An engine includes an engine casing that defines a hollow piston cavity separated from an exhaust passage and an intake passage by a valve seat. A gas exchange valve member is positioned adjacent the valve seat and is moveable between an open position and a closed position. The gas exchange valve member also defines an opening that opens into the hollow piston cavity. A needle valve member is positioned in the gas exchange valve member adjacent a nozzle outlet and is moveable between an inject position and a blocked position. A port control valve member, which has a hydraulic surface, is mounted around the gas exchange valve member and moveable between an intake position and an exhaust position. A pilot valve is moveable between a first position at which the port control hydraulic surface is exposed to a source of high pressure fluid, and a second position at which the port control hydraulic surface is exposed to a source of low pressure fluid.