-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, G9++P9Q4hd/k51cXCF6cfVv54vk5pOImmZGR0V2ZZqzzvH05Rm5ZF+wBi0QjAJG5 td35JFONUTG3otLRC2M80Q== 0000950116-05-002135.txt : 20050611 0000950116-05-002135.hdr.sgml : 20050611 20050609154241 ACCESSION NUMBER: 0000950116-05-002135 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20050331 FILED AS OF DATE: 20050609 DATE AS OF CHANGE: 20050609 EFFECTIVENESS DATE: 20050609 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONSTELLATION FUNDS CENTRAL INDEX KEY: 0000914243 IRS NUMBER: 680325521 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-08104 FILM NUMBER: 05887534 BUSINESS ADDRESS: STREET 1: 1325 WESTLAKES DRIVE STREET 2: STE 350 CITY: BERWYN STATE: PA ZIP: 19312 BUSINESS PHONE: 5109887110 MAIL ADDRESS: STREET 1: 1325 WESTLAKES DRIVE STREET 2: STE 350 CITY: BERWYN STATE: PA ZIP: 19312 FORMER COMPANY: FORMER CONFORMED NAME: ALPHA SELECT FUNDS DATE OF NAME CHANGE: 19981216 FORMER COMPANY: FORMER CONFORMED NAME: TIP INSTITUTIONAL FUNDS DATE OF NAME CHANGE: 19971205 FORMER COMPANY: FORMER CONFORMED NAME: SOLON FUNDS/DE/ DATE OF NAME CHANGE: 19970424 N-CSR 1 n-csr.txt N-CSR 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 811-08104 CONSTELLATION FUNDS (Exact name of registrant as specified in charter) -------- 1205 Westlakes Drive Suite 280 Berwyn, PA 19312 (Address of principal executive offices) (Zip code) Constellation Funds P.O. Box 219520 Kansas City, MO 64105-9520 (Name and address of agent for service) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 1-866-242-5742 DATE OF FISCAL YEAR END: SEPTEMBER 30, 2005 DATE OF REPORTING PERIOD: MARCH 31, 2005 ITEM 1. REPORTS TO STOCKHOLDERS. [LOGO OF CONSTELLATION FUNDS GROUP] SEMIANNUAL REPORT March 31, 2005 Constellation Clover Core Value Fund Constellation Clover Small Cap Value Fund Constellation Clover Large Cap Value Fund Constellation Clover Core Fixed Income Fund Constellation Clover Income Plus Fund Constellation Chartwell Ultra Short Duration Fixed Income Fund Constellation Chartwell Short Duration Fixed Income Fund Constellation Chartwell High Yield Fund Constellation HLAM Large Cap Quality Growth Fund Constellation HLAM Large Cap Value Fund Constellation Pitcairn Diversified Value Fund Constellation Pitcairn Select Value Fund Constellation Pitcairn Diversified Growth Fund Constellation Pitcairn Small Cap Fund Constellation Pitcairn Family Heritage(R) Fund Constellation Pitcairn Taxable Bond Fund Constellation Pitcairn Tax-Exempt Bond Fund Constellation Sands Capital Select Growth Fund Constellation TIP Small Cap Value Opportunities Fund Constellation TIP Financial Services Fund Constellation TIP Healthcare & Biotechnology Fund Constellation International Equity Fund Constellation Strategic Value and High Income Fund CONTENTS 1 Letter to Shareholders Shareholder Services 2 Performance 4 Disclosure of Fund Expenses Constellation Fund shareholders receive annual 6 Financial Statements and semiannual reports, and quarterly account 84 Notes to Financial Statements statements. Shareholders who have questions 96 Approval of Investment Advisory Agreements about their accounts may call a toll-free number, 1 (866) 242 5742, visit our website, www.constellationfundsgroup.com, or write to Constellation Funds Group, P.O. Box 219520, Kansas City, Missouri 64105-9520
LETTER TO SHAREHOLDERS TO OUR SHAREHOLDERS May 27, 2005 Dear Shareholder: We are pleased to provide you with the semi-annual report of the Constellation Funds. The important financial information contained in this report is only through March 31, 2005, so I invite you to get updated performance numbers and other important information regarding your investments by visiting us on the web at www.constellationfundsgroup.com, or calling (866) 242-5742. Because all of the funds in the Constellation Funds family line-up are managed on a day-to-day basis by unaffiliated money management firms, we do not have a view of the markets that we want to impart to you in this letter. Our goal is to bring you well-managed funds that follow investment strategies that are consistent with their investment policies, and to make them available for purchase both directly and through a wide variety of financial institutions and intermediaries, including broker-dealers, banks, financial advisers and retirement plans. It is our hope that investors will utilize our Funds in pursuit of their financial goals, whatever they are, and thus we strive to offer a wide variety of high quality choices, both by asset class and by style. Thank you for investing with us. Sincerely, /s/ John H. Grady John H. Grady President, Constellation Funds Constellation Funds 2005 Semiannual Report 1 PERFORMANCE (unaudited) TOTAL RETURNS OF CONSTELLATION FUNDS Through March 31, 2005 CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. PLEASE CALL (866) 242-5742 FOR THE MOST RECENT MONTH END PERFORMANCE INFORMATION.
Calendar Six Year to One Three Five Ten Months Date Year Years Years Years - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION CLOVER CORE VALUE FUND(1) 14.01% 1.53% 14.70% 9.20% 9.61% 11.42% Russell 3000 Value Index 10.32% -0.26% 12.88% 7.48% 5.89% 12.85% Inception date: 12/6/91 - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION CLOVER SMALL CAP VALUE FUND(1) 9.01% -3.93% 7.92% 7.55% 9.56% N/A Russell 2000 Value Index 8.70% -3.98% 9.79% 11.48% 15.42% n/a Inception date: 2/28/96 - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION CLOVER LARGE CAP VALUE FUND 8.55% 0.74% 6.89% 4.40% 1.35% N/A Russell 1000 Value Index 10.48% 0.09% 13.17% 7.16% 5.19% n/a Inception date: 10/31/97 - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION CLOVER CORE FIXED INCOME FUND 0.23% -0.25% 0.76% 5.13% 6.29% 6.60% Lehman Aggregate Bond Index 0.48% -0.47% 1.16% 6.00% 7.14% 7.14% Inception date: 12/6/91 - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION CLOVER INCOME PLUS FUND N/A N/A N/A N/A N/A N/A S&P 500 Index n/a n/a n/a n/a n/a n/a Lehman Aggregate Bond Index n/a n/a n/a n/a n/a n/a Inception date: 2/28/05 - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION CHARTWELL ULTRA SHORT DURATION FIXED INCOME FUND 1.20% 0.75% 1.86% 1.96% 3.53% 4.86% Merrill Lynch 3-Month U.S. Treasury Bill Index 1.06% 0.57% 1.67% 1.47% 2.78% 4.05% Inception date: 3/1/94 - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION CHARTWELL SHORT DURATION FIXED INCOME FUND 0.70% 0.16% 1.23% 2.84% 4.51% 5.35% Lehman 1-3 Year U.S. Government Bond Index -0.20% -0.26% -0.29% 2.91% 4.80% 5.42% Inception date: 3/1/94 - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION CHARTWELL HIGH YIELD FUND 1.31% -2.06% 5.37% 7.04% -3.39% N/A Merrill Lynch High Yield, Cash Pay Index 2.96% -1.44% 6.79% 10.43% 7.40% n/a Inception date: 2/27/98 - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION HLAM LARGE CAP QUALITY GROWTH FUND 2.36% -5.19% -2.48% -2.68% -2.84% 7.30% Russell 1000 Growth Index 4.71% -4.09% 1.16% -0.69% -11.28% 8.15% Inception date: 4/30/92 - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION HLAM LARGE CAP VALUE FUND 5.55% -3.04% N/A N/A N/A N/A Russell 1000 Value Index 10.48% 0.09% n/a n/a n/a n/a Inception date: 4/30/04 - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION PITCAIRN DIVERSIFIED VALUE FUND 8.42% -0.62% 10.40% 6.71% N/A N/A Russell 1000 Value Index 10.48% 0.09% 13.17% 7.16% n/a n/a Inception date: 8/4/00 - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION PITCAIRN SELECT VALUE FUND(1) 5.24% -2.56% 4.79% 2.52% N/A N/A Russell 1000 Value Index 10.48% 0.09% 13.17% 7.16% n/a n/a Inception date: 8/11/00 - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION PITCAIRN DIVERSIFIED GROWTH FUND 5.14% -4.10% 2.83% -1.83% N/A N/A Russell 1000 Growth Index 4.71% -4.09% 1.16% -0.69% n/a n/a Inception date: 8/4/00 - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION PITCAIRN SMALL CAP FUND(1) 4.61% -5.30% 2.46% 8.53% N/A N/A Russell 2000 Index 8.00% -5.34% 5.41% 8.05% n/a n/a Inception date: 8/25/00 - ------------------------------------------------------------------------------------------------------------------------------- Since Total Inception Assets (annualized) ($mil) - ------------------------------------------------------------------------- CONSTELLATION CLOVER CORE VALUE FUND(1) 12.27% $ 65.82 Russell 3000 Value Index 13.21% Inception date: 12/6/91 - ------------------------------------------------------------------------- CONSTELLATION CLOVER SMALL CAP VALUE FUND(1) 14.83% $ 520.93 Russell 2000 Value Index 13.11% Inception date: 2/28/96 - ------------------------------------------------------------------------- CONSTELLATION CLOVER LARGE CAP VALUE FUND 5.22% $ 6.36 Russell 1000 Value Index 7.63% Inception date: 10/31/97 - ------------------------------------------------------------------------- CONSTELLATION CLOVER CORE FIXED INCOME FUND 6.70% $ 27.34 Lehman Aggregate Bond Index 6.96% Inception date: 12/6/91 - ------------------------------------------------------------------------- CONSTELLATION CLOVER INCOME PLUS FUND -1.85% $ 3.64 S&P 500 Index -1.77% Lehman Aggregate Bond Index -0.51% Inception date: 2/28/05 - ------------------------------------------------------------------------- CONSTELLATION CHARTWELL ULTRA SHORT DURATION FIXED INCOME FUND 4.91% $ 340.98 Merrill Lynch 3-Month U.S. Treasury Bill Index 4.12% Inception date: 3/1/94 - ------------------------------------------------------------------------- CONSTELLATION CHARTWELL SHORT DURATION FIXED INCOME FUND 5.24% $ 127.36 Lehman 1-3 Year U.S. Government Bond Index 5.28% Inception date: 3/1/94 - ------------------------------------------------------------------------- CONSTELLATION CHARTWELL HIGH YIELD FUND -0.60% $ 7.14 Merrill Lynch High Yield, Cash Pay Index 5.44% Inception date: 2/27/98 - ------------------------------------------------------------------------- CONSTELLATION HLAM LARGE CAP QUALITY GROWTH FUND 7.28% $ 17.75 Russell 1000 Growth Index 8.22% Inception date: 4/30/92 - ------------------------------------------------------------------------- CONSTELLATION HLAM LARGE CAP VALUE FUND 3.89% $ 1.76 Russell 1000 Value Index 16.00% Inception date: 4/30/04 - ------------------------------------------------------------------------- CONSTELLATION PITCAIRN DIVERSIFIED VALUE FUND 5.32% $ 162.73 Russell 1000 Value Index 5.58% Inception date: 8/4/00 - ------------------------------------------------------------------------- CONSTELLATION PITCAIRN SELECT VALUE FUND(1) 4.09% $ 64.73 Russell 1000 Value Index 5.36% Inception date: 8/11/00 - ------------------------------------------------------------------------- CONSTELLATION PITCAIRN DIVERSIFIED GROWTH FUND -11.58% $ 110.01 Russell 1000 Growth Index -10.94% Inception date: 8/4/00 - ------------------------------------------------------------------------- CONSTELLATION PITCAIRN SMALL CAP FUND(1) 11.18% $ 95.78 Russell 2000 Index 4.87% Inception date: 8/25/00 - -------------------------------------------------------------------------
2 Constellation Funds 2005 Semiannual Report PERFORMANCE (unaudited) CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. PLEASE CALL (866) 242-5742 FOR THE MOST RECENT MONTH END PERFORMANCE INFORMATION.
Calendar Six Year to One Three Five Ten Months Date Year Years Years Years - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION PITCAIRN FAMILY HERITAGE(R) FUND 3.39% -3.79% 3.84% 3.39% -1.60% 10.47% Wilshire 5000 Index 7.53% -2.54% 6.98% 4.24% -2.66% 10.67% Inception date: 8/4/00(3) - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION PITCAIRN TAXABLE BOND FUND -0.51% -1.05% -0.39% 5.66% 6.46% 6.54% Lehman U.S. Government/Credit Index 0.13% -0.67% 0.41% 6.52% 7.29% 7.21% Inception date: 8/4/00(3) - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION PITCAIRN TAX-EXEMPT BOND FUND 0.56% -0.36% 1.66% 5.49% 5.92% 5.42% Lehman Municipal Bond Index 1.23% -0.03% 2.66% 6.10% 6.58% 6.33% Inception date: 8/11/00(3) - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION SANDS CAPITAL SELECT GROWTH FUND - CLASS I SHARES 1.32% -9.22% 1.92% 3.08% N/A N/A Russell 1000 Growth Index 4.71% -4.09% 1.16% -0.69% n/a n/a Inception date: 8/27/04(4) - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION SANDS CAPITAL SELECT GROWTH FUND - CLASS II SHARES 1.32% -9.10% 1.92% 3.08% N/A N/A Russell 1000 Growth Index 4.71% -4.09% 1.16% -0.69% n/a n/a Inception date: 8/11/00 - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION TIP SMALL CAP VALUE OPPORTUNITIES FUND(1) 9.96% -2.99% 11.68% 19.49% N/A N/A Russell 2000 Value Index 8.70% -3.98% 9.79% 11.48% n/a n/a Inception date: 3/4/02 - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION TIP FINANCIAL SERVICES FUND(2) 9.64% -4.88% 4.09% 8.29% 6.34% N/A S&P 500 Financials Index 1.07% -6.35% -0.99% 3.93% 5.36% n/a Inception date: 5/22/96 - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION TIP HEALTHCARE & BIOTECHNOLOGY FUND(1)(2) 8.27% -0.76% 4.84% 7.58% N/A N/A S&P 500 Healthcare Index 4.58% -0.60% 1.62% -1.79% n/a n/a Inception date: 2/28/01 - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION INTERNATIONAL EQUITY FUND 14.39% 0.37% 11.82% 8.25% -5.85% 3.04% MSCI All Country World Free ex-US Index 15.65% 0.25% 15.77% 12.64% -0.41% 5.65% Inception date: 8/4/00(3) - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION STRATEGIC VALUE AND HIGH INCOME FUND 5.48% -2.72% 5.45% N/A N/A N/A S&P 500 Index 6.88% -2.15% 6.69% n/a n/a n/a Inception date: 10/31/02 - ------------------------------------------------------------------------------------------------------------------------------- Since Total Inception Assets (annualized) ($mil) - ------------------------------------------------------------------------- CONSTELLATION PITCAIRN FAMILY HERITAGE(R) FUND 9.99% $ 82.12 Wilshire 5000 Index 10.63% Inception date: 8/4/00(3) - ------------------------------------------------------------------------- CONSTELLATION PITCAIRN TAXABLE BOND FUND 7.08% $ 48.05 Lehman U.S. Government/Credit Index 7.98% Inception date: 8/4/00(3) - ------------------------------------------------------------------------- CONSTELLATION PITCAIRN TAX-EXEMPT BOND FUND 5.87% $ 116.21 Lehman Municipal Bond Index 7.20% Inception date: 8/11/00(3) - ------------------------------------------------------------------------- CONSTELLATION SANDS CAPITAL SELECT GROWTH FUND - CLASS I SHARES -7.71% $ 59.32 Russell 1000 Growth Index -11.05% Inception date: 8/27/04(4) - ------------------------------------------------------------------------- CONSTELLATION SANDS CAPITAL SELECT GROWTH FUND - CLASS II SHARES -7.71% $ 83.77 Russell 1000 Growth Index -11.05% Inception date: 8/11/00 - ------------------------------------------------------------------------- CONSTELLATION TIP SMALL CAP VALUE OPPORTUNITIES FUND(1) 21.31% $ 29.39 Russell 2000 Value Index 12.68% Inception date: 3/4/02 - ------------------------------------------------------------------------- CONSTELLATION TIP FINANCIAL SERVICES FUND(2) 12.70% $ 15.91 S&P500 Financials Index 12.57% Inception date: 5/22/96 - ------------------------------------------------------------------------- CONSTELLATION TIP HEALTHCARE & BIOTECHNOLOGY FUND(1)(2) 10.39% $ 41.72 S&P 500 Healthcare Index -2.47% Inception date: 2/28/01 - ------------------------------------------------------------------------- CONSTELLATION INTERNATIONAL EQUITY FUND 4.47% $ 119.42 MSCI All Country World Free ex-US Index 6.41% Inception date: 8/4/00(3) - ------------------------------------------------------------------------- CONSTELLATION STRATEGIC VALUE AND HIGH INCOME FUND 20.64% $ 1.05 S&P 500 Index 14.65% Inception date: 10/31/02 - -------------------------------------------------------------------------
The Constellation Funds are distributed by Constellation Investment Distribution Company Inc., Berwyn, PA 19312. THE INVESTOR SHOULD CONSIDER THE INVESTMENT OBJECTIVES, RISKS, CHARGES AND EXPENSES BEFORE INVESTING. THIS INFORMATION CAN BE FOUND IN THE PROSPECTUS. A FREE PROSPECTUS, WHICH CONTAINS DETAILED INFORMATION, INCLUDING FEES AND EXPENSES, AND THE RISKS ASSOCIATED WITH INVESTING IN THE FUNDS, CAN BE OBTAINED BY CALLING (866) 242 5742. READ THE PROSPECTUS CAREFULLY BEFORE INVESTING. The performance data quoted represents past performance and the principal value and investment return will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Returns less than one year are cumulative. The performance in the above table does not reflect the deduction of taxes the shareholder will pay on fund distributions or the redemption of fund shares. Returns shown, unless otherwise indicated, are total returns, with dividends and income reinvested. Returns spanning more than one year are annualized. Fee waivers are in effect; if they had not been in effect performance would have been lower. The indexes mentioned are unmanaged statistical composites of stock market or bond market performance. Investing in an index is not possible. (1) Investing in small and medium capitalization companies and science and technology companies may subject the funds to specific inherent risks, including above-average price fluctuations. (2) Funds that take a focus or sector specific approach are subject to greater risk from downturns affecting a specific issuer or industry. (3) For periods prior to August 2000, when the Fund began operating, the performance data quoted represents past performance of the Pitcairn Investment Management's similarly managed common trust fund, adjusted to reflect fees and expenses expected to be borne by the Fund. The common trust fund was not a registered mutual fund, and therefore, was not subject to certain investment and tax restrictions which may have adversely affected performance. (4) Class I Shares for the periods prior to the inception date shown reflect the performance of the Fund's Class II Shares. Constellation Funds 2005 Semiannual Report 3 DISCLOSURE OF FUND EXPENSES (unaudited) All mutual funds have operating expenses. As a shareholder of a 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 Fund's gross income and directly reduce your final investment return. These expenses are expressed as a percentage of the Fund's average net assets; this percentage is known as the 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 below illustrates your Fund's costs in two ways: * ACTUAL FUND RETURN. This section helps you to estimate the actual expenses after fee waivers that your Fund incurred 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 account value by $1,000 to arrive at a ratio (for example, an $8,600 account value divided by $1,000 = $8.6), then multiply that ratio by the number shown for your Fund under "Expenses Paid During Period". * 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 (in the "Annualized Expense Ratios" column) for the period 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 "Expenses Paid During Period" column with those that appear in the same charts in the shareholder reports for other Funds. Note: Because the return is set at 5% for comparison purposes - NOT your Fund's actual return - the account values shown may not apply to your specific investment.
BEGINNING ENDING ANNUALIZED EXPENSES ACCOUNT ACCOUNT EXPENSE PAID DURING VALUE 10/1/04 VALUE 3/31/05 RATIOS PERIOD* - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION CLOVER CORE VALUE FUND - ------------------------------------------------------------------------------------------------------------------------------- Actual Fund Return $ 1,000.00 $ 1,140.10 1.09% $ 5.82 Hypothetical Fund Return 1,000.00 1,019.50 1.09 5.49 - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION CLOVER SMALL CAP VALUE FUND - ------------------------------------------------------------------------------------------------------------------------------- Actual Fund Return 1,000.00 1,090.10 1.23 6.41 Hypothetical Fund Return 1,000.00 1,018.80 1.23 6.19 - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION CLOVER LARGE CAP VALUE FUND - ------------------------------------------------------------------------------------------------------------------------------- Actual Fund Return 1,000.00 1,085.50 1.22 6.34 Hypothetical Fund Return 1,000.00 1,018.85 1.22 6.14 - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION CLOVER CORE FIXED INCOME FUND - ------------------------------------------------------------------------------------------------------------------------------- Actual Fund Return 1,000.00 1,002.30 0.80 3.99 Hypothetical Fund Return 1,000.00 1,020.94 0.80 4.03 - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION CLOVER INCOME PLUS FUND (1) - ------------------------------------------------------------------------------------------------------------------------------- Actual Fund Return 1,000.00 981.50 1.26 1.03 Hypothetical Fund Return 1,000.00 1,003.07 1.26 1.04 - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION CHARTWELL ULTRA SHORT DURATION FIXED INCOME FUND - ------------------------------------------------------------------------------------------------------------------------------- Actual Fund Return 1,000.00 1,012.00 0.53 2.66 Hypothetical Fund Return 1,000.00 1,022.29 0.53 2.67 - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION CHARTWELL SHORT DURATION FIXED INCOME FUND - ------------------------------------------------------------------------------------------------------------------------------- Actual Fund Return 1,000.00 1,007.00 0.59 2.95 Hypothetical Fund Return 1,000.00 1,021.99 0.59 2.97 - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION CHARTWELL HIGH YIELD FUND - ------------------------------------------------------------------------------------------------------------------------------- Actual Fund Return 1,000.00 1,013.10 0.81 4.07 Hypothetical Fund Return 1,000.00 1,020.89 0.81 4.08 - -------------------------------------------------------------------------------------------------------------------------------
4 Constellation Funds 2005 Semiannual Report DISCLOSURE OF FUND EXPENSES (unaudited)
BEGINNING ENDING ANNUALIZED EXPENSES ACCOUNT ACCOUNT EXPENSE PAID DURING VALUE 10/1/04 VALUE 3/31/05 RATIOS PERIOD* - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION HLAM LARGE CAP QUALITY GROWTH FUND (2) - ------------------------------------------------------------------------------------------------------------------------------- Actual Fund Return $ 1,000.00 $ 948.10 1.25% $ 3.00 Hypothetical Fund Return 1,000.00 1,009.25 1.25 3.10 - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION HLAM LARGE CAP VALUE FUND - ------------------------------------------------------------------------------------------------------------------------------- Actual Fund Return 1,000.00 1,055.50 1.20 6.15 Hypothetical Fund Return 1,000.00 1,018.95 1.20 6.04 - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION PITCAIRN DIVERSIFIED VALUE FUND - ------------------------------------------------------------------------------------------------------------------------------- Actual Fund Return 1,000.00 1,084.20 1.10 5.72 Hypothetical Fund Return 1,000.00 1,019.45 1.10 5.54 - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION PITCAIRN SELECT VALUE FUND - ------------------------------------------------------------------------------------------------------------------------------- Actual Fund Return 1,000.00 1,052.40 1.15 5.88 Hypothetical Fund Return 1,000.00 1,019.20 1.15 5.79 - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION PITCAIRN DIVERSIFIED GROWTH FUND - ------------------------------------------------------------------------------------------------------------------------------- Actual Fund Return 1,000.00 1,051.40 1.10 5.63 Hypothetical Fund Return 1,000.00 1,019.45 1.10 5.54 - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION PITCAIRN SMALL CAP FUND - ------------------------------------------------------------------------------------------------------------------------------- Actual Fund Return 1,000.00 1,046.10 1.11 5.66 Hypothetical Fund Return 1,000.00 1,019.40 1.11 5.59 - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION PITCAIRN FAMILY HERITAGE(R) FUND - ------------------------------------------------------------------------------------------------------------------------------- Actual Fund Return 1,000.00 1,033.90 1.30 6.59 Hypothetical Fund Return 1,000.00 1,018.45 1.30 6.54 - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION PITCAIRN TAXABLE BOND FUND - ------------------------------------------------------------------------------------------------------------------------------- Actual Fund Return 1,000.00 994.90 0.90 4.48 Hypothetical Fund Return 1,000.00 1,020.44 0.90 4.53 - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION PITCAIRN TAX-EXEMPT BOND FUND - ------------------------------------------------------------------------------------------------------------------------------- Actual Fund Return 1,000.00 1,005.60 0.70 3.50 Hypothetical Fund Return 1,000.00 1,021.44 0.70 3.53 - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION SANDS CAPITAL SELECT GROWTH FUND -- CLASS I - ------------------------------------------------------------------------------------------------------------------------------- Actual Fund Return 1,000.00 1,013.20 1.10 5.52 Hypothetical Fund Return 1,000.00 1,019.45 1.10 5.54 - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION SANDS CAPITAL SELECT GROWTH FUND -- CLASS II - ------------------------------------------------------------------------------------------------------------------------------- Actual Fund Return 1,000.00 1,013.20 1.35 6.78 Hypothetical Fund Return 1,000.00 1,018.20 1.35 6.79 - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION TIP SMALL CAP VALUE OPPORTUNITIES FUND - ------------------------------------------------------------------------------------------------------------------------------- Actual Fund Return 1,000.00 1,099.60 1.45 7.59 Hypothetical Fund Return 1,000.00 1,017.70 1.45 7.29 - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION TIP FINANCIAL SERVICES FUND - ------------------------------------------------------------------------------------------------------------------------------- Actual Fund Return 1,000.00 1,096.40 1.48 7.74 Hypothetical Fund Return 1,000.00 1,017.55 1.48 7.44 - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION TIP HEALTHCARE & BIOTECHNOLOGY FUND - ------------------------------------------------------------------------------------------------------------------------------- Actual Fund Return 1,000.00 1,082.70 1.85 9.61 Hypothetical Fund Return 1,000.00 1,015.71 1.85 9.30 - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION INTERNATIONAL EQUITY FUND - ------------------------------------------------------------------------------------------------------------------------------- Actual Fund Return 1,000.00 1,143.90 1.45 7.75 Hypothetical Fund Return 1,000.00 1,017.70 1.45 7.29 - ------------------------------------------------------------------------------------------------------------------------------- CONSTELLATION STRATEGIC VALUE AND HIGH INCOME FUND - ------------------------------------------------------------------------------------------------------------------------------- Actual Fund Return 1,000.00 1,054.80 0.25 1.28 Hypothetical Fund Return 1,000.00 1,023.68 0.25 1.26 - -------------------------------------------------------------------------------------------------------------------------------
* Expenses are equal to the Fund's annualized expense ratio multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period). (1) Fund commenced operations on February 28, 2005. Expenses are equal to the Fund's annualized expense ratio multiplied by the average account value over the period, multiplied by 30/365. (2) The Fund's fiscal year end has changed to September 30th from December 31st. Expenses are equal to the Fund's annualized expense ratio multiplied by the average account value over the period, multiplied by 90/365. Constellation Funds 2005 Semiannual Report 5 FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation Clover Core Value Fund March 31, 2005 SECTOR WEIGHTINGS+ - ------------------------------------------------------------------------------ [CHART APPEARS HERE] 25.1% Financials 12.1% Health Care 10.0% Energy 9.9% Cash Equivalents++ 9.5% Utilities 9.4% Industrials 7.2% Consumer Staples 6.7% Information Technology 6.2% Consumer Discretionary 3.9% Materials + Percentages based on total investments ++ Cash equivalents include a short-term investment held as collateral for loaned securities (see Note 9 in the Notes to Financial Statements). VALUE SHARES (000) - ------------------------------------------------------------------------------ COMMON STOCK+ (98.4%) - ------------------------------------------------------------------------------ CONSUMER DISCRETIONARY (6.8%) - ------------------------------------------------------------------------------ Clear Channel Communications 29,300 $ 1,010 Eastman Kodak 19,200 625 Furniture Brands International (A) 30,500 665 Interpublic Group* 39,400 484 Reebok International 14,000 620 Ryland Group 7,200 447 Walt Disney 22,000 632 ---------- 4,483 ---------- CONSUMER STAPLES (7.9%) - ------------------------------------------------------------------------------ Campbell Soup 33,000 958 ConAgra Foods (A) 44,000 1,189 Constellation Brands, Cl A* 19,500 1,031 CVS 38,000 1,999 ---------- 5,177 ---------- ENERGY (10.9%) - ------------------------------------------------------------------------------ ConocoPhillips 11,700 1,262 Denbury Resources* 41,800 1,473 National Oilwell Varco* 27,500 1,284 Noble Energy (A) 10,700 728 Reliant Energy (A)* 41,400 471 Valero Energy 26,600 1,949 ---------- 7,167 ---------- FINANCIALS (27.4%) - ------------------------------------------------------------------------------ ACE 17,000 702 Capital One Financial (A) 12,700 950 Citigroup 27,600 1,240 Freddie Mac 15,500 980 VALUE SHARES (000) - ------------------------------------------------------------------------------ Goldman Sachs Group (A) 12,000 $ 1,320 Hartford Financial Services Group 18,400 1,261 Hibernia, Cl A 46,000 1,472 iStar Financial 15,700 647 Lehman Brothers Holdings 10,700 1,007 Loews 9,000 662 Marshall & Ilsley 15,000 626 Merrill Lynch 25,300 1,432 North Fork Bancorporation 22,050 612 Platinum Underwriters Holdings 20,500 609 Prudential Financial 26,000 1,492 Radian Group 22,500 1,074 Safeco 17,200 838 St Paul Travelers 11,400 419 Willis Group Holdings 18,500 682 ---------- 18,025 ---------- HEALTH CARE (13.2%) - ------------------------------------------------------------------------------ Aetna 14,000 1,049 Cigna 10,800 964 Community Health Systems* 35,000 1,222 Sanofi-Aventis ADR (A) 29,000 1,228 Triad Hospitals* 35,100 1,758 WellChoice* 18,900 1,008 WellPoint* 11,500 1,442 ---------- 8,671 ---------- INDUSTRIALS (10.2%) - ------------------------------------------------------------------------------ Alliant Techsystems* 9,800 700 CSX 22,000 916 Dun & Bradstreet* 14,500 891 General Electric 35,000 1,262 Lafarge ADR 21,500 522 Republic Services 37,500 1,256 SPX 11,000 476 Yellow Roadway* 12,000 703 ---------- 6,726 ---------- INFORMATION TECHNOLOGY (7.3%) - ------------------------------------------------------------------------------ BISYS Group* 42,400 665 Digital Insight* 39,825 653 eFunds* 60,000 1,339 Fairchild Semiconductor International* 54,800 840 Ingram Micro, Cl A* 37,200 620 LSI Logic (A)* 130,400 729 ---------- 4,846 ---------- MATERIALS (4.3%) - ------------------------------------------------------------------------------ Lubrizol 23,700 963 Pactiv* 45,000 1,051 Syngenta ADR 38,300 804 ---------- 2,818 ---------- 6 Constellation Funds 2005 Semiannual Report FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation Clover Core Value Fund March 31, 2005 VALUE SHARES (000) - ------------------------------------------------------------------------------ UTILITIES (10.4%) - ------------------------------------------------------------------------------ AES* 65,000 $ 1,065 Ameren 16,000 784 CMS Energy* 65,000 848 Constellation Energy Group 18,900 977 NiSource 54,500 1,242 Public Service Enterprise Group 24,200 1,316 SCANA 17,100 654 ---------- 6,886 - ------------------------------------------------------------------------------ TOTAL COMMON STOCK (COST $52,387) 64,799 ============================================================================== SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES (9.6%) - ------------------------------------------------------------------------------ BlackRock Institutional Money Market Trust 6,302,324 6,302 - ------------------------------------------------------------------------------ TOTAL SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES (COST $6,302) 6,302 ============================================================================== CASH EQUIVALENTS (1.3%) - ------------------------------------------------------------------------------ BlackRock TempCash Fund, Institutional Shares 827,423 827 - ------------------------------------------------------------------------------ TOTAL CASH EQUIVALENTS (COST $827) 827 ============================================================================== TOTAL INVESTMENTS (109.3%) (COST $59,516) 71,928 ============================================================================== OTHER ASSETS AND LIABILITIES (-9.3%) - ------------------------------------------------------------------------------ Obligation to return securities lending collateral (6,302) Payable due to Investment Adviser (41) Payable for income distribution (10) Payable due to Administrator (8) Payable for Capital Shares redeemed (1) Other assets and liabilities, net 251 - ------------------------------------------------------------------------------ TOTAL OTHER ASSETS AND LIABILITIES (6,111) - ------------------------------------------------------------------------------ NET ASSETS (100%) $ 65,817 ============================================================================== NET ASSETS CONSIST OF: - ------------------------------------------------------------------------------ Portfolio capital (unlimited authorization -- no par value) $ 47,998 Distributions in excess of net investment income (1) Accumulated net realized gain on investments 5,408 Net unrealized appreciation on investments 12,412 - ------------------------------------------------------------------------------ NET ASSETS $ 65,817 ============================================================================== NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE--CLASS I SHARES ($65,816,898/3,788,764 SHARES) $ 17.37 ============================================================================== * Non-income producing security. + Narrow industries are utilized for compliance purposes, whereas broad sectors are utilized for reporting. (A) The security or a portion of this security is on loan at March 31, 2005 (See Note 9 in the Notes to Financial Statements). The total value of securities on loan at March 31, 2005 was $6,076,893. ADR - American Depositary Receipt Cl - Class The accompanying notes are an integral part of the financial statements. Constellation Funds 2005 Semiannual Report 7 FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation Clover Small Cap Value Fund March 31, 2005 SECTOR WEIGHTINGS+ - ------------------------------------------------------------------------------ [CHART APPEARS HERE] 26.5% Financials 15.2% Consumer Discretionary 13.3% Industrials 9.3% Information Technology 8.7% Cash Equivalents++ 6.4% Energy 5.9% Materials 5.8% Utilities 4.3% Health Care 3.2% Consumer Staples 1.4% Telecommunication Services + Percentages based on total investments ++ Cash equivalents include a short-term investment held as collateral for loaned securities (see Note 9 in the Notes to Financial Statements). VALUE SHARES (000) - ------------------------------------------------------------------------------ COMMON STOCK+ (97.7%) - ------------------------------------------------------------------------------ CONSUMER DISCRETIONARY (16.2%) - ------------------------------------------------------------------------------ Blue Nile* 109,300 $ 3,022 Brightpoint* 177,000 3,315 Callaway Golf 549,000 7,027 Charlotte Russe Holding* 139,300 1,800 Cumulus Media, Cl A* 367,500 5,237 Dollar Thrifty Automotive Group* 158,200 5,186 Electronics Boutique Holdings* 130,900 5,625 Entravision Communications, Cl A* 530,700 4,707 Hearst-Argyle Television 75,400 1,923 HOT Topic (A)* 253,200 5,532 La-Z-Boy (A) 175,400 2,443 Linens 'N Things* 68,800 1,708 Men's Wearhouse (A)* 125,450 5,295 O'Charleys* 156,800 3,409 Payless Shoesource* 206,900 3,267 Playtex Products* 506,400 4,558 Reebok International 110,900 4,913 Scholastic* 150,100 5,537 Sports Authority* 101,600 2,794 Steiner Leisure* 121,900 3,985 Too* 137,000 3,380 ---------- 84,663 ---------- CONSUMER STAPLES (3.5%) - ------------------------------------------------------------------------------ Chiquita Brands International (A) 139,100 3,725 Energizer Holdings* 45,000 2,691 Natures Sunshine Prods 139,600 2,397 NBTY* 176,300 4,423 Rayovac* 114,000 4,743 ---------- 17,979 ---------- VALUE SHARES (000) - ------------------------------------------------------------------------------ ENERGY (6.8%) - ------------------------------------------------------------------------------ Cabot Oil & Gas 108,750 $ 5,998 Denbury Resources* 97,200 3,424 Encore Acquisition* 138,500 5,720 Giant Industries* 15,675 403 Grey Wolf* 490,500 3,228 Helmerich & Payne 81,000 3,215 Reliant Energy* 709,000 8,068 SEACOR Holdings* 34,000 2,168 Whiting Petroleum* 80,000 3,262 ---------- 35,486 ---------- FINANCIALS (28.4%) - ------------------------------------------------------------------------------ Advanta, Cl B 112,000 2,576 AG Edwards 38,400 1,720 American Financial Realty Trust (A) 355,000 5,194 AmeriCredit* 140,300 3,289 AmerUs Group 75,000 3,544 BankAtlantic Bancorp, Cl A 114,500 1,992 Bankunited Financial, Cl A* 203,700 5,471 Colonial BancGroup 322,600 6,620 FelCor Lodging Trust* 780,900 9,707 FPIC Insurance Group* 82,500 2,652 HCC Insurance Holdings 82,450 2,981 Home Properties 108,100 4,194 HRPT Properties Trust 334,950 3,989 Instinet Group* 850,600 5,001 Intersections* 152,800 2,223 Jefferies Group 83,700 3,154 Knight Trading Group, Cl A* 415,200 4,002 LTC Properties 227,050 3,939 MeriStar Hospitality* 335,100 2,346 Mills 37,700 1,994 Northwest Bancorp 71,700 1,535 Ohio Casualty* 202,700 4,658 PFF Bancorp 208,100 5,744 Phoenix (A) 111,900 1,430 Piper Jaffray* 55,900 2,045 Platinum Underwriters Holdings 211,100 6,270 Providian Financial* 339,100 5,819 Quanta Capital Holdings* 229,500 1,836 Raymond James Financial 192,675 5,838 Scottish Re Group 278,400 6,270 South Financial Group 210,500 6,429 Sterling Financial* 116,770 4,169 Strategic Hotel Capital* 267,300 3,929 Susquehanna Bancshares 35,975 877 SWS Group 129,800 2,081 Triad Guaranty* 52,100 2,741 Trustreet Properties 229,150 3,527 United America Indemnity, Cl A* 150,000 2,826 W.P. Stewart (A) 145,700 3,302 ---------- 147,914 ---------- 8 Constellation Funds 2005 Semiannual Report FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation Clover Small Cap Value Fund March 31, 2005 VALUE SHARES (000) - ------------------------------------------------------------------------------ HEALTH CARE (4.6%) - ------------------------------------------------------------------------------ Community Health Systems* 108,100 $ 3,774 Dendrite International* 155,300 2,180 Hooper Holmes 231,800 886 Kindred Healthcare* 96,500 3,387 NuVasive* 43,425 561 Orthofix International* 26,650 1,043 Triad Hospitals* 134,000 6,713 United Therapeutics* 54,900 2,509 Viasys Healthcare* 160,200 3,057 ---------- 24,110 ---------- INDUSTRIALS (14.3%) - ------------------------------------------------------------------------------ Alderwoods Group* 255,600 3,180 Career Education* 85,800 2,939 Celadon Group* 179,325 3,326 CNF 61,500 2,878 First Consulting Group* 338,600 1,761 Flowserve* 113,500 2,936 Lennox International 193,100 4,233 Magnetek* 401,700 2,141 MAIR Holdings* 312,600 2,788 Mesa Air Group* 563,400 3,944 Milacron* 984,569 3,003 Molecular Devices* 54,650 1,038 NS Group* 115,600 3,631 On Assignment* 427,000 2,178 Overnite (A) 79,050 2,529 Pacer International* 157,000 3,751 Reliance Steel & Aluminum (A) 42,100 1,684 Stewart & Stevenson Services 385,400 8,822 Terex* 95,400 4,131 Tredegar 114,200 1,925 United Rentals* 234,900 4,747 Wolverine Tube* 200,750 1,797 Yellow Roadway* 84,100 4,923 ---------- 74,285 ---------- INFORMATION TECHNOLOGY (9.9%) - ------------------------------------------------------------------------------ Activision* 201,533 2,983 Ask Jeeves (A)* 73,400 2,061 Autobytel* 433,400 2,184 BISYS Group* 142,100 2,228 Carreker* 271,100 1,521 Checkpoint Systems* 133,000 2,245 Ciber* 422,300 3,070 Coherent* 81,200 2,741 Cymer (A)* 85,000 2,276 eFunds* 101,100 2,257 ESS Technology* 203,100 1,070 Exar* 230,600 3,090 Fairchild Semiconductor International (A)* 231,100 3,543 Integrated Silicon Solutions* 273,500 1,832 VALUE SHARES (000) - ------------------------------------------------------------------------------ IXYS* 264,400 $ 3,025 LSI Logic (A)* 471,100 2,633 Packeteer* 278,100 4,280 Pegasus Solutions* 262,800 3,106 THQ (A)* 132,800 3,737 Zoran* 172,800 1,789 ---------- 51,671 ---------- MATERIALS (6.3%) - ------------------------------------------------------------------------------ AK Steel Holding (A)* 192,600 2,130 Arch Chemicals 71,600 2,039 Buckeye Technologies* 118,975 1,285 Caraustar Industries* 110,050 1,420 Chesapeake 104,600 2,199 Crown Holdings* 201,100 3,129 Georgia Gulf 105,825 4,866 Owens-Illinois* 304,700 7,660 Packaging Corporation of America 174,200 4,231 RPM International 173,800 3,177 Wausau-Mosinee Paper 54,40 769 ---------- 32,905 ---------- TELECOMMUNICATION SERVICES (1.5%) - ------------------------------------------------------------------------------ Nice Systems ADR* 172,700 5,564 Remec* 201,250 1,063 Yak Communications* 206,275 1,106 ---------- 7,733 ---------- UTILITIES (6.2%) - ------------------------------------------------------------------------------ Alliant Energy 74,100 1,984 Avista 202,700 3,547 CMS Energy* 862,100 11,242 El Paso Electric* 173,000 3,287 Northeast Utilities 235,300 4,534 SEMCO Energy 337,050 1,938 Southern Union* 226,500 5,688 ---------- 32,220 - ------------------------------------------------------------------------------ TOTAL COMMON STOCK (COST $426,026) 508,966 ============================================================================== SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES (6.0%) - ------------------------------------------------------------------------------ BlackRock Institutional Money Market Trust 31,273,242 31,273 - ------------------------------------------------------------------------------ TOTAL SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES (COST $31,273) 31,273 ============================================================================== CASH EQUIVALENTS (3.4%) - ------------------------------------------------------------------------------ BlackRock TempCash Fund, Institutional Shares 17,479,259 17,479 - ------------------------------------------------------------------------------ TOTAL CASH EQUIVALENTS (COST $17,479) 17,479 ============================================================================== TOTAL INVESTMENTS (107.1%) (COST $474,778) 557,718 ============================================================================== Constellation Funds 2005 Semiannual Report 9 FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation Clover Small Cap Value Fund March 31, 2005 VALUE (000) - ------------------------------------------------------------------------------ OTHER ASSETS AND LIABILITIES (-7.1)% - ------------------------------------------------------------------------------ Obligation to return securities lending collateral $ (31,273) Payable for investment securities purchased (10,352) Payable for Capital Shares redeemed (4,843) Payable due to Investment Adviser (394) Payable due to Administrator (68) Other assets and liabilities, net 10,140 - ------------------------------------------------------------------------------ TOTAL OTHER ASSETS AND LIABILITIES (36,790) - ------------------------------------------------------------------------------ NET ASSETS (100%) $ 520,928 ============================================================================== NET ASSETS CONSIST OF: - ------------------------------------------------------------------------------ Portfolio capital (unlimited authorization -- no par value) $ 419,467 Accumulated net investment loss (1,075) Accumulated net realized gain on investments 19,596 Net unrealized appreciation on investments 82,940 - ------------------------------------------------------------------------------ NET ASSETS $ 520,928 ============================================================================== NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE--CLASS I SHARES ($520,928,250/20,114,682 SHARES) $ 25.90 ============================================================================== * Non-income producing security. + Narrow industries are utilized for compliance purposes, whereas broad sectors are utilized for reporting. (A) The security or a portion of this security is on loan at March 31, 2005 (See Note 9 in the Notes to Financial Statements). The total value of securities on loan at March 31, 2005 was $29,560,049. ADR - American Depositary Receipt Cl - Class The accompanying notes are an integral part of the financial statements. 10 Constellation Funds 2005 Semiannual Report FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation Clover Large Cap Value Fund March 31, 2005 SECTOR WEIGHTINGS+ - ------------------------------------------------------------------------------ [CHART APPEARS HERE] 25.7% Financials 12.4% Energy 11.5% Industrials 9.5% Cash Equivalents++ 8.0% Consumer Discretionary 6.8% Utilities 6.6% Health Care 5.4% Consumer Staples 4.8% Information Technology 4.8% Materials 3.7% Telecommunication Services 0.8% Exchange Traded Funds + Percentages based on total investments ++ Cash equivalents include a short-term investment held as collateral for loaned securities (see Note 9 in the Notes to Financial Statements). VALUE SHARES (000) - ------------------------------------------------------------------------------ COMMON STOCK+ (98.6%) - ------------------------------------------------------------------------------ CONSUMER DISCRETIONARY (8.9%) - ------------------------------------------------------------------------------ Black & Decker 725 $ 57 Eastman Kodak 1,700 55 Federated Department Stores 800 51 Harrah's Entertainment (A) 700 45 Lennar, Cl A 525 30 Liberty Media International, Cl A* 700 31 NVR* 40 31 Office Depot* 1,700 38 Sears Holdings (A)* 475 63 Sherwin-Williams 1,350 59 Toys "R" Us* 1,425 37 VF 1,125 67 ---------- 564 ---------- CONSUMER STAPLES (5.9%) - ------------------------------------------------------------------------------ Altria Group 2,100 137 Archer-Daniels-Midland 1,300 32 Coca-Cola Enterprises (A) 2,100 43 CVS 980 51 Kellogg (A) 975 42 Kimberly-Clark 300 20 McCormick 1,150 40 Procter & Gamble (A) 210 11 ---------- 376 ---------- ENERGY (13.7%) - ------------------------------------------------------------------------------ Burlington Resources 625 31 ChevronTexaco 2,150 125 VALUE SHARES (000) - ------------------------------------------------------------------------------ Devon Energy 1,500 $ 72 El Paso 4,000 42 Exxon Mobil 6,570 392 Occidental Petroleum 750 53 Sunoco 550 57 Valero Energy 1,325 97 ---------- 869 ---------- FINANCIALS (28.3%) - ------------------------------------------------------------------------------ ACE 675 28 Allstate 745 40 AMBAC Financial Group (A) 550 41 American International Group 1,470 82 Bank of America 5,220 230 CIT Group 1,050 40 Citigroup 6,345 285 E*Trade Financial* 2,400 29 Fidelity National Financial 1,100 36 Golden West Financial 750 45 Goldman Sachs Group (A) 265 29 Host Marriott 3,850 64 Lehman Brothers Holdings 350 33 M&T Bank 425 44 Merrill Lynch 850 48 Metlife 2,130 83 Morgan Stanley (A) 900 52 Old Republic International 1,650 39 Plum Creek Timber 675 24 PNC Financial Services Group 625 32 Principal Financial Group 1,150 44 Providian Financial* 2,700 46 Safeco 875 43 Simon Property Group 425 26 Transatlantic Holdings 500 33 US Bancorp 2,855 82 Wachovia 1,830 93 Wells Fargo 1,085 65 Zions Bancorporation 900 62 ---------- 1,798 ---------- HEALTH CARE (7.2%) - ------------------------------------------------------------------------------ Aetna 750 56 Becton Dickinson 800 47 Cigna 600 54 Coventry Health Care* 550 37 Humana* 925 29 Laboratory Corp of America Holdings* 1,325 64 McKesson 875 33 Quest Diagnostics 475 50 United Health Group 950 91 ---------- 461 ---------- INDUSTRIALS (12.6%) - ------------------------------------------------------------------------------ Boeing 1,100 64 Burlington Northern Santa Fe 625 34 FedEx 650 61 Constellation Funds 2005 Semiannual Report 11 FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation Clover Large Cap Value Fund March 31, 2005 VALUE SHARES (000) - ------------------------------------------------------------------------------ General Dynamics 275 $ 29 General Electric 9,300 335 Lockheed Martin 750 46 Masco 1,200 42 Raytheon 675 26 Republic Services 975 33 Textron 875 65 W.W. Grainger 1,085 68 ---------- 803 ---------- INFORMATION TECHNOLOGY (5.3%) - ------------------------------------------------------------------------------ Computer Sciences (A)* 1,310 60 Fiserv (A)* 1,150 46 Hewlett-Packard 3,200 70 International Business Machines 575 52 Microsoft 1,850 45 NCR* 850 29 Sun Microsystems (A)* 8,100 33 ---------- 335 ---------- MATERIALS (5.3%) - ------------------------------------------------------------------------------ Ball 1,450 60 E.I. du Pont de Nemours 1,390 71 Georgia-Pacific 1,650 59 Monsanto 550 36 Nucor 800 46 Phelps Dodge 650 66 ---------- 338 ---------- TELECOMMUNICATION SERVICES (4.0%) - ------------------------------------------------------------------------------ AT&T 1,600 30 Century Tel 1,200 39 SBC Communications (A) 3,490 83 Verizon Communications 2,930 104 ---------- 256 ---------- UTILITIES (7.4%) - ------------------------------------------------------------------------------ AES (A)* 4,950 81 Constellation Energy Group 625 32 Edison International 1,950 68 Entergy 525 37 Exelon 825 38 PG&E* 1,800 61 PPL(A) 850 46 Sempra Energy 1,450 58 TXU 650 52 ---------- 473 - ------------------------------------------------------------------------------ TOTAL COMMON STOCK (COST $5,760) 6,273 ============================================================================== VALUE SHARES (000) - ------------------------------------------------------------------------------ EXCHANGE TRADED FUND (0.9%) - ------------------------------------------------------------------------------ iShares Russell 1000 Value Index Fund 900 $ 59 - ------------------------------------------------------------------------------ TOTAL EXCHANGE TRADED FUND (COST $58) 59 ============================================================================== WARRANTS (0.0%) - ------------------------------------------------------------------------------ Lucent Technologies, Expires 12/10/07* 75 -- - ------------------------------------------------------------------------------ TOTAL WARRANTS (COST $0) -- ============================================================================== RIGHTS (0.0%) - ------------------------------------------------------------------------------ Seagate (B)* 425 -- - ------------------------------------------------------------------------------ TOTAL RIGHTS (COST $0) -- ============================================================================== SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES (10.0%) - ------------------------------------------------------------------------------ BlackRock Institutional Money Market Trust 634,335 634 - ------------------------------------------------------------------------------ TOTAL SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES (COST $634) 634 ============================================================================== CASH EQUIVALENTS (0.5%) - ------------------------------------------------------------------------------ BlackRock TempCash Fund, Institutional Shares 31,041 31 - ------------------------------------------------------------------------------ TOTAL CASH EQUIVALENTS (COST $31) 31 ============================================================================== TOTAL INVESTMENTS (110.0%) (COST $6,483) 6,997 ============================================================================== OTHER ASSETS AND LIABILITIES (-10.0%) - ------------------------------------------------------------------------------ Obligation to return securities lending collateral (634) Payable for income distribution (25) Payable for Capital Shares redeemed (3) Payable due to Investment Adviser (2) Payable due to Administrator (1) Other assets and liabilities, net 29 - ------------------------------------------------------------------------------ TOTAL OTHER ASSETS AND LIABILITIES (636) - ------------------------------------------------------------------------------ NET ASSETS (100%) $ 6,361 ============================================================================== 12 Constellation Funds 2005 Semiannual Report FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation Clover Large Cap Value Fund March 31, 2005 VALUE (000) - ------------------------------------------------------------------------------ NET ASSETS CONSIST OF: - ------------------------------------------------------------------------------ Portfolio capital (unlimited authorization -- no par value) $ 6,121 Accumulated net realized loss on investments (274) Net unrealized appreciation on investments 514 - ------------------------------------------------------------------------------ NET ASSETS $ 6,361 - ------------------------------------------------------------------------------ NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE--CLASS I SHARES ($6,361,251/546,053 SHARES) $ 11.65 ============================================================================== * Non-income producing security. + Narrow industries are utilized for compliance purposes, whereas broad sectors are utilized for reporting. (A) The security or a portion of this security is on loan at March 31, 2005 (See Note 9 in the Notes to Financial Statements). The total value of securities on loan at March 31, 2005 was $674,865. (B) This security was issued for possible settlement of pending litigation and does not have an expiration date. Cl - Class Amounts designated as "-" are either $0 or have been rounded to $0. The accompanying notes are an integral part of the financial statements. Constellation Funds 2005 Semiannual Report 13 FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation Clover Core Fixed Income Fund March 31, 2005 SECTOR WEIGHTINGS+ - ------------------------------------------------------------------------------ [CHART APPEARS HERE] 41.6% U.S. Government Mortgage- Backed Obligations 38.3% Corporate Obligations 7.4% U.S. Treasury Obligations 5.8% U.S. Government Agency Obligations 2.9% Convertible Bonds 2.5% Cash Equivalents 1.5% Municipal Bonds + Percentages based on total investments FACE AMOUNT VALUE (000) (000) - ------------------------------------------------------------------------------ CORPORATE BONDS (37.7%) - ------------------------------------------------------------------------------ CONSUMER STAPLES (6.7%) - ------------------------------------------------------------------------------ Conagra Foods 7.875%, 09/15/10 $ 700 $ 800 Sysco 7.250%, 04/15/07 405 428 7.160%, 04/15/27 500 612 ------------ 1,840 ------------ ENERGY (2.0%) - ------------------------------------------------------------------------------ XTO Energy 7.500%, 04/15/12 475 544 ------------ FINANCIALS (6.6%) - ------------------------------------------------------------------------------ First Data 4.700%, 11/01/06 500 504 Marsh & McClennan 7.125%, 06/15/09 600 647 Prudential Financial, MTN, Ser B 5.100%, 09/20/14 650 644 ------------ 1,795 ------------ INDUSTRIALS (6.4%) - ------------------------------------------------------------------------------ Roadway 8.250%, 12/01/08 925 1,017 Thermo Electron 7.625%, 10/30/08 665 724 ------------ 1,741 ------------ UTILITIES (16.0%) - ------------------------------------------------------------------------------ Air Products & Chemicals, MTN, Ser E 7.340%, 06/15/26 250 293 Carolina Power & Light 5.125%, 09/15/13 685 685 Emerson Electric 7.125%, 08/15/10 750 835 Kinder Morgan Energy 5.125%, 11/15/14 500 487 Natural Fuel Gas, MTN, Ser D 6.303%, 05/27/08 1,000 1,047 FACE AMOUNT VALUE (000) (000) - ------------------------------------------------------------------------------ Scana 5.810%, 10/23/08 $ 1,000 $ 1,032 ------------ 4,379 - ------------------------------------------------------------------------------ TOTAL CORPORATE BONDS (COST $10,025) 10,299 ============================================================================== U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS (40.9%) - ------------------------------------------------------------------------------ FHLMC CMO/REMIC Ser 2882, Cl OI IO 5.000%, 02/15/30 1,147 184 Ser 2882, Cl YI IO 5.000%, 03/15/24 4,847 546 FHLMC Pool #C01844 4.500%, 04/01/34 675 641 Pool #G11570 5.000%, 04/01/19 496 497 FNMA CMO/REMIC Ser 1994-17, Cl H 6.000%, 02/25/09 277 284 FNMA Pool #254759 4.500%, 06/01/18 1,541 1,510 Pool #255111 5.500%, 03/01/34 1,002 1,004 Pool #369214 5.000%, 04/01/09 47 47 Pool #535301 6.500%, 04/01/15 104 108 Pool #689022 5.000%, 05/01/33 1,042 1,022 Pool #694431 5.000%, 03/01/18 652 652 Pool #738783 7.000%, 02/01/25 839 890 GNMA CMO/REMIC Ser 2004-59, Cl DA 5.000%, 06/16/34 257 258 GNMA Pool #13125 8.000%, 10/15/06 2 2 Pool #187899 8.000%, 05/15/17 6 6 Pool #196477 10.000%, 04/15/10 22 25 Pool #202886 8.000%, 03/15/17 26 28 Pool #221235 8.500%, 07/15/17 17 19 Pool #331786 8.000%, 08/15/22 24 26 Pool #376400 6.500%, 02/15/24 130 136 Pool #439478 7.000%, 01/15/27 109 115 14 Constellation Funds 2005 Semiannual Report FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation Clover Core Fixed Income Fund March 31, 2005 FACE AMOUNT VALUE (000) (000) - ------------------------------------------------------------------------------ Pool #457921 5.500%, 12/15/28 $ 192 $ 194 Pool #462622 6.500%, 03/15/28 192 200 Pool #533974 6.500%, 05/15/32 98 103 Pool #553328 4.500%, 07/15/18 692 683 Pool #570400 6.500%, 09/15/31 234 245 Pool #604616 4.500%, 09/15/18 783 773 Pool #781029 6.500%, 05/15/29 67 70 Pool #781096 6.500%, 12/15/28 315 330 Pool #781231 7.000%, 12/15/30 153 162 Pool #781276 6.500%, 04/15/31 248 260 Pool #781328 7.000%, 09/15/31 157 166 - ------------------------------------------------------------------------------ TOTAL U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS (COST $11,257) 11,186 ============================================================================== U.S. TREASURY OBLIGATIONS (7.3%) - ------------------------------------------------------------------------------ U.S. Treasury Bonds 7.500%, 11/15/16 500 627 6.375%, 08/15/27 325 390 6.250%, 08/15/23 400 466 6.000%, 02/15/26 450 515 - ------------------------------------------------------------------------------ TOTAL U.S. TREASURY OBLIGATIONS (COST $1,915) 1,998 ============================================================================== U.S. GOVERNMENT AGENCY OBLIGATIONS (5.7%) - ------------------------------------------------------------------------------ FHLB 3.500%, 05/15/07 500 495 FHLMC 3.250%, 07/31/06 250 248 TVA 5.880%, 04/01/36 750 831 - ------------------------------------------------------------------------------ TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (COST $1,626) 1,574 ============================================================================== CONVERTIBLE BONDS (2.8%) - ------------------------------------------------------------------------------ BISYS Group, CV to 29.9458 Shares 4.000%, 03/15/06 650 643 Quebecor World, CV to 30.5880 Shares 6.000%, 10/01/07 128 131 - ------------------------------------------------------------------------------ TOTAL CONVERTIBLE BONDS (COST $773) 774 ============================================================================== FACE AMOUNT VALUE (000)/SHARES (000) - ------------------------------------------------------------------------------ MUNICIPAL BOND (1.5%) - ------------------------------------------------------------------------------ VIRGINIA (1.5%) - ------------------------------------------------------------------------------ State Housing Authority RB, Taxable Rental, Ser C 5.000%, 05/01/13 $ 400 $ 401 - ------------------------------------------------------------------------------ TOTAL MUNICIPAL BOND (COST $406) 401 ============================================================================== CASH EQUIVALENTS (2.5%) - ------------------------------------------------------------------------------ BlackRock TempCash Fund, Institutional Shares 672,065 672 - ------------------------------------------------------------------------------ TOTAL CASH EQUIVALENTS (COST $672) 672 ============================================================================== TOTAL INVESTMENTS (98.4%) (COST $26,674) 26,904 ============================================================================== OTHER ASSETS AND LIABILITIES (1.6%) - ------------------------------------------------------------------------------ Payable for income distribution (98) Payable for Capital Shares redeemed (24) Payable due to Investment Adviser (9) Payable due to Administrator (3) Other assets and liabilities, net 570 - ------------------------------------------------------------------------------ TOTAL OTHER ASSETS AND LIABILITIES 436 - ------------------------------------------------------------------------------ NET ASSETS (100%) $ 27,340 ============================================================================== NET ASSETS CONSIST OF: - ------------------------------------------------------------------------------ Portfolio capital (unlimited authorization -- no par value) $ 26,847 Distributions in excess of net investment income (1) Accumulated net realized gain on investments 264 Net unrealized appreciation on investments 230 - ------------------------------------------------------------------------------ NET ASSETS $ 27,340 ============================================================================== NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE--CLASS I SHARES ($27,340,177/2,750,518 SHARES) $ 9.94 ============================================================================== Cl - Class CMO - Collateralized Mortgage Obligation CV - Convertible Security FHLB - Federal Home Loan Bank FHLMC - Federal Home Loan Mortgage Corporation FNMA - Federal National Mortgage Association GNMA - Government National Mortgage Association IO - Interest Only Security MTN - Medium Term Note RB - Revenue Bond REMIC - Real Estate Mortgage Investment Conduit Ser - Series TVA - Tennessee Valley Authority The accompanying notes are an integral part of the financial statements. Constellation Funds 2005 Semiannual Report 15 FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation Clover Income Plus Fund March 31, 2005 SECTOR WEIGHTINGS+ - ------------------------------------------------------------------------------ [CHART APPEARS HERE] 22.3% Cash Equivalents 20.1% Financials 17.8% Utilities 8.4% Industrials 7.3% Energy 6.9% Materials 6.4% Consumer Discretionary 3.8% Consumer Staples 3.8% Exchange Traded Funds 1.7% Health Care 0.8% Information Technology 0.7% Telecommunication Services + Percentages based on total investments VALUE SHARES (000) - ------------------------------------------------------------------------------ COMMON STOCK (79.8%) - ------------------------------------------------------------------------------ CONSUMER DISCRETIONARY (6.9%) - ------------------------------------------------------------------------------ Cherokee 550 $ 18 Duquesne Light Holdings 1,725 31 Kimball International 1,300 19 Knape & Vogt Manufacturing 1,075 13 La-Z-Boy 1,425 20 OfficeMax 1,000 34 Russ Berrie 1,500 29 Stanley Works 925 42 Tupperware 2,300 47 ------------ 253 ------------ CONSUMER STAPLES (4.1%) - ------------------------------------------------------------------------------ ConAgra Foods 950 26 DIMON* 4,875 30 HJ Heinz 700 26 Kimberly-Clark 575 38 Reynolds American 375 30 ------------ 150 ------------ ENERGY (7.8%) - ------------------------------------------------------------------------------ BP ADR* 1,200 75 ChevronTexaco 1,450 85 ConocoPhillips 300 32 Lufkin Industries 500 24 Reliant Energy* 1,800 20 Wisconsin Energy 1,375 49 ------------ 285 ------------ VALUE SHARES (000) - ------------------------------------------------------------------------------ FINANCIALS (21.7%) - ------------------------------------------------------------------------------ American Financial Realty Trust 2,025 $ 30 AmSouth Bancorp 1,725 45 Bank of America 1,200 53 Citigroup 625 28 Comerica 300 17 Equity Residential 2,450 79 First Industrial Realty Trust 300 11 FirstMerit 1,200 32 Friedman Billings Ramsey Group, Cl A 2,500 40 Home Properties 700 27 Hospitality Properties Trust 650 26 Huntington Bancshares 1,200 29 La Quinta Properties* 1,000 26 LTC Properties 3,075 53 Public Storage 425 24 Reckson Associates Realty 800 25 Simon Property Group 650 39 Trustreet Properties 1,450 22 Vornado Realty Trust 650 45 W.P. Stewart 1,275 29 Waddell & Reed Financial, Cl A 1,200 24 Weingarten Realty Investors 650 22 Wilmington Trust 775 27 Winston Hotels 3,200 37 ------------ 790 ------------ HEALTH CARE (1.9%) - ------------------------------------------------------------------------------ Bristol-Myers Squibb 1,200 31 Merck 1,150 37 ------------ 68 ------------ INDUSTRIALS (9.0%) - ------------------------------------------------------------------------------ Emerson Electric 700 46 General Electric 725 26 Honeywell International 1,150 43 Hubbell, Cl B 450 23 International Aluminum 875 29 RR Donnelley & Sons 950 30 ServiceMaster 3,550 48 Standard Register 2,575 32 Stewart & Stevenson Services 2,275 52 ------------ 329 ------------ INFORMATION TECHNOLOGY (0.9%) - ------------------------------------------------------------------------------ Hewlett-Packard 1,425 31 ------------ MATERIALS (7.5%) - ------------------------------------------------------------------------------ Chesapeake 925 19 Dow Chemical 300 15 E.I. du Pont de Nemours 300 15 Kronos Worldwide* 8 -- Lyondell Chemical 850 24 MeadWestvaco 875 28 NL Industries 2,075 48 16 Constellation Funds 2005 Semiannual Report FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation Clover Income Plus Fund March 31, 2005 VALUE SHARES (000) - ------------------------------------------------------------------------------ Olin 1,075 $ 24 Packaging Corporation of America 1,375 33 RPM International 1,800 33 Sonoco Products 1,125 33 ------------ 272 ------------ TELECOMMUNICATION SERVICES (0.8%) - ------------------------------------------------------------------------------ Verizon Communications 800 29 ------------ UTILITIES (19.2%) - ------------------------------------------------------------------------------ Ameren 1,075 53 Atmos Energy 1,100 30 Cinergy 725 29 CMS Energy* 2,725 36 Constellation Energy Group 625 32 DPL 1,225 31 Duke Energy 575 16 Energy East 1,300 34 FPL Group 1,375 55 KeySpan 775 30 NiSource 2,350 54 Northeast Utilities 1,925 37 NSTAR 625 34 Piedmont Natural Gas 1,000 23 Public Service Enterprise Group 1,000 54 SCANA 875 33 SEMCO Energy 2,050 12 Southern 925 30 Southern Union* 500 13 Southwest Gas 925 22 Vectren 775 21 WGL Holdings 625 19 ------------ 698 - ------------------------------------------------------------------------------ TOTAL COMMON STOCK (COST $2,960) 2,905 ============================================================================== EXCHANGE TRADED FUND (4.1%) - ------------------------------------------------------------------------------ iShares Dow Jones Select Dividend Index Fund 2,475 148 - ------------------------------------------------------------------------------ TOTAL EXCHANGE TRADED FUND (COST $152) 148 ============================================================================== CASH EQUIVALENTS (24.0%) - ------------------------------------------------------------------------------ BlackRock TempCash Fund, Institutional Shares 874,163 874 - ------------------------------------------------------------------------------ TOTAL CASH EQUIVALENTS (COST $874) 874 ============================================================================== TOTAL INVESTMENTS (107.9%) (COST $3,986) 3,927 ============================================================================== VALUE (000) - ------------------------------------------------------------------------------ OTHER ASSETS AND LIABILITIES (-7.9%) - ------------------------------------------------------------------------------ Receivable due from Investment Adviser $ 2 Payable for income distribution (10) Payable for Capital Shares redeemed (294) Payable due to Shareholder Servicing Agent (1) Other assets and liabilities, net 15 - ------------------------------------------------------------------------------ TOTAL OTHER ASSETS AND LIABILITIES (288) - ------------------------------------------------------------------------------ NET ASSETS (100%) $ 3,639 ============================================================================== NET ASSETS CONSIST OF: - ------------------------------------------------------------------------------ Portfolio capital (unlimited authorization -- no par value) $ 3,702 Accumulated net realized loss on investments (4) Net unrealized depreciation on investments (59) - ------------------------------------------------------------------------------ NET ASSETS $ 3,639 ============================================================================== NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE--CLASS I SHARES ($3,639,331/371,792 SHARES) $ 9.79 ============================================================================== * Non-income producing security. ADR - American Depositary Receipt Cl - Class Amounts designated as "-" are either $0 or have been rounded to $0. The accompanying notes are an integral part of the financial statements. Constellation Funds 2005 Semiannual Report 17 FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation Chartwell Ultra Short Duration Fixed Income Fund March 31, 2005 SECTOR WEIGHTINGS+ - ------------------------------------------------------------------------------ [CHART APPEARS HERE] 87.5% U.S. Government Mortgage Backed Obligations 8.8% Cash Equivalents 3.7% U.S. Government Agency Obligations + Percentages based on total investments FACE AMOUNT VALUE (000) (000) - ------------------------------------------------------------------------------ U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS (87.4%) - ------------------------------------------------------------------------------ FHLMC CMO/REMIC Ser 1106, Cl E 7.500%, 07/15/06 $ 2 $ 2 Ser 1377, Cl F (A) 3.313%, 09/15/07 237 237 Ser 1544, Cl L(A) 3.550%, 07/15/08 153 153 Ser 161, Cl F 9.500%, 06/15/06 -- -- Ser 1832, Cl E 6.500%, 07/15/10 823 825 Ser 2118, Cl QD 6.500%, 10/15/27 194 194 Ser 2303, Cl TD 6.500%, 05/15/30 326 326 Ser 2416, Cl PN 6.000%, 11/15/28 2,718 2,732 Ser 2440, Cl OG 6.500%, 12/15/30 3,178 3,228 Ser 2463, Cl PE 6.000%, 03/15/28 5,559 5,615 Ser 2483, Cl DC 5.500%, 07/15/14 1,390 1,397 Ser 2520, Cl BD 5.250%, 10/15/31 1,902 1,921 Ser 2527, Cl LT 3.870%, 12/15/28 2,549 2,546 Ser 2527, Cl LU 3.790%, 12/15/28 3,869 3,865 Ser 2537, Cl LA 4.250%, 05/15/30 2,893 2,882 Ser 2571, Cl FN (A) 3.460%, 08/15/32 11,223 11,399 Ser 2575, Cl LM 4.500%, 05/15/32 2,578 2,569 Ser 2586, Cl WA 4.000%, 12/15/32 4,289 4,278 Ser 2586, Cl XG 4.000%, 12/15/32 7,651 7,357 FACE AMOUNT VALUE (000) (000) - ------------------------------------------------------------------------------ Ser 2590, Cl UL 3.750%, 03/15/32 $ 2,813 $ 2,774 Ser 2594, Cl YA 4.000%, 04/15/23 3,210 3,163 Ser 2628, Cl F (A) 3.210%, 06/15/32 4,392 4,402 Ser 2649, Cl PJ 3.500%, 06/15/33 3,116 3,049 Ser 2650, Cl FX (A) 3.210%, 12/15/32 8,880 8,927 Ser 2720, Cl FA(A) 3.210%, 01/15/29 3,147 3,158 Ser 2750, Cl FG (A) 3.210%, 02/15/34 5,629 5,658 Ser 2752, Cl FM (A) 3.160%, 12/15/30 4,182 4,197 Ser 2752, Cl FP(A) 4.210%, 02/15/34 3,319 3,324 Ser 2764, Cl FB (A) 3.160%, 03/15/31 4,451 4,464 Ser 2770, Cl FH (A) 3.210%, 03/15/34 4,764 4,799 Ser 2778, Cl FV (A) 3.410%, 03/15/34 2,339 2,367 Ser 2799, Cl F (A) 3.410%, 05/15/34 6,110 6,157 Ser 2822, Cl FD (A) 3.410%, 03/15/33 2,031 2,040 Ser 2822, Cl FP(A) 3.410%, 11/15/32 4,984 5,039 Ser 2827, Cl FW (A) 3.610%, 07/15/34 11,822 11,876 Ser 2858, Cl HF (A) 3.360%, 09/15/34 4,762 4,805 Ser 2876, Cl FH (A) 3.360%, 10/15/34 4,806 4,830 Ser 2878, Cl FD (A) 3.410%, 10/15/34 8,899 8,947 Ser 2886, Cl BF (A) 3.310%, 11/15/34 2,846 2,853 Ser 2892, Cl KF (A) 3.460%, 11/15/34 7,774 7,808 Ser 2894, Cl FB (A) 3.410%, 11/15/34 9,842 9,897 Ser 2921, Cl JF (A) 3.310%, 01/15/35 4,990 4,985 FHLMC Pool #184967 7.750%, 08/01/08 29 29 Pool #B15413 8.000%, 03/01/11 888 939 Pool #E00746 7.000%, 09/01/14 2,282 2,398 Pool #E64944 7.000%, 07/01/11 314 331 18 Constellation Funds 2005 Semiannual Report FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation Chartwell Ultra Short Duration Fixed Income Fund March 31, 2005 FACE AMOUNT VALUE (000) (000) - ------------------------------------------------------------------------------ Pool #G10665 7.000%, 03/01/12 $ 2,572 $ 2,705 Pool #G10822 7.000%, 07/01/13 4,928 5,181 Pool #G11656 7.000%, 06/01/17 4,879 5,128 Pool #M90686 5.500%, 12/01/06 323 327 FNMA CMO/REMIC Ser 2001-4, Cl PB 7.000%, 04/25/20 2,004 2,015 Ser 2001-50, Cl LD 6.500%, 05/25/30 334 334 Ser 2002-67, Cl AM 5.000%, 11/25/15 3,453 3,483 Ser 2002-81, Cl F (A) 3.350%, 04/25/32 15,000 15,206 Ser 2002-82, Cl FP(A) 3.350%, 02/25/32 5,000 5,063 Ser 2002-83, Cl MA 4.500%, 03/25/09 252 252 Ser 2002-87, Cl FB (A) 3.360%, 10/25/31 2,000 2,029 Ser 2002-9, Cl PB 6.000%, 11/25/14 100 100 Ser 2003-119, Cl PU 4.000%, 11/25/33 3,711 3,653 Ser 2003-33, Cl AM 4.250%, 05/25/33 1,662 1,649 Ser 2003-33, Cl AU 4.000%, 03/25/33 2,625 2,495 Ser 2003-34, Cl AD 4.000%, 01/25/32 2,190 2,161 Ser 2003-34, Cl FX (A) 3.990%, 05/25/33 2,470 2,489 Ser 2003-46, Cl PA 4.000%, 06/25/10 1,177 1,174 Ser 2003-61, Cl FK (A) 4.350%, 08/25/33 11,663 11,967 Ser 2003-69, Cl NF (A) 4.190%, 07/25/33 3,844 3,891 Ser 2003-76, Cl FB (A) 3.300%, 08/25/33 3,975 3,989 Ser 2003-81, Cl FE (A) 3.350%, 09/25/33 6,816 6,884 Ser 2004-29, Cl HF (A) 4.300%, 07/25/33 2,242 2,247 Ser 2004-96, Cl LF (A) 3.850%, 12/25/34 4,836 4,855 Ser 2005-16, Cl FW 3.490%, 01/25/35 7,807 7,819 FNMA Pool #190054 7.000%, 10/01/13 531 558 FACE AMOUNT VALUE (000) (000) - ------------------------------------------------------------------------------ Pool #253472 7.500%, 09/01/10 $ 368 $ 390 Pool #519992 7.000%, 10/01/14 343 360 Pool #535635 8.500%, 06/01/12 886 920 Pool #545304 7.500%, 11/01/31 4,354 4,659 Pool #555646 7.500%, 09/01/16 2,373 2,504 Pool #704214 7.500%, 12/01/27 1,934 2,078 GNMA ARM Pool #8103 (A) 4.000%, 02/20/16 72 73 Pool #8287 (A) 4.125%, 11/20/17 77 77 Pool #8297 (A) 4.125%, 12/20/17 126 128 Pool #8321 (A) 4.000%, 02/20/18 281 281 Pool #8333 (A) 4.000%, 03/20/18 197 200 Pool #8345 (A) 4.000%, 04/20/18 111 111 Pool #8366 (A) 3.375%, 06/20/18 122 123 Pool #8404 (A) 3.750%, 09/20/18 7 7 Pool #8405 (A) 4.000%, 09/20/18 64 65 Pool #8462 (A) 3.375%, 02/20/19 13 14 Pool #8489 (A) 4.000%, 04/20/19 115 115 GNMA CMO/REMIC Ser 2003-34, Cl PM 4.000%, 04/20/33 8,319 8,174 GNMA Pool #781140 7.000%, 10/15/14 4,827 5,105 - ------------------------------------------------------------------------------ TOTAL U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS (COST $296,339) 297,780 ============================================================================== U.S. GOVERNMENT AGENCY OBLIGATIONS (3.7%) - ------------------------------------------------------------------------------ FHLB (A) 4.750%, 09/29/14 3,000 2,941 3.120%, 06/08/06 1,750 1,750 2.980%, 02/22/07 5,000 4,995 FNMA(A) 2.610%, 02/24/06 2,950 2,930 - ------------------------------------------------------------------------------ TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (COST $12,697) 12,616 ============================================================================== Constellation Funds 2005 Semiannual Report 19 FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation Chartwell Ultra Short Duration Fixed Income Fund March 31, 2005 FACE AMOUNT VALUE (000)/SHARES (000) - ------------------------------------------------------------------------------ REPURCHASE AGREEMENT (8.8%) - ------------------------------------------------------------------------------ PNC Capital Markets, 2.56%, dated 03/31/05, to be repurchased on 04/01/05, repurchase price $30,120,142 (collateralized by a U.S. Government obligation, par value $30,118,000, 4.00%, 09/29/09, total market value $30,694,000)(B) $ 30,118 $ 30,118 - ------------------------------------------------------------------------------ TOTAL REPURCHASE AGREEMENT (COST $30,118) 30,118 ============================================================================== CASH EQUIVALENTS (0.0%) - ------------------------------------------------------------------------------ BlackRock TempCash Fund, Institutional Shares 382 -- - ------------------------------------------------------------------------------ TOTAL CASH EQUIVALENTS (COST $0) -- ============================================================================== TOTAL INVESTMENTS (99.9%) (COST $339,154) 340,514 ============================================================================== OTHER ASSETS AND LIABILITIES (0.1%) - ------------------------------------------------------------------------------ Payable for income distribution (918) Payable due to Capital Shares redeemed (627) Payable due to Investment Adviser (69) Payable due to Administrator (43) Other assets and liabilities, net 2,120 - ------------------------------------------------------------------------------ TOTAL OTHER ASSETS AND LIABILITIES 463 - ------------------------------------------------------------------------------ NET ASSETS (100%) $ 340,977 ============================================================================== NET ASSETS CONSIST OF: - ------------------------------------------------------------------------------ Portfolio capital (unlimited authorization -- no par value) $ 346,386 Distributions in excess of net investment income (9) Accumulated net realized loss on investments (6,760) Net unrealized appreciation on investments 1,360 - ------------------------------------------------------------------------------ NET ASSETS $ 340,977 ============================================================================== NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE--CLASS I SHARES ($340,977,074/33,763,561 SHARES) $ 10.10 ============================================================================== (A) Variable rate security - the rate reflected on the Statement of Net Assets is the rate in effect on March 31, 2005. (B) Tri-Party Repurchase Agreement ARM - Adjustable Rate Mortgage Cl - Class CMO - Collateralized Mortgage Obligation FHLB - Federal Home Loan Bank FHLMC - Federal Home Loan Mortgage Corporation FNMA - Federal National Mortgage Association GNMA - Government National Mortgage Association REMIC - Real Estate Mortgage Investment Conduit Ser - Series Amounts designated as "-" are either $0 or have been rounded to $0. The accompanying notes are an integral part of the financial statements. 20 Constellation Funds 2005 Semiannual Report FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation Chartwell Short Duration Fixed Income Fund March 31, 2005 SECTOR WEIGHTINGS+ - ------------------------------------------------------------------------------ [CHART APPEARS HERE] 77.3% U.S. Government Mortgage Backed Obligations 10.7% Cash Equivalents++ 7.1% U.S. Treasury Obligations 4.7% U.S. Government Agency Obligations 0.2% Asset-Backed Securities + Percentages based on total investments ++ Cash equivalents include a short-term investment held as collateral for loaned securities (see Note 9 in the Notes to Financial Statements). FACE AMOUNT VALUE (000) (000) - ------------------------------------------------------------------------------ U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS (83.2%) - ------------------------------------------------------------------------------ FHLMC CMO/REMIC Ser 1093, Cl F 7.500%, 06/15/06 $ 17 $ 16 Ser 1538, Cl J 6.500%, 06/15/08 160 165 Ser 161, Cl F 9.500%, 06/15/06 15 15 Ser 2416, Cl PN 6.000%, 11/15/28 2,718 2,732 Ser 2509, Cl EA 4.000%, 12/15/12 1,223 1,221 Ser 2510, Cl TA 4.000%, 06/15/32 1,459 1,421 Ser 2515, Cl ED 5.000%, 03/15/17 3,529 3,562 Ser 2537, Cl LA 4.250%, 05/15/30 2,864 2,853 Ser 2541, Cl MC 6.000%, 01/15/29 3,461 3,510 Ser 2543, Cl YJ 4.500%, 03/15/32 2,669 2,632 Ser 2552, Cl NH 4.500%, 04/15/21 505 506 Ser 2566, Cl LM 4.500%, 04/15/32 1,857 1,833 Ser 2575, Cl QP 4.500%, 11/15/31 2,379 2,361 Ser 2581, Cl PW 3.000%, 04/15/16 1,438 1,435 Ser 2583, Cl ND 4.250%, 12/15/10 1,347 1,348 Ser 2586, Cl XG 4.000%, 12/15/32 1,913 1,839 Ser 2590, Cl QY 3.750%, 04/15/28 1,655 1,621 Ser 2590, Cl UL 3.750%, 03/15/32 3,535 3,486 Ser 2596, Cl QE 4.000%, 03/15/33 2,308 2,228 FACE AMOUNT VALUE (000) (000) - ------------------------------------------------------------------------------ Ser 2649, Cl PJ 3.500%, 06/15/33 $ 1,871 $ 1,831 Ser 2744, Cl TA 5.500%, 03/15/26 3,843 3,903 FHLMC Pool #C46122 7.000%, 01/01/26 1,207 1,278 Pool #C66916 7.000%, 05/01/32 300 316 Pool #D94598 6.500%, 04/01/21 334 348 Pool #E97227 7.000%, 09/01/14 611 640 Pool #G10288 6.000%, 09/01/09 64 65 Pool #G10446 6.500%, 02/01/11 96 100 Pool #G30085 7.500%, 10/01/17 384 413 Pool #M90771 5.000%, 12/01/07 1,069 1,085 FNMA CMO/REMIC Ser 1991-133, Cl Z 8.000%, 09/25/06 92 94 Ser 1991-72, Cl G 8.000%, 07/25/06 15 15 Ser 1994-27, Cl PJ 6.500%, 06/25/23 484 492 Ser 1997-81, Cl PC 5.000%, 04/18/27 240 240 Ser 1999-15, Cl PC 6.000%, 09/25/18 69 71 Ser 2002-71, Cl AP 5.000%, 11/25/32 2,109 2,114 Ser 2002-72, Cl A 5.000%, 10/25/15 790 793 Ser 2003-119, Cl PU 4.000%, 11/25/33 1,591 1,566 Ser 2003-30, Cl MB 4.000%, 06/25/27 3,000 2,956 Ser 2003-34, Cl GJ 4.000%, 02/25/33 5,802 5,642 Ser 2003-42, Cl CA 4.000%, 05/25/33 1,812 1,769 Ser 2003-7, Cl PA 4.500%, 03/25/20 1,199 1,200 FNMA Pool #190054 7.000%, 10/01/13 1,021 1,071 Pool #250477 6.000%, 01/01/11 50 51 Pool #303096 7.500%, 12/01/09 137 143 Pool #313429 7.000%, 03/01/12 386 404 Constellation Funds 2005 Semiannual Report 21 FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation Chartwell Short Duration Fixed Income Fund March 31, 2005 FACE AMOUNT VALUE (000) (000) - ------------------------------------------------------------------------------ Pool #323441 7.000%, 12/01/13 $ 701 $ 736 Pool #323493 7.500%, 12/01/28 2,770 2,974 Pool #323832 7.500%, 07/01/29 405 434 Pool #334593 7.000%, 05/01/24 25 26 Pool #404993 7.500%, 11/01/27 1,621 1,740 Pool #535560 7.000%, 08/01/14 6,088 6,379 Pool #545304 7.500%, 11/01/31 4,643 4,969 Pool #546474 7.000%, 01/01/15 966 1,015 Pool #555973 7.500%, 12/01/14 2,076 2,190 Pool #6222 9.000%, 04/01/16 52 55 Pool #647567 6.000%, 06/01/17 817 844 Pool #665773 7.500%, 06/01/31 865 928 Pool #704214 7.500%, 12/01/27 1,095 1,177 Pool #725284 7.000%, 11/01/18 2,922 3,068 Pool #794717 7.500%, 06/01/31 4,606 4,943 Pool #8245 8.000%, 12/01/08 78 82 GNMA ARM Pool #8426 (A) 4.125%, 11/20/18 41 41 GNMA CMO/REMIC Pool #2707 5.500%, 01/20/14 18 18 Pool #2802 5.500%, 07/20/14 19 20 Pool #2843 5.500%, 11/20/14 232 239 Pool #2999 7.500%, 11/20/30 2,471 2,641 Pool #344233 8.000%, 02/15/23 160 173 Pool #345123 8.000%, 12/15/23 326 352 Pool #351122 6.500%, 07/15/08 55 56 Pool #357343 6.500%, 10/15/08 26 27 Pool #462486 6.500%, 01/15/13 74 78 FACE AMOUNT VALUE (000) (000) - ------------------------------------------------------------------------------ Pool #569337 6.500%, 04/15/22 $ 109 $ 115 Pool #578189 6.000%, 02/15/32 80 83 Pool #68224 8.000%, 06/15/12 106 112 Pool #780322 8.000%, 11/15/22 194 210 Pool #780327 8.000%, 11/15/17 99 107 Pool #780604 7.000%, 07/15/12 1,245 1,309 Pool #781140 7.000%, 10/15/14 2,477 2,619 Pool #814 8.000%, 08/20/17 242 260 Ser 2002-13, Cl A 6.000%, 10/16/30 421 422 Ser 2002-72, Cl AB 4.500%, 10/20/32 2,206 2,149 - ------------------------------------------------------------------------------ TOTAL U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS (COST $106,305) 105,975 ============================================================================== U.S. TREASURY OBLIGATION (7.6%) - ------------------------------------------------------------------------------ U.S. Treasury Note (C) 3.500%, 02/15/10 10,000 9,706 - ------------------------------------------------------------------------------ TOTAL U.S. TREASURY OBLIGATION (COST $9,788) 9,706 ============================================================================== U.S. GOVERNMENT AGENCY OBLIGATIONS (5.0%) - ------------------------------------------------------------------------------ FHLB (A) 6.000%, 04/26/19 500 489 4.750%, 09/29/14 4,000 3,922 FNMA(A) 2.610%, 02/24/06 2,000 1,986 - ------------------------------------------------------------------------------ TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (COST $6,490) 6,397 ============================================================================== ASSET-BACKED SECURITIES (0.2%) - ------------------------------------------------------------------------------ Discover Card Master Trust I, Ser 2000-9, Cl A 6.350%, 07/15/08 150 153 PECO Energy Transition Trust, Ser 1999-A, Cl A6 6.050%, 03/01/09 125 128 - ------------------------------------------------------------------------------ TOTAL ASSET-BACKED SECURITIES (COST $284) 281 ============================================================================== 22 Constellation Funds 2005 Semiannual Report FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation Chartwell Short Duration Fixed Income Fund March 31, 2005 FACE AMOUNT VALUE (000)/SHARES (000) - ------------------------------------------------------------------------------ REPURCHASE AGREEMENT (3.7%) - ------------------------------------------------------------------------------ PNC Capital Markets 2.56%, dated 03/31/05, to be repurchased on 04/01/2005, repurchase price $4,725,336 (collateralized by a U.S. Government obligation, 4.00%, 09/22/09, par value $4,725,000, total market value $4,816,000)(B) $ 4,725 $ 4,725 - ------------------------------------------------------------------------------ TOTAL REPURCHASE AGREEMENT (COST $4,725) 4,725 ============================================================================== SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES (7.8%) - ------------------------------------------------------------------------------ BlackRock Institutional Money Market Trust 9,887,500 9,888 - ------------------------------------------------------------------------------ TOTAL SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES (COST $9,888) 9,888 ============================================================================== TOTAL INVESTMENTS (107.5%) (COST $137,480) 136,972 ============================================================================== OTHER ASSETS AND LIABILITIES (-7.5%) - -------------------------------------------------------------------------------- Obligation to return securities lending collateral (9,888) Payable for income distribution (438) Payable due to Investment Adviser (24) Payable due to Administrator (16) Payable for Capital Shares redeemed (254) Other assets and liabilities, net 1,012 - ------------------------------------------------------------------------------ TOTAL OTHER ASSETS AND LIABILITIES (9,608) - ------------------------------------------------------------------------------ NET ASSETS (100%) $ 127,364 ============================================================================== VALUE (000) - ------------------------------------------------------------------------------ NET ASSETS CONSIST OF: - ------------------------------------------------------------------------------ Portfolio capital (unlimited authorization -- no par value) $ 130,603 Distributions in excess of net investment income (8) Accumulated net realized loss on investments (2,723) Net unrealized depreciation on investments (508) - ------------------------------------------------------------------------------ NET ASSETS $ 127,364 ============================================================================== NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE--CLASS I SHARES ($127,364,330/12,822,902 SHARES) $ 9.93 ============================================================================== (A) Variable rate security - the rate reflected on the Statement of Net Assets is the rate in effect on March 31, 2005. (B) Tri-Party Repurchase Agreement (C) Security fully or partially on loan at March 31, 2005 (See Note 9 in Notes to Financial Statements). The total value of securities on loan at March 31, 2005 was $9,749,408. ARM - Adjustable Rate Mortgage Cl - Class CMO - Collateralized Mortgage Obligation FHLB - Federal Home Loan Bank FHLMC - Federal Home Loan Mortgage Corporation FNMA - Federal National Mortgage Association GNMA - Government National Mortgage Association REMIC - Real Estate Mortgage Investment Conduit Ser - Series The accompanying notes are an integral part of the financial statements. Constellation Funds 2005 Semiannual Report 23 FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation Chartwell High Yield Fund March 31, 2005 SECTOR WEIGHTINGS+ - ------------------------------------------------------------------------------ [CHART APPEARS HERE] 27.4% Consumer Discretionary 25.2% Industrials 12.3% Cash Equivalents++ 8.7% Materials 6.8% Telecommunication Services 5.7% Consumer Staples 5.4% Financials 4.0% Health Care 2.3% Utilities 1.2% Energy 1.0% Information Technology + Percentages based on total investments ++ Cash equivalents include a short-term investment held as collateral for loaned securities (see Note 9 in the Notes to Financial Statements). FACE AMOUNT VALUE (000) (000) - ------------------------------------------------------------------------------ CORPORATE BONDS (91.1%) - ------------------------------------------------------------------------------ CONSUMER DISCRETIONARY (29.1%) - ------------------------------------------------------------------------------ Albritton Communications 7.750%, 12/15/12 $ 80 $ 79 Allied Security Escrow 11.375%, 07/15/11 80 82 Amscan Holdings 8.750%, 05/01/14 95 92 Cablevision Systems (A) 8.000%, 04/15/12 75 77 Charter Communications (A) 8.000%, 04/30/12 75 75 Chattem 7.000%, 03/01/14 75 75 Echostar DBS (A) 6.625%, 10/01/14 75 72 H&E Equipment 11.125%, 06/15/12 85 96 HLI Operating (D) 10.500%, 06/15/10 25 23 Intrawest 7.500%, 10/15/13 75 75 Invista (A) 9.250%, 05/01/12 75 83 Jean Countu Group (A)(D) 8.500%, 08/01/14 95 92 K&F Acquisition (A) 7.750%, 11/15/14 80 78 LCE Aquisition (A) 9.000%, 08/01/14 90 90 MTR Gaming Group, Ser B 9.750%, 04/01/10 70 76 FACE AMOUNT VALUE (000) (000) - ------------------------------------------------------------------------------ Mediacom Broadband 11.000%, 07/15/13 $ 75 $ 80 Mother's Work 11.250%, 08/01/10 75 75 Norcraft 9.000%, 11/01/11 45 47 Propex Fabrics (A) 10.000%, 12/01/12 95 94 RH Donnelley (A) 6.875%, 01/15/13 95 94 Sonic Automotive, Ser B 8.625%, 08/15/13 80 80 Tenneco Automotive (A)(D) 8.625%, 11/15/14 100 97 Time Warner (D) 9.750%, 07/15/08 8 8 Town Sports International 9.625%, 04/15/11 10 11 United Rentals (D) 7.750%, 11/15/13 95 92 Universal City Florida (A) 8.375%, 05/01/10 80 82 Vertis, Ser B (D) 10.875%, 06/15/09 75 72 W.H. Holdings 9.500%, 04/01/11 6 6 Wynn Las Vegas (A) 6.625%, 12/01/14 75 71 ------------ 2,074 ------------ CONSUMER STAPLES (6.0%) - ------------------------------------------------------------------------------ American Achievement 8.250%, 04/01/12 75 78 American Seafood Group 10.125%, 04/15/10 85 92 Chiquita Brands International 7.500%, 11/01/14 75 75 General Nutrition Center (A) 8.625%, 01/15/11 25 23 Stater Brothers Holdings 8.125%, 06/15/12 85 82 United Agri Products (A) 8.250%, 12/15/11 77 80 ------------ 430 ------------ ENERGY (1.3%) - ------------------------------------------------------------------------------ Belden & Blake 8.750%, 07/15/12 95 94 ------------ FINANCIALS (5.7%) - ------------------------------------------------------------------------------ Bluewater Finance 10.250%, 02/15/12 75 81 Crystal US Holdings (A) 9.625%, 06/15/14 85 97 E*Trade Financial 8.000%, 06/15/11 80 83 24 Constellation Funds 2005 Semiannual Report FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation Chartwell High Yield Fund March 31, 2005 FACE AMOUNT VALUE (000) (000) - ------------------------------------------------------------------------------ LaBranche 11.000%, 05/15/12 $ 140 $ 148 ------------ 409 ------------ HEALTH CARE (4.3%) - ------------------------------------------------------------------------------ DaVita (A) 7.250%, 03/15/15 50 49 Iasis Healthcare 8.750%, 06/15/14 90 94 Norcross Safety Products, Ser B 9.875%, 08/15/11 80 85 VWR International 8.000%, 04/15/14 75 76 ------------ 304 ------------ INDUSTRIALS (24.8%) - ------------------------------------------------------------------------------ Aearo 8.250%, 04/15/12 20 21 Ainsworth Lumber (A) 7.250%, 10/01/12 85 83 Allied Waste North America, Ser B 8.500%, 12/01/08 80 82 Buhrmann US 8.250%, 07/01/14 90 93 CE Generation 7.416%, 12/15/18 97 103 Cenveo 9.625%, 03/15/12 75 80 Coinmach 9.000%, 02/01/10 112 114 Continental Airlines (D) 8.000%, 12/15/05 100 98 Danka Business Systems 11.000%, 06/15/10 25 24 Douglas Dynamics (A) 7.750%, 01/15/12 75 73 Gencorp 9.500%, 08/15/13 13 14 Geo Group 8.250%, 07/15/13 125 127 Goodman Global Holdings (A) 7.875%, 12/15/12 75 69 IMCO Recycling 10.375%, 10/15/10 100 111 Koppers Industries 9.875%, 10/15/13 75 84 Noble Group (A) 6.625%, 03/17/15 90 84 Ply Gem Industries 9.000%, 02/15/12 85 80 Rayovac 8.500%, 10/01/13 85 88 Sensus Metering Systems 8.625%, 12/15/13 80 82 Ship Finance International 8.500%, 12/15/13 100 99 FACE AMOUNT VALUE (000) (000) - ------------------------------------------------------------------------------ Tech Olympic USA 9.000%, 07/01/10 $ 75 $ 78 Williams Scotsman 9.875%, 06/01/07 85 85 ------------ 1,772 ------------ INFORMATION TECHNOLOGY (1.1%) - ------------------------------------------------------------------------------ FTD 7.750%, 02/15/14 75 77 ------------ MATERIALS (9.2%) - ------------------------------------------------------------------------------ Autocam 10.875%, 06/15/14 70 61 California Steel Industries 6.125%, 03/15/14 80 76 Euromax International 8.500%, 08/15/11 100 103 Kraton Polymers (A) 8.125%, 01/15/14 40 38 Nalco 8.875%, 11/15/13 95 101 Russel Metals 6.375%, 03/01/14 75 73 Ryerson Tull 8.250%, 12/15/11 20 19 Solo Cup 8.500%, 02/15/14 105 105 Wolverine Tube (D) 10.500%, 04/01/09 75 79 ------------ 655 ------------ TELECOMMUNICATION SERVICES (7.2%) - ------------------------------------------------------------------------------ Centennial Cellular 10.125%, 06/15/13 80 88 Cincinnati Bell (A) 8.375%, 01/15/14 80 79 Intelsat Bermuda(B) 7.805%, 01/15/12 95 96 Rogers Wireless 7.250%, 12/15/12 75 77 Superior Essex Communications 9.000%, 04/15/12 75 76 Ubiquitel Operating 9.875%, 03/01/11 50 55 Ubiquitel Operating (A) 9.875%, 03/01/11 40 44 ------------ 515 ------------ UTILITIES (2.4%) - ------------------------------------------------------------------------------ AES 9.500%, 06/01/09 95 104 Reliant Energy 6.750%, 12/15/14 75 70 ------------ 174 - ------------------------------------------------------------------------------ TOTAL CORPORATE BONDS (COST $6,724) 6,504 ============================================================================== Constellation Funds 2005 Semiannual Report 25 FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation Chartwell High Yield Fund March 31, 2005 FACE AMOUNT VALUE (000)/SHARES (000) - ------------------------------------------------------------------------------ COMMON STOCK (1.9%) ============================================================================== INDUSTRIALS (1.9%) - ------------------------------------------------------------------------------ Coinmach Service 5,000 $ 66 Synagro Technologies 15,000 71 ------------ 137 - ------------------------------------------------------------------------------ TOTAL COMMON STOCK (COST $141) 137 ============================================================================== SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES (8.3%) - ------------------------------------------------------------------------------ BlackRock Institutional Money Market Trust 591,310 591 - ------------------------------------------------------------------------------ TOTAL SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES (COST $591) 591 ============================================================================== REPURCHASE AGREEMENT (4.8%) - ------------------------------------------------------------------------------ PNC Capital Markets 2.56%, dated 03/31/2005, to be repurchased on 04/01/05, repurchase price $341,024 (collateralized by a U.S. Government obligation, 4.00%, 09/22/09, par value $341,000, total market value $348,000)(C) $ 341 341 - ------------------------------------------------------------------------------ TOTAL REPURCHASE AGREEMENT (COST $341) 341 ============================================================================== CASH EQUIVALENTS (0.0%) - ------------------------------------------------------------------------------ BlackRock TempCash Fund, Institutional Shares 4 -- - ------------------------------------------------------------------------------ TOTAL CASH EQUIVALENTS (COST $0) -- - ------------------------------------------------------------------------------ TOTAL INVESTMENTS (106.1%) (COST $7,797) 7,573 - ------------------------------------------------------------------------------ OTHER ASSETS AND LIABILITIES (-6.1%) - ------------------------------------------------------------------------------ Receivable due from Investment Adviser 3 Obligation to return securities lending collateral (591) Payable due to income distribution (43) Payable due to Capital Shares redeemed (1) Payable due to Administrator (1) Other assets and liabilities, net 195 - ------------------------------------------------------------------------------ TOTAL OTHER ASSETS AND LIABILITIES (438) - ------------------------------------------------------------------------------ NET ASSETS (100%) $ 7,135 ============================================================================== VALUE (000) - ------------------------------------------------------------------------------ NET ASSETS CONSIST OF: - ------------------------------------------------------------------------------ Portfolio capital (unlimited authorization -- no par value) $ 22,304 Accumulated net realized loss on investments (14,945) Net unrealized depreciation on investments (224) - ------------------------------------------------------------------------------ NET ASSETS $ 7,135 ============================================================================== - ------------------------------------------------------------------------------ NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE--CLASS I SHARES ($7,134,819/1,420,810 SHARES) $ 5.02 ============================================================================== (A) Security sold within the terms of a private placement memorandum, exempt from registration under section 144A of the Securities Act of 1933, as amended, and may be sold only to dealers in the program or other "accredited investors". Security is considered liquid. On March 31, 2005, the value of these securities amounted to approximately $1,724,000, representing 24.2% of the net assets of the Fund. (B) Variable rate security - the rate reflected on the Statement of Net Assets is the rate in effect on March 31, 2005. (C) Tri-Party Repurchase Agreement (D) The security or a portion of this security is on loan at March 31, 2005 (See Note 9 in the Notes to Financial Statements). The total value of securities on loan at March 31, 2005 was $575,703. Ser - Series Amounts designated as "-" are either $0 or have been rounded to $0. The accompanying notes are an integral part of the financial statements. 26 Constellation Funds 2005 Semiannual Report FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation HLAM Large Cap Quality Growth Fund March 31, 2005 SECTOR WEIGHTINGS+ - ------------------------------------------------------------------------------- [CHART APPEARS HERE] 19.8% Health Care 19.7% Consumer Discretionary 17.0% Information Technology 16.1% Financials 14.2% Cash Equivalents++ 8.1% Consumer Staples 2.6% Industrials 2.5% Telecommunication Services + Percentages based on total investments ++ Cash equivalents include a short-term investment held as collateral for loaned securities (see Note 9 in the Notes to Financial Statements). VALUE SHARES (000) - ------------------------------------------------------------------------------ COMMON STOCK (99.0%) - ------------------------------------------------------------------------------ CONSUMER DISCRETIONARY (22.8%) - ------------------------------------------------------------------------------ Comcast, Cl A* 18,485 $ 624 Harley-Davidson (A) 15,520 896 Home Depot 19,365 741 International Game Technology 15,420 411 Omnicom Group (A) 10,660 944 Viacom, Cl B 12,265 427 ------------ 4,043 ------------ CONSUMER STAPLES (9.3%) - ------------------------------------------------------------------------------ PepsiCo 13,755 729 Walgreen 21,025 934 ------------ 1,663 ------------ FINANCIALS (18.6%) - ------------------------------------------------------------------------------ American International Group 19,396 1,075 Freddie Mac 8,460 534 Morgan Stanley 15,230 872 Synovus Financial 29,650 826 ------------ 3,307 ------------ HEALTH CARE (22.8%) - ------------------------------------------------------------------------------ Allergan (A) 12,360 859 Amgen* 10,745 625 Cardinal Health 10,210 570 Johnson & Johnson 12,005 806 Pfizer 20,180 530 Waters* 18,545 664 ------------ 4,054 ------------ INDUSTRIALS (3.0%) - ------------------------------------------------------------------------------ Dover 13,950 527 ------------ INFORMATION TECHNOLOGY (19.6%) - ------------------------------------------------------------------------------ Applied Materials* 47,600 774 Automatic Data Processing 17,055 767 First Data 12,945 509 International Business Machines 4,290 392 VALUE SHARES (000) - ------------------------------------------------------------------------------ Microsoft 26,320 $ 636 Texas Instruments 15,860 404 ------------ 3,482 ------------ TELECOMMUNICATION SERVICES (2.9%) - ------------------------------------------------------------------------------ Nokia ADR (A)* 33,360 515 - ------------------------------------------------------------------------------ TOTAL COMMON STOCK (COST $11,528) 17,591 ============================================================================== SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES (15.2%) - ------------------------------------------------------------------------------ BlackRock Institutional Money Market Trust 2,693,060 2,693 - ------------------------------------------------------------------------------ TOTAL SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES (COST $2,693) 2,693 ============================================================================== CASH EQUIVALENTS (1.3%) - ------------------------------------------------------------------------------ BlackRock TempCash Fund, Institutional Shares 224,562 225 - ------------------------------------------------------------------------------ TOTAL CASH EQUIVALENTS (COST $225) 225 ============================================================================== TOTAL INVESTMENTS (115.5%) (COST $14,446) 20,509 ============================================================================== OTHER ASSETS AND LIABILITIES (-15.5%) - ------------------------------------------------------------------------------ Obligation to return securities lending collateral (2,693) Payable for Capital Shares redeemed (33) Payable due to Investment Adviser (7) Payable due to Shareholder Servicing Agent (4) Payable due to Administrator (2) Other assets and liabilities, net (16) - ------------------------------------------------------------------------------ TOTAL OTHER ASSETS AND LIABILITIES (2,755) - ------------------------------------------------------------------------------ NET ASSETS (100%) $ 17,754 ============================================================================== NET ASSETS CONSIST OF: - ------------------------------------------------------------------------------ Portfolio capital (unlimited authorization -- no par value) $ 9,855 Accumulated net investment loss (12) Accumulated net realized gain on investments 1,848 Net unrealized appreciation on investments 6,063 - ------------------------------------------------------------------------------ NET ASSETS $ 17,754 ============================================================================== NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE--CLASS I SHARES ($17,753,986/867,587 SHARES) $ 20.46 ============================================================================== * Non-income producing security. (A) The security or a portion of this security is on loan at March 31, 2005 (See Note 9 in the Notes to Financial Statements). The total value of securities on loan at March 31, 2005 was $2,625,273. ADR - American Depositary Receipt Cl - Class The accompanying notes are an integral part of the financial statements. Constellation Funds 2005 Semiannual Report 27 FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation HLAM Large Cap Value Fund March 31, 2005 SECTOR WEIGHTINGS+ - ------------------------------------------------------------------------------- [CHART APPEARS HERE] 26.2% Financials 24.5% Consumer Discretionary 14.3% Health Care 10.9% Cash Equivalents++ 10.4% Information Technology 10.0% Consumer Staples 3.7% Industrials + Percentages based on total investments ++ Cash equivalents include a short-term investment held as collateral for loaned securities (see Note 9 in the Notes to Financial Statements). VALUE SHARES (000) - ------------------------------------------------------------------------------ COMMON STOCK+ (99.8%) - ------------------------------------------------------------------------------ CONSUMER DISCRETIONARY (27.5%) - ------------------------------------------------------------------------------ Comcast, Cl A* 2,265 $ 76 Gannett 465 37 Home Depot 2,360 90 Mattel 2,865 61 Nike, Cl B 435 36 Omnicom Group (A) 735 65 TJX 2,095 52 Walt Disney 2,255 65 ------------ 482 ------------ CONSUMER STAPLES (11.2%) - ------------------------------------------------------------------------------ CVS 1,335 70 Gillette 985 50 PepsiCo 1,425 76 ------------ 196 ------------ FINANCIALS (29.3%) - ------------------------------------------------------------------------------ American International Group 1,065 59 Berkshire Hathaway, Cl B* 43 123 Cincinnati Financial 2,000 87 Freddie Mac 900 57 Synovus Financial 2,200 61 US Bancorp 2,345 67 Washington Mutual 1,535 61 ------------ 515 ------------ HEALTH CARE (16.0%) - ------------------------------------------------------------------------------ Allergan (A) 400 28 Cardinal Health (A) 775 43 Johnson & Johnson 785 53 Pfizer 1,960 51 Waters* 1,695 61 Wyeth 1,080 46 ------------ 282 ------------ INDUSTRIALS (4.2%) - ------------------------------------------------------------------------------ Tyco International 2,165 73 ------------ VALUE SHARES (000) - ------------------------------------------------------------------------------ INFORMATION TECHNOLOGY (11.6%) - ------------------------------------------------------------------------------ Automatic Data Processing 1,910 $ 86 Cisco Systems* 3,000 54 First Data (A) 1,640 64 ------------ 204 - ------------------------------------------------------------------------------ TOTAL COMMON STOCK (COST $1,706) 1,752 ============================================================================== SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES (11.9%) - ------------------------------------------------------------------------------ BlackRock Institutional Money Market Trust 207,630 208 - ------------------------------------------------------------------------------ TOTAL SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES (COST $208) 208 ============================================================================== CASH EQUIVALENTS (0.4%) - ------------------------------------------------------------------------------ BlackRock TempCash Fund, Institutional Shares 6,619 7 - ------------------------------------------------------------------------------ TOTAL CASH EQUIVALENTS (COST $7) 7 ============================================================================== TOTAL INVESTMENTS (112.1%) (COST $1,921) 1,967 ============================================================================== OTHER ASSETS AND LIABILITIES (-12.1%) - ------------------------------------------------------------------------------ Receivable due from Investment Adviser 2 Obligation to return securities lending collateral (208) Payable for income distribution (1) Other assets and liabilities, net (5) - ------------------------------------------------------------------------------ TOTAL OTHER ASSETS AND LIABILITIES (212) - ------------------------------------------------------------------------------ NET ASSETS (100%) $ 1,755 ============================================================================== NET ASSETS CONSIST OF: - ------------------------------------------------------------------------------ Portfolio capital (unlimited authorization -- no par value) $ 1,683 Accumulated net realized gain on investments 26 Net unrealized appreciation on investments 46 - ------------------------------------------------------------------------------ NET ASSETS $ 1,755 ============================================================================== NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE--CLASS I SHARES ($1,754,526/169,281 SHARES) $ 10.36 ============================================================================== * Non-income producing security. + Narrow industries are utilized for compliance purposes, whereas broad sectors are utilized for reporting. (A) The security or a portion of this security is on loan at March 31, 2005 (See Note 9 in the Notes to Financial Statements). The total value of securities on loan at March 31, 2005 was $200,564. Cl - Class The accompanying notes are an integral part of the financial statements. 28 Constellation Funds 2005 Semiannual Report FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation Pitcairn Diversified Value Fund March 31, 2005 SECTOR WEIGHTINGS+ - ------------------------------------------------------------------------------- [CHART APPEARS HERE] 31.3% Financials 13.1% Energy 10.9% Consumer Discretionary 9.9% Industrials 6.5% Consumer Staples 6.1% Utilities 5.9% Information Technology 5.8% Cash Equivalents++ 4.1% Telecommunication Services 2.8% Health Care 2.6% Materials 1.0% Exchange Traded Funds + Percentages based on total investments ++ Cash equivalents include a short-term investment held as collateral for loaned securities (see Note 9 in the Notes to Financial Statements). VALUE SHARES (000) - ------------------------------------------------------------------------------ COMMON STOCK+ (99.0%) - ------------------------------------------------------------------------------ CONSUMER DISCRETIONARY (11.6%) - ------------------------------------------------------------------------------ Best Buy 43,935 $ 2,373 Harrah's Entertainment (A) 43,000 2,777 Home Depot 85,880 3,284 Kohl's* 49,400 2,551 Viacom, Cl B 75,106 2,616 Walt Disney 184,800 5,309 ------------ 18,910 ------------ CONSUMER STAPLES (7.0%) - ------------------------------------------------------------------------------ Altria Group 102,320 6,691 Anheuser-Busch 48,355 2,291 Procter & Gamble (A) 43,960 2,330 ------------ 11,312 ------------ ENERGY (13.9%) - ------------------------------------------------------------------------------ Devon Energy 139,860 6,678 Exxon Mobil 193,200 11,515 National Oilwell Varco* 93,535 4,368 ------------ 22,561 ------------ FINANCIALS (33.2%) - ------------------------------------------------------------------------------ American International Group 45,960 2,547 Bear Stearns 47,881 4,783 Capital Automotive REIT 89,540 2,966 Capital One Financial 44,590 3,334 Citigroup 171,710 7,717 Everest Re Group 27,415 2,333 Fifth Third Bancorp 70,510 3,031 MBNA 190,555 4,678 North Fork Bancorporation 174,250 4,834 VALUE SHARES (000) - ------------------------------------------------------------------------------ Radian Group 36,540 $ 1,744 State Street 68,300 2,986 TCF Financial (A) 84,600 2,297 Torchmark 46,591 2,432 iWashington Mutual 39,250 1,550 Wells Fargo 114,580 6,852 ------------ 54,084 ------------ HEALTH CARE (2.9%) - ------------------------------------------------------------------------------ Pfizer 88,430 2,323 UnitedHealth Group 25,640 2,446 ------------ 4,769 ------------ INDUSTRIALS (10.5%) - ------------------------------------------------------------------------------ 3M 24,965 2,139 Avery Dennison 33,770 2,092 FedEx 24,940 2,343 General Dynamics 22,140 2,370 Rockwell Automation 100,315 5,682 United Technologies 24,670 2,508 ------------ 17,134 ------------ INFORMATION TECHNOLOGY (6.3%) - ------------------------------------------------------------------------------ Alliance Data Systems* 40,195 1,624 Dell* 74,415 2,859 Flextronics International* 131,255 1,580 Microsoft 103,925 2,512 Texas Instruments 66,020 1,683 ------------ 10,258 ------------ MATERIALS (2.8%) - ------------------------------------------------------------------------------ E.I. du Pont de Nemours 61,785 3,166 Weyerhaeuser 19,965 1,367 ------------ 4,533 ------------ TELECOMMUNICATION SERVICES (4.3%) - ------------------------------------------------------------------------------ Alltel (A) 51,376 2,818 Sprint 184,460 4,196 ------------ 7,014 ------------ UTILITIES (6.5%) - ------------------------------------------------------------------------------ Dominion Resources 36,460 2,714 Entergy 59,527 4,206 FPL Group 91,560 3,676 ------------ 10,596 - ------------------------------------------------------------------------------ TOTAL COMMON STOCK (COST $137,404) 161,171 ============================================================================== EXCHANGE TRADED FUND (1.1%) - ------------------------------------------------------------------------------ iShares Russell 1000 Value Index Fund 25,815 1,699 - ------------------------------------------------------------------------------ TOTAL EXCHANGE TRADED FUND (COST $1,579) 1,699 ============================================================================== Constellation Funds 2005 Semiannual Report 29 FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation Pitcairn Diversified Value Fund March 31, 2005 VALUE SHARES (000) - ------------------------------------------------------------------------------ SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES (6.1%) - ------------------------------------------------------------------------------ BlackRock Institutional Money Market Trust 9,846,832 $ 9,847 - ------------------------------------------------------------------------------ TOTAL SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES (COST $9,847) 9,847 ============================================================================== CASH EQUIVALENTS (0.1%) - ------------------------------------------------------------------------------ PNC Bank Money Market Fund 197,263 197 - ------------------------------------------------------------------------------ TOTAL CASH EQUIVALENTS (COST $197) 197 ============================================================================== TOTAL INVESTMENTS (106.3%) (COST $149,027) 172,914 ============================================================================== OTHER ASSETS AND LIABILITIES (-6.3%) - ------------------------------------------------------------------------------ Obligation to return securities lending collateral (9,847) Payable for income distribution (324) Payable due to Capital Shares redeemed (84) Payable due to Investment Adviser (83) Payable due to Shareholder Servicing Agent (35) Payable due to Administrator (21) Other assets and liabilities, net 209 - ------------------------------------------------------------------------------ TOTAL OTHER ASSETS AND LIABILITIES (10,185) - ------------------------------------------------------------------------------ NET ASSETS (100%) $ 162,729 ============================================================================== NET ASSETS CONSIST OF: - ------------------------------------------------------------------------------ Portfolio capital (unlimited authorization -- no par value $ 133,660 Distributions in excess of net investment income (1) Accumulated net realized gain on investments 5,183 Net unrealized appreciation on investments 23,887 - ------------------------------------------------------------------------------ NET ASSETS $ 162,729 ============================================================================== NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE--CLASS II SHARES ($162,728,753/13,464,424 SHARES) $ 12.09 ============================================================================== * Non-income producing security. + Narrow industries are utilized for compliance purposes, whereas broad sectors are utilized for reporting. (A) The security or a portion of this security is on loan at March 31, 2005 (See Note 9 in the Notes to Financial Statements). The total value of securities on loan at March 31, 2005 was $9,530,678. Cl - Class REIT - Real Estate Investment Trust The accompanying notes are an integral part of the financial statements. 30 Constellation Funds 2005 Semiannual Report FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation Pitcairn Select Value Fund March 31, 2005 SECTOR WEIGHTINGS+ - ------------------------------------------------------------------------------- [CHART APPEAR HERE] 32.3% Financials 13.1% Energy 11.8% Consumer Discretionary 9.5% Information Technology 8.3% Industrials 6.3% Consumer Staples 6.0% Utilities 4.9% Telecommunication Services 3.0% Health Care 2.8% Cash Equivalents++ 1.7% Materials 0.3% Exchange Traded Funds + Percentages based on total investments ++ Cash equivalents include a short-term investment held as collateral for loaned securities (see Note 9 in the Notes to Financial Statements). VALUE SHARES (000) - ------------------------------------------------------------------------------ COMMON STOCK+ (99.7%) - ------------------------------------------------------------------------------ CONSUMER DISCRETIONARY (12.2%) - ------------------------------------------------------------------------------ Kohl's* 33,675 $ 1,739 Lowe's (A) 32,150 1,835 Walt Disney 150,180 4,315 ------------ 7,889 ------------ CONSUMER STAPLES (6.5%) - ------------------------------------------------------------------------------ Altria Group 47,745 3,122 Anheuser-Busch 22,850 1,083 ------------ 4,205 ------------ ENERGY (13.5%) - ------------------------------------------------------------------------------ Devon Energy 64,180 3,065 Exxon Mobil 58,560 3,490 National Oilwell Varco* 46,325 2,163 ------------ 8,718 ------------ FINANCIALS (33.2%) - ------------------------------------------------------------------------------ Capital One Financial 39,675 2,966 Citigroup 69,240 3,112 Everest Re Group 20,360 1,733 Fifth Third Bancorp 61,675 2,651 MBNA 138,240 3,394 North Fork Bancorporation 122,145 3,388 Radian Group 49,830 2,379 Wells Fargo 31,305 1,872 ------------ 21,495 ------------ HEALTH CARE (3.1%) - ------------------------------------------------------------------------------ Pfizer 76,815 2,018 ------------ VALUE SHARES (000) - ------------------------------------------------------------------------------ INDUSTRIALS (8.5%) - ------------------------------------------------------------------------------ Avery Dennison 31,620 $ 1,958 FedEx 13,770 1,294 Rockwell Automation 39,600 2,243 ------------ 5,495 ------------ INFORMATION TECHNOLOGY (9.8%) - ------------------------------------------------------------------------------ Alliance Data Systems* 38,545 1,557 Applied Materials* 97,035 1,577 Dell* 46,550 1,788 Flextronics International* 117,650 1,417 ------------ 6,339 ------------ MATERIALS (1.7%) - ------------------------------------------------------------------------------ Weyerhaeuser 16,170 1,107 ------------ TELECOMMUNICATION SERVICES (5.0%) - ------------------------------------------------------------------------------ Sprint 143,085 3,255 ------------ UTILITIES (6.2%) - ------------------------------------------------------------------------------ FPLGroup 55,410 2,225 PG&E* 51,775 1,765 ------------ 3,990 - ------------------------------------------------------------------------------ TOTAL COMMON STOCK (COST $58,012) 64,511 ============================================================================== EXCHANGE TRADED FUND (0.3%) - ------------------------------------------------------------------------------ iShares Russell 1000 Value Index Fund 3,020 199 - ------------------------------------------------------------------------------ TOTAL EXCHANGE TRADED FUND (COST $181) 199 ============================================================================== SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES (2.9%) - ------------------------------------------------------------------------------ BlackRock Institutional Money Market Trust 1,896,850 1,897 - ------------------------------------------------------------------------------ TOTAL SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES (COST $1,897) 1,897 ============================================================================== TOTAL INVESTMENTS (102.9%) (COST $60,090) 66,607 ============================================================================== OTHER ASSETS AND LIABILITIES (-2.9%) - ------------------------------------------------------------------------------ Obligation to return securities lending collateral (1,897) Payable due to Custodian (85) Payablefor income distribution (81) Payable due to Investment Adviser (34) Payable due to Capital Shares redeemed (15) Payable due to Shareholder Servicing Agent (14) Payable due to Administrator (8) Other assets and liabilities, net 257 - ------------------------------------------------------------------------------ TOTAL OTHER ASSETS AND LIABILITIES (1,877) - ------------------------------------------------------------------------------ NET ASSETS (100%) $ 64,730 ============================================================================== Constellation Funds 2005 Semiannual Report 31 FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation Pitcairn Select Value Fund March 31, 2005 VALUE (000) - ------------------------------------------------------------------------------ NET ASSETS CONSIST OF: - ------------------------------------------------------------------------------ Portfolio capital (unlimited authorization -- no par value) $ 54,223 Accumulated net realized gain on investments 3,990 Net unrealized appreciation on investments 6,517 - ------------------------------------------------------------------------------ NET ASSETS $ 64,730 ============================================================================== NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE--CLASS II SHARES ($64,729,512/5,756,118 SHARES) $ 11.25 ============================================================================== * Non-income producing security. + Narrow industries are utilized for compliance purposes, whereas broad sectors are utilized for reporting. (A) The security or a portion of this security is on loan at March 31, 2005 (See Note 9 in the Notes to Financial Statements). The total value of securities on loan at March 31, 2005 was $1,835,444. The accompanying notes are an integral part of the financial statements. 32 Constellation Funds 2005 Semiannual Report FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation Pitcairn Diversified Growth Fund March 31, 2005 SECTOR WEIGHTINGS+ - ------------------------------------------------------------------------------- [CHART APPEARS HERE] 22.6% Information Technology 20.8% Health Care 14.5% Cash Equivalents++ 14.4% Consumer Discretionary 9.5% Consumer Staples 7.8% Financials 6.7% Industrials 1.5% Energy 1.0% Telecommunication Services 0.9% Materials 0.3% Exchange Traded Funds + Percentages based on total investments ++ Cash equivalents include a short-term investment held as collateral for loaned securities (see Note 9 in the Notes to Financial Statements). VALUE SHARES (000) - ------------------------------------------------------------------------------ COMMON STOCK+ (99.4%) - ------------------------------------------------------------------------------ CONSUMER DISCRETIONARY (16.9%) - ------------------------------------------------------------------------------ Aeropostale* 56,380 $ 1,847 Best Buy (A) 28,520 1,540 Callaway Golf 63,105 808 Dollar Tree Stores (A)* 43,952 1,263 eBay (A)* 45,644 1,701 Fortune Brands 28,970 2,336 Harrah's Entertainment (A) 24,545 1,585 Home Depot 71,705 2,742 Kohl's* 29,770 1,537 Starbucks* 20,411 1,054 Walt Disney 74,635 2,144 ------------ 18,557 ------------ CONSUMER STAPLES (11.1%) - ------------------------------------------------------------------------------ Altria Group 26,410 1,727 Anheuser-Busch 19,447 921 PepsiCo 64,845 3,439 Procter & Gamble (A) 58,235 3,086 Wal-Mart Stores 60,482 3,031 ------------ 12,204 ------------ ENERGY (1.7%) - ------------------------------------------------------------------------------ National Oilwell Varco* 40,580 1,895 ------------ FINANCIALS (9.1%) - ------------------------------------------------------------------------------ American International Group 37,600 2,084 Bear Stearns 11,850 1,184 Capital One Financial (A) 26,320 1,968 Everest Re Group 10,285 875 Fifth Third Bancorp 25,695 1,104 MBNA 114,201 2,804 ------------ 10,019 ------------ VALUE SHARES (000) - ------------------------------------------------------------------------------ HEALTH CARE (24.3%) - ------------------------------------------------------------------------------ Amgen(A)* 39,492 $ 2,299 Cephalon (A)* 27,090 1,269 Eli Lilly 47,360 2,467 Health Management Associates, Cl A(A) 51,648 1,352 Hospira* 43,605 1,407 Johnson & Johnson 95,056 6,384 Medtronic 74,677 3,805 Pfizer 197,131 5,179 WellPoint* 20,115 2,521 ------------ 26,683 ------------ INDUSTRIALS (7.8%) - ------------------------------------------------------------------------------ Avery Dennison 21,945 1,359 Cintas 23,045 952 FedEx 17,735 1,666 General Electric 1 -- L-3 Communications Holdings 21,610 1,535 Rockwell Automation 55,230 3,128 ------------ 8,640 ------------ INFORMATION TECHNOLOGY (26.4%) - ------------------------------------------------------------------------------ Alliance Data Systems* 39,505 1,596 Andrew* 78,950 925 Applied Materials* 113,415 1,843 Cisco Systems* 170,632 3,053 Citrix Systems (A)* 83,580 1,991 Dell* 70,629 2,714 Flextronics International* 88,735 1,068 Intel 119,293 2,771 Lexmark International, Cl A* 14,020 1,121 Microsoft 198,649 4,801 Paychex 67,065 2,201 Qualcomm 30,354 1,113 Texas Instruments 68,980 1,758 Veritas Software* 35,500 824 Xilinx 43,861 1,282 ------------ 29,061 ------------ MATERIALS (1.0%) - ------------------------------------------------------------------------------ Sealed Air* 21,270 1,105 ------------ TELECOMMUNICATION SERVICES (1.1%) - ------------------------------------------------------------------------------ Sprint (A) 54,160 1,232 ------------ - ------------------------------------------------------------------------------ TOTAL COMMON STOCK (COST $114,893) 109,396 ============================================================================== EXCHANGE TRADED FUND (0.3%) - ------------------------------------------------------------------------------ iShares S&P MidCap 400/BARRA Growth Index Fund 2,395 322 - ------------------------------------------------------------------------------ TOTAL EXCHANGE TRADED FUND (COST $309) 322 ============================================================================== Constellation Funds 2005 Semiannual Report 33 FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation Pitcairn Diversified Growth Fund March 31, 2005 VALUE SHARES (000) - ------------------------------------------------------------------------------ SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES (16.9%) - ------------------------------------------------------------------------------ BlackRock Institutional Money Market Trust 18,541,479 $ 18,541 - ------------------------------------------------------------------------------ TOTAL SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES (COST $18,541) 18,541 ============================================================================== CASH EQUIVALENTS (0.1%) - ------------------------------------------------------------------------------ PNC Bank Money Market Fund 75,453 75 - ------------------------------------------------------------------------------ TOTAL CASH EQUIVALENTS (COST $75) 75 ============================================================================== TOTAL INVESTMENTS (116.7%) (COST $133,818) 128,334 ============================================================================== OTHER ASSETS AND LIABILITIES (-16.7%) - ------------------------------------------------------------------------------ Obligation to return securities lending collateral (18,541) Payable for investment securities purchased (267) Payable due to Investment Adviser (55) Payable due to Shareholder Servicing Agent (24) Payable due to Administrator (14) Payable for Capital Shares redeemed (14) Other assets and liabilities, net 594 - ------------------------------------------------------------------------------ TOTAL OTHER ASSETS AND LIABILITIES (18,321) - ------------------------------------------------------------------------------ NET ASSETS (100%) $ 110,013 ============================================================================== NET ASSETS CONSIST OF: - ------------------------------------------------------------------------------ Portfolio capital (unlimited authorization -- no par value) $ 186,134 Undistributed net investment income 42 Accumulated net realized loss on investments (70,679) Net unrealized depreciation on investments (5,484) - ------------------------------------------------------------------------------ NET ASSETS $ 110,013 ============================================================================== NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE--CLASS II SHARES ($110,013,011/19,613,903 SHARES) $ 5.61 ============================================================================== * Non-income producing security. + Narrow industries are utilized for compliance purposes, whereas broad sectors are utilized for reporting. (A) The security or a portion of this security is on loan at March 31, 2005 (See Note 9 in the Notes to Financial Statements). The total value of securities on loan at March 31, 2005 was $17,923,119. Cl - Class Amounts designated as "-" are either $0 or have been rounded to $0. The accompanying notes are an integral part of the financial statements. 34 Constellation Funds 2005 Semiannual Report FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation Pitcairn Small Cap Fund March 31, 2005 SECTOR WEIGHTINGS+ - ------------------------------------------------------------------------------- [CHART APPEARS HERE] 21.6% Financials 15.5% Information Technology 14.7% Health Care 13.0% Consumer Discretionary 10.4% Industrials 6.3% Cash Equivalents++ 5.7% Materials 5.6% Energy 3.4% Consumer Staples 2.1% Utilities 1.5% Telecommunication Services 0.2% Exchange Traded Funds + Percentages based on total investments ++ Cash equivalents include a short-term investment held as collateral for loaned securities (see Note 9 in the Notes to Financial Statements). VALUE SHARES (000) - ------------------------------------------------------------------------------ COMMON STOCK (99.2%) - ------------------------------------------------------------------------------ CONSUMER DISCRETIONARY (13.8%) - ------------------------------------------------------------------------------ Advance Auto Parts* 30,834 $ 1,556 Aeropostale* 71,925 2,356 California Pizza Kitchen* 83,391 1,955 Callaway Golf (A) 144,490 1,849 Furniture Brands International (A) 27,964 610 Linens 'N Things* 49,793 1,236 Modine Manufacturing 30,190 885 Rent-Way* 196,811 1,614 Wolverine World Wide 55,300 1,185 ------------ 13,246 ------------ CONSUMER STAPLES (3.6%) - ------------------------------------------------------------------------------ Cott 55,132 1,336 Pantry* 61,179 1,895 Peet's Coffee & Tea* 9,601 236 ------------ 3,467 ------------ ENERGY (5.9%) - ------------------------------------------------------------------------------ Forest Oil* 83,849 3,396 W-H Energy Services* 94,151 2,253 ------------ 5,649 ------------ FINANCIALS (22.9%) - ------------------------------------------------------------------------------ American Equity Investment Life Holding* 97,172 1,243 Capital Automotive REIT 97,621 3,233 Central Pacific Financial 64,172 2,159 Commercial Capital Bancorp 87,630 1,783 Euronet Worldwide* 50,462 1,441 VALUE SHARES (000) - ------------------------------------------------------------------------------ Flagstar Bancorp 38,760 $ 758 Flushing Financial 105,128 1,913 IPC Holdings 32,636 1,282 Metris* 356,938 4,137 R&G Financial, Cl B (A) 46,205 1,440 SL Green Realty (A) 31,842 1,790 Trico Bancshares 37,396 784 ------------ 21,963 ------------ HEALTH CARE (15.6%) - ------------------------------------------------------------------------------ Connetics* 102,342 2,588 Diagnostic Products 27,602 1,333 LabOne* 77,687 2,679 Matria Healthcare* 139,095 4,272 Serologicals* 84,899 2,075 Wilson Greatbatch Technologies* 107,312 1,957 ------------ 14,904 ------------ INDUSTRIALS (11.0%) - ------------------------------------------------------------------------------ AMR (A)* 61,791 661 Applied Films* 59,727 1,381 Genesee & Wyoming, Cl A* 32,349 838 Layne Christensen* 45,661 789 Pacer International* 52,204 1,247 PLATO Learning* 262,756 2,049 Trex* 34,610 1,537 Unifirst Corp 25,140 1,003 URS* 36,448 1,048 ------------ 10,553 ------------ INFORMATION TECHNOLOGY (16.5%) - ------------------------------------------------------------------------------ Aeroflex* 250,813 2,340 Anteon International* 31,318 1,219 Belden CDT(A)* 109,680 2,436 Credence Systems* 98,437 779 Hyperion Solutions* 94,805 4,182 j2 Global Communications* 45,992 1,578 Kronos* 27,944 1,428 Micrel* 72,605 669 SBS Technologies* 47,958 535 Vishay Intertechnology* 51,252 637 ------------ 15,803 ------------ MATERIALS (6.0%) - ------------------------------------------------------------------------------ Crown Holdings* 168,156 2,616 Ferro 53,711 1,011 RPM International 116,226 2,125 ------------ 5,752 ------------ TELECOMMUNICATION SERVICES (1.6%) - ------------------------------------------------------------------------------ Airspan Networks* 150,392 769 US LEC, Cl A* 316,904 805 ------------ 1,574 ------------ Constellation Funds 2005 Semiannual Report 35 FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation Pitcairn Small Cap Fund March 31, 2005 VALUE SHARES (000) - ------------------------------------------------------------------------------ UTILITIES (2.3%) - ------------------------------------------------------------------------------ Idacorp 41,446 $ 1,176 New Jersey Resources 22,623 985 ------------ 2,161 - ------------------------------------------------------------------------------ TOTAL COMMON STOCK (COST $76,814) 95,072 - ------------------------------------------------------------------------------ EXCHANGE TRADED FUND (0.2%) - ------------------------------------------------------------------------------ iShares Russell 2000 Growth Index Fund 3,463 217 - ------------------------------------------------------------------------------ TOTAL EXCHANGE TRADED FUND (COST $215) 217 ============================================================================== SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES (5.9%) - ------------------------------------------------------------------------------ BlackRock Institutional Money Market Trust 5,631,332 5,631 - ------------------------------------------------------------------------------ TOTAL SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES (COST $5,631) 5,631 ============================================================================== CASH EQUIVALENTS (0.8%) - ------------------------------------------------------------------------------ PNC Bank Money Market Fund 730,856 731 - ------------------------------------------------------------------------------ TOTAL CASH EQUIVALENTS (COST $731) 731 ============================================================================== TOTAL INVESTMENTS (106.1%) (COST $83,391) 101,651 ============================================================================== OTHER ASSETS AND LIABILITIES (-6.1%) - ------------------------------------------------------------------------------ Obligation to return securities lending collateral (5,631) Payable for Capital Shares redeemed (214) Payable due to Investment Adviser (47) Payable due to Shareholder Servicing Agent (21) Payable due to Administrator (12) Other assets and liabilities, net 58 - ------------------------------------------------------------------------------ TOTAL OTHER ASSETS AND LIABILITIES (5,867) - ------------------------------------------------------------------------------ NET ASSETS (100%) $ 95,784 ============================================================================== NET ASSETS CONSIST OF: - ------------------------------------------------------------------------------ Portfolio capital (unlimited authorization -- no par value) $ 76,050 Accumulated net investment loss (95) Accumulated net realized gain on investments 1,569 Net unrealized appreciation on investments 18,260 - ------------------------------------------------------------------------------ NET ASSETS $ 95,784 ============================================================================== NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE--CLASS II SHARES ($95,784,483/6,029,214 SHARES) $ 15.89 ============================================================================== * Non-income producing security. (A) The security or a portion of this security is on loan at March 31, 2005 (See Note 9 in the Notes to Financial Statements). The total value of securities on loan at March 31, 2005 was $5,269,294. Cl - Class REIT - Real Estate Investment Trust The accompanying notes are an integral part of the financial statements. 36 Constellation Funds 2005 Semiannual Report FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation Pitcairn Family Heritage(R) Fund March 31, 2005 SECTOR WEIGHTINGS+ - ------------------------------------------------------------------------------- [CHART APPEARS HERE] 20.4% Financials 16.0% Information Technology 10.7% Health Care 10.3% Cash Equivalents++ 9.7% Consumer Discretionary 8.6% Consumer Staples 8.2% Industrials 7.2% Energy 4.4% Materials 2.3% Utilities 2.2% Telecommunication Services + Percentages based on total investments ++ Cash equivalents include a short-term investment held as collateral for loaned securities (see Note 9 in the Notes to Financial Statements). VALUE SHARES (000) - ------------------------------------------------------------------------------ COMMON STOCK (99.1%) - ------------------------------------------------------------------------------ CONSUMER DISCRETIONARY (10.7%) - ------------------------------------------------------------------------------ Best Buy 14,714 $ 795 Carnival (A) 33,489 1,735 Comcast, Cl A* 48,333 1,633 International Speedway, Cl A 16,767 909 Marriott International, Cl A 10,328 690 Nike, Cl B 22,058 1,838 Viacom, Cl B 33,266 1,159 ------------ 8,759 ------------ CONSUMER STAPLES (9.5%) - ------------------------------------------------------------------------------ Estee Lauder, Cl A 19,415 873 JM Smucker 29,197 1,469 Lancaster Colony 20,814 886 Wal-Mart Stores 51,335 2,572 Wm. Wrigley Jr. 30,078 1,972 ------------ 7,772 ------------ ENERGY (7.9%) - ------------------------------------------------------------------------------ Apache 30,948 1,895 Chesapeake Energy 102,725 2,254 Devon Energy 49,274 2,353 ------------ 6,502 ------------ FINANCIALS (22.5%) - ------------------------------------------------------------------------------ Berkshire Hathaway, Cl B* 725 2,070 Capital One Financial 24,130 1,804 Commerce Bancshares (A) 34,998 1,687 Commercial Capital Bancorp 67,470 1,373 VALUE SHARES (000) - ------------------------------------------------------------------------------ Federated Investors, Cl B 60,820 $ 1,722 Flagstar Bancorp 92,614 1,811 MBNA 99,715 2,448 Philadelphia Consolidated Holding* 9,614 745 Progressive 10,163 932 SL Green Realty 29,719 1,671 TCF Financial (A) 82,750 2,247 ------------ 18,510 ------------ HEALTH CARE (11.8%) - ------------------------------------------------------------------------------ Cephalon* 25,545 1,196 Eli Lilly 51,536 2,685 Hillenbrand Industries 11,095 616 Medicis Pharmaceutical, Cl A 47,698 1,430 Stryker 54,055 2,411 Universal Health Services, Cl B 25,918 1,358 ------------ 9,696 ------------ INDUSTRIALS (9.1%) - ------------------------------------------------------------------------------ Danaher 20,270 1,082 Fastenal 21,239 1,175 General Dynamics 13,795 1,477 Illinois Tool Works 16,740 1,499 Molex, Cl A 57,245 1,351 Werner Enterprises 46,018 894 ------------ 7,478 ------------ INFORMATION TECHNOLOGY (17.7%) - ------------------------------------------------------------------------------ Dell* 65,170 2,504 Fiserv (A)* 33,300 1,325 Marvell Technology Group (A)* 47,233 1,811 Microsoft 162,906 3,937 Paychex 49,788 1,634 Qualcomm 41,359 1,516 Vishay Intertechnology* 58,143 723 Yahoo!* 32,501 1,102 ------------ 14,552 ------------ MATERIALS (4.9%) - ------------------------------------------------------------------------------ E.I. du Pont de Nemours 50,861 2,606 Worthington Industries 74,088 1,428 ------------ 4,034 ------------ TELECOMMUNICATION SERVICES (2.4%) - ------------------------------------------------------------------------------ Telephone & Data Systems 12,963 1,058 Wireless Facilities* 143,575 897 ------------ 1,955 ------------ UTILITIES (2.6%) - ------------------------------------------------------------------------------ AES* 128,010 2,097 ------------ - ------------------------------------------------------------------------------ TOTAL COMMON STOCK (COST $68,726) 81,355 ============================================================================== Constellation Funds 2005 Semiannual Report 37 FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation Pitcairn Family Heritage(R) Fund March 31, 2005 VALUE SHARES (000) - ------------------------------------------------------------------------------ SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES (10.4%) - ------------------------------------------------------------------------------ BlackRock Institutional Money Market Trust 8,559,195 $ 8,559 - ------------------------------------------------------------------------------ TOTAL SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES (COST $8,559) 8,559 ============================================================================== CASH EQUIVALENTS (1.0%) - ------------------------------------------------------------------------------ PNC Bank Money Market Fund 791,874 792 - ------------------------------------------------------------------------------ TOTAL CASH EQUIVALENTS (COST $792) 792 ============================================================================== TOTAL INVESTMENTS (110.5%) (COST $78,077) 90,706 ============================================================================== OTHER ASSETS AND LIABILITIES (-10.5%) - ------------------------------------------------------------------------------ Obligation to return securities lending collateral (8,559) Payable due to Investment Adviser (53) Payable for Capital Shares redeemed (24) Payable due to Shareholder Servicing Agent (18) Payable due to Administrator (10) Other assets and liabilities, net 74 - ------------------------------------------------------------------------------ TOTAL OTHER ASSETS AND LIABILITIES (8,590) - ------------------------------------------------------------------------------ NET ASSETS (100%) $ 82,116 ============================================================================== NET ASSETS CONSIST OF: - ------------------------------------------------------------------------------ Portfolio capital (unlimited authorization -- no par value) $ 85,072 Undistributed net investment income 37 Accumulated net realized loss on investments (15,622) Net unrealized appreciation on investments 12,629 - ------------------------------------------------------------------------------ NET ASSETS $ 82,116 ============================================================================== NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE--CLASS II SHARES ($82,115,889/8,509,177 SHARES) $ 9.65 ============================================================================== * Non-income producing security. (A) The security or a portion of this security is on loan at March 31, 2005 (See Note 9 in the Notes to Financial Statements). The total value of securities on loan at March 31, 2005 was $8,362,051. Cl - Class The accompanying notes are an integral part of the financial statements. 38 Constellation Funds 2005 Semiannual Report FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation Pitcairn Taxable Bond Fund March 31, 2005 SECTOR WEIGHTINGS+ - ------------------------------------------------------------------------------- [CHART APPEARS HERE] 47.5% Corporate Bonds 23.9% U.S. Government Agency Obligations 14.7% U.S. Treasury Obligations 9.4% Cash Equivalents++ 2.4% Asset-Backed Securities 1.2% U.S. Government Mortgage-Backed Obligations 0.9% Municipal Bonds +Percentages based on total investments ++Cash equivalents include a short-term investment held as collateral for loaned securities (see Note 9 in the Notes to Financial Statements). FACE AMOUNT VALUE (000) (000) - ------------------------------------------------------------------------------ CORPORATE BONDS (51.7%) - ------------------------------------------------------------------------------ CONSUMER DISCRETIONARY (4.5%) - ------------------------------------------------------------------------------ Harman International 7.320%, 07/01/07 $ 1,143 $ 1,205 May Department Stores 7.450%, 09/15/11 847 943 ------------ 2,148 ------------ CONSUMER STAPLES (2.3%) - ------------------------------------------------------------------------------ H.J. Heinz 6.000%, 03/15/08 1,045 1,088 ------------ ENERGY (4.1%) - ------------------------------------------------------------------------------ BP Capital Markets 2.625%, 03/15/07 1,000 976 Burlington Resources Finance 5.600%, 12/01/06 1,000 1,020 ------------ 1,996 ------------ FINANCIALS (23.1%) - ------------------------------------------------------------------------------ Bank of America 5.375%, 06/15/14 1,000 1,016 Block Financial 8.500%, 04/15/07 235 253 CIT Group 7.750%, 04/02/12 1,000 1,157 Colonial Realty 8.050%, 07/15/06 400 416 Ford Motor Credit 7.375%, 10/28/09 904 907 6.875%, 02/01/06 1,250 1,267 General Motors Acceptance (A) 6.750%, 12/01/14 1,000 864 HSBC Finance 4.750%, 05/15/09 1,000 1,001 Heller Financial 7.375%, 11/01/09 500 556 Kimco Realty, MTN, Ser B 7.900%, 12/07/07 450 491 FACE AMOUNT VALUE (000) (000) - ------------------------------------------------------------------------------ Lehman Brothers Holdings 7.000%, 02/01/08 $ 1,316 $ 1,404 Merrill Lynch 4.000%, 09/15/08 750 732 St Paul 8.125%, 04/15/10 904 1,029 ------------ 11,093 ------------ HEALTH CARE (2.0%) - ------------------------------------------------------------------------------ GlaxoSmithKline 4.375%, 04/15/14 1,000 953 ------------ INDUSTRIALS (10.2%) - ------------------------------------------------------------------------------ First Data 3.900%, 10/01/09 1,500 1,456 Honeywell International 7.500%, 03/01/10 1,052 1,181 Tyco International Group 7.000%, 06/15/28 2,000 2,270 ------------ 4,907 ------------ SOVEREIGN BOND (1.1%) - ------------------------------------------------------------------------------ Aid-Israel 5.500%, 04/26/24 500 528 ------------ TELECOMMUNICATION SERVICES (2.3%) - ------------------------------------------------------------------------------ Verizon Communications 7.510%, 04/01/09 1,000 1,097 ------------ UTILITIES (2.1%) - ------------------------------------------------------------------------------ Florida Power & Light 6.875%, 12/01/05 1,000 1,022 - ------------------------------------------------------------------------------ TOTAL CORPORATE BONDS (COST $24,662) 24,832 ============================================================================== U.S. GOVERNMENT AGENCY OBLIGATIONS (26.1%) - ------------------------------------------------------------------------------ FHLB 3.785%, 12/28/06 1,000 997 FHLB, Ser TV06 4.875%, 11/15/06 1,500 1,523 FHLMC 6.250%, 03/05/12 1,500 1,543 5.200%, 03/05/19 1,000 987 5.125%, 11/07/13 1,000 999 4.250%, 05/04/09 1,000 990 FHLMC (A) 4.375%, 07/30/09 1,500 1,476 FNMA 8.200%, 03/10/16 1,000 1,273 5.000%, 01/15/07 500 509 4.010%, 10/21/09 1,000 981 TVA, Ser B 6.235%, 07/15/45 1,175 1,241 - ------------------------------------------------------------------------------ TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (COST $12,245) 12,519 ============================================================================== Constellation Funds 2005 Semiannual Report 39 FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation Pitcairn Taxable Bond Fund March 31, 2005 FACE AMOUNT VALUE (000)/SHARES (000) - ------------------------------------------------------------------------------ U.S. TREASURY OBLIGATIONS (16.0%) - ------------------------------------------------------------------------------ U.S. Treasury Bonds 8.750%, 05/15/17 $ 1,500 $ 2,061 7.875%, 02/15/21 615 821 7.625%, 11/15/22 913 1,209 7.500%, 11/15/16 830 1,041 U.S. Treasury Bonds (A) 8.125%, 08/15/19 1,500 2,018 5.375%, 02/15/31 500 545 - ------------------------------------------------------------------------------ TOTAL U.S. TREASURY OBLIGATIONS (COST $6,950) 7,695 ============================================================================== ASSET-BACKED SECURITY (2.6%) - ------------------------------------------------------------------------------ Standard Credit Card Master Trust, Ser 1994-2, Cl A 7.250%, 04/07/06 1,199 1,239 - ------------------------------------------------------------------------------ TOTAL ASSET-BACKED SECURITY (COST $1,217) 1,239 ============================================================================== U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATION(1.3%) - ------------------------------------------------------------------------------ FHLMC CMO/REMIC Ser 2430, Cl QB 5.500%, 02/15/15 613 623 - ------------------------------------------------------------------------------ TOTAL U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATION (COST $607) 623 ============================================================================== MUNICIPAL BOND (1.0%) - ------------------------------------------------------------------------------ NEW YORK (1.0%) - ------------------------------------------------------------------------------ Sales Tax Asset Receivable RB, Ser B, FGIC 4.760%, 10/15/15 500 488 - ------------------------------------------------------------------------------ TOTAL MUNICIPAL BOND (COST $500) 488 ============================================================================== SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES (10.0%) ============================================================================== BlackRock Institutional Money Market Trust 4,823,365 4,823 - ------------------------------------------------------------------------------ TOTAL SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES (COST $4,823) 4,823 ============================================================================== CASH EQUIVALENTS (0.2%) - ------------------------------------------------------------------------------ PNC Bank Money Market Fund 109,095 109 - ------------------------------------------------------------------------------ TOTAL CASH EQUIVALENTS (COST $109) 109 ============================================================================== TOTAL INVESTMENTS (108.9%) (COST $51,113) 52,328 ============================================================================== VALUE (000) - ------------------------------------------------------------------------------ OTHER ASSETS AND LIABILITIES (-8.9%) - ------------------------------------------------------------------------------ Obligation to return securities lending collateral $ (4,823) Payable for income distribution (171) Payable for Capital Shares redeemed (64) Payable due to Investment Adviser (14) Payable due to Shareholder Servicing Agent (10) Payable due to Administrator (6) Other assets and liabilities, net 805 - ------------------------------------------------------------------------------ TOTAL OTHER ASSETS AND LIABILITIES (4,283) - ------------------------------------------------------------------------------ NET ASSETS (100%) $ 48,045 ============================================================================== NET ASSETS CONSIST OF: - ------------------------------------------------------------------------------ Portfolio capital (unlimited authorization -- no par value) $ 47,363 Accumulated net realized loss on investments (533) Net unrealized appreciation on investments 1,215 - ------------------------------------------------------------------------------ NET ASSETS $ 48,045 ============================================================================== NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE--CLASS II SHARES ($48,045,029/4,575,755 SHARES) $ 10.50 ============================================================================== (A) The security or a portion of this security is on loan at March 31, 2005 (See Note 9 in the Notes to Financial Statements). The total value of securities on loan at March 31, 2005 was $4,746,275. Cl - Class CMO - Collateralized Mortgage Obligation FGIC - Financial Guaranty Insurance Corporation FHLB - Federal Home Loan Bank FHLMC - Federal Home Loan Mortgage Corporation FNMA - Federal National Mortgage Association MTN - Medium Term Note RB - Revenue Bond REMIC - Real Estate Mortgage Investment Conduit Ser - Series TVA - Tennessee Valley Authority The accompanying notes are an integral part of the financial statements. 40 Constellation Funds 2005 Semiannual Report FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation Pitcairn Tax-Exempt Bond Fund March 31, 2005 SECTOR WEIGHTINGS+ - ------------------------------------------------------------------------------- [CHART APPEARS HERE] 13.7% General Obligations 12.8% Utilities 11.6% Medical 9.6% Higher Education 8.7% School District 8.0% Facilities 7.4% Transportation 6.8% Development 5.9% Power 4.9% General Revenue 3.0% Education 2.3% Water 1.8% Airport 1.5% Single-Family Housing 0.9% Pollution 0.9% Multi-Family Housing 0.2% Cash Equivalents + Percentages based on total investments FACE AMOUNT VALUE (000) (000) - ------------------------------------------------------------------------------ MUNICIPAL BONDS (98.9%) - ------------------------------------------------------------------------------ ALABAMA (0.9%) - ------------------------------------------------------------------------------ Bessemer RB, AMBAC, Callable 02/01/10 @ 102 5.600%, 02/01/30 $ 1,000 $ 1,088 ------------ ARIZONA (0.9%) - ------------------------------------------------------------------------------ Arizona School Facilities Board COP, MBIA, Pre-Refunded 03/01/13 @ 100 5.250%, 09/01/17 1,000 1,105 ------------ CALIFORNIA (10.6%) - ------------------------------------------------------------------------------ California State GO, AMBAC, Callable 04/01/14 @ 100 5.000%, 04/01/31 3,000 3,090 California State GO, Callable 02/01/13 @ 100 5.250%, 02/01/33 1,840 1,911 Community College Finance Authority RB, Mission Community College, MBIA Callable 05/01/07 @ 102 5.500%, 05/01/17 1,000 1,071 Health Facilities Finance Authority RB, St. Francis Memorial Hospital, Ser C, ETM 5.875%, 11/01/23 2,000 2,400 San Jose, Liberty Parks and Public Safety Projects GO, Callable 09/01/12 @ 100 5.000%, 09/01/17 1,000 1,057 State Economic Recovery GO, Ser A, Callable 07/01/11 @ 100 5.000%, 07/01/17 2,000 2,097 FACE AMOUNT VALUE (000) (000) - ------------------------------------------------------------------------------ Stockton Housing Facility RB, O'Connor Woods Project, Ser A, ETM, GNMA, Callable 05/06/05 @ 100 5.200%, 09/20/09 $ 675 $ 683 ------------ 12,309 ------------ COLORADO (0.9%) - ------------------------------------------------------------------------------ South Suburban Park & Recreation District GO, AMBAC, Callable 09/15/10 @ 100 5.375%, 09/15/18 1,000 1,080 ------------ CONNECTICUT (2.3%) - ------------------------------------------------------------------------------ Connecticut State GO, Ser B, MBIA 5.000%, 12/01/10 2,500 2,700 ------------ DELAWARE (0.9%) - ------------------------------------------------------------------------------ Delaware State, Economic Development Authority, Pollution Control RB, Delmarva Power, AMBAC, Callable 05/01/11 @ 100 (A) 4.900%, 05/01/26 1,000 1,059 ------------ DISTRICT OF COLUMBIA (1.2%) - ------------------------------------------------------------------------------ District of Columbia RB, Howard University Project, MBIA 5.500%, 10/01/16 1,000 1,126 Washington D.C., Convention Center Authority RB, Dedicated Tax Revenue, Senior Lien, AMBAC, Callable 10/01/08 @ 101 5.250%, 10/01/09 200 218 ------------ 1,344 ------------ FLORIDA (1.2%) - ------------------------------------------------------------------------------ Tampa Water & Sewer Revenue RB, Pre-Refunded 10/01/09 @ 101 5.500%, 10/01/29 1,300 1,432 ------------ GEORGIA (2.1%) - ------------------------------------------------------------------------------ Henry County, Water & Sewer Authority RB, AMBAC 6.150%, 02/01/20 2,000 2,429 ------------ HAWAII (4.0%) - ------------------------------------------------------------------------------ Honolulu, City & County GO, Ser B, ETM 8.000%, 10/01/10 1,680 2,065 University of Hawaii RB, Ser A, FGIC, Callable 07/15/12 @ 100 5.500%, 07/15/21 2,385 2,606 ------------ 4,671 ------------ ILLINOIS (10.1%) - ------------------------------------------------------------------------------ Chicago GO, FGIC, Callable 01/01/08 @ 102 5.500%, 01/01/21 1,500 1,616 Constellation Funds 2005 Semiannual Report 41 FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation Pitcairn Tax-Exempt Bond Fund March 31, 2005 FACE AMOUNT VALUE (000) (000) - ------------------------------------------------------------------------------ Chicago, Park District GO, Aquarium & Museum Project, FGIC, Callable 01/01/08 @ 100 5.500%, 01/01/10 $ 1,000 $ 1,058 Development Finance Authority RB, Elgin School District Project, FSA(B) 4.300%, 01/01/18 2,350 1,281 Health Facilities Authority RB, Hospital Sisters Services Project, Ser A, MBIA, Callable 06/01/08 @ 101 5.250%, 06/01/12 1,000 1,064 Metropolitan Pier & Exposition Authority RB, Illinois Dedicated State Tax Revenue, AMBAC, Callable 06/01/07 @ 101 5.125%, 06/01/13 1,200 1,261 Metropolitan Pier & Exposition Authority RB, Illinois Dedicated State Tax Revenue, Ser A, FGIC 5.500%, 12/15/23 500 570 Metropolitan Pier & Exposition Authority RB, Illinois Dedicated State Tax Revenue, Ser A, FGIC, ETM 5.500%, 12/15/23 500 576 Regional Transportation Authority GO, FSA 5.750%, 06/01/23 1,500 1,751 Southern Illinois University RB, Medical Facilities System Project, MBIA, Callable 04/01/07 @ 102 5.875%, 04/01/23 1,000 1,072 Will County, Community School District GO, FSA(B) 5.230%, 11/01/12 2,000 1,452 ------------ 11,701 ------------ INDIANA (2.0%) - ------------------------------------------------------------------------------ Indianapolis, Public Improvement Authority RB, Ser A, Callable 01/01/10 @ 101 6.000%, 01/01/25 1,000 1,107 Transportation Finance Authority RB, Ser A, MBIA 6.800%, 12/01/16 1,000 1,200 ------------ 2,307 ------------ KENTUCKY (1.0%) - ------------------------------------------------------------------------------ State Property & Buildings Commission RB, Project Number 67, Pre-Refunded 09/01/10 @ 100 5.625%, 09/01/13 1,050 1,168 ------------ LOUISIANA (2.0%) - ------------------------------------------------------------------------------ Public Facilities Authority RB, Franciscan Missionaries Project, Ser A, FSA 5.500%, 07/01/11 2,115 2,328 ------------ FACE AMOUNT VALUE (000) (000) - ------------------------------------------------------------------------------ MASSACHUSETTS (2.9%) - ------------------------------------------------------------------------------ State Housing Finance Agency RB, Ser B, MBIA, Callable 06/01/08 @ 101 5.300%, 12/01/17 $ 1,000 $ 1,029 State Special Obligation RB, Consolidated Loan, Ser A, Callable 06/01/08 @ 101 5.000%, 06/01/15 70 73 State Special Obligation RB, Consolidated Loan, Ser A, Pre-Refunded 06/01/08 @ 101 5.000%, 06/01/15 930 994 State Water Resources Authority RB, Ser D, MBIA, GOA 6.000%, 08/01/14 1,060 1,234 ------------ 3,330 ------------ MICHIGAN (0.9%) - ------------------------------------------------------------------------------ State Building Authority RB, Facilities Program, Ser II, MBIA, Callable 10/15/13 @ 100 5.000%, 10/15/23 1,000 1,048 ------------ MISSISSIPPI (0.9%) - ------------------------------------------------------------------------------ Developing Bank RB, Capital Project & Equipment Acquisition, Ser A2, AMBAC 5.000%, 07/01/24 1,000 1,080 ------------ NEVADA (4.1%) - ------------------------------------------------------------------------------ Clark County, Industrial Development, Nevada Power Authority RB, AMBAC, Callable 05/06/05 @ 100 7.200%, 10/01/22 2,000 2,017 Las Vegas, New Convention & Visitors Center RB, AMBAC, Callable 07/01/09 @ 101 6.000%, 07/01/13 2,500 2,798 ------------ 4,815 ------------ NEW JERSEY (2.2%) - ------------------------------------------------------------------------------ State GO, Ser D 6.000%, 02/15/11 150 169 State, Educational Facilities Authority RB, Princeton University, Callable 07/01/13 @ 100 5.000%, 07/01/15 2,000 2,157 State, Transportation System RB, Ser A 5.625%, 06/15/14 250 280 ------------ 2,606 ------------ NEW MEXICO (1.6%) - ------------------------------------------------------------------------------ Santa Fe County RB, Correctional Facilities Project, FSA 6.000%, 02/01/27 1,500 1,803 ------------ 42 Constellation Funds 2005 Semiannual Report FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation Pitcairn Tax-Exempt Bond Fund March 31, 2005 FACE AMOUNT VALUE (000) (000) - ------------------------------------------------------------------------------ NEW YORK (4.8%) - ------------------------------------------------------------------------------ New York City, Municipal Water & Sewer Authority RB, Ser A, Pre-Refunded 06/15/05 @ 101 6.000%, 06/15/25 $ 190 $ 193 New York City, Transitional Finance Authority RB, Ser A, Callable 11/01/11 @ 100 (A) 5.500%, 11/01/26 2,000 2,186 New York State Thruway Authority RB, Highway and Bridge Project, Callable 04/01/12 @ 100 5.500%, 04/01/15 2,000 2,180 New York State, Mortgage Agency RB, Homeowner Mortgage, Ser 80, Callable 03/01/09 @ 101 5.100%, 10/01/17 1,000 1,015 ------------ 5,574 ------------ NORTH CAROLINA (4.0%) - ------------------------------------------------------------------------------ North Carolina State, Eastern Municipal Power Authority RB, Ser B, AMBAC, Callable 01/01/06 @ 102 5.125%, 01/01/12 2,000 2,074 North Carolina State, Eastern Municipal Power Authority RB, Ser B, MBIA, Callable 01/01/07 @ 102 5.800%, 01/01/16 1,000 1,066 University of North Carolina Wilmington, RB, AMBAC, Callable 01/01/13 @ 100 5.250%, 01/01/21 1,380 1,489 ------------ 4,629 ------------ OKLAHOMA (3.6%) - ------------------------------------------------------------------------------ Oklahoma City, Water Utilities Authority RB, Ser A, Callable 07/01/09 @ 100 5.000%, 07/01/24 2,000 2,070 Oklahoma State, Health Systems Industries Authority RB, Integris Baptist Project, Ser D, AMBAC, Callable 08/15/06 @ 102 5.000%, 08/15/14 2,000 2,079 ------------ 4,149 ------------ PENNSYLVANIA (16.3%) - ------------------------------------------------------------------------------ Allegheny County, Pittsburgh International Airport RB, Ser B, MBIA, Callable 01/01/08 @ 101 5.000%, 01/01/17 2,000 2,067 Derry Township, Industrial & Commercial Development RB, Arena Project, Ser A (LOC: PNC Bank) (A) 5.375%, 11/01/30 1,700 1,719 FACE AMOUNT VALUE (000) (000) - ------------------------------------------------------------------------------ Downingtown Area School District GO, FSA, Callable 04/01/11 @ 100 5.250%, 04/01/14 $ 1,500 $ 1,630 Montgomery County Higher Education & Health Authority RB, Pottstown Healthcare, Callable 01/1/09 @ 101 5.000%, 01/01/27 2,000 2,150 Norwin Penn School District GO, FGIC, Pre-Refunded 04/01/10 @ 100 6.000%, 04/01/24 2,000 2,235 Pennsbury Penn School District GO, FSA, Callable 08/01/14 @ 100 5.000%, 08/01/25 2,000 2,088 Pennsylvania State, Higher Educational Facilities Authority RB, Saint Joseph's University, Callable 05/01/06 @ 100 (LOC: Allied Irish Bank PLC) (A) 5.000%, 05/01/11 1,500 1,534 Philadelphia, Authority for Industrial Development Lease Revenue RB, Ser B, FSA, Callable 10/01/11 @ 101 5.500%, 10/01/12 1,500 1,669 Philadelphia, Hospital & Higher Education Authority RB, Presbyterian Medical Center Project, ETM 6.500%, 12/01/11 1,300 1,448 Philadelphia, Water & Waste Water RB, FGIC 10.000%, 06/15/05 700 710 Philadelphia, Water & Waste Water RB, MBIA 6.250%, 08/01/09 525 587 State Public School Building Authority RB, Harrisburg Area Community College Project, AMBAC, Callable 04/01/14 @ 100 5.250%, 04/01/24 1,000 1,071 ------------ 18,908 ------------ PUERTO RICO (0.4%) - ------------------------------------------------------------------------------ Puerto Rico Electric Power Authority RB, Ser RR, CIFG, Callable 07/01/15 @ 100 5.000%, 07/01/29 500 520 ------------ RHODE ISLAND (1.1%) - ------------------------------------------------------------------------------ Rhode Island State, Depositors Economic Protection Authority RB, Special Obligation, Ser A, ETM 6.375%, 08/01/22 1,000 1,257 ------------ SOUTH CAROLINA (3.4%) - ------------------------------------------------------------------------------ Darlington County, Water & Sewer Authority RB, AMBAC, Callable 12/01/12 @ 101 5.625%, 12/01/23 2,530 2,793 Constellation Funds 2005 Semiannual Report 43 FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation Pitcairn Tax-Exempt Bond Fund March 31, 2005 FACE AMOUNT VALUE (000) (000) - ------------------------------------------------------------------------------ Piedmont, Municipal Power Agency Authority RB, South Carolina Electric Project, MBIA, ETM 6.250%, 01/01/09 $ 1,000 $ 1,110 ------------ 3,903 ------------ TEXAS (9.8%) - ------------------------------------------------------------------------------ Duncanville Independent School District, GO, PSF-GTD, Callable 02/15/13 @ 100 5.650%, 02/15/28 1,350 1,466 Fort Worth Water & Sewer RB, Callable 02/15/12 @ 100 5.625%, 02/15/15 1,000 1,123 Fort Worth Water & Sewer RB, Callable 08/15/10 @ 100 5.750%, 02/15/14 2,000 2,208 Harris County, Healthcare Facilities Development Authority RB, Christus Health Project, Ser A, MBIA, Callable 07/01/09 @ 101 5.375%, 07/01/24 1,850 1,937 Houston, Water & Sewer Systems Authority RB, Junior Lien, Ser C, FGIC, Pre-Refunded 12/01/07 @ 101 5.375%, 12/01/27 1,140 1,222 North Texas Thruway RB, Ser A, FSA, Callable 1/1/15 @ 100 5.000%, 01/01/40 2,000 2,035 San Antonio GO, ETM 5.000%, 08/01/07 15 16 Texas Water Development Board RB, Revolving Fund, Senior Lien, Ser B, Callable 01/15/10 @ 100 5.500%, 07/15/15 1,250 1,350 ------------ 11,357 ------------ WASHINGTON (2.8%) - ------------------------------------------------------------------------------ Central Puget Sound, Regional Transportation Authority RB, Sales Tax & Motor Project, FGIC 5.250%, 02/01/21 1,000 1,109 Clark County, School District No. 177 GO, AMBAC 5.250%, 12/01/14 1,000 1,104 Washington State GO, Ser A, FSA 5.000%, 07/01/20 1,000 1,053 ------------ 3,266 - ------------------------------------------------------------------------------ TOTAL MUNICIPAL BONDS (COST $109,029) 114,966 ============================================================================== VALUE SHARES (000) - ------------------------------------------------------------------------------ CASH EQUIVALENTS (0.2%) - ------------------------------------------------------------------------------ ABN Amro Tax Exempt Money Market Fund 228,503 $ 229 - ------------------------------------------------------------------------------ TOTAL CASH EQUIVALENTS (COST $229) 229 ============================================================================== TOTAL INVESTMENTS (99.1%) (COST $109,258) 115,195 ============================================================================== OTHER ASSETS AND LIABILITIES (0.9%) - ------------------------------------------------------------------------------ Receivable due from Shareholder Servicing Agent 25 Payable for investment securities purchased (2,747) Payable for income distribution (382) Payable due to Investment Adviser (18) Payable due to Administrator (15) Other assets and liabilities, net 4,150 - ------------------------------------------------------------------------------ TOTAL OTHER ASSETS AND LIABILITIES 1,013 - ------------------------------------------------------------------------------ NET ASSETS (100%) $ 116,208 ============================================================================== NET ASSETS CONSIST OF: - ------------------------------------------------------------------------------ Portfolio capital (unlimited authorization -- no par value) $ 109,535 Undistributed net investment income 105 Accumulated net realized gain on investments 631 Net unrealized appreciation on investments 5,937 - ------------------------------------------------------------------------------ NET ASSETS $ 116,208 ============================================================================== NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE--CLASS II SHARES ($116,208,358/10,998,595 SHARES) $ 10.57 ============================================================================== (A) Variable rate security - the rate reflected on the Statement of Net Assets is the rate in effect on March 31, 2005. (B) Zero coupon security - the rate reflected on the Statement of Net Assets is the effective yield at time of purchase. AMBAC - American Municipal Bond Assurance Corporation CIFG - CDC IXIS Financial Guaranty COP - Certificate of Participation ETM - Escrowed to Maturity FGIC - Financial Guaranty Insurance Corporation FSA - Financial Security Assurance GNMA - Government National Mortgage Association GO - General Obligation GOA - General Obligation of Authority LOC - Letter of Credit MBIA - Municipal Bond Insurance Association PLC - Public Liability Company PSF-GTD - Permanent School Fund - Guaranteed RB - Revenue Bond Ser - Series The accompanying notes are an integral part of the financial statements. 44 Constellation Funds 2005 Semiannual Report FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation Sands Capital Select Growth Fund March 31, 2005 SECTOR WEIGHTINGS+ - ------------------------------------------------------------------------------- [CHART APPEARS HERE] 24.9% Health Care 22.3% Cash Equivalents++ 19.6% Consumer Discretionary 17.4% Information Technology 6.6% Financials 5.5% Industrials 3.7% Consumer Staples + Percentages based on total investments ++ Cash equivalents include a short-term investment held as collateral for loaned securities (see Note 9 in the Notes to Financial Statements). VALUE SHARES (000) - ------------------------------------------------------------------------------ COMMON STOCK+ (97.1%) - ------------------------------------------------------------------------------ CONSUMER DISCRETIONARY (24.5%) - ------------------------------------------------------------------------------ Bed Bath & Beyond* 92,815 $ 3,392 eBay* 300,759 11,206 Kohl's* 75,716 3,909 Lowe's (A) 119,883 6,844 Starbucks* 187,551 9,689 ------------ 35,040 ------------ CONSUMER STAPLES (4.7%) - ------------------------------------------------------------------------------ Wal-Mart Stores 53,037 2,658 Walgreen 90,803 4,033 ------------ 6,691 ------------ FINANCIALS (8.3%) - ------------------------------------------------------------------------------ Capital One Financial (A) 106,441 7,959 Moody's 48,100 3,889 ------------ 11,848 ------------ HEALTH CARE (31.1%) - ------------------------------------------------------------------------------ Allergan (A) 61,176 4,250 Amgen (A)* 73,338 4,269 Genentech (A)* 163,684 9,266 Genzyme* 82,848 4,742 Medtronic 107,355 5,470 Patterson* 60,170 3,006 Stryker (A) 86,780 3,871 Teva Pharmaceutical Industries ADR* 205,109 6,358 Zimmer Holdings (A)* 42,339 3,294 ------------ 44,526 ------------ INDUSTRIALS (6.8%) - ------------------------------------------------------------------------------ Apollo Group, Cl A* 132,136 9,786 ------------ INFORMATION TECHNOLOGY (21.7%) - ------------------------------------------------------------------------------ Cisco Systems* 300,210 5,371 Dell* 213,704 8,210 Google, Cl A* 35,664 6,438 Microsoft 149,968 3,625 VALUE SHARES (000) - ------------------------------------------------------------------------------ Qualcomm 155,088 $ 5,684 Red Hat* 161,124 1,758 ------------ 31,086 - ------------------------------------------------------------------------------ TOTAL COMMON STOCK (COST $129,570) 138,977 ============================================================================== SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES (25.4%) ============================================================================== BlackRock Institutional Money Market Trust 36,388,223 36,388 - ------------------------------------------------------------------------------ TOTAL SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES (COST $36,388) 36,388 ============================================================================== CASH EQUIVALENTS (2.4%) - ------------------------------------------------------------------------------ PNC Bank Money Market Fund 3,382,612 3,383 - ------------------------------------------------------------------------------ TOTAL CASH EQUIVALENTS (COST $3,383) 3,383 ============================================================================== TOTAL INVESTMENTS (124.9%) (COST $169,341) 178,748 ============================================================================== OTHER ASSETS AND LIABILITIES (-24.9%) - ------------------------------------------------------------------------------ Obligation to return securities lending collateral (36,388) Payable due to Investment Adviser (101) Payable due to Administrator (19) Payable due to Shareholder Servicing Agent (19) Other assets and liabilities, net 875 - ------------------------------------------------------------------------------ Total Other assets and liabilities (35,652) - ------------------------------------------------------------------------------ NET ASSETS (100%) $ 143,096 ============================================================================== NET ASSETS CONSIST OF: - ------------------------------------------------------------------------------ Portfolio capital (unlimited authorization -- no par value) $ 160,986 Accumulated net investment loss (274) Accumulated net realized loss on investments (27,023) Net unrealized appreciation on investments 9,407 - ------------------------------------------------------------------------------ NET ASSETS $ 143,096 ============================================================================== NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE--CLASS I SHARES ($59,323,476/8,603,955 SHARES) $ 6.89 ============================================================================== NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE--CLASS II SHARES ($83,772,217/12,162,847 SHARES) $ 6.89 ============================================================================== * Non-income producing security. + Narrow industries are utilized for compliance purposes, whereas broad sectors are utilized for reporting. (A) The security or a portion of this security is on loan at March 31, 2005 (See Note 9 in the Notes to Financial Statements). The total value of securities on loan at March 31, 2005 was $34,852,601. ADR - American Depositary Receipt Cl - Class The accompanying notes are an integral part of the financial statements. Constellation Funds 2005 Semiannual Report 45 FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation TIP Small Cap Value Opportunities Fund March 31, 2005 SECTOR WEIGHTINGS+ - ------------------------------------------------------------------------------- [CHARTS APPEAR HERE] 26.1% Financials 20.5% Industrials 11.9% Consumer Discretionary 7.9% Health Care 7.0% Telecommunication Services 6.9% Information Technology 5.9% Energy 5.8% Cash Equivalents++ 4.4% Materials 2.5% Utilities 1.1% Consumer Staples + Percentages based on total investments ++ Cash equivalents include a short-term investment held as collateral for loaned securities (see Note 9 in the Notes to Financial Statements). VALUE SHARES (000) - ------------------------------------------------------------------------------ COMMON STOCK+ (99.8%) - ------------------------------------------------------------------------------ CONSUMER DISCRETIONARY (12.6%) - ------------------------------------------------------------------------------ 4Kids Entertainment* 10,870 $ 240 Carmike Cinemas 8,970 334 Children's Place* 6,610 316 CSK Auto* 14,320 253 Domino's Pizza* 8,020 150 Gaylord Entertainment* 6,610 267 Genesco* 12,640 359 Keystone Automotive Industries* 14,570 338 Men's Wearhouse (A)* 7,750 327 Playboy Enterprises, Cl B* 13,890 179 Rush Enterprises, Cl B* 25,740 434 Steinway Musical Instruments* 16,910 507 ------------ 3,704 ------------ CONSUMER STAPLES (1.1%) - ------------------------------------------------------------------------------ Ralcorp Holdings 7,020 332 ------------ ENERGY (6.2%) - ------------------------------------------------------------------------------ Atwood Oceanics* 4,520 301 Cal Dive International* 7,000 317 Cimarex Energy (A)* 7,580 296 Comstock Resources* 6,380 183 Lone Star Technologies* 10,550 416 Willbros Group* 15,460 312 ------------ 1,825 ------------ FINANCIALS (27.7%) - ------------------------------------------------------------------------------ Alexandria Real Estate Equities 4,720 304 Allmerica Financial* 9,400 338 American Equity Investment Life Holding* 12,190 156 VALUE SHARES (000) - ------------------------------------------------------------------------------ Apollo Investment 19,980 $ 335 Archipelago Holdings* 16,570 293 BankAtlantic Bancorp, Cl A 21,990 383 BioMed Realty Trust* 14,980 309 Capital Automotive REIT 12,730 422 Commercial Capital Bancorp 14,870 303 First Republic Bank 12,405 401 Gold Banc 25,940 364 Hanmi Financial 16,980 281 Heritage Commerce* 20,040 369 Instinet Group* 52,170 307 Kilroy Realty 8,790 360 Knight Trading Group, Cl A* 24,530 236 Maguire Properties 7,840 187 Ohio Casualty* 16,390 377 Platinum Underwriters Holdings 11,030 328 Provident Bancorp 23,840 292 Provident Bankshares 9,710 320 Reckson Associates Realty 10,550 324 SL Green Realty 5,310 298 Sterling Financial* 6,596 235 United America Indemnity, Cl A* 17,700 333 Virginia Commerce Bancorp* 10,480 283 ------------ 8,138 ------------ HEALTH CARE (8.4%) - ------------------------------------------------------------------------------ Analogic 7,510 325 Apria Healthcare Group* 9,740 313 Genesis HealthCare (A)* 4,960 213 Gentiva Health Services* 20,350 329 Kindred Healthcare* 9,940 349 Option Care 8,585 177 Par Pharmaceutical* 6,730 225 Prestige Brands Holdings* 13,500 238 West Pharmaceutical Services 11,980 286 ------------ 2,455 ------------ INDUSTRIALS (21.7%) - ------------------------------------------------------------------------------ Adesa* 18,020 421 Amerco* 3,350 155 Brink's 8,825 305 Curtiss-Wright 4,090 233 ElkCorp 8,160 314 General Maritime* 4,900 237 GenTek* 6,550 108 Jarden* 6,480 297 Kennametal 6,120 291 Laidlaw International* 26,890 559 McDermott International* 23,610 447 Measurement Specialties* 12,150 280 OMI 12,450 238 Standard Parking* 9,650 152 Team* 8,850 177 TeleTech Holdings* 29,170 377 Timken 12,150 332 46 Constellation Funds 2005 Semiannual Report FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation TIP Small Cap Value Opportunities Fund March 31, 2005 VALUE SHARES (000) - ------------------------------------------------------------------------------ Titan* 24,940 $ 453 Washington Group International* 11,060 498 Watts Water Technologies, Cl A 6,950 227 WCI Communities* 9,330 281 ------------ 6,382 ------------ INFORMATION TECHNOLOGY (7.3%) - ------------------------------------------------------------------------------ eFunds* 15,400 344 Inforte* 25,880 140 Intergraph (A)* 8,875 256 Lipman Electronic Engineering 15,150 435 NAM TAI Electronics 21,840 581 Sonic Solutions* 10,870 163 SonicWALL* 43,460 221 ------------ 2,140 ------------ MATERIALS (4.7%) - ------------------------------------------------------------------------------ Cleveland-Cliffs 5,510 402 FMC* 5,910 316 Foundation Coal Holdings* 13,520 318 Metals USA* 16,760 328 ------------ 1,364 ------------ TELECOMMUNICATION SERVICES (7.5%) - ------------------------------------------------------------------------------ Alamosa Holdings* 30,220 353 Leap Wireless International* 15,420 402 SBA Communications, Cl A* 54,110 496 Spectrasite* 5,910 342 US Unwired* 144,600 607 ------------ 2,200 ------------ UTILITIES (2.6%) - ------------------------------------------------------------------------------ AGL Resources 9,450 330 Southern Union* 17,573 441 ------------ 771 - ------------------------------------------------------------------------------ TOTAL COMMON STOCK (COST $26,915) 29,311 ============================================================================== SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES (3.8%) - ------------------------------------------------------------------------------ BlackRock Institutional Money Market Trust 1,120,940 1,121 - ------------------------------------------------------------------------------ TOTAL SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES (COST $1,121) 1,121 ============================================================================== CASH EQUIVALENTS (2.3%) - ------------------------------------------------------------------------------ BlackRock TempCash Fund, Institutional Shares 682,888 683 - ------------------------------------------------------------------------------ TOTAL CASH EQUIVALENTS (COST $683) 683 ============================================================================== TOTAL INVESTMENTS (105.9%) (COST $28,719) 31,115 ============================================================================== VALUE (000) - ------------------------------------------------------------------------------ OTHER ASSETS AND LIABILITIES (-5.9%) - ------------------------------------------------------------------------------ Obligation to return securities lending collateral $ (1,121) Payable for investment securities purchased (829) Payable for Capital Shares redeemed (87) Payable due to Investment Adviser (11) Payable due to Shareholder Servicing Agent (6) Payable due to Administrator (4) Other assets and liabilities, net 337 - ------------------------------------------------------------------------------ TOTAL OTHER ASSETS AND LIABILITIES (1,721) - ------------------------------------------------------------------------------ NET ASSETS (100%) $ 29,394 ============================================================================== NET ASSETS CONSIST OF: - ------------------------------------------------------------------------------ Portfolio capital (unlimited authorization -- no par value) $ 26,239 Undistributed net investment income 150 Accumulated net realized gain on investments 609 Net unrealized appreciation on investments 2,396 - ------------------------------------------------------------------------------ NET ASSETS $ 29,394 ============================================================================== NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE--CLASS II SHARES ($29,394,084/1,810,674 SHARES) $ 16.23 ============================================================================== * Non-income producing security. + Narrow industries are utilized for compliance purposes, whereas broad sectors are utilized for reporting. (A) The security or a portion of this security is on loan at March 31, 2005 (See Note 9 in the Notes to Financial Statements). The total value of securities on loan at March 31, 2005 was $1,091,171. Cl - Class REIT - Real Estate Investment Trust The accompanying notes are an integral part of the financial statements. Constellation Funds 2005 Semiannual Report 47 FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation TIP Financial Services Fund March 31, 2005 SECTOR WEIGHTINGS+ - ------------------------------------------------------------------------------- [CHART APPEARS HERE] 80.0% Financials 14.9% Information Technology 5.1% Cash Equivalents++ + Percentages based on total investments ++ Cash equivalents include a short-term investment held as collateral for loaned securities (see Note 9 in the Notes to Financial Statements). VALUE SHARES (000) - ------------------------------------------------------------------------------ COMMON STOCK+ (98.5%) - ------------------------------------------------------------------------------ FINANCIALS (83.1%) - ------------------------------------------------------------------------------ Affiliated Managers Group* 2,550 $ 158 Allstate 4,770 258 American Express 13,200 678 Aspen Insurance Holdings 6,640 167 Bank of America 16,100 710 CapitalSource* 14,370 331 Charles Schwab 34,020 358 Citigroup 16,940 761 City National 4,770 333 CoBiz 11,860 230 Community Bancorp* 12,170 307 East-West Bancorp 9,160 338 Fidelity Bankshares 9,030 208 Fidelity National Financial 8,600 283 Fifth Third Bancorp 6,860 295 GB&T Bancshares 9,650 209 Golden West Financial 6,730 407 Goldman Sachs Group (A) 3,900 429 International Securities Exchange* 13,000 338 Investment Technology Group* 18,180 318 Jackson Hewitt Tax Service* 13,790 288 MBNA 8,680 213 Merrill Lynch 9,290 526 Morgan Stanley 13,530 775 Northern Trust 14,570 633 Preferred Bank* 8,000 319 Principal Financial Group 6,190 238 Prudential Financial 6,650 382 Silicon Valley Bancshares* 14,720 649 Sovereign Bancorp 23,410 519 Sunstone Hotel Investors 17,480 375 Texas Regional Bancshares, Cl A 5,430 163 UCBH Holdings 8,850 353 Wells Fargo 5,105 305 Zions Bancorporation 5,130 354 ------------ 13,208 ------------ INFORMATION TECHNOLOGY (15.4%) - ------------------------------------------------------------------------------ Alliance Data Systems* 8,210 332 Automatic Data Processing 5,640 254 Certegy 7,260 251 Checkfree* 6,580 268 VALUE SHARES (000) - ------------------------------------------------------------------------------ First Data 8,890 $ 349 Global Payments 5,840 377 Open Solutions* 12,370 245 Paychex 11,480 377 ------------ 2,453 - ------------------------------------------------------------------------------ TOTAL COMMON STOCK (COST $13,523) 15,661 ============================================================================== SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES (2.7%) - ------------------------------------------------------------------------------ Black Rock Institutional Money Market Trust 436,800 437 - ------------------------------------------------------------------------------ TOTAL SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES (COST $437) 437 ============================================================================== CASH EQUIVALENTS (2.6%) - ------------------------------------------------------------------------------ BlackRock TempCash Fund, Institutional Shares 414,204 414 - ------------------------------------------------------------------------------ TOTAL CASH EQUIVALENTS (COST $414) 414 ============================================================================== TOTAL INVESTMENTS (103.8%) (COST $14,374) 16,512 ============================================================================== OTHER ASSETS AND LIABILITIES (-3.8%) - ------------------------------------------------------------------------------ Obligation to return securities lending collateral (437) Payable for investment securities purchased (163) Payable due to Investment Adviser (12) Payable due to Administrator (2) Other assets and liabilities, net 11 - ------------------------------------------------------------------------------ TOTAL OTHER ASSETS AND LIABILITIES (603) - ------------------------------------------------------------------------------ NET ASSETS (100%) $ 15,909 ============================================================================== NET ASSETS CONSIST OF: - ------------------------------------------------------------------------------ Portfolio capital (unlimited authorization -- no par value) $ 12,624 Undistributed net investment income 85 Accumulated net realized gain on investments 1,062 Net unrealized appreciation on investments 2,138 - ------------------------------------------------------------------------------ NET ASSETS $ 15,909 ============================================================================== NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE--CLASS I SHARES ($15,909,000/1,118,465 SHARES) $ 14.22 ============================================================================== * Non-income producing security. + Narrow industries are utilized for compliance purposes, whereas broad sectors are utilized for reporting. (A) The security or a portion of this security is on loan at March 31, 2005 (See Note 9 in the Notes to Financial Statements). The total value of securities on loan at March 31, 2005 was $428,961. Cl - Class The accompanying notes are an integral part of the financial statements. 48 Constellation Funds 2005 Semiannual Report FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation TIP Healthcare & Biotechnology Fund March 31, 2005 SECTOR WEIGHTINGS+ - ------------------------------------------------------------------------------- [CHART APPEARS HERE] 78.3% Health Care 20.5% Cash Equivalents++ 1.2% Financials + Percentages based on total investments ++ Cash equivalents include a short-term investment held as collateral for loaned securities (see Note 9 in the Notes to Financial Statements). VALUE SHARES (000) - ------------------------------------------------------------------------------ COMMON STOCK+ (92.1%) - ------------------------------------------------------------------------------ FINANCIALS (1.4%) - ------------------------------------------------------------------------------ Ventas 23,220 $ 579 ------------ HEALTH CARE (90.7%) - ------------------------------------------------------------------------------ Advanced Medical Optics (A)* 22,740 823 Amedisys* 14,720 445 AMERIGROUP* 19,420 710 Amgen (A)* 22,320 1,299 Bausch & Lomb 11,230 823 Biomet 32,050 1,163 Biosite (A)* 11,020 573 C.R. Bard 18,250 1,242 Caremark Rx* 43,380 1,726 Community Health Systems* 25,170 879 Cooper 16,130 1,176 CV Therapeutics* 33,480 682 Cypress Bioscience* 16,050 147 Dade Behring Holdings* 10,120 596 DaVita (A)* 25,060 1,049 Encysive Pharmaceuticals* 41,270 422 Fisher Scientific International* 18,030 1,026 Genesis HealthCare (A)* 29,763 1,277 Gilead Sciences* 56,590 2,026 Horizon Health* 7,490 318 Inamed* 5,940 415 Intuitive Surgical* 21,700 987 Johnson & Johnson 42,690 2,867 Kindred Healthcare (A)* 17,620 619 MGI Pharma* 18,240 461 NitroMed* 46,670 808 Pacificare Health Systems* 15,670 892 Pfizer 120,990 3,178 Renal Care Group* 37,390 1,419 Roche Holdings ADR 14,570 784 Sepracor* 12,930 742 Sierra Health Services* 5,450 348 St. Jude Medical* 17,520 631 SuperGen* 57,800 281 Syneron Medical* 11,910 379 Triad Hospitals* 18,540 929 United Therapeutics* 26,620 1,216 Varian* 10,220 387 WellCare Health Plans* 14,900 454 WellPoint* 7,740 970 VALUE SHARES (000) - ------------------------------------------------------------------------------ Zimmer Holdings (A)* 8,630 $ 672 ------------ 37,841 - ------------------------------------------------------------------------------ TOTAL COMMON STOCK (COST $34,379) 38,420 ============================================================================== SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES (12.8%) - ------------------------------------------------------------------------------ BlackRock Institutional Money Market Trust 5,337,770 5,338 - ------------------------------------------------------------------------------ TOTAL SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES (COST $5,338) 5,338 ============================================================================== CASH EQUIVALENTS (10.9%) - ------------------------------------------------------------------------------ BlackRock TempCash Fund, Institutional Shares 4,557,220 4,557 - ------------------------------------------------------------------------------ TOTAL CASH EQUIVALENTS (COST $4,557) 4,557 ============================================================================== TOTAL INVESTMENTS (115.8%) (COST $44,274) 48,315 ============================================================================== OTHER ASSETS AND LIABILITIES (-15.8%) - ------------------------------------------------------------------------------ Obligation to return securities lending (5,338) collateral Payable for investment securities purchased (1,713) Payable for Capital Shares redeemed (103) Payable due to Investment Adviser (34) Payable due to Shareholder Servicing Agent (8) Payable due to Administrator (5) Other assets and liabilities, net 603 - ------------------------------------------------------------------------------ TOTAL OTHER ASSETS AND LIABILITIES (6,598) - ------------------------------------------------------------------------------ NET ASSETS (100%) $ 41,717 ============================================================================== NET ASSETS CONSIST OF: - ------------------------------------------------------------------------------ Portfolio capital (unlimited authorization -- no par value) $ 38,094 Accumulated net investment loss (270) Accumulated net realized loss on investments (148) Net unrealized appreciation on investments 4,041 - ------------------------------------------------------------------------------ NET ASSETS $ 41,717 ============================================================================== NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE--CLASS II SHARES ($41,716,919/2,893,717 SHARES) $ 14.42 ============================================================================== * Non-income producing security. + Narrow industries are utilized for compliance purposes, whereas broad sectors are utilized for reporting. (A) The security or a portion of this security is on loan at March 31, 2005 (See Note 9 in the Notes to Financial Statements). The total value of securities on loan at March 31, 2005 was $5,135,067. ADR - American Depositary Receipt The accompanying notes are an integral part of the financial statements. Constellation Funds 2005 Semiannual Report 49 FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation International Equity Fund March 31, 2005 SECTOR WEIGHTINGS+ - ------------------------------------------------------------------------------- [CHART APPEARS HERE] 24.0% Financials 16.2% Consumer Discretionary 11.5% Industrials 9.0% Consumer Staples 8.7% Health Care 8.2% Materials 8.0% Energy 7.8% Telecommunication Services 4.6% Information Technology 2.0% Utilities + Percentages based on total investments VALUE SHARES (000) - ------------------------------------------------------------------------------ FOREIGN COMMON STOCK (94.6%) - ------------------------------------------------------------------------------ AUSTRALIA (0.9%) - ------------------------------------------------------------------------------ Amcor 39,792 $ 220 National Australia Bank 16,450 360 Rio Tinto 13,200 460 ------------ 1,040 ------------ BELGIUM (0.3%) - ------------------------------------------------------------------------------ Fortis* 13,800 394 ------------ BERMUDA (0.3%) - ------------------------------------------------------------------------------ Axis Capital Holdings 13,100 354 ------------ BRAZIL (1.4%) - ------------------------------------------------------------------------------ Brasil Telecom Participacoes ADR* 12,100 395 Cia Paranaense de Energia ADR* 54,900 257 Petroleo Brasileiro ADR* 17,541 775 Telecomunicacoes Brasileiras ADR* 7,040 204 ------------ 1,631 ------------ CANADA (1.6%) - ------------------------------------------------------------------------------ Barrick Gold 15,700 376 Canadian Imperial Bank of Commerce 1,600 97 Canadian Pacific Railway 5,510 199 Quebecor World 22,200 520 Royal Bank of Canada 3,958 241 Sobeys 12,550 400 Torstar, Cl B 5,080 104 ------------ 1,937 ------------ VALUE SHARES (000) - ------------------------------------------------------------------------------ CHINA (0.4%) - ------------------------------------------------------------------------------ China Telecom, Cl G 314,900 $ 110 Huadian Power International, Cl H 549,400 150 PetroChina ADR* 3,400 215 ------------ 475 ------------ DENMARK (0.5%) - ------------------------------------------------------------------------------ Carlsberg, Cl B* 3,569 177 Danske Bank 15,738 457 ------------ 634 ------------ FINLAND (1.2%) - ------------------------------------------------------------------------------ M-real, Cl B 39,100 231 Metso* 23,300 418 Nokia 600 9 Nokia ADR* 10,900 168 UPM-Kymmene 27,211 603 ------------ 1,429 ------------ FRANCE (8.9%) - ------------------------------------------------------------------------------ Accor* 7,733 379 AXA 23,200 618 BNP Paribas 5,230 371 Carrefour* 15,723 834 Credit Agricole 9,220 251 Eiffage* 2,361 272 France Telecom* 22,839 684 Lafarge* 2,100 203 Pernod-Ricard 1,792 250 Pinault-Printemps-Redoute* 2,865 306 Sanofi-Aventis* 22,530 1,899 Schneider Electric 1,824 143 Societe Generale* 5,900 613 Technip* 3,600 602 Total 10,051 2,351 Valeo 7,960 354 Veolia Environnement 15,563 552 ------------ 10,682 ------------ GERMANY (8.4%) - ------------------------------------------------------------------------------ Adidas-Salomon 3,019 479 Allianz* 1,040 132 Altana* 11,000 699 Bayer 27,252 900 Bayerische Hypo-und Vereinsbank* 51,626 1,262 Bayerische Motoren Werke* 9,400 427 Deutsche Bank* 3,108 268 Deutsche Boerse* 6,600 496 Deutsche Lufthansa* 14,270 206 Deutsche Post* 16,840 411 Deutsche Postbank* 4,150 191 Deutsche Telekom* 9,300 186 E.ON* 3,310 284 Fresenius Medical Care* 5,500 445 Heidelberger Druckmaschinen* 4,300 137 50 Constellation Funds 2005 Semiannual Report FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation International Equity Fund March 31, 2005 VALUE SHARES (000) - ------------------------------------------------------------------------------ Infineon Technologies* 19,420 $ 186 KarstadtQuelle* 21,934 220 Medion* 3,710 60 Rhoen Klinikum* 4,000 253 Schering* 12,301 816 Siemens* 9,362 741 Volkswagen* 25,524 1,215 ------------ 10,014 ------------ GUERNSEY (0.8%) - ------------------------------------------------------------------------------ Amdocs* 34,300 974 ------------ HONG KONG (1.8%) - ------------------------------------------------------------------------------ Bank of East Asia 79,079 228 Cafe de Coral Holdings 182,000 208 China Mobile Hong Kong 75,092 245 Citic Pacific 25,100 74 Denway Motors 944,000 333 Glorious Sun Enterprises 240,000 102 Hung Hing Printing Group 206,000 149 Sun Hung Kai Properties 38,000 345 Swire Pacific, Cl A 68,000 538 ------------ 2,222 ------------ HUNGARY (0.2%) - ------------------------------------------------------------------------------ Matav* 26,400 124 Matav ADR* 3,200 75 ------------ 199 ------------ INDIA (0.4%) - ------------------------------------------------------------------------------ Hindalco Industries GDR* 5,400 162 Mahanagar Telephone Nigam ADR* 19,700 125 Reliance Industries GDR* 9,200 236 ------------ 523 ------------ INDONESIA (0.2%) - ------------------------------------------------------------------------------ Gudang Garam* 137,900 235 ------------ IRELAND (1.1%) - ------------------------------------------------------------------------------ Bank of Ireland 33,750 533 Ryanair Holdings ADR* 16,700 731 ------------ 1,264 ------------ ITALY (3.2%) - ------------------------------------------------------------------------------ Banca Intesa* 163,025 828 Banche Popolari Unite 6,560 138 Benetton Group* 14,486 140 Enel 38,833 371 ENI 30,031 780 Finmeccanica* 274,480 278 Mediaset 55,991 805 UniCredito Italiano* 80,450 472 ------------ 3,812 ------------ VALUE SHARES (000) - ------------------------------------------------------------------------------ JAPAN (20.1%) - ------------------------------------------------------------------------------ 77 Bank 40,100 $ 291 Aeon 7,000 118 Alps Electric (A) 12,000 191 Aruze 4,600 125 Astellas Pharma 10,600 359 Bridgestone (A) 30,000 552 Canon (A) 11,500 617 Credit Saison 7,000 252 Denso 22,900 570 Dentsu (A) 69 189 Fanuc 7,600 476 Fuji Heavy Industries (A) 51,700 253 Fuji Photo Film (A) 22,200 812 Fujirebio (A) 50,000 786 Funai Electric (A) 1,850 228 JS Group 7,200 132 JSR (A) 17,000 335 Kao (A) 13,500 310 KDDI (A) 52 258 Keyence 800 185 Kuraray (A) 19,000 170 Lawson (A) 5,800 213 Mabuchi Motor 3,900 234 Matsumotokiyoshi 5,200 154 Matsushita Electric Industrial 24,000 354 Millea Holdings 90 1,310 Minebea 49,000 210 Mitsubishi Estate 69,000 802 Mitsubishi Tokyo Financial Group (A) 65 564 Murata Manufacturing 4,000 214 Nippon Express 90,000 473 Nippon Shinpan* 155,000 708 Nippon Telegraph & Telephone 51 223 Nipponkoa Insurance 165,000 1,131 Nissan Motor 34,500 354 Nomura Holdings 23,900 334 ORIX 4,448 567 Rinnai 10,900 277 Rohm 3,300 319 Secom 12,000 499 Sekisui House 22,000 235 Sharp 29,000 439 Shin-Etsu Chemical 8,878 336 Shiseido 1,400 18 Skylark 14,700 248 Sohgo Security Services 8,200 118 Sony 21,400 852 Sumitomo Bakelite 36,600 228 Sumitomo Chemical 39,300 194 Sumitomo Mitsui Financial Group 64 433 T&D Holdings* 9,850 501 Takeda Pharmaceutical 7,000 334 Takefuji 4,430 298 TDK 13,100 897 Constellation Funds 2005 Semiannual Report 51 FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation International Equity Fund March 31, 2005 VALUE SHARES (000) - ------------------------------------------------------------------------------ Tokyo Electron 6,000 $ 342 Tokyu 81,000 422 Toyoda Gosei 10,400 188 Toyota Motor 6,900 257 Yamada Denki 16,400 860 Yamaguchi Bank 34,000 419 Yamaha Motor 15,400 264 ------------ 24,032 ------------ MALAYSIA (0.3%) - ------------------------------------------------------------------------------ Malayan Banking 27,000 80 Sime Darby 118,700 186 Tenaga Nasional 30,800 83 ------------ 349 ------------ MEXICO (1.6%) - ------------------------------------------------------------------------------ Cemex ADR* 17,534 636 Coca-Cola Femsa ADR* 11,390 275 Grupo Televisa ADR* 3,493 205 Telefonos de Mexico ADR* 17,900 618 Wal-Mart de Mexico, Cl V* 42,686 150 ------------ 1,884 ------------ NETHERLANDS (6.0%) - ------------------------------------------------------------------------------ ABN AMRO Holding* 10,144 252 Aegon* 21,779 294 Akzo Nobel* 21,700 990 DSM* 9,400 662 Fortis Bank Nederland Holdings* 3,125 -- Heineken* 10,365 359 Heineken Holding, Cl A* 2,015 62 ING Groep 20,582 621 Koninklijke Ahold* 68,900 577 Koninklijke Philips Electronics* 34,740 957 Koninklijke Philips Electronics, NY Shares* 6,560 181 Royal Dutch Petroleum* 22,580 1,350 VNU* 19,564 570 Wolters Kluwer* 17,633 322 ------------ 7,197 ------------ NEW ZEALAND (0.1%) - ------------------------------------------------------------------------------ Carter Holt Harvey 48,200 68 ------------ NORWAY (0.1%) - ------------------------------------------------------------------------------ Telenor ASA* 19,387 174 ------------ PORTUGAL (0.7%) - ------------------------------------------------------------------------------ Banco Comercial Portugues* 105,579 287 Energias de Portugal* 62,100 173 Portugal Telecom SGPS* 29,155 342 ------------ 802 ------------ VALUE SHARES (000) - ------------------------------------------------------------------------------ SINGAPORE (1.0%) - ------------------------------------------------------------------------------ DBS Group Holdings* 69,200 $ 625 Flextronics International* 21,200 255 United Overseas Bank 31,400 274 ------------ 1,154 ------------ SOUTH AFRICA (0.5%) - ------------------------------------------------------------------------------ Nampak 89,300 226 Nedcor 17,272 208 Sappi 15,100 185 ------------ 619 ------------ SOUTH KOREA (4.0%) - ------------------------------------------------------------------------------ Hyundai Motor 3,710 201 Kookmin Bank* 47,014 2,099 Korea Electric Power 6,600 169 Korea Electric Power ADR* 3,100 42 KT ADR* 18,400 392 NCSoft* 1,220 94 Samsung Electronics 1,636 808 Shinsegae 780 240 SK Telecom ADR* 36,770 725 ------------ 4,770 ------------ SPAIN (3.9%) - ------------------------------------------------------------------------------ Acerinox 11,142 183 Banco Popular Espanol 5,346 346 Banco Sabadell* 11,400 285 Endesa* 18,900 425 Iberdrola* 22,926 599 Repsol YPF* 60,773 1,608 Telefonica* 70,440 1,227 ------------ 4,673 ------------ SWEDEN (0.9%) - ------------------------------------------------------------------------------ Electrolux, Cl B 28,580 665 Svenska Cellulosa, Cl B 4,580 173 Trelleborg, Cl B 12,400 215 ------------ 1,053 ------------ SWITZERLAND (6.2%) - ------------------------------------------------------------------------------ Ciba Specialty Chemicals* 5,533 358 Compagnie Financiere Richemont, Cl A* 12,003 377 Converium Holding* 43,600 410 Credit Suisse Group* 9,900 425 Forbo Holding* 700 147 Julius Baer Holding, Cl B* 80 28 Lonza Group* 13,313 815 Nestle 8,654 2,367 Novartis* 25,196 1,175 Roche Holding* 4,700 504 Swiss Reinsurance* 5,400 387 UBS* 4,340 366 ------------ 7,359 ------------ 52 Constellation Funds 2005 Semiannual Report FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation International Equity Fund March 31, 2005 VALUE SHARES (000) - ------------------------------------------------------------------------------ TAIWAN (1.6%) - ------------------------------------------------------------------------------ AU Optronics ADR* 27,650 $ 405 Chunghwa Telecom ADR* 20,800 441 Compal Electronics GDR* 51,900 244 Taiwan Semiconductor Manufacturing ADR* 66,905 567 United Microelectronics ADR* 81,447 275 ------------ 1,932 ------------ THAILAND (0.5%) - ------------------------------------------------------------------------------ Bangkok Bank* 80,800 209 Kasikornbank 142,800 213 PTT 42,800 211 ------------ 633 ------------ UNITED KINGDOM (15.1%) - ------------------------------------------------------------------------------ Aegis Group 196,800 379 Anglo American 36,126 857 AstraZeneca 16,797 662 BAA 15,540 171 BAE Systems 43,200 212 Barclays 23,304 238 BOC Group 10,600 204 Boots Group 28,579 337 BP 60,954 632 BT Group 103,264 401 Bunzl 26,902 263 Capita Group 38,148 271 Centrica 48,830 213 Compass Group 80,912 369 Diageo 127,454 1,796 GKN 79,780 383 GlaxoSmithKline 51,717 1,185 HBOS 32,300 503 Imperial Tobacco Group 27,056 710 International Power* 196,739 666 Invensys* 1,083,700 317 J Sainsbury* 42,823 234 Kingfisher 102,570 560 Lloyds TSB Group 92,903 839 Marks & Spencer Group 24,200 158 Michael Page International 96,200 353 Old Mutual 48,300 123 Pearson 71,066 866 Reed Elsevier 21,600 224 Rexam 16,682 150 Rio Tinto 10,204 330 Rolls-Royce Group, Cl B* 3,663,950 7 Royal & Sun Alliance Insurance Group 201,400 299 Royal Bank of Scotland Group 13,961 444 SABMiller 21,822 342 Shell Transport & Trading 61,685 554 Smith & Nephew 52,683 495 Unilever 43,400 429 Vodafone Group 145,531 386 VALUE SHARES (000) - ------------------------------------------------------------------------------ WPP Group 39,100 $ 445 ------------ 18,007 ------------ UNITED STATES (0.4%) - ------------------------------------------------------------------------------ NTL* 5,200 331 Royal Caribbean Cruises* 3,000 132 ------------ 463 - ------------------------------------------------------------------------------ TOTAL FOREIGN COMMON STOCK (COST $92,727) 112,988 ============================================================================== FOREIGN PREFERRED STOCK (0.2%) - ------------------------------------------------------------------------------ GERMANY (0.2%) - ------------------------------------------------------------------------------ Rhoen Klinikum* 4,400 274 - ------------------------------------------------------------------------------ TOTAL FOREIGN PREFERRED STOCK (COST $210) 274 ============================================================================== FOREIGN RIGHTS (0.0%) - ------------------------------------------------------------------------------ BRAZIL (0.0%) - ------------------------------------------------------------------------------ Embratel Participacoes*, Expires 04/07/05 7,040 -- - ------------------------------------------------------------------------------ TOTAL FOREIGN RIGHTS (COST $0) -- ============================================================================== CASH EQUIVALENTS (3.9%) - ------------------------------------------------------------------------------ BlackRock TempCash Fund, Institutional Shares 1,734,418 1,734 PNC Bank Money Market Fund 2,885,778 2,886 - ------------------------------------------------------------------------------ TOTAL CASH EQUIVALENTS (COST $4,620) 4,620 ============================================================================== TOTAL INVESTMENTS (98.7%) (COST $97,557) 117,882 ============================================================================== OTHER ASSETS AND LIABILTIES (1.3%) - ------------------------------------------------------------------------------ Payable for investment securities purchased (526) Payable for Capital Shares redeemed (29) Payable due to Investment Advisor (76) Payable due to Shareholder Servicing Agent (26) Payable due to Administrator (15) Other assets and liabilities, net 2,207 - ------------------------------------------------------------------------------ TOTAL OTHER ASSETS AND LIABILITIES 1,535 - ------------------------------------------------------------------------------ NET ASSETS (100%) $ 119,417 ============================================================================== Constellation Funds 2005 Semiannual Report 53 FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation International Equity Fund March 31, 2005 VALUE (000) - ------------------------------------------------------------------------------ NET ASSETS CONSIST OF: - ------------------------------------------------------------------------------ Portfolio capital (unlimited authorization -- no par value) $ 129,852 Distributions in excess of net investment income (719) Accumulated net realized loss on investments (30,045) Net unrealized appreciation on investments 20,325 Net unrealized appreciation on foreign currency and translation of other assets and liabilities in foreign currency investments 4 - ------------------------------------------------------------------------------ NET ASSETS $ 119,417 ============================================================================== NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE -- CLASS II SHARES ($119,416,591 /14,807,798 SHARES) $ 8.06 ============================================================================== * Non-income producing security. (A) Security valued at fair value using methods determined in good faith by the Valuation Committee of the Board of Trustees. ADR - American Depositary Receipt Cl - Class GDR - Global Depositary Receipt Amounts designated as "-" are either $0 or have been rounded to $0. As of March 31, 2005, the Constellation International Equity Fund had the following foreign currency contracts outstanding: IN UNREALIZED SETTLEMENT CONTRACTS TO EXCHANGE APPRECIATION DATE RECEIVE (DELIVER) FOR (DEPRECIATION) - ---------------------------------------------------------------------- FOREIGN CURRENCY PURCHASES: 4/1/05 JP 10,208,640 $ (95,168) $ 53 4/4/05 CH 14,042 (11,806) (67) 4/4/05 EU 50,459 (38,585) 312 4/4/05 HK 89,942 (11,532) - 4/4/05 JP 2,771,144 (25,986) (138) ------------- 160 ------------- FOREIGN CURRENCY SALES: 4/1/05 EU (100,00) 130,030 429 4/1/05 GB (47,325) 88,681 (738) 4/4/05 CA (14,263) 11,786 (10) 4/4/05 GB (95,614) 179,773 (851) 4/4/05 HK (26,350) 3,350 (29) 4/5/05 GB (34,487) 65,111 (34) 4/5/05 MX (26,892) 2,326 (79) 4/5/05 MY (8,829) 2,320 (4) 4/6/05 EU (3,006) 4,019 112 4/6/05 GB (7,773) 14,847 158 4/6/05 HK (4,600) 589 - 4/6/05 ID (62,992,105) 6,744 93 4/6/05 MY (48,452) 12,734 (17) 4/7/05 GB (11,217) 20,750 (444) ------------- (1,414) ------------- Net unrealized depreciation $ (1,254) ------------- CURRENCY LEGEND CA - Canadian Dollar ID - Indonesian CH - Swiss Franc JP - Japanese Yen EU - Euro MX - Mexican Peso GB - British Pounds MY - Malaysian Ringgit HK - Hong Kong Dollar The accompanying notes are an integral part of the financial statements. 54 Constellation Funds 2005 Semiannual Report FINANCIAL STATEMENTS (unaudited) STATEMENT OF NET ASSETS Constellation Strategic Value and High Income Fund March 31, 2005 SECTOR WEIGHTINGS+ - ------------------------------------------------------------------------------ [CHART APPEARS HERE] 61.1% Equity Funds 38.9% Fixed Income Fund + Percentages based on total investments VALUE SHARES (000) - ------------------------------------------------------------------------------ AFFILIATED EQUITY FUNDS (61.4%) - ------------------------------------------------------------------------------ Constellation HLAM Large Cap Value Fund, Class II Shares* 20,038 $ 207 Constellation TIP Small Cap Value Opportunities Fund, Class II Shares* 26,668 433 - ------------------------------------------------------------------------------ TOTAL AFFILIATED EQUITY FUNDS (COST $559) 640 ============================================================================== AFFILIATED FIXED INCOME FUND (39.0%) - ------------------------------------------------------------------------------ Constellation Chartwell High Yield Fund, Class I Shares* 81,087 407 - ------------------------------------------------------------------------------ TOTAL AFFILIATED FIXED INCOME FUND (COST $403) 407 - ------------------------------------------------------------------------------ TOTAL INVESTMENTS (100.4%) (COST $962) 1,047 - ------------------------------------------------------------------------------ OTHER ASSETS AND LIABILITIES (-0.4%) - ------------------------------------------------------------------------------ Receivable due from Investment Adviser 5 Payable for income distribution (6) Payable for investment securities purchased (2) Other assets and liabilities, net 1 - ------------------------------------------------------------------------------ TOTAL OTHER ASSETS AND LIABILITIES (2) - ------------------------------------------------------------------------------ NET ASSETS (100%) $ 1,045 ============================================================================== NET ASSETS CONSIST OF: - ------------------------------------------------------------------------------ Portfolio capital (unlimited authorization -- no par value) $ 798 Undistributed net investment income 1 Accumulated net realized gain on investments 161 Net unrealized appreciation on investments 85 - ------------------------------------------------------------------------------ NET ASSETS $ 1,045 ============================================================================== NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE--CLASS I SHARES ($1,044,719/78,914 SHARES) $ 13.24 ============================================================================== * Non-income producing security. The accompanying notes are an integral part of the financial statements. Constellation Funds 2005 Semiannual Report 55 FINANCIAL STATEMENTS (unaudited) STATEMENTS OF OPERATIONS (000)
Constellation Constellation Constellation Constellation Clover Core Clover Core Clover Small Clover Large Fixed Income Value Fund Cap Value Fund Cap Value Fund Fund --------------------------------------------------------------------- 6 months ended 6 months ended 6 months ended 6 months ended 3/31/05 3/31/05 3/31/05 3/31/05 - -------------------------------------------------------------------------------------------------------------------------- Investment Income: Dividends $ 441 $ 2,087 $ 94 $ 6 Interest - - - 702 Securities lending 3 212 - - Foreign taxes withheld (2) - - - - -------------------------------------------------------------------------------------------------------------------------- Total Investment Income 442 2,299 94 708 - -------------------------------------------------------------------------------------------------------------------------- Expenses: Investment advisory fees 237 2,355 23 67 Administrator fees 47 407 5 22 Shareholder servicing fees(3) - - - - Distribution fees Investor A Shares(4) - - - - Distribution fees Investor B Shares(4) - - - - Trustees' fees 2 16 - 1 Transfer agent fees 39 427 14 22 Professional fees 9 55 4 5 Custodian fees 5 66 1 3 Printing fees 5 44 - 2 Registration fees 2 19 - 1 Insurance and other fees 4 31 - 2 - -------------------------------------------------------------------------------------------------------------------------- Total expenses 350 3,420 47 125 Less: Investment advisory fees waived - - (10) (6) - -------------------------------------------------------------------------------------------------------------------------- Net expenses 350 3,420 37 119 - -------------------------------------------------------------------------------------------------------------------------- Net investment income (loss) 92 (1,121) 57 589 - -------------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) from securities sold 6,499 31,237 214 296 Net change in unrealized appreciation (depreciation) of investment securities 1,707 17,919 238 (794) - -------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 8,206 49,156 452 (498) - -------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $ 8,298 $ 48,035 $ 509 $ 91 ==========================================================================================================================
56 Constellation Funds 2005 Semiannual Report
Constellation Chartwell Ultra Constellation Constellation Short Duration Chartwell Short Constellation Clover Income Fixed Income Duration Fixed Chartwell High Constellation HLAM Large Plus Fund Fund Income Fund Yield Fund Cap Quality Growth Fund(2) - ------------------------------------------------------------------------------------------------------ 2/28/05(1) thru 6 months ended 6 months ended 6 months ended 1/1/05 thru year ended 3/31/05 3/31/05 3/31/05 3/31/05 3/31/05 12/31/04 - ------------------------------------------------------------------------------------------------------ $ 13 $ 2 $ - $ 1 $ 48 $ 432 - 6,082 2,820 271 - 3 - 2 1 2 - - - - - - - (5) - ------------------------------------------------------------------------------------------------------ 13 6,086 2,821 274 48 430 - ------------------------------------------------------------------------------------------------------ 2 468 199 21 36 267 - 275 117 6 7 5 1 6 14 - 12 8 - - - - - 65 - - - - - 40 - 11 5 - - 24 2 227 106 14 18 80 1 39 19 4 6 123 1 25 14 4 3 47 - 26 10 1 2 43 - 16 8 - - 19 - 13 10 - - 1 - ------------------------------------------------------------------------------------------------------ 7 1,106 502 50 84 722 (4) (129) (68) (19) (24) (257) - ------------------------------------------------------------------------------------------------------ 3 977 434 31 60 465 - ------------------------------------------------------------------------------------------------------ 10 5,109 2,387 243 (12) (35) - ------------------------------------------------------------------------------------------------------ (4) 241 (179) 213 892 6,721 (59) (747) (1,013) (312) (1,881) (5,981) - ------------------------------------------------------------------------------------------------------ (63) (506) (1,192) (99) (989) 740 - ------------------------------------------------------------------------------------------------------ $ (53) $ 4,603 $ 1,195 $ 144 $ (1,001) $ 705 ======================================================================================================
- ---------- (1) Commencement of operations. (2) On November 8, 2004 the Constellation Funds acquired the assets and liabilities of the Hilliard Lyons Growth Fund, Inc. in a tax-free reorganization. See Note 10 in Notes to Financial Statements for additional information. The Fund changed its fiscal year end from December 31 to September 30. (3) Attributable to Class II Shares only. (4) On November 8, 2004, Investor A shares were converted into Class II Shares. Subsequently, Investor B Shares were fully liquidated and exchanged for Class II Shares. See Note 10 in 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. Constellation Funds 2005 Semiannual Report 57 FINANCIAL STATEMENTS (unaudited) STATEMENTS OF OPERATIONS (000)
Constellation Constellation Constellation Pitcairn Constellation Pitcairn HLAM Large Diversified Pitcairn Select Diversified Cap Value Fund Value Fund Value Fund Growth Fund --------------------------------------------------------------------- 6 months ended 6 months ended 6 months ended 6 months ended 3/31/05 3/31/05 3/31/05 3/31/05 - -------------------------------------------------------------------------------------------------------------------------- Investment Income: Dividends $ 13 $ 1,890 $ 594 $ 1,176 Interest - 2 2 2 Securities lending - 3 1 2 Foreign taxes withheld - - - - - -------------------------------------------------------------------------------------------------------------------------- Total Investment Income 13 1,895 597 1,180 - -------------------------------------------------------------------------------------------------------------------------- Expenses: Investment advisory fees 6 562 226 389 Administrator fees 1 118 48 82 Shareholder servicing fees(1) 2 201 81 139 Trustees' fees - 4 1 3 Transfer agent fees 12 20 15 17 Professional fees 3 21 10 15 Custodian fees 1 10 5 8 Printing fees - 15 6 10 Registration fees - 4 2 3 Insurance and other fees - 9 4 6 - -------------------------------------------------------------------------------------------------------------------------- Total expenses 25 964 398 672 Less: Investment advisory fees waived (6) (80) (26) (60) Reimbursement from adviser (9) - - - - -------------------------------------------------------------------------------------------------------------------------- Net expenses 10 884 372 612 - -------------------------------------------------------------------------------------------------------------------------- Net investment income (loss) 3 1,011 225 568 - -------------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) from securities sold 26 5,360 4,568 1,961 Net change in unrealized appreciation (depreciation) of investment securities 49 6,425 (1,541) 2,875 - -------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 75 11,785 3,027 4,836 - -------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $ 78 $ 12,796 $ 3,252 $ 5,404 ==========================================================================================================================
58 Constellation Funds 2005 Semiannual Report FINANCIAL STATEMENTS (unaudited)
Constellation Constellation Constellation TIP Constellation Constellation Constellation Pitcairn Sands Capital Small Cap Value Pitcairn Small Pitcairn Family Pitcairn Taxable Tax-Exempt Select Growth Opportunities Cap Fund Heritage(R) Fund Bond Fund Bond Fund Fund Fund - -------------------------------------------------------------------------------------------------------------- 6 months ended 6 months ended 6 months ended 6 months ended 6 months ended 6 months ended 3/31/05 3/31/05 3/31/05 3/31/05 3/31/05 3/31/05 - -------------------------------------------------------------------------------------------------------------- $ 392 $ 979 $ - $ - $ 487 $ 311 6 4 1,203 2,621 41 - 45 1 - - 3 1 (1) - - - (4) - - -------------------------------------------------------------------------------------------------------------- 442 984 1,203 2,621 527 312 - -------------------------------------------------------------------------------------------------------------- 339 367 97 175 540 107 71 60 36 86 93 17 121 102 61 146 101 28 2 2 1 3 3 1 17 18 14 19 47 88 13 12 8 16 17 5 7 5 3 7 8 11 9 7 4 10 12 2 3 2 2 2 2 1 6 5 3 7 2 1 - -------------------------------------------------------------------------------------------------------------- 588 580 229 471 825 261 (51) (51) (12) (64) (24) (97) - - - - - - - -------------------------------------------------------------------------------------------------------------- 537 529 217 407 801 164 - -------------------------------------------------------------------------------------------------------------- (95) 455 986 2,214 (274) 148 - -------------------------------------------------------------------------------------------------------------- 1,570 3,435 (12) 631 (86) 739 2,809 (1,294) (1,226) (2,284) 98 548 - -------------------------------------------------------------------------------------------------------------- 4,379 2,141 (1,238) (1,653) 12 1,287 - -------------------------------------------------------------------------------------------------------------- $ 4,284 $ 2,596 $ (252) $ 561 $ (262) $ 1,435 ==============================================================================================================
- ---------- (1) Attributable to Class II Shares only. Amounts designated as "-" are either $0 or have been rounded to $0. The accompanying notes are an integral part of the financial statements. Constellation Funds 2005 Semiannual Report 59 FINANCIAL STATEMENTS (unaudited) STATEMENTS OF OPERATIONS (000)
Constellation Constellation Constellation TIP Healthcare Constellation Strategic Value TIP Financial & Biotechnology International and High Services Fund Fund Equity Fund Income Fund ---------------------------------------------------------------------- 6 months ended 6 months ended 6 months ended 6 months ended 3/31/05 3/31/05 3/31/05 3/31/05 - --------------------------------------------------------------------------------------------------------------------------- Investment Income: Dividends $ 203 $ 66 $ 955 $ 43* Interest - - 11 - Securities lending - 1 - - Foreign taxes withheld - - (94) - - --------------------------------------------------------------------------------------------------------------------------- Total Investment Income 203 67 872 43* - --------------------------------------------------------------------------------------------------------------------------- Expenses: Investment advisory fees 88 207 550 - Administrator fees 12 27 85 1 Shareholder servicing fees(1) - 46 145 - Trustees' fees - 1 3 - Transfer agent fees 17 42 19 16 Professional fees 5 7 15 4 Custodian fees 2 5 83 - Printing fees 1 3 4 - Registration fees 1 1 - - Insurance and other fees 1 2 11 - - --------------------------------------------------------------------------------------------------------------------------- Total expenses 127 341 915 21 Less: Investment advisory fees waived (9) (4) (76) - Reimbursement from adviser - - - (21) - --------------------------------------------------------------------------------------------------------------------------- Net expenses 118 337 839 - - --------------------------------------------------------------------------------------------------------------------------- Net investment income (loss) 85 (270) 33 43 - --------------------------------------------------------------------------------------------------------------------------- Net realized gain from securities sold 1,174 47 8,365 5* Net realized loss from foreign currency transactions - - (23) - Net change in unrealized appreciation (depreciation) of investment securities 190 2,857 6,923 (1)* Net change in unrealized depreciation on translation of foreign currency and other assets and liabilites denominated in foreign currency - - (23) - - --------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments 1,364 2,904 15,242 4 - --------------------------------------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations $ 1,449 $ 2,634 $ 15,275 $ 47 ===========================================================================================================================
- ---------- * Dividend income, net realized gain from securities sold and net change in unrealized appreciation of investment securities are attributable to the underlying investments in affiliated investment companies. (1) Attributable to Class II Shares only. Amounts designated as "-" are either $0 or have been rounded to $0. The accompanying notes are an integral part of the financial statements. 60 Constellation Funds 2005 Semiannual Report FINANCIAL STATEMENTS (unaudited) PAGE INTENTIONALLY LEFT BLANK Constellation Funds 2005 Semiannual Report 61 FINANCIAL STATEMENTS STATEMENTS OF CHANGES IN NET ASSETS (000)
Constellation Clover Constellation Clover Core Value Fund Small Cap Value Fund ---------------------------------------------------------------------- 6 months ended year ended 6 months ended year ended 3/31/05* 9/30/04(1) 3/31/05* 9/30/04(1) - --------------------------------------------------------------------------------------------------------------------------- Investment activities: Net investment income (loss) $ 92 $ 220 $ (1,121) $ (423) Net realized gain (loss) from securities sold 6,499 4,878 31,237 54,685 Net change in unrealized appreciation (depreciation) of investments 1,707 4,420 17,919 40,856 - --------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 8,298 9,518 48,035 95,118 - --------------------------------------------------------------------------------------------------------------------------- Dividends and distributions to shareholders: Net investment income Class I Shares (99) (213) - (652) Realized capital gains Class I Shares (5,133) (1,697) - - - --------------------------------------------------------------------------------------------------------------------------- Total dividends and distributions (5,232) (1,910) - (652) - --------------------------------------------------------------------------------------------------------------------------- Capital share transactions: Class I Shares Proceeds from shares issued 6,880 23,355 59,510 230,219 Proceeds from shares issued in lieu of cash distributions 5,133 1,838 - 593 Cost of shares redeemed (8,976) (19,760) (126,895) (179,946) - --------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from Class I Shares transactions 3,037 5,433 (67,385) 50,866 - --------------------------------------------------------------------------------------------------------------------------- Total increase (decrease) in net assets 6,103 13,041 (19,350) 145,332 - --------------------------------------------------------------------------------------------------------------------------- Net assets: Beginning of period 59,714 46,673 540,278 394,946 - --------------------------------------------------------------------------------------------------------------------------- End of period $ 65,817 $ 59,714 $ 520,928 $ 540,278 =========================================================================================================================== Undistributed net investment income (distributions in excess of net investment income/accumulated net investment loss) $ (1) $ 6 $ (1,075) $ 46 =========================================================================================================================== Shares issued and redeemed: Class I Shares Issued 399 1,446 2,334 10,042 Issued in lieu of cash distributions 300 120 - 26 Redeemed (527) (1,240) (4,956) (7,868) - --------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in Class I Shares 172 326 (2,622) 2,200 ===========================================================================================================================
62 Constellation Funds 2005 Semiannual Report FINANCIAL STATEMENTS
Constellation Clover Constellation Clover Constellation Clover Large Cap Value Fund Core Fixed Income Fund Income Plus Fund - -------------------------------------------------------------------------------------------------- 6 months ended year ended 6 months ended year ended 2/28/05(2) thru 3/31/05* 9/30/04(1) 3/31/05* 9/30/04(1) 3/31/05* - -------------------------------------------------------------------------------------------------- $ 57 $ 42 $ 589 $ 1,441 $ 10 214 422 296 859 (4) 238 212 (794) (1,401) (59) - -------------------------------------------------------------------------------------------------- 509 676 91 899 (53) - -------------------------------------------------------------------------------------------------- (57) (42) (624) (1,530) (10) - - (394) - - - -------------------------------------------------------------------------------------------------- (57) (42) (1,018) (1,530) (10) - -------------------------------------------------------------------------------------------------- 373 2,944 2,821 12,793 3,986 56 41 968 1,389 10 (771) (2,160) (7,856) (24,608) (294) - -------------------------------------------------------------------------------------------------- (342) 825 (4,067) (10,426) 3,702 - -------------------------------------------------------------------------------------------------- 110 1,459 (4,994) (11,057) 3,639 - -------------------------------------------------------------------------------------------------- 6,251 4,792 32,334 43,391 - - -------------------------------------------------------------------------------------------------- $ 6,361 $ 6,251 $ 27,340 $ 32,334 $ 3,639 ================================================================================================== $ - $ - $ (1) $ - $ - ================================================================================================== 33 272 279 1,247 401 5 4 96 136 1 (69) (200) (773) (2,407) (30) - -------------------------------------------------------------------------------------------------- (31) 76 (398) (1,024) 372 ==================================================================================================
- ---------- * Unaudited (1) On May 10, 2004 and August 2, 2004 the Constellation Funds acquired the assets of certain Turner Funds and the Pitcairn Funds, respectively, in a tax-free reorganization. See Note 10 in Notes to Financial Statements for additional information. (2) Commencement of operations. Amounts designated as "-" are either $0 or have been rounded to $0. The accompanying notes are an integral part of the financial statements. Constellation Funds 2005 Semiannual Report 63 FINANCIAL STATEMENTS STATEMENTS OF CHANGES IN NET ASSETS (000)
Constellation Chartwell Ultra Short Duration Fixed Income Fund -------------------------------- 6 months ended year ended 3/31/05* 9/30/04(1) - ----------------------------------------------------------------------------------------------------------------------- Investment activities: Net investment income $ 5,109 $ 8,655 Net realized gain (loss) from securities sold 241 (90) Net change in unrealized depreciation of investments (747) (1,750) - ----------------------------------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 4,603 6,815 - ----------------------------------------------------------------------------------------------------------------------- Dividends and distributions to shareholders: Net investment income Class I Shares (5,105) (8,654) Class II Shares (63) (125) - ----------------------------------------------------------------------------------------------------------------------- Total dividends and distributions (5,168) (8,779) - ----------------------------------------------------------------------------------------------------------------------- Capital share transactions: Class I Shares: Proceeds from shares issued 57,875 169,703 Proceeds from shares issued in lieu of cash distributions 4,959 8,365 Proceeds from shares issued in connection with conversion into Class I Shares(2) 7,625 - Cost of shares redeemed (120,859) (246,769) - ----------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from Class I Shares transactions (50,400) (68,701) - ----------------------------------------------------------------------------------------------------------------------- Class II Shares: Proceeds from shares issued 1,265 6,182 Proceeds from shares issued in lieu of cash distributions 39 101 Proceeds from shares issued in connection with conversion into Class I Shares(2) (7,625) - Cost of shares redeemed (2,566) (3,320) - ----------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from Class II Shares transactions (8,887) 2,963 - ----------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from capital share transactions (59,287) (65,738) - ----------------------------------------------------------------------------------------------------------------------- Total increase (decrease) in net assets (59,852) (67,702) - ----------------------------------------------------------------------------------------------------------------------- Net assets: Beginning of period 400,829 468,531 - ----------------------------------------------------------------------------------------------------------------------- End of period $ 340,977 $ 400,829 ======================================================================================================================= Undistributed net investment income (distributions in excess of net investment income) $ (9) $ (2) ======================================================================================================================= Shares issued and redeemed: Class I Shares: Issued 5,722 16,728 Issued in lieu of cash distributions 490 825 Issued in connection with conversion into Class I Shares(2) 755 - Redeemed (11,948) (24,310) - ----------------------------------------------------------------------------------------------------------------------- Increase (decrease) in Class I Shares (4,981) (6,757) - ----------------------------------------------------------------------------------------------------------------------- Class II Shares/Investor A Shares: Issued 124 607 Issued in lieu of cash distributions 4 10 Issued in connection with conversion into Class I Shares(2) (752) - Redeemed (252) (325) - ----------------------------------------------------------------------------------------------------------------------- Increase (decrease) in Class II Shares/Investor A Shares (876) 292 - ----------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in share transactions (5,857) (6,465) =======================================================================================================================
64 Constellation Funds 2005 Semiannual Report FINANCIAL STATEMENTS
Constellation Chartwell Short Duration Constellation Chartwell Fixed Income Fund High Yield Fund - --------------------------------------------------------------------------- 6 months ended year ended 6 months ended year ended 3/31/05* 9/30/04(1) 3/31/05* 9/30/04(1) - --------------------------------------------------------------------------- $ 2,387 $ 5,188 $ 243 $ 754 (179) 489 213 650 (1,013) (2,013) (312) (479) - --------------------------------------------------------------------------- 1,195 3,664 144 925 - --------------------------------------------------------------------------- (2,637) (5,741) (245) (753) (195) (69) - - - --------------------------------------------------------------------------- (2,832) (5,810) (245) (753) - --------------------------------------------------------------------------- 5,232 30,025 6,254 10,285 2,499 5,666 58 171 25,880 - - - (77,080) (114,133) (9,247) (9,865) - --------------------------------------------------------------------------- (43,469) (78,442) (2,935) 591 - --------------------------------------------------------------------------- 24,452 5,502 - - 119 66 - - (25,880) - - - (1,337) (4,882) - - - --------------------------------------------------------------------------- (2,646) 686 - - - --------------------------------------------------------------------------- (46,115) (77,756) (2,935) 591 - --------------------------------------------------------------------------- (47,752) (79,902) (3,036) 763 - --------------------------------------------------------------------------- 175,116 255,018 10,171 9,408 - --------------------------------------------------------------------------- $ 127,364 $ 175,116 $ 7,135 $ 10,171 =========================================================================== $ (8) $ (1) $ - $ 2 =========================================================================== 523 2,975 1,203 2,010 250 562 11 33 2,606 - - - (7,707) (11,321) (1,779) (1,930) - --------------------------------------------------------------------------- (4,328) (7,784) (565) 113 - --------------------------------------------------------------------------- 2,445 547 - - 12 6 - - (2,613) - - - (134) (485) - - - --------------------------------------------------------------------------- (290) 68 - - - --------------------------------------------------------------------------- (4,618) (7,716) (565) 113 ===========================================================================
- ---------- * Unaudited (1) On May 10, 2004 and August 2, 2004 the Constellation Funds acquired the assets of certain Turner Funds and the Pitcairn Funds, respectively, in a tax-free reorganization. See Note 10 in Notes to Financial Statements for additional information. (2) On January 28, 2005, Class II Shares merged into Class I Shares. See Note 10 in 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. Constellation Funds 2005 Semiannual Report 65 FINANCIAL STATEMENTS STATEMENTS OF CHANGES IN NET ASSETS (000)
Constellation HLAM Large Cap Quality Growth Fund ------------------------------------------------ 1/1/05 thru year ended year ended 3/31/05* 12/31/04(3) 12/31/03 - ------------------------------------------------------------------------------------------------------------------------- Investment activities: Net investment income (loss) $ (12) $ (35) $ (155) Net realized gain (loss) from securities sold 892 6,721 4,623 Net change in unrealized appreciation (depreciation) of investments (1,881) (5,981) 2,747 - ------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations (1,001) 705 7,215 - ------------------------------------------------------------------------------------------------------------------------- Dividends and distributions to shareholders: Net investment income Class II Shares - - - Realized capital gains Class II Shares/Investor A Shares - (3,543) (4,992) Investor B Shares - - (873) - ------------------------------------------------------------------------------------------------------------------------- Total dividends and distributions - (3,543) (5,865) - ------------------------------------------------------------------------------------------------------------------------- Capital share transactions: Class II Shares/Investor A Shares Proceeds from shares issued 24 1,180 1,345 Proceeds from shares issued in lieu of cash distributions - 3,377 4,897 Proceeds from shares issued in connection with conversion into Class II Shares(4) - 3,415 - Cost of shares redeemed (2,228) (20,003) (6,591) - ------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from Class II Shares/Investor A Shares transactions (2,204) (12,031) (349) - ------------------------------------------------------------------------------------------------------------------------- Investor B Shares Proceeds from shares issued - 60 150 Proceeds from shares issued in lieu of cash distributions - - 857 Proceeds from shares issued in connection with conversion into Class II Shares(4) - (3,415) - Cost of shares redeemed - (2,463) (2,152) - ------------------------------------------------------------------------------------------------------------------------- Net decrease in net assets from Investor B Shares transactions - (5,818) (1,145) - ------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from capital share transactions (2,204) (17,849) (1,494) - ------------------------------------------------------------------------------------------------------------------------- Total increase (decrease) in net assets (3,205) (20,687) (144) - ------------------------------------------------------------------------------------------------------------------------- Net assets: Beginning of period 20,959 41,646 41,790 - ------------------------------------------------------------------------------------------------------------------------- End of period $ 17,754 $ 20,959 $ 41,646 ========================================================================================================================= Undistributed net investment income(distributions in excess of net investment income/accumulated investment loss) $ (12) $ (35) $ - ========================================================================================================================= Shares issued and redeemed: Class II Shares/Investor A Shares Issued 1 46 55 Issued in lieu of cash distributions - 156 202 Issued in connection with conversion into Class II Shares(4) - 137 - Redeemed (104) (816) (265) - ------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in Class II Shares/Investor A Shares (103) (477) (8) - ------------------------------------------------------------------------------------------------------------------------- Investor B Shares Issued - 3 6 Issued in lieu of cash distributions - - 37 Issued in connection with conversion into Class II Shares(4) - (144) - Redeemed - (106) (89) - ------------------------------------------------------------------------------------------------------------------------- Decrease in Investor B Shares - (247) (46) - ------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in share transactions (103) (724) (54) =========================================================================================================================
66 Constellation Funds 2005 Semiannual Report FINANCIAL STATEMENTS
Constellation HLAM Large Cap Value Fund Constellation Pitcairn Diversified Value Fund - -------------------------------------------------------------------------------------- 6 months ended 4/30/04(1) thru 6 months ended 11/1/03 thru 11/1/02 thru 3/31/05* 9/30/04(2) 3/31/05* 9/30/04(2) 10/31/03 - -------------------------------------------------------------------------------------- $ 3 $ 2 $ 1,011 $ 1,436 $ 1,659 26 - 5,360 7,037 (4,189) 49 (3) 6,425 6,166 29,045 - -------------------------------------------------------------------------------------- 78 (1) 12,796 14,639 26,515 - -------------------------------------------------------------------------------------- (3) (2) (1,012) (1,559) (1,782) - - - - - - - - - - - -------------------------------------------------------------------------------------- (3) (2) (1,012) (1,559) (1,782) - -------------------------------------------------------------------------------------- 338 1,517 2,262 7,361 6,443 2 1 71 134 168 - - - - - (97) (78) (3,590) (12,014) (10,094) - -------------------------------------------------------------------------------------- 243 1,440 (1,257) (4,519) (3,483) - -------------------------------------------------------------------------------------- - - - - - - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------------- - - - - - - -------------------------------------------------------------------------------------- 243 1,440 (1,257) (4,519) (3,483) - -------------------------------------------------------------------------------------- 318 1,437 10,527 8,561 21,250 - -------------------------------------------------------------------------------------- 1,437 - 152,202 143,641 122,391 - -------------------------------------------------------------------------------------- $ 1,755 $ 1,437 $ 162,729 $ 152,202 $ 143,641 ====================================================================================== $ - $ - $ (1) $ - $ 154 ====================================================================================== 32 154 189 679 720 - - 6 12 19 - - - - - (9) (8) (300) (1,117) (1,148) - -------------------------------------------------------------------------------------- 23 146 (105) (426) (409) - -------------------------------------------------------------------------------------- - - - - - - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------------- - - - - - - -------------------------------------------------------------------------------------- 23 146 (105) (426) (409) ======================================================================================
- ---------- * Unaudited (1) Commencement of operations (2) On May 10, 2004 and August 2, 2004 the Constellation Funds acquired the assets of certain Turner Funds and the Pitcairn Funds, respectively, in a tax-free reorganization. See Note 10 in Notes to Financial Statements for additional information. (3) On November 8, 2004 the Constellation Funds acquired the assets and liabilities of the Hilliard Lyons Growth Fund, Inc. in a tax-free reorganization. See Note 10 in Notes to Financial Statements for additional information. The fund changed its fiscal year end from December 31 to September 30. (4) On November 8, 2004, Investor A shares were converted into Class II Shares. Subsequently, Investor B Shares were fully liquidated and exchanged for Class II Shares. See Note 10 in 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. Constellation Funds 2005 Semiannual Report 67 FINANCIAL STATEMENTS STATEMENTS OF CHANGES IN NET ASSETS (000)
Constellation Pitcairn Select Value Fund ----------------------------------------------- 6 months ended 11/1/03 thru 11/1/02 thru 3/31/05* 9/30/04(1) 10/31/03 - ------------------------------------------------------------------------------------------------------------------------ Investment activities: Net investment income (loss) $ 225 $ 463 $ 422 Net realized gain (loss) from securities sold and securities sold short 4,568 5,939 (1,877) Net change in unrealized appreciation (depreciation) of investments (1,541) (2,360) 13,361 - ------------------------------------------------------------------------------------------------------------------------ Net increase in net assets resulting from operations 3,252 4,042 11,906 - ------------------------------------------------------------------------------------------------------------------------ Dividends and distributions to shareholders: Net investment income Class II Shares (225) (492) (509) Realized capital gains Class II Shares (884) (902) - - ------------------------------------------------------------------------------------------------------------------------ Total dividends and distributions (1,109) (1,394) (509) - ------------------------------------------------------------------------------------------------------------------------ Capital share transactions: Class II Shares Proceeds from shares issued 2,396 5,616 6,080 Proceeds from shares issued in lieu of cash distributions 459 529 90 Proceeds from shares issued in connection with Fund Reorganization(2) - - - Cost of shares redeemed (2,085) (5,109) (7,889) - ------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from Class II Shares transactions 770 1,036 (1,719) - ------------------------------------------------------------------------------------------------------------------------ Total increase in net assets 2,913 3,684 9,678 - ------------------------------------------------------------------------------------------------------------------------ Net assets: Beginning of period 61,817 58,133 48,455 - ------------------------------------------------------------------------------------------------------------------------ End of period $ 64,730 $ 61,817 $ 58,133 ======================================================================================================================== Undistributed net investment income (accumulated net investment loss) $ - $ - $ 29 ======================================================================================================================== Shares issued and redeemed: Class II Shares Issued 211 519 685 Issued in lieu of cash distributions 40 50 10 Issued in connection with Fund Reorganization(2) - - - Redeemed (184) (478) (895) - ------------------------------------------------------------------------------------------------------------------------ Increase (decrease) in Class II Shares 67 91 (200) ========================================================================================================================
68 Constellation Funds 2005 Semiannual Report FINANCIAL STATEMENTS
Constellation Pitcairn Diversified Growth Fund Constellation Pitcairn Small Cap Fund - -------------------------------------------------------------------------------------------------------- 6 months ended 11/1/03 thru 11/1/02 thru 6 months ended 11/1/03 thru 11/1/02 thru 3/31/05* 9/30/04(1) 10/31/03 3/31/05* 9/30/04(1) 10/31/03 - -------------------------------------------------------------------------------------------------------- $ 568 $ - $ 44 $ (95) $ (216) $ (94) 1,961 644 (11,325) 1,570 13,756 11,111 2,875 1,228 26,682 2,809 (4,005) 14,082 - -------------------------------------------------------------------------------------------------------- 5,404 1,872 15,401 4,284 9,535 25,099 - -------------------------------------------------------------------------------------------------------- (526) (46) - - (3) (17) - - - (732) - - - -------------------------------------------------------------------------------------------------------- (526) (46) - (732) (3) (17) - -------------------------------------------------------------------------------------------------------- 7,493 13,230 17,450 1,480 3,348 3,024 58 5 - 358 - 2 - - - - - 25,687 (6,944) (6,257) (19,495) (2,454) (7,552) (16,371) - -------------------------------------------------------------------------------------------------------- 607 6,978 (2,045) (616) (4,204) 12,342 - -------------------------------------------------------------------------------------------------------- 5,485 8,804 13,356 2,936 5,328 37,424 - -------------------------------------------------------------------------------------------------------- 104,528 95,724 82,368 92,848 87,520 50,096 - -------------------------------------------------------------------------------------------------------- $ 110,013 $ 104,528 $ 95,724 $ 95,784 $ 92,848 $ 87,520 ======================================================================================================== $ 42 $ - $ 44 $ (95) $ - $ - ======================================================================================================== 1,307 2,434 3,773 93 226 280 10 1 - 21 - - - - - - - 2,603 (1,213) (1,168) (4,232) (153) (509) (1,610) - -------------------------------------------------------------------------------------------------------- 104 1,267 (459) (39) (283) 1,273 ========================================================================================================
- ---------- * Unaudited (1) On May 10, 2004 and August 2, 2004 the Constellation Funds acquired the assets of certain Turner Funds and the Pitcairn Funds, respectively, in a tax-free reorganization. See Note 10 in Notes to Financial Statements for additional information. (2) See Note 10 in 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. Constellation Funds 2005 Semiannual Report 69 FINANCIAL STATEMENTS STATEMENTS OF CHANGES IN NET ASSETS (000)
Constellation Pitcairn Family Heritage(R) Fund ----------------------------------------------- 6 months ended 11/1/03 thru 11/1/02 thru 3/31/05* 9/30/04(1) 10/31/03 - ------------------------------------------------------------------------------------------------------------------------ Investment activities: Net investment income $ 455 $ 4 $ 39 Net realized gain (loss) from securities sold 3,435 (6,033) (4,941) Net change in unrealized appreciation (depreciation) of investments (1,294) 13,076 18,782 - ------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets resulting from operations 2,596 7,047 13,880 - ------------------------------------------------------------------------------------------------------------------------ Dividends and distributions to shareholders: Net investment income Class II Shares (418) (38) - Realized capital gains Class II Shares - - - Return of capital Class II Shares - (2) - - ------------------------------------------------------------------------------------------------------------------------ Total dividends and distributions (418) (40) - - ------------------------------------------------------------------------------------------------------------------------ Capital share transactions: Class II Shares Proceeds from shares issued 3,582 4,564 3,668 Proceeds from shares issued in lieu of cash distributions 52 5 - Cost of shares redeemed (1,799) (6,963) (10,184) - ------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from Class II Shares transactions 1,835 (2,394) (6,516) - ------------------------------------------------------------------------------------------------------------------------ Total increase (decrease) in net assets 4,013 4,613 7,364 - ------------------------------------------------------------------------------------------------------------------------ Net assets: - ------------------------------------------------------------------------------------------------------------------------ Beginning of period 78,103 73,490 66,126 - ------------------------------------------------------------------------------------------------------------------------ End of period $ 82,116 $ 78,103 $ 73,490 ======================================================================================================================== Undistributed net investment income $ 37 $ - $ 39 ======================================================================================================================== Shares issued and redeemed: Class II Shares Issued 363 501 490 Issued in lieu of cash distributions 5 1 - Redeemed (183) (769) (1,388) - ------------------------------------------------------------------------------------------------------------------------ Increase (decrease) in Class II Shares 185 (267) (898) ========================================================================================================================
70 Constellation Funds 2005 Semiannual Report FINANCIAL STATEMENTS
Constellation Pitcairn Taxable Bond Fund Constellation Pitcairn Tax-Exempt Bond Fund - -------------------------------------------------------------------------------------------------------- 6 months ended 11/1/03 thru 11/1/02 thru 6 months ended 11/1/03 thru 11/1/02 thru 3/31/05* 9/30/04(1) 10/31/03 3/31/05* 9/30/04(1) 10/31/03 - -------------------------------------------------------------------------------------------------------- $ 986 $ 1,739 $ 1,859 $ 2,214 $ 4,063 $ 4,655 (12) 658 234 631 716 432 (1,226) (473) 852 (2,284) (314) 273 - -------------------------------------------------------------------------------------------------------- (252) 1,924 2,945 561 4,465 5,360 - -------------------------------------------------------------------------------------------------------- (984) (1,725) (1,858) (2,238) (4,075) (4,623) - - - (716) (432) (294) - - - - - - - -------------------------------------------------------------------------------------------------------- (984) (1,725) (1,858) (2,954) (4,507) (4,917) - -------------------------------------------------------------------------------------------------------- 7,863 4,881 10,661 6,410 14,164 11,201 251 301 384 300 222 174 (2,072) (5,574) (8,758) (1,989) (11,934) (16,253) - -------------------------------------------------------------------------------------------------------- 6,042 (392) 2,287 4,721 2,452 (4,878) - -------------------------------------------------------------------------------------------------------- 4,806 (193) 3,374 2,328 2,410 (4,435) - -------------------------------------------------------------------------------------------------------- 43,239 43,432 40,058 113,880 111,470 115,905 - -------------------------------------------------------------------------------------------------------- $ 48,045 $ 43,239 $ 43,432 $ 116,208 $ 113,880 $ 111,470 ======================================================================================================== $ - $ - $ - $ 105 $ 129 $ 141 ======================================================================================================== 732 458 1,003 595 1,309 1,034 24 28 36 28 21 15 (194) (520) (818) (185) (1,121) (1,516) - -------------------------------------------------------------------------------------------------------- 562 (34) 221 438 209 (467) ========================================================================================================
- ---------- * Unaudited (1) On May 10, 2004 and August 2, 2004 the Constellation Funds acquired the assets of certain Turner Funds and the Pitcairn Funds, respectively, in a tax-free reorganization. See Note 10 in 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. Constellation Funds 2005 Semiannual Report 71 FINANCIAL STATEMENTS STATEMENTS OF CHANGES IN NET ASSETS (000)
Constellation Sands Capital Select Growth Fund ----------------------------------------------- 6 months ended 11/1/03 thru 11/1/02 thru 3/31/05* 9/30/04(1) 10/31/03 - ------------------------------------------------------------------------------------------------------------------------ Investment activities: Net investment income (loss) $ (274) $ (638) $ (294) Net realized gain (loss) from securities sold (86) 730 (6,078) Net change in unrealized appreciation (depreciation) of investments 98 4,953 15,475 - ------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets resulting from operations (262) 5,045 9,103 - ------------------------------------------------------------------------------------------------------------------------ Dividends and distributions to shareholders: Realized capital gains Class I Shares - - - Class II Shares - - - - ------------------------------------------------------------------------------------------------------------------------ Total dividends and distributions - - - - ------------------------------------------------------------------------------------------------------------------------ Capital share transactions: Class I Shares(2) Proceeds from shares issued 29,163 32,632 - Proceeds from shares issued in lieu of cash distributions - - - Cost of shares redeemed (1,998) - - - ------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from Class I Shares transactions 27,165 32,632 - - ------------------------------------------------------------------------------------------------------------------------ Class II Shares Proceeds from shares issued 36,276 54,888 6,476 Proceeds from shares issued in lieu of cash distributions - - - Cost of shares redeemed (22,701) (33,825) (4,519) - ------------------------------------------------------------------------------------------------------------------------ Net increase in net assets from Class II Shares transactions 13,575 21,063 1,957 - ------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from capital share transactions 40,740 53,695 1,957 - ------------------------------------------------------------------------------------------------------------------------ Total increase (decrease) in net assets 40,478 58,740 11,060 - ------------------------------------------------------------------------------------------------------------------------ Net assets: Beginning of period 102,618 43,878 32,818 - ------------------------------------------------------------------------------------------------------------------------ End of period $ 143,096 $ 102,618 $ 43,878 ======================================================================================================================== Undistributed net investment income (accumulated net investment loss) $ (274) $ - $ - ======================================================================================================================== Shares issued and redeemed: Class I Shares(2) Issued 4,093 4,792 - Issued in lieu of cash distributions - - - Redeemed (281) - - - ------------------------------------------------------------------------------------------------------------------------ Increase (decrease) in Class I Shares 3,812 4,792 - - ------------------------------------------------------------------------------------------------------------------------ Class II Shares Issued 5,101 8,136 1,225 Issued in lieu of cash distributions - - - Redeemed (3,231) (5,007) (882) - ------------------------------------------------------------------------------------------------------------------------ Increase in Class II Shares 1,870 3,129 343 - ------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in share transactions 5,682 7,921 343 ========================================================================================================================
72 Constellation Funds 2005 Semiannual Report FINANCIAL STATEMENTS
Constellation TIP Small Cap Constellation TIP Financial Constellation TIP Healthcare Value Opportunities Fund Services Fund & Biotechnology Fund - -------------------------------------------------------------------------------------------------------- 6 months ended year ended 6 months ended year ended 6 months ended year ended 3/31/05* 9/30/04(1) 3/31/05* 9/30/04(1) 3/31/05* 9/31/04(1) - -------------------------------------------------------------------------------------------------------- $ 148 $ (39) $ 85 $ (40) $ (270) $ (256) 739 2,070 1,174 1,782 47 1,403 548 1,494 190 256 2,857 (540) - -------------------------------------------------------------------------------------------------------- 1,435 3,525 1,449 1,998 2,634 607 - -------------------------------------------------------------------------------------------------------- - - (1,101) (1,753) - - (1,990) (223) - - (1,234) (14) - -------------------------------------------------------------------------------------------------------- (1,990) (223) (1,101) (1,753) (1,234) (14) - -------------------------------------------------------------------------------------------------------- - - 278 1,131 - - - - 1,039 1,671 - - - - (1,025) (5,087) - - - -------------------------------------------------------------------------------------------------------- - - 292 (2,285) - - - -------------------------------------------------------------------------------------------------------- 23,387 29,439 - - 17,602 32,296 1,947 221 - - 1,219 13 (9,918) (24,169) - - (13,875) (12,384) - -------------------------------------------------------------------------------------------------------- 15,416 5,491 - - 4,946 19,925 - -------------------------------------------------------------------------------------------------------- 15,416 5,491 292 (2,285) 4,946 19,925 - -------------------------------------------------------------------------------------------------------- 14,861 8,793 640 (2,040) 6,346 20,518 - -------------------------------------------------------------------------------------------------------- 14,533 5,740 15,269 17,309 35,371 14,853 - -------------------------------------------------------------------------------------------------------- $ 29,394 $ 14,533 $ 15,909 $ 15,269 $ 41,717 $ 35,371 ======================================================================================================== $ 150 $ 2 $ 85 $ - $ (270) $ - ======================================================================================================== - - 18 78 - - - - 70 122 - - - - (70) (373) - - - -------------------------------------------------------------------------------------------------------- - - 18 (173) - - - -------------------------------------------------------------------------------------------------------- 1,398 1,999 - - 1,217 2,265 117 15 - - 84 1 (600) (1,569) - - (972) (907) - -------------------------------------------------------------------------------------------------------- 915 445 - - 329 1,359 - -------------------------------------------------------------------------------------------------------- 915 445 18 (173) 329 1,359 ========================================================================================================
- ---------- * Unaudited (1) On May 10, 2004 and August 2, 2004 the Constellation Funds acquired the assets of certain Turner Funds and the Pitcairn Funds, respectively, in a tax-free reorganization. See Note 10 in Notes to Financial Statements for additional information. (2) Class I Shares were offered beginning on August 27, 2004 for the Constellation Sands Capital Select Growth Fund. Amounts designated as "-" are either $0 or have been rounded to $0. The accompanying notes are an integral part of the financial statements. Constellation Funds 2005 Semiannual Report 73 FINANCIAL STATEMENTS STATEMENTS OF CHANGES IN NET ASSETS (000)
Constellation International Equity Fund ----------------------------------------------- 6 months ended 11/1/03 thru 11/1/02 thru 3/31/05** 9/30/04(1) 10/31/03 - ------------------------------------------------------------------------------------------------------------------------ Investment activities: Net investment income $ 33 $ 861 $ 956 Net realized gain (loss) from securities sold 8,365 12,637 (9,048) Net realized loss from foreign currency transactions (23) (62) (116) Net change in unrealized appreciation (depreciation) of investments 6,923 (2,756) 27,564 Net change in unrealized appreciation (depreciation) on translation of foreign currency and other assets and liabilities denominated in foreign currency (23) (15) 29 - ------------------------------------------------------------------------------------------------------------------------ Net increase in net assets resulting from operations 15,275 10,665 19,385 - ------------------------------------------------------------------------------------------------------------------------ Dividends and distributions to shareholders: Net investment income Class I Shares - - - Class II Shares (238) (2,621) (459) Realized capital gains Class I Shares - - - - ------------------------------------------------------------------------------------------------------------------------ Total dividends and distributions (238) (2,621) (459) - ------------------------------------------------------------------------------------------------------------------------ Capital share transactions: Class I Shares Proceeds from shares issued - - - Proceeds from shares issued in lieu of cash distributions - - - Cost of shares redeemed - - - - ------------------------------------------------------------------------------------------------------------------------ Net increase(decrease) in net assets from Class I Shares transactions - - - - ------------------------------------------------------------------------------------------------------------------------ Class II Shares Proceeds from shares issued 10,084 29,752 10,740 Proceeds from shares issued in lieu of cash distributions 27 340 62 Cost of shares redeemed (12,732) (28,952) (15,424) - ------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from Class II Shares transactions (2,621) 1,140 (4,622) - ------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from capital share transactions (2,621) 1,140 (4,622) - ------------------------------------------------------------------------------------------------------------------------ Total increase in net assets 12,416 9,184 14,304 - ------------------------------------------------------------------------------------------------------------------------ Net assets: Beginning of period 107,001 97,817 83,513 - ------------------------------------------------------------------------------------------------------------------------ End of period $ 119,417 $ 107,001 $ 97,817 ======================================================================================================================== Undistributed net investment income (distributions in excess of net investment income) $ (719) $ (491) $ 898 ======================================================================================================================== Shares issued and redeemed: Class I Shares Issued - - - Issued in lieu of cash distributions - - - Redeemed - - - - ------------------------------------------------------------------------------------------------------------------------ Increase in Class I Shares - - - - ------------------------------------------------------------------------------------------------------------------------ Class II Shares Issued 1,257 4,201 2,016 Issued in lieu of cash distributions 3 51 12 Redeemed (1,601) (4,219) (2,869) - ------------------------------------------------------------------------------------------------------------------------ Increase (decrease) in Class II Shares (341) 33 (841) - ------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in share transactions (341) 33 (841) ========================================================================================================================
74 Constellation Funds 2005 Semiannual Report FINANCIAL STATEMENTS Constellation Strategic Value and High Income Fund - --------------------------------- 6 months ended year ended 3/31/05** 9/30/04(1) - --------------------------------- $ 43* $ 116* 5* 524* - - (1)* 64* - - - --------------------------------- 47 704 - --------------------------------- (42) (116) - - (64) (9) - --------------------------------- (106) (125) - --------------------------------- 734 13,524 105 123 (441) (13,963) - --------------------------------- 398 (316) - --------------------------------- - - - - - - - --------------------------------- - - - --------------------------------- 398 (316) - --------------------------------- 339 263 - --------------------------------- 706 443 - --------------------------------- $ 1,045 $ 706 ================================= $ 1 $ - ================================= 53 985 8 9 (32) (979) - --------------------------------- 29 15 - --------------------------------- - - - - - - - --------------------------------- - - - --------------------------------- 29 15 ================================= - ---------- * Dividend income, net realized gain from securities sold and net change in unrealized appreciation of investment securities are attributable to the underlying investments in affiliated investment companies. ** Unaudited (1) On May 10, 2004 and August 2, 2004 the Constellation Funds acquired the assets of certain Turner Funds and the Pitcairn Funds, respectively, in a tax-free reorganization. See Note 10 in 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. Constellation Funds 2005 Semiannual Report 75 FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
Realized and Net asset unrealized Dividends Total value, Net gains Total from from net Distributions dividends beginning investment (losses) on investment investment from capital and of period income (loss) investments activities income gains distributions - --------------------------------------------------------------------------------------------------------------------------- Constellation Clover Core Value Fund - Class I Shares - --------------------------------------------------------------- 2005* $ 16.51 0.03 2.27 2.30 (0.03) (1.41) (1.44) 2004(1) $ 14.18 0.06 2.84 2.90 (0.06) (0.51) (0.57) 2003(2) $ 11.71 0.05 2.47 2.52 (0.05) - (0.05) 2002 $ 14.85 0.08 (0.61) (0.53) (0.08) (2.53) (2.61) 2001(3) $ 14.23 0.05 0.59 0.64 (0.02) - (0.02) 2000 $ 15.92 0.05 1.79 1.84 (0.07) (3.46) (3.53) - --------------------------------------------------------------- Constellation Clover Small Cap Value Fund - Class I Shares - --------------------------------------------------------------- 2005* $ 23.76 (0.06) 2.20 2.14 - - - 2004(1) $ 19.23 (0.01) 4.57 4.56 (0.03) - (0.03) 2003 $ 15.20 0.01 4.04 4.05 (0.02)(4) - (0.02) 2002 $ 16.69 0.06 (1.50) (1.44) (0.05) - (0.05) 2001(5) $ 16.36 0.10 1.67 1.77 (0.05) (1.39) (1.44) 2000 $ 13.71 (0.02) 3.91 3.89 - (1.24) (1.24) - --------------------------------------------------------------- Constellation Clover Large Cap Value Fund - Class I Shares - --------------------------------------------------------------- 2005* $ 10.83 0.11 0.82 0.93 (0.11) - (0.11) 2004(1) $ 9.56 0.08 1.27 1.35 (0.08) - (0.08) 2003 $ 7.86 0.08 1.70 1.78 (0.08) - (0.08) 2002 $ 9.89 0.10 (2.03) (1.93) (0.10) - (0.10) 2001(6) $ 12.44 0.11 (1.93) (1.82) (0.11) (0.62) (0.73) 2000 $ 11.43 0.08 2.06 2.14 (0.09) (1.04) (1.13) - --------------------------------------------------------------- Constellation Clover Core Fixed Income Fund - Class I Shares - --------------------------------------------------------------- 2005* $ 10.27 0.21 (0.19) 0.02 (0.21) (0.14) (0.35) 2004(1) $ 10.40 0.43 (0.13) 0.30 (0.43) - (0.43) 2003 $ 10.55 0.45 (0.10) 0.35 (0.47) (0.03) (0.50) 2002 $ 10.20 0.52 0.35 0.87 (0.52) - (0.52) 2001(7) $ 9.62 0.54 0.58 1.12 (0.54) - (0.54) 2000 $ 9.50 0.54 0.12 0.66 (0.54) - (0.54) - --------------------------------------------------------------- Constellation Clover Income Plus Fund - Class I Shares - --------------------------------------------------------------- 2005(8)* $ 10.00 0.02 (0.20) (0.18) (0.03) - (0.03) - ---------------------------------------------------------------------------------- Constellation Chartwell Ultra Short Duration Fixed Income Fund - Class I Shares - ---------------------------------------------------------------------------------- 2005(9)* $ 10.12 0.14 (0.02) 0.12 (0.14) - (0.14) 2004(1) $ 10.17 0.21 (0.05) 0.16 (0.21) - (0.21) 2003 $ 10.23 0.08(10) 0.06 0.14 (0.19) (0.01) (0.20) 2002 $ 10.22 0.25 0.05 0.30 (0.29) - (0.29) 2001 $ 10.05 0.54 0.15 0.69 (0.52) - (0.52) 2000 $ 10.05 0.61 0.01 0.62 (0.62) - (0.62)
76 Constellation Funds 2005 Semiannual Report FINANCIAL STATEMENTS
Ratio of net Net assets Ratio of Ratio of total investment Net asset end net expenses expenses income (loss) Portfolio value, end Total of period to average to average to average turnover of period return (000) net assets++ net assets net assets++ rate+++ - ---------------------------------------------------------------------------------------------------------------- $ 17.37 14.01%+ $ 65,817 1.09% 1.09% 0.29% 46% $ 16.51 20.75% $ 59,714 1.08% 1.08% 0.39% 55% $ 14.18 21.61% $ 46,673 1.13% 1.13% 0.43% 67% $ 11.71 (6.37)% $ 43,571 1.10% 1.13% 0.56% 103% $ 14.85 4.50% $ 41,715 1.10% 1.16% 0.30% 128% $ 14.23 13.67% $ 45,657 1.10% 1.11% 0.34% 90% $ 25.90 9.01%+ $ 520,928 1.23% 1.23% (0.40)% 32% $ 23.76 23.72% $ 540,278 1.22% 1.22% (0.09)% 61% $ 19.23 26.66% $ 394,946 1.27% 1.27% 0.08% 52% $ 15.20 (8.69)% $ 464,576 1.26% 1.26% 0.31% 38% $ 16.69 12.15% $ 178,164 1.28% 1.28% 0.37% 120% $ 16.36 29.59% $ 36,254 1.40% 1.47% (0.11)% 86% $ 11.65 8.55%+ $ 6,361 1.22% 1.53% 1.83% 77% $ 10.83 14.07% $ 6,251 1.25% 1.52% 0.72% 78% $ 9.56 22.72% $ 4,792 1.15% 1.70% 0.89% 59% $ 7.86 (19.66)% $ 4,255 0.95% 1.54% 1.06% 70% $ 9.89 (15.47)% $ 5,152 0.95% 3.56% 1.00% 121% $ 12.44 19.84% $ 5,163 0.95% 3.98% 0.75% 154% $ 9.94 0.23%+ $ 27,340 0.80% 0.84% 3.96% 20% $ 10.27 2.97% $ 32,334 0.80% 0.85% 3.94% 45% $ 10.40 3.37% $ 43,391 0.78% 0.87% 4.25% 46% $ 10.55 8.85% $ 42,924 0.75% 0.87% 5.03% 49% $ 10.20 11.99% $ 34,074 0.75% 1.01% 5.50% 34% $ 9.62 7.21% $ 31,486 0.75% 1.02% 5.72% 42% $ 9.79 (1.85)%+ $ 3,639 1.26% 2.89% 3.97% 6% $ 10.10 1.20%+ $ 340,977 0.53% 0.60% 2.77% 42% $ 10.12 1.63% $ 391,934 0.46% 0.58% 2.08% 44% $ 10.17 1.40% $ 462,567 0.41% 0.62% 0.78% 222% $ 10.23 2.95% $ 470,021 0.36% 0.60% 2.27% 71% $ 10.22 7.09% $ 93,531 0.36% 0.87% 5.09% 119% $ 10.05 6.34% $ 30,365 0.36% 1.25% 6.15% 141%
- ---------- * For the six month period ended March 31, 2005 (unaudited). All ratios for the period have been annualized. + Returns are for the period indicated and have not been annualized. ++ Inclusive of directed brokerage arrangements, waivers and reimbursements. +++ Excludes effect of in-kind transfers and mergers. (1) Effective May 10, 2004 and August 2, 2004, the Constellation Funds acquired the assets of certain Turner Funds and the Pitcairn Funds, respectively, in a tax-free reorganization. In connection with the reorganization, CIMCO became the investment adviser to the Funds. See Note 10 in Notes to Financial Statements for additional information. (2) Effective April 15, 2003, the Board of Trustees of Turner Funds approved a resolution to change the name of the Turner Midcap Value Fund to the Turner Core Value Fund and to change its principal investment strategy to a "core" approach. (3) On April 30, 2001, shareholders of the Clover Equity Value Fund approved a change in the adviser from Clover Capital Management, Inc. to Turner Investment Partners, Inc., with Clover Capital becoming the Fund's sub-adviser. In connection with the change in adviser, the Fund changed its name to the Turner Midcap Value Fund effective May 1, 2001. (4) Includes return of capital of $0.004. (5) On April 30, 2001, shareholders of the Clover Small Cap Value Fund approved a change in the adviser from Clover Capital Management, Inc. to Turner Investment Partners, Inc., with Clover Capital becoming the Fund's sub-adviser. In connection with the change in adviser, the Fund changed its name to the Turner Small Cap Value Fund effective May 1, 2001. (6) On April 30, 2001, shareholders of the Clover Max Cap Value Fund approved a change in the adviser from Clover Capital Management, Inc. to Turner Investment Partners, Inc., with Clover Capital becoming the Fund's sub-adviser. In connection with the change in adviser, the Fund changed its name to the Turner Large Cap Value Fund effective May 1, 2001. (7) On April 30, 2001, shareholders of the Clover Fixed Income Fund approved a change in the adviser from Clover Capital Management, Inc. to Turner Investment Partners, Inc., with Clover Capital becoming the Fund's sub-adviser. In connection with the change in adviser, the Fund changed its name to the Turner Core Fixed Income Fund effective May 1, 2001. (8) Commenced operations on February 28, 2005. All ratios for the period have been annualized. (9) On January 28, 2005, Class II Shares merged into Class I Shares. See Note 10 in Notes to Financial Statements for additional information. (10) Based on average shares outstanding. Amounts designated as "-" are either $0 or have been rounded to $0. The accompanying notes are an integral part of the financial statements. Constellation Funds 2005 Semiannual Report 77 FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
Realized and Net asset unrealized Dividends Total value, Net gains Total from from net Distributions dividends beginning investment (losses) on investment investment from capital and of period income (loss) investments activities income gains distributions - --------------------------------------------------------------------------------------------------------------------------- Constellation Chartwell Short Duration Fixed Income Fund - Class I Shares - ---------------------------------------------------------------------------- 2005(1)* $ 10.04 0.18 (0.11) 0.07 (0.18) - (0.18) 2004(2) $ 10.14 0.28 (0.10) 0.18 (0.28) - (0.28) 2003 $ 10.24 0.17(3) 0.05 0.22 (0.25) (0.07) (0.32) 2002 $ 10.16 0.35 0.12 0.47 (0.39) - (0.39) 2001 $ 9.82 0.57 0.32 0.89 (0.55) - (0.55) 2000 $ 9.84 0.58 (0.01) 0.57 (0.59) - (0.59) - ---------------------------------------------------------------------------- Constellation Chartwell High Yield Fund - Class I Shares - ---------------------------------------------------------------------------- 2005* $ 5.12 0.17 (0.10) 0.07 (0.17) - (0.17) 2004(2) $ 5.02 0.35 0.10 0.45 (0.35) - (0.35) 2003 $ 4.45 0.37 0.56 0.93 (0.36) - (0.36) 2002(4) $ 5.49 0.64 (1.04) (0.40) (0.64) - (0.64) 2001 $ 8.10 0.78 (2.61) (1.83) (0.78) - (0.78) 2000 $ 8.82 0.79 (0.72) 0.07 (0.79) - (0.79) - --------------------------------------------------------------------------------------- Constellation HLAM Large Cap Quality Growth Fund(5) - Investor A Shares/Class II Shares - --------------------------------------------------------------------------------------- 2005** $ 21.58 (0.01) (1.11) (1.12) - - - 2004 $ 24.73 0.01 1.16 1.17 - (4.32) (4.32) 2003 $ 24.02 (0.07) 4.58 4.51 - (3.80) (3.80) 2002 $ 30.89 (0.08) (6.79) (6.87) - - - 2001 $ 33.89 (0.12) (2.88) (3.00) - - - 2000 $ 33.71 (0.06) 0.24 0.18 - - _ - ---------------------------------------------------------------------------- Constellation HLAM Large Cap Value Fund - Class II Shares - ---------------------------------------------------------------------------- 2005* $ 9.83 0.02 0.53 0.55 (0.02) - (0.02) 2004(6) $ 10.00 0.01 (0.17) (0.16) (0.01) - (0.01) - ---------------------------------------------------------------------------- Constellation Pitcairn Diversified Value Fund - Class II Shares - ---------------------------------------------------------------------------- 2005* $ 11.22 0.08 0.87 0.95 (0.08) - (0.08) 2004(2)(7) $ 10.26 0.10 0.97 1.07 (0.11) - (0.11) 2003 $ 8.50 0.12 1.77 1.89 (0.13) - (0.13) 2002 $ 9.19 0.10 (0.69) (0.59) (0.10) - (0.10) 2001 $ 10.52 0.09 (1.33) (1.24) (0.09) - (0.09) 2000(8) $ 10.00 0.01(3) 0.51 0.52 - - - - ---------------------------------------------------------------------------- Constellation Pitcairn Select Value Fund - Class II Shares - ---------------------------------------------------------------------------- 2005* $ 10.87 0.04 0.54 0.58 (0.04) (0.16) (0.20) 2004(2)(7) $ 10.38 0.08 0.66 0.74 (0.09) (0.16) (0.25) 2003 $ 8.36 0.08 2.03 2.11 (0.09) - (0.09) 2002 $ 10.01 0.09 (1.65) (1.56) (0.09) - (0.09) 2001 $ 10.96 0.09 (0.95) (0.86) (0.09) - (0.09) 2000(9) $ 10.00 0.02 0.95 0.97 (0.01) - (0.01)
78 Constellation Funds 2005 Semiannual Report FINANCIAL STATEMENTS
Ratio of net Net assets Ratio of Ratio of total investment Net asset end net expenses expenses income (loss) Portfolio value, end Total of period to average to average to average turnover of period return (000) net assets++ net assets net assets++ rate+++ - --------------------------------------------------------------------------------------------------------------- $ 9.93 0.70%+ $ 127,364 0.59% 0.68% 3.23% 26% $ 10.04 1.84% $ 172,213 0.46% 0.60% 2.49% 84% $ 10.14 2.15% $ 252,772 0.41% 0.62% 1.65% 200% $ 10.24 4.69% $ 264,010 0.36% 0.60% 3.27% 178% $ 10.16 9.35% $ 68,405 0.36% 0.72% 5.65% 104% $ 9.82 6.00% $ 42,092 0.36% 0.74% 5.94% 136% $ 5.02 1.31%+ $ 7,135 0.81% 1.33% 6.44% 130% $ 5.12 9.34% $ 10,171 0.86% 1.14% 6.98% 199% $ 5.02 21.61% $ 9,408 0.76% 1.16% 7.71% 241% $ 4.45 (8.05)% $ 9,432 0.68% 1.47% 12.78% 171% $ 5.49 (23.66)% $ 13,977 0.68% 1.38% 11.18% 86% $ 8.10 0.56% $ 32,560 0.68% 1.04% 8.94% 76% $ 20.46 (5.19)%+ $ 17,754 1.25% 1.75% (0.24)% 2% $ 21.58 4.73% $ 20,959 1.30% 1.97% 0.04% 7% $ 24.73 19.07% $ 35,806 1.30% 1.82% (0.27)% 28% $ 24.02 (22.20)% $ 34,963 1.29% 1.46% (0.32)% 19% $ 30.89 (8.85)% $ 51,402 1.25% 1.44% (0.36)% 19% $ 33.89 0.53% $ 62,884 1.29% 1.37% (0.17)% 34% $ 10.36 5.55%+ $ 1,755 1.20% 3.05% 0.32% 11% $ 9.83 (1.58)%+ $ 1,437 1.20% 3.91% 0.33% 4% $ 12.09 8.42%+ $ 162,729 1.10% 1.20% 1.26% 25% $ 11.22 10.50%+ $ 152,202 1.02% 1.14% 1.06% 75% $ 10.26 22.43% $ 143,641 1.01% 1.14% 1.32% 59% $ 8.50 (6.43)% $ 122,391 1.02% 1.13% 1.17% 26% $ 9.19 (11.87)% $ 139,767 1.00% 1.16% 0.92% 48% $ 10.52 5.24%+ $ 165,823 1.00% 1.22% 0.73% 12% $ 11.25 5.24%+ $ 64,730 1.15% 1.23% 0.69% 54% $ 10.87 7.16%+ $ 61,817 1.03% 1.19% 0.84% 111% $ 10.38 25.48% $ 58,133 1.02% 1.23% 0.86% 104% $ 8.36 (15.77)% $ 48,455 1.02% 1.19% 0.92% 110% $ 10.01 (7.90)% $ 60,986 1.00% 1.19% 0.85% 104% $ 10.96 9.70%+ $ 62,392 1.00% 1.33% 0.95% 27%
- ---------- * For the six month period ended March 31, 2005 (unaudited). All ratios for the period have been annualized. ** For the three month period ended March 31, 2005 (unaudited). All ratios for the period have been annualized. The Fund changed its fiscal year end from December 31 to September 30. + Returns are for the period indicated and have not been annualized. ++ Inclusive of directed brokerage arrangements, waivers and reimbursements. +++ Excludes effect of in-kind transfers and mergers. (1) On January 28, 2005, Class II Shares merged into Class I Shares. See Note 10 in Notes to Financial Statements for additional information. (2) Effective May 10, 2004 and August 2, 2004, the Constellation Funds acquired the assets of certain Turner Funds and the Pitcairn Funds, respectively, in a tax-free reorganization. In connection with the reorganization, CIMCO became the investment adviser to the Funds. See Note 10 in Notes to Financial Statements for additional information. (3) Based on average shares outstanding. (4) The information set forth in this table for the periods prior to May 1, 2002, is the financial data of the Penn Capital Strategic High Yield Bond Fund. Effective May 1, 2002, Turner Investment Partners, Inc. became the Fund's adviser. (5) On November 8, 2004, the Constellation Funds acquired the assets and liabilities of the Hilliard Lyons Growth Fund, Inc., in a tax-free reorganization. Investor A Shares were converted into Class II Shares. Subsequently, Investor B Shares were liquidated and exchanged for Class II Shares. Investor A Shares were the accounting survivor in this transaction, and as a result, its operating results for the periods prior to November 8, 2004 have been carried forward in these financial highlights. See Note 10 in Notes to Financial Statements for additional information. (6) Commenced operations on April 30, 2004. All ratios for the period have been annualized. (7) For the eleven-month period ended September 30, 2004. All ratios for the period have been annualized. The Fund changed its fiscal year end from October 31 to September 30. (8) Commenced operations on August 4, 2000. All ratios for the period have been annualized. (9) Commenced operations on August 11, 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. Constellation Funds 2005 Semiannual Report 79 FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
Realized and Net asset unrealized Dividends Total value, Net gains Total from from net Distributions dividends beginning investment (losses) on investment investment from capital and of period income (loss) investments activities income gains distributions - --------------------------------------------------------------------------------------------------------------------------- Constellation Pitcairn Diversified Growth Fund - Class II Shares - --------------------------------------------------------------------- 2005* $ 5.36 0.03 0.25 0.28 (0.03) - (0.03) 2004(1)(2) $ 5.25 - 0.11 0.11 -(3) - - 2003 $ 4.40 - 0.85 0.85 - - - 2002 $ 5.66 (0.01) (1.25) (1.26) - - - 2001 $ 9.18 (0.03) (3.49) (3.52) - - - 2000(4) $ 10.00 (0.01) (0.81) (0.82) - - - - --------------------------------------------------------------------- Constellation Pitcairn Small Cap Fund - Class II Shares - --------------------------------------------------------------------- 2005* $ 15.30 (0.02) 0.73 0.71 - (0.12) (0.12) 2004(1)(2) $ 13.78 (0.04) 1.56 1.52 -(3) - - 2003 $ 9.87 -(5) 3.91 3.91 -(3) - - 2002 $ 10.67 0.07 (0.78) (0.71) (0.09) - (0.09) 2001 $ 10.18 0.10 0.49 0.59 (0.10) - (0.10) 2000(7) $ 10.00 0.02 0.16 0.18 - - - - --------------------------------------------------------------------- Constellation Pitcairn Family Heritage(R) Fund - Class II Shares - --------------------------------------------------------------------- 2005* $ 9.38 0.05 0.27 0.32 (0.05) - (0.05) 2004(1)(2) $ 8.55 - 0.83 0.83 -(3)** - - 2003 $ 6.97 - 1.58 1.58 - - - 2002 $ 7.82 (0.01) (0.84) (0.85) - - - 2001 $ 9.87 (0.02) (2.03) (2.05) - - - 2000(4) $ 10.00 (0.01) (0.12) (0.13) - - - - --------------------------------------------------------------------- Constellation Pitcairn Taxable Bond Fund - Class II Shares - --------------------------------------------------------------------- 2005* $ 10.77 0.22 (0.27) (0.05) (0.22) - (0.22) 2004(1)(2) $ 10.73 0.43 0.04 0.47 (0.43) - (0.43) 2003 $ 10.47 0.51 0.26 0.77 (0.51) - (0.51) 2002 $ 10.98 0.56 (0.42) 0.14 (0.56) (0.09) (0.65) 2001 $ 10.09 0.59 0.90 1.49 (0.60) - (0.60) 2000(4) $ 10.00 0.15 0.09 0.24 (0.15) - (0.15) - --------------------------------------------------------------------- Constellation Pitcairn Tax-Exempt Bond Fund - Class II Shares - --------------------------------------------------------------------- 2005* $ 10.78 0.21 (0.14) 0.07 (0.21) (0.07) (0.28) 2004(1)(2) $ 10.77 0.39 0.05 0.44 (0.39) (0.04) (0.43) 2003 $ 10.71 0.44 0.09 0.53 (0.44) (0.03) (0.47) 2002 $ 10.60 0.44 0.12 0.56 (0.44) (0.01) (0.45) 2001 $ 10.04 0.45 0.57 1.02 (0.46) - (0.46) 2000(8) $ 10.00 0.10 0.04 0.14 (0.10) - (0.10) - --------------------------------------------------------------------- Constellation Sands Capital Select Growth Fund - Class I Shares - --------------------------------------------------------------------- 2005* $ 6.80 (0.03) 0.12 0.09 - - - 2004(1)(9) $ 6.74 - 0.06 0.06 - - - - --------------------------------------------------------------------- Constellation Sands Capital Select Growth Fund - Class II Shares - --------------------------------------------------------------------- 2005* $ 6.80 (0.01) 0.10 0.09 - - - 2004(1)(2) $ 6.13 (0.06) 0.73 0.67 - - - 2003 $ 4.81 (0.04)(5) 1.36 1.32 - - - 2002 $ 5.55 (0.04) (0.70) (0.74) - - - 2001 $ 9.02 (0.04) (3.43) (3.47) - - - 2000(8) $ 10.00 (0.01) (0.97) (0.98) - - -
80 Constellation Funds 2005 Semiannual Report FINANCIAL STATEMENTS
Ratio of net Net assets Ratio of Ratio of total investment Net asset end net expenses expenses income (loss) Portfolio value, end Total of period to average to average to average turnover of period return (000) net assets++ net assets net assets++ rate+++ - ---------------------------------------------------------------------------------------------------------------- $ 5.61 5.14%+ $ 110,013 1.10% 1.21% 1.02% 20% $ 5.36 2.14%+ $ 104,528 1.02% 1.15% -% 53% $ 5.25 19.32% $ 95,724 1.01% 1.16% 0.05% 70% $ 4.40 (22.26)% $ 82,368 1.01% 1.14% (0.15)% 35% $ 5.66 (38.34)% $ 107,141 1.00% 1.17% (0.44)% 37% $ 9.18 (8.20)%+ $ 174,960 1.00% 1.22% (0.68)% 6% $ 15.89 4.61%+ $ 95,784 1.11% 1.21% (0.20)% 37% $ 15.30 11.03%+ $ 92,848 1.08% 1.15% (0.26)% 72% $ 13.78 39.65% $ 87,520 1.20%(6) 1.17% (0.04)% 149% $ 9.87 (6.78)% $ 50,096 1.28%(6) 1.38% 0.58% 93% $ 10.67 5.80% $ 62,227 1.16%(6) 1.19% 0.93% 96% $ 10.18 1.80%+ $ 67,651 1.22%(6) 1.33% 1.11% 10% $ 9.65 3.39%+ $ 82,116 1.30% 1.42% 1.12% 14% $ 9.38 9.77%+ $ 78,103 1.23% 1.37% 0.01% 19% $ 8.55 22.67% $ 73,490 1.23% 1.38% 0.06% 12% $ 6.97 (10.87)% $ 66,126 1.27% 1.36% (0.18)% 24% $ 7.82 (20.77)% $ 77,295 1.20% 1.37% (0.19)% 37% $ 9.87 (1.30)%+ $ 98,420 1.20% 1.44% (0.29)% 1% $ 10.50 (0.51)%+ $ 48,045 0.90% 0.95% 4.08% 13% $ 10.77 4.42%+ $ 43,239 0.75% 0.94% 4.36% 26% $ 10.73 7.44% $ 43,432 0.73% 0.97% 4.74% 24% $ 10.47 1.46% $ 40,058 0.78% 0.98% 5.35% 58% $ 10.98 15.19% $ 35,562 0.70% 0.99% 5.63% 54% $ 10.09 2.36%+ $ 37,212 0.70% 1.10% 6.51% 7% $ 10.57 0.56%+ $ 116,208 0.70% 0.81% 3.81% 19% $ 10.78 4.20%+ $ 113,880 0.62% 0.75% 3.97% 25% $ 10.77 4.96% $ 111,470 0.60% 0.74% 4.06% 14% $ 10.71 5.41% $ 115,905 0.60% 0.74% 4.19% 14% $ 10.60 10.30% $ 113,071 0.60% 0.77% 4.35% 23% $ 10.04 1.43%+ $ 99,187 0.60% 0.86% 4.88% 10% $ 6.89 1.32%+ $ 59,324 1.10% 1.14% (0.33)% 19% $ 6.80 0.89%+ $ 32,591 1.10% 1.10% (0.79)% 11% $ 6.89 1.32%+ $ 83,772 1.35% 1.39% (0.49)% 19% $ 6.80 10.93%+ $ 70,027 1.20% 1.35% (0.95)% 11% $ 6.13 27.44% $ 43,878 1.17% 1.45% (0.81)% 28% $ 4.81 (13.33)% $ 32,818 1.16% 1.43% (0.69)% 24% $ 5.55 (38.44)% $ 39,326 1.15% 1.43% (0.63)% 37% $ 9.02 (9.80)%+ $ 54,794 1.15% 1.50% (0.61)% 13%
- ---------- * For the six month period ended March 31, 2005 (unaudited). All ratios for the period have been annualized. ** Includes return capital of $0.0003. + Returns are for the period indicated and have not been annualized. ++ Inclusive of directed brokerage arrangements, waivers and reimbursements. +++ Excludes effect of in-kind transfers and mergers. (1) Effective May 10, 2004 and August 2, 2004, the Constellation Funds acquired the assets of certain Turner Funds and the Pitcairn Funds, respectively, in a tax-free reorganization. In connection with the reorganization, CIMCO became the investment adviser to the Funds. See Note 10 in Notes to Financial Statements for additional information. (2) For the eleven-month period ended September 30, 2004. All ratios have been annualized. The Fund changed its fiscal year end from October 31 to September 30. (3) Amounts represents less than $0.01 per share. (4) Commenced operations on August 4, 2000. All ratios for the period have been annualized. (5) Based on average shares outstanding. (6) The ratio of expenses to average net assets excluding interest expense for the periods ended October 31, 2003, October 31, 2002, October 31, 2001 and October 31, 2000 were 1.10%, 1.19%, 1.00% and 1.00% respectively. (7) Commenced operations on August 25, 2000. All ratios for the period have been annualized. (8) Commenced operations on August 11, 2000. All ratios for the period have been annualized. (9) Commenced operations on August 27, 2004. 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. Constellation Funds 2005 Semiannual Report 81 FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
Realized and Net asset unrealized Dividends Total value, Net gains Total from from net Distributions dividends beginning investment (losses) on investment investment from capital and of period income (loss) investments activities income gains distributions - --------------------------------------------------------------------------------------------------------------------------- Constellation TIP Small Cap Value Opportunities Fund - Class II Shares - -------------------------------------------------------------------------- 2005* $ 16.21 0.08 1.58 1.66 - (1.64) (1.64) 2004(1) $ 12.72 (0.04) 3.75 3.71 - (0.22) (0.22) 2003 $ 9.27 (0.01) 3.47 3.46 (0.01) - (0.01) 2002(2) $ 10.00 - (0.73) (0.73) - - - - -------------------------------------------------------------------------- Constellation TIP Financial Services Fund - Class I Shares - -------------------------------------------------------------------------- 2005* $ 13.88 0.08 1.31 1.39 - (1.05) (1.05) 2004(1) $ 13.60 (0.04) 1.69 1.65 - (1.37) (1.37) 2003 $ 10.11 (0.02) 3.62 3.60 - (0.11) (0.11) 2002 $ 16.67 (0.02) (1.12) (1.14) - (5.42) (5.42) 2001(3)(4) $ 19.76 (0.13) (2.96) (3.09) - - - 2001 $ 17.19 (0.14) 3.30 3.16 - (0.59) (0.59) 2000 $ 18.01 (0.17) (0.65) (0.82) - - - - -------------------------------------------------------------------------- Constellation TIP Healthcare & Biotechnology Fund - Class II Shares - -------------------------------------------------------------------------- 2005* $ 13.79 (0.09) 1.24 1.15 - (0.52) (0.52) 2004(1) $ 12.31 (0.06) 1.55 1.49 - (0.01) (0.01) 2003 $ 9.83 (0.11) 2.59 2.48 - - - 2002 $ 11.15 (0.10) (1.20) (1.30) - (0.02) (0.02) 2001(5) $ 10.00 (0.03) 1.18 1.15 - - - - -------------------------------------------------------------------------- Constellation International Equity Fund - Class II Shares - -------------------------------------------------------------------------- 2005* $ 7.06 - 1.02 1.02 (0.02) - (0.02) 2004(1)(6) $ 6.47 0.05 0.71 0.76 (0.17) - (0.17) 2003 $ 5.23 0.06 1.21 1.27 (0.03) - (0.03) 2002 $ 6.19 0.04 (0.94) (0.90) (0.06) - (0.06) 2001 $ 9.28 0.01 (3.05) (3.04) (0.02) (0.03) (0.05) 2000(7) $ 10.00 (0.01) (0.71) (0.72) - - - - -------------------------------------------------------------------------- Constellation Strategic Value and High Income Fund(8) - Class I Shares - -------------------------------------------------------------------------- 2005* $ 14.01 0.60 0.21 0.81 (0.60) (0.98) (1.58) 2004(1) $ 12.58 0.47 1.53 2.00 (0.47) (0.10) (0.57) 2003(9) $ 10.00 0.25 2.58 2.83 (0.25) - (0.25)
82 Constellation Funds 2005 Semiannual Report FINANCIAL STATEMENTS
Ratio of net Net assets Ratio of Ratio of total investment Net asset end net expenses expenses income (loss) Portfolio value, end Total of period to average to average to average turnover of period return (000) net assets++ net assets net assets++ rate+++ - ---------------------------------------------------------------------------------------------------------------- $ 16.23 9.96%+ $ 29,394 1.45% 2.31% 1.31% 94% $ 16.21 29.36% $ 14,533 1.45% 1.82% (0.23)% 272% $ 12.72 37.29% $ 5,740 1.40% 3.64% (0.26)% 245% $ 9.27 (7.30)%+ $ 913 1.45% 6.18% 0.08% 142% $ 14.22 9.64%+ $ 15,909 1.48% 1.59% 1.07% 38% $ 13.88 12.31% $ 15,269 1.45% 1.52% (0.24)% 103% $ 13.60 35.95% $ 17,309 1.50% 1.82% (0.22)% 139% $ 10.11 (12.48)% $ 12,149 1.40% 2.16% (0.40)% 171% $ 16.67 (15.64)%+ $ 15,554 2.29% 2.33% (1.19)% 52% $ 19.76 18.20% $ 23,341 2.11% 2.11% (0.59)% 110% $ 17.19 (4.55)% $ 25,892 2.14% 2.14% (0.91)% 180% $ 14.42 8.27%+ $ 41,717 1.85% 1.87% (1.48)% 104% $ 13.79 12.12% $ 35,371 1.61% 1.84% (1.10)% 163% $ 12.31 25.23% $ 14,853 1.47% 1.63% (1.16)% 274% $ 9.83 (11.66)% $ 9,288 1.87% 2.33% (1.44)% 202% $ 11.15 11.50%+ $ 1,192 1.50% 13.70% (0.79)% 95% $ 8.06 14.39%+ $ 119,417 1.45% 1.58% 0.06% 30% $ 7.06 11.97%+ $ 107,001 1.35% 1.60% 0.90% 62% $ 6.47 24.40% $ 97,817 1.30% 1.60% 1.15% 128% $ 5.23 (14.68)% $ 83,513 1.32% 1.48% 0.63% 69% $ 6.19 (32.91)% $ 108,777 1.25% 1.45% 0.16% 44% $ 9.28 (7.20)%+ $ 175,029 1.25% 1.53% (0.37)% 10% $ 13.24 5.48%+ $ 1,045 0.25% 4.64% 8.93% 48% $ 14.01 16.04% $ 706 0.25% 1.36% 3.23% 411% $ 12.58 28.57%+ $ 443 0.25% 21.93% 3.27% 397%
- ---------- * For the six month period ended March 31, 2005 (unaudited). All ratios for the period have been annualized. + Returns are for the period indicated and have not been annualized. ++ Inclusive of directed brokerage arrangements, waivers and reimbursements. +++ Excludes effect of in-kind transfers and mergers. (1) Effective May 10, 2004 and August 2, 2004, the Constellation Funds acquired the assets of certain Turner Funds and the Pitcairn Funds, respectively, in a tax-free reorganization. In connection with the reorganization, CIMCO became the investment adviser to the Funds. See Note 10 in Notes to Financial Statements for additional information. (2) Commenced operations on March 4, 2002. All ratios for the period have been annualized. (3) On November 12, 2001, the Titan Financial Services Fund (the "Titan Fund") exchanged all of its assets and liabilities for shares of the Turner Financial Services Fund. The Titan Fund is the accounting survivor in this transaction, and as a result, the accounting history and operating results for the periods prior to November 12, 2001 have been carried forward in these financial highlights. (4) For the six month period ended October 31, 2001. All ratios for the period have been annualized. The Titan Fund changed its fiscal year end from April 30 to October 31. (5) Commenced operations on February 28, 2001. All ratios for the period have been annualized. (6) For the eleven-month period ended September 30, 2004. All ratios have been annualized. The Fund changed its fiscal year end from October 31 to September 30. (7) Commenced operations on August 4, 2000. All ratios for the period have been annualized. (8) The Constellation Strategic Value and High Income Fund and its shareholders indirectly bear a pro rata share of the expenses of the underlying Constellation Funds. The expense ratios do not include such expenses. Recognition of net investment income is affected by the timing of the declaration of dividends by the Constellation Funds in which the Constellation Strategic Value and High Income Fund invests. (9) Commenced operations on October 31, 2002. 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. Constellation Funds 2005 Semiannual Report 83 NOTES TO FINANCIAL STATEMENTS (unaudited) NOTES TO FINANCIAL STATEMENTS March 31, 2005 1. ORGANIZATION: The Constellation Funds (the "Trust"), a Delaware statutory trust, is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company with 24 active portfolios. The financial statements included herein are those of the Constellation Clover Core Value Fund, the Constellation Clover Small Cap Value Fund, the Constellation Clover Large Cap Value Fund, the Constellation Clover Core Fixed Income Fund, the Constellation Clover Income Plus Fund, the Constellation Chartwell Ultra Short Duration Fixed Income Fund, the Constellation Chartwell Short Duration Fixed Income Fund, the Constellation Chartwell High Yield Fund, the Constellation HLAM Large Cap Quality Growth Fund, the Constellation HLAM Large Cap Value Fund, the Constellation Pitcairn Diversified Value Fund, the Constellation Pitcairn Select Value Fund, the Constellation Pitcairn Diversified Growth Fund, the Constellation Pitcairn Small Cap Fund, the Constellation Pitcairn Family Heritage(R) Fund, the Constellation Pitcairn Taxable Bond Fund, the Constellation Pitcairn Tax-Exempt Bond Fund, the Constellation Sands Capital Select Growth Fund, the Constellation TIP Small Cap Value Opportunities Fund, the Constellation TIP Financial Services Fund, the Constellation TIP Healthcare & Biotechnology Fund, the Constellation International Equity Fund and the Constellation Strategic Value and High Income Fund, each a "Fund" and collectively the "Funds". Each Fund is registered as a diversified portfolio of the Trust with the exception of the Constellation HLAM Large Cap Quality Growth Fund, the Constellation Pitcairn Select Value Fund, the Constellation Pitcairn Family Heritage(R) Fund, the Constellation Pitcairn Taxable Bond Fund, the Constellation Sands Capital Select Growth Fund, the Constellation TIP Financial Services Fund and the Constellation TIP Healthcare & Biotechnology Fund, each of which is non-diversified. The Funds are registered to offer different classes of shares: Class I Shares, Class II Shares, or both. The assets of each Fund are segregated, and a shareholder's interest is limited to the Fund in which shares are held. The Funds' prospectus provides a description of each Fund's investment objectives, policies, and strategies along with information on the classes of shares currently being offered. 2. SIGNIFICANT ACCOUNTING POLICIES: The following is a summary of the significant accounting policies followed by the Funds. 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 reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of income and expenses during the reported period. Actual results could differ from those estimates. 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 ) 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. The prices for foreign securities are reported in local currency and converted to U.S. dollars using currency exchange rates. Prices for most securities held in the Funds are provided daily by recognized independent pricing agents. If a security price cannot be obtained from an independent, third-party pricing agent, the Funds seek to obtain and use the average of the bid and ask price from at least two independent brokers. 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 Funds' Fair Value Procedures are implemented through a Fair Value Committee (the "Committee") designated by the Funds' Board of Trustees. Some of the more common reasons that may necessitate that a security be valued using Fair Value 84 Constellation Funds 2005 Semiannual Report NOTES TO FINANCIAL STATEMENTS (unaudited) 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's primary pricing source is not able or willing to provide a price or a significant event with respect to a security has occurred. 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. For securities that principally trade on a foreign market or exchange, a significant gap in time can exist between the time of a particular security's last trade and the time at which a Fund calculates its net asset value. The closing prices of such securities may no longer reflect their market value at the time the Fund calculates its net asset value if an event that could materially affect the value of those securities (a "Significant Event") has occurred between the time of the security's last close and the time that the Fund calculates its net asset value. A Significant Event may relate to a single issuer or to an entire market sector. If the Adviser or Sub-Adviser of a Fund becomes aware of a Significant Event that has occurred with respect to a security or group of securities after the closing of the exchange or market on which the security or securities principally trade, but before the time at which the Fund calculates its net asset value, it may request that a Committee meeting be called. In addition, the Funds' Administrator or Sub-Administrator monitors price movements among certain selected indices, securities and/or baskets of securities that may be an indicator that the closing prices received earlier from foreign exchanges or markets may not reflect market value at the time the Fund calculates its net asset value. If price movements in a monitored index or security exceed levels established by the Adviser, the Administrator or Sub-Administrator notifies the Adviser or Sub-Adviser for any Fund holding the relevant securities that such limits have been exceeded. In such event, the Adviser makes the determination whether a Committee meeting should be called based on the information provided. The assets of the Constellation Strategic Value and High Income Fund consist of investments in underlying affiliated investment companies, which are valued at their respective net asset value per share. Security transactions and related income - Security transactions are accounted for on the date the security is purchased or sold (trade date). Dividend income is recognized on the ex-dividend date, and interest income is recognized on the accrual basis subject to the recognition of certain gains and losses on mortgage-and asset-backed securities. Costs used in determining realized gains and losses on the sales of investment securities are those of the specific securities sold during the respective holding period. Purchase discounts and premiums on securities held by the Funds are accreted and amortized to maturity using the effective interest method. Repurchase agreements - Securities pledged as collateral for repurchase agreements are held by the custodian bank until the respective agreements mature. Provisions of the repurchase agreements ensure that the market value of the collateral, including accrued interest thereon, is not less than 100%. In the event of default of the counter party and the value of the collateral declines or if the counter party enters an insolvency proceeding, realization of the collateral by the Funds may be delayed or limited. Securities sold short - A Fund may sell a security short by borrowing and selling the identical security in the secondary market. While a security is sold short, the Fund recognizes rebate income, incurs interest expense on certain amounts related to the securities sold short and reflects changes in the value of the securities sold short as unrealized gains or losses in the Statement of Operations of the Fund. Foreign currency translation - The books and records of the Constellation International Equity Fund are maintained in U.S. dollars and translated into U.S. dollars on the following basis: (1) market value of investment securities, assets and liabilities at the current rate of exchange on the valuation date; and (2) purchases and sales of investment securities, income and expenses at the relevant rates of exchange prevailing on the respective dates of such transactions. The Constellation International Equity Fund does not isolate that portion of gains and losses on investments in equity securities that is due to changes in the foreign exchange rates from that which is due to changes in market prices of equity securities. Forward foreign currency contracts - The Constellation Constellation Funds 2005 Semiannual Report 85 NOTES TO FINANCIAL STATEMENTS (unaudited) International Equity Fund may enter into forward foreign currency contracts as hedges against specific transactions. All commitments are "marked-to-market" daily at the applicable foreign exchange rate, and any resulting unrealized gains or losses are recorded currently. The Constellation International Equity Fund realizes gains or losses at the time forward contracts are extinguished. Unrealized gains or losses on outstanding positions in forward foreign currency contracts held at the close of the year are recognized as ordinary income or loss for deferral tax purposes. Foreign withholding taxes - A Fund may be subject to taxes imposed by countries in which it invests with respect to its investment in issuers existing or operating in such countries. Such taxes are generally based on income earned. A Fund accrues such taxes when the related income is earned. Expenses - Expenses that are specifically attributed to one of the Funds are charged to that Fund. Certain other expenses of the Funds are prorated among the Trust on the basis of relative daily net assets. Other common expenses of the Trust are allocated among the Funds on the basis of relative daily net assets. In addition to the Funds' direct expenses, shareholders of the Constellation Strategic Value and High Income Fund also bear a proportionate share of the underlying funds' expenses. 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. Dividends and distributions - The Constellation TIP Small Cap Value Opportunities, Constellation TIP Financial Services, Constellation TIP Healthcare & Biotechnology and Constellation International Equity Funds declare and distribute net investment income, if any, annually, as a dividend to shareholders. The Constellation Clover Core Value, Constellation Clover Small Cap Value, Constellation Clover Large Cap Value, Constellation HLAM Large Cap Quality Growth, Constellation HLAM Large Cap Value, Constellation Pitcairn Diversified Value, Constellation Pitcairn Select Value, Constellation Pitcairn Diversified Growth, Constellation Pitcairn Small Cap, Constellation Pitcairn Family Heritage(R), Constellation Sands Capital Select Growth and Constellation Strategic Value and High Income Funds declare and distribute net investment income, if any, quarterly, as a dividend to shareholders. The Constellation Clover Core Fixed Income, Constellation Chartwell Ultra Short Duration Fixed Income, Constellation Chartwell Short Duration Fixed Income, Constellation Chartwell High Yield, Constellation Pitcairn Taxable Bond and Constellation Pitcairn Tax-Exempt Bond Funds declare net investment income daily and distribute it monthly, as a dividend to shareholders. Any net realized capital gains on sales of securities for all Funds are distributed to shareholders at least annually. Redemption fees - Each Fund, except for the Constellation Chartwell Ultra Short Duration Fixed Income Fund and Constellation Chartwell Short Duration Fixed Income Fund, may charge a redemption fee up to 2% of redemption proceeds, which will automatically be paid to the Fund. There were no redemption fees collected during the period ended March 31, 2005. 3. TRANSACTIONS WITH AFFILIATES: Certain trustees and officers of the Trust are also officers of Constellation Investment Management Company, LP ("CIMCO" or the "Adviser"), Constellation Investment Distribution Company, Inc. ("CIDCO" or the "Distributor") and SEI Investments Global Funds Services ("SEI"). Such officers are paid no fees by the Trust for serving as officers and trustees of the Trust. Pursuant to an exemptive order issued by the Securities and Exchange Commission, the Funds and the Adviser are permitted to operate in a "Manager-of-Managers" structure. 4. ADMINISTRATION, SHAREHOLDER SERVICING, AND DISTRIBUTION AGREEMENTS: Effective March 1, 2004, CIMCO began providing administrative services for the Funds. For its services, CIMCO receives an annual fee of 0.15% of the aggregate average daily net assets of the Trust up to $2 billion and 0.12% of the aggregate average daily net assets of the Trust over $2 billion. The fee is then allocated among the Funds on the basis of relative daily net assets. Under a separate Sub-Administration Agreement between CIMCO and SEI, SEI provides sub-administrative services to the Trust. For the period ended March 31, 2005, SEI was paid $533,026 for its services. 86 Constellation Funds 2005 Semiannual Report NOTES TO FINANCIAL STATEMENTS (unaudited) CIDCO provides distribution services to the Funds under a Distribution Agreement. The Constellation Clover Income Plus, Constellation HLAM Large Cap Quality Growth, Constellation HLAM Large Cap Value, Constellation Pitcairn Diversified Value, Constellation Pitcairn Select Value, Constellation Pitcairn Diversified Growth, Constellation Pitcairn Small Cap, Constellation Pitcairn Family Heritage(R), Constellation Pitcairn Taxable Bond, Constellation Pitcairn Tax-Exempt Bond, Constellation Sands Capital Select Growth, Constellation TIP Small Cap Value Opportunities, Constellation TIP Healthcare & Biotechnology, Constellation International Equity and Constellation Strategic Value and High Income Funds have adopted a Distribution and Shareholder Service Plan for their Class II Shares (the "Class II Plan"). Under the Class II Plan, a Plan adopted pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended, the Distributor is eligible to receive aggregate fees not exceeding 0.75% of each Fund's Class II Shares' average daily net assets in return for providing a broad range of distribution services. Under the Plan, CIMCO currently receives fees equal to 0.25% of each Fund's Class II Shares' average daily net assets to provide or procure shareholder services. No fees are currently being paid for distribution services. DST Systems, Inc. serves as the transfer agent and dividend disbursing agent for the Funds under a transfer agency agreement with the Trust. Certain Funds reimburse CIMCO for amounts paid to third parties that provide sub-transfer agency and other administrative services to the Funds. 5. INVESTMENT ADVISORY AGREEMENT: The Trust and CIMCO are parties to an Investment Advisory Agreement dated March 4, 2004 under which CIMCO receives a fee, that is calculated daily and paid monthly. For its services, CIMCO is entitled to receive base investment advisory fees at an annualized rate, based on the average daily net assets of each Fund. CIMCO has agreed to waive all or a portion of its fee and to reimburse expenses in order to keep certain Fund's "Other Expenses" from exceeding a specified percentage of the average daily net assets of the Fund on an annualized basis.
"OTHER ADVISORY EXPENSE" TOTAL FEES CAP EXPENSES -------- -------- -------- Constellation Clover Core Value Fund 0.74% 0.50%(1) 1.24% Constellation Clover Small Cap Value Fund 0.85 0.50(1) 1.35 Constellation Clover Large Cap Value Fund 0.74 0.50(1) 1.24 Constellation Clover Core Fixed Income Fund 0.45 0.35(1) 0.80 Constellation Clover Income Plus Fund 0.80 0.50(2) 1.30 Constellation Chartwell Ultra Short Duration Fixed Income Fund 0.25 0.43(3)(4) 0.68 Constellation Chartwell Short Duration Fixed Income Fund 0.25 0.43(3)(4) 0.68 Constellation Chartwell High Yield Fund 0.55 0.05(3)(5) 0.60 Constellation HLAM Large Cap Quality Growth Fund 0.75 0.50(6) 1.25 Constellation HLAM Large Cap Value Fund 0.70 0.50(3) 1.20 Constellation Pitcairn Diversified Value Fund 0.70 0.40(7) 1.10 Constellation Pitcairn Select Value Fund 0.70 0.45(7) 1.15 Constellation Pitcairn Diversified Growth Fund 0.70 0.40(7) 1.10 Constellation Pitcairn Small Cap Fund 0.70 0.40(7)(8) 1.10 Constellation Pitcairn Family Heritage(R) Fund 0.90 0.40(7) 1.30 Constellation Pitcairn Taxable Bond Fund 0.40 0.50(7) 0.90 Constellation Pitcairn Tax-Exempt Bond Fund 0.30 0.40(7) 0.70 Constellation Sands Capital Select Growth Fund - Class I Shares 0.85 0.25(7) 1.10 Constellation Sands Capital Select Growth Fund - Class II Shares 0.85 0.50(7) 1.35 Constellation TIP Small Cap Value Opportunities Fund 0.95 0.50(3) 1.45 Constellation International Equity Fund 0.95 0.50(7)(8) 1.45 Constellation Strategic Value and High Income Fund 0.10 0.15(3) 0.25
(1) Represents a voluntary cap. (2) Represents a contractual cap effective through October 1, 2005. (3) Represents a contractual cap effective through January 31, 2006. (4) Effective February 1, 2005, the Board agreed to increase the other expense cap from 0.24% to 0.43%. (5) Effective February 1, 2005, the Board agreed to decrease the other expense cap from 0.35% to 0.05%. (6) Represents a contractual cap effective through October 1, 2007. (7) Represents a contractual cap effective through July 31, 2007. (8) This fee waiver obligation will be reduced by up to 0.01% to the extent that the Fund earns revenues from securities lending activities. See the Funds' Prospectus for additional information. For the Constellation TIP Financial Services and Constellation TIP Healthcare & Biotechnology Funds, the advisory fees are comprised of a base fee and a performance adjustment that increases or decreases the total fee depending upon the performance of the Fund relative to the Fund's performance benchmark. The Fund's base fee is accrued daily and paid monthly, based on the Fund's average net assets during the current Constellation Funds 2005 Semiannual Report 87 NOTES TO FINANCIAL STATEMENTS (unaudited) month. The performance period consists of the previous 12 months. The performance adjustment is calculated and paid monthly by comparing the Fund's performance to that of the Fund's performance benchmark over the performance period. The annual performance adjustment is multiplied by the average net assets of the Fund over the entire performance period, which is then multiplied by a fraction, the numerator of which is the number of days in the month and the denominator of which is 365 (366 in leap years). The resulting amount is then added to (in the case of over performance) or subtracted from (in the case of underperformance) the base fee. The base advisory fee, annual adjustment rate, benchmark, and over/under performance relative to the benchmark threshold are as follows: BASE ANNUAL ADVISORY ADJUSTMENT BENCHMARK FEE RATE BENCHMARK THRESHOLD(1) ------------ ------------ ------------ ------------ Constellation TIP Financial S&P Services Financials Fund 1.00% +/-0.25% Index +/-3.01% Constellation TIP Healthcare & S&P Biotechnology Healthcare Fund 1.00 +/-0.25 Index +/-3.01 (1) See the Funds' Prospectus and Statement of Additional Information for more information regarding the Funds' benchmark performance. During the period ended March 31, 2005, the Funds' advisory fees were adjusted in accordance with the policy described above: BASE NET ADVISER ADVISER PERFORMANCE FEE BEFORE FEE ADJUSTMENT WAIVERS ------------ ------------ ------------ Constellation TIP Financial Services Fund $ 79,920 $ 8,253 $ 88,173 Constellation TIP Healthcare & Biotechnology Fund 182,398 24,747 207,145 Beginning May 1, 2005 for the remaining Former Turner Funds and the Constellation HLAM Large Cap Value Fund, August 1, 2005 for the Former Pitcairn Funds, December 1, 2005 for the Constellation HLAM Large Cap Quality Growth Fund and January 31, 2006 for the Constellation Clover Income Plus Fund, the Funds' advisory fees will be subject to adjustment, up or down, based on each Fund's performance relative to the performance of the Fund's benchmark. See the Funds' Prospectus and Statement of Additional Information for more information regarding the Funds' benchmark performance. CIMCO has entered into investment sub-advisory agreements with the following parties: Clover Capital Management, Inc. Constellation Clover Core Value Fund Constellation Clover Small Cap Value Fund Constellation Clover Large Cap Value Fund Constellation Clover Core Fixed Income Fund Constellation Clover Income Plus Fund Chartwell Investment Partners Constellation Chartwell Ultra Short Duration Fixed Income Fund Constellation Chartwell Short Duration Fixed Income Fund Constellation Chartwell High Yield Fund Hilliard Lyons Asset Management Constellation HLAM Large Cap Quality Growth Fund Constellation HLAM Large Cap Value Fund Pitcairn Investment Management Constellation Pitcairn Diversified Value Fund Constellation Pitcairn Select Value Fund Constellation Pitcairn Diversified Growth Fund Constellation Pitcairn Small Cap Fund Constellation Pitcairn Family Heritage(R) Fund Constellation Pitcairn Taxable Bond Fund Constellation Pitcairn Tax-Exempt Bond Fund Sands Capital Management, Inc. Constellation Sands Capital Select Growth Fund Turner Investment Partners, Inc. Constellation TIP Small Cap Value Opportunities Fund Constellation TIP Financial Services Fund Constellation TIP Healthcare & Biotechnology Fund Oechsle International Advisors, LLC Constellation International Equity Fund The Boston Company Asset Management, LLC Constellation International Equity Fund Brandywine Asset Management, LLC Constellation International Equity Fund CIMCO pays sub-advisory fees to each Sub-Adviser from its advisory fee, if any. Similar to the advisory fee paid to CIMCO, the sub-advisory fee paid to Clover Capital Management, Inc., Chartwell Investment Partners, Pitcairn Investment Management, Sands Capital Management, Inc., Brandywine Asset Management, LLC and Turner Investment Partners, Inc. can increase or decrease depending on a Fund's performance relative to its benchmark. The sub-advisory fees paid to Oechsle International Advisors, LLC and The Boston Company Asset Management, LLC are not subject to a performance adjustment. 88 Constellation Funds 2005 Semiannual Report NOTES TO FINANCIAL STATEMENTS (unaudited) 6. INVESTMENT TRANSACTIONS: The cost of security purchases and the proceeds from security sales and maturities, other than short-term investments, for the period ended March 31, 2005, were as follows:
SALES AND PURCHASES MATURITIES (000) (000) ----------- ----------- Constellation Clover Core Value Fund $ 28,923 $ 29,962 Constellation Clover Small Cap Value Fund 175,006 238,521 Constellation Clover Large Cap Value Fund 4,742 4,840 Constellation Clover Income Plus Fund 3,303 187 Constellation Chartwell High Yield Fund 8,230 11,038 Constellation HLAM Large Cap Quality Growth Fund 387 2,734 Constellation HLAM Large Cap Value Fund 413 169 Constellation Pitcairn Diversified Value Fund 40,550 41,597 Constellation Pitcairn Select Value Fund 34,518 34,528 Constellation Pitcairn Diversified Growth Fund 22,758 22,306 Constellation Pitcairn Small Cap Fund 35,502 35,504 Constellation Pitcairn Family Heritage(R)Fund 13,025 11,705 Constellation Pitcairn Taxable Bond Fund 12,953 6,178 Constellation Pitcairn Tax-Exempt Bond Fund 26,461 20,889 Constellation Sands Capital Select Growth Fund 64,110 22,631 Constellation TIP Small Cap Value Opportunities Fund 34,737 20,657 Constellation TIP Financial Services Fund 5,856 6,709 Constellation TIP Healthcare & Biotechnology Fund 37,101 36,266 Constellation International Equity Fund 33,596 38,897 Constellation Strategic Value and High Income Fund 786 445
SALES AND MATURITIES PURCHASES (000) (000) ------------------- ------------------- GOV'T OTHER GOV'T OTHER -------- -------- -------- -------- Constellation Clover Core Fixed Income Fund $ 3,276 $ 2,431 $ 5,060 $ 4,647 Constellation Chartwell Ultra Short Duration Fixed Income Fund 122,477 - 91,019 - Constellation Chartwell Short Duration Fixed Income Fund 33,348 - 39,358 11,185
7. FEDERAL TAX POLICIES AND INFORMATION: Each of the Funds is classified as a separate taxable entity for Federal income tax purposes. Each of the Funds intends to continue to qualify as a separate "regulated investment company" under the Internal Revenue Code and make the requisite distributions to shareholders that will be sufficient to relieve it from Federal income tax and Federal excise tax. Therefore, no Federal tax provision is required. To the extent that distributions from net investment income and net realized capital gains exceed amounts reported in the financial statements, such amounts are reported separately. The amounts of distributions from net investment income and net realized capital gains are determined in accordance with Federal income tax regulations, which may differ from those amounts determined under accounting principles generally accepted in the United States of America. These book/tax differences are either temporary or permanent in nature. The character of distributions made during the year from net investment income or net realized gains, and the timing of distributions where the fiscal year in which the amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. To the extent these differences are permanent, adjustments are made to the appropriate equity accounts in the period that the differences arise. Constellation Funds 2005 Semiannual Report 89 NOTES TO FINANCIAL STATEMENTS (unaudited) The tax character of dividends and distibutions declared during the periods ended September 30, 2004 and September 30, 2003 (unless otherwise noted) were as follows (000):
ORDINARY LONG-TERM TAX EXEMPT RETURN OF INCOME CAPITAL GAIN INCOME CAPITAL TOTAL ----------- ------------ ---------- ----------- ----------- Constellation Clover Core Value Fund 2004 $ 468 $ 1,442 $ - $ - $ 1,910 2003 189 - - - 189 Constellation Clover Small Cap Value Fund 2004 652 - - - 652 2003 315 - - 109 424 Constellation Clover Large Cap Value Fund 2004 42 - - - 42 2003 39 - - - 39 Constellation Clover Core Fixed Income Fund 2004 1,530 - - - 1,530 2003 1,934 108 - - 2,042 Constellation Chartwell Ultra Short Duration Fixed Income Fund 2004 8,779 - - - 8,779 2003 10,584 483 - - 11,067 Constellation Chartwell Short Duration Fixed Income Fund 2004 5,810 - - - 5,810 2003 8,475 563 - - 9,038 Constellation Chartwell High Yield Fund 2004 753 - - - 753 2003 709 - - - 709 Constellation HLAM Large Cap Quality Growth Fund(1) 2004 - 3,543 - - 3,543 2003 4 5,861 - - 5,865 Constellation HLAM Large Cap Value Fund 2004(2) 2 - - - 2 Constellation Pitcairn Diversified Value Fund 2004(3) 1,559 - - - 1,559 2003(4) 1,782 - - - 1,782 2002(4) 1,613 - - - 1,613 Constellation Pitcairn Select Value Fund 2004(3) 492 902 - - 1,394 2003(4) 509 - - - 509 2002(4) 516 - - - 516 Constellation Pitcairn Diversified Growth Fund 2004(3) 46 - - - 46 2003(4) - - - - - 2002(4) - - - - - Constellation Pitcairn Small Cap Fund 2004(3) - 3 - - 3 2003(4) 17 - - - 17 2002(4) 494 - - - 494 Constellation Pitcairn Family Heritage(R) Fund 2004(3) 38 - - 2 40 2003(4) - - - - - 2002(4) - - - - - Constellation Pitcairn Taxable Bond Fund 2004(3) 1,725 - - - 1,725 2003(4) 1,858 - - - 1,858 2002(4) 2,275 - - - 2,275 Constellation Pitcairn Tax-Exempt Bond Fund 2004(3) 41 432 4,034 - 4,507 2003(4) 12 294 4,611 - 4,917 2002(4) 50 11 4,690 - 4,751 Constellation TIP Small Cap Value Opportunities Fund 2004 223 - - - 223 2003 1 - - - 1 Constellation TIP Financial Services Fund 2004 1,642 111 - - 1,753 2003 - 136 - - 136 Constellation TIP Healthcare & Biotechnology Fund 2004 5 9 - - 14 2003 - - - - - Constellation International Equity Fund 2004(3) 2,621 - - - 2,621 2003(4) 459 - - - 459 2002(4) 1,095 - - - 1,095 Constellation Strategic Value and High Income Fund 2004 125 - - - 125 2003(5) 4 - - - 4
(1) For the year ended December 31, 2003 and 2004. (2) Commenced operations April 30, 2004. (3) From the period November 1, 2003 through September 30, 2004. The Fund changed its fiscal year end from October 31 to September 30. (4) For the year ended October 31, 2002 and 2003. (5) Commenced operations October 31, 2002. 90 Constellation Funds 2005 Semiannual Report NOTES TO FINANCIAL STATEMENTS (unaudited) As of September 30, 2004, the components of distributable earnings (accumulated losses)on a tax basis were are follows (000):
CAPITAL ORDINARY LONG-TERM TAX-EXEMPT LOSS INCOME CAPITAL GAIN INCOME CARRYFORWARD -------------- -------------- -------------- -------------- Constellation Clover Core Value Fund $ 51 $ 4,076 $ - $ - Constellation Clover Small Cap Value Fund - - - (11,559) Constellation Clover Large Cap Value Fund 13 - - (484) Constellation Clover Core Fixed Income Fund 110 394 - - Constellation Chartwell Ultra Short Duration Fixed Income Fund 754 - - (6,719) Constellation Chartwell Short Duration Fixed Income Fund 453 - - (1,994) Constellation Chartwell High Yield Fund 54 - - (15,154) Constellation HLAM Large Cap Quality Growth Fund(1) - 956 - - Constellation HLAM Large Cap Value Fund 1 - - - Constellation Pitcairn Diversified Value Fund 330 - - (172) Constellation Pitcairn Select Value Fund 103 306 - - Constellation Pitcairn Diversified Growth Fund - - - (70,034) Constellation Pitcairn Small Cap Fund - 731 - - Constellation Pitcairn Family Heritage(R) Fund - - - (13,032) Constellation Pitcairn Taxable Bond Fund 145 - - (491) Constellation Pitcairn Tax-Exempt Bond Fund - 716 367 - Constellation Sands Capital Select Growth Fund - - - (26,265) Constellation TIP Small Cap Value Opportunities Fund 1,597 279 - - Constellation TIP Financial Services Fund 726 330 - - Constellation TIP Healthcare & Biotechnology Fund 163 932 - - Constellation International Equity Fund 211 - - (37,045) Constellation Strategic Value and High Income Fund 223 2 - - TOTAL DISTRIBUTABLE POST- UNREALIZED OTHER EARNINGS OCTOBER APPRECIATION TEMPORARY (ACCUMULATED) LOSSES (DEPRECIATION) DIFFERENCES (LOSSES) -------------- -------------- -------------- -------------- Constellation Clover Core Value Fund $ - $ 10,671 $ (45) $ 14,753 Constellation Clover Small Cap Value Fund - 64,985 - 53,426 Constellation Clover Large Cap Value Fund - 272 (13) (212) Constellation Clover Core Fixed Income Fund - 1,024 (108) 1,420 Constellation Chartwell Ultra Short Duration Fixed Income Fund (229) 2,107 (757) (4,844) Constellation Chartwell Short Duration Fixed Income Fund (112) 505 (454) (1,602) Constellation Chartwell High Yield Fund - 85 (53) (15,068) Constellation HLAM Large Cap Quality Growth Fund(1) - 7,944 - 8,900 Constellation HLAM Large Cap Value Fund - (3) (1) (3) Constellation Pitcairn Diversified Value Fund - 17,457 (330) 17,285 Constellation Pitcairn Select Value Fund - 8,058 (103) 8,364 Constellation Pitcairn Diversified Growth Fund (2,107) (8,858) - (80,999) Constellation Pitcairn Small Cap Fund - 15,451 - 16,182 Constellation Pitcairn Family Heritage(R) Fund (6,010) 13,908 - (5,134) Constellation Pitcairn Taxable Bond Fund - 2,409 (145) 1,918 Constellation Pitcairn Tax-Exempt Bond Fund - 8,333 (350) 9,066 Constellation Sands Capital Select Growth Fund - 8,637 - (17,628) Constellation TIP Small Cap Value Opportunities Fund - 1,834 - 3,710 Constellation TIP Financial Services Fund - 1,881 - 2,937 Constellation TIP Healthcare & Biotechnology Fund - 1,128 - 2,223 Constellation International Equity Fund (61) 11,424 (1) (25,472) Constellation Strategic Value and High Income Fund - 86 (5) 306
(1) For the year ended December 31, 2004 Post-October losses represent losses realized on investment transactions from November 1, 2003 through September 30, 2004 that, in accordance with Federal income tax regulations, a Fund may elect to defer and treat as having arisen in the following year. For Federal income tax purposes, capital loss carryforwards may be carried forward and applied against future capital gains. Constellation Funds 2005 Semiannual Report 91 NOTES TO FINANCIAL STATEMENTS (unaudited) As of September 30, 2004, the Funds had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates (000):
EXPIRING SEPTEMBER 30, --------------------------------------------------------------------------------- 2007 2008 2009 2010 2011 2012 Total --------- --------- --------- --------- --------- --------- --------- Constellation Clover Small Cap Value Fund $ - $ - $ - $ - $ 11,559 $ - $ 11,559 Constellation Clover Large Cap Value Fund - - - 196 288 - 484 Constellation Chartwell Ultra Short Duration Fixed Income Fund - - - - - 6,719 6,719 Constellation Chartwell Short Duration Fixed Income Fund - - - - - 1,994 1,994 Constellation Chartwell High Yield Fund 565 2,916 2,590 4,590 4,493 - 15,154 Constellation Pitcairn Diversified Value Fund - - - - 172 - 172 Constellation Pitcairn Diversified Growth Fund - - 23,304 35,399 11,331 - 70,034 Constellation Pitcairn Family Heritage(R) Fund - 1,614 3,678 2,799 4,941 - 13,032 Constellation Pitcairn Taxable Bond Fund - - - 491 - - 491 Constellation Sands Capital Select Growth Fund - - 8,179 12,366 5,720 - 26,265 Constellation International Equity Fund - - 4,428 24,091 8,526 - 37,045
During the year ended September 30, 2004, the following Funds utilized capital loss carryforwards to offset capital gains: FUND AMOUNT - ------------------------------------------------- -------------- Constellation Clover Small Cap Value Fund $ 42,082,156 Constellation Clover Large Cap Value Fund 188,939 Constellation Clover Core Fixed Income Fund 5,536 Constellation Chartwell High Yield Fund 576,132 Constellation Pitcairn Diversified Value Fund 7,072,106 Constellation Pitcairn Select Value Fund 4,731,191 Constellation Pitcairn Diversified Growth Fund 2,785,056 Constellation Pitcairn Small Cap Fund 12,891,786 Constellation Pitcairn Taxable Bond Fund 672,266 Constellation Sands Capital Select Growth Fund 1,024,064 Constellation TIP Healthcare & Biotechnology Fund 94,064 Constellation International Equity Fund 11,912,492 At March 31, 2005, the total cost of securities for Federal income tax purposes and the aggregate gross unrealized appreciation and depreciation for the securities held by the Funds were as follows (000):
NET UNREALIZED FEDERAL UNREALIZED UNREALIZED APPRECIATION TAX COST APPRECIATION DEPRECIATION (DEPRECIATION) ------------ ------------ ------------ -------------- Constellation Clover Core Value Fund $ 59,516 $ 12,849 $ (437) $ 12,412 Constellation Clover Small Cap Value Fund 474,872 95,866 (13,020) 82,846 Constellation Clover Large Cap Value Fund 6,485 691 (179) 512 Constellation Clover Core Fixed Income Fund 26,674 496 (266) 230 Constellation Clover Income Plus Fund 3,986 20 (79) (59) Constellation Chartwell Ultra Short Duration Fixed Income Fund 339,154 2,056 (696) 1,360 Constellation Chartwell Short Duration Fixed Income Fund 137,480 523 (1,031) (508) Constellation Chartwell High Yield Fund 7,797 17 (241) (224) Constellation HLAM Large Cap Quality Growth Fund 14,446 6,579 (516) 6,063 Constellation HLAM Large Cap Value Fund 1,921 108 (62) 46 Constellation Pitcairn Diversified Value Fund 149,027 25,868 (1,981) 23,887 Constellation Pitcairn Select Value Fund 60,090 7,701 (1,184) 6,517 Constellation Pitcairn Diversified Growth Fund 134,249 11,764 (17,679) (5,915) Constellation Pitcairn Small Cap Fund 83,391 19,968 (1,708) 18,260 Constellation Pitcairn Family Heritage(R) Fund 78,091 20,505 (7,890) 12,615 Constellation Pitcairn Taxable Bond Fund 51,113 1,659 (444) 1,215 Constellation Pitcairn Tax-Exempt Bond Fund 109,151 6,428 (384) 6,044 Constellation Sands Capital Select Growth Fund 171,820 13,568 (6,640) 6,928 Constellation TIP Small Cap Value Opportunities Fund 28,831 2,827 (543) 2,284 Constellation TIP Financial Services Fund 14,374 2,443 (305) 2,138 Constellation TIP Healthcare & Biotechnology Fund 44,308 4,714 (707) 4,007 Constellation International Equity Fund 97,557 21,721 (1,396) 20,325 Constellation Strategic Value and High Income Fund 965 82 - 82
92 Constellation Funds 2005 Semiannual Report NOTES TO FINANCIAL STATEMENTS (unaudited) 8. CONCENTRATIONS/RISKS: Certain Funds invest a high percentage of their assets in specific sectors of the market in order to achieve a potentially greater investment return. As a result, the Funds may be more susceptible to economic, political, and regulatory developments in a particular sector of the market, positive or negative, and may experience increased volatility on the Fund's net asset value and magnified effect on the total return. The Constellation International Equity Fund invests in securities of foreign issuers in various countries. These investments may involve certain considerations and risks not typically associated with investments in the United States of America, as a result of, among other factors, the possibility of future political and economic developments and the level of governmental supervision and regulation of securities markets in the respective countries. The Funds enter into contracts that contain a variety of indemnifications. The Funds' maximum exposure under these arrangements is unknown. However, the Funds have not had prior claims or losses pursuant to these contracts and expect the risk of loss to be remote. 9. LOANS OF PORTFOLIO SECURITIES: Effective February 1, 2005, the Funds may lend securities in their portfolio pursuant to a securities lending agreement ("Lending Agreement") with PFPC, Inc. Unless otherwise agreed, security loans made pursuant to the Lending Agreement are required at all times to be secured by collateral equal to at least 100% of the market value of the securities loaned. Cash collateral received is invested pursuant to the terms approved by the Board. All such investments are made at the risk of the Funds and, as such, the Funds are liable for investment losses. The Funds are receiving an annual fee for their participation in the Lending Agreement which is allocated among participating Funds based on estimated lending activity. In the event of bankruptcy of the borrower, realization/retention of the collateral may be subject to legal proceedings. Cash collateral received in connection with securities lending is invested in BlackRock Institutional Money Market Trust. The Funds bear the risk of incurring a loss from the investment of cash collateral due to either credit or market factors. Prior to February 1, 2005, the Funds were parties to a separate securities lending agreement. The borrower paid the lending Fund income accrued thereon, and the Fund invested cash collateral in permissible securities, thereby earning additional income. 10. FUND REORGANIZATION: The Trustees of the Pitcairn Small Cap Fund unanimously approved a Plan of Reorganization which resulted in the transfer of all the assets and liabilities of the Pitcairn Small Cap Fund to the Pitcairn Small Cap Core Fund in exchange for shares of the Pitcairn Small Cap Core Fund after the close of business of October 31, 2002. The shareholders of the Pitcairn Small Cap Fund exchanged 5,536,781 shares and received 2,602,903 shares of the Pitcairn Small Cap Core Fund with an aggregate value of $25,687,425. The value of the Pitcairn Small Cap Fund on October 31, 2002 was $25,687,425 which included $4,381,612 in unrealized depreciation and $23,046,960 in accumulated net realized losses. Upon the business combination of the Funds after the close of business on October 31, 2002, the value of the Pitcairn Small Cap Core Fund was $75,783,828. The Pitcairn Small Cap Core Fund changed its name to the Pitcairn Small Cap Fund. The shareholders of the Turner Large Cap Value Fund, Turner Core Value Fund, Turner Small Cap Value Fund, Turner Core Fixed Income Fund, Turner Ultra Short Duration Fixed Income Fund, Turner Short Duration Fixed Income Fund, Turner High Yield Fund, Turner Small Cap Value Opportunities Fund, Turner Financial Services Fund, Turner Healthcare & Biotechnology Fund, Turner Tax Managed U.S. Equity Fund and Turner Strategic Value and High Income Fund, (each a "Turner Fund" and collectively the "Turner Funds") voted to reorganize each Turner Fund into a substantially similar series (each a "Constellation Fund" and collectively the "Constellation Funds") of Constellation Funds (the "Constellation Trust") in a tax-free reorganization effective May 10, 2004. Each shareholder received a number of shares of a Constellation Fund equal in dollar value and in the number of shares of each Turner Fund as of May 7, 2004. Each Constellation Fund has the same investment objectives and policies, and substantially the same risks, policies, restrictions and limitations, as a Turner Fund. The shareholders of the Pitcairn Diversified Value Fund, Pitcairn Select Value Fund, Pitcairn Diversified Growth Fund, Pitcairn Small Cap Fund, Pitcairn Family Heritage(R) Fund, Pitcairn Taxable Bond Fund, Pitcairn Tax-Exempt Bond Fund, Pitcairn Select Growth Fund Constellation Funds 2005 Semiannual Report 93 NOTES TO FINANCIAL STATEMENTS (unaudited) and Pitcairn International Equity Fund, (each a "Pitcairn Fund" and collectively the "Pitcairn Funds") voted to reorganize each Pitcairn Fund into a substantially similar series of Constellation Funds in a tax-free reorganization effective August 2, 2004. Each shareholder received a number of shares of a Constellation Fund equal in dollar value and in the number of shares of each Pitcairn Fund as of July 30, 2004. Each Constellation Fund has the same investment objectives and policies, and substantially the same risks, policies, restrictions and limitations, as a Pitcairn Fund. Accordingly, following completion of the reorganizations, shareholders of each Turner Fund and each Pitcairn Fund owned shares of the Corresponding Acquiring Fund as set forth in the chart below:
TURNER/PITCAIRN FUND CORRESPONDING AQUIRING FUND - --------------------------------------------- -------------------------------------------------------------- Turner Large Cap Value Fund Constellation Clover Large Cap Value Fund Turner Core Value Fund Constellation Clover Core Value Fund Turner Small Cap Value Fund Constellation Clover Small Cap Value Fund Turner Core Fixed Income Fund Constellation Clover Core Fixed Income Fund Turner Ultra Short Duration Fixed Income Fund Constellation Chartwell Ultra Short Duration Fixed Income Fund Turner Short Duration Fixed Income Fund Constellation Chartwell Short Duration Fixed Income Fund Turner High Yield Fund Constellation Chartwell High Yield Fund Pitcairn Diversified Value Fund Constellation Pitcairn Diversified Value Fund Pitcairn Select Value Fund Constellation Pitcairn Select Value Fund Pitcairn Diversified Growth Fund Constellation Pitcairn Diversified Growth Fund Pitcairn Small Cap Fund Constellation Pitcairn Small Cap Fund Pitcairn Family Heritage Fund Constellation Pitcairn Family Heritage(R) Fund Pitcairn Taxable Bond Fund Constellation Pitcairn Taxable Bond Fund Pitcairn Tax-Exempt Bond Fund Constellation Pitcairn Tax-Exempt Bond Fund Pitcairn Select Growth Fund Constellation Sands Capital Select Growth Fund Turner Small Cap Value Opportunities Fund Constellation TIP Small Cap Value Opportunities Fund Turner Financial Services Fund Constellation TIP Financial Services Fund Turner Healthcare & Biotechnology Fund Constellation TIP Healthcare & Biotechnology Fund Pitcairn International Equity Fund Constellation International Equity Fund Turner Strategic Value and High Income Fund Constellation Strategic Value and High Income Fund
The shareholders of the Hilliard Lyons Growth Fund, Inc. approved the reorganization of the Hilliard Lyons Growth Fund, Inc. with and into the Constellation HLAM Large Cap Quality Growth Fund, a newly-formed series of the Constellation Funds in a tax-free reorganization effective November 8, 2004. Each shareholder of the Hilliard Lyons Growth Fund, Inc. Investor A Shares received a number of shares of the Constellation HLAM Large Cap Quality Growth Fund equal in dollar value and in number of shares of the Hilliard Lyons Growth Fund, Inc. as of November 5, 2004. Each shareholder of the Hilliard Lyons Growth Fund, Inc. Investor B Shares received a number of shares of the Constellation HLAM Large Cap Quality Growth Fund equal in dollar value to Hilliard Lyons Growth Fund, Inc. The Constellation HLAM Large Cap Quality Growth Fund has the same investment objective and policies, and substantially the same risks, policies, restrictions and limitations, as the Hilliard Lyons Growth Fund, Inc. Prior to November 8, 2004, the Fund offered Investor A and Investor B Shares. On November 8, 2004, the Fund converted the Investor A Shares into Class II Shares. Subsequently, the Investor B Shares were fully liquidated and exchanged for Class II Shares. Investor A Shares were the accounting survivor in this transaction. Prior to January 28, 2005, the Constellation Chartwell Ultra Short Duration Fixed Income and Constellation Chartwell Short Duration Fixed Income Funds offered Class I and Class II Shares. On January 28, 2005, the Funds merged Class II Shares into Class I Shares. 94 Constellation Funds 2005 Semiannual Report NOTES TO FINANCIAL STATEMENTS (unaudited) 11. SUBSEQUENT EVENT Effective April 15, 2005, the Constellation TIP Midcap Core Portfolio, a series of Constellation Institutional Portfolios, was reorganized as a seperate, newly organized series of the Trust, the Constellation TIP Mid Cap Fund. Constellation Funds 2005 Semiannual Report 95 APPROVAL OF INVESTMENT ADVISORY AGREEMENTS (unaudited) On February 25, 2005, the Board of Trustees held a meeting to decide, among other things, whether to hire CIMCO to serve as the investment adviser to the Constellation TIP Mid Cap Fund and whether to approve a proposed sub-advisory agreement between CIMCO and Turner Investment Partners (the "Sub-Adviser"), relating to the Fund. These approvals were proposed in connection with the reorganization of the CIP Midcap Core Portfolio, a series of Constellation Institutional Portfolios (the "CIP Portfolio") into the TIP Mid Cap Fund. The Board requested and reviewed a wide variety of information from CIMCO and the Sub-Adviser in advance of the meeting and the Trustees used this information to help decide whether to approve the proposed advisory and sub-advisory agreements. Specifically, prior to the meeting, the Board received written materials from CIMCO and the Sub-Adviser about their (a) nature, quality and extent of investment management and other services; (b) investment management personnel; (c) operations and financial condition; (d) brokerage practices (including any soft dollar arrangements) and other investment strategies; (e) the level of the advisory and sub-advisory fees the Fund is charged; (f) the Fund's overall fees and operating expenses compared with similar mutual funds; (g) CIMCO's and the Sub-Adviser's compliance systems; (h) CIMCO's and the Sub-Adviser's policies on and compliance procedures for personal securities transactions; and (i) CIMCO's and the Sub-Adviser's reputation, expertise and resources. The Board reviewed the comparative fund data from Morningstar provided by CIMCO, and the Trustees discussed in depth the comparative expense information for the peer group in which the Fund is classified. The Trustees did not consider information related to the level of CIMCO's and the Sub-Adviser's profitability from their investment management-related operations and the CIP Portfolio's performance compared with similar funds because the Fund is continuing the operations of an existing fund post-reorganization. With regard to factors (a), (b), (c), (d), (h) and (i), the Board determined that there would be no material changes in the services provided by CIMCO and the Sub-Adviser to the Fund after its reorganization from Constellation Institutional Portfolios. Moreover, with respect to factors (e) and (f), in light of the information provided to the Board, the Trustees considered the different fee structure of the Fund as compared to the CIP Portfolio, including CIMCO's contractual fee waiver/expense reimbursement agreement, the introduction of a performance-based adjustment to the advisory and sub-advisory fees after one year and comparisons of the fees paid to CIMCO and the Sub-Adviser by other similar mutual funds. The Trustees concluded that the Fund's advisory and sub-advisory fees and expense ratios are reasonable as compared to those of other funds. With regard to factor (g), CIMCO's and the Sub-Adviser's compliance systems, the Board determined that each has the requisite staffing to address compliance and new fund regulations. At the meeting, representatives from CIMCO presented additional information to the Trustees to help the Trustees evaluate CIMCO's and the Sub-Adviser's advisory and sub-advisory fees and other aspects of the respective agreements. The Trustees discussed the materials that they received before the meeting and all other information received at the meeting, and deliberated on the proposed advisory and sub-advisory agreements in light of this information. In its deliberations, the Trustees did not identify any single piece of information that was all-important or controlling. Based on the Board's deliberations and its evaluation of the information described above, the Trustees, including all of the non-interested Trustees, unanimously concluded: (a) that terms of the proposed advisory and sub-advisory agreements are fair and reasonable; and (b) that CIMCO's and the Sub-Adviser's fees are reasonable in light of the services that they provide to the Fund. 96 Constellation Funds 2005 Semiannual Report INVESTMENT ADVISER Constellation Investment Management Company, LP Berwyn, Pennsylvania DISTRIBUTOR Constellation Investment Distribution Company, Inc. Berwyn, Pennsylvania ADMINISTRATOR Constellation Investment Management Company, LP Berwyn, Pennsylvania LEGAL COUNSEL Morgan, Lewis & Bockius LLP Philadelphia, Pennsylvania INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM KPMG LLP Philadelphia, Pennsylvania This report was prepared for shareholders of the Constellation Funds. It may be distributed to others only if preceded or accompanied by a Constellation Funds' prospectus, which contains detailed information. All Constellation Funds are offered by prospectus only. THE TRUST FILES EACH FUND'S COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THE FIRST AND THIRD QUARTERS OF EACH FISCAL YEAR ON FORM N-Q WITHIN SIXTY DAYS AFTER THE END OF THE PERIOD. THE FUNDS' FORMS N-Q ARE AVAILABLE ON THE COMMISSION'S WEBSITE AT http://www.sec.gov, AND MAY BE REVIEWED AND COPIED AT THE COMMISSION'S PUBLIC REFERENCE ROOM IN WASHINGTON, DC. 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 EACH FUND USES TO DETERMINE HOW TO VOTE PROXIES 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, UPON REQUEST, (I) VIA THE FUNDS' WEBSITE, www.constellationfundsgroup.com; AND (II) ON THE COMMISSION'S WEBSITE AT http://www.sec.gov. CONSTELLATION FUNDS GROUP P.O. Box 219520 Kansas City, Missouri 64105-9520 1 (866) 242 5742 www.constellationfundsgroup.com ITEM 2. CODE OF ETHICS. Not applicable for semi-annual report. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable for semi-annual report. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable for semi-annual report. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable to open-end management investment 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 management investment 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. PURCHASES 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) Not applicable for semi-annual report. (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) Constellation Funds By (Signature and Title)* /s/ John H. Grady, Jr. ----------------------------------- John H. Grady, Jr., President & CEO Date May 27, 2005 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/ John H. Grady, Jr. ----------------------------------- John H. Grady, Jr., President & CEO Date May 27, 2005 By (Signature and Title)* /s/ Eric Kleinschmidt ----------------------------------- Eric Kleinschmidt, Controller & Chief Financial Officer Date May 27, 2005 * Print the name and title of each signing officer under his or her signature. EX-99 2 ex99-a.txt EXHIBIT 99(A) CERTIFICATION Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 I, John H. Grady, Jr., certify that: 1. I have reviewed this report on Form N-CSR of the Constellation Funds; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940)for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: May 27, 2005 /s/ John H. Grady, Jr. - ----------------------- John H. Grady, Jr. President & CEO EX-99 3 ex99-b.txt EXHIBIT 99(B) CERTIFICATION Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 I, Eric Kleinschmidt, certify that: 1. I have reviewed this report on Form N-CSR of the Constellation Funds; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940)for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: May 27, 2005 /s/ Eric Kleinschmidt - ------------------------------------ Eric Kleinschmidt Controller & Chief Financial Officer EX-99 4 ex99-c.txt EXHIBIT 99(C) CERTIFICATION Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 The undersigned, the President & CEO of the Constellation Funds (the "Fund"), with respect to the Fund's Form N-CSR for the period ended March 31, 2005 as filed with the Securities and Exchange Commission, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge: 1. such Form N-CSR fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. the information contained in such Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Fund. Dated: May 27, 2005 /s/ John H. Grady, Jr. ----------------------------------- John H. Grady, Jr., President & CEO EX-99 5 ex99-d.txt EXHIBIT 99(D) CERTIFICATION Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 The undersigned, the Controller & Chief Financial Officer of the Constellation Funds (the "Fund"), with respect to the Fund's Form N-CSR for the period ended March 31, 2005 as filed with the Securities and Exchange Commission, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge: 1. such Form N-CSR fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. the information contained in such Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Fund. Dated: May 27, 2005 /s/ Eric Kleinschmidt ------------------------------------ Eric Kleinschmidt, Controller & Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----