<PAGE> 1
LETTER FROM THE FUNDS' MANAGEMENT 1
- --------------------------------------------------------------------------------
Dear Shareholder:
We are pleased to provide you with the Annual Report of the Pilot domestic
equity and fixed income funds for the year ended August 31,1996.
The Funds delivered strong performance relative to their benchmarks, even
as both equity and fixed income markets experienced some turbulence after the
start of 1996. We believe the Funds are well positioned to take advantage of the
continuing growth in the economy, as well as any resulting changes the Federal
Reserve may make to interest rates.
The Pilot Funds are pleased to announce the introduction of two new
portfolios which will be available for investment this October*. The Pilot
Growth Equity Fund is designed to provide investors with long-term capital
growth by investing in companies expected to sustain superior profitability,
strong competitive advantages, and the potential for above-average appreciation
over time. The Pilot Diversified Bond Income Fund will seek to provide investors
with total return, emphasizing current income, and preservation of capital by
investing primarily in debt securities. The Fund's average weighted maturity
will be between five and fifteen years. We believe these two new portfolios will
provide shareholders and new investors with even greater opportunities for
professional management and investment diversification within The Pilot Family
of Funds.
It was announced on August 30, 1996 that Boatmen's Bancshares, Inc., of
which The Pilot Funds' investment advisor, Boatmen's Trust Company is a
subsidiary, will be acquired by Nationsbank Corporation, N.A. of Charlotte, NC.
The combined Nations/Boatmen's organizations will continue to provide the same
superior investment management expertise to The Pilot Funds that shareholders
have come to expect.
Thank you for choosing The Pilot Funds to help meet your investment goals.
Should you have any questions or wish to learn more about any of the Funds,
please call your local Boatmen's representative or The Pilot Funds at
1-800-71-PILOT (717-4568).
Sincerely,
David F. Toth
SENIOR VICE PRESIDENT
Boatmen's Trust Company
- -------------------------------------------------------------------------------
* The Funds are effective and registered with the SEC. They will not be
available for sale, by decision of the Distributor, until October, 1996.
THE FUNDS ARE ADVISED BY BOATMEN'S TRUST COMPANY, A NON-BANK SUBSIDIARY OF
BOATMEN'S BANCSHARES, INC., AND ARE DISTRIBUTED BY PILOT FUNDS DISTRIBUTORS,
INC., WHICH IS NOT AFFILIATED WITH BOATMEN'S TRUST COMPANY. BOATMEN'S TRUST
COMPANY RECEIVES FEES FOR PROVIDING INVESTMENT ADVISORY SERVICES TO THE FUNDS.
This report is not authorized for distribution to prospective investors unless
preceded or accompanied by a current prospectus.
<PAGE> 2
FUND HIGHLIGHTS 2
- -------------------------------------------------------------------------------
Total Returns
as of August 31, 1996
<TABLE>
<CAPTION>
Pilot Shares Class A Shares Class B Shares
NAV NAV POP NAV CDSC
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Pilot Growth & Income Fund
Since Inception 18.59% 17.78% 14.38% 17.08% 15.12%
1 Year 15.79% 15.57% 10.33% 14.75% 10.25%
Inception Date and Maximum Sales Load or CDSC 11/7/94 2/7/95 4.5% 11/11/94 4.5%
Pilot Equity Income Fund
Since Inception 18.41% 18.80% 15.37% 20.32% 18.14%
1 Year 16.49% 16.10% 10.83% 15.31% 10.81%
Inception Date and Maximum Sales Load or CDSC 11/7/94 2/7/95 4.5% 1/12/95 4.5%
Pilot Small Capitalization Equity Fund*
Since Inception 7.37% 6.88% 2.09% 6.65% 2.15%
1 Year N/A N/A N/A N/A N/A
Inception Date and Maximum Sales Load or CDSC 12/12/95 12/12/95 4.5% 12/12/95 4.5%
Pilot U.S. Government Securities Fund
Since Inception 11.63% 8.86% 5.73% 10.12% 8.05%
1 Year 3.46% 3.44% -1.23% 2.43% -1.80%
Inception Date and Maximum Sales Load or CDSC 11/7/94 2/7/95 4.5% 11/10/94 4.5%
Pilot Intermediate U.S. Government Securities Fund
Since Inception 7.53% 7.44% 4.86% N/A N/A
1 Year 3.52% 3.33% -.85% N/A N/A
Inception Date and Maximum Sales Load or CDSC 11/7/94 12/21/94 4.0%
Pilot Municipal Bond Fund
Since Inception 9.59% 7.58% 4.45% 8.31% 6.04%
1 Year 5.44% 5.23% .53% 4.31% -.18%
Inception Date and Maximum Sales Load or CDSC 11/7/94 2/7/95 4.5% 12/27/94 4.5%
- ------------------------------------------------------------------------------------------------------------------
Pilot Intermediate Municipal Bond Fund
Since Inception 6.91% 7.52% 5.10% N/A N/A
1 Year 3.43% 3.45% -.71% N/A N/A
Inception Date and Maximum Sales Load or CDSC 11/7/94 11/18/94 4.0%
- ------------------------------------------------------------------------------------------------------------------
<FN>
*Aggregate Total Returns
</TABLE>
Past performance is not a guarantee of future results. Investment returns and
principal values will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
Note: This table reflects the fact that Class A and Class B Shares are subject
to different fees and expenses. Class A Shares are subject to a front-end sales
load of up to 4.5% of the offering price and a Rule 12b-1 fee of up to .25 of
1%. Class B Shares are subject to Contingent Deferred Sales Charges for
redemptions before the periods outlined in the Funds' prospectuses and a Rule
12b-1 fee of up to 1%. All other Fund expenses related to Class A and B Shares
are the same as for Pilot Shares.
The S&P 500(R) Index is an unmanaged broad-based index of 500 companies listed
on the New York Stock Exchange. The Lehman Brothers Government Bond Index and
the Lehman Brothers Intermediate Government Bond Index are unmanaged and
represent the returns of government bonds with an average maturity of
approximately nine and five years respectively. The Lehman Brothers Municipal
Bond Index and the Lehman Brothers 5-Year Municipal Bond Index are unmanaged and
represent the returns of municipal bonds with an average maturity of
approximately nine and five years, respectively.
These indices do not reflect the deduction of expenses associated with mutual
funds, such as investment management and accounting fees. The Funds' performance
reflects the deduction of fees for these value-added services.
Sources: Standard & Poor's, Lehman Brothers, Inc.
<PAGE> 3
3
- --------------------------------------------------------------------------------
Growth of a $10,000 Investment vs. a Benchmark Since Inception as of August 31,
1996
- --------------------------------------------------------------------------------
Pilot Growth and Income Fund - Pilot Shares
[Graph inserted here]
<TABLE>
<CAPTION>
Nov. 7, 1994 Aug. 31, 1996
<S> <C> <C>
[] S&P 500(R) Index $ 10,000 $ 14,724
[] Pilot Growth & Income Fund 10,000 13,630
</TABLE>
- --------------------------------------------------------------------------------
[Graph inserted here]
<TABLE>
<CAPTION>
Dec. 12, 1995 Aug. 31, 1996
<S> <C> <C>
Pilot Small Capitalization Equity Fund -
Pilot Shares
[] Russell 2000 Index $ 10,000 $ 10,943
[] Pilot Small Capitalization Equity Fund 10,000 10,737
</TABLE>
- --------------------------------------------------------------------------------
[Graph inserted here]
<TABLE>
<CAPTION>
Nov. 7, 1994 Aug. 31, 1996
<S> <C> <C>
Pilot U.S. Government Securities Fund -
Pilot Shares
[] Lehman Brothers Government Bond Index $ 10,000 $ 11,694
[] Pilot U.S. Government Securities Fund 10,000 12,211
</TABLE>
- --------------------------------------------------------------------------------
[Graph inserted here]
<TABLE>
<CAPTION>
Nov. 7, 1994 Aug. 31, 1996
<S> <C> <C>
Pilot Municipal Bond Fund -
Pilot Shares
[] Lehman Brothers Municipal Bond Index $ 10,000 $ 12,056
[] Pilot Municipal Bond Fund 10,000 11,810
</TABLE>
- --------------------------------------------------------------------------------
Pilot Equity Income Fund -
Pilot Shares
[Graph inserted here]
<TABLE>
<CAPTION>
Nov. 7, 1994 Aug. 31, 1996
<S> <C> <C>
[] S&P 500(R) Index $ 10,000 $ 14,724
[] Pilot Equity Income Fund 10,000 13,593
</TABLE>
- --------------------------------------------------------------------------------
[Graph inserted here]
<TABLE>
<CAPTION>
Nov. 7, 1994 Aug. 31, 1996
<S> <C> <C>
Pilot Intermediate U.S. Government
Securities Fund - Pilot Shares
[] Lehman Brothers Intermediate Government Bond Index $ 10,000 $ 11,546
[] Pilot Intermediate U.S. Government Securities Fund 10,000 11,410
</TABLE>
- --------------------------------------------------------------------------------
[Graph inserted here]
<TABLE>
<CAPTION>
Nov. 7, 1994 Aug. 31, 1996
<S> <C> <C>
Pilot Intermediate Municipal
Bond Fund - Pilot Shares
[] Lehman Brothers 5-Year Municipal Bond Index $ 10,000 $ 11,035
[] Pilot Intermediate Municipal Bond Fund 10,000 11,291
</TABLE>
<PAGE> 4
LETTERS FROM THE PORTFOLIO MANAGERS 4
- -------------------------------------------------------------------------------
Pilot Growth and Income Fund
Dear Shareholder:
The Fund produced a strong return of 15.79% (Pilot Shares) for the year ending
August 31, 1996. Since the Fund's inception on November 7, 1994, Pilot Shares of
the Fund, which are available to Trust customers, returned 18.59%.
Investment Philosophy
Our investment discipline is geared toward removing the emotion from investment
decisions. We invest in mid to large-sized "good businesses" on the basis of
their long-term relative value, not their current popularity. An emphasis on
"good businesses" first, and on valuations second, is central to our approach.
Many factors determine whether a business is good: a competitive strategy, a
sustainable product or service mix, and a management team that can adapt to its
environment. Our research analysts focus on assessing these and other
characteristics to identify competitive advantages.
- -------------------------------------------------------------------------------
Portfolio and S&P 500(R) Index
Composition by Sector*
as of 8/31/96
<TABLE>
<CAPTION>
Pilot Growth S&P 500
and Income Fund Index**
- ---------------------------------------------------------
<S> <C> <C>
Finance 14.2% 13.7%
- ---------------------------------------------------------
Materials & Processing 8.2 6.9
- ---------------------------------------------------------
Industrial Goods & Services 10.2 9.9
- ---------------------------------------------------------
Retailing 7.6 6.7
- ---------------------------------------------------------
Consumer Staples 12.7 13.1
- ---------------------------------------------------------
Consumer Cyclicals 7.5 7.7
- ---------------------------------------------------------
Health Care 9.5 10.6
- ---------------------------------------------------------
Energy 10.0 9.7
- ---------------------------------------------------------
Technology 8.0 11.2
- ---------------------------------------------------------
Utilities 12.1 10.5
- ---------------------------------------------------------
<FN>
* Portfolio holdings are subject to change.
** The Standard & Poor's 500 Stock Index (S&P 500) is an unmanaged index
typically used as a standard for common stock performance.
</TABLE>
<PAGE> 5
5
- --------------------------------------------------------------------------------
Investment Environment
The fourth quarter of 1995 was marked by strong performance despite a growing
number of weaker-than-expected earnings forecasts. The beginning of 1996 saw a
bottoming out of interest rates in the expectation that the economy was headed
for continued gradual growth. By late spring, however, strong job growth coupled
with higher retail sales and lower inventory levels indicated a heating up of
economic growth. Continued stronger-than-expected economic data has made many
market watchers believe the Federal Reserve may be pushed to raise interest
rates. Given the remarkable strength of the market over the last year, some
degree of profit-taking is possible in the near term; however, such periods are
likely to be mild and short-lived.
- -------------------------------------------------------------------------------
Top Ten Holdings*
as of 8/31/96
<TABLE>
<CAPTION>
Company % of Portfolio
- ------------------------------------------------
<S> <C>
Royal Dutch Petroleum Co. 3.9%
- ------------------------------------------------
Dayton Hudson Co. 3.3
- ------------------------------------------------
Kimberly Clark Co. 3.4
- ------------------------------------------------
SmithKline Beecham 3.4
- ------------------------------------------------
AT&T Co. 3.3
- ------------------------------------------------
Automatic Data Processing Inc. 3.2
- ------------------------------------------------
Atlantic Ritchfield Co. 3.1
- ------------------------------------------------
General Reinsurance Co. 3.0
- ------------------------------------------------
Ford Motor Co. 3.0
- ------------------------------------------------
Raytheon Co. 3.0
- ------------------------------------------------
* Portfolio holdings are subject to change.
</TABLE>
Portfolio Positioning
The Pilot Growth and Income Fund benefited during this period from an
overweighted position in the finance sector. The Fund reduced this position by
taking profits throughout the year, though it still remains overweighted. The
Fund underweighted its technology holdings, and therefore, underperformed
relative to the S&P(R) 500 Index. Our fundamental analysis continues to view
particular "stand-out" technology stocks as overvalued, and therefore, they have
not been considered for purchase. As long-term investors, we continue to
emphasize our time-proven formula: purchasing stock in good businesses with
attractive valuations.
Sincerely,
Randall L. Yoakum, CFA
Senior Vice President
Managing Director
Portfolio Management
Boatmen's Trust Company
<PAGE> 6
LETTER FROM THE PORTFOLIO MANAGERS 6
- --------------------------------------------------------------------------------
Pilot Equity Income Fund
Dear Shareholder:
For the year ending August 31, 1996, the Pilot Equity Income Fund had a total
return of 16.5% (Pilot Shares) which compared to 16.2% for the Lipper Equity
Income Fund(R) Average (a composite of the top 30 largest equity income funds)
and to the total return of 18.7% for the S&P 500(R) Index.
Investment Philosophy
We follow a disciplined valuation approach to identify companies that represent
superior long-term investment values. We generally invest in larger, established
companies, selecting those which offer what we believe are the best relative
values. We also emphasize companies which offer high current dividend yields.
This approach seeks to provide competitive long-term results with controlled
risk exposure.
- -------------------------------------------------------------------------------
Average Portfolio Composition*
9/1/95 - 8/31/96
Convertible Bonds &
Preferred Stock 14%
Cash 2%
Equity Securities 84%
- -------------------------------------------------------------------------------
Portfolio and S&P 500(R) Index
Composition by Sector*
as of 8/31/96
<TABLE>
<CAPTION>
Pilot Equity S&P 500
Income Fund Index**
- ---------------------------------------------------
<S> <C> <C>
Finance 12.9% 13.7%
- ---------------------------------------------------
Materials & Processing 9.4 6.9
- ---------------------------------------------------
Industrial Goods & Services 5.5 9.9
- ---------------------------------------------------
Retailing 2.8 6.7
- ---------------------------------------------------
Consumer Staples 15.9 13.1
- ---------------------------------------------------
Consumer Cyclicals 6.0 7.7
- ---------------------------------------------------
Health Care 9.9 10.6
- ---------------------------------------------------
Energy 14.3 9.7
- ---------------------------------------------------
Technology 0.8 11.2
- ---------------------------------------------------
Utilities 22.5 10.5
- ---------------------------------------------------
<FN>
* Portfolio holdings are subject to change.
** The Standard & Poor's 500 Stock Index (S&P 500(R)) is an unmanaged index
typically used as a standard for common stock performance.
</TABLE>
<PAGE> 7
7
- --------------------------------------------------------------------------------
Top Ten Holdings*
as of 8/31/96
<TABLE>
<CAPTION>
Company % of Portfolio
- ---------------------------------------------------
<S> <C>
Oklahoma Gas & Electric Company 3.35%
- ---------------------------------------------------
Philip Morris 3.33
- ---------------------------------------------------
Cooper Industries Inc. (CSD) 3.17
- ---------------------------------------------------
American Home Products 3.13
- ---------------------------------------------------
ConAgra Inc. 3.13
- ---------------------------------------------------
Kimberly Clark Corporation 2.95
- ---------------------------------------------------
Nicor Inc. 2.92
- ---------------------------------------------------
Ford Motor Company 2.90
- ---------------------------------------------------
Banc One Corporation 2.88
- ---------------------------------------------------
Dow Chemical Company 2.88
- ---------------------------------------------------
<FN>
* Portfolio holdings are subject to change.
</TABLE>
General Discussion
During the last six months the direction of the market has been flat to slightly
higher, with fluctuations linked to moves in interest rates and reaction to
economic data and Fed policy.
The portfolio remains diversified, with some exposure to most industry
sectors. We continue to be overweighted in three sectors: consumer staples,
energy and, most notably, utilities. During the last six months we increased
our exposure to health care and consumer cyclicals, and initiated a position in
technology with a purchase of the convertible preferred stock of a company in
the electronic measurement industry. As always, we remain positioned in what we
believe to be the higher yielding securities and sectors of the market.
Sincerely,
David W. Papendick, CFA
Senior Vice President
Senior Portfolio Manager
Boatmen's Trust Company
<PAGE> 8
LETTERS FROM THE PORTFOLIOS MANAGERS 8
- --------------------------------------------------------------------------------
Small Capitalization Equity Fund
Dear Shareholder:
Since its inception on December 22, 1995, the Fund has returned 7.37% (Pilot
Shares) for the year ending August 31, 1996.
Investment Objective
The objective of this Fund is to provide shareholders with long-term capital
growth by investing primarily in equity securities of smaller domestic
companies. The Fund invests a minimum of 65% of its total assets in equity
securities of companies with a market capitalization of $1 billion or less.
Investment Environment
During the period since the Fund's inception, the market for small company
stocks has cooled from its torrid pace of 1995. The beginning of 1996 saw a
bottoming out of interest rates in the expectation that the economy was headed
for continued gradual growth. Earnings expectations peaked in 1995, with some
profit taking occurring at year end. Prospects for 1996 have been favorable for
the small company market, with continued growth in the economy and many sectors
performing beyond expectations.
- -------------------------------------------------------------------------------
Portfolio and Russell 2000(R) Index
Composition by Sector*
as of 8/31/96
<TABLE>
<CAPTION>
Pilot Small Russell
Capitalization 2000(R)
Equity Fund Index**
- -------------------------------------------
<S> <C> <C>
Finance 17.9% 24.0%
- -------------------------------------------
Materials & Processing 13.7 10.5
- -------------------------------------------
Producer Durables 10.2 7.6
- -------------------------------------------
Consumer Discretionary 21.4 16.4
- -------------------------------------------
Consumer Staples 3.8 3.3
- -------------------------------------------
Health Care 5.8 10.7
- -------------------------------------------
Energy 9.3 4.0
- -------------------------------------------
Technology 6.7 11.1
- -------------------------------------------
Utilities 8.4 6.8
- -------------------------------------------
Transportation 2.2 3.8
- -------------------------------------------
Other 0.6 1.8
- -------------------------------------------
<FN>
* Portfolio holdings are subject to change.
** The Russell 2000(R) Index is an unmanaged index representing 2000 small
companies and is typically used as a measure of small cap stocks.
</TABLE>
<PAGE> 9
9
- -------------------------------------------------------------------------------
Top Ten Holdings*
as of 8/31/96
<TABLE>
<CAPTION>
Company % of Portfolio
- --------------------------------------------------
<S> <C>
Sodak Gaming Inc. 1.8%
- --------------------------------------------------
Olympic Steel Inc. 1.4
- --------------------------------------------------
Eagle Hardware & Garden Inc. 1.3
- --------------------------------------------------
City National Corp. 1.3
- --------------------------------------------------
Bayview Capital Corp. 1.3
- --------------------------------------------------
Reading & Bates Corp. 1.2
- --------------------------------------------------
Texas Meridian Resources Corp. 1.2
- --------------------------------------------------
Logicon Inc. 1.2
- --------------------------------------------------
First American Financial Corp. 1.2
- --------------------------------------------------
Kaydon Corp. 1.2
- --------------------------------------------------
<FN>
* Portfolio holdings are subject to change.
</TABLE>
The recent market volatility has had little impact on the stability of the
Fund. The underlying fundamentals for the stock market remain favorable and
stocks should continue to follow earnings growth as long as inflation remains in
check and interest rates remain relatively stable. Shareholders should remember,
however, that small capital funds typically carry additional risk since smaller
companies generally have a higher risk of failure and, historically, their
stocks have experienced a greater degree of market volatility than stocks on
average.
Portfolio Positioning
The Fund's overweighting in the retail sector has helped performance as
prospects for smaller retail companies continue to improve, fueled by the
children of baby boomers spending money on consumer goods. The Fund's
overweighting in the energy sector also remains a strength as energy companies
enjoy the results of higher oil prices due to strong global demand. Technology
holdings continue to be underweighted as our fundamental analysis continues to
view particular "stand-out" technology stocks as overvalued. However, we plan to
watch this sector closely to identify any buy opportunities.
Sincerely,
Daniel Ginsparg
Senior Portfolio Manager
Boatmen's Trust Company
Michael E. Kenneally
Senior Vice President
Boatmen's Trust Company
<PAGE> 10
LETTERS FROM THE PORTFOLIO MANAGERS 10
- -------------------------------------------------------------------------------
Pilot U.S. Government Securities Fund
Pilot Intermediate U.S. Government Securities Fund
Dear Shareholder:
Positive inflation news, fears of recession and a more accommodative Federal
Reserve led to dramatically lower interest rates in 1995, and the bond market
posted its best single year since 1985.
Two significant events in the first quarter of 1996, however, changed the
tone of the entire fixed income market. The first was Federal Reserve Chairman
Alan Greenspan's Humphry Hawkins testimony in late February. Greenspan stated
that any current economic weakness was only "transitory," and he believed that
the economy was "basically on track for sustained growth." His comments sent
bond prices lower as investors anticipated stronger growth and an end to
additional Fed easing.
A few weeks later, the February employment report showed that the economy
had created an astounding 705,000 jobs that month. This report was the first in
a series of stronger-than-expected releases indicating that the economy was
creating jobs at a torrid pace. Through August, monthly job growth has averaged
237,000, and the unemployment rate now stands at a seven year low of 5.1%. Fears
of rising wage pressures, higher inflation and tighter Fed monetary policy are
now on the minds of fixed income investors.
- --------------------------------------------------------------------------------
Pilot U.S. Government Securities Fund Maturity Distribution of Securities* as of
8/31/96
[GRAPH] 0-5 yrs. - 51.0% 5-10 yrs. - 23.1% 10-20 yrs. - 25.9%
- --------------------------------------------------------------------------------
Pilot U.S. Government Securities Fund Security Holdings* as of
8/31/96
[GRAPH]
U.S. Treasury Bonds 26.0%
Repurchase Agreements
and Other 6.1%
U.S Treasury Notes 67.9%
* Portfolio holdings are subject to change.
<PAGE> 11
In a difficult market such as this, Pilot shareholders can take comfort in
the benefits of professional fixed income management.
Pilot U.S. Government Securities Fund
At the beginning of 1995, the Pilot U.S. Government Securities Fund was
aggressively positioned to benefit from declining interest rates. When market
yields declined, as we anticipated, the Fund gradually adopted a much more
neutral structure. Our strategy of actively managing the maturity structure of
the Fund based on the level of "real" inflation-adjusted yields is the key to
our efforts to provide shareholders with favorable long-term results. The
aggressive posture of the Fund during 1995 resulted in strong gains from income
and price appreciation. The more conservative structure currently in place has
helped preserve those gains as interest rates moved significantly higher in the
first eight months of 1996.
Pilot Intermediate U.S. Government
Securities Fund
Consistent with its objectives, the Pilot Intermediate U.S. Government
Securities Fund maintains a conservative stance with regard to its average
maturity and portfolio structure. To help provide stability of principal and to
help limit potential volatility in performance, the
- -------------------------------------------------------------------------------
Pilot Intermediate U.S. Government
Securities Fund
Maturity Distribution of Securities*
as of 8/31/96
[GRAPH] 0-3 Yrs. - 39.3% 3-5 Yrs. - 36.8% 5-10 Yrs. - 23.9%
- -------------------------------------------------------------------------------
Pilot Intermediate U.S. Government
Securities Fund
Security Holdings*
as of 8/31/96
[GRAPH]
U.S. Treasury Notes 98.7%
Repurchase Agreements 1.3%
* Portfolio holdings are subject to change.
<PAGE> 12
LETTERS FROM THE PORTFOLIO MANAGERS 12
- -----------------------------------------------------------------------------
Fund targets investments solely in fixed income securities maturing in 10 years
or less. Despite this conservative stance, the Fund generated solid double-digit
returns from income and market appreciation during 1995. Perhaps more
importantly, the conservative structure of the Fund has helped safeguard those
results as market rates have risen significantly in 1996. The Fund remains well
suited to clients seeking a competitive level of income with relative stability
in the value of invested principal.
Looking Ahead
We continue to expect above-trend economic growth, as well as additional strain
on the economy's resources. Strong consumer confidence, good income growth, and
robust employment indicate that consumer demand is unlikely to wane. These
factors, combined with tight labor markets, high capacity utilization rates, and
low inventory levels point to higher wages and production bottlenecks. If left
unchecked, inflationary pressures will continue to build and higher interest
rates may result. In our view, the Federal Reserve will need to move relatively
soon to tighten monetary policy and slow the economy's momentum.
We have recently raised our forward-looking forecast of inflation. While
somewhat defensive over the near term, we continue to believe that the Federal
Reserve will remain diligent in its pursuit of price stability, driving
inflation lower. This will set the stage for lower interest rates over the long
term, and good performance for bond investors.
Sincerely,
Frank J. Aten, CFA
Senior Vice President
Director Of Taxable Fixed Income
Boatmen's Trust Company
Scott P. Leiberton, CFA
Portfolio Manager
Taxable Fixed Income
Boatmen's Trust Company
<PAGE> 13
13
- --------------------------------------------------------------------------------
Pilot Municipal Bond Fund
Pilot Intermediate Municipal Bond Fund
Dear Shareholder:
Over the last twelve months, the fixed income markets have reversed course
regarding their expectations for future economic growth. The prevalent theme
during the first four months of this period was characterized by slower economic
growth and lower interest rates. By February, however, continued economic
strength was evident and the markets began the decline which continued
throughout the summer months. During the period from February 1 through August
31, 30-year Treasury bond yields increased 103 basis points while 30-year Aaa
municipal yields increased just 49 basis points. The relative outperformance was
even more apparent for bonds that mature in 10 years where treasury bonds
increased 134 basis points versus 49 basis points for municipal bonds. There
were several reasons why municipal bonds held their value more than Treasury
bonds. First, the supply of new tax-exempt bonds has continued to be light.
Second, the last large wave of bond calls occurred during this period, which
reduced the amount of outstanding municipals and gave investors more cash to
reinvest. Finally, the municipal market continues to be one driven by
individuals focused on income. For this reason, higher yields tend to increase
demand. Over the last year, the Pilot Municipal Bond Fund and the Pilot
Intermediate Municipal Bond Fund turned in competitive performances of 5.44% and
3.43%, respectively, for the Pilot shares.
Pilot Municipal Bond Fund
The Pilot Municipal Bond Fund maintained a duration modestly longer than the
Lehman Brothers Municipal Bond Index but equal to that of the Lipper General
Municipal Bond Fund Composite. This reflects our continued focus on providing
competitive tax-free income to our shareholders. In addition, we remain positive
on the outlook for inflation on a longer-term basis despite our caution on the
short-term direction of interest rates. During the last year, the Fund focused
on purchases that reduced our volatility to interest rate changes. We continued
to take advantage of opportunities to increase the tax-free income to our
shareholders by
- -------------------------------------------------------------------------------
Pilot Municipal Bond Fund
Maturity Distribution of Securities*
as of 8/31/96
[GRAPH]
* Portfolio holdings are subject to change.
0-10 Yrs. - 29.2% 10-20 Yrs. - 55.9% 20-30 Yrs. - 14.9%
<PAGE> 14
LETTERS FROM THE PORTFOLIO MANAGERS 14
- -------------------------------------------------------------------------------
Pilot Municipal Bond Fund
Portfolio Sector Allocation*
as of 8/31/96
[GRAPH]
Insured 39.4%
Government-Backed 7.9%
Electric Utility 8.2%
Water/Sewer 7.1%
Transportation 1.6%
Hospital 0.3%
IDR 1.3%
Miscellaneous 6.0%
General Obligation 28.2%
- -------------------------------------------------------------------------------
Pilot Municipal Bond Fund
Portfolio Allocation by State*
as of 8/31/96
[GRAPH]
Missouri 14.5%
Washington 12.4%
Texas 10.0%
California 7.9%
Illinois 6.4%
Florida 6.4%
Michigan 5.5%
Massachusetts 4.5%
New York 3.7%
Other 28.7%
- -------------------------------------------------------------------------------
Pilot Municipal Bond Fund
Investment Ratings of Securities*
as of 8/31/96
[GRAPH]
Other 0.1%
A 18.0%
AA 28.7%
AAA 53.2%
*Portfolio holdings are subject to change.
purchasing high quality revenue bonds and improving call protection. As always,
limiting capital gains is a prime consideration.
Pilot Intermediate Municipal Bond Fund
During the last twelve months, the Pilot Intermediate Municipal Bond Fund
maintained a duration consistent with the Lehman Brothers 5-Year Municipal Bond
Index. This conservative stance reflects our caution on the outlook for
short-term interest rates and our desire to limit the potential volatility of
the Fund. We continued to consolidate smaller holdings by selectively selling
low coupon bonds and by purchasing higher coupon bonds that were more insulated
from a rise in short-term rates. In addition, we continue to look for
opportunities to increase income through the purchase of high-quality revenue
bonds that offer more yield to our shareholders.
Looking Ahead
We believe the economy will continue to grow above its non-inflationary
potential, causing further tightness in the labor markets and future
inflationary pressures. We expect the Federal Reserve Bank to raise short-term
interest rates in response to these pressures.
Therefore, our short-term outlook remains cautious while our confidence in
the Federal
<PAGE> 15
15
- --------------------------------------------------------------------------------
Pilot Intermediate Municipal Bond Fund Maturity Distribution of Securities*
as of 8/31/96
[GRAPH] 0-3 Yrs. - 17.7% 3-5 Yrs. - 38.1% 5-10 Yrs. - 42.8% 10-20 Yrs. - 1.4%
Reserve Bank supports our positive longer-term outlook for the bond market. The
outperformance of municipal bonds over Treasury bonds should come to an end now
that municipals are trading in an expensive range relative to Treasury bonds. In
addition, the presidential election should add further volatility to the
municipal market due to uncertainty over the potential changes in the tax code.
Sincerely,
Jennifer R. Wacker, CFA
Vice President
Director Of Tax-Exempt Fixed Income
Boatmen's Trust Company
Pilot Intermediate Municipal Bond Fund Portfolio Sector Allocation*
as of 8/31/96
[GRAPH]
Insured 32.1%
Government-Backed 6.0%
Electric Utility 5.6%
Water/Sewer 5.4%
Transportation 1.0%
Hospital 1.4%
Miscellaneous 8.7%
General Obligation 39.8%
- -------------------------------------------------------------------------------
Pilot Intermediate Municipal Bond Fund Portfolio Allocation by State*
as of 8/31/96
[GRAPH]
Missouri 13.3%
Texas 12.7%
Washington 9.2%
Illinois 6.1%
Arizona 5.6%
Hawaii 4.9%
California 4.5%
Wisconsin 3.8%
New Jersey 3.3%
Other 36.6%
- ------------------------------------------------------------------------------
Pilot Intermediate Municipal Bond Fund Investment Ratings of Securities*
as of 8/31/96
[GRAPH]
Other 0.1%
A 11.7%
AA 43.9%
AAA 44.3%
* Portfolio holdings are subject to change.
<PAGE> 16
PILOT GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
Portfolio of Investments
August 31, 1996
- ----------------------------------------------------------
- ----------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares (Note 2)
<S> <C> <C>
- -------------------------------------------------------------
COMMON STOCKS--97.2%
CONSUMER CYCLICAL--6.3%
AUTOMOTIVE--3.0%
170,000 Ford Motor Co. $ 5,695,000
------------
HOUSING & FURNISHING--1.7%
90,000 Owens Corning Fiberglass Corp. 3,273,750
------------
MEDIA--1.6%
200,000 Tele-Communications, Inc., Class A* 2,975,000
------------
CONSUMER STAPLES--7.1%
BEVERAGE & TOBACCO--4.2%
55,000 Anheuser-Busch Cos., Inc. 4,166,250
43,000 Philip Morris Cos., Inc. 3,859,250
------------
8,025,500
------------
FOOD PROCESSING--2.9%
315,000 Archer-Daniels-Midland Co. 5,591,250
------------
ENERGY--9.7%
INTEGRATED OIL--9.7%
50,000 Atlantic Richfield Co. 5,837,500
90,400 Chevron Corp. 5,322,300
49,110 Royal Dutch Petroleum Co. (ADR) 7,335,806
------------
18,495,606
------------
FINANCE--17.7%
BANKING--2.9%
71,330 BankAmerica Corp. 5,528,075
------------
HOLDING COMPANIES--2.9%
110,000 Temple-Inland, Inc. 5,431,250
------------
FINANCIAL SERVICES--5.0%
75,305 Chase Manhattan Corp. 5,600,809
45,000 Federal Home Loan Mortgage Corp. 3,976,875
------------
9,577,684
------------
Value
Shares (Note 2)
- -------------------------------------------------------------
INSURANCE--6.9%
30,000 AETNA Life and Casualty Co. $ 1,983,750
40,000 General Re Corp. 5,795,000
58,190 Marsh & McClennan Cos., Inc. 5,411,670
------------
13,190,420
------------
HEALTHCARE--8.2%
MEDICAL SUPPLIES & SERVICES--2.1%
70,000 Columbia/HCA Healthcare Corp. 3,946,250
------------
PHARMACEUTICALS--6.1%
80,490 Merck & Co., Inc. 5,282,156
110,000 SmithKline Beecham 6,407,500
------------
11,689,656
------------
INDUSTRIAL GOODS & SERVICES--12.8%
AEROSPACE--5.0%
45,265 Lockheed Martin Corp. 3,807,918
110,000 Raytheon Co. 5,665,000
------------
9,472,918
------------
COMMERCIAL SERVICES--2.9%
175,000 WMX Technologies, Inc. 5,534,375
------------
METAL & PLASTIC--4.9%
95,000 Cooper Industries, Inc. 3,847,500
117,450 Crown Cork & Seal, Inc. 5,490,788
------------
9,338,288
------------
MANUFACTURING--5.3%
CONSUMER PRODUCTS--5.3%
82,290 Kimberly-Clark Corp. 6,449,479
140,000 Rubbermaid, Inc. 3,710,000
------------
10,159,479
------------
MATERIALS & PROCESSING--2.2%
PAPER & FOREST PRODUCTS--2.2%
105,000 International Paper Co. 4,200,000
------------
</TABLE>
- ----------------------------------------------------------
- ----------------------------------------------------------
See Notes to Financial Statements.
16
<PAGE> 17
PILOT GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
Portfolio of Investments (continued)
August 31, 1996
- ----------------------------------------------------------
- ----------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares (Note 2)
<S> <C> <C>
- -------------------------------------------------------------
RETAILING--7.4%
DEPARTMENT STORES--5.2%
186,690 Dayton Hudson Corp. $ 6,440,805
75,340 May Department Stores Co. 3,427,970
------------
9,868,775
------------
SPECIALTY STORES--2.2%
145,670 Toys R Us* 4,297,265
------------
TECHNOLOGY--6.1%
COMPUTERS & OFFICE EQUIPMENT--1.9%
145,430 Apple Computer 3,526,678
------------
SOFTWARE & SERVICES--4.2%
145,000 Automatic Data Processing, Inc. 6,035,625
65,000 Electronic Arts* 2,006,875
------------
8,042,500
------------
UTILITIES--14.5%
COMMUNICATION--9.0%
120,000 AT&T Corp. 6,300,000
220,000 MCI Communications Corp. 5,527,500
100,000 Motorola, Inc. 5,337,500
------------
17,165,000
------------
ELECTRIC POWER--5.5%
266,110 PacifiCorp 5,355,464
220,960 Unicom Corp. 5,082,080
------------
10,437,544
- -------------------------------------------------------------
TOTAL COMMON STOCKS (cost $164,557,838) 185,462,263
- -------------------------------------------------------------
Value
Shares (Note 2)
- -------------------------------------------------------------
CONVERTIBLE PREFERRED STOCK--0.3%
7,892 AETNA Services, Inc. $ 548,494
- -------------------------------------------------------------
TOTAL CONVERTIBLE PREFERRED STOCK (cost $279,785) 548,494
- -------------------------------------------------------------
Principal
Amount
(000)
- ----------------------------------------------------------
REPURCHASE AGREEMENT--2.4%
$ 4,525 Repurchase agreement with Lehman
Brothers, Inc., dated 8/30/96,
5.24% due 9/3/96, (cost
$4,525,004) (see Footnote A) 4,525,004
- -------------------------------------------------------------
TOTAL INVESTMENTS--99.8% (cost $169,362,628) 190,535,761
- -------------------------------------------------------------
OTHER ASSETS IN EXCESS OF LIABILITIES--0.2% 328,815
- -------------------------------------------------------------
NET ASSETS--100.0% $190,864,576
- -------------------------------------------------------------
ADR--American Depository Receipt.
* Non-income producing security.
Footnote A
Collateralized by $5,320,000 U.S. Treasury Bond, 6.00%, due 2/15/26 with a
value of $4,619,812.
</TABLE>
- ----------------------------------------------------------
- ----------------------------------------------------------
See Notes to Financial Statements.
17
<PAGE> 18
PILOT EQUITY INCOME FUND
- --------------------------------------------------------------------------------
Portfolio of Investments
August 31, 1996
- ----------------------------------------------------------
- ----------------------------------------------------------
<TABLE>
<CAPTION>
Market
Value
Shares (Note 2)
<S> <C> <C>
- --------------------------------------------------------------
COMMON STOCKS--84.4%
CONSUMER CYCLICAL--5.3%
AUTOMOTIVE--2.9%
115,271 Ford Motor Co. $ 3,861,579
-------------
MEDIA--2.4%
80,000 Readers Digest Assoc., Inc. Class A 3,230,000
-------------
7,091,579
-------------
CONSUMER STAPLES--10.8%
BEVERAGES AND TOBACCO--5.3%
49,404 Philip Morris Cos., Inc. 4,434,009
90,000 UST, Inc. 2,700,000
-------------
7,134,009
-------------
FOOD PROCESSING--5.5%
98,763 Conagra, Inc. 4,160,391
60,000 General Mills, Inc. 3,300,000
-------------
7,460,391
-------------
ENERGY--9.7%
INTEGRATED OIL--9.7%
33,524 AMOCO Corp. 2,313,156
19,409 Atlantic Richfield Co. 2,266,001
27,645 Exxon Corp. 2,249,612
20,000 Royal Dutch Petroleum Co. (ADR) 2,987,500
37,645 Texaco, Inc. 3,340,993
-------------
13,157,262
-------------
FINANCE--14.9%
BANKING--8.0%
100,000 Banc One Corp. 3,837,500
46,000 BankAmerica Corp. 3,565,000
43,288 Bankers Trust New York Corp. 3,365,642
-------------
10,768,142
-------------
INSURANCE--2.1%
30,000 Marsh & McLennan Co., Inc. 2,790,000
-------------
MISCELLANEOUS FINANCE--4.8%
41,000 J.P. Morgan & Co. 3,592,625
60,000 Temple-Inland, Inc. 2,962,500
-------------
6,555,125
-------------
Market
Value
Shares (Note 2)
- --------------------------------------------------------------
HEALTHCARE--7.1%
PHARMACEUTICALS--7.1%
70,294 American Home Products Corp. $ 4,164,920
35,359 Bristol-Myers Squibb Co. 3,102,752
35,288 Merck & Co., Inc. 2,315,775
-------------
9,583,447
-------------
MANUFACTURING--4.2%
AUTO PARTS--2.2%
55,000 Eaton Corp. 3,045,625
-------------
HOUSEHOLD PRODUCTS--2.0%
100,000 Rubbermaid, Inc. 2,650,000
-------------
MATERIALS AND PROCESSING--7.5%
CHEMICALS (BASIC)--2.8%
48,000 Dow Chemical Co. 3,828,000
-------------
PAPER AND FOREST PRODUCTS--4.7%
50,000 Kimberly Clark Corp. 3,918,750
50,000 Union Camp Corp. 2,425,000
-------------
6,343,750
-------------
RETAILING--2.7%
DEPARTMENT AND DISCOUNT STORES--2.7%
70,000 J. C. Penney Co., Inc. 3,701,250
-------------
UTILITIES--22.2%
COMMUNICATIONS--4.3%
73,519 GTE Corp. 2,894,810
24,702 NYNEX Corp. 1,065,274
63,000 U. S. West, Inc. 1,858,500
-------------
5,818,584
-------------
ELECTRIC POWER--15.0%
115,000 Consolidated Edison Company New
York, Inc. 3,004,375
100,000 Frontier Corp. 2,950,000
110,000 Oklahoma Gas & Electric Co. 4,455,000
179,660 PacifiCorp 3,615,658
141,154 UNICOM Corp. 3,246,542
100,000 Western Resources, Inc. 2,937,500
-------------
20,209,075
-------------
</TABLE>
- ----------------------------------------------------------
- ----------------------------------------------------------
See Notes to Financial Statements.
18
<PAGE> 19
PILOT EQUITY INCOME FUND
- --------------------------------------------------------------------------------
Portfolio of Investments (continued)
August 31, 1996
- ----------------------------------------------------------
- ----------------------------------------------------------
<TABLE>
<CAPTION>
Market
Value
Shares (Note 2)
<S> <C> <C>
- --------------------------------------------------------------
NATURAL GAS AND WATER--2.9%
123,800 NICOR, Inc. $ 3,884,225
- --------------------------------------------------------------
TOTAL COMMON STOCKS (cost $96,748,570) 114,020,464
- --------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS--8.6%
ENERGY--2.8%
INTEGRATED OIL--2.8%
61,288 Ashland Inc., $3.125, 12/31/49 3,715,585
-------------
HEALTHCARE--2.6
MEDICAL SERVICES--2.6%
50,590 AETNA Services, Inc. 3,516,005
-------------
MATERIAL & PROCESSING--2.4%
PAPER & FOREST PRODUCTS--2.4%
70,000 International Paper Co., 5.25%,
7/20/25, 144A 3,272,500
-------------
TECHNOLOGY--0.8%
INSTRUMENTS & COMPONENTS--0.8%
1,000,000 Analog Devices, 3.50%, 12/1/00 1,107,500
- --------------------------------------------------------------
TOTAL CONVERTIBLE PREFERRED STOCKS
($11,334,068) 11,611,590
- --------------------------------------------------------------
Principal Market
Amount Value
(000) (Note 2)
- --------------------------------------------------------------
CONVERTIBLE BONDS--5.4%
CONSUMER CYCLICAL--0.7%
HOUSING & FURNISHINGS--0.7%
$1,000 Masco Corp., 5.25%, 2/15/12 $ 917,500
-------------
ENERGY--1.6%
INTEGRATED OIL--1.6%
2,000 Pennzoil Oil Co., 4.75%, 10/01/03 2,130,000
-------------
INDUSTRIAL GOODS & SERVICES--3.1%
MANUFACTURING--3.1%
3,922 Cooper Industries, Inc., 7.05%,
1/1/15 4,216,150
- --------------------------------------------------------------
TOTAL CONVERTIBLE BONDS (cost $6,953,962) 7,263,650
- --------------------------------------------------------------
REPURCHASE AGREEMENT--4.3%
5,900 Repurchase agreement with Lehman
dated 8/30/96, 5.24%, due 9/3/96
(Cost 5,899,701)
(See Footnote A) 5,899,701
- --------------------------------------------------------------
TOTAL INVESTMENTS--102.7% (cost $120,936,301) 138,795,405
LIABILITIES IN EXCESS OF OTHER ASSETS--(2.7%) (3,677,533)
- --------------------------------------------------------------
NET ASSETS--100.0% $ 135,117,872
- --------------------------------------------------------------
ADR--American Depository Receipt.
Footnote A
Collateralized by $6,782,000 U.S. Treasury Bonds, with various coupon rates
and maturity dates ranging from 6.00% to 6.75% and 2/15/26 through 8/15/26
with a market value of $6,019,548.
</TABLE>
- ----------------------------------------------------------
- ----------------------------------------------------------
See Notes to Financial Statements.
19
<PAGE> 20
PILOT SMALL CAPITALIZATION EQUITY FUND
- --------------------------------------------------------------------------------
Portfolio of Investments
August 31, 1996
- ----------------------------------------------------------
- ----------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares (Note 2)
<S> <C> <C>
- -------------------------------------------------------------
COMMON STOCKS--84.2%
CONSUMER CYCLICAL--8.3%
AUTOMOTIVE--1.8%
24,400 Champion Enterprises, Inc.* $ 463,600
19,300 Kaydon Corp. 866,088
-----------
1,329,688
-----------
HOUSING & FURNISHING--3.8%
29,300 Bush Industries, Inc. 538,388
49,800 Kaufman & Broad Home Corp. 610,050
21,400 NCI Building Systems, Inc.* 596,525
28,400 Oakwood Homes Corp. 667,400
17,700 Pulte Corp. 440,288
-----------
2,852,651
-----------
MEDIA--2.7%
23,400 Ha-Lo Industries, Inc.* 585,000
36,025 International Family
Entertainment-- Class B* 648,450
14,300 Pulitzer Publishing Co. 775,775
-----------
2,009,225
-----------
CONSUMER GOODS & STAPLES--3.5%
BEAUTY & HEALTH PRODUCTS--1.7%
19,800 Alberto Culver Co. 819,225
21,700 Church & Dwight, Inc. 458,413
-----------
1,277,638
-----------
BEVERAGE & TOBACCO--1.0%
26,600 Mondavi Robert Corp.* 751,450
-----------
FOOD PRODUCTS & PROCESSING--0.8%
24,800 Ben & Jerry's Homemade, Inc.* 372,000
18,000 Eskimo Pie Corp. 270,000
-----------
642,000
-----------
ENERGY--6.1%
DRILLING--1.4%
17,200 Parker Drilling Co.* 120,400
38,100 Reading & Bates Corp.* 933,450
-----------
1,053,850
-----------
Value
Shares (Note 2)
- -------------------------------------------------------------
INTEGRATED OIL & GAS--4.7%
27,400 Brown, Tom, Inc.* $ 438,400
70,550 Comstock Resources, Inc.* 740,775
9,100 Diamond Shamrock, Inc. 249,113
47,546 Forest Oil Corp.* 671,587
69,700 Texas Meridian Resources Corp.* 897,388
20,800 Vintage Petroleum, Inc. 525,200
-----------
3,522,463
-----------
FINANCE--15.8%
BANKING--4.0%
15,400 Brenton Banks, Inc. 377,300
54,600 City National Corp. 962,325
7,400 Commercial Federal Corp. 288,600
12,300 Deposit Guaranty Corp. 567,338
40,400 First Republic Bancorp, Inc.* 540,350
9,000 OnBancorp, Inc. 290,250
-----------
3,026,163
-----------
BROKERAGE--1.0%
67,700 Southwest Securities Group, Inc. 795,475
-----------
FINANCIAL SERVICES--7.2%
9,400 Aames Financial Corp. 458,766
16,100 Advanta Corp. 786,888
25,400 Bay View Capital Corp. 939,800
32,850 Capstead Mortgage Corp. 685,744
13,300 Cole Taylor Financial Group, Inc. 385,700
31,100 Resource Mortgage Capital Corp. 769,725
18,000 Sturm, Ruger & Co. 645,750
19,500 US BANCORP, Inc. 711,750
-----------
5,384,123
-----------
INSURANCE--3.6%
14,200 Berkeley, W.R. Corp. 646,100
10,800 Executive Risk, Inc. 371,250
27,200 First American Financial Corp. 867,000
20,940 Frontier Insurance Group, Inc. 816,660
-----------
2,701,010
-----------
</TABLE>
- ----------------------------------------------------------
- ----------------------------------------------------------
See Notes to Financial Statements.
20
<PAGE> 21
PILOT SMALL CAPITALIZATION EQUITY FUND
- --------------------------------------------------------------------------------
Portfolio of Investments (continued)
August 31, 1996
- ----------------------------------------------------------
- ----------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares (Note 2)
<S> <C> <C>
- -------------------------------------------------------------
HEALTH CARE--5.3%
MEDICAL SUPPLIES & SERVICES--4.9%
32,400 Amco International Corp. $ 469,800
11,300 Ballard Medical Products 189,275
16,100 Bergen Brunswig Corp. 448,788
24,250 Bio-Rad Laboratories, Inc.* 679,000
8,600 Coherent, Inc.* 337,550
17,200 Human Genome Sciences, Inc.* 586,950
26,236 Steris Corp.* 806,757
8,365 Vital Signs, Inc. 170,436
-----------
3,688,556
-----------
PHARMACEUTICALS--0.4%
22,800 Matrix Pharmaeuticals* 287,850
-----------
INDUSTRIAL GOODS & SERVICES--5.6%
CHEMICALS--1.6%
55,200 Crompton & Knowles Corp. 828,000
32,400 International Specialty Products* 356,400
-----------
1,184,400
-----------
COMMERCIAL SERVICES--0.7%
49,200 Calgon Carbon Corp. 565,800
-----------
ELECTRONICS--2.4%
24,500 Core Industries, Inc. 297,063
15,700 Electro Scientific Industries,
Inc.* 286,525
9,700 Komag, Inc.* 206,125
30,100 Logicon, Inc. 891,713
7,900 Watkins-Johnson Co. 158,000
-----------
1,839,426
-----------
ENVIRONMENT--0.7%
26,600 Zurn Industries, Inc. 548,625
-----------
METAL & PLASTIC--0.2%
8,760 Wyman-Gordon Co.* 182,865
-----------
LEISURE--2.8%
GAMING RESORTS & HOTELS--2.8%
3,900 Rio Hotel & Casino, Inc.* 67,763
25,400 Sodak Gaming, Inc.* 1,320,800
30,900 WMS Industries, Inc.* 714,563
-----------
2,103,126
-----------
Value
Shares (Note 2)
- -------------------------------------------------------------
MANUFACTURING--14.1%
COMMUNICATIONS EQUIPMENT--0.4%
2,700 Communications Systems, Inc. $ 35,100
20,000 Network Equipment Technologies* 255,000
-----------
290,100
-----------
CONSUMER PRODUCTS--1.8%
36,000 Foamex International, Inc.* 560,250
36,600 Paragon Trade Brands, Inc.* 759,450
-----------
1,319,700
-----------
MACHINERY--2.5%
42,200 Credence Systems Corp.* 569,700
21,200 Gardner Denver Machinery, Inc.* 636,000
28,000 Standard Products Co. 644,000
-----------
1,849,700
-----------
MANUFACTURING--MISC.--4.8%
9,500 Applied Power, Inc. 285,000
15,100 Blount International, Inc. 517,175
17,700 Dionex Corp.* 632,775
12,900 Esterline Technologies Corp.* 266,063
46,300 Fossil, Inc.* 381,975
26,000 GenCorp, Inc. 360,750
19,400 Proxim, Inc.* 630,500
9,400 Tuscarora, Inc. 203,275
54,000 Worldtex, Inc.* 324,000
-----------
3,601,513
-----------
STEEL--4.0%
44,500 National Steel Corp.* 456,125
44,000 Olympic Steel, Inc.* 1,078,000
18,700 Rouge Steel Co. 418,413
46,600 Steel Technologies, Inc. 553,375
51,300 WHX Corp.* 525,825
-----------
3,031,738
-----------
TEXTILE--0.6%
36,400 Culp, Inc. 473,200
-----------
RETAILING--9.4%
DEPARTMENT STORES--2.1%
27,300 Neiman Marcus Group, Inc. 808,763
19,100 Proffitts, Inc.* 783,100
-----------
1,591,863
-----------
</TABLE>
- ----------------------------------------------------------
- ----------------------------------------------------------
See Notes to Financial Statements.
21
<PAGE> 22
PILOT SMALL CAPITALIZATION EQUITY FUND
- --------------------------------------------------------------------------------
Portfolio of Investments (continued)
August 31, 1996
- ----------------------------------------------------------
- ----------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares (Note 2)
<S> <C> <C>
- -------------------------------------------------------------
GROCERY STORES--0.8%
23,800 Riser Foods, Inc. $ 568,225
-----------
SPECIALTY STORES--5.8%
38,300 Chronimed, Inc.* 469,175
45,370 Eagle Hardware & Garden, Inc.* 1,009,483
23,800 Fabri Centers of America, Inc.* 321,300
21,800 Inacom Corp.* 588,600
24,600 Pacific Sunwear of California* 639,600
19,600 Quicksilver, Inc.* 460,600
8,500 Ross Stores, Inc. 327,250
113,400 Venture Stores, Inc.* 524,475
-----------
4,340,483
-----------
WAREHOUSE--0.7%
23,700 Waban, Inc.* 503,625
-----------
SERVICES--2.4%
AIRLINES--1.0%
15,900 Air Express International Corp. 443,213
16,200 USAir Group, Inc.* 289,575
-----------
732,788
-----------
RESTAURANT--0.7%
21,100 Sbarro, Inc. 522,225
-----------
SERVICES--MISC.--0.7%
10,600 Corrections Corp. of America* 341,850
7,200 Filenet Corp.* 172,800
-----------
514,650
-----------
TECHNOLOGY--1.2%
COMPUTERS & OFFICE EQUIPMENT--1.2%
6,600 American Business Products, Inc. 134,475
25,000 Exabyte Corp.* 368,750
35,450 Marcam Corp.* 385,509
-----------
888,734
-----------
Value
Shares (Note 2)
- -------------------------------------------------------------
UTILITIES--9.7%
ELECTRIC POWER--5.8%
24,100 Calenergy Inc.* $ 729,024
20,400 Central Hudson Gas & Electric Co. 614,550
11,900 Central Maine Power Co. 144,288
10,700 Central Vermont Public Service 135,088
18,000 Commonwealth Energy System Cos. 420,750
20,500 DT Industries, Inc. 538,125
8,600 IES Industries, Inc. 285,950
5,100 Northwestern Public Service Co. 146,625
38,900 Pioneer Standard Electronics, Inc. 515,425
30,300 TNP Enterprises, Inc. 708,263
7,000 Tucson Electric Power Co.* 112,875
-----------
4,350,963
-----------
NATURAL GAS--3.9%
15,100 Connecticut Natural Gas Corp. 339,750
26,700 Giant Industries, Inc. 400,500
33,900 Piedmont Natural Gas Co., Inc. 839,025
27,070 Southeastern Michigan Gas 466,958
28,800 Southwestern Energy Co. 442,800
128,000 Wainoco Oil Corp.* 432,000
-----------
2,921,033
- -------------------------------------------------------------
63,246,924
- -------------------------------------------------------------
TOTAL COMMON STOCKS (cost $62,289,386)
</TABLE>
- ----------------------------------------------------------
- ----------------------------------------------------------
See Notes to Financial Statements.
22
<PAGE> 23
PILOT SMALL CAPITALIZATION EQUITY FUND
- --------------------------------------------------------------------------------
Portfolio of Investments (continued)
August 31, 1996
- ----------------------------------------------------------
- ----------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Value
(000) (Note 2)
- -------------------------------------------------------------
<S> <C>
U.S. TREASURY BILLS--0.6%**
$400 5.25%, 12/12/96 $ 394,269
- -------------------------------------------------------------
TOTAL U.S. TREASURY BILLS (cost $394,466) 394,269
- -------------------------------------------------------------
REPURCHASE AGREEMENTS--15.4%
7,512 Repurchase agreement with Lehman
Brothers Inc., dated 8/30/96,
5.24%, due 9/3/96 (see Footnote
A) 7,512,003
4,000 Repurchase agreement with J. P.
Morgan, dated 8/30/96, 5.25%, due
9/3/96, (see Footnote B) 4,000,000
- -------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS (cost $11,512,003) 11,512,003
- -------------------------------------------------------------
TOTAL INVESTMENTS --100.2% (cost $74,195,855) 75,153,196
LIABILITIES IN EXCESS OF OTHER ASSETS--(0.2%) (180,128)
- -------------------------------------------------------------
NET ASSETS--100.0% $74,973,068
- -------------------------------------------------------------
</TABLE>
Footnote A
Collateralized by $7,755,000 U.S. Treasury Note, 5.25%, due 4/15/00 with a
value of $7,662,518.
Footnote B
Collateralized by $3,364,000 U.S. Treasury Bonds, 10.75%, due 2/15/03 with a
value of $4,080,915.
* Non-income producing security.
** Securities deposited into a segregated custodial account for futures margin
requirements.
<TABLE>
<CAPTION>
NUMBER OF
CONTRACTS SETTLEMENT UNREALIZED
TYPE LONG(A) MONTH LOSS
- -------------------------------------------------------------
<S> <C> <C> <C>
FUTURES CONTRACTS
S & P 400 MIDCAP 73 Sept. 96 $ (268,353)
S & P 500 INDEX 9 Sept. 96 (67,500)
- -------------------------------------------------------------
$ (335,853)
- -------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------
(a) Each S&P 400 MIDCAP and S&P 500 contract. Contract represents $50,000 in
notional par value. The total net notional amount and net market value for
the futures contracts shown above are $4,100,000 and $11,415,500,
respectively. The determination of notional amounts does not consider market
risk factors and therefore notional amounts as presented here are indicative
only of volume of activity and not a measure of market risk.
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
23
<PAGE> 24
PILOT U.S. GOVERNMENT SECURITIES FUND
- --------------------------------------------------------------------------------
Portfolio of Investments
August 31, 1996
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Maturity Value
(000) Rate Date (Note 2)
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS--96.6%
U.S. TREASURY BONDS--25.4%
$ 34,000 U.S. Treasury Bond 7.50 % 11/15/16 $ 34,823,480
2,500 U.S. Treasury Bond 7.13 2/15/23 2,457,025
------------
37,280,505
------------
U.S. TREASURY NOTES--71.2%
30,000 U.S. Treasury Note 6.88 2/28/97 30,182,700
10,500 U.S. Treasury Note 6.50 4/30/97 10,549,245
20,000 U.S. Treasury Note 5.50 11/15/98 19,634,400
11,000 U.S. Treasury Note 5.63 11/30/00 10,571,990
24,000 U.S. Treasury Note 5.75 8/15/03 22,541,280
11,500 U.S. Treasury Note 6.50 8/15/05 11,163,970
------------
104,643,585
- ----------------------------------------------------------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(cost $143,401,169) 141,924,090
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
(000) (Note 2)
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
REPURCHASE AGREEMENT--2.1%
$ 3,118 Repurchase agreement, Lehman Brothers
dated 8/30/96, 5.24%, due 9/3/96
(Cost $3,118,222) (See Footnote A) $ 3,118,222
- ----------------------------------------------------------------
TOTAL INVESTMENTS--98.7% (cost $146,519,391) 145,042,312
OTHER ASSETS IN EXCESS OF LIABILITIES--1.3% 1,893,157
- ----------------------------------------------------------------
NET ASSETS--100.0% $146,935,469
- ----------------------------------------------------------------
</TABLE>
- ----------------------------------------------------------------
Footnote A
Collateralized by $3,220,000 U.S. Treasury Note, 5.50%, due 4/15/00 with a
value of $3,181,642.
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
24
<PAGE> 25
PILOT INTERMEDIATE U.S. GOVERNMENT SECURITIES FUND
- --------------------------------------------------------------------------------
Portfolio of Investments
August 31, 1996
- -----------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Maturity Value
(000) Rate Date (Note 2)
- -----------------------------------------------------------------
<S> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS--97.5%
UNITED STATES TREASURY NOTES--97.5%
$31,000 United States
Treasury Note 6.25% 2/15/03 $ 30,074,960
16,000 United States
Treasury Note 6.75 6/30/99 16,100,000
36,000 United States
Treasury Note 6.50 8/15/97 36,168,840
11,000 United States
Treasury Note 7.88 11/15/04 11,648,010
58,000 United States
Treasury Note 7.13 2/29/00 58,897,260
24,000 United States
Treasury Note 6.13 5/15/98 23,940,000
13,500 United States
Treasury Note 6.50 5/15/05 13,122,405
11,000 United States
Treasury Note 8.13 2/15/98 11,288,750
25,000 United States
Treasury Note 5.63 11/30/00 24,027,250
- -----------------------------------------------------------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(cost $229,003,079) 225,267,475
- -----------------------------------------------------------------
<CAPTION>
Principal
Amount Value
(000) (Note 2)
- -----------------------------------------------------------------
<S> <C> <C> <C>
REPURCHASE AGREEMENT--1.3%
$ 2,908 Repurchase agreement, Lehman Brothers,
dated 8/30/96, 5.24%, due 9/3/96
(cost $2,907,839) (See Footnote A) $ 2,907,839
- -----------------------------------------------------------------
TOTAL INVESTMENTS--98.8% (cost $231,910,918) 228,175,314
OTHER ASSETS IN EXCESS OF LIABILITIES--1.2% 2,786,640
- -----------------------------------------------------------------
NET ASSETS--100.0% $230,961,954
- -----------------------------------------------------------------
</TABLE>
Footnote A
Collateralized by $3,005,000 U.S. Treasury Note, 5.50%, due 4/15/00, with a
market value of $2,969,203.
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
25
<PAGE> 26
PILOT MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Portfolio of Investments
August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Ratings
Amount (Moody's/S&P) Maturity Value
(000) Unaudited Rate Date (Note 2)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MUNICIPAL BONDS--95.6%
ARIZONA--2.7%
$2,000 Maricopa County, Scottsdale School District, G.O. Aa/AA 5.00% 7/01/14 $ 1,827,500
400 Pima County University School District, Series D,
G.O. (FGIC Insured) Aaa/AAA 6.10 7/01/11 412,000
2,000 Salt River Project, Agriculture Improvement &
Power District Electric Systems Revenue, Series C Aa/AA 6.25 1/01/19 2,057,500
900 Tucson, Series 1984-G, G.O. (FGIC Insured) Aaa/AAA 6.25 7/01/16 938,250
----------
5,235,250
----------
ARKANSAS--0.7%
1,300 State Development Waste Systems Authority, Revenue
Series A Aa/NR 5.70 12/01/12 1,280,500
----------
CALIFORNIA--7.9%
400 California State, G.O. A+/A1 9.10 11/01/01 477,000
200 California State, G.O. A+/A1 9.00 6/01/02 240,250
500 California State, Series AM, G.O. A+/A1 9.00 10/01/02 605,625
200 California State, Series-AQ, G.O. A+/A1 9.10 10/01/02 243,250
1,000 California State, G.O. A+/A1 7.10 9/01/02 1,113,750
200 California State, Series AM, G.O. A+/A1 9.00 10/01/03 246,750
1,000 California State, G.O. A+/A1 7.00 8/01/04 1,123,750
200 California State, Series AN, G.O. A+/A1 9.00 4/01/05 251,500
200 California State, G.O. A+/A1 7.20 4/01/05 227,750
700 California State, G.O. A+/A1 7.00 8/01/05 790,125
400 California State, G.O. A+/A1 7.10 3/01/07 454,500
400 California State University Revenue, (FGIC
Insured) Aaa/AAA 6.00 11/01/10 413,500
500 Long Beach Water Revenue Aa/AA 6.00 5/01/14 505,000
200 Los Angeles, Water & Power Waterworks Revenue Aa/AA 7.70 5/15/07 214,000
1,000 Los Angeles Wastewater Systems Revenue, Series C,
(MBIA Insured) Aaa/AAA 5.50 6/01/14 958,750
500 Los Angeles County, Metropolitan Transportation
Authority Sales Tax Revenue Propodition A-Series
A, (MBIA Insured) Aaa/AAA 5.63 7/01/18 484,375
400 Los Angeles County Sanitation District Authority
Revenue Capital Project, Series A Aa/AA 5.38 10/01/13 378,000
2,000 Metropolitan Water District Southern, Revenue
Bonds, Series A (MBIA Insured) Aaa/AAA 5.75 7/01/15 1,992,500
500 San Francisco Rapid Transit District Sales Tax
Revenue (AMBAC Insured) Aaa/AAA 6.75 7/01/11 561,250
700 San Francisco City & County Sewer Revenue, (AMBAC
Insured) Aaa/AAA 5.50 10/01/15 673,750
2,595 San Francisco Apartments Commission, Revenue
Series 98 (FGIC Insured) Aaa/AAA 5.25 5/01/13 2,462,006
500 University Revenue, Project-Series C, (AMBAC
Insured) Aaa/AAA 5.25 9/01/16 460,625
----------
14,878,006
----------
COLORADO--1.4%
200 Colorado Springs, Utilities Revenue, Series A Aa/AA 6.50 11/15/15 215,250
2,500 Douglas County, Sales & Use Tax, Revenue Aaa/AAA 5.50 10/15/11 2,446,875
----------
2,662,125
----------
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
26
<PAGE> 27
PILOT MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Portfolio of Investments (continued)
August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Ratings
Amount (Moody's/S&P) Maturity Value
(000) Unaudited Rate Date (Note 2)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CONNECTICUT--0.5%
$1,000 State of Connecticut, G.O., Series A Aa-/AA 5.30% 5/15/10 $ 978,750
----------
FLORIDA--6.3%
2,500 Broward County School District, G.O. Aa-/AA1 5.60 2/15/07 2,534,375
500 Florida State Board of Education Cap Outlay, G.O. Aa/AA 6.13 6/01/10 519,375
1,000 Florida State Board of Education Cap Outlay, G.O.,
Series A Aa/AA 5.50 6/01/14 975,000
700 Florida State Board of Education Cap Outlay, G.O.,
Series D Aa/AA 5.00 6/01/15 637,875
200 Florida State Board of Education Cap Outlay, G.O.,
Series A Aa/AA 7.25 6/01/23 219,000
300 Florida State Board of Education Public Education,
G.O., Series B1 Aaa/AAA 7.88 6/01/19 324,375
400 Jacksonville Electric Authority Revenue-St. Johns
River Power Park Systems, Series 10 Aa/AA1 5.50 10/01/13 388,500
2,000 Jacksonville Electric Authority Revenue-St. Johns
River Power Park Systems Aa/AA1 5.38 10/01/15 1,897,500
600 Jacksonville Transportation, Series 1985 Aaa/AAA 9.00 1/01/04 648,750
1,200 Orlando Utilities Common Water & Electric Revenue,
Series D Aa-/AA 6.75 10/01/17 1,369,500
700 Orlando Utilities Common Water & Electric Revenue,
Series A Aa-/AA 5.50 10/01/12 682,500
1,800 St. Lucie County, Pollution Control Revenue* Aa-/AA3 3.75 1/01/26 1,800,000
----------
11,996,750
----------
GEORGIA--2.6%
1,100 Atlanta, G.O. Aa/AA 5.60 12/01/11 1,108,250
800 De Kalb County, G.O. Aa+/AA1 5.25 1/01/20 738,000
200 Fulton County Water & Sewer Revenue, (FGIC
Insured) Aaa/AAA 6.38 1/01/14 215,000
300 Municipal Electric Authority Revenue, Series V A/A 6.50 1/01/12 320,250
1,000 Municipal Electric Authority Revenue, Series V A/A 6.60 1/01/18 1,073,750
1,000 Municipal Electric Authority Revenue, Series B A/A 6.25 1/01/12 1,042,500
400 Henry County School District, G.O., (MBIA Insured) Aaa/AAA 6.00 8/01/14 412,500
----------
4,910,250
----------
HAWAII--0.1%
200 Hawaii State, Series BW, G.O. Aa/AA 6.25 3/01/12 213,250
----------
ILLINOIS--6.3%
400 Chicago, Series 1993, G.O., (FGIC Insured) Aaa/AAA 5.38 1/01/13 384,000
600 Chicago Metro Water-Capital Improvement, G.O. Aa/AA 5.50 12/01/12 591,000
400 Chicago Park District-Capital Improvement, G.O.,
(FGIC Insured) Aaa/AAA 6.05 1/01/03 407,500
2,000 Cook County, G.O. Aaa/AAA 5.90 11/15/16 1,980,000
600 Du Page County, Ref. Jail Proj., G.O. Aaa/AAA 5.50 1/01/13 580,500
600 Du Page County, Ref. Jail Proj., G.O. Aaa/AAA 5.60 1/01/21 579,750
600 Du Page Water Commission, Water Revenue Aa/AA1 5.25 5/01/14 551,250
200 Illinois State, G.O. Aa-/A1 9.50 11/01/03 214,000
400 Illinois State, G.O. Aa-/NR 8.00 10/01/04 423,972
2,340 Illinois State, G.O. Aa-/A1 5.88 6/01/11 2,354,625
2,000 Illinois State, G.O. Aaa/AAA 6.00 2/01/16 2,030,000
800 Illinois State, G.O. Aa-/A1 5.50 8/01/18 756,000
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
27
<PAGE> 28
PILOT MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Portfolio of Investments (continued)
August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Ratings
Amount (Moody's/S&P) Maturity Value
(000) Unaudited Rate Date (Note 2)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ILLINOIS (continued)
$ 600 Illinois State, G.O. Aa-/A1 5.80% 4/01/19 $ 585,000
700 Illinois State Sales Tax Revenue, Series S Aaa/A1 5.25 6/15/18 629,125
----------
12,066,722
----------
KANSAS--1.5%
2,000 Kansas State Department Transportation Highway
Revenue, Series A Aa/AA 6.00 9/01/07 2,115,000
700 Kansas State Department Transportation Highway
Revenue Aa/AA 5.38 3/01/13 670,250
----------
2,785,250
----------
KENTUCKY--0.5%
1,000 Kentucky State Turnpike Authority Economic
Development Revenue Aaa/AAA 5.63 7/01/15 980,000
----------
LOUISIANA--0.2%
400 Louisiana State, Series B, G.O. A-/AAA 8.00 5/01/03 418,092
----------
MAINE--0.4%
700 Turnpike Authority Revenue, (MBIA Insured) Aaa/AAA 6.00 7/01/14 712,250
----------
MASSACHUSETTS--4.5%
2,500 Massachusetts, Series A, G.O. (MBIA Insured) Aaa/AAA 5.75 2/01/13 2,503,125
2,000 Massachusetts, Series B, G.O. Aaa/AAA 5.50 6/01/10 1,987,500
3,675 Massachusetts Bay Transportation Authority,
Revenue, Series A A+/A1 5.75 3/01/18 3,592,313
500 Massachusetts Water Reserve Authority, Series A,
Revenue Bonds (MBIA Insured) Aaa/AAA 5.90 8/01/16 501,250
----------
8,584,188
----------
MICHIGAN--5.4%
1,750 Byron Center Public Schools, G.O. (MBIA Insured) Aaa/AAA 5.97 5/01/15 1,771,875
1,000 Environmental Protection Project, G.O. Aa/AA 6.25 11/01/12 1,073,750
1,400 Ferndale School District, G.O. Aaa/AAA 5.38 5/01/16 1,326,500
1,010 Grand Rapids County College, G.O. Aaa/AAA 5.45 5/01/12 991,063
300 Hudsonville Public Schools, Series B, G.O. (FGIC
Insured) Aaa/AAA 6.00 5/01/14 306,000
1,250 Kalamazoo City School District, G.O. Aaa/AAA 5.65 5/01/14 1,243,750
1,000 Lakeshore Public Schools, G.O. Aaa/AAA 5.75 5/01/15 986,250
1,000 Michigan State Trunk Line, Revenue, Series A (FGIC
Insured) Aaa/AAA 5.63 11/15/14 972,500
1,700 Oxford Community School District, G.O. (FGIC
Insured) Aaa/AAA 5.30 5/01/11 1,634,125
----------
10,305,813
----------
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
28
<PAGE> 29
PILOT MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Portfolio of Investments (continued)
August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Ratings
Amount (Moody's/S&P) Maturity Value
(000) Unaudited Rate Date (Note 2)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MISSOURI--14.3%
$ 300 Board Public Building, State Office Building,
Revenue, Special Obligation Aa/AA 6.40% 12/01/10 $ 315,000
400 Environmental Impt. & Energy Res. Auth. Water Poll
Ct.-Revolving FD-Multipart, Series A NR/AA 6.45 7/01/08 433,000
500 Environmental Impt. & Energy Res. Auth. Water Poll
Ct.-Revolving FD-Springfield, Series A NR/AA 7.00 10/01/10 548,750
300 Environmental Impt. & Energy Res. Auth. Water Poll
Ct.-Revolving FD-Multipart, Series A Aaa/AAA 6.88 6/01/14 325,125
400 Environmental Impt. & Energy Res. Auth. Water Poll
Ct.-Revolving FD-Multipart, Series A NR/AA 6.55 7/01/14 427,500
200 Environmental Impt. & Energy Res. Auth. Water Poll
Ct.-Revolving FD-Multipart, Series A NR/AA 6.05 7/01/15 201,750
1,000 Environmental Impt. & Energy Res. Auth., Revolving
FD, Kansas City, Series A NR/AA1 5.75 1/01/16 996,250
1,100 Environmental Impt. & Energy Res. Auth. Env. Impt.
Rev.-Union Electric Co. (AMBAC-TCRS Insured) Aaa/AAA 7.40 5/01/20 1,197,625
200 Environmental Impt. & Energy Res. Auth. Env. Impt.
Rev.-Union Electric Co., Series A Aa-/A1 7.40 5/01/20 217,000
200 Health & Educational Facs. Authority Rev.-Gen.
Tuition-St. Louis University, (AMBAC Insured) Aaa/AAA 6.50 8/01/16 214,000
400 Health & Educational Facs. Authority Rev.-St.
Louis University, Series A, (AMBAC Insured) Aaa/AAA 7.75 6/01/07 417,012
1,500 Health & Educational Facs. Authority Health Facs.
Rev.-Barnes Hospital Aaa/NR 7.13 12/15/09 1,672,500
400 Health & Educational Facs. Authority Health Facs.
Rev.-Children's Mercy Hosp. Proj. (MBIA Insured) Aaa/AAA 5.63 5/15/12 391,000
500 Health & Educational Facs. Authority Health Facs.
Rev.-Deaconess Health Services Corp., (FGIC
Insured) Aaa/AAA 6.75 4/01/15 514,425
500 Health & Educational Facs. Authority Health Facs.
Rev.-Deaconess Health Services Corp., (FGIC
Insured) Aaa/AAA 6.75 4/01/07 513,625
200 Health & Educational Facs. Authority Health Facs.
Rev.-SSM Hlth. Care Proj., Series B, (MBIA
Insured) Aaa/AAA 7.00 6/01/15 213,000
290 Health & Educational Facs. Authority Health Facs.
Rev.-Jewish Hosp. St. Louis, (FGIC Insured) Aaa/AAA 7.25 7/01/15 298,947
500 Health & Educational Facs. Authority Health Facs.
Rev.-Sisters Of Mercy Health, Series A Aa/AA 6.25 6/01/15 520,000
900 Health & Educational Facs. Authority Health Facs.
Rev.-SSM Health Care Proj., (BIGI Insured) Aaa/AAA 7.75 6/01/16 972,000
700 Health & Educational Facs. Authority Health Facs.
Rev.-St. Louis University, (AMBAC Insured) Aaa/AAA 5.00 10/01/10 659,750
1,000 Health & Educational Facs. Authority Health Facs.
Rev.-St. Louis University, (AMBAC Insured) Aaa/AAA 5.13 10/01/16 915,000
900 Health & Educational Facs. Authority Health Facs.
Rev.-St. Lukes Episcopl-Presby., (FGIC Insured) Aaa/AAA 6.88 12/01/07 932,625
200 Health & Educational Facs. Authority Health Facs.
Rev.-St. Lukes Episcopal Hosp., (FGIC Insured) Aaa/AAA 6.80 12/01/03 214,500
1,000 Independence School District, G.O. NR/A 6.25 3/01/11 1,061,250
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
29
<PAGE> 30
PILOT MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Portfolio of Investments (continued)
August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Ratings
Amount (Moody's/S&P) Maturity Value
(000) Unaudited Rate Date (Note 2)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MISSOURI (continued)
$ 200 Jackson County Ind. Dev. Authority Health Care
Corp. Rev.- St. Joseph Health Center Proj. (BIG
Insured) Aaa/AAA 8.25% 7/01/07 $ 210,964
300 Jefferson City School District, G.O., Series A NR/AA 6.70 3/01/11 335,625
400 Kansas City Apartment Revenue, Series B, (MBIA
Insured) Aaa/AAA 7.20 9/01/08 437,000
500 Kansas City Apartment Revenue, Series B, (MBIA
Insured) Aaa/AAA 7.20 9/01/09 546,250
400 Kansas City, G.O. Aa/AA 5.75 10/01/07 408,000
400 Kansas City, G.O. Aa/AA 5.75 10/01/11 402,000
1,000 Kansas City-Var. Purpose, G.O. Aa/AA 6.00 3/01/08 1,023,750
400 Mehlville School District 09, G.O., (MBIA Insured) Aaa/AAA 6.00 2/15/13 411,000
1,625 Missouri State Water Pollution Control, G.O.,
Series A Aaa/AAA 5.60 4/01/15 1,610,781
1,750 Missouri State Housing Development Commission,
Revenue,
Series A, (GNMA/FHA/VA)** Aaa/NR 6.10 9/01/14 1,758,750
400 Ritenour Cons. School District, Series A, G.O.,
(FGIC Insured) Aaa/AAA 6.00 2/01/10 408,500
400 Rolla School District No. 31, G.O. A/A 6.38 3/01/14 417,500
400 Springfield School District No. R-12, Series A,
G.O., (MBIA Insured) Aaa/AAA 5.25 3/01/11 381,500
800 Springfield Waterworks Revenue, Series A A+/AA 5.50 5/01/19 766,000
500 St. Louis County Pattonville R-3 School District, G.O.,
(FGIC Insured) Aaa/AAA 6.25 2/01/10 535,000
200 St. Louis County Parkway School, Series A, G.O. NR/AA 6.00 7/01/10 206,500
500 St. Louis County-Refunding & Improvement,
Series B, G.O. NR/AA1 5.40 2/01/10 493,125
200 St. Louis Industrial Development
Authority-Anheuser-Busch Co. Project Aa-/A1 6.65 5/01/16 216,250
500 University City School District, G.O., (MBIA
Insured) Aaa/AAA 6.20 2/15/14 521,250
800 University of Missouri, Revenue, Hospital &
Clinics Improvement Aaa/AAA 7.38 11/01/10 897,000
500 University of Missouri, Revenue, Ref. &
Impt.-Systems Facs. Aa+/AA 5.38 11/01/13 476,250
400 University of Missouri, Revenue, Series A, (AMBAC
Insured) Aaa/AAA 6.50 11/01/11 428,500
200 University of Missouri, Revenue, Series B, (AMBAC
Insured) Aaa/AAA 6.50 11/01/11 214,250
----------
27,277,379
----------
NEBRASKA--0.8%
800 Public Power District Revenue, Power Supply
Systems A+/A1 6.13 1/01/15 808,000
400 Public Power District Revenue, Power Supply
Systems A+/A1 5.75 1/01/20 387,000
400 Omaha Public Power District Electric Revenue,
Series B Aa/AA 6.20 2/01/17 424,500
----------
1,619,500
----------
NEVADA--2.2%
1,400 Clark County-Ref. & Impt. Transportation, Series
A, G.O.,
(MBIA Insured) Aaa/AAA 6.00 6/01/12 1,447,250
1,000 Las Vegas-Clark County Library District, G.O.,
(FGIC Insured) Aaa/AAA 6.00 2/01/12 1,027,500
800 Nevada State, Municipal Bond Bank Project No. 42,
G.O. Aa/AA 5.88 9/01/12 808,000
1,000 Nevada State, Municipal Bank, Series A, G.O. Aa/AA 5.50 11/01/17 947,500
----------
4,230,250
----------
NEW JERSEY--0.3%
500 New Jersey State, Series B, G.O. Aa+/AA1 6.25 1/15/05 542,500
----------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
30
<PAGE> 31
PILOT MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Portfolio of Investments (continued)
August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Ratings
Amount (Moody's/S&P) Maturity Value
(000) Unaudited Rate Date (Note 2)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NEW MEXICO--0.3%
$ 400 New Mexico State University Revenue, Refunding &
Improvement Aa/A1 5.75% 4/01/16 $ 401,500
200 Santa Fe Revenue (AMBAC Insured) Aaa/AAA 6.25 6/01/15 215,500
----------
617,000
----------
NEW YORK--3.7%
2,000 Municipal Assistance Corp. for New York A+/AA 5.20 7/01/08 1,972,500
2,000 New York Energy Authority, Revenue A+/A1 6.10 8/15/00 1,995,000
3,000 New York State Assistance Corp. Revenue, Series A A/A 6.00 4/01/16 3,030,000
----------
6,997,500
----------
NORTH CAROLINA--1.6%
2,000 Eastern Municipal Power, Series A, (FGIC Insured) Aaa/AAA 6.20 1/01/12 2,065,000
1,000 Municipal Power Agency, Catawba Electric Revenue,
(MBIA Insured) Aaa/AAA 6.00 1/01/10 1,045,000
----------
3,110,000
----------
OHIO--0.4%
700 Lakota Local School District, G.O., (AMBAC
Insured) Aaa/AAA 6.25 12/01/14 730,625
----------
OREGON--2.9%
2,000 Chemetka Community College District, G.O. (FGIC
Insured) Aaa/AAA 5.80 6/01/12 2,017,500
200 Oregon State, G.O. Aa/AA 8.75 10/01/97 210,058
200 Oregon State, G.O. Aa/AA 11.00 12/01/99 239,000
2,900 Portland Sewer Systems Revenue, Series A A+/A1 6.25 6/01/15 3,001,500
----------
5,468,058
----------
PENNSYLVANIA--0.2%
500 Pennsylvania State Higher Education, Revenue
Series J,
(AMBAC Insured) Aaa/AAA 5.63 6/15/19 478,125
----------
RHODE ISLAND--1.5%
2,845 State of Rhode Island, G.O., Series A (MBIA
Insured) Aaa/AAA 5.60 8/01/10 2,841,444
----------
SOUTH CAROLINA--0.6%
1,000 Piedmont Municipal Power Agency, Electric Revenue,
Series A, (FGIC Insured) Aaa/AAA 6.50 1/01/16 1,082,500
----------
TENNESSEE--0.5%
1,000 Memphis, G.O. Aa/AA 5.20 11/01/10 958,750
----------
TEXAS--9.9%
700 Austin Utility Systems Revenue, Series A Aaa/AAA 8.00 11/15/16 792,750
500 Austin Utility Systems Revenue, Combined, Series A Aaa/AAA 9.50 5/15/15 580,000
400 Austin Utility Systems Revenue, Combined, (BIG
Insured) Aaa/AAA 8.63 11/15/12 473,000
1,000 Austin Utility Systems Revenue Aaa/AAA 7.30 5/15/17 1,115,000
10 Austin Water Sewer & Electric Refunding Revenue A-/A 14.00 11/15/01 12,888
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
31
<PAGE> 32
PILOT MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Portfolio of Investments (continued)
August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Ratings
Amount (Moody's/S&P) Maturity Value
(000) Unaudited Rate Date (Note 2)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TEXAS (continued)
$ 385 Austin Water Sewer & Electric Refunding Revenue A-/A 14.00% 11/15/01 $ 498,575
3,610 Bexar Metropolitan Water District Waterworks,
Revenue
(MBIA Insured) Aaa/AAA 6.00 5/01/15 3,668,662
2,575 Carrollton Farmers Branch School District, G.O.,
(PSFG Insured) Aaa/AAA 5.70 2/15/17 2,539,594
400 Cypress-Fairbanks Indpt. School District, G.O.,
(PSFG Insured) Aaa/AAA 5.75 2/01/08 407,000
1,275 Cypress-Fairbanks Indpt. School District, G.O.,
(PSFG Insured) Aaa/AAA 5.75 2/15/16 1,271,812
1,000 Dallas School District, G.O., (PSFG Insured) Aaa/AAA 5.70 8/15/12 1,002,500
1,075 Denton Utility System, Revenue Aaa/AAA 5.70 12/01/10 1,069,625
200 Harris County, G.O. Aa/AAA 7.80 1/01/03 230,250
700 Harris County Toll Rd - Sub Lien Revenue, G.O. Aa/AA 6.75 8/01/14 751,625
500 Houston Water Systems Revenue, Prior Lien Aaa/AAA 7.40 12/01/17 530,000
1,000 San Antonio Electric & Gas, Revenue (MBIA Insured) Aaa/AAA 5.38 2/01/16 948,750
2,000 San Antonio Electric & Gas, Revenue (MBIA Insured) Aaa/AAA 5.38 2/01/18 1,870,000
1,100 San Antonio Water Revenue, (MBIA Insured) Aaa/AAA 6.50 5/15/10 1,179,750
----------
18,941,781
----------
UTAH--2.2%
500 Intermountain Power Agency, Power Supply Revenue,
Series B Aa-/AA 5.25 7/01/17 454,375
800 Intermountain Power Agency Power Supply Revenue,
Series A Aa-/AA 5.50 7/01/20 743,000
2,000 Intermountain Power Agency, Power Supply Revenue,
Series A Aa-/AA 5.00 7/01/16 1,775,000
1,300 Salt Lake City Water & Sewer, Revenue (AMBAC
Insured) Aaa/AAA 6.10 2/01/14 1,326,000
----------
4,298,375
----------
WASHINGTON--12.2%
2,480 Clark County Sewer, Revenue Aaa/AAA 5.80 12/01/11 2,492,400
900 King & Snohomish Counties School District No. 417
Northshore, G.O., (MBIA Insured) Aaa/AAA 6.30 6/01/13 928,125
1,035 King County Library Systems, G.O. Aa-/AA 6.15 12/01/10 1,084,162
2,000 King County School District #415, G.O. Aaa/AAA 5.80 6/01/13 2,005,000
2,000 Seattle, G.O., Series A Aa+/AA1 5.63 1/15/10 1,990,000
300 Seattle Metropolitan Municipality, G.O. A+/AA 5.65 1/01/20 288,375
2,000 Seattle Metropolitan Municipal Sewer Revenue,
Series X (FGIC Insured) Aaa/AAA 5.50 1/01/16 1,897,500
2,000 Seattle Municipal Light & Power, Revenue Aa/AA 6.63 7/01/16 2,107,500
500 Seattle Municipal Light & Power Revenue, Series B Aa/AA 5.75 8/01/08 505,625
1,400 Seattle Water Systems, Revenue Aa/AA 5.50 6/01/18 1,323,000
500 Tacoma Electric Systems Revenue, Series B, (AMBAC
Insured) Aaa/AAA 5.90 1/01/05 520,000
500 Washington State, G.O. Aaa/AAA 8.90 10/01/03 525,330
200 Washington State, G.O., Ref-Series 86D** Aaa/AAA 8.00 9/01/05 200,000
200 Washington State-Motor Vehicle Fuel Tax, Series E,
G.O.** Aaa/AAA 8.00 9/01/05 200,000
300 Washington State, G.O. Aaa/AAA 7.75 12/01/07 322,500
5,000 Washington State, G.O., Series A Aa/AA 6.75 2/01/15 5,581,250
300 Washington State, G.O., Series A & AT-6 Aa/AA 6.25 2/01/11 318,375
200 Public Power Supply Systems Nuclear Project #1,
Revenue Aaa/AAA 14.38 7/01/01 250,500
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
32
<PAGE> 33
PILOT MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Portfolio of Investments (continued)
August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Ratings
Amount (Moody's/S&P) Maturity Value
(000) Unaudited Rate Date (Note 2)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
WASHINGTON (continued)
$ 400 Public Power Supply Systems Nuclear Project #2,
Revenue, Series A Aa-/AA1 7.25% 7/01/06 $ 450,000
300 Public Power Supply Systems Nuclear Project #1,
Revenue, Series B Aa-/AA1 7.25 7/01/09 337,875
----------
23,327,517
----------
WEST VIRGINIA--0.5%
1,000 University Revenue, (AMBAC Insured) Aaa/AAA 5.75 4/01/16 983,750
----------
WISCONSIN--0.5%
1,000 Wisconsin State, Series 1, G.O. Aa/AA 5.80 11/01/08 1,033,750
----------
TOTAL MUNICIPAL BONDS (cost $174,946,457) 182,546,000
Shares
(000)
- ---------------------------------------------------------------------------------------------------------------------------------
TAX-EXEMPT MONEY MARKET MUTUAL FUND--3.2%
6,170 Federated Tax Exempt Obligation Fund (Cost $6,170,068) 6,170,068
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS--98.8% (cost $181,116,525) 188,716,068
OTHER ASSETS IN EXCESS OF LIABILITIES--1.2% 2,236,576
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS--100.0% $ 190,952,644
- ---------------------------------------------------------------------------------------------------------------------------------
AMBAC -- AMBAC Indemnity Corporation
BIG -- Bond Investors Guaranty
FGIC -- Financial Guaranty Insurance Corporation
FHA -- Federal Housing Administration
GNMA -- Government National Mortgage Association
G.O. -- General Obligation
MBIA -- Municipal Bond Insurance Association
VA -- Veterans Administration
</TABLE>
* Variable rate securities having liquidity sources through bank letters of
credit or other credit and/or liquidity agreements. The interest rate, which
will change periodically, is based upon bank prime rates or an index of
market interest rates. The rate reflected on the Schedule of Portfolio
Investments is the rate in effect at August 31, 1996.
** Indicates bonds called or portions of bonds called subsequent to year-end.
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
33
<PAGE> 34
PILOT INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Portfolio of Investments
August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Moody's/S&P
Principal Ratings Maturity Value
Amount Unaudited Rate Date (Note 2)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MUNICIPAL BONDS--98.5%
ARIZONA--5.7%
$2,000,000 Arizona State Transportation Board, Excise Tax
Revenue (AMBAC Insured) Aa/AAA 5.50 % 7/01/02 $ 2,065,000
300,000 Flagstaff, Series 1991A (FGIC Insured) Aaa/AAA 8.50 7/01/98 322,125
1,100,000 Glendale G.O. Refunding Bonds (FGIC Insured) Aaa/AAA 4.95 7/01/01 1,113,750
300,000 Maricopa County High School District 210, G.O.
Refunding Bonds, Series D Aa/AA 6.70 7/01/03 325,875
300,000 Maricopa County School District 48, G.O. Refunding
Bonds, Series 1991 Aa/AA 6.00 7/01/00 310,125
3,000,000 Mesa G.O. Refunding Bonds (FGIC Insured) Aaa/AAA 5.35 7/01/00 3,082,500
900,000 Mesa G.O. Refunding Bonds (MBIA Insured) Aaa/AAA 5.00 7/01/03 905,625
900,000 Phoenix G.O. Refunding Bonds Aa+/AA1 5.40 7/01/97 911,538
300,000 Pima County G.O. NR 7.10 7/01/99 313,683
900,000 Pima County G.O. Refunding Bonds A+/AA 5.35 7/01/00 922,500
400,000 Pima County School District No. 1, G.O., Refunding
Bonds, Preref 7/01/01 @ 101 (MBIA Insured) Aaa/AAA 6.70 7/01/04 438,000
600,000 Salt River Project, Agriculture Impt. & Power
District Revenue Bonds, Series D Aa/AA 5.10 1/01/99 609,000
800,000 Salt River Project, Agriculture Revenue Refunding
Bonds,
Series C Aa/AA 4.30 1/01/02 777,000
400,000 Tempe, Series 1992 Aa+/AA 5.60 7/01/00 414,500
-----------
12,511,221
-----------
CALIFORNIA--4.6%
300,000 California State, G.O. A+/A1 5.70 10/01/00 311,625
400,000 California State, G.O. A+/A1 7.00 8/01/04 449,500
2,000,000 California State, Public Improvements, G.O. A+/A1 5.25 3/01/00 2,040,000
1,100,000 California State, School & Public Improvements, G.O. A+/A1 4.80 3/01/00 1,105,500
900,000 Contra Costa Water District Revenue Bonds, Series G
(MBIA Insured) Aaa/AAA 5.40 10/01/03 924,750
900,000 Los Angeles G.O. Bonds, Series A (MBIA Insured) Aaa/AAA 5.40 9/01/03 924,750
1,100,000 Metropolitan Water District Southern Revenue Bonds,
Series 1992 Aa/AA 4.85 7/01/99 1,111,000
1,400,000 Metropolitan Water District Southern Revenue Bonds,
Series B Aaa/AAA 4.10 7/01/02 1,356,250
700,000 Riverside Sewer Revenue Refunding Bonds (FGIC
Insured) Aaa/AAA 4.80 8/01/01 701,750
600,000 San Diego Open Space Park Facilities, District No. 1,
G.O. Refunding Bonds Aa+/AAA 5.13 1/01/00 613,500
600,000 University of California, Multiple Purpose
Projects--C, Revenue Refunding Bonds (AMBAC
Insured) Aaa/AAA 4.80 9/01/04 591,000
-----------
10,129,625
-----------
COLORADO--3.0%
300,000 Colorado Springs Utility Authority, Revenue, Series A Aa/AA 6.63 11/15/04 325,125
300,000 Denver City & County, G.O. Bonds Aa/AA 6.38 8/01/03 322,125
300,000 Denver City & County, G.O. Bonds Aa/AA 6.50 8/01/04 322,500
400,000 Denver City & County, Various Purpose G.O. Bonds,
Series A Aa/AA 5.50 8/01/99 409,500
1,195,000 La Plata County School District, #9R Durango, G.O.
(MBIA Insured) Aaa/AAA 5.00 11/01/02 1,206,950
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
34
<PAGE> 35
PILOT INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Portfolio of Investments (continued)
August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Moody's/S&P
Principal Ratings Maturity Value
Amount Unaudited Rate Date (Note 2)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COLORADO(continued)
$1,500,000 Northglenn, G.O. Bonds** Aaa/AAA 5.25 % 12/01/03 $ 1,541,250
1,500,000 Northglenn, G.O. Bonds** Aaa/AAA 5.25 12/01/04 1,535,625
900,000 Platte River Power Authority, Revenue, Series CC A+/AA 4.63 6/01/00 897,750
-----------
6,560,825
-----------
CONNECTICUT--2.2%
600,000 Connecticut State G.O., Refunding Bonds, Series B Aa-/AA 5.65 11/15/98 618,000
300,000 Connecticut State G.O., Series A NR/AA 6.60 3/01/04 324,750
700,000 Connecticut State Public Improvements, G.O. Bonds,
Series D Aa-/AA 4.60 8/01/00 700,875
1,000,000 Connecticut State Public Improvements, G.O. Refunding
Bonds, Series B Aa-/AA 4.80 3/15/01 1,005,000
2,000,000 Connecticut State Special Unemployment Compensation,
Revenue Series A Aaa/AAA 5.50 11/15/00 2,067,500
-----------
4,716,125
-----------
DELAWARE--0.4%
800,000 Delaware State School Improvements, G.O. Bonds,
Series A Aa+/AA1 4.60 3/01/00 801,000
-----------
DISTRICT OF COLUMBIA--0.5%
1,100,000 District of Columbia G.O. Bonds, Series A (AMBAC
Insured) Aaa/AAA 7.00 6/01/98 1,144,000
-----------
FLORIDA--2.3%
1,000,000 Broward County School Dist., G.O. Refunding Bonds Aa-/A1 5.10 2/15/02 1,008,750
500,000 Florida State Board of Education Capital Outlay, G.O.
Refunding Bonds, Series 1992A Aa/AA 5.70 6/01/03 525,000
1,500,000 Jacksonville Electric Authority, St. Johns River,
Revenue Refunding Bonds, Series 10 Aa/AA1 4.60 10/01/00 1,507,500
300,000 Jacksonville Electric Authority, St. Johns River,
Special Obligation Bonds Aa/AA1 6.40 10/01/00 321,375
1,000,000 Orlando Utility Commission, Water & Electric Revenue
Refunding Bonds Aa/AA1 5.20 10/01/00 1,026,250
600,000 Tampa Guaranteed Entitlement Revenue Refunding Bonds
(AMBAC Insured) Aaa/AAA 6.50 10/01/99 635,250
-----------
5,024,125
-----------
GEORGIA--1.6%
300,000 Georgia Municipal Electric Authority, Power Revenue
Ref. Bonds, Series Q A/A 7.40 1/01/98 310,500
300,000 Georgia Municipal Electric Authority, Power Revenue
Ref. Bonds, Series U A/A 6.80 1/01/03 323,625
300,000 Georgia State, G.O. Aa+/AAA 7.00 1/01/00 328,500
200,000 Georgia State Public Improvements, G.O., Series C Aa+/AAA 6.50 4/01/04 220,500
700,000 Gwinnett County G.O. Refunding Bonds, Series 1992 Aa+/AA1 4.88 1/01/99 707,000
1,615,000 Gwinnett County School District, G.O., Series A Aa+/AA1 5.10 2/01/01 1,647,300
-----------
3,537,425
-----------
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
35
<PAGE> 36
PILOT INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Portfolio of Investments (continued)
August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Moody's/S&P
Principal Ratings Maturity Value
Amount Unaudited Rate Date (Note 2)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
HAWAII--5.0%
$ 700,000 Hawaii County, Series 1993A (FGIC Insured) Aaa/AAA 4.80 % 5/01/00 $ 703,500
600,000 Hawaii State, G.O. Refunding Bonds, Series 1992BW Aa/AA 5.50 3/01/99 614,250
900,000 Hawaii State, G.O. Refunding Bonds, Series CC Aa/AA 4.60 2/01/00 900,000
1,000,000 Hawaii State, G.O. School & Public Improvements,
Series BU Aa/AA 5.85 11/01/01 1,052,500
300,000 Hawaii State, G.O., Series BZ Aa/AA 5.40 10/01/01 309,375
2,000,000 Hawaii State, G.O., Series CJ Aa/AA 5.63 1/01/02 2,077,500
2,000,000 Hawaii State, G.O. Aa/AA 5.00 3/01/03 2,010,000
600,000 Honolulu City & County, G.O. Refunding Bonds, Series B Aa/AA 4.60 10/01/99 600,750
900,000 Honolulu City & County, G.O. Refunding Bonds,
Series 1992 One Aa/AA 5.38 6/01/99 919,125
500,000 Honolulu City & County, Public Improvements, Series
1994A Aa/AA 5.00 4/01/99 505,625
1,300,000 Honolulu City & County, Public Improvements, G.O.
Series A Aa/AA 5.25 1/01/01 1,324,375
-----------
11,017,000
-----------
ILLINOIS--6.3%
2,165,000 Chicago Metropolitan Water Reclamation District, G.O. Aa/AA 5.75 12/01/01 2,262,425
1,100,000 Chicago Metropolitan Capital Improvement, G.O. Aa/AA 5.00 12/01/02 1,108,250
600,000 Chicago Water Revenue Refunding Bonds (AMBAC Insured) Aaa/AAA 5.60 11/01/04 616,500
1,500,000 Cook County, G.O. Aaa/AAA 5.10 11/12/03 1,503,750
100,000 Du Page County Jail Project, G.O. Revenue Bonds Aaa/AAA 9.00 1/01/00 113,000
300,000 Du Page County Stormwater Project, G.O. Revenue Bonds Aaa/AAA 9.00 1/01/00 339,000
900,000 Du Page Water Commission Revenue Refunding Bonds Aa/AA1 5.00 5/01/02 910,125
1,100,000 Illinois State G.O. Bonds Aa-/A1 5.50 8/01/03 1,127,500
1,450,000 Illinois State G.O. Bonds Aa-/AA1 5.00 6/01/02 1,451,813
1,900,000 Illinois State, G.O. Sales Tax Revenue Bonds, Series
Q Aaa/A1 5.30 6/15/00 1,928,500
1,300,000 Illinois State Toll Hwy. Priority Revenue Refunding ,
Series A A/A1 4.50 1/01/00 1,287,000
600,000 Northwest Subn. Mun. Water Agy. Revenue Refunding
Bonds (MBIA Insured) Aaa/AAA 5.40 5/01/99 612,000
500,000 Waukegan G.O. Refunding Bonds (FGIC Insured) Aaa/AAA 5.40 1/01/00 510,625
-----------
13,770,488
-----------
INDIANA--0.4%
900,000 Indiana Municipal Power Supply System Revenue
Refunding Bonds, Series B (MBIA Insured) Aaa/AAA 5.38 1/01/03 915,750
-----------
KANSAS--0.2%
100,000 Johnson County Uni. School District No. 229, G.O.
Refunding Bonds (FGIC Insured) Aaa/AAA 7.10 3/01/99 102,642
300,000 Kansas State Department of Transportation Highway
Revenue Bonds, Series A Aa/AA 4.10 9/01/00 291,000
-----------
393,642
-----------
KENTUCKY--0.3%
700,000 Kentucky State Turnpike Authority Economic
Development Revitalization Project, (AMBAC Insured) Aaa/AAA 4.90 7/01/00 706,125
-----------
LOUISIANA--0.5%
300,000 Louisiana State, G.O. Refunding Bonds, Series A A-/BAA1 6.60 8/01/97 305,487
700,000 Louisiana St., Series A (MBIA Insured) Aaa/AAA 6.70 8/01/98 728,259
-----------
1,033,746
-----------
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
36
<PAGE> 37
PILOT INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Portfolio of Investments (continued)
August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Moody's/S&P
Principal Ratings Maturity Value
Amount Unaudited Rate Date (Note 2)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MAINE--0.5%
$1,000,000 Maine Municipal Bond Bank, Series E Aaa/AAA 5.25 % 11/01/04 $ 1,016,250
-----------
MARYLAND--0.3%
600,000 Anne Arundel County Cons. General Improvement, G.O. Aa+/AA 4.40 2/01/00 595,500
-----------
MASSACHUSETTS--2.2%
1,000,000 Massachusetts State G.O., Refunding, Series B A+/A1 5.00 11/01/01 1,012,500
300,000 Massachusetts State G.O., Series B A+/A1 7.25 4/01/99 319,125
300,000 Massachusetts State G.O., Series C A+/A1 7.00 12/01/97 310,875
400,000 Massachusetts State G.O., Series D A+/A1 6.38 7/01/00 424,500
1,260,000 Massachusetts State G.O., Series D Aaa/AAA 5.13 11/01/01 1,283,625
1,500,000 Massachusetts State Turnpike Authority, Series A A+/A1 5.00 6/01/99 1,522,500
-----------
4,873,125
-----------
MICHIGAN--1.0%
900,000 Michigan State Recreation Program, G.O., Series 1992 Aa/AA 5.50 11/01/99 925,875
600,000 Michigan State Trunk Line, Series 1994A Aa-/A1 5.25 11/15/00 609,000
600,000 University of Michigan, University Revenue Refunding,
Student Fee Aa+/AA1 4.60 4/01/99 602,250
-----------
2,137,125
-----------
MINNESOTA--1.5%
900,000 Metropolitan Council, G.O., Minneapolis-St. Paul,
Series A Aaa/AAA 5.00 12/01/04 897,750
300,000 Minnesota State, Various Purpose G.O. Bonds Aa+/AAA 6.40 8/01/99 316,500
900,000 Minnesota State, G.O. Refunding Bonds Aa+/AAA 4.88 8/01/00 913,500
300,000 Ramsey County, G.O., Refunding Capital Improvement,
Series C Aa+/AAA 5.15 12/01/00 307,500
900,000 St. Paul Sewer Revenue Refunding Bonds (AMBAC
Insured) Aaa/AAA 5.10 12/01/01 905,625
-----------
3,340,875
-----------
MISSOURI--13.7%
300,000 Clay County Public School District 53, G.O. Series B
(MBIA Insured) Aaa/AAA 5.00 3/01/03 301,125
400,000 Columbia G.O., Refunding Aa/AA 5.20 10/01/00 410,000
100,000 Independence School District G.O. Bonds NR/A 6.10 3/01/01 105,500
300,000 Kansas City Airport Revenue Bonds A/A 7.40 9/01/98 315,951
1,000,000 Kansas City Municipal Assistance Revenue Bonds Aaa/AAA 4.80 4/15/03 991,250
200,000 Kansas City Public Safety G.O. Bonds Aa/AA 6.20 9/01/97 200,012
1,300,000 Kansas City School District Building, Leasehold
Revenue Series A, Prerefunded 2/1/98 @ 102 (FGIC
Insured) Aaa/AAA 7.90 2/01/08 1,392,625
300,000 Kansas City Various Purpose G.O. Bonds Aa/AA 6.30 3/01/03 315,750
300,000 Kansas City Various Purpose G.O. Bonds Aa/AA 6.40 3/01/04 315,750
600,000 Kansas City Various Purpose G.O. Bonds Aa/AA 6.00 3/01/07 616,500
200,000 Kansas City Water Revenue Bonds, Series B (AMBAC
Insured) Aa/AA 6.60 12/01/02 207,000
300,000 Mehlville School District No. 9, G.O. (MBIA Insured) Aaa/AAA 5.00 2/15/00 303,375
200,000 Missouri State Environmental Improvement & Energy
Authority, Water Pollution Control Revenue Bonds,
Series A NR/AA 5.40 7/01/97 202,570
1,000,000 Missouri State Environmental Bonds Aa/A1 5.50 12/01/05 1,025,000
600,000 Missouri State Health & Educational Facilities
Authority, Revenue, Barnes-Jewish, Series A Aa/AA 5.90 5/15/04 629,250
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
37
<PAGE> 38
PILOT INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Portfolio of Investments (continued)
August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Moody's/S&P
Principal Ratings Maturity Value
Amount Unaudited Rate Date (Note 2)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MISSOURI(continued)
$1,200,000 Missouri State Health & Educational Facilities
Authority, Revenue, Barnes-Jewish, Series A Aa/AA 4.00 % 5/15/98 $ 1,192,500
200,000 Missouri State Health & Educational Facilities
Authority, Revenue, Barnes Hospital Aaa/NR 6.55 12/15/97 206,500
200,000 Missouri State Health & Educational Facilities
Authority, Revenue, Barnes Hospital Aaa/NR 6.65 12/15/98 211,000
200,000 Missouri State Health & Educational Facilities
Authority, Revenue, Barnes Hospital Aaa/NR 6.75 12/15/99 214,000
300,000 Missouri State Health & Educational Facilities
Authority, Revenue Refunding & Improvement,
Christian Health, A (FGIC Insured) Aaa/AAA 6.40 2/15/00 318,375
300,000 Missouri State Health & Educational Facilities
Authority, Revenue Refunding & Improvement,
Christian Health, Series A (FGIC Insured) Aaa/AAA 6.25 2/15/98 309,375
600,000 Missouri State Health & Educational Facilities
Authority, Revenue Refunding & Improvement,
Christian Health, Series A, Prerefunded 2/15/01
@ 102 Aaa/AAA 6.60 2/15/02 655,500
3,000,000 Missouri State Health & Educational Facilities
Authority, Revenue, Drury College, Series A * NR/AA3 3.25 8/15/21 3,000,000
300,000 Missouri State Health & Educational Facilities
Authority, Revenue, Missouri Baptist Medical
Center, Series 1990A NR 7.30 7/01/99 322,500
300,000 Missouri State Health & Educational Facilities
Authority Revenue, General Tuition, St. Louis
University (AMBAC Insured) Aaa/AAA 6.10 8/01/99 313,125
600,000 Missouri State Health & Educational Facilities
Authority, Revenue Refunding, St. Louis University
(AMBAC Insured) Aaa/AAA 4.10 10/01/00 586,500
1,000,000 Missouri State Health & Educational Facilities
Authority, Revenue, St. Louis Childrens Hosp. (MBIA
Insured) Aaa/AAA 5.40 5/15/99 1,026,250
100,000 Missouri State Health & Educational Facilities
Authority, Revenue Refunding, St. Lukes Hospital,
Kansas City (MBIA Insured) Aaa/AAA 6.50 11/15/02 109,000
300,000 Missouri State Health & Educational Facilities
Authority, Health Facilities Revenue, St. Lukes
Episcopal/Presbyterian (FGIC Insured) Aaa/AAA 4.70 12/01/98 304,125
200,000 Missouri State Health & Educational Facilities
Authority, Revenue, St. Lukes Episcopal Hosp. (FGIC
Insured) Aaa/AAA 6.60 12/01/00 213,250
600,000 Missouri State Health & Educational Facilities
Authority, Revenue, St. Lukes Health System (MBIA
Insured) Aaa/AAA 4.25 11/15/01 583,500
300,000 Missouri State Health & Educational Facilities
Authority, Revenue Refunding & Improvement, Sisters
of Mercy, Series E Aa/AA 7.00 6/01/98 312,750
700,000 Missouri State Health & Educational Facilities
Authority, Revenue Refunding & Improvement, Sisters
of Mercy, Series E Aa/AA 7.00 6/01/99 743,750
1,500,000 Missouri State Health & Educational Facilities
Authority, Revenue Refunding, SSM Health Care,
Series AA (MBIA Insured) Aaa/AAA 5.40 6/01/00 1,535,625
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
38
<PAGE> 39
PILOT INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Portfolio of Investments (continued)
August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Moody's/S&P
Principal Ratings Maturity Value
Amount Unaudited Rate Date (Note 2)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MISSOURI(continued)
$ 200,000 Missouri State Health & Educational Facilities
Authority, Revenue, SSM Care Project., Series B
(MBIA Insured) Aaa/AAA 6.50 % 6/01/98 $ 208,000
400,000 Missouri State Health & Educational Facilities
Authority, Revenue, SSM Health Care Project (BIGI
Insured) Aaa/AAA 7.00 6/01/97 409,292
200,000 Missouri State Health & Educational Facilities
Authority, Revenue, SSM Health Care Project, Series
B (MBIA Insured) Aaa/AAA 6.40 6/01/97 203,782
400,000 Missouri State Office Building Special Obligation
Revenue, Series A 1991 Aa/AA 5.90 12/01/01 423,000
900,000 Missouri State, Third State Building, G.O. Refunding
Bonds, Series A Aaa/AAA 5.00 8/01/01 916,875
300,000 Missouri State, Third State Building, G.O. Refunding
Bonds, Series B Aaa/AAA 5.50 11/01/01 312,375
200,000 Missouri State, Water Pollution Control, G.O., Series
1989 A Aaa/AAA 7.75 9/01/96 200,022
200,000 Missouri State, Water Pollution Control, G.O., Series
B, Prerefunded 11/01/01 @ 100 Aaa/AAA 5.70 11/01/02 209,250
300,000 Missouri State, Water Pollution Control, G.O., Series
B, Prerefunded 11/01/01 @ 100 Aaa/AAA 5.80 11/01/03 315,375
300,000 Springfield School District No. R12, School Building,
G.O. Refunding Bonds, Series A (FGIC Insured) Aaa/AAA 6.40 3/01/03 318,000
300,000 Springfield School District No. R12, School Building,
G.O. Refunding Bonds, Series A (FGIC Insured) Aaa/AAA 6.40 3/01/04 317,625
300,000 Springfield School District No. R12, School Building,
G.O. Refunding Bonds, Series A (FGIC Insured) Aaa/AAA 6.25 3/01/05 315,750
400,000 Springfield Waterworks Revenue Refunding Bonds,
Series B A+/AA 4.75 5/01/02 399,000
600,000 St. Louis County, Pattonville School District No.
R-3, G.O. (FGIC Insured) Aaa/AAA 5.70 2/01/01 624,750
1,300,000 St. Louis County Refunding & Improvement, Series A Aaa/AAA 4.80 2/01/03 1,293,500
200,000 St. Louis County Regional Convention & Sports
Complex, Series B BBB+/A 6.20 8/15/98 205,250
100,000 St. Louis County Regional Convention & Sports
Complex, Series B BBB+/A 6.30 8/15/99 103,625
500,000 St. Louis County, Rockwood School District No. R-6,
G.O., Prerefunded 2/1/99 @ 100 NR/AAA 6.00 2/01/01 518,750
400,000 St. Louis County, Rockwood School District No. R-6,
G.O., Prerefunded 2/1/99 @ 100 NR/AAA 6.00 2/01/02 415,000
700,000 St. Louis County, Rockwood School District No. R-6,
G.O., Refunding Bonds NR/AA 5.00 2/01/03 698,250
300,000 St. Louis School District, G.O., (FGIC Insured) Aaa/AAA 6.50 4/01/03 329,250
400,000 St. Louis School District, Mississippi River Subdiv.,
G.O. Ref Bonds, (FGIC Insured) Aaa/AAA 6.30 2/15/01 422,000
400,000 St. Louis School District, Mississippi River Subdiv.,
G.O. Ref Bonds, (FGIC Insured) Aaa/AAA 6.40 2/15/02 422,000
100,000 University Mo., Univ. Revenue Refunding Bonds, Series
A (AMBAC Insured) Aaa/AAA 6.05 11/01/96 100,410
200,000 University Mo., Univ. Revenue Refunding Bonds, Series
A (AMBAC Insured) Aaa/AAA 6.10 11/01/97 204,250
200,000 University Mo., Univ. Revenue Refunding Bonds, Series
A (AMBAC Insured) Aaa/AAA 6.20 11/01/98 207,000
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
39
<PAGE> 40
PILOT INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Portfolio of Investments (continued)
August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Moody's/S&P
Principal Ratings Maturity Value
Amount Unaudited Rate Date (Note 2)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MISSOURI(continued)
$ 200,000 University Mo., Univ. Revenue Refunding Bonds, Series
B (AMBAC Insured) Aaa/AAA 6.05 % 11/01/96 $ 200,820
200,000 University Mo., Univ. Revenue Refunding Bonds, Series
B (AMBAC Insured) Aaa/AAA 6.10 11/01/97 204,250
100,000 University Mo., Univ. Revenue Refunding Bonds, Series
B (AMBAC Insured) Aaa/AAA 6.20 11/01/98 103,500
-----------
30,090,234
-----------
NEBRASKA--1.2%
1,000,000 Nebraska Public Power District Revenue, Power Supply
System A+/A1 5.30 1/01/02 1,016,250
900,000 Omaha Public Power District Electric Revenue, Series A Aaa/NR 5.40 2/01/98 916,875
600,000 Omaha Public Power District Electric Revenue, Series D Aa/AA 4.75 2/01/04 587,250
-----------
2,520,375
-----------
NEVADA--2.0%
400,000 Clark County G.O. Revenue Bonds, Series A (AMBAC Insured) Aaa/AAA 5.50 6/01/98 408,500
300,000 Clark County School District, G.O., Series A. (MBIA
Insured) Aaa/AAA 6.50 6/01/02 323,625
1,000,000 Nevada State, G.O., Bk. No. 38-39-A Aa/NR 6.00 7/01/01 1,050,000
1,000,000 Nevada State, G.O., Series A Aa/AA 5.80 5/01/00 1,038,750
1,500,000 Washoe County G.O. Refunding Bonds (AMBAC Insured) Aaa/AAA 5.00 9/01/01 1,522,500
-----------
4,343,375
-----------
NEW JERSEY--3.3%
1,100,000 Bergen County Util. Authority, Water Pollution Cntrl.
Revenue, Series B (FGIC Insured) Aaa/AAA 5.50 12/15/02 1,141,250
3,000,000 New Jersey G.O. Bonds Aa+/AA1 5.13 1/01/02 3,060,000
1,100,000 New Jersey State Transportation Trust Fund Authority,
Series A (AMBAC Insured) Aaa/AAA 5.20 12/15/00 1,122,000
2,000,000 New Jersey State Transportation Trust Fund Authority,
Series B (MBIA Insured) Aaa/AAA 5.00 6/15/02 2,007,500
-----------
7,330,750
-----------
NEW MEXICO--1.8%
1,400,000 Albuquerque G.O. Bonds, Series A & B Aa/AA 4.70 7/01/00 1,405,250
2,000,000 New Mexico State Capital Project, G.O. Bonds Aa+/AA1 5.25 9/01/03 2,022,500
600,000 New Mexico State Severance Tax, Series B Aa/AA 5.10 7/01/00 610,500
-----------
4,038,250
-----------
NEW YORK--1.4%
300,000 New York State G.O. A-/A 6.75 6/15/99 316,875
600,000 New York State Various Purpose G.O. Bonds A-/A 6.60 11/15/98 629,250
1,100,000 New York State Various Purpose G.O. Bonds A-/A 6.70 11/15/99 1,168,750
1,000,000 New York State Tollway Authority Bonds, Series B Aaa/AAA 5.00 4/01/00 1,013,750
-----------
3,128,625
-----------
NORTH CAROLINA--0.1%
300,000 North Carolina State G.O. Aaa/AAA 5.60 4/01/00 310,875
-----------
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
40
<PAGE> 41
PILOT INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Portfolio of Investments (continued)
August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Moody's/S&P
Principal Ratings Maturity Value
Amount Unaudited Rate Date (Note 2)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OHIO--1.0%
$1,000,000 Cleveland, G.O. (AMBAC Insured) Aaa/AAA 4.90 % 9/01/04 $ 997,500
900,000 Columbus G.O. Refunding Bonds, Series D Aaa/AAA 4.75 9/15/00 907,875
300,000 Ohio State Water Development Authority Revenue, Pure
Water Series I (MBIA Insured) Aaa/AAA 7.00 6/01/99 320,250
-----------
2,225,625
-----------
OKLAHOMA--0.9%
2,000,000 Tulsa, G.O. Aa/AA 5.13 5/01/02 2,035,000
-----------
OREGON--2.6%
3,000,000 Multnomah County School District 1J, G.O., Portland** Aa-/AA 5.50 6/01/05 3,075,000
1,300,000 Portland Sewer System Revenue, Series A A+/A1 5.45 6/01/03 1,343,875
1,300,000 Washington County University Sewer Agency (AMBAC
Insured) Aaa/AAA 5.30 10/01/01 1,337,375
-----------
5,756,250
-----------
RHODE ISLAND--0.4%
800,000 Pawtucket G.O. Bonds (FGIC Insured) Aaa/AAA 5.25 4/15/01 818,000
-----------
TENNESSEE--0.8%
300,000 Hamilton County, Series 1994 NR/AA 5.00 7/01/00 303,750
600,000 Metropolitan Government, Nashville & Davidson County,
Electric Revenue, Series B Aa/AA 5.63 5/15/03 621,750
900,000 Shelby County G.O. Refunding Bonds, Series A Aa+/AA 5.30 3/01/98 914,625
-----------
1,840,125
-----------
TEXAS--13.0%
700,000 Arlington Permanent Improvement Refunding Bonds Aa/AA 4.80 8/15/01 702,625
500,000 Austin Public Improvement Refunding Bonds Aa/AA 4.50 9/01/98 502,500
1,100,000 Austin Utility System Revenue Refunding Comb., Series
A A/A 5.00 5/15/01 1,098,625
500,000 Austin Utility System Revenue Refunding Comb., Series
A (AMBAC Insured) Aaa/AAA 6.50 11/15/03 543,125
900,000 Colorado River Municipal Water District (AMBAC
Insured) Aaa/AAA 5.00 1/01/04 892,125
2,000,000 Dallas-Fort Worth International Airport Revenue Bonds
(MBIA Insured) Aaa/AAA 4.75 11/01/01 1,995,000
1,000,000 Dallas G.O. Refunding Bonds Aaa/AA1 5.20 2/15/98 1,013,750
2,400,000 Dallas Waterworks & Sewer System Revenue Refunding
Bonds Aa/AA 4.50 4/01/00 2,397,000
900,000 Garland G.O. Refunding Bonds Aa/AA 5.50 8/15/99 924,750
900,000 Houston Refunding , Series 1993D Aa-/AA 4.70 3/01/01 897,750
2,500,000 Houston Water & Sewer System Revenue, Series A (MBIA
Insured) Aaa/AAA 5.80 12/01/04 2,606,250
400,000 Lower Co. River Authority Revenue Refunding Bonds Aa-/AA 6.90 1/01/01 410,216
400,000 Lower Co. River Authority Revenue, Prerefunded
1/01/97 @ 102 Aaa/AAA 7.00 1/01/03 411,888
1,100,000 San Antonio Electric & Gas Revenue Refunding Bonds Aa/AA1 4.00 2/01/00 1,076,625
1,000,000 San Antonio Electric & Gas Revenue Refunding, Libor
Reserve 2 Aa/AA1 5.20 2/01/01 1,016,250
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
41
<PAGE> 42
PILOT INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Portfolio of Investments (continued)
August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Moody's/S&P
Principal Ratings Maturity Value
Amount Unaudited Rate Date (Note 2)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TEXAS(continued)
$1,100,000 San Antonio Electric & Gas Revenue Refunding, Libor
Reserve 2 Aa/AA1 5.20 % 2/01/01 $ 1,115,125
2,200,000 Texas A & M University Revenue Refunding Bonds Aa/AA 5.95 5/15/05 2,318,250
1,880,000 Texas A & M University Revenue Refunding Bonds Aa/AA 5.00 5/15/02 1,887,050
900,000 Texas State Pub. Fin. Authority, Series B Aa/AA 5.00 10/01/01 915,750
900,000 Texas State Refunding, Series A Aa/AA 5.70 10/01/03 945,000
1,100,000 Texas State Superconducting, 1992 C Aa/AA 5.35 4/01/01 1,133,000
300,000 University of Texas, Permanent Fund, Revenue
Refunding Bond Aaa/AAA 6.70 7/01/05 329,250
1,100,000 University of Texas, Revenue Refunding Bond Aa+/AA1 5.10 8/15/99 1,116,500
2,000,000 University of Texas, Permanent University Revenue
Fund Aaa/AAA 5.00 7/01/01 2,027,500
300,000 University of Texas, Revenue Refunding Bond Aa+/AA1 5.20 8/15/00 305,625
-----------
28,581,529
-----------
UTAH--2.0%
300,000 Davis County School District G.O. Bonds, Preref.
12/01/01 @ 100 (FGIC Insured) Aaa/AAA 6.45 6/01/02 323,250
2,000,000 Intermountain Power Agency Obligation Aaa/AAA 5.05 7/01/01 2,020,000
900,000 Intermountain Pwr. Agy., Pwr. Supply Revenue
Refunding, Series B Aa-/AA 5.20 7/01/98 912,375
1,100,000 Utah State G.O. Bonds, Series A & B Aaa/AAA 4.40 7/01/99 1,101,375
-----------
4,357,000
-----------
VIRGINIA--2.5%
1,620,000 Chesapeake Bay Bridge & Tunnel Revenue Bonds (FGIC
Insured) Aaa/AAA 5.10 7/01/01 1,644,300
1,100,000 Fairfax County Refunding, Series A Aaa/AAA 4.70 6/01/00 1,104,125
1,000,000 Norfolk G.O. Bonds Aa/AA 5.25 6/01/01 1,023,750
700,000 Norfolk G.O. Refunding Bonds, Series A Aa/AA 4.60 6/01/01 697,375
1,100,000 Prince William County Refunding, Series C Aa/AA 4.50 8/01/01 1,093,125
-----------
5,562,675
-----------
WASHINGTON--9.4%
600,000 King County Refunding, Series A Aa+/AA1 5.25 12/01/01 616,500
2,500,000 King County Refunding, Series C Aa+/AA1 5.63 6/01/02 2,606,250
1,195,000 King County School District # 415 Aaa/AAA 5.10 6/01/04 1,193,506
3,000,000 Pierce County School District Refunding Aaa/AAA 5.00 12/01/03 3,022,500
1,500,000 Snohomish County School District 103 Aaa/AAA 5.15 6/01/05 1,501,875
300,000 Snohomish County School District 2, Series A (MBIA
Insured) Aaa/AAA 6.80 6/01/03 325,500
400,000 Spokane G.O. Aa/AA 8.50 1/01/00 446,000
800,000 Tacoma Electric System Revenue Refunding Bonds (FGIC
Insured) Aaa/AAA 5.50 1/01/01 821,000
2,500,000 Tacoma Electric System Revenue Refunding, Series B
(AMBAC Insured) Aaa/AAA 5.90 1/01/05 2,600,000
600,000 Tacoma Sewer Revenue Refunding, Series B (FGIC
Insured) Aaa/AAA 5.50 12/01/03 616,500
1,000,000 Tacoma, Series A A+/A1 5.75 7/01/02 1,037,500
700,000 Washington State Public Power Supply, Nuclear Project
No. 1, Series C Aa/AA1 7.25 7/01/97 716,275
600,000 Washington State Public Power Supply, Nuclear Project
No. 1, Series C Aa/AA1 7.30 7/01/98 626,250
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
42
<PAGE> 43
PILOT INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Portfolio of Investments (continued)
August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Moody's/S&P
Principal Ratings Maturity Value
Amount Unaudited Rate Date (Note 2)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
WASHINGTON(continued)
$ 300,000 Washington State Public Power Supply, Nuclear Project
No. 3, Series B Aa/AA1 7.10 % 7/01/98 $ 312,375
600,000 Washington State Refunding Aa/AA 4.80 9/01/98 606,000
900,000 Washington State Refunding, Series R 92C Aa/AA 5.60 9/01/01 934,875
600,000 Washington State, Prerefunded 6/01/98 @ 100 Aa/AAA 7.30 6/01/00 631,500
900,000 Washington State, Series 93A Aa/AA 5.25 10/01/00 920,250
500,000 Washington State, Series B Aa/AA 6.30 6/01/02 531,250
600,000 Yakima County School District No. 7 (MBIA Insured) Aaa/AAA 5.50 12/01/03 624,000
-----------
20,689,906
-----------
WISCONSIN--3.9%
800,000 Milwaukee County, Series 1994A Aa-/A1 5.00 12/01/00 807,000
300,000 Milwaukee Metropolitan Sewer District, Series A Aa/AA 7.00 9/01/00 324,750
400,000 Milwaukee Metropolitan Sewer District, Series A Aa/AA 6.70 10/01/00 429,000
600,000 Milwaukee Refunding, Series 1992 Aa+/AA1 5.70 6/01/99 619,500
300,000 Milwaukee, Series BZ Aa+/AA1 6.38 6/15/03 319,500
3,070,000 Sun Prairie Area School District, G.O. Aaa/AAA 5.50 4/01/03 3,150,587
600,000 Wisconsin State G.O., Series A Aa/AA 5.75 5/01/00 622,500
300,000 Wisconsin State G.O., Series D Aa/AA 6.00 5/01/00 313,875
900,000 Wisconsin State Refunding, Series 1 Aa/AA 5.10 11/01/01 915,750
1,100,000 Wisconsin State Refunding, Series 3 Aa/AA 4.25 11/01/99 1,093,125
-----------
8,595,587
-----------
TOTAL MUNICIPAL BONDS (cost $210,853,987) 216,448,153
-----------
</TABLE>
<TABLE>
<CAPTION>
Shares
(000)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TAX-EXEMPT MONEY MARKET MUTUAL FUND--3.9%
8,469 Federated Tax Exempt Obligation Fund (cost $8,469,127) 8,469,127
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS--102.4%(cost $219,323,114) 224,917,280
LIABILITIES IN EXCESS OF OTHER ASSETS--(2.4%) (5,251,796)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS--100.0% $219,665,484
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
AMBAC -- AMBAC Indemnity Corporation
FGIC -- Financial Guaranty Insurance Corporation
MBIA -- Municipal Bond Insurance Association
* Variable rate securities having liquidity sources through bank letters of
credit or other credit and/or liquidity agreements. The interest rate, which
will change periodically, is based upon bank prime rates or an index of
market interest rates. The rate reflected on the Schedule of Portfolio
Investments is the rate in effect at August 31, 1996.
** When issued securities
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
43
<PAGE> 44
THE PILOT FUNDS
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities
August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SMALL
GROWTH AND EQUITY CAPITALIZATION
INCOME FUND INCOME FUND EQUITY FUND
------------ ------------ -------------------
<S> <C> <C> <C>
ASSETS:
Investment in securities, at value...................................... $186,010,757 $132,895,704 $63,641,193
Repurchase agreements, at cost.......................................... 4,525,004 5,899,701 11,512,003
- -----------------------------------------------------------------------------------------------------------------------------
Total (cost $169,362,628; $120,936,301; and $74,195,855;
respectively).......................................................... 190,535,761 138,795,405 75,153,196
Cash.................................................................... 659 860 1,677
Dividends receivable.................................................... 443,091 607,775 32,478
Interest receivable..................................................... 658 42,775 1,676
Receivable for Portfolio shares sold.................................... 364,624 117,229 200,058
Receivable from brokers from investments sold........................... -- 2,652 --
Deferred organization costs and other assets............................ 68,080 64,667 26,046
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS............................................................ 191,412,873 139,631,363 75,415,131
- -----------------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Advisory fees payable................................................... 80,629 55,529 45,426
Administration fees payable............................................. 17,794 12,721 --
Distribution expenses payable (Class A Shares).......................... 969 343 528
Distribution expenses payable (Class B Shares).......................... 3,221 2,492 1,464
Payable to brokers for investments purchased............................ -- 3,866,900 218,007
Dividends payable....................................................... 378,279 436,971 35,159
Payable for Portfolio shares redeemed................................... -- 60,331 86,341
Custodian fees payable.................................................. 6,974 3,633 2,597
Net variation margin on open futures contracts.......................... -- -- 34,616
Other accrued expenses.................................................. 60,431 74,571 17,925
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES....................................................... 548,297 4,513,491 442,063
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS.............................................................. $190,864,576 $135,117,872 $74,973,068
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE
($1.00 PAR VALUE, UNLIMITED NUMBER OF SHARES AUTHORIZED):
PILOT SHARES:
Net assets.............................................................. $182,379,130 $130,278,087 $70,483,423
Shares of beneficial interest issued and outstanding.................... 14,134,853 10,526,776 6,617,289
Net asset value......................................................... $12.90 $12.38 $10.65
- -----------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES:
Net assets.............................................................. $ 4,667,227 $ 1,639,657 $ 2,611,194
Shares of beneficial interest issued and outstanding.................... 361,868 131,637 245,417
Net asset value......................................................... $12.90 $12.46 $10.64
- -----------------------------------------------------------------------------------------------------------------------------
Sales charge--4.50%, 4.50%, and 4.50%, respectively, of offering
price.................................................................. 0.61 0.59 0.50
- -----------------------------------------------------------------------------------------------------------------------------
Maximum offering price.................................................. $13.51 $13.05 $11.14
- -----------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES:
Net assets.............................................................. $ 3,818,219 $ 3,200,128 $ 1,878,451
Shares of beneficial interest issued and outstanding.................... 295,864 257,156 176,356
Net asset value......................................................... $12.91 $12.44 $10.65
- -----------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS:
Shares of beneficial interest, at par................................... $ 14,792,585 $ 10,915,569 $ 7,039,062
Additional paid-in capital.............................................. 146,269,265 103,004,683 66,723,981
Undistributed net investment income..................................... 22,405 126,759 7,331
Accumulated undistributed net realized gains from investment and futures
transactions........................................................... 8,607,188 3,211,757 581,207
Net unrealized appreciation from investments and futures................ 21,173,133 17,859,104 621,487
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS, AUGUST 31, 1996............................................. $190,864,576 $135,117,872 $74,973,068
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
44
<PAGE> 45
THE PILOT FUNDS
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities
August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERMEDIATE INTERMEDIATE
U.S. GOVERNMENT U.S. GOVERNMENT MUNICIPAL MUNICIPAL
SECURITIES FUND SECURITIES FUND BOND FUND BOND FUND
---------------- ---------------- ------------ ------------
<S> <C> <C> <C> <C>
ASSETS:
Investment in securities, at value.................... $141,924,090 $225,267,475 $188,716,068 $224,917,280
Repurchase agreements, at cost........................ 3,118,222 2,907,839 -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total (cost $146,519,391; $231,910,918; $181,116,525;
and $219,323,114, respectively)...................... 145,042,312 228,175,314 188,716,068 224,917,280
Cash.................................................. 454 423 -- --
Dividends receivable.................................. -- -- -- --
Interest receivable................................... 2,613,646 3,811,094 2,878,528 2,822,964
Receivable for Portfolio shares sold.................. 91,400 131,000 290,500 333,800
Receivable from brokers from investments sold......... -- -- -- --
Deferred organization costs and other assets.......... 64,099 65,629 64,968 66,263
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS.......................................... 147,811,911 232,183,460 191,950,064 228,140,307
- ---------------------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Advisory fees payable................................. 48,619 68,610 73,263 74,237
Administration fees payable........................... 13,717 21,646 17,984 20,494
Distribution expenses payable (Class A Shares)........ 138 197 378 140
Distribution expenses payable (Class B Shares)........ 933 -- 1,052 --
Payable to brokers for investments purchased.......... -- -- 7,425,535
Dividends payable..................................... 694,730 1,042,589 812,893 832,232
Payable for Portfolio shares redeemed................. 25,090 30,380 242 36,000
Custodian fees payable................................ 3,723 4,543 4,361 3,243
Net variation margin on open futures contracts........ -- -- -- --
Other accrued expenses................................ 89,492 53,541 87,247 82,942
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES..................................... 876,442 1,221,506 997,420 8,474,823
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS............................................ $146,935,469 $230,961,954 $190,952,644 $219,665,484
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER SHARE:
($1.00 PAR VALUE, UNLIMITED NUMBER OF SHARES
AUTHORIZED):
PILOT SHARES:
Net assets............................................ $145,065,550 $230,030,254 $187,939,314 $218,901,820
Shares of beneficial interest issued and
outstanding.......................................... 13,780,940 22,639,312 17,593,520 21,164,250
Net asset value....................................... $10.53 $10.16 $10.68 $10.34
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES:
Net assets............................................ $ 632,434 $ 931,700 $ 1,754,563 $ 763,664
Shares of beneficial interest issued and
outstanding.......................................... 60,030 91,731 164,350 73,742
Net asset value....................................... $10.54 $10.16 $10.68 $10.36
- ---------------------------------------------------------------------------------------------------------------------------------
Sales charge--4.50%, 4.00%, 4.50%, and 4.00%,
respectively, of offering price...................... 0.50 0.42 0.50 0.43
- ---------------------------------------------------------------------------------------------------------------------------------
Maximum offering price................................ $11.04 $10.58 $11.18 $10.79
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES:
Net assets............................................ $ 1,237,485 $ -- $ 1,258,767 $ --
Shares of beneficial interest issued and
outstanding.......................................... 117,601 -- 118,533 --
Net asset value....................................... $10.52 -- $10.62 --
- ---------------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS:
Shares of beneficial interest, at par................. $ 13,958,571 $ 22,731,043 $ 17,876,403 $ 21,237,992
Additional paid-in capital............................ 127,511,360 208,830,182 164,275,240 192,309,747
Undistributed net investment income................... 22,072 22,072 (151,486) 22,150
Accumulated undistributed net realized gains from
investment and futures transactions.................. 6,920,545 3,114,261 1,352,944 501,429
Net unrealized appreciation (depreciation) from
investments and futures.............................. (1,477,079) (3,735,604) 7,599,543 5,594,166
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS, AUGUST 31, 1996........................... $146,935,469 $230,961,954 $190,952,644 $219,665,484
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
45
<PAGE> 46
THE PILOT FUNDS
- --------------------------------------------------------------------------------
Statements of Operations
For the year ended August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY
GROWTH AND INCOME SMALL CAPITALIZATION
INCOME FUND FUND EQUITY FUND(a)
----------- ----------- --------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign taxes of $10,028 on Growth and Income
Fund)................................................................ $3,727,607 $4,929,581 $ 103,779
Interest............................................................... 211,409 564,455 537,785
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME........................................................... 3,939,016 5,494,036 641,564
- -----------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Advisory fees.......................................................... 1,184,210 910,255 310,841
Administration fees.................................................... 174,389 134,044 34,284
Distribution expenses (Class A Shares)................................. 5,586 2,101 1,958
Distribution expenses (Class B Shares)................................. 22,266 16,984 6,106
Accounting Fees........................................................ 8,139 6,374 4,253
Audit fees............................................................. 16,754 21,726 13,423
Transfer agent fees and expenses....................................... 35,640 32,690 10,567
Custodian fees and expenses............................................ 48,804 49,386 32,617
Reports to shareholders................................................ 12,167 9,249 3,050
Registration fees...................................................... 48,875 51,393 47,814
Amortization of organization expenses.................................. 20,496 19,764 5,391
Legal fees............................................................. 6,914 4,840 3,333
Trustees' fees......................................................... 6,357 5,598 2,581
Other expenses......................................................... 19,209 18,135 9,754
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES......................................................... 1,609,806 1,282,539 485,972
- -----------------------------------------------------------------------------------------------------------------------------
Less: Fee waivers and expense reimbursements by advisor, administrator,
and distributor...................................................... (423,606 ) (355,773 ) (166,248)
- -----------------------------------------------------------------------------------------------------------------------------
NET EXPENSES........................................................... 1,186,200 926,766 319,724
- -----------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME.................................................. 2,752,816 4,567,270 321,840
- -----------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAINS FROM INVESTMENTS:
Net realized gains from investment and futures transactions............ 9,243,395 4,887,676 581,207
Net change in unrealized appreciation from investments and futures..... 8,360,600 7,360,212 621,487
- -----------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAINS FROM INVESTMENTS AND FUTURES......... 17,603,995 12,247,888 1,202,694
- -----------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................... $20,356,811 $16,815,158 $1,524,534
- -----------------------------------------------------------------------------------------------------------------------------
<FN>
(a) For the period from December 12, 1995 (commencement of operations) through
August 31, 1996.
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
46
<PAGE> 47
THE PILOT FUNDS
- --------------------------------------------------------------------------------
Statements of Operations
For the year ended August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERMEDIATE INTERMEDIATE
U.S. GOVERNMENT U.S. GOVERNMENT MUNICIPAL MUNICIPAL
SECURITIES FUND SECURITIES FUND BOND FUND BOND FUND
--------------- --------------- ---------- ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest.................................................. $ 8,777,414 $12,820,252 $9,969,995 $10,889,785
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME.............................................. 8,777,414 12,820,252 9,969,995 10,889,785
- -------------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Advisory fees............................................. 770,623 1,128,188 931,305 1,144,620
Administration fees....................................... 155,600 227,769 187,073 229,870
Distribution expenses (Class A Shares).................... 816 1,811 2,213 884
Distribution expenses (Class B Shares).................... 7,222 -- 7,906 --
Accounting fees........................................... 6,085 9,528 17,183 20,241
Audit fees................................................ 17,098 20,752 19,752 31,088
Transfer agent fees and expenses.......................... 32,574 33,032 33,340 38,096
Custodian fees and expenses............................... 43,336 38,604 42,672 37,676
Reports to shareholders................................... 10,203 15,834 12,731 15,326
Registration fees......................................... 57,766 63,069 74,591 77,961
Amortization of organization expenses..................... 19,764 19,764 19,764 19,764
Legal fees................................................ 5,343 10,879 7,474 10,761
Trustees' fees............................................ 7,207 9,615 9,478 12,714
Other expenses............................................ 22,271 10,407 3,513 3,377
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES............................................ 1,155,908 1,589,252 1,368,995 1,642,378
- -------------------------------------------------------------------------------------------------------------------------------
Less: Fee waivers and expense reimbursements by advisor,
administrator, and distributor.......................... (237,673) (421,581) (190,712 ) (322,971)
- -------------------------------------------------------------------------------------------------------------------------------
NET EXPENSES.............................................. 918,235 1,167,671 1,178,283 1,319,407
- -------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME..................................... 7,859,179 11,652,581 8,791,712 9,570,378
- -------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED LOSSES FROM INVESTMENTS:
Net realized gains from investment and futures
transactions............................................ 6,920,545 3,434,313 1,327,403 626,264
Net change in unrealized depreciation from investments and
futures................................................. (9,917,288) (8,921,949) (1,391,889) (3,240,645)
- -------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED LOSSES FROM INVESTMENTS....... (2,996,743) (5,487,636) (64,486 ) (2,614,381)
- -------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS...... $ 4,862,436 $ 6,164,945 $8,727,226 $ 6,955,997
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
47
<PAGE> 48
THE PILOT FUNDS
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH AND INCOME FUND EQUITY INCOME FUND
----------------------------------------- ------------------
FOR THE PERIOD
NOVEMBER 7, 1994
FOR THE YEAR ENDED THROUGH AUGUST 31, FOR THE YEAR ENDED
AUGUST 31, 1996 1995(a) AUGUST 31, 1996
------------------ ------------------- ------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income........................ $ 2,752,816 $ 1,410,693 $ 4,567,270
Net realized gains from investment and
futures transactions....................... 9,243,395 2,531,612 4,887,676
Net change in unrealized appreciation from
investments and futures.................... 8,360,600 12,812,533 7,360,212
- -------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from
operations..................................... 20,356,811 16,754,838 16,815,158
- -------------------------------------------------------------------------------------------------------------------
Dividends to shareholders from net investment
income:
Pilot Shares................................. (2,705,578) (1,405,927) (4,386,503)
Class A Shares............................... (35,542) (2,695) (29,116)
Class B Shares............................... (18,351) (2,071) (46,964)
- -------------------------------------------------------------------------------------------------------------------
Total dividends to shareholders from net
investment income.............................. (2,759,471) (1,410,693) (4,462,583)
- -------------------------------------------------------------------------------------------------------------------
Dividends to shareholders from net realized
gains:
Pilot Shares................................. (3,103,049) -- (2,661,530)
Class A Shares............................... (26,472) -- (10,717)
Class B Shares............................... (32,042) -- (28,820)
- -------------------------------------------------------------------------------------------------------------------
TOTAL DIVIDENDS TO SHAREHOLDERS FROM NET
REALIZED GAINS................................. (3,161,563) -- (2,701,067)
- -------------------------------------------------------------------------------------------------------------------
Portfolio share transactions:
Proceeds from shares issued.................. 86,745,491 108,627,918 35,891,753
Dividends reinvested......................... 1,030,725 29,706 408,568
Cost of shares redeemed...................... (22,128,731) (13,220,455) (10,464,963)
- -------------------------------------------------------------------------------------------------------------------
Net increase in net assets from Portfolio share
transactions................................... 65,647,485 95,437,169 25,835,358
- -------------------------------------------------------------------------------------------------------------------
Total increase.................................. 80,083,262 110,781,314 35,486,866
- -------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of period............................. 110,781,314 -- 99,631,006
- -------------------------------------------------------------------------------------------------------------------
End of period(b)................................ $190,864,576 $ 110,781,314 $135,117,872
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
SMALL CAPITALIZATION
EQUITY INCOME FUND EQUITY FUND
------------------ --------------------
FOR THE PERIOD FOR THE PERIOD
NOVEMBER 7, 1994 DECEMBER 12, 1995
THROUGH AUGUST 31, THROUGH AUGUST 31,
1995(a) 1996(a)
------------------- --------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income........................ $ 2,906,445 $ 321,840
Net realized gains from investment and
futures transactions....................... 1,025,148 581,207
Net change in unrealized appreciation from
investments and futures.................... 10,498,892 621,487
- -----------------------------------------------------------------------------------------------
Net increase in net assets resulting from
operations..................................... 14,430,485 1,524,534
- -----------------------------------------------------------------------------------------------
Dividends to shareholders from net investment
income:
Pilot Shares................................. (2,899,282) (310,641)
Class A Shares............................... (2,859) (5,306)
Class B Shares............................... (4,304) (1,071)
- -----------------------------------------------------------------------------------------------
Total dividends to shareholders from net
investment income.............................. (2,906,445) (317,018)
- -----------------------------------------------------------------------------------------------
Dividends to shareholders from net realized
gains:
Pilot Shares................................. -- --
Class A Shares............................... -- --
Class B Shares............................... -- --
- -----------------------------------------------------------------------------------------------
TOTAL DIVIDENDS TO SHAREHOLDERS FROM NET
REALIZED GAINS................................. -- --
- -----------------------------------------------------------------------------------------------
Portfolio share transactions:
Proceeds from shares issued.................. 97,830,026 75,500,924
Dividends reinvested......................... 11,124 61,309
Cost of shares redeemed...................... (9,734,184) (1,796,681)
- -----------------------------------------------------------------------------------------------
Net increase in net assets from Portfolio share
transactions................................... 88,106,966 73,765,552
- -----------------------------------------------------------------------------------------------
Total increase.................................. 99,631,006 74,973,068
- -----------------------------------------------------------------------------------------------
NET ASSETS
Beginning of period............................. -- --
- -----------------------------------------------------------------------------------------------
End of period(b)................................ $99,631,006 $ 74,973,068
- -----------------------------------------------------------------------------------------------
<FN>
(a) Period from commencement of operations.
(b) Includes undistributed net investment income of $22,405, $0, $126,759, $0
and $7,331, respectively.
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
48
<PAGE> 49
THE PILOT FUNDS
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERMEDIATE
U.S. GOVERNMENT SECURITIES FUND U.S. GOVERNMENT SECURITIES FUND
---------------------------------------- ----------------------------------------
FOR THE PERIOD FOR THE PERIOD
NOVEMBER 7, 1994 NOVEMBER 7, 1994
FOR THE YEAR ENDED THROUGH AUGUST 31, FOR THE YEAR ENDED THROUGH AUGUST 31,
AUGUST 31, 1996 1995(a) AUGUST 31,1996 1995(a)
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income.................. $ 7,859,179 $ 6,679,639 $ 11,652,581 $ 6,702,977
Net realized gains from investment
transactions......................... 6,920,545 5,611,049 3,434,313 603,070
Net change in unrealized appreciation
from investments..................... (9,917,288) 8,440,209 (8,921,949) 5,186,345
- ------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from
operations............................... 4,862,436 20,730,897 6,164,945 12,492,392
- ------------------------------------------------------------------------------------------------------------------------------
Dividends to shareholders from net
investment income:
Pilot Shares........................... (7,807,800) (6,676,446) (11,613,105) (6,696,515)
Class A Shares......................... (17,876) (1,568) (39,476) (6,462)
Class B Shares......................... (33,503) (1,625) -- --
- ------------------------------------------------------------------------------------------------------------------------------
Total dividends to shareholders from net
investment income........................ (7,859,179) (6,679,639) (11,652,581) (6,702,977)
- ------------------------------------------------------------------------------------------------------------------------------
Dividends to shareholders from net realized
gains:
Pilot Shares........................... (5,585,839) -- (920,212) --
Class A Shares......................... (6,785) -- (2,910) --
Class B Shares......................... (18,425) -- -- --
- ------------------------------------------------------------------------------------------------------------------------------
Total dividends to shareholders from net
realized gains........................... (5,611,049) -- (923,122) --
- ------------------------------------------------------------------------------------------------------------------------------
Portfolio share transactions:
Proceeds from shares issued............ 35,505,082 132,691,392 106,677,263 175,708,067
Proceeds from shares issued to
shareholders in reinvestment of
dividends............................ 318,249 6,753 434,942 37,493
Cost of shares redeemed................ (17,773,679) (9,255,794) (35,679,621) (15,594,847)
- ------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from Portfolio
share transactions....................... 18,049,652 123,442,351 71,432,584 160,150,713
- ------------------------------------------------------------------------------------------------------------------------------
Total increase............................. 9,441,860 137,493,609 65,021,826 165,940,128
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of period........................ 137,493,609 -- 165,940,128 --
- ------------------------------------------------------------------------------------------------------------------------------
End of period(b)........................... $146,935,469 $137,493,609 $230,961,954 $165,940,128
- ------------------------------------------------------------------------------------------------------------------------------
<FN>
(a) Period from commencement of operations.
(b) Includes undistributed net investment income of $22,072, $0, $22,072 and $0,
respectively.
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
49
<PAGE> 50
THE PILOT FUNDS
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERMEDIATE
MUNICIPAL BOND FUND MUNICIPAL BOND FUND
---------------------------------------- ----------------------------------------
FOR THE PERIOD FOR THE PERIOD
NOVEMBER 7, 1994 NOVEMBER 7, 1994
FOR THE YEAR ENDED THROUGH AUGUST 31, FOR THE YEAR ENDED THROUGH AUGUST 31,
AUGUST 31, 1996 1995(a) AUGUST 31, 1996 1995(a)
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income................. $ 8,791,712 $ 6,200,580 $ 9,570,378 $ 6,846,081
Net realized gains from investment
transactions........................ 1,327,403 333,880 626,264 333,078
Net change in unrealized appreciation
from investments.................... (1,391,889) 8,991,432 (3,240,645) 8,834,811
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from
operations.............................. 8,727,226 15,525,892 6,955,997 16,013,970
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends to shareholders from net
investment income:
Pilot Shares.......................... (8,564,690) (6,191,471) (9,554,825) (6,841,198)
Class A Shares........................ (43,027) (5,179) (15,553) (4,883)
Class B Shares........................ (32,509) (3,930) -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total dividends to shareholders from net
investment income....................... (8,640,226) (6,200,580) (9,570,378) (6,846,081)
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions in excess of net investment
income:
Pilot Shares.......................... (150,162) -- -- --
Class A Shares........................ (754) -- -- --
Class B Shares........................ (570) -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total distributions in excess of net
investment income....................... (151,486) -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends to shareholders from net
realized gains:
Pilot Shares.......................... (478,674) -- (457,443) --
Class A Shares........................ (1,491) -- (392) --
Class B Shares........................ (1,732) -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total dividends to shareholders from net
realized gains.......................... (481,897) -- (457,835) --
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio share transactions:
Proceeds from shares issued........... 57,950,418 152,916,334 61,811,217 218,287,220
Proceeds from shares issued to
shareholders in reinvestment of
dividends........................... 122,269 11,041 136,276 9,603
Cost of shares redeemed............... (18,294,826) (10,531,521) (35,651,223) (31,023,282)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from Portfolio
share transactions...................... 39,777,861 142,395,854 26,296,270 187,273,541
- ----------------------------------------------------------------------------------------------------------------------------------
Total increase............................ 39,231,478 151,721,166 23,224,054 196,441,430
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of period....................... 151,721,166 -- 196,441,430 --
- ----------------------------------------------------------------------------------------------------------------------------------
End of period(b).......................... $190,952,644 $151,721,166 $219,665,484 $196,441,430
- ----------------------------------------------------------------------------------------------------------------------------------
<FN>
(a) Period from commencement of operations.
(b) Includes undistributed (distributions in excess of) net investment income of
($151,486), $0, $22,150 and $0, respectively.
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
50
<PAGE> 51
Financial Pilot Growth and
Direction Income Fund
[logo]
Pilot Equity
Income Fund
Pilot Small
Capitalization
Equity Fund
Pilot U.S. Government
Securities Fund
Pilot Intermediate
U.S. Government
Securities Fund
Pilot Municipal
Bond Fund
Pilot Intermediate
Municipal Bond Fund
Annual Report
August 31, 1996
The
Pilot
Funds
NOT May Lose Value
FDIC No Bank Guarantee
INSURED No Govt. Guarantee
Distributor: Pilot Funds Distributors, Inc. 10/96
<PAGE> 52
THE PILOT FUNDS
- --------------------------------------------------------------------------------
Notes to Financial Statements
August 31, 1996
- --------------------------------------------------------------------------------
1. GENERAL
The Pilot Growth and Income Fund, Pilot Equity Income Fund, Pilot Small
Capitalization Equity Fund, Pilot U.S. Government Securities Fund, Pilot
Intermediate U.S. Government Securities Fund, Pilot Municipal Bond Fund, and
Pilot Intermediate Municipal Bond Fund are separate portfolios (individually, a
"Portfolio"; collectively, the "Portfolios") of The Pilot Funds (the "Fund").
The Fund is a Massachusetts business trust registered under the Investment
Company Act of 1940, as amended (the 1940 Act), as an open-end management
investment company. All of the Portfolios are diversified. The Fund currently
offers twelve portfolios. The accompanying financial statements are those of the
seven Portfolios only.
The Portfolios each offer three classes of shares: Pilot Shares, Class A Shares,
and Class B Shares. Each class of shares is substantially the same, except that
Class A Shares and Class B Shares bear the fees payable under the Fund's
Distribution Plan. Small Capitalization Equity Fund commenced operations on
December 12, 1995, by offering Pilot Shares, Class A Shares, and Class B Shares.
Class B Shares of Intermediate U.S. Government Securities Fund and Intermediate
Municipal Bond Fund have not been sold as of August 31, 1996.
The Fund entered into an Agreement and Plan of Reorganization (the
"Reorganization Agreement") with FUNDS IV Trust ("FUNDS IV"), a Massachusetts
business trust. The agreement contemplates that each of six investment
portfolios of FUNDS IV will transfer substantially all of the assets and
liabilities of FUNDS IV to a corresponding Portfolio of the Fund. The Board of
Trustees of FUNDS IV and the FUNDS IV shareholders, at a special shareholder
meeting held September 17, 1996, each approved the Reorganization Agreement
which became effective October 21, 1996. Pursuant to the Reorganization
Agreement, the Value Stock Appreciation Fund of FUNDS IV and the Stock
Appreciation Fund of FUNDS IV transferred substantially all of their assets and
liabilities to the Pilot Growth and Income Fund. All such transfers were in
exchange for Pilot Shares of each respective Portfolio.
Growth and Income Fund seeks capital appreciation and current income. Equity
Income Fund seeks current income and, secondarily, capital appreciation. Small
Capitalization Equity Fund seeks long-term capital growth. Municipal Bond Fund
and Intermediate Municipal Bond Fund seek current income free of federal income
tax as is consistent with preservation of capital.
At a meeting of the Board of Trustees on February 20, 1996, the Trustees of the
Fund approved a change in investment objectives and policies of the U.S.
Government Securities Fund and the Intermediate U.S. Government Securities Fund.
Effective June 1, 1996, these Portfolios will seek total return and preservation
of capital. These Portfolios will emphasize the capital appreciation component
of total return.
Boatmen's Trust Company ("Boatmen's") serves as the Fund's investment adviser
and custodian. BISYS Fund Services Limited Partnership ("BISYS") serves as the
Fund's administrator and Pilot Funds Distributor Inc. (the "Distributor"), an
affiliate of BISYS, serves as the distributor of the Fund's shares. BISYS is a
wholly-owned subsidiary of The BISYS Group, Inc.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies consistently
followed by the Portfolios in the preparation of the financial statements. The
policies are in conformity with generally accepted accounting principles. The
preparation of financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of income and expenses
for the period. Actual results could differ from those estimates.
- --------------------------------------------------------------------------------
51
<PAGE> 53
THE PILOT FUNDS
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
August 31, 1996
- --------------------------------------------------------------------------------
A. Investment Valuation
Portfolio securities are valued as follows: (a) securities that are traded on
any U.S. or foreign stock exchange or the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") are valued at the last sale price
on that exchange or NASDAQ prior to the Portfolio's valuation time; if no sale
occurs, securities traded on a U.S. exchange or NASDAQ are valued at the mean
between the closing bid and closing asked price and securities traded on a
foreign exchange will be valued at the official bid price; (b) over-the-counter
stocks not quoted on NASDAQ are valued at the last sale price prior to the
Portfolio's valuation time or, if no sale occurs, at the mean between the last
bid and asked price; (c) debt securities are valued by a pricing service
selected by Boatmen's and approved by the Trustees of the Fund; these prices
reflect broker/dealer supplied valuations and electronic data processing
techniques if those prices are deemed by Boatmen's to be representative of
market values at the Portfolio's valuation time; and (d) all other securities
and assets, for which quotations supplied are not representative of current
market values or for which quotations are not readily available, are valued at
fair value as determined in good faith pursuant to procedures established by the
Trustees of the Fund. Money market instruments held by a Portfolio with a
remaining maturity of sixty days or less are valued at amortized cost which
approximates market value.
B. Repurchase Agreements
The custodian for the Portfolios and other banks acting in a subcustodian
capacity take possession of the collateral pledged for investments in repurchase
agreements. The underlying collateral is valued daily on a mark-to-market basis
to determine that the value, including accrued interest, is not less than 102%
of the repurchase price, including accrued interest. In the event of the
seller's default of the obligation to repurchase, the Portfolios have the right
to liquidate the collateral and apply the proceeds in satisfaction of the
obligation. Under certain circumstances, in the event of default or bankruptcy
by the other party to the agreement, realization and/or retention of the
collateral may be subject to legal proceedings.
C. Futures Contracts
The Small Capitalization Equity Fund may enter into futures contracts on
securities and futures based on securities indices. The Portfolio will do so to
hedge against anticipated changes in securities values that would otherwise have
an adverse effect upon the value of portfolio securities or upon securities to
be acquired.
Futures contracts involve brokerage costs, which may be less than 1% of the
contract price, and require the Portfolio to deposit as margin into a segregated
custodial account an amount of cash or liquid securities equal to approximately
2% to 5% of the value of each futures contract. The Portfolio's position in the
futures market will be marked-to-market on a daily basis; the Portfolio 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
Portfolio may instead make or take delivery of the underlying securities
whenever it appears economically advantageous for it to do so.
Futures contracts on securities indices do not require the physical delivery of
securities, but merely provide for gains and losses resulting from changes in
the market value of a 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.
D. Securities Transactions and Investment Income
Securities transactions are recorded on the trade date. Realized gains and
losses from sales of investments are
- --------------------------------------------------------------------------------
52
<PAGE> 54
THE PILOT FUNDS
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
August 31, 1996
- --------------------------------------------------------------------------------
calculated on the identified cost basis. Dividend income is recorded on the
ex-dividend date. Interest income, including accretion of discounts and
amortization of premiums on investments, is accrued daily. Investment income of
each Portfolio is allocated to the separate classes of shares based upon their
relative net assets.
E. Dividends to Shareholders
Dividends of U.S. Government Securities Fund, Intermediate U.S. Government
Securities Fund, Municipal Bond Fund and Intermediate Municipal Bond Fund are
declared daily to shareholders of record at the close of business on the day of
declaration and paid monthly. Dividends of Growth and Income Fund, Equity Income
Fund, and Small Capitalization Equity Fund are declared and paid monthly to
shareholders of record at the close of business on the day of declaration.
Distributions of net realized gains, if any, will be paid at least annually.
However, to the extent that net realized gains of a Portfolio can be offset by
capital loss carryovers, such gains will not be distributed. Dividends and
distributions are recorded by the Portfolios on the ex-dividend date.
F. Federal Taxes
It is each Portfolio's policy to comply or continue to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute each year substantially all of its investment
company taxable and tax-exempt income to its shareholders. Accordingly, no
federal tax provisions are required.
G. Organizational Expenses
Costs incurred by the Fund in connection with its organization and registration
of shares have been deferred and are amortized using the straight line method
over a period not to exceed five years from the commencement of the public
offering of shares of the Portfolios.
H. Expenses
Expenses incurred by the Fund that do not specifically relate to an individual
portfolio of the Fund are allocated to the portfolios based on each portfolio's
relative net assets. The expenses of each Portfolio (other than expenses
incurred pursuant to the Distribution Plans) are allocated to the separate
classes of shares based upon their relative net assets.
3. AGREEMENTS AND TRANSACTIONS WITH AFFILIATES
A. Advisory Agreement
Boatmen's is the investment adviser for each Portfolio pursuant to separate
Investment Advisory Agreements and is responsible for managing the investment
operations of the Portfolios. For its services, Boatmen's is entitled to a fee,
accrued daily and paid monthly, at an annual rate equal to 1.00% of the average
daily net assets of the Small Capitalization Equity Fund; 0.75% of the average
daily net assets of each of the Growth and Income Fund and the Equity Income
Fund; and 0.55% of the average daily net assets of each of the U.S. Government
Securities Fund, the Intermediate U.S. Government Securities Fund, the Municipal
Bond Fund and the Intermediate Municipal Bond Fund.
Boatmen's has voluntarily agreed to limit the fees it receives from each
Portfolio to the following annual rates: 0.75% of the average daily net assets
of the Small Capitalization Equity Fund; 0.50% of the average daily net assets
of each of the Growth and Income Fund and the Equity Income Fund; 0.45% of the
average daily net assets of the Municipal Bond Fund; 0.40% of the average daily
net assets of each of the U.S. Government Securities Fund and the Intermediate
Municipal Bond Fund; and 0.35% of the average daily net assets of the
Intermediate U.S. Government Securities Fund.
Additionally, Boatmen's has voluntarily agreed to reimburse each of the
Portfolio's expenses to the extent that such expenses exceed the following
limits as percentages of average daily net assets (excluding distribution fees
for Class A Shares and Class B Shares): 1.00% of the Small Capitalization Equity
Fund; 0.75% of the Growth and Income Fund and Equity Income Fund; 0.70% of the
Municipal Bond Fund; 0.65% of the U.S. Government Securities Fund and the
Intermediate Municipal Bond Fund; and 0.60% of
- --------------------------------------------------------------------------------
53
<PAGE> 55
THE PILOT FUNDS
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
August 31, 1996
- --------------------------------------------------------------------------------
the Intermediate U.S. Government Securities Fund. For the period ended August
31, 1996, Boatmen's waived fees and/or reimbursed expenses in the following
amounts:
<TABLE>
<S> <C>
Growth and Income Fund.......................... $395,403
Equity Income Fund.............................. 314,788
Small Capitalization Equity Fund................ 131,964
U.S. Government Securities Fund................. 215,525
Intermediate U.S. Government Securities Fund.... 410,883
Municipal Bond Fund............................. 170,380
Intermediate Municipal Bond Fund................ 312,584
</TABLE>
B. Administration Agreement
The Portfolios have entered into an Administration Agreement with BISYS.
Pursuant to the terms of this agreement, BISYS is responsible for assisting in
all aspects of the operations of each of the Portfolios. For its services, BISYS
is entitled to a fee, accrued daily and paid monthly, at an annual rate of
0.115% of the first $1.5 billion of the aggregate average net assets of all of
the portfolios constituting the Fund, plus 0.11% of the next $1.5 billion of
such assets, plus 0.1075% of such assets in excess of $3.0 billion. For the
period ended August 31, 1996, BISYS voluntarily waived a portion of its fees as
administrator. The fee waivers were equal to the following amounts:
<TABLE>
<S> <C>
Growth and Income Fund.......................... $ 28,203
Equity Income Fund.............................. 40,985
Small Capitalization Equity Fund................ 34,284
U.S. Government Securities Fund................. 22,148
Intermediate U.S. Government Securities Fund.... 10,698
Municipal Bond Fund............................. 20,332
Intermediate Municipal Bond Fund................ 10,387
</TABLE>
C. Distribution Agreements
The Portfolios adopted Distribution Plans pursuant to Rule 12b-1 under the 1940
Act 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 A Shares may not exceed 0.25% (on
an annual basis) of the average daily net assets 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 assets 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 as
well as expenses related to other promotional and distribution activities.
Actual distribution expenses paid by the Distributor with respect to Class B
Shares for any given year may exceed the distribution fees and contingent
deferred sales charges received with respect to those Shares. These excess
expenses may be reimbursed by a Portfolio 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.
The Distributor has voluntarily agreed to limit the fees it receives on Class A
Shares from the following Portfolios to the following annual rates: 0.20 of 1%
of the average daily net asset value of the U.S. Government Securities Fund and
the Municipal Bond Fund; and 0.15 of 1% of the average daily net asset value of
the Intermediate U.S. Government Securities Fund and the Intermediate Municipal
Bond Fund.
- --------------------------------------------------------------------------------
54
<PAGE> 56
THE PILOT FUNDS
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
August 31, 1996
- --------------------------------------------------------------------------------
D. Transfer Agent Agreement
BISYS Fund Services, Inc. (the "Transfer Agent"), a wholly-owned subsidiary of
The BISYS Group, Inc. is the transfer agent for all classes of the Portfolios.
Prior to April 26, 1996, Primary Fund Services Corporation was the transfer
agent for Class A Shares and Class B Shares. The Portfolios incurred fees and
expenses in total of $215,939 for the transfer agent services provided.
E. Custodian Agreement
Boatmen's is the custodian responsible for holding the investments purchased by
the Portfolios. In connection with the Custodian Agreement with Boatmen's, the
Portfolios incurred expenses of approximately $30,000. Prior to May 6, 1996,
State Street Bank & Trust served the Portfolios as custodian.
F. Fund Accounting Agreement
BISYS is the fund accounting agent for all of the Portfolios. Pursuant to the
terms of the Fund Accounting Agreement, BISYS is entitled to a fee accrued daily
and paid monthly, at an annual rate of 0.012% of average daily net assets. The
fee will not exceed, on an annual basis, $200,000 per Portfolio.
4. SECURITIES TRANSACTIONS
For the period ended August 31, 1996, the cost of purchases and the proceeds
from sales or maturities of portfolio securities (excluding short-term
investments) were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ -----------
<S> <C> <C>
Growth and Income Fund........... $117,794,227 $55,614,116
Equity Income Fund............... 65,105,311 40,400,061
Small Capitalization Equity
Fund*.......................... 72,981,687 11,266,268
U.S. Government Securities
Fund**......................... 123,641,507 119,484,052
Intermediate U.S. Government
Securities Fund***............. 207,038,208 137,075,977
Municipal Bond Fund.............. 65,201,881 29,616,725
Intermediate Municipal Bond
Fund........................... 50,762,613 23,229,579
<FN>
- ---------------
* For the period December 12, 1995 (commencement of operations) to August 31,
1996.
** 100% of purchases and sales are of U.S. Government securities.
*** Includes purchases and sales of U.S. Government Securities of $197,089,919
and $96,330,665, respectively.
</TABLE>
At August 31, 1996, the cost of each of the following Portfolio's securities for
federal income tax purposes was substantially the same as for financial
reporting purposes. Accordingly, the Portfolio's had the following amounts of
net unrealized appreciation and depreciation:
<TABLE>
<CAPTION>
APPRECIATION DEPRECIATION NET
------------ ------------ -----------
<S> <C> <C> <C>
Growth and Income
Fund(a)........... $25,789,059 $(4,622,198) $21,166,861
Equity Income
Fund.............. 19,360,553 (1,501,449) 17,859,104
Small Capitalization
Equity Fund(a).... 5,666,240 (4,708,899) 957,341
U.S. Government
Securities Fund... 879,479 (2,356,558) (1,477,079)
Intermediate U.S.
Government
Securities Fund
(a)............... 785,746 (4,657,385) (3,871,639)
Municipal Bond
Fund.............. 8,589,036 (989,493) 7,599,543
Intermediate
Municipal Bond
Fund.............. 5,985,263 (391,097) 5,594,166
<FN>
- ---------------
(a) Cost of securities for financial reporting purposes differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting purposes in excess of federal income tax reporting of
$6,272, $1,195, and $136,035, respectively for Growth and Income Fund, Small
Capitalization Equity Fund and Intermediate U.S. Government Securities Fund.
</TABLE>
- --------------------------------------------------------------------------------
55
<PAGE> 57
THE PILOT FUNDS
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
August 31, 1996
- --------------------------------------------------------------------------------
5. PORTFOLIO SHARE TRANSACTIONS
Transactions in shares of the Portfolios are as follows (000 omitted):
<TABLE>
<CAPTION>
EQUITY
GROWTH AND INCOME FUND INCOME FUND
---------------------------------- ------------
YEAR NOVEMBER 7, 1994 YEAR
ENDED THROUGH ENDED
AUGUST 31, AUGUST 31, AUGUST 31,
1996 1995(a) 1996
------------ ----------------- ------------
<S> <C> <C> <C>
CAPITAL TRANSACTIONS:
Pilot Shares:
Proceeds from shares issued............................. $ 79,546 $ 107,297 $ 31,927
Dividends reinvested.................................... 920 25 298
Cost of shares redeemed................................. (21,705) (13,174) (10,117)
-------- --------- --------
Change in net assets from Pilot share transactions...... $ 58,761 $ 94,148 $ 22,108
======== ========= ========
Class A Shares(b):
Proceeds from shares issued............................. $ 4,152 $ 695 $ 1,498
Dividends reinvested.................................... 61 3 37
Cost of shares redeemed................................. (348) (29) (233)
-------- --------- --------
Change in net assets from Class A share transactions.... $ 3,865 $ 669 $ 1,302
======== ========= ========
Class B Shares(c):
Proceeds from shares issued............................. $ 3,048 $ 636 $ 2,467
Dividends reinvested.................................... 50 2 74
Cost of shares redeemed................................. (76) (18) (116)
-------- --------- --------
Change in net assets from Class B share transactions.... $ 3,022 $ 620 $ 2,425
======== ========= ========
SHARE TRANSACTIONS:
Pilot Shares:
Issued.................................................. 6,320 10,643 2,586
Reinvested.............................................. 74 2 25
Redeemed................................................ (1,702) (1,202) (820)
-------- --------- --------
Change in Pilot Shares.................................. 4,692 9,443 1,791
======== ========= ========
Class A Shares(b):
Issued.................................................. 324 62 120
Reinvested.............................................. 5 - 3
Redeemed................................................ (27) (2) (18)
-------- --------- --------
Change in Class A Shares................................ 302 60 105
======== ========= ========
Class B Shares(c):
Issued.................................................. 241 58 198
Reinvested.............................................. 4 -- 6
Redeemed................................................ (6) (1) (9)
-------- --------- --------
Change in Class B Shares................................ 239 57 195
======== ========= ========
<CAPTION>
SMALL
CAPITALIZATION
EQUITY FUND
-----------------
NOVEMBER 7, 1994 DECEMBER 12, 1995
THROUGH THROUGH
AUGUST 31, AUGUST 31,
1995(a) 1996(a)
----------------- -----------------
<S> <C> <C>
CAPITAL TRANSACTIONS:
Pilot Shares:
Proceeds from shares issued............................. $96,783 $70,989
Dividends reinvested.................................... 5 56
Cost of shares redeemed................................. (9,671) (1,743)
------- -------
Change in net assets from Pilot share transactions...... $87,117 $69,302
======= =======
Class A Shares(b):
Proceeds from shares issued............................. $ 300 $ 2,643
Dividends reinvested.................................... 3 4
Cost of shares redeemed................................. (3) (42)
------- -------
Change in net assets from Class A share transactions.... $ 300 $ 2,605
======= =======
Class B Shares(c):
Proceeds from shares issued............................. $ 746 $ 1,869
Dividends reinvested.................................... 4 1
Cost of shares redeemed................................. (60) (11)
------- -------
Change in net assets from Class B share transactions.... $ 690 $ 1,859
======= =======
SHARE TRANSACTIONS:
Pilot Shares:
Issued.................................................. 9,631 6,777
Reinvested.............................................. - 6
Redeemed................................................ (895) (166)
------- -------
Change in Pilot Shares.................................. 8,736 6,617
======= =======
Class A Shares(b):
Issued.................................................. 27 249
Reinvested.............................................. - --
Redeemed................................................ - (4)
------- -------
Change in Class A Shares................................ 27 245
======= =======
Class B Shares(c):
Issued.................................................. 68 177
Reinvested.............................................. - (0)
Redeemed................................................ (5) (1)
------- -------
Change in Class B Shares................................ 63 176
======= =======
<FN>
- ---------------
(a) Period from commencement of operations.
(b) Class A Shares commenced operations February 7, 1995 for the Growth and
Income Fund and the Equity Income Fund.
(c) Class B Shares commenced operations November 11, 1994 and January 12, 1995
for the Growth and Income Fund and the Equity Income Fund, respectively.
</TABLE>
- ------------------------------------------------------------------------------
56
<PAGE> 58
THE PILOT FUNDS
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
August 31, 1996
- ----------------------------------------------------------
- ----------------------------------------------------------
<TABLE>
<CAPTION>
INTERMEDIATE
U.S. GOVERNMENT U.S. GOVERNMENT MUNICIPAL
SECURITIES FUND SECURITIES FUND BOND FUND
----------------------------- ----------------------------- ----------
NOVEMBER 7, 1994 NOVEMBER 7, 1994
YEAR ENDED THROUGH YEAR ENDED THROUGH YEAR ENDED
AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31,
1996 1995(a) 1996 1995(a) 1996
---------- ---------------- ---------- ---------------- ----------
<S> <C> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
Pilot Shares:
Proceeds from shares issued........... $ 33,655 $132,462 $106,052 $175,132 $ 55,601
Dividends reinvested.................. 261 3 416 34 66
Cost of shares redeemed............... (17,579) (9,250) (35,490) (15,511) (18,138)
---------- -------- ---------- ------- --------
Change in net assets from Pilot
share transactions.................. $ 16,337 $123,215 $ 70,978 $159,655 $ 37,529
======== ======== ======== ======== ========
Class A Shares(b):
Proceeds from shares issued........... $ 690 $ 88 $ 625 $ 577 $ 1,462
Dividends reinvested.................. 16 2 19 3 32
Cost of shares redeemed............... (143) (6) (189) (84) (70)
---------- -------- ---------- ------- --------
Change in net assets from Class A
share transactions.................. $ 563 $ 84 $ 455 $ 496 $ 1,424
======== ======== ======== ======== ========
Class B Shares(c):
Proceeds from shares issued........... $ 1,160 $ 141 $ -- $ -- $ 888
Dividends reinvested.................. 42 2 -- -- 24
Cost of shares redeemed............... (52) -- -- -- (87)
---------- -------- ---------- ------- --------
Change in net assets from Class B
share transactions.................. $ 1,150 $ 143 $ -- $ -- $ 825
======== ======== ======== ======== ========
SHARE TRANSACTIONS:
Pilot Shares:
Issued................................ 3,091 13,109 10,181 17,349 5,168
Reinvested............................ 23 -- 39 3 6
Redeemed.............................. (1,590) (852) (3,421) (1,512) (1,684)
---------- -------- ---------- ------- --------
Change in Pilot Shares................ 1,524 12,257 6,799 15,840 3,490
======== ======== ======== ======== ========
Class A Shares(b):
Issued................................ 64 8 60 56 136
Reinvested............................ 1 -- 2 -- 3
Redeemed.............................. (13) -- (18) (8) (6)
---------- -------- ---------- ------- --------
Change in Class A Shares.............. 52 8 44 48 133
======== ======== ======== ======== ========
Class B Shares(c):
Issued................................ 106 13 -- -- 82
Reinvested............................ 4 -- -- -- 2
Redeemed.............................. (5) -- -- -- (8)
---------- -------- ---------- ------- --------
Change in Class B Shares.............. 105 13 -- -- 76
======== ======== ======== ======== ========
<CAPTION>
INTERMEDIATE
MUNICIPAL BOND FUND
-----------------------------
NOVEMBER 7, 1994 NOVEMBER 7, 1994
THROUGH YEAR ENDED THROUGH
AUGUST 31, AUGUST 31, AUGUST 31,
1995(a) 1996 1995(a)
---------------- ---------- ----------------
<S> <<C> <C> <C>
CAPITAL TRANSACTIONS:
Pilot Shares:
Proceeds from shares issued........... $152,081 $ 60,965 $218,063
Dividends reinvested.................. 4 129 9
Cost of shares redeemed............... (10,476) (35,332) (31,023)
------- ---------- -------
Change in net assets from Pilot
share transactions.................. 141,609 25,762 187,049
================ ========= ================
Class A Shares(b):
Proceeds from shares issued........... $ 334 $ 846 $ 225
Dividends reinvested.................. 5 7 --
Cost of shares redeemed............... -- (319) --
------- ---------- -------
Change in net assets from Class A
share transactions.................. $ 339 $ 534 $ 225
================ ========= ================
Class B Shares(c):
Proceeds from shares issued........... $ 501 $ -- $ --
Dividends reinvested.................. 2 -- --
Cost of shares redeemed............... (55) -- --
------- ---------- -------
Change in net assets from Class B
share transactions.................. $ 448 $ -- $ --
================ ========= ================
SHARE TRANSACTIONS:
Pilot Shares:
Issued................................ 15,116 5,830 21,735
Reinvested............................ -- 12 1
Redeemed.............................. (1,013) (3,381) (3,033)
------- ---------- -------
Change in Pilot Shares................ 14,103 2,461 18,703
================ ========= ================
Class A Shares(b):
Issued................................ 32 81 22
Reinvested............................ -- 1 --
Redeemed.............................. -- (30) --
------- ---------- -------
Change in Class A Shares.............. 32 52 22
================ ========= ================
Class B Shares(c):
Issued................................ 47 -- --
Reinvested............................ -- -- --
Redeemed.............................. (5) -- --
------- ---------- -------
Change in Class B Shares.............. 42 -- --
================ ========= ================
<FN>
- ---------------
(a) Period from commencement of operations.
(b) Class A Shares commenced operations February 7, 1995, December 21, 1994,
February 7, 1995 and November 18, 1994 for the U.S. Government Securities
Fund, Intermediate U.S. Government Securities Fund, Municipal Bond Fund, and
Intermediate Municipal Bond Fund, respectively.
(c) Class B Shares commenced operations November 10, 1994 and December 27, 1994
for the U.S. Government Securities Fund and Municipal Bond Fund,
respectively.
</TABLE>
- ----------------------------------------------------------
- ----------------------------------------------------------
57
<PAGE> 59
THE PILOT FUNDS
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
August 31, 1996
- --------------------------------------------------------------------------------
6. FEDERAL INCOME TAX INFORMATION (UNAUDITED)
At August 31, 1996, none of the Portfolios had any capital loss carryforwards.
Under current tax law, capital losses realized after October 31 may be
deferred and treated as occurring on the first day of the fiscal year ended
August 31, 1997. As of August 31, 1996, the Small Capitalization Equity Fund has
deferred losses of $133,049.
The Municipal Bond Fund and the Intermediate Municipal Bond Fund designate
exempt-interest dividends paid for the taxable year ended August 31, 1996 of
$8,303,039 and $8,400,686, respectively.
For the taxable year ended August 31, 1996, 94.6% and 89.7% of the income
dividends paid by the Growth and Income Fund and the Equity Income Fund,
respectively, qualifies for the dividends received deduction available to
corporations.
- --------------------------------------------------------------------------------
58
<PAGE> 60
THE PILOT FUNDS
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
Pilot Growth and Income Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31, 1996 PERIOD ENDED AUGUST 31, 1995
---------------------------- --------------------------
PILOT CLASS A CLASS B PILOT CLASS A CLASS B
SHARES SHARES SHARES SHARES(a) SHARES(b) SHARES(c)
-------- ------- ------- -------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period..... $ 11.59 $ 11.58 $ 11.59 $ 10.00 $10.44 $10.08
-------- ------- ------- -------- ------ ------
Investment Activities
Net investment income................ 0.22 0.18 0.09 0.17 0.09 0.08
Net realized and unrealized
gains from investments............. 1.59 1.60 1.60 1.59 1.14 1.51
-------- ------- ------- -------- ------ ------
Total from Investment Activities..... 1.81 1.78 1.69 1.76 1.23 1.59
Distributions
From net investment income........... (0.22) (0.18) (0.09) (0.17) (0.09) (0.08)
From net realized gains.............. (0.28) (0.28) (0.28) -- -- --
-------- ------- ------- -------- ------ ------
Total distributions.................. (0.50) (0.46) (0.37) (0.17) (0.09) (0.08)
-------- ------- ------- -------- ------ ------
Net Asset Value, End of Period........... $ 12.90 $ 12.90 $ 12.91 $ 11.59 $11.58 $11.59
========= ======== ======== ========= ======= =======
Total Return(d).......................... 15.79% 15.57% 14.75% 17.72% 11.78% 15.85%
Ratios/Supplemental Data:
Net Assets at end of period (000).... $182,379 $ 4,667 $ 3,818 $109,423 $ 697 $ 661
Ratio of expenses to average net
assets............................. 0.74% 0.99% 1.74% 0.75%(e) 1.00%(e) 1.75%(e)
Ratio of net investment income to
average net assets................. 1.76% 1.52% 0.76% 1.98%(e) 1.65%(e) 0.94%(e)
Ratio of expenses to average net
assets assuming no waiver or
expense reimbursement.............. 1.01% 1.26% 2.01% 1.15%(e) 1.40%(e) 2.15%(e)
Ratio of net investment income to
average net assets assuming no
waiver or expense reimbursement.... 1.49% 1.25% 0.49% 1.58%(e) 1.25%(e) 0.54%(e)
Portfolio turnover rate(f)........... 36.77% 36.77% 36.77% 28.00% 28.00% 28.00%
Average commission rate paid(g)...... $ 0.0539 $0.0539 $0.0539
<FN>
- ---------------
(a) Pilot Shares commenced activity November 7, 1994.
(b) Class A Shares commenced activity February 7, 1995.
(c) Class B Shares commenced activity November 11, 1994.
(d) Total return excludes sales charge of Class A Shares and Class B Shares,
would have been lower had certain expenses not been reduced during the
periods presented, and is not annualized.
(e) Annualized.
(f) Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing among the classes of shares issued.
(g) The average commission represents the total dollar amount of commissions
paid on portfolio transactions, for the time period of May 4, 1996 to
August 31, 1996, divided by total number of portfolio shares purchased and
sold for which commissions were charged. Disclosure is not required for
prior periods.
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
59
<PAGE> 61
THE PILOT FUNDS
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
Pilot Equity Income Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31, 1996 PERIOD ENDED AUGUST 31, 1995
------------------------------ --------------------------------------
PILOT CLASS A CLASS B PILOT CLASS A CLASS B
SHARES SHARES SHARES SHARES(a) SHARES(b) SHARES(c)
-------- ------- ------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period............................ $ 11.29 $ 11.36 $ 11.34 $ 10.00 $10.24 $ 9.85
-------- ------- ------- ---------- ---------- ----------
Investment Activities
Net investment income........... 0.46 0.41 0.33 0.35 0.18 0.18
Net realized and unrealized
gains from investments........ 1.38 1.40 1.39 1.29 1.12 1.49
-------- ------- ------- ---------- ---------- ----------
Total from Investment
Activities.................... 1.84 1.81 1.72 1.64 1.30 1.67
Distributions
From net investment income...... (0.45) (0.41) (0.32) (0.35) (0.18) (0.18)
From net realized gains......... (0.30) (0.30) (0.30) -- -- --
-------- ------- ------- ---------- ---------- ----------
Total distributions............. (0.75) (0.71) (0.62) (0.35) (0.18) (0.18)
-------- ------- ------- ---------- ---------- ----------
Net Asset Value, End of Period...... $ 12.38 $ 12.46 $ 12.44 $ 11.29 $11.36 $11.34
========= ======== ======== ========= ========= =========
Total Return(d)..................... 16.49% 16.10% 15.31% 16.69% 12.78% 17.36%
Ratios/Supplemental Data:
Net Assets at end of period
(000)......................... $130,278 $ 1,640 $ 3,200 $ 98,607 $ 311 $ 713
Ratio of expenses to average net
assets........................ 0.75% 1.00% 1.75% 0.75%(e) 1.00%(e) 1.75%(e)
Ratio of net investment income
to average net assets......... 3.78% 3.53% 2.79% 4.12%(e) 3.70%(e) 2.88%(e)
Ratio of expenses to average net
assets assuming no waiver or
expense reimbursement......... 1.04% 1.29% 2.04% 1.14%(e) 1.39%(e) 2.14%(e)
Ratio of net investment income
to average net assets assuming
no waiver or expense
reimbursement................. 3.49% 3.24% 2.50% 3.73%(e) 3.31%(e) 2.49%(e)
Portfolio turnover rate(f)...... 34.48% 34.48% 34.48% 37.00% 37.00% 37.00%
Average commission rate
paid(g)....................... $ 0.0629 $0.0629 $0.0629
<FN>
- ---------------
(a) Pilot Shares commenced activity November 7, 1994.
(b) Class A Shares commenced activity February 7, 1995.
(c) Class B Shares commenced activity January 12, 1995.
(d) Total return excludes sales charge of Class A Shares and Class B Shares,
would have been lower had certain expenses not been reduced during the
periods presented, and is not annualized.
(e) Annualized.
(f) Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing among the classes of shares issued.
(g) The average commission represents the total dollar amount of commissions
paid on portfolio transactions, for the time period of May 4, 1996 to
August 31, 1996, divided by total number of portfolio shares purchased and
sold for which commissions were charged. Disclosure is not required for
prior periods.
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
60
<PAGE> 62
THE PILOT FUNDS
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
Pilot Small Capitalization Equity Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 12, 1995 TO AUGUST
31, 1996(a)
-----------------------------
PILOT CLASS A CLASS B
SHARES SHARES SHARES
------- ------- -------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period................................... $ 10.00 $ 10.00 $ 10.00
------- ------ ------
Investment Activities
Net investment income.............................................. 0.09 0.05 0.01
Net realized and unrealized 0.64 0.64 0.65
gains from investments and futures...............................
------- ------ ------
Total from Investment Activities................................... 0.73 0.69 0.66
Distributions
From net investment income......................................... (0.08) (0.05) (0.01)
From net realized gains............................................ -- -- --
------- ------ ------
Total distributions................................................ (0.08) (0.05) (0.01)
------- ------ ------
Net Asset Value, End of Period......................................... $ 10.65 $ 10.64 $ 10.65
======= ====== ======
Total Return(b)........................................................ 7.37% 6.88% 6.65%
Ratios/Supplemental Data:
Net Assets at end of period (000).................................. $70,483 $ 2,611 $ 1,878
Ratio of expenses to average net assets............................ 1.00%(c) 1.25%(c) 2.01%(c)
Ratio of net investment income to average net assets............... 1.06%(c) 0.66%(c) (0.07%)(c)
Ratio of expenses to average net assets 1.54%(c) 1.65%(c) 2.44%(c)
assuming no waiver or expense reimbursement......................
Ratio of net investment income to average net assets 0.52%(c) 0.26%(c) (0.50%)(c)
assuming no waiver or expense reimbursement......................
Portfolio turnover rate(d)......................................... 30.67% 30.67% 30.67%
Average commission rate paid(e).................................... $0.0340 $0.0340 $0.0340
<FN>
- ---------------
(a) Period from commencement of operations.
(b) Total return from date of inception excludes sales charge of Class A Shares
and Class B Shares, would have been lower had certain expenses not been
reduced during the periods presented, and is not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing among the classes of shares issued.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio transactions, for the time period of May 4, 1996 to
August 31, 1996, divided by total number of portfolio shares purchased and
sold for which commissions were charged. Disclosure is not required for
prior periods.
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
61
<PAGE> 63
THE PILOT FUNDS
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
Pilot U.S. Government Securities Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31, 1996 PERIOD ENDED AUGUST 31, 1995
------------------------------ -----------------------------------
PILOT CLASS A CLASS B PILOT CLASS A CLASS B
SHARES SHARES SHARES SHARES(a) SHARES(b) SHARES(c)
-------- ------- ------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period............................. $ 11.20 $ 11.19 $ 11.19 $ 10.00 $ 10.48 $ 10.05
-------- ------- ------- --------- --------- ---------
Investment Activities
Net investment income............ 0.61 0.59 0.51 0.56 0.37 0.46
Net realized and unrealized gains
from investments............... (0.22) (0.20) (0.22) 1.20 0.71 1.14
-------- ------- ------- --------- --------- ---------
Total from Investment
Activities..................... 0.39 0.39 0.29 1.76 1.08 1.60
Distributions
From net investment income....... (0.61) (0.59) (0.51) (0.56) (0.37) (0.46)
From net realized gains.......... (0.45) (0.45) (0.45) -- -- --
-------- ------- ------- --------- --------- ---------
Total distributions.............. (1.06) (1.04) (0.96) (0.56) (0.37) (0.46)
-------- ------- ------- --------- --------- ---------
Net Asset Value, End of Period....... $ 10.53 $ 10.54 $ 10.52 $ 11.20 $ 11.19 $ 11.19
========= ======= ======= ========= ======== ========
Total Return(d)...................... 3.46% 3.44% 2.43% 18.03% 10.41% 16.19%
Ratios/Supplemental Data:
Net Assets at end of period
(000).......................... $145,066 $ 632 $ 1,237 $ 137,261 $ 87 $ 146
Ratio of expenses to average net
assets......................... 0.65% 0.85% 1.65% 0.62%(e) 0.82%(e) 1.62%(e)
Ratio of net investment income to
average net assets............. 5.61% 5.44% 4.60% 6.45%(e) 5.76%(e) 5.19%(e)
Ratio of expenses to average net
assets assuming no waiver or
expense reimbursement.......... 0.82% 1.07% 1.82% 0.87%(e) 1.12%(e) 1.87%(e)
Ratio of net investment income to
average net assets assuming no
waiver or expense
reimbursement.................. 5.44% 5.22% 4.43% 6.20%(e) 5.46%(e) 4.94%(e)
Portfolio turnover rate(f)....... 87.18% 87.18% 87.18% 132.00% 132.00% 132.00%
<FN>
- ---------------
(a) Pilot Shares commenced activity November 7, 1994.
(b) Class A Shares commenced activity February 7, 1995.
(c) Class B Shares commenced activity November 10, 1994.
(d) Total return excludes sales charge of Class A Shares and Class B Shares,
would have been lower had certain expenses not been reduced during the
periods presented, and is not annualized.
(e) Annualized.
(f) Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing among the classes of shares issued.
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
62
<PAGE> 64
THE PILOT FUNDS
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
Pilot Intermediate U.S. Government Securities Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
AUGUST 31, 1996 AUGUST 31, 1995
------------------- ----------------------
PILOT CLASS A PILOT CLASS A
SHARES SHARES SHARES(a) SHARES(b)
-------- ------- -------- ----------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................... $ 10.44 $ 10.44 $ 10.00 $ 9.98
-------- ------- -------- ----------
Investment Activities
Net investment income.............................. 0.59 0.57 0.56 0.45
Net realized and unrealized gains from
investments...................................... (0.23) (0.23) 0.44 0.46
-------- ------- -------- ----------
Total from Investment Activities................... 0.36 0.34 1.00 0.91
Distributions
From net investment income......................... (0.59) (0.57) (0.56) (0.45)
From net realized gains............................ (0.05) (0.05) -- --
-------- ------- -------- ----------
Total distributions................................ (0.64) (0.62) (0.56) (0.45)
-------- ------- -------- ----------
Net Asset Value, End of Period......................... $ 10.16 $ 10.16 $ 10.44 $10.44
========= ======= ========= =========
Total Return(c)........................................ 3.52% 3.33% 10.21% 9.31%
Ratios/Supplemental Data:
Net Assets at end of period (000).................. $230,030 $ 932 $165,441 $ 499
Ratio of expenses to average net assets............ 0.57% 0.72% 0.57%(d) 0.72%(d)
Ratio of net investment income to average net
assets........................................... 5.68% 5.45% 6.65%(d) 6.27%(d)
Ratio of expenses to average net assets assuming no
waiver or expense reimbursement.................. 0.78% 1.03% 0.87%(d) 1.12%(d)
Ratio of net investment income to average net
assets assuming no waiver or expense
reimbursement.................................... 5.47% 5.14% 6.35%(d) 5.87%(d)
Portfolio turnover rate(e)......................... 73.41% 73.41% 87.00% 87.00%
<FN>
- ---------------
(a) Pilot Shares commenced activity November 7, 1994.
(b) Class A Shares commenced activity December 21, 1994.
(c) Total return excludes sales charge of Class A Shares, would have been lower
had certain expenses not been reduced during the periods presented, and is
not annualized.
(d) Annualized.
(e) Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
63
<PAGE> 65
THE PILOT FUNDS
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
Pilot Municipal Bond Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31, 1996 PERIOD ENDED AUGUST 31, 1995
------------------------------ ------------------------------------
PILOT CLASS A CLASS B PILOT CLASS A CLASS B
SHARES SHARES SHARES SHARES(a) SHARES(b) SHARES(c)
-------- ------- ------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period............................. $ 10.70 $10.70 $10.65 $ 10.00 $10.37 $10.02
-------- ------- ------- -------- ---------- ----------
Investment Activities
Net investment income............ 0.57 0.54 0.45 0.48 0.34 0.33
Net realized and unrealized
gains from investments......... 0.01 0.01 -- 0.70 0.33 0.63
-------- ------- ------- -------- ---------- ----------
Total from Investment
Activities..................... 0.58 0.55 0.45 1.18 0.67 0.96
Distributions
From net investment income....... (0.56) (0.53) (0.44) (0.48) (0.34) (0.33)
In excess of net investment
income......................... (0.01) (0.01) (0.01) -- -- --
From net realized gains.......... (0.03) (0.03) (0.03) -- -- --
-------- ------- ------- -------- ---------- ----------
Total distributions.............. (0.60) (0.57) (0.48) (0.48) (0.34) (0.33)
-------- ------- ------- -------- ---------- ----------
Net Asset Value, End of Period....... $ 10.68 $10.68 $10.62 $ 10.70 $10.70 $10.65
========= ======= ======= ========= ========= =========
Total Return(d)...................... 5.44% 5.23% 4.31% 12.00% 6.54% 9.62%
Ratios/Supplemental Data:
Net Assets at end of period
(000).......................... $187,939 $1,755 $1,259 $150,934 $ 340 $ 448
Ratio of expenses to average net
assets......................... 0.69% 0.92% 1.68% 0.67%(e) 0.87%(e) 1.67%(e)
Ratio of net investment income to
average net assets............. 5.20% 4.91% 4.16% 5.63%(e) 5.26%(e) 4.48%(e)
Ratio of expenses to average net
assets assuming no waiver or
expense reimbursement.......... 0.80% 1.08% 1.79% 0.86%(e) 1.11%(e) 1.86%(e)
Ratio of net investment income to
average net assets assuming no
waiver or expense
reimbursement.................. 5.09% 4.75% 4.05% 5.44%(e) 5.02%(e) 4.29%(e)
Portfolio turnover rate(f)....... 18.06% 18.06% 18.06% 10.00% 10.00% 10.00%
<FN>
- ---------------
(a) Pilot Shares commenced activity November 7, 1994.
(b) Class A Shares commenced activity February 7, 1995.
(c) Class B Shares commenced activity December 27, 1994.
(d) Total return excludes sales charge of Class A Shares and Class B Shares,
would have been lower had certain expenses not been reduced during the
periods presented, and is not annualized.
(e) Annualized.
(f) Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing among the classes of shares issued.
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
64
<PAGE> 66
THE PILOT FUNDS
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
Pilot Intermediate Municipal Bond Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
AUGUST 31, 1996 AUGUST 31, 1995
------------------- ----------------------
PILOT CLASS A PILOT CLASS A
SHARES SHARES SHARES(A) SHARES(B)
-------- ------- -------- ----------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period....................... $ 10.49 $ 10.49 $ 10.00 $ 9.88
-------- ------ -------- ------
Investment Activities
Net investment income.................................. 0.48 0.46 0.41 0.37
Net realized and unrealized gains from investments..... (0.13) (0.11) 0.49 0.61
-------- ------ -------- ------
Total from Investment Activities....................... 0.35 0.35 0.90 0.98
Distributions
From net investment income............................. (0.48) (0.46) (0.41) (0.37)
From net realized gains................................ (0.02) (0.02) -- --
-------- ------ -------- ------
Total distributions.................................... (0.50) (0.48) (0.41) (0.37)
-------- ------ -------- ------
Net Asset Value, End of Period............................. $ 10.34 $ 10.36 $ 10.49 $10.49
======== ====== ======== ======
Total Return(c)............................................ 3.43% 3.45% 9.16% 10.03%
Ratios/Supplemental Data:
Net Assets at end of period (000)...................... $218,902 $ 764 $196,209 $ 232
Ratio of expenses to average net assets................ 0.63% 0.78% 0.58%(d) 0.73%(d)
Ratio of net investment income to average net assets... 4.60% 4.38% 4.90%(d) 4.60%(d)
Ratio of expenses to average net assets assuming no
waiver or expense reimbursement...................... 0.79% 1.03% 0.81%(d) 1.06%(d)
Ratio of net investment income to average net assets
assuming no waiver or expense reimbursement.......... 4.44% 4.13% 4.67%(d) 4.27%(d)
Portfolio turnover rate(e)............................. 11.54% 11.54% 8.00% 8.00%
<FN>
- ---------------
(a) Pilot Shares commenced activity November 7, 1994.
(b) Class A Shares commenced activity November 18, 1994.
(c) Total return excludes sales charge of Class A Shares and Class B Shares,
would have been lower had certain expenses not been reduced during the
periods presented, and is not annualized.
(d) Annualized.
(e) Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
65
<PAGE> 67
- --------------------------------------------------------------------------------
Report of Independent Public Accountants
- --------------------------------------------------------------------------------
To the Shareholders and Trustees of the Pilot Growth and Income Fund, Pilot
Equity Income Fund, Pilot Small Capitalization Equity Fund, Pilot U.S.
Government Securities Fund, Pilot Intermediate U.S. Government Securities Fund,
Pilot Municipal Bond Fund and Pilot Intermediate Municipal Bond Fund of The
Pilot Funds:
We have audited the accompanying statements of assets and liabilities of the
Pilot Growth and Income Fund, Pilot Equity Income Fund, Pilot Small
Capitalization Equity Fund, Pilot U.S. Government Securities Fund, Pilot
Intermediate U.S. Government Securities Fund, Pilot Municipal Bond Fund and
Pilot Intermediate Municipal Bond Fund (the "Funds") of The Pilot Funds (a
Massachusetts business trust), including the portfolios of investments as of
August 31, 1996, and the related statements of operations for the period then
ended and the statements of changes in net assets and financial highlights for
the periods presented. These financial statements and financial highlights are
the responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
August 31, 1996 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and the financial highlights
referred to above present fairly, in all material respects, the financial
position of the Funds as of August 31, 1996, the results of their operations for
the period then ended, the changes in their net assets and the financial
highlights for the periods presented in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
October 21, 1996
66
<PAGE> 68
Financial Pilot Growth and
Direction Income Fund
[logo]
Pilot Equity
Income Fund
Pilot Small
Capitalization
Equity Fund
Pilot U.S. Government
Securities Fund
Pilot Intermediate
U.S. Government
Securities Fund
Pilot Municipal
Bond Fund
Pilot Intermediate
Municipal Bond Fund
Annual Report
August 31, 1996
The
Pilot
Funds
NOT May Lose Value
FDIC No Bank Guarantee
INSURED No Govt. Guarantee
Distributor: Pilot Funds Distributors, Inc. 10/96
<PAGE> 69
PILVAR96ANN
- ---------------------
BULK RATE
U.S. POSTAGE
PAID
CLEVELAND, OH
PERMIT NO. 1
- ---------------------
