<PAGE> 1
LETTER FROM THE FUNDS' MANAGEMENT
Dear Shareholder:
We are pleased to provide you with the Semi-Annual Report of the Pilot Money
Market Funds for the six months ended February 28, 1997.
The Funds delivered strong performance relative to their benchmarks,
even as both taxable and tax-exempt short-term income markets experienced some
turbulence after the start of 1997. We believe the Funds are well positioned to
take advantage of the continuing improvement in the economy, as well as any
resulting changes the Federal Reserve may make to interest rates.
The Pilot Funds are pleased to announce the introduction of two new
portfolios which were made available for investment in October, 1996. THE PILOT
GROWTH EQUITY FUND is designed to provide investors with long-term capital
growth by investing in companies expected to sustain superior profitability,
strong competitive advantages, and the potential for above-average appreciation
over time. THE PILOT DIVERSIFIED BOND INCOME FUND seeks to provide investors
with total return, emphasizing current income, and preservation of capital by
investing primarily in debt securities. The Fund's average weighted maturity
will be between five and fifteen years. We believe these two new portfolios
provide shareholders and new investors with even greater opportunities for
professional management and investment diversification within The Pilot Family
of Funds.
It was announced on August 30, 1996 that Boatmen's Bancshares, Inc., of
which The Pilot Funds' investment advisor, Boatmen's Trust Company is a
subsidiary, would be acquired by Nationsbank, Inc. of Charlotte, NC. The merger
was completed on January 8, 1997. The combined Nations/Boatmen's organizations
will continue to provide the same investment management expertise to The Pilot
Funds that shareholders have come to expect.
Thank you for choosing The Pilot Funds to help meet your investment
goals. Should you have any questions or wish to learn more about any of the
Funds, please call your local Boatmen's representative or The Pilot Funds at
1-800-71-PILOT (717-4568).
Sincerely,
William Tomko David F. Toth
PRESIDENT SENIOR VICE PRESIDENT
The Pilot Funds Boatmen's Trust Company
- --------------------------------------------------------------------------------
The Funds are advised by Boatmen's Trust Company, a non-bank subsidiary of
Boatmen's Bancshares, Inc., and are distributed by Pilot Funds Distributors,
Inc., which is not affiliated with Boatmen's Trust Company. Boatmen's Trust
Company receives fees for providing investment advisory services to the Funds.
This report is not authorized for distribution to prospective investors unless
preceded or accompanied by a current prospectus.
<PAGE> 2
PILOT SHORT-TERM U.S. TREASURY FUND
- --------------------------------------------------------------------------------
Portfolio of Investments
February 28, 1997
(unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Maturity Amortized
(000) Description Rate Date Cost
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS--48.4%
U.S. TREASURY BILLS--21.4%
$ 90,000 U.S. Treasury Bill 5.05% 3/6/97 $ 89,937,819
300,000 U.S. Treasury Bill 5.31 4/17/97 298,080,000
--------------
388,017,819
--------------
U.S. TREASURY NOTES--27.0%
50,000 U.S. Treasury Note 6.63 3/31/97 50,053,438
168,000 U.S. Treasury Note 8.50 4/15/97 168,640,470
25,000 U.S. Treasury Note 6.50 5/15/97 25,060,462
125,000 U.S. Treasury Note 5.36 5/31/97 125,216,655
95,000 U.S. Treasury Note 5.48 7/31/97 95,175,296
25,000 U.S. Treasury Note 5.64 8/31/97 25,052,319
--------------
489,198,640
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT OBLIGATIONS (cost $877,216,459) 877,216459
- -----------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS--51.5%
433,000 Repurchase agreement with J.P. Morgan, dated 2/28/97, 5.38%, due
3/3/97 (see Footnote A) 433,000,000
66,254 Repurchase agreement with Lehman Brothers, dated 2/28/97, 5.35%, due 3/3/97 (see Footnote B) 66,254,000
433,000 Repurchase agreement with Merrill Lynch, dated 2/28/97, 5.35%, due
3/3/97 (see Footnote C) 432,999,971
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS (cost $932,253,971) 932,253,971
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $1,809,470,430)--99.9% 1,809,470,430
- -----------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS IN EXCESS OF LIABILITIES--0.1% 1,701,165
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS--100.0% $1,811,171,595
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Footnote A
Collateralized by $415,132,000 Government National Mortgage Association
Bonds, with various coupon rates and maturities ranging from 6.00% through
10.38% and 5/31/99 through 2/15/26 with an aggregate value of $434,715,509.
Footnote B
Collateralized by $67,719,000 U.S. Treasury Notes, with various coupon rates
and maturities ranging from 4.75% through 9.25% and 8/15/98 through 8/31/98
with an aggregate value of $67,572,684.
Footnote C
Collateralized by $405,759,000 Federal National Mortgage Association, with
various coupon rates and maturities ranging from 8/28/97 through 5/15/04 and
5.88% through 15.75% with an aggregate value of $437,870,740.
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
2
<PAGE> 3
PILOT SHORT-TERM DIVERSIFIED ASSETS FUND
- --------------------------------------------------------------------------------
Portfolio of Investments
February 28, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Maturity Amortized
(000) Description Rate Date Cost
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CERTIFICATES OF DEPOSIT--19.6%
$ 30,000 ABN AMRO 5.43% 4/21/97 $ 30,002,011
50,000 Amex Centurian Bank* 5.40 12/9/97 50,000,000
60,000 Banc One 5.30 3/17/97 59,999,539
50,000 Banque National De Paris 5.39 3/11/97 50,000,000
25,000 Canadian Imperial Bank 5.41 3/7/97 25,000,000
50,000 Canadian Imperial Bank 5.41 3/14/97 50,000,000
7,000 Landesbank Hessen-Thuringen Giro 5.41 3/27/97 6,999,945
40,000 Rabobank Nederland 5.45 4/18/97 40,000,524
30,000 Westdeutsche Lanbdesbank Gz 5.42 4/21/97 30,001,592
50,000 Yankee Certificate of Deposit 5.30 4/22/97 50,000,716
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL CERTIFICATE OF DEPOSIT (cost $392,004,327) 392,004,327
- -----------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER--41.6%
50,000 Abbey National North American Corp. 5.26 4/23/97 49,612,806
25,000 American General Finance Corp. 5.34 4/8/97 24,859,083
50,000 American Home Products Corp. 5.34 3/5/97 49,970,333
25,000 Chrysler Financial Corp. 5.34 4/4/97 24,873,917
20,000 Ciesco LP 5.34 3/17/97 19,952,533
25,000 Cit Group Holdings 5.34 4/7/97 24,862,792
30,000 Delaware Fdg. Corp. 5.34 3/20/97 29,915,450
20,000 Finova Capital Corp. 5.36 3/7/97 19,982,133
20,000 Finova Capital Corp. 5.37 3/10/97 19,973,150
35,000 Finova Capital Corp. 5.43 4/16/97 34,757,158
25,000 First Chicago Financial 5.36 3/17/97 24,940,444
65,000 Ford Motor Credit Co. 5.34 4/7/97 64,645,931
25,000 General Electric Capital Corp. 5.35 4/1/97 24,884,826
25,000 General Motors Acceptance Corp. 5.36 4/3/97 24,877,167
20,000 Green Tree Financial Corp. 5.42 3/7/97 19,982,000
40,000 Green Tree Financial Corp. 5.40 3/10/97 39,946,000
10,000 Green Tree Financial Corp. 5.40 3/18/97 9,974,500
50,000 J.P. Morgan Company, Inc.* 5.35 3/17/97 49,881,111
20,000 Merrill Lynch & Co. 5.33 4/7/97 19,890,439
43,000 Merrill Lynch & Co. 5.35 4/11/97 42,737,999
50,000 Morgan Stanely, Inc. 5.34 4/14/97 49,673,667
10,000 NYNEX Corp. 5.35 1/30/97 9,955,417
15,000 NYNEX Corp. 5.36 3/11/97 14,977,667
25,000 NYNEX Corp. 5.35 4/3/97 24,877,396
25,000 NYNEX Corp. 5.35 4/14/97 24,836,528
50,000 Prudential Funding 5.35 3/18/97 49,873,681
12,000 Rtz American, Inc. 5.34 4/11/97 11,927,020
25,000 Sears Roebuck Acceptance 5.37 3/19/97 24,932,875
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER (cost $831,574,023) 831,574,023
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
3
<PAGE> 4
PILOT SHORT-TERM DIVERSIFIED ASSETS FUND
- --------------------------------------------------------------------------------
Portfolio of Investments (continued)
February 28, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Maturity Amortized
(000) Description Rate Date Cost
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS--3.3%
$ 25,000 Federal Farm Credit Banks 4.95% 3/3/97 $ 24,999,734
40,700 Student Loan Marketing Assoc.* 5.49 11/20/97 40,746,446
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT OBLIGATIONS (cost $65,746,180) 65,746,180
- -----------------------------------------------------------------------------------------------------------------------------
CORPORATE OBLIGATIONS--9.0%
10,000 Banco Popular Puerto Rico* 5.66 4/4/97 10,000,000
16,000 First Boston* 5.48 3/6/97 16,000,000
50,000 First Boston* 5.46 5/12/97 50,000,000
11,000 Goldman Sachs* 5.45 5/19/97 11,000,000
50,000 Lehman Brothers Holding Corp.* 5.48 6/6/97 50,000,000
12,000 Sanwa Business Credit Corp.* 5.56 3/4/97 11,999,939
32,000 SMM Trust* 5.71 3/26/97 32,000,000
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL CORPORATE OBLIGATIONS (cost $180,999,939) 180,999,939
- -----------------------------------------------------------------------------------------------------------------------------
MASTER NOTES--8.1%
38,000 Bear Stearns Co., Inc.* 5.44 1/20/98 38,000,000
25,000 Bear Stearns Co., Inc.* 5.48 6/3/97 25,000,000
50,000 Anchor National Life Insurance Co.* 5.59 7/1/97 50,000,000
50,000 General American Life Insurance* 5.63 4/9/97 50,000,000
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL MASTER NOTES (cost $163,000,000) 163,000,000
- -----------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS--18.5%
250,000 Repurchase agreement with J.P. Morgan, dated 2/28/97, 5.42%, due
3/3/97 (See Footnote A) 250,000,000
69,715 Repurchase agreement with Lehman Brothers, dated 2/28/97, 5.37%, due 3/3/97
(See Footnote B) 69,715,000
50,000 Repurchase agreement with Merrill Lynch, dated 2/28/97, 5.40%, due
3/3/97
(See Footnote C) 50,000,000
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS (cost $369,715,000) 369,715,000
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $2,003,039,469)--100.1% 2,003,039,469
- -----------------------------------------------------------------------------------------------------------------------------
OTHER LIABILITIES IN EXCESS OF OTHER ASSETS--(0.1%) (2,311,580)
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS--100.0% $2,000,727,889
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Variable rate security.
Footnote A
Collateralized by $265,718,314 Government National Mortgage Association
Bonds, with various coupon rates and maturity dates ranging from 5.50%
through 8.00% and 7/15/11 through 2/20/27, with an aggregate value of
$253,692,843.
Footnote B
Collateralized by $67,810,000 U.S.Treasury Note, 9.25%, due 8/15/98 with a
value of $70,882,469.
Footnote C
Collateralized by $51,330,000 Federal National Mortgage Association, 8.00%
with a value of $50,701,737.
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
4
<PAGE> 5
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND
- --------------------------------------------------------------------------------
Portfolio of Investments
February 28, 1997
(unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Amortized
Amount Moody's/S&P Maturity Cost
(000) Description Ratings Rate Date (Note 2)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MUNICIPAL SECURITIES--100.1%
COLORADO--0.5%
$ 1,000 Arvada Urban Renewal Authority Revenue
Bonds, Arvada City Center Urban--A
(MBIA Insured) (Aaa)(AAA) 3.65% 9/1/97 $ 1,000,000
-------------
FLORIDA--1.0%
2,025 Gainesville Utility Systems Revenue
Bonds, Series A (Aaa)(AAA)(NR) 7.88 10/1/10 2,111,764
-------------
MICHIGAN--3.0%
6,300 Michigan State Strategic Funding Ltd.,
Detroit Edison Co. (LOC--Barclay
Bank)* (P-1)(AA)(A-1+) 3.40 9/1/30 6,300,000
-------------
MISSOURI--95.6%
5,000 Berkeley IDR Bonds, Flight Safety
International, Inc. Project
(LOC--Wachovia)* (Aa2)(NR) 3.34 9/1/04 5,000,000
5,000 Berkeley IDR Bonds, Wetterau Project
(LOC--PNC)* (A1)(NR) 3.30 7/1/08 5,000,000
4,100 Columbia Special Obligation, Series A
(LOC--Toronto Dominion Bank)* (Aa2)(VMIG1)(NR) 3.34 6/1/08 4,100,000
10,800 Columbia Water & Electric Revenue Bonds,
Series B (LOC--Toronto Dominion Bank)* (Aa2)(VMIG1)(AA)(A-1+) 3.34 12/1/15 10,800,000
8,950 Independence Water & Utility Revenue
(LOC--Wetdeutsche Landesbank) (A1)(VMIG1)(NR) 3.35 4/9/97 8,950,000
1,400 Independence IDR, Resthaven Project
(LOC--Credit Local de France)* (NR)(AA+)(A-1+) 3.40 2/1/25 1,400,000
5,500 Jackson County IDR, YMCA Greater Kansas
Project, Series A (LOC--Commerce
Bank)* (NR)(A)(A-1) 3.60 11/1/16 5,500,000
2,400 Kansas City IDR, Multi-Family Housing
Revenue Bonds, Timblane Village
Apartments Project (LOC--Security
Pacific National Bank)* (Aa3)(VMIG1)(NR) 3.30 6/1/08 2,400,000
645 Kansas City, GO, Chouteau Bridge
Project, Series--B (Aa3)(AA) 7.00 5/1/97 648,619
465 Kansas City, Water Revenue, Series B (Aa)(AA) 5.75 12/1/97 471,806
810 Mexico IDR Bonds, Wetterau, Inc.,
Project A (LOC--PNC)* (A1)(NR) 3.30 12/1/98 810,000
815 Mexico IDR Bonds, Wetterau, Inc.,
Project B (LOC--PNC)* (A1)(NR) 3.30 12/1/98 815,000
3,000 Missouri Environment Improvement &
Energy Resources Authority (LOC--Union
Bank of Switzerland) (Aa1)(P-1)(AA+)(A-1+) 3.40 3/10/97 3,000,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
5
<PAGE> 6
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND
- --------------------------------------------------------------------------------
Portfolio of Investments (continued)
February 28, 1997
(unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Amortized
Amount Moody's/S&P Maturity Cost
(000) Description Ratings Rate Date (Note 2)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MISSOURI (continued)
$ 5,000 Missouri Environment Improvement &
Energy Resources Authority (LOC--West
Deutsche Landesbank) (Aa1)(P-1)(AA+)(A-1+) 3.80% 3/19/97 $ 5,000,000
2,000 Missouri Environment Improvement &
Energy Resources Authority, PCR,
Monsanto Co. Project* (A1)(P-1)(NR) 3.30 6/1/23 2,000,000
2,795 Missouri Environment Improvement &
Energy Resources Authority, PCR,
Noranda Aluminum Inc. Project
(LOC--Sanwa)* (Aa3)(NR) 3.49 10/1/02 2,795,000
7,000 Missouri Environment Improvement &
Energy Resources Authority, PCR Union
Electric Co., Series B (LOC--Union
Bank of Switzerland) (Aaa)(P-1)(AA+)(A-1+) 3.65 6/1/97 7,000,000
12,600 Missouri Health & Educational Facilities
Authority Revenue, SSM Health Care
Series C (LOC--Morgan Guaranty Trust) (A1)(VMIG1)(NR) 3.50 5/15/97 12,600,000
2,000 Missouri Health & Educational Facilities
Authority School District Advanced
Funding Program, Branson School
District, Series F (NR)(Sp1+) 4.50 9/8/97 2,006,049
2,000 Missouri Health & Educational Facilities
Authority School District Advanced
Funding Pattonville School District,
Series I (NR)(Sp1+) 4.50 9/8/97 2,006,049
8,225 Missouri Health & Educational Facilities
Authority, Educational Facilities
Revenue, Drury College, Series A* (Aa2)(VMIG1)(NR) 3.45 8/15/21 8,225,000
4,370 Missouri Health & Educational Facilities
Authority, Health Facilities Revenue,
Barnes Jewish, Inc., Series A (Aa2)(Aa2)(AA) 3.90 5/15/97 4,371,621
2,000 Missouri Health & Educational Facilities
Authority School District Advanced
Funding Program, Joplin School
District, Series B (NR)(Sp1+) 4.50 9/8/97 2,006,049
5,000 Missouri State Environmental Pollution
Control, Union Electric Co. Project,
Series B (LOC--West Deutsche
Landesbank) (Aa1)(P-1)(AA+)(A-1+) 3.45 4/21/97 5,000,000
1,500 Missouri State Health & Educational
Facilities Authority Revenue,
Christian Health Services A
(LOC--Morgan Guaranty Trust)* (NR)(AAA)(A-1+) 3.19 11/1/19 1,500,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
6
<PAGE> 7
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND
- --------------------------------------------------------------------------------
Portfolio of Investments (continued)
February 28, 1997
(unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Amortized
Amount Moody's/S&P Maturity Cost
(000) Description Ratings Rate Date (Note 2)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MISSOURI (continued)
$ 7,400 Missouri State Health & Educational
Facilities Authority, Educational
Facilities Revenue, Rockhurst College
Project (LOC--Morgan Guaranty Trust)* (A1)(VMIG1)(NR) 3.30% 11/1/25 $ 7,400,000
2,600 Missouri State Health & Educational
Facilities Authority, Educational
Facilities Revenue, St. Louis
University (LOC--Morgan Guaranty
Trust)* (Aaa)(VMIG1)(AAA)(A-1+) 3.55 12/1/05 2,600,000
1,600 Missouri State Health & Educational
Facilities Authority, Educational
Facilities Revenue, Washington
University* (Aa1)(VMIG1)(AA)(A-1+) 3.30 9/1/09 1,600,000
1,050 Missouri State Health & Educational
Facilities Authority, Educational
Facilities Revenue, Washington
University, Series A* (Aa1)(VMIG1)(AA)(A-1+) 3.30 9/1/10 1,050,000
2,000 Missouri State Health & Educational
Facilities Authority, Educational
Facilities Revenue, Washington
University, Series B* (Aa1)(VMIG1)(AA)(A-1+) 3.30 9/1/10 2,000,000
2,900 Missouri State Health & Educational
Facilities Authority, Educational
Facilities Revenue, Washington
University, Series B* (Aa1)(VMIG1)(AA)(A-1+) 3.45 9/1/30 2,900,000
3,300 Missouri State Health & Educational
Facilities Authority, Educational
Facilities Revenue, Washington
University, Series C* (Aa1)(VMIG1)(AA)(A-1+) 3.40 9/1/30 3,300,000
4,800 Missouri State Health & Educational
Facilities Authority, Educational
Facilities Revenue, Washington
University, Series D* (Aa1)(VMIG1)(AA)(A-1+) 3.40 9/1/30 4,800,000
7,000 Missouri State Health & Educational
Facilities Authority, Health
Facilities Revenue, Sisters of Mercy,
Ref. B* (Aa2)(VMIG1)(AA)(A-1+) 3.25 6/1/14 7,000,000
5,800 Missouri State Health & Educational
Facilities Authority, Health
Facilities Revenue, Sisters of Mercy
Health Systems, Series B* (Aa2)(VMIG1)(AA)(A-1+) 3.25 6/1/19 5,800,000
2,300 Missouri State Health & Educational
Facilities Authority, Health
Facilities Revenue, St. Francis
Medical Center, Series A (LOC--Credit
Local de France)* (NR)(AA+)(A-1+) 3.40 6/1/26 2,300,000
1,505 Moberly Industrial Development
Authority, Hospital Revenue, Prefunded
3/1/97 @103 (NR)(NR) 8.75 3/1/16 1,550,150
9,660 Platte County Industrial Development
Authority Multifamily Revenue, Wexford
PL Project (LOC--Bank One)* (NR)(NR) 3.40 4/1/28 9,660,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
7
<PAGE> 8
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND
- --------------------------------------------------------------------------------
Portfolio of Investments (continued)
February 28, 1997
(unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Amortized
Amount Moody's/S&P Maturity Cost
(000) Description Ratings Rate Date (Note 2)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MISSOURI (continued)
$ 3,070 St. Charles County IDR, Casalon
Apartments Project (LOC--Citibank)* (NR)(AA-)(A-1+) 3.34% 9/1/25 $ 3,070,000
7,250 St. Charles County IDR, Vanderbilt
Apartments Project, Series A
(LOC--Citibank)* (A1)(VMIG1)(AA-)(A-1+) 3.35 8/1/17 7,250,000
4,400 St. Charles County IDR, Venture Stores
Inc. Project (LOC--Bank of America)* (Aa3)(VMIG1)(NR) 3.30 10/1/06 4,400,000
4,000 St. Louis County IDR (LOC--PNC) NR/NR 3.30 5/1/09 4,000,000
8,000 St. Louis County IDR, Wetterau Inc.
Project (LOC--Wachovia)* (Aa2)(NR) 3.30 12/1/03 8,000,000
5,035 St. Louis Planned Industrial Expansion
Authority, IDR Alumax Foils Project
(LOC--PNC) (A1)(NR) 3.30 12/1/05 5,035,000
2,500 St. Louis Tax & Revenue (MIG1)(Sp1+) 4.75 6/30/97 2,506,234
13,000 University of Missouri, Capital Projects
Notes, Series FY 1996--97 (MIG1)(Sp1+) 4.75 6/30/97 13,035,220
-------------
202,661,796
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL SECURITIES (cost $212,073,561) 212,073,561
- -------------------------------------------------------------------------------------------------------------------------------
MONEY MARKET MUTUAL FUNDS--0.7%
50,000 Fidelity Institutional Tax Exempt Money
Market Fund 3.29 12/31/99 50,000
1,420,000 Federated Tax Exempt Money Market Fund 3.26 12/31/99 1,420,000
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL MONEY MARKET MUTUAL FUNDS (cost $1,470,000) 1,470,000
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $213,543,561)--100.8% 213,543,561
- -------------------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS--(0.8%) (1,837,986)
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS--100.0% $ 211,905,575
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Variable Rate Security.
FGIC--Financial Guaranty Insurance Corporation.
GO--General Obligation.
IDR--Industrial Development Revenue.
LOC--Letter of Credit.
PCR--Pollution Control Revenue.
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
8
<PAGE> 9
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND
- --------------------------------------------------------------------------------
Portfolio of Investments
February 28, 1997
(unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Amortized
Amount Moody's/S&P Maturity Cost
(000) Description Ratings Rate Date (Note 2)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MUNICIPAL SECURITIES--74.4%
ALABAMA--1.1%
$ 5,000 Mobile Alabama Industrial Development, PCR,
Alabama Power* A1/VMIG1/A+/A-1 3.44% 6/1/15 $ 5,000,000
------------
ARKANSAS--0.4%
1,785 Jonesboro, Sales & Use Tax (FSA Insured) Aaa/AAA 3.80 5/1/97 1,785,000
------------
COLORADO--1.3%
5,000 Arapahoe County School District #005** MIG1/Sp1+ 4.50 6/30/97 5,010,467
1,000 Adams County School District #012 Aaa/AAA 4.12 12/15/97 1,004,037
------------
6,014,504
------------
DISTRICT OF COLUMBIA--3.1%
5,700 District of Columbia Revenue, ACES-Georgetown
University, Series C
(LOC-Bayerische Landesbank)* Aaa/VMIG1/AAA/A-1+ 3.30 4/1/12 5,700,000
7,300 District of Columbia Revenue, ACES-Georgetown
University, Series D
(LOC-Bayerische Landesbank)* Aaa/VMIG1/AAA/A-1+ 3.30 4/1/17 7,300,000
1,100 District of Columbia Revenue, ACES-Georgetown
University, Series E
(LOC-Bayerische Landesbank)* Aaa/VMIG1/AAA/A-1+ 3.30 4/1/18 1,100,000
------------
14,100,000
------------
FLORIDA--2.2%
7,100 Jacksonville Health Facilities Authority
(LOC-Barnett Bank)* NR/A/A-1 3.49 6/1/20 7,100,000
3,000 Martin County, PCR, Flordia Power &
Light Co. Project* Aa3/VMIG1/AA-/A-1+ 3.40 9/1/24 3,000,000
------------
10,100,000
------------
GEORGIA--3.2%
1,200 Coweta County Development Authority
(LOC-Union Bank of Switzerland)* Ba3/NR 3.44 3/1/09 1,200,000
2,200 Dekalb County, Atlantic Jewish Federation,
(LOC-Wachovia Bank)* Aa2/VMIG1/NR 3.34 8/1/21 2,200,000
6,200 Fulco Hospital Authority Revenue, Piedmont
Hospital Project, (LOC-Trust Co. Bank)* NR/AA-/A-1+ 3.34 2/1/07 6,200,000
5,000 Municipal Electric Project One
(LOC-Aisse National de Credit Agricole) 3.50 4/11/97 5,000,000
------------
14,600,000
------------
ILLINOIS--3.2%
1,250 Du Page Water Commission Revenue Prerefunded
5/1/97 @102 NR/AAA 6.80 5/1/07 1,281,150
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
9
<PAGE> 10
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND
- --------------------------------------------------------------------------------
Portfolio of Investments
February 28, 1997
(unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Amortized
Amount Moody's/S&P Maturity Cost
(000) Description Ratings Rate Date (Note 2)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ILLINOIS (continued)
$ 4,250 Du Page Water Commission Revenue, Prerefunded
5/1/97 @102 NR/AAA 6.87% 5/1/14 $ 4,355,901
1,400 Illinois State Sales Tax Revenue, Prefunded
6/15/97 @102 #AAA/AAA 7.50 6/15/06 1,442,542
1,000 Illinois State Sales Tax Revenue, Prefunded
6/15/97 @102 #AAA/AAA 7.60 6/15/07 1,030,671
5,100 Illinois Development Financial Authority
(LOC-Northern Trust, Harris Trust & Savings
Bank, NBD Bank, & Aisse Nationale de Credit
Agricole)* Aa3/VMIG1/AA-/A-1+ 3.30 12/1/28 5,100,000
1,600 Joliet District Marine, Exxon Project* Aaa/P-1/AAA/A-1+ 3.44 10/1/24 1,600,000
------------
14,810,264
------------
INDIANA--5.4%
5,000 Indiana Board Book Advance Funding Notes MIG1/Sp1+ 4.25 1/21/98 5,023,730
19,700 Indiana Health Facilities, Clarion Health
Partners* Aa3/VMIG1/AA/A-1+ 3.39 2/15/26 19,700,000
------------
24,723,730
------------
KENTUCKY--4.1%
13,200 Mayfield Multi-City Lease Revenue, League of
Cities Lease Finance Program 96
(LOC-PNC)* A1/VMIG1/A/A-1 3.49 7/1/26 13,200,000
5,800 Mason County, PCR, Eastern Kentucky Power Co.,
(LOC-CFC)* NR/AA-/A-1+ 3.35 10/15/14 5,800,000
------------
19,000,000
------------
LOUISIANA--2.3%
2,000 Ascension Parish, PCR, Shell Oil Co. Project* NR/AAA/A-1+ 3.40 9/1/23 2,000,000
1,000 East Baton Rougue Mortgage Finance Aaa/VMIG1/NR 3.85 10/1/26 1,000,000
2,315 Louisiana Public Facilities Authority NR/Sp1+ 4.50 9/24/97 2,322,577
1,300 Louisiana State Offshore Port Authority
(LOC-Union Bank of Switzerland)* Aaa/VMIG1/AA+/A-1+ 3.49 9/1/08 1,300,000
4,000 Louisiana State Reference, GO, Series A #AAA/A- 7.00 8/1/02 4,130,481
------------
10,753,058
------------
MICHIGAN--3.2%
4,150 Michigan State Underground Storage Tank
(LOC-AMBAC) Aaa/AAA 5.00 5/1/97 4,158,755
9,800 University of Michigan Revenue, Hospital
Revenue, Series A* Aa2/VMIG1/NR 3.49 12/1/19 9,800,000
800 University of Michigan Revenue, Medical
Services Plan, Series A Aa2/VMIG1/AA/A-1+ 3.49 12/1/27 800,000
------------
14,758,755
------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
10
<PAGE> 11
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND
- --------------------------------------------------------------------------------
Portfolio of Investments
February 28, 1997
(unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Amortized
Amount Moody's/S&P Maturity Cost
(000) Description Ratings Rate Date (Note 2)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MINNESOTA--1.3%
$ 3,000 Minneapolis School District Tax & AID, TAN,
Series B, (LOC-SD Credit Program) MIG1/NR 4.00% 3/14/97 $ 3,000,776
3,000 Minnesota School District Tax & AID MIG1/NR 4.50 9/9/97 3,009,863
------------
6,010,639
------------
MISSISSIPPI--0.5%
2,100 Mississippi State, GO Aa3/AA 4.50 9/1/97 2,106,444
------------
MISSOURI--13.9%
4,000 Kansas City Industrial Development Authority
(LOC-IBJ Schroder B&T)* A1/NR 3.42 12/31/08 4,000,000
14,700 Kansas City Multi-Family Housing Revenue,
Timblane Village Apartments Project
(LOC-Security Pacific National Bank)* Aa3/VMIG1/NR 3.30 6/1/08 14,700,000
3,000 Missouri Environment Authority
(LOC-Sanwa Bank)* Aa3/NR 3.49 10/1/02 3,000,000
2,550 Missouri Health & Educational Facilities
Authority Project: Washington University* Aa1/VMIG1/AA/A-1+ 3.30 9/1/10 2,550,000
15,190 Missouri Health & Educational Facilities
Authority
Barnes Hospital Project
(LOC-Morgan Garanty Trust)* Aa1/VMIG1/AAA/A-1+ 3.25 12/1/15 15,190,000
6,100 Missouri Health & Educational Facilities
Authority,
Educational Facilities Revenue, Sisters Mercy
Health, Series D* Aa2/VMIG1/AA/A-1+ 3.25 6/1/19 6,100,000
250 Missouri Health & Educational Facilities
Authority Christian Health Services, Series B
(LOC-Morgan Guaranty Trust)* NR/AAA/A-1+ 3.20 11/1/19 250,000
9,600 Missouri Health & Educational Facilities
Authority, Educational Facilities Revenue,
Sisters Mercy Health* Aa2/VMIG1/AA/A-1+ 3.25 6/1/19 9,600,000
1,500 Missouri Health & Educational Facilities
Authority, Educational Facilities Revenue,
ACES-SSM Health Care Project, Series A
(LOC-Rabobank Nederland)* Aaa/VMIG1/NR 3.40 6/1/06 1,500,000
1,000 St. Louis Industrial Development Authority
(LOC-PNC)* NR/NR 3.30 5/1/09 1,000,000
3,500 St. Louis Tax & Revenue MIG1/Sp1+ 4.75 6/30/97 3,508,726
2,400 University of Missouri MIG1/Sp1+ 4.75 6/30/97 2,405,839
------------
63,804,565
------------
MONTANA--0.3%
1,400 Montana Health Facilities Authority Revenue,
Healthcare Pooled Loan Project, Series A (FGIC
Insured)* Aaa/VMIG1/AAA/A-1+ 3.30 12/1/15 1,400,000
------------
NEW YORK--1.7%
660 Monroe County, GO Aa/AA- 4.50 3/1/97 660,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
11
<PAGE> 12
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND
- --------------------------------------------------------------------------------
Portfolio of Investments
February 28, 1997
(unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Amortized
Amount Moody's/S&P Maturity Cost
(000) Description Ratings Rate Date (Note 2)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NEW YORK (continued)
$ 2,040 Monroe County, GO Aa/AA- 4.50% 3/1/97 $ 2,040,000
1,300 New York City, Subseries B-4, GO (LOC-Union Bank
of Switzerland)* Aaa/VMIG1/AA+/A-1+ 3.55 8/15/22 1,300,000
1,500 New York City, GO (LOC-Union Bank of
Switzerland)* Aaa/VMIG1/AA+/A-1+ 3.55 8/15/21 1,500,000
2,250 New York City, Series B, G.O. (FGIC Insured)* Aaa/VMIG1/AAA/A-1+ 3.55 10/1/22 2,250,000
------------
7,750,000
------------
NORTH CAROLINA--3.5%
9,450 Raleigh Durham Airport Authority, Special
Facility Revenue American Airlines, Series A,
(LOC -- Royal Bank of Canada)* NR/AA-/A-1+ 3.44 11/1/15 9,450,000
6,800 Raleigh Durham Airport Authority (LOC -- Royal
Bank of Canada)* NR/AA-/A-1+ 3.44 11/1/15 6,800,000
------------
16,250,000
------------
OHIO--3.2%
6,600 Ohio State Air Quality Development Authority
(LOC-Union Bank of Switzerland)* NR/AA+/A-1+ 3.55 12/1/15 6,600,000
2,000 Ohio State Air Quality Development Authority
(LOC-Morgan (J.P.) Delaware)* NR/AAA/A-1+ 3.55 12/1/15 2,000,000
5,000 Ohio State Highway, GO, Series V Aa1/AAA 4.50 5/15/97 5,007,000
1,000 Ohio State, PCR, British Petroleum Project* Aa2/AA/A-1+ 3.34 5/1/22 1,000,000
------------
14,607,000
------------
PENNSYLVANIA--5.1%
1,590 Allegheny County Hospital Development Authority
Revenue (LOC-PNC)* A1/VMIG1/NR 3.34 3/1/18 1,590,000
3,400 Pennsylvania State Higher Education Authority* NR/AA-/A-1+ 3.44 11/1/25 3,400,000
3,300 Pennsylvania State Higher Education Authority* NR/AA-/A-1+ 3.44 11/1/29 3,300,000
4,000 Philadelphia Water & Wastewater (MBIA Insured) Aaa/AAA 4.50 6/15/97 4,011,397
11,200 Temple University Higher Education Revenue NR/Sp1+ 4.62 5/20/97 11,222,761
------------
23,524,158
------------
SOUTH CAROLINA--0.4%
2,050 York County, PCR, Electric Project NRU-84N-1
(CFC Guarantee)* Aa3/VMIG1/AA-/A-1+ 3.34 9/15/14 2,050,000
------------
TEXAS--9.1%
1,650 Dallas Waterworks Revenue Bonds Aa/AA 8.00 10/1/97 1,688,021
5,200 Harris County Health Facilities Development
Corp., St. Lukes Episcopal Hospital, Series D* NR/AA/A-1+ 3.44 2/15/16 5,200,000
5,000 Harris County Health Facilities Revenue,
Methodist Hospital NR/AA/A-1+ 3.44 12/1/25 5,000,000
2,100 Harris County Health Facilities Development
Corp., St. Lukes Episcopal Hospital, Series B* NR/AA/A-1+ 3.44 2/15/16 2,100,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
12
<PAGE> 13
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND
- --------------------------------------------------------------------------------
Portfolio of Investments
February 28, 1997
(unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Amortized
Amount Moody's/S&P Maturity Cost
(000) Description Ratings Rate Date (Note 2)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
TEXAS (continued)
$ 6,100 Harris County Health Facilities Development
Corp., St. Lukes Episcopal Hospital, Series C* NR/AA/A-1+ 3.44% 2/15/16 $ 6,100,000
8,900 Harris County Industrial Development Corp., PCR,
Exxon Corp. Project* Aaa/AAA/A-1+ 3.40 3/1/24 8,900,000
2,000 Harris County Toll Road, Multimode
Series Lien-B NR/AAA 8.70 8/15/17 2,102,733
2,000 Houston, GO Aa3/AA- 5.50 4/1/97 2,002,984
1,500 Klein Independent School District, Prefunded
8/1/97 @100 NR/AAA 6.87 8/1/97 1,518,778
7,200 Texas State Tax & Revenue MIG1/Sp1+ 4.75 8/29/97 7,240,297
------------
41,852,813
------------
UTAH--1.2%
5,500 Salt Lake County, PCR British Petroleum
Co. Project* Aa2/P-1/AA-/A-1+ 3.44 8/1/07 5,500,000
------------
WEST VIRGINIA -- 1.8%
8,100 Marshall County, PCR, British Petroleum
Co. Project* Aa2/AA-/A-1+ 3.44 12/1/20 8,100,000
------------
WISCONSIN--0.2%
1,000 Milwaukee, Program-Series AH Aa1/AA+ 6.10 12/1/97 1,018,023
------------
WASHINGTON--2.7%
5,200 Washington Public Power Supply System, Nuclear
Project No 3, Series 3A-1,
(LOC-Bank of America)* Aa3/VMIG1/AA-/A-1+ 3.25 7/1/18 5,200,000
7,300 Washington Public Power Supply System, Nuclear
Project No 3, Series 3A-2,
(LOC-Bank of America)* Aa3/VMIG1/AA-/A-1+ 3.25 7/1/18 7,300,000
------------
12,500,000
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL SECURITIES (cost $342,118,953) 342,118,953
- -----------------------------------------------------------------------------------------------------------------------------
SHORT TERM PUTS--1.0%
PENNSYLVANIA--1.0%
4,500 Cumberland County Muni Authority (LOC-PNC Bank)* 3.67 6/2/97 4,500,000
- -----------------------------------------------------------------------------------------------------------------------------
TAX-FREE COMMERCIAL PAPER--19.3%
FLORIDA--5.2%
2,000 Jacksonville Electric Authority 3.50 3/6/97 2,000,000
5,700 Jacksonville Electric Authority 3.50 5/9/97 5,700,000
750 Sunshine State, Government Finance Commission 3.35 4/10/97 750,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
13
<PAGE> 14
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND
- --------------------------------------------------------------------------------
Portfolio of Investments
February 28, 1997
(unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Amortized
Amount Maturity Cost
(000) Description Rate Date (Note 2)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FLORIDA (continued)
$ 1,500 Sunshine State, Government Finance Commission 3.45% 4/10/97 $ 1,500,000
13,950 Sunshine State, Government Finance Commission 3.50 4/10/97 13,950,000
------------
23,900,000
------------
GEORGIA--3.7%
2,000 Georgia Municipal Gas Authority 3.45 5/13/97 2,000,000
15,000 Municipal Electric Authority 3.60 3/10/97 15,000,000
------------
17,000,000
------------
KANSAS--0.4%
2,000 Burlington, PCR 3.45 5/13/97 2,000,000
------------
MARYLAND--0.7%
3,300 Anne Arundel County, Baltimore Gas & Electric
Project 3.60 4/10/97 3,300,000
------------
MICHIGAN--2.2%
10,000 Michigan State Underground Tank Storage 3.40 4/8/97 10,000,000
------------
MISSOURI--3.6%
9,000 Missouri Environment Improvement & Energy 3.55 3/19/97 9,000,000
7,475 Missouri Environment Improvement & Energy 3.40 4/15/97 7,475,000
------------
16,475,000
------------
NEW YORK--1.5%
6,700 New York City 3.35 4/10/97 6,700,000
------------
TEXAS--2.0%
6,100 San Antonio, Electric & Gas 3.50 5/15/97 6,100,000
3,000 Houston Texas 3.45 5/14/97 3,000,000
------------
9,100,000
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL TAX FREE COMMERCIAL PAPER (cost $88,475,000) 88,475,000
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
14
<PAGE> 15
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND
- --------------------------------------------------------------------------------
Portfolio of Investments
February 28, 1997
(unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Amortized
Amount Maturity Cost
(000) Description Rate Date (Note 2)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TAX-EXEMPT MONEY MARKET FUND--4.7%
$10,785 Federated Tax-Exempt Money Market 3.26% 12/31/99 $ 10,785,453
10,624 Fidelity Institutional Tax Exempt Money Market 3.29 12/31/99 10,623,867
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL TAX-EXEMPT MONEY MARKET FUND (cost $20,409,320) 21,409,320
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $456,503,274)--99.3% 456,503,274
- -----------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS IN EXCESS OF LIABILITIES--0.7% 3,104,607
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS--100.0% $459,607,881
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Variable rate security.
** When issued security.
ACES --Adjustable Convertible Extendible Securities.
FGIC --Financial Guaranty Insurance Company.
GO --General Obligation.
LOC --Letter of credit.
MBIA --Municipal Bond Insurance Association.
PCR --Pollution Control Revenue.
TAN --Tax Anticipation Notes.
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
15
<PAGE> 16
THE PILOT FUNDS
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities
February 28, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MISSOURI SHORT-TERM
SHORT-TERM SHORT-TERM SHORT-TERM TAX-EXEMPT
U.S. TREASURY DIVERSIFIED TAX-EXEMPT DIVERSIFIED
FUND ASSETS FUND FUND FUND
-------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
(unaudited) (unaudited) (unaudited)
ASSETS
Investment in securities, at amortized cost...... $ 877,216,459 $1,633,324,469 $ 213,543,561 456,503,274
Repurchase agreements, at cost................... 932,253,971 369,715,000 -- --
Cash............................................. 215 836 -- 1,308,236
Interest receivable.............................. 9,726,768 5,017,105 1,473,686 2,979,049
Receivable from brokers for investments sold..... 297,057,153 -- -- --
Deferred organization Cost....................... 20,381 -- -- 17,595
Other assets..................................... 80,288 92,879 2,281 2,038
- ----------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS..................................... 2,116,355,235 2,008,150,289 215,019,528 460,810,192
- ----------------------------------------------------------------------------------------------------------------------
LIABILITIES
Advisory fees payable............................ 201,195 233,600 32,642 67,281
Administration fees payable...................... 147,301 170,606 17,912 36,823
Service fees payable (Pilot Administration
Shares)........................................ 48,359 47,444 2,245 3,574
Service fees payable (Pilot Investor Shares)..... 68,336 34,632 5,595 2,790
Custodian fees payable........................... 15,976 19,336 8,732 15,947
Payable to brokers for investments purchased..... 298,080,000 -- 2,000,000 --
Dividends payable................................ 6,514,906 6,769,955 477,617 1,012,827
Cash overdraft................................... -- -- 510,080 --
Other accrued expenses........................... 107,567 146,827 59,130 63,069
- ----------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES................................ 305,183,640 7,422,400 3,113,953 1,202,311
- ----------------------------------------------------------------------------------------------------------------------
NET ASSETS....................................... $1,811,171,595 $2,000,727,889 $ 211,905,575 $ 459,607,881
- ----------------------------------------------------------------------------------------------------------------------
SHARES OUTSTANDING ($0.001 PAR VALUE, UNLIMITED
NUMBER OF SHARES AUTHORIZED):
Pilot Shares..................................... 1,384,315,606 1,686,486,939 184,970,211 438,396,004
Pilot Administration Shares...................... 247,987,536 229,173,088 11,159,532 14,339,541
Pilot Investor Shares............................ 179,098,823 85,388,330 15,786,545 6,874,987
- ----------------------------------------------------------------------------------------------------------------------
TOTAL SHARES OUTSTANDING......................... 1,811,401,965 2,001,048,357 211,916,288 459,610,532
- ----------------------------------------------------------------------------------------------------------------------
Net Asset Value, Offering Price and Redemption
Price per Share................................ $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS:
Shares of beneficial interest, at par............ $ 1,811,402 $ 2,001,048 $ 211,916 $ 459,611
Additional paid-in capital....................... 1,809,590,692 1,998,984,936 211,506,267 459,106,434
Undistributed (distributions in excess of) net
investment income.............................. (87,358) 276,772 201,785 41,741
Accumulated undistributed net realized gains
(losses) from investment transactions.......... (143,141) (534,867) (14,393) 95
- ----------------------------------------------------------------------------------------------------------------------
NET ASSETS, FEBRUARY 28, 1997.................... $1,811,171,595 $2,000,727,889 $ 211,905,575 $ 459,607,881
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
16
<PAGE> 17
THE PILOT FUNDS
- --------------------------------------------------------------------------------
Statements of Operations
For the period ended February 28, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHORT-TERM MISSOURI SHORT-TERM
U.S. SHORT-TERM SHORT-TERM TAX-EXEMPT
TREASURY DIVERSIFIED TAX-EXEMPT DIVERSIFIED
FUND ASSETS FUND FUND FUND
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
(unaudited) (unaudited) (unaudited)
INVESTMENT INCOME:
Interest............................................ $ 44,636,687 $ 51,268,053 $ 3,702,785 $ 7,281,291
- ------------------------------------------------------------------------------------------------------------------
EXPENSES:
Advisory fees....................................... 1,267,621 1,407,991 211,201 414,983
Administration fees................................. 928,727 1,031,731 116,179 227,823
Administration Service Fees (Pilot Administration
Shares)........................................... 286,637 315,908 14,611 18,143
Investor Service Fees (Pilot Investor Shares)....... 459,752 180,509 36,370 11,371
Accounting fees..................................... 103,204 113,487 18,764 32,408
Audit fees.......................................... 19,395 40,017 9,771 17,615
Transfer agent fees and expenses.................... 115,201 95,618 27,649 27,050
Custodian fees and expenses......................... 39,605 53,317 14,058 10,760
Registration fees................................... 84,659 68,984 10,074 7,872
Amortization of organization expenses............... 20,091 -- -- 9,050
Legal fees.......................................... 71,463 50,425 7,300 13,937
Trustees' fees...................................... 35,530 36,882 4,132 7,843
Reports to shareholders............................. 36,564 43,672 4,314 7,814
Other expenses...................................... 122,774 98,083 10,680 23,808
- ------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES...................................... 3,591,223 3,536,624 485,103 830,477
- ------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME............................... 41,045,464 47,731,429 3,217,682 6,450,814
- ------------------------------------------------------------------------------------------------------------------
NET REALIZED GAINS (LOSSES) FROM INVESTMENTS........ (12,094) (392,497) 615 --
- ------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS........................................ $ 41,033,370 $ 47,338,932 $ 3,218,297 $ 6,450,814
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
17
<PAGE> 18
THE PILOT FUNDS
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHORT-TERM SHORT-TERM
U.S. TREASURY FUND DIVERSIFIED ASSETS FUND
----------------------------------- -----------------------------------
SIX MONTHS SIX MONTHS
ENDED FOR THE ENDED FOR THE
FEBRUARY 28, YEAR ENDED FEBRUARY 28, YEAR ENDED
1997 AUGUST 31, 1996 1997 AUGUST 31, 1996
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
(unaudited)
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income...................... $ 41,045,464 $ 87,159,849 $ 47,731,429 $ 76,380,222
Net realized gains (losses) from investment
transactions............................. (12,094) (72,161) (392,497) (7,389)
- -----------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from
operations................................... 41,033,370 87,087,688 47,338,932 76,372,833
- -----------------------------------------------------------------------------------------------------------------------------
Dividends to shareholders from net investment
income:
Pilot Shares............................... (31,574,382) (68,912,660) (39,885,716) (62,678,596)
Pilot Administration Shares................ (5,384,858) (10,651,264) (6,170,487) (11,779,432)
Pilot Investor Shares...................... (4,086,224) (7,507,828) (1,674,454) (1,922,216)
- -----------------------------------------------------------------------------------------------------------------------------
Total dividends to shareholders from net
investment income............................ (41,045,464) (87,071,752) (47,730,657) (76,380,244)
- -----------------------------------------------------------------------------------------------------------------------------
Dividends to shareholders in excess of net
investment income:
Pilot Shares............................... -- (69,139) -- --
Pilot Administration Shares................ -- (10,686) -- --
Pilot Investor Shares...................... -- (7,533) -- --
- -----------------------------------------------------------------------------------------------------------------------------
Total dividends to shareholders from net
investment income............................ -- (87,358) -- --
- -----------------------------------------------------------------------------------------------------------------------------
Portfolio share transactions:
Proceeds from shares issued................ 4,174,581,226 9,878,532,918 3,435,587,010 5,663,449,795
Proceeds from shares issued in connection
with reorganization...................... -- -- 260,342,183 --
Dividends reinvested....................... 7,496,600 18,323,119 7,263,135 13,444,984
Cost of shares redeemed.................... (4,064,229,767) (9,741,562,840) (3,312,658,871) (5,388,561,055)
- -----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from
Portfolio transactions....................... 117,848,059 155,293,197 390,533,457 288,333,724
- -----------------------------------------------------------------------------------------------------------------------------
Total increase (decrease)...................... 117,835,965 155,221,775 390,141,732 288,326,313
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period............................ 1,693,335,630 1,538,113,855 1,610,586,157 1,322,259,844
- -----------------------------------------------------------------------------------------------------------------------------
End of period(a)............................... $ 1,811,171,595 $ 1,693,335,630 $ 2,000,727,889 $ 1,610,586,157
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Includes undistributed (distributions in excess of) net investment income
of ($87,358), ($87,358), $276,772, $276,000, $201,785, $201,785, $41,741
and $41,741 respectively.
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
18
<PAGE> 19
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MISSOURI SHORT-TERM SHORT-TERM
TAX-EXEMPT FUND TAX-EXEMPT DIVERSIFIED FUND
----------------------------------------- -----------------------------------------
SIX MONTHS FOR THE SIX MONTHS FOR THE
ENDED YEAR ENDED ENDED YEAR ENDED
FEBRUARY 28, 1997 AUGUST 31, 1996 FEBRUARY 28, 1997 AUGUST 31, 1996
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C>
(unaudited) (unaudited)
$ 3,217,682 $ 7,274,957 $ 6,450,814 12,759,729
615 25,794 -- 59,395
---------------------------------------------------------------------------------------
3,218,297 7,300,751 6,450,814 12,819,124
---------------------------------------------------------------------------------------
(2,862,768) (6,637,519) (6,182,445) (12,351,930)
(166,209) (297,782) (208,672) (405,583)
(188,705) (339,651) (59,697) (4,963)
---------------------------------------------------------------------------------------
)
(3,217,682 (7,274,952) (6,450,814) (12,762,476)
---------------------------------------------------------------------------------------
-- (30,594)
-- (1,060)
-- (144)
---------------------------------------------------------------------------------------
-- (31,798)
---------------------------------------------------------------------------------------
313,838,192 573,611,650 361,196,170 497,372,489
882,276 2,239,269 261,736 442,282
(315,831,326) (589,471,487) (293,052,674) (518,867,826)
---------------------------------------------------------------------------------------
(1,110,858) (13,620,568) 68,405,232 (21,053,055)
---------------------------------------------------------------------------------------
(1,110,243) (13,594,769) 68,373,434 (20,996,407)
---------------------------------------------------------------------------------------
213,015,818 226,610,587 391,234,447 412,230,854
---------------------------------------------------------------------------------------
$ 211,905,575 $ 213,015,818 $ 459,607,881 $ 391,234,447
---------------------------------------------------------------------------------------
</TABLE>
19
<PAGE> 20
THE PILOT FUNDS
- --------------------------------------------------------------------------------
Notes to Financial Statements
February 28, 1997
==========================================================
1. GENERAL
The Pilot Short-Term U.S. Treasury Fund, the Pilot Short-Term Diversified Assets
Fund, the Pilot Missouri Short-Term Tax-Exempt Fund, and the Pilot Short-Term
Tax-Exempt Diversified Fund are separate money market portfolios (individually,
a "Portfolio"; collectively, the "Portfolios") of The Pilot Funds (the "Fund").
The Fund is a Massachusetts business trust registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end management
investment company. All of the Portfolios are diversified except for the
Missouri Short-Term Tax-Exempt Fund. Shares of the Fund are offered exclusively
to customers of Boatmen's Trust Company ("Boatmen's"), its affiliates and to
customers of other participating service organizations. The Fund currently
offers fourteen portfolios. The accompanying financial statements are those of
the four Portfolios only.
The Portfolios each offer three classes of shares: Pilot Shares, Pilot
Administration Shares and Pilot Investor Shares. Each class of shares is
substantially the same, except that Pilot Administration Shares bear the fees
payable under the Portfolios' Administration Plan, and Pilot Investor Shares
bear the fees payable under the Portfolios' Service Plan.
On August 29, 1996 Boatmen's Bancshares Inc. ("Bancshares") the parent of
Boatmen's Trust Company ("Boatmen's"), the Funds investment adviser, entered
into an Agreement and Plan of Merger (the "Merger Agreement"), with NationsBank
Corporation. The Merger Agreement provides that Bancshares will merge with and
into a wholly owned subsidiary of NationsBank Corporation. The merger was
consummated in January, 1997.
The Fund entered into an Agreement and Plan of Reorganization (the
"Reorganization Agreement") with Nations Fund, Inc., Nations Fund Trust and
Nations Fund Portfolio, Inc ("The Nations Funds"). The agreement contemplates
that each of fourteen investment portfolios of the Fund will transfer
substantially all of their assets and liabilities of the Fund to a corresponding
Portfolio of the Nations Funds. The Board of Trustees of the Fund and the Fund's
shareholders, at a special shareholder meeting held December 18, 1996, each
approved the Reorganization Agreement to become effective on or about May 16,
1997.
The Short-Term U.S. Treasury Fund and Short-Term Diversified Assets fund seek to
maximize current income to the extent consistent with the preservation of
capital and the maintenance of liquidity by investing exclusively in
high-quality money market instruments. The Missouri Short-Term Tax-Exempt Fund
and Short-Term Tax-Exempt Diversified Fund seek as high a level of current
income which is exempt from federal income tax as is consistent with the
preservation of capital.
Nationsbanc Advisors Inc. serves as the Fund's investment adviser (See Note 3).
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.
The Pilot Short-Term Diversified Assets Fund Financial Statements have been
audited for the period ending February 28, 1997. The Pilot Short-Term Treasury
Fund, the Pilot Missouri Short-Term Tax-Exempt Fund and the Pilot Short-Term Tax
Exempt Diversified Fund Financial Statements are unaudited for the period ended
February 28, 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 manage-
==========================================================
20
<PAGE> 21
THE PILOT FUNDS
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
February 28, 1997
==========================================================
ment to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of income and expenses for the period. Actual results could differ from
those estimates.
A. Investment Valuation
The Portfolios use the amortized cost method for valuing portfolio securities.
Under this method, all investments purchased at a discount or premium are valued
by amortizing the difference between the original purchase price and maturity
value of the issue over the period to maturity. In addition, the Portfolios may
not (a) purchase any instrument with a remaining maturity greater than thirteen
months unless such instrument is subject to a demand feature, or (b) maintain a
dollar-weighted-average maturity which exceeds 90 days.
B. Repurchase Agreements
The custodian for the Portfolios and other banks acting in a subcustodian
capacity take possession of the collateral pledged for investments in repurchase
agreements. The underlying collateral is valued daily on a mark-to-market basis
to determine that the value, including accrued interest, is not less than 102%
of the repurchase price, including accrued interest. In the event of the
seller's default of the obligation to repurchase, the Portfolios have the right
to liquidate the collateral and apply the proceeds in satisfaction of the
obligation. Under certain circumstances, in the event of default or bankruptcy
by the other party to the agreement, realization and/or retention of the
collateral may be subject to legal proceedings.
C. Securities Transactions and Investment Income
Securities transactions are recorded on a trade date basis. Interest income,
including accretion of discounts and amortization of premiums on investments, is
accrued daily. Investment income of each Portfolio is allocated to the separate
classes of shares based upon their relative net assets.
D. Dividends to Shareholders
Dividends are declared daily to shareholders of record at the close of business
on the day of declaration and paid monthly. Distributions of net realized gains,
if any, will be paid at least annually. However, to the extent that net realized
gains of a Portfolio can be offset by capital loss carryovers, such gains will
not be distributed. Dividends and distributions are recorded by the Portfolios
on the ex-dividend date.
E. Federal Taxes
It is each Portfolio's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute each
year substantially all of its investment company taxable and tax-exempt income
to its shareholders. Accordingly, no federal tax provisions are required.
Amortized cost of investments is substantially the same for federal income tax
purposes and financial reporting purposes.
F. Organizational Expenses
Costs incurred by the Fund in connection with its organization and registration
of shares have been deferred and 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.
G. Expenses
Expenses incurred by the Fund that do not specifically relate to an individual
portfolio of the Fund are allocated to the portfolios based on each portfolio's
relative net
==========================================================
21
<PAGE> 22
THE PILOT FUNDS
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
February 28, 1997
==========================================================
assets. The expenses of each Portfolio (other than expenses incurred pursuant to
the Administration and Service Plans) are allocated to the separate classes of
shares based upon their relative net assets.
3. AGREEMENTS AND TRANSACTIONS WITH AFFILIATES
A. Advisory Agreements
Nationsbanc Advisor Inc. currently serves as the Investment Advisor for each
Portfolio pursuant to separate Investment Advisory agreements and is responsible
for managing the investment operations of the Portfolio. Prior to January 7,
1997 Boatmen's served as the Investment Advisor. For their services, the
respective adviser has been entitled to a fee, accrued daily and paid monthly,
at an annual rate equal to .15 of 1% of the average daily net assets of each of
the Short-Term U.S. Treasury Fund and the Short-Term Diversified Assets Fund and
.20 of 1% of the average daily net assets of each of the Missouri Short-Term
Tax-Exempt Fund and the Short-Term Tax-Exempt Diversified Fund.
B. Administration Agreement
The Portfolios have entered into an Administration Agreement with BISYS.
Pursuant to the terms of this agreement, BISYS is responsible for assisting in
all aspects of the operations of each of the Portfolios. For its services, BISYS
is entitled to a fee, accrued daily and paid monthly, at an annual rate of .115
of 1% of the first $1.5 billion of the aggregate average daily net assets of all
of the portfolios constituting the Fund, plus .11 of 1% of the next $1.5 billion
of such net assets, plus .1075 of 1% of such net assets in excess of $3.0
billion.
C. Administration and Investor Plans
The Fund has adopted Administration and Investor Plans which allow for Pilot
Administration Shares and Pilot Investor Shares, respectively, to compensate
service organizations, which may include Boatmen's, BISYS and their affiliates
for providing varying levels of account administration and shareholder liaison
services to customers who are beneficial owners of such shares. The
Administration and Investor Plans provide for compensation to the service
organizations in an amount up to .25 of 1% and .50 of 1% (on an annualized
basis), respectively, of the average daily net asset value of the respective
shares. During the period ended February 28, 1997, affiliates of the Fund
received the following fees pursuant to the Administration and Investor Plans:
<TABLE>
<CAPTION>
ADMINISTRATION INVESTOR
FUND PLAN PLAN
- ---- -------------- --------
<S> <C> <C>
Short-Term U.S. Treasury Fund.... $286,637 $459,752
Short-Term Diversified Assets
Fund........................... 315,908 180,509
Missouri Short-Term Tax-Exempt
Fund........................... 14,611 36,370
Short-Term Tax-Exempt Diversified
Fund........................... 18,143 11,371
</TABLE>
D. Distribution Agreement
The Distributor does not receive a fee under its Distribution Agreement.
E. Transfer Agent Agreement
BISYS Fund Services, Inc. (the "Transfer Agent"), a wholly-owned subsidiary of
The BISYS Group, Inc. is the transfer agent for all classes of the Portfolios.
In connection with the Transfer Agent Agreement, the Money Market Portfolios
incurred expenses of approximately $266,000.
F. Custodian Agreement
Boatmen's is the custodian responsible for holding the investments purchased by
the Portfolios. In connection with the Custodian Agreement with Boatmen's, the
Money Market Portfolios incurred expenses of approximately $118,000.
==========================================================
22
<PAGE> 23
THE PILOT FUNDS
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
February 28, 1997
==========================================================
G. Fund Accounting Agreement
BISYS is responsible for the Fund Accounting for the Portfolios. In connection
with the Fund Accounting Agreement with BISYS, the Money Market Portfolios
incurred expenses of approximately $268,000.
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Portfolios are as follows (000
omitted) (at $1.00 per share):
SHORT-TERM U.S. TREASURY FUND
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
FEBRUARY 28, AUGUST 31,
1997 1996
------------ ----------
<S> <C> <C>
Pilot Shares:
Proceeds from shares issued... 971,245 2,810,597
Dividends reinvested.......... 90 150
Cost of shares redeemed....... (886,277) (2,703,045)
------- -------
Change in net assets from Pilot
share transactions.............. 85,058 107,702
======= =======
Pilot Administration Shares:
Proceeds from shares issued... 1,887,283 4,452,376
Dividends reinvested.......... 3,985 10,146
Cost of shares redeemed....... (1,859,673) (4,461,741)
------- -------
Change in net assets from Pilot
Administration share
transactions.................... 31,595 781
======= =======
Pilot Investor Shares:
Proceeds from shares issued... 1,316,053 2,615,560
Dividends reinvested.......... 3,422 8,027
Cost of shares redeemed....... (1,318,280) (2,576,777)
------- -------
Change in net assets from Pilot
Investor share transactions..... 1,195 46,810
======= =======
</TABLE>
SHORT-TERM DIVERSIFIED ASSETS FUND
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
FEBRUARY 28, AUGUST 31,
1997 1996
------------ ----------
<S> <C> <C>
Pilot Shares:
Proceeds from shares issued... 1,318,783 1,876,383
Proceeds from shares issued in
connection with
reorganization.............. 260,342 --
Dividends reinvested.......... 52 119
Cost of shares redeemed....... (1,211,405) (1,614,354)
--------- ---------
Change in net assets from Pilot
share transactions.............. 367,772 262,148
========= =========
Pilot Administration Shares:
Proceeds from shares issued... 1,724,385 3,150,340
Dividends reinvested.......... 5,551 11,279
Cost of shares redeemed....... (1,742,716) (3,151,335)
--------- ---------
Change in net assets from Pilot
Administration share
transactions.................... (12,780) 10,284
========= =========
Pilot Investor Shares:
Proceeds from shares issued... 392,419 636,727
Dividends reinvested.......... 1,660 2,047
Cost of shares redeemed....... (358,538) (622,872)
--------- ---------
Change in net assets from Pilot
Investor share transactions..... 35,541 15,902
========= =========
</TABLE>
==========================================================
23
<PAGE> 24
THE PILOT FUNDS
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
February 28, 1997
==========================================================
Transactions in shares of the Portfolios are as follows (000 omitted) (at $1.00
per share):
MISSOURI SHORT-TERM TAX-EXEMPT FUND
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
FEBRUARY 28, AUGUST 31,
1997 1996
------------ ----------
<S> <C> <C>
Pilot Shares:
Proceeds from shares issued.... 198,263 348,043
Dividends reinvested........... 516 1,563
Cost of shares redeemed........ (197,634) (376,691)
------- -------
Change in net assets from Pilot
share transactions............... 1,145 (27,085)
======= =======
Pilot Administration Shares:
Proceeds from shares issued.... 75,514 140,954
Dividends reinvested........... 171 310
Cost of shares redeemed........ (78,007) (132,319)
------- -------
Change in net assets from Pilot
Administration share
transactions..................... (2,322) 8,945
======= =======
Pilot Investor Shares:
Proceeds from shares issued.... 40,061 84,615
Dividends reinvested........... 195 366
Cost of shares redeemed........ (40,190) (80,461)
------- -------
Change in net assets from Pilot
Investor share transactions...... 66 4,520
======= =======
</TABLE>
SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
FEBRUARY 28, AUGUST 31,
1997 1996
------------ ----------
<S> <C> <C>
Pilot Shares:
Proceeds from shares issued.... 302,158 482,524
Dividends reinvested........... -- --
Cost of shares redeemed........ (239,547) (504,585)
------- -------
Change in net assets from Pilot
share transactions............... 62,611 (22,061)
======= =======
Pilot Administration Shares:
Proceeds from shares issued.... 12,411 13,384
Dividends reinvested........... 214 438
Cost of shares redeemed........ (12,800) (13,716)
------- -------
Change in net assets from Pilot
Administration share
transactions..................... (175) 106
======= =======
Pilot Investor Shares:
Proceeds from shares issued.... 46,626 1,465
Dividends reinvested........... 48 4
Cost of shares redeemed........ (40,705) (567)
------- -------
Change in net assets from Pilot
Investor share transactions...... 5,969 902
======= =======
</TABLE>
==========================================================
24
<PAGE> 25
THE PILOT FUNDS
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
February 28, 1997
==========================================================
5. FEDERAL INCOME TAX INFORMATION
At February 28, 1997, the Portfolios had the following capital loss
carryforwards which are available to offset future capital gains, if any (000
omitted):
<TABLE>
<CAPTION>
AMOUNT EXPIRES
-------- -------
<S> <C> <C>
Short-Term U.S. Treasury Fund........... $ 16,306 2002
Short-Term U.S. Treasury Fund........... 26,323 2003
Short-Term U.S. Treasury Fund........... 88,418 2004
Short-Term Diversified Assets Fund...... 131,029 2003
Short-Term Diversified Assets Fund...... 11,341 2004
Missouri Short-Term Tax-Exempt Fund..... 15,008 2003
</TABLE>
6. REORGANIZATIONS:
The Fund entered an Agreement and Plan of Reorganization ("Reorganization") with
Funds IV Trust (Funds IV) pursuant to which all of the assets and liabilities of
each Funds IV fund transferred to a portfolio or portfolios of the Fund in
exchange for shares of the corresponding portfolio of the the Fund. The Funds IV
Cash Reserve Money Market Fund transferred its assets and liabilities to the
Short-Term Diversified Assets Fund. The Reorganization, which qualified as a
tax-free exchange for Federal income tax purposes, was completed October 21,
1996 following approval by shareholders of Funds IV at a special shareholder
meeting. The following is a summary of the shares outstanding, net assets, and
net asset value per share immediately before and after the Reorganization:
<TABLE>
<CAPTION>
AFTER
BEFORE REORGANIZATION REORGANIZATION
----------------------------- --------------
FUNDS IV SHORT-TERM SHORT-TERM
CASH RESERVE DIVERSIFIED DIVERSIFIED
MONEY MARKET ASSETS FUND ASSETS FUND
------------ -------------- --------------
<S> <C> <C> <C>
Shares.............. $260,341,436 $1,704,272,859 $1,964,614,295
Net Assets.......... $260,342,183 $1,703,962,555 $1,964,304,738
Net Asset Value --
Class A............ 1.00
Pilot.............. 1.00 1.00
</TABLE>
==========================================================
25
<PAGE> 26
PILOT SHORT-TERM U.S. TREASURY FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED FEBRUARY 28, 1997
UNAUDITED YEAR ENDED AUGUST 31, 1996
-------------------------------------------- ----------------------------------------
PILOT ADMINISTRATION INVESTOR PILOT ADMINISTRATION INVESTOR
SHARES SHARES SHARES SHARES SHARES SHARES
---------- -------------- -------- ---------- -------------- --------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period............................... $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
---------- -------- -------- ---------- -------- --------
Investment Activities
Net investment income............. 0.0245 0.0233 0.0220 0.0522 0.0497 0.0472
Net realized gains from investment
transactions.................... -- -- -- -- -- --
---------- -------- -------- ---------- -------- --------
Total from Investment
Activities...................... 0.0245 0.0233 0.0220 0.0522 0.0497 0.0472
Distributions to shareholders from net
investment income................... (0.0245) (0.0233) (0.0220) (0.0522) (0.0497) (0.0472)
---------- -------- -------- ---------- -------- --------
Net Asset Value, End of Period........ $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
========== ======== ======== ========== ======== ========
Total Return.......................... 2.48%(c) 2.35%(c) 2.22%(c) 5.35% 5.08% 4.82%
Ratios/Supplemental Data:
Net Assets at end of period
(000)........................... $1,384,134 $247,961 $179,076 $1,299,086 $216,368 $177,882
Ratio of expenses to average net
assets(d)....................... 0.34%(e) 0.59%(e) 0.84%(e) 0.27% 0.52% 0.77%
Ratio of net investment income to
average net assets(d)........... 4.95%(e) 4.70%(e) 4.44%(e) 5.22% 4.96% 4.70%
Ratio of expenses to average net
assets assuming no waiver or
expense reimbursement(d)........ 0.34%(e) 0.59%(e) 0.84%(e) 0.31% 0.56% 0.81%
Ratio of net investment income to
average net assets assuming no
waiver or expense
reimbursement(d)................ 4.95%(e) 4.70%(e) 4.44%(e) 5.18% 4.92% 4.66%
</TABLE>
- ---------------
(a) Pilot Investor Shares commenced offering during July 1992.
(b) Prior to June 1, 1994, Goldman Sachs Asset Management served the Portfolio
as investment adviser.
(c) Not annualized.
(d) Does not reflect the fee which may be charged by Boatmen's directly to its
customers' accounts at an annual rate not to exceed 0.25% of the average
daily balance of Pilot Shares in the customers' accounts.
(e) Annualized.
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
26
<PAGE> 27
PILOT SHORT-TERM U.S. TREASURY FUND
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31, 1995 YEAR ENDED AUGUST 31, 1994(b) YEAR ENDED AUGUST 31, 1993(b)
---------------------------------------- -------------------------------------- --------------------------------------
PILOT ADMINISTRATION INVESTOR PILOT ADMINISTRATION INVESTOR PILOT ADMINISTRATION INVESTOR
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
---------- -------------- -------- -------- -------------- -------- -------- -------------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 1.0000 1.0000 1.0000 $ 1.0000 1.0000 1.0000 $ 1.0000 1.0000 1.0000
---------- -------- -------- -------- ------- -------- -------- ------- --------
0.0534 0.0509 0.0484 0.0334 0.0309 0.0284 0.0294 0.0269 0.0244
-- -- -- 0.0002 0.0002 0.0002 0.0006 0.0006 0.0006
---------- -------- -------- -------- ------- -------- -------- ------- --------
0.0534 0.0509 0.0484 0.0336 0.0311 0.0286 0.0300 0.0275 0.0250
(0.0534) (0.0509) (0.0484) (0.0336) (0.0311) (0.0286) (0.0300) (0.0275) (0.0250)
---------- -------- -------- -------- ------- -------- -------- ------- --------
$ 1.0000 1.0000 1.0000 $ 1.0000 1.0000 1.0000 $ 1.0000 1.0000 1.0000
========== ======== ======== ======== ======= ======== ======== ======= ========
5.47% 5.21% 4.94% 3.40% 3.15% 2.90% 3.04% 2.79% 2.53%
$1,191,447 $215,593 $131,074 $843,111 $ 98,823 $156,132 $942,109 $ 65,570 $193,764
0.23% 0.48% 0.73% 0.16% 0.41% 0.66% 0.14% 0.39% 0.64%
5.36% 5.12% 4.82% 3.34% 3.09% 2.84% 2.94% 2.69% 2.44%
0.24% 0.49% 0.74% 0.28% 0.53% 0.78% 0.30% 0.55% 0.80%
5.35% 5.11% 4.81% 3.24% 2.99% 2.74% 2.78% 2.53% 2.28%
</TABLE>
27
<PAGE> 28
PILOT SHORT-TERM DIVERSIFIED ASSETS FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED FEBRUARY 28, 1997 YEAR ENDED AUGUST 31, 1996
-------------------------------------- --------------------------------------
PILOT ADMINISTRATION INVESTOR PILOT ADMINISTRATION INVESTOR
SHARES SHARES SHARES SHARES SHARES SHARES
---------- -------------- -------- ---------- -------------- --------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period....... $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
---------- -------- ------- ---------- -------- -------
Investment Activities
Net investment income.................. 0.0255 0.0242 0.0230 0.0534 0.0509 0.0484
Net realized gains from investment
transactions......................... -- -- -- -- -- --
---------- -------- ------- ---------- -------- -------
Total from Investment Activities....... 0.0255 0.0242 0.0230 0.0534 0.0509 0.0484
Distributions to shareholders from net
investment income........................ (0.0255) (0.0242) (0.0230) (0.0534) (0.0509) (0.0484)
---------- -------- ------- ---------- -------- -------
Net Asset Value, End of Period............. $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
========== ======== ======= ========== ======== =======
Total Return............................... 2.57%(c) 2.45%(c) 2.32%(c) 5.47% 5.21% 4.95%
Ratios/Supplemental Data:
Net Assets at end of period (000) $1,686,224 $229,128 $ 85,376 $1,318,767 $241,970 $ 49,849
Ratio of expenses to average net
assets(d)............................ 0.32%(e) 0.57%(e) 0.82%(e) 0.27% 0.52% 0.77%
Ratio of net investment income to
average net assets(d)................ 5.13%(e) 4.88%(e) 4.63%(e) 5.33% 5.07% 4.83%
Ratio of expenses to average net assets
assuming no waiver or expense
reimbursement(d)..................... 0.32%(e) 0.57%(e) 0.82%(e) 0.31% 0.56% 0.81%
Ratio of net investment income to
average net assets assuming no waiver
or expense reimbursement(d).......... 5.13%(e) 4.88%(e) 4.63%(e) 5.29% 5.03% 4.79%
</TABLE>
- ---------------
(a) Pilot Investor Shares commenced offering during July 1992.
(b) Prior to June 1, 1994, Goldman Sachs Asset Management served the Portfolio
as investment adviser.
(c) Not annualized
(d) Does not reflect the fee which may be charged by Boatmen's directly to its
customers' accounts at an annual rate not to exceed 0.25% of the average
daily balance of Pilot Shares in the customers' accounts.
(e) Annualized.
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
28
<PAGE> 29
PILOT SHORT-TERM DIVERSIFIED ASSETS FUND
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
YEAR ENDED AUGUST 31, 1995 YEAR ENDED AUGUST 31, 1994(b) 1993(b)
---------------------------------------- ---------------------------------------- ----------------------------
PILOT ADMINISTRATION INVESTOR PILOT ADMINISTRATION INVESTOR PILOT ADMINISTRATION
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
---------- -------------- -------- ---------- -------------- -------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
---------- -------- ------- ---------- -------- ------- ---------- --------
0.0554 0.0529 0.0504 0.0353 0.0328 0.0303 0.0325 0.0298
-- -- -- 0.0001 0.0001 0.0001 0.0001 0.0001
---------- -------- ------- ---------- -------- ------- ---------- --------
0.0554 0.0529 0.0504 0.0354 0.0329 0.0304 0.0326 0.0299
(0.0554) (0.0529) (0.0504) (0.0354) (0.0329) (0.0304) (0.0326) (0.0299)
---------- -------- ------- ---------- -------- ------- ---------- --------
$ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
========== ======== ======= ========== ======== ======= ========== ========
5.68% 5.42% 5.15% 3.60% 3.35% 3.10% 3.29% 3.04%
$1,056,624 $231,688 $ 33,948 $ 857,795 $303,288 $ 37,896 $1,293,667 $378,262
0.23% 0.48% 0.73% 0.15% 0.40% 0.65% 0.12% 0.37%
5.56% 5.22% 5.00% 3.53% 3.28% 3.03% 3.25% 2.98%
0.24% 0.49% 0.74% 0.29% 0.54% 0.79% 0.29% 0.54%
%
5.55 5.21% 4.99% 3.40% 3.15% 2.90% 3.08% 2.81%
<CAPTION>
INVESTOR
SHARES
--------
<S> <C>
$ 1.0000
-------
0.0273
0.0001
-------
0.0274
(0.0274)
-------
$ 1.0000
=======
2.78%
$ 36,814
0.62%
2.74%
0.79%
2.57%
</TABLE>
29
<PAGE> 30
THE PILOT MISSOURI SHORT-TERM U.S. TAX-EXEMPT FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED FEBRUARY 28, 1997
UNAUDITED YEAR ENDED AUGUST 31, 1996
-------------------------------------- --------------------------------------
PILOT ADMINISTRATION INVESTOR PILOT ADMINISTRATION INVESTOR
SHARES SHARES SHARES SHARES SHARES SHARES
-------- -------------- -------- -------- -------------- --------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period...... $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
-------- ------- ------- -------- -------- --------
Investment Activities
Net investment income................. 0.0154 0.0141 0.0129 0.0318 0.0292 0.0267
Net realized gains from investment
transactions........................ -- -- -- -- -- --
-------- ------- ------- -------- -------- --------
Total from Investment Activities...... 0.0154 0.0141 0.0129 0.0318 0.0292 0.0267
Distributions to shareholders from net
investment income....................... (0.0154) (0.0141) (0.0129) (0.0318) (0.0292) (0.0267)
-------- ------- ------- -------- -------- --------
Net Asset Value, End of Period........ $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
======== ======= ======= ======== ======== ========
Total Return.............................. 1.56%(c) 1.42%(c) 1.29%(c) 3.22% 2.96% 2.70%
Ratios/Supplemental Data:
Net Assets at end of period (000)..... $184,960 $ 11,160 $ 15,786 $183,772 $ 13,501 $ 15,743
Ratio of expenses to average net
assets(d)........................... 0.41%(e) 0.66%(e) 0.91%(e) 0.43% 0.68% 0.93%
Ratio of net investment income to
average net assets(d)............... 3.10%(e) 2.84%(e) 2.59%(e) 3.17% 2.87% 2.65%
Ratio of expenses to average net
assets assuming no waiver or expense
reimbursement(d).................... 0.41%(e) 0.66%(e) 0.91%(e) 0.43% 0.68% 0.93%
Ratio of net investment income to
average net assets assuming no
waiver or expense
reimbursement(d).................... 3.10%(e) 2.84%(e) 2.59%(e) 3.17% 2.87% 2.65%
</TABLE>
- ---------------
(a) Pilot Investor Shares commenced offering during July 1992.
(b) Prior to July 1, 1995, Goldman Sachs Asset Management served the Portfolio
as investment adviser.
(c) Not annualized.
(d) Does not reflect the fee which may be charged by Boatmen's directly to its
customers' accounts at an annual rate not to exceed 0.25% of the average
daily balance of Pilot Shares in the customers' accounts.
(e) Annualized.
(f) Pilot Administration Shares commenced offering during March of 1994.
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
30
<PAGE> 31
THE PILOT MISSOURI SHORT-TERM U.S. TAX-EXEMPT FUND
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED
YEAR ENDED AUGUST 31, 1995(b) YEAR ENDED AUGUST 31, 1994(b) AUGUST 31, 1993(b)
------------------------------------------ ------------------------------------------ -----------------------
PILOT ADMINISTRATION INVESTOR PILOT ADMINISTRATION INVESTOR PILOT INVESTOR
SHARES SHARES SHARES SHARES SHARES(F) SHARES SHARES SHARES
-------- -------------- -------- -------- -------------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
-------- ------- ------- -------- ------- ------- -------- -------
0.0332 0.0300 0.0282 0.0220 0.0103 0.0170 0.0221 0.0172
-- -- -- -- -- -- -- --
-------- ------- ------- -------- ------- ------- -------- -------
0.0332 0.0300 0.0282 0.0220 0.0103 0.0170 0.0221 0.0172
(0.0332) (0.0300) (0.0282) (0.0220) (0.0103) (0.0170) (0.0221) (0.0172)
-------- ------- ------- -------- ------- ------- -------- -------
$ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
======== ======= ======= ======== ======= ======= ======== =======
3.37% 3.05% 2.86% 2.23% 2.04%(e) 1.73% 2.24% 1.73%
$210,834 $ 4,555 $ 11,222 $239,796 $ -- 9,364 $228,075 $ 7,819
0.44% 0.69% 0.94% 0.37% 0.67%(e) 0.87% 0.36% 0.86%
3.31% 3.06% 2.83% 2.20% 2.03%(e) 1.70% 2.21% 1.71%
0.44% 0.69% 0.94% 0.37% 0.67%(e) 0.87% 0.36% 0.86%
3.31% 3.06% 2.83% 2.20% 2.03%(e) 1.70% 2.21% 1.71%
</TABLE>
31
<PAGE> 32
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
FEBRUARY 28, 1997 YEAR ENDED
UNAUDITED AUGUST 31, 1996
------------------------------------------ -----------------------------------------
PILOT ADMINISTRATION INVESTOR PILOT ADMINISTRATION INVESTOR
SHARES SHARES SHARES SHARES SHARES SHARES
-------- -------------- -------- -------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period........................... $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
-------- ------- ------- -------- ------- -------
Investment Activities
Net investment income.......... 0.0155 0.0143 0.0130 0.0326 0.0301 0.0276
Net realized gains from
investment transactions...... -- -- -- -- -- --
-------- ------- ------- -------- ------- -------
Total from Investment
Activities................... 0.0155 0.0143 0.0130 0.0326 0.0301 0.0276
Distributions to shareholders from
net investment income............ (0.0155) (0.0143) (0.0130) (0.0326) (0.0301) (0.0276)
-------- ------- ------- -------- ------- -------
Net Asset Value, End of Period..... $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
======== ======= ======= ======== ======= =======
Total Return....................... 1.56%(c) 1.43%(c) 1.31%(c) 3.31% 3.05% 2.79%
Ratios/Supplemental Data:
Net Assets at end of period
(000)........................ $438,393 $ 14,340 $ 6,875 $375,777 14,550 907
Ratio of expenses to average
net assets(d)................ 0.39%(e) 0.64%(e) 0.88%(e) 0.37% 0.62% 0.87%
Ratio of net investment income
to average net assets(d)..... 3.12%(e) 2.88%(e) 2.62%(e) 3.26% 2.97% 2.56%
Ratio of expenses to average
net assets assuming no waiver
or expense
reimbursement(d)............. 0.39%(e) 0.64%(e) 0.88%(e) 0.41% 0.66% 0.91%
Ratio of net investment income to
average net assets assuming no
waiver or expense
reimbursement(d)................. 3.12%(e) 2.88%(e) 2.62%(e) 3.22% 2.93% 2.52%
</TABLE>
- ---------------
(a) Pilot Investor Shares commenced offering during July 1992.
(b) Prior to June 1, 1994, Goldman Sachs Asset Management served the Portfolio
as investment adviser.
(c) Not annualized.
(d) Does not reflect the fee which may be charged by Boatmen's directly to its
customers' accounts at an annual rate not to exceed 0.25% of the average
daily balance of Pilot Shares in the customers' accounts.
(e) Annualized.
(f) Pilot Administration Shares commenced offering during September 1993.
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
32
<PAGE> 33
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
AUGUST 31, 1995(b) AUGUST 31, 1994(b) AUGUST 31, 1993(b)
----------------------------------------- --------------------------- ------------------
PILOT ADMINISTRATION INVESTOR PILOT ADMINISTRATION PILOT
SHARES SHARES SHARES(a) SHARES SHARES(f) SHARES
-------- -------------- --------- -------- -------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
$ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
-------- ------- ------- -------- ------- -------
0.0353 0.0328 0.0195 0.0240 0.0208 0.0121
-- -- -- -- -- --
-------- ------- ------- -------- ------- -------
0.0353 0.0328 0.0195 0.0240 0.0208 0.0121
(0.0353) (0.0328) (0.0195) (0.0240) (0.0208) (0.0121)
-------- ------- ------- -------- ------- -------
$ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
======== ======= ======= ======== ======= =======
3.59% 3.33% 1.96% 2.43% 2.18%(e) 2.23%(e)
$397,783 $ 14,443 $ 5 $388,048 $ 3,040 $428,843
0.28% 0.53% 0.78%(e) 0.20% 0.45%(e) 0.15%(e)
3.54% 3.36% 3.15%(e) 2.40% 2.15%(e) 2.21%(e)
0.29% 0.54% 0.79%(e) 0.20% 0.45%(e) 0.20%(e)
3.53% 3.35% 3.14%(e) 2.40% 2.15%(e) 2.16%(e)
</TABLE>
33
<PAGE> 34
- --------------------------------------------------------------------------------
Report of Independent Public Accountants
- --------------------------------------------------------------------------------
To the Shareholders and Trustees of the Pilot Short-Term Diversified Assets Fund
of The Pilot Funds:
We have audited the accompanying statements of assets and liabilities of the
Pilot Short-Term Diversified Assets Fund (the Fund) of The Pilot Funds (a
Massachusetts business trust), including the portfolio of investments as of
February 28, 1997, and the related statement of operations for the period then
ended, and the statements of changes in net assets and financial highlights for
the periods presented. These financial statements and financial highlights are
the responsibility of the 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
February 28, 1997 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
Fund as of February 28, 1997, the results of its operations for the period then
ended, the changes in its net assets and the financial highlights for the
periods presented in conformity with generally accepted accounting principles.
Arthur Andersen LLP
Boston, Massachusetts
April 18, 1997
34
<PAGE> 35
Financial Pilot Short-Term
Direction U.S. Treasury Fund
Pilot Short-Term
PILOT LOGO Diversified Assets Fund
Pilot Missouri
Short-Term
Tax-Exempt Fund
Pilot Short-Term
Tax-Exempt
Diversified Fund
Semi-Annual Report
February 28, 1997
The
Pilot
Funds
- ----------------------------
NOT May Lose Value
FDIC No Bank Guarantee
INSURED No Govt. Guarantee
- ----------------------------
Distributor: Pilot Funds Distributors, Inc. 10/96
<PAGE> 36
PILMMF97MID
BULK RATE
U.S. POSTAGE
PAID
CLEVELAND, OH
PERMIT NO. 1
