<PAGE> 1
LETTER FROM THE FUNDS' MANAGEMENT 1
Dear Shareholder:
We are pleased to provide you with the Annual Report of the Pilot Money Market
Funds for the year ended August 31, 1996.
The Funds delivered strong performance relative to their benchmarks, even
as both taxable and tax-exempt short-term fixed income markets experienced some
turbulence after the start of 1996. We believe the Funds are well positioned to
take advantage of the continuing improvement 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
ANNUAL HIGHLIGHTS 2
- -------------------------------------------------------------------------------
Pilot Money Market Funds
7-Day Current Yields as of August 31, 1996
<TABLE>
<CAPTION>
Pilot Shares Pilot Administration Shares Pilot Investor Shares
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pilot Short-Term U.S. Treasury Fund 4.80% 4.55% 4.30%
Pilot Short-Term Diversified Assets Fund 5.11% 4.87% 4.62%
Pilot Missouri Short-Term Tax-Exempt Fund* 3.09% 2.85% 2.60%
- ---------------------------------------------------------------------------------------------------------------------------
Pilot Short-Term Tax-Exempt Diversified Fund* 3.16% 2.91% 2.66%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
Past performance is not a guarantee of future results. Yields will fluctuate as
market conditions change. An investment in the funds is neither insured nor
guaranteed by the u.S. Government, and there can be no assurance that the funds
will be able to maintain a stable net asset value of $1.00 Per share.
* A portion of the income from these Funds may be subject to the federal
alternative minimum tax and to certain state and local taxes.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
9/95 10/95 11/95 12/95 1/96 2/96 3/96 4/96 5/96 6/96 7/96 8/96
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Pilot Short-Term U.S. Treasury Fund
Pilot Shares** 7-Day Yield at Month-End
[GRAPH] 5.64% 5.52% 5.56% 5.42% 5.29% 5.07% 5.16% 5.03% 4.95% 5.09% 5.12% 4.80%
Pilot Short-Term Diversified Assets Fund
Pilot Shares** 7-Day Yield at Month-End
[GRAPH] 5.66% 5.63% 5.62% 5.56% 5.38% 5.19% 5.21% 5.17% 5.12% 5.17% 5.20% 5.11%
Pilot Missouri Short-Term Tax-Exempt Fund
Pilot Shares** 7-Day Yield at Month-End
[GRAPH] 3.66% 3.43% 3.40% 4.18% 3.03% 3.00% 2.96% 3.36% 3.22% 3.02% 3.09% 3.09%
Pilot Short-Term Tax-Exempt Diversified Fund
Pilot Shares** 7-Day Yield at Month-End
[GRAPH] 3.75% 3.53% 3.49% 4.24% 3.12% 3.07% 3.08% 3.50% 3.30% 3.15% 3.22% 3.16%
<FN>
** Pilot Administration Shares and Pilot Investor Shares pay administration
and investor service fees of 0.25% and 0.50%, respectively. Consequently,
yields on these shares would have been lower for the periods shown.
</TABLE>
<PAGE> 3
LETTERS FROM THE PORTFILIO MANAGERS 3
Pilot Short-Term U.S. Treasury Fund
Pilot Short-Term Diversified Assets Fund
DEAR SHAREHOLDER:
Over the last twelve months, the fixed income markets have reversed course
regarding their expectations for future economic growth. The first four months
of the period were characterized by slow economic growth and lower interest
rates. Strong technical demand for Treasury securities combined with the
obscuring effects of the Government shutdown and the blizzard of 1996
exacerbated the market's perception of a weakening economy. The result was an
inverted yield curve with yields for six-month and one-year instruments well
below the Fed Funds level. Throughout this period, lack of corporate issuance
caused spreads between Treasuries and other money market investments to narrow.
By mid-February, however, continued economic strength was evident and interest
rates began to rise. This continued throughout the summer months.
As you may recall from our last report, we did not anticipate a downturn in
the economy. The presence of ample credit, rising personal income, favorable
wealth effects from the financial markets, and a Federal Reserve policy that we
felt was not overly restrictive, guided our investment decision to remain
defensive. The Pilot Short-Term Funds initially purchased securities with
slightly longer maturities to preserve the higher yields that were available
prior to the Federal Reserve board twice decreasing the level of short-term
interest rates. As the yield curve inverted, however, the Funds focused their
investments in instruments with shorter maturities. This was beneficial for
shareholders as short-term rates ceased to decline.
Pilot Short-Term U.S. Treasury Fund
To provide shareholders with attractive yields, the Pilot Short-Term U.S.
Treasury Fund has continued to reduce its investments in longer- dated
Treasuries and has concentrated its purchases in Treasury notes rather than
bills. Early in the period, the maturity structure took advantage of the
attractive yields that longer-
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average Days to Maturity
Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
'95 '95 '95 '95 '96 '96 '96 '96 '96 '96 '96 '96
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 days (1) 14 42 42 43 38 41 43 36 38 49 33 32
40 days
30 days
20 days
10 days (2) 36 44 43 38 34 31 40 38 49 36 34 33
</TABLE>
__
|_1| Pilot Short-Term U.S. Treasury Fund
__
|_2| Pilot Short-Term Diversified Assets Fund
<PAGE> 4
LETTERS FROM THE PORTFOLIO MANAGERS 4
dated Treasuries offered. As the yield curve shifted, however, so too did the
Fund's holdings. As rates declined, the Fund emphasized shorter maturities,
again preferring Treasury notes and repurchase agreements for enhanced yield.
Conversely, rates have now begun to rise and we remain defensive believing that
investors are not properly rewarded for the probability of increasing rates.
This defensive position is best reflected in our Weighted Average days to
Maturity ("WAM") which is currently shorter than the average of competing funds.
Most recently, the Fund's WAM has averaged 32 days versus the average of 44 days
for other funds with similar objectives and guidelines.
Pilot Short-Term Diversified Assets Fund
Similarly, this Fund's WAM is currently shorter than the average of other
competing funds. Most recently the Pilot Short-Term Diversified Assets Fund's
WAM has averaged 34 days versus the average of 47 days for other funds with
similar objectives and guidelines. Purchases have emphasized high grade
commercial paper, as well as top-rated bank obligations, in an effort to provide
shareholders with attractive yields. Early in this period the maturity structure
took advantage of the attractive yields that longer-dated securities offered. As
the yield curve shifted, however, so too did the Fund's holdings. As rates
declined for longer-dated securities the Fund emphasized shorter
- -------------------------------------------------------------------------------
Pilot Short-Term U.S. Treasury Fund
Portfolio Composition as of 8/31/96*
Repurchase Agreements 44%
U.S. Treasury Bills and Notes 56%
- -------------------------------------------------------------------------------
Pilot Short-Term Diversified Assets Fund
Portfolio Composition as of 8/31/96*
Tier 1 Commercial Paper 28%
Repurchase Agreements 24%
Foreign Bank Obligations 8%
Domestic Bank Obligations 14%
Corporate Obligations 2%
Floating Rate Notes-Agencies 7%
Floating Rate Notes-Corporates 16%
Floating Rate Notes-Certificates of Deposit 1%
*Portfolio holdings are subject to change.
<PAGE> 5
5
maturities. Conversely, rates have now begun to rise and we remain defensive
believing that investors are not properly rewarded for the probability of
increasing rates. This defensive position is best reflected in the WAM of the
Fund, and the purchases of short-dated commercial paper, bank obligations, and
floating rate notes ("FRNs") whose interest rates reset frequently. Currently,
the Fund has approximately 22% of its assets invested in FRNs which we believe
should benefit the Fund's yield as short-term rates continue to rise.
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 Fed 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. Consistent with
that belief, the Funds will continue to purchase securities that offer the most
value to shareholders while maintaining our primary objective of stability of
principal.
Sincerely,
Frank J. Aten, CFA
SENIOR VICE PRESIDENT
DIRECTOR OF TAXABLE FIXED INCOME
Boatmen's Trust Company
David W. Brooks
PORTFOLIO MANAGER
TAXABLE FIXED INCOME
Boatmen's Trust Company
<PAGE> 6
LETTERS FROM THE PORTFOLIO MANAGERS 6
Pilot Missouri Short-Term Tax-Exempt Fund
Pilot Short-Term Tax-Exempt Diversified Fund
DEAR SHAREHOLDER:
Extensive declines in interest rates in 1995 set the stage for increased growth
in 1996. A significant increase in the demand side of the economy emerged,
especially in the consumption of big-ticket items such as motor vehicles and
existing homes, which suggested an improvement in the rate of business
expansion. Consequently, the market shifted from an expectation of lower
interest rates to one of higher interest rates. With respect to municipal
securities, stronger economic activity should benefit the state and local
governments' fiscal and financial positions, which in turn should support the
municipal bond market.
Pilot Missouri Short-Term Tax-Exempt Fund
For the majority of the past year, the Fund has targeted a weighted average
maturity ("WAM") neutral to its peer group. However, in both the first and
second quarters, the Fund extended its WAM to avoid the increased reinvestment
risk that is frequently prevalent in the short-term tax-exempt market during
those periods. Typically, during the first two quarters tax-exempt short-term
rates drop drastically due to significant cash inflows from maturities and
coupon payments. The month of July saw the highest price levels with yields
falling briefly through two percent. By positioning the Fund slightly longer
than its benchmark, some of the reinvestment risk experienced during the first
and second quarters was alleviated. In addition to positioning to avoid
reinvestment risk, the Fund also lengthened its WAM due to an increased supply
of Missouri issues that came to market during the summer months. This enabled
the Fund to increase its Missouri allocation to approximately 96%, up 11% from a
year ago. Overall, this strategy worked well as it allowed the Fund to provide
competitive returns versus its peer group.
Pilot Short-Term Tax-Exempt Diversified Fund
For the majority of the past year, the Fund has targeted a WAM neutral with its
peer group. However, in both the first and second quarters, the Fund extended
its WAM to avoid the increased reinvestment risk that is frequently
- -------------------------------------------------------------------------------
Average Days to Maturity
__
|_3| Pilot Missouri Short-Term Tax-Exempt Fund
__
|_4| Pilot Short-Term Tax-Exempt Diversified Fund
<TABLE>
<CAPTION>
Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
'95 '95 '95 '95 '96 '96 '96 '96 '96 '96 '96 '96
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(3) 51 50 57 54 45 42 42 30 54 63 57 61
(4) 49 50 53 57 42 42 46 36 60 52 39 53
</TABLE>
<PAGE> 7
prevalent in the short-term tax-exempt market during those periods. Typically,
during those periods tax-exempt short-term yields drop drastically due to
significant cash inflows from maturities and coupon payments. The month of July
saw the highest price levels with rates falling briefly through two percent. By
positioning the Fund slightly longer than its benchmark, some of the
reinvestment risk experienced during the first and second quarters was
alleviated. Overall, this strategy worked well as it allowed the Fund to provide
competitive returns versus its peer group.
Looking Ahead
In the year to come, we expect the Federal Reserve to raise short-term interest
rates to guard against the possibility of escalating inflation due to
accelerated economic activity. The vigilance of the Federal Reserve in keeping
inflation contained should prove to be a long-term positive for the bond
markets.
Sincerely,
Jennifer R. Wacker, CFA
VICE PRESIDENT
DIRECTOR OF TAX-EXEMPT
FIXED INCOME
Boatmen's Trust Company
Dawn Daggy-Mangerson
PORTFOLIO MANAGER
Boatmen's Trust Company
- -------------------------------------------------------------------------------
Pilot Missouri Short-Term Tax-Exempt Fund
Portfolio Composition as of 8/31/96*
Missouri 96%
Other 4%
- -------------------------------------------------------------------------------
Pilot Short-Term Tax-Exempt Diversified Fund
Portfolio Composition as of 8/31/96*
Other 36%
Missouri 22%
Texas 10%
Georgia 9%
New York 7%
Pennsylvania 6%
Illinois 5%
Michigan 5%
*Portfolio holdings are subject to change.
Please place broker/dealer information here.
<PAGE> 8
PILOT SHORT-TERM U.S. TREASURY FUND
- --------------------------------------------------------------------------------
Portfolio of Investments
August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Maturity Amortized
(000) Description Rate Date Cost
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--53.8%
U.S. TREASURY BILLS--27.1%
$ 25,00 U.S. Treasury Bill 4.85%* 2/06/97 $ 24,474,979
435,000 U.S. Treasury Bill 5.23* 9/17/96 434,126,428
--------------
458,601,407
--------------
U.S. TREASURY NOTES--26.7%
300,000 U.S. Treasury Note 7.25 11/30/96 301,306,913
100,000 U.S. Treasury Note 7.50 12/31/96 100,688,728
50,00 U.S. Treasury Note 6.88 2/28/97 50,378,606
--------------
452,374,247
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT OBLIGATIONS (cost $910,975,654) 910,975,654
- -----------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS--43.6%
355,187 Repurchase agreement with J.P. Morgan, dated 8/30/96, 5.23%, due
9/03/96,
(see Footnote A) 355,186,607
16,439 Repurchase agreement with Lehman Brothers, dated 8/30/96, 5.24%, due 9/03/96,
(see Footnote B) 16,439,249
366,771 Repurchase agreement with Merrill Lynch, dated 8/30/96, 5.22%, due 9/03/96,
(see Footnote C) 366,770,959
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS (cost $738,396,815) 738,396,815
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $1,649,372,469) -- 97.4% 1,649,372,469
- -----------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS IN EXCESS OF LIABILITIES--2.6% 43,963,161
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS--100.0% $1,693,335,630
- -----------------------------------------------------------------------------------------------------------------------------
<FN>
* Effective yield.
Footnote A
Collateralized by $320,742,000 U.S. Treasury Bonds, with various coupon
rates and maturities ranging from 6.25% to 12.375% and 5/15/03 through
8/15/26 with an aggregate value of $362,290,954.
Footnote B
Collateralized by $18,288,000 U.S. Treasury Bonds, with various coupon rates
and maturities ranging from 6.00% to 7.63% and 8/15/23 through 2/15/26, with
an aggregate value of $16,768,449.
Footnote C
Collateralized by $286,684,000 U.S. Treasury Securities, with various coupon
rates and maturities ranging from 0.00% to 15.75% and 8/21/97 through
11/15/04, with an aggregate value of $374,112,251.
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
</TABLE>
8
<PAGE> 9
PILOT SHORT-TERM DIVERSIFIED ASSETS FUND
- --------------------------------------------------------------------------------
Portfolio of Investments
August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Moody's/S&P
Amount Ratings Maturity Amortized
(000) Description (Unaudited) Rate Date Cost
<C> <S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER--25.1%
$ 25,000 ABN AMRO Aa1/AA 5.22% 12/04/96 $ 24,659,250
12,000 Amercian Home Products Corp. A2/A- 5.32 10/15/96 11,920,200
4,030 Brown-Forman Corp. A1/A+ 5.31 9/18/96 4,019,895
27,565 First Chicago Financial A1/A+ 5.29 9/18/96 27,496,141
25,000 Ford Motor Credit Corp. A1/A+ 5.36 12/02/96 24,657,556
50,000 General Motors Acceptance Corp. A3/A- 5.37 11/04/96 49,522,667
10,000 Glaxo Wellcome PLC A1/NA 5.30 10/01/96 9,955,833
20,000 Green Tree Financial Corp. Baa1/A 5.41 9/24/96 19,930,872
50,000 IBM Credit Corp. A3/A 5.29 9/12/96 49,919,181
50,000 J.P. Morgan Company, Inc. Aa2/AA+ 5.40 1/06/97 49,047,500
25,000 Merrill Lynch & Co. A1/A+ 5.35 9/03/96 24,992,569
15,000 NYNEX Corp. A3/A 5.45 9/13/96 14,972,750
37,000 NYNEX Corp. A3/A 5.41 9/20/96 36,894,355
30,000 Sears Roebuck Acceptance A2/A 5.31 10/15/96 29,805,300
26,000 Whirlpool Financial Corp. A/A3 5.31 9/16/96 25,942,475
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER (cost $403,736,544) 403,736,544
- ------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--8.7%
25,000 Federal Farm Credit Banks Aaa/NA 4.95 3/03/97 24,975,653
20,000 Federal National Mortgage Association * Aaa/AAA 5.37 9/04/96 20,000,000
25,000 Federal National Mortgage Association * Aaa/AAA 5.37 9/04/96 24,991,596
40,700 Student Loan Marketing Association * Aaa/AAA 5.56 9/04/96 40,778,290
30,000 Student Loan Marketing Association * Aaa/AAA 5.42 9/04/96 30,000,000
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT OBLIGATION NOTES (cost $140,745,539) 140,745,539
- ------------------------------------------------------------------------------------------------------------------------------
MASTER NOTES--7.8%
50,000 Anchor National Life Insurance Co. * A2/AA- 5.54 10/01/96 50,000,000
25,000 Bear Stearns Co., Inc. * A2/A 5.63 6/03/97 25,000,000
50,000 General American Life Insurance * A1/AA- 5.64 9/01/96 50,000,000
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL MASTER NOTES (cost $125,000,000) 125,000,000
- ------------------------------------------------------------------------------------------------------------------------------
CORPORATE OBLIGATIONS--9.4%
25,000 Bear Stearns Co., Inc. A2/A 5.60 3/18/97 25,000,000
32,000 SMM Trust * NA/NA 5.71 9/26/96 32,000,000
50,000 First Boston * A2/A 5.46 5/12/97 50,000,000
45,000 USL Cap Corp. * A1/A+ 5.60 10/31/96 45,009,202
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL CORPORATE OBLIGATIONS (cost $152,009,202) 152,009,202
- ------------------------------------------------------------------------------------------------------------------------------
TIME DEPOSITS--1.9%
30,000 SunTrust Bank A1/A+ 5.19 9/03/96 30,000,000
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL TIME DEPOSITS (cost $30,000,000) 30,000,000
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
9
<PAGE> 10
PILOT SHORT-TERM DIVERSIFIED ASSETS FUND
- --------------------------------------------------------------------------------
Portfolio of Investments (continued)
August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Moody's/S&P
Amount Ratings Maturity Amortized
(000) Description (Unaudited) Rate Date Cost
<C> <S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT--22.8%
$ 50,000 Bank of America A1/A+ 5.35% 9/03/96 $ 50,000,000
45,000 Banque Nationale De Paris Aa3/A+ 5.35 10/21/96 45,001,190
25,000 Chase Manhattan Corp. A1/A 5.50 11/04/96 25,000,000
21,000 Chase Manhattan Corp. A1/A 5.85 1/08/97 21,021,902
25,000 Commerzbank AG Aa2/AA- 5.32 10/22/96 25,000,000
50,000 Landesbank Hesson -- Thuringen Aaa/AAA 5.44 12/09/96 50,000,000
8,000 Merrill Lynch A1/A+ 6.36 12/16/96 8,016,524
50,000 Morgan Guaranty Trust Corp. Aa1/AAA 5.52 1/06/97 50,001,729
50,000 NationsBank A2/A 5.65 11/01/96 50,009,996
13,000 Royal Bank of Canada Aa2/AA- 5.62 11/29/96 13,003,231
20,000 Royal Bank of Canada Aa2/AA- 5.39 12/13/96 19,995,402
10,000 Societe Generale Aa2/AA- 5.39 11/22/96 10,000,674
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL CERTIFICATES OF DEPOSIT (cost $367,050,648) 367,050,648
- ------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS--24.2%
153,327 Repurchase agreement with Lehman Brothers, dated 153,326,522
8/30/96, 5.24%, due 9/03/96
(See Footnote A)
112,831 Repurchase agreement with J. P. Morgan, dated 112,830,912
8/30/96, 5.25%, due 9/03/96
(See Footnote B)
122,863 Repurchase agreement with Merrill Lynch, dated 122,862,747
8/30/96, 5.27%, due 9/03/96
(See Footnote C)
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS (cost $389,020,181) 389,020,181
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS--99.8% (cost $1,607,562,114) 1,607,562,114
- ------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS IN EXCESS OF LIABILITIES--0.2% 3,024,043
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSETS--100.0% $1,610,586,157
- ------------------------------------------------------------------------------------------------------------------------------
* Variable rate security.
Footnote A
Collateralized by $169,565,000 U.S. Treasury Notes, 5.625%, with maturity
date of 2/15/06, with an aggregate value of $156,388,573.
Footnote B
Collateralized by $118,193,000 U.S. Treasury Bills, with maturity date of
2/27/97, with a value of $115,091,616.
Footnote C
Collateralized by $50,000,000 U.S. Treasury Bonds, 7.625%, with maturity
date of 2/15/25, and by $188,648,906 Federal National Mortgage Association
Bonds, with various coupon rates and maturity dates ranging from 6.06%
through 8.15% and 11/01/17 through 1/01/31, with an aggregate value of
$125,320,750.
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
</TABLE>
10
<PAGE> 11
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND
- --------------------------------------------------------------------------------
Portfolio of Investments
August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Moody's/S&P Amortized
Amount Ratings Maturity Cost
(000) Description (Unaudited) Rate Date (Note 2)
- ------------------------------------------------------------------------------------------------------------------------
MUNICIPAL SECURITIES--99.0%
COLORADO--0.1%
<S> <C> <C> <C> <C> <C>
$ 250 Adams Arapahoe Counties School District 28 (Aaa)(AAA) 10.00% 12/01/96 $ 253,814
------------
FLORIDA--1.6%
1,900 St. Lucie County PCR, Florida Power & Light
Co.* (Aa3)(AA-) 3.75 9/03/96 1,900,000
1,400 Volusia County Health Facility Revenue (LOC
Rabobank Nederland) * (NR)(AAA) 3.80 9/03/96 1,400,000
------------
3,300,000
------------
MISSOURI--95.8%
5,000 Berkeley IDR Bonds, Wetterau Project* (Aa3)(NR) 3.55 9/03/96 5,000,000
5,000 Berkeley IDR Bonds, Flight Safety
International Inc. Project* (Aa2)(NR) 3.50 9/03/96 5,000,000
10,800 Columbia Water & Electric Revenue Bonds,
Series B (LOC--Toronto Dominion Bank)* (Aa2)(AA+) 3.40 9/04/96 10,800,000
4,100 Columbia Special Obligation, (LOC Toronto
Dominion Bank)* (Aa2)(NR) 3.40 9/04/96 4,100,000
3,400 Independence, Water Utility Revenue (Aa1)(NR) 3.50 10/04/96 3,400,000
5,350 Independence, Water Utility Revenue (Aa1)(NR) 3.45 9/03/96 5,350,000
1,400 Independence IDR, Resthaven Project* (Aaa)(NR) 3.50 2/01/97 1,400,000
6,500 Independence Industrial Authority
(LOC--Citibank)* (NR)(AA-) 3.45 9/06/96 6,500,000
2,400 Kansas City IDR, Multi-Family Housing
Revenue Bonds, Timblane Village Apartments
Project (LOC--Security Pacific National
Bank)* (Aaa)(AAA) 3.50 9/05/96 2,400,000
1,385 Kansas City School District Building,
Capital Improvement Project (Aaa)(AAA) 3.65 2/01/97 1,386,122
810 Mexico IDR Bonds, Wetterau Inc. Project A* (Aa3)(NR) 3.50 9/03/96 810,000
815 Mexico IDR Bonds, Wetterau Inc. Project B* (Aa3)(NR) 3.50 9/05/96 815,000
7,000 Missouri Environment Improvement & Energy
Resources Authority, Pollution Control
Revenue, Union Electric, Series B * (NR)(NR) 3.65 6/01/97 7,000,000
2,000 Missouri Environment Improvement & Energy
Resources Authority, PCR, Monsanto Co.
Project* (A1)(NR) 3.45 9/04/96 2,000,000
2,795 Missouri Environment Improvement & Energy
Resources Authority, PCR (Aa1)(AA+) 3.70 9/04/96 2,795,000
5,000 Missouri Environment Improvement & Energy
Resources Authority (Aaa)(AAA) 3.55 9/20/96 5,000,000
5,000 Missouri Environment Improvement & Energy
Resources Authority (Aa1)(AA+) 3.65 11/19/96 5,000,000
3,000 Missouri Environment Improvement & Energy
Resources Authority (Aaa)(AAA) 3.60 10/09/96 3,000,000
8,000 Missouri Environment Improvement & Energy
Resources Authority, PCR, Kansas City
Power* (Aa1)(AA+) 3.55 9/04/96 8,000,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
11
<PAGE> 12
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND
- --------------------------------------------------------------------------------
Portfolio of Investments (continued)
August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Moody's/S&P Amortized
Amount Ratings Maturity Cost
(000) Description (Unaudited) Rate Date (Note 2)
<C> <S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
MISSOURI (continued)
$ 345 Missouri Health & Educational Facilities
Authority Revenue, St. Louis University
Project (Aa1)(AA) 4.00% 10/01/96 $ 345,179
500 Missouri Health & Educational Facilities
Authority Revenue, Washington University,
Freeman Hospital Project Prerefunded
9/01/96 @ 102 (Aa)(AA-) 7.30 9/01/96 510,000
2,000 Missouri Health & Educational Facilities
Authority Funding, Branson School District
Advanced Funding Program (Aa1)(AA) 4.50 9/08/97 2,011,782
7,900 Missouri Health & Educational Facilities
Authority, Educational Facilities Revenue,
Washington University Project, Series C* (Aa1)(AA) 3.85 9/03/96 7,900,000
2,000 Missouri Health & Educational Facilities
Authority, Pattonville School District
Advanced Funding (Aa1)(AA) 4.50 9/08/97 2,011,782
4,370 Missouri Health & Educational Facilities
Authority, Barnes Jewish, Inc., Series A (Aa1)(AA) 3.90 5/15/97 4,377,893
1,300 Missouri Health & Educational Facilities
Authority, Health Facilities Revenue,
Sisters Mercy Ref., Series A (Aa1)(AA) 3.60 12/01/96 1,300,000
9,500 Missouri Health & Educational Facilities
Authority, St. Francis Medical Center,
Series A (LOC--Local De France)* (Aa1)(AA) 3.80 9/03/96 9,500,000
1,500 Missouri Health & Educational Facilities
Authority Revenue* (Aa1)(AA) 3.35 9/05/96 1,500,000
2,800 Missouri Health & Educational Facilities
Authority, St. Louis University Project* (Aa1)(AA) 3.85 9/03/96 2,800,000
2,000 Missouri Health & Educational Facilities
Authority Revenue (Aa1)(AA) 4.50 9/08/97 2,011,782
5,800 Missouri Health & Educational Facilities
Authority Revenue, Series C* (Aa1)(AA) 3.45 9/03/96 5,800,000
1,400 Missouri Health & Educational Facilities
Authority Revenue, Washington University
Project* (Aa1)(AA) 3.80 9/03/96 1,400,000
7,000 Missouri Health & Educational Facilities
Authority Revenue, Rockers & College
Project* (Aa1)(AA) 3.45 9/03/96 7,000,000
1,400 Missouri Health & Educational Facilities
Authority Revenue, Washington University* (Aa1)(AA) 3.45 9/03/96 1,400,000
4,300 Missouri Health & Educational Facilities
Authority Revenue, Washington University
Project* (Aa1)(AA) 3.85 9/03/96 4,300,000
1,100 Missouri Health & Educational Facilities
Authority Revenue, Washington University,
Series A* (Aa1)(AA) 3.45 9/04/96 1,100,000
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
12
<PAGE> 13
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND
- --------------------------------------------------------------------------------
Portfolio of Investments (continued)
August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Moody's/S&P Amortized
Amount Ratings Maturity Cost
(000) Description (Unaudited) Rate Date (Note 2)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MISSOURI (continued)
$ 1,000 Missouri Health & Educational Facilities
Authority Revenue, Series B, Washington
University, Series A* (Aa1)(AA) 3.45% 9/03/96 $ 1,000,000
7,000 Missouri Health & Educational Facilities
Authority Revenue, Washington University* (Aa1)(AA) 3.45 9/04/96 7,000,000
6,125 Missouri Health & Educational Facilities
Authority Revenue, Drury College, Series
A* (Aa1)(AA) 3.25 9/03/96 6,125,000
4,000 Missouri Health & Educational Facilities
Authority Revenue (Aa1)(AA) 3.45 10/10/96 4,000,000
8,600 Missouri Health & Educational Facilities
Authority Revenue (Aa1)(AA) 3.55 10/15/96 8,600,000
600 Missouri Water Pollution Control, Series B (Aa)(NR) 7.75 11/01/96 604,507
1,505 Moberly Hospital Authority Prefunded 3/1/97
@ 103 (Aa)(NR) 8.75 3/01/97 1,586,759
3,070 St. Charles County IDR, Casalon Apartments
Project* (NR)(AA-) 3.76 9/05/96 3,070,000
3,000 St. Charles County IDR, Westchester
Apartment Projects* (NR)(AA-) 3.50 9/03/96 3,000,000
2,500 St. Louis Tax & Revenue (NR)(NR) 4.75 6/30/97 2,515,556
8,000 St. Louis County IDR* (Aa3)(NR) 3.50 9/03/96 8,000,000
785 St. Louis County IDR, Rockwood School (A1)(NR) 7.30 2/01/97 798,293
4,000 St. Louis County IDR* (Aa3)(NR) 3.50 9/05/96 4,000,000
5,500 St. Louis Planned Industrial Expansion
Authority, Alumax Foils Project (LOC--PNC
Bank)* (Aa3)(NR) 3.50 9/03/96 5,500,000
13,000 University of Missouri, Capital Projects
Notes, Series FY 1995-96 (NR)(NR) 4.75 6/30/97 13,087,904
------------
203,912,559
------------
NEW YORK--0.5%
1,000 New York City, GO*, FGIC Insured (Aaa)(AAA) 4.00 9/03/96 1,000,000
------------
OHIO--0.3%
700 Columbus School District, GO (Aaa)(AAA) 4.00 12/01/96 700,825
------------
PENNSYLVANIA--0.7%
1,590 Allegheny County Hospital Authority
(LOC--PNC Bank)* (Aa1)(NR) 3.50 9/05/96 1,590,000
- --------------------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL SECURITIES (cost $210,757,198) 210,757,198
- --------------------------------------------------------------------------------------------------------------------
SHARES (000'S)
- --------
TAX-EXEMPT MONEY MARKET MUTUAL FUND--0.8%
1,781 Federated Tax-Exempt Obligation Fund (cost
$1,781,000) 1,781,000
- --------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS--(cost $212,538,198) 99.8% 212,538,198
OTHER ASSETS IN EXCESS OF LIABILITIES--0.2% 477,620
- --------------------------------------------------------------------------------------------------------------------
NET ASSETS--100.0% $213,015,818
- --------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
</TABLE>
13
<PAGE> 14
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND
- --------------------------------------------------------------------------------
Portfolio of Investments (continued)
August 31, 1996
- --------------------------------------------------------------------------------
* Variable rate security.
FGIC--Financial Guaranty Insurance Corporation.
GO --General Obligation.
IDR --Industrial Development Revenue.
LOC --Letter of Credit.
PCR --Pollution Control Revenue.
TAN --Tax Anticipation Notes.
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
14
<PAGE> 15
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND
- --------------------------------------------------------------------------------
Portfolio of Investments
August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Moody's/S&P Amortized
Amount Ratings Maturity Cost
(000) Description (Unaudited) Rate Date (Note 2)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MUNICIPAL SECURITIES--79.8%
ARKANSAS--0.4%
$ 1,785 Jonesboro Residential Housing NR/AAA 3.80% 5/01/97 $ 1,785,000
------------
COLORADO--2.5%
5,000 Arapahoe County School District #005** NR 4.50 6/30/97 5,025,950
5,000 Denver City & County, GO NR/AA 5.00 10/01/96 5,007,254
------------
10,033,204
------------
DISTRICT OF COLUMBIA--3.6%
5,700 District of Columbia Revenue,
ACES-Georgetown University, Series C* A1+/A+ 3.50 9/04/96 5,700,000
7,300 District of Columbia Revenue,
ACES-Georgetown University, Series D* A1+/A+ 3.50 9/04/96 7,300,000
1,100 District of Columbia Revenue,
ACES-Georgetown University, Series E* A1+/A+ 3.50 9/04/96 1,100,000
------------
14,100,000
------------
FLORIDA--4.2%
5,400 Martin County, PCR* A1+/AA 3.75 9/03/96 5,400,000
1,600 Manatee County PCR, Florida Power & Light
Co. Project* A1+/AA 3.75 9/03/96 1,600,000
400 Putnam County Development Authority, PCR,
Florida Power & Light Co.* A1+/AA 3.75 9/03/96 400,000
8,200 St. Lucie County PCR,
Florida Power & Light Co.* A1+/AA 3.75 9/03/96 8,200,000
1,100 Volusia County Health Facilities Authority,
Alliance Community* (LOC-Rabobank
Nederland) A1+/AA 3.80 9/03/96 1,100,000
------------
16,700,000
------------
GEORGIA--5.3%
1,000 Burke County Development Authority, PCR,
Georgia Power Plant Project, 4th Series* A1/A+ 3.75 9/03/96 1,000,000
6,000 Cobb County Development Authority, PCR,
Georgia Power Co. Plant Project
(LOC-Trust Co. Bank)* NR/A1 3.80 7/01/11 6,000,000
2,200 Dekalb County, Atlantic Jewish Federation,
(LOC-Wachovia Bank)* NR/AA2 3.50 9/05/96 2,200,000
6,600 Fulco Hospital Authority Revenue, Piedmont
Hospital Project, (LOC-Trust Co. Bank)* A1+/AA 3.50 9/04/96 6,600,000
2,400 Georgia State, Series F NR/AAA 6.50 12/01/96 2,417,582
1,900 Monroe County Cev. Authority, PCR* A1/A+ 3.75 9/03/96 1,900,000
510 Walton County, School District NR/AAA 5.00 1/01/97 511,815
------------
20,629,397
------------
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
15
<PAGE> 16
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND
- --------------------------------------------------------------------------------
Portfolio of Investments (continued)
August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Moody's/S&P Amortized
Amount Ratings Maturity Cost
(000) Description (Unaudited) Rate Date (Note 2)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ILLINOIS--1.4%
$ 1,450 Du Page Water Commission Revenue,
Prerefunded 5/01/97 @ 102 NR/AAA 6.88% 5/01/97 $ 1,521,915
1,250 Du Page Water Commission Revenue,
Prerefunded 5/01/97 @ 102 NR/AAA 6.80 5/01/97 1,299,399
1,400 Illinois State Sales Tax Revenue,
Prerefunded 6/15/97 @102 NR/AAA 7.50 6/15/97 1,466,250
1,000 Illinois State Sales Tax Revenue,
Prerefunded 6/15/97 @102 NR/AAA 7.60 6/15/97 1,048,089
------------
5,335,653
------------
INDIANA--1.7%
6,700 Indiana Health Facilities Finance Authority,
Hospital Revenue, ACES-Methodist Hospital,
Series B* A1+/AA 3.40 9/04/96 6,700,000
------------
KENTUCKY--1.5%
5,900 Mason County PCR, Eastern Kentucky Power
Co., (LOC -- CFC)* A1-/AA- 3.55 9/03/96 5,900,000
------------
LOUISIANA--1.1%
4,000 Louisiana State Reference, GO, Series A NR/AAA 7.00 8/01/02 4,195,943
------------
MICHIGAN--5.3%
8,000 Michigan, GO Aaa/AAA 4.00 9/30/96 8,005,590
4,150 Michigan Underground (LOC-AMBAC) NR/AAA 5.00 5/01/97 4,184,733
7,600 University of Michigan, Hospital Revenue
Series A* NR/AA 3.85 9/03/96 7,600,000
800 University of Michigan Revenue, Medical
Services Plan, Series A* A1+/AA 3.85 9/03/96 800,000
------------
20,590,323
------------
MINNESOTA--2.9%
3,000 Minnesota School District Tax & AID, TAN,
Series B (LOC, SD Credit Program) NR 4.00 3/14/97 3,011,576
3,000 Minnesota School District Tax & AID** NR 4.50 9/09/97 3,018,750
3,520 Minneapolis & St. Paul Housing Authority
Health Care Series B* A1+/AAA 3.85 9/03/96 3,520,000
1,600 Minneapolis Special School District (LOC-SD
Credit Program) NR/AA 5.00 2/01/97 1,609,707
------------
11,160,033
------------
MISSISSIPPI--1.3%
5,000 Grenada County, Georgia Pacific Corp.
Project (LOC-Sumitomo Bank)* NR/A1 3.65 9/04/96 5,000,000
------------
MISSOURI--18.2%
4,000 Kansas City Industrial Development
Authority* NR/A1 3.53 9/05/96 4,000,000
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
16
<PAGE> 17
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND
- --------------------------------------------------------------------------------
Portfolio of Investments (continued)
August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Moody's/S&P Amortized
Amount Ratings Maturity Cost
(000) Description (Unaudited) Rate Date (Note 2)
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
MISSOURI (continued)
$ 14,700 Kansas City Multi-Family Housing Revenue,
Timblane Village Apartments Project
(LOC-Security Pacific National Bank)* NR/AA3 3.50% 9/05/96 $ 14,700,000
3,000 Missouri Environment Authority (LOC-Sanwa
Bank)* NR/AA3 3.70 9/04/96 3,000,000
9,500 Missouri Environment Authority* A1/A- 3.55 9/04/96 9,500,000
2,600 Missouri Health & Educational Facilities
Authority* A1+/AA 3.45 9/04/96 2,600,000
9,600 Missouri Health & Educational Facilities
Authority, Educational Facilities Revenue,
Sisters Mercy Health* A1+/AA 3.45 9/05/96 9,600,000
6,100 Missouri Health & Educational Facilities
Authority, Educational Facilities Revenue,
Sisters Mercy Health, Series D* A1+/AA 3.45 9/05/96 6,100,000
1,500 Missouri Health & Educational Facilities
Authority, Educational Facilities Revenue,
ACES-SSM Health Care Project, Series A
(LOC-Industrial Bank of Japan)* NR/AAA 3.60 9/03/96 1,500,000
250 Missouri Health & Educational Facilities,
Christian Health Services, Series B*
(LOC-Morgan Guaranty)* A1+/AA 3.35 9/04/96 250,000
15,490 Missouri Health & Educational Facilities,
Barnes Hospital Project (LOC-Morgan
Stanley)* A1+/AA 3.40 9/04/96 15,490,000
3,500 St. Louis Tax & Revenue, Anticipation Note A1/NR 4.75 6/30/97 3,521,779
1,000 St. Louis Industrial Development Authority* A1/NR 3.50 9/05/96 1,000,000
------------
71,261,779
------------
MONTANA--1.8%
5,800 Montana State Board of Investments, Payroll
Tax Workers Compensation* NR/A 3.55 9/04/96 5,800,000
1,400 Montana Health Facilities Authority Revenue,
Healthcare Pooled Loan Project, Series A
(FGIC Insured) * A1+/AAA 3.45 9/05/96 1,400,000
------------
7,200,000
------------
NEW YORK--6.2%
3,000 New York City, Series B* A1+/AAA 4.00 9/03/96 3,000,000
2,800 New York City, Subseries B-4, GO* A1+/AAA 4.00 9/03/96 2,800,000
2,800 New York City, Series B, GO* A1+/AAA 4.00 9/03/96 2,800,000
15,600 New York City Municipal Water Financing
Authority, Water & Sewer System Revenue,
Series A (FGIC Insured)* A1+/AAA 4.00 9/03/96 15,600,000
------------
24,200,000
------------
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
17
<PAGE> 18
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND
- --------------------------------------------------------------------------------
Portfolio of Investments (continued)
August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Moody's/S&P Amortized
Amount Ratings Maturity Cost
(000) Description (Unaudited) Rate Date (Note 2)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NORTH CAROLINA--3.3%
$ 3,300 Raleigh Durham Airport Authority (LOC --
Royal Bank of Canada) * A1+/AA 3.85% 9/03/96 $ 3,300,000
9,450 Raleigh Durham Airport Authority, Special
Facility Revenue American Airlines, Series
A (LOC -- Royal Bank of Canada) * A1+/AA 3.85 9/03/96 9,450,000
------------
12,750,000
------------
PENNSYLVANIA--5.8%
11,200 Temple University Higher Education Revenue NR 4.63 5/20/97 11,274,259
2,600 Allegheny County Hospital* A1/AAA 3.50 9/05/96 2,600,000
8,650 Allegheny County Hospital Development* A1/AAA 3.50 9/05/96 8,650,000
------------
22,524,259
------------
SOUTH CAROLINA--0.5%
2,100 York County PCR, Electric Project NRU-84N-1
(WC -- FGIC) * A1-/AA- 3.55 9/04/96 2,100,000
------------
2,100,000
------------
TEXAS--8.6%
2,000 Houston, GO NR/AA 5.50 4/01/97 2,020,409
1,500 Klein Independent School District, Prefunded
8/01/97 @100 NR/AAA 6.88 8/01/97 1,540,992
1,805 North Harris Montgomery Community College
District, GO NR/AAA 6.10 2/15/97 1,825,203
5,200 Harris County Health Facilities Development
Corp., Hospital Revenue, St. Lukes
Episcopal, Series D, (SPA-Morgan Guaranty
Trust)* A1+/AA 3.75 9/03/96 5,200,000
3,700 Harris County Health Facilities Development
Corp., Hospital Revenue, Texas Children,
Series B2, (SPA-NationsBank of Texas)* NR/AA 3.45 9/04/96 3,700,000
2,200 Harris County Health Facilities, St. Lukes,
Series B* A1+/AA 3.75 9/03/96 2,200,000
4,100 Harris County Industrial Development Corp.,
Exxon Corp., PCR* A1+/AA 3.75 9/03/96 4,100,000
10,700 Harris County Health Facility, St. Lukes,
Series C* A1+/AA 3.75 9/03/96 10,700,000
335 Lewisville Water & Sewer Revenue,
Prerefunded 2/15/97 @100,
San Antonio Electric & Gas System NR/AA 8.05 2/15/97 341,618
1,000 Texas, Series A NR/AA 6.00 10/01/96 1,001,754
1,065 Dallas Waterworks & Sewer, Series A NR/AA 5.90 10/01/96 1,067,262
------------
33,697,238
------------
UTAH--0.5%
2,000 Salt Lake County, PCR* A1+/AA- 3.75 9/03/96 2,000,000
------------
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
18
<PAGE> 19
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND
- --------------------------------------------------------------------------------
Portfolio of Investments (continued)
August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Moody's/S&P Amortized
Amount Ratings Maturity Cost
(000) Description (Unaudited) Rate Date (Note 2)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
WASHINGTON--3.7%
$ 5,200 Washington Public Power Supply System,
Nuclear Project No 3, Series 3A-1,
(LOC-Bank of America)* A1/AA- 3.40% 9/04/96 $ 5,200,000
7,300 Washington Public Power Supply, System,
Nuclear Project No 3, Series 3A-2,
(LOC-Indl Bank Japan Ltd.)* A1/AA- 3.40 9/04/96 7,300,000
2,000 Washington Motor Vehicle Fuel, Series R 93C NR/AAA 3.85 9/01/96 2,000,000
------------
14,500,000
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL SECURITIES (cost $312,362,829) 312,362,829
- -----------------------------------------------------------------------------------------------------------------------------
SHORT TERM PUTS--4.2%
ILLINOIS--3.1%
12,000 Chicago, GO Limited, (LOC-Morgan Guaranty) A1+/NR 3.65 10/31/96 12,000,000
------------
PENNSYLVANIA--1.1%
4,500 Cumberland County Municipal Authority, (LOC-
PNC Bank)* NR/A1 3.68 6/01/97 4,500,000
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL SHORT TERM PUTS (cost $16,500,000) 16,500,000
- -----------------------------------------------------------------------------------------------------------------------------
TAX-FREE COMMERCIAL PAPER--17.2%
FLORIDA--3.6%
13,950 Sunshine State, Government Finance
Commission Aa2/NR 3.60 9/26/96 13,950,000
------------
GEORGIA--4.3%
2,000 Georgia Municipal Gas Authority A1+/AA+ 3.50 10/16/96 2,000,000
15,000 Municipal Electric Authority A1+/AA 3.60 11/06/96 15,000,000
------------
17,000,000
------------
ILLINOIS--0.9%
3,350 Cook County Health Fund A1/NR 3.50 10/01/96 3,350,000
------------
KANSAS--0.5%
2,000 Burlington, PCR A1+/AA 3.60 10/16/96 2,000,000
------------
MASSACHUSETTS--0.8%
3,300 Anne Arundel County 3.65 9/10/96 3,300,000
------------
MISSOURI--4.2%
7,000 Missouri Environment Improvement & Energy A1+/AA+ 3.65 11/19/96 7,000,000
2,000 Missouri Environment Improvement & Energy A1+/AA+ 3.65 11/19/96 2,000,000
7,475 Missouri Environment Improvement & Energy A1+/AA+ 3.70 2/14/97 7,475,000
------------
16,475,000
------------
NEW YORK--1.3%
5,000 New York City A1+/AA+ 3.50 9/13/96 5,000,000
------------
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
19
<PAGE> 20
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND
- --------------------------------------------------------------------------------
Portfolio of Investments (continued)
August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Moody's/S&P Amortized
Amount Ratings Maturity Cost
(000) Description (Unaudited) Rate Date (Note 2)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
TEXAS--1.6%
$ 6,100 San Antonio, Electric & Gas, Series A A1+/AA 3.60% 10/10/96 $ 6,100,000
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL TAX FREE COMMERCIAL PAPER(COST $67,175,000) 67,175,000
- -----------------------------------------------------------------------------------------------------------------------------
TAX-EXEMPT MONEY MARKET FUND--0.5%
2,166 Federated Tax-Exempt Obligation Fund (cost
$2,166,053) 2,166,053
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $398,203,882)--101.8% 398,203,882
- -----------------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS--(1.8%) (6,969,435)
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS--100.0% $391,234,447
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Variable rate security.
** When issued security.
<TABLE>
<S> <C>
ACES --Adjustable Convertible Extendible Securities.
FGIC --Financial Guaranty Insurance Company.
GO --General Obligation.
LOC --Letter of credit.
MBIA --Municipal Bond Insurance Association.
PCR --Pollution Control Revenue.
TAN --Tax Anticipation Notes.
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
20
<PAGE> 21
THE PILOT FUNDS
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities
August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MISSOURI SHORT-TERM
SHORT-TERM SHORT-TERM SHORT-TERM TAX-EXEMPT
U.S. TREASURY DIVERSIFIED TAX-EXEMPT DIVERSIFIED
FUND ASSETS FUND FUND FUND
-------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
ASSETS
Investment in securities, at amortized cost............. $ 910,975,654 $1,218,541,933 $ 212,538,198 $ 398,203,882
Repurchase agreements, at cost.......................... 738,396,815 389,020,181 -- --
Cash.................................................... -- 56,758 -- 880
Interest receivable..................................... 24,056,030 8,849,128 980,493 2,230,143
Receivable from brokers for investments sold............ 460,000,000 -- -- --
Other assets............................................ 244,439 112,348 25,060 49,372
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS............................................ 2,133,672,938 1,616,580,348 213,543,751 400,484,277
- -----------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Advisory fees payable................................... 216,278 192,549 36,635 67,021
Administration fees payable............................. 159,608 140,774 20,180 36,905
Service fees payable (Pilot Administration Shares)...... 47,848 51,958 2,603 3,040
Service fees payable (Pilot Investor Shares)............ 75,475 19,493 6,562 427
Custodian fees payable.................................. 16,008 7,478 2,237 16,458
Payable to brokers for investments purchased............ 434,126,428 -- -- 8,044,700
Dividends payable....................................... 5,625,016 5,428,487 403,935 1,017,754
Other accrued expenses.................................. 70,647 153,452 55,781 63,525
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES....................................... 440,337,308 5,994,191 527,933 9,249,830
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS.............................................. $1,693,335,630 $1,610,586,157 $ 213,015,818 $ 391,234,447
- -----------------------------------------------------------------------------------------------------------------------------
SHARES OUTSTANDING ($0.001 PAR VALUE, UNLIMITED NUMBER
OF SHARES AUTHORIZED):
Pilot Shares............................................ 1,299,257,989 1,318,714,071 183,782,475 375,748,990
Pilot Administration Shares............................. 216,392,754 241,953,456 13,500,641 14,549,406
Pilot Investor Shares................................... 177,903,259 49,847,391 15,744,033 906,905
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL SHARES OUTSTANDING................................ 1,693,554,002 1,610,514,918 213,027,149 391,205,301
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Offering Price and Redemption Price per
Share................................................. $1.00 $1.00 $1.00 $1.00
- -----------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS:
Shares of beneficial interest, at par................... $ 1,693,554 $ 1,610,515 $ 213,027 $ 391,205
Additional paid-in capital.............................. 1,691,860,481 1,608,842,012 212,616,014 390,769,608
Undistributed (distributions in excess of) net
investment income..................................... (87,358) 276,000 201,785 41,741
Accumulated undistributed net realized gains (losses)
from investment transactions.......................... (131,047) (142,370) (15,008) 31,893
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS, AUGUST 31, 1996............................. $1,693,335,630 $1,610,586,157 $ 213,015,818 $ 391,234,447
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
21
<PAGE> 22
THE PILOT FUNDS
- --------------------------------------------------------------------------------
Statements of Operations
For the year ended August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHORT-TERM MISSOURI SHORT-TERM
U.S. SHORT-TERM SHORT-TERM TAX-EXEMPT
TREASURY DIVERSIFIED TAX-EXEMPT DIVERSIFIED
FUND ASSETS FUND FUND FUND
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest............................................ $ 93,046,517 $ 81,049,659 $ 8,356,213 $ 14,242,722
- ------------------------------------------------------------------------------------------------------------------
EXPENSES:
Advisory fees....................................... 2,552,746 2,174,296 466,582 787,503
Administration fees................................. 1,880,792 1,598,802 257,068 433,805
Administration Service Fees (Pilot Administration
Shares)........................................... 535,662 579,043 25,994 33,990
Investor Service Fees (Pilot Investor Shares)....... 799,775 199,056 64,299 968
Accounting fees..................................... 64,990 56,629 11,228 16,541
Audit fees.......................................... 84,507 65,571 51,960 82,838
Transfer agent fees and expenses.................... 6,708 10,102 4,794 5,559
Custodian fees and expenses......................... 123,260 105,065 75,653 41,906
Registration fees................................... 116,909 105,018 47,375 41,386
Amortization of organization expenses............... 6,773 42,551 38,714 18,300
Legal fees.......................................... 76,704 86,599 11,799 19,140
Trustees' fees...................................... 58,348 70,361 7,751 16,607
Reports to shareholders............................. 31,726 27,545 4,277 7,343
Other expenses...................................... 204,731 67,191 13,762 122,656
- ------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES...................................... 6,543,631 5,187,829 1,081,256 1,628,542
- ------------------------------------------------------------------------------------------------------------------
Less fee waived by advisor.......................... (656,963) (518,392) -- (145,549)
- ------------------------------------------------------------------------------------------------------------------
NET EXPENSES........................................ 5,886,668 4,669,437 1,081,256 1,482,993
- ------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME............................... 87,159,849 76,380,222 7,274,957 12,759,729
- ------------------------------------------------------------------------------------------------------------------
NET REALIZED GAINS (LOSSES) FROM INVESTMENTS........ (72,161) (7,389) 25,794 59,395
- ------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS........................................ $ 87,087,688 $ 76,372,833 $ 7,300,751 $ 12,819,124
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
22
<PAGE> 23
[THIS PAGE INTENTIONALLY LEFT BLANK]
23
<PAGE> 24
THE PILOT FUNDS
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHORT-TERM SHORT-TERM
U.S. TREASURY FUND DIVERSIFIED ASSETS FUND
---------------------------------- ----------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED THE YEAR ENDED YEAR ENDED
AUGUST 31, 1996 AUGUST 31, 1995 AUGUST 31, 1996 AUGUST 31, 1995
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income......................... $ 87,159,849 $ 64,324,193 $ 76,380,222 $ 72,518,156
Net realized gains (losses) from investment
transactions................................ (72,161) (99,326) (7,389) (126,776)
- -----------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from
operations...................................... 87,087,688 64,224,867 76,372,833 72,391,380
- -----------------------------------------------------------------------------------------------------------------------------
Dividends to shareholders from net investment
income:
Pilot Shares.................................. (68,912,660) (50,061,109) (62,678,596) (56,135,624)
Pilot Administration Shares................... (10,651,264) (7,236,770) (11,779,432) (14,769,836)
Pilot Investor Shares......................... (7,507,828) (7,049,513) (1,922,216) (1,730,773)
- -----------------------------------------------------------------------------------------------------------------------------
Total dividends to shareholders from net
investment income............................... (87,071,752) (64,347,392) (76,380,244) (72,636,233)
- -----------------------------------------------------------------------------------------------------------------------------
Distributions in excess of net investment income:
Pilot Shares.................................. (69,139) -- -- --
Pilot Administration Shares................... (10,686) -- -- --
Pilot Investor Shares......................... (7,533) -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Total distributions in excess of net investment
income.......................................... (87,358) -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Portfolio share transactions:
Proceeds from shares issued................... 9,878,532,918 7,633,890,413 5,663,449,795 6,079,682,781
Dividends reinvested.......................... 18,323,119 12,508,935 13,444,984 13,612,333
Cost of shares redeemed....................... (9,741,562,840) (7,206,228,934) (5,388,561,055) (5,969,699,418)
- -----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from
Portfolio share transactions.................... 155,293,197 440,170,414 288,333,724 123,595,696
- -----------------------------------------------------------------------------------------------------------------------------
Total increase (decrease)......................... 155,221,775 440,047,889 288,326,313 123,350,843
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period............................... 1,538,113,855 1,098,065,966 1,322,259,844 1,198,909,001
- -----------------------------------------------------------------------------------------------------------------------------
End of period(a).................................. $ 1,693,335,630 $ 1,538,113,855 $ 1,610,586,157 $ 1,322,259,844
- -----------------------------------------------------------------------------------------------------------------------------
<FN>
(a) Includes undistributed (distributions in excess of) net investment income
of ($87,358), $6, $276,000, $0, $201,785, $0, $41,741 and $0, respectively.
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
24
<PAGE> 25
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MISSOURI SHORT-TERM SHORT-TERM
TAX-EXEMPT FUND TAX-EXEMPT DIVERSIFIED FUND
--------------------------------------- ---------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
AUGUST 31, 1996 AUGUST 31, 1995 AUGUST 31, 1996 AUGUST 31, 1995
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C>
$ 7,274,957 $ 8,685,370 $ 12,759,729 $ 14,249,567
25,794 (26,998) 59,395 (17,838)
-----------------------------------------------------------------------------------
7,300,751 8,658,372 12,819,124 14,231,729
-----------------------------------------------------------------------------------
(6,637,519) (8,297,281) (12,351,930) (13,962,657)
(297,782) (89,381) (405,583) (287,100)
(339,651) (299,924) (4,963) (98)
-----------------------------------------------------------------------------------
(7,274,952) (8,686,586) (12,762,476) (14,249,855)
-----------------------------------------------------------------------------------
-- -- -- --
-- -- -- --
-- -- -- --
-----------------------------------------------------------------------------------
-- -- -- --
-----------------------------------------------------------------------------------
573,611,650 1,021,732,285 497,372,489 601,226,465
2,239,269 2,892,628 442,282 262,723
(589,471,487) (1,047,146,227) (518,867,826) (580,327,778)
-----------------------------------------------------------------------------------
(13,620,568) (22,521,314) (21,053,055) 21,161,410
-----------------------------------------------------------------------------------
(13,594,769) (22,549,528) (20,996,407) 21,143,284
-----------------------------------------------------------------------------------
226,610,587 249,160,115 412,230,854 391,087,570
-----------------------------------------------------------------------------------
$ 213,015,818 $ 226,610,587 $ 391,234,447 $ 412,230,854
-----------------------------------------------------------------------------------
</TABLE>
25
<PAGE> 26
THE PILOT FUNDS
- --------------------------------------------------------------------------------
Notes to Financial Statements
August 31, 1996
- ----------------------------------------------------------
- ----------------------------------------------------------
1. GENERAL
The Pilot Short-Term U.S. Treasury Fund, the Pilot Short-Term Diversified Assets
Fund, the Pilot Missouri Short-Term Tax-Exempt Fund, and the Pilot Short-Term
Tax-Exempt Diversified Fund are separate money market 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 except for the
Missouri Short-Term Tax-Exempt Fund. Shares of the Fund are offered exclusively
to customers of Boatmen's Trust Company ("Boatmen's"), its affiliates and to
customers of other participating service organizations. The Fund currently
offers twelve Portfolios. The accompanying financial statements are those of the
four Portfolios only.
The Portfolios each offer three classes of shares: Pilot Shares, Pilot
Administration Shares and Pilot Investor Shares. Each class of shares is
substantially the same, except that Pilot Administration Shares bear the fees
payable under the Portfolios' Administration Plan, and Pilot Investor Shares
bear the fees payable under the Portfolios' Service Plan.
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 Cash Reserve Money Market Fund of FUNDS IV transferred
substantially all of its assets and liabilities to the Short-Term Diversified
Assets Fund in exchange for Pilot Shares of such Portfolio.
The Short-Term U.S. Treasury Fund and Short-Term Diversified Assets fund seek to
maximize current income to the extent consistent with the preservation of
capital and the maintenance of liquidity by investing exclusively in
high-quality money market instruments. The Missouri Short-Term Tax-Exempt Fund
and Short-Term Tax-Exempt Diversified Fund seek as high a level of current
income which is exempt from federal income tax as is consistent with the
preservation of capital.
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.
A. Investment Valuation
The Portfolios use the amortized cost method for valuing portfolio securities.
Under this method, all investments purchased at a discount or premium are valued
by amortizing the difference between the original purchase price and maturity
value of the issue over the period to maturity. In addition, the Portfolios may
not (a) purchase
- ----------------------------------------------------------
- ----------------------------------------------------------
26
<PAGE> 27
THE PILOT FUNDS
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
August 31, 1996
- ----------------------------------------------------------
- ----------------------------------------------------------
any instrument with a remaining maturity greater than thirteen months unless
such instrument is subject to a demand feature, or (b) maintain a
dollar-weighted-average maturity which exceeds 90 days.
B. Repurchase Agreements
The custodian for the Portfolios and other banks acting in a subcustodian
capacity take possession of the collateral pledged for investments in repurchase
agreements. The underlying collateral is valued daily on a mark-to-market basis
to determine that the value, including accrued interest, is not less than 102%
of the repurchase price, including accrued interest. In the event of the
seller's default of the obligation to repurchase, the Portfolios have the right
to liquidate the collateral and apply the proceeds in satisfaction of the
obligation. Under certain circumstances, in the event of default or bankruptcy
by the other party to the agreement, realization and/or retention of the
collateral may be subject to legal proceedings.
C. Securities Transactions and Investment Income
Securities transactions are recorded on a trade date basis. Interest income,
including accretion of discounts and amortization of premiums on investments, is
accrued daily. Investment income of each Portfolio is allocated to the separate
classes of shares based upon their relative net assets.
D. Dividends to Shareholders
Dividends are declared daily to shareholders of record at the close of business
on the day of declaration and paid monthly. Distributions of net realized gains,
if any, will be paid at least annually. However, to the extent that net realized
gains of a Portfolio can be offset by capital loss carryovers, such gains will
not be distributed. Dividends and distributions are recorded by the Portfolios
on the ex-dividend date.
Distributions from net investment income and from net capital gains are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences are primarily due to
differing treatments for expiring capital loss carryforwards and deferrals of
certain losses. Permanent book and tax differences, which affect shareholder
distributions, have been reclassified among the components of net assets.
E. Federal Taxes
It is each Portfolio's policy 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.
Amortized cost of investments is substantially the same for federal income tax
purposes and financial reporting purposes.
F. Organizational Expenses
Costs incurred by the Fund in connection with its organization and registration
of shares have been deferred and were 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. As of August 31, 1996, organization costs
have been fully amortized.
G. Expenses
Expenses incurred by the Fund that do not specifically relate to an individual
portfolio of the Fund are allocated to the portfolios based on each portfolio's
relative net assets. The expenses of each Portfolio (other than expenses
incurred pursuant to the Administration and Service Plans) are allocated to the
separate classes of shares based upon their relative net assets.
- ----------------------------------------------------------
- ----------------------------------------------------------
27
<PAGE> 28
THE PILOT FUNDS
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
August 31, 1996
- ----------------------------------------------------------
- ----------------------------------------------------------
3. AGREEMENTS AND TRANSACTIONS WITH AFFILIATES
A. Advisory Agreements
Boatmen's is the investment adviser for each Portfolio pursuant to separate
Investment Advisory Agreements and is responsible for managing the investment
operations of the Portfolios. For its services, Boatmen's is entitled to a fee,
accrued daily and paid monthly, at an annual rate equal to 0.15% of the average
daily net assets of each of the Short-Term U.S. Treasury Fund and the Short-Term
Diversified Assets Fund and 0.20% of the average daily net assets of each of the
Missouri Short-Term Tax-Exempt Fund and the Short-Term Tax-Exempt Diversified
Fund.
Boatmen's voluntarily waived 0.05% from its contractual fee rates for the
Short-Term U.S. Treasury Fund, the Short-Term Diversified Assets, and the
Short-Term Tax-Exempt Diversified Assets Fund, based on each Portfolios average
daily net assets on an annualized basis, for each such Portfolio for the period
July 1, 1995 until January 1, 1996, and 0.03% from its contractual fee rates,
based on each Portfolios average daily net assets on an annualized basis, for
the period January 1, 1996 until July 1, 1996. For the year ended August 31,
1996 Boatmen's waived fees in the following amounts:
<TABLE>
<S> <C>
Short-Term U.S. Treasury Fund................... $ 656,963
Short-Term Diversified Assets Fund.............. 518,392
Short-Term Tax-Exempt Diversified Fund.......... 145,549
</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 daily net assets of
all of the portfolios constituting the Fund, plus 0.11% of the next $1.5 billion
of such net assets, plus 0.1075% of such net assets in excess of $3.0 billion.
C. Administration and Investor Plans
The Fund has adopted Administration and Investor Plans which allow for Pilot
Administration Shares and Pilot Investor Shares, respectively, to compensate
service organizations, which may include Boatmen's, BISYS and their affiliates
for providing varying levels of account administration and shareholder liaison
services to customers who are beneficial owners of such shares. The
Administration and Investor Plans provide for compensation to the service
organizations in an amount up to 0.25% and 0.50% (on an annualized basis),
respectively, of the average daily net asset value of the respective shares.
During the year ended August 31, 1996, affiliates of the Fund received the
following fees pursuant to the Administration and Investor Plans:
<TABLE>
<CAPTION>
ADMINISTRATION INVESTOR
FUND PLAN PLAN
- --------------------------------- -------------- --------
<S> <C> <C>
Short-Term U.S. Treasury Fund.... $535,662 $799,775
Short-Term Diversified Assets
Fund........................... 579,043 199,056
Missouri Short-Term Tax-Exempt
Fund........................... 25,994 64,299
Short-Term Tax-Exempt Diversified
Fund........................... 33,990 968
</TABLE>
D. Distribution Agreement
The Distributor does not receive a fee under its Distribution Agreement.
E. 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.
BISYS does not receive a fee for the transfer agent services provided.
F. 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 $55,000. Prior to
- ----------------------------------------------------------
- ----------------------------------------------------------
28
<PAGE> 29
THE PILOT FUNDS
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
August 31, 1996
- ----------------------------------------------------------
- ----------------------------------------------------------
May 6, 1996, State Street Bank & Trust served the Portfolios as custodian.
G. 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. PORTFOLIO SHARE TRANSACTIONS
Transactions in shares of the Portfolios are as follows (000 omitted) (at $1.00
per share):
PILOT SHORT-TERM U.S. TREASURY FUND
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
AUGUST 31, AUGUST 31,
1996 1995
---------- ----------
<S> <C> <C>
Pilot Shares:
Proceeds from shares
issued..................... 2,810,597 2,313,451
Dividends reinvested......... 150 151
Cost of shares redeemed...... (2,703,045) (1,965,257)
---------- ----------
Change in net assets from Pilot
share transactions............. 107,702 348,345
========== ==========
Pilot Administration Shares:
Proceeds from shares
issued..................... 4,452,376 2,834,858
Dividends reinvested......... 10,146 5,415
Cost of shares redeemed...... (4,461,741) (2,723,506)
---------- ----------
Change in net assets from Pilot
Administration share
transactions................... 781 116,767
========== ==========
Pilot Investor Shares:
Proceeds from shares
issued..................... 2,615,560 2,485,581
Dividends reinvested......... 8,027 6,943
Cost of shares redeemed...... (2,576,777) (2,517,466)
---------- ----------
Change in net assets from Pilot
Investor share transactions.... 46,810 (24,942)
========== ==========
</TABLE>
PILOT SHORT-TERM DIVERSIFIED ASSETS FUND
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
AUGUST 31, AUGUST 31,
1996 1995
---------- ----------
<S> <C> <C>
Pilot Shares:
Proceeds from shares issued... 1,876,383 1,554,497
Dividends reinvested.......... 119 152
Cost of shares redeemed....... (1,614,354) (1,355,685)
---------- ----------
Change in net assets from Pilot
share transactions.............. 262,148 198,964
========== ==========
Pilot Administration Shares:
Proceeds from shares issued... 3,150,340 3,925,718
Dividends reinvested.......... 11,279 11,755
Cost of shares redeemed....... (3,151,335) (4,008,968)
---------- ----------
Change in net assets from Pilot
Administration share
transactions.................... 10,284 (71,495)
========== ==========
Pilot Investor Shares:
Proceeds from shares issued... 636,727 599,468
Dividends reinvested.......... 2,047 1,705
Cost of shares redeemed....... (622,872) (605,046)
---------- ----------
Change in net assets from Pilot
Investor share transactions..... 15,902 (3,873)
========== ==========
</TABLE>
- ----------------------------------------------------------
- ----------------------------------------------------------
29
<PAGE> 30
THE PILOT FUNDS
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
August 31, 1996
- ----------------------------------------------------------
- ----------------------------------------------------------
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
AUGUST 31, AUGUST 31,
1996 1995
---------- ----------
<S> <C> <C>
Pilot Shares:
Proceeds from shares issued..... 348,043 839,422
Dividends reinvested............ 1,563 2,540
Cost of shares redeemed......... (376,691) (870,898)
---------- ----------
Change in net assets from Pilot
share transactions................ (27,085) (28,936)
========== ==========
Pilot Administration Shares:
Proceeds from shares issued..... 140,954 62,333
Dividends reinvested............ 310 69
Cost of shares redeemed......... (132,319) (57,846)
---------- ----------
Change in net assets from Pilot
Administration share
transactions...................... 8,945 8,915
========== ==========
Pilot Investor Shares:
Proceeds from shares issued..... 84,615 119,978
Dividends reinvested............ 366 283
Cost of shares redeemed......... (80,461) (118,402)
---------- ----------
Change in net assets from Pilot
Investor share transactions....... 4,520 1,859
========== ==========
</TABLE>
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED ASSETS FUND
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
AUGUST 31, AUGUST 31,
1996 1995
---------- ----------
<S> <C> <C>
Pilot Shares:
Proceeds from shares issued..... 482,524 504,042
Dividends reinvested............ -- --
Cost of shares redeemed......... (504,585) (494,289)
-------- --------
Change in net assets from Pilot
share transactions................ (22,061) 9,753
======== ========
Pilot Administration Shares:
Proceeds from shares issued..... 13,384 97,179
Dividends reinvested............ 438 263
Cost of shares redeemed......... (13,716) (86,039)
-------- --------
Change in net assets from Pilot
Administration share
transactions...................... 106 11,403
======== ========
Pilot Investor Shares:
Proceeds from shares issued..... 1,465 5
Dividends reinvested............ 4 --
Cost of shares redeemed......... (567) --
-------- --------
Change in net assets from Pilot
Investor share transactions....... 902 5
======== ========
</TABLE>
5. FEDERAL INCOME TAX INFORMATION
At August 31, 1996, the Portfolios had the following capital loss carryforwards
which are available to offset future capital gains, if any (000 omitted):
<TABLE>
<CAPTION>
AMOUNT EXPIRES
-------- -------
<S> <C> <C>
Short-Term U.S. Treasury Fund........... $ 16,306 2002
Short-Term U.S. Treasury Fund........... 26,323 2003
Short-Term U.S. Treasury Fund........... 88,418 2004
Short-Term Diversified Assets Fund...... 131,029 2003
Short-Term Diversified Assets Fund...... 11,341 2004
Missouri Short-Term Tax-Exempt Fund..... 15,008 2003
</TABLE>
6. EXEMPT-INTEREST INCOME DESIGNATIONS
(UNAUDITED):
The Missouri Short-Term Tax-Exempt Fund and Short-Term Tax-Exempt Diversified
Fund designate exempt-interest dividends paid for the taxable period January 1,
1996 to August 31, 1996 of approximately $4,075,360 and $6,889,538,
respectively.
- ----------------------------------------------------------
- ----------------------------------------------------------
30
<PAGE> 31
[THIS PAGE INTENTIONALLY LEFT BLANK]
31
<PAGE> 32
PILOT SHORT-TERM U.S. TREASURY FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31, 1996 YEAR ENDED AUGUST 31, 1995
---------------------------------------- ----------------------------------------
PILOT ADMINISTRATION INVESTOR PILOT ADMINISTRATION INVESTOR
SHARES SHARES SHARES SHARES SHARES SHARES
---------- -------------- -------- ---------- -------------- --------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........ $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
---------- -------- -------- ---------- -------- --------
Investment Activities
Net investment income................... 0.0522 0.0497 0.0472 0.0534 0.0509 0.0484
Net realized gains from investment
transactions.......................... -- -- -- -- -- --
---------- -------- -------- ---------- -------- --------
Total from Investment Activities........ 0.0522 0.0497 0.0472 0.0534 0.0509 0.0484
Distributions to shareholders from net
investment income......................... (0.0522) (0.0497) (0.0472) (0.0534) (0.0509) (0.0484)
---------- -------- -------- ---------- -------- --------
Net Asset Value, End of Period.............. $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
========== ======== ======== ========== ======== ========
Total Return(c)............................. 5.35% 5.08% 4.82% 5.47% 5.21% 4.94%
Ratios/Supplemental Data:
Net Assets at end of period (000)....... $1,299,086 $216,368 $177,882 $1,191,447 $215,593 $131,074
Ratio of expenses to average net
assets(d)............................. 0.27% 0.52% 0.77% 0.23% 0.48% 0.73%
Ratio of net investment income
to average net assets(d).............. 5.22% 4.96% 4.70% 5.36% 5.12% 4.82%
Ratio of expenses to average net
assets assuming no waiver or expense
reimbursement(d)...................... 0.31% 0.56% 0.81% 0.24% 0.49% 0.74%
Ratio of net investment income to
average net assets assuming no waiver
or expense reimbursement(d)........... 5.18% 4.92% 4.66% 5.35% 5.11% 4.81%
<FN>
- ---------------
(a) Pilot Investor Shares commenced offering during July 1992.
(b) Prior to June 1, 1994, Goldman Sachs Asset Management served the Portfolio
as investment adviser.
(c) Total return would have been lower had certain expenses not been reduced
during the periods presented and is not annualized.
(d) Does not reflect the fee which may be charged by Boatmen's directly to its
customers' accounts at an annual rate not to exceed 0.25% of the average
daily balance of Pilot Shares in the customers' accounts.
(e) Annualized.
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
32
<PAGE> 33
PILOT SHORT-TERM U.S. TREASURY FUND
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31, 1994(B) YEAR ENDED AUGUST 31, 1993(B) YEAR ENDED AUGUST 31, 1992(B)
-------------------------------------- -------------------------------------- --------------------------------------
PILOT ADMINISTRATION INVESTOR PILOT ADMINISTRATION INVESTOR PILOT ADMINISTRATION INVESTOR
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES(A)
-------- -------------- -------- -------- -------------- -------- -------- -------------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
-------- ------- -------- -------- ------- -------- -------- ------- --------
0.0334 0.0309 0.0284 0.0294 0.0269 0.0244 0.0400 0.0362 0.0048
0.0002 0.0002 0.0002 0.0006 0.0006 0.0006 0.0014 0.0016 0.0002
-------- ------- -------- -------- ------- -------- -------- ------- --------
0.0336 0.0311 0.0286 0.0300 0.0275 0.0250 0.0414 0.0378 0.0050
(0.0336) (0.0311) (0.0286) (0.0300) (0.0275) (0.0250) (0.0414) (0.0378) (0.0050)
-------- ------- -------- -------- ------- -------- -------- ------- --------
$ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
======== ======= ======== ======== ======= ======== ======== ======= ========
3.40% 3.15% 2.90% 3.04% 2.79% 2.53% 4.30% 4.04% 2.92%(e)
$843,111 $ 98,823 $156,132 $942,109 $ 65,570 $193,764 $887,321 $ 91,152 $212,920
0.16% 0.41% 0.66% 0.14% 0.39% 0.64% 0.24% 0.49% 0.71%(e)
3.34% 3.09% 2.84% 2.94% 2.69% 2.44% 4.00% 3.62% 2.83%(e)
0.28% 0.53% 0.78% 0.30% 0.55% 0.80% 0.30% 0.56% 0.81%(e)
3.24% 2.99% 2.74% 2.78% 2.53% 2.28% 3.94% 3.55% 2.73%(e)
</TABLE>
- --------------------------------------------------------------------------------
33
<PAGE> 34
PILOT SHORT-TERM DIVERSIFIED ASSETS FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31, 1996 YEAR ENDED AUGUST 31, 1995
---------------------------------------- ----------------------------------------
PILOT ADMINISTRATION INVESTOR PILOT ADMINISTRATION INVESTOR
SHARES SHARES SHARES SHARES SHARES SHARES
---------- -------------- -------- ---------- -------------- --------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period.............................. $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
---------- -------- -------- ---------- -------- --------
Investment Activities
Net investment income............. 0.0534 0.0509 0.0484 0.0554 0.0529 0.0504
Net realized gains from investment
transactions.................... -- -- -- -- -- --
---------- -------- -------- ---------- -------- --------
Total from Investment
Activities...................... 0.0534 0.0509 0.0484 0.0554 0.0529 0.0504
Distributions to shareholders from net
investment income................... (0.0534) (0.0509) (0.0484) (0.0554) (0.0529) (0.0504)
---------- -------- -------- ---------- -------- --------
Net Asset Value, End of Period........ $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
========== ======== ======== ========== ======== ========
Total Return(c)....................... 5.47% 5.21% 4.95% 5.68% 5.42% 5.15%
Ratios/Supplemental Data:
Net Assets at end of period
(000)........................... $1,318,767 $241,970 $ 49,849 $1,056,624 $231,688 $ 33,948
Ratio of expenses to average net
assets(d)....................... 0.27% 0.52% 0.77% 0.23% 0.48% 0.73%
Ratio of net investment income to
average net assets(d)........... 5.33% 5.07% 4.83% 5.56% 5.22% 5.00%
Ratio of expenses to average net
assets assuming no waiver or
expense reimbursement(d)........ 0.31% 0.56% 0.81% 0.24% 0.49% 0.74%
Ratio of net investment income to
average net assets assuming no
waiver or expense
reimbursement(d) 5.29% 5.03% 4.79% 5.55% 5.21% 4.99%
<FN>
- ---------------
(a) Pilot Investor Shares commenced offering during July 1992.
(b) Prior to June 1, 1994, Goldman Sachs Asset Management served the Portfolio
as investment adviser.
(c) Total return would have been lower had certain expenses not been reduced
during the periods presented and is not annualized.
(d) Does not reflect the fee which may be charged by Boatmen's directly to its
customers' accounts at an annual rate not to exceed 0.25% of the average
daily balance of Pilot Shares in the customers' accounts.
(e) Annualized.
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
34
<PAGE> 35
PILOT SHORT-TERM DIVERSIFIED ASSETS FUND
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31, 1994(B) YEAR ENDED AUGUST 31, 1993(B) YEAR ENDED AUGUST 31, 1992(B)
- -------------------------------------- ---------------------------------------- ----------------------------------------
PILOT ADMINISTRATION INVESTOR PILOT ADMINISTRATION INVESTOR PILOT ADMINISTRATION INVESTOR
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES(A)
- -------- -------------- -------- ---------- -------------- -------- ---------- -------------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
- -------- -------- -------- ---------- -------- -------- -------- -------- --------
0.0353 0.0328 0.0303 0.0325 0.0298 0.0273 0.0452 0.0396 0.0043
0.0001 0.0001 0.0001 0.0001 0.0001 0.0001 -- 0.0001 --
- -------- -------- -------- ---------- -------- -------- -------- -------- --------
0.0354 0.0329 0.0304 0.0326 0.0299 0.0274 0.0452 0.0397 0.0043
(0.0354) (0.0329) (0.0304) (0.0326) (0.0299) (0.0274) (0.0452) (0.0397) (0.0043)
- -------- -------- -------- ---------- -------- -------- -------- -------- --------
$ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
======== ======== ======== ========== ======== ======== ======== ======== ========
3.60% 3.35% 3.10% 3.29% 3.04% 2.78% 4.68% 4.42% 3.24%(e)
$857,795 $303,288 $ 37,896 $1,293,667 $378,262 $ 36,814 $1,939,568 $271,606 $ 27,880
0.15% 0.40% 0.65% 0.12% 0.37% 0.62% 0.12% 0.37% 0.62%(e)
3.53% 3.28% 3.03% 3.25% 2.98% 2.74% 4.52% 3.95% 3.14%(e)
0.29% 0.54% 0.79% 0.29% 0.54% 0.79% 0.29% 0.54% 0.80%(e)
3.40% 3.15% 2.90% 3.08% 2.81% 2.57% 4.35% 3.78% 2.96%(e)
</TABLE>
35
<PAGE> 36
PILOT MISSOURI SHORT-TERM U.S. TAX-EXEMPT FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31, 1996 YEAR ENDED AUGUST 31, 1995(B)
-------------------------------------- --------------------------------------
PILOT ADMINISTRATION INVESTOR PILOT ADMINISTRATION INVESTOR
SHARES SHARES SHARES SHARES SHARES SHARES
-------- -------------- -------- -------- -------------- --------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period...... $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
----------
-
------------
---------- -------- -------- --------
Investment Activities
Net investment income................. 0.0318 0.0292 0.0267 0.0332 0.0300 0.0282
Net realized gains from investment
transactions........................ -- -- -- -- -- --
----------
-
------------
---------- -------- -------- --------
Total from Investment Activities...... 0.0318 0.0292 0.0267 0.0332 0.0300 0.0282
Distributions to shareholders from net
investment income....................... (0.0318) (0.0292) (0.0267) (0.0332) (0.0300) (0.0282)
----------
-
------------
---------- -------- -------- --------
Net Asset Value, End of Period............ $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
============ ========== =========== ======== ======== ========
Total Return(c)........................... 3.22% 2.96% 2.70% 3.37% 3.05% 2.86%
Ratios/Supplemental Data:
Net Assets at end of period (000)..... $183,772 $ 13,501 $ 15,743 $210,834 $ 4,555 $ 11,222
Ratio of expenses to average net
assets(d) 0.43% 0.68% 0.93% 0.44% 0.69% 0.94%
Ratio of net investment income to
average net assets(d)............... 3.17% 2.87% 2.65% 3.31% 3.06% 2.83%
Ratio of expenses to average net
assets assuming no waiver or expense
reimbursement(d).................... 0.43% 0.68% 0.93% 0.44% 0.69% 0.94%
Ratio of net investment income to
average net assets assuming no
waiver or expense reimbursement(d) 3.17% 2.87% 2.65% 3.31% 3.06% 2.83%
<FN>
- ---------------
(a) Pilot Investor Shares commenced offering during July 1992.
(b) Prior to July 1, 1995, Goldman Sachs Asset Management served the Portfolio
as investment adviser.
(c) Total return would have been lower had certain expenses not been reduced
during the periods presented and is not annualized.
(d) Does not reflect the fee which may be charged by Boatmen's directly to its
customers' accounts at an annual rate not to exceed 0.25% of the average
daily balance of Pilot Shares in the customers' accounts.
(e) Annualized.
(f) Pilot Administration Shares commenced offering during March of 1994.
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
36
<PAGE> 37
PILOT MISSOURI SHORT-TERM U.S. TAX-EXEMPT FUND
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
YEAR ENDED AUGUST 31, 1994(B) AUGUST 31, 1993(B) AUGUST 31, 1992(B)
-------------------------------------------- ----------------------- ------------------------
PILOT ADMINISTRATION INVESTOR PILOT INVESTOR PILOT INVESTOR
SHARES SHARES(F) SHARES SHARES SHARES SHARES SHARES(A)
-------- -------------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
-------- -------- -------- -------- -------- -------- --------
0.0220 0.0103 0.0170 0.0221 0.0172 0.0325 0.0030
-- -- -- -- -- (0.0001) --
-------- -------- -------- -------- -------- -------- --------
0.0220 0.0103 0.0170 0.0221 0.0172 0.0324 0.0030
(0.0220) (0.0103) (0.0170) (0.0221) (0.0172) (0.0324) (0.0030)
-------- -------- -------- -------- -------- -------- --------
$ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
======== ======== ======== ======== ======== ======== ========
2.23% 2.04%(e) 1.73% 2.24% 1.73% 3.29% 1.74%(e)
$239,796 $ -- $ 9,364 $228,075 $ 7,819 $202,304 $ 10,696
0.37% 0.67%(e) 0.87% 0.36% 0.86% 0.37% 0.87%(e)
2.20% 2.03%(e) 1.70% 2.21% 1.71% 3.24% 1.75%(e)
0.37% 0.67%(e) 0.87% 0.36% 0.86% 0.37% 0.87%(e)
2.20% 2.03%(e) 1.70% 2.21% 1.71% 3.24% 1.75%(e)
</TABLE>
37
<PAGE> 38
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
AUGUST 31, 1996 AUGUST 31, 1995(B)
-------------------------------------- ---------------------------------------
PILOT ADMINISTRATION INVESTOR PILOT ADMINISTRATION INVESTOR
SHARES SHARES SHARES SHARES SHARES SHARES(A)
-------- -------------- -------- -------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period..... $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
-------- -------- -------- -------- -------- --------
Investment Activities
Net investment income................ 0.0326 0.0301 0.0276 0.0353 0.0328 0.0195
Net realized gains from investment
transactions....................... -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Total from Investment Activities..... 0.0326 0.0301 0.0276 0.0353 0.0328 0.0195
Distributions to shareholders from net
investment income...................... (0.0326) (0.0301) (0.0276) (0.0353) (0.0328) (0.0195)
-------- -------- -------- -------- -------- --------
Net Asset Value, End of Period........... $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
======== ======== ======== ======== ======== ========
Total Return(c).......................... 3.31% 3.05% 2.79% 3.59% 3.33% 1.96%
Ratios/Supplemental Data:
Net Assets at end of period (000).... $375,777 $ 14,550 $ 907 $397,783 $ 14,443 $ 5
Ratio of expenses to average net
assets(d).......................... 0.37% 0.62% 0.87% 0.28% 0.53% 0.78%(e)
Ratio of net investment income to
average net assets(d).............. 3.26% 2.97% 2.56% 3.54% 3.36% 3.15%(e)
Ratio of expenses to average net
assets assuming no waiver or
expense reimbursement(d) 0.41% 0.66% 0.91% 0.29% 0.54% 0.79%(e)
Ratio of net investment income to
average net assets assuming no
waiver or expense reimbursement(d) 3.22% 2.93% 2.52% 3.53% 3.35% 3.14%(e)
<FN>
- ---------------
(a) Pilot Investor Shares commenced offering during January 1995.
(b) Prior to July 1, 1995, Goldman Sachs Asset Management served the Portfolio
as investment adviser.
(c) Total return would have been lower had certain expenses not been reduced
during the periods presented and is not annualized.
(d) Does not reflect the fee which may be charged by Boatmen's directly to its
customers' accounts at an annual rate not to exceed 0.25% of the average
daily balance of Pilot Shares in the customers' accounts.
(e) Annualized.
(f) Pilot Administration Shares commenced offering during September 1993.
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
38
<PAGE> 39
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31, YEAR ENDED
1994(B) AUGUST 31, 1993(B)
-------------------------- ------------------
PILOT ADMINISTRATION PILOT
SHARES SHARES(F) SHARES
-------- -------------- ------------------
<S> <C> <C> <C>
$ 1.0000 $ 1.0000 $ 1.0000
-------- -------- --------
0.0240 0.0208 0.0121
-- -- --
-------- -------- --------
0.0240 0.0208 0.0121
(0.0240) (0.0208) (0.0121)
-------- -------- --------
$ 1.0000 $ 1.0000 $ 1.0000
======== ======== ========
2.43% 2.18%(e) 2.23%(e)
388,048 3,040 428,843
0.20% 0.45%(e) 0.15%(e)
2.40% 2.15%(e) 2.21%(e)
0.20% 0.45%(e) 0.20%(e)
2.40% 2.15%(e) 2.16%(e)
</TABLE>
39
<PAGE> 40
- --------------------------------------------------------------------------------
Report of Independent Public Accountants
- --------------------------------------------------------------------------------
To the Shareholders and Trustees of the Pilot Short-Term U.S. Treasury Fund,
Pilot Short-Term Diversified Assets Fund, Pilot Missouri Short-Term Tax-Exempt
Fund, and Pilot Short-Term Tax-Exempt Diversified Fund of The Pilot Funds:
We have audited the accompanying statements of assets and liabilities of the
Pilot Short-Term U.S. Treasury Fund, Pilot Short-Term Diversified Assets Fund,
Pilot Missouri Short-Term Tax-Exempt Fund and Pilot Short-Term Tax-Exempt
Diversified Fund (the Pilot Money Market 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 Fund's 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 financial highlights referred
to above present fairly, in all material respects, the financial position of the
Pilot Money Market Funds as of August 31, 1996, the results of their operations,
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
40
<PAGE> 41
Financia Pilot Short-Term
Direction U.S. Treasury Fund
[logo] Pilot Short-Term
Diversified Assets Fund
Pilot Missouri
Short-Term
Tax-Exempt Fund
Pilot Short-Term
Tax-Exempt
Diversified 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> 42
PILMMF96ANN
BULK RATE
U.S. POSTAGE
PAID
CLEVELAND, OH
PERMIT NO. 1
