Group 5.68% 8/23/96 15,576,111 15,576,111
26,756 26,756 Southern California Gas Co. 5.56% 5/3/96 26,495,664 26,495,664
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER
33,000 557,656 590,656 32,370,667 554,799,305 587,169,972
- -----------------------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS--1.3%
8,000 8,000 Shawmut Bank Ct. 5.32% 5/10/96 8,000,000 8,000,000
16,000 16,000 Goldman Sachs Group 5.81% 3/4/96 16,000,000 16,000,000
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL CORPORATE BONDS
24,000 24,000 24,000,000 24,000,000
- -----------------------------------------------------------------------------------------------------------------------------------
CORPORATE OBLIGATIONS--5.0%
25,000 25,000 Dean Witter Discover Co. 5.00% 4/1/96 24,981,383 24,981,383
23,000 23,000 Glaxo Welcome PLC 5.15% 4/22/96 22,828,906 22,828,906
2,300 2,300 Phillip Morris Co., Inc. 8.75% 12/1/96 2,360,954 2,360,954
45,000 45,000 USL Capital Corp. 6.02% 10/31/96 45,037,422 45,037,422
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL CORPORATE OBLIGATIONS
95,300 95,300 95,208,665 95,208,665
- -----------------------------------------------------------------------------------------------------------------------------------
MASTER NOTE--7.9%
50,000 50,000 Anchor National Life Insurance Co. 5.53% 8/1/96 50,000,000 50,000,000
35,000 35,000 Bear Sterns Co., Inc. 5.69% 5/22/96 35,000,000 35,000,000
15,000 15,000 IBM Credit Corp. 6.40% 4/29/96 15,021,799 15,021,799
50,000 50,000 NationsBank, Dallas NA 5.65% 11/1/96 50,040,147 50,040,147
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL MASTER NOTES
150,000 150,000 150,061,946 150,061,946
- -----------------------------------------------------------------------------------------------------------------------------------
TIME DEPOSITS--12.6%
DOMESTIC
50,000 50,000 UBS Finance, Inc. 5.45% 3/1/96 50,000,000 50,000,000
FOREIGN
40,000 40,000 Banque Nationale De Paris 5.20% 4/15/96 40,000,496 40,000,496
40,000 40,000 Bayerische Vereinsbank 5.45% 4/9/96 39,763,833 39,763,833
15,000 15,000 BK Brussels Lambert 5.63% 3/1/96 15,000,000 15,000,000
15,000 15,000 Fuji Bank, Ltd. 5.63% 3/1/96 15,000,000 15,000,000
15,000 15,000 Skand Ensk Banken 5.63% 3/1/96 15,000,000 15,000,000
25,000 25,000 Societe Generale 5.25% 4/5/96 25,000,000 25,000,000
14,514 14,514 Sumitomo Bank 5.63% 3/1/96 14,513,605 14,513,605
25,000 25,000 Toronto Dominion Bank 5.44% 4/29/96 25,000,000 25,000,000
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL TIME DEPOSITS
59,514 180,000 239,514 59,513,605 179,764,329 239,277,934
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--10.1%
25,000 25,000 Federal Farm Credit Banks 4.95% 3/3/97 24,951,172 24,951,172
50,000 50,000 Federal National Mortgage Association * 5.15% 3/1/96 49,947,223 49,947,223
20,000 20,000 Federal National Mortgage Association * 4.99% 3/5/96 20,000,000 20,000,000
25,000 25,000 Federal National Mortgage Association * 4.99% 3/5/96 24,990,205 24,990,205
40,700 40,700 Student Loan Marketing Association * 5.34% 3/5/96 40,810,662 40,810,662
30,000 30,000 Student Loan Marketing Association * 5.20% 3/5/96 30,000,000 30,000,000
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 145
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
TOTAL U.S. GOVERNMENT OBLIGATION NOTES
190,700 190,700 190,699,262 190,699,262
- -----------------------------------------------------------------------------------------------------------------------------------
VARIABLE RATE NOTE--8.7%
15,000 15,000 American Honda Financial Corp. 5.34% 2/7/97 15,000,000 15,000,000
14,000 14,000 Banca CRT 5.68% 9/24/96 14,000,000 14,000,000
14,000 14,000 Bank of Boston 5.52% 1/24/97 14,000,000 14,000,000
3,000 3,000 Banponce Corp. 5.91% 12/18/96 3,000,000 3,000,000
13,000 13,000 Bear Stearns Co., Inc. 5.68% 1/17/97 13,000,000 13,000,000
5,410 5,410 Chemical Bank Corp. 5.58% 4/15/96 5,411,817 5,411,817
8,000 8,000 GMAC 6.03% 3/1/96 8,000,000 8,000,000
6,000 6,000 GMAC 5.48% 7/19/96 6,006,338 6,006,338
15,000 15,000 Heller Financial, Inc. 5.50% 10/25/96 15,000,000 15,000,000
14,000 14,000 Lehman Brothers Holding Corp. 5.38% 8/22/96 14,000,000 14,000,000
15,000 15,000 Merita Bank NY 5.50% 10/18/96 15,000,000 15,000,000
16,000 16,000 Merrill Lynch & Co. 5.81% 1/14/97 15,997,136 15,997,136
6,000 6,000 Morgan Stanley, Inc. 5.63% 7/2/96 6,004,988 6,004,988
15,000 15,000 Postipankki Bank Ltd. 5.81% 9/20/96 15,000,000 15,000,000
5,000 5,000 Shawmutt Bank Conn. 5.68% 3/25/96 5,000,000 5,000,000
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL VARIABLE RATE NOTES
164,410 164,410 164,420,279 164,420,279
- -----------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS--16.4%
50,000 50,000 Repurchase agreement with Lehman Brothers,
dated 2/23/96, 5.22%, due 3/1/96, 50,000,000 50,000,000
15,683 15,683 Repurchase agreement with Lehman Brothers,
dated 2/29/96, 5.43%, due 3/1/96, 15,682,759 15,682,759
101,411 101,411 Repurchase agreement with J. P. Morgan,
dated 2/29/96, 5.42%, due 3/1/96, 101,411,039 101,411,039
118,223 118,223 Repurchase agreement with Merrill Lynch,
dated 2/29/96, 5.43%, due 3/1/96, 118,222,617 118,222,617
25,000 25,000 Repurchase agreement with State Street Bank
and Trust, dated 2/29/96, 5.35%, due 3/1/96, 25,000,000 25,000,000
- -----------------------------------------------------------------------------------------------------------------------------------
310,317 310,317 TOTAL REPURCHASE AGREEMENTS 310,316,415 310,316,415
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -102.1%
(COST $1,934,113,242) 358,275,298 1,575,837,944 1,934,113,242
------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS - (2.1%) (13,391,548) (25,671,569) (39,069,187)
------------------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $344,883,750 $1,550,166,375 $1,895,044,055
------------------------------------------------------------------------------------------------------
* Variable rate security.
</TABLE>
See Notes to Pro Forma Combined Financial Statements.
<PAGE> 146
FUNDS IV TRUST
AGGRESSIVE STOCK APPRECIATION FUND
VALUE STOCK APPRECIATION FUND
STOCK APPRECIATION FUND
BOND INCOME FUND
INTERMEDIATE BOND INCOME FUND
CASH RESERVE MONEY MARKET FUND
THE PILOT FUNDS
PILOT GROWTH FUND
PILOT GROWTH AND INCOME FUND
PILOT DIVERSIFIED BOND INCOME FUND
PILOT SHORT-TERM DIVERSIFIED ASSETS FUND
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(Unaudited)
-------
1. BASIS OF COMBINATION:
--------------------
The unaudited Pro Forma Combined Statements of Assets and Liabilities,
Statements of Operations, and Schedules of Portfolio Investments reflect the
accounts of FUNDS IV Trust ("Funds IV Trust")--including Aggressive Stock
Appreciation Fund, Value Stock Appreciation Fund, Stock Appreciation Fund, Bond
Income Fund, Intermediate Bond Income Fund and Cash Reserve Money Market Fund
(collectively, the "Reorganizing Funds")--and The Pilot Funds--including Pilot
Growth Fund, Pilot Growth and Income Fund, Pilot Diversified Bond Income Fund
and Pilot Short-Term Diversified Assets Fund (collectively, the "Acquiring
Funds")--as if the proposed reorganization occurred as of and for the year
ended February 29, 1996. As of February 29, 1996, Pilot Growth and Pilot
Diversified Bond Income had not yet commenced operations. These statements have
been derived from books and records utilized in calculating daily net asset
value at February 29, 1996.
All fees and expenses, including accounting expenses, portfolio transfer taxes,
if any, or other similar expenses incurred in connection with the consummation
by the Acquiring Funds and the Reorganizing Funds of the transactions
contemplated by the proposed Agreement and Plan of Reorganization will be paid
by the party directly incurring such fees and expenses. The costs of proxy
materials and proxy solicitation, including legal expenses, will be borne by
Boatmen's Trust Company ("Boatmen's"). However, such expenses will be paid by
the party directly incurring such expenses if and to the extent that payments by
the other party of such expenses would result in the disqualification of any
Reorganizing Fund or Acquiring Fund as a regulated investment company as defined
within Section 851 of the Internal Revenue Code.
56
<PAGE> 147
<TABLE>
The pro forma combined statements give effect to the proposed transfers
of the assets and stated liabilities of each Reorganizing Fund in exchange for
shares of the corresponding Acquiring Fund as follows:
<CAPTION>
Shareholders of: Will Receive Shares of:
- ---------------- -----------------------
<S> <C>
Stock Appreciation Fund Pilot Growth Fund
Value Stock Appreciation Fund Pilot Growth and Income Fund
Stock Appreciation Fund Pilot Growth and Income Fund
Bond Income Fund Pilot Diversified Bond Income Fund
Intermediate Bond Income Fund Pilot Diversified Bond Income Fund
Cash Reserve Money Market Fund Pilot Short-Term Diversified Assets Fund
</TABLE>
Each Acquiring Fund offers three classes of shares. Pilot Growth Fund, Pilot
Growth and Income Fund and Pilot Diversified Bond Income Fund offer Pilot
Shares, Class A Shares and Class B Shares. Pilot Short-Term Diversified Assets
Fund offers Pilot Shares, Administration Shares, and Investor Shares. Each of
the Reorganizing Funds currently offers only Service Class shares. All
outstanding shares of the Premium Class of the Reorganizing Funds are held by
Furman Selz and will be redeemed prior to the effectiveness of the
reorganization transactions (each, a "Reorganization"). As part of each
Reorganization, each holder of Service Shares of the applicable Reorganizing
Fund will receive Pilot Shares of the corresponding Acquiring Fund. Each
Reorganization is a separate transaction and is not contingent upon any
other Reorganization. The Reorganization Agreement contemplates that the assets
of each Reorganizing Fund will be acquired by the corresponding Acquiring Fund
in a tax-free exchange for shares issued by the Acquiring Fund and the
assumption by the Acquiring Fund of the stated liabilities of the Reorganizing
Fund.
Under the pooling method of accounting for business combinations under generally
accepted accounting principles, the basis on the part of the Acquiring Funds, of
the assets of the Reorganizing Funds will be the historical cost basis of such
assets on the closing date of the Reorganization. For accounting purposes, the
Acquiring Funds are the survivors of each Reorganization. The Pro Forma Combined
Statements of Operations reflect the combined results of operations of the
Reorganizing Funds and the Acquiring Funds. However, should such Reorganization
be effected, the Statements of Operations of the Acquiring Funds will not be
restated for results of the corresponding Reorganizing Funds for periods prior
to the proposed Reorganization.
The Pro forma Combined Statements of Assets and Liabilities, Statements of
Operations, and Schedules of Portfolio Investments should be read in conjunction
with the historical financial statements of the Funds IV Trust and The Pilot
Funds incorporated by reference in the Statement of Additional Information.
Funds IV Trust and The Pilot Funds are registered, open-end, management
investment companies consisting of seven and twelve funds, respectively. The
Pro Forma Combined
57
<PAGE> 148
Statements of Assets and Liabilities, Statements of Operations and Schedules of
Portfolio Investments present the Reorganizing Funds and Acquiring Funds only.
2. EXPENSES
--------
Reorganizing Funds:
- ------------------
<TABLE>
Bank IV Kansas, N.A. ("Bank IV") serves as investment adviser for each
Reorganizing Fund--except for Cash Reserve Money Market Fund for which
AMR Investment Services, Inc. ("AMR") serves as investment adviser. Bank IV and
AMR are entitled to receive advisory fees from each Fund they advise, computed
and paid daily, at a fixed annual rate, expressed as a percentage of average
daily net assets as presented in the table below. Bank IV also serves as
custodian of each Reorganizing Fund's assets.
<S> <C>
Aggressive Stock Appreciation 0.745%
Value Stock Appreciation 0.65%
Stock Appreciation 0.65%
Bond Income 0.40%
Intermediate Bond Income 0.40%
Cash Reserve Money Market 0.20%
</TABLE>
Funds IV Trust has entered into an Administrative Services Contract with Furman
Selz LLC ("Furman Selz") pursuant to which Furman Selz provides certain
management and administrative services necessary for the operation of the
Reorganizing Funds. Pursuant to Services and Fund Accounting Agreements with
Funds IV, Furman Selz also assists the Reorganizing Funds with certain
transfer and dividend disbursing agent and fund accounting functions. In
addition, the Reorganizing Funds may pay fees to various service organizations
which provide them with other administrative services, such as maintaining
shareholder accounts and records. For these services, each of the Reorganizing
Funds pays Furman Selz a monthly fee, at an annual rate of 0.15% of the
corresponding Fund's average daily net assets.
Funds IV Distributor Inc. ("FFD"), and affiliate of Furman Selz, serves as the
distributor of shares of the Reorganizing Funds. Each Fund has adopted a Rule
12b-1 Distribution Plan and Agreement pursuant to which it may reimburse FFD on
a monthly basis for costs and expenses that FFD incurs in connection with the
marketing and distribution of Fund shares.
Acquiring Funds:
- ---------------
Boatmen's serves as investment adviser to each Acquiring Fund pursuant to
separate Investment Advisory Agreements and is responsible for managing the
investment operations of the Acquiring Funds. For its services, Boatmen's is
entitled to a fee, accrued daily and paid monthly, at a fixed annual rate,
expressed as a percentage of average daily net assets as presented in the table
below. Boatmen's also serves as the custodian of each Acquiring Fund's assets.
58
<PAGE> 149
Pilot Growth Fund 0.75%
Pilot Growth and Income Fund 0.75%
Pilot Diversified Bond Income Fund 0.40%
Pilot Short-Term Diversified Assets Fund 0.15%
The Acquiring Funds have entered into an Administration Agreement with BISYS
Fund Services Limited Partnership d/b/a BISYS Fund Services ("BISYS"), a
subsidiary of The BISYS Group, Inc. Pursuant to the terms of the Administration
Agreement, BISYS is responsible for assisting in all aspects of the
operations of each of the Funds. 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 Funds constituting
The Pilot Funds, plus 0.11% of the next $1.5 billion of such net assets, plus
0.1075% of such net assets in excess of $3.0 billion.
<TABLE>
Boatmen's and BISYS have voluntarily agreed to waive a portion of their fees
and to reimburse the Acquiring Funds for certain expenses so that total expenses
do not exceed certain annual expense limitations. During the year ended February
29, 1996, Boatmen's and BISYS waived and/or reimbursed the following amounts:
<CAPTION>
Investment Administration
Advisory Fees Fees
<S> <C> <C>
Pilot Growth and Income Fund $321,041 $83,808
Pilot Short-Term Diversified Assets Fund 423,534 --
</TABLE>
59
<PAGE> 150
PRO FORMA ADJUSTMENTS AND PRO FORMA COMBINED COLUMNS
- --------------------------------------------------
The pro forma adjustments and pro forma combined columns of the statements of
operations reflect the adjustments necessary to show expenses at the rates
which would have been in effect if the Reorganizing Funds were included in the
Acquiring Funds for the year ended February 29, 1996. Investment advisory,
administration and other asset-based fees in the pro forma combined column are
calculated at the rates in effect for the Acquiring Funds based upon the
combined net assets of the Reorganizing Funds and the Acquiring Funds. All
other pro forma combined expenses are based on the combined net assets of the
funds. Certain pro forma adjustments were made to estimate the benefit of
combining operations of separate funds into one survivor fund. No other
reductions of expenses, other than incremental fee waivers, have been included.
Therefore, other expense amounts approximately equal the sum of the
Reorganizing Funds' expenses and the Acquiring Funds' expenses.
3. PORTFOLIO VALUATION:
-------------------
Acquiring Funds:
- ---------------
Pilot Growth Fund, Pilot Growth and Income Fund, and Pilot Diversified Bond
Income Fund: 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.
Pilot Short-Term Diversified Assets Fund: The Portfolios use the amortized cost
method for valuing portfolio securities. Under this method, all investments
purchased at a discount or premium are valued by amortizing the difference
between the original purchase price and maturity value of the issue over the
period to maturity. In addition, the Portfolios may not (a) purchase any
instrument with a remaining maturity greater than
60
<PAGE> 151
thirteen months unless such instrument is subject to a demand feature, or (b)
maintain a dollar-weighted-average maturity which exceeds 90 days.
Reorganizing Funds:
- ------------------
Aggressive Stock Appreciation Fund, Value Stock Appreciation Fund, Stock
Appreciation Fund, Bond Income Fund, and Intermediate Bond Income Fund: The
Funds value investments at the last sales price on the securities exchange which
such securities are primarily traded. Over-the-counter securities, or exchange
traded securities for which there are no transactions, are valued at the current
bid price. Bonds and other fixed income securities may be valued on the basis of
prices provided by a pricing service approved by the Board of Trustees. In the
absence of market quotations, investments are valued at fair value as determined
in good faith by, or at the direction of the Board of Trustees. Short-term
securities which mature in 60 days or less are valued at amortized cost, if
their term to maturity at purchase was 60 days or less, or by amortizing their
value on the 61st day prior to maturity, if their original term to maturity at
purchase exceeded 60 days.
Cash Reserve Money Market Fund: Investment securities of the Fund are valued
under the amortized cost method, which approximates current market value. Under
this method, securities are valued at cost when purchased and, thereafter, a
constant proportionate amortization of any discount of premium is recorded until
maturity of the security.
4. CAPITAL SHARES:
--------------
The pro forma net asset values per share assume the issuance of Pilot Shares of
The Acquiring Funds which would have occurred at February 29, 1996 in
connection with the proposed reorganization. The pro forma number of
shares outstanding consists of the following:
61
<PAGE> 152
<TABLE>
<CAPTION>
AGGRESSIVE STOCK PILOT PRO FORMA
APPRECIATION FUND GROWTH FUND COMBINED
----------------- ----------- ---------
<S> <C> <C> <C>
Total Net Assets........................ $59,081,469 $ -- $59,074,419
Service Class/Pilot Class........... $59,074,419 $ -- $59,074,419
Shares Outstanding...................... 4,819,274 -- 4,818,699
Service Class/Pilot Class........... 4,818,699 -- 4,818,699
Net Asset Value per Share
Service Class/Pilot Class........... $ 12.26 $ -- $ 12.26
<CAPTION>
PRO FORMA
VALUE STOCK PILOT GROWTH COMBINED FUND(1)
APPRECIATION FUND AND INCOME FUND (FUNDS SHOWN) (ALL FUNDS)
----------------- --------------- ------------- -----------
<S> <C> <C> <C> <C>
Total Net Assets........................ $26,231,853 $160,278,040 $186,509,817 $351,528,095
Service Class/Pilot Class........... $26,231,777 $156,537,553 $ 1,762,540 $347,787,608
Shares Outstanding...................... 2,125,432 12,680,734 14,755,715 27,812,269
Service Class/Pilot Class........... 2,125,426 12,384,869 139,471 27,516,404
Net Asset Value Per Share
Service Class/Pilot Class........... $ 12.34 $ 12.64 $ 12.64 $ 12.64
<CAPTION>
PRO FORMA
STOCK PILOT GROWTH COMBINED FUND(2)
APPRECIATION FUND AND INCOME FUND (Funds Shown) (ALL FUNDS)
----------------- --------------- ------------- -----------
<S> <C> <C> <C> <C>
Total Net Assets........................ $165,025,702 $160,278,040 $325,296,318 $351,528,095
Service Class/Pilot Class........... $165,018,278 $156,537,553 $321,555,831 $347,787,608
Shares Outstanding...................... 12,803,900 12,680,734 25,737,288 27,812,269
Service Class/Pilot Class........... 12,803,324 12,384,869 25,441,423 27,516,404
Net Asset Value Per Share
Service Class/Pilot Class........... $ 12.89 $ 12.64 $ 12.64 $ 12.64
<CAPTION>
PRO FORMA
BOND PILOT DIVERSIFIED COMBINED FUND(3)
INCOME FUND BOND INCOME FUND (FUNDS SHOWN) (ALL FUNDS)
----------- ----------------- ------------- -----------
<S> <C> <C> <C> <C>
Total Net Assets........................ $32,670,790 $ -- $32,664,389 $155,928,876
Service Class/Pilot Class........... $32,664,389 $ -- $32,664,389 $155,928,876
Shares Outstanding...................... 3,116,919 -- 3,116,308 15,214,591
Service Class/Pilot Class........... 3,116,308 -- 3,116,308 15,214,591
Net Asset Value Per Share
Service Class/Pilot Class........... $ 10.48 $ -- $ 10.48 $ 10.25
<CAPTION>
PRO FORMA
INTERMEDIATE PILOT DIVERSIFIED COMBINED FUND(4)
BOND INCOME FUND BOND INCOME FUND (FUNDS SHOWN) (ALL FUNDS)
---------------- ----------------- ------------- -----------
<S> <C> <C> <C> <C>
Total Net Assets........................ $123,270,751 $ -- $123,264,487 $155,928,876
Service Class/Pilot Class........... $123,264,487 $ -- $123,264,487 $155,928,876
Shares Outstanding...................... 12,028,967 -- 12,028,356 15,214,591
Service Class/Pilot Class........... 12,028,356 -- 12,028,356 15,214,591
Net Asset Value Per Share
Service Class/Pilot Class........... $ 10.25 $ -- $ 10.25 $ 10.25
</TABLE>
<PAGE> 153
<TABLE>
<CAPTION>
CASH RESERVE PILOT SHORT-TERM PRO FORMA
MONEY MARKET FUND DIVERSIFIED ASSETS FUND COMBINED
----------------- ----------------------- ---------
<S> <C> <C> <C>
Total Net Assets........................ $344,883,750 $1,550,166,375 $1,895,044,055
Service Class/Pilot Class........... $344,877,680 $1,276,431,740 $1,621,309,420
Shares Outstanding...................... 344,883,169 1,550,040,634 1,894,917,733
Service Class/Pilot Class........... 344,877,099 1,276,305,999 1,621,183,098
Net Asset Value Per Share
Service Class/Pilot Class........... $ 1.00 $ 1.00 $ 1.00
</TABLE>
- ------------------------------------------
(1) The third column reflects pro forma combined information resulting from
the Reorganization of Pilot Growth and Income Fund and Value Stock
Appreciation Fund. It is contemplated that Stock Appreciation Fund will
also be reorganized into Pilot Growth and Income Fund; the fourth
column reflects pro forma combined information in the event that both
Reorganizations take place. It should be noted, however, that each
Reorganization is independent of and not contingent on the other.
(2) The third column reflects pro forma combined information resulting from
the reorganization of Pilot Growth and Income Fund and Stock
Appreciation Fund. It is contemplated that Value Stock Appreciation
Fund will also be reorganized into Pilot Growth and Income Fund; the
fourth column reflects pro forma combined information in the event that
both Reorganizations take place. It should be noted, however, that each
Reorganization is independent of and not contingent on the other.
(3) The third column reflects pro forma combined information resulting from
the Reorganization of Pilot Diversified Bond Income Fund and Bond
Income Fund. It is contemplated that Intermediate Bond Income Fund will
also be reorganized into Pilot Diversified Bond Income Fund; the fourth
column reflects pro forma combined information in the event that both
Reorganizations take place. It should be noted, however, that each
Reorganization is independent of and not contingent on the other.
(4) The third column reflects pro forma combined information resulting from
the Reorganization of Pilot Diversified Bond Income Fund and
Intermediate Bond Income Fund. It is contemplated that Bond Income Fund
will also be reorganized into Pilot Diversified Bond Income Fund; the
fourth column reflects pro forma combined information in the event that
both Reorganizations take place. It should be noted, however, that each
Reorganization is independent of and not contingent on the other.
<PAGE> 1
Exhibit 17(b)
FUNDS IV TRUST
AGGRESSIVE STOCK APPRECIATION FUND
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS -- SEPTEMBER 17, 1996
The undersigned appoints John J. Pileggi and Jean V. Fiore and each of
them, attorneys and proxies of the undersigned, with power of substitution, to
vote all shares of AGGRESSIVE STOCK APPRECIATION FUND (the "Fund") which the
undersigned is entitled to vote at the Special Meeting of Shareholders to be
held on Tuesday, September 17, 1996 at 10:00 a.m., New York time, and at any
adjournment thereof.
Please Complete, Sign and Date on Reverse Side and Mail in Accompanying
Postpaid Envelope.
(Continued on other side)
<PAGE> 2
(Continued from other side)
THE BOARD OF TRUSTEES FAVORS A VOTE FOR EACH PROPOSAL
1. To approve the proposed Agreement and Plan of Reorganization with respect to
the Fund and the transactions contemplated thereby as described in the
accompanying Combined Proxy Statement/Prospectus.
/ / FOR / / AGAINST / / ABSTAIN
2. To consider and act upon any other business as may properly come before the
Special Meeting and any adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. WHEN
PROPERLY EXECUTED, IT SHALL BE VOTED IN THE MANNER SPECIFIED. IF NO
SPECIFICATION IS MADE, IT SHALL BE VOTED "FOR" THE APPROVAL OF PROPOSAL 1 AND IN
THE DISCRETION OF THE PERSONS NAMED AS PROXIES AS TO SUCH OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENTS THEREOF.
NOTE: This instrument must be signed by the
registered holder(s). When signing as
attorney, administrator, trustee or
guardian, please give your title as such.
-------------------------------------------------
Date
-------------------------------------------------
-------------------------------------------------
Signature(s)
<PAGE> 3
FUNDS IV TRUST
STOCK APPRECIATION FUND
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS -- SEPTEMBER 17, 1996
The undersigned appoints John J. Pileggi and Jean V. Fiore and each of
them, attorneys and proxies of the undersigned, with power of substitution, to
vote all shares of STOCK APPRECIATION FUND (the "Fund") which the undersigned is
entitled to vote at the Special Meeting of Shareholders to be held on
Tuesday, September 17, 1996 at 10:00 a.m., New York time, and at any
adjournment thereof.
Please Complete, Sign and Date on Reverse Side and Mail in Accompanying
Postpaid Envelope.
(Continued on other side)
<PAGE> 4
(Continued from other side)
THE BOARD OF TRUSTEES FAVORS A VOTE FOR EACH PROPOSAL
1. To approve the proposed Agreement and Plan of Reorganization with respect to
the Fund and the transactions contemplated thereby as described in the
accompanying Combined Proxy Statement/Prospectus.
/ / FOR / / AGAINST / / ABSTAIN
2. To consider and act upon any other business as may properly come before the
Special Meeting and any adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. WHEN
PROPERLY EXECUTED, IT SHALL BE VOTED IN THE MANNER SPECIFIED. IF NO
SPECIFICATION IS MADE, IT SHALL BE VOTED "FOR" THE APPROVAL OF PROPOSAL 1 AND IN
THE DISCRETION OF THE PERSONS NAMED AS PROXIES AS TO SUCH OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENTS THEREOF.
NOTE: This instrument must be signed by the
registered holder(s). When signing as
attorney, administrator, trustee or
guardian, please give your title as such.
------------------------------------------------
Date
------------------------------------------------
------------------------------------------------
Signature(s)
<PAGE> 5
FUNDS IV TRUST
BOND INCOME FUND
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS -- SEPTEMBER 17, 1996
The undersigned appoints John J. Pileggi and Jean V. Fiore and each of
them, attorneys and proxies of the undersigned, with power of substitution, to
vote all shares of BOND INCOME FUND (the "Fund") which the undersigned is
entitled to vote at the Special Meeting of Shareholders to be held on
Tuesday, September 17, 1996 at 10:00 a.m., New York time, and at any
adjournment thereof.
Please Complete, Sign and Date on Reverse Side and Mail in Accompanying
Postpaid Envelope.
(Continued on other side)
<PAGE> 6
(Continued from other side)
THE BOARD OF TRUSTEES FAVORS A VOTE FOR EACH PROPOSAL
1. To approve the proposed Agreement and Plan of Reorganization with respect to
the Fund and the transactions contemplated thereby as described in the
accompanying Combined Proxy Statement/Prospectus.
/ / FOR / / AGAINST / / ABSTAIN
2. To consider and act upon any other business as may properly come before the
Special Meeting and any adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. WHEN
PROPERLY EXECUTED, IT SHALL BE VOTED IN THE MANNER SPECIFIED. IF NO
SPECIFICATION IS MADE, IT SHALL BE VOTED "FOR" THE APPROVAL OF PROPOSAL 1 AND IN
THE DISCRETION OF THE PERSONS NAMED AS PROXIES AS TO SUCH OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENTS THEREOF.
NOTE: This instrument must be signed by the
registered holder(s). When signing as
attorney, administrator, trustee or
guardian, please give your title as such.
------------------------------------------------
Date
------------------------------------------------
------------------------------------------------
Signature(s)
<PAGE> 7
FUNDS IV TRUST
INTERMEDIATE BOND INCOME FUND
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS -- SEPTEMBER 17, 1996
The undersigned appoints John J. Pileggi and Jean V. Fiore and each of
them, attorneys and proxies of the undersigned, with power of substitution, to
vote all shares of INTERMEDIATE BOND INCOME FUND (the "Fund") which the
undersigned is entitled to vote at the Special Meeting of Shareholders to be
held on Tuesday, September 17, 1996 at 10:00 a.m., New York time, and at any
adjournment thereof.
Please Complete, Sign and Date on Reverse Side and Mail in Accompanying
Postpaid Envelope.
(Continued on other side)
<PAGE> 8
(Continued from other side)
THE BOARD OF TRUSTEES FAVORS A VOTE FOR EACH PROPOSAL
1. To approve the proposed Agreement and Plan of Reorganization with respect to
the Fund and the transactions contemplated thereby as described in the
accompanying Combined Proxy Statement/Prospectus.
/ / FOR / / AGAINST / / ABSTAIN
2. To consider and act upon any other business as may properly come before the
Special Meeting and any adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. WHEN
PROPERLY EXECUTED, IT SHALL BE VOTED IN THE MANNER SPECIFIED. IF NO
SPECIFICATION IS MADE, IT SHALL BE VOTED "FOR" THE APPROVAL OF PROPOSAL 1 AND IN
THE DISCRETION OF THE PERSONS NAMED AS PROXIES AS TO SUCH OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENTS THEREOF.
NOTE: This instrument must be signed by the
registered holder(s). When signing as
attorney, administrator, trustee or
guardian, please give your title as such.
------------------------------------------------
Date
------------------------------------------------
------------------------------------------------
Signature(s)
<PAGE> 9
FUNDS IV TRUST
VALUE STOCK APPRECIATION FUND
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS -- SEPTEMBER 17, 1996
The undersigned appoints John J. Pileggi and Jean V. Fiore and each of
them, attorneys and proxies of the undersigned, with power of substitution, to
vote all shares of VALUE STOCK APPRECIATION FUND (the "Fund") which the
undersigned is entitled to vote at the Special Meeting of Shareholders to be
held on Tuesday, September 17, 1996 at 10:00 a.m., New York time, and at any
adjournment thereof.
Please Complete, Sign and Date on Reverse Side and Mail in Accompanying
Postpaid Envelope.
(Continued on other side)
<PAGE> 10
(Continued from other side)
THE BOARD OF TRUSTEES FAVORS A VOTE FOR EACH PROPOSAL
1. To approve the proposed Agreement and Plan of Reorganization with respect to
the Fund and the transactions contemplated thereby as described in the
accompanying Combined Proxy Statement/Prospectus.
/ / FOR / / AGAINST / / ABSTAIN
2. To consider and act upon any other business as may properly come before the
Special Meeting and any adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. WHEN
PROPERLY EXECUTED, IT SHALL BE VOTED IN THE MANNER SPECIFIED. IF NO
SPECIFICATION IS MADE, IT SHALL BE VOTED "FOR" THE APPROVAL OF PROPOSAL 1 AND IN
THE DISCRETION OF THE PERSONS NAMED AS PROXIES AS TO SUCH OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENTS THEREOF.
NOTE: This instrument must be signed by the
registered holder(s). When signing as
attorney, administrator, trustee or
guardian, please give your title as such.
------------------------------------------------
Date
------------------------------------------------
------------------------------------------------
Signature(s)
<PAGE> 11
FUNDS IV TRUST
CASH RESERVE MONEY MARKET FUND
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS -- SEPTEMBER 17, 1996
The undersigned appoints John J. Pileggi and Jean V. Fiore and each of
them, attorneys and proxies of the undersigned, with power of substitution, to
vote all shares of CASH RESERVE MONEY MARKET FUND (the "Fund") which the
undersigned is entitled to vote at the Special Meeting of Shareholders to be
held on Tuesday, September 17, 1996 at 10:00 a.m., New York time, and at any
adjournment thereof.
Please Complete, Sign and Date on Reverse Side and Mail in Accompanying
Postpaid Envelope.
(Continued on other side)
<PAGE> 12
(Continued from other side)
THE BOARD OF TRUSTEES FAVORS A VOTE FOR EACH PROPOSAL
1. To approve the proposed Agreement and Plan of Reorganization with respect to
the Fund and the transactions contemplated thereby as described in the
accompanying Combined Proxy Statement/Prospectus.
/ / FOR / / AGAINST / / ABSTAIN
2. To consider and act upon any other business as may properly come before the
Special Meeting and any adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. WHEN
PROPERLY EXECUTED, IT SHALL BE VOTED IN THE MANNER SPECIFIED. IF NO
SPECIFICATION IS MADE, IT SHALL BE VOTED "FOR" THE APPROVAL OF PROPOSAL 1 AND IN
THE DISCRETION OF THE PERSONS NAMED AS PROXIES AS TO SUCH OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENTS THEREOF.
NOTE: This instrument must be signed by the
registered holder(s). When signing as
attorney, administrator, trustee or
guardian, please give your title as such.
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Date
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Signature(s)
