PILOT FUNDS, 497, 1996-07-02

PILOT FUNDS
497, 1996-07-02

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<PAGE> 1

- -----FINANCIAL

DIRECTION April 5, 1996
as supplemented July 1, 1996
LOGO

The
Pi lot
Funds
PROSPECTUS ENCLOSED
PILOT INTERNATIONAL
EQUITY FUND
Class A Shares and
Class B Shares

<PAGE> 2

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
---
<S> <C>
EXPENSE SUMMARY.................................................................................... 2
FINANCIAL HIGHLIGHTS............................................................................... 3
INVESTMENT OBJECTIVE AND RISK FACTORS.............................................................. 5
DESCRIPTION OF SECURITIES AND INVESTMENT TECHNIQUES................................................ 5
U.S. Government Securities.................................................................... 5
U.S. and Foreign Bank Obligations............................................................. 5
Forward Commitments and When-Issued Securities................................................ 5
Common and Preferred Stocks................................................................... 6
Convertible Securities........................................................................ 6
Small Capitalization Companies................................................................ 6
Foreign Securities............................................................................ 6
Investing in Emerging Markets................................................................. 6
American/European Depository Receipts......................................................... 7
Forward Foreign Currency Exchange Contracts................................................... 7
Currency Swaps................................................................................ 7
Repurchase Agreements......................................................................... 7
Lending of Portfolio Securities............................................................... 8
Options Transactions.......................................................................... 8
Futures Contracts and Options on Futures Contracts............................................ 8
Other Information............................................................................. 9
INVESTMENT LIMITATIONS............................................................................. 9
INVESTING IN THE PILOT FUNDS....................................................................... 9
HOW TO BUY SHARES.................................................................................. 12
HOW TO SELL SHARES................................................................................. 15
TRANSACTION RULES.................................................................................. 16
SHAREHOLDER SERVICES............................................................................... 19
Tax Sheltered Retirement Plans................................................................ 19
Exchange Privileges Among The Pilot Funds..................................................... 19
Automatic Investment Plan..................................................................... 19
Automatic Withdrawal Plan..................................................................... 20
Front-End Sales Charge Reductions............................................................. 20
Right of Accumulation......................................................................... 20
Example....................................................................................... 20
Statement of Intention........................................................................ 20
Quantity Discounts............................................................................ 21
Cross-Reinvestment Privilege.................................................................. 21
Reinstatement Privilege....................................................................... 21
DIVIDENDS AND DISTRIBUTIONS........................................................................ 22
Where do your dividends and distributions come from?.......................................... 22
What are your dividend and distribution options?.............................................. 22
When are dividends and distributions declared and paid?....................................... 22
DISTRIBUTION ARRANGEMENTS.......................................................................... 22
THE PILOT FAMILY OF FUNDS.......................................................................... 23
THE BUSINESS OF THE FUND........................................................................... 24
FUND MANAGEMENT.................................................................................... 24
TAX IMPLICATIONS................................................................................... 26
MEASURING PERFORMANCE.............................................................................. 27
</TABLE>

<PAGE> 3

THE PILOT FUNDS

LOGO

PROSPECTUS FOR CLASS A SHARES AND CLASS B SHARES

OF THE

PILOT INTERNATIONAL EQUITY FUND

April 5, 1996 as supplemented July 1, 1996

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

The Pilot Funds is an open-end, management investment company (a "mutual fund")
consisting of multiple portfolios (the "Funds"). This prospectus relates solely
to the offering of Class A and Class B Shares of the Pilot International Equity
Fund, formerly known as the Pilot Kleinwort Benson International Equity Fund
(the "Fund"). Boatmen's Trust Company ("Boatmen's") serves as the Fund's
investment adviser. Kleinwort Benson Investment Management Americas Inc.
("Kleinwort Benson") serves as the Fund's investment manager. Pilot Funds
Distributors, Inc. serves as the Fund's distributor, and its parent, BISYS Fund
Services Limited Partnership, serves as the Fund's administrator.

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

This Prospectus describes concisely the information about the Fund that you
should know before investing. Please read it carefully and keep it for future
reference.

More information about the Fund is contained in a Statement of Additional
Information that has been filed with the Securities and Exchange Commission. The
Statement of Additional Information can be obtained free upon request by calling
800/71-PILOT, by calling your service organization or by writing Pilot Funds
Distributors, Inc., 3435 Stelzer Road, Columbus, Ohio 43219-3035. The Statement
of Additional Information, as it may be revised from time to time, is dated
April 5, 1996 as supplemented July 1, 1996 and is incorporated by reference into
(considered a part of) the Prospectus.

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

<PAGE> 4

EXPENSE SUMMARY

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

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

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

<TABLE>
<CAPTION>
CLASS A CLASS B
------- -------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Front End Sales Charge Imposed on Purchases (as a percentage of offering
price)..................................................................... 4.50%(1) None
Sales Charge Imposed on Reinvested Dividends.................................. None None
Deferred Sales Charge (as a percentage of original purchase price or
redemption proceeds, whichever is lower)................................... None 4.50%(2)
Exchange Fee.................................................................. None None
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets):
Management Fee(3)............................................................. 0.80% 0.80%
Rule 12b-1/Distribution Payments.............................................. 0.25% 1.00%
Other Expenses................................................................ 0.37% 0.37%(4)
------- -------
Total Fund Operating Expenses(3).............................................. 1.42% 2.17%
======= ======
</TABLE>

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

(1) Reduced sales charges may be available. See "Shareholder
Services -- Front-End Sales Charge Reductions."

(2) This amount applies to redemptions during the first year. The charge
decreases .50% annually to 2.50% for redemptions made during the fifth year
and then decreases .75% to 1.75% for redemptions made during the sixth year.
No deferred sales charge is charged for redemptions made after the sixth
year. See "How to Buy Shares -- Explanation of Sales Price."

(3) This expense information is provided to help you understand the expenses you
would bear either directly (as with the transaction expenses) or indirectly
(as with the annual operating expenses) as a shareholder of the Fund. You
should note that any fees that are charged by the Fund's Adviser, its
affiliates or any other institutions directly to their customer accounts for
services related to an investment in the Fund are in addition to and not
reflected in the fees and expenses described above.

(4) Other Expenses for the Class B Shares are based on estimated amounts for the
current fiscal year.

Because of the Distribution Payments paid by the Fund as shown in the above
table, long-term shareholders may pay more than the economic equivalent of the
maximum front-end sales charge permitted by the National Association of
Securities Dealers, Inc.

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

<TABLE>
<CAPTION>
1 3 5 10
YEAR AFTER YEARS AFTER YEARS AFTER YEARS AFTER
PURCHASE PURCHASE PURCHASE PURCHASE
---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Class A Shares(1)..................................... $ 59 $ 88 $ 119 $ 208
Class B Shares
Assuming complete redemption at end of period(2).... $ 67 $ 103 $ 141 $ 250
Assuming no redemption.............................. $ 22 $ 68 $ 116 $ 250
</TABLE>

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

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

(2) Assumes deduction of maximum applicable contingent deferred sales charge.

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

<PAGE> 5

PILOT INTERNATIONAL EQUITY FUND
FINANCIAL HIGHLIGHTS

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

The following data with respect to a Share of the Pilot International Equity
Fund, formerly known as the Pilot Kleinwort Benson International Equity Fund,
outstanding during the period ended August 31, 1995 has been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report
incorporated by reference and attached to the Statement of Additional
Information, and should be read in conjunction with the financial statements and
related notes incorporated by reference and attached to the Statement of
Additional Information. This annual report also contains performance information
and is available upon request and without charge by writing to the address on
the front of this Prospectus. Prior to a tax-free reorganization effective July
12, 1993, the Pilot Kleinwort Benson International Equity Fund was a separate
portfolio of Kleinwort Benson Investment Strategies and known as the Kleinwort
Benson International Equity Fund. The following financial highlights also
present historical information of the Kleinwort Benson International Equity Fund
prior to July 12, 1993. The Kleinwort Benson International Equity Fund was
advised solely by Kleinwort Benson Investment Management Americas Inc., formerly
Kleinwort Benson International Investment Limited for those periods.

The following data with respect to a Share of the Kleinwort Benson International
Equity Fund of Kleinwort Benson Investment Strategies outstanding for each of
the seven years in the period ended December 31, 1992 have been audited by Ernst
& Young LLP, independent auditors, as indicated in their report incorporated by
reference and attached to the Statement of Additional Information, and should be
read in conjunction with the financial statements and related notes incorporated
by reference and attached to the Statement of Additional Information.

The Pilot Shares were first issued by the Pilot Kleinwort Benson International
Equity Fund during July, 1993. Accordingly, there are no financial highlights
with respect to the Fund for such shares for periods prior to such dates. In
this regard, Class B Shares were first issued by the Pilot International Equity
Fund during June, 1996. Therefore, financial highlights are not presented for
such shares. The financial highlights presented below for periods prior to July
12, 1993 represent historical information for shares of the Kleinwort Benson
International Equity Fund which became Pilot Administration Shares pursuant to a
tax-free reorganization effected on July 12, 1993. Effective August 21, 1995 the
Administration Shares of the Fund were redesignated as the Class A Shares of the
Fund. The Class A Shares will be subject to additional fees (Distribution Plan
Fees), as well as a front-end sales load of up to 4.5% of the offering price.

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

<PAGE> 6

PILOT INTERNATIONAL EQUITY FUND

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

FINANCIAL HIGHLIGHTS

SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH OF
THE PERIODS INDICATED

<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS
------------------------------------------------------------------------
NET REALIZED NET REALIZED
AND AND UNREALIZED TOTAL
UNREALIZED GAIN (LOSS) ON INCOME
NET ASSET NET GAIN (LOSS) FOREIGN (LOSS)
VALUE AT INVESTMENT ON CURRENCY FROM
BEGINNING INCOME INVESTMENT RELATED INVESTMENT
OF PERIOD (LOSS) TRANSACTIONS TRANSACTIONS(C) OPERATIONS
--------- ---------- ------------ --------------- ----------
<S> <C> <C> <C> <C> <C>
FOR THE YEAR ENDED AUGUST 31,
- ------------------------------------------------------
1995--Pilot Shares.................................... $ 16.34 $ 0.13(i) $(0.22)(i) $ 0.39(i) $ 0.30
1995--Class A Shares(j)............................... 16.29 0.08(i) (0.22)(i) 0.39(i) 0.25
1994--Pilot Shares.................................... 14.14 0.11(i) 1.65(i) 0.59(i) 2.35
1994--Administration Shares........................... 14.13 0.07(i) 1.65(i) 0.59(i) 2.31
FOR THE EIGHT MONTHS ENDED AUGUST 31,
- ------------------------------------------------------
1993--Pilot Shares(d)................................. 13.15 (0.01)(i) 1.10(i) (0.10)(i) 0.99
1993--Administration Shares........................... 11.85 0.02(i) 2.51(i) (0.25)(i) 2.28
FOR THE YEARS ENDED DECEMBER 31,(A)(B)
- ------------------------------------------------------
1992--Administration Shares........................... 12.29 0.04(i) (0.46)(i) -- (0.42)
1991--Administration Shares........................... 12.65 0.06 1.36 -- 1.42
1990--Administration Shares........................... 15.58 0.12 (2.40) -- (2.28)
1989--Administration Shares........................... 14.66 0.07 3.22 -- 3.29
1988--Administration Shares........................... 13.21 (0.01) 2.73 -- 2.72
1987--Administration Shares........................... 22.92 -- 2.11 -- 2.11
1986--Administration Shares........................... 17.95 0.02 9.13 -- 9.15
1985--Administration Shares........................... 11.87 0.02 6.28 -- 6.30

<CAPTION>
DISTRIBUTIONS TO

SHAREHOLDERS FROM:
--------------------------
NET REALIZED
GAIN ON
INVESTMENTS
AND
FOREIGN
NET CURRENCY
INVESTMENT RELATED
INCOME TRANSACTIONS
---------- ------------
<S> <C> <C> <C>
FOR THE YEAR ENDED AUGUST 31,
- ------------------------------------------------------
1995--Pilot Shares.................................... $(0.11) $ (0.29)
1995--Class A Shares(j)............................... (0.11) (0.29)
1994--Pilot Shares.................................... -- (0.15)
1994--Administration Shares........................... -- (0.15)
FOR THE EIGHT MONTHS ENDED AUGUST 31,
- ------------------------------------------------------
1993--Pilot Shares(d)................................. -- --
1993--Administration Shares........................... -- --
FOR THE YEARS ENDED DECEMBER 31,(A)(B)
- ------------------------------------------------------
1992--Administration Shares........................... (0.02) --
1991--Administration Shares........................... (0.08) (1.70)
1990--Administration Shares........................... (0.14) (0.51)
1989--Administration Shares........................... (0.22) (2.15)
1988--Administration Shares........................... -- (1.27)
1987--Administration Shares........................... -- (11.82)
1986--Administration Shares........................... -- (4.18)
1985--Administration Shares........................... (0.06) (0.16)

RATIO OF
NET RATIO OF NET
ASSET EXPENSES INVESTMENT
VALUE TO INCOME NET ASSETS
AT PORTFOLIO AVERAGE (LOSS) AT END OF
END OF TOTAL TURNOVER NET TO AVERAGE PERIOD
PERIOD RETURN(E) RATE ASSETS NET ASSETS (IN 000'S)
------- --------- ------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
FOR THE YEAR ENDED AUGUST 31,
- ------------------------------------------------------
1995--Pilot Shares.................................... $16.24 2.08% 35.91% 1.18% 0.82% $363,212

1995--Class A Shares(j)............................... 16.14 1.77 35.91 1.42 0.50 27,625

1994--Pilot Shares.................................... 16.34 16.75 35.40 1.12 0.75 307,561

1994--Administration Shares........................... 16.29 16.48 35.40 1.37 0.48 44,990

FOR THE EIGHT MONTHS ENDED AUGUST 31,
- ------------------------------------------------------
1993--Pilot Shares(d)................................. 14.14 7.53(f) 26.65(f)(h) 1.31(g) (0.56)(g) 195,548

1993--Administration Shares........................... 14.13 19.24(f) 26.65(f)(h) 2.17(g) 0.25(g) 55,816

FOR THE YEARS ENDED DECEMBER 31,(A)(B)
- ------------------------------------------------------
1992--Administration Shares........................... 11.85 (3.42) 58.55 1.78 0.35 56,358

1991--Administration Shares........................... 12.29 11.81 51.88 1.79 0.45 65,939

1990--Administration Shares........................... 12.65 (14.77) 52.00 1.82 0.76 72,007

1989--Administration Shares........................... 15.58 22.99 61.54 2.00 0.39 80,224

1988--Administration Shares........................... 14.66 21.03 54.84 2.31 (0.07) 59,864

1987--Administration Shares........................... 13.21 9.28 58.98 1.72 0.01 53,800

1986--Administration Shares........................... 22.92 52.62 76.35 1.49 0.10 92,592

1985--Administration Shares........................... 17.95 54.03 73.32 1.94 0.15 41,290

</TABLE>

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

<TABLE>
<S> <C>
(a) Prior to a tax-free organization into Pilot Administration shares effective July 12, 1993, the Pilot Kleinwort Benson Interna-
tional Equity Portfolio was a separate portfolio of Kleinwort Benson Investment Strategies known as Kleinwort Benson Interna-
tional Equity Fund. The predecessor portfolio was advised by Kleinwort Benson International Investment Limited and had a
December 31 fiscal year-end.

(b) Prior to July 12, 1993, the Pilot Administration shares were not subject to an Administration plan.

(c) For years preceding the fiscal year ended August 31, 1993, net realized and unrealized gain (losses) from foreign currency
related transactions were included in net realized and unrealized gain (losses) from investments. Effective January 1, 1993,
realized and unrealized gain (losses) from Foreign currency related transactions are disclosed separately from net realized
and unrealized gain (losses) from investments.

(d) Pilot shares were initially issued on July 26, 1993.

(e) Assumes investment at net asset value at the beginning of the period, reinvestment of all dividends and distributions, a
complete redemption of the investment at the net asset value at the end of the period and no sales charges. Total return
would be reduced if sales charges were taken for the Pilot Administration shares.

(f) Not annualized

(g) Annualized

(h) Calculated on a portfolio-wide level and excludes the transfer of assets effective on August 6, 1993.

(i) Calculated based on the average shares outstanding methodology.

(j) Effective August 21, 1995 the Administration Class Shares were redesignated as the Class A Shares.
</TABLE>

4
<PAGE> 7

THE PILOT INTERNATIONAL EQUITY FUND USES A VARIETY OF DIFFERENT INVESTMENTS AND
INVESTMENT TECHNIQUES IN SEEKING TO ACHIEVE THE FUND'S INVESTMENT OBJECTIVE. THE
FUND DOES NOT USE ALL OF THE INVESTMENTS AND INVESTMENT TECHNIQUES DESCRIBED IN
THE FOLLOWING SECTIONS. THE FUND IS NOT DESIGNED TO BE A COMPLETE INVESTMENT
PROGRAM BUT CAN BE APPROPRIATE AS PART OF A COMPLETE INVESTMENT STRATEGY. YOU
SHOULD CONSIDER WHETHER THE FUND MEETS YOUR INVESTMENT GOAL. ALTHOUGH THE FUND
ATTEMPTS TO ATTAIN ITS INVESTMENT OBJECTIVE, THERE CAN BE NO ASSURANCE IT WILL
BE SUCCESSFUL.

SHAREHOLDER APPROVAL IS NOT REQUIRED TO CHANGE THE INVESTMENT OBJECTIVE OF THE
FUND. HOWEVER, SHAREHOLDERS WILL BE GIVEN AT LEAST 30 DAYS' PRIOR WRITTEN NOTICE
IN THE EVENT OF A CHANGE IN THE FUND'S OBJECTIVE. UNLESS OTHERWISE STATED, EACH
INVESTMENT POLICY DESCRIBED BELOW MAY BE CHANGED AT ANY TIME BY THE PILOT FUNDS'
BOARD OF TRUSTEES WITHOUT SHAREHOLDER APPROVAL.

INVESTMENT OBJECTIVE AND RISK FACTORS

The investment objective of the Fund is to provide long-term capital growth by
investing primarily in equity securities of companies domiciled in countries
outside the United States and listed on major stock exchanges primarily in
Europe and the Pacific Basin. Under normal circumstances, the Fund will invest
at least 65% of its total assets in foreign equity securities, including
securities convertible into equity securities and in securities which are listed
on major stock exchanges. The Fund may purchase the stock of small and large
capitalization companies.

The Fund may invest up to 35% of its total assets in securities of issuers
domiciled in developing countries. These countries are generally located in
Eastern Europe, the Asia-Pacific region, Latin and South America, Africa and,
subject to approval by the Board of Trustees, Russia and the Middle East. Debt
securities, if any, purchased by the Fund will be rated in the top two
categories by a nationally recognized statistical rating organization ("NRSRO")
or, if unrated, determined by Kleinwort Benson to be of comparable quality. For
temporary defensive purposes, the Fund may invest up to 100% of its assets in
debt and equity securities of U.S. issuers. Debt securities in which the Fund
may invest include short-term and intermediate-term obligations of corporations,
foreign governments and international organizations (such as the International
Bank for Reconstruction and Development (the "World Bank")), including money
market instruments.

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

DESCRIPTION OF SECURITIES
AND INVESTMENT TECHNIQUES

- --U.S. Government Securities. The Fund may purchase obligations of the U.S.
Government. These obligations are issued or guaranteed as to principal or
interest by the U.S. Government, its agencies, authorities or instrumentalities
("U.S. Government Securities"). Some U.S. Government securities, such as
Treasury bills, notes and bonds, which differ only in their interest rates,
maturities and times of issuance, are supported by the full faith and credit of
the United States. Others, such as obligations issued or guaranteed by U.S.
Government agencies, authorities or instrumentalities, are supported by (a) the
full faith and credit of the U.S. Government (such as securities of the Small
Business Administration), (b) the right of the issuer to borrow from the
Treasury (such as securities of the Federal Home Loan Banks), (c) the
discretionary authority of the U.S. Government to purchase the agency's
obligations (such as securities of the Federal National Mortgage Association),
or (d) only the credit of the issuer. No assurance can be given that the U.S.
Government will continue to provide financial support to U.S. Government
agencies, authorities or instrumentalities.

- --U.S. and Foreign Bank Obligations. The Fund may invest in domestic bank
obligations of banks that have total assets in excess of $1 billion and are
subject to U.S. Government regulation, and in certificates of deposit issued by
Federal Deposit Insurance Corporation (FDIC) members that have total assets less
than $1 billion, provided that the principal amounts of such certificates are
fully covered by FDIC insurance. The Fund may invest in U.S. dollar-denominated
foreign bank obligations of foreign banks that have total assets in excess of
$10 billion, are among the 75 largest foreign banks in total assets, have
branches or agencies in the U.S. and meet other criteria established by the
Fund's Trustees. The Fund may also invest in other bank obligations.

- --Forward Commitments and When-Issued Securities. The Fund may purchase
when-issued securities and make contracts to purchase or sell securities for a
fixed price at a future date beyond customary settlement time. The Fund is
required to hold and maintain in a segregated account with the Funds' custodian
or subcustodian until the settlement date, cash, U.S. Government securities or
other high grade liquid debt obligations in an amount sufficient

<PAGE> 8

to meet the purchase price. Alternatively, the Fund may enter into offsetting
contracts for the forward sale of other securities that it owns. Securities
purchased or sold on a when-issued or forward commitment basis involve a risk of
loss if the value of the security to be purchased decreases prior to the
settlement date or if the value of the security to be sold increases prior to
the settlement date. Although the Fund would generally purchase securities on a
when-issued or forward commitment basis with the intention of acquiring
securities for its portfolio, the Fund may dispose of a when-issued security or
forward commitment prior to settlement if Boatmen's, or Kleinwort Benson, deems
it appropriate to do so and such disposition may give rise to a capital gain and
loss.

- --Common and Preferred Stocks. Common stocks are generally more volatile than
other securities. Preferred stocks share some of the characteristics of both
debt and equity and are generally preferred over common stocks with respect to
dividends and in liquidation.

- --Convertible Securities. The Fund may invest in convertible securities, which
may offer higher income than the common stocks into which they may be converted.
All convertible securities purchased by the Fund will be rated in the top two
categories by an NRSRO or, if unrated, determined by Kleinwort Benson to be of
comparable quality. Convertible securities (which may be current or zero coupon
securities) are bonds, notes, debentures, preferred stocks or other securities
which may be converted or exchanged at a stated or determinable exchange ratio
into shares of common stock. Prior to their conversion, convertible securities
have general characteristics similar to non-convertible securities. While
convertible securities generally offer lower interest or dividend yields than
non-convertible securities of similar quality, they may reflect changes in the
value of the underlying common stock. Convertible securities generally entail
less credit risk than the issuer's common stock because they rank senior to
common stock.

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

- --Foreign Securities. The Fund may invest in foreign securities which are
denominated in foreign currencies. Investment in foreign securities may present
a greater degree of risk than investment in domestic securities because of less
publicly-available financial and other information, less securities regulation,
different accounting standards, lower trading volume and market volatility,
difficulties in enforcing obligations, potential imposition of foreign
withholding and other taxes (including withholding on dividends or interest paid
to the Fund), war, expropriation or other adverse governmental or economic
actions. Furthermore, the settlement period of securities transactions may be
longer in foreign markets than in domestic markets, delivery of securities
without payment therefor may be required and transactions may involve
non-negotiable brokerage commissions. Purchases of foreign securities by the
Fund will usually be made in foreign currencies and, as a result, the Fund may
incur currency conversion costs and may be affected favorably or unfavorably by
changes in the value of foreign currencies against the U.S. dollar. In addition,
the Fund's performance may be favorably or unfavorably affected by changes in
exchange rates or exchange rate controls, which may include suspension of the
ability to transfer currency from a given country. These risks generally are of
greater concern in developing countries.

The Fund may acquire U.S. dollar denominated obligations of the World Bank.
Obligations of the World Bank are supported by subscribed but unpaid commitments
of its member countries; there is no assurance that these commitments will be
fulfilled in the future.

- --Investing in Emerging Markets. The Fund may also invest up to 35% of its total
assets in one or more countries with emerging economies. These countries are
located in the Asia-Pacific region, Eastern Europe, Latin and South America,
Africa and, subject to approval by the Board of Trustees, Russia and the Middle
East. Political and economic structures in many of such countries may be
undergoing significant evolution and rapid development, and such countries may
lack the social, political and economic stability characteristic of more
developed countries. Certain of such countries may have in the past failed to
recognize private property rights and have at times nationalized or expropriated
the assets of private companies. As a result, the risks described above,
including the risks of nationalization or expropriation of assets, may be
heightened. In addition, unanticipated political or social developments may
affect the values of the Fund's investments in those countries and the
availability to the Fund of additional investments in those

<PAGE> 9

countries. The small size and inexperience of the securities markets in certain
of such countries and the limited volume of trading in securities in those
countries may make the Fund's investment in such countries illiquid and more
volatile than investments in most other non-major U.S. markets, and the Fund may
be required to establish special custodial or other arrangements before making
certain investments in those countries. There may be little financial or
accounting information available with respect to issuers located in certain of
such countries, and it may be difficult as a result to assess the value of
prospects of an investment in such issuers.

- --American/European Depository Receipts. The Fund may invest indirectly in the
securities of foreign issuers through sponsored or unsponsored ADRs and EDRs or
other securities representing securities of companies based in countries other
than the United States. Transactions in these securities may not necessarily be
settled in the same currency as the underlying securities which they represent.
Ownership of unsponsored ADRs and EDRs may not entitle the Fund to financial or
other reports from the issuer, to which it would be entitled as the owner of
sponsored ADRs or EDRs. Generally, ADRs, in registered form, are designed for
use in the U.S. securities markets, and EDRs, in bearer form, are designed for
use in European securities markets. ADRs and EDRs also involve certain risks of
other investments in foreign securities.

- --Forward Foreign Currency Exchange Contracts. The Fund may enter into forward
foreign currency exchange contracts ("forward contracts") for hedging and to
seek to increase total return and to purchase or sell currency in connection
with purchases and sales of foreign securities. A forward contract is
individually negotiated and privately traded by currency traders and their
customers. A forward contract involves an obligation to purchase or sell a
specific currency for an agreed price at a future date, which may be any fixed
number of days from the date of the contract. A forward contract may be for a
single price or for a range of prices. The Fund may be required to segregate
assets, consisting of cash, U.S. Government securities or other high grade
liquid debt obligations to cover forward contracts that require it to purchase
foreign currency.

The purpose of entering into these contracts is to minimize the risk to the Fund
from adverse changes in the relationship between the U.S. dollar and foreign
currencies. At the same time, such contracts may limit potential gain from a
positive change in the relationship between the U.S. dollar and foreign
currencies. When Kleinwort Benson believes that the currency of a specific
country may deteriorate against another currency, it may enter into a forward
contract to sell the less attractive currency and buy the more attractive one
("cross-hedging"). The amount in question could be less than or equal to the
value of the Fund's securities denominated in the less attractive currency. The
use of currency transactions can result in the Fund incurring losses as a result
of a number of factors, including the imposition of exchange controls,
suspension of settlements, or the inability to deliver or receive a specified
currency. Unanticipated changes in currency prices may result in poorer overall
performance for the Fund than that performance it would have had had it not
engaged in forward contracts.

- --Currency Swaps. The Fund may enter into currency swaps for hedging purposes
and to seek to increase total return. Currency swaps involve the exchange of
rights to make or receive payments in specified currencies. Since currency swaps
are individually negotiated, the Fund expects to achieve an acceptable degree of
correlation between its portfolio investments and its currency swap positions.
Currency swaps usually involve the delivery of the entire principal value of one
designated currency in exchange for the other designated currency. Therefore,
the entire principal value of a currency swap is subject to the risk that the
other party to the swap will default on its contractual delivery obligations.

The use of currency swaps is a highly specialized activity which involves
investment techniques and risks different from those associated with ordinary
portfolio securities transactions. If Kleinwort Benson is incorrect in its
forecasts of market values and currency exchange rates, the investment
performance of the Fund would be less favorable than it would be if this
investment technique were not used.

- --Repurchase Agreements. The Fund may enter into repurchase agreements with
banks and selected broker-dealers. A repurchase agreement is an agreement under
which the Fund purchases securities and the seller agrees to repurchase the
securities within a particular time at a specified price. The repurchase price
will exceed the original purchase price, the difference being income to the
Fund, and will be unrelated to the interest rate on the purchased securities.
The Fund's custodian or subcustodian will maintain custody of the purchased
securities for the duration of the agreement. The value of the purchased
securities, including accrued interest, will at all times exceed the value of
the repurchase agreement. In the event of bankruptcy of the seller or failure of
the seller to repurchase the securities as agreed, the Fund could suffer losses,
including loss of interest on or principal of the security and costs associated
with delay and enforcement of the repurchase agreement.

<PAGE> 10

- --Lending of Portfolio Securities. The Fund may seek to increase its total
return by lending portfolio securities. Under present regulatory policies, such
loans may be made to institutions, such as broker-dealers, and are required to
be secured continuously by collateral in cash, U.S. Government securities or
other high grade liquid debt obligations maintained on a current basis at an
amount at least equal to the market value of the securities loaned. As with
other extensions of credit there are risks of delay in recovering, or even loss
of rights in, the collateral should the borrower of the securities fail
financially. However, the loans will be made only to firms deemed by Boatmen's
or Kleinwort Benson to be of good standing, and when, in the judgment of
Boatmen's or Kleinwort Benson, the consideration which may be earned currently
from securities loans of this type justifies the attendant risk. If securities
loans are made, it is intended that the value of the securities loaned would not
exceed 30% of the value of the total assets of the Fund.

- --Options Transactions. The Fund may purchase and sell (write) call and put
options on securities. Such options are agreements by the Fund in exchange for a
premium to sell or purchase securities at a specified price if the option is
exercised on or before a set date. Put options on securities will be written
only when the underlying securities are ones which the Fund could otherwise
purchase. Risks associated with writing covered options include the possible
inability to effect closing transactions at favorable prices and an appreciation
limit on the securities set aside for settlement. Call options will be sold
(written) only when the underlying securities are ones which the Fund holds.

The Fund may purchase and sell (write) call and put options on securities to
hedge against the risk of unfavorable price movements adversely affecting the
value of the securities the Fund holds or intends to buy.

The Fund may also purchase and sell (write) call and put options on securities
indexes to hedge against the risk of unfavorable price movements in securities.
Options on securities indexes are similar to options on securities except that
the holder of an option on an index has the right, in return for the premium
paid, to buy from (in the case of a call) or sell (in the case of a put) the
writer of the option the cash value of the index (rather than the security
underlying the option) at a specified exercise price at any time during the term
of the option.

The Fund may also purchase and sell options on currencies to seek to increase
total return and to protect against declines in the dollar value of foreign
portfolio securities and against increases in the U.S. dollar cost of foreign
securities to be acquired. As with other kinds of option transactions, however,
the writing of an option on foreign currency will constitute only a partial
hedge, up to the amount of the premium received. The Fund could be required to
purchase or sell foreign currencies at disadvantageous exchange rates, thereby
incurring losses. The purchase of an option on foreign currency may constitute
an effective hedge against exchange rate fluctuations; however, in the event of
exchange rate movements adverse to the Fund's position, the Fund may forfeit the
entire amount of the premium plus related transaction costs. Options on foreign
currencies to be written or purchased by the Fund will be traded on U.S. and
foreign exchanges or over-the-counter.

The Fund is required to segregate assets, consisting of cash, U.S. Government
securities or other high grade liquid debt obligations in an amount equal to the
value of its obligations unless offsetting positions are maintained.

- --Futures Contracts and Options on Futures Contracts. For bona fide hedging or
other permissible risk management purposes, such as protecting the price or
interest rate of a security it holds or intends to buy the Fund may enter into
futures contracts on securities and securities indexes and may purchase and sell
(write) call and put options on these futures contracts. The Fund may also enter
into futures contracts on currencies and may enter into futures contracts and
related options for purposes of seeking to increase total return, consistent
with the regulations of the Commodities Futures Trading Commission.

Hedging and other risk-management transactions are undertaken to reduce or
eliminate any of several kinds of price fluctuation risk. For example, put
options on securities futures might be purchased to protect against declines in
the market values of debt securities occasioned by higher interest rates and
securities-index futures might be sold to protect against a general decline in
the value of securities of the type that comprise the index. Currency futures
might be sold to protect against declines in the value of currencies in which
portfolio securities are denominated. If these hedging transactions are
successful, the futures or options positions taken by the Fund will rise in
value by an amount which approximately offsets the decline in the value of the
portion of a portfolio that is being hedged. Such decline in value might be
caused by a decline in the market value of portfolio securities.

The Fund may lose the expected benefit of futures transactions if securities
prices move in an unanticipated manner. Such unanticipated changes may also
result in poorer overall performance for the Fund than the performance it would
have had had it not entered into any futures transactions. In addition, changes
in the value of the Fund's futures and options positions may not prove to be
perfectly or even highly correlated with changes in the value of its portfolio
securities. This could limit the Fund's

<PAGE> 11

ability to hedge effectively against interest rate or market risk or both and
give rise to additional risks. There is no assurance of market liquidity for
purposes of closing out positions in futures contracts and options on futures
contracts; if such positions cannot be closed, the Fund may incur losses in
excess of its initial margin deposits.

The Fund will incur brokerage costs and will be required to post and maintain
"margin" as a good-faith deposit against performance of its obligations under
futures contracts and options thereon. In addition, the Fund is required to
segregate assets, consisting of cash, U.S. Government securities or other high
grade liquid debt obligations in an amount equal to the value of the instruments
underlying futures contracts and options thereon.

- --Other Information. The Funds have adopted certain procedures under the 1940
Act which enable the Fund to purchase certain instruments during the existence
of an underwriting or selling syndicate of which The Boatmen's National Bank of
St. Louis or Kleinwort Benson, is a member relating to the instruments. These
procedures establish, among other things, certain limitations on the amount of
securities which may be purchased in any single offering and on the amount of
the Fund's assets which may be invested in any single offering. Accordingly, in
view of such entities' active role in the underwriting of securities, the Fund's
ability to purchase securities in the primary market may from time to time be
limited.

The Fund changes its portfolio securities for investment consideration and not
for trading purposes.

INVESTMENT LIMITATIONS

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

1. The Fund may not invest 25% or more of its total assets in one or more
issuers conducting their principal business activities in the same industry
(with certain limited exceptions, including investments in U.S. Government
securities or tax-exempt obligations of state and municipal governments and
their agencies and authorities). For purposes of this restriction, foreign
governments are considered to be separate industries.

2. The Fund may not invest (with certain limited exceptions, including U.S.
Government securities) more than 5% of the value of the Fund's total assets in
the securities of a single issuer, except that up to 25% of each Fund's total
assets can be invested without regard to such 5% limitation (such 5% limitation
shall not apply to repurchase agreements collateralized by U.S. Government
securities).

3. The Fund may not borrow money except as a temporary measure and then only in
amounts not exceeding 5% of the value of the Fund's total assets or from banks
or in connection with reverse repurchase agreements provided that immediately
after such borrowing, all borrowings of the Fund do not exceed one-third of the
Fund's total assets and no purchases of portfolio instruments will be made while
such Fund has borrowings outstanding in an amount exceeding 5% of its total
assets.

4. The Fund may not make loans, except to the extent that the lending of
portfolio securities and purchase of debt obligations in accordance with the
Fund's investment objective and policies and the entry into repurchase
agreements with banks, brokers, dealers and other financial institutions may be
deemed to be loans.

The Fund has no current intention (which may be changed without shareholder
approval) of purchasing restricted securities, except those securities which can
be offered and sold to "qualified institutional buyers" pursuant to Rule 144A
and which the Funds' Trustees determine are traded in a liquid market. The Fund
may invest up to 15% of the value of its net assets in illiquid securities,
including restricted securities. Risks associated with investing in restricted
securities include the risk that the lack of an active secondary market and
resale restrictions may result in the inability of the Fund to sell a security
at a fair price and may substantially delay the sale of a security that the Fund
seeks to sell. Issuers whose securities are publicly traded are also not subject
to the same disclosure and other legal requirements as are applicable to issuers
with publicly traded securities.

INVESTING IN THE PILOT FUNDS

Getting Your Investment Started

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

You may choose to invest your Boatmen's Investment Services account where an
Account Representative can advise you in selecting among the Pilot Funds.
Whether

<PAGE> 12

you currently have a Boatmen's Investment Services account or wish to open one,
your Pilot Funds investment can be executed within a few minutes by telephone
or, if you prefer, during a consultation with an Investment Officer of Boatmen's
Investment Services. Call Boatmen's Investment Services at 800/469-5999 to speak
with an Account Representative, to place a Pilot Funds transaction or to arrange
a consultation scheduled at your convenience.

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

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

Your Alternative Purchase Options

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

Characteristics of Class A Shares and Class B Shares

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

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

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

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

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

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

<PAGE> 13

Considerations In Choosing Between Class A And Class B Shares

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

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

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

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

If You Have Questions

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

<TABLE>
<CAPTION>
CALL FOR INFORMATION
- --------------- -----------------------------------
<S> <C>
800/71-PILOT Regarding the Fund's investment
8:00 am to objectives and policies or for
7:00 pm information about opening an
Central time account (including information
regarding the Fund's alternative
purchase options). Information on
changing your Pilot Fund's
services, and Statements of
Additional Information, are also
available at this number.
- -----------------------------------------------------
800/227-3654 To obtain your account balance or
8:00 am to to request a telephone transaction.
5:00 pm
Central time
</TABLE>

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

You should note that neither The Pilot Funds nor its service contractors will be
responsible for any loss or expense for acting upon telephone instructions that
are believed to be genuine. In attempting to confirm that telephone instructions
are genuine, The Pilot Funds will use procedures considered reasonable.

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

<TABLE>
<S> <C>
Confirmation Statements After every transaction that
affects your account balance or
your account registration.
Account Statements Either monthly, quarterly or
annually depending on the Fund in
which you invest or the type of
account you hold.
Financial Reports Every six months. To reduce The
Pilot Funds' expenses, only one
copy of most Fund reports will be
mailed to your household, even if
you have more than one account in
a fund.
</TABLE>

<PAGE> 14

HOW TO BUY SHARES

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

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

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

OPENING AND ADDING TO YOUR PILOT FUNDS ACCOUNT

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

<PAGE> 15

[CAPTION]

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TO ADD TO AN ACCOUNT
TO OPEN AN ACCOUNT HELD DIRECTLY WITH THE
DIRECTLY WITH THE PILOT FUNDS PILOT FUNDS
------------------------------------- -------------------------------------
<S> <C> <C>
By Mail to: -- Complete an Account Application -- Make your check payable to the
The Pilot Funds and mail it, along with a check particular Fund in which you are
c/o BISYS Fund Services payable to the Fund in which you investing and mail it to the
Dept. L-1709 are investing, to the address on address on the left.
Columbus, OH 43260-1709 the left.
-- Please include your account number
on your check.
-- Or use the convenient form
attached to your regular Fund
statement.
- ------------------------------------------------------------------------------------------------------------
In Person to: -- Deliver the Account Application -- Deliver your check payable to the
BISYS Fund Services and your check payable to the Fund in particular Fund in which you are
3435 Stelzer Road which you are investing to the investing to the address on the
Columbus, OH 43219-3035 address on the left. left.
-- Please include your account number
on your check.
- ------------------------------------------------------------------------------------------------------------
By Wire to: -- Ask your bank to send immediately -- Ask your bank to wire immediately
Call 1-800-71-PILOT for available funds by wire. available funds as described at
Wire Instructions left, except that the wire should
-- The wire should say that you are note that it is to make a
opening a new Fund account (if an subsequent purchase rather than to
Account Application Form is not open a new account.
received for a new account within
30 days after the wire is received, -- Please include your Fund account
dividends and redemption proceeds number.
from the account will be subject to
back-up withholding). The wire
should say that the purchase is to
be in your name.
-- Include your name, address and
taxpayer identification number.
Indicate the name of the Fund in
which you are investing. Investors
should also indicate share class
selection.
Consult your bank for information on remitting funds by wire and associated
bank charges
- ------------------------------------------------------------------------------------------------------------
Automatic Investment (allows -- You must first complete an Account -- Call 800/71-PILOT to find out how
regular investment without Application and select the to set up this service.
ongoing paperwork) Automatic Investment Plan option.
-- Additional purchases will then
-- Call 800/71-PILOT for more automatically be made as directed
information. by you.
</TABLE>

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

<PAGE> 16

Explanation of Sales Price

The public offering price for each class of shares is based upon net asset value
per share plus, in the case of Class A Shares, a front-end sales charge. Net
asset value per share for each class of the Fund will be determined by adding
the value of the Fund's investments, cash and other assets attributable to the
class, subtracting the Fund's liabilities attributable to that class, and then
dividing the result by the number of shares in the class that are outstanding.
The assets of the Fund are valued at market value or, if market quotes cannot be
readily obtained, fair value is used as determined by the Board of Trustees.
Debt securities held by the Fund that have sixty days or less until they mature
are valued at amortized cost, which generally approximates market value.

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

Net asset value is computed as of 3:00 P.M., Central time, on all days the New
York Stock Exchange (the "Exchange") is open for trading, which is Monday
through Friday except for holidays (scheduled Exchange holidays for 1996 are New
Years Day (observed), President's Day, Good Friday, Memorial Day, Independence
Day (observed), Labor Day, Thanksgiving Day and Christmas Day (observed)). On
those days when the Exchange closes early as a result of such day being a
partial holiday or otherwise, the right is reserved to advance the time on that
day by which purchase and redemption requests must be received.

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

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

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

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

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

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

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

For example, assume you purchased 100 Class B Shares at $10 a share (for a total
cost of $1,000), three years later the shares have a net asset value of $12 per
share and during that time you acquired 10 additional shares through dividend
reinvestment. If you then make your first redemption of 50 shares (resulting in
proceeds of $600, 50 shares X $12 per share), the first 10 shares redeemed will
not be subject to the contingent deferred sales charge because they were
acquired through reinvestment of dividends. With respect to the remaining 40
shares redeemed, the contingent deferred sales charge is charged at $10 per
share (because the original purchase price of $10 per share is lower than the
current net asset value of $12 per share). Therefore, only $400 of the $600 you
received from selling your shares will be subject to the contingent deferred
sales charge, at a rate of 3.50%, the applicable rate in the third year after
purchase. The proceeds from the contingent deferred sales charge that

<PAGE> 17

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

From time to time, the Fund's distributor will make or allow additional payments
or promotional incentives in the form of cash or other compensation such as
trips to sales seminars, tickets to sporting and other entertainment events and
gifts of merchandise to firms that sell shares of the Fund.

HOW TO SELL SHARES

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

<PAGE> 18

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

<TABLE>
<CAPTION>
HOW TO REDEEM SHARES ADDITIONAL LIMITATIONS
------------------------------------- -------------------------------------
<S> <C> <C>
By Mail to: -- Send a signed request (each owner, -- Requests greater than $50,000 per
The Pilot Funds including each joint owner, must day must be signature guaranteed.
c/o BISYS Fund Services sign) to the Transfer Agent at the
Dept. L-1709 address on the left. -- You should refer to "Transaction
Columbus, OH 43260-1709 Rules" below for additional
-- Be sure to include both the name limitations.
of the particular Fund whose shares
you are selling and your account
number.
- ------------------------------------------------------------------------------------------------------------
By Wire: -- After you have signed up for wire -- The Transfer Agent may act upon
redemption privileges on the such a request from any person
Account Application, you may representing himself or herself to
instruct the Transfer Agent to wire be you and reasonably believed by
your redemption proceeds to your the Transfer Agent to be genuine.
bank account by sending a request
in writing or by phone -- The transaction amount must be a
(800/227-3654). $1,000 minimum.
-- This privilege may be subject to
limits regarding frequency and
overall amount.
- ------------------------------------------------------------------------------------------------------------
In Person to: -- Deliver your written request -- Requests must be signed by each
BISYS Fund Services directly to the Transfer Agent at the owner, including each joint owner.
3435 Stelzer Road address on the left.
Columbus, OH 43219-3035 -- Requests greater than $50,000 per
day must be signature guaranteed.
- ------------------------------------------------------------------------------------------------------------
Systematic Withdrawal -- Withdrawals begin after you have -- Your account must have a total net
(permits automatic signed up for this service (either asset value of at least $5,000.
withdrawal of pre-arranged on the account application or in a
amount) subsequent letter to the Transfer -- The transaction amount must be at
Agent). least $50 minimum.
-- Call 800/71-PILOT for more
information.
Consult your bank for information on remitting funds by wire and associated
bank charges
</TABLE>

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

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

TRANSACTION RULES

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

Purchases and sales should be made for long-term investment purposes only and
not for short-term trading. The Funds and its Service Organizations each reserve
the right to restrict purchases of Shares (including exchanges) when a pattern
of frequent purchases and sales made in response to short-term fluctuations in
the Fund's share price appears evident. Additionally, the Fund reserves the
right to reject any purchase order (including exchanges) that is not received in
"good order."

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

<PAGE> 19

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

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

MISCELLANEOUS PURCHASE INFORMATION. You must specify at the time of investment
whether you are purchasing Class A or Class B Shares. Federal regulations
require that you provide a certified taxpayer identification number whenever you
open or reopen an account. Share certificates will not be issued. If your check
does not clear, a fee may be imposed by the Transfer Agent. If shares are
purchased with a check that does not clear, the purchase will be cancelled and
the purchaser will be subject to any losses or fees incurred in the transaction.

MISCELLANEOUS REDEMPTION INFORMATION. The Pilot Funds usually makes payments for
the shares that you redeem within three business days after it receives your
request in proper form. SHARES PURCHASED BY CHECK FOR WHICH A REDEMPTION REQUEST
HAS BEEN RECEIVED WILL NOT BE REDEEMED UNLESS THE CHECK USED FOR INVESTMENT HAS
CLEARED, WHICH MAY TAKE UP TO SEVEN BUSINESS DAYS OR MORE. If the purchaser
purchases shares by Federal Funds wire the purchaser may avoid this delay.
Redemption requests by telephone prior to the expiration of the seven-day period
will not be accepted. The telephone redemption option will be suspended for a
period of 30 days following a telephonic address change.

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

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

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

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

THE FUND MAY SUSPEND THE RIGHT OF A SHAREHOLDER TO REDEEM SHARES and may suspend
the date of payments by the Fund (a) for any period during which the New York
Stock Exchange is closed, other than the customary weekends or holidays, or if
trading in the markets the Fund normally utilizes is closed or is restricted as
determined by the Securities and Exchange Commission ("SEC"), (b) during any
emergency, as determined by the SEC, as a result of which it is not reasonably
practicable for the Fund to dispose of instruments owned by it or fairly to
determine the value of its net assets, or (c) for such other period as the SEC
may by order permit for the protection of the Shareholders of the Fund.

The Fund reserves the right to adopt by action of the Trustees a policy pursuant
to which it may without Shareholder approval redeem upon not less than 60 days'
notice (a) Shares in an account which have a value below $500, or such other
amount as the Trustees may designate at the time the policy is adopted
(provided, however, that the Fund will not redeem Shares when, due to a change
in the net asset value of the Shares, the value of a Shareholder's account drops
below such designated minimum amount; and provided further that during the
notice period Shareholders will have the opportunity to

<PAGE> 20

bring the value of their accounts up to the designated amount) or (b) all of the
Fund's Shares if such Shares have an aggregate value below a designated amount
and if the Trustees determine that it is not practical, efficient or advisable
to continue the operation of the Fund and that any applicable requirements of
the 1940 Act have been complied with. As of the date of this Prospectus, no such
policy has been adopted. While, as indicated above, the Trustees have the
authority to adopt, and thereafter to change from time to time, such a policy,
they will not do so without providing at least 60 days' notice to the
Shareholders.

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

In order to maximize earnings on the Fund, the Fund tries to be invested as
completely as is practicable. Accordingly, orders for Class A and Class B Shares
received by a Service Organization by 3:00 p.m., Central time, on Business Days
are executed at the net asset value next calculated after receipt of the order,
plus a sales load, if any. Different Service Organizations may establish
different times by which purchase orders must be received by them in order to
ensure timely transmittal of purchase orders to the Transfer Agent and payments
to the Custodian or the Funds.

The purchase price must be paid by a Service Organization by wiring Federal
Funds to the Custodian or by forwarding a check to Pilot International Equity
Fund, c/o BISYS Fund Services, Dept. L-1709, Columbus, OH 43260-1709. Payment
must be received within three business days of receipt of the purchase order.
Boatmen's Investment Services and other participating Service Organizations have
undertaken to arrange for the timely transmittal of purchase orders to the
Transfer Agent and of payments to the Custodian or the Funds. Purchases may be
made through a customer's account at Boatmen's, its affiliates or other Service
Organizations.

Additional purchases may be made at any time through Service Organizations or
directly with the Fund's Transfer Agent, c/o The Pilot Funds, Pilot
International Equity Fund, Dept. L-1709, Columbus, OH 43260-1709.

In certain situations or for certain individuals or entities, the front-end
sales charge for Class A Shares of the Fund may be waived either because of the
nature of the investor or the reduced sales efforts required to attract such
investments. No sales charge is charged on reinvested dividends or
distributions. Likewise, there is no front-end sales charge on (1) any purchase
by Boatmen's, BISYS, any of their affiliates or their respective officers,
partners, directors or employees (including retired employees), any Trustee or
officer of The Pilot Funds and designated family members of any of the above
individuals, (2) any purchase by any registered representative or full-time
employee of broker-dealers or Service Organizations having agreements with the
Distributor pertaining to the sale and/or servicing of Fund shares (and their
spouses and minor children) to the extent permitted by such organizations, (3)
any purchase by any state, county or city, or any instrumentality, department,
authority or agency thereof, which is prohibited by applicable investment laws
from paying a sales load or commission, (4) any purchase by a registered
investment adviser who is purchasing shares for its own account or for accounts
for which it is authorized to make investment decisions (i.e., a discretionary
account), (5) any shares issued in connection with reorganizations with or
acquisitions of the assets of other organizations, (6) under certain
circumstances, any purchase of shares pursuant to the Reinstatement Privilege
described below under "Shareholder Services", (7) under certain circumstances,
any purchase of shares as a result of the Cross-Reinvestment Privilege described
below under "Shareholder Services", (8) any purchase of Fund shares with the
proceeds from a recent redemption of shares of any other non-money market
investment portfolio of another investment company, provided that any purchase
must be made within 60 days of such redemption and that a copy of the account
statement showing such redemption must accompany the purchase request, (9) any
purchase of shares offered through a registered broker-dealer as part of a wrap
product, and (10) exchanges where the shares being exchanged are non-money
market fund shares that came from the distribution of assets held in a qualified
trust agency or custodian account maintained with the trust department of
Boatmen's or its affiliates.

In order to receive the sales charge waiver, a purchaser must certify its
eligibility for a waiver to their Service Organization on its application form
and must certify on such form that it will notify the Service Organization if,
at the time of additional purchases, it is no longer eligible for a waiver. The
Transfer Agent and Service Organizations reserve the right to request additional
certification or information from a purchaser in order to verify that such
purchaser is eligible for a waiver. From time to time, the Fund's distributor or
a Service Organization may make expense reimbursements for special training of
registered representatives in group meetings or to help pay the expenses of
sales contests. In some instances, promotional incentives to dealers may be
offered only to certain dealers who have sold or may sell significant amounts of
Fund shares.

CERTAIN TYPES OF REDEMPTIONS MAY ALSO QUALIFY FOR AN EXEMPTION FROM THE
CONTINGENT DEFERRED SALES CHARGE. To receive one of the first three exemptions
listed below, you

<PAGE> 21

must explain the status of your redemption at the time you redeem your shares.
The contingent deferred sales charge with respect to Class B Shares is not
charged on (1) exchanges described under "Exchange Privileges"; (2) redemptions
in connection with minimum required distributions from IRA, 403(b)(7) and
Qualified Plan accounts due to the shareholder reaching age 70 1/2; (3)
redemptions in connection with a shareholder's death or disability (as defined
in the Internal Revenue Code); and (4) involuntary redemptions as a result of an
account's net asset value remaining below $1,000 after thirty days' written
notice. In addition, no contingent deferred sales charge is charged on shares
acquired through the reinvestment of dividends or distributions.

SHAREHOLDER SERVICES

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

Tax Sheltered Retirement Plans

The Fund will offer Class A and Class B Shares for purchase by retirement plans,
including Individual Retirement Account Plans for individuals and their non-
employed spouses.

Detailed information concerning these plans and copies of the plans will be
available from Service Organizations. This information should be read carefully,
and consultation with an attorney or tax adviser is advisable. The information
will set forth the service fee charged for retirement plans and describe the
federal income tax consequences of establishing a plan. Under all plans,
dividends and distributions will be automatically reinvested in additional
shares of the same fund or, if so directed by the shareholder, in cash, in
shares of another fund or in Administration or Investor Shares of a Money Market
Fund for the Class A and Class B Shares, respectively. An initial investment
minimum of $500 applies to purchases in connection with tax-sheltered retirement
plans.

EXCHANGE PRIVILEGES AMONG THE PILOT FUNDS

You may sell your Fund shares and buy other shares of The Pilot Funds by calling
the Transfer Agent at 800/227-3654 or sending a written exchange request to the
Transfer Agent at The Pilot Funds, Pilot International Equity Fund, c/o BISYS
Fund Services, Dept. L-1709, Columbus, OH 43260-1709. Specifically, Class A
Shares of the Fund may be exchanged for Class A Shares of any other fund of the
Pilot Family of Funds. Class A Shares purchased with a front-end sales charge
may be exchanged without the need to pay any additional front-end charge on the
shares acquired through the exchange. Class B Shares of the Fund may be
exchanged for Class B Shares of the Pilot Funds without the payment of any
contingent deferred sales charge at the time the exchange is made. In
determining the holding period for calculating the contingent deferred sales
charge payable on redemption of Class B Shares, the holding period of the shares
originally held will be added to the holding period of the shares acquired
through exchange.

If you have a qualified trust, agency or custodian account with the trust
department of Boatmen's or its affiliates, and your shares are to be held in
that account, you may also exchange your current Class A Shares in the Fund for
Pilot Shares in the same Fund. Conversely, Pilot Shares may be exchanged for
Class A Shares of the Fund in connection with the distribution of assets held in
such a qualified trust, agency or custodian account. These exchanges are made
without a sales charge at the net asset value of the respective share classes.

Exchanges may have tax consequences for you. Consult your tax adviser for
further information.

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

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

AUTOMATIC INVESTMENT PLAN
(requires your request)

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

At your option, your bank account will be debited in a particular amount that
you have specified, and Fund shares

<PAGE> 22

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

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

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

AUTOMATIC WITHDRAWAL PLAN
(requires your request)

The Pilot Funds offers a convenient way of withdrawing funds from your
investment portfolio. You may request regular monthly, quarterly, semi-annual or
annual withdrawals in any amount above $50 provided the Fund account you are
withdrawing from has a minimum current balance of at least $5,000. There is no
minimum withdrawal amount required for automatic withdrawals by employees of
Boatmen's or its affiliates. The automatic withdrawal will be made on the first
or fifteenth day of the month. Purchases of additional shares concurrently with
withdrawals are ordinarily not advantageous for share classes that charge a
sales charge. Use of the Plan may also be disadvantageous for Class B Shares
during the first six years a share is held, due to the potential need to pay a
contingent deferred sales charge.

FRONT-END SALES CHARGE REDUCTIONS

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

Right of Accumulation. When buying Class A Shares, your current aggregate
investment determines the amount of any sales load that you pay. If your current
aggregate investment plus the purchase price of the new investment in Class A
Shares accumulates to the requisite amount or beyond, the sales percentage
charged to you on subsequent investments is decreased. Your current aggregate
investment is the accumulated combination of your immediate investment along
with the Class A Shares that you beneficially own in the Fund alone or in
combination with Class A Shares of other funds of the Pilot Family of Funds
(excluding Administration Shares of the Money Market Funds not acquired by
exchange from other funds.) Class A Shares purchased without the imposition of a
sales charge may not be aggregated with Class A Shares purchased subject to a
sales charge. Class A Shares of the Fund and Class A shares of other funds of
the Pilot Family of Funds purchased (i) by an individual, his spouse and his
children, and (ii) by a trustee, guardian or other fiduciary of a single trust
estate or a single fiduciary account, will be combined for the purpose of
determining whether a purchase will qualify for such right of accumulation and,
if qualifying, the applicable sales level.

EXAMPLE

If a Class A Shareholder owns Class A Shares with a current market value of
$75,000 and purchases additional Class A Shares with a purchase price of
$25,000, the sales load for the $25,000 purchase would be the rate applicable to
a single purchase of $100,000.

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

Statement of Intention. This Statement provides the means for you to receive a
reduced sales load on all of your investments in Class A Shares, whether they
are of the

<PAGE> 23

Fund alone or in combination with Class A Shares of the Funds (excluding the
Money Market Funds). The Statement of Intention is your commitment to acquire an
aggregate investment for $100,000 or more within a 13-month period. You should
read the Statement of Intention, which you can obtain by calling 800/71-PILOT,
as you will be bound by its terms.

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

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

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

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

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

CROSS-REINVESTMENT PRIVILEGE

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

REINSTATEMENT PRIVILEGE

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

A reinstating Shareholder may realize a gain or loss for federal tax purposes as
a result of such redemption. If the redemption occurs within ninety (90) days
after the original purchase of Class A Shares, any sales load paid on the
original purchase cannot be taken into account by a Class A Shareholder
reinstating at net asset value for purposes of determining gain or loss realized
on the redemption, but instead will be added to the tax basis of the Class A
Shares received in the reinstatement, provided that Shares of the Fund into
which the reinstatement is made are subject to a sales load on initial
purchases. To the extent that any loss is realized and the Class A Shares of the
Funds are purchased within thirty (30) days before or after the redemption, some
or all of the loss will not be

<PAGE> 24

allowed as a deduction depending upon the number of Class A Shares purchased.
Shareholders should consult their own tax advisers concerning the tax
consequences of reinstatement.

DIVIDENDS AND DISTRIBUTIONS

Where do your dividends and distributions come from?

The Fund's net investment income consists of the excess of (i) certain accrued
interest, (ii) accretion of discount (including both original issue and market
discount, if any, on certain portfolio securities) and (iii) any income of the
Fund from sources other than capital gains, over (iv) the amortization of market
premium on certain portfolio securities and (v) the estimated expenses of the
Fund, including a proportionate share of the general expenses of the Fund.

What are your dividend and distribution options?

A shareholder may elect on his or her application form to have dividends,
capital gains distributions or both either paid in cash or reinvested in shares
of the same fund or one of the other funds, as described under "Shareholder
Services--Cross-Reinvestment Privilege." Such reinvestments will be made at the
net asset value per share. This election may be changed upon written notice to
the Service Organization at any time prior to the record date for a particular
dividend or distribution. If no election is made, all dividends and capital gain
distributions will be reinvested in the same Fund. The election to reinvest
dividends and distributions paid by the Fund in additional Shares of the Fund or
any other fund of the Pilot Family of Funds will not affect the tax treatment of
such dividends and distributions, which will be treated as received by the
shareholder and then used to purchase shares of the Fund or another fund of the
Funds. Any election to reinvest in additional Shares or to receive cash will be
administered by the Shareholder's Service Organization in a manner arranged for
the Fund. If you elect to receive distributions in cash and checks (1) are
returned and marked as "undeliverable" or (2) remain uncashed for six months,
your cash election will be changed automatically and your future dividend and
capital gains distributions will be reinvested in the Fund at the per share net
asset value determined as of the date of payment of the distribution. In
addition, any undeliverable checks or checks that remain uncashed for six months
will be canceled and will be reinvested in the Fund at the per share net asset
value determined as of the date of cancellation.

When are dividends and distributions declared and paid?

The Fund intends to declare and pay dividends from net investment income at
least annually.

DISTRIBUTION ARRANGEMENTS

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

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

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

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

Actual distribution expenses paid by the Distributor with respect to Class B
Shares for any given year may exceed

<PAGE> 25

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

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

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

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

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

THE PILOT FAMILY OF FUNDS

The Pilot Funds was organized on July 15, 1992 as a Massachusetts business trust
under the name Centerland Fund. On June 1, 1994, its name was changed to The
Pilot Funds. The Pilot Funds is a mutual fund of the type known as an "open-end
management investment company." A mutual fund permits an investor to pool his or
her assets with those of others in order to achieve economies of scale, take
advantage of professional money managers and enjoy other advantages
traditionally reserved for large investors. The Trustees of the Funds are
responsible for the overall management and supervision of its affairs. The
Agreement and Declaration of Trust permits the Board of Trustees of The Pilot
Funds to create separate series or portfolios of shares. To date, fourteen
portfolios have been established. The Agreement and Declaration of Trust also
permits the Board of Trustees to classify or reclassify any series or portfolio
of shares into one or more classes and to establish additional portfolios in the
future. The Trustees have authorized the issuance of an unlimited number of
shares available to selected investors, in each of three share classes (Class A
Shares, which are referred to as the Administration Shares in the Money Market
portfolios, Class B Shares, which are referred to as Investor Shares in the
Money Market portfolios, and Pilot Shares) in the Funds. Information regarding
The Pilot Funds' other portfolios may be obtained by contacting The Pilot Funds
or the Distributor.

Class A and Class B Shares of the Fund are described in this prospectus. Each
Class A Share, Class B Share and Pilot Share of the Fund represents an equal
proportionate interest in the assets belonging to the Fund. It is contemplated
that most Shares will be held in accounts of which the record owner is a bank or
other institution acting as nominee for its customers who are beneficial owners
of the Shares. Pilot Shares may be purchased for accounts held in the name of an
institution that is not compensated by the Funds for services provided to the

<PAGE> 26

institution's customers. Class A and Class B Shares may be purchased for
accounts held in the name of an institution that provides certain account
administration services to its customers, including maintenance of account
records and processing orders to purchase, redeem and exchange Class A and Class
B Shares. Please refer to the Statement of Additional Information for the Class
A and Class B Shares for a more complete description of such services. Shares of
each class may be exchanged only for Shares of the same class in another fund.
Except as described herein, the three classes of Shares are identical. Certain
aspects of the Shares may be altered, after advance notice to Shareholders, if
it is deemed necessary in order to satisfy certain tax regulatory requirements.

When issued, Shares will be fully paid and nonassessable. In the event of
liquidation, Shareholders are entitled to share pro rata in the net assets of
the applicable fund available for distribution to Shareholders. Shares entitle
their holders to one vote per Share, are freely transferable and have no
preemptive, subscription or conversion rights.

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

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

THE BUSINESS OF THE FUND

FUND MANAGEMENT

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

SERVICE PROVIDERS

Adviser: BOATMEN'S TRUST COMPANY (referred to as "Boatmen's" or the "Adviser")
manages the investment portfolio of the Fund, selecting the investments and
making purchase and sale orders. Its principal offices are located at 100 North
Broadway, St. Louis, Missouri 63178-4737. The mailing address is P.O. Box 14737
at that address.

Investment Manager: KLEINWORT BENSON INVESTMENT MANAGEMENT AMERICAS INC.
(referred to as "Kleinwort Benson"), formerly Kleinwort Benson International
Investment Limited, serves as investment manager to the Fund. It is located at
200 Park Avenue, New York, New York 10166.

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

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

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

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

MORE ABOUT BOATMEN'S. Founded in 1889, Boatmen's a trust company, organized
under the laws of Missouri, provides a broad range of trust and investment
services for individuals, privately and publicly held business, governmental
units, pension and profit sharing plans and other institutions and
organizations. As of June 30, 1995, Boatmen's and its affiliates managed nearly
$83 billion in assets ($45 billion over which they had investment discretion and
$38 billion over which they did not have investment discretion).

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

Under its Advisory Agreement with the Funds on behalf of each of the Funds,
Boatmen's supervises the activities of Kleinwort Benson, the investment manager.
Boatmen's pays all costs incurred by it in connection with the

<PAGE> 27

performance of its duties under the Advisory Agreement other than the cost
(including taxes and brokerage commissions, if any) of securities purchased for
the Fund.

Boatmen's has designated the following portfolio manager as being primarily
responsible for the management of the Fund. Michael E. Kenneally, CFA is a
Senior Vice President and Director of Research. In addition to his
responsibilities in connection with the management of the international
portfolios, including the Fund, Mr. Kenneally is responsible for all fundamental
and quantitative research as well as the management of all small capitalization
and growth-style portfolios.

MORE ABOUT KLEINWORT BENSON. Kleinwort Benson is the SEC registered investment
management subsidiary of the London-based Kleinwort Benson Group plc, a holding
company for a merchant banking group whose origins date back to 1792. Kleinwort
Benson has offices in London, Hong Kong and Tokyo and may utilize the general
expertise of Kleinwort Benson Group plc and its affiliates in respect of, for
example, economic analyses and predictions and market developments and trends.

Since it commenced operations in 1980, Kleinwort Benson has managed investment
accounts, primarily for institutions in North America, comprised of equity,
fixed income and balanced portfolios. These portfolios as a general rule consist
principally of foreign securities. As of September 30, 1994, Kleinwort Benson
had approximately $3.6 billion of assets under management.

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

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

Effective June 1, 1995, pursuant to approval from shareholders received at a
Special Meeting held on May 24, 1995, as compensation for the services rendered
by Kleinwort Benson as investment manager to the Fund, Kleinwort Benson is
entitled to a fee, paid by Boatmen's directly out of Boatmen's advisory fee,
computed daily and payable monthly at an annual rate equal to .40 of 1% up to
$325,000,000 and .25 of 1% of such assets in excess of $325,000,000, on an
annualized basis. Prior to June 1, 1995, Kleinwort Benson was entitled to a fee,
computed daily and payable monthly at an annual rate equal to .80 of 1% of such
assets up to $65,000,000, .40 of 1% of such assets in excess of $65,000,000 and
less than $325,000,000, and .25 of 1% of such assets in excess of $325,000,000.
For the period from August 31, 1993 through August 31, 1994, the compensation
received by Kleinwort Benson constituted .48 of 1% of the Fund's average daily
net assets. For the fiscal year ended August 31, 1995, the fee paid by Boatmen's
to Kleinwort Benson America was $1,535,377, which equaled .43 of 1% of the
Fund's average daily net assets. Under the terms of the Investment Management
Agreement among the Funds, Kleinwort Benson and Boatmen's, Kleinwort Benson,
subject to the general supervision of the Funds' Board of Trustees and
Boatmen's, manages the investment operations of the Fund and the composition of
the Fund's assets, including the purchase, retention and disposition thereof.
With respect to the Fund, all investment decisions are made by a committee
consisting of personnel of Kleinwort Benson. No one person is responsible for
recommendations to that committee.

For its services as administrator, BISYS is entitled to an administration fee
from The Pilot Funds which is calculated based on the net assets of all of the
investment portfolios of The Pilot Funds combined. Under the Administration
Agreement, each Fund pays its pro-rata share of an annual fee to BISYS, computed
daily and payable monthly, of .115 of 1% of The Pilot Funds' average net assets
up to $1.5 billion, .110 of 1% of The

<PAGE> 28

Pilot Funds' average net assets on the next $1.5 billion and .1075 of 1% of The
Pilot Funds' average net assets in excess of $3 billion. These amounts may be
reduced pursuant to fee waivers by BISYS. Any such fee waivers may be terminated
by BISYS at any time. For the fiscal year ended August 31, 1994 and 1995, the
Fund paid administration fees in the amount of $295,477 and $386,949,
respectively.

The Funds are responsible for all expenses incurred by the Fund, other than
those expressly borne by Boatmen's, Kleinwort Benson, BISYS or the Transfer
Agent under the Advisory, Investment Management, Administration or Transfer
Agency Agreements. Such expenses include, the fees payable to Boatmen's, BISYS
and the Transfer Agent, the fees and expenses of the Fund's custodian, brokerage
fees and commissions, any portfolio losses, state and federal registration fees
for qualifying Fund Shares under federal or state securities laws, organization
expenses, membership fees in investment-company organizations, taxes, interest,
costs of liability insurance, fidelity bonds, indemnification or contribution,
any costs, expenses or losses arising out of any liability of, or claim for
damages or other relief asserted against, the Funds for violation of any law,
legal and auditing and tax fees and expenses, expenses of preparing and setting
in type prospectuses, statements of additional information, proxy material,
reports and notices and the printing and distributing of the same to the Fund's
Shareholders and regulatory authorities, compensation and expenses of its
Trustees and extraordinary expenses incurred by the Funds. The fees payable to
Kleinwort Benson are paid by Boatmen's directly out of Boatmen's advisory fee.

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

TAX IMPLICATIONS

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

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

The Fund intends to elect to be treated as a regulated investment company under
Subchapter M of the Internal Revenue Code, as amended, (the "Code"). As a
regulated investment company, the Fund must satisfy certain requirements
relating to the sources of its income, diversification of its assets and
distribution of its income to shareholders. In addition, as a regulated
investment company, the Fund generally will not incur a federal income or excise
tax on any investment company taxableincome and net capital gains that are
distributed to its Shareholders in accordance with certain timing requirements
of the Code.

Dividends of investment company taxable income, which generally includes the
excess of net short-term capital gains over net long-term capital losses,
dividends and interest (including original issue discount and market discount),
less expenses, will be taxable to Shareholders as ordinary income. If a portion
of the income of the Fund consists of dividends paid by U.S. corporations, a
portion of the dividends paid by the Fund may be eligible for the corporate
dividends-received deduction. Distributions of the excess of net long-term
capital gains over net short-term capital losses, if any, which are designated
as "capital gains dividends" by the Fund will be taxable as long-term capital
gains regardless of how long the Shareholders have held their Shares. These tax
consequences will apply regardless of whether distributions are received in cash
or reinvested in Shares. Distributions declared in October, November or December
with a record date in such month and paid in January of the following year are
taxable to Shareholders as if received on December 31 of the year declared.
Shareholders will be informed about the amount and character of distributions
received from the Fund for federal income tax purposes, including any
distributions that may constitute a return of capital.

Investments in zero coupon securities and other original issue discount
obligations will result in income to the Fund each year equal to a portion of
the excess of the face value of the securities over their issue price, even
though the Fund receives no cash interest payments from the securities.

<PAGE> 29

Individuals and certain other classes of Shareholders may be subject to 31%
withholding of federal income tax on taxable distributions if they fail to
furnish the Fund with their correct taxpayer identification number and certain
certifications regarding their tax status or if they are otherwise subject to
backup withholding. Backup withholding is not an additional tax. Any amounts
withheld may be credited against a Shareholder's U.S. federal income tax
liability.

If the Fund invests in foreign securities it may be subject to foreign
withholding taxes on income earned on such securities and may be unable to pass
through to Shareholders the ability to claim foreign tax credits and deductions
with respect to such taxes. Certain gains and losses which are attributable to
fluctuations in the value of foreign currency are treated as ordinary income and
losses. These gains and losses may increase or decrease the amount of the Fund's
investment company taxable income to be distributed to Shareholders as ordinary
income.

In addition to federal taxes, a Shareholder may be subject to state and local
taxes on payments received from the Fund. A state tax exemption may be available
in some states to the extent distributions of the Fund are derived from interest
on certain direct U.S. Government obligations or on obligations of the
particular state.

Shareholders should consult their own tax advisers concerning these matters.

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

MEASURING PERFORMANCE

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

Understanding performance measures:

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

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

<PAGE> 30

PILIEAB596P

<PAGE> 31

THE PILOT FUNDS
3435 Stelzer Road
Columbus, Ohio 43219-3035

- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
APRIL 5, 1996 AS SUPPLEMENTED JULY 1, 1996
PILOT SHARES, CLASS A SHARES AND CLASS B SHARES

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

Pilot International Equity Fund (formerly Pilot Kleinwort Benson
International Equity Fund)

Boatmen's Trust Company ("Boatmen's") serves as the investment adviser
to the Fund. Kleinwort Benson Investment Management Americas Inc., formerly
Kleinwort Benson International Investment Limited, ("Kleinwort Benson") serves
as the investment manager to the Pilot International Equity Fund. Pilot Funds
Distributors, Inc. ("PFD") serves as the Fund's distributor, and its parent,
BISYS Fund Services, L.P. ("BISYS"), serves as the Fund's administrator.

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

<PAGE> 32

TABLE OF CONTENTS
<TABLE>

<S> <C>
INVESTMENT POLICIES AND PRACTICES OF THE FUND........................................4
U.S. Government Securities..................................................4
Custodial Receipts..........................................................4
Corporate Debt Securities...................................................4
U.S. and Foreign Bank Obligations...........................................5
Forward Commitments and When-Issued Securities..............................5
REITs.......................................................................6
Convertible Securities......................................................6
Foreign Securities..........................................................7
Forward Foreign Currency Exchange Contracts.................................8
Currency Swaps..............................................................8
Repurchase Agreements.......................................................9
Lending of Portfolio Securities............................................10
Other Investment Companies.................................................10
Options on Securities and Indexes..........................................10
Options on Currencies......................................................11
Futures Contracts on Securities and Indexes................................12
Futures Contracts on Foreign Currencies....................................13
Options on Futures Contracts...............................................13
Limitations on Use of Futures Transactions and Risk Considerations.........14
Restricted and Other Illiquid Securities...................................14
Risks of Specialized Investment Techniques Abroad..........................15
Combined Transactions......................................................15
Use of Segregated and Other Special Accounts...............................15
Other Information..........................................................16

INVESTMENT RESTRICTIONS.............................................................16
Other Investment Policies..................................................18

TRUSTEES AND OFFICERS...............................................................20

INVESTMENT ADVISER, MANAGER, ADMINISTRATOR,
DISTRIBUTOR AND TRANSFER AGENT....................................................23
The Adviser and Manager....................................................23
The Administrator..........................................................26
The Distributor............................................................27
The Transfer Agent.........................................................27

PORTFOLIO TRANSACTIONS..............................................................28

NET ASSET VALUE.....................................................................30

MATTERS RELATING TO CLASS A SHARES AND CLASS B SHARES...............................31

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION......................................33
Supplementary Redemption Information.......................................34
Exchange Privilege.........................................................35
Right of Accumulation and Statement of Information.........................36
Miscellaneous..............................................................37
</TABLE>

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<PAGE> 33

<TABLE>

<S> <C>
In Kind Purchases..........................................................37
Redemptions in Kind........................................................37

CALCULATION OF PERFORMANCE QUOTATIONS...............................................38

TAX INFORMATION.....................................................................40
State and Local............................................................44

ORGANIZATION AND CAPITALIZATION.....................................................44
Shareholder and Trustee Liability..........................................45

CUSTODIAN AND SUBCUSTODIANS.........................................................45

INDEPENDENT ACCOUNTANTS AND COUNSEL.................................................46

MISCELLANEOUS.......................................................................46

FINANCIAL STATEMENTS................................................................46

APPENDIX............................................................................47

DESCRIPTION OF COMMERCIAL PAPER RATINGS.............................................50
</TABLE>

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<PAGE> 34

INVESTMENT POLICIES AND PRACTICES OF THE FUND

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

U.S. GOVERNMENT SECURITIES

The Fund may invest in U.S. Government securities. Securities
guaranteed as to principal or interest by the U.S. Government, its agencies,
authorities or instrumentalities are deemed to include (a) securities for which
the payment of principal and interest is backed by an irrevocable letter of
credit issued by the U.S. Government, its agencies, authorities or
instrumentalities and (b) participations in loans made to foreign governments or
their agencies that are so guaranteed. The secondary market for certain of these
participations is limited. If such participations are illiquid they will not be
purchased.

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

CUSTODIAL RECEIPTS

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

CORPORATE DEBT SECURITIES

The Fund may invest in short-term and intermediate-term corporate debt
securities of both foreign and domestic issuers of all types and maturities,
such as bonds, debentures, notes, equipment lease certificates, equipment trust
certificates, conditional sales contracts and commercial paper. Corporate debt
securities may involve equity features, such as conversion or exchange rights or
warrants for the acquisition of stock of the same or a different issuer;
participation based on revenue, sales or profits; or the purchase of common
stock or warrants in a unit transaction (where corporate debt obligations and
common stock are offered as a unit).

Corporate debt securities purchased by the Fund, if any, will be rated
in the top two categories by a Nationally Recognized Statistical Rating
Organization ("NRSRO") or, if unrated, determined to be of equivalent quality by
Kleinwort Benson. Consistent with prudent investment management, if the rating
of any corporate debt security held by the Fund falls below such ratings

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then consideration shall be given as to whether it should be sold. A description
of these ratings is attached in an Appendix to this Statement of Additional
Information.

U.S. AND FOREIGN BANK OBLIGATIONS

These obligations include negotiable certificates of deposit, banker's
acceptances and fixed time deposits. The Fund limits its investments in domestic
bank obligations to banks having total assets in excess of $1 billion and
subject to regulation by the U.S. Government. 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. Fixed time deposits are
obligations which are payable at a stated maturity date and bear a fixed rate of
interest. Generally, fixed time deposits may be withdrawn on demand by the Fund,
but they may be subject to early withdrawal penalties which vary depending upon
market conditions and the remaining maturity of the obligation. Although fixed
time deposits do not have a market, there are no contractual restrictions on the
Fund's right to transfer a beneficial interest in the deposit to a third party.

The Fund will limit its investment in securities of foreign banks in
accordance with Section 12 of the Investment Company Act of 1940 (the "1940
Act"), the applicable rules thereunder and interpretations thereof of the staff
of the Securities and Exchange Commission (the "SEC").

FORWARD COMMITMENTS AND WHEN-ISSUED SECURITIES

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

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

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

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REITS

Securities issued by real estate investment trusts (REITs) bear certain
unique risks. These include the same market risks as those affecting the real
estate industry, such as fluctuations in interest rates and changes in tax laws.
REITs' underlying assets are illiquid and often not diversified, and REITs are
highly dependent upon management skill. REITs also are subject to heavy cash
flow dependency, defaults by borrowers, self-liquidation and the possibility of
failing to qualify for special tax treatment and other regulatory exemptions.
For so long as it remains a restriction of the Wisconsin Securities Department,
the Funds may not purchase securities issued by REITs in excess of 10% of the
Fund's total assets.

CONVERTIBLE SECURITIES

The Fund may invest in convertible securities, such as bonds, notes,
debentures, preferred stocks and other securities that may be converted into
common stock. All convertible securities purchased by the Fund will be rated in
the top two categories by an NRSRO or, if unrated, determined by Kleinwort
Benson to be of comparable quality. Investments in convertible securities can
provide income through interest and dividend payments as well as an opportunity
for capital appreciation by virtue of their conversion or exchange features.

The convertible securities in which the Fund may invest include
fixed-income and zero coupon debt securities, and preferred stock that may be
converted or exchanged at a stated or determinable exchange ratio into
underlying shares of common stock. The exchange ratio for any particular
convertible security may be adjusted from time to time due to stock splits,
dividends, spin-offs, other corporate distributions or scheduled changes in the
exchange ratio. Convertible debt securities and convertible preferred stocks,
until converted, have general characteristics similar to both debt and equity
securities. Although to a lesser extent than with debt securities generally, the
market value of convertible securities tends to decline as interest rates
increase and, conversely, tends to increase as interest rates decline. In
addition, because of the conversion or exchange feature, the market value of
convertible securities typically changes as the market value of the underlying
common stock changes, and, therefore, also tends to follow movements in the
general market for equity securities. A unique feature of convertible securities
is that as the market price of the underlying common stock declines, convertible
securities tend to trade increasingly on a yield basis, and so may not
experience market value declines to the same extent as the underlying common
stock. When the market price of the underlying common stock increases, the price
of a convertible security tends to rise as a reflection of the value of the
underlying common stock, although typically not as much as the price of the
underlying common stock. While no securities investments are without risk,
investments in convertible securities generally entail less risk than
investments in common stock of the same issuer.

As debt securities, convertible securities are investments which
provide for a stream of income or, in the case of zero coupon securities,
accretion of income with generally higher yields than common stocks. Of course,
like all debt securities, there can be no assurance of income or principal
payments because the issuers of the convertible securities may default on their
obligations. Convertible securities generally offer lower yields than
non-convertible securities of similar quality because of their conversion or
exchange features. Convertible securities generally are subordinated to other
similar but non-convertible securities of the same issuer, although convertible
bonds, as corporate debt obligations, are senior in right of payment to all
equity securities, and convertible preferred stock is senior to common stock, of
the same issuer. However, convertible bonds and convertible preferred stock
typically have lower coupon rates than similar non-convertible securities.
Convertible securities may be issued as fixed income obligations

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

FOREIGN SECURITIES

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

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FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS

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

The maturity date of a forward contract may be any fixed number of days
from the date of the contract agreed upon by the parties, rather than a
predetermined date in a given month, and forward contracts may be in any amounts
agreed upon by the parties rather than predetermined amounts. Also, forward
contracts are traded directly between currency traders so that no intermediary
is required. A forward contract generally requires no margin or other deposit.
Closing purchase transactions with respect to forward contracts are usually
effected with the currency trader who is a party to the original forward
contract.

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

The reasons forward contracts would be used are described under
"Futures Contracts on Foreign Currencies" below. The Fund's activities involving
forward contracts may be limited by the requirements of Subchapter M of the
Internal Revenue Code for qualification as a regulated investment company.

CURRENCY SWAPS

The Fund may enter into currency swaps for hedging purposes and to seek
to increase total return. Inasmuch as swaps are entered into for good faith
hedging purposes or are offset by a segregated account as described below, the
Fund and Kleinwort Benson believe that swaps do not constitute senior securities
as defined in the 1940 Act and, accordingly, will not treat them as being
subject to the Fund's borrowing restrictions. The net amount of the excess, if
any, of the Fund's obligations over its entitlements with respect to each
currency swap will be accrued on a daily basis and an amount of cash or liquid
high grade debt securities (i.e., securities rated in one of the top three
ratings categories by an NRSRO or, if unrated, deemed by Kleinwort Benson to be
of comparable credit quality) having an aggregate net asset value at least equal
to such accrued excess will be maintained in a segregated account by the Fund's
custodian. The Fund will not enter into any currency swap unless the credit
quality of the unsecured senior debt or the claims-paying ability of the other
party thereto is considered to be investment grade by Kleinwort Benson.

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If there is a default by the other party to such a transaction, the Fund will
have contractual remedies pursuant to the agreements related to the transaction.
The swap market has grown substantially in recent years with a large number of
banks and investment banking firms acting both as principals and as agents
utilizing standardized swap documentation. As a result, the swap market has
become relatively liquid in comparison with the markets for other similar
instruments which are traded in the interbank market. However, the staff of the
SEC takes the position that currency swaps are illiquid investments that are
subject to the Fund's 15% limitation on such investments.

REPURCHASE AGREEMENTS

The Fund may enter into repurchase agreements with selected
brokers-dealers, banks or other financial institutions. A repurchase agreement
is an arrangement under which the purchaser (i.e., the Fund) purchases a U.S.
Government or other high quality short-term debt obligation (the "Obligation")
and the seller agrees at the time of sale to repurchase the Obligation at a
specified time and price.

Custody of the Obligation will be maintained by the Fund's custodian or
subcustodian. The repurchase price may be higher than the purchase price, the
difference being income to the Fund, or the purchase and repurchase prices may
be the same, with interest at a stated rate due to the Fund together with the
repurchase price on repurchase. In either case, the income to the Fund is
unrelated to the interest rate on the Obligation subject to the repurchase
agreement.

Repurchase agreements pose certain risks for all entities, including
the Fund, that utilize them. Such risks are not unique to the Fund but are
inherent in repurchase agreements. The Fund seeks to minimize such risks by,
among others, the means indicated below, but because of the inherent legal
uncertainties involved in repurchase agreements, such risks cannot be
eliminated.

For purposes of the 1940 Act, a repurchase agreement is deemed to be a
loan from the Fund to the seller of the Obligation. It is not clear whether for
other purposes a court would consider the Obligation purchased by the Fund
subject to a repurchase agreement as being owned by the Fund or as being
collateral for a loan by the Fund to the seller.

If in the event of bankruptcy or insolvency proceedings against the
seller of the Obligation, a court holds that the Fund does not have a perfected
security interest in the Obligation, the Fund may be required to return the
Obligation to the seller's estate and be treated as an unsecured creditor of the
seller. As an unsecured creditor, the Fund would be at risk of losing some or
all of the principal and income involved in the transaction. To minimize this
risk, the Fund utilizes custodians and subcustodians that Kleinwort Benson
believes follow customary securities industry practice with respect to
repurchase agreements, and Kleinwort Benson analyzes the creditworthiness of the
obligor, in this case the seller of the Obligation. But because of the legal
uncertainties, this risk, like others associated with repurchase agreements,
cannot be eliminated.

Also, in the event of commencement of bankruptcy or insolvency
proceedings with respect to the seller of the Obligation before repurchase of
the Obligation under a repurchase agreement, the Fund may encounter delay and
incur costs before being able to sell the security. Such a delay may involve
loss of interest or a decline in price of the Obligation.

Apart from risks associated with bankruptcy or insolvency proceedings,
there is also the risk that the seller may fail to repurchase the security.
However, if the market value of the Obligation subject to the repurchase
agreement becomes less than the repurchase price (including accrued

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interest), the Fund will direct the seller of the Obligation to deliver
additional securities so that the market value of all securities subject to the
repurchase agreement equals or exceeds the repurchase price.

Certain repurchase agreements which provide for settlement in more than
seven days can be liquidated before the nominal fixed term on seven days or less
notice. Such repurchase agreements will be regarded as illiquid instruments.

The Fund may also enter into repurchase agreements with any party
deemed creditworthy by Kleinwort Benson, including foreign banks and
broker-dealers, if the transaction is entered into for investment purposes and
the counterparty's creditworthiness is at least equal to that of issuers of
securities which the Fund may purchase.

LENDING OF PORTFOLIO SECURITIES

The Fund may seek to increase its income by lending portfolio
securities. Under present regulatory policies, such loans may be made to
institutions, such as broker-dealers, and are required to be secured
continuously by collateral in cash, U.S. Government securities or other high
grade liquid debt obligations maintained on a current basis at an amount at
least equal to the market value of the securities loaned. Such loans will be
terminable at any time.

OTHER INVESTMENT COMPANIES

In seeking to attain their investment objectives, the Funds may invest
in securities issued by other investment companies within the limits prescribed
by the 1940 Act. Each Fund currently intends to limit its investments so that,
as determined immediately after a securities purchase is made: (a) not more than
5% of the value of its total assets will be invested in the securities of any
one investment company; (b) not more than 10% of the value of its total assets
will be invested in the aggregate in securities of investment companies as a
group; and (c) not more than 3% of the outstanding voting stock of any one
investment company will be owned by the Fund or by the Trust as a whole. As a
shareholder of another investment company, a Fund would bear, along with other
shareholders, its pro rata portion of the other investment company's expenses,
including advisory fees. These expenses would be in addition to the advisory and
other expenses that a Fund bears in connection with its own operations. The
Investment Adviser has agreed to remit to the respective investing fund fees
payable to it under its respective investment advisory agreement with an
affiliated money market fund to the extent such fees are based upon the
investing fund's assets invested in shares of the affiliated money market fund.

OPTIONS ON SECURITIES AND INDEXES

The Fund also may purchase and sell options on securities that the Fund
may buy and on securities indexes.

The Fund may purchase and sell over-the-counter options to the extent
consistent with the Fund's limitation on investments in illiquid securities.
Trading in over-the-counter options is subject to the risk that the other party
will be unable or unwilling to close-out options purchased or sold by the Fund.

An option on a security (or index) is a contract that gives the holder
of the option, in return for a premium paid, the right to buy from (in the case
of a call) or sell to (in the case of a put) the seller ("writer") of the option
the security underlying the option (or the cash value of the index) at a

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specified exercise price at any time during the term of the option. The writer
of an option on a security has the obligation upon exercise of the option to
deliver the underlying security upon payment of the exercise price or to pay the
exercise price upon delivery of the underlying security. Upon exercise, the
writer of an option on an index is obligated to pay the difference between the
closing price of the index and the exercise price of the option, expressed in
dollars, times a specified multiple (the "multiplier"). (An index is designed to
reflect specified facets of a particular financial or securities market, a
specified group of financial instruments or securities, or certain economic
indicators.)

If an option written by the Fund expires, the Fund realizes a capital
gain equal to the premium received at the time the option was written. If an
option purchased by the Fund expires unexercised, the Fund realizes a capital
loss equal to the premium paid. Prior to the earlier of exercise or expiration,
an option may be closed out by an offsetting purchase or sale of an option of
the same series (type, exchange, underlying security or index, exercise price
and expiration). There can be no assurance, however, that a closing purchase or
sale transaction can be effected when the Fund desires.

The Fund will realize a capital gain from a closing purchase
transaction if the cost of the closing option is less than the premium received
from writing the option and will realize a capital loss if it is more. If the
premium received from a closing sale transaction is more than the premium paid
to purchase the option, the Fund will realize a capital gain, or if it is less,
the Fund will realize a capital loss. The principal factors affecting the market
value of a put or a call option include supply and demand, interest rates, the
current market price of the underlying security or index in relation to the
exercise price of the option, the volatility of the underlying security or
index, and the time remaining until the expiration date.

There are several risks associated with transactions in options on
securities and on indexes. For example, there are significant differences
between the securities and options markets that could result in an imperfect
correlation between these markets, causing a given transaction not to achieve
its objectives. There can be no assurance that a liquid market will exist when
the Fund seeks to close out an option position. If the Fund were unable to close
out an option it had purchased on a security, it would have to exercise the
option to realize any profit or the option may expire worthless. If the Fund
were unable to close out a covered call option it had written on a security, it
would not be able to sell the underlying security unless the option expired
without exercise. As a writer of a covered call option, the Fund forgoes, during
the option's life, the opportunity to profit from increases in the market value
of the security covering the call option above the sum of the premium and the
exercise price of the call. If trading were suspended in an option purchased by
the Fund, the Fund would not be able to close out the option. If restrictions on
exercise were imposed, the Fund might be unable to exercise an option it had
purchased. Except to the extent that a call option on an index written by the
Fund is covered by an option on the same index purchased by the Fund, movements
in the index may result in a loss to the Fund; however, such losses may be
mitigated by changes in the value of the Fund's securities during the period the
option was outstanding.

OPTIONS ON CURRENCIES

The Fund may purchase and sell options on currencies to hedge the value
of securities the Fund holds or intends to buy. Options on foreign currencies
may be traded on U.S. and foreign exchanges or over-the-counter.

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<PAGE> 42

FUTURES CONTRACTS ON SECURITIES AND INDEXES

The Fund may enter into futures contracts on securities and futures
contracts based on securities indexes, which futures are traded on exchanges
that are licensed and regulated by the Commodity Futures Trading Commission
("CFTC") or, consistent with CFTC regulations, on foreign exchanges. The Fund
will do so to hedge against anticipated changes in securities values that would
otherwise have an adverse effect upon the value of portfolio securities or upon
securities to be acquired and to increase total return. Futures contracts and
related options entered into by the Fund will be entered into consistent with
CFTC regulations.

The Fund may take a "short" position in the futures markets by selling
contracts for the future delivery of securities in order to hedge against an
anticipated decline in stock prices. Such futures contracts may include
contracts for the future delivery of securities held by the Fund or securities
with price-fluctuation characteristics similar to those of its portfolio
securities. If, in the opinion of Kleinwort Benson, there is a sufficient degree
of correlation between price trends for the Fund's securities and futures
contracts based on indexes, the Fund may also enter into such futures contracts
as part of its hedging strategy. When hedging of this character is successful,
any depreciation in the value of the Fund's securities will substantially be
offset by appreciation in the value of the futures position. On other occasions,
the Fund may take a "long" position by purchasing futures contracts. This would
be done, for example, when the Fund anticipates the purchase of particular
securities in the future, but expects the price then available in the securities
market to be less favorable than prices that are currently available in the
futures markets. The Fund expects that, in the normal course, it will terminate
the long futures position when it makes the anticipated purchase; under unusual
market conditions, however, a long futures position may be terminated without
the corresponding purchase of securities.

Futures contracts involve brokerage costs, which may be less than 1% of
the contract price, and require parties to the contract to make "margin"
deposits to secure performance of the contract. The Fund will be required to
deposit as margin into a segregated custodial account (held subject to the
claims of the Fund's futures broker) an amount of cash or liquid securities
equal to approximately 2% to 5% of the value of each futures contract. This
initial margin is in the nature of a performance bond or good faith deposit on
the contract. The Fund's position in the futures market will be marked-to-market
on a daily basis; the Fund may subsequently be required to make "variation"
margin payments depending upon whether its futures position declines or rises in
value. Positions taken in the futures markets are not usually held until the
expiration of the contract but, instead, are normally liquidated through
offsetting transactions, which may result in a profit or a loss. Nevertheless,
the Fund may instead make or take delivery of the underlying securities whenever
it appears economically advantageous for it to do so. A clearing corporation
associated with the exchange on which futures contracts are traded assumes
responsibility for closing out contracts and guarantees that, if the contract is
still open, the sale or purchase of securities will be performed on the
settlement date.

Futures contracts on securities indexes do not require the physical
delivery of securities, but merely provide for profits and losses resulting from
changes in the market value of a contract to be credited or debited at the close
of each trading day to the respective accounts of the parties to the contract.
On the contract's expiration date a final cash settlement occurs and the futures
positions are simply closed out. Changes in the market value of a particular
futures contract reflect changes in the value of the securities comprising the
index on which the futures contract is based. Futures contracts based on
securities indexes currently are actively traded on the Chicago Board of Trade,
the Chicago Mercantile Exchange, the New York Futures Exchange and the Kansas
City Board of Trade.

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FUTURES CONTRACTS ON FOREIGN CURRENCIES

A foreign currency futures contract is a standardized contract for the
future delivery of a specified amount of a foreign currency at a future date at
a price established when the position is taken. Foreign currency futures
contracts traded in the United States are designed by and traded on exchanges
regulated by the CFTC, such as the Chicago Mercantile Exchange.

The Fund may enter into foreign currency futures contracts in several
circumstances. First, when the Fund enters into a contract for the purchase or
sale of a foreign security denominated in a foreign currency, or when the Fund
anticipates the receipt in a foreign currency of interest payments on such a
security which it holds, the Fund may desire to "lock in" the U.S. dollar price
of the security or the U.S. dollar equivalent of such interest payments, as the
case may be. By entering into a futures contract for the purchase or sale, for a
fixed amount of U.S. dollars, of the amount of foreign currency involved in the
underlying transactions, the Fund will attempt to protect itself against a
possible loss resulting from an adverse change in the relationship between the
U.S. dollar and the applicable foreign currency during the period between the
date on which the obligation is purchased or sold, or on which the interest
payment is declared, and the date on which such payments are made or received.

Second, when Kleinwort Benson believes that the currency of a
particular foreign country may suffer a substantial decline against the U.S.
dollar (or sometimes against another currency), the Fund may enter into a
futures contract to sell, for a fixed dollar or other currency amount, foreign
currency approximating the value of some or all of the securities held by the
Fund which are denominated in that currency. The precise matching of the futures
contract amounts and the value of the securities involved will not generally be
possible because the future value of such securities in foreign currencies will
change as a consequence of market movements in the value of those securities
between the date on which the contract is entered into and the date it expires.

Under normal circumstances, consideration of the prospect for changes
in currency exchange rates will be incorporated into the Fund's long-term
investment strategies. However, Kleinwort Benson believes that it is important
for the Fund to have the flexibility to enter into foreign currency futures
contracts when it determines that the best interest of the Fund will be served.

OPTIONS ON FUTURES CONTRACTS

The Fund may also purchase and sell (write) call and put options on
futures contracts, which options are traded on exchanges that are licensed and
regulated by the CFTC, or, consistent with CFTC regulations, on foreign
exchanges or in the over-the-counter market or privately negotiated. A "call"
option on a futures contract gives the purchaser the right, in return for the
premium paid, to buy a futures contract (assume a long position) at a specified
exercise price, by exercising the option at any time before the option expires.
A "put" option gives the purchaser the right, in return for the premium paid, to
sell a futures contract (assume a "short" position), for a specified exercise
price, by exercising the option at any time before the option expires.

Upon the exercise of a call, the writer of the option is obligated to
sell the futures contract (to deliver a "long" position to the option holder) at
the option exercise price, which will presumably be lower than the then current
market price of the contract in the futures market. Upon exercise of a put, the
writer of the option is obligated to purchase the futures contract (deliver a
"short" position to the option holder) at the option exercise price, which will
presumably be higher than the then current market price of the contract in the
futures market. When a person exercises an option

-13-

<PAGE> 44

and assumes a long futures position, in the case of a call, or a short futures
position, in the case of a put, his gain will be credited to his futures margin
account, while the loss suffered by the writer of the option will be debited to
his account. However, as with the trading of futures contracts, most
participants in the options markets do not seek to realize their gains or losses
by exercising their option rights. Instead, the holder of an option will usually
realize a gain or loss by buying or selling an offsetting option at a market
price that will reflect an increase or a decrease from the premium originally
paid.

Options on futures contracts can be used by the Fund to hedge the same
risks as might be addressed by the direct purchase or sale of the underlying
futures contracts. If the Fund purchases an option on a futures contract, it may
obtain benefits similar to those that would result if it held the futures
position itself. But, in contrast to a futures transaction in which only
transaction costs are involved, benefits received in an option transaction in
the event of a favorable market movement will be reduced by the amount of the
premium paid as well as by transaction costs. In the event of an adverse market
movement, however, in contrast to the full market risk of a futures position,
the Fund will not be subject to a risk of loss on the option transaction beyond
the amount of the premium it paid plus its transaction costs. Consequently, the
Fund may benefit from an increase in the value of its portfolio that would have
been more completely offset if the hedge had been effected through the use of a
futures contract.

If the Fund writes options on futures contracts, it will receive a
premium but will assume a risk of adverse movement in the price of the
underlying futures contract comparable to that involved in holding a futures
position. If the option is not exercised, the Fund will gain the amount of the
premium, which may partially offset unfavorable changes in the value of its
portfolio securities held in, or to be acquired for, the Fund. If the option is
exercised, the Fund will incur a loss in the option transaction, which will be
reduced by the amount of the premium it has received. Such loss may partially
offset favorable changes in the value of its portfolio securities.

LIMITATIONS ON USE OF FUTURES TRANSACTIONS AND RISK CONSIDERATIONS

The Fund will incur brokerage fees in connection with its futures
transactions, and will be required to deposit and maintain funds with its broker
as margin to guarantee performance of its futures obligations. In addition,
while futures contracts will be traded to reduce certain risks, futures trading
itself entails certain other risks. Thus, while the Fund may benefit from the
use of such contracts, unanticipated changes in securities or currency values
may result in a poorer overall performance from the Fund than if it had not
entered into any futures contracts. Some futures contracts may not have a broad
and liquid market, in which case the contracts may not be able to be closed at a
fair price and the Fund may lose in excess of the initial margin deposit.
Moreover, in the event of an imperfect correlation between the futures contract
and the portfolio position that is intended to be protected, the desired
protection may not be obtained and the Fund may be exposed to risk of loss.

Tax-related requirements may limit the extent to which the Fund may
engage in futures and related options transactions.(See "TAX INFORMATION.")

RESTRICTED AND OTHER ILLIQUID SECURITIES

The Fund may purchase securities that are not registered under the
Securities Act of 1933 or have some other legal or contractual restriction on
resale in the principal market where the security is traded ("restricted
securities"), but can be offered and sold to "qualified institutional buyers"
under Rule 144A under the Securities Act of 1933. However, the Fund will not
invest

-14-

<PAGE> 45

more than 15% of the value of its net assets in illiquid securities, including
restricted securities, unless the Funds' Board of Trustees determines, based
upon a continuing review of the trading markets for the specific Rule 144A
security, that such restricted security is liquid. The Trustees may adopt
guidelines and delegate to Kleinwort Benson the daily function of determining
and monitoring liquidity of securities. The Trustees, however, will retain
sufficient oversight and be ultimately responsible for the determinations.
Because it is not possible to predict with assurance exactly how this market for
restricted securities sold and offered under Rule 144A will develop, the
Trustees will carefully monitor the Fund's investments in these securities,
focusing on such important factors, among others, as valuation, liquidity and
availability of information. This investment practice could have the effect of
increasing the level of illiquidity in the Fund to the extent that qualified
institutional buyers become for a time uninterested in purchasing these
restricted securities.

RISKS OF SPECIALIZED INVESTMENT TECHNIQUES ABROAD

The above described specialized investment techniques, when engaged in
abroad, may not be regulated as effectively as when engaged in the United
States; may not involve a clearing mechanism and related guarantees; and are
subject to the risk of governmental actions affecting trading in, or the prices
of, foreign securities. The value of such positions also could be adversely
affected by: (i) other complex foreign political, legal and economic factors;
(ii) lesser availability than in the United States of data on which to make
trading decisions; (iii) delays in the Fund's ability to act upon economic
events occurring in foreign markets during non-business hours in the United
States; (iv) the imposition of different exercise and settlement terms and
procedures and margin requirements than in the United States; and (v) lesser
trading volume.

COMBINED TRANSACTIONS

The Fund may enter into multiple transactions, including multiple
options transactions, multiple futures transactions, multiple foreign currency
transactions (including forward foreign currency exchange contracts) and any
combination of futures, options and foreign currency transactions ("component"
transactions), instead of a single transaction, as part of a single hedging
strategy when, in the opinion of Kleinwort Benson, it is in the best interest of
the Fund to do so and where underlying hedging strategies are permitted by the
Fund's investment policies. A combined transaction, while part of a single
hedging strategy, may contain elements of risk that are present in each of its
component transactions. (See above for the risk characteristics of certain
transactions.)

USE OF SEGREGATED AND OTHER SPECIAL ACCOUNTS

Options, futures and forward foreign currency contracts that obligate
the Fund to provide cash, securities or currencies to complete such transactions
will result in that Fund either segregating assets in an account with, or on the
books of, the Funds' custodian, or otherwise "covering" the transaction as
described below. For example, a call option written by the Fund will require the
Fund to hold the securities subject to the call (or securities convertible into
the needed securities without additional consideration) or liquid assets
sufficient to meet the obligation by purchasing and delivering the securities if
the call is exercised. A call option written on an index will require the Fund
to have portfolio securities that correlate with the index. A put option written
by the Fund also will require the Fund to have available assets sufficient to
purchase the securities the Fund would be obligated to buy if the put is
exercised.

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<PAGE> 46

A forward foreign currency contract that obligates the Fund to provide
currencies will require the Fund to hold currencies or liquid securities
denominated in a foreign currency which will equal the Fund's obligations. Such
a contract requiring the purchase of currencies also requires segregation.

Unless a segregated account consists of the securities, cash or
currencies that are the subject of the obligation, the Fund will hold cash, U.S.
Government securities and other high grade liquid debt obligations in a
segregated account. These assets cannot be transferred while the obligation is
outstanding unless replaced with other suitable assets. In the case of an
index-based transaction, the Fund could own securities substantially replicating
the movement of the particular index.

In the case of a futures contract, the Fund must deposit initial margin
and variation margin, as often as daily if the position moves adversely,
sufficient to meet its obligation to purchase or provide securities or
currencies, or to pay the amount owed at the expiration of an index-based
futures contract. Similarly, options on futures contracts require the Fund to
deposit margin to the extent necessary to meet the Fund's commitments.

In lieu of such assets, such transactions may be covered by other means
consistent with applicable regulatory policies. The Fund may enter into
offsetting transactions so that its combined position, coupled with any
segregated assets, equals its net outstanding obligation in related options and
hedging transactions. For example, the Fund could purchase a put option if the
strike price of that option is the same or higher than the strike price of a put
option sold by the Fund. Moreover, instead of segregating assets if the Fund
held a futures or forward contract, it could purchase a put option on the same
futures or forward contract with a strike price as high or higher than the price
of the contract held. Of course, the offsetting transaction must terminate at
the time of or after the primary transaction.

OTHER INFORMATION

Kleinwort Benson Investment Management Americas Inc. is a wholly-owned,
independent subsidiary of Kleinwort Benson Group plc. The Fund may hold
securities of companies with respect to which Kleinwort Benson Group plc or its
affiliates (including, without limitation, Kleinwort Benson Limited)
(collectively, the "Kleinwort Benson Group") provides investment banking,
financial advisory or other services, has other confidential relationships,
maintains a position or makes a market or otherwise may have an interest. For
good commercial and legal reasons, nonpublic information (a) which becomes
available to any member of the Kleinwort Benson Group through its relationships
or for any other reason cannot be passed on to Kleinwort Benson Investment
Management Americas Inc. or to the Funds or used for the benefit of the Fund;
and (b) which becomes available to Kleinwort Benson Investment Management
Americas Inc. for any reason cannot be passed on to the Funds or used for the
benefit of the Fund.

INVESTMENT RESTRICTIONS

The Fund has adopted certain fundamental investment restrictions which
may not be changed with respect to the Fund without the approval of the holders
of a majority of the Fund's outstanding voting Shares.

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<PAGE> 47

As used in this Statement of Additional Information, with respect to
matters required by the provisions of the 1940 Act to be submitted to
Shareholders, the term "majority of the outstanding Shares" of either the Funds
or the Fund means the vote of the lesser of: (i) 67% or more of the Shares of
the Funds or Fund present at a meeting, if the holders of more than 50% of the
outstanding Shares of the Funds or Fund are present or represented by proxy, or
(ii) more than 50% of the outstanding Shares of the Funds or Fund.

As a matter of fundamental policy, the Fund may not:

(1) Purchase securities of any issuer if immediately after such purchase
the value of the Fund's investments in issuers conducting their
principal business activity in any one industry would exceed 25% of the
value of the Fund's total assets, provided that: (a) the gas, electric,
water and telephone businesses will be considered separate industries;
(b) the personal credit and business credit businesses will be
considered separate industries; (c) wholly- owned finance companies
will be considered to be in the industry of their parents if their
activities are primarily related to financing the activity of their
parents; (d) foreign governments will be considered separate
industries; and (e) there is no limitation with respect to or arising
out of investments in obligations issued or guaranteed by the U.S.
Government, its agencies and instrumentalities or tax-exempt
obligations of state and municipal governments and their agencies and
authorities.

(2) Make loans, except to the extent that the lending of portfolio
securities and purchase of debt obligations in accordance with the
Fund's investment objective and policies and the entry into repurchase
agreements with banks, brokers, dealers and other financial
institutions may be deemed to be loans.

(3) Borrow money, except: (a) as a temporary measure, and then only in
amounts not exceeding 5% of the value of the Fund's total assets, (b)
from banks, or (c) in connection with reverse repurchase agreements,
provided that immediately after any such borrowing all borrowings of
the Fund do not exceed one-third of the Fund's total assets. While the
Fund has borrowings outstanding in an amount exceeding 5% of its total
assets the Funds will not make any purchases of portfolio instruments
for the Fund. The Funds may not borrow money from Boatmen's Bancshares,
Inc. or any majority-owned subsidiary thereof.

(4) Purchase or sell real estate (except securities secured by real estate
or interests therein, securities issued by real estate investment
trusts and securities of companies that deal in real estate or
mortgages), commodities or commodity contracts relating to physical
commodities or oil and gas interests (although the Fund may invest in
companies that own or invest in such interests) except that the Fund
may invest up to 10% of its net assets in gold bullion, or invest in
companies for the purpose of exercising control or management. The
Funds reserve freedom of action to hold and to sell real estate
acquired as a result of the Funds' ownership of securities.

(5) Act as an underwriter of securities (except as the Funds may be deemed
to be an underwriter under the Securities Act of 1933) in connection
with the purchase and sale of instruments or make short sales of
securities unless the Fund contemporaneously owns or has the right to
obtain at no added cost securities identical to those sold short.

(6) Mortgage, pledge or hypothecate more than one-third of the Fund's
assets, except to secure permitted borrowings.

-17-
<PAGE> 48

(7) Purchase the securities of any issuer other than the U.S. Government,
its agencies or instrumentalities, if immediately after such purchase,
more than 5% of the value of the Fund's total assets would be invested
in any one issuer except that: (a) up to 25% of the value of its total
assets may be invested without regard to such 5% limitation, and (b)
such 5% limitation shall not apply to repurchase agreements
collateralized by obligations of the U.S. Government, its agencies or
instrumentalities. 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).

(8) Issue senior securities, except: (a) as appropriate to evidence
indebtedness that it is permitted to incur and (b) for Shares of the
separate classes or series of the Funds, 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 the purpose of this restriction.

OTHER INVESTMENT POLICIES

As a matter of non-fundamental policy, which may be changed by the
Trustees without Shareholder approval, the Fund may not:

(a) Invest in any securities that would cause more than 15% of its net
assets at the time of such investment to be invested in securities that
are not readily marketable or restricted securities (for these purposes
restricted security means a security with a legal or contractual
restriction on resale in the principal market in which the security is
traded but does not include liquid Rule 144A securities), including
repurchase agreements maturing in more than seven days, and any other
assets for which a bona fide market does not exist at the time of
purchase or subsequent valuation;

(b) Purchase securities of any one issuer if as a result more than 10% of
the voting securities of such issuer would be held by the Fund;

(c) Purchase securities issued by any other open-end investment company,
except in the open market where no commission or profit to a sponsor or
dealer results from the purchase other than customary brokerage
commissions or except when such purchase is part of a merger or
consolidation or except shares of no-load "money market" investment
companies advised by one of the Funds' investment advisers or an
affiliate thereof;

(d) Write put and call options, unless each option is "covered," the
underlying securities are ones that the Fund is permitted to purchase,
each option is traded in a liquid market and the aggregate value of the
securities underlying the calls or obligations underlying the puts
determined as of the date an option is sold shall not exceed 25% of the
Fund's net assets;

(e) Purchase futures contracts or options on futures contracts for
non-hedging purposes if immediately after the purchase the value of the
aggregate initial margin with respect to all futures contracts (both
for receipt and delivery) entered into on behalf of the Fund (including
foreign currency futures contracts) and premiums paid for options on
futures contracts, will exceed 5% of the fair market value of its total
assets;

(f) Purchase warrants if as a result warrants taken at the lower of cost or
market value would represent more than 5% of the value of the Fund's
net assets or more than 2% of its net

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<PAGE> 49

assets in warrants that are not listed on the New York or American
Stock Exchanges or on an exchange with comparable listing requirements
(for this purpose, warrants attached to securities will be deemed to
have no value);

(g) Borrow for investment leverage purposes, except in connection with
permitted reverse repurchase agreements, but solely for extraordinary
or emergency purposes and to facilitate management of the Funds'
portfolio by enabling the Funds to meet redemption requests when the
liquidation of portfolio instruments is deemed to be disadvantageous or
not possible. In the event the net assets of the Fund fall below 300%
of its borrowings, the Funds will promptly reduce the borrowings of the
Fund in accordance with the 1940 Act;

(h) Purchase securities on margin or make short sales unless, by virtue of
the ownership of other securities, it has the right to obtain
securities equivalent in kind and amount to the securities sold and, if
the right is conditional, the sale is made upon the same conditions,
except in connection with arbitrage transactions and except that the
Fund may obtain such short-term credits as are necessary for the
clearance of transactions, and provided that the Fund may make initial
and variation margin payments in connection with transactions in
futures contracts and options on futures contracts.

With regard to restriction (g) above, the Fund may have to sell a
portion of its investments at a time when it may be disadvantageous to do so.
With respect to fundamental investment restriction (4), investment in real
estate limited partnerships is prohibited.

In addition to the above restrictions, so long as it remains a policy
of the Ohio Division of Securities, the Fund may not purchase or retain the
securities of an issuer if, to the Fund's knowledge, those officers, directors
or Trustees of the Funds or its investment advisers who individually own
beneficially more than 0.5% of the outstanding securities of such issuer
together own beneficially more than 5% of such outstanding securities. Moreover,
so long as it remains a restriction of the Ohio Division of Securities, the Fund
will not purchase securities of any issuer with a record of less than three
years' continuous operations, including predecessors, except U.S. 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 15% of the Fund's total assets. In
addition, for so long as it remains a restriction of the Ohio Division of
Securities, the Fund will treat securities eligible for resale under Rule 144A
as subject to the Funds' restriction on investing in restricted securities.

In addition, so long as it remains a restriction of the Arkansas or
Wisconsin Securities Department, the Fund will not purchase securities of any
issuers with a record of less than three years continuous operations, including
predecessors, except U.S. Government securities, securities of such issuers
which are rated by at least one nationally recognized statistical rating
organization, municipal obligations 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 5% of the total
assets of the Fund taken at market value. Further, as long as it remains a
restriction of the Wisconsin Securities Department, the Fund will invest not
more than 10% of its total assets in restricted securities. Also, for so long as
it remains a restriction of the Wisconsin Securities Department, the Funds may
not purchase securities issued by REITs in excess of 10% of the Fund's total
assets.

For so long as it remains a restriction of the Arkansas Securities
Department, the Fund will not purchase puts, calls, straddles, spreads or any
combination thereof if the value of the Fund's aggregate investment in such
securities exceeds 5% of its total assets.

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<PAGE> 50

Also, with respect to investments in investment company securities, the
Fund will comply with Section 12(d) of the 1940 Act and the rules thereunder.

For purposes of the foregoing fundamental and non-fundamental
limitations, any limitation that involves a maximum percentage shall not be
considered violated unless an excess over the percentage occurs immediately
after, and is caused by, an acquisition or encumbrance of securities or assets
of, or borrowings on behalf of, the Fund.

TRUSTEES AND OFFICERS

Information pertaining to the Trustees and officers of the Funds is set
forth below. Trustees and officers deemed to be "interested persons" of the
Funds for purposes of the 1940 Act are indicated by an asterisk.

<TABLE>
<CAPTION>
Principal Occupation
Name and Address Position(s) with Funds During Past 5 Years
- ----------------- ----------------------- -------------------

<S> <C> <C>
J. Hord Armstrong, III (54) Trustee Chairman and CEO,
8000 Maryland Avenue D&K Wholesale Drug, Inc.,
Suite 1190 a distributor of pharmaceutical
St. Louis, Missouri 63105 products, since 1987.

David Holford Benson* (57) Honorary Trustee Chairman, Kleinwort
Kleinwort Benson Limited Charter Investment Trust
P.O. Box 560 plc. since March 1992.
20 Fenchurch Street Non-Executive Director
London EC3 P3DB of Kleinwort Benson
Group plc. (formerly
Vice Chairman).

Lee F. Fetter (42) Chairman Chief Operating and
660 S. Euclid, Box 8003 Financial Officer of
St. Louis, Missouri 63110 Washington University
School of Medicine since
1983.

Henry O. Johnston (58) Trustee President of Fordyce
9650 Clayton Road Four, Incorporated, a
St. Louis, Missouri 63124 corporation engaged
in the acquisition and
management of personal
investments.
</TABLE>

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<PAGE> 51

<TABLE>
<S> <C> <C>
L. White Matthews, III (49) Trustee Executive Vice President
Eighth and Eaton Avenues of Finance since 1987,
Bethlehem, Pennsylvania 18018 Union Pacific Corporation,
a company engaged
in transportation,
exploration and refining
of hydrocarbons, mining
and real estate.

Nicholas G. Penniman, IV (57) Trustee Publisher, St. Louis Post-
900 N. Tucker Boulevard Dispatch since 1986.
St. Louis, Missouri 63101 Senior Vice President
of Pulitzer Publishing
Company since 1986.
William J. Tomko (36) President Vice President, BISYS
3435 Stelzer Road Fund Services, Inc.
Columbus, Ohio 43219

W. Eugene Spurbeck (40) Vice President Manager, BISYS Fund
3435 Stelzer Road Services, Inc.
Columbus, Ohio 43219

Martin R. Dean (32) Treasurer Manager, Mutual Fund
3435 Stelzer Road Accounting, BISYS Fund
Columbus, Ohio 43219 Services, Inc. since May
1994. Prior thereto,
Senior Manager, KPMG
Peat Marwick.

George O. Martinez (36) Secretary Senior Vice President
3435 Stelzer Road and Director of Legal and
Columbus, Ohio 43219 Compliance Services of
BISYS Fund Services, Inc.
since April 1995. Prior
thereto, Vice President
and Associate General
Counsel of Alliance
Capital Management, L.P.
</TABLE>

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<PAGE> 52

<TABLE>
<S> <C> <C>
Alaina Metz (28) Assistant Secretary Employee of BISYS Fund
3435 Stelzer Road Services, L.P. since June
Columbus, Ohio 43219 1995; prior thereto,
Supervisor, Alliance
Capital Management, L.P.

Bruce Treff (30) Assistant Secretary Counsel, BISYS Fund
3435 Stelzer Road Services, Inc. since
Columbus, Ohio 43219 September 1995. Prior
thereto, Manager,
Alliance Capital
Management, L.P.
</TABLE>

The Agreement and Declaration of Trust of the Funds (the "Trust
Agreement") provides that, subject to its provisions, the business of the Funds
shall be managed by the Trustees. The Trust Agreement provides that: (a) the
Trustees may enter into agreements with other persons to provide for the
performance and assumption of various services and duties, including, subject to
their general supervision, advisory and administration services and duties, and
also including distribution, custodian, transfer and dividend disbursing agency,
Shareholder servicing and accounting services and duties, (b) a Trustee shall be
liable for his own willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office, and for nothing
else, and shall not be liable for errors of judgment or mistakes of fact or law,
and (c) subject to the preceding clause, the Trustees are not responsible or
liable for any neglect or wrongdoing of any officer or any person referred to in
clause (a).

Certain of the Trustees and officers and the organizations with which
they are associated have had in the past, and/or may have in the future,
transactions with Boatmen's, its parent, Boatmen's Bancshares Inc, Kleinwort
Benson, BISYS and their respective affiliates. The Funds have been advised by
such Trustees and officers that all such transactions have been and are expected
to be ordinary transactions, and that the terms of such transactions, including
all loans and loan commitments by such persons, have been and are expected to be
substantially the same as the prevailing terms of comparable transactions with
other customers.

Each officer holds comparable positions with certain other investment
companies for which BISYS and its affiliates serve as administrator and/or
distributor.

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<PAGE> 53

The following table provides information relating to the aggregate
compensation received by the Trustees from the Registrant for the fiscal year
ended August 31, 1995.

<TABLE>
<CAPTION>
COMPENSATION TABLE

(1) (2) (3) (4) (5)
Total
Pension or Compensation
Aggregate Retirement Estimated Annual From Registrant
Compensation Benefits Upon Benefits Upon Fund Complex
Name of Person From Registrant Retirement Retirement Paid to Persons
-------------- --------------- ---------- ---------- ---------------

<S> <C> <C> <C> <C>
J. Hord Armstrong, III $ 14,000 0 0 $ 14,000
David Holford Benson* $ 0 0 0 $ 0
Lee F. Fetter (Chairman) $ 11,500 0 0 $ 11,500
Henry O. Johnston* $ 13,750 0 0 $ 13,750
L. White Matthews, III $ 13,750 0 0 $ 13,750
Nicholas G. Penniman, IV $ 13,750 0 0 $ 13,750
</TABLE>

* "Interested person" of the Funds for purposes of the 1940 Act.

Each of the Trustees who is not an "interested person" of the Funds for
purposes of the 1940 Act (the "non-interested Trustees") is compensated by the
Funds for his services as such. The compensation paid to the non-interested
Trustees other than the Chairman is $7,000 per year and $750 for each meeting
attended by such Trustee. The compensation paid to the Chairman is $9,500 and
$750 for each Trustee meeting attended. Each of the non-interested Trustees is
entitled to reimbursement for out-of-pocket expenses. Compensation paid to the
Trustees who are considered interested persons is paid directly by the
investment adviser. Trustees' fees during the period ended August 31, 1995
distributed to or accrued for the account of the non-interested Trustees (four
persons) amounted to approximately $53,000, which amount represented the total
compensation paid by the Funds to the Trustees during that year.

INVESTMENT ADVISER, MANAGER, ADMINISTRATOR,
DISTRIBUTOR AND TRANSFER AGENT

THE ADVISER AND MANAGER

Boatmen's Trust Company, a subsidiary of Boatmen's Bancshares, Inc.,
P.O. Box 14737, 100 North Broadway, St. Louis, Missouri 63178-4737, acts as
investment adviser to the Fund pursuant to an Investment Advisory Agreement (the
"Advisory Agreement") between the Fund and Boatmen's. As adviser, Boatmen's is
responsible for the management of the Fund's assets pursuant to an Advisory
Agreement between the Fund and Boatmen's.

Kleinwort Benson Investment Management Americas, Inc., 200 Park Avenue,
New York, New York 10166, serves as investment manager to the Fund pursuant to
an Investment Management Agreement among Kleinwort Benson, Boatmen's and the
Fund. As investment manager, Kleinwort Benson manages the investment operations
of the Fund and the composition of the Fund's assets, including the purchase,
retention and sale thereof.

-23-

<PAGE> 54

The Fund has no present intention of purchasing any securities issued
by Boatmen's, Boatmen's Bancshares, Inc. or any of its affiliates. Mr. Henry O.
Johnston, a Trustee of the Funds, owns shares amounting to less than one-tenth
of one percent (.001%) of the outstanding shares of common stock of Boatmen's
Bancshares, Inc.

Under its Advisory Agreement with the Fund, Boatmen's provides
guidelines for Kleinwort Benson, the investment manager, with regard to
investment strategy and the allocation of assets among countries and currencies,
monitors compliance with such guidelines, reviews selection and monitors
performance of foreign subcustodians, periodically reviews pricing of portfolio
securities, and makes periodic reports to the Funds' Board of Trustees.

The Advisory Agreement provides that, subject to Section 36 of the 1940
Act, Boatmen's will not be liable for any error of judgment or mistake of law or
for any loss suffered by the Funds, except liability to the Funds or its
Shareholders to which Boatmen's would otherwise be subject by reason of its
willful misfeasance, bad faith or gross negligence in the performance of, or its
reckless disregard of, its obligations and duties under the Agreement. The
Agreement provides that the Funds will indemnify Boatmen's against certain
liabilities, including liabilities under the Federal securities laws, or, in
lieu thereof, contribute to resulting losses.

As compensation for the services rendered to the Fund by Boatmen's as
investment adviser, and the assumption by Boatmen's of the expenses related
thereto, Boatmen's is entitled to a fee, computed daily and payable monthly, at
an annual rate equal to .80 of 1% of the average daily net assets of the Fund.
While this fee is higher than the advisory fee paid by most mutual funds, it is
believed to be comparable to advisory fees paid by many funds having similar
objectives and policies. For the period from July 12, 1993 through August 31,
1993, Boatmen's received a fee of $158,136 for services rendered to Fund under
the Advisory Agreement, for the period September 1, 1993 to August 31, 1994,
received a fee of $2,422,559 for such services, and for the period September 1,
1994 through August 31, 1995, received a fee of $2,828,628 for such services.

In connection with the foregoing services, Boatmen's bears all costs
incurred by it in connection with the performance of its duties, other than the
cost (including taxes and brokerage commission, if any) of securities purchased
for the Fund.

Kleinwort Benson's fee is paid by Boatmen's directly out of Boatmen's
advisory fee. The Fund is responsible for all expenses incurred by the Fund,
other than those expressly borne by Boatmen's, Kleinwort Benson, PFD, and BISYS
under the Advisory, Investment Management, Distribution, Administration or
Transfer Agency Agreements. Such expenses include, without limitation, the fees
payable to Boatmen's and BISYS, fees and expenses incurred in connection with
membership in investment company organizations, the fees and expenses of the
Fund's custodian and fund accounting agent, brokerage fees and commissions, any
portfolio losses, filing fees for the registration or qualification of the
Fund's Shares under federal or state securities laws, expenses of the
organization of the Fund, taxes, interest, costs of liability insurance,
fidelity bonds, indemnification or contribution, any costs, expenses or losses
arising out of any liability of, or claim for damages or other relief asserted
against, the Fund for violation of any law, legal and auditing and tax fees and
expenses, expenses of preparing and setting in type prospectuses, statements of
additional information, proxy material, reports and notices and the printing and
distributing of the same to the Fund's Shareholders and regulatory authorities,
compensation and expenses of its Trustees and extraordinary expenses incurred by
the Fund. If, however, in any fiscal year, the sum of the Fund's expenses
(excluding taxes, interest, brokerage and extraordinary expenses such as for
litigation) exceeds the expense limitations applicable to such Fund imposed by
state securities administrators, as such limitations may be lowered or raised
from time to time, the Fund's agreements with Boatmen's and Kleinwort Benson
provide that the Fund is entitled to be reimbursed on a pro rata basis based on
Boatmen's and Kleinwort Benson's respective share of the

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<PAGE> 55

fees paid by the Fund to Boatmen's for investment advisory services, to the
extent required by these expense limitations. As of the date hereof, the most
restrictive expense limitation imposed by state securities administrators of
which the Fund is aware provides that annual expenses (as defined) may not
exceed 2 1/2% of the first $30,000,000 of the Fund's average net assets, plus 2%
of the next $70,000,000 of such assets, plus 1-1/2% of such assets in excess of
$100,000,000, provided that (under the Missouri expense limitation) the
aggregate annual expenses of every type paid or incurred by the Fund or its
Shareholders, must be substantially comparable with the aggregate annual
operating and advisory expenses incurred by other investment companies with
similar objectives and operating policies.

The Advisory Agreement between Boatmen's and the Fund was approved by
the sole holder of outstanding Shares of the Fund, The Goldman Sachs Group,
L.P., on July 12, 1993. The Advisory Agreement for the Fund was last approved by
the Trustees, including the "non-interested" Trustees, on August 21, 1995. The
Advisory Agreement will remain in effect until May 31, 1997 and will continue in
effect thereafter only if such continuance is specifically approved at least
annually: (1) by the vote of a majority of the outstanding Shares of the Fund
(as defined under "Investment Restrictions") or by the Trustees of the Funds,
and by the vote of a majority of the "non-interested" Trustees. The Advisory
Agreement will terminate automatically if assigned (as defined in the 1940 Act),
and is terminable at any time without penalty by the Trustees of the Funds or by
vote of a majority of the outstanding Shares of the Fund (as defined under
"Investment Restrictions") on 60 days' written notice to Boatmen's, and by
Boatmen's on 60 days' written notice to the Funds.

Banking laws and regulations currently prohibit a bank holding company
registered under the Federal Bank Holding Company Act of 1956 or any bank or
non-bank affiliate thereof from sponsoring, organizing, controlling or
distributing the shares of a registered open-end investment company continuously
engaged in the issuance of its shares, but such banking laws and regulations do
not prohibit such a holding company or affiliate or banks generally from acting
as investment adviser, transfer agent or custodian to such an investment
company, or from purchasing shares of such a company as agent for and upon the
order of customers. Boatmen's is a state-chartered trust company. Boatmen's
believes that it may perform the services contemplated by its agreement with the
Funds without violation of such banking laws or regulations, which are
applicable to it. It should be noted, however, that future changes in either
Federal or state statutes and regulations relating to the permissible activities
of banks and their subsidiaries or affiliates, as well as future judicial or
administrative decisions or interpretations of current and future statutes and
regulations, could prevent Boatmen's from continuing to perform such services
for the Funds.

Should future legislative, judicial or administrative action prohibit
or restrict the activities of Boatmen's in connection with the provision of
services on behalf of the Funds, the Funds might be required to alter materially
or discontinue its arrangements with Boatmen's and change its method of
operations. It is not anticipated, however, that any change in the Funds' method
of operations would affect the net asset value per share of the Fund or result
in a financial loss to any shareholder. Moreover, if current restrictions
preventing a bank from legally sponsoring, organizing, controlling or
distributing shares of an open-end investment company were relaxed, the Funds
expect that Boatmen's would consider the possibility of offering to provide some
or all of the services now provided by BISYS and PFD. It is not possible, of
course, to predict whether or in what form such restrictions might be relaxed or
the terms upon which Boatmen's might offer to provide services for consideration
by the Trustees.

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<PAGE> 56

The terms of the Investment Management Agreement among Kleinwort
Benson, Boatmen's and the Fund provide that Kleinwort Benson, subject to
supervision of the Funds' Board of Trustees and Boatmen's, manages the
investment operations of the Fund and the composition of the Fund's assets,
including the purchase, retention and disposition thereof. The Investment
Management Agreement provides that, subject to Section 36 of the 1940 Act,
Kleinwort Benson will not be liable for any error of judgment or mistake of law
or for any loss suffered by the Fund, except liability to the Fund or its
Shareholders to which Kleinwort Benson would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of, or its
reckless disregard of, its obligations and duties under the Agreement. The
Agreement provides that the Fund will indemnify Kleinwort Benson against certain
liabilities, including liabilities under the Federal securities laws, or, in
lieu thereof, contribute to resulting losses.

At its regular meeting held on August 21, 1995, the Board of Trustees
of The Pilot Funds approved a new investment management agreement between
Kleinwort Benson Investment Management Americas Inc., Boatmen's Trust Company
and the Pilot Kleinwort Benson International Equity Fund. This action was
necessary because of the anticipated acquisition of Kleinwort Benson by Dresdner
Bank AG ("Dresdner") which would, pursuant to the terms of the current
agreement, result in a termination of that agreement as required by the
Investment Company Act of 1940.

As compensation for Kleinwort Benson's services, Kleinwort Benson is
entitled to a fee paid by Boatmen's directly out of Boatmen's advisory fee
computed daily and payable monthly, at an annual rate equal to, effective June
1, 1995, .40 of 1% up to $325,000,000 and .25 of 1% of such assets in excess of
$325,000,000, on an annualized basis. Prior to June 1, 1995, Kleinwort Benson
was entitled to a fee, computed daily and payable monthly at an annual rate
equal to .80 of 1% of the Fund up to $65,000,000, .40 of 1% of such assets in
excess of $65,000,000 and .25 of 1% of such assets in excess of $325,000,000.
For the period from July 12, 1993 through August 31, 1993, the investment
management fee paid by Boatmen's to Kleinwort Benson was $114,903, which equaled
.58 of 1% of the Fund's average daily net assets. For the fiscal year ended
August 31, 1994, the fee paid by Boatmen's to Kleinwort Benson was $1,465,815
which equaled .48 of 1% of the Fund's average daily net assets. For the fiscal
year ended August 31, 1995, the fee paid by Boatmen's to Kleinwort Benson was
$1,535,377, which equaled .43 of 1% of the Fund's average daily net assets. The
rate used to determine fees payable pursuant to the new Investment Management
Agreement is identical to the rate in the existing Investment Management
Agreement. All fees and expenses are accrued daily and deducted before
declaration of dividends to shareholders.

THE ADMINISTRATOR

BISYS Fund Services Limited Partnership ("BISYS"), with principal
offices at 3435 Stelzer Road, Columbus, Ohio 43219 serves as the Fund's
Administrator. BISYS also serves as administrator to several other investment
companies. BISYS is a wholly-owned subsidiary of The BISYS Group, Inc.

BISYS provides administrative services for the Fund as described in the
Prospectus pursuant to an Administration Agreement with the Trust dated as of
June 1, 1996. The Agreement will continue in effect with respect to the Fund
until June 1, 199_ and thereafter will be automatically extended as to the Fund
for successive periods of three years, provided that such continuance is
specifically approved: (a) by a vote of a majority of those members of the Board
of Trustees of the Trust who are not parties to the Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval, and (b) by the Board of Trustees of the Trust or by
vote of a majority of the outstanding voting securities of the Fund (as defined
under "Investment Restrictions"). The Agreement is terminable by the Board of
Trustees of the Trust with

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<PAGE> 57

regard to the Fund, without the payment of any penalty, at any time if for
cause. "Cause" shall mean a material breach by BISYS of its obligations under
the Agreement which shall not have been cured within 60 days after the date on
which BISYS shall have received written notice setting forth in detail the facts
alleged to give rise to the breach.

For its services under the Administration Agreement, BISYS is entitled
to receive an administration fee from the Trust, which is calculated based on
the net assets of all investment portfolios of the Trust combined. Under the
Administration Agreement, the Fund pays its pro rata share of an annual fee to
BISYS, computed daily and payable monthly, of .115 of 1% of the Trust's average
net assets up to $1.5 billion, .110 of 1% of the Trust's average net assets on
the next $1.5 billion, and .1075 of 1% of the Trust's average net assets in
excess of $3 billion. From time to time, BISYS may waive fees or reimburse the
Trust for expenses, either voluntarily or as required by certain state
securities laws.

BISYS will bear all expenses in connection with the performance of its
services under the Administration Agreement for the Trust with the exception of
fees charged for certain fund accounting services which are borne by the Fund.

The Administration Agreement provides that BISYS shall not be liable
for any error of judgment or mistake of law or any loss suffered by the Fund in
connection with the matters to which the Agreement relates except a loss
resulting from willful misfeasance, bad faith or negligence in the performance
of BISYS' duties or from the reckless disregard by BISYS of its obligations and
duties thereunder.

THE DISTRIBUTOR

Pilot Funds Distributors Inc. (the "Distributor"), is a registered
broker-dealer and a wholly- owned subsidiary of BISYS, located at 3435 Stelzer
Road, Columbus, Ohio 43219. Pending the registration of Pilot Funds
Distributors, Inc. in all states, Concord Financial Group, Inc. will act as the
Fund's distributor in those states in which Pilot Funds Distributors, Inc. is
not currently registered to sell Fund shares.

The Distribution Agreement with the Distributor will continue in effect
with respect to the Fund until May 31, 1996 and thereafter will be automatically
extended for successive terms of one year, provided that such continuance is
specifically approved: (a) by a majority of those members of the Board of
Trustees who are not interested persons of the Trust and who have no direct or
indirect financial interest in the operation of any plan that has been adopted
by the Trust pursuant to Rule 12b-1 under the 1940 Act ("Plan") or in any
agreement entered into in connection with such plans ("Disinterested Trustees"),
pursuant to a vote cast in person at a meeting called for the purpose of voting
on such approval, and (b) by the Board of Trustees of the Trust or by vote of a
majority of the outstanding voting securities of the Trust (as defined under
"Investment Restrictions"). The Agreement is terminable by the Trust at any time
with regard to any class of its shares, without the payment of any penalty, by
vote of a majority of the Disinterested Trustees or by vote of a majority of the
outstanding voting securities of such class (as defined under "Investment
Restrictions") on 60 days' written notice to the Distributor, or by the
Distributor at any time, without payment of any penalty, on 60 days' written
notice to the Trust.

THE TRANSFER AGENT

BISYS Fund Services, Inc. (the "Transfer Agent"), located at 3435
Stelzer Road, Columbus, Ohio 43219 serves as the Fund's transfer agent and
dividend disbursing agent. Under its Transfer Agency Agreement with the Trust,
the Transfer Agent, has undertaken with the Trust to: (i) record

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<PAGE> 58

the issuance, transfer and redemption of shares, (ii) provide confirmations of
purchases and redemptions, or monthly statements in lieu thereof, as well as
certain other statements, (iii) provide certain information to the Trust's
custodian and the relevant sub-custodian in connection with redemptions, (iv)
provide dividend crediting and certain disbursing agent services, (v) maintain
shareholder accounts, (vi) provide certain state Blue Sky and other information,
(vii) provide shareholders and certain regulatory authorities with tax related
information, (viii) respond to shareholder inquiries, and (ix) render certain
other miscellaneous services.

PORTFOLIO TRANSACTIONS

Kleinwort Benson is responsible for decisions to buy and sell
securities for the Fund, the selection of brokers and dealers to effect the
transactions and the negotiation of brokerage commissions, if any. Purchases and
sales of securities on a securities exchange are effected through brokers who
charge a negotiated commission for their services. Orders may be directed to any
broker including, to the extent and in the manner permitted by applicable law.

In the over-the-counter market, securities are generally traded on a
"net" basis with dealers acting as principal for their own accounts without
stated commissions, although the price of a security usually includes a profit
to the dealer. In underwritten offerings, securities are purchased at a fixed
price that includes an amount of compensation to the underwriter, generally
referred to as the underwriter's concession or discount.

In placing orders for portfolio securities of the Fund, Kleinwort
Benson is required to give primary consideration to obtaining the most favorable
price and efficient execution. This means that Kleinwort Benson will seek to
execute each transaction at a price and commission, if any, which provide the
most favorable total cost or proceeds reasonably attainable in the
circumstances. In seeking such execution, Kleinwort Benson will use its best
judgment in evaluating the terms of a transaction, and will give consideration
to various relevant factors, including, without limitation, the size and type of
the transaction, the nature and character of the market for the security, the
confidentiality, speed and certainty of effective execution required for the
transaction, the general execution and operational capabilities of the
broker-dealer, the reputation, reliability, experience and financial condition
of the firm, the value and quality of the services rendered by the firm in this
and other transactions, and the reasonableness of the spread or commission, if
any.

While Kleinwort Benson generally seeks reasonably competitive spreads
or commissions, the Fund will not necessarily be paying the lowest spread or
commission available. Within the framework of this policy, Kleinwort Benson will
consider research and investment services provided by brokers or dealers who
effect or are parties to portfolio transactions of the Fund, Kleinwort Benson,
or its other clients. Such research and investment services are those which
brokerage houses customarily provide to institutional investors and include
statistical and economic data and research reports on particular companies and
industries. Such services are used by Kleinwort Benson in connection with all of
its investment activities, and some of such services obtained in connection with
the execution of transactions for the Fund may be used in managing other
investment accounts. Conversely, brokers furnishing such services may be
selected for the execution of transactions of such other accounts, whose
aggregate assets are far larger than those of the Fund; and the services
furnished by such brokers may be used by Kleinwort Benson in providing
investment management services for the Funds.

Commission rates are established pursuant to negotiations with the
broker based on the quality and quantity of execution services provided by the
broker in the light of generally prevailing

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<PAGE> 59

rates. The allocation of orders among brokers and the commission rates paid are
reviewed periodically by the Trustees of the Funds.

In certain instances there may be securities which are suitable for one
or more of the other clients of Kleinwort Benson. Investment decisions for the
Fund and for Kleinwort Benson's other clients are made with a view toward
achieving their respective investment objectives. It may happen that a
particular security is bought or sold for only one client even though it might
be held by, or bought or sold for, other clients. Likewise, a particular
security may be bought for one or more client when one or more other clients are
selling that same security. Some simultaneous transactions are inevitable when
several clients receive investment advice from the same investment adviser,
particularly when the same security is suitable for the investment objectives of
more than one client. When two or more clients are simultaneously engaged in the
purchase or sale of the same security, the securities are allocated among
clients in a manner believed to be equitable to each. It is recognized that in
some cases this system could have a detrimental effect on the price or volume of
the security in a particular transaction as far as the Fund is concerned. The
Fund believes that over time its ability to participate in volume transactions
will produce superior executions for the Fund.

The anticipated annual portfolio turnover rate of the Fund is expected
to be less than 100%. The Portfolio turnover rate for the Fund for the fiscal
years ended August 31, 1994 and August 31, 1995 was 35.4% and 35.9%,
respectively. The Fund will not engage in purchasing securities for short-term
trading purposes.

For the fiscal years ended August 31, 1994 and August 31, 1995, the
brokerage commissions paid by the Fund were as follows:

<TABLE>
<CAPTION>
Total Total Amount Brokerage
Total Brokerage of Transactions Commissions
Brokerage Commissions On Which Paid To
Commissions Paid To Commissions Brokers Providing
Paid Affiliated Persons Were Paid Research
----------- ------------------ ----------------- -----------------
<S> <C> <C> <C> <C>
Fiscal
Year from
September 1,
1994 through
August 31,
1995 $ 781,228 $ 0 (1) $ 291,172,320 (2) $ 0

Fiscal
Year from
September 1,
1993 through
August 31,
1994 $ 1,484,166 $ 0 (1) $ 154,608,502 (2) $ 0
</TABLE>

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<PAGE> 60

(1) Percentage of total commissions paid.

(2) Percentage of total amount of transactions involving the payment of
commissions effected through affiliated persons. During the fiscal year
ended August 31, 1994, the Fund did not acquire or sell securities
issued by its regular broker-dealers.

NET ASSET VALUE

The net asset value per Share of the Fund is determined by the Fund's
custodian at 3:00 p.m., Central time (4:00 p.m., Eastern time), on each Business
Day as defined in the Prospectus. In the event that the New York Stock Exchange
or the national securities exchange on which stock options are traded adopt
different trading hours on either a permanent or temporary basis, the Trustees
of the Funds will reconsider the time at which net asset value is computed. In
addition, the Fund may compute its net asset value as of any time permitted
pursuant to any exemption, order or statement of the SEC or its staff.

Portfolio securities of the Fund are valued as follows: (a) securities
that are traded on any U.S. or foreign stock exchange or the National
Association of Securities Dealers NASDAQ System ("NASDAQ") are valued at the
last sale price on that exchange or NASDAQ prior to the Fund'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 Fund'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 Kleinwort Benson and approved by the Trustees of the Funds,
which prices reflect broker/dealer supplied valuations and electronic data
processing techniques if those prices are deemed by Kleinwort Benson to be
representative of market values at the Fund's valuation time; (d) options and
futures contracts are valued at the last sale price on the market prior to the
Fund's valuation time where any such option or futures contract is principally
traded; (e) forward foreign currency exchange contracts are valued at their
respective current fair market values, supplied by a dealer in such contracts
prior to the Fund's valuation time, determined on the basis of prices supplied
by a dealer in such contracts; and (f) all other securities and other assets,
including debt securities, for which prices are supplied by a pricing agent but
are not deemed by Kleinwort Benson to be representative of market values, but
excluding money market instruments with a remaining maturity of sixty days or
less and including restricted securities and securities for which no market
quotation is available, are valued at fair value as determined in good faith
pursuant to procedures established by the Trustees of the Funds, including use
of a valuation committee. Money market instruments held by the Fund with a
remaining maturity of sixty days or less will be valued by the amortized cost
method.

Fund securities traded on more than one United States national
securities exchange or foreign securities exchange are valued at the last sale
price on each business day prior to the Fund's valuation time on the exchange
representing the principal market for such securities. The value of all assets
and liabilities expressed in foreign currencies will be converted into U.S.
dollar values at the rates of such currencies against U.S. dollars last quoted
by any major bank between the buying and selling rates of such currencies
against U.S. dollars last quoted by any major bank. If such quotations are not
available, the rate of exchange will be determined in good faith by or under
procedures established by the Trustees of the Funds.

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<PAGE> 61

Trading in securities on European and Far Eastern securities exchanges
and on over-the-counter markets is normally completed well before the close of
business on each business day of the Funds. In addition, European or Far Eastern
securities trading generally or in a particular country or countries may not
take place on all business days in the United States. Furthermore, trading takes
place in various foreign markets on days which are not business days in the
United States and days on which the Fund's net asset value is not calculated.
Such calculation does not take place contemporaneously with the determination of
the prices of the majority of the portfolio securities used in such calculation.
Events affecting the values of portfolio securities that occur between the time
their prices are determined and the Fund's valuation time will not be reflected
in the Fund's calculation of net asset values unless Kleinwort Benson deems that
the particular event would materially affect net asset value, in which case an
adjustment will be made.

The proceeds received by the Fund and each additional portfolio
established by the Trustees of the Funds for each issue or sale of its shares,
and all net investment income, realized and unrealized gain and proceeds
thereof, subject only to the rights of creditors, will be specifically allocated
to such Fund and constitute the underlying assets of that Fund. The underlying
assets of such Fund will be segregated on the books of account, and will be
charged with the liabilities of such Fund and a share of the general liabilities
of the Funds. Expenses with respect to the Fund are generally allocated in
proportion to the net asset values of the respective portfolios except where
allocations of direct expenses can otherwise be fairly made. In addition,
certain distribution, administration and service fees will be borne exclusively
by the class to which they relate.

MATTERS RELATING TO CLASS A SHARES AND CLASS B SHARES

As distributor, the Distributor pays the cost of printing and
distributing prospectuses to persons who are not shareholders of the Fund
(excluding preparation and printing expenses necessary for the continued
registration of the Fund's shares) and of printing and distributing all sales
literature. The Distributor is entitled to the payment of a front-end sales
charge on the sale of Class A Shares of the Fund as described in the Prospectus
for such Shares. The Distributor is also entitled to the payment of a contingent
deferred sales charge upon redemption of Class B Shares of the Fund as described
in the Prospectus for such Shares.

The Distributor is also entitled to payment by the Trust for
distribution in addition to the sales charges described in the Prospectuses.
Under the Trust's Distribution Plan for Class A Shares, the Trust pays fees for
the provision of services by Service Organizations (which may include the
Distributor itself), persons ("Clients") for whom the Service Organization is
the dealer of record or holder of record or with whom the Service Organization
has a servicing relationship. Under the Trust's Distribution Plan for Class B
Shares of the Fund, the Trust may pay the Distributor for (a) expenses incurred
in connection with advertising and marketing shares of the Fund, including but
not limited to any advertising or marketing via radio, television, newspapers,
magazines, telemarketing or direct mail solicitations; (b) fees for services
rendered with respect to Class B Shares similar to those services described
above with respect to Class A Shares; (c) expenses incurred in preparing,
printing and distributing Prospectuses (except those used for regulatory
purposes or for distribution to existing shareholders) and in implementing and
operating the Distribution Plan; and (d) interest on amounts expended by the
Distributor that are not immediately repaid by the Trust (to the extent approved
by the Board of Trustees and permitted by published positions of the Securities
and Exchange Commission).

Services provided by Service Organizations pursuant to the Distribution
Plans may include, among other things: (i) establishing and maintaining accounts
and records relating to Clients that beneficially own Class A or Class B Shares;
(ii) processing dividend and distribution payments on

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<PAGE> 62

behalf of Clients; (iii) providing information periodically to Clients regarding
their Share positions; (iv) arranging for bank wires; (v) responding to Client
inquiries concerning their investments in Shares; (vi) providing the information
to the Fund necessary for accounting or subaccounting; (vii) if required by law,
forwarding shareholder communications from the Fund (such as proxies,
shareholder reports, annual and semi-annual financial statements and dividend,
distribution and tax notices) to Clients; (viii) assisting in processing
exchange and redemption requests from Clients; (ix) assisting Clients in
changing dividend options, account designations and addresses; and (x) providing
other similar services.

The Distribution Plan for Class A Shares provides that the Distributor
is entitled to receive distribution payments on a monthly basis at an annual
rate not exceeding .25% of the average daily net assets during such month of the
outstanding Shares to which a particular Plan relates. If in any month the
Distributor expends or is due more monies than can be immediately paid due to
this percentage limitation, the unpaid amount is carried forward from month to
month while the Distribution Plan is in effect until such time, if ever, when it
can be paid in accordance with such percentage limitation. Conversely, if in any
month the Distributor does not expend the entire amount then available under a
Plan, and assuming that no unpaid amounts have been carried forward and remain
unpaid, then the amount not expended will be a credit to be drawn upon by the
Distributor to permit future payment. However, any unpaid amounts or credits due
under a Distribution Plan may not be "carried forward" beyond the end of the
fiscal year in which such amounts or credits due are accrued.

The Distribution Plan for Class B Shares provides that the Distributor
is entitled to receive distribution payments on a monthly basis at an annual
rate not exceeding 1.00% of the average daily net assets during such month of
the outstanding Shares to which such Plan relates. Not more than 0.25% of such
net assets will be used to compensate Service Organizations for personal
services provided to Class B Shareholders and/or the maintenance of such
shareholders' accounts and not more than .75% of such net assets will be used
for promotional and other primary distribution activities.

Payments made out of or charged against the assets of a particular
class of Shares of a particular Fund must be in payment for expenses incurred on
behalf of that class. (The Distribution Plans permit, however, joint
distribution financing by the Fund or other investment portfolios or companies
that are affiliated persons of the Fund, affiliated persons of such a person, or
affiliated persons of the Distributor, in accordance with applicable regulations
of the Securities and Exchange Commission.)

Payments for distribution expenses under a particular Distribution
Plan are subject to Rule 12b-1 (the "Rule") under the 1940 Act. Payments under
the Distribution Plans are also subject to the conditions imposed by Rule 18f-3
under the 1940 Act and a Rule 18f-3 Multiple Class Plan which has been adopted
by the Trustees of the Trust for the benefit of the Fund. The Rule defines
distribution expenses to include the cost of "any activity which is primarily
intended to result in the sale of [Trust] shares." The Rule provides, among
other things, that an investment company may bear such expenses only pursuant to
a plan adopted in accordance with the Rule. In accordance with the Rule, the
Plans provide that a report of the amounts expended under the respective Plans,
and the purposes for which such expenditures were incurred, will be made to the
Board of Trustees for its review at least quarterly. The Distribution Plans for
Class A Shares and Class B Shares provide that they may not be amended to
increase materially the costs which Class A or Class B Shares of the Fund may
bear for distribution pursuant to the respective Distribution Plans without
shareholder approval, and both Plans provide that any other type of material
amendment must be approved by a majority of the Board of Trustees, and by a
majority of the Trustees who are neither

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<PAGE> 63

"interested persons" (as defined in the 1940 Act) of the Trust nor have any
direct or indirect financial interest in the operation of the Plan being amended
or in any related agreements, by vote cast in person at a meeting called for the
purpose of considering such amendments (the "Disinterested Trustees"). In
addition, as long as the Distribution Plans for the respective Share classes are
in effect, the nomination of the Trustees who are not interested persons of the
Trust (as defined in the 1940 Act) must be committed to the non-interested
Trustees.

The Board of Trustees of the Trust has concluded that there is a
reasonable likelihood that the Plan will benefit the Fund and Class A and Class
B Shareholders, respectively. The Plan is subject to annual re-approval by a
majority of the Disinterested Trustees of the Trust and are terminable at any
time with respect to any Fund by a vote of a majority of such Trustees or, with
respect to the Distribution Plan, by vote of the holders of a majority of the
applicable Shares of the Fund involved. Any agreement entered into pursuant to
the respective Distribution Plan with a Service Organization is terminable with
respect to any Fund without penalty, at any time, by vote of a majority of the
Disinterested Trustees, by vote of the holders of a majority of the applicable
Shares of such Fund, by the Distributor or by the Service Organization. An
agreement will also terminate automatically in the event of its assignment.

Banks may act as Service Organizations and receive payments under the
Distribution Plan as described. The Glass-Steagall Act and other applicable
laws, among other things, prohibit banks from engaging in the business of
underwriting securities. If a bank were prohibited from acting as a Service
Organization, changes in the operation of the Funds might occur and a
shareholder serviced by such bank might no longer be able to avail himself or
herself of any automatic investment or other services than being provided by the
bank. It is not expected that shareholders would suffer any adverse financial
consequences as a result of these occurrences.

The Trust understands that Boatmen's and its affiliates and/or some
Service Organizations may charge their clients a direct fee for services in
connection with their investments in the Fund. These fees would be in addition
to any amounts which might be received under the Plan. Small, inactive long-term
accounts involving such additional charges may not be in the best interest of
shareholders.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

As described in the Prospectuses for such Shares, Class A Shares and
Class B Shares may be purchased directly from the Distributor or by Clients of
certain financial institutions such as broker-dealers that have entered into
selling and/or servicing agreements with the Distributor ("Service
Organizations"). Pilot Shares may be purchased by Boatmen's and its affiliates
acting on behalf of themselves and persons maintaining qualified accounts at
such institutions, as described in the Prospectus for such Shares. Individuals
may not purchase Pilot Shares directly. Boatmen's and its affiliates and Service
Organizations may impose minimum customer account and other requirements in
addition to those imposed by the Trust and described in the Prospectuses.
Depending on the terms of the particular account, these entities may charge
their customers fees for automatic investment, redemption and other services.
Such fees may include, for example, account maintenance fees, compensating
balance requirements or fees based upon account transactions, assets or income.
Boatmen's and its affiliates and Service Organizations are responsible for
providing information concerning these services and any charges to any customer
who must authorize the purchase of shares prior to such purchase.

Purchase orders will be effected only on business days. Persons wishing
to purchase shares through their accounts at a Service Organization (for Class A
Shares and Class B Shares, or at

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<PAGE> 64

Boatmen's or its affiliates (for Pilot Shares), should contact such entity
directly for appropriate instructions.

An investor desiring to purchase Class A Shares or Class B Shares
directly from the Trust by wire should request his or her bank to transmit
immediately available funds by wire State Street Bank and Trust Company, Boston,
MA, ABA # 011000028, Re: PFTC, f/b/o Pilot Funds Incoming Wire Account DDA No.
9904-8852, for purchase of shares in the investor's name. It is important that
the wire include the investor's name, address, and taxpayer identification
number, indicate whether a new account is being established or a subsequent
payment is being made to an established account and indicate the name of the
Fund and the class of shares being purchased. If a subsequent payment is being
made, the investor's Fund account number should be included. An investor in
Class A Shares or Class B Shares must have completed and forwarded to the
Transfer Agent an Account Application including any required signature
guarantees, before any redemptions of shares purchased by wire may be processed.

Class A Shares of the Fund are sold with a front-end sales charge. As
described in the Prospectus for Class A Shares of the Fund, a front-end sales
charge will not be imposed on certain types of transactions and/or investors
(provided the status of the investment is explained at the time of investment).
These exemptions to the imposition of a front-end sales charge are due to the
nature of the investors and/or the reduced sales efforts that will be needed in
obtaining such investments.

Class B Shares of the Fund are sold without a front-end sales charge,
but are subject to a contingent deferred sales charge. As described in the
Prospectus for Class B Shares, the contingent deferred sales charge is not
charged on certain types of redemptions. You must explain the status of your
redemption at the time you redeem your shares in order to receive the sales
charge exemption.

Boatmen's and/or the Distributor may charge certain fees for acting as
Custodian for IRAs or 401k retirement plans, payment of which could require the
liquidation of shares. Consult the appropriate form for a description of these
fees. Purchases for IRA accounts or 401k retirement plans will be effective only
when payments received by the Transfer Agent are converted into federal funds.
Purchases for these plans may not be made in advance of receipt of funds.

SUPPLEMENTARY REDEMPTION INFORMATION

An investor whose shares are purchased through accounts at Boatmen's or
its affiliates or a Service Organization may redeem all or part of his or her
shares in accordance with instructions pertaining to such accounts. Shares in
the Fund for which orders placed by Boatmen's or its affiliates, a Service
Organization or individual investor for wire redemption are received on a
business day before the close of regular trading hours on the New York Stock
Exchange (currently 3:00 p.m. Central time) will be redeemed as of the close of
regular trading on such Exchange and the proceeds of redemption (less any
applicable contingent deferred sales charge) will normally be wired in federal
funds on the next business day to the commercial bank specified by the
individual investor on the Account Application (or other bank of record on the
investor's file with the Transfer Agent), or to the Service Organization through
which the investment was made. To qualify to use the wire redemption privilege
with the Trust, the payment for shares must be drawn on, and redemption proceeds
paid to, the same bank and account as designated on the Account Application (or
other bank of record as described above). If the proceeds of a particular
redemption are to be wired to another bank, the request must be in writing and
signature guaranteed. Shares in the Fund for which orders for wire redemption
are received by the Trust after the close of regular

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<PAGE> 65

trading hours on the New York Stock Exchange or on a non-business day will be
redeemed as of the close of regular trading on such Exchange on the next day on
which shares of the Fund are priced and the proceeds (less any applicable
contingent deferred sales charge) will normally be wired in federal funds on the
next business day thereafter. Redemption proceeds (less any applicable
contingent deferred sales charge) will be wired to a correspondent member bank
if the investor's designated bank is not a member of the Federal Reserve System.
Immediate notification by the correspondent bank to the investor's bank is
necessary to avoid a delay in crediting the funds to the investor's bank
account. Proceeds of less than $1,000 will be mailed to the investor's address.

To change the commercial bank or account designated to receive
redemption proceeds from Class A Shares or Class B Shares a written request must
be sent to The Pilot Funds, c/o BISYS Fund Services, Inc., 3435 Stelzer Road,
Columbus, Ohio 43219. Such request must be signed by each shareholder, with each
signature guaranteed as described in the Fund's Prospectuses. Guarantees must be
signed by an authorized signatory and "signature guaranteed" must appear with
the signature.

For processing redemptions or to change wiring instructions with the
Trust, the Transfer Agent may request further documentation from corporations,
executors, administrators, trustees or guardians. The Transfer Agent will accept
other suitable verification arrangements from foreign investors, such as
consular verification.

EXCHANGE PRIVILEGE

The Trust offers an exchange privilege whereby investors may exchange
all or part of their Class A Shares for Class A Shares of other investment
portfolios of the Trust; Class B Shares for Class B Shares of other investment
portfolios of the Trust; and Pilot Shares for Pilot Shares of other investment
portfolios of the Trust. By use of this exchange privilege, the investor
authorizes the Transfer Agent to act on telephonic or written exchange
instructions from any person representing himself or herself to be the investor
and believed by the Transfer Agent to be genuine. The Transfer Agent's records
of such instructions are binding. The exchange privilege may be modified or
terminated at any time upon notice to shareholders. For federal income tax
purposes, exchange transactions are treated as sales on which a purchaser will
realize a capital gain or loss depending on whether the value of the shares
exchanged is more or less than his or her basis in such shares at the time of
the transaction.

Exchange transactions described in Paragraphs A, B and C below will be
made on the basis of the relative net asset values per share of the investment
portfolios involved in the transaction. Paragraphs A, B and C relate only to
whether a front-end sales charge will be imposed, not to whether a particular
exchange transaction is permissible or impermissible.

(a) Class A Shares, as well as additional shares acquired through
reinvestment of dividends or distributions on such shares, may be
exchanged without a front-end sales charge for Class A Shares of any
non-money market investment portfolio of the Trust.

(b) Shares of any investment portfolio of the Trust acquired by a previous
exchange transaction involving shares on which a front-end sales charge
has directly or indirectly been paid (e.g., Class A Shares issued in
connection with an exchange transaction involving Class A Shares), as
well as additional shares acquired through reinvestment of dividends or
distributions on such shares, may be exchanged without a front-end
sales charge for Class A Shares of any other non-money market
investment portfolio of the Trust. To accomplish

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<PAGE> 66

an exchange transaction under the provisions of this Paragraph,
investors must notify the Transfer Agent of their prior ownership of
shares and their account number.

(c) Class A Shares of any non-money market portfolio acquired in connection
with the distribution of assets held in a qualified trust, agency or
custodial account maintained with Boatmen's or its affiliates may be
exchanged without a front-end sales charge for Class A Shares of any
non-money market investment portfolio of the Trust.

Class B Shares acquired pursuant to an exchange transaction will
continue to be subject to a contingent deferred sales charge. However, Class B
Shares may be exchanged for other Class B Shares without the payment of a
contingent deferred sales charge at the time of exchange. In determining the
holding period for calculating the contingent deferred sales charge payable on
redemption of Class B Shares, the holding period of the shares originally held
will be added to the holding period of the shares acquired through exchange.

In addition, as described in the Prospectuses, under certain
circumstances exchange transactions between Class A Shares and Pilot Shares in
the Fund may be permitted without the payment of a front-end sales charge.

Except as stated above, a front-end sales charge will be imposed when
shares of any investment portfolio of the Trust that were purchased or otherwise
acquired without a front-end sales charge are exchanged for shares of a
non-money market investment portfolio of the Trust subject to such a front-end
charge.

Exchange requests received on a business day prior to the time shares
of the investment portfolios involved in the request are priced will be
processed on the date of receipt. "Processing" a request means that shares in
the investment portfolios from which the shareholder is withdrawing an
investment will be redeemed at the net asset value per share next determined on
the date of receipt. Shares of the new investment portfolio into which the
shareholder is investing will also normally be purchased at the net asset value
per share next determined coincident to or after the time of redemption.
Exchange requests received on a business day after the time shares of the
investment portfolios involved in the request are priced will be processed on
the next business day in the manner described above.

RIGHT OF ACCUMULATION AND STATEMENT OF INTENTION

For the purpose of applying the Right of Accumulation or Statement of
Intention privileges available to certain Class A Share investors in the Fund as
described in the Prospectus, the scale of sales charges applies to purchases of
Class A Shares made by any "purchaser," which term includes an individual and/or
spouse purchasing securities for his, her or their own account or for the
account of any minor children; or a trustee or other fiduciary account
(including a pension, profit-sharing or other employee benefit trust created
pursuant to a plan qualified under Section 401 of the Internal Revenue Code)
although more than one beneficiary is involved; or "a qualified group" which has
been organized for the purpose of buying redeemable securities of a registered
investment company at a discount, provided that the purchases are made through a
central administrator or a single dealer, or by other means which result in
economy of sales effort or expense. A "qualified group" must have more than 10
members, must be available to arrange for group meetings between representatives
of the Fund and the members, and must be able to arrange for mailings to members
at reduced or no cost to the Distributor.

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<PAGE> 67

MISCELLANEOUS

Certificates for shares will not be issued.

With respect to the Fund, a "business day" is a day on which the New
York Stock Exchange is open for trading, and includes Martin Luther King, Jr.
Day, Columbus Day and Veterans Day. The scheduled 1996 holidays on which the New
York Stock Exchange is closed are: New Year's Day (observed), President's Day,
Good Friday, Memorial Day, Independence Day (observed), Labor Day, Thanksgiving
Day and Christmas Day (observed).

The Trust may suspend the right of redemption or postpone the date of
payment for shares during any period when (a) trading on the New York Stock
Exchange (the "Exchange") is restricted by applicable rules and regulations of
the Securities Exchange Commission; (b) the Exchange is closed for other than
customary weekend and holiday closings; (c) the Securities and Exchange
Commission has by order permitted such suspension; or (d) an emergency exists as
determined by the Securities and Exchange Commission. (The Trust may also
suspend or postpone the recordation of the transfer of its shares upon the
occurrence of any of the foregoing conditions.)

The Trust reserves the right to require a shareholder to redeem
involuntarily shares in an account (other than an IRA or Qualified Retirement
Plan account) if the balance held of record by the shareholder drops below
$1,000 and such shareholder does not increase such balance to $1,000 or more
upon 30 days' notice. The Trust will not require a shareholder to redeem shares
of a Fund if the balance held of record by the shareholder is less than $1,000
solely because of a decline in the net asset value of the Fund's shares or
because the shareholder has made an initial investment in a lower amount as
provided for in the Funds' Prospectuses. The Trust may also redeem shares
involuntarily if such redemption is appropriate to carry out the Trust's
responsibilities under the 1940 Act.

The Trust may redeem shares involuntarily to reimburse a Fund for any
loss sustained by reason of the failure of a shareholder to make full payment
for shares purchased by the shareholder or to collect any charge relating to a
transaction effected for the benefit of a shareholder which is applicable to
Fund shares as provided in the Funds' Prospectuses from time to time.

IN KIND PURCHASES

Payment for shares of a Fund may, in the discretion of Boatmen's, be
made in the form of securities that are permissible investments for the Fund as
described in the Prospectuses. For further information about this form of
payment, contact Boatmen's. In connection with an in-kind securities payment, a
Fund will require, among other things, that the securities be valued on the day
of purchase in accordance with the pricing methods used by the Fund and that the
Fund receive satisfactory assurances that it will have good and marketable title
to the securities received by it; that the securities be in proper form for
transfer to the Fund; and that adequate information be provided concerning the
basis and other tax matters relating to the securities.

REDEMPTIONS IN KIND

If the Board of Trustees determines that conditions exist which make
payment of redemptions proceeds wholly in cash unwise or undesirable, the Trust
may make payment wholly or partly in securities or other property. Such
redemptions will only be made in "readily marketable" securities. In such an
event, a shareholder would incur transaction costs in selling the securities or
other property. Each Fund may commit that it will pay all redemption requests by
a shareholder of

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<PAGE> 68

record in cash, limited in amount with respect to each shareholder during any
ninety-day period to the lesser of $250,000 or 1% of the net asset value of the
Fund at the beginning of such period.

CALCULATION OF PERFORMANCE QUOTATIONS

From time to time, quotations of the Fund's performance may be included
in advertisements, sales literature or reports to Shareholders or prospective
investors. These performance figures may be calculated in the following manner:

A. Average Annual Total Return is the average annual compounded rate of
return for the periods of one year and the life of the Fund, ended on
the last day of a recent calendar quarter. Average annual total return
quotations reflect changes in the price of the Fund's Shares and
assume that all dividends and capital gains distributions during the
respective periods were reinvested in the Fund's Shares. Average
annual total return is calculated by finding the average annual
compounded rates of return of a hypothetical investment over such
periods according to the following formula (average annual total
return is then expressed as a percentage):

T = (ERV/P)1/n - 1
Where:
T = average annual total return
P = a hypothetical initial investment of $1,000
n = number of years
ERV = ending redeemable value: ERV is the value, at the
end of the applicable period, of a hypothetical
$1,000 investment made at the beginning of the
applicable period.

A. Cumulative Total Return is the cumulative rate of return on a
hypothetical initial investment of $1,000 for a specified period.
Cumulative total return quotations reflect changes in the price of a
Fund's Shares and assume that all dividends and capital gains
distributions during the period were reinvested in Shares of the
applicable Fund. Cumulative total return is calculated by finding the
cumulative rates of a return of a hypothetical investment over such
periods, according to the following formula (cumulative total return is
then expressed as a percentage):

C = (ERV/P) - 1
Where:
C = cumulative total return
P = a hypothetical initial investment of $1,000
ERV = ending redeemable value: ERV is the value, at the
end of the applicable period, of a hypothetical
$1,000 investment made at the beginning of the
applicable period.

A. Total Return is the rate of return on an investment for a specified
period of time calculated in the same manner as Cumulative Total
Return.

A. Yield is the net annualized yield based on a specified 30-day (or one
month) period assuming semi-annual compounding of income. Yield is
calculated by dividing the net investment income per Share earned
during the period by the maximum offering price per Share on the last
day of the period, according to the following formula:

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<PAGE> 69

YIELD = 2[(a-b + 1)to the 6th power - 1]
---
cd

Where:
a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of Shares outstanding during the period that
were entitled to receive dividends.
d = the maximum offering price per Share on the last day of the period.

Unlike bank deposits or other investments that pay a fixed yield or
return for a stated period of time, the return for the Fund will fluctuate from
time to time and does not provide a basis for determining future returns. Return
is a function of portfolio quality, composition, maturity and market conditions,
as well as the expenses allocated to the Fund. The return of the Fund may not be
readily comparable to other investment alternatives because of differences in
the foregoing variables and the methods used to value portfolio securities,
compute expenses and calculate return.

Average annual total return, cumulative total return, total return and
yield are calculated separately for Pilot Shares and Class A Shares. Pilot
Shares and Class A and Class B Shares are subject to different fees and expenses
and may have different performance for the same period. Performance information
is not available for Class B Shares which did not commence operations until June
1996.

For periods prior to July 12, 1993 the performance information for the
Pilot International Equity Fund is actually the performance for the Kleinwort
Benson International Equity Fund of Kleinwort Benson Investment Strategies, all
of the assets of which were acquired by the Pilot International Equity Fund in
exchange for Class A Shares in a reorganization effective July 12, 1993. The
Pilot International Equity Fund did not commence operations until that date. The
Kleinwort Benson International Equity Fund was advised solely by Kleinwort
Benson prior to that date.

The average annual total return for share classes outstanding August
31, 1995 of the Pilot International Equity Fund with respect to Pilot Shares and
Class A Shares for the one, five and ten-year periods ended August 31, 1995,
assuming such Shares had been outstanding and subject to maximum service fees
and that the maximum sales charge had been assessed is shown below:

For the period prior to July 12, 1993, the information reflects the
performance of the Kleinwort Benson International Equity Fund.

<TABLE>
<CAPTION>
Average Annual Total Return
--------------------------------------
One Year Five Years Ten Years
-------- ---------- ---------
<S> <C> <C> <C>
Pilot International Equity Fund

Pilot Shares 2.08% 4.10% 15.65%

Class A Shares -2.81% 2.89% 14.83%
</TABLE>

The average annual total return for share classes outstanding August
31, 1995 of the Fund with respect to Pilot Shares and Class A Shares for the
one, five and ten-year periods ended August

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<PAGE> 70

31, 1995, assuming such Shares had been outstanding and subject to maximum
service fees and that no sales charge had been assessed is shown below:

For the period prior to July 12, 1993, the information reflects the
performance of the Kleinwort Benson International Equity Fund.

<TABLE>
<CAPTION>
Average Annual Total Return
--------------------------------------
One Year Five Years Ten Years
-------- ---------- ---------
<S> <C> <C> <C>
Pilot International Equity Fund

Pilot Shares 2.08% 4.10% 15.65%

Class A Shares 1.77% 3.83% 15.36%
</TABLE>

From time to time, the Funds may publish an indication of one or more
Funds' past performance as measured by independent sources, such as Lipper
Analytical Services, Incorporated, Weisenberger Investment Companies Service,
Donoghue's Money Fund Report, Barron's, Business Week, Changing Times, Financial
World, Forbes, Money, Personal Investor, Sylvia Porter's Personal Finance and
The Wall Street Journal.

TAX INFORMATION

The Fund intends to elect to be treated as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"). Such qualification does not involve supervision of management or
investment practices by any governmental agency or bureau.

In order to qualify as a regulated investment company, the Fund must,
among other things: (a) derive at least 90% of its annual gross income from
dividends, interest, payments with respect to securities loans and gains from
the sale or other disposition of stock or securities or foreign currencies, or
other income (such as gains from options, futures or forward contracts) derived
with respect to its business of investing in such stock, securities or
currencies; (b) derive less than 30% of its annual gross income from the sale or
other disposition of: (i) stock or securities, (ii) options, futures or forward
contracts (other than options, futures or forward contracts on foreign
currencies), or (iii) foreign currencies (or foreign currency options, futures
or forward contracts) not directly related to the Fund's principal business of
investing in stock or securities (or options and futures with respect to stocks
or securities), held less than three months (the "30% Limitation"); and (c)
diversify its holdings so that, at the end of each quarter of its taxable year:
(i) at least 50% of the market value of the Fund's total assets is represented
by cash and cash items (including receivables), U.S. Government securities, the
securities of other regulated investment companies and other securities, with
such other securities of any one issuer limited for the purposes of this
calculation to an amount not greater than 5% of the value of the Fund's total
assets and not greater than 10% of the outstanding voting securities of such
issuer, and (ii) not more than 25% of the value of the Fund's total assets is
invested in the securities (other than U.S. Government securities and securities
of other regulated investment companies) of any one issuer.

The Fund, as a regulated investment company, generally should not be
subject to federal income tax on its investment company taxable income (which
includes, among other items, dividends, interest and net short-term capital
gains in excess of net long-term capital losses) and net capital gains (the
excess of net long-term capital gains over net short-term capital losses) which
are distributed to Shareholders in any taxable year, provided that the Fund
distributes at least 90% of its investment

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<PAGE> 71

company taxable income and its net tax-exempt interest income, if any, each
taxable year. In order to avoid a 4% federal excise tax, the Fund must
distribute (or be deemed to have distributed) by December 31 of each calendar
year at least 98% of its ordinary income (not taking into account any capital
gains or losses) for such year, at least 98% of the excess of its capital gains
over its capital losses (adjusted for certain ordinary losses) computed on the
basis of the one-year period ending on October 31 of such year, and any ordinary
income and capital gains for previous years that were not distributed during
those years. A distribution will be treated as having been paid on December 31
of the current calendar year if it is declared by the Fund in October, November
or December with a record date in such a month and paid during January of the
following calendar year. Such distributions will be taxable to Shareholders in
the calendar year in which the distributions are declared.

Dividends paid out of the Fund's investment company taxable income will
be treated as ordinary income in the hands of Shareholders. If a portion of the
Fund's income consists of dividends paid by U.S. corporations, a portion of the
dividends paid by the Fund may qualify for the corporate dividends-received
deduction. Distributions of net capital gains, if any, which are designated as
capital gain dividends are taxable to Shareholders as long-term capital gain,
regardless of the length of time the Shares of the Fund have been held by such
Shareholders, and are not eligible for the corporate dividends-received
deduction. Net capital gains for a taxable year are computed by taking into
account any capital loss carry-forward of the Fund.

Distributions of investment company taxable income and net capital
gains will be taxable as described above, whether received in additional Shares
or in cash. Shareholders electing to receive distributions in the form of
additional Shares will have a cost basis in each Share so received equal to the
net asset value of such Share on the reinvestment date.

Investments by the Fund in zero coupon securities will result in income
to the Fund equal to a portion of the excess of the face value of the securities
over their issue price (the "original issue discount") each year that the
securities are held, even though the Fund receives no cash interest payments.
This income is included in determining the amount of income which the Fund must
distribute to maintain its status as a regulated investment company and to avoid
the payment of federal income tax and the 4% excise tax.

Gain derived by the Fund from the disposition of any market discount
bonds (i.e., bonds purchased other than at original issue, where the face value
of the bonds exceeds their purchase price), including tax-exempt market discount
bonds, held by the Fund will be taxed as ordinary income to the extent of the
accrued market discount on the bonds, unless the Fund elects to include the
market discount in income as it accrues.

The taxation of equity options and over-the-counter options on debt
securities is governed by Code Section 1234. Pursuant to Code Section 1234, the
premium received by the Fund for selling a put or call option is not included in
income at the time of receipt. If the option expires, the premium is short-term
capital gain to the Fund. If the Fund enters into a closing transaction, the
difference between the amount paid to close out its position and the premium
received is short-term capital gain or loss. If a call option written by the
Fund is exercised, thereby requiring the Fund to sell the underlying security,
the premium will increase the amount realized upon the sale of such security and
any resulting gain or loss will be a capital gain or loss, and will be long-term
or short-term depending upon the holding period of the security. With respect to
a put or call option that is purchased by the Fund, if the option is sold, any
resulting gain or loss will be a capital gain or loss, and will be long-term or
short-term, depending upon the holding period of the option. If the option
expires, the resulting loss is a capital loss and is long-term or short-term,
depending upon the holding period of the option. If the option is exercised, the
cost of the

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<PAGE> 72

option, in the case of a call option, is added to the basis of the purchased
security and, in the case of a put option, reduces the amount realized on the
underlying security in determining gain or loss.

Certain options, futures contracts and forward contracts in which the
Fund may invest are "section 1256 contracts." Gains or losses on section 1256
contracts generally are considered 60% long-term and 40% short-term capital
gains or losses; however, foreign currency gains or losses (as discussed below)
arising from certain section 1256 contracts may be treated as ordinary income or
loss. Also, section 1256 contracts held by the Fund at the end of each taxable
year (and, generally, for purposes of the 4% excise tax, on October 31 of each
year) are "marked-to-market" (that is, treated as sold at fair market value),
resulting in unrealized gains or losses being treated as though they were
realized.

Generally, the hedging transactions undertaken by the Fund may result
in "straddles" for U.S. federal income tax purposes. The straddle rules may
affect the character of gains (or losses) realized by the Fund. In addition,
losses realized by the Fund on positions that are part of a straddle may be
deferred under the straddle rules, rather than being taken into account in
calculating the taxable income for the taxable year in which the losses are
realized. Because only a few regulations implementing the straddle rules have
been promulgated, the tax consequences to the Fund of engaging in hedging
transactions are not entirely clear. Hedging transactions may increase the
amount of short-term capital gain realized by the Fund which is taxed as
ordinary income when distributed to its Shareholders.

The Fund may make one or more of the elections available under the Code
which are applicable to straddles. If the Fund makes any of the elections, the
amount, character and timing of the recognition of gains or losses from the
affected straddle positions will be determined under rules that vary according
to the election(s) made. The rules applicable under certain of the elections may
operate to accelerate the recognition of gains or losses from the affected
straddle position.

Because the straddle rules may affect the character of gains or losses,
defer losses and/or accelerate the recognition of gains or losses from the
affected straddle positions, the amount which may be distributed to
Shareholders, and which will be taxed to them as ordinary income or long-term
capital gain, may be increased or decreased as compared to a fund that did not
engage in such hedging transactions.

The 30% Limitation and the diversification requirements applicable to
the Fund's assets may limit the extent to which the Fund will be able to engage
in transactions in options, futures contracts and forward contracts.

Under the Code, gains or losses attributable to fluctuations in
exchange rates which occur between the time the Fund accrues receivables or
liabilities denominated in a foreign currency and the time the Fund actually
collects such receivables, or pays such liabilities, generally are treated as
ordinary income or ordinary loss. Similarly, on disposition of debt securities
denominated in a foreign currency and on disposition of certain futures
contracts, forward contracts and options, gains or losses attributable to
fluctuations in the value of foreign currency between the date of acquisition of
the security or contract and the date of disposition also are treated as
ordinary gain or loss. These gains or losses, referred to under the Code as
"section 988" gains or losses, may increase or decrease the amount of the Fund's
investment company taxable income to be distributed to its Shareholders as
ordinary income.

If the Fund invests in stock of certain foreign investment companies,
the Fund may be subject to U.S. federal income taxation on a portion of any
"excess distribution" with respect to, or gain from the disposition of, such
stock. The tax would be determined by allocating such distribution or gain
ratably to each day of the Fund's holding period for the stock. The distribution
or gain so allocated to any taxable year of the Fund, other than the taxable
year of the excess distribution or disposition, would be taxed to

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<PAGE> 73

the Fund at the highest ordinary income rate in effect for such year, and the
tax would be further increased by an interest charge to reflect the value of the
tax deferral deemed to have resulted from the ownership of the foreign company's
stock. Any amount of distribution or gain allocated to the taxable year of the
distribution or disposition would be included in the Fund's investment company
taxable income and, accordingly, would not be taxable to the Fund to the extent
distributed by the Fund as a dividend to its Shareholders.

The Fund may be able to make an election, in lieu of being taxable in
the manner described above, to include annually in income its pro rata share of
the ordinary earnings and net capital gain of the foreign investment company,
regardless of whether it actually received any distributions from the foreign
company. These amounts would be included in the Fund's investment company
taxable income and net capital gain which, to the extent distributed by the Fund
as ordinary or capital gain dividends, as the case may be, would not be taxable
to the Fund. In order to make this election, the Fund would be required to
obtain certain annual information from the foreign investment companies in which
it invests, which in many cases may be difficult to obtain. Alternatively, the
Fund may be able to elect to mark to market its foreign investment company
stock, resulting in the stock being treated as sold at fair market value on the
last business day of each taxable year. Any resulting gain would be reported as
ordinary income, and any resulting loss would not be recognized.

Any gain or loss realized by a Shareholder upon the sale or other
disposition of Shares, or upon receipt of a distribution in complete liquidation
of the Fund, generally will be a capital gain or loss which will be long-term or
short-term, generally depending upon the Shareholder's holding period for the
Shares. Any loss realized on a sale or exchange will be disallowed to the extent
the Shares disposed of are replaced (including Shares acquired pursuant to a
dividend reinvestment plan) within a period of 61 days beginning 30 days before
and ending 30 days after disposition of the Shares. In such a case, the basis of
the Shares acquired will be adjusted to reflect the disallowed loss. Any loss
realized by a Shareholder on a disposition of Shares held by the Shareholder for
six months or less will be treated as a long-term capital loss to the extent of
any distributions of net capital gains received by the Shareholder with respect
to such Shares.

The Fund may be subject to foreign withholding taxes on its investments
in certain securities of foreign entities. These taxes may be reduced under the
terms of applicable tax treaties, and the Fund intends to satisfy any procedural
requirements to qualify for benefits under these treaties. In the event that
more than 50% of the value of its total assets at the close of a taxable year is
composed of stock or securities of foreign corporations, a Fund may make an
election under Code Section 853 to permit its Shareholders (subject to
limitations) to claim a credit or deduction on their federal income tax returns
for their pro rata portion of qualified taxes paid by that Fund in foreign
countries. In the event such an election is made, Shareholders would be required
to include their pro rata portion of such taxes in gross income and may be
entitled to claim a foreign tax credit or deduction for the taxes, subject to
certain limitations under the Code. Shareholders who are precluded from taking
such credits or deductions will nevertheless be taxed on their pro rata share of
the foreign taxes included in their gross income, unless they are otherwise
exempt from federal income taxes.

The Fund will be required to report to the Internal Revenue Service
(the "IRS") all taxable distributions (except in the case of certain exempt
Shareholders). Under the backup withholding provisions of Code Section 3406, all
such distributions may be subject to withholding of federal income tax at the
rate of 31%. This tax generally would be withheld if: (a) the payee fails to
furnish the Fund with the payee's taxpayer identification number ("TIN") under
penalties of perjury, (b) the IRS notifies the Fund that the TIN furnished by
the payee is incorrect, (c) the IRS notifies the Fund that the payee has failed
to properly report interest or dividend income to the IRS, or (d) when required
to do so, the payee fails to certify under penalties of perjury that it is not
subject to backup withholding. An individual's TIN

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is his or her social security number. The Funds may refuse to accept an
application that does not contain any required TIN or certification that the
number provided is correct. If the withholding provisions are applicable, any
distributions, whether taken in cash or reinvested in Shares, will be reduced by
the amounts required to be withheld. Backup withholding is not an additional
tax. Any amounts withheld may be credited against the Shareholder's U.S. federal
income tax liability. Investors may wish to consult their tax advisors about the
applicability of the backup withholding provisions.

All distributions, whether received in Shares or cash, must be reported
by each Shareholder on his or her federal income tax return. Each Shareholder
should consult his or her own tax adviser to determine the state and local tax
consequences of an investment in the Fund.

The foregoing discussion relates solely to U.S. federal income tax law
as it applies to U.S. persons (i.e., U.S. citizens and residents and U.S.
corporations, partnerships, trusts and estates). Each Shareholder who is not a
U.S. person should consult his or her tax adviser regarding the U.S. and non-
U.S. tax consequences of ownership of Shares of the Fund, including the
possibility that such a Shareholder may be subject to a U.S. withholding tax at
a rate of 30% (or a lower rate under an applicable U.S. income tax treaty) on
certain distributions.

STATE AND LOCAL

The Fund may be subject to state or local taxes in jurisdictions in
which the Fund may be deemed to be doing business. In addition, in those states
or localities which have income tax laws, the treatment of the Fund and its
Shareholders under such laws may differ from their treatment under Federal
income tax laws. Also, an investment in the Fund may have different tax
consequences for Shareholders than would a direct investment in the securities
held by the Fund. Shareholders should consult their own tax advisers concerning
these matters. For example, in such states or localities, it may be appropriate
for Shareholders to review with their tax advisers the state income tax
consequences of investment by the Fund in securities issued or guaranteed as to
principal and interest by the U.S. Government or its various agencies or
instrumentalities, portfolio repurchase agreements, and securities loans.

ORGANIZATION AND CAPITALIZATION

The Pilot Funds is a Massachusetts business trust established under the
laws of the Commonwealth of Massachusetts by an Agreement and Declaration of
Trust dated July 15, 1982, as amended (the "Declaration of Trust") under the
name Centerland Fund. On June 1, 1994, the name of the Funds was changed to The
Pilot Funds. Each Shareholder is deemed to have expressly assented and agreed to
the terms of the Declaration of Trust and is deemed to be a party thereto. The
authorized capital of the Funds consists of an unlimited number of units of
beneficial interest which are referred to as "Shares" in this Statement of
Additional Information. The Trustees have authority under the Declaration of
Trust to create and classify Shares of beneficial interest in separate series
("Funds") without further action by Shareholders. The Trustees have established
fourteen Funds, one of which is offered herein and known as the Pilot
International Equity Fund. Each Share of the Fund has a par value of $.001. It
represents an equal proportionate interest in the Fund with each other Share,
and is entitled to such distributions out of the income belonging to the Fund as
are declared by the Trustees. Upon the liquidation of the Fund, Shareholders
thereof are entitled to share pro rata in the net assets belonging to the Fund
available for distribution. The Declaration of Trust further authorizes the
Trustees to classify or reclassify any series or Fund of Shares into one or more
classes. The Trustees have authorized the issuance of three classes of the Fund:
Pilot Shares, Class A Shares and Class B Shares. Each Pilot Share, Class A Share
and Class B Share is entitled to one vote per Share; however, separate votes
will be taken by the Fund or one of its classes on matters affecting only the
Fund or that particular class or as otherwise required by law. Fractional Shares
are entitled to proportionate fractional votes. Shares have

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<PAGE> 75

neither cumulative voting rights nor any preemptive, subscription, or conversion
rights (the right of redemption is described under "Transaction Rules" and "How
to Sell Shares" in the Prospectus). Shares when issued as described herein are
fully paid and nonassessable, except as expressly set forth below. For
information relating to possible mandatory redemption of Shares at the option of
the Funds, see "Transaction Rules" and "How to Sell Shares" in the Prospectus.
The Trust Agreement provides for Shareholder voting only for the election or
removal of one or more Trustees, if a meeting is called for that purpose, and
for certain other designated matters. Each Trustee serves until the next meeting
of Shareholders, if any, called for the purpose of considering the election or
reelection of the Trustee or successor thereto, and until the election and
qualification of his successor, if any, elected at that meeting, or until the
Trustee sooner dies, resigns, retires or is removed by the Shareholders or
two-thirds of the Trustees.

As of the date of this Statement of Additional Information, the
Trustees and officers of the Funds owned beneficially less than 1% of the
outstanding shares of the Fund.

SHAREHOLDER AND TRUSTEE LIABILITY

The Pilot Funds is an entity of the type commonly known as a
"Massachusetts business trust," which is the form in which many mutual funds are
organized. Shareholders of such a trust may, under certain circumstances, be
held personally liable as partners for the obligations of the trust. The
Declaration of Trust contains an express disclaimer of Shareholder liability for
acts or obligations of the Funds. Notice of such disclaimer will normally be
given in each agreement, obligation or instrument entered into or executed by
the Funds or the Trustees. The Declaration of Trust provides for indemnification
by the relevant Fund for any loss suffered by a Shareholder as a result of an
obligation of the Fund. The Declaration of Trust also provides that the Funds
shall, upon request, assume the defense of any claim made against a Shareholder
for any act or obligation of the Funds, and satisfy any judgment thereon. Thus,
the risk of a Shareholder incurring financial loss on account of Shareholder
liability is limited to circumstances in which the Fund is unable to meet its
obligations. The Trustees believe that, in view of the above, the risk of
personal liability of Shareholders is not material.

The Declaration of Trust provides that the Trustees of the Funds shall
not be liable for any action taken by them in good faith, and that they shall be
fully protected in relying in good faith upon the records of the Funds and upon
reports made to the Funds by persons selected in good faith by the Trustees as
qualified to make such reports. The Declaration of Trust further provides that
the Trustees will not be liable for errors of judgment or mistakes of fact or
law. The Declaration of Trust provides that the Funds will indemnify Trustees
and officers of the Funds against liabilities and expenses reasonably incurred
in connection with litigation in which they may be involved because of their
positions with the Funds, unless it is determined, in the manner provided in the
Declaration of Funds, that they have not acted in good faith in the reasonable
belief that, in the case of conduct in their official capacity with the Funds,
their conduct was in the best interests of the Funds and that, in all other
cases, their conduct was at least not opposed to the best interest of the Funds
(and that, in the case of any criminal proceeding, they had no reasonable cause
to believe that the conduct was unlawful). However, nothing in the Declaration
of Trust or the By-Laws protects or indemnifies Trustees or officers against any
liability to which they would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of their office.

CUSTODIAN AND SUBCUSTODIANS

Boatmen's Trust Company ("Boatmen's"), 100 N. Broadway, St. Louis,
Missouri 63102, is the custodian of the Fund's assets. Boatmen's has established
a network of foreign subcustodians to hold certain foreign securities purchased
by the Fund, and The Northern Trust Company, 50 South LaSalle

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<PAGE> 76

Street, Chicago, Illinois 60675, as subcustodian to hold cash and handle certain
wire receipts and transfers of funds.

INDEPENDENT ACCOUNTANTS AND COUNSEL

Arthur Andersen LLP, independent public accountants, One International
Place, Boston, Massachusetts 02110, have been selected as auditors of the Fund.
In addition to providing audit services, Arthur Andersen LLP prepares the Funds'
federal and state tax returns and provides consultation and assistance on
accounting, internal control and related matters. The financial statements and
related report of Arthur Andersen LLP contained in the 1995 Annual Report of the
Funds and the financial statements and related report of Ernst & Young LLP,
independent auditors, contained in the 1992 Annual Report of Kleinwort Benson
Investment Strategies relating to its Kleinwort Benson International Equity Fund
series, are hereby incorporated by reference.

Goodwin, Procter & Hoar LLP, Exchange Place, Boston, Massachusetts
02109, serves as general counsel to the Funds.

MISCELLANEOUS

The following table indicates each additional person known by the Fund
to own beneficially 5% or more of the Class A Shares as of greater as of
December 12, 1995.

<TABLE>
<CAPTION>
Percent of Total Outstanding
Name and Address Number of Shares Shares of Class
- ---------------- ---------------- ----------------------------
<S> <C> <C>
Blush & Co. 139,154 8%
P. O. Box 976
New York, NY 10268

Fox & Co. 100,851 6%
P. O. Box 976
New York, NY 10268
</TABLE>

FINANCIAL STATEMENTS

The financial statements and related report of Arthur Andersen LLP
contained in the 1995 Annual Report of the Funds are hereby incorporated by
reference and attached hereto.

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<PAGE> 77

APPENDIX
DESCRIPTION OF SECURITIES RATINGS

MOODY'S INVESTORS SERVICE, INC.

AAA: Bonds which are rated Aaa are judged to be the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.

AA: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which made the long-term risks appear somewhat larger than with Aaa securities.

A: Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.

BAA: Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.

Moody's applies numerical modifiers, 1, 2, and 3 in the Aa, A and Baa
categories. The modifier 1 indicates that the security ranks in the higher end
of the applicable category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower end of the category.

Moody's ratings for state and municipal and other short-term
obligations will be designated Moody's Investment Grade ("MIG"). The distinction
is in recognition of the differences between short-term credit risk and
long-term risk. Factors affecting the liquidity of the borrower are uppermost in
importance in short-term borrowing, while various factors of the first
importance in long-term borrowing risk are of lesser importance in the short
run. Symbols used will be as follows:

MIG-1--Notes bearing this designation are of the best quality
enjoying strong protection from established cash flows of funds for
their servicing or from established and broad-based access to the
market for refinancing, or both.

MIG-2--Notes bearing this designation are of favorable
quality, with all security elements accounted for, but lacking the
undeniable strength of the preceding grade. Market access for
refinancing, in particular, is likely to be less well established.

A short-term rating may also be assigned on an issue having a demand
feature. Such ratings will be designated as VMIG to reflect such characteristics
as payment upon periodic demand rather than fixed maturity dates and payment
relying on external liquidity. Additionally, investors should be alert to the
fact that the source of payment may be limited to the external liquidity with no
or limited legal recourse to the

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issuer in the event the demand is not met. VMIG-1, VMIG-2 and VMIG-3 ratings
carry the same definitions as MIG-1, MIG-2 and MIG-3, respectively.

STANDARD & POOR'S CORPORATION

AAA: Debt rated AAA has the highest rating assigned by Standard &
Poor's. This rating indicates an extremely strong capacity to pay interest and
repay principal.

AA: Debt rated AA also has a very strong capacity to pay interest and
repay principal, and in the majority of instances it differs from AAA issues
only in small degree. The ratings in AA may be modified by the addition of a
plus ("+") or minus ("-") sign to show relative standing within the major rating
categories.

A: Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.

BBB: Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.

Municipal notes issued since July 29, 1984 are rated "SP-1," "SP-2,"
and "SP-3." The designation SP-1 indicates a very strong capacity to pay
principal and interest. A plus ("+") sign is added to those issues determined to
possess overwhelming safe characteristics. An SP-2 designation indicates a
satisfactory capacity to pay principal and interest, while an SP-3 designation
indicates speculative capacity to pay principal and interest.

DUFF & PHELPS

AAA: Instruments rated AAA are of the highest credit quality. The risk
factors are negligible, being only slightly more than for risk-free U.S.
Treasury debt.

AA+, AA, AA-: Instruments bearing these designations are of high credit
quality. Protection factors are strong. Risk is modest but may vary slightly
from time to time because of economic conditions.

A+, A, A-: Protection factors for instruments bearing these
designations are average but adequate. However, risk factors are more variable
and greater in period of economic stress.

BBB+, BBB, BBB-: Protection factors for instruments bearing these
designations are below average but still considered sufficient for prudent
investment. There is considerable variability in risk during economic cycles.

Preferred stocks are rated on the same scale as bonds but the preferred
rating gives weight to its more junior position in the capital structure.
Structured Financings are also rated on this scale.

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<PAGE> 79

FITCH INVESTORS SERVICE, INC.

AAA: Bonds rated AAA are considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by reasonably
foreseeable events.

AA: Bonds rated AA are considered to be investment grade and of very
high credit quality. The obligor's ability to pay interest and repay principal
is very strong, although not quite as strong as bonds rated "AAA." Because bonds
rated in the "AAA" and "AA" categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is generally
rated "F-1+."

A: Bonds rated A are considered to be investment grade and of high
credit quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.

BBB: Bonds rated BBB are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and repay
principal is considered to be adequate. Adverse changes in economic conditions
and circumstances, however, are more likely to have adverse impact on these
bonds, and therefor impair timely payment. The likelihood that the ratings of
these bonds will fall below investment grade is higher than for bonds with
higher ratings.

Plus ("+") and minus ("-") signs are used with a rating symbol to
indicate the relative position of a credit within the rating category. Plus and
minus signs, however, are not used within the "AAA" category. Ratings are placed
on FitchAlert to notify investors of an occurrence that is likely to result in a
rating change and the likely direction of such change. These are designated as
"Positive," indicating a potential upgrade, "Negative," for potential downgrade,
or "Evaluating," where ratings may be raised or lowered. FitchAlert is
relatively short-term and should be resolved within 12 months.

IBCA, INC.

AAA: Obligations rated AAA are obligations for which there is the
lowest expectation of investment risk. Capacity for timely repayment of
principal and interest is substantial such that adverse changes in business,
economic, or financial conditions are likely to increase investment risk
significantly.

AA: Obligations rated AA are obligations for which there is a very low
expectation of investment risk. Capacity for timely repayment of principal and
interest is substantial. Adverse changes in business, economic, or financial
conditions may increase investment risk albeit not very significantly.

A: Obligations rated A are obligations for which there is a low
expectation of investment risk. Capacity for timely repayment of principal and
interest is strong, although adverse changes in business, economic, or financial
conditions may lead to increased investment risk.

BBB: Obligations rated BBB are obligations for which there is currently
a low expectation of investment risk. Capacity for timely repayment of principal
and interest is adequate, although adverse changes in business, economic or
financial conditions are more likely to lead to increased investment risk than
for obligations in higher categories.

"+" or "-" may be appended to denote relative status within major
rating categories. Rating Watch highlights an emerging situation which may
materially affect the profile of a rated corporation.

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DESCRIPTION OF COMMERCIAL PAPER RATINGS

MOODY'S INVESTORS SERVICES, INC.

P-1: Issuers have a superior capacity for repayment of short-term
promissory obligations. Prime-1 or P-1 repayment capacity will normally be
evidenced by the following characteristics:

Leading market positions in well established industries.

High rates of return on funds employed.

Conservative capitalization structures with moderate reliance on debt
and ample asset protection.

Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.

Well-established access to a range of financial markets and assured
sources of alternate liquidity.

P-2: Issuers have a strong capacity for repayment of short-term
promissory obligations. This will normally be evidenced by many of the
characteristics cited above but to a lesser degree. Earnings trends and coverage
ratios, while sound, will be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.

P-3: Issuers have an acceptable ability for repayment of senior
short-term obligations. The effect of industry characteristics and market
compositions may be more pronounced. Variability in earnings and profitability
may result in changes in the level of debt protection measurements and may
require relatively high financial leverage. Adequate alternate liquidity is
maintained.

STANDARD & POOR'S CORPORATION

A-1: Standard & Poor's Commercial Paper ratings are current assessments
of the likelihood of timely payment of debts having an original maturity of no
more than 365 days. The A-1 designation indicates the degree of safety regarding
timely payment is very strong. Those issues determined to possess overwhelming
safety characteristics will be denoted with a plus ("+") sign designation.

A-2: Capacity for timely payment on issues with this designation is
strong. However, the relative degree of safety is not as high as for issues
designated "A-1."

DUFF & PHELPS

DUFF 1 plus: These instruments bear the highest certainty of timely
payment. Short-term liquidity including internal operating factors and/or ready
access to alternative sources of funds, is clearly outstanding, and safety is
just below risk-free U.S. Treasury short-term obligations.

DUFF 1: These instruments bear very high certainty of timely payment.
Liquidity factors are excellent and supported by strong fundamental protection
factors. Risk factors are minor.

DUFF 1 MINUS: These instruments bear high certainty of timely payment.
Liquidity factors are strong and supported by good fundamental protection
factors. Risk factors are very small.

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DUFF 2: These instruments bear good certainty of timely payment.
Liquidity factors and company fundamentals are sound. Although ongoing internal
funds needs may enlarge total financing requirements, access to capital markets
is good. Risk factors are small.

DUFF 3: These instruments bear satisfactory liquidity and other
protection factors which qualify an issue as to investment grade. Risk factors
are larger and subject to more variation. Nevertheless, timely payment is
expected.

No ratings are issued for companies whose paper is not deemed to be of
investment grade.

FITCH INVESTORS SERVICE, INC.

F-1+: Exceptionally Strong Credit Quality. Issues assigned this rating
are regarded as having the strongest degree of assurance for timely payment.

F-1: Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
"F-1+."

F-2: Good Credit Quality. Issues assigned this rating have a
satisfactory degree of assurance for timely payment, but the margin of safety is
not as great as for issues assigned "F-1+" and "F-1" ratings.

F-3: Fair Credit Quality. Issues assigned this rating have
characteristics suggesting that the degree of assurance for timely payment is
adequate, however, near-term adverse changes could cause these securities to be
rated below investment grade.

LOC: The symbol LOC indicates that the rating is based on a letter of
credit issued by a commercial bank.

IBCA, INC.

A1+: Obligations supported by the highest capacity for timely
repayment.

A1: Obligations supported by a very strong capacity for timely
repayment.

A2: Obligations supported by a strong capacity for timely repayment,
although such capacity may be susceptible to adverse changes in business,
economic, or financial conditions.

B1: Obligations supported by an adequate capacity for timely repayment.
Such capacity is more susceptible to adverse changes in business, economic, or
financial conditions than for obligations in higher categories.

"+" or "-" may be appended to denote relative status within major
rating categories. Rating Watch highlights an emerging situation which may
materially affect the profile of a rated corporation.

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