N-CSR 1 expedition_arcombined103104.txt EXPEDITION AR 10_04 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------- FORM N-CSR -------- CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES INVESTMENT COMPANY ACT FILE NUMBER 811-5900 EXPEDITION FUNDS (Exact name of registrant as specified in charter) -------- 101 Federal Street Boston, MA 02110 (Address of principal executive offices) (Zip code) SEI Corporation One Freedom Valley Drive Oaks, PA 19456 (Name and address of agent for service) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 1-800-342-5734 DATE OF FISCAL YEAR END: OCTOBER 31, 2004 DATE OF REPORTING PERIOD: OCTOBER 31, 2004 ITEM 1. REPORTS TO STOCKHOLDERS. [Graphics Omitted] Expedition Funds GUIDING YOUR WAY 2004 Annual Report [Logo Omitted] EXPEDITION FUNDS(R) Table of Contents Letter to Our Shareholders ................................................. 1 Management's Discussion and Analysis ....................................... 4 Report of Independent Registered Public Accounting Firm .................... 14 Statements of Net Assets ................................................... 15 Statements of Operations ................................................... 50 Statements of Changes in Net Assets ........................................ 53 Financial Highlights ....................................................... 56 Notes to Financial Statements .............................................. 62 Trustees and Officers of the Trust ......................................... 72 Disclosure of Fund Expenses ................................................ 80 Notice to Shareholders ..................................................... 82 The Trust's Forms N-Q are available on the Commission's web site at http://www.sec.gov, and may be reviewed and copied at the Commission's Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. A description of the policies and procedures that the Expedition Funds use to determine how to vote proxies (if any) relating to portfolio securities, as well as information relating to how a Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, is available without charge (i) upon request, by calling 800-992-2085; and (ii) on the Commission's website at http://ww.sec.gov. -------------------------------------------------------------------------------- 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 neither insured nor guaranteed by the U.S. Government and there can be no assurance that the Expedition Money Market Fund or Tax-Free Money Market Fund will be able to maintain a stable net asset value of $1.00 per share. Compass Asset Management, a division of Compass Bank, serves as investment adviser to the Expedition Funds. Compass Bank serves as the Funds' custodian. In addition, Compass Bank as well as certain of its divisions and affiliates, may provide other services to the Funds. Compass Bank and these affiliates and divisions will be compensated for these services. -------------------------------------------------------------------------------- LETTER TO OUR SHAREHOLDERS Dear Shareholder: Fiscal year 2004 witnessed a constant struggle between good news and bad news. And ultimately, the good news appeared to win. On the negative side, the U.S. economy was battered by rising oil prices, which peaked above $50 per barrel for the first time in history. Conventional wisdom holds that such a dramatic spike would have a serious dampening effect on consumer spending and corporate profits, but both of these areas proved to be surprisingly resilient. In addition, the conflict in Iraq appeared to worsen, as insurgents continued to inflict heavy casualties on the brave U.S. soldiers who are striving to bring democracy to a troubled region. In the good news column, overall economic growth was positive, if somewhat uneven. Factory orders, corporate purchasing, and other major indicators were positive for much of the fiscal year, although not strong enough to clearly signal continued growth for the year ahead. The U.S. job market managed to provide both bad news and good news. In the first half of the year, many worried about a "jobless recovery" that produced good corporate earnings but few new hires. Later in the fiscal year, employment staged a shaky recovery - although it is unclear whether the newly-created jobs offered the same level of earnings as those of the past. In the business world, a few sectors stumbled, while many others flourished. Airlines, for example, experienced a near-total meltdown as many of the major carriers veered toward bankruptcy under the weight of rising fuel costs and unsustainable cost structures. On the other side of the coin, the energy sector was among those that recorded record profits. Over all, many companies continued to benefit from their efforts to streamline operations in recent years, resulting in strong profitability from even the most modest revenue gains. Of course, the ultimate good news/bad news story - depending on where you sit - was the 2004 presidential election, which dominated public attention during the second half of the fiscal year. The 2004 campaign was marked by uncommon rancor, negativity, and divisiveness. And it inspired many investors to adopt a wait-and-see attitude until November 3. In light of all these conflicting factors, the financial markets managed to take their place in the "good news" column for the fiscal year, as investors welcomed a return to relative stability after several turbulent years. STOCKS RISE MODESTLY. The U.S. stock markets produced solid gains for the year, but little in the way of excitement. Investors often appeared to be unfazed by impressive gains in corporate profits. As a long list of companies - large and small - reported better-than-expected earnings, the markets generally failed to respond with more than a disappointed yawn. Those companies that failed to meet expectations, however, were often punished by sharp declines in their stock prices. Virtually no sector was immune to investor disinterest. The technology industry, in particular, experienced an unexpected surge in revenues - due in part to increased sales to China and other Asia-Pacific countries. And yet, prices of bellwether technology stocks such as Intel, Microsoft, and Cisco increased only slightly. One explanation may be that investors are still suffering a hangover from the irrational exuberance of the late 1990's. Or, it could be argued that earnings are only now catching up with the still-high prices of many stocks. One of the few moments of actual entertainment value in the stock market came with the long-awaited initial public offering of Google, which many hoped would usher in a new era of technology IPOs. And while that era has not yet arrived, Google itself performed extremely well in its first few months as a public company. OCTOBER 31, 2004 1 LETTER TO OUR SHAREHOLDERS (CONCLUDED) A MIXED YEAR FOR BONDS. The strengthening economy, skyrocketing federal deficits, and rising energy costs caused mixed results in the bond markets. Taxable bond prices declined somewhat as it became clear that interest rates had finally bottomed out and were on their way up. The Federal Reserve Board raised interest rates three times, totaling 0.75 percent. But investors appeared to recognize that the Fed may have been even more aggressive if not for the upcoming election. Municipal bonds also struggled, as many state and local governments faced declining federal assistance for key public works projects. Money market instruments were among the few beneficiaries of the current interest rate scenario, moving up to single-digit territory for the first time in several years. STEADY MANAGEMENT, STEADY GAINS. Throughout the year, the managers of the Expedition Funds continued to pursue their strategies of seeking investments of strong value and strong quality. The results were good performance in comparison to their respective indices. In addition, our prudent approach was once again validated by increasing assets from both individual and institutional investors. AN IMPORTANT ANNOUNCEMENT TO ALL EXPEDITION FUNDS INVESTORS. Finally, it is with a mixture of pride and sadness that I announce the planned closing of the Expedition Funds family in February 2005. My pride comes from the strong history of returns to our investors since our founding in 1990, from the pleasure of working with such committed fund managers, and above all from the privilege of serving you, our valued investors. My sadness comes from realizing that this chapter in our history is closing. But I feel certain that a new chapter will begin for all our investors, and we will make every effort to ensure that the transition is a smooth one. In the coming weeks, you will receive detailed information on the reasons behind this event, as well as our suggested course of action. For now, we want to thank you for your confidence in us over the past year - and all the years since our founding. And we wish you and yours the very best during the upcoming holiday season and the new year ahead. Sincerely, /s/Denise A. Woodham Denise A. Woodham Managing Director of Investments Compass Asset Management Group TO DETERMINE IF THESE FUNDS ARE AN APPROPRIATE INVESTMENT FOR YOU, CAREFULLY CONSIDER THE FUNDS' INVESTMENT OBJECTIVES, RISK FACTORS AND CHARGES AND EXPENSES BEFORE INVESTING. THIS AND OTHER INFORMATION CAN BE FOUND IN THE FUNDS' PROSPECTUS, WHICH MAY BE OBTAINED BY CALLING 1-800-992-2085, OR LOGGING ON TO OUR WEBSITE AT WWW.EXPEDITIONFUNDS.COM. PLEASE READ IT CAREFULLY BEFORE INVESTING. THE MATERIAL REPRESENTS THE MANAGER'S ASSESSMENT OF THE PORTFOLIO AND MARKET ENVIRONMENT AT A SPECIFIC POINT IN TIME AND SHOULD NOT BE RELIED UPON BY THE READER AS RESEARCH OR INVESTMENT ADVICE REGARDING ANY STOCK. THE EXPEDITION FUNDS ARE DISTRIBUTED BY SEI INVESTMENTS DISTRIBUTION CO. SEI INVESTMENTS DISTRIBUTION CO. IS NOT AFFILIATED WITH EXPEDITION FUNDS OR ANY OTHER AFFILIATE. THERE ARE RISKS INVOLVED WITH INVESTING, INCLUDING POSSIBLE LOSS OF PRINCIPAL. IN ADDITION TO THESE RISKS, PRODUCTS AND COMPANIES IN WHICH TECHNOLOGY FUNDS INVEST MAY BE SUBJECT TO SEVERE COMPETITION AND RAPID OBSOLESCENCE. 2 OCTOBER 31, 2004 INDEX DEFINITIONS LEHMAN INTERMEDIATE GOVERNMENT/CREDIT INDEX -- A market value weighted performance benchmark for government and Baa and higher rated corporate fixed-rate debt issues with maturities between one and ten years. LEHMAN MUNICIPAL BOND INDEX -- A broad-based total return index comprised of 8,000 investment grade, fixed rate, tax-exempt bonds with a remaining maturity of at least one year, including state and local general obligation, revenue, insured and pre-refunded bonds. RUSSELL 1000 INDEX -- Measures the performance of the 1,000 largest companies in the Russell 3000 Index which represents approximately 92% of total market capitalization of the Russell 3000 Index. S&P 400 MID-CAP INDEX -- This index is a capitalization-weighted index which measures the performance of the mid-range of the U.S. Stock Market. This index consists of 400 domestic stocks chosen for market size, liquidity and industry group representation. It is a market value weighted index, with each stock affecting the index in proportion to its market value. S&P 500 COMPOSITE INDEX -- An unmanaged capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. S&P 500/BARRA VALUE INDEX -- This index is constructed by dividing the stocks of the S&P 500 Composite Index according to price-to-book ratio. It contains firms with lower price-to-book ratios. The index is capitalization-weighted, meaning that each stock in the index is weighted in proportion to its market value. OCTOBER 31, 2004 3 EXPEDITION EQUITY FUND MANAGEMENT'S DISCUSSION AND ANALYSIS For the twelve month period ended October 31, 2004, the Expedition Equity Fund (Institutional Shares) generated a total return of 4.97%. This compares to a 9.42% return for the S&P 500 Composite Index and a 5.98% return for the Lipper Large-Cap Core Funds Classification. The Fund seeks to provide growth of capital, with a secondary objective of income and pursues these objectives by investing in a diversified portfolio of common stocks issued by mid- and large-capitalization companies. The Expedition Equity Fund was well positioned to take advantage of the market's surge in the first half of the fiscal year, and managed to hold onto its gains during the relatively uneventful second half. An emphasis on the energy, financial, and technology sectors enabled the Fund to benefit from rising energy prices, a strengthening economy, and a surprisingly healthy global demand for computer and telecommunications equipment. Other strong sectors included utilities, telecommunications, and basic materials. 4 OCTOBER 31, 2004 EXPEDITION EQUITY FUND MANAGEMENT'S DISCUSSION AND ANALYSIS ================================================================================ EXPEDITION EQUITY FUND ================================================================================ AVERAGE ANNUAL TOTAL RETURN
----------------------------------------------------------------------------------------------- 1 Year 3 Year 5 Year 10 Year Inception to Return Return Return* Return* Date* ----------------------------------------------------------------------------------------------- Institutional Shares 4.97% -0.81% -4.99% 8.16% 7.40% ----------------------------------------------------------------------------------------------- Investment Shares - Class A 4.64% -1.06% -5.21% 7.99%** 7.25%** ----------------------------------------------------------------------------------------------- Investment Shares - Class A w/load+ 0.39% -2.40% -5.98% 7.56%** 6.85%** ----------------------------------------------------------------------------------------------- Investment Shares - Class B 3.98% -1.80% -5.93% 7.51%** 6.82%** ----------------------------------------------------------------------------------------------- Investment Shares - Class B w/load++ -1.02% -2.79% -6.08% 7.51%** 6.82%** -----------------------------------------------------------------------------------------------
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE EXPEDITION EQUITY FUND, INSTITUTIONAL SHARES, INVESTMENT SHARES-CLASS A AND INVESTMENT SHARES-CLASS B, VERSUS THE RUSSELL 1000 INDEX, THE S&P 500 COMPOSITE INDEX, THE S&P 400 MID-CAP INDEX, THE LIPPER GROWTH & INCOME FUNDS OBJECTIVE, AND THE LIPPER LARGE-CAP CORE FUNDS CLASSIFICATION. [THE FOLLOWING TABLE WAS REPRESENTED AS LINE GRAPH IN THE PRINTED MATERIAL.]
EXPEDITION EXPEDITION EXPEDITION EQUITY FUND, EQUITY FUND, LIPPER LIPPER EQUITY FUND, INVESTMENT INVESTMENT S&P 500 S&P 400 GROWTH & LARGE-CAP INSTITUTIONAL SHARES- SHARES- RUSSELL COMPOSITE MID-CAP INCOME FUNDS CORE FUNDS SHARES CLASS A CLASS B 1000 INDEX INDEX INDEX OBJECTIVE CLASSIFICATION 10/94 $10,000 $ 9,600 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 10/95 11,673 11,206 11,673 12,700 12,644 12,121 12,228 12,089 10/96 14,274 13,703 14,274 15,611 15,691 14,224 14,822 14,747 10/97 18,149 17,423 18,149 20,581 20,730 18,868 19,034 18,983 10/98 21,630 20,800 21,666 24,638 25,288 20,132 21,847 20,930 10/99 28,307 27,073 28,067 30,940 31,780 24,374 27,217 24,658 10/00 34,538 32,956 33,904 33,743 33,715 32,089 29,868 27,232 10/01 22,453 21,385 21,831 24,957 25,320 28,094 22,207 22,826 10/02 17,255 16,396 16,600 21,313 21,494 26,751 18,620 19,656 10/03 20,877 19,793 19,881 26,070 25,965 34,971 21,993 23,730 10/04 21,915 20,712 20,672 28,502 28,411 38,832 23,310 26,032
* FOR PERIODS PRIOR TO THE INCEPTION OF THE EXPEDITION EQUITY FUND (THE "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 FUND'S INVESTMENT ADVISOR, ADJUSTED FOR THE MAXIMUM FEE AND EXPENSES OF THE INSTITUTIONAL SHARES OF THE FUND APPLICABLE AT THE INCEPTION OF THE 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. ** CLASS A SHARES OF THE FUND WERE OFFERED BEGINNING NOVEMBER 24, 1997 AND CLASS B SHARES OF THE FUND WERE OFFERED BEGINNING NOVEMBER 16, 1998. THE PERFORMANCE INFORMATION SHOWN PRIOR TO THAT REPRESENTS PERFORMANCE OF INSTITUTIONAL SHARES. THE PRIOR INSTITUTIONAL SHARES PERFORMANCE HAS BEEN ADJUSTED TO REFLECT THE MAXIMUM FRONT-END SALES CHARGES AND THE MAXIMUM CONTINGENT DEFERRED SALES CHARGES APPLICABLE TO CLASS A AND CLASS B SHARES, RESPECTIVELY, BUT DOES NOT REFLECT THE HIGHER RULE 12B-1 FEES FOR EITHER CLASS. HAD THAT ADJUSTMENT BEEN MADE, PERFORMANCE WOULD HAVE BEEN LOWER. + REFLECTS 4.00% SALES CHARGE. ++ REFLECTS MAXIMUM CDSC OF 5.00%. 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. RETURNS SHOWN DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. THE RETURNS FOR CERTAIN PERIODS REFLECT FEE WAIVERS AND/OR REIMBURSEMENTS IN EFFECT FOR THAT PERIOD; ABSENT FEE WAIVERS AND REIMBURSEMENTS, PERFORMANCE WOULD HAVE BEEN LOWER. OCTOBER 31, 2004 5 EXPEDITION EQUITY INCOME FUND MANAGEMENT'S DISCUSSION AND ANALYSIS For the twelve month period ended October 31, 2004, the Expedition Equity Income Fund (Institutional Shares) generated a total return of 11.22%. This compares to a 9.42% return for the S&P 500 Composite Index and a 11.58% return for the Lipper Large-Cap Value Funds Classification for the comparable time period. The Fund seeks to provide growth of capital, with a secondary objective of income. These objectives are pursued through a diversified portfolio of common stocks issued by mid- and large- capitalization companies. After a strong first half, the market for blue-chip, income-oriented stocks reached a plateau during the third and fourth quarters. Investors largely ignored strong earnings reports and good fundamentals, and instead focused on uncertainties about the direction of the economy, oil prices, and the presidential election. Still, the combination of good gains from the first half and strong dividends throughout the year led to strong total returns for the Expedition Equity Income Fund. In addition, the recent reduction in taxes on dividends led more and more companies in the portfolio to increase their payouts to investors. Looking ahead, we believe that investors will continue to place a high value on the relative stability and income potential of dividend-oriented stocks. Therefore, we plan to maintain our strategy of seeking high-quality companies that produce above-average dividend yields. 6 OCTOBER 31, 2004 EXPEDITION EQUITY INCOME FUND MANAGEMENT'S DISCUSSION AND ANALYSIS ================================================================================ EXPEDITION EQUITY INCOME FUND ================================================================================ AVERAGE ANNUAL TOTAL RETURN -------------------------------------------------------------------------------- 1 Year 3 Year Inception to Return Return Date -------------------------------------------------------------------------------- Institutional Shares 11.22% 0.39% -4.67% -------------------------------------------------------------------------------- Investment Shares - Class A 11.00% 0.15% -4.47% -------------------------------------------------------------------------------- Investment Shares - Class A w/load+ 6.51% -1.21% -5.31% -------------------------------------------------------------------------------- Investment Shares - Class B 10.01% -0.64% -5.27% -------------------------------------------------------------------------------- Investment Shares - Class B w/load++ 5.01% -1.64% -5.46% -------------------------------------------------------------------------------- COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE EXPEDITION EQUITY INCOME FUND, INSTITUTIONAL SHARES, INVESTMENT SHARES-CLASS A AND INVESTMENT SHARES-CLASS B, VERSUS THE S&P 500 COMPOSITE INDEX, THE S&P 500/BARRA VALUE INDEX, AND THE LIPPER LARGE-CAP VALUE FUNDS CLASSIFICATION, THE LIPPER EQUITY INCOME CLASSIFICATION, AND THE LIPPER EQUITY INCOME OBJECTIVE [THE FOLLOWING TABLE WAS REPRESENTED AS LINE GRAPH IN THE PRINTED MATERIAL.]
EXPEDITION EXPEDITION EQUITY INCOME EQUITY INCOME FUND, EXPEDITION LIPPER FUND, INVESTMENT EQUITY INCOME S&P 500 S&P 500/ LARGE-CAP LIPPER LIPPER INSTITUTIONAL SHARES- FUND, INVESTMENT COMPOSITE BARRA VALUE VALUE FUNDS EQUITY INCOME EQUITY INCOME SHARES CLASS A SHARES-CLASS B INDEX INDEX CLASSIFICATION CLASSIFICATION OBJECTIVE 03/00 $10,000 $9,600 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 10/00 10,350 9,918 10,302 9,600 10,609 10,698 10,778 10,693 10/01 7,556 7,221 7,453 7,210 8,656 9,539 9,759 9,561 10/02 5,920 5,642 5,786 6,120 7,290 8,160 8,616 8,396 10/03 6,874 6,536 6,646 7,393 9,100 9,862 10,306 10,020 10/04 7,645 7,255 7,242 8,090 10,415 11,004 11,586 11,228
+ REFLECTS 4.00% SALES CHARGE. ++ REFLECTS MAXIMUM CDSC OF 5.00%. 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. RETURNS SHOWN DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. THE RETURNS FOR CERTAIN PERIODS REFLECT FEE WAIVERS AND/OR REIMBURSEMENTS IN EFFECT FOR THAT PERIOD; ABSENT FEE WAIVERS AND REIMBURSEMENTS, PERFORMANCE WOULD HAVE BEEN LOWER. OCTOBER 31, 2004 7 EXPEDITION INVESTMENT GRADE BOND FUND MANAGEMENT'S DISCUSSION AND ANALYSIS For the twelve month period ended October 31, 2004, the Expedition Investment Grade Bond Fund (Institutional Shares) generated a total return of 4.33%. This compares to a 4.86% return for the Lipper Intermediate Investment-Grade Debt Objective. The Fund seeks to provide income with relative stability of principal. Growing economic strength, rising oil prices, and the conflict in Iraq were among the factors that held the bond market back during fiscal 2004. In addition, the Federal Reserve Board reversed its recent course of rate cutting, raising short-term interest rates by a total of three-quarters of a percent. In light of these factors, the Expedition Investment Grade Bond Fund produced satisfactory returns that were well in line with those of its benchmark. Throughout the year, the Fund continued to hold the maturity of its Treasury holdings relatively short, adding high-quality corporate issues to take advantage of their comparatively high yields. Looking ahead, we believe that interest rates will continue to edge upward, driven by increasing strength in the U.S. economy. Therefore, we plan to maintain a relatively conservative stance, taking advantage of higher-rate instruments if and when they become available. 8 OCTOBER 31, 2004 EXPEDITION INVESTMENT GRADE BOND FUND MANAGEMENT'S DISCUSSION AND ANALYSIS ================================================================================ EXPEDITION INVESTMENT GRADE BOND FUND ================================================================================ AVERAGE ANNUAL TOTAL RETURN
---------------------------------------------------------------------------------------- 1 Year 3 Year 5 Year 10 Year Inception Return Return Return Return* to Date* ---------------------------------------------------------------------------------------- Institutional Shares 4.33% 5.03% 7.24% 6.61% 6.16% ---------------------------------------------------------------------------------------- Investment Shares - Class A 4.07% 4.76% 6.98% 6.42% 6.01% ---------------------------------------------------------------------------------------- Investment Shares - Class A w/load+ -0.13% 3.35% 6.11% 5.98% 5.67% ---------------------------------------------------------------------------------------- Investment Shares - Class B 3.39% 4.01% 6.25% 6.24% 5.88% ---------------------------------------------------------------------------------------- Investment Shares - Class B w/load++ -1.60% 3.08% 6.09% 6.24% 5.88% ----------------------------------------------------------------------------------------
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE EXPEDITION INVESTMENT GRADE BOND FUND, INSTITUTIONAL SHARES, INVESTMENT SHARES-CLASS A AND INVESTMENT SHARES-CLASS B, VERSUS THE LEHMAN INTERMEDIATE GOVERNMENT/CREDIT INDEX, AND THE LIPPER INTERMEDIATE INVESTMENT- GRADE DEBT OBJECTIVE. [THE FOLLOWING TABLE WAS REPRESENTED AS LINE GRAPH IN THE PRINTED MATERIAL.]
EXPEDITION EXPEDITION EXPEDITION INVESTMENT INVESTMENT INVESTMENT LEHMAN LIPPER GRADE BOND FUND, GRADE BOND FUND, GRADE BOND FUND, INTERMEDIATE INTERMEDIATE- INSTITUTIONAL INVESTMENT SHARES- INVESTMENT SHARES- GOVERNMENT/ GRADE DEBT SHARES CLASS A CLASS B CREDIT INDEX OBJECTIVE 10/94 $10,000 $ 9,600 $10,000 $10,000 $10,000 10/95 11,094 10,650 11,094 11,252 11,466 10/96 11,587 11,123 11,587 11,907 12,078 10/97 12,329 11,836 12,329 12,799 13,103 10/98 13,369 12,813 13,346 13,963 14,156 10/99 13,361 12,760 13,520 14,102 14,157 10/00 14,228 13,554 14,269 15,010 15,015 10/01 16,362 15,549 16,265 17,150 17,048 10/02 17,488 16,577 17,212 18,164 17,687 10/03 18,168 17,178 17,704 19,146 18,688 10/04 18,955 17,877 18,304 19,975 19,596
* INSTITUTIONAL SHARES OF THE FUND WERE OFFERED BEGINNING JUNE 13, 1997 AND CLASS B SHARES OF THE FUND WERE OFFERED BEGINNING NOVEMBER 16, 1998. THE PERFORMANCE INFORMATION SHOWN PRIOR TO THAT REPRESENTS PERFORMANCE OF CLASS A SHARES, WHICH WERE OFFERED BEGINNING APRIL 20, 1992. FOR INSTITUTIONAL SHARES, THE PRIOR CLASS A SHARES PERFORMANCE REFLECTS THE MAXIMUM FRONT-END SALES CHARGE AND RULE 12B-1 FEES ON CLASS A SHARES, NEITHER OF WHICH APPLIES TO INSTITUTIONAL SHARES. FOR CLASS B SHARES, THE PRIOR CLASS A SHARES PERFORMANCE REFLECTS THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE ON CLASS B SHARES, BUT DOES NOT REFLECT CLASS B SHARES' HIGHER RULE 12B-1 FEES. HAD THAT ADJUSTMENT BEEN MADE, PERFORMANCE WOULD HAVE BEEN LOWER. + REFLECTS 4.00% SALES CHARGE. ++ REFLECTS MAXIMUM CDSC OF 5.00%. 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. RETURNS SHOWN DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. THE RETURNS FOR CERTAIN PERIODS REFLECT FEE WAIVERS AND/OR REIMBURSEMENTS IN EFFECT FOR THAT PERIOD; ABSENT FEE WAIVERS AND REIMBURSEMENTS, PERFORMANCE WOULD HAVE BEEN LOWER. OCTOBER 31, 2004 9 EXPEDITION TAX-FREE INVESTMENT GRADE BOND FUND MANAGEMENT'S DISCUSSION AND ANALYSIS For the twelve month period ended October 31, 2004, the Expedition Tax-Free Investment Grade Bond Fund (Institutional Shares) generated a total return of 4.98%. This compares to a 6.02% return for the Lehman Municipal Bond Index and a 3.99% return for the Lipper Intermediate Municipal Debt Funds Objective. Tax-exempt bonds put in a relatively weak showing in the first half of the fiscal year, as supply outstripped demand and investors anticipated rate increases by the Federal Reserve Board. In the second half of the year, they regained some strength as uncertainties about the conflict in Iraq and the presidential election led investors to move some assets back to safer havens such as municipal bonds. During this period, the Expedition Tax-Free Investment Grade Bond Fund extended its maturity level somewhat. Still, our average maturity remains slightly shorter than that of our benchmark, reflecting our concern that rates could go higher in the coming year. Looking ahead, we believe that the prospect of continued rate increases, rising federal deficits, and a stronger economy could continue to limit municipal bond returns. However, we believe that high-quality, tax-exempt investments will retain their appeal to higher-income investors, and that our conservative approach will continue to produce favorable results. Regardless of any short-term trends the Fund plans to maintain emphasis on securities that are of high quality, widely traded, and not subject to early redemption. 10 OCTOBER 31, 2004 EXPEDITION TAX-FREE INVESTMENT GRADE BOND FUND MANAGEMENT'S DISCUSSION AND ANALYSIS ================================================================================ EXPEDITION TAX-FREE INVESTMENT GRADE BOND FUND ================================================================================ AVERAGE ANNUAL TOTAL RETURN -------------------------------------------------------------------------------- 1 Year 3 Year Inception to Return Return Date -------------------------------------------------------------------------------- Institutional Shares 4.98% 5.02% 6.74% -------------------------------------------------------------------------------- Investment Shares - Class A 4.62% 4.75% 6.35% -------------------------------------------------------------------------------- Investment Shares - Class A w/load+ 0.47% 3.35% 5.42% -------------------------------------------------------------------------------- Investment Shares - Class B 3.84% 3.94% 5.38% -------------------------------------------------------------------------------- Investment Shares - Class B w/load++ -1.12% 3.01% 5.19% -------------------------------------------------------------------------------- COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE EXPEDITION TAX-FREE INVESTMENT GRADE BOND FUND, INSTITUTIONAL SHARES AND INVESTMENT SHARES-CLASS A, VERSUS THE LEHMAN MUNICIPAL BOND INDEX, THE LIPPER GENERAL MUNICIPAL DEBT FUNDS OBJECTIVE, AND THE LIPPER INTERMEDIATE MUNICIPAL DEBT FUNDS OBJECTIVE. [THE FOLLOWING TABLE WAS REPRESENTED AS LINE GRAPH IN THE PRINTED MATERIAL.]
EXPEDITION TAX-FREE EXPEDITION TAX-FREE LIPPER LIPPER INVESTMENT GRADE INVESTMENT GRADE LEHMAN GENERAL MUNICIPAL INTERMEDIATE BOND FUND, BOND FUND, INVESTMENT MUNICIPAL BOND DEBT FUNDS MUNICIPAL DEBT INSTITUTIONAL SHARES SHARES-CLASS A INDEX OBJECTIVE FUNDS OBJECTIVE 3/00 $10,000 $ 9,600 $10,000 $10,000 $10,000 10/00 10,462 10,019 10,510 10,444 10,405 10/01 11,459 10,947 11,616 11,443 11,368 10/02 12,089 11,521 12,297 11,922 11,923 10/03 12,642 12,027 12,926 12,469 12,440 10/04 13,271 12,583 13,704 13,121 12,936
+ REFLECTS 4.00% SALES CHARGE. ++ REFLECTS MAXIMUM CDSC OF 5.00%. 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. RETURNS SHOWN DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. THE RETURNS FOR CERTAIN PERIODS REFLECT FEE WAIVERS AND/OR REIMBURSEMENTS IN EFFECT FOR THAT PERIOD; ABSENT FEE WAIVERS AND REIMBURSEMENTS, PERFORMANCE WOULD HAVE BEEN LOWER. OCTOBER 31, 2004 11 EXPEDITION MONEY MARKET FUND MANAGEMENT'S DISCUSSION AND ANALYSIS For the twelve month period ended October 31, 2004, the Expedition Money Market Fund (Institutional Shares) generated a total return of 0.80%. This compares to a 0.62% return for the Lipper Money Market Mutual Funds Index. Yields on money market instruments rose during the year, thanks to a total of three quarter-point rate increases by the Federal Reserve Board. The Fed clearly views rising oil prices and the nation's growing economic strength as potential harbingers of inflation, and appears poised to increase rates again in the months ahead. For much of the fiscal year, the Expedition Money Market Fund maintained a relatively conservative stance, with assets concentrated in 30 to 60 day commercial paper and corporate notes of six months to one year. The remainder of the Fund was invested in overnight repurchase agreements. Looking ahead, we believe that all signs are pointing toward a higher-rate environment. Therefore, we plan to continue with our conservative investment approach in order to take advantage of potentially stronger yields in the months to come. 12 OCTOBER 31, 2004 EXPEDITION TAX-FREE MONEY MARKET FUND MANAGEMENT'S DISCUSSION AND ANALYSIS For the twelve month period ended October 31, 2004, the Expedition Tax-Free Money Market Fund (Institutional Shares) generated a total return of 0.75%. This compares to a 0.59% return for the Lipper Tax-Exempt Money Market Funds Index. The Fund seeks to provide income, exempt from Federal income taxes, consistent with stability of principal. The Fund pursues this investment objective by investing in high quality money market instruments maturing in 397 days or less. Yields on short-term municipal instruments increased substantially during the year, in response to three 0.25 percent rate increases by the Federal Reserve Board. As a result, yields on the Expedition Tax-Free Money Market Fund increased, at a rate comparable to those of the benchmark index. Looking ahead, we plan to retain our relatively short maturity levels in order to take advantage of any potential rate increases of the future. In addition, we will maintain our focus on instruments of the highest quality - including those that are backed by municipal bond insurance. OCTOBER 31, 2004 13 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Trustees and Shareholders of Expedition Funds: We have audited the accompanying statements of net assets of Expedition Funds (the "Funds"), comprising the Equity, Equity Income, Investment Grade Bond, Tax-Free Investment Grade Bond, Money Market and Tax-Free Money Market Portfolios as of October 31, 2004, and the related statements of operations, statements of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2004, by correspondence with the custodians and brokers; where replies were not received from brokers, 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, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial positions of the Portfolios as of September 30, 2004, the results of their operations, the changes in their net assets for each of the two years in the period then ended, and their financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. As discussed in Note 8 to the financial statements, effective February 2005, the Funds will be reorganizing each of the Funds into a corresponding fund and share class of the Goldman Sachs Trust. DELOITTE & TOUCHE LLP Philadelphia, Pennsylvania December 17, 2004 14 OCTOBER 31, 2004 EXPEDITION EQUITY FUND STATEMENT OF NET ASSETS SECTOR WEIGHTINGS (UNAUDITED)**: [THE FOLLOWING TABLE WAS REPRESENTED AS BAR GRAPH IN THE PRINTED MATERIAL.] Medical Products & Services 11.4% Retail 11.1% Computers & Services 9.0% Diversified Manufacturing 7.8% Petroleum Refining 7.0% Insurance 6.3% Broker/Dealers 6.1% Banks 4.6% Food, Beverage & Tobacco 4.6% Cosmetics/Toiletries 3.2% Telephones & Telecommunications 3.1% Electrical Services 2.7% Aerospace & Defense 2.4% Communications Equipment 2.3% Machinery 2.1% Pharmaceuticals 2.0% Semi-Conductors/Instruments 2.0% Software & Programming 2.0% Broadcasting, Newspapers & Advertising 1.9% Miscellaneous Business Services 1.9% Diversified Financial Services 1.8% Metals-Aluminum 1.6% Metals 1.1% Related Party Money Market Fund 1.1% Entertainment 0.9% ** PERCENTAGES ARE BASED ON TOTAL INVESTMENTS. VALUE DESCRIPTION SHARES (000) ------------------------------------------------------------------------------- COMMON STOCK - 99.3% AEROSPACE & DEFENSE - 2.4% United Technologies 35,000 $ 3,249 ------------------------------------------------------------------------------- TOTAL AEROSPACE & DEFENSE 3,249 ------------------------------------------------------------------------------- BANKS - 4.7% Bank of America 70,000 3,135 Wells Fargo 51,500 3,076 ------------------------------------------------------------------------------- TOTAL BANKS 6,211 ------------------------------------------------------------------------------- BROADCASTING, NEWSPAPERS & ADVERTISING - 1.9% Omnicom Group 20,000 1,578 UTStarcom* 55,000 942 ------------------------------------------------------------------------------- TOTAL BROADCASTING, NEWSPAPERS & ADVERTISING 2,520 ------------------------------------------------------------------------------- BROKER/DEALERS - 6.1% Citigroup 70,000 3,106 Goldman Sachs Group 20,000 1,968 JP Morgan Chase 80,000 3,088 ------------------------------------------------------------------------------- TOTAL BROKER/DEALERS 8,162 ------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT - 2.3% L-3 Communications Holdings 46,030 3,035 ------------------------------------------------------------------------------- TOTAL COMMUNICATIONS EQUIPMENT 3,035 ------------------------------------------------------------------------------- OCTOBER 31, 2004 15 EXPEDITION EQUITY FUND STATEMENT OF NET ASSETS VALUE DESCRIPTION SHARES (000) ------------------------------------------------------------------------------- COMPUTERS & SERVICES - 9.1% Affiliated Computer Services, Cl A* 49,000 $ 2,673 Cisco Systems* 90,000 1,729 Dell* 60,000 2,104 EMC* 88,000 1,132 Intel 107,500 2,393 International Business Machines 23,000 2,064 ------------------------------------------------------------------------------- TOTAL COMPUTERS & SERVICES 12,095 ------------------------------------------------------------------------------- COSMETICS/TOILETRIES - 3.2% Gillette 40,000 1,659 Procter & Gamble 50,000 2,559 ------------------------------------------------------------------------------- TOTAL COSMETICS/TOILETRIES 4,218 ------------------------------------------------------------------------------- DIVERSIFIED FINANCIAL SERVICES - 1.8% American Express 45,000 2,388 ------------------------------------------------------------------------------- TOTAL DIVERSIFIED FINANCIAL SERVICES 2,388 ------------------------------------------------------------------------------- DIVERSIFIED MANUFACTURING - 7.8% 3M 20,000 1,551 Fortune Brands 40,000 2,913 General Electric 125,000 4,265 Johnson Controls 30,000 1,721 ------------------------------------------------------------------------------- TOTAL DIVERSIFIED MANUFACTURING 10,450 ------------------------------------------------------------------------------- ELECTRICAL SERVICES - 2.7% Exelon 90,000 3,566 ------------------------------------------------------------------------------- TOTAL ELECTRICAL SERVICES 3,566 ------------------------------------------------------------------------------- ENTERTAINMENT - 0.9% Harrah's Entertainment 20,000 1,170 ------------------------------------------------------------------------------- TOTAL ENTERTAINMENT 1,170 ------------------------------------------------------------------------------- FOOD, BEVERAGE & TOBACCO - 4.7% Constellation Brands, Cl A* 77,000 3,020 PepsiCo 48,000 2,380 Sysco 25,000 807 ------------------------------------------------------------------------------- TOTAL FOOD, BEVERAGE & TOBACCO 6,207 ------------------------------------------------------------------------------- INSURANCE - 6.3% Allstate 60,000 2,886 American International Group 46,000 2,793 Lincoln National 63,000 2,759 ------------------------------------------------------------------------------- TOTAL INSURANCE 8,438 ------------------------------------------------------------------------------- MACHINERY - 2.1% Caterpillar 35,000 2,819 ------------------------------------------------------------------------------- TOTAL MACHINERY 2,819 ------------------------------------------------------------------------------- 16 OCTOBER 31, 2004 EXPEDITION EQUITY FUND STATEMENT OF NET ASSETS VALUE DESCRIPTION SHARES (000) ------------------------------------------------------------------------------- MEDICAL PRODUCTS & SERVICES - 11.5% Amgen* 45,000 $ 2,556 CR Bard 43,000 2,442 Johnson & Johnson 41,000 2,394 Mylan Laboratories 100,000 1,722 Quest Diagnostics 22,800 1,996 St. Jude Medical* 18,000 1,378 UnitedHealth Group 38,000 2,751 ------------------------------------------------------------------------------- TOTAL MEDICAL PRODUCTS & SERVICES 15,239 ------------------------------------------------------------------------------- METALS - 1.1% Ball 37,000 1,474 ------------------------------------------------------------------------------- TOTAL METALS 1,474 ------------------------------------------------------------------------------- METALS-ALUMINUM - 1.6% Alcoa 65,000 2,113 ------------------------------------------------------------------------------- TOTAL METALS-ALUMINUM 2,113 ------------------------------------------------------------------------------- MISCELLANEOUS BUSINESS SERVICES - 1.9% First Data 60,000 2,477 ------------------------------------------------------------------------------- TOTAL MISCELLANEOUS BUSINESS SERVICES 2,477 ------------------------------------------------------------------------------- PETROLEUM REFINING - 7.0% Apache 39,000 1,977 ChevronTexaco 66,500 3,529 ConocoPhillips 23,500 1,981 Schlumberger 30,000 1,888 ------------------------------------------------------------------------------- TOTAL PETROLEUM REFINING 9,375 ------------------------------------------------------------------------------- PHARMACEUTICALS - 2.0% Pfizer 91,000 2,634 ------------------------------------------------------------------------------- TOTAL PHARMACEUTICALS 2,634 ------------------------------------------------------------------------------- RETAIL - 11.1% Best Buy 25,000 1,480 CVS 65,000 2,825 Home Depot 50,000 2,054 Staples 90,000 2,677 Target 60,000 3,001 Wal-Mart Stores 51,000 2,750 ------------------------------------------------------------------------------- TOTAL RETAIL 14,787 ------------------------------------------------------------------------------- SEMI-CONDUCTORS/INSTRUMENTS - 2.0% Flextronics* 100,000 1,205 Texas Instruments 61,000 1,491 ------------------------------------------------------------------------------- TOTAL SEMI-CONDUCTORS/INSTRUMENTS 2,696 ------------------------------------------------------------------------------- OCTOBER 31, 2004 17 EXPEDITION EQUITY FUND STATEMENT OF NET ASSETS VALUE DESCRIPTION SHARES (000) ------------------------------------------------------------------------------- SOFTWARE & PROGRAMMING - 2.0% Microsoft 95,000 $ 2,659 ------------------------------------------------------------------------------- TOTAL SOFTWARE & PROGRAMMING 2,659 ------------------------------------------------------------------------------- TELEPHONES & TELECOMMUNICATIONS - 3.1% Alltel 37,000 2,032 SBC Communications 84,600 2,137 ------------------------------------------------------------------------------- TOTAL TELEPHONES & TELECOMMUNICATIONS 4,169 ------------------------------------------------------------------------------- TOTAL COMMON STOCK (COST $121,326) 132,151 ------------------------------------------------------------------------------- RELATED PARTY MONEY MARKET FUND - 1.1% Expedition Money Market Fund+ 1,408,767 1,409 ------------------------------------------------------------------------------- TOTAL RELATED PARTY MONEY MARKET FUND (COST $1,409) 1,409 ------------------------------------------------------------------------------- TOTAL INVESTMENTS - 100.4% (COST $122,735) 133,560 ------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES - (0.4%) Investment Advisory Fees Payable (81) Administrator Fees Payable (24) Distribution Fees Payable (14) Trustees' Fees Payable (3) Custodian Fees Payable (2) Other Assets and Liabilities, Net (431) ------------------------------------------------------------------------------- TOTAL OTHER ASSETS & LIABILITIES (555) ------------------------------------------------------------------------------- NET ASSETS - 100.0% $133,005 ------------------------------------------------------------------------------- NET ASSETS: Portfolio Capital of Institutional Shares (unlimited authorization -- no par value) based on 14,460,059 outstanding shares of beneficial interest 167,248 Portfolio Capital of Investment Shares - Class A (unlimited authorization -- no par value) based on 941,104 outstanding shares of beneficial interest 12,641 Portfolio Capital of Investment Shares - Class B (unlimited authorization -- no par value) based on 1,870,182 outstanding shares of beneficial interest 25,210 Undistributed net investment income 19 Accumulated net realized loss on investments (82,938) Net unrealized appreciation on investments 10,825 ------------------------------------------------------------------------------- NET ASSETS $133,005 ------------------------------------------------------------------------------- 18 OCTOBER 31, 2004 EXPEDITION EQUITY FUND STATEMENT OF NET ASSETS DESCRIPTION VALUE ------------------------------------------------------------------------------- NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE -- INSTITUTIONAL SHARES ($112,113,633 / 14,460,059 SHARES) $7.75 ------------------------------------------------------------------------------- NET ASSET VALUE AND REDEMPTION PRICE PER SHARE -- INVESTMENT SHARES - CLASS A ($7,219,726 / 941,104 SHARES) $7.67 ------------------------------------------------------------------------------- MAXIMUM OFFERING PRICE PER SHARE -- INVESTMENT SHARES - CLASS A (1) $7.99 ------------------------------------------------------------------------------- NET ASSET VALUE AND OFFERING PRICE PER SHARE -- INVESTMENT SHARES - CLASS B (2) (13,671,432 / 1,870,182 SHARES) $7.31 ------------------------------------------------------------------------------- * Non-income producing security. + See Note 4 in Notes to Financial Statements. (1) The offering price is calculated by dividing the net asset value by 1 minus the maximum sales charge of 4.00%. (2) Class B Shares have a contingent deferred sales charge. For a description of a possible redemption charge, see a prospectus for the Funds. Cl -- Class The accompanying notes are an integral part of the financial statements. OCTOBER 31, 2004 19 EXPEDITION EQUITY INCOME FUND STATEMENT OF NET ASSETS SECTOR WEIGHTINGS (UNAUDITED)**: [THE FOLLOWING TABLE WAS REPRESENTED AS BAR GRAPH IN THE PRINTED MATERIAL.] Banks 15.2% Petroleum Refining 10.3% Retail 9.3% Diversified Manufacturing 8.2% Diversified Financial Services 7.1% Telephones & Telecommunications 7.1% Electrical Services 6.1% Broker/Dealers 4.3% Aerospace & Defense 4.1% Insurance 3.9% Chemicals 3.4% Entertainment 3.1% Computers & Services 3.0% Pharmaceuticals 2.3% Food, Beverage & Tobacco 1.8% Gas/Natural Gas 1.7% Metals 1.7% Software & Programming 1.6% Medical Products & Services 1.4% Miscellaneous Business Services 1.3% Related Party Money Market Fund 1.1% Air Transportation 1.0% Real Estate Investment Trusts 1.0% ** PERCENTAGES ARE BASED ON TOTAL INVESTMENTS. VALUE DESCRIPTION SHARES (000) ------------------------------------------------------------------------------- COMMON STOCK - 98.4% AEROSPACE & DEFENSE - 4.1% General Dynamics 2,000 $ 204 United Technologies 2,000 186 ------------------------------------------------------------------------------- TOTAL AEROSPACE & DEFENSE 390 ------------------------------------------------------------------------------- AIR TRANSPORTATION - 1.0% FedEx 1,000 91 ------------------------------------------------------------------------------- TOTAL AIR TRANSPORTATION 91 ------------------------------------------------------------------------------- BANKS - 15.2% Bank of America 4,000 179 Bank of New York 7,500 243 BB&T 5,000 206 Keycorp 6,500 218 Regions Financial 3,500 123 Wachovia 5,000 246 Wells Fargo 3,750 224 ------------------------------------------------------------------------------- TOTAL BANKS 1,439 ------------------------------------------------------------------------------- BROKER/DEALERS - 4.2% Goldman Sachs Group 1,000 98 Merrill Lynch 3,250 175 Morgan Stanley 2,500 128 ------------------------------------------------------------------------------- TOTAL BROKER/DEALERS 401 ------------------------------------------------------------------------------- CHEMICALS - 3.4% EI Du Pont de Nemours 3,500 150 PPG Industries 2,700 172 ------------------------------------------------------------------------------- TOTAL CHEMICALS 322 ------------------------------------------------------------------------------- COMPUTERS & SERVICES - 3.0% Hewlett-Packard 7,000 131 International Business Machines 1,700 152 ------------------------------------------------------------------------------- TOTAL COMPUTERS & SERVICES 283 ------------------------------------------------------------------------------- 20 OCTOBER 31, 2004 EXPEDITION EQUITY INCOME FUND STATEMENT OF NET ASSETS VALUE DESCRIPTION SHARES (000) ------------------------------------------------------------------------------- DIVERSIFIED FINANCIAL SERVICES - 7.1% Alliance Capital Management Holding 5,250 $ 200 Citigroup 6,250 277 JP Morgan Chase 5,000 193 ------------------------------------------------------------------------------- TOTAL DIVERSIFIED FINANCIAL SERVICES 670 ------------------------------------------------------------------------------- DIVERSIFIED MANUFACTURING - 8.1% Fortune Brands 4,000 291 General Electric 9,750 333 Johnson Controls 2,600 149 ------------------------------------------------------------------------------- TOTAL DIVERSIFIED MANUFACTURING 773 ------------------------------------------------------------------------------- ELECTRICAL SERVICES - 6.0% Centerpoint Energy 13,000 137 Exelon 7,000 277 Southern 5,000 158 ------------------------------------------------------------------------------- TOTAL ELECTRICAL SERVICES 572 ------------------------------------------------------------------------------- ENTERTAINMENT - 3.1% Harrah's Entertainment 5,000 293 ------------------------------------------------------------------------------- TOTAL ENTERTAINMENT 293 ------------------------------------------------------------------------------- FOOD, BEVERAGE & TOBACCO - 1.8% Adolph Coors, Cl B 2,500 167 ------------------------------------------------------------------------------- TOTAL FOOD, BEVERAGE & TOBACCO 167 ------------------------------------------------------------------------------- GAS/NATURAL GAS - 1.7% Kinder Morgan Energy Partners 3,500 162 ------------------------------------------------------------------------------- TOTAL GAS/NATURAL GAS 162 ------------------------------------------------------------------------------- INSURANCE - 3.9% ACE Ltd. 3,250 124 American International Group 4,000 243 ------------------------------------------------------------------------------- TOTAL INSURANCE 367 ------------------------------------------------------------------------------- MEDICAL PRODUCTS & SERVICES - 1.4% Quest Diagnostics 1,500 131 ------------------------------------------------------------------------------- TOTAL MEDICAL PRODUCTS & SERVICES 131 ------------------------------------------------------------------------------- METALS - 1.7% Alcan 3,500 162 ------------------------------------------------------------------------------- TOTAL METALS 162 ------------------------------------------------------------------------------- MISCELLANEOUS BUSINESS SERVICES - 1.3% First Data 3,000 124 ------------------------------------------------------------------------------- TOTAL MISCELLANEOUS BUSINESS SERVICES 124 ------------------------------------------------------------------------------- OCTOBER 31, 2004 21 EXPEDITION EQUITY INCOME FUND STATEMENT OF NET ASSETS VALUE DESCRIPTION SHARES (000) ------------------------------------------------------------------------------- PETROLEUM REFINING - 10.3% Anadarko Petroleum 3,400 $ 229 ChevronTexaco 4,500 239 Exxon Mobil 7,500 369 Royal Dutch Petroleum 2,500 136 ------------------------------------------------------------------------------- TOTAL PETROLEUM REFINING 973 ------------------------------------------------------------------------------- PHARMACEUTICALS - 2.2% Abbott Laboratories 5,000 213 ------------------------------------------------------------------------------- TOTAL PHARMACEUTICALS 213 ------------------------------------------------------------------------------- REAL ESTATE INVESTMENT TRUSTS - 1.0% Crescent Real Estate Equity 6,000 96 ------------------------------------------------------------------------------- TOTAL REAL ESTATE INVESTMENT TRUSTS 96 ------------------------------------------------------------------------------- RETAIL - 9.2% CVS 5,500 239 Pier 1 Imports 5,400 97 Wal-Mart Stores 4,000 216 Yum! Brands 7,500 326 ------------------------------------------------------------------------------- TOTAL RETAIL 878 ------------------------------------------------------------------------------- SOFTWARE & PROGRAMMING - 1.6% Microsoft 5,500 154 ------------------------------------------------------------------------------- TOTAL SOFTWARE & PROGRAMMING 154 ------------------------------------------------------------------------------- TELEPHONES & TELECOMMUNICATIONS - 7.1% Alltel 3,000 165 BellSouth 5,500 147 Nokia ADR 7,000 108 SBC Communications 3,800 96 Verizon Communications 4,000 156 ------------------------------------------------------------------------------- TOTAL TELEPHONES & TELECOMMUNICATIONS 672 ------------------------------------------------------------------------------- TOTAL COMMON STOCK (COST $7,995) 9,333 ------------------------------------------------------------------------------- RELATED PARTY MONEY MARKET FUND - 1.1% Expedition Money Market Fund+ 107,434 107 ------------------------------------------------------------------------------- TOTAL RELATED PARTY MONEY MARKET FUND (COST $107) 107 ------------------------------------------------------------------------------- TOTAL INVESTMENTS - 99.5% (COST $8,102) 9,440 ------------------------------------------------------------------------------- 22 OCTOBER 31, 2004 EXPEDITION EQUITY INCOME FUND STATEMENT OF NET ASSETS VALUE DESCRIPTION (000) ------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES - 0.5% Investment Advisory Fees Receivable $ 8 Administrator Fees Payable (6) Distribution Fees Payable (1) Other Assets and Liabilities, Net 49 ------------------------------------------------------------------------------- TOTAL OTHER ASSETS & LIABILITIES 50 ------------------------------------------------------------------------------- NET ASSETS - 100.0% $ 9,490 ------------------------------------------------------------------------------- NET ASSETS: Portfolio Capital of Institutional Shares (unlimited authorization -- no par value) based on 1,169,393 outstanding shares of beneficial interest 14,540 Portfolio Capital of Investment Shares -- Class A (unlimited authorization -- no par value) based on 41,446 outstanding shares of beneficial interest 506 Portfolio Capital of Investment Shares -- Class B (unlimited authorization -- no par value) based on 84,810 outstanding shares of beneficial interest 999 Undistributed net investment income 6 Accumulated net realized loss on investments (7,899) Net unrealized appreciation on investments 1,338 ------------------------------------------------------------------------------- NET ASSETS $ 9,490 ------------------------------------------------------------------------------- NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE -- INSTITUTIONAL SHARES ($8,572,998 / 1,169,393 SHARES) $7.33 ------------------------------------------------------------------------------- NET ASSET VALUE AND REDEMPTION PRICE PER SHARE -- INVESTMENT SHARES - CLASS A ($303,313 / 41,446 SHARES) $7.32 ------------------------------------------------------------------------------- MAXIMUM OFFERING PRICE PER SHARE -- INVESTMENT SHARES -- CLASS A (1) $7.63 ------------------------------------------------------------------------------- NET ASSET VALUE AND OFFERING PRICE PER SHARE -- INVESTMENT SHARES -- CLASS B (2) ($613,199 / 84,810 SHARES) $7.23 ------------------------------------------------------------------------------- + See Note 4 in Notes to Financial Statements. (1) The offering price is calculated by dividing the net asset value by 1 minus the maximum sales charge of 4.00%. (2) Class B Shares have a contingent deferred sales charge. For a description of a possible redemption charge, see a prospectus for the Funds. ADR -- American Depository Receipt Cl -- Class Ltd. -- Limited The accompanying notes are an integral part of the financial statements. OCTOBER 31, 2004 23 EXPEDITION INVESTMENT GRADE BOND FUND STATEMENT OF NET ASSETS SECTOR WEIGHTINGS (UNAUDITED)*: [THE FOLLOWING TABLE WAS REPRESENTED AS BAR GRAPH IN THE PRINTED MATERIAL.] Corporate Obligations 37.9% U.S. Government Agency Obligations 26.9% U.S. Treasury Obligations 24.8% U.S. Government Mortgage-Backed Obligations 6.6% Asset-Backed Securities 3.2% Related Party Money Market Fund 0.6% * PERCENTAGES ARE BASED ON TOTAL INVESTMENTS. FACE VALUE DESCRIPTION AMT. (000) (000) ------------------------------------------------------------------------------- CORPORATE OBLIGATIONS - 37.5% BANKS - 3.0% Bank of America 5.875%, 02/15/09 $1,000 $ 1,086 Bank One 6.000%, 08/01/08 2,000 2,170 ------------------------------------------------------------------------------- TOTAL BANKS 3,256 ------------------------------------------------------------------------------- BROKER/DEALERS - 5.2% Goldman Sachs Group 6.600%, 01/15/12 2,000 2,250 Merrill Lynch 6.375%, 10/15/08 1,000 1,095 Morgan Stanley 6.750%, 04/15/11 2,000 2,273 ------------------------------------------------------------------------------- TOTAL BROKER/DEALERS 5,618 ------------------------------------------------------------------------------- CHEMICALS - 2.1% EI Du Pont de Nemours 6.875%, 10/15/09 2,000 2,280 ------------------------------------------------------------------------------- TOTAL CHEMICALS 2,280 ------------------------------------------------------------------------------- COMPUTERS & SERVICES - 1.9% International Business Machines 4.750%, 11/29/12 2,000 2,046 ------------------------------------------------------------------------------- TOTAL COMPUTERS & SERVICES 2,046 ------------------------------------------------------------------------------- COSMETICS/TOILETRIES - 1.9% Procter & Gamble 4.950%, 08/15/14 2,000 2,068 ------------------------------------------------------------------------------- TOTAL COSMETICS/TOILETRIES 2,068 ------------------------------------------------------------------------------- DIVERSIFIED FINANCIAL SERVICES - 10.2% American Express 4.875%, 07/15/13 2,000 2,045 General Electric Capital MTN, Ser A 7.375%, 01/19/10 3,000 3,487 General Motors Acceptance 6.150%, 04/05/07 2,000 2,103 Household Finance 6.375%, 10/15/11 1,000 1,117 Wells Fargo Financial 5.875%, 08/15/08 2,000 2,188 ------------------------------------------------------------------------------- TOTAL DIVERSIFIED FINANCIAL SERVICES 10,940 ------------------------------------------------------------------------------- 24 OCTOBER 31, 2004 EXPEDITION INVESTMENT GRADE BOND FUND STATEMENT OF NET ASSETS FACE VALUE DESCRIPTION AMT. (000) (000) ------------------------------------------------------------------------------- ELECTRICAL SERVICES - 2.0% Alabama Power, Ser G 5.375%, 10/01/08 $2,000 $ 2,128 ------------------------------------------------------------------------------- TOTAL ELECTRICAL SERVICES 2,128 ------------------------------------------------------------------------------- PHARMACEUTICALS - 1.9% Abbott Laboratories 3.500%, 02/17/09 2,000 1,994 ------------------------------------------------------------------------------- TOTAL PHARMACEUTICALS 1,994 ------------------------------------------------------------------------------- RETAIL - 8.3% Lowe's 8.250%, 06/01/10 2,000 2,430 Target 5.875%, 11/01/08 2,000 2,175 4.000%, 06/15/13 1,000 969 Wal-Mart Stores 6.875%, 08/10/09 3,000 3,420 ------------------------------------------------------------------------------- TOTAL RETAIL 8,994 ------------------------------------------------------------------------------- TELEPHONES & TELECOMMUNICATIONS - 1.0% SBC Communications 5.875%, 02/01/12 1,000 1,081 ------------------------------------------------------------------------------- TOTAL TELEPHONES & TELECOMMUNICATIONS 1,081 ------------------------------------------------------------------------------- TOTAL CORPORATE OBLIGATIONS (COST $36,746) 40,405 ------------------------------------------------------------------------------- U.S. GOVERNMENT AGENCY OBLIGATIONS - 26.6% FHLB 5.250%, 06/18/14 2,000 2,135 3.125%, 08/15/07 3,000 3,004 FHLB, Ser 100 5.800%, 09/02/08 2,000 2,173 FHLB, Ser 363 4.500%, 11/15/12 3,000 3,062 FHLMC 7.000%, 03/15/10 3,000 3,471 6.625%, 09/15/09 3,000 3,401 4.875%, 11/15/13 2,000 2,072 FNMA 7.250%, 01/15/10 2,500 2,916 5.500%, 03/15/11 3,000 3,258 5.250%, 01/15/09 3,000 3,210 ------------------------------------------------------------------------------- TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (COST $26,457) 28,702 ------------------------------------------------------------------------------- OCTOBER 31, 2004 25 EXPEDITION INVESTMENT GRADE BOND FUND STATEMENT OF NET ASSETS FACE VALUE DESCRIPTION AMT. (000) (000) ------------------------------------------------------------------------------- U.S. TREASURY OBLIGATIONS - 24.5% U.S. Treasury Notes 7.000%, 07/15/06 $1,000 $ 1,076 6.500%, 10/15/06 2,000 2,151 6.500%, 02/15/10 1,000 1,151 6.125%, 08/15/07 3,000 3,269 6.000%, 08/15/09 3,000 3,363 5.625%, 05/15/08 2,000 2,178 5.500%, 05/15/09 3,000 3,296 5.000%, 02/15/11 500 540 4.875%, 02/15/12 2,000 2,144 4.750%, 05/15/14 2,000 2,115 4.250%, 08/15/13 3,000 3,067 3.875%, 05/15/09 2,000 2,057 ------------------------------------------------------------------------------- TOTAL U.S. TREASURY OBLIGATIONS (COST $24,182) 26,407 ------------------------------------------------------------------------------- U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS - 6.6% FHLMC, Gold Pool #E00532 6.500%, 02/01/13 132 140 FHLMC, Gold Pool #E00543 6.000%, 04/01/13 302 318 FHLMC, Gold Pool #E00584 6.000%, 11/01/13 444 467 FHLMC, Gold Pool #E00832 7.500%, 04/01/15 167 178 FHLMC, Gold Pool #E00856 7.500%, 06/01/15 170 180 FNMA, Pool # 614934 6.000%, 12/01/16 1,359 1,427 FNMA, Pool #535966 7.000%, 05/01/16 445 473 GNMA, Pool #552999 5.000%, 01/15/18 3,787 3,898 ------------------------------------------------------------------------------- TOTAL U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS (COST $6,937) 7,081 ------------------------------------------------------------------------------- ASSET-BACKED SECURITIES - 3.2% MBNA Master Credit Card Trust, Ser 1999-J, Cl A 7.000%, 02/15/12 3,000 3,428 ------------------------------------------------------------------------------- TOTAL ASSET-BACKED SECURITIES (COST $3,134) 3,428 ------------------------------------------------------------------------------- 26 OCTOBER 31, 2004 EXPEDITION INVESTMENT GRADE BOND FUND STATEMENT OF NET ASSETS VALUE DESCRIPTION SHARES (000) ------------------------------------------------------------------------------- RELATED PARTY MONEY MARKET FUND - 0.6% Expedition Money Market Fund+ 611,601 $ 612 ------------------------------------------------------------------------------- TOTAL RELATED PARTY MONEY MARKET FUND (COST $612) 612 ------------------------------------------------------------------------------- TOTAL INVESTMENTS - 99.0% (COST $98,068) 106,635 ------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES - 1.0% Investment Advisory Fees Payable (32) Administrator Fees Payable (18) Custodian Fees Payable (2) Distribution Fees Payable (2) Trustees' Fees Payable (2) Other Assets and Liabilities, Net 1,115 ------------------------------------------------------------------------------- TOTAL OTHER ASSETS & LIABILITIES 1,059 ------------------------------------------------------------------------------- NET ASSETS - 100.0% $107,694 ------------------------------------------------------------------------------- NET ASSETS: Portfolio Capital of Institutional Shares (unlimited authorization -- no par value) based on 9,455,896 outstanding shares of beneficial interest 89,594 Portfolio Capital of Investment Shares -- Class A (unlimited authorization -- no par value) based on 461,910 outstanding shares of beneficial interest 8,818 Portfolio Capital of Investment Shares -- Class B (unlimited authorization -- no par value) based on 161,942 outstanding shares of beneficial interest 1,665 Accumulated net realized loss on investments (950) Net unrealized appreciation on investments 8,567 ------------------------------------------------------------------------------- NET ASSETS $107,694 ------------------------------------------------------------------------------- OCTOBER 31, 2004 27 EXPEDITION INVESTMENT GRADE BOND FUND STATEMENT OF NET ASSETS DESCRIPTION VALUE ------------------------------------------------------------------------------- NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE -- INSTITUTIONAL SHARES ($101,031,236 / 9,455,896 SHARES) $10.68 ------------------------------------------------------------------------------- NET ASSET VALUE AND REDEMPTION PRICE PER SHARE -- INVESTMENT SHARES -- CLASS A ($4,930,443 / 461,910 SHARES) $10.67 ------------------------------------------------------------------------------- MAXIMUM OFFERING PRICE PER SHARE -- INVESTMENT SHARES -- CLASS A (1) $11.11 ------------------------------------------------------------------------------- NET ASSET VALUE AND OFFERING PRICE PER SHARE -- INVESTMENT SHARES -- CLASS B (2) ($1,732,124 / 161,942 SHARES) $10.70 ------------------------------------------------------------------------------- + See Note 4 in Notes to Financial Statements. (1) The offering price is calculated by dividing the net asset value by 1 minus the maximum sales charge of 4.00%. (2) Class B Shares have a contingent deferred sales charge. For a description of a possible redemption charge, see a prospectus for the Funds. Cl -- Class FHLB -- Federal Home Loan Bank FHLMC -- Federal Home Loan Mortgage Corporation FNMA -- Federal National Mortgage Association GNMA -- Government National Mortgage Association MTN -- Medium Term Note Ser -- Series The accompanying notes are an integral part of the financail statements. 28 OCTOBER 31, 2004 EXPEDITION TAX-FREE INVESTMENT GRADE BOND FUND STATEMENT OF NET ASSETS SECTOR WEIGHTINGS (UNAUDITED)*: [THE FOLLOWING TABLE WAS REPRESENTED AS BAR GRAPH IN THE PRINTED MATERIAL.] General Obligation 38.1% School District 14.4% Transportation 10.5% Higher Education 9.1% Utilities 7.7% Water 4.3% General Revenue 3.6% Power 3.4% Related Party Money Market Fund 2.5% Education 1.9% Facilities 1.9% Public Improvement 1.8% Pollution 0.8% * PERCENTAGES ARE BASED ON TOTAL INVESTMENTS. FACE VALUE DESCRIPTION AMT. (000) (000) ------------------------------------------------------------------------------- MUNICIPAL BONDS - 96.6% ALABAMA - 10.9% Alabama State, Municipal Electric Authority, Power Supply RB, Ser A, MBIA 5.000%, 09/01/33 $1,000 $ 1,027 Alabama State, Public School & College Authority, Capital Improvements RB, Ser D 5.750%, 08/01/19 1,150 1,298 Birmingham, Capital Improvement Warrants GO, Ser A 5.550%, 08/01/21 1,000 1,109 Montgomery, Warrants GO, Ser A 5.100%, 10/01/09 1,000 1,079 Tuscaloosa, Warrants 5.650%, 01/01/17 1,000 1,121 University of Alabama RB, Ser A, MBIA 5.000%, 07/01/12 1,000 1,113 ------------------------------------------------------------------------------- TOTAL ALABAMA 6,747 ------------------------------------------------------------------------------- ALASKA - 1.7% Anchorage Alaska, RB, MBIA 5.125%, 05/01/29 1,000 1,042 ------------------------------------------------------------------------------- TOTAL ALASKA 1,042 ------------------------------------------------------------------------------- CALIFORNIA - 13.4% California State GO, FGIC 5.250%, 09/01/30 1,280 1,340 Los Angeles School District GO, Ser 1997-E, MBIA 5.125%, 01/01/27 1,000 1,049 Menlo Park, GO 5.250%, 08/01/27 1,000 1,059 San Diego School District GO, Ser 1998-D, FGIC 5.250%, 07/01/24 1,000 1,133 San Gabriel School District GO, Ser A, FSA 5.375%, 08/01/21 500 551 Southern California, Metropolitan Water District RB, Ser A 5.100%, 07/01/25 1,000 1,054 University of California, Multiple Purpose Projects RB, Ser M, FGIC 5.125%, 09/01/22 1,000 1,059 5.125%, 09/01/23 1,000 1,054 ------------------------------------------------------------------------------- TOTAL CALIFORNIA 8,299 ------------------------------------------------------------------------------- OCTOBER 31, 2004 29 EXPEDITION TAX-FREE INVESTMENT GRADE BOND FUND STATEMENT OF NET ASSETS FACE VALUE DESCRIPTION AMT. (000) (000) ------------------------------------------------------------------------------- COLORADO - 3.5% Denver, City and County GO, Ser B 5.625%, 08/01/07 $1,000 $ 1,090 La Plata County School District GO, MBIA 5.250%, 11/01/25 1,000 1,069 ------------------------------------------------------------------------------- TOTAL COLORADO 2,159 ------------------------------------------------------------------------------- CONNECTICUT - 1.8% Connecticut State ST, Ser B, FGIC 5.000%, 01/01/16 1,000 1,104 ------------------------------------------------------------------------------- TOTAL CONNECTICUT 1,104 ------------------------------------------------------------------------------- FLORIDA - 3.5% Florida State, Department of Transportation GO, Right of Way Project, Ser B 5.500%, 07/01/11 1,000 1,087 Palm Beach County GO, Ser A 5.450%, 08/01/13 1,000 1,105 ------------------------------------------------------------------------------- TOTAL FLORIDA 2,192 ------------------------------------------------------------------------------- GEORGIA - 1.9% Georgia State GO, Ser B 6.000%, 03/01/12 1,000 1,185 ------------------------------------------------------------------------------- TOTAL GEORGIA 1,185 ------------------------------------------------------------------------------- HAWAII - 1.8% Hawaii State GO, Ser CO, FGIC 6.000%, 03/01/08 1,000 1,121 ------------------------------------------------------------------------------- TOTAL HAWAII 1,121 ------------------------------------------------------------------------------- ILLINOIS - 2.1% Chicago, Project & Refunding GO, Ser C, FGIC 5.500%, 01/01/19 1,180 1,314 ------------------------------------------------------------------------------- TOTAL ILLINOIS 1,314 ------------------------------------------------------------------------------- KANSAS - 1.7% Kansas State, Department of Transportation RB, Ser A 5.000%, 09/01/06 1,000 1,054 ------------------------------------------------------------------------------- TOTAL KANSAS 1,054 ------------------------------------------------------------------------------- MASSACHUSETTS - 5.4% Massachusetts Bay Transportation Authority RB, Ser A 5.000%, 07/01/28 1,000 1,033 Massachusetts State, Consolidated Loan GO, Ser A Pre-Refunded @ 101 (A) 6.000%, 02/01/10 2,000 2,332 ------------------------------------------------------------------------------- TOTAL MASSACHUSETTS 3,365 ------------------------------------------------------------------------------- 30 OCTOBER 31, 2004 EXPEDITION TAX-FREE INVESTMENT GRADE BOND FUND STATEMENT OF NET ASSET FACE VALUE DESCRIPTION AMT. (000) (000) ------------------------------------------------------------------------------- MINNESOTA - 0.8% Minnesota State, Public Facilities Authority RB, Water Pollution Control, Ser A 6.000%, 03/01/09 $ 500 $ 507 ------------------------------------------------------------------------------- TOTAL MINNESOTA 507 ------------------------------------------------------------------------------- NEW HAMPSHIRE - 1.8% New Hampshire RB, MBIA 5.250%, 08/15/19 1,000 1,120 ------------------------------------------------------------------------------- TOTAL NEW HAMPSHIRE 1,120 ------------------------------------------------------------------------------- NEW JERSEY - 1.8% New Jersey State GO, Ser F 5.500%, 08/01/11 1,000 1,141 ------------------------------------------------------------------------------- TOTAL NEW JERSEY 1,141 ------------------------------------------------------------------------------- NEW YORK - 11.3% Brookhaven GO, FGIC 5.500%, 10/01/13 500 543 Metropolitan Transportation Authority RB, Ser F, MBIA 5.250%, 11/15/27 1,000 1,060 New York City GO, Ser C, MBIA 5.375%, 11/15/17 1,000 1,082 New York City Transitional Authority RB, Ser C, FGIC 5.250%, 08/01/14 1,000 1,123 New York State GO, Ser A Pre-Refunded @ 101 (A) 5.875%, 03/15/05 1,000 1,025 New York State GO, Ser F 5.250%, 09/15/13 500 544 New York State, Environmental Water Facilities RB, Pooled Financing Program, Ser F 5.250%, 11/15/20 500 551 Triborough, Bridge & Tunnel Authority RB, Ser A Pre-Refunded @ 100.5 (A) 5.250%, 07/01/09 1,000 1,125 ------------------------------------------------------------------------------- TOTAL NEW YORK 7,053 ------------------------------------------------------------------------------- NORTH CAROLINA - 4.5% Charlotte, Water & Sewer Systems RB 5.125%, 06/01/26 1,000 1,053 Winston-Salem, Water & Sewer Systems RB Pre-Refunded @ 101 (A) 5.250%, 06/01/11 1,500 1,716 ------------------------------------------------------------------------------- TOTAL NORTH CAROLINA 2,769 ------------------------------------------------------------------------------- OCTOBER 31, 2004 31 EXPEDITION TAX-FREE INVESTMENT GRADE BOND FUND STATEMENT OF NET ASSETS FACE VALUE DESCRIPTION AMT. (000) (000) ------------------------------------------------------------------------------- OHIO - 2.7% Ohio State, Building Authority RB, State Facilities Adult Correctional Facilities, Ser A, FSA 5.500%, 10/01/13 $1,000 $ 1,141 Pickerington Ohio, Local School District GO, FGIC 5.250%, 12/01/20 500 551 ------------------------------------------------------------------------------- TOTAL OHIO 1,692 ------------------------------------------------------------------------------- PENNSYLVANIA - 1.7% Pennsylvania State, Intergovernmental Authority ST, Philadelphia Funding Project, FGIC 5.250%, 06/15/15 1,000 1,085 ------------------------------------------------------------------------------- TOTAL PENNSYLVANIA 1,085 ------------------------------------------------------------------------------- SOUTH CAROLINA - 3.6% Greenville County, School District RB 6.000%, 12/01/21 1,000 1,148 Lancaster County, School District GO, FSA 5.100%, 03/01/15 1,000 1,085 ------------------------------------------------------------------------------- TOTAL SOUTH CAROLINA 2,233 ------------------------------------------------------------------------------- TEXAS - 9.1% Frisco, Independent School District GO, PSF 5.125%, 08/15/30 1,000 1,030 Grand Prairie, Independent School District GO, FSA 5.375%, 02/15/18 1,000 1,118 Mesquite, Independent School District GO, PSF 5.500%, 08/15/21 1,160 1,282 Texas University RB, Ser B 5.250%, 08/15/20 1,000 1,106 Williamson County GO, FSA 5.250%, 02/15/27 1,040 1,089 ------------------------------------------------------------------------------- TOTAL TEXAS 5,625 ------------------------------------------------------------------------------- UTAH - 1.7% Utah State, Intermountain Power Agency RB, ETM, Ser B, MBIA 6.000%, 07/01/06 1,000 1,066 ------------------------------------------------------------------------------- TOTAL UTAH 1,066 ------------------------------------------------------------------------------- VIRGINIA - 6.3% Bristol Virginia Utility System RB, MBIA 5.250%, 07/15/26 1,850 1,970 Newport News GO, Ser A, MBIA Pre-Refunded @ 102 (A) 5.625%, 07/01/05 795 831 Virginia, Commonwealth Transportation Board RB, Northern Virginia Transportation Program, Ser A 5.500%, 05/15/15 1,000 1,114 ------------------------------------------------------------------------------- TOTAL VIRGINIA 3,915 ------------------------------------------------------------------------------- 32 OCTOBER 31, 2004 EXPEDITION TAX-FREE INVESTMENT GRADE BOND FUND STATEMENT OF NET ASSETS FACE AMT. VALUE DESCRIPTION (000)/SHARES (000) ------------------------------------------------------------------------------- WASHINGTON - 1.8% Washington State GO, Ser B 6.000%, 01/01/13 $1,000 $ 1,143 ------------------------------------------------------------------------------- TOTAL WASHINGTON 1,143 ------------------------------------------------------------------------------- WEST VIRGINIA - 1.8% West Virginia State GO, State Road Project, FGIC 5.625%, 06/01/18 1,000 1,127 ------------------------------------------------------------------------------- TOTAL WEST VIRGINIA 1,127 ------------------------------------------------------------------------------- TOTAL MUNICIPAL BONDS (COST $55,987) 60,058 ------------------------------------------------------------------------------- RELATED PARTY MONEY MARKET FUND - 2.5% Expedition Tax-Free Money Market Fund+ 1,536,457 1,536 ------------------------------------------------------------------------------- TOTAL RELATED PARTY MONEY MARKET FUND (COST $1,536) 1,536 ------------------------------------------------------------------------------- TOTAL INVESTMENTS - 99.1% (COST $57,523) 61,594 ------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES - 0.9% Investment Advisory Fees Payable (18) Administrator Fees Payable (11) Custodian Fees Payable (1) Trustees' Fees Payable (1) Other Assets and Liabilities, Net 604 ------------------------------------------------------------------------------- TOTAL OTHER ASSETS & LIABILITIES 573 ------------------------------------------------------------------------------- NET ASSETS - 100.0% $62,167 ------------------------------------------------------------------------------- OCTOBER 31, 2004 33 EXPEDITION TAX-FREE INVESTMENT GRADE BOND FUND STATEMENT OF NET ASSETS VALUE DESCRIPTION (000) ------------------------------------------------------------------------------- NET ASSETS: Portfolio Capital of Institutional Shares (unlimited authorization -- no par value) based on 5,688,667 outstanding shares of beneficial interest $57,174 Portfolio Capital of Investment Shares -- Class A (unlimited authorization -- no par value) based on 36,378 outstanding shares of beneficial interest 348 Portfolio Capital of Investment Shares -- Class B (unlimited authorization -- no par value) based on 20,204 outstanding shares of beneficial interest 214 Undistributed net investment income 24 Accumulated net realized gain on investments 336 Net unrealized appreciation on investments 4,071 ------------------------------------------------------------------------------- NET ASSETS $62,167 ------------------------------------------------------------------------------- NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE -- INSTITUTIONAL SHARES ($61,554,847 / 5,688,667 SHARES) $ 10.82 ------------------------------------------------------------------------------- NET ASSET VALUE AND REDEMPTION PRICE PER SHARE -- INVESTMENT SHARES -- CLASS A ($393,337 / 36,378 SHARES) $ 10.81 ------------------------------------------------------------------------------- MAXIMUM OFFERING PRICE PER SHARE -- INVESTMENT SHARES -- CLASS A (1) $ 11.26 ------------------------------------------------------------------------------- NET ASSET VALUE AND OFFERING PRICE PER SHARE -- INVESTMENT SHARES -- CLASS B (2) ($218,506 / 20,204 SHARES) $ 10.81 ------------------------------------------------------------------------------- + See Note 4 in Notes to Financial Statements. (1) The offering price is calculated by dividing the net asset value by 1 minus the maximum sales charge of 4.00%. (2) Class B Shares have a contingent deferred sales charge. For a description of a possible redemption charge, see a prospectus for the Funds. (A) Pre-Refunded Security -- The maturity date shown is the pre-refunded date. ETM -- Escrowed to Maturity FGIC -- Financial Guaranty Insurance Company FSA -- Financial Security Assurance GO -- General Obligation MBIA -- Municipal Bond Insurance Association PSF -- Permanent School Fund Guarantee Program RB -- Revenue Bond Ser -- Series ST -- Special Tax The accompanying notes are an integral part of the financial statements. 34 OCTOBER 31, 2004 EXPEDITION MONEY MARKET FUND STATEMENT OF NET ASSETS SECTOR WEIGHTINGS (UNAUDITED)*: [THE FOLLOWING TABLE WAS REPRESENTED AS BAR GRAPH IN THE PRINTED MATERIAL.] Commercial Paper 53.9% Short-Term Investments 17.2% U.S. Government Obligations 14.8% Corporate Obligations 11.4% Certificates of Deposit 2.7% * PERCENTAGES ARE BASED ON TOTAL INVESTMENTS. FACE VALUE DESCRIPTION AMT. (000) (000) ------------------------------------------------------------------------------- COMMERCIAL PAPER (A) - 53.9% BANKS - 3.6% Wells Fargo 1.750%, 11/29/04 $20,000 $ 19,973 ------------------------------------------------------------------------------- TOTAL BANKS 19,973 ------------------------------------------------------------------------------- BROKER/DEALERS - 4.5% Bear Stearns 1.810%, 11/23/04 5,000 4,994 1.840%, 12/20/04 20,000 19,950 ------------------------------------------------------------------------------- TOTAL BROKER/DEALERS 24,944 ------------------------------------------------------------------------------- DIVERSIFIED FINANCIAL SERVICES - 17.6% American General Finance 1.570%, 11/01/04 10,000 10,000 1.800%, 11/29/04 15,000 14,979 Citigroup 1.830%, 11/23/04 13,000 12,985 General Electric Capital 1.810%, 12/01/04 10,000 9,985 1.860%, 12/13/04 5,000 4,989 1.800%, 12/13/04 10,000 9,979 Household Finance 1.720%, 11/08/04 15,000 14,995 1.830%, 11/30/04 10,000 9,985 Toyota Motor Credit 1.880%, 11/23/04 10,000 9,989 ------------------------------------------------------------------------------- TOTAL DIVERSIFIED FINANCIAL SERVICES 97,886 ------------------------------------------------------------------------------- ELECTRICAL SERVICES - 1.0% Southern 1.760%, 11/09/04 5,400 5,398 ------------------------------------------------------------------------------- TOTAL ELECTRICAL SERVICES 5,398 ------------------------------------------------------------------------------- FUNDING CORPORATIONS - 9.9% Falcon Asset Securitization 1.780%, 11/01/04 10,000 10,000 1.790%, 11/12/04 15,000 14,992 Preferred Receivable Funding 1.780%, 11/09/04 10,000 9,996 Ranger Funding 1.780%, 11/05/04 20,000 19,996 ------------------------------------------------------------------------------- TOTAL FUNDING CORPORATIONS 54,984 ------------------------------------------------------------------------------- OCTOBER 31, 2004 35 EXPEDITION MONEY MARKET FUND STATEMENT OF NET ASSETS FACE VALUE DESCRIPTION AMT. (000) (000) ------------------------------------------------------------------------------- LEASING & RENTING - 1.8% International Lease Finance 1.760%, 11/24/04 $10,000 $ 9,989 ------------------------------------------------------------------------------- TOTAL LEASING & RENTING 9,989 ------------------------------------------------------------------------------- MULTIMEDIA - 4.0% Gannett 1.780%, 11/16/04 11,900 11,891 1.730%, 11/19/04 10,000 9,992 ------------------------------------------------------------------------------- TOTAL MULTIMEDIA 21,883 ------------------------------------------------------------------------------- PHARMACEUTICALS - 3.4% Abbott Laboratories 1.770%, 11/24/04 9,000 8,990 Pfizer 1.810%, 11/30/04 10,000 9,985 ------------------------------------------------------------------------------- TOTAL PHARMACEUTICALS 18,975 ------------------------------------------------------------------------------- SPECIAL PURPOSE ENTITY - 4.5% Three Pillars 1.840%, 11/19/04 25,000 24,977 ------------------------------------------------------------------------------- TOTAL SPECIAL PURPOSE ENTITY 24,977 ------------------------------------------------------------------------------- UTILITIES - 3.6% National Rural Utilities 1.780%, 11/01/04 10,000 10,000 1.850%, 12/03/04 10,000 9,984 ------------------------------------------------------------------------------- TOTAL UTILITIES 19,984 ------------------------------------------------------------------------------- TOTAL COMMERCIAL PAPER (COST $298,993) 298,993 ------------------------------------------------------------------------------- CORPORATE OBLIGATIONS - 11.4% BANKS - 2.1% Bank of America 6.875%, 02/15/05 1,000 1,014 7.875%, 05/16/05 3,000 3,097 Wachovia 6.950%, 11/01/04 2,535 2,535 Wells Fargo MTN, Ser F 6.500%, 06/01/05 5,000 5,125 ------------------------------------------------------------------------------- TOTAL BANKS 11,771 ------------------------------------------------------------------------------- BROKER/DEALERS - 3.8% Merrill Lynch 6.000%, 11/15/04 7,700 7,713 6.000%, 07/15/05 7,000 7,177 Merrill Lynch MTN, Ser B 4.540%, 03/08/05 6,000 6,064 ------------------------------------------------------------------------------- TOTAL BROKER/DEALERS 20,954 ------------------------------------------------------------------------------- 36 OCTOBER 31, 2004 EXPEDITION MONEY MARKET FUND STATEMENT OF NET ASSET FACE VALUE DESCRIPTION AMT. (000) (000) ------------------------------------------------------------------------------- DIVERSIFIED FINANCIAL SERVICES - 3.1% Associates Corporation of North America MTN, Ser G 8.580%, 11/23/04 $5,000 $ 5,021 Citigroup 4.125%, 06/30/05 5,025 5,085 General Electric Capital MTN, Ser A 4.250%, 01/28/05 2,000 2,014 Toyota Motor Credit MTN 4.050%, 11/30/04 5,000 5,009 ------------------------------------------------------------------------------- TOTAL DIVERSIFIED FINANCIAL SERVICES 17,129 ------------------------------------------------------------------------------- LEASING & RENTING - 0.4% International Lease Finance MTN, Ser M 5.540%, 03/21/05 2,000 2,032 ------------------------------------------------------------------------------- TOTAL LEASING & RENTING 2,032 ------------------------------------------------------------------------------- PRINTING & PUBLISHING - 0.8% Gannett 4.950%, 04/01/05 4,650 4,706 ------------------------------------------------------------------------------- TOTAL PRINTING & PUBLISHING 4,706 ------------------------------------------------------------------------------- UTILITIES - 1.2% National Rural Utilities 5.500%, 01/15/05 2,625 2,647 6.125%, 05/15/05 3,995 4,079 ------------------------------------------------------------------------------- TOTAL UTILITIES 6,726 ------------------------------------------------------------------------------- TOTAL CORPORATE OBLIGATIONS (COST $63,318) 63,318 ------------------------------------------------------------------------------- U.S. GOVERNMENT OBLIGATIONS - 14.8% FHLMC 1.800%, 11/23/04 (A) 15,000 14,983 1.880%, 03/31/05 (A) 10,000 9,922 7.000%, 07/15/05 5,000 5,164 FNMA 1.820%, 11/30/04 (A) 10,000 9,985 1.750%, 12/08/04 (A) 15,000 14,973 1.670%, 12/13/04 (A) 10,000 9,981 1.770%, 01/12/05 (A) 5,000 4,982 1.980%, 03/09/05 (A) 10,000 9,930 6.350%, 06/10/05 2,033 2,085 ------------------------------------------------------------------------------- TOTAL U.S.GOVERNMENT OBLIGATIONS (COST $82,005) 82,005 ------------------------------------------------------------------------------- OCTOBER 31, 2004 37 EXPEDITION MONEY MARKET FUND STATEMENT OF NET ASSETS SHARES/FACE VALUE DESCRIPTION AMT. (000) (000) ------------------------------------------------------------------------------- CERTIFICATES OF DEPOSIT - 2.7% BANKS - 2.7% Sun Trust Bank 2.060%, 02/17/05 $15,000 $ 15,000 ------------------------------------------------------------------------------- TOTAL CERTIFICATES OF DEPOSIT (COST $15,000) 15,000 ------------------------------------------------------------------------------- MONEY MARKET FUND - 0.9% Financial Square Government Money Market Fund 4,964,267 4,964 ------------------------------------------------------------------------------- TOTAL MONEY MARKET FUND (COST $4,964) 4,964 ------------------------------------------------------------------------------- REPURCHASE AGREEMENT - 16.2% Deutsche Bank 1.780%, dated 10/29/04, to be repurchased on 11/01/04, repurchase price $93,066,358 (collateralized by various U.S. Government Obligations, ranging in par value $9,000- 7,247,000, 0.000%-14.000%, 11/04/04-08/15/26; with total market value $91,854,148) $90,053 90,053 ------------------------------------------------------------------------------- TOTAL REPURCHASE AGREEMENT (COST $90,053) 90,053 ------------------------------------------------------------------------------- TOTAL INVESTMENTS - 99.9% (COST $554,333) 554,333 ------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES - 0.1% Investment Advisory Fees Payable (89) Distribution Fees Payable (79) Administrator Fees Payable (75) Custodian Fees Payable (10) Trustees' Fees Payable (10) Other Assets and Liabilities, Net 1,050 ------------------------------------------------------------------------------- TOTAL OTHER ASSETS & LIABILITIES 787 ------------------------------------------------------------------------------- NET ASSETS - 100.0% $555,120 ------------------------------------------------------------------------------- 38 OCTOBER 31, 2004 EXPEDITION MONEY MARKET FUND STATEMENT OF NET ASSETS VALUE DESCRIPTION (000) ------------------------------------------------------------------------------- NET ASSETS: Portfolio Capital of Institutional Shares (unlimited authorization -- no par value) based on 224,525,623 outstanding shares of beneficial interest $224,524 Portfolio Capital of Investment Service Shares (unlimited authorization -- no par value) based on 264,411,766 outstanding shares of beneficial interest 264,411 Portfolio Capital of Investment Sweep Class Shares (unlimited authorization -- no par value) based on 66,192,486 outstanding shares of beneficial interest 66,190 Accumulated net realized loss on investments (5) ------------------------------------------------------------------------------- NET ASSETS - 100.0% $555,120 ------------------------------------------------------------------------------- NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE -- INSTITUTIONAL SHARES ($224,526,806 / 224,525,623 SHARES) $1.00 ------------------------------------------------------------------------------- NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE -- INVESTMENT SERVICE SHARES ($264,401,563 / 264,411,766 SHARES) $1.00 ------------------------------------------------------------------------------- NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE -- SWEEP CLASS SHARES ($66,191,854 / 66,192,486 SHARES) $1.00 ------------------------------------------------------------------------------- (A) The rate reported is the effective yield at time of purchase. FHLMC -- Federal Home Loan Mortgage Corporation FNMA -- Federal National Mortgage Association MTN -- Medium Term Note Ser -- Series The accompanying notes are an integral part of the financial statements. OCTOBER 31, 2004 39 EXPEDITION TAX-FREE MONEY MARKET FUND STATEMENT OF NET ASSETS SECTOR WEIGHTINGS (UNAUDITED)*: [THE FOLLOWING TABLE WAS REPRESENTED AS BAR GRAPH IN THE PRINTED MATERIAL.] Medical 19.1% Development 16.0% Higher Education 12.2% Multi-Family Housing 10.5% General Obligation 8.6% General Revenue 6.1% School District 6.0% Student Loan 5.5% Utilities 4.2% Facilities 3.5% Housing 2.8% Power 2.5% Education 2.4% Water 0.6% * PERCENTAGES ARE BASED ON TOTAL INVESTMENTS. FACE VALUE DESCRIPTION AMT. (000) (000) -------------------------------------------------------------------------------- MUNICIPAL BONDS - 99.8% ALABAMA - 0.8% Montgomery County, Special Care Financing Authority RB, VHA Alabama Incorporated Project, Ser H, AMBAC (A) (B) 1.800%, 12/01/30 $1,200 $ 1,200 ------------------------------------------------------------------------------- TOTAL ALABAMA 1,200 ------------------------------------------------------------------------------- ALASKA - 0.9% Valdez, Marine Term RB, Pipelines Project, Ser B (A) (B) 1.740%, 07/01/37 1,300 1,300 ------------------------------------------------------------------------------- TOTAL ALASKA 1,300 ------------------------------------------------------------------------------- ARIZONA - 0.7% Phoenix, Arizona Industrial Development Authority RB, Valley of the Sun YMCA Project (A) (B) (C) 1.740%, 01/01/31 1,100 1,100 ------------------------------------------------------------------------------- TOTAL ARIZONA 1,100 ------------------------------------------------------------------------------- CALIFORNIA - 5.5% Anaheim, Multi-Family Housing Finance RB, Heritage Village Apartments, Ser A, FNMA (A) (B) 1.760%, 07/15/33 300 300 California State Economic Recovery RB, Ser C-6 (A) (B) (C) 1.710%, 07/01/23 4,100 4,100 City of Corona Multi-Family Housing RB, County Hills Apartment Project, Ser B, FHLMC (A) (B) 1.750%, 02/01/25 3,000 3,000 Hemet Multi-Family Housing RB, Sunwest Retirement, Ser A, FHLMC (A) (B) 1.750%, 01/01/25 900 900 Los Angeles County Multi-Family Housing Revenue Authority RB, Malibu Canyon Apartments, Ser B (A) (B) 1.770%, 06/01/10 120 120 ------------------------------------------------------------------------------- TOTAL CALIFORNIA 8,420 ------------------------------------------------------------------------------- COLORADO - 3.3% Arapahoe County, Water & Waste Authority RB, Ser A (A) (B) (C) 1.790%, 12/01/33 1,000 1,000 40 OCTOBER 31, 2004 EXPEDITION TAX-FREE MONEY MARKET FUND STATEMENT OF NET ASSETS FACE VALUE DESCRIPTION AMT. (000) (000) ------------------------------------------------------------------------------- Denver City & County, Multi-Family Housing Authority RB, Cottonwood Creek Project, Ser A (A) (B) 1.760%, 04/15/14 $1,000 $ 1,000 Denver City & County, Multi-Family Housing Authority RB, Ogden Residences Project (A) (B) (C) 1.750%, 12/01/29 1,400 1,400 Thornton, Multi-Family Revenue RB, Quail Ridge Project, Ser A (A) (B) (C) 1.790%, 04/01/10 1,550 1,550 ------------------------------------------------------------------------------- TOTAL COLORADO 4,950 ------------------------------------------------------------------------------- DELAWARE - 0.5% Delaware State, Economic Development Authority RB, School House Project (A) (B) (C) 1.850%, 12/01/15 750 750 ------------------------------------------------------------------------------- TOTAL DELAWARE 750 ------------------------------------------------------------------------------- FLORIDA - 7.8% Collier County Educational Authority RB, International College Project (A) (B) (C) 1.760%, 04/01/28 2,000 2,000 Florida Housing Finance Corporation RB, Lakeside North, FHLMC (A) (B) 1.780%, 06/01/34 1,530 1,530 Florida State Multi-Family Housing Authority RB, Country Club Project, FHLMC (A) (B) 1.790%, 12/01/12 2,000 2,000 Palm Beach County RB, Jewish Community Campus Project (A) (B) (C) 1.780%, 03/01/30 1,800 1,800 Pinellas County, Health Facilities Authority RB, Pooled Hospital Loan Program, AMBAC (A) (B) 1.760%, 12/01/15 3,500 3,500 Sarasota Hospital RB, Ser A, AMBAC (A) (B) 1.780%, 07/01/37 1,000 1,000 ------------------------------------------------------------------------------- TOTAL FLORIDA 11,830 ------------------------------------------------------------------------------- GEORGIA - 4.8% Dekalb County, Development Authority RB, American Cancer Society (A) (B) (C) 1.770%, 09/01/17 1,200 1,200 Dekalb County, Multi-Family Housing Authority RB, Winters Creek Apartments Project, FNMA (A) (B) 1.780%, 06/15/25 400 400 Floyd County Development Authority RB, Berry College Project (A) (B) (C) 1.770%, 08/01/22 200 200 OCTOBER 31, 2004 41 EXPEDITION TAX-FREE MONEY MARKET FUND STATEMENT OF NET ASSETS FACE VALUE DESCRIPTION AMT. (000) (000) ------------------------------------------------------------------------------- Fulton County, Multi-Family Housing Authority RB, Champions Green Apartment Project, Ser B (A) (B) 1.780%, 10/01/25 $ 800 $ 800 Fulton County, Multi-Family Housing Authority RB, Hampton Hills Apartment Project, FHLMC (A) (B) 1.770%, 06/01/23 600 600 Gwinnett, Wesleyan Development Authority RB, Wesley School Project (A) (B) (C) 1.770%, 03/01/21 100 100 Macon-Bibb County, Hospital Authority RB, Medical Center Project (A) (B) (C) 1.770%, 07/01/28 1,900 1,900 Macon-Bibb County, Hospital Authority RB, Medical Control Center Project (A) (B) (C) 1.770%, 12/01/18 1,700 1,700 Marietta Multi-Family Housing Authority RB, Winterset Apartments Project (A) (B) (C) 1.780%, 02/01/26 400 400 ------------------------------------------------------------------------------- TOTAL GEORGIA 7,300 ------------------------------------------------------------------------------- IDAHO - 1.8% Idaho State, Health Facilities Authority RB, St. Lukes Regional Medical Center Project (A) (B) (C) 1.740%, 05/01/22 2,700 2,700 ------------------------------------------------------------------------------- TOTAL IDAHO 2,700 ------------------------------------------------------------------------------- ILLINOIS - 7.3% Central Lake RB, Merlots, Ser B18, AMBAC (A) (B) 1.840%, 05/01/20 900 900 Cook County GO, Merlots, Ser B11, AMBAC (A) (B) 1.840%, 11/15/25 500 500 Illinois Development Finance Authority RB, YMCA Chicago Project (A) (B) (C) 1.740%, 06/01/29 1,000 1,000 Illinois Educational Facilities Authority RB, Cultural Pooled Financing (A) (B) (C) 1.810%, 07/01/29 1,000 1,000 Illinois Educational Facilities RB, Art Institute of Chicago (A) (B) 1.770%, 03/01/34 2,300 2,300 Illinois State, Educational Facilities Authority RB, Art Institute of Chicago Project (A) (B) 1.770%, 03/01/27 1,000 1,000 Oakbrook Terrace, Industrial Development Authority RB, Oakbrook Terrace Atrium Project (A) (B) (C) 1.750%, 12/01/25 2,000 2,000 Orland Park, Industrial Development Authority RB, Ser A (A) (B) (C) 1.700%, 12/28/04 755 755 42 OCTOBER 31, 2004 EXPEDITION TAX-FREE MONEY MARKET FUND STATEMENT OF NET ASSETS FACE VALUE DESCRIPTION AMT. (000) (000) ------------------------------------------------------------------------------- Schaumburg GO, Ser B (A) (B) 1.780%, 12/01/15 $1,700 $ 1,700 ------------------------------------------------------------------------------- TOTAL ILLINOIS 11,155 ------------------------------------------------------------------------------- INDIANA - 9.0% Goshen Community Schools, TAW 1.900%, 12/31/04 2,490 2,491 Goshen Community Schools, TRAN 2.000%, 12/31/04 1,000 1,001 Indiana Health Facility Financing Authority RB, Margaret Mary Community Hospital, Ser A (A) (B) (C) 1.790%, 12/01/29 950 950 Indiana State Educational Facilities RB (A) (B) (C) 1.740%, 07/01/18 2,400 2,400 Indiana State, Health Facilities Financing Authority RB, Capital Access Project (A) (B) (C) 1.780%, 04/01/13 1,300 1,300 1.780%, 01/01/20 2,000 2,000 Mishawaka, TAW 1.480%, 12/31/04 2,000 2,000 Spencer Owen Independent Community Schools, TAN 2.000%, 12/31/04 1,500 1,502 ------------------------------------------------------------------------------- TOTAL INDIANA 13,644 ------------------------------------------------------------------------------- IOWA - 11.0% Hills Healthcare RB, Mercy Community Hospital Project (A) (B) (C) 1.740%, 08/01/32 2,950 2,950 Iowa Financial Authority Private College RB, Drake University Project (A) (B) (C) 1.740%, 07/01/24 1,400 1,400 Iowa Financial Authority Private College RB, Morningside College Project (A) (B) (C) 1.790%, 07/01/26 3,500 3,500 Iowa Higher Education Loan Authority RB (A) (B) (C) 1.740%, 11/01/32 1,500 1,500 Iowa Higher Education Loan Authority RB, Des Moines Project (A) (B) (C) 1.790%, 10/01/24 100 100 Iowa Higher Education Loan Authority RB, Private College Facilities, Loras Project (A) (B) (C) 1.740%, 11/01/30 2,645 2,645 Iowa Higher Education Loan Authority RB, Private College, Des Moines Project (A) (B) (C) 1.790%, 10/01/33 200 200 Iowa Higher Education Loan Authority RB, Private College, St. Ambrose Project (A) (B) (C) 1.740%, 04/01/33 2,650 2,650 OCTOBER 31, 2004 43 EXPEDITION TAX-FREE MONEY MARKET FUND STATEMENT OF NET ASSETS FACE VALUE DESCRIPTION AMT. (000) (000) ------------------------------------------------------------------------------- Iowa State, Finance Authority RB, Drake University Project (A) (B) (C) 1.790%, 07/01/31 $ 100 $ 100 Iowa State, Health Care Facilities Authority RB, Care Initiatives Project (A) (B) (C) 1.790%, 11/01/32 100 100 Iowa State, Higher Education Loan Authority RB, Wartburg Project, (A) (B) (C) 1.790%, 03/01/30 1,520 1,520 ------------------------------------------------------------------------------- TOTAL IOWA 16,665 ------------------------------------------------------------------------------- KANSAS - 0.5% Kansas State Development Finance Authority Lease RB (A) (B) 1.740%, 12/01/34 500 500 Kansas State Development Finance Authority RB, Hays Medical Center, Ser N (A) (B) (C) 1.790%, 05/15/26 200 200 Kansas State Development Finance Authority RB, Village Shalom Obligation Group, Ser BB (A) (B) (C) 1.740%, 11/15/28 100 100 ------------------------------------------------------------------------------- TOTAL KANSAS 800 ------------------------------------------------------------------------------- KENTUCKY - 4.6% Kentucky Asset Liability Commission, TRAN 3.000%, 06/29/05 2,500 2,524 Kentucky Association of Counties Advance, TRAN 3.000%, 06/30/05 2,500 2,521 Lexington-Fayette Urban County, Government Industrial Building Authority RB, American Horse Shows Association Project (A) (B) (C) 1.840%, 12/01/18 1,925 1,925 ------------------------------------------------------------------------------- TOTAL KENTUCKY 6,970 ------------------------------------------------------------------------------- MASSACHUSETTS - 3.3% Chicopee Development Finance Authority BAN 2.000%, 11/19/04 3,536 3,537 Hull BAN 3.000%, 07/14/05 1,500 1,514 ------------------------------------------------------------------------------- TOTAL MASSACHUSETTS 5,051 ------------------------------------------------------------------------------- MICHIGAN - 3.2% Dearborn Michigan School District GO (A) (B) 3.000%, 05/01/05 1,000 1,010 Jackson County, Economic Development Authority RB, Thrifty Leoni Project (A) (B) (C) 1.770%, 12/01/14 1,000 1,000 Michigan State Housing Development Authority RB, Courtyards of Taylor Project, Ser A, FNMA (A) (B) 1.770%, 08/15/32 500 500 44 OCTOBER 31, 2004 EXPEDITION TAX-FREE MONEY MARKET FUND STATEMENT OF NET ASSETS FACE VALUE DESCRIPTION AMT. (000) (000) ------------------------------------------------------------------------------- Michigan State Job Development Authority RB, East Lansing Residential Project (A) (B) (C) 1.660%, 12/01/14 $ 900 $ 900 Northern University RB, FGIC (A) (B) 1.740%, 06/01/31 1,500 1,500 ------------------------------------------------------------------------------- TOTAL MICHIGAN 4,910 ------------------------------------------------------------------------------- MINNESOTA - 2.6% Cohasset, Power & Light Project, RB Series A (A) (B) (C) 1.740%, 06/01/20 2,200 2,200 Minnesota State Higher Educational Facilities RB, St. Olaf College, Ser 5-M1 (A) (B) 1.740%, 10/01/32 400 400 Minnesota State Higher Educational Facilities RB, St. Olaf College, Ser 5H (A) (B) (C) 1.740%, 10/01/30 1,400 1,400 ------------------------------------------------------------------------------- TOTAL MINNESOTA 4,000 ------------------------------------------------------------------------------- MISSOURI - 2.3% Clayton, Industrial Development Authority RB, Bailey Court Project (A) (B) (C) 1.900%, 01/01/09 500 500 Kansas City, Industrial Development Authority RB, Ewing Marion Kauffman, Ser A (A) (B) 1.740%, 04/01/27 100 100 Kirkwood RB, Commons Project (A) (B) (C) 1.790%, 10/01/17 100 100 Missouri State, Health & Educational Facilities Authority RB, Drury College Project (A) (B) (C) 1.790%, 08/15/24 200 200 Missouri State, Health & Educational Facilities Authority RB, St. Louis University Project (A) (B) 1.790%, 07/01/32 100 100 Missouri State, Health & Educational Facilities RB, Saint Francis Medical Center Project, Ser A (A) (B) (C) 1.740%, 06/01/26 1,500 1,500 University of Missouri RB, Ser B (A) (B) 1.740%, 11/01/30 1,000 1,000 ------------------------------------------------------------------------------- TOTAL MISSOURI 3,500 ------------------------------------------------------------------------------- MONTANA - 1.0% Montana State, Board Investment RB, Municipal Finance Consolidated-Intercap Project (A) (B) 1.250%, 03/01/25 1,500 1,500 ------------------------------------------------------------------------------- TOTAL MONTANA 1,500 ------------------------------------------------------------------------------- NEBRASKA - 0.5% Nebraska State, Educational Financial Authority, Creighton University Project RB (A) (B) (C) 1.740%, 08/01/31 800 800 ------------------------------------------------------------------------------- TOTAL NEBRASKA 800 ------------------------------------------------------------------------------- OCTOBER 31, 2004 45 EXPEDITION TAX-FREE MONEY MARKET FUND STATEMENT OF NET ASSETS FACE VALUE DESCRIPTION AMT. (000) (000) ------------------------------------------------------------------------------- NEW YORK - 3.1% New York City GO, Ser H-2 (A) (B) 1.740%, 08/01/14 $ 800 $ 800 New York City, Municipal Water Finance RB, Ser C-1 (A) (B) 1.740%, 06/15/18 2,800 2,800 New York City, Municipal Water Finance RB, Ser F-1 (A) (B) 1.740%, 06/15/33 1,100 1,100 ------------------------------------------------------------------------------- TOTAL NEW YORK 4,700 ------------------------------------------------------------------------------- OHIO - 4.1% American Municipal Power BAN 1.250%, 12/02/04 1,635 1,635 Cincinnati GO (A) (B) 4.000%, 12/01/04 1,205 1,208 Clermont County, Economic Development Authority RB, John Q. Hammons Project (A) (B) (C) 1.350%, 05/01/12 605 605 Ohio State Higher Education Facilities RB, Kenyon College Project (A) (B) 1.820%, 08/01/33 250 250 Painesville Local School District BAN 1.760%, 02/17/05 1,000 1,001 Stark County, BAN, Ser 2004-1 1.550%, 11/15/04 420 420 Toledo Lucas County, Port Facilities Authority RB, Toledo Museum of Art Project (A) (B) (C) 1.770%, 09/01/19 1,100 1,100 ------------------------------------------------------------------------------- TOTAL OHIO 6,219 ------------------------------------------------------------------------------- OKLAHOMA - 0.7% Tulsa, Industrial Development Authority RB, Ser A (A) (B) 1.400%, 05/15/17 1,000 1,000 ------------------------------------------------------------------------------- TOTAL OKLAHOMA 1,000 ------------------------------------------------------------------------------- PENNSYLVANIA - 5.2% Allegheny County RB, Industrial Development Authority, Jewish Home & Hospital Project, Ser B (A) (B) (C) 1.800%, 10/01/26 1,240 1,240 Lawrence County Industrial Development Authority RB, Villa Maria Project (A) (B) (C) 1.790%, 07/01/33 1,800 1,800 Pennsylvania State, Economic Development Financing Authority RB, Philadelphia Area Project, Ser J3 (A) (B) (C) 1.710%, 11/01/30 3,100 3,100 Philadelphia Authority Ignles House RB (A) (B) 1.900%, 05/01/17 500 500 46 OCTOBER 31, 2004 EXPEDITION TAX-FREE MONEY MARKET FUND STATEMENT OF NET ASSETS FACE VALUE DESCRIPTION AMT. (000) (000) ------------------------------------------------------------------------------- Philadelphia RB, School for the Deaf Project (A) (B) (C) 1.810%, 11/01/32 $1,000 $ 1,000 Philadelphia, Hospital & Higher Education Facilities Authority RB, Temple East Project, Ser B (A) (B) (C) 1.790%, 06/01/14 300 300 ------------------------------------------------------------------------------- TOTAL PENNSYLVANIA 7,940 ------------------------------------------------------------------------------- TENNESSEE - 0.7% Wilson County, Industrial Development Board RB, Hartmann Luggage Co. Project (A) (B) 1.810%, 07/01/26 1,100 1,100 ------------------------------------------------------------------------------- TOTAL TENNESSEE 1,100 ------------------------------------------------------------------------------- TEXAS - 3.0% Cypress-Fairbanks GO, Independent School District, Ser C-16 (A) (B) 1.840%, 02/15/27 2,500 2,500 Garland, Health Facilities Authority RB, Chambrel Club Project, FNMA (A) (B) 1.770%, 11/15/32 600 600 Houston Utilities System RB, Water & Sewer Revenue, MBIA (A) (B) 1.840%, 05/15/27 1,500 1,500 ------------------------------------------------------------------------------- TOTAL TEXAS 4,600 ------------------------------------------------------------------------------- WASHINGTON - 5.2% Washington State GO, Ser A11, MBIA (A) (B) 1.840%, 06/01/17 1,390 1,390 Washington State, Housing Finance Commission Non-Profit RB, Rockwood Retirement Community (A) (B) (C) 1.820%, 01/01/34 300 300 Washington State, Housing Finance Commission Non-Profit RB, Rockwood Retirement Community, Ser A (A) (B) (C) 1.820%, 01/01/30 3,600 3,600 Washington State, Housing Finance Commission Non-Profit RB, Tacoma Art Museum Project (A) (B) (C) 1.790%, 06/01/32 100 100 Washington State, Housing Finance Commission Non-Profit RB, Vincent Depaul Project, Ser A, (A) (B) (C) 1.780%, 02/01/31 1,100 1,100 Washington State, Housing Finance Commission Non-Profit RB, Pioneer Human Services Project, Ser A (A) (B) (C) 1.820%, 08/01/19 350 350 Washington State, Housing Finance Commission Non-Profit RB, YMCA Columbia/Willamette Project (A) (B) (C) 1.840%, 08/01/24 100 100 Washington State, Housing Finance Commission Non-Profit RB, YMCA Greater Seattle (A) (B) (C) 1.750%, 07/01/11 1,000 1,000 ------------------------------------------------------------------------------- TOTAL WASHINGTON 7,940 ------------------------------------------------------------------------------- OCTOBER 31, 2004 47 EXPEDITION TAX-FREE MONEY MARKET FUND STATEMENT OF NET ASSETS FACE VALUE DESCRIPTION AMT. (000) (000) ------------------------------------------------------------------------------- WEST VIRGINIA - 0.8% Putnam County, Industrial Development RB, FMC Corporation Project (A) (B) (C) 1.650%, 10/01/11 $1,200 $ 1,200 ------------------------------------------------------------------------------- TOTAL WEST VIRGINIA 1,200 ------------------------------------------------------------------------------- WISCONSIN - 2.4% Delavan Darien Wisconsin School District TRAN 3.000%, 08/26/05 1,100 1,112 Wisconsin State, Health & Educational Facilities Authority RB, Gundersen Lutheran Project, Ser B, FSA (A) (B) 1.740%, 12/01/29 2,500 2,500 ------------------------------------------------------------------------------- TOTAL WISCONSIN 3,612 ------------------------------------------------------------------------------- MULTI-STATE - 0.4% Greystone, Municipal Lease Certificate Trust Authority COP, Ser A (A) (B) (C) 1.930%, 07/01/05 200 200 Greystone, Tax Exempt Certificate Trust Authority RB, Senior Certificate of Beneficial Ownership Project (A) (B) (C) 1.910%, 05/01/28 420 420 ------------------------------------------------------------------------------- TOTAL MULTI-STATE 620 ------------------------------------------------------------------------------- SOUTH DAKOTA - 0.4% South Dakota State, Health & Educational Facilities Authority RB, Rapid City Regional Hospital, MBIA (A) (B) 1.740%, 09/01/27 550 550 ------------------------------------------------------------------------------- TOTAL SOUTH DAKOTA 550 ------------------------------------------------------------------------------- VIRGINIA - 2.4% Loudon County, Industrial Development Authority RB, Howard Hughes, Ser A (A) (B) 1.710%, 02/15/38 3,600 3,600 ------------------------------------------------------------------------------- TOTAL VIRGINIA 3,600 ------------------------------------------------------------------------------- TOTAL MUNICIPAL BONDS (COST $151,626) 151,626 ------------------------------------------------------------------------------- TOTAL INVESTMENTS - 99.8% (COST $151,626) 151,626 ------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES - 0.2% Distribution Fees Payable (25) Administrator Fees Payable (19) Investment Advisory Fees Payable (13) Trustees' Fees Payable (4) Custodian Fees Payable (3) Other Assets and Liabilities, Net 413 ------------------------------------------------------------------------------- TOTAL OTHER ASSETS & LIABILITIES 349 ------------------------------------------------------------------------------- NET ASSETS - 100.0% $151,975 ------------------------------------------------------------------------------- 48 OCTOBER 31, 2004 EXPEDITION TAX-FREE MONEY MARKET FUND STATEMENT OF NET ASSETS VALUE DESCRIPTION (000) ------------------------------------------------------------------------------- NET ASSETS: Portfolio Capital of Institutional Shares (unlimited authorization -- no par value) based on 47,826,209 outstanding shares of beneficial interest $ 47,825 Portfolio Capital of Investment Investment Service Shares (unlimited authorization -- no par value) based on 85,334,857 outstanding shares of beneficial interest 85,335 Portfolio Capital of Sweep Class Shares (unlimited authorization -- no par value) based on 18,830,600 outstanding shares of beneficial interest 18,830 Accumulated net realized loss on investments (15) ------------------------------------------------------------------------------- NET ASSETS - 100.0% $151,975 ------------------------------------------------------------------------------- NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE -- INSTITUTIONAL SHARES ($47,820,254 / 47,826,209 SHARES) $1.00 ------------------------------------------------------------------------------- NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE -- INVESTMENT SERVICE SHARES ($85,325,146 / 85,334,857 SHARES) $1.00 ------------------------------------------------------------------------------- NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE -- SWEEP CLASS SHARES ($18,829,666 / 18,830,600 SHARES) $1.00 ------------------------------------------------------------------------------- (A) Floating rate security. (B) Put & Demand Feature -- the date reported is the final maturity date, not the next reset or put date. (C) Securities are held in conjunction with a letter of credit from a major bank or financial institution. AMBAC -- American Municipal Bond Assurance Company BAN -- Bond Anticipation Notes COP -- Certificate of Participation FGIC -- Financial Guaranty Insurance Corporation FHLMC -- Federal Home Loan Mortgage Corporation FNMA -- Federal National Mortgage Association FSA -- Financial Security Assurance GO -- General Obligation MBIA -- Municipal Bond Insurance Association RB -- Revenue Bond Ser -- Series TAN -- Tax Anticipation Notes TAW -- Tax Anticipation Warrants TRAN -- Tax & Revenue Anticipation Notes VHA -- Veterans Housing Authority The accompanying notes are an integral part of the financial statements. OCTOBER 31, 2004 49 STATEMENTS OF OPERATIONS (000) For the year ended October 31, 2004 EXPEDITION EXPEDITION EQUITY EQUITY INCOME FUND FUND ----------- ----------- INVESTMENT INCOME: Dividends $2,289 $ 231 Interest 13 1 Less foreign tax withheld (3) (2) ------ ------ Total investment income 2,299 230 ------ ------ EXPENSES: Investment advisory fees 1,316 80 Administrator fees 351 75 Custodian fees 35 2 Distribution fees -- Investment Shares - Class A 20 1 Investment Shares - Class B 149 7 Trustees' fees 6 -- Transfer agency fee 340 97 Professional fees 31 18 Registration fees 24 2 Printing expense 19 1 Other fees 14 1 ------ ------ Total expenses 2,305 284 ------ ------ Less: Waiver of investment advisory fees (25) (80) Reimbursement of expenses by investment advisor -- (63) ------ ------ Net expenses 2,280 141 ------ ------ NET INVESTMENT INCOME 19 89 ------ ------ Net realized gain on investments 12,213 1,067 Net change in unrealized appreciation (depreciation) of investments (3,787) 52 ------ ------ NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 8,426 1,119 ------ ------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $8,445 $1,208 ====== ====== Amounts designated as "--" are $0 or have been rounded to $0 The accompanying notes are an integral part of the financial statements. 50 OCTOBER 31, 2004 STATEMENTS OF OPERATIONS (000) For the year ended October 31, 2004 EXPEDITION EXPEDITION TAX-FREE INVESTMENT INVESTMENT GRADE BOND GRADE BOND FUND FUND ----------- ----------- INVESTMENT INCOME: Interest $5,721 $3,025 Dividends 14 8 ------ ------ Total investment income 5,735 3,033 ------ ------ EXPENSES: Investment advisory fees 551 337 Administrator fees 221 135 Custodian fees 22 13 Distribution fees -- Investment Shares - Class A 13 1 Investment Shares - Class B 20 2 Trustees' fees 3 2 Transfer agency fee 145 92 Professional fees 26 23 Registration fees 19 11 Printing expense 12 7 Other fees 11 11 ------ ------ Total expenses 1,043 634 ------ ------ Less: Waiver of investment advisory fees (128) (92) ------ ------ Net expenses 915 542 ------ ------ NET INVESTMENT INCOME 4,820 2,491 ------ ------ Net realized gain on investments 478 336 Net change in unrealized appreciation (depreciation) of investments (656) 292 ------ ------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (178) 628 ------ ------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $4,642 $3,119 ====== ====== The accompanying notes are an integral part of the financial statements. OCTOBER 31, 2004 51 STATEMENTS OF OPERATIONS (000) For the year ended October 31, 2004 EXPEDITION EXPEDITION TAX-FREE MONEY MARKET MONEY MARKET FUND FUND ----------- ----------- INVESTMENT INCOME: Interest $ 7,472 $2,040 Dividends 53 -- ------- ------ Total investment income 7,525 2,040 ------- ------ EXPENSES: Investment advisory fees 2,406 699 Administrator fees 1,203 349 Shareholder Servicing fees -- Investment Service Shares 742 203 Sweep Class Shares 237 84 Custodian fees 120 35 Trustees' fees 19 6 Transfer agency fee 358 107 Registration fees 98 35 Professional fees 66 32 Printing expense 61 19 Other fees 17 8 ------- ------ Total expenses 5,327 1,577 ------- ------ Less: Waiver of investment advisory fees (1,340) (451) Waiver of administrator fees (301) (87) ------- ------ Net expenses 3,686 1,039 ------- ------ NET INVESTMENT INCOME 3,839 1,001 ------- ------ Net realized loss on investments (6) (2) ------- ------ NET REALIZED LOSS ON INVESTMENTS (6) (2) ------- ------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 3,833 $ 999 ======= ====== Amounts designated as "--" are $0 or have been rounded to $0 The accompanying notes are an integral part of the financial statements. 52 OCTOBER 31, 2004 STATEMENTS OF CHANGES IN NET ASSETS (000) For the years ended October 31,
EXPEDITION EXPEDITION EQUITY EQUITY INCOME FUND FUND ------------------------ ------------------------ 2004 2003 2004 2003 ---------- ---------- ---------- ---------- OPERATIONS: Investment income $ 19 $ 710 $ 89 $ 86 Net realized gain (loss) on investments 12,213 (22,249) 1,067 (2,349) Net change in unrealized appreciation (depreciation) of investments (3,787) 53,720 52 4,184 -------- -------- ------- ------- Net increase in net assets resulting from operations 8,445 32,181 1,208 1,921 -------- -------- ------- ------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Investment income: Institutional Shares (145) (775) (80) (106) Investment Shares - Class A -- (10) (2) (2) Investment Shares - Class B -- -- (1) -- Realized capital gains: Institutional Shares -- -- -- (4) Investment Shares - Class A -- -- -- -- Investment Shares - Class B -- -- -- -- -------- -------- ------- ------- Total dividends and distributions (145) (785) (83) (112) -------- -------- ------- ------- CAPITAL SHARE TRANSACTIONS (1): Institutional Shares: Proceeds from sales 7,044 11,892 -- 39 Shares issued in lieu of cash distributions 52 397 -- -- Payments for redemptions (58,450) (56,560) (4,883) (3,157) -------- -------- ------- ------- Decrease in net assets from Investment Shares transactions (51,354) (44,271) (4,883) (3,118) -------- -------- ------- ------- Investment Shares - Class A: Proceeds from sales 816 1,872 35 26 Shares issued in lieu of cash distributions -- 9 2 1 Payments for redemptions (2,906) (1,610) (39) (100) -------- -------- ------- ------- Increase (decrease) in net assets from Investment Shares - Class A transactions (2,090) 271 (2) (73) -------- -------- ------- ------- Investment Shares - Class B: Proceeds from sales 1,384 1,577 117 80 Shares issued in lieu of cash distributions -- -- 1 -- Payments for redemptions (3,311) (2,176) (282) (164) -------- -------- ------- ------- Decrease in net assets from Investment Shares - Class B transactions (1,927) (599) (164) (84) -------- -------- ------- ------- Total decrease in net assets from capital share transactions (55,371) (44,599) (5,049) (3,275) -------- -------- ------- ------- Total decrease in net assets (47,071) (13,203) (3,924) (1,466) -------- -------- ------- ------- NET ASSETS AT BEGINNING OF YEAR 180,076 193,279 13,414 14,880 -------- -------- ------- ------- NET ASSETS AT END OF YEAR $133,005 $180,076 $ 9,490 $13,414 ======== ======== ======= ======= Undistributed net investment income included in net assets at year end $ 19 $ 145 $ 6 $ -- ======== ======== ======= =======
(1) See note 5 in the notes to financial statements for additional information. Amounts designated as "--" are either $0 or have been rounded to $0. The accompanying notes are an integral part of the financial statements. OCTOBER 31, 2004 53 STATEMENTS OF CHANGES IN NET ASSETS (000) For the years ended October 31,
EXPEDITION EXPEDITION TAX-FREE INVESTMENT GRADE INVESTMENT GRADE BOND FUND BOND FUND ------------------------ ------------------------ 2004 2003 2004 2003 ---------- ---------- ---------- ---------- OPERATIONS: Investment income $ 4,820 $ 5,265 $ 2,491 $ 2,668 Net realized gain on investments 478 776 336 1,425 Net change in unrealized appreciation (depreciation) of investments (656) (1,476) 292 (711) -------- -------- -------- -------- Net increase in net assets resulting from operations 4,642 4,565 3,119 3,382 -------- -------- -------- -------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Investment income: Institutional Shares (4,574) (5,021) (2,468) (2,652) Investment Shares - Class A (216) (231) (10) (15) Investment Shares - Class B (67) (73) (6) (6) Realized capital gains: Institutional Shares -- -- (1,416) (1,267) Investment Shares - Class A -- -- (4) (14) Investment Shares - Class B -- -- (4) (4) -------- -------- -------- -------- Total dividends and distributions (4,857) (5,325) (3,908) (3,958) -------- -------- -------- -------- CAPITAL SHARE TRANSACTIONS (1): Institutional Shares: Proceeds from sales 10,484 27,319 4,365 10,476 Shares issued in lieu of cash distributions 2,672 2,852 960 989 Payments for redemptions (18,563) (33,137) (14,195) (14,752) -------- -------- -------- -------- Decrease in net assets from Institutional Shares transactions (5,407) (2,966) (8,870) (3,287) -------- -------- -------- -------- Investment Shares - Class A: Proceeds from sales 87 489 328 182 Shares issued in lieu of cash distributions 171 179 14 28 Payments for redemptions (727) (525) (252) (723) -------- -------- -------- -------- Increase (decrease) in net assets from Investment Shares - Class A transactions (469) 143 90 (513) -------- -------- -------- -------- Investment Shares - Class B: Proceeds from sales 273 669 5 41 Shares issued in lieu of cash distributions 63 67 8 7 Payments for redemptions (725) (510) (13) (51) -------- -------- -------- -------- Increase (decrease) in net assets from Investment Shares - Class B transactions (389) 226 -- (3) -------- -------- -------- -------- Total decrease in net assets from capital share transactions (6,265) (2,597) (8,780) (3,803) -------- -------- -------- -------- Total decrease in net assets (6,480) (3,357) (9,569) (4,379) -------- -------- -------- -------- NET ASSETS AT BEGINNING OF YEAR 114,174 117,531 71,736 76,115 -------- -------- -------- -------- NET ASSETS AT END OF YEAR $107,694 $114,174 $ 62,167 $ 71,736 ======== ======== ======== ======== Undistributed net investment income included in net assets at year end $ -- $ -- $ 24 $ 17 ======== ======== ======== ==========
(1) See note 5 in the notes to financial statements for additional information. Amounts designated as "--" are either $0 or have been rounded to $0. The accompanying notes are an integral part of the financial statements. 54 OCTOBER 31, 2004 STATEMENTS OF CHANGES IN NET ASSETS (000) For the years ended October 31,
EXPEDITION EXPEDITION TAX-FREE MONEY MARKET MONEY MARKET FUND FUND ------------------------ ------------------------ 2004 2003 2004 2003 ---------- ---------- ---------- ---------- OPERATIONS: Investment income $ 3,839 $ 4,347 $ 1,001 $ 1,321 Net realized gain (loss) on investments (6) 24 (2) (3) ---------- --------- --------- --------- Net increase in net assets resulting from operations 3,833 4,371 999 1,318 ---------- --------- --------- --------- DIVIDENDS TO SHAREHOLDERS FROM: Investment income: Institutional Shares (1,913) (2,064) (512) (727) Investment Service Shares (1,650) (2,081) (405) (512) Sweep Class Shares (278) (249) (84) (81) ---------- --------- --------- --------- Total dividends (3,841) (4,394) (1,001) (1,320) ---------- --------- --------- --------- CAPITAL SHARE TRANSACTIONS (1): Institutional Shares: Proceeds from sales $1,028,696 831,364 246,684 395,054 Shares issued in lieu of cash distributions 65 90 -- -- Payments for redemptions (1,055,443) (818,571) (282,981) (408,728) ---------- --------- --------- --------- Increase (decrease) in net assets from Institutional Shares transactions (26,682) 12,883 (36,297) (13,674) ---------- --------- --------- --------- Investment Service Shares: Proceeds from sales 820,319 646,623 203,064 231,192 Shares issued in lieu of cash distributions 126 214 2 4 Payments for redemptions (869,884) (689,955) (204,801) (220,987) ---------- --------- --------- --------- Increase (decrease) in net assets from Investment Service Shares transactions (49,439) (43,118) (1,735) 10,209 ---------- --------- --------- --------- Sweep Class Shares: Proceeds from sales 198,220 153,774 62,477 62,132 Shares issued in lieu of cash distributions 259 233 23 19 Payments for redemptions (185,787) (150,961) (66,406) (47,843) ---------- --------- --------- --------- Increase (decrease) in net assets from Sweep Class Shares transactions 12,692 3,046 (3,906) 14,308 ---------- --------- --------- --------- Total increase (decrease) in net assets from capital share transactions (63,429) (27,189) (41,938) 10,843 ---------- --------- --------- --------- Total increase (decrease) in net assets (63,437) (27,212) (41,940) 10,841 ---------- --------- --------- --------- NET ASSETS AT BEGINNING OF YEAR 618,557 645,769 193,915 183,074 ---------- --------- --------- --------- NET ASSETS AT END OF YEAR $ 555,120 $ 618,557 $ 151,975 $ 193,915 ========== ========= ========= ========= Undistributed net investment income included in net assets at year end $ -- $ 2 $ -- $ -- ========== ========= ========= =========
(1) See note 5 in the notes to financial statements for additional information. Amounts designated as "--" are either $0 or have been rounded to $0. The accompanying notes are an integral part of the financial statements. OCTOBER 31, 2004 55 FINANCIAL HIGHLIGHTS For a Share Outstanding Throughout Each Period
----------------------------------------------------------------------------------------------------------------- REALIZED AND NET NET UNREALIZED DIVIDENDS ASSET VALUE, INVESTMENT GAINS OR TOTAL FROM NET DIVIDENDS BEGINNING INCOME (LOSSES) ON FROM INVESTMENT FROM OF PERIOD (LOSS) INVESTMENTS OPERATIONS INCOME CAPITAL GAINS ----------------------------------------------------------------------------------------------------------------- EQUITY FUND ----------------------------------------------------------------------------------------------------------------- Institutional Shares 2004 $ 7.39 $ 0.03 $ 0.34 $ 0.37 $(0.01) $ -- 2003 6.14 0.04 1.24 1.28 (0.03) -- 2002 7.99 0.01 (1.86) (1.85) -- -- 2001 14.25 (0.01) (4.44) (4.45) -- (1.81) 2000 13.09 (0.02) 2.67 2.65 -- (1.49) Investment Shares - Class A 2004 $ 7.33 $(0.02) $ 0.36 $ 0.34 $ -- $ -- 2003 6.08 0.02 1.24 1.26 (0.01) -- 2002 7.93 (0.02) (1.83) (1.85) -- -- 2001 14.18 (0.03) (4.41) (4.44) -- (1.81) 2000 13.06 (0.03) 2.64 2.61 -- (1.49) Investment Shares - Class B 2004 $ 7.03 $(0.11) $ 0.39 $ 0.28 $ -- $ -- 2003 5.87 (0.04) 1.20 1.16 -- -- 2002 7.72 (0.07) (1.78) (1.85) -- -- 2001 13.95 (0.09) (4.33) (4.42) -- (1.81) 2000 12.96 (0.08) 2.56 2.48 -- (1.49) ----------------------------------------------------------------------------------------------------------------- EQUITY INCOME FUND ----------------------------------------------------------------------------------------------------------------- Institutional Shares 2004 $ 6.65 $ 0.06 $ 0.68 $ 0.74 $(0.06) $ -- 2003 5.78 0.05 0.87 0.92 (0.05)++ -- 2002 7.42 0.04 (1.64) (1.60) (0.04) -- 2001 10.77 0.05 (2.82) (2.77) (0.05) (0.53) 2000(1) 10.00 0.07 0.76 0.83 (0.06) -- Investment Shares - Class A 2004 $ 6.64 $ 0.04 $ 0.69 $ 0.73 $(0.05) $ -- 2003 5.77 0.04 0.87 0.91 (0.04)++ -- 2002 7.41 0.02 (1.64) (1.62) (0.02) -- 2001 10.76 0.04 (2.83) (2.79) (0.03) (0.53) 2000(2) 9.78 0.04 1.00 1.04 (0.06) -- Investment Shares - Class B 2004 $ 6.58 $(0.04) $ 0.70 $ 0.66 $(0.01) $ -- 2003 5.73 (0.02) 0.87 0.85 --*++ -- 2002 7.38 (0.03) (1.62) (1.65) -- -- 2001 10.75 (0.02) (2.82) (2.84) -- (0.53) 2000(3) 9.82 0.01 0.94 0.95 (0.02) --
* Amount represents less than $0.01. + Returns are for the period indicated and have not been annualized. ++ Includes Return of Capital of $0.0003. The accompanying notes are an integral part of the financial statements. 56 OCTOBER 31, 2004
TOTAL NET ASSET RATIO OF DIVIDENDS VALUE, NET ASSETS EXPENSES AND END OF TOTAL END OF TO AVERAGE DISTRIBUTIONS PERIOD RETURN+ PERIOD (000) NET ASSETS --------------------------------------------------------------------------------------------------- EQUITY FUND --------------------------------------------------------------------------------------------------- Institutional Shares 2004 $(0.01) $ 7.75 4.97% $112,114 1.20% 2003 (0.03) 7.39 20.99% 156,142 1.18% 2002 -- 6.14 (23.15)% 173,038 1.16% 2001 (1.81) 7.99 (34.99)% 288,992 1.10% 2000 (1.49) 14.25 22.01% 422,148 1.05% Investment Shares - Class A 2004 $ -- $ 7.67 4.64% $ 7,220 1.45% 2003 (0.01) 7.33 20.72% 8,910 1.43% 2002 -- 6.08 (23.33)% 7,100 1.41% 2001 (1.81) 7.93 (35.11)% 11,253 1.35% 2000 (1.49) 14.18 21.73% 10,090 1.30% Investment Shares - Class B 2004 $ -- $ 7.31 3.98% $ 13,671 2.20% 2003 -- 7.03 19.76% 15,024 2.18% 2002 -- 5.87 (23.96)% 13,141 2.16% 2001 (1.81) 7.72 (35.61)% 18,186 2.10% 2000 (1.49) 13.95 20.80% 20,358 2.05% --------------------------------------------------------------------------------------------------- EQUITY INCOME FUND --------------------------------------------------------------------------------------------------- Institutional Shares 2004 $(0.06) $ 7.33 11.22% $ 8,573 1.25% 2003 (0.05)++ 6.65 16.12% 12,422 1.25% 2002 (0.04) 5.78 (21.66)% 13,865 1.25% 2001 (0.58) 7.42 (26.99)% 20,401 1.25% 2000(1) (0.06) 10.77 8.36% 34,420 1.25% Investment Shares - Class A 2004 $(0.05) $ 7.32 11.00% $ 304 1.50% 2003 (0.04)++ 6.64 15.84% 277 1.50% 2002 (0.02) 5.77 (21.87)% 309 1.50% 2001 (0.56) 7.41 (27.19)% 408 1.50% 2000(2) (0.06) 10.76 10.60% 286 1.50% Investment Shares - Class B 2004 $(0.01) $ 7.23 10.01% $ 613 2.25% 2003 --*++ 6.58 14.85% 715 2.25% 2002 -- 5.73 (22.36)% 706 2.25% 2001 (0.53) 7.38 (27.66)% 836 2.25% 2000(3) (0.02) 10.75 9.71% 427 2.25%
RATIO OF EXPENSES TO AVERAGE RATIO OF NET ASSETS INVESTMENT (EXCLUDING INCOME (LOSS) WAIVERS TO AVERAGE AND PORTFOLIO NET ASSETS REIMBURSEMENT) TURNOVER RATE ----------------------------------------------------------------------------- EQUITY FUND ----------------------------------------------------------------------------- Institutional Shares 2004 0.11% 1.22% 57.50% 2003 0.51% 1.18% 66.18% 2002 0.16% 1.16% 47.88% 2001 (0.09)% 1.10% 79.08% 2000 (0.22)% 1.05% 64.54% Investment Shares - Class A 2004 (0.14)% 1.47% 57.50% 2003 0.24% 1.43% 66.18% 2002 (0.09)% 1.41% 47.88% 2001 (0.32)% 1.35% 79.08% 2000 (0.49)% 1.30% 64.54% Investment Shares - Class B 2004 (0.89)% 2.22% 57.50% 2003 (0.50)% 2.18% 66.18% 2002 (0.84)% 2.16% 47.88% 2001 (1.08)% 2.10% 79.08% 2000 (1.24)% 2.05% 64.54% ---------------------------------------------------------------------------- EQUITY INCOME FUND ---------------------------------------------------------------------------- Institutional Shares 2004 0.89% 2.58% 27.35% 2003 0.70% 2.23% 99.66% 2002 0.56% 1.72% 93.43% 2001 0.60% 1.42% 88.73% 2000(1) 1.00% 1.25% 73.31% Investment Shares - Class A 2004 0.73% 2.83% 27.35% 2003 0.46% 2.48% 99.66% 2002 0.32% 1.97% 93.43% 2001 0.32% 1.67% 88.73% 2000(2) 0.84% 1.50% 73.31% Investment Shares - Class B 2004 (0.04)% 3.58% 27.35% 2003 (0.29)% 3.23% 99.66% 2002 (0.43)% 2.72% 93.43% 2001 (0.45)% 2.42% 88.73% 2000(3) (0.15)% 2.25% 73.31% (1) Commenced operations on March 3, 2000. All ratios for the period have been annualized. (2) Commenced operations on March 10, 2000. All ratios for the period have been annualized. (3) Commenced operations on March 15, 2000. All ratios for the period have been annualized. Amounts designated as "--" are either $0 or have been rounded to $0. OCTOBER 31, 2004 57 FINANCIAL HIGHLIGHTS For a Share Outstanding Throughout Each Period --------------------------------------------------------------------------------
NET REALIZED AND DIVIDENDS ASSET VALUE, NET UNREALIZED TOTAL FROM NET DISTRIBUTIONS BEGINNING INVESTMENT GAINS OR (LOSSES) FROM INVESTMENT FROM OF PERIOD INCOME ON INVESTMENTS OPERATIONS INCOME CAPITAL GAINS ----------------------------------------------------------------------------------------------------------------------------- INVESTMENT GRADE BOND FUND ----------------------------------------------------------------------------------------------------------------------------- Institutional Shares 2004 $10.70 $0.47 $(0.02) $0.45 $(0.47) $ -- 2003 10.77 0.49 (0.07) 0.42 (0.49) -- 2002 10.60 0.53 0.17 0.70 (0.53) -- 2001 9.72 0.53 0.88 1.41 (0.53) -- 2000 9.65 0.53 0.07 0.60 (0.53) -- Investment Shares - Class A 2004 $10.69 $0.45 $(0.02) $0.43 $(0.45) $ -- 2003 10.76 0.46 (0.07) 0.39 (0.46) -- 2002 10.59 0.50 0.17 0.67 (0.50) -- 2001 9.71 0.50 0.88 1.38 (0.50) -- 2000 9.64 0.51 0.07 0.58 (0.51) -- Investment Shares - Class B 2004 $10.71 $0.37 $(0.01) $0.36 $(0.37) $ -- 2003 10.78 0.38 (0.07) 0.31 (0.38) -- 2002 10.61 0.42 0.17 0.59 (0.42) -- 2001 9.72 0.43 0.89 1.32 (0.43) -- 2000 9.64 0.44 0.08 0.52 (0.44) -- --------------------------------------------------------------------------------------------------------------------------- TAX-FREE INVESTMENT GRADE BOND FUND --------------------------------------------------------------------------------------------------------------------------- Institutional Shares 2004 $10.91 $0.40 $ 0.13 $0.53 $(0.40) $(0.22) 2003 11.00 0.39 0.10 0.49 (0.39) (0.19) 2002(1) 10.89 0.43 0.15 0.58 (0.43) (0.04) 2001 10.37 0.44 0.52 0.96 (0.44) -- 2000(2) 10.00 0.31 0.37 0.68 (0.31) -- Investment Shares - Class A 2004 $10.91 $0.37 $ 0.12 $0.49 $(0.37) $(0.22) 2003 10.99 0.36 0.11 0.47 (0.36) (0.19) 2002(1) 10.88 0.40 0.15 0.55 (0.40) (0.04) 2001 10.36 0.42 0.52 0.94 (0.42) -- 2000(3) 10.05 0.28 0.31 0.59 (0.28) -- Investment Shares - Class B 2004 $10.91 $0.29 $ 0.12 $0.41 $(0.29) $(0.22) 2003 10.99 0.28 0.11 0.39 (0.28) (0.19) 2002(1) 10.89 0.32 0.14 0.46 (0.32) (0.04) 2001 10.37 0.34 0.52 0.86 (0.34) -- 2000(4) 10.18 0.13 0.19 0.32 (0.13) --
+ Returns are for the period indicated and have not been annualized. (1) As required, effective November 1, 2001, the Funds adopted the provisions of the AICPA AUDIT AND ACCOUNTING GUIDE FOR INVESTMENT COMPANIES that requires it to record the accretion of market discounts. The accompanying notes are an integral part of the financial statements. 58 OCTOBER 31, 2004
---------------------------------------------------------------------------------------- TOTAL NET ASSET DIVIDENDS VALUE, NET ASSETS AND END OF TOTAL END OF DISTRIBUTIONS PERIOD RETURN+ PERIOD (000) ---------------------------------------------------------------------------------------- INVESTMENT GRADE BOND FUND ---------------------------------------------------------------------------------------- Institutional Shares 2004 $(0.47) $ 10.68 4.33% $ 101,031 2003 (0.49) 10.70 3.89% 106,643 2002 (0.53) 10.77 6.88% 110,312 2001 (0.53) 10.60 15.00% 119,279 2000 (0.53) 9.72 6.49% 136,354 Investment Shares - Class A 2004 $(0.45) $10.67 4.07% $ 4,931 2003 (0.46) 10.69 3.63% 5,407 2002 (0.50) 10.76 6.61% 5,305 2001 (0.50) 10.59 14.72% 5,262 2000 (0.51) 9.71 6.22% 5,222 Investment Shares - Class B 2004 $(0.37) $10.70 3.39% $ 1,732 2003 (0.38) 10.71 2.86% 2,124 2002 (0.42) 10.78 5.82% 1,914 2001 (0.43) 10.61 13.99% 1,059 2000 (0.44) 9.72 5.54% 204 -------------------------------------------------------------------------------------- TAX-FREE INVESTMENT GRADE BOND FUND -------------------------------------------------------------------------------------- Institutional Shares 2004 $(0.62) $ 10.82 4.98% $61,555 2003 (0.58) 10.91 4.57% 71,211 2002(1) (0.47) 11.00 5.50% 75,064 2001 (0.44) 10.89 9.53% 86,461 2000(2) (0.31) 10.37 6.84% 84,729 Investment Shares - Class A 2004 $(0.59) $ 10.81 4.62% $ 393 2003 (0.55) 10.91 4.40% 305 2002(1) (0.44) 10.99 5.24% 827 2001 (0.42) 10.88 9.26% 872 2000(3) (0.28) 10.36 5.95% 523 Investment Shares - Class B 2004 $(0.51) $ 10.81 3.84% $ 219 2003 (0.47) 10.91 3.63% 220 2002(1) (0.36) 10.99 4.36% 224 2001 (0.34) 10.89 8.45% 182 2000(4) (0.13) 10.37 3.16% 3
----------------------------------------------------------------------------------------------------------- RATIO OF NET RATIO OF INVESTMENT RATIO OF EXPENSES EXPENSES INCOME TO TO AVERAGE NET ASSETS TO AVERAGE AVERAGE (EXCLUDING WAIVERS PORTFOLIO NET ASSETS NET ASSETS AND REIMBURSEMENTS) TURNOVER RATE ----------------------------------------------------------------------------------------------------------- INVESTMENT GRADE BOND FUND ----------------------------------------------------------------------------------------------------------- Institutional Shares 2004 0.80% 4.40% 0.92% 25.05% 2003 0.80% 4.42% 0.89% 27.97% 2002 0.80% 5.06% 0.90% 13.80% 2001 0.77% 5.35% 0.86% 29.53% 2000 0.75% 5.61% 0.89% 77.09% Investment Shares - Class A 2004 1.05% 4.15% 1.17% 25.05% 2003 1.05% 4.17% 1.14% 27.97% 2002 1.05% 4.81% 1.15% 13.80% 2001 1.02% 5.09% 1.11% 29.53% 2000 1.00% 5.32% 1.14% 77.09% Investment Shares - Class B 2004 1.80% 3.40% 1.92% 25.05% 2003 1.80% 3.42% 1.89% 27.97% 2002 1.80% 4.03% 1.90% 13.80% 2001 1.77% 4.30% 1.86% 29.53% 2000 1.75% 4.58% 1.89% 77.09% ----------------------------------------------------------------------------------------------------------- TAX-FREE INVESTMENT GRADE BOND FUND ----------------------------------------------------------------------------------------------------------- Institutional Shares 2004 0.80% 3.70% 0.94% 17.37% 2003 0.80% 3.54% 0.91% 38.86% 2002(1) 0.80% 3.96% 0.88% 23.39% 2001 0.77% 4.22% 0.83% 29.84% 2000(2) 0.65% 4.58% 0.75% 42.74% Investment Shares - Class A 2004 1.05% 3.47% 1.19% 17.37% 2003 1.05% 3.31% 1.16% 38.86% 2002(1) 1.05% 3.71% 1.13% 23.39% 2001 1.02% 3.96% 1.08% 29.84% 2000(3) 0.90% 4.36% 1.00% 42.74% Investment Shares - Class B 2004 1.80% 2.71% 1.94% 17.37% 2003 1.80% 2.54% 1.91% 38.86% 2002(1) 1.80% 2.96% 1.88% 23.39% 2001 1.77% 3.18% 1.83% 29.84% 2000(4) 1.65% 3.56% 1.75% 42.74%
The effect of this change for the year ended October 31, 2002 was a decrease in the ratio of net investment income to average net assets of 0.01%. Per share data and ratios for period prior to November 1, 2001 have not been restated to reflect this change in accounting. (2) Commenced operations on March 3, 2000. All ratios for the period have been annualized. (3) Commenced operations on March 10, 2000. All ratios for the period have been annualized. (4) Commenced operations on June 23, 2000. All ratios for the period have been annualized. Amounts designated as "--" are either $0 or have been rounded to $0. OCTOBER 31, 2004 59 FINANCIAL HIGHLIGHTS For a Share Outstanding Throughout Each Period
----------------------------------------------------------------------------------------------------------------------------- NET REALIZED AND DIVIDENDS ASSET VALUE, NET UNREALIZED TOTAL FROM NET DISTRIBUTIONS BEGINNING INVESTMENT GAINS FROM INVESTMENT FROM OF PERIOD INCOME ON INVESTMENTS OPERATIONS INCOME CAPITAL GAINS ----------------------------------------------------------------------------------------------------------------------------- MONEY MARKET FUND ----------------------------------------------------------------------------------------------------------------------------- Institutional Shares 2004 $1.00 $0.01 $-- $0.01 $(0.01) $-- 2003 1.00 0.01 -- 0.01 (0.01) $-- 2002 1.00 0.01 -- 0.01 (0.01) -- 2001 1.00 0.04 -- 0.04 (0.04) -- 2000 1.00 0.06 -- 0.06 (0.06) -- Investment Service Shares 2004 $1.00 $0.01 $-- $0.01 $(0.01) $-- 2003 1.00 0.01 -- 0.01 (0.01) -- 2002 1.00 0.01 -- 0.01 (0.01) -- 2001 1.00 0.04 -- 0.04 (0.04) -- 2000 1.00 0.06 -- 0.06 (0.06) -- Sweep Class Shares 2004 $1.00 $ -- $-- $ -- $ --* $-- 2003 1.00 0.01 -- 0.01 (0.01) -- 2002 1.00 0.02 -- 0.02 (0.02) -- 2001 1.00 0.04 -- 0.04 (0.04) -- 2000(1) 1.00 0.01 -- 0.01 (0.01) -- ---------------------------------------------------------------------------------------------------------------------------- TAX-FREE MONEY MARKET FUND ---------------------------------------------------------------------------------------------------------------------------- Institutional Shares 2004 $1.00 $0.01 $-- $0.01 $(0.01) $-- 2003 1.00 0.01 -- 0.01 (0.01) -- 2002 1.00 0.01 -- 0.01 (0.01) -- 2001 1.00 0.03 -- 0.03 (0.03) -- 2000 1.00 0.04 -- 0.04 (0.04) -- Investment Service Shares 2004 $1.00 $ -- $-- $ -- $ --* $-- 2003 1.00 0.01 -- 0.01 (0.01) -- 2002 1.00 0.01 -- 0.01 (0.01) -- 2001 1.00 0.03 -- 0.03 (0.03) -- 2000 1.00 0.03 -- 0.03 (0.03) -- Sweep Class Shares 2004 $1.00 $ -- $-- $ -- $ --* $-- 2003 1.00 -- -- -- --* -- 2002 1.00 0.01 -- 0.01 (0.01) -- 2001 1.00 0.03 -- 0.03 (0.03) -- 2000(1) 1.00 0.01 -- 0.01 (0.01) --
* Amount represents less than $0.01. + Returns are for the period indicated and have not been annualized. (1) Commenced operations on August 1, 2000. All ratios for the period have been annualized. Amounts designated as "--" are either $0 or have been rounded to $0. The accompanying notes are an integral part of the financial statements. 60 OCTOBER 31, 2004
-------------------------------------------------------------------------------------------- TOTAL NET ASSET DIVIDENDS VALUE, NET ASSETS AND END OF TOTAL END OF DISTRIBUTIONS PERIOD RETURN+ PERIOD (000) -------------------------------------------------------------------------------------------- MONEY MARKET FUND -------------------------------------------------------------------------------------------- Institutional Shares 2004 $(0.01) $1.00 0.80% $224,527 2003 (0.01) 1.00 0.88% 251,212 2002 (0.01) 1.00 1.56% 238,337 2001 (0.04) 1.00 4.61% 147,806 2000 (0.06) 1.00 5.96% 130,891 Investment Service Shares 2004 $(0.01) $1.00 0.55% $264,401 2003 (0.01) 1.00 0.63% 313,845 2002 (0.01) 1.00 1.31% 356,976 2001 (0.04) 1.00 4.35% 377,922 2000 (0.06) 1.00 5.69% 324,583 Sweep Class Shares 2004 $ --* $1.00 0.43% $ 66,192 2003 (0.01) 1.00 0.51% 53,500 2002 (0.02) 1.00 1.18% 50,456 2001 (0.04) 1.00 4.22% 52,530 2000(1) (0.01) 1.00 1.53% 31,979 -------------------------------------------------------------------------------------------- TAX-FREE MONEY MARKET FUND -------------------------------------------------------------------------------------------- Institutional Shares 2004 $(0.01) $1.00 0.75% $ 47,820 2003 (0.01) 1.00 0.79% 84,116 2002 (0.01) 1.00 1.28% 97,792 2001 (0.03) 1.00 2.97% 35,939 2000 (0.04) 1.00 3.80% 5,622 Investment Service Shares 2004 $ --* $1.00 0.50% $ 85,325 2003 (0.01) 1.00 0.54% 87,062 2002 (0.01) 1.00 1.02% 76,854 2001 (0.03) 1.00 2.71% 113,519 2000 (0.03) 1.00 3.54% 72,535 Sweep Class Shares 2004 $ --* $1.00 0.38% $ 18,830 2003 --* 1.00 0.42% 22,737 2002 (0.01) 1.00 0.90% 8,428 2001 (0.03) 1.00 2.59% 4,069 2000(1) (0.01) 1.00 1.00% 2,058
---------------------------------------------------------------------------------------- RATIO OF NET RATIO OF INVESTMENT RATIO OF EXPENSES EXPENSES INCOME TO TO AVERAGE NET ASSETS TO AVERAGE AVERAGE (EXCLUDING WAIVERS NET ASSETS NET ASSETS AND REIMBURSEMENTS) ---------------------------------------------------------------------------------------- MONEY MARKET FUND ---------------------------------------------------------------------------------------- Institutional Shares 2004 0.45% 0.80% 0.72% 2003 0.45% 0.85% 0.67% 2002 0.45% 1.54% 0.68% 2001 0.45% 4.59% 0.72% 2000 0.43% 5.79% 0.69% Investment Service Shares 2004 0.70% 0.56% 0.97% 2003 0.70% 0.62% 0.92% 2002 0.70% 1.30% 0.93% 2001 0.70% 4.17% 0.97% 2000 0.68% 5.62% 0.94% Sweep Class Shares 2004 0.82% 0.43% 1.09% 2003 0.82% 0.49% 1.04% 2002 0.82% 1.18% 1.05% 2001 0.82% 3.96% 1.09% 2000(1) 0.80% 5.95% 1.06% --------------------------------------------------------------------------------------- TAX-FREE MONEY MARKET FUND --------------------------------------------------------------------------------------- Institutional Shares 2004 0.43% 0.72% 0.74% 2003 0.43% 0.80% 0.67% 2002 0.43% 1.25% 0.68% 2001 0.43% 2.55% 0.76% 2000 0.43% 3.61% 0.69% Investment Service Shares 2004 0.68% 0.50% 0.99% 2003 0.68% 0.53% 0.92% 2002 0.68% 1.03% 0.93% 2001 0.68% 2.62% 1.01% 2000 0.68% 3.48% 0.94% Sweep Class Shares 2004 0.80% 0.37% 1.11% 2003 0.80% 0.39% 1.04% 2002 0.80% 0.91% 1.05% 2001 0.80% 2.31% 1.13% 2000(1) 0.80% 3.81% 1.06%
OCTOBER 31, 2004 61 NOTES TO FINANCIAL STATEMENTS (1) ORGANIZATION The Expedition Funds (the "Trust") were organized on August 7, 1989 and are registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end, management investment company offering the following Funds as of October 31, 2004: the Expedition Equity Fund (the "Equity Fund"), the Expedition Equity Income Fund (the "Equity Income Fund"),the Expedition Investment Grade Bond Fund (the "Investment Grade Bond Fund"), the Expedition Tax-Free Investment Grade Bond Fund (the "Tax-Free Investment Grade Bond Fund"), the Expedition Money Market Fund (the "Money Market Fund"), and the Expedition Tax-Free Money Market Fund (the "Tax-Free Money Market Fund") (each a "Fund", collectively, the "Funds"). The Funds are registered to offer three classes of shares. The Equity, Equity Income, Investment Grade Bond, and Tax-Free Investment Grade Bond Funds offer Institutional Shares, Investment Shares - Class A and Investment Shares - Class B, and the Money Market and Tax-Free Money Market Funds offer Institutional Shares, Investment Service Shares and Sweep Class Shares. The assets of each Fund are segregated and a shareholder's interest is limited to the Funds in which shares are held. The investment objectives, policies, and strategies of the Funds are described in their prospectuses. Under the Funds' organizational documents, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Funds. In addition, in the normal course of business, the Funds enter into contracts with their vendors and others that provide for general indemnifications. The Funds' maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds. However, based on experience, the Funds consider the risk of loss from such claims to be remote. (2) SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Funds which are in conformity with accounting principles generally accepted in the United States of America. USE OF ESTIMATES -- The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and income reported in the financial statements. Actual results could differ from those estimated. SECURITY VALUATION -- Securities listed on a securities exchange, market or automated quotation system for which quotations are readily available (except for securities traded on NASDAQ), including securities traded over the counter, are valued at the last quoted sale price on the primary exchange or market (foreign or domestic) on which they are traded, or, if there is no such reported sale, at the most recent quoted bid price. For securities traded on NASDAQ, the NASDAQ Official Closing Price will be used. If available, debt securities are priced based upon valuations provided by independent, third-party pricing agents. Such values generally reflect the last reported sales price if the security is actively traded. The third-party pricing agents may also value debt securities at an evaluated bid price by employing methodologies that utilize actual market transactions, broker-supplied valuations, or other methodologies designed to identify the market value for such securities. Debt obligations with remaining maturities of sixty days or less may be valued at their amortized cost, which approximates market value. 62 OCTOBER 31, 2004 Securities for which market prices are not "readily available" are valued in accordance with Fair Value Procedures established by the Funds' Board of Trustees the ("Board"). The Funds' Fair Value Procedures are implemented through a Fair Value Committee (the "Committee") designated by the Board. Some of the more common reasons that may necessitate that a security be valued using Fair Value Procedures include: the security's trading has been halted or suspended; the security has been de-listed from a national exchange; the security's primary trading market is temporarily closed at a time when under normal conditions it would be open; the security has not been traded for an extended period of time; the security's primary pricing source is not able or willing to provide a price; or trading of the security is subject to local government-imposed restrictions. When a security is valued in accordance with the Fair Value Procedures, the Committee will determine the value after taking into consideration relevant information reasonably available to the Committee. 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 Compass Asset Management, a division of Compass Bank, the Funds' investment advisor (the "Advisor"), to be creditworthy pursuant to the guidelines and/or standards reviewed or established by the Board. 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 Investment Grade Bond Fund, the Tax-Free Investment Grade Bond Fund, the Money Market Fund and the Tax-Free Money Market Fund are declared daily and paid monthly. The Equity Fund and the Equity Income Fund declare and pay dividends from net investment income, if any, quarterly. Any net realized capital gains will be distributed at least annually for all Funds. 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 OCTOBER 31, 2004 63 NOTES TO FINANCIAL STATEMENTS begin earning interest on the settlement date. At October 31, 2004, no such securities were held by the Funds. INVESTING IN GOVERNMENT SPONSORED ENTERPRISES -- The Investment Grade Bond and Money Market Funds invest in securities issued by the Federal Home Loan Mortgage Corporation ("Freddie Mac") and similar United States Government sponsored entities such as Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Banks ("FHLB's"). Freddie Mac, Fannie Mae and FHLB's, although chartered and sponsored by Congress, are not funded by Congressional appropriations and the debt and mortgage-backed securities issued by Freddie Mac, Fannie Mae, FHLB's are neither guaranteed nor insured by the United States Government. EXPENSES -- Expenses that are directly related to one of the Funds are charged directly to that Fund. Other operating expenses of the Funds are prorated to the Funds on the basis of relative daily net assets. 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) INVESTMENT ADVISORY, ADMINISTRATION, DISTRIBUTION AND SERVICE AGREEMENTS INVESTMENT ADVISORY FEE -- The Advisor, receives for its services annual advisory fees based on the Funds' 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. Accordingly, the advisory fee and voluntary expense limitations for each Fund are as follows: -------------------------------------------------------------------------------- VOLUNTARY ADVISORY EXPENSE FEES LIMITATIONS -------------------------------------------------------------------------------- Equity Fund, Institutional Shares 0.75% 1.25% Equity Fund, Investment Shares - Class A 0.75% 1.50% Equity Fund, Investment Shares - Class B 0.75% 2.25% Equity Income Fund, Institutional Shares 0.75% 1.25% Equity Income Fund, Investment Shares - Class A 0.75% 1.50% Equity Income Fund, Investment Shares - Class B 0.75% 2.25% Investment Grade Bond Fund, Institutional Shares 0.50% 0.80% Investment Grade Bond Fund, Investment Shares - Class A 0.50% 1.05% Investment Grade Bond Fund, Investment Shares - Class B 0.50% 1.80% Tax-Free Investment Grade Bond Fund, Institutional Shares 0.50% 0.80% Tax-Free Investment Grade Bond Fund, Investment Shares - Class A 0.50% 1.05% Tax-Free Investment Grade Bond Fund, Investment Shares - Class B 0.50% 1.80% Money Market Fund, Institutional Shares 0.40% 0.45% Money Market Fund, Investment Service Shares 0.40% 0.70% Money Market Fund, Sweep Class Shares 0.40% 0.82% Tax-Free Money Market Fund, Institutional Shares 0.40% 0.43% Tax-Free Money Market Fund, Investment Service Shares 0.40% 0.68% Tax-Free Money Market Fund, Sweep Class Shares 0.40% 0.80% 64 OCTOBER 31, 2004 INVESTMENT SUB-ADVISOR -- Weiss, Peck & Greer, L.L.C. ("WPG") serves as the Tax-Free Money Market Fund's investment sub-advisor under a sub-advisory agreement (the "Sub-Advisory Agreement") with the Advisor. Under the Sub-Advisory Agreement, WPG invests the assets of the Fund on a daily basis, and continuously administers the investment program of the Fund. WPG is entitled to a fee which is paid by the Advisor and which is calculated daily and paid monthly, at an annual rate of: 0.075% of the Fund's average daily net assets up to $150 million; 0.05% of the next $350 million of the Fund's average daily net assets, 0.04% of the next $500 million of the Funds' average daily net assets; and 0.03% of the Fund's average daily net assets over $1 billion. ADMINISTRATIVE FEE -- The Trust and SEI Investments Global Funds Services (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 equal to the higher of $75,000 or 0.20% 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. The Administrator waived 0.05% of its fee for the Money Market and Tax Free Money Market Funds. DISTRIBUTION AND SHAREHOLDER SERVICING FEES -- The Trust and SEI Investments Distribution Co. (the "Distributor") are parties to a Distribution Agreement dated June 9, 1997. The Equity, Equity Income, Investment Grade Bond, and Tax-Free Investment Grade Bond Funds have adopted Distribution Plans for Investment Shares - Class A and Investment Shares - Class B. Under the terms of each Plan the Funds pay the Distributor a monthly distribution fee at an annual rate of 0.25% of the average daily net assets of the Class A Shares and 1.00% of the average daily net assets of Class B Shares, which may be used by the Distributor to provide compensation for sales support and distribution activities. The Money Market and Tax-Free Money Market Funds have adopted and entered into a Shareholder Service Plan and Agreement with the Distributor. Each Fund pays the Distributor a monthly shareholder servicing fee at an annual rate of 0.25% of the average daily net assets of each Fund's Investment Service Shares and Sweep Class Shares, which may be used by the Distributor to provide compensation to service providers that have agreed to provide certain shareholders support services for their customers who own such Shares of the Funds. ADMINISTRATIVE SERVICING FEES -- To the extent that investors buy Sweep Class Shares through Compass Bank or any of its affiliates providing sub-accounting, sub-transfer agency services or other administrative services, including Compass Brokerage, Inc., those entities may receive administrative servicing fees, payable from the Funds' assets, of up to 0.12% of each Fund's average daily net assets attributable to Sweep Class Shares. CUSTODIAN FEES -- Compass Bank serves as the Funds' custodian. Their 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. OCTOBER 31, 2004 65 NOTES TO FINANCIAL STATEMENTS (4) TRANSACTIONS WITH AFFILIATES 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. Pursuant to an exemptive order issued by the Securities and Exchange Commission, the Funds may invest in the Money Market Fund or the Tax-Free Money Market Fund (the "Money Market Funds"), provided that investments in the Money Market Funds do not exceed 25% of the investing Fund's total assets. -------------------------------------------------------------------------------- (5) CAPITAL SHARE TRANSACTIONS (000) For the years ended October 31,
EXPEDITION EXPEDITION EQUITY EQUITY INCOME FUND FUND -------------------- -------------------- 2004 2003 2004 2003 -------- -------- -------- -------- Institutional Shares: Shares issued 926 1,756 -- 7 Shares issued in lieu of cash distributions 7 64 -- -- Shares redeemed (7,595) (8,868) (699) (536) -------- -------- -------- -------- Increase (decrease) from Institutional Shares transactions (6,662) (7,048) (699) (529) -------- -------- -------- -------- Investment Shares - Class A and Investment Service Shares, respectively: Shares issued 107 292 5 5 Shares issued in lieu of cash distributions -- 2 -- -- Shares redeemed (382) (246) (5) (17) -------- -------- -------- -------- Increase (decrease) from Investment Shares - Class A and Investment Service Shares transactions, respectively (275) 48 -- (12) -------- -------- -------- -------- Investment Shares - Class B and Sweep Class Shares, respectively: Shares issued 190 252 17 14 Shares issued in lieu of cash distributions -- -- -- -- Shares redeemed (456) (354) (41) (28) -------- -------- -------- -------- Increase (decrease) from Investment Shares - Class B and Sweep Class Shares transactions, respectively (266) (102) (24) (14) -------- -------- -------- -------- TOTAL INCREASE (DECREASE) FROM SHARE TRANSACTIONS (7,203) (7,102) (723) (555) ======== ======== ======== ========
Amounts designated as "--" are either $0 or have been rounded to $0. 66 OCTOBER 31, 2004
EXPEDITION EXPEDITION TAX-FREE INVESTMENT GRADE INVESTMENT GRADE BOND FUND BOND FUND -------------------- -------------------- 2004 2003 2004 2003 -------- -------- -------- -------- Institutional Shares: Shares issued 984 2,515 403 957 Shares issued in lieu of cash distributions 251 263 89 92 Shares redeemed (1,746) (3,052) (1,328) (1,350) -------- -------- -------- -------- Increase (decrease) from Institutional Shares transactions (511) (274) (836) (301) -------- -------- -------- -------- Investment Shares - Class A and Investment Service Shares, respectively: Shares issued 8 45 30 16 Shares issued in lieu of cash distributions 16 17 1 3 Shares redeemed (68) (49) (23) (66) -------- -------- -------- -------- Increase (decrease) from Investment Shares - Class A and Investment Service Shares transactions, respectively (44) 13 8 (47) -------- -------- -------- -------- Investment Shares - Class B and Sweep Class Shares, respectively: Shares issued 26 61 -- 4 Shares issued in lieu of cash distributions 6 6 1 1 Shares redeemed (68) (47) (1) (5) -------- -------- -------- -------- Increase (decrease) from Investment Shares - Class B and Sweep Class Shares transactions, respectively (36) 20 -- -- -------- -------- -------- -------- TOTAL INCREASE (DECREASE) FROM SHARE TRANSACTIONS (591) (241) (828) (348) ======== ======== ======== ========
EXPEDITION EXPEDITION MONEY MARKET TAX-FREE MONEY FUND MARKET FUND ------------------------ ------------------------ 2004 2003 2004 2003 ---------- ---------- -------- ---------- Institutional Shares: Shares issued 1,028,696 831,364 246,684 395,054 Shares issued in lieu of cash distributions 65 90 -- -- Shares redeemed (1,055,443) (818,571) (282,981) (408,728) ---------- ---------- ---------- ---------- Increase (decrease) from Institutional Shares transactions (26,682) 12,883 (36,297) (13,674) ---------- ---------- ---------- ---------- Investment Shares - Class A and Investment Service Shares, respectively: Shares issued 820,319 646,623 203,064 231,192 Shares issued in lieu of cash distributions 126 214 2 4 Shares redeemed (869,884) (689,955) (204,801) (220,987) ---------- ---------- ---------- ---------- Increase (decrease) from Investment Shares - Class A and Investment Service Shares transactions, respectively (49,439) (43,118) (1,735) 10,209 ---------- ---------- ---------- ---------- Investment Shares - Class B and Sweep Class Shares, respectively: Shares issued 198,220 153,774 62,477 62,132 Shares issued in lieu of cash distributions 259 233 23 19 Shares redeemed (185,787) (150,961) (66,406) (47,843) ---------- ---------- ---------- ---------- Increase (decrease) from Investment Shares - Class B and Sweep Class Shares transactions, respectively 12,692 3,046 (3,906) 14,308 ---------- ---------- ---------- ---------- TOTAL INCREASE (DECREASE) FROM SHARE TRANSACTIONS (63,429) (27,189) (41,938) 10,843 ========== ========== ========== ==========
OCTOBER 31, 2004 67 NOTES TO FINANCIAL STATEMENTS (6) INVESTMENT TRANSACTIONS Purchases, sales and maturities of investments, excluding short-term securities, for the year ended October 31, 2004, were as follows (000): TAX-FREE EQUITY INVESTMENT INVESTMENT EQUITY INCOME GRADE BOND GRADE BOND FUND FUND FUND FUND -------- -------- ---------- ---------- Purchases U.S. Government ....... $ -- $ -- $18,989 $ -- Other ................. 99,314 2,918 7,972 11,164 Sales and Maturities U.S. Government ....... -- -- 23,042 -- Other ................. 154,143 8,067 10,481 19,772 (7) FEDERAL TAX INFTORMATION It is each Fund's policy to continue to comply with the provisions of the Internal Revenue Code of 1986 (Subchapter M), 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. Dividends from net investment income and distributions from net realized capital gains, if any, are determined in accordance with U.S. Federal income tax regulations. Certain book/tax differences are either temporary or permanent in nature. To the extent these differences are permanent, they are charged or credited to paid-in-capital or accumulated net realized gain, as appropriate, in the period that the differences arise. Accordingly, at October 31, 2004, the following reclassifications were made to the Funds primarily attributable to different treatment for gains and losses on paydowns of mortgage- and asset-backed securities for tax purposes (000): UNDISTRIBUTED ACCUMULATED NET INVESTMENT REALIZED INCOME/(LOSS) GAIN/(LOSS) -------------- ------------ Investment Grade Bond Fund ............. $37 $(37) These reclassifications had no effect on net assets or net asset value per share. 68 OCTOBER 31, 2004 The tax character of dividends and distributions declared during the years ended October 31, 2004, and October 31, 2003, were as follows (000):
TAX-FREE ORDINARY LONG-TERM RETURN OF INCOME INCOME CAPITAL GAIN CAPITAL TOTAL -------- -------- ------------ --------- -------- Equity Fund 2004 ................ $ -- $ 145 $ -- $-- $ 145 2003 ................ -- 785 -- -- 785 Equity Income Fund 2004 ................ -- 83 -- -- 83 2003 ................ -- 108 -- 4 112 Investment Grade Bond Fund 2004 ................ -- 4,857 -- -- 4,857 2003 ................ -- 5,325 -- -- 5,325 Tax-Free Investment Grade Bond Fund 2004 ................ 2,480 3 1,425 -- 3,908 2003 ................ 2,534 -- 1,424 -- 3,958 Money Market Fund 2004 ................ -- 3,841 -- -- 3,841 2003 ................ -- 4,394 -- -- 4,394 Tax-Free Money Market Fund 2004 ................ 1,001 -- -- -- 1,001 2003 ................ 1,320 -- -- -- 1,320
As of October 31, 2004, the components of Distributable Earnings (Accumulated Losses) were as follows (000):
TOTAL UNDISTRIBUTED DISTRIBUTABLE UNDISTRIBUTED UNDISTRIBUTED LONG-TERM CAPITAL OTHER EARNINGS TAX EXEMPT ORDINARY CAPITAL LOSS UNREALIZED TEMPORARY (ACCUMULATED INCOME INCOME GAIN CARRYFORWARDS APPRECIATION DIFFERENCES LOSSES) ------------- ------------- ------------- ------------- ------------ ----------- ------------- Equity Fund $ -- $ 19 $ -- $(82,672) $10,559 $ -- $(72,094) Equity Income Fund -- 6 -- (7,885) 1,324 -- (6,555) Investment Grade Bond Fund -- 402 -- (950) 8,567 (402) 7,617 Tax-Free Investment Grade Bond Fund 207 -- 336 -- 4,071 (183) 4,431 Money Market Fund -- 587 -- (5) -- (587) (5) Tax-Free Money Market Fund 129 -- -- (15) -- (129) (15)
OCTOBER 31, 2004 69 NOTES TO FINANCIAL STATEMENTS For Federal income tax purposes, capital loss carryforwards may be carried forward and applied against future capital gains. At October 31, 2004, the Funds had the following capital loss carryforwards (000):
TOTAL CAPITAL LOSS CARRY- EXPIRES EXPIRES EXPIRES EXPIRES EXPIRES EXPIRES FORWARD 2012 2011 2010 2009 2008 2007 10/31/04 ------- ------- ------- ------- ------- ------- -------- Equity Fund $ -- $22,416 $33,297 $26,959 $ -- $ -- $82,672 Equity Income Fund -- 2,567 5,318 -- -- -- 7,885 Investment Grade Bond Fund -- -- -- -- 950 -- 950 Money Market Fund 5 -- -- -- -- -- 5 Tax-Free Money Market Fund 2 3 2 -- 1 7 15
During the year ended October 31, 2004, the Equity Fund, Equity In come Fund and the Investment Grade Bond Fund utilized capital loss carryforwards of $10,121,910, $999,059 and $441,434 to offset capital gains, respectively. For Federal income tax purposes, the cost of securities owned at October 31, 2004, and the net realized gains or losses on securities sold for the period were different from amounts reported for financial reporting purposes, primarily due to wash sales which cannot be used for Federal income tax purposes in the current year and have been deferred for use in future years. The Federal tax cost and aggregate gross unrealized appreciation and depreciation on investments, held by the Funds at October 31, 2004, were as follows (000): NET FEDERAL APPRECIATED DEPRECIATED UNREALIZED TAX COST SECURITIES SECURITIES APPRECIATION --------- ----------- ----------- ------------ Equity Fund ....... $123,001 $16,377 $(5,818) $10,559 Equity Income Fund ........... 8,116 1,415 (91) 1,324 Investment Grade Bond Fund ...... 98,068 8,567 -- 8,567 Tax-Free Investment Grade Bond Fund 57,523 4,071 -- 4,071 70 OCTOBER 31, 2004 (8) SUBSEQUENT EVENT At a board meeting held on December 10, 2004, the Board of Trustees of the Trust approved an agreement and plan of reorganization (the "Reorganization Agreement") between the Expedition Equity Fund and the Goldman Sachs Core U.S. Equity Fund, the Expedition Equity Income Fund and the Goldman Sachs Growth and Income Fund, the Expedition Investment Grade Bond Fund and the Goldman Sachs Core Fixed Income Fund, the Expedition Tax-Free Investment Grade Bond Fund and the Goldman Sachs Municipal Income Fund, the Expedition Money Market Fund and the Goldman Sachs Financial Square Prime Obligations Fund and the Expedition Tax-Free Money Market Fund and the Goldman Sachs Financial Square Tax-Free Money Market Fund. The Reorganization Agreement sets forth the terms by which the Expedition Funds will transfer their assets and liabilities to the Goldman Sachs Funds in exchange for their shares of the Goldman Sachs Funds, and subsequently distribute those Goldman Sachs Funds' shares to Fund Shareholders (the "Reorganization"). As a result of the reorganization, each shareholder will effectively become a shareholder of the Goldman Sachs Funds. Shareholders are required to approve the Reorganization by voting, in proxy or in person, at a special meeting of shareholders. If approved by shareholders, the Reorganization is expected to occur on or about February 25, 2005. Please read your prospectus/proxy statement carefully as it provides more detailed information about the proposed Reorganization, the Goldman Sachs Funds and the special meeting. OCTOBER 31, 2004 71 TRUSTEES AND OFFICERS OF THE EXPEDITION FUNDS (UNAUDITED) Set forth below are the names, age, position with the Trust, length of term of office, and the principal occupations for the last five years of each of the persons currently serving as Trustees of the Trust. Trustees who are deemed not to be "interested persons" of the Trust are referred to as "Independent Board Members." Messrs. Nesher and Doran are Trustees who may be deemed to be "interested" persons of the Fund as that term is defined in the 1940 Act by virtue of their affiliation with the Trust's Distributor. The following chart lists Trustees and Officers as of November 16, 2004. The Trust's Statement of Additional Information ("SAI") includes additional information about the Trustees and Officers. The SAI may be obtained without charge by calling 1-800-992-2085.
NUMBER OF PORTFOLIOS IN THE EXPEDITION TERM OF TRUST POSITION(S) OFFICE AND OVERSEEN BY NAME, ADDRESS, HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) BOARD OTHER DIRECTORSHIPS AGE(1) THE TRUST TIME SERVED(2) DURING PAST 5 YEARS MEMBER HELD BY BOARD MEMBER(3) ---------------------------------------------------------------------------------------------------------------------------------- INDEPENDENT BOARD MEMBERS ------------- JOHN T. COONEY Trustee (Since 1993) Vice Chairman of 6 Trustee of the Advisors' 77 yrs. old Ameritrust Texas N.A., Inner Circle Fund, The 1989-1992, and MTrust MDL Funds, and The Corp., 1985-1989. Advisors' Inner Circle Fund II. ---------------------------------------------------------------------------------------------------------------------------------- ROBERT A. PATTERSON Trustee (Since 1993) Pennsylvania State 6 Member and Treasurer, 87 yrs. old University, Senior Vice Board of Trustees of President, Treasurer Grove City College. (Emeritus); Financial Trustee of The Advisors' and Investment Inner Circle Fund, The Consultant, Professor of MDL Funds, and The Transportation since Advisors' Inner Circle 1984; Vice President- Fund II. Investments, Treasurer, Senior Vice President (Emeritus), 1982-1984. Director, Pennsylvania Research Corp. ---------------------------------------------------------------------------------------------------------------------------------- EUGENE B. PETERS Trustee (Since 1993) Private investor from 6 Trustee of the Advisors' 75 yrs. old 1987 to present. Vice Inner Circle Fund, The President and Chief MDL Funds, and The Financial officer, Advisors' Inner Circle Western Company of North Fund II. America (petroleum ser- vice company), 1980-1986. President of Gene Peters and Associates (import company), 1978-1980. President and Chief Executive Officer of Jos. Schlitz Brewing Company before 1978. ---------------------------------------------------------------------------------------------------------------------------------- JAMES M. STOREY Trustee (Since 1994) Attorney, solo 6 Trustee of the Advisors' 73 yrs. old practitioner since 1994. Inner Fund, The MDL Partner, Dechert (law Funds, The Advisors' firm), September 1987- Inner Circle Fund II, December 1993. SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI Institutional International Trust, SEI Institutional Investments Trust, SEI Institutional Managed Trust, SEI Liquid Asset Trust, SEI Tax Exempt Trust, State Street Research Funds, Massachusetts Health and Education Tax-Exempt Trust. ----------------------------------------------------------------------------------------------------------------------------------
1 Unless otherwise noted, the business address of each Trustee is SEI Investments Company, 1 Freedom Valley Drive, Oaks, Pennsylvania 19456. 2 Each Trustee shall hold office during the lifetime of this Trust until the election and qualification of his or her successor, or until he or she sooner dies, resigns or is removed in accordance with the Trust's Declaration of Trust. 3 Directorships of companies required to report to the Securities and Exchange Commission under the Securities Exchange Act of 1934 (i.e., "public companies") or other investment companies registered under the Investment Company Act of 1940. 72-73 OCTOBER 31, 2004 TRUSTEES AND OFFICERS OF THE EXPEDITION FUNDS (UNAUDITED)
NUMBER OF PORTFOLIOS IN THE EXPEDITION TERM OF TRUST POSITION(S) OFFICE AND OVERSEEN BY NAME, ADDRESS, HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) BOARD OTHER DIRECTORSHIPS AGE(1) THE TRUST TIME SERVED(2) DURING PAST 5 YEARS MEMBER(3) HELD BY BOARD MEMBER(3) ---------------------------------------------------------------------------------------------------------------------------------- INDEPENDENT BOARD MEMBERS (CONTINUED) ------------------------- GEORGE J. SULLIVAN, JR. Trustee (Since 1999) Chief Executive Officer, 6 Trustee, State Street 62 yrs. old Newfound Consultants, Navigator Securities Inc. since April 1997. Lending Trust, since General Partner, Teton 1995. Trustee of The Partners, L.P., June Advisors' Inner Circle 1991-December 1996; Fund, The MDL Funds, The Chief Financial Officer, Advisors' Inner Circle Nobel Partners, L.P., Fund II, SEI Asset March 1991-December Allocation Trust, SEI 1996; Treasurer and Daily Income Trust, SEI Clerk, Peak Asset Index Funds, SEI Management, Inc., since Institutional 1991. International Trust, SEI Institutional Investments Trust, SEI Institutional Managed Trust, SEI Liquid Asset Trust, SEI Tax Exempt Trust, SEI Absolute Return Master Fund, LP, SEI Opportunity Master Fund, LP, SEI Absolute Return Fund, LP and SEI Opportunity Fund, LP. ---------------------------------------------------------------------------------------------------------------------------------- INTERESTED BOARD MEMBERS ------------- ROBERT A. NESHER Chairman (Since 1991) Currently performs 6 Trustee of The Advisors' 58 yrs. old of the Board various services on Inner Circle Fund, of Trustees behalf of SEI Bishop Street Funds, The Investments for which Advisors' Inner Circle Mr. Nesher is Fund II, The MDL Funds, compensated. Executive SEI Asset Allocation Vice President of SEI Trust, SEI Daily Income Investments, 1986-1994. Trust, SEI Index Funds, Director and Executive SEI Institutional Vice president of the International Trust, SEI Administrator and the Institutional Distributor, 1981-1994. Investments Trust, SEI Institutional Managed Trust, SEI Liquid Asset Trust, SEI Tax Exempt Trust, SEI Opportunity Master Fund, L.P., SEI Opportunity Fund, L.P., SEI Absolute Return Master Fund, L.P., SEI Absolute Return Fund, L.P., SEI Global Master Fund, PLC, SEI Global Assets Fund, PLC, SEI Global Investments Fund, PLC and SEI Investments Global, Limited. ----------------------------------------------------------------------------------------------------------------------------------
1 Unless otherwise noted, the business address of each Trustee is SEI Investments Company, 1 Freedom Valley Drive, Oaks, Pennsylvania 19456. 2 Each Trustee shall hold office during the lifetime of this Trust until the election and qualification of his or her successor, or until he or she sooner dies, resigns or is removed in accordance with the Trust's Declaration of Trust. 3 Directorships of companies required to report to the Securities and Exchange Commission under the Securities Exchange Act of 1934 (i.e., "public companies") or other investment companies registered under the Investment Company Act of 1940. 74-75 OCTOBER 31, 2004 TRUSTEES AND OFFICERS OF THE EXPEDITION FUNDS (UNAUDITED)
NUMBER OF PORTFOLIOS IN THE ADVISORS' TERM OF INNER CIRCLE FUND POSITION(S) OFFICE AND OVERSEEN BY OTHER DIRECTORSHIPS NAME, ADDRESS, HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) BOARD HELD BY BOARD AGE(1) THE TRUST TIME SERVED(2) DURING PAST 5 YEARS MEMBER/OFFICER MEMBER(3)/OFFICER ---------------------------------------------------------------------------------------------------------------------------------- INTERESTED BOARD MEMBERS (CONTINUED) ------------------------- WILLIAM M. DORAN Trustee (Since 1992) Self-employed consultant 6 Director of SEI 1701 Market Street since 2003. Director of Investments Company and Philadelphia, PA 19103 the Distributor since SEI Investments 64 yrs. old 2003. Partner, Morgan, Distribution Co., Lewis & Bockius LLP (law Trustee of The Advisors' firm), counsel to the Inner Circle Fund, The Trust, SEI Investments, MDL Funds, The Advisors' the Administrator and Inner Circle Fund II, the Distributor from SEI Asset Allocation 1976-2003. Director of Trust, SEI Daily Income SEI Investments since Trust, SEI Index Funds, 1974; Secretary of SEI SEI Institutional Investments since 1978. International Trust, SEI Institutional Investments Trust, SEI Institutional Managed Trust, SEI Liquid Asset Trust and SEI Tax Exempt Trust. ---------------------------------------------------------------------------------------------------------------------------------- OFFICERS -------- JAMES F. VOLK, CPA President (Since 2003) Senior Operations N/A N/A 42 yrs. old Officer, SEI Investments, Fund Accounting and Administration since 1996; Assistant Chief Accountant of the U.S. Securities & Exchange Commission's from 1993-1996. ---------------------------------------------------------------------------------------------------------------------------------- PETER GOLDEN Controller (Since 2001) Director, SEI N/A N/A 40 yrs. old and Chief Investments, Fund Financial Accounting and Officer Administration since June 2001. From March 2000 to 2001, Vice President of Funds Administration for J.P. Morgan Chase & Co. From 1997 to 2000, Vice President of Pension and Mutual Fund Accounting for Chase Manhattan Bank. ---------------------------------------------------------------------------------------------------------------------------------- WILLIAM E. ZITELLI Chief (Since 2004) Vice President and N/A N/A 36 yrs. old Compliance Assistant Secretary of Officer SEI Investments Global Funds Services and SEI Investments Distribution Co. from 2000-2004; Vice President, Merrill Lynch & Co. Asset Management Group from 1998-2000; Associate at Pepper Hamilton LLP from 1997-1998. ----------------------------------------------------------------------------------------------------------------------------------
1 Unless otherwise noted, the business address of each Trustee is SEI Investments Company, 1 Freedom Valley Drive, Oaks, Pennsylvania 19456. 2 Each Trustee shall hold office during the lifetime of this Trust until the election and qualification of his or her successor, or until he or she sooner dies, resigns or is removed in accordance with the Trust's Declaration of Trust. 3 Directorships of companies required to report to the Securities and Exchange Commission under the Securities Exchange Act of 1934 (i.e., "public companies") or other investment companies registered under the Investment Company Act of 1940. 76-77 OCTOBER 31, 2004 TRUSTEES AND OFFICERS OF THE EXPEDITION FUNDS (UNAUDITED)
NUMBER OF PORTFOLIOS TERM OF IN THE ADVISORS' POSITION(S) OFFICE AND INNER CIRCLE FUND NAME, ADDRESS, HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY OTHER DIRECTORSHIPS AGE(1) THE TRUST TIME SERVED DURING PAST 5 YEARS OFFICER HELD BY OFFICER ---------------------------------------------------------------------------------------------------------------------------------- OFFICERS (CONTINUED) -------------------- JAMES NDIAYE Vice (Since 2004) Employed by SEI N/A N/A 36 yrs. old President Investments Company and since 2004, Vice Secretary President, Deutsche Asset Management from 2003-2004, Associate, Morgan, Lewis & Bockius LLP 2000-2003, Counsel, Assistant Vice President, ING Variable Annuities Group 1999-2000. Senior Counsel The Dreyfus Corporation, 1997-1999. ---------------------------------------------------------------------------------------------------------------------------------- TIMOTHY D. BARTO Vice (Since 2000) General Counsel, Vice N/A N/A 36 yrs. old President President and Secretary and of SEI Investments Assistant Global Funds Services Secretary since 1999; Associate, Dechert (law firm) from 1997-1999; Associate, Richter, Miller & Finn (law firm) from 1994-1997. ---------------------------------------------------------------------------------------------------------------------------------- JOHN MUNERA Vice (Since 2002) Middle Office Compliance N/A N/A 41 yrs. old President Officer at SEI and Investments since 2000; Assistant Supervising Examiner at Secretary Federal Reserve Bank of Philadelphia from 1998-2000. ---------------------------------------------------------------------------------------------------------------------------------- PHILIP T. MASTERSON Vice (Since 2004) Employed by SEI N/A N/A 40 yrs. old President Investments Company and since 2004; General Assistant Counsel, Citco Mutual Secretary Fund Services from 2003-2004; Vice President and Assistant Counsel from 2001-2003 and Vice President and Assistant Counsel, Oppenheimer Funds from 1997-2001. ----------------------------------------------------------------------------------------------------------------------------------
1 The business address of each officer is SEI Investments Company, 1 Freedom Valley Drive, Oaks, Pennsylvania 19456. OCTOBER 31, 2004 78-79 EXPEDITION FUNDS DISCLOSURE OF FUND EXPENSES (UNAUDITED) All mutual funds have operating expenses. As a shareholder of a mutual fund, your investment is affected by these ongoing costs, which include (among others) costs for portfolio management, administrative services, and shareholder reports like this one. It is important for you to understand the impact of these costs on your investment returns. Operating expenses such as these are deducted from the mutual fund's gross income and directly reduce your final investment return. These expenses are expressed as a percentage of the mutual fund's average net assets; this percentage is known as the mutual fund's expense ratio. The following examples use the expense ratio and are intended to help you understand the ongoing costs (in dollars) of investing in your Fund and to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period. The table on the next page illustrates your Fund's costs in two ways: o ACTUAL FUND RETURN. This section helps you to estimate the actual expenses after fee waivers that you paid over the period. The "Expenses Paid During Period" column shows the actual dollar expense cost incurred by a $1,000 investment in the Fund, and the "Ending Account Value" number is derived from deducting that expense cost from the Fund's gross investment return. You can use this information, together with the actual amount you invested in the Fund, to estimate the expenses you paid over that period. Simply divide your actual starting account value by $1,000 to arrive at a ratio (for example, an $8,600 account value divided by $1000 = 8.6), then multiply that ratio by the number shown for your Fund under "Expenses Paid During Period." o HYPOTHETICAL 5% RETURN. This section helps you compare your Fund's costs with those of other mutual funds. It assumes that the fund had an annual 5% return before expenses during the year, but that the expense ratio (Column 3) is unchanged. This example is useful in making comparisons because the Securities and Exchange Commission requires all mutual funds to make this 5% calculation. You can assess your Fund's comparative cost by comparing the hypothetical result for your fund in the "Expense Paid During Period" column with those that appear in the same charts in the shareholder reports for other mutual funds. NOTE: Because the return is set at 5% for comparison purposes -- NOT your Fund's actual return -- the account values shown do not apply to your specific investment. 80 OCTOBER 31, 2004 EXPEDITION FUNDS DISCLOSURE OF FUND EXPENSES (UNAUDITED)
----------------------------------------------------------------------------------------- BEGINNING ENDING EXPENSE ACCOUNT ACCOUNT ANNUALIZED PAID VALUE VALUE EXPENSE DURING 4/30/04 10/31/04 RATIOS PERIOD* ----------------------------------------------------------------------------------------- EQUITY FUND ----------------------------------------------------------------------------------------- ACTUAL FUND RETURN Institutional Shares $1,000.00 $1,010.90 1.23% $ 6.22 Investment Shares - Class A $1,000.00 $1,009.20 1.48% $ 7.47 Investment Shares - Class B $1,000.00 $1,005.50 2.23% $11.24 HYPOTHETICAL 5% RETURN Institutional Shares $1,000.00 $1,018.95 1.23% $ 6.24 Investment Shares - Class A $1,000.00 $1,017.70 1.48% $ 7.51 Investment Shares - Class B $1,000.00 $1,013.93 2.23% $11.29 ---------------------------------------------------------------------------------------- EQUITY INCOME FUND ---------------------------------------------------------------------------------------- ACTUAL FUND RETURN Institutional Shares $1,000.00 $1,064.30 1.25% $ 6.49 Investment Shares - Class A $1,000.00 $1,063.00 1.50% $ 7.78 Investment Shares - Class B $1,000.00 $1,058.10 2.25% $11.64 HYPOTHETICAL 5% RETURN Institutional Shares $1,000.00 $1,018.85 1.25% $ 6.34 Investment Shares - Class A $1,000.00 $1,017.60 1.50% $ 7.61 Investment Shares - Class B $1,000.00 $1,013.83 2.25% $11.39 ---------------------------------------------------------------------------------------- INVESTMENT GRADE BOND FUND ---------------------------------------------------------------------------------------- ACTUAL FUND RETURN Institutional Shares $1,000.00 $1,037.30 0.80% $ 4.10 Investment Shares - Class A $1,000.00 $1,036.00 1.05% $ 5.37 Investment Shares - Class B $1,000.00 $1,033.00 1.80% $ 9.20 HYPOTHETICAL 5% RETURN Institutional Shares $1,000.00 $1,021.11 0.80% $ 4.06 Investment Shares - Class A $1,000.00 $1,019.86 1.05% $ 5.33 Investment Shares - Class B $1,000.00 $1,016.09 1.80% $ 9.12 ---------------------------------------------------------------------------------------- TAX-FREE INVESTMENT GRADE BOND FUND ---------------------------------------------------------------------------------------- ACTUAL FUND RETURN Institutional Shares $1,000.00 $1,042.50 0.80% $ 4.11 Investment Shares - Class A $1,000.00 $1,041.20 1.05% $ 5.39 Investment Shares - Class B $1,000.00 $1,037.30 1.80% $ 9.22 HYPOTHETICAL 5% RETURN Institutional Shares $1,000.00 $1,021.11 0.80% $ 4.06 Investment Shares - Class A $1,000.00 $1,019.86 1.05% $ 5.33 Investment Shares - Class B $1,000.00 $1,016.09 1.80% $ 9.12 ---------------------------------------------------------------------------------------- MONEY MARKET FUND ---------------------------------------------------------------------------------------- ACTUAL FUND RETURN Institutional Shares $1,000.00 $1,004.80 0.45% $ 2.27 Investment Service Shares $1,000.00 $1,003.60 0.70% $ 3.53 Sweep Class Shares $1,000.00 $1,003.00 0.82% $ 4.13 HYPOTHETICAL 5% RETURN Institutional Shares $1,000.00 $1,022.87 0.45% $ 2.29 Investment Service Shares $1,000.00 $1,021.62 0.70% $ 3.56 Sweep Class Shares $1,000.00 $1,021.01 0.82% $ 4.17 ---------------------------------------------------------------------------------------- TAX-FREE MONEY MARKET FUND ---------------------------------------------------------------------------------------- ACTUAL FUND RETURN Institutional Shares $1,000.00 $1,004.30 0.43% $ 2.17 Investment Service Shares $1,000.00 $1,003.00 0.68% $ 3.42 Sweep Class Shares $1,000.00 $1,002.40 0.80% $ 4.03 HYPOTHETICAL 5% RETURN Institutional Shares $1,000.00 $1,022.97 0.43% $ 2.19 Investment Service Shares $1,000.00 $1,021.72 0.68% $ 3.46 Sweep Class Shares $1,000.00 $1,021.11 0.80% $ 4.06 -----------------------------------------------------------------------------------------
*Expenses are equal to the Fund's annualized expense ratio multiplied by the average account value over the period, multiplied by 184/366 (to reflect one-half year period). OCTOBER 31, 2004 81 NOTICE TO SHAREHOLDERS (UNAUDITED) For shareholders that do not have a October 31, 2004 tax year end, this notice is for informational purposes only. For shareholders with a October 31, 2004, please consult your tax advisor as to the pertinence of this notice. For this fiscal year ended October 31, 2004, each Fund is designating the following items with regard to distributions paid during the year.
Qualifying Long Term Qualified Dividend (15% Rate) 5-Year Ordinary Income Capital Gain Gain Income Tax Exempt Total Qualifying (15% Tax Rate Distribution Distributions Distributions Interest Distributions Dividends(1) For QDI)(2) ------------ ------------- ------------- ---------- ------------- ------------ ------------- Equity Fund 0.00% 0.00% 100.00% 0.00% 100.00% 100.00% 100.00% Equity Income Fund 0.00% 0.00% 100.00% 0.00% 100.00% 100.00% 100.00% Investment Grade Bond Fund(3) 0.00% 0.00% 100.00% 0.00% 100.00% 0.00% 0.00% Tax-Free Investment Grade Bond 36.27% 0.00% 0.07% 63.66% 100.00% 0.00% 0.00% Money Market Fund 0.00% 0.00% 100.00% 0.00% 100.00% 0.00% 0.00% Tax-Free Money Market Fund 0.00% 0.00% 0.00% 100.00% 100.00% 0.00% 0.00%
(1) Qualifying dividends represent dividends which qualify for the corporate dividends received deduction and is reflected as a percentage of "Ordinary Income Distributions." (2) The percentage in this column represents the amount of "Qualifying Dividend Income" as created by the Jobs and Growth Tax Relief Reconciliation Act of 2003 and is reflected as a percentage of "Ordinary Income Distributions." It is the intention of each of the aforementioned Funds to designate the maximum amount permitted by the law. The information reported herein may differ from the information and distributions taxable to the shareholders for the calendar year ending December 31, 2004. Complete information will be computed and reported in conjunction with your 2004 Form 1099-DIV. (3) For the Investment Grade Bond Fund, a total of 30.84% of the dividends distributed during the fiscal year was derived from interest on U.S. Government Securities which is generally exempt from state income tax. 82 OCTOBER 31, 2004 NOTES NOTES [Logo Omitted] EXPEDITION FUNDS(R) INVESTMENT ADVISOR Compass Asset Management, a division of 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 REGISTERED PUBLIC ACCOUNTING FIRM: Deloitte & Touche LLP Two World Financial Center New York, NY 10281 COUNSEL: Morgan, Lewis & Bockius LLP 1800 M Street, N.W. Washington, D.C. 20036 EXP-AR-011-0900 ITEM 2. CODE OF ETHICS. The registrant has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, comptroller or principal accounting officer, and any person who performs a similar function. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. (a)(1) The registrant's board of trustees has determined that the registrant has at least one audit committee financial expert serving on the audit committee. (a)(2) The audit committee financial experts are George Sullivan and Robert Patterson and are independent as defined in Form N-CSR Item 3(a)(2). ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Fees billed by Deloitte & Touche LLP Related to the Trust Deloitte & Touche LLP billed the Trust aggregate fees for services rendered to the Trust for the last two fiscal years as follows:
------------------------------------------------------------------------------------------------------------------------------ 2004 2003 ------------------------------------------------------------------------------------------------------------------------------ All fees and All fees and All other fees All fees and All fees and All other fees services to the services to and services to services to the services to and services to Trust that were service service Trust that were service service pre-approved affiliates that affiliates that pre-approved affiliates that affiliates that were did not require were did not require pre-approved pre-approval pre-approved pre-approval ------------------------------------------------------------------------------------------------------------------------------ (a) Audit $85,800 N/A N/A $78,000 N/A N/A Fees(1) ------------------------------------------------------------------------------------------------------------------------------ (b) Audit- $19,800 N/A N/A $18,000 N/A N/A Related Fees(2) ------------------------------------------------------------------------------------------------------------------------------ (c) Tax Fees $0 N/A N/A $ 0 N/A N/A ------------------------------------------------------------------------------------------------------------------------------ (d) All $0 N/A N/A $ 0 N/A N/A Other Fees ------------------------------------------------------------------------------------------------------------------------------
Notes: (1) Audit fees include amounts related to the audit of the registrant's annual financial statements and services normally provided by the accountant in connection with statutory and regulatory filings. (2) Audit-Related Fees were billed for three security verifications for the Trust as required under section (f) of Rule 17f-2 of the Investment Company Act of 1940. (e)(1) Not Applicable. (e)(2) Percentage of fees billed applicable to non-audit services pursuant to waiver of pre-approval requirement were as follows: --------------------------------------------------------------- 2004 2003 --------------------------------------------------------------- Audit-Related Fees 0% 0% --------------------------------------------------------------- Tax Fees 0% 0% --------------------------------------------------------------- All Other Fees 0% 0% --------------------------------------------------------------- (f) Not Applicable. (g) The aggregate non-audit fees and services billed by Deloitte & Touche LLP for the last two fiscal years were $19,800 and $18,000 for 2004 and 2003, respectively. (h) Not Applicable. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable to open-end investment management companies. ITEM 6. SCHEDULE OF INVESTMENTS Not applicable. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable to open-end investment management companies. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES Not applicable. Effective for closed-end management investment companies for fiscal years ending on or after December 31, 2005 ITEM 9. PURCHASERS OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable to open-end management investment companies. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not applicable. ITEM 11. CONTROLS AND PROCEDURES. (a) The certifying officers, whose certifications are included herewith, have evaluated the registrant's disclosure controls and procedures within 90 days of the filing date of this report. In their opinion, based on their evaluation, the registrant's disclosure controls and procedures are adequately designed, and are operating effectively to ensure, that information required to be disclosed by the registrant in the reports it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. (b) There were no significant changes in the registrant's internal control over financial reporting that occurred during the registrant's last fiscal half-year that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting. ITEMS 12. EXHIBITS. (a)(1) Code of Ethics attached hereto. (a)(2) A separate certification for the principal executive officer and the principal financial officer of the registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940, as amended (17 CFR 270.30a-2(a)), are filed herewith. (b) Officer certifications as required by Rule 30a-2(b) under the Investment Company Act of 1940, as amended (17 CFR 270.30a-2(b)) also accompany this filing as an Exhibit. -------------------------------------------------------------------------------- SIGNATURES Pursuant to the requirements of the securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) Expedition Funds By (Signature and Title)* /s/James F. Volk ---------------- James F. Volk, President Date December 28, 2004 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By (Signature and Title)* /s/James F. Volk ---------------- James F. Volk, President Date Date December 28, 2004 By (Signature and Title)* /s/Peter J. Golden ------------------ Peter J. Golden, Controller and CFO Date Date December 28, 2004 * Print the name and title of each signing officer under his or her signature.