<PAGE> 1
LETTER FROM THE FUNDS' MANAGEMENT
Dear Shareholder:
We are pleased to provide you with the Semi-Annual Report of the Pilot
International Equity Fund for the six months ended February 28, 1997.
The Fund delivered strong performance relative to its benchmark as most
international markets continued their modest rally after a lackluster 1994-95
period. Your fund has benefited from continued favorable trends in global
economic conditions, including signs of economic recovery in Japan and strong
performance in many of the European economies. The portfolio managers believe
that the outlook for international markets is attractive. We encourage all
shareholders to view the Fund as a vehicle for helping achieve international
diversification for their total portfolio.
The Pilot Funds are pleased to announce the introduction of two new
portfolios which were made available for investment in October, 1996. 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 seeks 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
provide shareholders and new investors with even greater 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, would be acquired by Nationsbank, Inc. of Charlotte, NC. The merger
was completed on January 8, 1997. The combined Nations/Boatmen's organizations
will continue to provide the same 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,
William Tomko David F. Toth
President Senior Vice President
The Pilot Funds Boatmen's Trust Company
- --------------------------------------------------------------------------------
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
PILOT INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
Portfolio of Investments
February 28, 1997
==========================================================
<TABLE>
<CAPTION>
Shares or
Principal Value
Amount Description (Note 2)
- ------------
<C> <S> <C>
COMMON STOCKS--94.8%
ARGENTINA PESO--0.2%
Energy Sources--0.2%
174,966 Naviera Perez Companc S.A., Class
A $ 1,339,066
AUSTRALIAN DOLLAR--2.9%
Broadcasting & Publishing--0.4%
565,000 News Corp. Ltd. 3,008,197
Commercial Services--0.6%
635,000 Mayne Nickless Ltd. 3,750,526
Diversified Operations--0.5%
180,000 Brambles Industries Ltd. 3,031,559
Energy Sources--0.5%
309,000 Broken Hill Proprietary Co. Ltd. 4,088,996
Leisure & Tourism--0.5%
2,000,000 Sydney Harbour Casino Holdings
Ltd.* 3,647,805
Metal-Non Ferrous--0.4%
2,070,000 M.I.M. Holdings Ltd. 2,875,790
20,402,873
AUSTRIAN SCHILLING--0.8%
Machinery & Engineering--0.4%
20,000 VA Technologies A.G. 3,016,695
Metals & Mining--0.4%
75,000 Radex-Heraklith
Indutriebeteiligungs AG 2,720,366
5,737,061
BRAZILIAN CRUZIERO--0.1%
Electric Utility--0.1%
4,122,000 Light Servicos de Eletricid 1,682,635
BRITISH POUND STERLING--13.3%
Advertising--0.9%
1,425,000 WPP Group PLC 6,067,965
<CAPTION>
Shares or
Principal Value
Amount Description (Note 2)
- ------------
<C> <S> <C>
Banking--1.5%
435,281 Royal Bank of Scotland Group PLC $ 4,101,186
457,512 Standard Chartered PLC 6,281,224
10,382,410
Business & Public Services--0.5%
349,000 Reuters Holdings PLC 3,740,921
Chemicals--0.7%
325,000 BOC Group PLC 5,244,057
Commercial Services--0.7%
1,085,000 Inchcape PLC 4,708,679
Electrical & Electronics--0.9%
1,676,000 Astec (BSR) PLC 3,964,877
277,789 Premier Farnell PLC 2,250,204
6,215,081
Energy Sources--1.4%
195,000 British-Borneo Petroleum
Syndicate PLC 3,924,293
343,000 Shell Transport & Trading Co. 5,833,885
9,758,178
Financial Services--1.0%
1,250,000 Invesco PLC 7,280,579
Food & Household Products--0.7%
390,450 Reckitt & Coleman PLC 5,064,310
Health & Personal Care--1.7%
415,000 SmithKline Beecham PLC 6,222,305
200,000 Zeneca Group PLC* 5,889,724
12,112,029
Leisure & Tourism--1.5%
405,381 Granada Group PLC 6,010,291
650,000 Rank Group PLC 4,422,187
10,432,478
</TABLE>
==========================================================
See Notes to Financial Statements.
2
<PAGE> 3
PILOT INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
Portfolio of Investments (continued)
February 28, 1997
==========================================================
<TABLE>
<CAPTION>
Shares or
Principal Value
Amount Description (Note 2)
- ------------
<C> <S> <C>
Multi-Industry--0.6%
567,638 Morgan Crucible Co., PLC $ 4,343,422
Telecommunications--1.2%
400,000 Azlan Group PLC 4,072,230
961,500 Securicor PLC 4,902,155
8,974,385
94,324,494
CANADIAN DOLLAR--0.9%
Energy Sources--0.3%
70,000 Renaissance Energy Ltd.* 1,984,416
Manufacturing/Consumer Goods--0.3%
85,000 United Dominion Industries, Ltd. 2,297,716
Telecommunications/Equipment--0.3%
30,000 Northern Telecom Ltd. 2,158,532
6,440,664
FINNISH MARKKA--0.5%
Forest Products & Paper--0.5%
370,000 Enso Gutzeit OY* 3,196,703
FRENCH FRANC--4.9%
Beverages & Tobacco--0.7%
20,000 LVMH (Moet HennessyLouis Vuitton) 4,679,433
Broadcasting & Publishing--0.4%
33,000 Societe Television Francaise 1 3,058,306
Electrical & Electronic--0.5%
35,000 Alcatel Alsthom 3,593,825
Energy Sources--0.8%
60,000 Societe Elf Aquitaine S.A. 5,739,589
Food & Household Products--0.4%
17,058 Groupe Danone 2,586,872
Health & Personal Care--0.5%
10,000 L'Oreal, S.A. 3,389,341
Shares or
Principal Value
Amount Description (Note 2)
- ------------
Leisure & Tourism--0.6%
31,941 Accor S.A. $ 4,395,392
Merchandising--0.4%
20,231 Castorama Dubois Investments 3,050,307
Office Equipment & Services--0.6%
50,000 Strafor Facom S.A. 3,949,259
34,442,324
GERMAN DEUTSCHEMARK--4.5%
Banking--1.2%
100,000 Deutsche Bank, A.G. 5,182,038
87,900 Deutsche Pfandbrief &
Hypothekenbank A.G. 3,847,912
9,029,950
Chemicals--1.5%
100,000 Bayer A.G. 4,199,891
75,000 Henkel Kgaa-Vorzug 3,971,829
50,000 Hoechst A.G. 2,136,969
10,308,689
Computer Software--0.5%
24,000 SAP A.G. 3,677,896
Health & Personal Care--1.0%
100,000 Gehe, A.G. 6,770,769
Machinery & Engineering--0.3%
5,000 Mannesmann A.G. 1,976,141
31,763,445
HONG KONG DOLLAR--6.1%
Banking--1.4%
409,400 HSBC Holdings PLC 9,991,843
Construction--0.3%
650,000 Cheung Kong Infrastructure
Holdings* 1,838,203
</TABLE>
==========================================================
See Notes to Financial Statements.
3
<PAGE> 4
PILOT INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
Portfolio of Investments (continued)
February 28, 1997
==========================================================
<TABLE>
<CAPTION>
Shares or
Principal Value
Amount Description (Note 2)
- ------------
<C> <S> <C>
Merchandising--0.1%
1,422,000 Giordano International, Ltd. $ 1,009,946
Multi-Industry--2.0%
700,000 China Resources Enterprises Ltd. 1,572,835
790,000 Hutchison Whampoa Ltd. 6,018,871
590,000 Swire Pacific, Class A, 5,066,518
1,700,000 Guangdong Investment 1,657,417
14,315,641
Real Estate--2.3%
1,000,000 New World Developments 6,198,366
400,000 Sun Hung Kai Properties, Ltd. 4,622,948
1,290,000 Wharf Holdings 5,730,389
16,551,703
43,707,336
INDONESIAN RUPIAH--0.6%
Beverages & Tobacco--0.3%
464,000 Gudang Garam 2,259,520
Food Products & Services--0.2%
580,000 Indofood Sukses Makmur 1,294,265
Real Estate--0.1%
850,000 Kawasan Industri Jababeka 1,010,427
4,564,212
IRISH PUNT--0.6%
Building Materials & Components--0.6%
404,557 CRH PLC (Dublin Registered) 4,042,341
ITALIAN LIRA--1.9%
Energy Sources--0.4%
600,000 ENI S.p.A. 2,962,722
Multi-Industry--0.1%
1,300,000 Seat S.p.A.* 469,231
Telecommunications--1.0%
1,700,000 Societa' Finanziaria Telefonica
S.p.A. 7,292,898
Shares or
Principal Value
Amount Description (Note 2)
- ------------
Utilities-Electric & Gas--0.4%
200,000 Edison S.p.A. $ 1,099,408
500,000 Italgas S.p.A. 1,782,544
2,881,952
13,606,803
JAPANESE YEN--22.2%
Appliances & Household Durables--1.5%
456,000 Sharp Corp. 5,705,193
1,120,000 Sanyo Electric Co. Ltd. 4,667,825
10,373,018
Automobiles--0.7%
200,000 Toyota Motor Corp. 5,120,555
Banking--1.0%
240,000 Sanwa Bank Ltd. 2,764,105
200,000 Fuji Bank 2,336,564
137,000 Bank of Toyko -- Mitsubishi 2,247,576
7,348,245
Broadcasting & Publishing--0.8%
500,000 Toppan Printing Co. Ltd. 5,758,553
Building Materials & Components--0.2%
164,000 INAX Corp. 1,080,288
Business & Public Services--0.9%
115,000 Secom Co., Ltd. 6,479,408
Chemicals--2.0%
860,000 Asahi Chemical Industry Co. Ltd. 4,653,077
900,000 Dainippon Ink & Chemicals, Inc. 2,841,162
350,000 Shin-Etsu Chemical 6,756,979
14,251,218
Computers/Integrated Systems--0.8%
600,000 Fujitsu 5,915,981
Electrical & Electronic--2.0%
650,000 Citizen Watch Co. 4,631,700
600,000 Hitachi Ltd. 5,170,269
300,000 Matsushita Electric Industries 4,623,414
14,425,383
</TABLE>
==========================================================
See Notes to Financial Statements.
4
<PAGE> 5
PILOT INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
Portfolio of Investments (continued)
February 28, 1997
==========================================================
<TABLE>
<CAPTION>
Shares or
Principal Value
Amount Description (Note 2)
- ------------
<C> <S> <C>
Electrical Components & Instruments--2.2%
24,000 Keyence Corp. $ 2,923,191
400,000 Nikon Corp. 5,866,267
100,000 TDK Corp. 6,694,836
15,484,294
Food & Household Products--0.4%
194,000 House Foods Industry 2,700,471
Health & Personal Care--1.4%
483,000 KAO Corp. 5,282,623
266,000 Daiichi Pharmaceutical Co., Ltd. 4,341,866
9,624,489
Industrial Components--0.6%
400,000 NGK Spark Plug Co. 4,109,701
Insurance--0.8%
600,000 Tokio Marine & Fire Insurance Co. 5,717,125
Machinery & Engineering--0.9%
885,000 Mitsubishi Heavy Industries Ltd. 6,372,233
Merchandising--1.8%
140,000 Ito Yokado 6,356,780
320,000 Marui Co., Ltd. 4,586,957
66,400 York-Benimaru Co. 1,760,543
12,704,280
Office Equipment--1.6%
229,900 Canon Sales Co., Inc. 4,457,418
600,000 Ricoh Co., Ltd. 7,059,406
11,516,824
Recreation & Other Consumer Goods--0.5%
225,000 Shimano, Inc. 3,877,702
Steel--0.6%
1,650,000 Nippon Steel 4,388,515
Telecommunications--0.3%
171,000 Nippon Comsys Corp. 1,884,414
Tools-Hand/Machine--0.5%
260,000 Mori Seiki Co. 3,489,932
Transportation-Road/Rail--0.7%
774,000 Nippon Express Co., Ltd. 4,982,996
157,605,625
Shares or
Principal Value
Amount Description (Note 2)
- ------------
MALAYSIAN RINGGIT--1.2%
Banking--0.2%
440,000 Public Bank Bhd $ 1,027,768
Leisure & Tourism--0.3%
330,000 Genting Berhad 2,246,026
Machinery & Engineering--0.4%
300,000 United Engineers (Malaysia) Ltd. 2,766,756
Multi-Industry--0.1%
260,000 Sime Darby Bhd 984,273
Telecommunications--0.2%
160,000 Telekom Malaysia Bhd 1,295,180
8,320,003
MEXICAN PESO--0.3%
Banking--0.3%
745,000 Grupo Financiero Banamex Accival,
S.A. -- Class B * 1,755,465
NETHERLANDS GUILDER--6.7%
Appliances & Household Durables--0.7%
115,760 Philips Electronics, (NV) 5,224,674
Broadcasting & Publishing--0.8%
46,000 Wolters Kluwer (CVA) 5,901,399
Business & Public Services--2.2%
249,883 Getronics (NV) 8,159,213
92,000 Randstad Holdings (NV) 7,117,533
15,276,746
Energy Sources--0.6%
25,000 Royal Dutch Petroleum Co. (NV) 4,326,408
Financial Services--0.3%
50,000 ING Groep (NV) 1,935,429
</TABLE>
==========================================================
See Notes to Financial Statements.
5
<PAGE> 6
PILOT INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
Portfolio of Investments (continued)
February 28, 1997
==========================================================
<TABLE>
<CAPTION>
Shares or
Principal Value
Amount Description (Note 2)
- ------------
<C> <S> <C>
Food Products & Services--2.1%
38,000 Nutricia Verenigoe Bedrijven (NV) $ 5,763,628
139,543 Koninklijke Ahold NV 9,017,216
14,780,844
47,445,500
NORWEGIAN KRONE--0.3%
Machinery & Engineering--0.3%
28,000 Kvaerner Industries, A.S. Class B 1,246,552
25,074 Kvaerner Industries, A.S. Class A 1,231,638
2,478,190
PHILIPPINE PESO--0.8%
Banking--0.2%
97,500 Philippine National Bank* 1,138,606
Utilities-Electric & Gas--0.2%
156,500 Manila Electric Co., Class B 1,242,180
Real Estate--0.4%
1,187,000 Ayala Land, Inc. Class B 1,419,989
5,000,000 Prime Holdings, Inc. 1,500,102
2,920,091
5,300,877
POLISH ZLOTY--0.1%
Construction & Housing--0.1%
280,000 Mostostal-Export, S.A. 732,318
PORTUGUESE ESCUDA--0.6%
Banking--0.1%
40,000 Banco Espirito Santo* 758,718
Building Materials & Components--0.1%
44,000 Corticeira Amorim, S.A. 541,447
Construction & Housing--0.1%
62,000 Engil-SGPS 697,938
Food & Household Products--0.1%
12,000 Estabelecimentos Jeronimo Martins
& Filho 647,149
Shares or
Principal Value
Amount Description (Note 2)
- ------------
Insurance--0.1%
32,600 Companhia de Seguros
Tranquilidade $ 710,340
Retail/Hypermarkets--0.1%
13,000 Inparsa Industry 49,929
26,000 Sonae BR 826,131
876,060
4,231,652
SINGAPOREAN DOLLAR--2.7%
Banking--0.6%
290,687 Development Bank of Singapore,
Ltd. 3,852,756
Beverages & Tobacco--0.4%
43,200 Fraser & Neave, Warrants, 5/7/98
* 183,283
300,000 Fraser & Neave 2,692,870
2,876,153
Broadcasting & Publishing--0.3%
120,000 Singapore Press Holdings 2,339,431
Multi-Industry--0.9%
450,000 Keppel Corp. Ltd. 3,250,378
1,200,000 Singapore Technologies Industrial
Corp. 3,214,613
6,464,991
Real Estate--0.5%
375,000 City Developments 3,707,955
19,241,286
SPANISH PESETA--2.4%
Energy Sources--0.7%
125,000 Respol S.A. 4,752,353
Utilities-Electric & Gas--1.7%
36,000 Gas Natural SDG, S.A. 7,785,139
76,000 Empresa Nacional de Electricidad,
S.A. 4,638,994
12,424,133
17,176,486
SWEDISH KRONA--3.8%
Banking--0.6%
200,000 Sparbanken Sverige AB 3,947,683
</TABLE>
==========================================================
See Notes to Financial Statements.
6
<PAGE> 7
PILOT INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
Portfolio of Investments (continued)
February 28, 1997
==========================================================
<TABLE>
<CAPTION>
Shares or
Principal Value
Amount Description (Note 2)
- ------------
<C> <S> <C>
Machinery & Engineering--1.4%
280,000 Atlas Copco Atiebolag, Class A $ 6,664,116
42,000 Atlas Copco Atiebolag, Class B 974,651
50,000 Skanska AB 2,207,235
9,846,002
Medical Instruments--0.4%
165,000 Getinge Industrier AB 3,135,807
Steel/Producers--0.6%
250,000 Svenskt Stal AB 4,251,095
Telecommunications--0.5%
100,000 Tlelfonaktiebolaget LM Ericsson 3,180,819
Wholesale Distribution--0.3%
110,000 Dahl International AB 2,347,271
26,708,677
SWISS FRANC--6.1%
Banking--0.8%
50,000 Credit Suisse Group 5,330,429
Business & Public Services--1.1%
14,000 Adecco S.A.* 4,536,882
1,500 SGS Societe Generale de
Surveillance Holdings S.A. 3,406,729
7,943,611
Electrical & Electronics--0.6%
4,000 ABB A.G. 4,545,017
Food & Household Products--0.6%
3,856 Nestle, S.A. 4,198,402
Health & Personal Care--3.0%
970 Roche Holdings, Warrants* 59,514
1,210 Roche Holdings, A.G. 10,184,356
9,000 Novartis* 10,287,304
9,000 Novartis, Right -- Ciba
Speciality 569,585
21,100,759
43,118,218
THAI BAHT--1.1%
Banking--0.2%
160,000 Bangkok Bank 1,408,766
Shares or
Principal Value
Amount Description (Note 2)
- ------------
Building Materials & Components--0.1%
440,000 TPI Polene $ 730,643
Real Estate--0.1%
147,200 Land & House PCL 835,621
Transportation--0.1%
830,000 Bangkok Expressway PCL* 897,470
Telecommunications--0.3%
135,000 Advanced Information Services PCL 1,303,340
600,000 TelecomAsia Corp. PCL* 1,106,391
2,409,731
Utilities-Electric & Gas--0.2%
440,000 Electricity Generating PCL 1,112,956
Wholesale Distribution--0.1%
170,000 Siam Makro PCL 768,102
8,163,289
TURKISH LIRE--0.5%
Appliances & Household Durables--0.1%
4,818,325 Arcelik, A.S. 803,479
Building Materials & Components--0.3%
16,579,162 Trakya Cam SananyII A.S. 957,514
10,000,000 Baticim Bati Anadolu Cimento
Sanayii S.A. 1,138,813
2,096,327
Food & Household Products--0.1%
704,700 Migros Turk T.A.S. 788,191
3,687,997
UNITED STATES DOLLAR--8.7%
Automobiles--0.1%
78,660 Tata Engineering & Locomotion Co.
Ltd. (GDR) 983,250
</TABLE>
==========================================================
See Notes to Financial Statements.
7
<PAGE> 8
PILOT INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
Portfolio of Investments (continued)
February 28, 1997
==========================================================
<TABLE>
<CAPTION>
Shares or
Principal Value
Amount Description (Note 2)
- ------------
<C> <S> <C>
Banking--1.0%
51,400 Banco Frances del Rio De la Plata
S.A. (ADR) $ 1,471,325
57,000 Banco de Santiago (ADR) 1,588,875
72,200 Banco Industrial Colombiano, S.A.
(ADR) 1,308,625
10,000 Banque Marocaine (GDR)* 168,750
120,000 Cho Hung Bank (GDS)* 696,000
30,000 OTP Bank (GDR) 640,860
65,300 State Bank of India (GDR)* 1,285,594
7,160,029
Beverages & Tobacco--0.3%
54,000 Embotelladora Andina S.A. (ADR) 1,971,000
Broadcasting & Publishing--0.2%
63,300 Grupo Televisa (GDR)* 1,550,850
Closed-end Mutual Funds--0.7%
40,000 Chile Fund, Inc. 965,000
123,890 Korea Fund, Inc. 1,889,323
80,000 Morgan Stanley India Invesment
Fund, Inc. 880,000
120,000 Taiwan Fund, Inc. 1,440,000
5,174,323
Electrical & Electronics--0.5%
104,000 Advanced Semiconducting
Engineering (GDR) 1,287,000
190,000 Elektrim, S.A. (ADR) 1,918,563
718 Samsung Electirc (GDR)* 31,592
13,873 Samsung Electirc Co. (NV) (GDR) 263,587
3,500,742
Energy Sources--0.2%
59,550 YPF Sociedad Anonima (ADR) 1,592,963
Financial Services--0.3%
41,500 Cementos Diamante (ADR) 556,598
65,800 Credicorp Ltd. 1,513,400
2,069,998
Shares or
Principal Value
Amount Description (Note 2)
- ------------
Health & Personal Care--1.7%
11,000 Egis Rt. (EDR)* $ 732,930
150,000 Fresenius Medical Care AG (ADR)* 4,725,000
30,000 Gedeon Richter (ADR) 2,059,866
34,800 Kimberly-Clark de Mexico S.A.
(ADR) 1,494,166
50,000 Luxottica Group S.p.A. (ADR)* 2,912,500
11,924,462
Metals-Iron/Steel--0.1%
35,000 Pohang Iron & Steel, Ltd. (ADR) 682,500
Metal-Non Ferrous--0.5%
70,000 Hindalco Industries Ltd. (GDR)* 1,865,500
50,000 Impala Platinum Holdings (ADR) 697,305
334,000 Siderurgica Venezolana (ADR) 1,114,191
3,676,996
Multi-Industry--1.0%
80,000 Barlow, Ltd. (ADR) 843,456
115,000 Cemex S.A. (ADR) * 932,109
60,000 Cemex S.A. Toumex (ADR) Class B 525,468
26,200 Chilectra S.A.(ADR) 1,654,635
72,000 Corimon C.A. (ADR)* 95,018
55,552 Desc, S.A. de C.V. (ADR) * 1,465,184
66,500 Grupo Industrial Maseca S.A.
(ADR) 1,197,000
6,712,870
Telecommunications--1.1%
55,000 CIA Telecom Chile (ADR) 1,608,750
21,700 Philippine Long Distance
Telephone Co. (ADR) 1,258,600
31,730 Telecom Argentina Stet (ADR) 1,527,006
76,900 Telefonica del Peru S.A. (ADR) 1,691,800
36,000 Telefonos de Mexico (ADR) 1,399,500
7,485,656
</TABLE>
==========================================================
See Notes to Financial Statements.
8
<PAGE> 9
PILOT INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
Portfolio of Investments (continued)
February 28, 1997
==========================================================
<TABLE>
<CAPTION>
Shares or
Principal Value
Amount Description (Note 2)
- ------------
<C> <S> <C>
Utilities-Electric & Gas--1.0%
25,000 BSES Ltd. (GDR) $ 499,583
88,220 Empresa Nacional de Electricidad,
S.A. (ADR) 2,119,485
38,000 Hub Power Co. (GDR) * 779,000
62,600 Korea Electric (ADR) 1,126,800
38,350 Manila Electric Co. (GDR) 1,457,300
98,000 Transportadora de Gas Del Sur
(ADR) 1,237,250
7,219,418
61,705,057
TOTAL COMMON STOCKS (cost $583,148,276) 672,920,597
CONVERTIBLE BONDS--0.1%
JAPANESE YEN--0.1%
Electronics--0.1%
120,000,000 Fuji International Finance,
0.25%, 1/31/02 922,818
TOTAL CONVERTIBLE BONDS (cost $1,064,679) 922,818
PREFERRED STOCK--1.3%
BRAZILIAN CRUZEIRO--0.8%
Banking--0.2%
5,400,000 Telecomunucacoes de Sao Paulo 1,464,412
Beverage & Tobacco--0.2%
2,150,000 Cervejaria Brahma 1,442,288
Energy Sources--0.2%
6,800,000 Petroleo Brasiliero S.A. 1,352,321
Home Appliances--0.2%
5,250,000 Brasmotor S.A. 1,348,800
5,607,821
Shares or
Principal Value
Amount Description (Note 2)
- ------------
GERMAN DEUTSCHEMARK--0.5%
Machinery & Engineering--0.5%
10,000 GEA, A.G. $ 3,423,889
TOTAL PREFERRED STOCKS (cost $12,900,685) 9,031,710
TOTAL LONG-TERM INVESTMENTS (cost $597,113,640) 682,875,125
SHORT-TERM INVESTMENTS--1.7%
12,395,663 Banker's Trust Money Fund 12,395,663
TOTAL SHORT-TERM INVESTMENTS (cost $12,395,663) 12,395,663
TOTAL INVESTMENTS (cost $609,509,303**) 695,270,788
OTHER ASSETS IN EXCESS OF LIABILITIES--2.0% 14,588,132
NET ASSETS--100.0% $709,858,920
----------------------------------------------------------
* Non-income producing security.
** Represents cost for financial reporting purposes and
differs from cost for federal income tax purposes by the
amount of losses recognized for financial reporting
purposes of $142,357 cost for tax purposes differs from
value by net unrealized appreciation from investments as
follows:
Gross unrealized appreciation from investments $125,937,638
Gross unrealized depreciation from investments (40,318,510)
Net unrealized appreciation from investments $ 85,619,128
----------------------------------------------------------
</TABLE>
ADR--American Depository Receipt.
GDR--Global Depository Receipt.
GDS--Global Depository Shares.
==========================================================
See Notes to Financial Statements.
9
<PAGE> 10
PILOT INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
Portfolio of Investments (continued)
February 28, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Unrealized
Value on Appreciation
Forward Foreign Currency Exchange Contracts Expiring Settlement Date Current Value (Depreciation)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CURRENCY SOLD:
Belgian Franc 3/3/97 $ 3,734,989 $ 3,754,566 $ (19,577)
German Marks 5/6/97 28,125,037 28,090,712 34,325
Italian Lira 3/3/97 293,756 290,300 3,456
Swiss Franc 3/4/97 5,746,524 5,751,185 (4,661)
Japanese Yen 5/6/97 82,532,283 83,745,036 (1,212,753)
--------------- ------------- --------------
$ 120,432,589 $121,631,800 (1,199,210)
- -------------------------------------------------------------------------------------------------------------------------------
CURRENCY PURCHASED:
Japanese Yen 5/6/97 $ 21,782,591 $ 21,973,811 $ 191,220
--------------- ------------- --------------
$ 21,782,591 $ 21,973,811 $ 191,220
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
10
<PAGE> 11
PILOT INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities
February 28, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investment in securities, at value (cost $597,113,640).................................................... $682,875,125
Short-term investments, at cost........................................................................... 12,395,663
- -------------------------------------------------------------------------------------------------------------------------
Total Investments......................................................................................... 695,270,788
Cash and foreign currency................................................................................. 4,789,405
Receivable for forward foreign currency exchange contracts................................................ 37,782
Receivable from brokers for investments sold.............................................................. 10,013,326
Dividends receivable...................................................................................... 253,135
Interest receivable....................................................................................... 66,998
Foreign taxes receivable.................................................................................. 480,049
Receivable for Portfolio shares sold...................................................................... 639,108
Deferred organization costs............................................................................... 74,389
Prepaid expenses and other assets......................................................................... 341,142
- -------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS.............................................................................................. 711,966,122
- -------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Payable for Portfolio shares redeemed..................................................................... 403,567
Payable for forward foreign currency exchange contracts................................................... 1,045,772
Advisory fees payable..................................................................................... 433,632
Administration fees payable............................................................................... 59,437
Distribution fees payable (Class A Shares)................................................................ 5,082
Distribution fees payable (Class B Shares)................................................................ 412
Withholding tax payable from unrealized gains on foreign securities....................................... 123,078
Other accrued expenses.................................................................................... 36,222
- -------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES......................................................................................... 2,107,202
- -------------------------------------------------------------------------------------------------------------------------
NET ASSETS................................................................................................ $709,858,920
- -------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE ($0.001 PAR VALUE, UNLIMITED NUMBER OF
SHARES AUTHORIZED):
PILOT SHARES:
Net assets.............................................................................................. $682,986,468
Shares of beneficial interest issued and outstanding.................................................... 39,718,250
Net asset value......................................................................................... $ 17.20
- -------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES:
Net assets.............................................................................................. $ 26,334,157
Shares of beneficial interest issued and outstanding.................................................... 1,544,135
Net asset value......................................................................................... $ 17.05
- -------------------------------------------------------------------------------------------------------------------------
SALES CHARGE--4.50% OF OFFERING PRICE..................................................................... $ 0.80
- -------------------------------------------------------------------------------------------------------------------------
MAXIMUM OFFERING PRICE.................................................................................... $ 17.85
- -------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES:
Net assets.............................................................................................. $ 538,295
Shares of beneficial interest issued and outstanding.................................................... 31,422
Net asset value......................................................................................... $ 17.13
- -------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS:
Shares of beneficial interest, at par..................................................................... $ 41,294
Additional paid-in capital................................................................................ 621,448,645
Distributions in excess of net investment income.......................................................... (216,983)
Accumulated undistributed net realized gains from investment transactions................................. 16,771,418
Accumulated net realized losses from foreign currency transactions........................................ (12,915,145)
Net unrealized appreciation from investments.............................................................. 110,686,081
Net unrealized depreciation from translation of assets and liabilities denominated in foreign
currencies.............................................................................................. (25,956,390)
- -------------------------------------------------------------------------------------------------------------------------
NET ASSETS, FEBRUARY 28, 1997............................................................................. $709,858,920
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
11
<PAGE> 12
PILOT INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
Statement of Operations
For the period ended February 28, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividend Income......................................................... $ 2,773,927
Interest income......................................................... 656,310
Foreign tax withholding................................................. (189,741)
- ---------------------------------------------------------------------------------------------------
TOTAL INCOME............................................................ 3,240,496
- ---------------------------------------------------------------------------------------------------
EXPENSES:
Advisory fees........................................................... $2,650,070
Administration fees..................................................... 364,115
Distribution fees (Class A Shares)...................................... 33,327
Distribution fees (Class B Shares)...................................... 2,122
Accounting fees......................................................... 52,128
Audit fees.............................................................. 23,545
Transfer agent fees and expenses........................................ 62,036
Custodian fees and expenses............................................. 323,222
Registration fees....................................................... 33,611
Amortization of organization expenses................................... 26,969
Legal fees.............................................................. 19,879
Trustees' fees.......................................................... 12,639
Reports to shareholders................................................. 61,010
Other expenses.......................................................... 4,256
- ---------------------------------------------------------------------------------------------------
TOTAL EXPENSES.......................................................... 3,668,929
- ---------------------------------------------------------------------------------------------------
NET INVESTMENT LOSS..................................................... (428,433)
- ---------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAINS (LOSSES) FROM INVESTMENTS AND FOREIGN
CURRENCIES:
Net realized gains from investment transactions......................... 21,016,085
Net realized losses from foreign currency transactions.................. (14,512,045)
Net change in unrealized appreciation from investments.................. 45,249,335
Net change in unrealized depreciation from translation of assets and
liabilities denominated in foreign currencies......................... (26,643,382)
- ---------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAINS FROM INVESTMENTS AND FOREIGN
CURRENCIES............................................................ 25,109,993
- ---------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................... $ 24,681,560
- ---------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
12
<PAGE> 13
PILOT INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE FOR THE
PERIOD ENDED YEAR ENDED
FEBRUARY 28, AUGUST 31,
1997 1996
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income/(loss)...................................... $ (428,433) $ 3,316,017
Net realized gains from investment transactions................... 21,016,085 8,391,035
Net realized gains (losses) from foreign currency transactions.... (14,512,045) 15,336,402
Net change in unrealized appreciation from investments............ 45,249,335 38,713,502
Net change in unrealized depreciation from translation of assets
and liabilities denominated in foreign currencies.............. (26,643,382) (19,628,913)
Net increase in net assets resulting from operations.............. 24,681,560 46,128,043
DIVIDENDS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Pilot Shares...................................................... (6,364,115) (11,112,928)
Class A Shares.................................................... (217,519) (765,596)
Class B Shares.................................................... (3,200) --
Total dividends to shareholders from net investment income.......... (6,584,834) (11,878,524)
DIVIDENDS TO SHAREHOLDERS IN EXCESS OF NET INVESTMENT INCOME:
Pilot Shares...................................................... (209,710) --
Class A Shares.................................................... (7,168) --
Class B Shares.................................................... (105) --
Total dividends to shareholders in excess of net investment
income............................................................ (216,983)
DIVIDENDS TO SHAREHOLDERS FROM NET REALIZED GAINS:
Pilot Shares...................................................... (12,568,191) (9,018,759)
Class A Shares.................................................... (530,390) (648,034)
Class B Shares.................................................... (8,620) --
Total dividends to shareholders from net realized gains............. (13,107,201) (9,666,793)
PORTFOLIO SHARE TRANSACTIONS:
Proceeds from shares issued....................................... 121,839,732 215,676,940
Dividends reinvested.............................................. 13,570,407 16,367,712
Cost of shares redeemed........................................... (36,257,326) (41,530,325)
Net increase in net assets from Portfolio share transactions...... 99,152,813 190,514,327
Total Increase in Net Assets........................................ 103,925,355 215,097,053
NET ASSETS
Beginning of period................................................. 605,933,565 390,836,512
End of period (including accumulated undistributed (distributions in
excess of) net investment income of ($216,983) and $7,013,267,
respectively.).................................................... $709,858,920 $605,933,565
- ---------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
13
<PAGE> 14
PILOT INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
Notes to Financial Statements
February 28, 1997
==========================================================
1. GENERAL
The Pilot International Equity Fund, formerly Pilot Kleinwort Benson
International Equity Fund, (the "Portfolio") is a separate diversified portfolio
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. The Portfolio seeks to
provide long-term capital growth. The Fund currently offers fourteen Portfolios.
The accompanying financial statements are those of the Portfolio only.
The Portfolio offers three classes of shares: Pilot Shares, ClassA Shares and
Class B Shares. Pilot Shares, Class A Shares and Class B Shares are
substantially the same except that Class A Shares bear the fees payable under
the Portfolio's Class A Distribution Plan and Class B Shares bear the fees
payable under the Portfolio's Class B Distribution Plan.
On August 29, 1996 Boatmen's Bancshares Inc. ("Bancshares"), the parent of
Boatmen's Trust Company ("Boatmen's"), the Funds investment adviser, entered
into an Agreement and Plan of Merger (the "Merger Agreement") with Nations Bank
Corporation. The Merger Agreement provides that Bancshares will merge with and
into a wholly owned subsidiary of NationsBank Corporation. The merger was
consummated January, 1997.
The Fund entered into an Agreement and Plan of Reorganization (the
"Reorganization Agreement") with Nations Fund, Inc., Nations Fund Trust and
Nations Fund Portfolio, Inc. (the "Nations Funds"). The agreement contemplates
that each of fourteen investment portfolios of the Fund will transfer
substantially all of their assets and liabilities of the Fund to a corresponding
Portfolio of The Nations Funds. The Board of Trustees of the Pilot Funds and the
Funds' shareholders, at a special shareholder meeting held December 18, 1996,
each approved the Reorganization Agreement which is expected to become effective
on or about May 16, 1997.
Nationsbanc Advisor Inc. serves as the Fund's investment adviser (see Note 3).
Kleinwort Benson Investment Management Americas Inc. ("Kleinwort Benson") serves
as the Portfolio's investment manager. 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 Portfolio 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
Investments in securities traded on a U.S. or foreign securities exchange or the
National Association of Securities Dealers Automated Quotation System ("NASDAQ")
are valued at their last sale or closing price on the principal exchange on
which they are traded or NASDAQ, on the valuation day. If no sale occurs,
securities traded on a U.S. exchange or NASDAQ are valued at the mean between
the closing bid and asked price, and securities traded on a foreign exchange
will be valued at the official bid price. Unlisted equity securities for which
market quotations are available are valued at the mean between the most recent
bid and asked prices.
==========================================================
14
<PAGE> 15
PILOT INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
February 28, 1997
==========================================================
Debt securities are valued at prices supplied by an independent pricing service,
which reflect broker/dealer-supplied valuations and matrix pricing systems.
Short-term debt obligations maturing in sixty days or less are valued at
amortized cost, which approximates market value. The amortized cost method
involves valuing a security at its cost on the date of purchase or, in the case
of securities purchased with more than 60 days until maturity, at their market
value each day until the 61st day prior to maturity, and thereafter assuming a
constant amortization to maturity of the difference between the principal amount
due at maturity and such valuation. Restricted securities, and other securities
for which quotations are not readily available, are valued at fair value using
methods approved by the Board of Trustees of the Fund.
B. Foreign Currency Translation
The books and records of the Portfolio are maintained in U.S. dollars. Amounts
denominated in foreign currencies are translated into U.S. dollars on the
following basis: (i) investment securities, other assets and liabilities
initially expressed in foreign currencies are converted each business day into
U.S. dollars based upon current exchange rates; (ii) purchases and sales of
foreign securities, income and expenses are converted into U.S. dollars based
upon currency exchange rates prevailing on the respective dates of such
transactions.
Net realized and unrealized gains (losses) from foreign currency translation
will represent: (i) foreign exchange gains and losses from the sale and holdings
of foreign currencies and securities; (ii) gains and losses between trade date
and settlement date on investment securities transactions and forward exchange
contracts; and (iii) gains and losses from the difference between amounts of
dividends and interest recorded and the amounts actually received.
C. Forward Foreign Currency Exchange Contracts
The Portfolio is authorized to enter into forward foreign exchange contracts for
the purchase of a specific foreign currency at a fixed price on a future date as
a hedge or cross-hedge against either specific transactions or portfolio
positions. The aggregate principal amounts of the contracts are reflected net in
the Portfolio's Statement of Assets and Liabilities. All commitments are
"marked-to-market" daily at the applicable translation rates and any resulting
unrealized appreciation or depreciation is recorded in the Portfolio's financial
statements. The Portfolio records realized gains or losses at the time the
forward contract is offset by entry into a closing transaction or extinguished
by delivery of the currency. Risks may arise upon entering these contracts from
the potential inability of counterparties to meet the terms of their contracts
and from unanticipated movements in the value of a foreign currency relative to
the U.S. dollar.
The contractual amounts of forward foreign currency exchange contracts do not
necessarily represent the amounts potentially subject to risk. The measurement
of the risks associated with these instruments is meaningful only when all
related and offsetting transactions are considered. At August 31, 1996, the Fund
had sufficient cash and/or securities to cover any commitments under these
contracts.
D. Securities Transactions and Investment Income
Securities transactions are recorded on the trade date. Realized gains and
losses from sales of investments are calculated on the identified cost basis.
Dividend income is recorded on the ex-dividend date, except that certain
dividends from foreign securities which are not known on the ex-dividend date
are recorded as soon as the Portfolio is informed of the dividend. Interest
income, including accretion of discounts and amortization of premiums on
investments, is accrued daily. Investment income is allo-
==========================================================
15
<PAGE> 16
PILOT INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
February 28, 1997
==========================================================
cated to the separate classes of shares based upon their relative net assets.
E. Dividends to Shareholders
Dividends of the Portfolio are declared and paid annually to shareholders of
record at the close of business on the day of declaration. Distributions of net
realized gains, if any, will be paid at least annually. However, to the extent
that net realized gains of the Portfolio can be offset by capital loss
carryovers, such gains will not be distributed. Dividends and distributions are
recorded by the Portfolio 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, foreign currency
transactions, and deferrals of certain losses. Permanent book and tax basis
differences, which affect shareholder distributions, have been reclassified
among components of net assets.
F. Federal Taxes
It is the Portfolio's policy to comply with the requirements of the Internal
Revenue Code (the "Code") applicable to regulated investment companies and to
distribute substantially all of its investment company taxable income and
capital gains to its shareholders. Accordingly, no federal tax provision is
required.
G. Organizational Expenses
Costs incurred by the Fund in connection with its organization and registration
of shares have been deferred and are amortized using the straight-line method
over a period not to exceed five years from the commencement of the public
offering of shares of the Portfolio.
H. Expenses
Expenses incurred by the Fund that do not specifically relate to an individual
portfolio of the Fund are allocated to the portfolios based on each portfolio's
relative net assets. The expenses of the Portfolio (other than expenses incurred
pursuant to the Class A and Class B Distribution Plan) are allocated to the
separate classes of shares based upon their relative net assets.
3. AGREEMENTS AND TRANSACTIONS WITH AFFILIATES
A. Advisory Agreement
Nationsbanc Advisory Inc. is currently the Portfolio's investment adviser under
an Advisory Agreement. Under the Advisory Agreement, Nationsbanc supervises the
activities of Kleinwort Benson, the Portfolio's investment manager. Prior to
January 7, 1997 Boatmen's served as the Investment Adviser. As compensation for
the services rendered under the Advisory Agreement and the assumption of the
expenses related thereto, the respective Adviser has been entitled to a fee,
computed daily and payable monthly, at an annual rate equal to .80 of 1% of the
Portfolio's average daily net assets.
B. Investment Management Agreement
The Portfolio has entered into an Investment Management Agreement with Kleinwort
Benson and Boatmen's. Under the Investment Management Agreement, Kleinwort
Benson, subject to the general supervision of the Portfolio's Board of Trustees
and Boatmen's, manages the investment operations of the Portfolio. As
compensation for the services rendered pursuant to the Investment Management
Agreement, Kleinwort Benson is entitled to a fee, paid by Boatmen's directly out
of Boatmen's advisory fee, computed daily and payable monthly, at an annual rate
equal to .40 of 1% of the Portfolio's average daily net assets up to
$325,000,000 and .25 of 1% of such assets in excess of $325,000,000.
==========================================================
16
<PAGE> 17
PILOT INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
February 28, 1997
==========================================================
C. Administration Agreement
The Portfolio has 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 the Portfolio. For its services, BISYS is entitled
to a fee, accrued daily and paid monthly, at an annual rate of .115 of 1% of the
first $1.5 billion of the aggregate average net assets of all of the portfolios
constituting the Fund, plus .110 of 1% of the next $1.5 billion of such assets,
plus 0.1075 of 1% of such assets in excess of $3.0 billion.
D. Distribution Agreements
The Portfolio adopted Distribution Plans pursuant to Rule 12b-1 under the 1940
Act for its Class A and Class B Shares. Under these Plans, the Distributor
receives payments for distribution and support services. The Distribution Plan
for Class A Shares, formerly the Administration Plan, authorizes payments to the
Distributor and service organizations for personal services provided to Class A
shareholders and/or the maintenance of shareholder accounts.
Payments under the Distribution Plan for Class A Shares may not exceed 0.25% (on
an annual basis) of the average daily net assets of the shares to which such
Plan relates. If more money is due the Distributor than it can collect in any
month because of this limitation, the unpaid amount may be carried forward until
it can be paid. Similarly, if in any month the Distributor does not expend the
entire amount to which it would otherwise be entitled, this amount may be used
as a credit and drawn upon to permit the payment of expenses in the future.
Neither of these amounts, however, is payable beyond the fiscal year in which
they accrue. The Distribution Plan for Class A Shares replaced the Portfolio's
Administration Plan effective April 5, 1996 under substantially the same terms.
Fees incurred under the Distribution Plan for Class A Shares and the
Administration Plan have been combined in the financial statements.
Distribution payments under the Distribution Plan for Class B Shares may not
exceed 1.00% (on an annual basis) of the average daily net assets of the Class B
Shares. Not more than 0.25% of such value will be used to compensate service
organizations for personal services provided to Class B shareholders and/or the
maintenance of shareholder accounts. Not more than 0.75% of such value will be
paid to the Distributor as reimbursement for commissions and transaction fees as
well as expenses related to other promotional and distribution activities.
Actual distribution expenses paid by the Distributor with respect to Class B
Shares for any given year may exceed the distribution fees and contingent
deferred sales charges received with respect to those Shares. These excess
expenses may be reimbursed by a Portfolio or its Class B Shareholders out of
contingent deferred sales charges and distribution payments in future years as
long as the Distribution Plan for Class B Shares is in effect.
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.
In connection with the Transfer Agent Agreement with BISYS Fund Services Inc.,
the Portfolio incurred expenses of approximately $62,000.
F. Custodian Agreement
Boatmen's is the custodian responsible for holding the investments purchased by
the Portfolio. In connection with the Custodian Agreement with Boatmen's, the
Portfolio incurred expenses of approximately $323,000.
==========================================================
17
<PAGE> 18
PILOT INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
February 28, 1997
==========================================================
G. Fund Accounting Agreement
BISYS Fund Services, Inc. is responsible for the Fund Accounting for the
Portfolio. In connection with the Fund Accounting Agreement with BISYS, the
Portfolio incurred expenses of approximately $52,000.
4. SECURITIES TRANSACTIONS
For the period ended February 28, 1997, cost of purchases and proceeds from
sales or maturities of securities (excluding short-term investments) were
$225,810,911 and $164,054,319 respectively.
5. CAPITAL SHARE TRANSACTIONS
Transactions in capital shares of the Portfolio are as follows (000 omitted):
<TABLE>
<CAPTION>
PERIOD YEAR
ENDED ENDED
FEBRUARY 28, AUGUST 31,
1997 1996
------------ ----------
<S> <C> <C>
CAPITAL TRANSACTIONS:
Pilot Shares:
Proceeds from shares issued.... $121,006 $214,270
Dividends reinvested........... 13,088 15,491
Cost of shares redeemed........ (34,661) (37,293)
-------- --------
Change in net assets from Pilot
share transactions........... $ 99,433 $192,468
======== ========
Class A Shares:
Proceeds from shares issued.... $ 439 $ 1,223
Dividends reinvested........... 471 877
Cost of shares redeemed........ (1,543) (4,237)
-------- --------
Change in net assets from Class
A share transactions......... $ (633) $ (2,137)
======== ========
Class B Shares:
Proceeds from shares issued.... $ 395 $ 183
Dividends reinvested........... 11 --
Cost of shares redeemed........ (53) --
-------- --------
Change in net assets from Class
B share transactions......... $ 353 $ 183
======== ========
Total change in net assets from
portfolio share transactions..... $ 99,153 $190,514
======== ========
</TABLE>
<TABLE>
<CAPTION>
PERIOD YEAR
ENDED ENDED
FEBRUARY 28, AUGUST 31,
1997 1996
------------ ----------
<S> <C> <C>
SHARE TRANSACTIONS:
Pilot Shares:
Issued......................... 7,015 12,865
Reinvested..................... 755 967
Redeemed....................... (2,021) (2,235)
-------- --------
Change in Pilot Shares......... 5,749 11,597
======== ========
Class A Shares:
Issued......................... 26 73
Reinvested..................... 27 55
Redeemed....................... (90) (258)
-------- --------
Change in Class A Shares....... (37) (130)
======== ========
Class B Shares:
Issued......................... 23 11
Reinvested..................... 1 --
Redeemed....................... (3) --
-------- --------
Change in Class B Shares....... 21 11
-------- --------
Total change in shares............. 5,733 11,478
======== ========
</TABLE>
==========================================================
18
<PAGE> 19
[THIS PAGE INTENTIONALLY LEFT BLANK]
19
<PAGE> 20
PILOT INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PILOT INTERNATIONAL EQUITY FUND PILOT INTERNATIONAL EQUITY FUND(A)
-------------------------------------- --------------------------------------
PERIOD ENDED YEAR ENDED
FEBRUARY 28, 1997 AUGUST 31, 1996
-------------------------------------- --------------------------------------
PILOT CLASS A CLASS B PILOT CLASS A CLASS B
SHARES SHARES SHARES SHARES SHARES SHARES(B)
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period.............................. $ 17.05 $ 16.90 $ 17.04 $ 16.24 $ 16.14 $ 17.54
-------- -------- -------- -------- -------- --------
Investment Activities
Net investment income (loss)..... 0.02 (0.04) (0.08) 0.18 0.04 --
Net realized and unrealized gain
(loss) from investments........ 1.46 1.50 1.48 1.61 1.69 (0.65)
Net realized and unrealized gain
(loss) from foreign
currencies..................... (0.82) (0.83) (0.85) (0.13) (0.12) 0.15
-------- -------- -------- -------- -------- --------
Total from Investment
Activities..................... 0.66 0.63 0.55 1.66 1.61 (0.50)
Distributions
From net investment income....... (0.02) -- -- (0.46) (0.46) --
In excess of net investment
income......................... (0.15) (0.14) (0.12) -- -- --
From net realized gains
from investments and
foreign currencies............. (0.34) (0.34) (0.34) (0.39) (0.39) --
-------- -------- -------- -------- -------- --------
Total distributions.............. (0.51) (0.48) (0.46) (0.85) (0.85) --
-------- -------- -------- -------- -------- --------
Net Asset Value, End of Period....... $ 17.20 $ 17.05 $ 17.13 $ 17.05 $ 16.90 $ 17.04
======== ======== ======== ======== ======== ========
Total Return(i)...................... 3.73% 3.60% 3.20% 10.64% 10.40% (2.85%)*
Ratios/Supplemental Data:
Net Assets at end of period
(000).......................... $682,986 $ 26,334 $ 538 $579,019 $ 26,730 $ 184
Ratio of expenses to average net
assets......................... 1.10%(j) 1.35%(j) 2.10%(j) 1.08% 1.32% 2.06%(j)
Ratio of net investment income to
average net assets............. (0.12%)(j) (0.25%)(j) (1.37%)(j) 0.69% 0.48% (0.32%)(j)
Portfolio turnover rate(k)....... 11.98% 11.98% 11.98% 22.31% 22.31% 22.31%
Average Commission Rate
Paid(l)........................ $0.00230 $0.00230 $0.00230 $0.01600 $0.01600 $0.01600
</TABLE>
- ---------------
(a) The Pilot Klienwort Benson International Equity Fund has been renamed the
Pilot International Equity Fund effective November 30, 1995.
(b) Class B Shares were initially issued on July 1, 1996.
(c) The Pilot Administration Shares were redesignated the Class A Shares.
(d) Pilot Shares were initially issued on July 26, 1993.
(e) Prior to July 12, 1993, the Pilot Administration Shares were not subject to
an Administration plan.
(f) Prior to a tax-free reorganization into Pilot Administration Shares
effective July 12, 1993, the Pilot Klienwort Benson International Equity
Portfolio was a separate portfolio of Klienwort Benson Investment
Strategies known as Klienwort Benson International Equity Fund. The
predecessor portfolio was advised by Klienwort Benson International
Investment Limited and had a December 31 year end.
(g) Calculated based on the average shares outstanding methodology.
(h) For years preceding the fiscal period ended August 31, 1993, net realized
and unrealized gains (losses) from investments included net realized and
unrealized gains (losses) from foreign currencies.
(i) Total return excludes sales charge of Class A Shares and is not annualized.
(j) Annualized.
(k) Portfolio turnover is calculated on the basis of the portfolio as a whole
without distinguishing between the classes of shares issued and is not
annualized.
(l) Represents the total dollar amount of commissions paid on security
transactions, divided by total number of security shares purchased and sold
for which commissions were charged. For the year ended August 31, 1996
amount represents the time period from May 4, 1996 to August 31, 1996.
Disclosure is not required for prior periods.
(m) Excludes transfer of assets effective August 6, 1993 from a collective
trust for which Boatmen's Trust Company served as Trustee.
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
20
<PAGE> 21
PILOT INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PILOT KLIENWORT BENSON INTERNATIONAL EQUITY FUND
-------------------------------------------------------------------------------------------------
EIGHT MONTHS ENDED AUGUST 31,
YEAR ENDED
YEAR ENDED AUGUST 31, 1994 1993
AUGUST 31, 1995 ----------------------------- ------------------------------
------------------------ PILOT PILOT
PILOT CLASS A PILOT ADMINISTRATION PILOT ADMINISTRATION
SHARES SHARES(C) SHARES SHARES SHARES(D) SHARES
-------- --------- -------- -------------- --------- --------------
<S> <C> <C> <C> <C> <C>
$ 16.34 $ 16.29 $ 14.14 $ 14.13 $ 13.15 $ 11.85
-------- ------- -------- ------- -------- -------
0.13(g) 0.08(g) 0.11(g) 0.07(g) (0.01) (g) 0.02(g)
(0.22)(g) (0.22)(g) 1.65(g) 1.65(g) 1.10 (g) 2.51(g)
0.39(g) 0.39(g) 0.59(g) 0.59(g) (0.10) (g) (0.25)(g)
-------- ------- -------- ------- -------- -------
0.30 0.25 2.35 2.31 0.99 2.28
(0.11) (0.11) -- -- -- --
-- -- -- -- -- --
(0.29) (0.29) (0.15) (0.15) -- --
-------- ------- -------- ------- -------- -------
(0.40) (0.40) (0.15) (0.15) -- --
-------- ------- -------- ------- -------- -------
$ 16.24 $ 16.14 $ 16.34 $ 16.29 $ 14.14 $ 14.13
======== ======= ======== ======= ======== =======
2.08% 1.77% 16.75% 16.48% 7.53% 19.24%
$363,212 $27,625 $307,561 $ 44,990 $195,548 $ 55,816
1.18% 1.42% 1.12% 1.37% 1.31% (j) 2.17%(j)
0.82% 0.50% 0.75% 0.48% (0.56%) (j) 0.25%(j)
35.91% 35.91% 35.40% 35.40% 26.65% (m) 26.65%(m)
</TABLE>
- --------------------------------------------------------------------------------
21
<PAGE> 22
Financial Pilot International
Direction Equity Fund
PILOT LOGO
Semi-Annual Report
February 28, 1997
The
Pilot
Funds
- ----------------------------
NOT May Lose Value
FDIC No Bank Guarantee
INSURED No Govt. Guarantee
- ----------------------------
Distributor: Pilot Funds Distributors, Inc. 10/96
<PAGE> 23
- --------------------------------------------------------------------------------
Report of Independent Public Accountants
- --------------------------------------------------------------------------------
To the Shareholders and Trustees of the Pilot International Equity Fund:
We have audited the accompanying statement of assets and liabilities of the
Pilot International Equity of The Pilot Funds (a Massachusetts business trust),
including the portfolio of investments as of February 28, 1997, and the related
statement of operations for the period then ended and the statements of changes
in net assets and financial highlights for the periods presented. These
financial statements and financial highlights are the responsibility of the
Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
February 28, 1997 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and the financial highlights
referred to above present fairly, in all material respects, the financial
position of the Funds as of February 28, 1997, the results of its operations for
the period then ended, the changes in its net assets and the financial
highlights for the periods presented in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
April 18, 1997
22
<PAGE> 24
<TABLE>
<S> <C> <C>
PILINT97MID ---------------
Bulk Rate
U.S. Postage
PAID
Cleveland, OH
Permit No. 1
---------------
</TABLE>
