ANNUAL REPORT TO SHAREHOLDERS
[Graphic Omitted] EXPEDITION FUNDS
OCTOBER 31, 1997
<PAGE>
TABLE OF CONTENTS
LETTER TO SHAREHOLDERS......................................1
MANAGEMENT'S DISCUSSION & ANALYSIS..........................3
STATEMENT OF NET ASSETS.....................................7
STATEMENT OF OPERATIONS....................................13
STATEMENT OF CHANGES IN NET ASSETS.........................14
FINANCIAL HIGHLIGHTS.......................................15
NOTES TO FINANCIAL STATEMENTS..............................16
INDEPENDENT AUDITORS' REPORT...............................21
NOTICE TO SHAREHOLDERS OF THE EXPEDITION FUNDS.............22
================================================================================
SHARES OF THE EXPEDITION FUNDS ARE NOT DEPOSITS OF OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY COMPASS BANK, COMPASS BANCSHARES, INC. OR ANY OF THEIR
AFFILIATES, OR ANY BANK, AND ARE NOT OBLIGATIONS OF, GUARANTEED BY OR INSURED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY.
AN INVESTMENT IN SHARES OF THE FUNDS INVOLVES INVESTMENT RISK, INCLUDING THE
POSSIBLE LOSS OF ALL OR A PORTION OF THE PRINCIPAL INVESTED, AND THE INVESTMENT
RETURN AND VALUE OF SHARES OF THE FUNDS WILL FLUCTUATE SO THAT AN INVESTMENT,
WHEN LIQUIDATED, MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST.
MONEY MARKET FUNDS ARE NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT AND
THERE CAN BE NO ASSURANCE THAT THE EXPEDITION MONEY MARKET FUND WILL BE ABLE TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
COMPASS BANK SERVES AS INVESTMENT ADVISOR AND CUSTODIAN TO THE EXPEDITION FUNDS,
AND COMPASS BANK AND VARIOUS OF ITS AFFILIATES MAY PROVIDE VARIOUS SERVICES TO
THE FUNDS, FOR WHICH INVESTMENT ADVISORY, CUSTODIAN AND OTHER SERVICES COMPASS
BANK AND/OR SUCH OTHER AFFILIATES ARE ENTITLED TO RECEIVE COMPENSATION.
================================================================================
<PAGE>
LETTER TO SHAREHOLDERS
- --------------------------------------------------------------------------------
Dear Expedition Funds Shareholder:
I am pleased to report that the Expedition Funds have completed another year of
solid achievement, having made important strides in such critical areas as
investment performance, asset growth, and shareholder services. Among the most
notable accomplishments of this past fiscal year were:
[BULLET] OUTSTANDING PERFORMANCE: All three of the Expedition Funds'
portfolios performed well for the fiscal year. And while we recognize that not
every year will bring such positive results, we are proud of our efforts to seek
consistent performance that is in line with their relevant indices and peer
groups. We believe that this type of consistency is particularly important in
today's environment of market uncertainty and volatility.
[BULLET] ASSET GROWTH: For the fiscal year, total assets under management
increased from $358 million to $558 million. This reflects the growing
enthusiasm for the fund family, which offers a convenient, cost-efficient way
for investors to take advantage of the proven investment management approach of
the Compass Bank organization.
[BULLET] A NEW IDENTITY: During the year, we announced a new name for the
fund family: The Expedition Funds. "Expedition" is defined as a journey or
voyage with a specific purpose, and symbolizes our desire to guide investors to
their individual financial destinations.
[BULLET] A NEW EQUITY FUND: Fiscal 1997 was also the first year of
operation for the Expedition Equity Fund. This fund invests primarily in
large-capitalization stocks, as well as some mid-cap issues, and uses a
management style that blends both growth- and value-oriented approaches. The
Equity Fund is designed to provide a convenient way for investors to participate
in the long-term growth potential of the equity markets, under the experienced
management of Compass Bank's equity specialists.
[BULLET] NEW SERVICE PROVIDERS: The Expedition Funds family recently
appointed a new distributor, administrator, and transfer agent, selecting some
of America's leading providers for these important services. These new providers
will help to ensure a higher level of service to you, the Funds' shareholders.
And they will support Compass Bank, the Funds' investment advisor, with improved
marketing and distribution services designed to help the fund family grow.
1
<PAGE>
LETTER TO SHAREHOLDERS (CONCLUDED)
- --------------------------------------------------------------------------------
As we enter fiscal 1998, we look forward to helping the Funds' investors
continue to pursue their long-term financial goals. As part of this effort, the
Compass Bank Asset Management Group and its affiliates currently are developing
programs that will help their customers, including Expedition Fund shareholders,
take advantage of the time-tested investment principle known as asset
allocation. Details on this exciting program will be announced in the months
ahead.
In addition, we continue to explore a variety of new opportunities to
enhance the fund family, and to deliver the best and most comprehensive services
to you, the Funds' shareholders.
If you should have any questions, comments, or requests regarding how we
can serve you better, please contact us by calling toll-free: 1-800-992-2085.
On behalf of our entire investment management family, we thank you for your
continued confidence in the Expedition Funds.
Sincerely,
/S/ SIGNATURE
Jan A. Koenig, CFA
Chief Investment Officer
Compass Bank Asset Management Group
Expedition Funds Investment Advisor
2
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
- --------------------------------------------------------------------------------
EXPEDITION EQUITY FUND
For the period from June 13, 1997 (inception date) to October 31, 1997, the
Expedition Equity Fund generated a total return of 2.96%. This compares to a
2.92% return for the S&P 500 Index. The Fund seeks to provide growth of capital,
with a secondary objective of income, and pursues these investment objectives by
investing in a diversified portfolio consisting primarily of common stocks
issued by mid and large capitalization companies.
Fiscal 1997 was a period of extremes for the stock markets, with a series
of historic highs throughout the year, followed by record-breaking volatility at
year-end. In retrospect, however, it was an excellent time to be an investor in
equities, and an auspicious beginning for the Expedition Equity Fund.
For most of the year, equities continued to post the same strong advances
seen throughout much of the bull equity market which began almost exactly seven
years ago. Since then (October 11, 1990), the market has gained over 20% per
annum on average. Despite two significant corrections during the last fiscal
year, broad market indices still managed to gain over 32% for the period.
As in years past, this bull market continued to be fueled by favorable
economic conditions, including a moderately growing domestic economy, expansion
of the global economy, enhanced productivity, low inflation, declining interest
rates, a relatively weak U.S. dollar, a strong export market, and corporate
profit growth which has exceeded most market expectations.
================================================================================
EXPEDITION EQUITY FUND
================================================================================
AVERAGE ANNUAL TOTAL RETURN
- --------------------------------------------------------------------------------
Annualized Annualized
1 Year 3 Year Inception
Return Return to Date
- --------------------------------------------------------------------------------
Synthetic Institutional Class+ 27.15% 21.98% 15.98%
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE EXPEDITION
EQUITY FUND, INSTITUTIONAL CLASS, SYNTHETIC PERFORMANCE, VERSUS THE S&P 500
COMPOSITE INDEX, THE S&P 400 MID-CAP INDEX, AND THE LIPPER GROWTH & INCOME FUNDS
AVERAGE.
[LINE GRAPH OMITTED]
PLOT POINTS ARE AS FOLLOW:
<TABLE>
<CAPTION>
EXPEDITION EQUITY FUND, S&P 500 S&P 400 LIPPER GROWTH &
INSTITUTIONAL CLASS, COMPOSITE INDEX MID-CAP INDEX INCOME FUNDS AVERAGE
SYNTHETIC PERFORMANCE
<S> <C> <C> <C> <C>
10/93 10,000 10,000 10,000 10,000
10/94 10,033 10,386 10,236 10,278
10/95 11,712 13,129 12,407 12,388
10/96 14,321 16,290 14,560 15,055
10/97 18,209 21,521 19,313 19,289
</TABLE>
* FOR PERIODS PRIOR TO THE INCEPTION OF THE EXPEDITION EQUITY FUND ON JUNE 13,
1997, THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE OF THE EQUITY
MODEL COMMON TRUST FUND INTERNALLY MANAGED BY AN AFFILIATE OF THE EXPEDITION
EQUITY FUND'S INVESTMENT ADVISOR, ADJUSTED FOR THE MAXIMUM FEE AND EXPENSES OF
THE INSTITUTIONAL SHARES OF THE EXPEDITION EQUITY FUND APPLICABLE AT THE
INCEPTION OF THE EXPEDITION EQUITY FUND. THE EQUITY MODEL COMMON TRUST FUND
WAS NOT REGISTERED UNDER THE INVESTMENT COMPANY ACT OF 1940 AND THEREFORE,
WAS NOT SUBJECT TO CERTAIN RESTRICTIONS WHICH MAY HAVE ADVERSELY AFFECTED
PERFORMANCE.
NOTE: PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NOT PREDICTIVE
OF FUTURE PERFORMANCE. ACTUAL RETURN AND PRINCIPAL VALUE WILL FLUCTUATE,
AND SHARES WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
+SYNTHETIC, NOT ACTUAL RETURN.
3
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
- --------------------------------------------------------------------------------
The Expedition Equity Fund was well-positioned to take advantage of these
conditions, with strong representation by many of the best-performing sectors of
the equity markets, including computer technology, telecommunications equipment,
capital goods, financial services, retailers, consumer services and staples, and
energy-related.
For much of last year, most measurements of equity values suggested that
the U.S. stock market was overpriced given prevailing corporate profit
expectations and the environment for interest rates and inflation.
In the waning days of October, the market experienced a sharp correction in
reaction to a meltdown in Far Eastern currency and equity markets and lower
profit expectations for U.S. multinational companies, culminating in the largest
single-day point drop in history for the Dow Jones Industrial Average. However,
the very next session brought the largest one-day point gain, and U.S. and
European markets have since regained their upward momentum.
Looking ahead, we believe that the primary risk in the markets is that
earnings expectations will not be met during this time of slowing global
economic growth. However, this risk is partially offset by continued low
inflation and the relatively low probability of Federal Reserve action to raise
interest rates. Therefore, we remain cautiously optimistic that the favorable
environment for equities will continue into the coming fiscal year.
EXPEDITION BOND FUND
For the twelve months ended October 31, 1997, the Expedition Bond Fund
Investment Shares generated a total return of 6.41%. This compares to a 7.49%
return for the Lehman Intermediate Gov't./Corp. Bond Index. The Fund seeks to
provide current income, and pursues this objective by investing in a
professionally managed, diversified portfolio consisting primarily of bonds, as
well as other fixed income securities.
The Bond Fund's performance was the result of favorable market conditions
for high-quality government and corporate bonds, as well as income-enhancing
portfolio strategies.
Over the course of the fiscal year, yields on fixed income instruments
dropped across the board. For example, yields on one-year Treasury Bills fell by
five basis points (.05%), while yields on five-year Treasury Notes fell 35 basis
points (.35%), and yields on ten-year notes fell 50 basis points (.50%).
These yield declines took place against a backdrop of inaction by the
Federal Reserve Board, whose only move was a modest .25% boost in short term
rates in March of 1997.
4
<PAGE>
================================================================================
EXPEDITION BOND FUND
================================================================================
AVERAGE ANNUAL TOTAL RETURN
- --------------------------------------------------------------------------------
Annualized Annualized Annualized
1 Year 3 Year 5 Year Inception
Return Return Return to Date
- --------------------------------------------------------------------------------
Investment Shares Class 6.41% 7.23% 5.31% 5.94%
- --------------------------------------------------------------------------------
Investment Shares Class w/load 2.13% 5.77% 4.45% 5.15%
- --------------------------------------------------------------------------------
Synthetic Institutional Class+ 6.41% 7.23% 5.31% 5.94%
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE EXPEDITION BOND
FUND, INVESTMENT SHARES CLASS OR SYNTHETIC INSTITUTIONAL CLASS, VERSUS THE
LEHMAN INTERMEDIATE GOV'T/CORP BOND INDEX, LEHMAN INTERMEDIATE GOV'T BOND INDEX,
AND THE LIPPER SHORT/INTMDT. GOVERNMENT BOND AVERAGE
[LINE GRAPH OMITTED]
PLOT POINTS ARE AS FOLLOW:
<TABLE>
EXPEDITION EXPEDITION LEHMAN LEHMAN LIPPER
BOND FUND, BOND FUND, INTERMEDIATE INTERMEDIATE SHORT/INTMDT.
INVESTMENT SYNTHETIC GOV'T/CORP. GOV'T GOVERNMENT
SHARES CLASS INSTITUTIONAL CLASS BOND INDEX* BOND INDEX BOND AVERAGE
<S> <C> <C> <C> <C> <C>
4/92 9,600 10,000 10,000 10,000 10,000
10/92 10,215 10,640 10,620 10,617 10,533
10/93 11,075 11,536 11,675 11,596 11,397
10/94 10,730 11,176 11,449 11,397 11,129
10/95 11,903 12,399 12,883 12,743 12,258
10/96 12,432 12,949 13,632 13,464 12,866
10/97 13,229 13,780 14,653 14,451 13,692
</TABLE>
NOTE: PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NOT PREDICTIVE
OF FUTURE PERFORMANCE. ACTUAL RETURN AND PRINCIPAL VALUE WILL FLUCTUATE,
AND SHARES WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
*PREVIOUSLY, THE FUND USED THE LEHMAN INTERMEDIATE GOV'T BOND INDEX AS A
BENCHMARK. GOING FORWARD, THE FUND WILL USE THE LEHMAN INTERMEDIATE GOV'T/CORP.
BOND INDEX AS A COMPARISON BECAUSE IT IS BETTER SUITED TO THE FUND'S OBJECTIVE.
+ SYNTHETIC, NOT ACTUAL RETURN.
Yields were further eroded in the wake of volatility in the foreign
markets, particularly the sharp corrections in Asia during late October. These
events helped to push U.S. bond prices to new yearly highs, and virtually ruled
out any chance of the Federal Reserve Board action for the remainder of calendar
year 1997.
In response to these conditions, the Fund was slightly overweighted in the
high-quality corporate sector, and maintained an average weighted maturity that
was slightly longer than that of its benchmark. This strategy allowed the Fund
to take advantage of the favorable yield spread between corporate and Treasury
instruments, as well as the yield advantage of longer-term securities.
Looking ahead, we believe that the Federal Reserve's current
market-friendly stance, along with uncertainty in the equity markets, will
continue to favor high-quality bond and fixed income investments. Therefore, we
plan to maintain our somewhat aggressive approach to pursuing yields over and
above those of the benchmark.
EXPEDITION MONEY MARKET FUND
For the twelve months ended October 31, 1997, the Expedition Money Market
Fund Institutional Shares generated a total return of 5.26%. The Fund seeks to
provide current income consistent with stability of principal, and pursues this
investment objective by investing in a variety of high quality money market
instruments maturing in 13 months or less.
The Money Market Fund's performance was the result of a favorable market
environment, as well as portfolio strategies that allowed us to capitalize on
that environment.
5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONCLUDED)
- --------------------------------------------------------------------------------
Over the course of the year, interest rates at the shorter end of the money
market spectrum increased, while rates at the longer end decreased. For example,
the yield on three-month Treasury bills rose by five basis points (.05 percent)
while the yield on the one-year Treasury bill fell by six basis points (.06
percent).
One reason for this flattening of the yield curve was the Federal Reserve
Board's action to raise short-term rates by one quarter of one percent in March,
due to concerns about possible overheating of the U.S. economy.
In light of these events, the Expedition Money Market Fund focused
primarily on securities at the shorter end of the yield spectrum, such as 30-day
and 60-day commercial paper, and corporate notes with maturities of less than
one year. The remainder of the Fund's assets were invested in overnight
repurchase agreements.
This strategy enabled the Fund to take advantage of the relatively
attractive rates in shorter-term instruments, while retaining the flexibility to
shift assets to longer maturities later on.
As economic activity slowed in the second half of fiscal 1997, the Federal
Reserve Board took no further action and rates fell across the board. The Fund
then began extending its maturities somewhat in order to capture the incremental
yields available. At fiscal year end, the Fund's average weighted maturity stood
at 61 days.
In late October, volatility in the Asian markets helped push the yields on
U.S. bonds to their lowest rates of the year. One important side-effect of this
turmoil was the decreased likelihood that the Federal Reserve Board will take
any further action to boost rates during the remainder of calendar year 1997.
Looking ahead, we believe that the shorter end of the yield spectrum
continues to offer the best combination of attractive rates and strategic
flexibility. Therefore, in the near future we plan to maintain our current
strategy of holding relatively short maturities, while seeking opportunities to
capture any yield advantages that may arise.
6
<PAGE>
STATEMENT OF NET ASSETS
THE EXPEDITION EQUITY FUND
- --------------------------------------------------------------------------------
VALUE
DESCRIPTION SHARES (000)
- -----------------------------------------------------
COMMON STOCKS - 98.9%
AIRCRAFT - 6.1%
Boeing 93,100 $ 4,457
Lockheed Martin 59,560 5,662
United Technologies 62,260 4,358
- -----------------------------------------------------
TOTAL AIRCRAFT 14,477
- -----------------------------------------------------
AUTOMOTIVE - 3.8%
Chrysler 130,800 4,611
Dana 93,920 4,397
- -----------------------------------------------------
TOTAL AUTOMOTIVE 9,008
- -----------------------------------------------------
BANKS - 4.0%
J.P. Morgan 41,195 4,521
Mellon Bank 94,585 4,877
- -----------------------------------------------------
TOTAL BANKS 9,398
- -----------------------------------------------------
BEAUTY PRODUCTS - 2.9%
Procter & Gamble 100,340 6,823
- -----------------------------------------------------
TOTAL BEAUTY PRODUCTS 6,823
- -----------------------------------------------------
BROADCASTING, NEWSPAPERS & ADVERTISING - 2.0%
Omnicom Group 69,270 4,892
- -----------------------------------------------------
TOTAL BROADCASTING, NEWSPAPERS &
ADVERTISING 4,892
- -----------------------------------------------------
CHEMICALS - 1.5%
E.I. du Pont de Nemours 64,050 3,643
- -----------------------------------------------------
TOTAL CHEMICALS 3,643
- -----------------------------------------------------
COMPUTER COMMUNICATIONS EQUIPMENT - 2.2%
Cisco Systems* 63,795 5,233
- -----------------------------------------------------
TOTAL COMPUTER COMMUNICATIONS EQUIPMENT 5,233
- -----------------------------------------------------
COMPUTERS & SERVICES - 6.0%
Compaq Computer 59,090 3,767
Hewlett Packard 75,490 4,657
IBM 59,000 5,786
- -----------------------------------------------------
TOTAL COMPUTERS & SERVICES 14,210
- -----------------------------------------------------
DRUGS - 5.4%
Merck 71,240 6,358
Pfizer 91,000 6,438
- -----------------------------------------------------
TOTAL DRUGS 12,796
- -----------------------------------------------------
ELECTRIC UTILITY - 2.0%
Enova 196,045 4,766
- -----------------------------------------------------
TOTAL ELECTRIC UTILITY 4,766
- -----------------------------------------------------
- -----------------------------------------------------
VALUE
DESCRIPTION SHARES (000)
- -----------------------------------------------------
ENTERTAINMENT - 4.3%
Carnival, Cl A 107,485 $ 5,213
Walt Disney 59,795 4,918
- -----------------------------------------------------
TOTAL ENTERTAINMENT 10,131
- -----------------------------------------------------
ENVIRONMENTAL SERVICES - 1.4%
USA Waste Services* 92,320 3,416
- -----------------------------------------------------
TOTAL ENVIRONMENTAL SERVICES 3,416
- -----------------------------------------------------
FINANCIAL SERVICES - 4.3%
Beneficial 68,345 5,241
Franklin Resources 54,070 4,860
- -----------------------------------------------------
TOTAL FINANCIAL SERVICES 10,101
- -----------------------------------------------------
FOOD & TOBACCO - 7.3%
H.J. Heinz 133,630 6,205
PepsiCo 157,925 5,814
Philip Morris 134,360 5,324
- -----------------------------------------------------
TOTAL FOOD & TOBACCO 17,343
- -----------------------------------------------------
GAS/NATURAL GAS - 2.8%
Williams Companies 130,740 6,660
- -----------------------------------------------------
TOTAL GAS/NATURAL GAS 6,660
- -----------------------------------------------------
INSURANCE - 7.6%
Conseco 129,625 5,655
Marsh & McLennan 70,590 5,012
Travelers 104,385 7,307
- -----------------------------------------------------
TOTAL INSURANCE 17,974
- -----------------------------------------------------
MACHINERY - 5.5%
Crane 118,697 4,933
General Electric 72,700 4,694
Hubbell, Cl B 79,600 3,507
- -----------------------------------------------------
TOTAL MACHINERY 13,134
- -----------------------------------------------------
MEDICAL PRODUCTS & SERVICES - 2.6%
Baxter International 136,330 6,305
- -----------------------------------------------------
TOTAL MEDICAL PRODUCTS & SERVICES 6,305
- -----------------------------------------------------
METAL/FABRICATE HARDWARE - 1.7%
Reynolds Metals 67,975 4,142
- -----------------------------------------------------
TOTAL METAL/FABRICATE HARDWARE 4,142
- -----------------------------------------------------
PAPER & PAPER PRODUCTS - 1.9%
Temple Inland 77,000 4,418
- -----------------------------------------------------
TOTAL PAPER & PAPER PRODUCTS 4,418
- -----------------------------------------------------
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
STATEMENT OF NET ASSETS
THE EXPEDITION EQUITY FUND
- --------------------------------------------------------------------------------
SHARES/FACE VALUE
DESCRIPTION AMT. (000) (000)
- -----------------------------------------------------
PETROLEUM & FUEL PRODUCTS - 6.7%
Baker Hughes 133,000 $ 6,110
Dresser Industries 111,950 4,716
Schlumberger 58,617 5,129
- -----------------------------------------------------
TOTAL PETROLEUM & FUEL PRODUCTS 15,955
- -----------------------------------------------------
PETROLEUM REFINING - 1.9%
Exxon 75,260 4,624
- -----------------------------------------------------
TOTAL PETROLEUM REFINING 4,624
- -----------------------------------------------------
RETAIL - 4.5%
Dayton Hudson 84,000 5,276
Safeway* 92,295 5,365
- -----------------------------------------------------
TOTAL RETAIL 10,641
- -----------------------------------------------------
TELEPHONES & TELECOMMUNICATIONS - 5.7%
Lucent Technologies 42,630 3,514
SBC Communications 80,120 5,098
Sprint 94,190 4,898
- -----------------------------------------------------
TOTAL TELEPHONES & TELECOMMUNICATIONS 13,510
- -----------------------------------------------------
TRANSPORTATION SERVICES - 2.0%
CSX 86,880 4,751
- -----------------------------------------------------
TOTAL TRANSPORTATION SERVICES 4,751
- -----------------------------------------------------
SEMICONDUCTORS/INSTRUMENTS - 2.8%
Avnet 40,360 2,540
Motorola 67,300 4,156
- -----------------------------------------------------
TOTAL SEMICONDUCTORS/INSTRUMENTS 6,696
- -----------------------------------------------------
TOTAL COMMON STOCKS
(COST $223,176) 235,047
- -----------------------------------------------------
REPURCHASE AGREEMENT - 1.3%
Merrill Lynch
5.600%, dated 10/31/97,
matures 11/03/97, repurchase
price $3,147,468 (collateralized
by U.S. Treasury Instrument,
market value: $3,211,035) $3,146 3,146
- -----------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(COST $3,146) 3,146
- -----------------------------------------------------
TOTAL INVESTMENTS - 100.2%
(COST $226,322) 238,193
- -----------------------------------------------------
OTHER ASSETS AND LIABILITIES, NET - (0.2%) (626)
- -----------------------------------------------------
- -----------------------------------------------------
VALUE
DESCRIPTION (000)
- -----------------------------------------------------
NET ASSETS:
Portfolio Shares--Institutional Class
(unlimited authorization -- no
par value) based on 25,302,911
outstanding shares of
beneficial interest $212,881
Undistributed net investment income 124
Accumulated net realized gain
on investments 12,691
Net unrealized appreciation
on investments 11,871
- -----------------------------------------------------
TOTAL NET ASSETS -- 100.0% $237,567
- -----------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- INSTITUTIONAL CLASS $9.39
- -----------------------------------------------------
Cl--Class
*Non-income producing security
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
STATEMENT OF NET ASSETS
THE EXPEDITION BOND FUND
- --------------------------------------------------------------------------------
FACE AMT. VALUE
DESCRIPTION (000) (000)
- -----------------------------------------------------
ASSET BACKED SECURITIES - 9.8%
AT&T Universal Card Master Trust,
Ser 1995-2, Cl A,
Callable 10/17/00 @ 100
5.950%, 10/17/02 $4,500 $ 4,504
MBNA Master Trust,
Ser 1995-F, Cl A,
Callable 08/15/00 @ 100
6.600%, 01/15/03 2,300 2,340
Premier Auto Trust,
Ser 1993-6, Cl A2
4.650%, 11/02/99 355 352
Proffitts Credit Card
Master Trust,
Ser 1997-2, Cl A,
Callable 08/15/02 @ 100
6.500%, 12/15/05 4,000 4,037
Signet Credit Card Master
Trust, Ser 1993-1, Cl A,
Callable 10/15/98 @ 100
5.200%, 02/15/02 1,000 996
- -----------------------------------------------------
TOTAL ASSET BACKED SECURITIES
(COST $12,133) 12,229
- -----------------------------------------------------
CORPORATE BONDS - 21.1%
BANKS - 1.8%
First Bank Systems
6.375%, 03/15/01 750 757
Morgan Guaranty Trust
5.750%, 10/08/99 1,500 1,496
- -----------------------------------------------------
TOTAL BANKS 2,253
- -----------------------------------------------------
CONSUMER NON-DURABLE - 3.5%
Archer Daniels Midland
6.250%, 05/15/03 1,500 1,506
Campbell Soup,
Callable 09/15/00 @ 100
5.625%, 09/15/03 1,875 1,823
Coca Cola Enterprises
6.375%, 08/01/01 1,000 1,011
- -----------------------------------------------------
TOTAL CONSUMER NON-DURABLE 4,340
- -----------------------------------------------------
DIVERSIFIED FINANCE - 8.7%
American General Finance
Senior Notes
7.250%, 04/15/00 1,500 1,541
Associates Corporation
of North America
7.470%, 03/30/00 500 516
Beneficial Finance
7.750%, 11/08/02 500 533
Caterpillar Finance Services
6.490%, 10/15/99 1,000 1,009
- -----------------------------------------------------
- -----------------------------------------------------
FACE AMT. VALUE
DESCRIPTION (000) (000)
- -----------------------------------------------------
DIVERSIFIED FINANCE - CONTINUED
Ford Motor Credit
6.500%, 02/28/02 $ 3,500 $ 3,539
Lehman Brothers Holdings
6.500%, 10/01/02 1,000 1,005
Merrill Lynch
6.510%, 03/19/01 500 507
Norwest Financial
6.125%, 08/01/03 2,250 2,233
- -----------------------------------------------------
TOTAL DIVERSIFIED FINANCE 10,883
- -----------------------------------------------------
LEASING & RENTING - 0.8%
International Lease Finance
6.250%, 10/15/00 1,005 1,009
- -----------------------------------------------------
TOTAL LEASING & RENTING 1,009
- -----------------------------------------------------
PETROLEUM REFINING - 0.6%
Shell Oil
6.625%, 07/01/99 700 709
- -----------------------------------------------------
TOTAL PETROLEUM REFINING 709
- -----------------------------------------------------
RETAIL - 5.1%
Dillard Department Stores
7.150%, 09/01/02 2,025 2,103
Wal-Mart Stores
6.500%, 06/01/03 1,520 1,547
7.500%, 05/15/04 2,500 2,672
- -----------------------------------------------------
TOTAL RETAIL 6,322
- -----------------------------------------------------
TELEPHONES & TELECOMMUNICATIONS - 0.6%
AT&T, Callable 12/09/97 @ 100
5.125%, 04/01/01 800 778
- -----------------------------------------------------
TOTAL TELEPHONES & TELECOMMUNICATIONS 778
- -----------------------------------------------------
TOTAL CORPORATE BONDS
(COST $25,842) 26,294
- -----------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 4.9%
FHLMC Note
6.800%, 3/19/07 1,000 1,054
FNMA Notes
6.670%, 08/01/01 1,000 1,026
6.350%, 11/23/01,
Callable 11/23/99 @ 100 2,000 2,014
6.220%, 03/13/06 1,000 1,010
6.620%, 06/25/07 1,000 1,041
- -----------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(COST $5,943) 6,145
- -----------------------------------------------------
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
STATEMENT OF NET ASSETS
THE EXPEDITION BOND FUND
- --------------------------------------------------------------------------------
FACE AMT. VALUE
DESCRIPTION (000) (000)
- -----------------------------------------------------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED
OBLIGATIONS - 14.6%
FHLMC, Ser 1437, Cl H
7.000%, 12/15/02 $ 1,205 $ 1,224
FHLMC, Ser 1317, Cl H
7.000%, 01/15/07 1,000 1,018
FHLMC, Ser 1668, Cl B
6.500%, 11/15/10 896 897
FHLMC, Gold Pool #E00413
6.500%, 01/01/11 3,454 3,455
FHLMC, Gold Pool #E00475
7.500%, 02/01/12 1,853 1,904
FHLMC, Gold Pool #E00485
7.000%, 05/01/12 2,916 2,959
FHLMC, Ser 59, Cl D
9.700%, 01/15/16 98 98
FNMA, Ser 1991-4, Cl E
8.250%, 09/25/05 444 453
FNMA, Pool #369212
6.500%, 11/01/08 1,355 1,354
FNMA, Pool #190665
7.000%, 03/01/09 2,442 2,475
FNMA, Ser 1990-38, Cl G
9.100%, 07/25/18 340 340
FNMA, Ser 1990-53, Cl G
8.000%, 12/25/18 137 137
FNMA, Ser 1991-31, Cl L
6.500%, 05/25/20 1,838 1,844
- -----------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY
MORTGAGE-BACKED OBLIGATIONS
(COST $18,068) 18,158
- -----------------------------------------------------
U.S. TREASURY OBLIGATIONS - 47.7%
U.S. Treasury Bond
6.000%, 08/15/99 1,250 1,257
U.S. Treasury Notes
5.750%, 12/31/98 2,500 2,504
6.750%, 05/31/99 2,000 2,033
7.750%, 01/31/00 4,300 4,484
6.375%, 05/15/00 4,565 4,638
6.250%, 08/31/00 4,500 4,561
6.125%, 09/30/00 1,500 1,516
5.625%, 11/30/00 4,000 3,986
6.250%, 04/30/01 3,500 3,555
6.625%, 06/30/01 3,000 3,083
7.500%, 11/15/01 4,500 4,776
6.250%, 01/31/02 2,000 2,035
7.500%, 05/15/02 4,500 4,808
6.375%, 08/15/02 3,250 3,331
6.250%, 02/15/03 3,000 3,060
5.750%, 08/15/03 1,500 1,494
- -----------------------------------------------------
FACE AMT. VALUE
DESCRIPTION (000) (000)
- -----------------------------------------------------
U.S. TREASURY OBLIGATIONS -- CONTINUED
7.250%, 08/15/04 $3,000 $ 3,234
6.500%, 08/15/05 3,000 3,111
6.875%, 05/15/06 1,000 1,063
6.500%, 10/15/06 1,000 1,039
- -----------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS
(COST $58,863) 59,568
- -----------------------------------------------------
REPURCHASE AGREEMENT - 0.9%
Merrill Lynch
5.600%, dated 10/31/97,
matures 11/03/97, repurchase
price: $1,159,541 (collateralized
by U.S. Treasury Instrument,
market value: $1,183,201) 1,159 1,159
- -----------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(COST $1,159) 1,159
- -----------------------------------------------------
TOTAL INVESTMENTS - 99.0%
(COST $122,008) 123,553
- -----------------------------------------------------
OTHER ASSETS AND LIABILITIES, NET - 1.0% 1,301
- -----------------------------------------------------
NET ASSETS:
Portfolio Shares--Institutional Class (unlimited
Authorization -- no par value) based on
10,274,562 outstanding shares
of beneficial interest 99,458
Portfolio Shares--Investment Shares Class
(unlimited authorization -- no par
value) based on 2,399,316 outstanding
shares of beneficial interest 27,966
Distribution in excess of net
investment income (3)
Accumulated net realized loss
on investments (4,112)
Net unrealized appreciation
on investments 1,545
- -----------------------------------------------------
TOTAL NET ASSETS -- 100.0% $124,854
- -----------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- INSTITUTIONAL CLASS $9.85
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- INVESTMENT SHARES CLASS $9.85
OFFERING PRICE PER SHARE -- INVESTMENT
SHARES CLASS(1) $10.26
- -----------------------------------------------------
(1) The offer price is calculated by dividing the net
asset value by 1 minus the maximum sales charge of 4.00%.
Cl-- Class
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
Ser -- Series
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
STATEMENT OF NET ASSETS
THE EXPEDITION MONEY MARKET FUND
- --------------------------------------------------------------------------------
FACE AMT. VALUE
DESCRIPTION (000) (000)
- -----------------------------------------------------
CERTIFICATES OF DEPOSIT - 9.5%
Barclays Bank
5.600%, 01/07/98 $5,000 $ 5,000
Societe Generale
5.600%, 12/04/97 5,000 5,000
5.870%, 03/03/98 1,500 1,500
5.765%, 10/09/98 2,000 1,999
Wachovia
5.510%, 12/05/97 5,000 5,000
- -----------------------------------------------------
TOTAL CERTIFICATES OF DEPOSIT
(COST $18,499) 18,499
- -----------------------------------------------------
COMMERCIAL PAPER - 54.7%
BROKER/DEALERS - 6.6%
Goldman Sachs Group
5.680%, 11/04/97 3,000 2,998
5.510%, 11/13/97 5,000 4,991
Merrill Lynch
5.520%, 11/07/97 5,000 4,995
- -----------------------------------------------------
TOTAL BROKER/DEALERS 12,984
- -----------------------------------------------------
DIVERSIFIED FINANCE - 24.2%
American General Finance
5.490%, 12/12/97 5,000 4,969
Avco Financial Services
5.530%, 11/20/97 4,000 3,988
5.520%, 11/26/97 4,000 3,985
General Electric Capital
5.490%, 11/12/97 5,000 4,992
Norwest Corporation
5.490%, 11/21/97 5,000 4,985
Pitney Bowes Credit
5.540%, 12/19/97 3,000 2,978
5.520%, 01/09/98 5,000 4,947
Preferred Receivables
5.540%, 11/18/97 3,725 3,715
Transamerica Finance
5.530%, 12/02/97 5,000 4,976
Vehicle Services of America
5.630%, 01/14/98 8,000 7,907
- -----------------------------------------------------
TOTAL DIVERSIFIED FINANCE 47,442
- -----------------------------------------------------
ELECTRICAL SERVICES - 4.0%
Alabama Power
5.500%, 11/18/97 2,750 2,743
General Electric
5.510%, 11/17/97 5,000 4,988
- -----------------------------------------------------
TOTAL ELECTRICAL SERVICES 7,731
- -----------------------------------------------------
- -----------------------------------------------------
FACE AMT. VALUE
DESCRIPTION (000) (000)
- -----------------------------------------------------
FUNDING CORPORATIONS - 17.3%
Centric Capital
5.530%, 11/14/97 $5,000 $ 4,990
5.540%, 12/23/97 3,000 2,976
Falcon Asset Securitization
5.510%, 11/04/97 5,000 4,998
Madison Funding
5.550%, 11/24/97 4,000 3,986
5.580%, 12/11/97 4,000 3,975
Receivables Capital
5.530%, 12/04/97 8,000 7,959
Riverwood Funding
5.490%, 11/13/97 5,000 4,991
- -----------------------------------------------------
TOTAL FUNDING CORPORATIONS 33,875
- -----------------------------------------------------
INDUSTRIAL - 2.6%
Xerox
5.570%, 11/05/97 5,000 4,997
- -----------------------------------------------------
TOTAL INDUSTRIAL 4,997
- -----------------------------------------------------
TOTAL COMMERCIAL PAPER
(COST $107,029) 107,029
- -----------------------------------------------------
CORPORATE BONDS - 19.9%
BANKS - 3.0%
NationsBank
6.625%, 01/15/98 3,770 3,776
5.560%, 07/15/98 1,000 998
5.125%, 09/15/98 1,000 994
- -----------------------------------------------------
TOTAL BANKS 5,768
- -----------------------------------------------------
BROKER/DEALERS - 1.5%
Merrill Lynch
6.090%, 06/08/98 1,000 1,001
6.600%, 06/24/98 2,000 2,008
- -----------------------------------------------------
TOTAL BROKER/DEALERS 3,009
- -----------------------------------------------------
CONSUMER NON-DURABLES - 0.5%
Philip Morris
9.450%, 11/19/97 1,050 1,052
- -----------------------------------------------------
TOTAL CONSUMER NON-DURABLES 1,052
- -----------------------------------------------------
DIVERSIFIED FINANCE - 9.4%
Associates Corporation of North America
6.625%, 11/15/97 1,500 1,500
7.250%, 05/15/98 2,000 2,013
6.500%, 09/09/98 2,000 2,011
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
STATEMENT OF NET ASSETS
THE EXPEDITION MONEY MARKET FUND
- --------------------------------------------------------------------------------
FACE AMT. VALUE
DESCRIPTION (000) (000)
- -----------------------------------------------------
DIVERSIFIED FINANCE - CONTINUED
Ford Motor Credit
7.125%, 12/01/97 $1,000 $ 1,001
8.000%, 12/01/97 1,500 1,503
6.450%, 02/05/98 1,500 1,502
8.900%, 02/18/98 1,000 1,009
General Electric Capital
7.950%, 02/02/98 1,750 1,759
7.650%, 02/23/98 1,100 1,107
Norwest Financial
8.500%, 08/15/98 2,000 2,040
6.230%, 09/01/98 2,000 2,005
6.000%, 10/13/98 1,000 1,001
- -----------------------------------------------------
TOTAL DIVERSIFIED FINANCE 18,451
- -----------------------------------------------------
ELECTRICAL SERVICES - 1.3%
Georgia Power
5.500%, 04/01/98 2,600 2,596
- -----------------------------------------------------
TOTAL ELECTRICAL SERVICES 2,596
- -----------------------------------------------------
LEASING & RENTING - 3.2%
International Lease Finance
5.625%, 03/01/98 1,000 999
7.150%, 04/20/98 1,200 1,206
6.250%, 06/15/98 3,000 3,007
5.980%, 11/16/98 1,000 1,000
- -----------------------------------------------------
TOTAL LEASING & RENTING 6,212
- -----------------------------------------------------
TELEPHONES & TELECOMMUNICATIONS - 1.0%
Southwestern Bell Telephone
5.500%, 04/20/98 2,000 1,994
- -----------------------------------------------------
TOTAL TELEPHONES & TELECOMMUNICATIONS 1,994
- -----------------------------------------------------
TOTAL CORPORATE BONDS
(COST $39,082) 39,082
- -----------------------------------------------------
TIME DEPOSIT - 2.6%
General American Life Insurance
Funding Agreement*
5.856%, 11/07/97 5,000 5,000
- -----------------------------------------------------
TOTAL TIME DEPOSIT
(COST $5,000) 5,000
- -----------------------------------------------------
- -----------------------------------------------------
FACE AMT. VALUE
DESCRIPTION (000) (000)
- -----------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 4.6%
Federal National Mortgage
Association
8.150%, 05/11/98 $ 2,000 $ 2,023
Student Loan Marketing
Agency*
5.450%, 04/16/98 3,000 3,000
5.420%, 06/28/99 4,000 4,002
- -----------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(COST $9,025) 9,025
- -----------------------------------------------------
REPURCHASE AGREEMENT - 8.6%
Merrill Lynch
5.600%, dated 10/31/97, matures
11/03/97, repurchase price
$16,925,895 (collateralized by
U.S. Treasury Instruments,
total market value:
$17,259,400) 16,918 16,918
- -----------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(COST $16,918) 16,918
- -----------------------------------------------------
TOTAL INVESTMENTS - 99.9%
(COST $195,553) 195,553
- -----------------------------------------------------
OTHER ASSETS AND LIABILITIES, NET - 0.1% 104
- -----------------------------------------------------
NET ASSETS:
Portfolio Shares -- Institutional
Class (unlimited authorization
-- no par value) based on
48,005,527 outstanding shares
of beneficial interest 48,005
Portfolio Shares -- Investment
Service Shares Class
(unlimited authorization --
no par value) based on 147,655,464
outstanding shares of beneficial
interest 147,656
Accumulated net realized loss
on investments (4)
- -----------------------------------------------------
TOTAL NET ASSETS -- 100.0% $195,657
- -----------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- INSTITUTIONAL CLASS $1.00
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- INVESTMENT SERVICE
SHARES CLASS $1.00
- -----------------------------------------------------
* Variable Rate Security -- the rate reported on the Statement
of Net Assets is the rate in effect as of October 31, 1997.
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
STATEMENT OF OPERATIONS (000)
for the Period Ended October 31,1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EXPEDITION EXPEDITION EXPEDITION
EQUITY BOND MONEY MARKET
FUND* FUND FUND
---------- ---------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 1,370 $ -- $ --
Interest 114 4,640 9,139
------- ------ ------
Total investment income 1,484 4,640 9,139
EXPENSES:
Investment Advisory fees 692 547 657
Waiver of Investment Advisory fees -- (68) (166)
Administrator fees 187 159 311
Waiver of Administrator fees -- -- (37)
Transfer Agent fees 11 74 71
Custodian fees 17 20 44
Directors' fees 5 2 6
Registration fees 9 11 26
Professional fees 26 25 20
Printing fees 49 40 36
Shareholder Servicing fees--Investment Service Shares -- -- 143
Distribution fees--Investment Shares -- 89 44
Waiver of Distribution fees--Investment Shares -- (89) (18)
Amortization of organizational costs 1 -- --
Other fees 2 5 3
------- ------ ------
Total net expenses 999 815 1,140
------- ------ ------
Investment income--net 485 3,825 7,999
------- ------ ------
Net realized gain (loss) on investments 31,123 (739) --
Net change in unrealized appreciation
(depreciation) of investments (24,519) 2,551 --
------- ------ ------
NET GAIN ON INVESTMENTS 6,604 1,812 --
------- ------ ------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 7,089 $5,637 $7,999
======= ====== ======
<FN>
* Commenced operations June 13, 1997.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (000)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EXPEDITION EXPEDITION EXPEDITION
EQUITY BOND MONEY MARKET
FUND FUND FUND
------------- ---------------------- ---------------------
Period Ended* Year Ended Year Ended Year Ended Year Ended
10/31/97 10/31/97 10/31/96 10/31/97 10/31/96
------------- ---------- ---------- ---------- ----------
OPERATIONS:
<S> <C> <C> <C> <C> <C>
Investment income--net $ 485 $ 3,825 $ 3,235 $ 7,999 $ 7,780
Net realized gain (loss) on investments 31,123 (739) (2) -- --
Net change in unrealized appreciation
(depreciation) of investments (24,519) 2,551 (1,021) -- --
---------- ---------- --------- ---------- ----------
Net increase in net assets resulting
from operations 7,089 5,637 2,212 7,999 7,780
---------- ---------- --------- ---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment income--net:
Institutional class (361) (1,889) -- (910) --
Investment class -- (1,939) (3,235) (7,089) (7,780)
Net realized gain on investments:
Institutional class (18,432) -- -- -- --
Investment class -- -- -- -- --
---------- ---------- --------- ---------- ----------
Total distributions (18,793) (3,828) (3,235) (7,999) (7,780)
---------- ---------- --------- ---------- ----------
CAPITAL SHARE TRANSACTIONS (1):
Institutional class:
Proceeds from sales 21,421 21,432 -- 75,569 --
Proceeds in connection with acquisition of
Common Trust Fund Assets 245,636 95,844 -- -- --
Reinvestment of distributions 18,432 -- -- -- --
Payments for redemptions (36,218) (17,787) -- (27,564) --
---------- ---------- --------- ---------- ----------
Increase in net assets from Institutional
class transactions 249,271 99,489 -- 48,005 --
---------- ---------- --------- ---------- ----------
Investment Service and Investment
Shares Class (respectively):
Proceeds from sales -- 675 1,380 864,106 672,444
Reinvestment of distributions -- 874 1,654 1,085 2,024
Payments for redemptions -- (22,545) (20,979) (890,259) (698,096)
---------- ---------- --------- ---------- ----------
Decrease in net assets from
Investment Service and Investment Shares
Class (respectively) transactions -- (20,996) (17,945) (25,068) (23,628)
---------- ---------- --------- ---------- ----------
Increase (decrease) in net assets from
capital share transactions 249,271 78,493 (17,945) 22,937 (23,628)
---------- ---------- --------- ---------- ----------
Total increase (decrease) in net assets 237,567 80,302 (18,968) 22,937 (23,628)
---------- ---------- --------- ---------- ----------
NET ASSETS AT BEGINNING OF PERIOD -- 44,552 63,520 172,720 196,348
---------- ---------- --------- ---------- ----------
NET ASSETS AT END OF PERIOD $ 237,567 $ 124,854 $ 44,552 $ 195,657 $ 172,720
========== ========== ========= ========== ==========
(1)Capital share transactions:
Institutional class:
Shares issued 2,253 2,200 -- 75,569 --
Shares issued in connection with
acquisition of
Common Trust Fund Assets 24,854 9,891 -- -- --
Shares issued in lieu of cash distributions 2,032 -- -- -- --
Shares redeemed (3,836) (1,816) -- (27,564) --
---------- ---------- --------- ---------- ----------
Total Institutional class transactions 25,303 10,275 -- 48,005 --
---------- ---------- --------- ---------- ----------
Investment Service and Investment
Shares Class (respectively):
Shares issued -- 63 140 864,106 672,444
Shares issued in lieu of cash distributions -- 90 169 1,085 2,024
Shares redeemed -- (2,312) (2,152) (890,259) (698,096)
---------- ---------- --------- ---------- ----------
Total Investment Service and Investment
Shares Class (respectively) transactions -- (2,159) (1,843) (25,068) (23,628)
---------- ---------- --------- ---------- ----------
NET INCREASE (DECREASE) FROM
SHARE TRANSACTIONS 25,303 8,116 (1,843) 22,937 (23,628)
========== ========== ========= ========== ==========
<FN>
*Commenced operations on June 13, 1997.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
NET ASSET REALIZED AND DISTRIBUTIONS DISTRIBUTIONS
VALUE, NET UNREALIZED FROM NET FROM NET ASSET NET ASSETS
BEGINNING INVESTMENT GAINS OR (LOSSES) INVESTMENT CAPITAL VALUE, END TOTAL END OF
OF PERIOD INCOME ON INVESTMENTS INCOME GAINS OF PERIOD RETURN PERIOD (000)
--------- ---------- ----------------- ------------- ------------- ---------- ------ ------------
- -----------
EQUITY FUND
- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INSTITUTIONAL SHARES
1997(1) $10.00 0.02 0.25 (0.02) (0.86) $ 9.39 2.96% $237,567
- ---------
BOND FUND
- ---------
INSTITUTIONAL SHARES
1997(1) $ 9.69 0.19 0.16 (0.19) -- $ 9.85 3.49% $101,224
INVESTMENT SHARES
1997 $ 9.77 0.53 0.08 (0.53) -- $ 9.85 6.41%(6) $ 23,630
1996 9.92 0.58 (0.15) (0.58) -- 9.77 4.44% 44,552
1995 9.54 0.63 0.38 (0.63) -- 9.92 10.94% 63,521
1994 10.40 0.54 (0.86) (0.54) -- 9.54 (3.12%) 58,827
1993 10.25 0.63 0.21 (0.63) (0.06) 10.40 8.42% 97,246
1992(2) 10.00 0.36 0.25 (0.36) -- 10.25 6.24% 65,984
- -----------------
MONEY MARKET FUND
- -----------------
INSTITUTIONAL SHARES
1997(3) $ 1.00 0.02 -- (0.02) -- $ 1.00 5.26%* $ 48,006
INVESTMENT SERVICE SHARES(4)
1997 $ 1.00 0.08 -- (0.08) -- $ 1.00 4.97% $147,651
1996 1.00 0.04 -- (0.04) -- 1.00 4.95% 136,666
1995 1.00 0.05 -- (0.05) -- 1.00 5.51% 141,434
1994 1.00 0.03 -- (0.03) -- 1.00 3.29% 158,367
1993 1.00 0.03 -- (0.03) -- 1.00 2.84% 131,508
1992 1.00 0.04 -- (0.04) -- 1.00 4.07% 187,394
1991 1.00 0.06 -- (0.06) -- 1.00 6.44% 212,997
1990(5) 1.00 0.06 -- (0.06) -- 1.00 5.89% 117,716
</TABLE>
<TABLE>
<CAPTION>
RATIO RATIO OF NET
RATIO OF NET OF EXPENSES INVESTMENT INCOME
RATIO OF INVESTMENT TO AVERAGE TO AVERAGE
EXPENSES INCOME NET ASSETS NET ASSETS PORTFOLIO AVERAGE
TO AVERAGE TO AVERAGE (EXCLUDING (EXCLUDING TURNOVER COMMISSION
NET ASSETS NET ASSETS WAIVERS) WAIVERS) RATE RATE
---------- ----------- ----------- ----------------- --------- ----------
- -----------
EQUITY FUND
- -----------
<S> <C> <C> <C> <C> <C> <C>
INSTITUTIONAL SHARES
1997(1) 1.09%* 0.53%* 1.09%* 0.53%* 64.68% $0.0519
- ---------
BOND FUND
- ---------
INSTITUTIONAL SHARES
1997(1) 1.10%* 5.05%* 1.11%* 5.04%* 69.09% --
INVESTMENT SHARES
1997 1.13% 5.46% 1.56% 5.03% 69.09% --
1996 1.08% 5.90% 1.58% 5.40% 77.00% --
1995 1.04% 6.51% 1.51% 6.04% 79.00% --
1994 1.20% 5.44% 1.50% 5.14% 91.00% --
1993 1.11% 6.11% 1.40% 5.82% 69.00% --
1992(2) 0.79%* 6.79%* 1.39%* 6.19%* 88.00% --
- -----------------
MONEY MARKET FUND
- -----------------
INSTITUTIONAL SHARES
1997(3) 0.43%* 5.22%* 0.70%* 4.95%* -- --
INVESTMENT SERVICE SHARES(4)
1997 0.73% 4.84% 0.85% 4.72% -- --
1996 0.71% 4.85% 0.71% 4.85% -- --
1995 0.56% 5.38% 0.66% 5.28% -- --
1994 0.75% 3.26% 0.79% 3.22% -- --
1993 0.70% 2.83% 0.70% 2.83% -- --
1992 0.64% 4.01% 0.65% 4.00% -- --
1991 0.62% 6.13% 0.67% 6.08% -- --
1990(5) 0.58%* 7.80%* 0.68%* 7.70%* -- --
<FN>
* Annualized
(1) Commenced operations on June 13, 1997.
(2) Commenced operations on April 20, 1992.
(3) Commenced operations on June 9, 1997.
(4) During 1997, the Starburst Money Market Trust Shares were renamed the Expedition Money Market Investment Service Shares.
(5) Commenced operations on February 5, 1990.
(6) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(1) ORGANIZATION
The Expedition Funds (the "Trust") is registered under the Investment Company
Act of 1940, as amended (the "1940 Act") as an open-end, management investment
company with three portfolios: the Expedition Equity Fund ( "the Equity Fund" ),
the Expedition Bond Fund ( "the Bond Fund" ) and the Expedition Money Market
Fund ( "the Money Market Fund" ) ( collectively, "the Funds"). Each Fund is
registered to offer two classes of shares. The Bond and Equity Funds offer
Institutional and Investment shares and the Money Market Fund offers
Institutional and Investment Services shares. The assets of each portfolio are
segregated and a shareholder's interest is limited to the portfolio in which
shares are held. The investment objectives, policies, and strategies of the
Funds are described in their prospectuses.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. These
policies are in conformity with generally accepted accounting principles.
Certain amounts in the 1996 financial statements have been reclassified to
conform with the presentation in the 1997 financial statements.
SECURITY VALUATION -- Investment securities held by the Money Market Fund are
stated at amortized cost, which approximates market value. Under this valuation
method, purchase discounts and premiums are accreted and amortized ratably to
maturity and are included in interest income.
Investments in securities held in the Expedition Equity and Bond Funds are
valued as follows: Equity Securities that are traded on a national securities
exchange (or reported on the NASDAQ national market system) are stated at the
last quoted sales price if readily available for such equity securities on each
business day; other equity securities traded in the over-the-counter market and
listed equity securities for which no sale was reported on that date are stated
at the last quoted bid price. Debt obligations exceeding sixty days to maturity
for which market quotations are readily available are valued at the mean of the
most recently quoted bid and asked price. Debt obligations with sixty days or
less remaining until maturity may be valued at their amortized cost. Restricted
securities for which quotations are not readily available are valued at fair
value using methods determined in good faith under general supervision of the
Board of Trustees (the "Trustees").
REPURCHASE AGREEMENTS -- It is the policy of the Funds to require the custodian
bank to take possession, to have legally segregated in the Federal Reserve Book
Entry System, or to have segregated within the custodian bank's vault, all
securities held as collateral under repurchase agreement transactions.
Additionally, procedures have been established by the Funds to monitor, on a
daily basis, the market value of each repurchase agreement's collateral to
ensure that the value of collateral at least equals the repurchase price to be
paid under the repurchase agreement transaction.
The Funds will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed by
the Funds adviser to be creditworthy pursuant to the
16
<PAGE>
- --------------------------------------------------------------------------------
guidelines and/or standards reviewed or established by the Trustees. Risks may
arise from the potential inability of counterparties to honor the terms of the
repurchase agreement. Accordingly, the Funds could receive less than the
repurchase price on the sale of collateral securities.
SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Security transactions are
accounted for on the date the security is purchased or sold (trade date). Costs
used in determining realized gains and losses on the sale of investment
securities are those of the specific securities sold, adjusted for the accretion
and amortization of purchase, discounts, and premiums during the respective
holding periods. Interest income is recorded on the accrual basis; dividend
income is recorded on the ex-dividend date.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment
income for the Money Market Fund and Bond Fund are declared daily and paid
monthly. The Equity Fund declares and pays dividends from net investment income
monthly. Any net realized capital gains will be distributed at least annually
for all Funds. Dividends and distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
deferral of wash sales losses and post-October losses.
FEDERAL TAXES -- It is each Fund's policy to comply with the provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), applicable to regulated
investment companies and to distribute to shareholders each year substantially
all of its income. Accordingly, no provisions for federal tax are necessary.
At October 31, 1997, the Bond Fund and the Money Market Fund, for federal tax
purposes, had a capital loss carryforward of $3,787,019 and $4,857,
respectively, which will reduce the Fund's taxable income arising from future
net realized gain on investments, if any, to the extent permitted by the Code,
and thus will reduce the amount of any distributions to shareholders which would
otherwise be necessary to relieve the Fund of any liability for federal tax.
Pursuant to the Code, such capital loss carryforward will expire as follows:
EXPIRATION
AMOUNT
----------
EXPIRATION BOND MONEY MARKET
YEAR FUND FUND
---------- --------- ------------
2001 $ 391,292 $1,224
2002 $2,421,386 $2,757
2003 $ 558,610 $ 712
2004 $ 1,621 $ --
2005 $ 414,110 $ 164
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS -- The Funds may engage in
when-issued or delayed delivery transactions. The Funds record when-issued
securities on the trade date and maintain security positions such that
sufficient liquid assets will be available to make payment for the securities
purchased upon settlement. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
USE OF ESTIMATES -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts of assets, liabilities, expenses and
revenues reported in the financial statements. Actual results could differ from
those estimated.
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
CLASSES -- Class specific expenses are borne by that class. Income, non-class
specific expenses, and realized/ unrealized gains and losses are allocated to
the respective classes on the basis of the relative daily net assets.
(3) SHARES OF BENEFICIAL INTEREST
INVESTMENT ADVISORY FEE -- Compass Bank, the Trusts' Investment Advisor (the
"Advisor"), receives for its services annual advisory fees equal to 0.75% of
each of the Bond and Equity Fund's and 0.40% of the Money Market Fund's average
daily net assets. The Advisor may voluntarily choose to waive any portion of its
fee. The Advisor can modify or terminate these voluntary waivers at any time at
its sole discretion.
ADMINISTRATIVE FEE -- The Trust and SEI Fund Resources (the "Administrator"), a
Delaware business trust, are parties to an administration agreement (the
"Agreement") dated June 9, 1997, under which the Administrator provides the
Trust with certain legal, accounting, and shareholder services for an annual fee
of .20% of the Funds' average daily net assets. The Administrator may
voluntarily waive its fee, subject to termination at any time by the
Administrator, to the extent necessary to limit the total operating expenses of
a Fund.
Prior to June 9, 1997, administrative and accounting services were provided to
the Trust by Federated Administrative Services.
DISTRIBUTION PLAN -- The Trust and SEI Investments Distribution Co. (the
"Distributor") are parties to a Distribution Agreement dated June 9, 1997. The
Bond and Equity Funds have adopted a Distribution Plan (the "Plan") pursuant to
Rule 12b-1 under the Act. Under the terms of the Plan, each Fund will compensate
the Distributor from the net assets of each Fund to finance activities intended
to result in the sale of the Fund's shares. The plan provides that each Fund may
incur distribution expenses up to 0.25% of the average daily net assets of each
Fund's Investment Shares, annually, to compensate the Distributor. The
Distributor may voluntarily choose to waive a portion of its fee. The
Distributor can modify or terminate this voluntary waiver at any time at its
sole discretion and has done so for the current fiscal year for the Bond Fund.
Prior to June 9, 1997, Federated Securities Corp., served as distributor to the
Bond Fund and the Money Market Fund and was compensated at a rate of up to 0.25%
of the Bond Fund's Investment Shares.
Pursuant to the terms of a Shareholder Service Plan, the Money Market Fund will
pay the Distributor an amount equal to 0.25% of the average daily net asset
value of the Money Market Fund's Investment Services Shares.
CUSTODIAN FEES -- Compass Bank is the Funds' custodian. The fee is based on a
rate of 0.02% of each Fund's average daily net assets for the period, plus
out-of- pocket expenses.
GENERAL -- Certain of the officers and trustees of the Trust are also officers
of the Administrator and/or Distributor. Such officers and trustees are paid no
fees by the Trust for serving in their respective roles.
18
<PAGE>
(4) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
year ended October 31, 1997, were as follows (000):
BOND EQUITY
FUND FUND
------- --------
Purchases ................. $50,852 $256,095
Sales ..................... $62,997 $152,589
At October 31, 1997, the total cost of securities and the net realized gains or
losses on securities sold for Federal income tax purposes were not materially
different from amounts reported for financial reporting purposes. The aggregate
gross unrealized appreciation and depreciation for securities held by the Funds
at October 31, 1997, are as follows (000):
BOND EQUITY
FUND FUND
-------- --------
Aggregate gross unrealized
appreciation ............ $1,864 $18,916
Aggregate gross unrealized
depreciation ............ (319) (7,045)
------ -------
Net unrealized appreciation $1,545 $11,871
====== =======
(5) ORGANIZATION COSTS AND TRANSACTIONS WITH AFFILIATES
Organization costs have been capitalized by the Funds and are being amortized
over sixty months commencing with the reorganization. In the event any of the
initial shares of a Fund are redeemed by any holder thereof during the period
that such Fund is amortizing its organizational costs, the redemption proceeds
payable to the holder thereof by the Fund will be reduced by the unamortized
organizational costs in the same ratio as the number of initial shares being
redeemed bears to the number of initial shares outstanding at the time of
redemption.
Certain officers of the Trust are also officers of the Administrator and the
Distributor. Such officers are paid no fees by the Trust for serving as officers
of the Trust.
(6) COMMON TRUST FUND CONVERSIONS
On June 13 and June 20, 1997, certain Common Trust Funds of Compass Bank and
certain of its affiliates were converted into the Expedition Funds. The Funds
involved in the conversion are as follows:
COMMON TRUST FUND EXPEDITION FUND
- ----------------- ---------------
River Oaks Equity Model Equity
Compass EB Growth Equity
Compass EB Value Stock Equity
Compass EB Contrarian
Stock Equity
Compass Value Stock Equity
Compass Growth Stock Equity
Compass Contrarian Stock Equity
Compass EB Short Term
High Quality Bond
Compass EB Intermediate Bond
Compass Short Term
High Quality Bond
River Oaks Cap Trust Bond
River Oaks Cap
Preserv Bond Bond
EB - Employee Benefit
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
- --------------------------------------------------------------------------------
The assets, which consisted of securities, and related receivables less
liabilities were converted on a tax-free basis. The net assets of each fund
(including net unrealized gain/loss) immediately before the conversion were as
follows (000):
COMMON UNREALIZED NET
TRUST FUND ASSETS GAIN/(LOSS) ASSETS
- -------------- ------- ----------- -------
River Oaks Equity Model $23,029 $7,456 $30,485
Compass EB Growth 35,434 2,118 37,552
Compass EB Value Stock 48,976 2,663 51,639
Compass EB Contrarian
Stock 42,068 2,123 44,191
Compass Value Stock 21,677 9,907 31,584
Compass Growth Stock 13,687 5,086 18,773
Compass Contrarian Stock 24,375 7,037 31,412
Compass EB Short Term
High Quality 39,083 215 39,298
Compass EB Intermediate 6,603 51 6,654
Compass Short Term
High Quality 42,538 (285) 42,253
River Oaks Cap Trust 6,609 41 6,650
River Oaks Cap
Preserv Bond 980 9 989
The value and number of shares issued in exchange for each Common Trust
Fund's assets and shares outstanding in the tax-free conversions are included in
the capital share transactions of the Institutional Class in the Statement of
Changes in Net Assets for each respective fund.
20
<PAGE>
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
The Board of Trustees and Shareholders of
Expedition Funds:
We have audited the accompanying statements of net assets of Expedition Funds
(the "Funds"), including the Money Market Fund, Bond Fund, and Equity Fund, as
of October 31, 1997, and the related statements of operations, statements of
changes in net assets and financial highlights for the periods presented. These
financial statements atnd the financial highlights are the responsibility of the
Funds' management. Our responsibility is to express an opinion on these
financial statements and the 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 the 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
October 31, 1997 by correspondence with the custodians and brokers, and where
replies were not received, we performed other auditing procedures. 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, such financial statements and financial highlights present
fairly, in all material respects, the financial position of the Funds as of
October 31, 1997, the results of their operations, the changes in their net
assets, and the financial highlights for the respective stated periods, in
conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
December 5, 1997
21
<PAGE>
NOTICE TO SHAREHOLDERS
- --------------------------------------------------------------------------------
Notice to Shareholders
of
The Expedition Funds
(unaudited)
<TABLE>
<CAPTION>
Shareholder Voting Results
- --------------------------
There was a special meeting of shareholders on May 16, 1997 to elect the Board
of Trustees. The results were as follows:
Election of Trustees:
SHARES VOTED % OF VOTED % OF TOTAL SHARES VOTED % OF TOTAL
FOR FOR FOR WITHHELD WITHHELD
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Robert A. Nesher 225,295,326.00 99.79% 74.45% 468,652.00 0.15%
Robert A. Patterson 225,925,326.00 99.79% 74.45% 468,652.00 0.15%
Eugene Peters 225,925,326.00 99.79% 74.45% 468,652.00 0.15%
John T. Cooney 225,925,326.00 99.79% 74.45% 468,652.00 0.15%
Frank E. Morris 225,925,326.00 99.79% 74.45% 468,652.00 0.15%
James M. Storey 225,925,326.00 99.79% 74.45% 468,652.00 0.15%
William M. Doran 225,925,326.00 99.79% 74.45% 468,652.00 0.15%
</TABLE>
22
<PAGE>
- --------------------------------------------------------------------------------
Notice to Shareholders
of
The Expedition Funds
(unaudited)
For the shareholders that do not have a October 31, 1997 taxable year end, this
notice is for informational purposes only. For shareholders with a October 31,
1997 taxable year end, please consult your tax adviser as to the pertinence of
this notice.
For the fiscal year ended October 31, 1997, the portfolio is designating long
term capital gains, qualifying dividends and exempt interest income with regard
to distributions paid during the year as follows:
(A) (B)
LONG TERM ORDINARY (C)
CAPITAL GAIN INCOME TOTAL
DISTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS
PORTFOLIO (TAX BASIS) (TAX BASIS) (TAX BASIS)
--------- ------------- ------------- -------------
Expedition Equity Fund ......... 87% 13% 100%
Expedition Bond Fund ........... 0% 100% 100%
Expedition Money Market Fund ... 0% 100% 100%
(D) (E) (F)
QUALIFYING TAX EXEMPT FOREIGN
PORTFOLIO DIVIDENDS (1) INTEREST TAX CREDIT
--------- ------------- ------------- -------------
Expedition Equity Fund ......... 13% 0% 0%
Expedition Bond Fund ........... 0% 0% 0%
Expedition Money Market Fund ... 0% 0% 0%
- ------------
(1) Qualifying dividends represent dividends which qualify for the corporate
dividends received deduction.
* Items (A) and (B) are based on a percentage of the portfolio's total
distributions.
** Items (D), (E) and (F) are based on a percentage of ordinary income
distributions of the portfolio.
23
<PAGE>
Notes
- --------------------------------------------------------------------------------
24
<PAGE>
<PAGE>
EXPEDITION FUNDS
- --------------------------------------------------------------------------------
INVESTMENT ADVISOR AND CUSTODIAN:
Compass Bank
15 South 20th Street
Birmingham, Alabama 35233
DISTRIBUTOR:
SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, Pennsylvania 19456
TRANSFER AGENT:
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
SERVICING AGENT:
Boston Financial Data Services, Inc.
Two Heritage Drive
Quincy, Massachusetts 02171
INDEPENDENT AUDITORS:
Deloitte & Touche LLP
117 Campus Drive
Princeton, New Jersey 08540
COUNSEL:
Morgan, Lewis & Bockius LLP
1800 M Street, N.W.
Washington, D.C. 20036
EXP-F-011-01
