The Pilot Funds
Pilot U.S. Government Securities Fund
Pilot Small Capitalization Equity Fund
Pilot International Equity Fund
Annual Report For The Period Ended May 16, 1997
<PAGE>
July 14, 1997
Dear Shareholder:
We are pleased to provide you with the annual report for the Pilot U.S.
Government Securities Fund, Pilot Small Capitalization Equity Fund and Pilot
International Equity Fund (the "Funds") for the period September 1, 1996
through May 16, 1997.
As you know, on May 23, 1997, the Funds were reorganized into new Nations Funds,
each of which is advised by NationsBanc Advisors, Inc. We welcome you to the
Nations Funds Family of mutual funds and are pleased to provide you with access
to a broad range of investment opportunities to help you pursue your financial
goals.
The following is a review of each Funds' performance during the period. The
reviews have been prepared based on information provided by each Fund's
investment adviser.*
During the period from September 1, 1996 through April 30, 1997, the Pilot U.S.
Government Securities Fund (Pilot Shares) provided a total return of 5.25%,
which compares favorably to the performance of the Lipper General U.S.
Government average which provided a total return of 5.08%. After beginning the
period with yields in excess of 7.10%, the yield on long-term U.S. Treasury
Bonds declined below 6.35% by the end of November 1996. By the end of the
period under review, however, such yields had risen back to 6.90%.
Throughout this time, the investment adviser's outlook called for rising
interest rates in response to strong economic growth and projected short-term
rate increases by the Federal Reserve Board. Consequently, the Portfolio was
postured defensively, with its average maturity and duration actively managed
consistently below its benchmark. The active management of duration offset the
impact of the net decline in yields during the period and led to the Portfolio's
relative outperformance. In February 1997, as long-term rates declined below
6.60%, duration was further decreased. This shift added to incremental returns
as long yields subsequently backed up above 7.10% in April. In response, the
investment adviser extended duration as valuations improved. This last Portfolio
shift further added to the Portfolio's attractive performance during the final
month of the period.
The Pilot Small Capitalization Equity Fund (Pilot Shares) provided a total
return of 6.26% compared with a return of -0.35% for the Lipper Small Company
average, for the period September 1, 1996 through April 30, 1997. The market
favored larger capitalization companies and more value-oriented stocks during
this time period, with the S&P 500 Index up more than three times as much as
the Russell 2000 Index (31.00% vs. 9.60%). The Portfolio's overweighted
positions in basic materials, capital goods, consumer cyclicals, energy and
transportation sectors were rewarded by the market and contributed to the
Portfolio's relative outperformance. Due to the magnitude of their gains, three
companies stood out in particular: Innovex (disk drive components), Jabil
Circuit (contract manufacturing) and Cellstar Corp. (wholesale distributor of
cellular phones), all of which had market prices that more than tripled in price
during the period.
continued
NOT FDIC-INSURED May Lose Value No Bank Guarantee
Nations Funds Distributor: Stephens Inc. Stephens Inc., which is not affiliated
with NationsBank, N.A., is not a bank, and securities offered by it are not
guaranteed by any bank or insured by the FDIC. Stephens Inc., member NYSE,
SIPC.
Nations Funds Investment Adviser: NationsBanc Advisors, Inc.
Nations Funds Investment Sub-Advisers: TradeStreet Investment Associates, Inc.,
Gartmore Global Partners, Boatmen's Trust Company, and Kleinwort Benson
Investment Management Americas, Inc.
This material is authorized for distribution only when preceded or accompanied
by a current prospectus.
<PAGE>
During the period from September 1, 1996 through April 30, 1997, the Pilot
International Equity Fund (Pilot Shares) returned 5.05%. The Morgan Stanley
Capital International EAFE Index provided a return of 3.20% and the average
international growth fund, as tracked by Lipper Analytical Services, Inc.,
returned 7.81% during the same period. Due to disappointing results from
emerging markets in Europe and Asia, the Portfolio's exposure to emerging
markets contributed negatively to performance. However, the performance in
these markets was counterbalanced to some extent by strong performance in
Latin America. The Portfolio's underweighted exposure to Japanese stocks
contributed positively to performance despite the Japanese market's rally at
the end of the period due to the upward revision of economic forecasts and the
reversal of recent yen weakness. Stock selection within Japan contributed
positively throughout the period. The underweighting of United Kingdom stocks
hindered performance, but this was mitigated by strong stock selection in the
region.
Looking toward the second half of 1997, the investment environment continues to
appear as if it were being scripted to enhance financial assets--moderate but
persistent economic growth, low inflation and strong earnings. Although the
duration of this economic expansion is six years and counting, there seems to
be no evidence that the economy will move off its current track.
Importantly, after a long period of outperformance by stocks, investors should
pay particular attention to their current allocation relative to their
objectives and risk tolerance. We expect that future advances in the
markets will be accompanied by increased volatility and periodic corrections
as the market adjusts to factors such as changes in monetary
policy. While we expect markets to reach significant new highs before
the end of the millennium, markets do not go straight up, and there will
be periods of decline along the way.
We look forward to helping you pursue your investment goals, now and well into
the future.
/s/ Mark H. Williamson
Mark H. Williamson
President, NationsBank Advisors, Inc.
* The performance date quoted represents past performance and is not predictive
of future results. Lipper Analytical Services, Inc. is an independent monitor
of fund performance.
<PAGE>
<TABLE>
<CAPTION>
Total Returns* Pilot Shares Class A Shares Class B Shares
NAV NAV POP NAV POP
<S> <C> <C> <C> <C> <C>
Pilot U.S. Government Securities**
Since Inception*** 8.50% 8.23% 7.76% 7.39% 7.39%
One Year 6.42% 6.08% 1.31% 5.26% 0.95%
Inception Date and Maximum Sales Load
or CDSC 11/7/94 2/7/95 4.50% 11/10/94 4.50%
Pilot Small Capitalization Equity Fund
Since Inception** 9.99% 9.47% 5.80% 8.90% 5.74%
One Year 4.60% 4.30% -0.39% 3.62% -0.88%
Inception Date and Maximum Sales Load
or CDSC 12/12/95 12/12/95 4.50% 12/12/95 4.50%
Pilot International Equity Fund****
Since Inception** 13.14% 12.86% 12.48% 1.49% -2.96%
One Year 2.89% 2.69% -1.95% N/A N/A
Five Year N/A 8.99% 7.96% N/A N/A
Ten Year N/A 7.32% 6.83% N/A N/A
Inception Date and Maximum Sales Load
or CDSC 8/21/95 1/2/68 4.50% 7/1/96 4.50%
</TABLE>
* Returns shown are through April 30, 1997. The financial statement information
presented in this report is shown through May 16, 1997, the fiscal year end of
the Pilot US Government Securities Fund, Pilot Small Capitalization Equity Fund
and the Pilot International Equity Fund.
** Please note that the performance shown for Pilot Shares prior to November 7,
1994, Class A prior to February 7, 1995 and Class B Shares prior to November 11,
1994 includes the performance for the Boatmen's Trust Taxable Bond Commingled
Fund. The Commingled Fund has not been registered under the Investment Company
Act of 1940 or subject to the investment restrictions imposed by the 1940 Act.
If the Commingled Fund had been subject to the 1940 Act the performance might
have been adversely affected. The Commingled Fund performance has been
adjusted to reflect the performance the Commingled Fund would have experienced
if Pilot Fund share expenses (as estimated at the commencement of operations)
had been incurred during the periods shown.
*** Returns shown are annualized total returns.
**** For periods prior to July 12, 1993, the performance information for the
Pilot International Equity Fund reflects the performance for the Kleinwort
Benson International Equity Portfolio of Kleinwort Benson Investment
Strategies, all of the assets of which were acquired by the Pilot International
Equity Fund in a reorganization effective July 12, 1993. Prior to that date,
the Kleinwort Benson International Equity Portfolio was advised solely by
Kleinwort Benson International Investment Limited.
Past performance is not a guarantee of future results. Investment returns and
principal values will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
<PAGE>
Total Returns (continued)
Note: This table reflects the fact that Class A and Class B Shares are subject
to different fees and expenses. Class A Shares are subject to a front-end sales
load of up to 4.50% of the offering price and a Rule 12b-1 fee of up to .25%.
Class B Shares are subject to Contingent Deferred Sales Charge ("CDSC") for
redemptions before the periods outlined in the Fund's prospectus and a
Rule 12b-1 fee of up to 1.0%. All other Fund expenses related to Class A
and B Shares are the same as for Pilot Shares.
<PAGE>
Pilot U.S. Government Securities Fund
Growth of a $10,000 investment vs. a benchmark
since inception as of April 30, 1997*
(Graph appears here. See table below for plot points.)
<TABLE>
<CAPTION>
Jun-86 Apr-92 Apr-95 Apr-97
<S> <C> <C> <C> <C>
Pilot Shares $ 10,000 $ 16,136 $ 20,856 $ 24,213
Class A Shares $ 9,542 $ 15,176 $ 19,446 $ 22,595
Class B Shares $ 10,000 $ 15,226 $ 18,552 $ 21,668
Lehman Brothers Govt Bond Index $ 10,000 $ 16,220 $ 19,952 $ 23,018
</TABLE>
The Lehman Brothers Government Bond Index is unmanaged and represents the
returns of government bonds with an average maturity of approximately nine
years.
* The values presented in the above graph are shown through April 30, 1997.
Information presented in the accompanying financial statements is through
May 16, 1997.
Please note that the performance shown for Pilot Shares prior to November 7,
1994, Class A prior to February 7, 1995 and Class B Shares prior to November 11,
1994 includes the performance for the Boatmen's Trust Taxable Bond Fund
Commingled Fund. The Commingled Fund has not been registered under the
Investment Company Act of 1940 or subject to the investment restrictions
imposed by the 1940 Act. If the Commingled Fund had been subject to the 1940
Act the performance might have been adversely affected. The Commingled Fund
performance has been adjusted to reflect the performance the Commingled Fund
would have experienced if Pilot Fund share class expenses (as estimated at the
commencement of operations) had been incurred during the periods shown.
<PAGE>
Pilot Small Capitalization Equity Fund
Growth of a $10,000 investment vs. a benchmark since
inception as of April 30, 1997*
(Graph appears here. See table below for plot points.)
12/12/95 Aug-96 Apr-97
Pilot Shares $10,000 $10,737 $11,409
Russell 2000 $10,000 $10,657 $11,078
Class A Shares $ 9,551 $10,209 $10,825
Class B Shares $10,000 $10,215 $10,802
The Russell 2000 Index is an unmanaged index representing 2000 small companies
and is typically used as a measure of small capitalization stocks.
* The values presented in the above graph are shown through April 30, 1997.
Information presented in the accompanying financial statements is through
May 16, 1997.
<PAGE>
Pilot International Equity Fund
Growth of a $10,000 investment vs. a benchmark
since inception as of April 30, 1997*
Pilot Shares and Class A Shares
(Graph appears here. See table below for plot points.)
Nov-83 Apr-87 Apr-92 Apr-96 Apr-97
Pilot Shares $10,000 $25,572 $33,708 $51,000 $52,474
Class A Shares $9,551 $23,921 $31,529 $47,211 $48,481
EAFE Index $10,000 $40,329 $39,735 $66,302 $65,712
The Morgan Stanley Capital International EAFE Index is an unmanaged index
representing major European, Australian and Far East common stock.
* The values presented in the above graph are shown through April 30, 1997.
Information presented in the accompanying financial statements is through
May 16, 1997.
For periods prior to July 12, 1993, the performance information for the Fund
reflects the performance for the Kleinwort Benson International Equity
Portfolio of Kleinwort Benson investment Strategies, all of the assets of which
were acquired by the Pilot International Equity Fund in a reorganization
effective July 12, 1993. Prior to that date, the Kleinwort Benson International
Equity Portfolio was advised solely by Kleinwort Benson International Investment
Limited.
<PAGE>
Pilot International Equity Fund
Growth of a $10,000 investment vs. a benchmark
since inception as of April 30, 1997*
Class B Shares
(Graph appears here. See table below for plot points.)
Jul-96 Apr-97
Class B Shares $10,000 $9,703
EAFE Index $10,000 $9,803
The Morgan Stanley Capital International EAFE Index is an unmanaged index
representing major European, Australian and Far East common stock.
* The values presented in the above graph are shown through April 30, 1997.
Information presented in the accompanying financial statements is through
May 16, 1997.
<PAGE>
Pilot U.S. Government Securities Fund
Portfolio of Investments
May 16, 1997
<TABLE>
<CAPTION>
Principal
Amount Maturity Value
(000) Rate Date (Note 2)
<S> <C> <C> <C>
U.S. Government Obligations- 97.9%
U.S Treasury Bonds- 19.3%
$27,500 U.S. Treasury Bond 7.50% 11/15/16 $ 28,986,650
U.S. Treasury Notes- 78.6%
6,650 U.S. Treasury Note 6.00 8/31/97 6,656,251
22,800 U.S. Treasury Note 5.50 11/15/98 22,589,784
17,000 U.S. Treasury Note 5.88 1/31/99 16,909,730
11,000 U.S. Treasury Note 5.63 11/30/00 10,709,490
32,760 U.S. Treasury Note 6.50 8/31/01 32,708,894
18,000 U.S. Treasury Note 5.75 8/15/03 17,218,080
11,500 U.S. Treasury Note 6.50 8/15/05 11,354,410
-----------
118,146,639
Total U.S. Government Obligations
(cost $147,101,562) 147,133,289
Repurchase Agreements- 1.4%
2,121 Repurchase agreement with Lehman Brothers, Inc.
dated 5/16/97, 5.37%, due 5/19/97
(cost $2,121,000) ( Footnote A) 2,121,000
Total Investments--99.3% (cost-$149,222,562) 149,254,289
Other assets in excess of liabilities--0.7% 1,090,971
NET ASSETS--100.0% $150,345,260
Footnote A
Collateralized by $2,085,000 U.S. Treasury Note, 7.50%, due 11/15/01 with a value of $2,165,259.
</TABLE>
See Notes to Financial Statements
<PAGE>
Pilot Small Capitalization Equity Fund
Portfolio of Investments
May 16, 1997
Market
Value
Shares (Note 2)
COMMON STOCKS- 97.3%
CONSUMER CYCLICAL- 12.2%
Building - Manufactured Housing-1.1%
38,400 Champion Enterprises, Inc.* $ 662,400
29,500 Oakwood Homes Corporation 652,688
---------
1,315,088
Building Products- 3.9%
60,600 Centex Corporation 1,158,975
11,300 Fibreboard Corporation 526,863
12,400 Southdown, Inc. 505,300
52,400 TJ International, Inc. 1,254,325
43,800 Zurn Industries, Inc. 1,073,100
---------
4,518,563
Housing & Furnishing- 4.9%
29,300 Bush Industries, Inc. 673,900
24,600 Ethan Allen Interiors, Inc. 1,260,750
92,900 O' Sullivan Industries Holdings, Inc.* 1,393,500
78,400 Kaufman & Broad Home Corporation 1,146,600
92,900 Pulte Corporation 1,255,375
---------
5,730,125
Media- 2.3%
41,125 Ha-Lo Industries, Inc.* 827,641
26,350 McClatchy Newspapers, Inc. 675,219
26,166 Pulitzer Publishing Company 1,226,531
---------
2,729,391
CONSUMER GOODS & STAPLES- 2.3%
Beauty & Health Products- 2.3%
39,600 Alberto Culver Company, Class B 1,133,550
68,300 NBTY, Inc.* 1,502,600
---------
2,636,150
ENERGY- 6.2%
Oil & Gas Exploration & Production- 6.2%
17,500 Cliffs Drilling Company 1,144,063
43,946 Forest Oil Corporation* 620,737
98,700 Parker Drilling Company* 925,313
34,800 Reading & Bates Corporation* 922,200
16,200 Seacor Holdings, Inc.* 803,925
36,700 Swift Energy Company 940,437
29,300 Texas Meridian Resources Corporation* 377,238
17,900 Varco International, Inc. 476,587
16,400 Vintage Petroleum, Inc. 522,750
26,900 Wiser Oil Company 433,763
---------
7,167,013
See Notes to Financial Statements.
<PAGE>
Pilot Small Capitalization Equity Fund
Portfolio of Investments
May 16, 1997
Market
Value
Shares (Note 2)
FINANCE- 15.3%
Banking- 5.2%
48,554 Brenton Banks, Inc. $ 1,238,127
54,600 City National Corporation 1,235,325
33,800 Deposit Guaranty Corporation 1,068,925
52,300 First Republic Bancorp, Inc. 1,130,988
28,100 ONBANCorp, Inc. 1,387,437
---------
6,060,802
Financial Services- 2.4%
40,450 Aames Financial Corporation 541,019
67,700 Southwest Securities Group, Inc. 1,083,200
24,800 US Bancorp, Inc. 1,165,600
---------
2,789,819
Insurance- 4.3%
26,778 Delphi Financial Group* 1,017,564
23,000 Executive Risk, Inc. 1,144,250
23,040 Frontier Insurance Group, Inc. 1,229,760
11,837 Security Capital Corporation* 1,083,085
14,700 Triad Guaranty, Inc. 496,125
----------
4,970,784
Real Estate- 2.5%
39,000 BRE Properties, Inc. 955,500
45,050 Capstead Mortgage Corporation 1,053,044
31,100 Dynex Capital, Inc. 859,138
---------
2,867,682
Savings & Loans- 1%
25,300 Bay View Capital Corporation 1,217,562
HEALTH CARE- 5.9%
Biotechnology- 1.4%
28,700 Human Genome Sciences, Inc.* 1,018,850
42,900 Vical, Inc.* 643,500
---------
1,662,350
Chemicals- 0.9%
19,490 Fuller (H. B.) Company 1,069,514
Medical Supplies & Services- 2.9%
46,100 Acuson Corporation* 1,175,550
36,400 Innovex, Inc. 1,342,250
52,100 Sullivan Dental Products, Inc. 833,600
---------
3,351,400
See Notes to Financial Statements.
<PAGE>
Pilot Small Capitalization Equity Fund
Portfolio of Investments
May 16, 1997
Market
Value
Shares (Note 2)
Pharmaceuticals- 0.7%
71,600 Chronimed, Inc.* $ 778,650
INDUSTRIAL GOODS & SERVICES- 10.2%
Aerospace & Defense- 1.1%
62,900 GenCorp, Inc. 1,226,550
Chemicals- 1.8%
69,900 AMCO International Corporation 1,275,675
36,000 Crompton & Knowles Corporation 832,500
---------
2,108,175
Commercial Services- 0.8%
65,800 Calgon Carbon Corporation 871,850
Electrical & Electronic- 6%
10,400 Coherent, Inc.* 460,200
47,200 Core Industries, Inc. 784,700
28,000 Dionex Corporation* 1,421,000
41,100 Electro Scientific Industries, Inc.* 1,381,988
69,300 MagneTek, Inc.* 1,221,412
21,000 Plexus Corporation 687,750
44,960 Wyman-Gordon Company* 1,034,080
---------
6,991,130
Paper Products- 0.5%
18,800 Chesapeake Corporation 608,650
LEISURE- 0.8%
Cable TV- 0.8%
36,725 International Family Entertainment, Inc.* 885,991
MANUFACTURING- 12.6%
Automation/Robtics- 1.6%
39,200 Esterline Technologies Corporation* 1,122,100
24,800 DT Industries, Inc. 750,200
---------
1,872,300
Consumer Products- 2.6%
59,800 Foamex International, Inc.* 792,350
84,900 Fossil, Inc.* 1,262,887
44,900 Russ Berrie & Company, Inc. 942,900
---------
2,998,137
MachineTools & Related Products- 0.7%
17,700 Applied Power, Inc. 776,587
See Notes to Financial Statements.
<PAGE>
Pilot Small Capitalization Equity Fund
Portfolio of Investments
May 16, 1997
Market
Value
Shares (Note 2)
Machinery/General Industrial- 1.2%
56,400 Gardner Denver Machinery, Inc.* $ 1,381,800
Metal Processors & Fabrication- 1.1%
25,300 Kaydon Corporation 1,246,025
Steel- 2.1%
114,700 National Steel Corporation* 1,433,750
33,812 Rouge Steel Company 528,313
43,670 Steel Technologies, Inc. 436,700
---------
2,398,763
Textile Products- 3.3%
52,678 Culp, Inc. 888,941
109,200 Delta Woodside Industries* 641,550
55,600 Galey & Lord, Inc.* 896,550
33,300 Quiksilver, Inc. 844,987
68,700 Worldtex, Inc.* 489,488
---------
3,761,516
RETAILING- 10.4%
Apparel/Shoe- 2.8%
61,900 Goody's Family Clothing, Inc.* 1,137,412
31,050 Pacific Sunwear of California* 1,078,987
36,400 Ross Stores, Inc. 982,800
---------
3,199,199
Department Stores- 0.8%
36,600 Nieman Marcus Group, Inc. 947,025
Discount Stores- 1.1%
63,500 Shopko Stores, Inc. 1,317,625
Food Products & Services- 1.7%
18,300 Quality Food Centers, Inc. 699,975
30,000 Riser Foods, Inc.* 1,248,750
---------
1,948,725
Specialty Stores- 1.7%
58,700 Fabri-Centers of America, Inc. 1,240,037
21,700 Williams Sonoma 775,775
----------
2,015,812
Warehouse- 1.5%
35,370 Eagle Hardware & Garden, Inc.* 751,612
32,500 Waban, Inc.* 926,250
---------
1,677,862
See Notes to Financial Statements.
<PAGE>
Pilot Small Capitalization Equity Fund
Portfolio of Investments
May 16, 1997
Market
Value
Shares (Note 2)
Wholesale Companies- 0.8%
35,700 Inacom Corporation* $ 903,656
SERVICES- 4.8%
Airlines- 3.6%
28,400 Air Express International Corporation 1,011,750
35,500 Airborne Freight Corporation 1,233,625
55,700 US Airways Group* 1,949,500
----------
4,194,875
Restaurants- 1.2%
40,400 Foodmaker, Inc. 510,050
28,500 Sbarro, Inc. 840,750
----------
1,350,800
TECHNOLOGY- 13.1%
Computer Hardware- 2.5%
13,100 Hutchinson Technology, Inc. 394,637
25,300 Jabil Circuit, Inc.,* 1,306,113
34,200 Komag, Inc.* 1,188,450
---------
2,889,200
Computer Software- 2.6%
23,900 Avid Technology, Inc. 507,875
46,300 Exabyte Corporation* 694,500
39,600 Progress Software 722,700
69,500 Viewlogic System, Inc.* 1,094,625
---------
3,019,700
Electronics Components/Semiconductors- 3.5%
44,000 Cyrix Corporation* 984,500
36,000 Electroglas, Inc. 738,000
23,400 Fusion Systems Corporation 716,625
89,400 LTX Corporation 497,288
36,700 Watkins-Johnson Company 1,110,175
---------
4,046,588
Office Equipment & Services- 0.5%
25,300 American Business Products 610,362
Instrumentation- 0.9%
70,700 Molecular Dynamics Inc.* 1,060,500
See Notes to Financial Statements.
<PAGE>
Pilot Small Capitalization Equity Fund
Portfolio of Investments
May 16, 1997
Market
Value
Shares (Note 2)
Telecommunication Equipment- 3.1%
34,400 Cellstar Corporation $ 1,053,500
33,200 Commnet Cellular, Inc. 908,850
42,800 Proxim, Inc.* 1,080,700
26,000 Spectrian Corporation 494,000
---------
3,537,050
UTILITIES- 3.6%
Electric Utility- 2.4%
33,400 Central Hudson Gas & Electric 1,081,325
27,100 Northwestern Public Service Company 1,026,413
42,900 Tucson Electric Power Company* 643,500
---------
2,751,238
Natural Gas- 1.2%
17,200 Kinder Morgan Energy Partners, Inc. 797,650
34,199 SEMCO Energy, Inc. 607,023
---------
1,404,673
Total Common Stocks (cost $ 98,766,831) 112,867,257
Principal
Amount Value
(000) (Note 2)
U.S. Treasury Bills- 0.6%
700 U.S. Treasury Bills 5.03% 9/11/97 688,373
Total U.S. Treasury Bills (cost $ 688,484) 688,373
Repurchase Agreements- 4.3%
4,923 Repurchase agreement with Lehman Brothers, 4,923,000
Inc., dated 5/16/97, 5.37%, due 5/19/97
(Footnote A)
Total Repurchase Agreements (cost $ 4,923,000) 4,923,000
Total Investments- 102.3% (cost $104,378,315) 118,478,630
Liabilities in excess of other assets- (2.3%) (2,695,778)
NET ASSETS- 100.0% $ 115,782,852
Footnote A
Collateralized by $4,840,000 U.S. Treasury Note, 7.50%, due 11/15/01
with a value of $5,023,987.
* Non-income producing security.
See Notes to Financial Statements
<PAGE>
Pilot Small Capitalization Equity Fund
Portfolio of Investments
May 16, 1997
Number of
Contracts Settlement Unrealized
Type Long (a) Month Gain or ( Loss)
Futures Contracts
S & P Midcap Index 32 June 97 $ 9,830
S&P 500 7 June 97 132,705
$ 142,535
(a) Each S&P Midcap Index and S&P 500 contract represents $50,000 in notional
par value. The total notional amount and net market value for the contracts
shown above are $1,950,000 and $7,236,178, respectively. The determination
of notional amounts does not consider market risk factors and therefore
notional amounts as presented here are indicitive only of volume of
activity and not a measure of market risk.
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
PILOT INTERNATIONAL EQUITY FUND
- -------------------------------------------------------------------------------------------------------------
Portfolio of Investment
May 16, 1997
_____________________________________________________________________________________________________________
Shares or Value
Principal Amount Description (Note 2)
<S> <C> <C>
COMMON STOCK - 102.6%
AUSTRALIAN DOLLAR - 2.9%
Broadcasting & Publishing - 0.3%
565,000 News Corp. Ltd. $ 2,524,444
Diversified Operations - 0.5%
180,000 Brambles Industries Ltd. 3,297,678
Energy Sources - 0.6%
309,000 Broken Hill Proprietary Co. Ltd. 4,472,382
Food Products and Services - 0.6%
1,375,000 Woolworths Limited 4,312,728
Leisure & Tourism - 0.5%
2,000,000 Sydney Harbour Casino Holdings Ltd.* 3,454,055
Metal-Non Ferrous - 0.4%
2,070,000 M.I.M. Holdings Ltd. 2,917,670
20,978,957
AUSTRIAN SCHILLING - 0.9%
Machinery & Engineering - 0.5%
20,000 VA Technologies A.G. 3,326,511
Metals & Mining - 0.4%
75,000 Radex-Heraklith Indutriebeteiligungs AG 3,170,183
6,496,694
BRAZILLIAN REAL - 0.7%
Beverage & Tobacco- 0.2%
2,150,000 Cia Cervejaria Brahma 1,551,381
Energy Sources - 0.2%
6,800,000 Petroleo Brasiliero S.A. 1,503,869
Electric Utility - 0.2%
2,682,000 Light Participacoes, Rights 1,226,501
Home Appliances - 0.1%
5,250,000 Brasmotor S.A. 1,131,557
5,413,308
BRITISH POUND STERLING - 14.5%
Advertising- 0.8%
1,425,000 WPP Group PLC 5,845,261
See Notes to Financial Statements
<PAGE>
<CAPTION>
PILOT INTERNATIONAL EQUITY FUND
- -------------------------------------------------------------------------------------------------------------
Portfolio of Investment
May 16, 1997
_____________________________________________________________________________________________________________
Shares or Value
Principal Amount Description (Note 2)
<S> <C> <C>
COMMON STOCKS (continued)
BRITISH POUND STERLING (continued)
Air Transportation - 0.6%
220,000 British Aerospace PLC $ 4,580,579
Banking - 1.7%
750,000 Royal Bank of Scotland Group PLC 5,102,860
457,512 Standard Chartered PLC 7,491,759
12,594,619
Business & Public Services - 0.6%
399,000 Reuters Holdings PLC 4,393,863
Chemicals - 0.7%
325,000 BOC Group PLC 5,425,652
Commercial Services - 0.7%
1,085,000 Inchcape PLC 5,276,762
Electrical & Electronics - 0.8%
1,676,000 Astec (BSR) PLC 4,061,786
208,788 Premier Farnell PLC 1,612,013
5,673,799
Energy Sources - 1.5%
195,000 British-Borneo Petroleum Syndicate PLC 4,023,338
343,000 Shell Transport & Trading Co. 6,560,218
10,583,556
Financial Services - 1.0%
1,250,000 Invesco PLC 7,041,250
Food & Household Products - 0.8%
390,450 Reckitt & Coleman PLC 5,843,768
Health & Personal Care - 1.9%
416,178 SmithKline Beecham PLC 7,179,513
200,000 Zeneca Group PLC* 6,446,838
13,626,351
Leisure & Tourism - 1.5%
405,381 Granada Group PLC 6,140,256
650,000 Rank Group PLC 4,768,400
10,908,656
See Notes to Financial Statements
<PAGE>
<CAPTION>
PILOT INTERNATIONAL EQUITY FUND
- -------------------------------------------------------------------------------------------------------------
Portfolio of Investment
May 16, 1997
_____________________________________________________________________________________________________________
Shares or Value
Principal Amount Description (Note 2)
<S> <C> <C>
COMMON STOCKS (continued)
BRITISH POUND STERLING (continued)
Multi-Industry - 0.6%
567,638 Morgan Crucible Co., PLC $ 4,206,020
Telecommunications - 1.3%
500,000 Azlan Group PLC 4,892,031
961,500 Securicor PLC 4,628,902
9,520,933
105,521,069
CANADIAN DOLLAR - 0.9%
Energy Sources - 0.3%
70,000 Renaissance Energy Ltd.* 2,086,646
Manufacturing/Consumer Goods - 0.3%
85,000 United Dominion Industries, Ltd. 2,232,956
Telecommunications/Equipment - 0.3%
30,000 Northern Telecom Ltd. 2,359,928
6,679,530
Finnish Markka - 0.5%
Forest Products & Paper--0.5%
370,000 Enso Gutzeit OY* 3,403,833
French Franc - 9.2%
Beverages & Tobacco--0.7%
20,000 LVMH (Moet HennessyLouis Vuitton) 5,215,047
Broadcasting & Publishing - 0.5%
33,000 Societe Television Francaise 3,429,209
Business Services - 0.5%
26,000 Cie Generale Des Eaux 3,713,268
26,000 Cie Generale Des Eaux, Warrants 17,997
3,731,265
Drugs - 0.5%
30,000 Synthelabo 3,758,829
Electrical & Electronic - 1.0%
61,000 Alcatel Alsthom 7,343,648
See Notes to Financial Statements
<PAGE>
<CAPTION>
PILOT INTERNATIONAL EQUITY FUND
- -------------------------------------------------------------------------------------------------------------
Portfolio of Investment
May 16, 1997
_____________________________________________________________________________________________________________
Shares or Value
Principal Amount Description (Note 2)
<S> <C> <C>
COMMON STOCKS (continued)
FRENCH FRANC (continued)
Energy Sources - 0.9%
60,000 Societe Elf Aquitaine S.A. $ 6,319,039
Food & Household Products - 0.4%
17,058 Groupe Danone 2,756,033
Health & Personal Care - 0.8%
15,000 L'Oreal, S.A. 5,748,643
Insurance - 0.5%
50,000 AXA-UAP 3,283,061
Leisure & Tourism - 1.0%
47,941 Accor S.A. 7,376,102
Manufacturing - Consumer Goods - 0.4%
22,000 BIC 3,388,729
Merchandising - 1.5%
20,231 Castorama Dubois Investments 3,013,433
21,000 Promodes 7,783,142
10,796,575
Office Equipment & Services - 0.5%
50,000 Strafor-Facom S.A. 3,671,211
66,817,391
German Deutschemark - 6.5%
Banking - 0.7%
87,900 Deutsche Pfandbrief & Hypothekenbank A.G. 5,110,933
Chemicals - 2.9%
100,000 Bayer A.G. 3,878,291
120,000 Degussa 5,401,273
75,000 Henkel Kgaa-Vorzug 4,183,773
200,000 Hoechst A.G. 7,962,008
21,425,345
Computer Software - 1.1%
40,000 SAP A.G. 7,567,686
See Notes to Financial Statements
<PAGE>
<CAPTION>
PILOT INTERNATIONAL EQUITY FUND
- -------------------------------------------------------------------------------------------------------------
Portfolio of Investment
May 16, 1997
_____________________________________________________________________________________________________________
Shares or Value
Principal Amount Description (Note 2)
<S> <C> <C>
COMMON STOCKS (continued)
GERMAN DEUTSCHEMARK (continued)
Health & Personal Care - 1.0%
100,000 Gehe, A.G. $ 6,906,546
Machinery & Engineering - 0.8%
5,000 Mannesmann A.G. 2,120,664
10,000 GEA, A.G. 3,972,740
6,093,404
47,103,914
Hong Kong Dollar - 5.8%
Banking - 1.6%
409,400 HSBC Holdings PLC 11,638,944
Construction - 0.2%
500,000 Cheung Kong Infrastructure Holdings* 1,440,847
Multi-Industry - 1.8%
310,000 China Resources Enterprises Ltd. 865,284
790,000 Hutchison Whampoa Ltd. 6,278,346
590,000 Swire Pacific, Class A 4,765,134
1,270,000 Guangdong Investment 1,198,035
13,106,799
Real Estate - 2.2%
1,000,000 New World Developments 6,293,207
400,000 Sun Hung Kai Properties, Ltd. 4,845,898
1,290,000 Wharf Holdings 5,100,987
16,240,092
42,426,682
INDONESIAN RUPIAH - 0.6%
Beverages & Tobacco - 0.3%
464,000 Gudang Garam 1,852,000
Food Products & Services - 0.2%
580,000 Indofood Sukses Makmur (Foreign Shares) 1,202,134
Real Estate - 0.1%
850,000 Kawasan Industri Jababeka 1,029,140
4,083,274
See Notes to Financial Statements
<PAGE>
<CAPTION>
PILOT INTERNATIONAL EQUITY FUND
- -------------------------------------------------------------------------------------------------------------
Portfolio of Investment
May 16, 1997
_____________________________________________________________________________________________________________
Shares or Value
Principal Amount Description (Note 2)
<S> <C> <C>
COMMON STOCKS (continued)
IRISH PUNT - 0.5%
Building Materials & Components--0.5%
408,991 CRH PLC (Dublin Registered) $3,912,022
Italian Lira - 2.0%
Energy Sources--0.4%
600,000 ENI S.p.A. 3,240,915
Multi-Industry--0.1%
1,300,000 Seat S.p.A.* 374,817
Telecommunications--1.1%
1,700,000 Societa' Finanziaria Telefonica S.p.A. 8,511,439
Utilities-Electric & Gas--0.4%
200,000 Edison S.p.A. 954,688
500,000 Italgas S.p.A. 1,716,764
2,671,452
14,798,623
Japanese Yen - 22.4%
Appliances & Household Durables- 1.6%
456,000 Sharp Corp. 6,484,630
1,120,000 Sanyo Electric Co. Ltd. 4,836,419
11,321,049
Automobiles - 0.9%
200,000 Toyota Motor Corp. 6,191,198
Banking - 1.1%
240,000 Sanwa Bank Ltd. 3,142,423
200,000 Fuji Bank 2,653,371
137,000 Bank of Toyko - Mitsubishi 2,506,568
8,302,362
Broadcasting & Publishing - 1.0%
500,000 Toppan Printing Co. Ltd. 7,587,253
Building Materials & Components - 0.2%
164,000 INAX Corp. 1,167,518
Business & Public Services - 0.9%
95,000 Secom Co., Ltd. 6,754,823
See Notes to Financial Statements.
<PAGE>
<CAPTION>
PILOT INTERNATIONAL EQUITY FUND
- -------------------------------------------------------------------------------------------------------------
Portfolio of Investment
May 16, 1997
_____________________________________________________________________________________________________________
Shares or Value
Principal Amount Description (Note 2)
<S> <C> <C>
Common Stocks (continued)
Japanese Yen (continued)
Chemicals- 1.9%
860,000 Asahi Chemical Industry Co. Ltd. $5,234,944
900,000 Dainippon Ink & Chemicals, Inc. 3,589,855
230,000 Shin-Etsu Chemical 5,245,176
14,069,975
Computers / Integrated Systems - 0.8%
520,000 Fujitsu Ltd 6,132,235
Electrical & Electronic- 2.2%
650,000 Citizen Watch Co. 5,196,618
510,000 Hitachi Ltd. 5,439,410
300,000 Matsushita Electric Industries 5,696,943
16,332,971
Electrical Components & Instruments - 1.2%
300 Keyence Corp. 42,402
120,000 Nikon Corp. 1,924,994
82,000 TDK Corp. 6,434,858
8,402,254
Food & Household Products - 0.4%
194,000 House Foods Industry 3,196,185
Health & Personal Care - 1.5%
423,000 KAO Corp. 5,758,595
266,000 Daiichi Pharmaceutical Co., Ltd. 4,889,833
10,648,428
Industrial Components - 0.6%
400,000 NGK Spark Plug Co. 4,370,258
Insurance - 0.7%
400,000 Tokio Marine & Fire Insurance Co. 4,890,526
Machinery & Engineering - 0.9%
885,000 Mitsubishi Heavy Industries Ltd. 6,576,587
Merchandising- 2.1%
140,000 Ito Yokado 8,145,675
320,000 Marui Co., Ltd. 6,076,739
36,400 York-Benimaru Co. 1,117,329
15,339,743
See Notes to Financial Statements. 15,339,743
<PAGE>
<CAPTION>
PILOT INTERNATIONAL EQUITY FUND
- -------------------------------------------------------------------------------------------------------------
Portfolio of Investment
May 16, 1997
_____________________________________________________________________________________________________________
Shares or Value
Principal Amount Description (Note 2)
<S> <C> <C>
Common Stocks (continued)
Japanese Yen (continued)
Office Equipment- 1.6%
229,900 Canon Sales Co., Inc. $5,382,441
480,000 Ricoh Co., Ltd. 6,201,604
-----------
11,584,045
Recreation & Other Consumer Goods - 0.6%
225,000 Shimano, Inc. 4,428,788
Steel - 0.7%
1,650,000 Nippon Steel 5,279,427
Telecommunications - 0.1%
41,000 Nippon Comsys Corp. 551,051
Tools-Hand/Machine - 0.6%
260,000 Mori Seiki Co. 4,193,366
Transportation-Road/Rail - 0.8%
674,000 Nippon Express Co., Ltd. 5,546,291
-----------
162,866,333
Malaysian Ringgit - 0.9%
Banking- 0.1%
440,000 Public Bank Berhad 744,099
Electric Utility - 0.1%
200,000 Tenaga Nasional Berhad 893,885
Leisure & Tourism - 0.3%
330,000 Genting Berhad 1,740,660
Machinery & Engineering - 0.3%
300,000 United Engineers (Malaysia) Ltd. 2,053,520
Multi-Industry - 0.1%
260,000 Sime Darby Berhad 811,342
-----------
6,243,506
Mexican Peso - 0.2%
Banking - 0.2%
745,000 Grupo Financiero Banamex Accival, S.A.* 1,708,847
See Notes to Financial Statements.
<PAGE>
<CAPTION>
PILOT INTERNATIONAL EQUITY FUND
- -------------------------------------------------------------------------------------------------------------
Portfolio of Investment
May 16, 1997
_____________________________________________________________________________________________________________
Shares or Value
Principal Amount Description (Note 2)
<S> <C> <C>
Common Stocks (continued)
Netherlands Guilder- 7.8%
Appliances & Household Durables- 0.9%
115,760 Philips Electronics, (NV) $6,728,434
Broadcasting & Publishing- 1.1%
61,469 Wolters Kluwer (CVA) 7,745,960
Business & Public Services - 2.3%
248,128 Getronics (NV) 7,999,300
92,000 Randstad Holdings (NV) 8,984,804
----------
16,984,104
Energy Sources - 0.7%
25,000 Royal Dutch Petroleum Co. (NV) 4,745,218
Financial Services - 0.3%
50,000 ING Groep (NV) 2,092,359
Food Products & Services- 2.5%
48,000 Nutricia Verenigoe Bedrijven (NV) 7,452,473
139,543 Koninklijke Ahold NV 10,770,435
------------
18,222,908
-----------
56,518,983
Norwegian Krone - 0.4%
Machinery & Engineering - 0.4%
25,074 Kvaerner Industries, A.S. Class A 1,364,779
28,000 Kvaerner Industries, A.S. Class B 1,402,833
----------
2,767,612
Philippine Peso - 0.6%
Banking - 0.1%
134,062 Philippine National Bank* 818,508
Utilities-Electric & Gas - 0.2%
203,450 Manila Electric Co., Class B 918,109
Real Estate- 0.3%
1,483,750 Ayala Land, Inc. Class B 1,040,931
5,000,000 Prime Holdings, Inc. 1,270,382
2,311,313
---------
4,047,930
See Notes to Financial Statements. ---------
<PAGE>
<CAPTION>
PILOT INTERNATIONAL EQUITY FUND
- -------------------------------------------------------------------------------------------------------------
Portfolio of Investment
May 16, 1997
_____________________________________________________________________________________________________________
Shares or Value
Principal Amount Description (Note 2)
<S> <C> <C>
Common Stocks (continued)
Polish Zloty - 0.2%
Engineering - 0.2%
285,600 Mostosal-Export SA $1,098,371
Portuguese Escuda - 0.6%
Banking - 0.1%
40,000 Banco Espirito Santo* 836,798
Building Materials & Components - 0.1%
44,000 Corticeira Amorim, S.A. 412,770
Construction & Housing - 0.1%
62,000 Engil-SGPS 750,303
Food & Household Products - 0.1%
12,000 Estabelecimentos Jeronimo Martins & Filho 814,752
Insurance - 0.1%
32,600 Companhia de Seguros Tranquilidade 707,985
Retail / Hypermarkets- 0.1%
13,000 Inparsa Industry 109,454
26,000 Sonae BR 944,845
-------
1,054,299
----------
Singaporean Dollar - 2.5%
Banking- 0.5%
290,687 Development Bank of Singapore, Ltd. 3,674,186
Beverages & Tobacco - 0.4%
43,200 Fraser & Neave, Warrants, 5/7/98 * 124,291
300,000 Fraser & Neave 2,409,218
----------
2,533,509
Broadcasting & Publishing - 0.3%
120,000 Singapore Press Holdings 2,363,128
Multi-Industry- 0.8%
562,500 Keppel Corp. Ltd. 2,730,010
1,200,000 Singapore Technologies Industrial Corp. 3,268,156
---------
See Notes to Financial Statements. 5,998,166
<PAGE>
<CAPTION>
PILOT INTERNATIONAL EQUITY FUND
- -------------------------------------------------------------------------------------------------------------
Portfolio of Investment
May 16, 1997
_____________________________________________________________________________________________________________
Shares or Value
Principal Amount Description (Note 2)
<S> <C> <C>
Common Stocks (continued)
Singaporean Dollar (continued)
Real Estate- 0.5%
375,000 City Developments $ 3,325,768
17,894,757
Spanish Peseta - 2.8%
Energy Sources - 0.7%
125,000 Respol S.A. 5,246,956
Utilities-Electric & Gas - 2.1%
47,000 Gas Natural SDG, S.A. 9,091,575
76,000 Empresa Nacional de Electricidad, S.A. 5,875,191
----------
14,966,766
-----------
20,213,722
Swedish Krona - 3.7%
Banking - 0.6%
200,000 Sparbanken Sverige AB 4,000,749
Machinery & Engineering - 1.2%
288,000 Atlas Copco Atiebolag, Class A 7,989,955
42,000 Atlas Copco Atiebolag, Class B 1,159,693
-----------
9,149,648
Medical Instruments - 0.4%
165,000 Getinge Industrier AB - Class B 2,965,145
Steel / Producers - 0.2%
71,600 Svenskt Stal AB 1,368,374
Telecommunications - 1.0%
200,000 Tlelfonaktiebolaget LM Ericsson 7,070,177
Wholesale Distribution - 0.3%
110,000 Dahl International AB 2,294,200
----------
26,848,293
Swiss Franc - 5.9%
Business & Public Services- 1.0%
21,000 Adecco S.A.* 7,368,437
Electrical & Electronics - 0.8%
4,000 ABB A.G. 5,554,863
See Notes to Financial Statements.
<PAGE>
<CAPTION>
PILOT INTERNATIONAL EQUITY FUND
- -------------------------------------------------------------------------------------------------------------
Portfolio of Investment
May 16, 1997
_____________________________________________________________________________________________________________
Shares or Value
Principal Amount Description (Note 2)
<S> <C> <C>
Common Stocks (continued)
Swiss Franc (continued)
Food & Household Products- 0.7%
3,856 Nestle, S.A. $5,045,168
Health & Personal Care - 1.7%
970 Roche Holdings, Warrants* 83,038
1,300 Roche Holdings, A.G. 12,360,697
-----------
12,443,735
Pharmaceuticals - 1.7%
9,000 Novartis AG 12,752,088
-----------
43,164,291
Thai Baht - 0.3%
Banking - 0.2%
160,000 Bangkok Bank 1,212,213
Utilities-Electric & Gas - 0.1%
440,000 Electricity Generating PCL 867,412
-----------
2,079,625
Turkish Lire - 0.4%
Appliances & Household Durables - 0.1%
4,818,325 Arcelik, A.S. 687,536
Building Materials & Components - 0.2%
16,579,162 Trakya Cam SananyII A.S. 622,871
10,000,000 Baticim Bati Anadolu Cimento Sanayii S.A. 1,083,737
---------
1,706,608
Food & Household Products - 0.1%
704,700 Migros Turk T.A.S. 814,623
3,208,767
United States Dollar - 9.1%
Banking - 0.8%
51,400 Banco Frances del Rio De la Plata S.A. (ADR) 1,542,000
50,300 Banco de Santiago (ADR) 1,207,200
220,000 Cho Hung Bank (GDS)* 1,048,784
30,000 OTP Bank (GDR) 713,712
65,300 State Bank of India (GDR)* 1,557,405
----------
See Notes to Financial Statements. 6,069,101
<PAGE>
<CAPTION>
PILOT INTERNATIONAL EQUITY FUND
- -------------------------------------------------------------------------------------------------------------
Portfolio of Investment
May 16, 1997
_____________________________________________________________________________________________________________
Shares or Value
Principal Amount Description (Note 2)
<S> <C> <C>
Common Stocks (continued)
United States Dollar (continued)
Beverages & Tobacco- 0.2%
72,000 Embotelladora Andina S.A. (ADR) $ 1,494,000
Broadcasting & Publishing - 0.2%
63,300 Grupo Televisa (GDR)* 1,550,850
Closed-end Mutual Funds - 0.5%
164,777 Korea Fund, Inc. 1,977,324
80,000 Morgan Stanley India Investment Fund, Inc. 870,000
80,000 R.O.C. Taiwan Fund, Inc. 1,000,000
---------
3,847,324
Electrical & Electronics - 0.5%
190,000 Elektrim, S.A. (ADR) 1,567,500
718 Samsung Electric (GDR)* 36,618
46,873 Samsung Electric Co. (NV) (GDR) 1,218,698
58,000 Siliconware Precision SP (GDR) 1,026,600
-----------
3,849,416
Energy Sources - 0.2%
59,550 YPF Sociedad Anonima (ADR) 1,726,950
Financial Services - 0.2%
78,960 Credicorp Ltd. 1,668,030
Health & Personal Care - 2.1%
11,000 Egis Rt. (EDR)* 642,763
260,000 Fresenius Medical Care AG (ADR)* 7,475,000
30,000 Gedeon Richter (ADR) 2,407,200
69,600 Kimberly-Clark de Mexico S.A. (ADR) 1,287,747
50,000 Luxottica Group S.p.A. (ADR)* 3,162,500
----------
See Notes to Financial Statements. 14,975,210
<PAGE>
<CAPTION>
PILOT INTERNATIONAL EQUITY FUND
- -------------------------------------------------------------------------------------------------------------
Portfolio of Investment
May 16, 1997
_____________________________________________________________________________________________________________
Shares or Value
Principal Amount Description (Note 2)
<S> <C> <C>
Common Stocks (continued)
United States Dollar (continued)
Metal-Non Ferrous- 0.4%
35,000 Hindalco Industries Ltd. (GDR)* $ 1,102,500
50,000 Impala Platinum Holdings (ADR) 508,435
434,000 Siderurgica Venezolana (ADR) 1,434,457
---------
3,045,392
Multi-Industry - 0.9%
80,000 Barlow, Ltd. (ADR) 883,224
115,000 Cemex S.A. (ADR) * 816,109
60,000 Cemex S.A. Toumex (ADR) Class B 473,700
65,500 Chilectra S.A.(ADR) 1,606,761
72,000 Corimon C.A. (ADR)* 63,000
56,107 Desc, S.A. de C.V. (ADR) * 1,493,849
105,000 Grupo Industrial Maseca S.A. (ADR) 1,588,125
-----------
6,924,768
Recycling - 0.6%
320,000 Philip Environmental 4,080,000
Telecommunications - 1.2%
55,000 CIA Telecom Chile (ADR) 1,766,875
33,000 Northern Telecom Ltd 2,586,375
11,700 Philippine Long Distance Telephone Co. (ADR) 640,575
31,730 Telecom Argentina Stet (ADR) 1,649,960
54,000 Telefonica del Peru S.A. (ADR) 1,282,500
60,000 Videsh Sanchar (GDR) 1,141,500
---------
9,067,785
Utilities-Electric & Gas - 1.1%
36,000 BSES Ltd. (GDR) 722,210
88,220 Empresa Nacional de Electricidad, S.A. (ADR) 2,263,680
58,000 Hub Power Co. (GDR) * 1,358,638
62,600 Korea Electric (ADR) 1,001,600
38,350 Manila Electric Co. (GDR) 1,313,487
98,000 Transportadora de Gas Del Sur (ADR) 1,237,250
----------
7,896,865
----------
66,195,691
Total Common Stocks (cost $615,446,230) 747,068,932
See Notes to Financial Statements.
<PAGE>
<CAPTION>
PILOT INTERNATIONAL EQUITY FUND
- -------------------------------------------------------------------------------------------------------------
Portfolio of Investment
May 16, 1997
_____________________________________________________________________________________________________________
Shares or Value
Principal Amount Description (Note 2)
<S> <C> <C>
Convertible Bonds- 0.1%
Japanese Yen- 0.1%
Electronics--0.1%
120,000,000 Fuji International Finance, 0.25%, 1/31/02 $ 991,112
Total Convertible Bonds (cost $1,064,679) 991,112
Preferred Stocks - 0.2%
Brazilian Real- 0.2%
Banking-0.2%
4,450,000 Telecomunicacoes de Sao Paulo 1,392,822
Total Preferred Stocks (cost $1,051,642) 1,392,822
Total Investments (cost $617,562,551) 749,452,866
Other assets and liabilities- (2.9%) (21,130,167)
Net Assets--100.0% $728,322,699
* Non-income producing security.
** Represents cost for financial reporting puposes and differs from cost for federal income tax puposes by the
amount of losses recognized for financial reporting purposes of $xxx,xxx, Cost for tax purposes differs from
value by net unrealized appreciation from investments as follows:
Gross unrealized appreciation from investments
Gross unrealized depreciation from investments
Net unrealized appreciation $ -
ADR--American Depository Receipt.
GDR--Global Depository Receipt.
GDS--Global Depository Shares.
</TABLE>
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
PILOT INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------------------------------------------
Portfolio of Investments
May 16, 1997
- --------------------------------------------------------------------------------------------------------------------
Unrealized
Value on Appreciation
Forward Foreign Currency Exchange Contracts Expiring Settlement Date Current Value (Depreciation)
<S> <C> <C> <C> <C>
CURRENCY SOLD:
German Marks 6/20/97 $ 20,931,724 $ 21,268,625 $ (336,901)
Japanese Yen 6/20/97 69,987,289 76,593,672 (6,606,383)
Thai Baht 5/21/97 3,313,421 3,305,345 8,076
------------ ------------ ------------
$ 94,232,434 $101,167,642 $ (6,935,208)
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
CURRENCY PURCHASED:
<S> <C> <C> <C> <C>
French Franc 5/30/97 $ 10,375,860 $ 10,429,142 $ 53,282
German Marks 5/20/97 11,417,124 11,425,865 8,741
------------ ------------ ------------
$ 21,792,984 $ 21,855,007 $ 62,023
</TABLE>
<PAGE>
The Pilot Funds
Statements of Assets and Liabilities
May 16,1997
<TABLE>
<CAPTION>
U.S. Government Small Capitalization International
Securities Fund Equity Fund Equity Fund
<S> <C> <C> <C>
Assets
Investment in securities, at value $147,133,289 $113,555,630 $749,452,866
Repurchase agreements, at cost 2,121,000 4,923,000 -
Total (cost $104,378,315; 149,222,562;
617,562,551 respectively) 149,254,289 118,478,630 749,452,866
Cash 1,993 448,411 -
Foreign currency at value - - 41,172
Dividends receivable - 37,303 2,171,909
Interest receivable 1,630,899 - 10,573
Foreign taxes receivable - - 645,297
Receivable for Portfolio shares sold 100 59,850 99,184
Receivable from investment adviser - 7,157 -
Receivable from brokers from investments
sold - - 7,004,997
Receivable for forward foreign currency
exchange contracts 61,358
Deferred organization costs - - 745
Other assets 270 331 187,684
- -
Total Assets 150,887,551 119,031,682 759,675,785
Liabilities
Due to custodian bank - - 1,488,711
Advisory fees payable 29,708 - 282,961
Administration fees payable 10,416 2,847 49,364
Distribution expenses payable (Class A Shares) 104 400 270
Distribution expenses payable (Class B Shares) 762 1,328 3,319
Payable to brokers for investments purchased - 445,881 21,841,522
Payable for forward foreign currency exchange
contracts - - 6,934,543
Dividends payable 422,782 - -
Payable for Portfolio shares redeemed - 2,709,902 469,861
Custodian fees payable 3,084 1,362 77,987
Net variation margin on open futures contracts - 64,178 -
Other accrued expenses 75,435 22,932 204,548
Total Liabilities 542,291 3,248,830 31,353,086
Net Assets $ 150,345,260 $ 115,782,852 $728,322,699
Net Asset Value, Offering Price and Redemption
Price per Share ($1.00, $1.00 and $.001 par
value respectively, unlimited number of
shares authorized):
Pilot Shares:
Net assets $ 148,082,284 $ 109,450,403 $701,032,760
Shares of beneficial interest issued and
outstanding 14,529,997 9,065,316 38,039,778
Net asset value $ 10.19 $ 12.07 $ 18.43
Class A Shares:
Net assets $ 733,984 $ 3,697,466 $ 26,729,575
Shares of beneficial interest issued and
outstanding 71,959 306,758 1,463,251
Net asset value $ 10.20 $ 12.05 $ 18.27
Sales charge-4.50%, 4.50% and 4.50%
respectively 0.48 0.57 0.86
Maximum offering price $ 10.68 $ 12.62 $ 19.13
Class B Shares:
Net assets $ 1,528,992 $ 2,634,983 $ 560,364
Shares of beneficial interest issued and
outstanding 150,064 219,116 30,587
Net asset value $ 10.19 $ 12.03 $ 18.32
Composition of Net Assets:
Shares of beneficial interest, at par $ 14,752,020 $ 9,591,190 $ 39,534
Additional paid-in capital 134,912,454 93,427,664 590,494,991
Undistributed net investment income 22,072 890 2,415,558
Accumulated undistributed net realized gains
(losses) from investment and futures
transactions 626,987 (1,479,742) 24,057,165
Accumulated undistributed net realized losses
from foreign currency transactions - - (13,496,832)
Net unrealized appreciation from investments
and futures 31,727 14,242,850 145,528,444
Net unrealized depreciation from translation
of assets and liabilities denominated in
foreign currencies - - (20,716,161)
Net Assets, May 16, 1997 $ 150,345,260 $115,782,852 $728,322,699
See Notes to Financial Statements.
</TABLE>
<PAGE>
The Pilot Funds
Statements of Operations
For the period ended May 16, 1997
<TABLE>
<CAPTION>
U.S. Government Small Capitalization International
Securities Fund Equity Fund Equity Fund
---------------- -------------------- --------------
<S> <C> <C> <C>
Investment Income:
Dividends $6,646,384 $ 933,976 $ 7,926,604
Interest - 150,185 802,520
Foreign tax withholding - - (786,594)
Total Income 6,646,384 1,084,161 7,942,530
Expenses:
Advisory fees 552,504 731,622 3,861,385
Administration fees 117,089 78,360 530,382
Distribution expenses
(Class A Shares) 1,701 5,816 47,496
Distribution expenses
(Class B Shares) 11,063 17,260 3,286
Accounting fees 12,831 8,555 57,919
Audit fees 26,240 29,254 66,885
Transfer agent fees and expenses 24,130 54,616 171,149
Custodian fees and expenses 9,220 9,936 665,565
Reports to shareholders 3,030 24,438 125,805
Registration fees 13,950 58,791 91,602
Amortization of organization expenses 13,662 2,660 37,697
Legal fees 7,596 2,414 33,331
Trustees' fees 3,560 2,696 20,064
Other expenses 3,372 5,613 25,856
Total Expenses 799,948 1,032,031 5,738,422
Less: Fee waivers and expense reimbursements
by advisor, administrator, and distributor (125,674) (312,289) -
Net Expenses 674,274 719,742 5,738,422
Net Investment Income 5,972,110 364,419 2,204,108
Realized and Unrealized Gains (Losses)
from Investments:
Net realized losses from investment
and futures transactions 923,301 (1,681,500) 28,301,833
Net realized losses from foreign currency
transactions - - (15,093,732)
Net change in unrealized appreciation
from investments and futures 1,508,806 13,621,363 80,091,698
Net change in unrealized depreciation from
translation of assets and liabilities
denominated in foreign currencies - - (21,403,153)
Net Realized and Unrealized Gains from
Investments 2,432,107 11,939,863 71,896,646
Net Increase in Net Assets
Resulting from Operations $ 8,404,217 $ 12,304,282 $74,100,754
</TABLE>
See Notes to Financial Statements.
<PAGE>
The Pilot Funds
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
U.S. Government Small Capitalization International
Securities Fund Equity Fund Equity Fund
December 12,
For the period For the year For the period 1995 through For the period For the year
ended ended ended August 31, 1996 ended ended
May 16, 1997 August 31, 1996 May 16, 1997 (a) May 16, 1997 August 31, 1996
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets
Operations:
Net investment income $5,972,110 $ 7,859,179 $ 364,419 $ 321,840 $ 2,204,108 $ 3,316,017
Net realized gains from
investment and futures
transactions 923,301 6,920,545 (1,681,500) 581,207 28,301,833 8,391,035
Net realized gain (loss) from
foreign currency transactions - - - - (15,093,732) 15,336,402
Net change in unrealized
appreciation (depreciation)
from investments and futures 1,508,806 (9,917,288) 13,621,363 621,487 80,091,698 38,713,502
Net change in unrealized depreciation
from translation of assets and
liabilities denominated in
foreign currencies - - - - (21,403,153) (19,628,913)
Net increase in net assets
resulting from operations 8,404,217 4,862,436 12,304,282 1,524,534 74,100,754 46,128,043
Dividends to shareholders from net
investment income:
Pilot Shares (5,885,069) (7,807,800) (361,933) (310,641) (6,573,825) (11,112,928)
Class A Shares (36,240) (17,876) (8,336) (5,306) (224,687) (765,596)
Class B Shares (50,801) (33,503) (591) (1,071) (3,305) -
Total dividends to shareholders
from net investment income (5,972,110) (7,859,179) (370,860) (317,018) (6,801,817) (11,878,524)
Dividends to shareholders from net
realized gains:
Pilot Shares (7,085,032) (5,585,839) (357,391) - (12,568,191) (9,018,759)
Class A Shares (55,087) (6,785) (12,306) - (530,391) (648,034)
Class B Shares (76,740) (18,425) (9,752) - (8,620) -
Total dividends to shareholders
from net realized gains (7,216,859) (5,611,049) (379,449) - (13,107,202) (9,666,793)
Portfolio share transactions
Proceeds from shares issued 24,856,233 35,505,082 41,498,279 75,500,924 143,162,653 215,676,940
Dividends reinvested 634,343 318,249 127,206 61,309 13,572,706 16,367,712
Cost of shares redeemed (17,296,033) (17,773,679) (12,369,674) (1,796,681) (88,537,960) (41,530,325)
Net increase in net assets
from Portfolio transactions 8,194,543 18,049,652 29,255,811 73,765,552 68,197,399 190,514,327
Total increase 3,409,791 9,441,860 40,809,784 74,973,068 122,389,134 215,097,053
Net Assets
Beginning of period 146,935,469 137,493,609 74,973,068 - 605,933,565 390,836,512
End of period (b) $ 150,345,260 $146,935,469 $115,782,852 $ 74,973,068 $728,322,699 $605,933,565
</TABLE>
See Notes to Financial Statements.
(a) Period from commencement of operations.
(b) Includes undistributed Net Investment Income of $22,072, $22,072, $890,
$7,331, $2,415,558, and $7,013,267, respectively.
<PAGE>
THE PILOT FUNDS
FINANCIAL HIGHLIGHTS
PILOT U.S. GOVERNMENT SECURITIES FUND
<TABLE>
<CAPTION>
Period Ended May 16, 1997 Year Ended August 31, 1996
Pilot Class A Class B Pilot Class A Class B
Shares Shares Shares Shares Shares Shares
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $10.53 $ 10.54 $ 10.52 $ 11.20 $ 11.19 $ 11.19
Investment Activities
Net investment income 0.41 0.39 0.34 0.61 0.59 0.51
Net realized and unrealized
gains from investments 0.17 0.17 0.18 (0.22) (0.20) (0.22)
Total from Investment Activities 0.58 0.56 0.52 0.39 0.39 0.29
Distributions
From net investment income (0.41) (0.39) (0.34) (0.61) (0.59) (0.51)
From net realized gains (0.51) (0.51) (0.51) (0.45) (0.45) (0.45)
Total distributions (0.92) (0.90) (0.85) (1.06) (1.04) (0.96)
Net Asset Value, End of Period $ 10.19 $ 10.20 $ 10.19 $ 10.53 $ 10.54 $ 10.52
Total Return(d) 5.62% 5.44% 4.99% 3.46% 3.44% 2.43%
Ratios/Supplemental Data:
Net Assets at end of period (000) $148,082 $ 734 $ 1,529 $145,066 $ 632 $ 1,237
Ratio of expenses to average net
assets(d) 0.62%(e) 0.87%(e) 1.62%(e) 0.65% 0.85% 1.65%
Ratio of net investment income to
average net assets(d) 5.60%(e) 5.35%(e) 4.60%(e) 5.61% 5.44% 4.60%
Ratio of expenses to average net
assets assuming no waiver or
expense reimbursement(d) 0.77%(e) 1.07%(e) 1.77%(e) 0.82% 1.07% 1.82%
Ratio of net investment income to
average net assets assuming
no waiver or expense
reimbursement(d) 5.45%(e) 5.15%(e) 4.45%(e) 5.44% 5.22% 4.43%
Portfolio turnover rate(f) 57.64% 57.64% 57.64% 87.18% 87.18% 87.18%
</TABLE>
<TABLE>
<CAPTION>
Period Ended August 31,1995
Pilot Class A Class B
Shares (a) Shares (b) Shares (c)
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $ 10.00 $ 10.48 $ 10.05
Investment Activities
Net investment income 0.56 0.37 0.46
Net realized and unrealized
gains from investments 1.20 0.71 1.14
Total from Investment Activities 1.76 1.08
Distributions
From net investment income (0.56) (0.37) (0.46)
From net realized gains - - -
Total distributions (0.56) (0.37) (0.46)
Net Asset Value, End of Period $ 11.20 $ 11.19 $ 11.19
Total Return(d) 18.03% 10.41% 16.19%
Ratios/Supplemental Data:
Net Assets at end of period (000) $137,261 $ 87 $ 146
Ratio of expenses to average net
assets(d) 0.62%(e) 0.82%(e) 1.62%(e)
Ratio of net investment income
to average net assets(d) 6.45%(e) 5.76%(e) 5.19%(e)
Ratio of expenses to average net
assets assuming no waiver or
expense reimbursement(d) 0.87%(e) 1.12%(e) 1.87%(e)
Ratio of net investment income to
average net assets assuming
no waiver or expense reimburse-
ment(d) 6.20%(e) 5.46%(e) 4.94%(e)
Portfolio turnover rate(f) 132.00% 132.00% 132.00%
</TABLE>
(a) Pilot Shares commenced activity November 7, 1994.
(b) Class A Shares commenced activity February 7, 1995.
(c) Class B Shares commenced activity November 10, 1994.
(d) Total return excludes sales charge of Class A Shares and Class
B Shares, would have been lower had certain expenses not been
reduced during the periods presented, and is not annualized.
(e) Annualized.
(f) Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing among the classes of shares issued.
<PAGE>
THE PILOT FUNDS
FINANCIAL HIGHLIGHTS
PILOT SMALL CAPITALIZATION EQUITY FUND
<TABLE>
<CAPTION>
Period Ended May 16, 1997 December 12, 1995 to August 31, 1996 (a)
Pilot Class A Class B Pilot Class A Class B
Shares Shares Shares Shares Shares Shares
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 10.65 $ 10.64 $ 10.65 10.00 $ 10.00 $ 10.00
Investment Activities
Net investment income (Loss) 0.04 0.03 (0.03) 0.09 0.05 0.01
Net realized and unrealized
gains from investments and futures 1.47 1.46 1.46 0.64 0.64 0.65
Total from Investment Activities 1.51 1.49 1.43 0.73 0.69 0.66
Distributions
From net investment income (0.04) (0.03) - (0.08) (0.05) (0.01)
From net realized gains (0.05) (0.05) (0.05) - - -
Total distributions (0.09) (0.08) (0.05) (0.08) (0.05) (0.01)
Net Asset Value, End of Period $ 12.07 $ 12.05 $ 12.03 10.65 $ 10.64 $ 10.65
Total Return (b) 14.21% 13.98% 13.43% 7.37% 6.88% 6.65%
Ratios/Supplemental Data:
Net Assets at end of period (000) $109,450 $ 3,697 $ 2,635 $ 70,483 $ 2,611 $ 1,878
Ratio of expenses to average net assets 0.98%(c) 1.23%(c) 1.97%(c) 1.00%(c) 1.25%(c) 2.01%(c)
Ratio of net investment income (Loss)
to average net assets 0.54%(c) 0.30%(c) (0.45%)(c) 1.06%(c) 0.66%(c) (0.07%)(c)
Ratio of expenses to average net assets
assuming no waiver or expense reimbursement 1.41%(c) 1.66%(c) 2.41%(c) 1.54%(c) 1.65%(c) 2.44% (c)
Ratio of net investment income(Loss)
to average net assets assuming no waiver
or expense reimbursement 0.11%(c) (0.13%)(c) (0.89%)(c) 0.52%(c) 0.26%(c) (0.50%)(c)
Portfolio turnover rate (d) 47.97% 47.97% 47.97% 30.67% 30.67% 30.67%
Average Commission Rate Paid (e) 0.0323 0.0323 0.0323 $ 0.0340 $ 0.0340 $ 0.0340
</TABLE>
(a) Period from commencement of operations.
(b) Total return excludes sales charge of Class A Shares and Class B Shares,
would have been lower had certain expenses not been reduced during the
periods presented, and is not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing among the classes of shares issued.
(e) The average commission represents the total dollar amount of commissions
paid on portfolio transactions, for the time period of May 4, 1996 to
August 31, 1996, divided by the total number of portfolio shares
purchased and sold for which commissions were charged. Disclosure is not
required for the prior periods.
See Notes to Financial Statements
<PAGE>
PILOT INTERNATIONAL EQUITY FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Pilot International Equity Fund Pilot International Equity Fund (a)
Period Ended May 16, 1997 Year Ended 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) 0.05 (0.05) (0.05) 0.18 0.04 -
Net realized and unrealized gain (loss)
from investments 2.76 2.85 2.71 1.61 1.69 (0.65)
Net realized and unrealized gain (loss) from
foreign currencies (0.92) (0.95) (0.92) (0.13) (0.12) 0.15
Total from Investment Activities 1.89 1.85 1.74 1.66 1.61 (0.50)
Distributions
From net investment income (0.17) (0.14) (0.12) (0.46) (0.46) -
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 $18.43 $ 18.27 $ 18.32 $ 17.05 $ 16.90 $ 17.04
Total Return (i) 11.28% 11.14% 10.37% 10.64% 10.40% (2.85%)*
Ratios/Supplemental Data:
Net Assets at end of period (000) $ 701,033 $ 26,730 $ 560 $ 579,019 $ 26,730 $ 184
Ratio of expenses to average net assets 1.18%(j) 1.42%(j) 2.18%(j) 1.08% 1.32% 2.06%(j)
Ratio of net investment income (Loss)
to average net assets 0.47%(j) 0.29%(j) (0.61%)(j) 0.69% 0.48% (0.32%)(j)
Portfolio turnover rate (k) 33.68% 33.68% 33.68% 22.31% 22.31% 22.31%
Average Commission Rate Paid (l) $ 0.0107 $0.0107 $ 0.0107 $ 0.01600 $ 0.01600 $0.01600
Pilot Klienwort Benson International Equity Fund
Year Ended Year Ended Eight Months Ended
August 31,1995 August 31,1994 August 31, 1993
Pilot Pilot Pilot
Pilot Class A Pilot Administration Pilot Administration
Shares Shares (c) Shares Shares Shares (d) Shares
<C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 16.34 $ 16.29 $ 14.14 $ 14.13 $ 13.15 $ 11.85
Investment Activities
Net investment income (Loss) 0.13(g) 0.08(g) 0.11(g) 0.07(g) (0.01)(g) 0.02(g)
Net realized and unrealized gain (loss)
from investments (0.22)(g) (0.22)(g) 1.65(g) 1.65(g) 1.10(g) 2.51(g)
Net realized and unrealized gain (loss) from
foreign currencies 0.39(g) 0.39(g) 0.59(g) 0.59(g) (0.10)(g) (0.25)(g)
Total from Investment Activities 0.30 0.25 2.35 2.31 0.99 2.28
Distributions
From net investment income (0.11) (0.11) - - - -
From net realized gains from investments
and foreign currencies (0.29) (0.29) (0.15) (0.15) - -
Total distributions (0.40) (0.40) (0.15) (0.15) - -
Net Asset Value, End of Period $ 16.24 $16.14 $ 16.34 $ 16.29 $ 14.14 $ 14.13
Total Return (i) 2.08% 1.77% 16.75% 16.48% 7.53% 19.24%
Ratios/Supplemental Data:
Net Assets at end of period (000) $363,212 $27,625 $ ####### $ 44,990 $195,548 $ 55,816
Ratio of expenses to average net assets 1.18% 1.42% 1.12% 1.37% 1.31%(j) 2.17%(j)
Ratio of net investment income (Loss)
to average net assets 0.82% 0.50% 0.75% 0.48% (0.56%)(j) 0.25%(j)
Portfolio turnover rate (k) 35.91% 35.91% 35.40% 35.40% 26.65%(m) 26.65%(m)
Average Commission Rate Paid (l)
Kleinwort Benson
International
Equity Fund
Year Ended
December 31, 1992
Pilot
Administration
Shares (e)(f)
<C>
Net Asset Value, Beginning of Period $ 12.29
Investment Activities
Net investment income (Loss) 0.04(g)
Net realized and unrealized gain (loss)
from investments (0.46)(g)(h)
Net realized and unrealized gain (loss) from
foreign currencies
Total from Investment Activities (0.42)
Distributions
From net investment income (0.02)
From net realized gains from investments
and foreign currencies -
Total distributions (0.02)
Net Asset Value, End of Period $ 11.85
Total Return (i) (3.42%)
Ratios/Supplemental Data:
Net Assets at end of period (000) $ 56,358
Ratio of expenses to average net assets 1.78%
Ratio of net investment income (Loss) 0.35%
to average net assets 58.55%
Portfolio turnover rate (k)
Average Commission Rate Paid (l)
</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. 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
<PAGE>
THE PILOT FUNDS
- --------------------------------------------------------------------------------
Notes to Financial Statements
May 16, 1997
- --------------------------------------------------------------------------------
1. GENERAL
The Pilot U.S. Government Securities Fund, Pilot Small Capitalization Equity
Fund and the Pilot International Equity Fund, formerly Pilot Kleinwort Benson
International Equity Fund, are separate portfolios (individually, a "Portfolio";
collectively, the "Portfolios") of The Pilot Funds (the "Fund"). The Fund is a
Massachusetts business trust registered under the Investment Company Act of
1940, as amended (the 1940 Act), as an open-end management investment company.
All of the Portfolios are diversified.
The Portfolios each offer three classes of shares: Pilot Shares, Class A Shares,
and Class B Shares. Each class of shares is substantially the same, except that
Class A Shares 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.
Boatmen's Trust Company ("Boatmen's") serves as the Fund's investment adviser
and custodian for the Portfolios. Kleinwort Benson Investment Management
Americas Inc. ("Kleinwort Benson") serves as the investment manager for the
Pilot International Equity Fund. 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.
Pursuant to an Agreement in Plan of Merger exectued on August 29, 1996,
Boatmen's Bancshares Inc. ("Bancshares") the former parent company of Boatmen's,
the Funds investment adviser, merged with and into NationsBank Corporation on
January 7, 1997
On December 18, 1996, the Fund's shareholders, at a special shareholder meeting,
approved new Investment Advisory Agreements between the Fund on behalf of the
Portfolios and Boatmen's by the following votes:
<TABLE>
<CAPTION>
For Against Abstain Total
<S> <C> <C> <C> <C>
U.S. Government Securities Fund 12,308,225 212,855 231,302 12,752,382
Small Capitalization Equity Fund 5,905,432 38,601 65,008 6,009,041
International Equity Fund 24,316,327 29,999 655,313 25,001,639
-------------- ------------- ----------- ---------------
Total 42,529,984 281,455 951,623 43,763,062
============== ============= =========== ===============
</TABLE>
<PAGE>
THE PILOT FUNDS
- --------------------------------------------------------------------------------
Notes to Financial Statements
May 16, 1997
- --------------------------------------------------------------------------------
In a separate vote, the shareholders of the Pilot International Equity Fund
approved a new Investment Management Agreement between the Fund on behalf of the
Pilot International Equity Fund, Boatmen's and Klienwort Benson Investment
Management Americas Inc.
("Kleinwort Benson") by the following votes:
<TABLE>
<CAPTION>
For Against Abstain Total
<S> <C> <C> <C> <C>
International Equity Fund 24,209,390 86,361 705,888 25,001,639
---------------- --------------- ------------- ----------------
</TABLE>
The Fund entered into an Agreement and Plan of Reorganization (the
"Reorganization Agreement") with Nations Fund, Inc. ("Nations Funds"). The
Reorganization Agreement contemplates that each of the Portfolios will transfer
substantially all of its assets and liabilities to the corresponding portfolio
of the Nations Funds. The Fund's shareholders, at a special shareholder meeting
held on April 28, 1997, approved the Reorganization Agreement by the following
votes:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN TOTAL
<S> <C> <C> <C> <C>
U.S. Government Securities Fund 13,289,058 5,651 17,809 13,312,518
Small Capitalization Equity Fund 7,085,918 54,595 55,792 7,196,305
International Equity Fund 28,587,048 1,063,085 232,018 29,882,151
-------------- ------------- ------------ ---------------
Total 48,962,024 1,123,331 305,619 50,390,974
============== ============= ============ ===============
</TABLE>
Pursuant to the reorganization, the fiscal year end of Pilot U.S. Government
Securities Fund, Pilot Small Capitalization Equity Fund and Pilot International
Equity Fund was changed from August 31, 1997 to May 16, 1997. The information
presented in this report covers the period from September 1, 1996 through May
16, 1997.
Small Capitalization Equity Fund seeks long term capital growth. U.S. Government
Securities Fund seeks total return and preservation of capital. International
Equity Fund seeks to provide long term capital growth by investing primarily in
equity securities of companies domiciled in countries outside the United States
and listed on major stock exchanges primarily in Europe and the Pacific Basin.
<PAGE>
THE PILOT FUNDS
- --------------------------------------------------------------------------------
Notes to Financial Statements
May 16, 1997
- --------------------------------------------------------------------------------
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
Portfolio securities are valued as follows: (a) securities that are traded on
any U.S. or foreign stock exchange or the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") are valued at the last sale price
on that exchange or NASDAQ prior to the Portfolio's valuation time; if no sale
occurs, securities traded on a U.S. exchange or NASDAQ are valued at the mean
between the closing bid and closing asked price and securities traded on a
foreign exchange will be valued at the official bid price; (b) over-the-counter
stocks not quoted on NASDAQ are valued at the last sale price prior to the
Portfolio's valuation time or, if no sale occurs, at the mean between the last
bid and asked price; (c) debt securities are valued at prices supplied by an
independent pricing service selected by Boatmen's and approved by the Trustees
of the Fund; these prices reflect broker/dealer supplied valuations and
electronic data processing techniques if those prices are deemed by Boatmen's to
be representative of market values at the Portfolio's valuation time; and (d)
all other securities and assets, for which quotations supplied are not
representative of current market values or for which quotations are not readily
available, are valued at fair value as determined in good faith pursuant to
procedures established by the Trustees of the Fund. Money market instruments
held by a Portfolio with a remaining maturity of sixty days or less are valued
at amortized cost which approximates market value.
B. FOREIGN CURRENCY TRANSLATION
The books and records of the Pilot International Equity Fund 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.
<PAGE>
THE PILOT FUNDS
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Notes to Financial Statements
May 16, 1997
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C. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The Pilot International Equity Fund 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 Pilot International Equity Fund'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 Pilot International Equity Fund's financial
statements. The Pilot International Equity Fund 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 May 16, 1997, the Fund
had sufficient cash and/or securities to cover any commitments under these
contracts.
D. 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.
E. FUTURES CONTRACTS
The Small Capitalization Equity Fund may enter into futures contracts on
securities and futures based on securities indices. The Small Capitalization
Equity Fund will do so to hedge against anticipated changes in securities values
that would otherwise have an adverse effect upon the value of portfolio
securities or upon securities to be acquired.
Futures contracts involve brokerage costs, which may be less than 1% of the
contract price, and require the Small Capitalization Equity Fund to deposit as
margin into a segregated custodial account an amount of cash or liquid
securities equal to approximately 2% to 5% of the value of each futures
contract. The Small Capitalization Equity Fund's position in the futures market
will be marked-to-market on a daily basis; the Small Capitalization Equity Fund
may subsequently be required to make "variation" margin payments depending upon
whether its futures position declines or rises in value.
<PAGE>
THE PILOT FUNDS
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Notes to Financial Statements
May 16, 1997
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Positions taken in the futures markets are not usually held until the expiration
of the contract but, instead, are normally liquidated through offsetting
transactions, which may result in a profit or a loss. Nevertheless, the Small
Capitalization Equity Fund may instead make or take delivery of the underlying
securities whenever it appears economically advantageous for it to do so.
Futures contracts on securities indices do not require the physical delivery of
securities, but merely provide for gains and losses resulting from changes in
the market value of a contract. On the contract's expiration date a final cash
settlement occurs and the futures positions are simply closed out. Changes in
the market value of a particular futures contract reflect changes in the value
of the securities comprising the index on which the futures contract is based.
F. 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. 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.
G. DIVIDENDS TO SHAREHOLDERS
Dividends of U.S. Government Securities Fund are declared daily to shareholders
of record at the close of business on the day of declaration and paid monthly.
Dividends of Small Capitalization Equity Fund are declared and paid monthly to
shareholders of record at the close of business on the day of declaration.
Dividends of the International Equity Fund 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 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.
H. FEDERAL TAXES
It is each Portfolio's policy to comply or continue to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute each year substantially all of its investment
company taxable and tax-exempt income to its shareholders. Accordingly, no
federal tax provisions are required.
I. ORGANIZATIONAL EXPENSES
Costs incurred by the Fund in connection with its organization and registration
of shares have been deferred and are amortized using the straight line method
over a period not to exceed five years from the commencement of the public
offering of shares of the Portfolios.
<PAGE>
THE PILOT FUNDS
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Notes to Financial Statements
May 16, 1997
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J. EXPENSES
Expenses incurred by the Fund that do not specifically relate to an individual
portfolio of the Fund are allocated to the Portfolios based on each Portfolio's
relative net assets. The expenses of each Portfolio (other than expenses
incurred pursuant to the Distribution Plans) are allocated to the separate
classes of shares based upon their relative net assets.
3. AGREEMENTS AND TRANSACTIONS WITH AFFILIATES
A. ADVISORY AGREEMENT
Boatmen's is the investment adviser for each Portfolio pursuant to separate
Investment Advisory Agreements and is responsible for managing the investment
operations of the Portfolios. Under the Advisory Agreement with the
International Equity Fund, Boatmen's supervises the activities of Kleinwort
Benson, the Portfolio's investment manager. For its services, Boatmen's is
entitled to a fee, accrued daily and paid monthly, at an annual rate equal to
0.55% of the average daily net assets of the U.S. Government Securities Fund,
1.00% of the average daily net assets of the Small Capitalization Equity Fund;
and .80% of the average daily net assets of the International Equity Fund .
Boatmen's has voluntarily agreed to limit the fees it receives from certain
Portfolios to the following annual rates: 0.75% of the average daily net assets
of the Small Capitalization Equity Fund; 0.40% of the average daily net assets
of the U.S. Government Securities Fund .
Additionally, Boatmen's has voluntarily agreed to reimburse certain of the
Portfolio's expenses to the extent that such expenses exceed the following
limits as percentages of average daily net assets (excluding distribution fees
for Class A Shares and Class B Shares): 1.00% of the Small Capitalization Equity
Fund. For the period ended May 16, 1997, Boatmen's waived fees and/or reimbursed
expenses in the following amounts:
Pilot U.S. Government Securities Fund .................... $125,674
Pilot Small Capitalization Equity Fund ................... 250,319
<PAGE>
B. INVESTMENT MANAGEMENT AGREEMENT
The Fund, on behalf of the International Equity Fund, 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 International Equity Fund's Board of Trustees and Boatmen's,
manages the investment operations of the International Equity Fund. 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 International Equity Fund's average daily net assets
up to $325,000,000 and .25 of 1% of such assets in excess of $325,000,000.
<PAGE>
THE PILOT FUNDS
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Notes to Financial Statements
May 16, 1997
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C. ADMINISTRATION AGREEMENT
The Fund, on behalf of the Portfolios 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 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 1% of the first $1.5 billion of the
aggregate average net assets of all of the portfolios constituting the Fund,
plus 0.110 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. For the period ended May 16, 1997, BISYS
voluntarily waived a portion of its fees as administrator. The fee waivers were
equal to the following amount:
Pilot Small Capitalization Equity Fund ........................ $61,970
D. DISTRIBUTION AGREEMENTS
The Portfolios adopted Distribution Plans pursuant to Rule 12b-1 under the 1940
Act for its Class A and Class B Shares. Under these Plans, the Distributor
receives payments for distribution and support services. The Distribution Plan
for Class A Shares authorizes payments to the Distributor and service
organizations for personal services provided to Class A shareholders and/or the
maintenance of shareholder accounts.
Payments under the Distribution Plan for Class A Shares may not exceed 0.25% (on
an annual basis) of the average daily net assets of the shares to which such
Plan relates. If more money is due the Distributor than it can collect in any
month because of this limitation, the unpaid amount may be carried forward until
it can be paid. Similarly, if in any month the Distributor does not expend the
entire amount to which it would otherwise be entitled, this amount may be used
as a credit and drawn upon to permit the payment of expenses in the future.
Neither of these amounts, however, is payable beyond the fiscal year in which
they accrue.
Distribution payments under the Distribution Plan for Class B Shares may not
exceed 1.00% (on an annual basis) of the average daily net assets of the Class B
Shares. Not more than 0.25% of such value will be used to compensate service
organizations for personal services provided to Class B shareholders and/or the
maintenance of shareholder accounts. Not more than 0.75% of such value will be
paid to the Distributor as reimbursement for commissions and transaction fees as
well as expenses related to other promotional and distribution activities.
Actual distribution expenses paid by the Distributor with respect to Class B
Shares for any given year may exceed the distribution fees and contingent
deferred sales charges received with respect to those Shares. These excess
expenses may be reimbursed by a Portfolio or its Class B Shareholders out of
contingent deferred sales charges and distribution payments in future years as
long as the Distribution Plan for Class B Shares is in effect.
The Distributor has voluntarily agreed to limit the fees it receives on Class A
Shares of the U.S. Government Securities Fund to .20% of the average daily net
asset value of the Portfolio.
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.
Prior to April 26, 1996, Primary Fund Services Corporation was the transfer
agent for Class A Shares and Class B Shares.
<PAGE>
THE PILOT FUNDS
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Notes to Financial Statements
May 16, 1997
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F. CUSTODIAN AGREEMENT
Boatmen's is the custodian responsible for holding the investments purchased by
the Portfolios.
G. FUND ACCOUNTING AGREEMENT
BISYS Fund Services, Inc. is responsible for the Fund Accounting for the
Portfolios.
4. SECURITIES TRANSACTIONS
For the period ended May 16, 1997, the cost of purchases and the proceeds from
sales or maturities of portfolio securities (excluding short-term investments)
were as follows:
Cost of Cost of
Purchases Sales
Pilot Government Securities Fund * $86,991,121 $84,156,582
Pilot Small Capitalization Equity Fund 82,869,472 46,392,027
Pilot International Equity Fund 312,887,947 221,259,303
* 100% of purchases and sales are of U.S. Government Securities.
At May 16, 1997, the cost of each Portfolio's securities for federal income tax
purposes was substantially the same as for financial reporting purposes.
Accordingly, the Portfolio's had the following amounts of net unrealized
appreciation and depreciation:
APPRECIATION DEPRECIATION NET
Pilot U.S. Government Securities Fund $1,133,777 $1,128,880 $4,897
Pilot Small Capitalization Equity Fund 16,659,888 2,603,000 14,056,888
Pilot International Equity Fund 156,827,954 25,084,996 131,742,958
<PAGE>
THE PILOT FUNDS
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Notes to Financial Statements
May 16, 1997
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5. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Portfolios are as follows (000 omitted):
<TABLE>
<CAPTION>
U.S. Government Small Capitalization International
Securities Fund Equity Fund Equity Fund
December 12,
For the period For the year For the period 1995 through For the period For the year
ended ended ended August 31, 1996 ended ended
May 16, 1997 August 31, 1996 May 16, 1997 (a) May 16, 1997 August 31, 1996
<S> <C> <C> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
Pilot Shares:
Proceeds from shares issued $23,888 $33,655 $39,824 $70,989 $142,213 $214,270
Dividends reinvested 436 261 96 56 13,088 15,491
Cost of shares redeemed (16,630) (17,579) (11,850) (1,743) (85,373) (37,293)
Change in net assets from Pilot
share transactions $ 7,694 $16,337 28,070 $69,302 69,928 $192,468
Class A Shares:
Proceeds from shares issued 567 $ 690 1,015 $ 2,643 546 $ 1,223
Dividends reinvested 90 16 21 4 471 877
Cost of shares redeemed (501) (143) (332) (42) (3,088) (4,237)
Change in net assets from Class A
share transactions $ 156 $ 563 704 $ 2,605 (2,071) $ (2,137)
Class B Shares :
Proceeds from shares issued 401 $ 1,160 660 $ 1,869 405 $ 183
Dividends reinvested 108 42 10 1 11 -
Cost of shares redeemed (165) (52) (188) (11) (77) -
Change in net assets from Class B
share transactions $ 344 $ 1,150 482 $ 1,859 339 $ 183
SHARE TRANSACTIONS:
Pilot Shares:
Issued 2,307 3,091 3,463 6,777 8,260 12,865
Reinvested 42 23 8 6 755 967
Redeemed (1,600) (1,590) (1,023) (166) (4,945) (2,235)
Change in Pilot Shares 749 1,524 2,448 6,617 4,070 11,597
Class A Shares:
Issued 52 64 88 249 32 73
Reinvested 9 1 2 - 27 55
Redeemed (49) (13) (29) (4) (178) (258)
Change in Class A Shares 12 52 61 245 (119) (130)
Class B Shares :
Issued 37 106 58 177 24 11
Reinvested 10 4 1 - 1 -
Redeemed (15) (5) (16) (1) (5) -
Change in Class B Shares 32 105 43 176 20 11
(a) Period from commencement of operations
</TABLE>
<PAGE>
THE PILOT FUNDS
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Notes to Financial Statements
May 16, 1997
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6. FEDERAL INCOME TAX INFORMATION ( UNAUDITED )
For the year ended August 31, 1996 the International Equity Fund's capital gain
dividend distributions from long-term capital gains were approximately
$8,649,780.
Under current tax law, capital losses realized after October 31st may be
deferred and treated as occurring on the first day of the fiscal year ended
August 31, 1997. As if August 31, 1996, the Small Capitalization Equity Fund had
deferred losses of $133,049.
At August 31, 1996, none of the Portfolios had any capital loss carryforwards.
<PAGE>
Report of Independent Public Accountants
To the Shareholders and Trustees of the Pilot U.S. Government Securities Fund,
Pilot Small Capitalization Equity Fund and Pilot International Equity Fund of
the Pilot Funds:
We have audited the accompanying statements of assets and liabilities of
the Pilot U.S. Government Securities Fund, Pilot Small Capitalization Equity
Fund and Pilot International Equity Fund of the Pilot Funds (a Massachusetts
business trust), including the portfolios of investments as of May 16, 1997, and
the related statements of operations for the period then ended, the statements
of changes in net assets and financial highlights for 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 May
16, 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 financial highlights referred
to above present fairly, in all material respects, the financial position of the
Pilot U.S. Government Securities Fund, Pilot Small Capitalization Equity Fund
and Pilot International Equity Fund as of May 16, 1997, the results of their
operations and the changes in their net assets and financial highlights for the
periods presented in conformity with generally accepted accounting principles.
Arthur Andersen LLP
Boston, Massachusetts
June 20, 1997
