Expedition Funds
GUIDING YOUR WAY
1998 Semi-annual Report
[PHOTO OF COMPASS AND SPREADSHEET OMITTED]
<PAGE>
Table of Contents
Letter to Shareholders......................................1
Statement of Net Assets.....................................3
Statement of Operations....................................15
Statement of Changes in Net Assets.........................16
Financial Highlights.......................................18
Notes to Financial Statements..............................20
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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 of 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.
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<PAGE>
Letter to Shareholders
Dear Shareholder:
I am pleased to report that the six-month period ended April 30, 1998 was a
positive one for the Expedition Funds, marked by good performance, continued
asset growth, an expanding shareholder base, and the introduction of a new fund.
(BULLET) MARKET OVERVIEW: The investment markets experienced increased
volatility during the period, as investors grew concerned about the economic
crisis in Asia and how it may impact the U.S. economy. These concerns
periodically dampened enthusiasm for equities, sending the major indices down
from their recent historic highs. The domestic economy remained strong, however,
with corporate profits showing modest growth, and unemployment levels reaching
thirty-year lows.
As they often do during times of uncertainty, bonds performed well overall,
helped in part by inflows of cash from domestic and international investors
seeking the safe haven of U.S. government and corporate debt instruments. The
bond market also benefited from continued inaction by the Federal Reserve Board,
which saw the Asian crisis as an additional reason to leave interest rates at
their current levels.
(BULLET) A GROWING INVESTMENT FAMILY: During this period, assets
in the Expedition Funds grew to $572 million, an increase of 2.5% over their
level on October 31, 1997. The number of individual and institutional
shareholders also increased, reflecting a growing interest in mutual fund
portfolios that are managed by the investment professionals of Compass Asset
Management Group.
During April, 1998, the Expedition Tax-Free Money Market Fund was
introduced, filling an important niche in our fund family. This Fund seeks
income that is generally free from Federal income taxes, providing an attractive
alternative to conservative, tax-conscious investors. The Fund also seeks
stability of principal by investing primarily in high quality money market
instruments, offering shareholders immediate access to their funds.
1
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Letter to Shareholders (concluded)
With this new fund, investors now have a fuller range of tools for building
their investment strategies. The other portfolios within the Expedition Funds
family are:
(BULLET) Expedition Equity Fund
(BULLET) Expedition Bond Fund
(BULLET) Expedition Money Market Fund
In the months ahead, we may expand our family even further with the
introduction of additional new funds. Details on these funds will be announced
as soon as they are available.
(BULLET) A POSITIVE OUTLOOK: We are gratified by the growth of our fund
family, and continue to seek new opportunities to provide our shareholders with
the very best in investment products and services. And while we are proud of the
recent performance of our funds, we recognize that the investment markets seldom
move in a straight upward line. Therefore, we continually seek to avoid undue
risk, and encourage our investors to maintain a long-term outlook and to ignore
short-term market trends. As always, 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 investment management family, 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>
Statement of Net Assets (unaudited)
The Expedition Equity Fund
VALUE
DESCRIPTION SHARES (000)
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COMMON STOCKS - 99.5%
AIRCRAFT - 5.3%
Boeing 83,625 $ 4,186
Lockheed Martin 54,970 6,122
United Technologies 57,825 5,692
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TOTAL AIRCRAFT 16,000
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AUTOMOTIVE - 3.3%
Chrysler 106,690 4,288
Dana 99,220 5,866
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TOTAL AUTOMOTIVE 10,154
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BANKS - 4.4%
J.P. Morgan 34,545 4,534
Mellon Bank 120,885 8,704
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TOTAL BANKS 13,238
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BEAUTY PRODUCTS - 4.5%
Gillette 46,095 5,321
Procter & Gamble 101,640 8,354
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TOTAL BEAUTY PRODUCTS 13,675
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BROADCASTING, NEWSPAPERS & ADVERTISING - 2.1%
Omnicom Group 132,140 6,260
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TOTAL BROADCASTING, NEWSPAPERS & ADVERTISING 6,260
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CHEMICALS - 2.0%
E.I. du Pont de Nemours 84,745 6,170
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TOTAL CHEMICALS 6,170
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COMPUTER COMMUNICATIONS EQUIPMENT - 2.6%
Cisco Systems* 105,692 7,742
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TOTAL COMPUTER COMMUNICATIONS EQUIPMENT 7,742
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COMPUTERS & SERVICES - 7.0%
Compaq Computer 286,280 8,034
Computer Associates 83,450 4,887
IBM 71,800 8,320
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TOTAL COMPUTERS & SERVICES 21,241
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DRUGS - 5.0%
Merck 68,200 8,218
Pfizer 62,400 7,102
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TOTAL DRUGS 15,320
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ELECTRICAL UTILITY - 0.9%
Enova 106,440 2,847
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TOTAL ELECTRICAL UTILITY 2,847
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The accompanying notes are an integral part of the financial statements.
3
<PAGE>
Statement of Net Assets (unaudited)
The Expedition Equity Fund
VALUE
DESCRIPTION SHARES (000)
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ENTERTAINMENT - 4.3%
Carnival 96,885 $ 6,740
Walt Disney 51,295 6,377
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TOTAL ENTERTAINMENT 13,117
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ENVIRONMENTAL SERVICES - 1.6%
USA Waste Services* 101,920 5,000
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TOTAL ENVIRONMENTAL SERVICES 5,000
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FINANCIAL SERVICES - 4.6%
Fannie Mae 90,935 5,445
Franklin Resources 160,545 8,589
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TOTAL FINANCIAL SERVICES 14,034
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FOOD & TOBACCO - 4.9%
H.J. Heinz 150,600 8,208
PepsiCo 70,651 2,804
Philip Morris 100,580 3,753
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TOTAL FOOD & TOBACCO 14,765
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GAS/NATURAL GAS - 2.4%
Williams Companies 229,485 7,257
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TOTAL GAS/NATURAL GAS 7,257
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INSURANCE - 7.1%
Allstate 63,000 6,064
Marsh & McLennan 67,590 6,159
Travelers 153,177 9,373
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TOTAL INSURANCE 21,596
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MACHINERY - 4.5%
Crane 85,302 4,590
General Electric 106,385 9,056
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TOTAL MACHINERY 13,646
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MEDICAL PRODUCTS & SERVICES - 6.0%
Biomet 152,901 4,587
McKesson 106,830 7,552
Tenet Healthcare* 159,195 5,960
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TOTAL MEDICAL PRODUCTS & SERVICES 18,099
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PAPER & PAPER PRODUCTS - 1.9%
Temple Inland 89,730 5,793
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TOTAL PAPER & PAPER PRODUCTS 5,793
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The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Statement of Net Assets (unaudited)
The Expedition Equity Fund
SHARES/FACE VALUE
DESCRIPTION AMT. (000) (000)
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PETROLEUM & FUEL PRODUCTS - 5.2%
Dresser Industries 144,950 $ 7,664
Schlumberger 97,042 8,042
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TOTAL PETROLEUM & FUEL PRODUCTS 15,706
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PETROLEUM REFINING - 3.2%
Exxon 131,320 9,572
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TOTAL PETROLEUM REFINING 9,572
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RETAIL - 5.3%
Dayton Hudson 93,355 8,151
Safeway* 204,950 7,839
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TOTAL RETAIL 15,990
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SPECIALTY CONSTRUCTION - 2.4%
Masco 126,525 7,338
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TOTAL SPECIALTY CONSTRUCTION 7,338
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TELEPHONES & TELECOMMUNICATION - 9.0%
Lucent Technologies 101,660 7,739
SBC Communications 257,180 10,657
Sprint 132,720 9,066
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TOTAL TELEPHONES & TELECOMMUNICATION 27,462
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TOTAL COMMON STOCKS
(COST $245,624) 302,022
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REPURCHASE AGREEMENT - 0.3%
Greenwich Treasury
5.48%, dated 04/30/98,
matures 05/01/98, repurchase
price $1,060,161 (collateralized
by U.S. Treasury Instrument,
market value: $1,081,210) $1,060 1,060
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TOTAL REPURCHASE AGREEMENT
(COST $1,060) 1,060
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TOTAL INVESTMENTS -- 99.8%
(COST $246,684) 303,082
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OTHER ASSETS AND LIABILITIES, NET - 0.2% 610
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The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Statement of Net Assets (unaudited)
The Expedition Equity Fund
VALUE
DESCRIPTION (000)
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NET ASSETS:
Portfolio Shares of Institutional Class (unlimited
authorization -- no par value) based
on 27,547,876 outstanding shares
of beneficial interest $235,156
Portfolio Shares of Investment Shares Class (unlimited
authorization -- no par value) based
on 34,945 outstanding shares
of beneficial interest 211
Distribution in excess of net investment income (538)
Accumulated net realized gain on investments 12,465
Net unrealized appreciation on investments 56,398
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TOTAL NET ASSETS -- 100.0% $303,692
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NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- INSTITUTIONAL CLASS $11.01
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NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- INVESTMENT SHARES CLASS $11.03
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* Non-income producing security
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
Statement of Net Assets (unaudited)
The Expedition Bond Fund
FACE VALUE
DESCRIPTION AMT.(000) (000)
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ASSET BACKED SECURITIES - 10.1%
AT&T Universal Card Master Trust,
Ser 1995-2, Cl A
5.950%, 10/17/02 $2,500 $ 2,508
MBNA Master Credit Card Trust,
97-I, Cl A
6.550%, 01/15/07 2,500 2,565
MBNA Master Trust,
Ser 1995-F, Cl A
6.600%, 01/15/03 2,300 2,341
Proffitts Credit Card Master Trust,
Ser 1997-2, Cl A
6.500%, 12/15/05 4,000 4,053
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TOTAL ASSET BACKED SECURITIES
(COST $11,318) 11,467
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CORPORATE BONDS - 18.7%
BANKS - 1.3%
Morgan Guaranty Trust
5.750%, 10/08/99 1,500 1,494
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TOTAL BANKS 1,494
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CONSUMER NON-DURABLE - 3.8%
Archer Daniels Midland
6.250%, 05/15/03 1,500 1,504
Campbell Soup
5.625%, 09/15/03 1,875 1,830
Coca-Cola Enterprises
6.375%, 08/01/01 1,000 1,013
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TOTAL CONSUMER NON-DURABLE 4,347
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DIVERSIFIED FINANCE - 7.1%
American General Finance Senior Notes
7.250%, 04/15/00 1,500 1,532
Beneficial Finance
7.750%, 11/08/02 500 528
Caterpillar Finance Services
6.490%, 10/15/99 1,000 1,007
Ford Motor Credit
6.125%, 04/28/03 3,500 3,491
Lehman Brothers Holdings
6.500%, 10/01/02 1,000 1,008
Merrill Lynch
6.510%, 03/19/01 500 506
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TOTAL DIVERSIFIED FINANCE 8,072
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The accompanying notes are an integral part of the financial statements.
7
<PAGE>
Statement of Net Assets (unaudited)
The Expedition Bond Fund
FACE VALUE
DESCRIPTION AMT.(000) (000)
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LEASING & RENTING - 0.9%
International Lease Finance
6.250%, 10/15/00 $1,005 $ 1,010
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TOTAL LEASING & RENTING 1,010
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RETAIL - 5.6%
Dillard Department Stores
7.150%, 09/01/02 2,025 2,096
Wal-Mart Stores
6.500%, 06/01/03 1,520 1,552
7.500%, 05/15/04 2,500 2,678
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TOTAL RETAIL 6,326
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TOTAL CORPORATE BONDS
(COST $20,970) 21,249
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U.S. GOVERNMENT AGENCY OBLIGATIONS - 4.5%
FHLMC Note
6.800%, 03/19/07 1,000 1,052
FNMA Notes
6.350%, 11/23/01 2,000 2,012
6.220%, 03/13/06 1,000 1,009
6.620%, 06/25/07 1,000 1,041
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TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(COST $4,939) 5,114
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U.S. GOVERNMENT AGENCY MORTGAGE-BACKED OBLIGATIONS - 15.4%
FHLMC, Ser 1437, Cl H
7.000%, 12/15/02 1,107 1,126
FHLMC, Ser 1317, Cl H
7.000%, 01/15/07 1,000 1,016
FHLMC, Ser 1668, Cl B
6.500%, 11/15/10 831 834
FHLMC, Gold Pool #E00413
6.500%, 01/01/11 3,186 3,204
FHLMC, Gold Pool #E00475
7.500%, 02/01/12 1,644 1,693
FHLMC, Gold Pool #E00485
7.000%, 05/01/12 2,696 2,749
FHLMC, Gold Pool #E00532
6.500%, 02/01/13 1,980 1,991
FNMA, Ser 1991-4, Cl E
8.250%, 09/25/05 333 338
FNMA, Pool #369212
6.500%, 11/01/08 1,103 1,108
FNMA, Pool #190665
7.000%, 03/01/09 2,215 2,256
FNMA, Ser 1991-31, Cl L
6.500%, 05/25/20 1,176 1,178
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
Statement of Net Assets (unaudited)
The Expedition Bond Fund
FACE VALUE
DESCRIPTION AMT. (000) (000)
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TOTAL U.S. GOVERNMENT AGENCY
MORTGAGE-BACKED OBLIGATIONS
(COST $17,367) $17,493
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U.S. TREASURY OBLIGATIONS - 49.2%
U.S. Treasury Bond
6.000%, 08/15/99 $1,250 1,257
U.S. Treasury Notes
6.750%, 05/31/99 2,000 2,025
7.750%, 01/31/00 2,300 2,382
6.375%, 05/15/00 3,000 3,045
6.250%, 08/31/00 3,500 3,549
6.125%, 09/30/00 2,000 2,023
5.625%, 11/30/00 3,000 3,001
6.250%, 04/30/01 1,500 1,526
6.625%, 06/30/01 3,500 3,598
7.500%, 11/15/01 2,500 2,647
6.250%, 01/31/02 3,500 3,568
7.500%, 05/15/02 4,000 4,261
6.375%, 08/15/02 3,250 3,336
6.250%, 02/15/03 3,000 3,073
5.750%, 08/15/03 5,000 5,020
7.250%, 08/15/04 3,000 3,241
6.500%, 08/15/05 3,000 3,132
6.875%, 05/15/06 1,000 1,071
6.500%, 10/15/06 1,000 1,048
6.250%, 02/15/07 1,000 1,034
6.125%, 08/15/07 2,000 2,053
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TOTAL U.S. TREASURY OBLIGATIONS
(COST $55,239) 55,890
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REPURCHASE AGREEMENT - 0.2%
Morgan Stanley
5.25%, dated 04/30/98,
matures 05/01/98, repurchase
price $213,031 (collateralized
by U.S. Treasury Instrument,
market value: $218,368) 213 213
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TOTAL REPURCHASE AGREEMENT
(COST $213) 213
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TOTAL INVESTMENTS -- 98.1%
(COST $110,046) 111,426
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OTHER ASSETS AND LIABILITIES, NET - 1.9% 2,135
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The accompanying notes are an integral part of the financial statements.
9
<PAGE>
Statement of Net Assets (unaudited)
The Expedition Bond Fund
VALUE
DESCRIPTION (000)
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NET ASSETS:
Portfolio Shares of Institutional Class (unlimited
authorization -- no par value) based on
10,241,399 outstanding shares
of beneficial interest $ 99,158
Portfolio Shares of Investment Shares Class
(unlimited authorization -- no par value)
based on 1,264,903 outstanding shares
of beneficial interest 16,728
Distribution in excess of net investment income (5)
Accumulated net realized loss on investments (3,700)
Net unrealized appreciation on investments 1,380
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TOTAL NET ASSETS -- 100.0% $113,561
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NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- INSTITUTIONAL CLASS $9.87
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NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- INVESTMENT SHARES CLASS $9.86
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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 (unaudited)
The Expedition Money Market Fund
FACE VALUE
DESCRIPTION AMT. (000) (000)
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CERTIFICATES OF DEPOSIT - 5.8%
Societe Generale
5.765%, 10/09/98 $2,000 $ 1,999
5.700%, 03/23/99 2,000 2,000
Wachovia
5.530%, 06/01/98 5,000 5,000
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TOTAL CERTIFICATES OF DEPOSIT
(COST $8,999) 8,999
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COMMERCIAL PAPER - 56.2%
BROKER/DEALERS - 12.9%
Bear Stearns
5.520%, 05/15/98 5,000 4,989
Goldman Sachs Group
5.490%, 05/29/98 4,000 3,983
Merrill Lynch
5.530%, 05/15/98 4,000 3,991
Morgan Stanley, Dean Witter, Discover
5.510%, 05/26/98 4,000 3,985
5.500%, 07/06/98 3,000 2,970
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TOTAL BROKER/DEALERS 19,918
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DIVERSIFIED FINANCE - 18.0%
American General Finance
5.520%, 05/08/98 4,000 3,996
Avco Financial Services
5.500%, 06/12/98 4,000 3,974
5.480%, 06/23/98 3,000 2,976
Ford Motor Credit
5.470%, 06/03/98 3,000 2,985
Norwest Corporation
5.510%, 05/22/98 3,000 2,990
Preferred Receivables Funding
5.510%, 05/27/98 3,000 2,988
5.500%, 06/10/98 4,000 3,976
Transamerica Finance
5.510%, 05/11/98 4,000 3,994
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TOTAL DIVERSIFIED FINANCE 27,879
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ELECTRICAL SERVICES - 5.2%
General Electric
5.430%, 05/05/98 2,000 1,999
5.520%, 05/26/98 3,000 2,988
Georgia Power
5.500%, 05/12/98 3,000 2,995
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TOTAL ELECTRICAL SERVICES 7,982
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The accompanying notes are an integral part of the financial statements.
11
<PAGE>
Statement of Net Assets (unaudited)
The Expedition Money Market Fund
FACE VALUE
DESCRIPTION AMT.(000) (000)
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FUNDING CORPORATIONS - 20.1%
Centric Capital
5.520%, 06/18/98 $5,000 $ 4,963
Falcon Asset Securitization
5.510%, 05/19/98 3,240 3,231
5.510%, 06/04/98 2,000 1,990
Receivables Capital
5.510%, 06/19/98 7,000 6,948
Riverwood Funding
5.520%, 05/08/98 3,000 2,997
5.530%, 05/28/98 4,000 3,983
Toyota Motor Credit
5.500%, 05/13/98 4,000 3,993
5.580%, 05/14/98 3,000 2,994
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TOTAL FUNDING CORPORATIONS 31,099
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TOTAL COMMERCIAL PAPER
(COST $86,878) 86,878
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CORPORATE BONDS - 23.4%
BANKS - 6.8%
NationsBank
5.560%, 07/15/98 1,000 999
5.125%, 09/15/98 3,000 2,992
8.500%, 03/01/99 1,500 1,533
Norwest Corporation
6.230%, 09/01/98 2,000 2,002
6.000%, 10/13/98 1,000 1,000
Wachovia
6.000%, 03/15/99 2,000 2,008
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TOTAL BANKS 10,534
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BROKER/DEALER - 1.9%
Merrill Lynch
6.090%, 06/08/98 1,000 1,000
6.600%, 06/24/98 2,000 2,002
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TOTAL BROKER/DEALERS 3,002
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DIVERSIFIED FINANCE - 8.2%
Associates Corporation of North America
7.250%, 05/15/98 2,000 2,001
5.250%, 09/01/98 1,000 998
6.500%, 09/09/98 2,000 2,005
5.270%, 02/22/99 1,000 996
6.000%, 03/15/99 1,280 1,285
Ford Motor Credit
5.625%, 12/15/98 1,000 999
7.900%, 05/17/99 2,200 2,249
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
Statement of Net Assets (unaudited)
The Expedition Money Market Fund
FACE VALUE
DESCRIPTION AMT.(000) (000)
- --------------------------------------------------------------------------------
General Electric Capital
8.100%, 01/26/99 $2,085 $ 2,120
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TOTAL DIVERSIFIED FINANCE 12,653
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ELECTRICAL SERVICES - 2.6%
Southern California Edison
5.450%, 06/15/98 2,000 1,999
7.500%, 04/15/99 2,000 2,031
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TOTAL ELECTRICAL SERVICES 4,030
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LEASING & RENTING - 3.9%
International Lease Finance
6.250%, 06/15/98 3,000 3,001
5.980%, 11/16/98 1,000 1,000
6.270%, 02/10/99 1,000 1,004
7.500%, 03/01/99 1,000 1,014
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TOTAL LEASING & RENTING 6,019
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TOTAL CORPORATE BONDS
(COST $36,238) 36,238
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U.S. GOVERNMENT AGENCY OBLIGATIONS - 5.8%
Federal National Mortgage Association
5.540%, 04/02/99 2,000 1,998
Student Loan Marketing Agency*
5.473%, 10/15/98 3,000 3,000
5.393%, 06/28/99 4,000 4,002
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TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(COST $9,000) 9,000
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REPURCHASE AGREEMENT - 8.7%
Greenwich Treasury
5.48%, dated 04/30/97,
matures 05/01/98, repurchase
price $13,438,045 (collateralized
by U.S. Treasury Instruments,
total market value: $13,706,843) 13,436 13,436
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TOTAL REPURCHASE AGREEMENT
(COST $13,436) 13,436
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TOTAL INVESTMENTS -- 99.9%
(COST $154,551) 154,551
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OTHER ASSETS AND LIABILITIES, NET -- 0.1% 85
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The accompanying notes are an integral part of the financial statements.
13
<PAGE>
Statement of Net Assets (unaudited)
The Expedition Money Market Fund
VALUE
DESCRIPTION (000)
- --------------------------------------------------------------------------------
NET ASSETS:
Portfolio Shares of Institutional
Class (unlimited authorization -- no par
value) based on 33,445,708 outstanding shares
of beneficial interest $ 33,446
Portfolio Shares of Investment Service
Shares Class (unlimited authorization
-- no par value) based on 121,192,980 outstanding
shares of beneficial interest 121,193
Accumulated net realized loss on investments (3)
- --------------------------------------------------------------------------------
TOTAL NET ASSETS -- 100.0% $154,636
- --------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- INSTITUTIONAL CLASS $1.00
- --------------------------------------------------------------------------------
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- INVESTMENT SERVICE SHARES CLASS $1.00
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* Variable Rate Security -- the rate reported on the Statement of Net Assets is
the rate in effect as of April 30, 1998.
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
Statement of Operations (000) (unaudited)
For the six-month period ended April 30, 1998
EXPEDITION EXPEDITION EXPEDITION
EQUITY BOND MONEY MARKET
FUND FUND FUND
----------- ---------- ------------
INVESTMENT INCOME:
Dividends $ 2,017 $ -- $ --
Interest 95 3,603 4,796
------- ------ ------
Total investment income 2,112 3,603 4,796
EXPENSES:
Investment Advisory fees 979 440 337
Waiver of Investment Advisory fees -- (68) (188)
Administrator fees 257 117 168
Waiver of Administrator fees -- -- (42)
Transfer Agent fees 49 32 27
Custodian fees 26 12 17
Directors' fees 7 3 4
Registration fees 64 40 26
Professional fees 10 5 7
Printing fees 13 4 6
Shareholder Servicing fees --
Investment Service Shares -- -- 168
Distribution fees--Investment shares -- 5 --
Amortization of organizational costs 3 -- --
Other fees 3 3 1
------- ------ ------
Total net expenses 1,411 593 531
------- ------ ------
Investment income--net 701 3,010 4,265
------- ------ ------
Net realized gain on investments 12,663 412 1
Net change in unrealized appreciation
(depreciation) of investments 44,527 (165) --
------- ------ ------
NET GAIN ON INVESTMENTS 57,190 247 1
------- ------ ------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $57,891 $3,257 $4,266
======= ====== ======
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
Statement of Changes in Net Assets (000)
For the six-month period ended April 30, 1998
and the year ended October 31, 1997
EXPEDITION
EQUITY
FUND
--------------------------------
Period Ended Period Ended*
04/30/98 10/31/97
-------- ---------
OPERATIONS:
Investment income--net $ 701 $ 485
Net realized gain (loss) on investments 12,663 31,123
Net change in unrealized appreciation
(depreciation) of investments 44,527 (24,519)
-------- ---------
Net increase in net assets resulting
from operations 57,891 7,089
-------- ---------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment income--net:
Institutional Class (1,363) (361)
Investment Shares/Investment Service
Shares Class -- --
Net realized gain on investments:
Institutional Class (12,889) (18,432)
Investment Shares/Investment Service
Shares Class -- --
-------- ---------
Total distributions (14,252) (18,793)
-------- ---------
CAPITAL SHARE TRANSACTIONS:
Institutional class:
Proceeds from sales 49,151 21,421
Proceeds in connection with acquisition of
Common Trust Fund Assets -- 245,636
Reinvestment of distributions 162 18,432
Payments for redemptions (27,038) (36,218)
-------- ---------
Increase (decrease) in net assets from Institutional
class transactions 22,275 249,271
-------- ---------
Investment Service Shares and Investment
Shares Class (respectively):
Proceeds from sales 385 --
Reinvestment of distributions -- --
Payments for redemptions (174) --
-------- ---------
Increase (decrease) in net assets from
Investment Service Shares and Investment
Shares Class (respectively) transactions 211 --
-------- ---------
Increase (decrease) in net assets from
capital share transactions 22,486 249,271
-------- ---------
Total increase (decrease) in net assets 66,125 237,567
-------- ---------
NET ASSETS AT BEGINNING OF PERIOD 237,567 --
-------- ---------
NET ASSETS AT END OF PERIOD $303,692 $ 237,567
======== =========
Capital share transactions:
Institutional class:
Shares issued 4,971 2,253
Shares issued in connection with acquisition of
Common Trust Fund Assets -- 24,854
Shares issued in lieu of cash distributions 15 2,032
Shares redeemed (2,741) (3,836)
-------- ---------
Total Institutional class transactions 2,245 25,303
-------- ---------
Investment Service Shares and Investment
Shares Class (respectively):
Shares issued 35 --
Shares issued in lieu of cash distributions -- --
Shares redeemed -- --
-------- ---------
Total Investment Service Shares and Investment
Shares Class (respectively) transactions 35 --
-------- ---------
NET INCREASE (DECREASE) FROM SHARE TRANSACTIONS 2,280 25,303
======== =========
*Commenced operations on June 13, 1997.
16
<PAGE>
(unaudited)
EXPEDITION EXPEDITION
BOND MONEY MARKET
FUND FUND
------------------------------------ ----------------------------
Period Ended Year Ended Period Ended Year Ended
04/30/98 10/31/97 04/30/98 10/31/97
------- -------- -------- --------
$ 3,010 $ 3,825 $ 4,265 $ 7,999
412 (739) 1 --
(165) 2,551 -- --
------- -------- -------- --------
3,257 5,637 4,266 7,999
------- -------- -------- --------
(2,562) (1,889) (892) (910)
(450) (1,939) (3,373) (7,089)
-- -- -- --
-- -- -- --
-------- -------- -------- --------
(3,012) (3,828) (4,265) (7,999)
-------- -------- -------- --------
10,283 21,432 36,463 75,569
-- 95,844 -- --
452 -- -- --
(11,035) (17,787) (51,023) (27,564)
-------- --------- --------- ---------
(300) 99,489 (14,560) 48,005
-------- --------- --------- ---------
48 675 271,102 864,106
217 874 646 1,085
(11,503) (22,545) (298,210) (890,259)
-------- --------- --------- --------
(11,238) (20,996) (26,462) (25,068)
-------- --------- --------- --------
(11,538) 78,493 (41,022) 22,937
-------- --------- --------- --------
(11,293) 80,302 (41,021) 22,937
-------- --------- --------- --------
124,854 44,552 195,657 172,720
-------- --------- --------- --------
$113,561 $ 124,854 $ 154,636 $195,657
======== ========= ========= ========
1,040 2,200 36,463 75,569
-- 9,891 -- --
45 -- -- --
(1,119) (1,816) (51,023) (27,564)
-------- --------- --------- --------
(34) 10,275 (14,560) 48,005
-------- --------- --------- --------
5 63 271,102 864,106
22 90 646 1,085
(1,161) (2,312) (298,210) (890,259)
-------- --------- --------- --------
(1,134) (2,159) (26,462) (25,068)
-------- --------- --------- --------
(1,168) 8,116 (41,022) 22,937
======== ========= ========= ========
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
Financial Highlights
FOR THE SIX-MONTH PERIOD ENDED APRIL 30, 1998 (UNAUDITED) AND THE PERIODS ENDED
OCTOBER 31, FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
REALIZED AND
NET UNREALIZED DISTRIBUTIONS NET ASSET
ASSET VALUE, NET GAINS OR FROM NET DISTRIBUTIONS VALUE,
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT FROM END OF TOTAL
OF PERIOD INCOME INVESTMENTS INCOME CAPITAL GAINS PERIOD RETURN
---------- ----------- ----------- ------------ -------------- -------- --------
- ------------
EQUITY FUND
- ------------
Institutional Shares
<S> <C> <C> <C> <C> <C> <C> <C>
1998+ $ 9.39 0.03 2.15 (0.05) (0.51) $11.01 24.31%
1997(1) 10.00 0.02 0.25 (0.02) (0.86) 9.39 2.96%
Investment Shares
1998+(7) $ 9.65 0.02 1.92 (0.05) (0.51) $11.03 24.45%
- ----------
BOND FUND
- ----------
Institutional Shares
1998+ $ 9.85 0.25 0.02 (0.25) -- $ 9.87 2.79%
1997(1) 9.69 0.19 0.16 (0.19) -- 9.85 3.49%
Investment Shares
1998+ $ 9.85 0.25 0.01 (0.25) -- $ 9.86 2.64%(6)
1997 9.77 0.53 0.08 (0.53) -- 9.85 6.41%(6)
1996 9.92 0.58 (0.15) (0.58) -- 9.77 4.44%
1995 9.54 0.63 0.38 (0.63) -- 9.92 10.94%
1994 10.40 0.54 (0.86) (0.54) -- 9.54 (3.12%)
1993 10.25 0.63 0.21 (0.63) (0.06) 10.40 8.42%
1992(2) 10.00 0.36 0.25 (0.36) -- 10.25 6.24%
- ------------------
MONEY MARKET FUND
- ------------------
Institutional Shares
1998+ $ 1.00 0.03 -- (0.03) -- $ 1.00 2.64%
1997(3) 1.00 0.02 -- (0.02) -- 1.00 5.26%*
Investment Service Shares(4)
1998+ $ 1.00 0.03 -- (0.03) -- $ 1.00 2.51%
1997 1.00 0.08 -- (0.08) -- 1.00 4.97%
1996 1.00 0.04 -- (0.04) -- 1.00 4.95%
1995 1.00 0.05 -- (0.05) -- 1.00 5.51%
1994 1.00 0.03 -- (0.03) -- 1.00 3.29%
1993 1.00 0.03 -- (0.03) -- 1.00 2.84%
1992 1.00 0.04 -- (0.04) -- 1.00 4.07%
1991 1.00 0.06 -- (0.06) -- 1.00 6.44%
1990(5) 1.00 0.06 -- (0.06) -- 1.00 5.89%
18
RATIO RATIO OF NET
RATIO OF NET OF EXPENSES INVESTMENT INCOME
NET RATIO OF INVESTMENT TO AVERAGE TO AVERAGE
ASSETS EXPENSES INCOME NET ASSETS NET ASSETS PORTFOLIO AVERAGE
END OF TO AVERAGE TO AVERAGE EXCLUDING (EXCLUDING TURNOVER COMMISSION
PERIOD (000) NET ASSETS NET ASSETS (WAIVERS) WAIVERS) RATE RATE
------------- ---------- ------------- ------------- --------------- -------- -----------
- ------------
EQUITY FUND
- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Institutional Shares
1998+ $303,310 1.07%* 0.54%* 1.07%* 0.54%* 38.04% $0.0432
1997(1) 237,567 1.09%* 0.53%* 1.09%* 0.53%* 64.68% 0.0519
Investment Shares
1998+(7) $ 385 1.11%* (0.64%)* 1.11%* (0.64%)* 38.04% $0.0432
- ----------
BOND FUND
- ----------
Institutional Shares
1998+ $101,085 0.99%* 5.11%* 1.11%* 5.23%* 20.55% --
1997(1) 101,224 1.10%* 5.05%* 1.11%* 5.04%* 69.09% --
Investment Shares
1998+ $ 12,476 1.08%* 5.01%* 1.17%* 5.10%* 20.55% --
1997 23,630 1.13% 5.46% 1.56% 5.03% 69.09% --
1996 44,552 1.08% 5.90% 1.58% 5.40% 77.00% --
1995 63,521 1.04% 6.51% 1.51% 6.04% 79.00% --
1994 58,827 1.20% 5.44% 1.50% 5.14% 91.00% --
1993 97,246 1.11% 6.11% 1.40% 5.82% 69.00% --
1992(2) 65,984 0.79%* 6.79%* 1.39%* 6.19%* 88.00% --
- ------------------
MONEY MARKET FUND
- ------------------
Institutional Shares
1998+ $ 33,446 0.43%* 5.24%* 0.65%* 5.02%* -- --
1997(3) 48,006 0.43%* 5.22%* 0.70%* 4.95%* -- --
Investment Service Shares(4)
1998+ $121,190 0.68%* 4.98%* 0.90%* 4.76%* -- --
1997 147,651 0.73% 4.84% 0.85% 4.72% -- --
1996 136,666 0.71% 4.85% 0.71% 4.85% -- --
1995 141,434 0.56% 5.38% 0.66% 5.28% -- --
1994 158,367 0.75% 3.26% 0.79% 3.22% -- --
1993 131,508 0.70% 2.83% 0.70% 2.83% -- --
1992 187,394 0.64% 4.01% 0.65% 4.00% -- --
1991 212,997 0.62% 6.13% 0.67% 6.08% -- --
1990(5) 117,716 0.58%* 7.80%* 0.68%* 7.70%* -- --
<FN>
* Annualized
+ For the six month period ended April 30, 1998.
(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.
(7) Commenced operations on November 24, 1997.
The accompanying notes are an integral part of the financial statements.
</FN>
</TABLE>
18 & 19
<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 offering the following portfolios as of April 30, 1998: the Expedition
Equity Fund ("the Equity Fund"), the Expedition Bond Fund ("the Bond Fund"), the
Expedition Money Market Fund ("the Money Market Fund") (collectively, "the
Funds"). A fourth portfolio, the Expedition Tax Free Money Market Fund, had not
commenced operations as of April 30, 1998. Each of the Expedition Funds
portfolios is registered to offer two classes of shares. The Bond and Equity
Funds offer Institutional and Investment shares and the Money Market Fund and
the Tax Free Money Market Fund offer Institutional and Investment Service
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 Expedition Funds portfolios 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
20
<PAGE>
(unaudited)
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 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
21
<PAGE>
Notes to Financial Statements
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.
22
<PAGE>
(unaudited)
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 Trust's 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.
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.
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.
23
<PAGE>
Notes to Financial Statements
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.
(4) Investment Transactions
Purchases and sales of investments, excluding short-term securities, for the
period ended April 30, 1998, were as follows (000):
BOND EQUITY
FUND FUND
-------- --------
Purchases............................. $23,326 $106,809
Sales................................. $34,627 $ 99,318
At April 30, 1998, 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 April 30, 1998, are as follows (000):
BOND EQUITY
FUND FUND
-------- --------
Aggregate gross unrealized
appreciation........................ $1,659 $60,301
Aggregate gross unrealized
depreciation........................ (279) (3,903)
------ -------
Net unrealized appreciation........... $1,380 $56,398
====== =======
24
<PAGE>
(unaudited)
(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.
(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
25
<PAGE>
Notes to Financial Statements (unaudited)
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.
26
<PAGE>
Notes
<PAGE>
Notes
<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-016-01
