UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-CSRS
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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)
--------
303 Broadway, Suite 1100
Cincinnati, OH 45202
(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, 2006
DATE OF REPORTING PERIOD: MARCH 31, 2006
ITEM 1. REPORTS TO STOCKHOLDERS.
Constellation funds Group [LOGO]
SEMI-ANNUAL REPORT
March 31, 2006
Constellation Clover Core Value Fund
Constellation Clover Small Cap Value Fund
Constellation Clover Core Fixed Income Fund
Constellation Chartwell Ultra Short Duration Fixed Income Fund
Constellation Chartwell Short Duration Fixed Income Fund
Constellation HLAM Large Cap Quality Stock 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 Mid Cap Fund
Constellation TIP Healthcare & Biotechnology Fund
Constellation International Equity Fund
Constellation SmallCap Value Opportunities Fund
Constellation Strategic Value and High Income Fund
CONTENTS
1 Letter to Shareholders
2 Performance
4 Disclosure of Fund Expenses
6 Financial Statements
82 Notes to Financial Statements
95 Board Considerations Regarding New Advisory and
Sub-Advisory Agreements
97 Shareholder Voting Results
Shareholder Services
Constellation Fund shareholders receive annual and semiannual reports, and
quarterly account statements. Shareholders who have questions 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 (unaudited)
TO OUR SHAREHOLDERS
May 15, 2006
Dear Constellation Funds Shareholder:
We are pleased to present you with the Semi-Annual Report of the Constellation
Funds. Inside, you will find key financial information for the six months ended
March 31, 2006.
As you may be aware, Touchstone Advisors, Inc. completed the acquisition of the
assets of Constellation Investment Management Company, L.P. (CIMCO), adviser to
the Constellation Funds on March 6, 2006.
At that time, Touchstone Advisors, Inc. replaced CIMCO as the advisor to all
of the Constellation Funds. Concurrently, Touchstone Securities, Inc. became the
distributor of the Constellation Funds, which were formerly distributed by
Constellation Investment Distribution Company, Inc. (CIDCO).
While Touchstone Advisors assumed responsibility from CIMCO for selecting and
monitoring fund sub-advisors, the Constellation Funds' sub-advisors continue to
be responsible for the day-to-day management of the funds. Touchstone is proud
to be associated with the premier institutional money management firms that
manage the Constellation Funds and pleased to offer investment solutions using
their disciplined strategies.
Thank you for the confidence you have placed in us. We look forward to serving
your investment needs in the years to come
Sincerely,
/s/ Jill T. McGruder
- -------------------------------------
Jill T. McGruder
President
Constellation Funds
Constellation Funds 2006 Semi-Annual Report 1
PERFORMANCE (unaudited)
TOTAL RETURNS OF CONSTELLATION FUNDS(5)
Through March 31, 2006
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. 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. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN
THE PERFORMANCE DATA QUOTED. PLEASE CALL (866)242-5742 FOR MOST RECENT MONTH-END
PERFORMANCE INFORMATION.
(Annualized) Net
Six Year to One Three Five Ten Since Assets
Months Date Year Years Years Years Inception ($mil)
------ ------- ----- ----- ----- ----- ------------ -------
CONSTELLATION CLOVER CORE VALUE FUND(1) 5.19 4.33 15.18 25.91 12.30 10.84 12.47 $100.12
Russell 3000 Value Index 7.89 6.60 14.20 22.46 8.42 11.16 13.28
Inception Date: 12/6/91
CONSTELLATION CLOVER SMALL CAP VALUE FUND(1) 14.13 13.49 21.75 31.62 13.88 15.47 15.50 $320.40
Russell 2000 Value Index 14.26 13.50 23.77 30.75 16.24 14.03 14.12
Inception Date: 2/28/96
CONSTELLATION CLOVER CORE FIXED
INCOME FUND (0.34) (0.95) 1.69 2.26 4.32 5.70 6.35 $ 25.52
Lehman Aggregate Bond Index (0.05) (0.64) 2.26 2.93 5.11 6.29 6.62
Inception Date: 12/6/91
CONSTELLATION CHARTWELL ULTRA SHORT DURATION
FIXED INCOME FUND 1.46 0.76 2.93 2.22 2.63 4.44 4.74 $214.68
Merrill Lynch 3-Month U.S. Treasury Bill Index 1.95 1.02 3.53 2.09 2.24 3.83 4.07
Inception Date: 3/1/94
CONSTELLATION CHARTWELL SHORT DURATION
FIXED INCOME FUND 0.39 0.13 1.81 1.84 3.04 4.71 4.96 $ 90.31
Lehman 1-3 Year U.S. Government Bond Index 1.09 0.41 2.40 1.51 3.34 4.89 5.04
Inception Date: 3/1/94
CONSTELLATION HLAM LARGE CAP QUALITY
STOCK FUND 6.68 2.97 10.17 11.76 0.85 5.63 7.49 $ 14.06
Russell 1000 Growth Index 6.16 3.10 13.15 14.80 1.66 6.50 8.57
Inception Date: 4/30/92
CONSTELLATION PITCAIRN DIVERSIFIED
VALUE FUND 6.61 5.73 11.58 20.19 7.47 N/A 6.40 $167.40
Russell 1000 Value Index 7.27 5.93 13.30 21.77 7.79 n/a 6.90
Inception Date: 8/4/00
CONSTELLATION PITCAIRN SELECT VALUE FUND 6.70 5.96 10.33 19.03 4.27 N/A 5.17 $ 62.00
Russell 1000 Value Index 7.27 5.93 13.30 21.77 7.79 n/a 6.73
Inception Date: 8/11/00
CONSTELLATION PITCAIRN DIVERSIFIED
GROWTH FUND 5.75 3.58 9.34 13.65 0.15 N/A (8.20) $121.77
Russell 1000 Growth Index 6.16 3.09 13.15 14.80 1.66 n/a (7.09)
Inception Date: 8/4/00
CONSTELLATION PITCAIRN SMALL CAP FUND(1) 12.83 10.89 17.23 25.87 11.93 N/A 12.24 $ 95.08
Russell 2000 Index 15.23 13.94 25.84 29.53 12.59 n/a 8.34
Inception Date: 8/25/00
CONSTELLATION PITCAIRN FAMILY
HERITAGE(R) FUND 3.08 1.12 6.39 15.50 4.24 9.89 9.76 $ 83.75
Wilshire 5000 Index 7.98 5.53 14.95 19.73 5.98 9.15 10.90
Inception Date: 8/4/00(2)
CONSTELLATION PITCAIRN TAXABLE
BOND FUND (0.65) (0.72) 1.36 2.57 4.32 5.64 6.74 $ 46.22
Lehman U.S. Government Credit Index (0.42) (1.01) 2.02 2.83 5.23 6.31 7.63
Inception Date: 8/4/00(2)
CONSTELLATION PITCAIRN TAX-EXEMPT
BOND FUND 0.72 0.08 2.94 3.20 4.52 5.11 5.70 $116.83
Lehman Municipal Bond Index 0.98 0.25 3.80 4.10 5.17 5.87 7.00
Inception Date: 8/11/00(2)
2 Constellation Funds 2006 Semi-Annual Report
PERFORMANCE (unaudited)
(Annualized) Net
Six Year to One Three Five Ten Since Assets
Months Date Year Years Years Years Inception ($mil)
------ ------- ----- ----- ----- ----- ------------ -------
CONSTELLATION SANDS CAPITAL SELECT
GROWTH FUND -- CLASS I SHARES 4.74 (1.92) 18.72 19.28 6.11 N/A (3.49) $182.11
Russell 1000 Growth Index 6.16 3.10 13.15 14.80 1.66 n/a (7.17)
Inception Date: 8/27/04(3)
CONSTELLATION SANDS CAPITAL SELECT
GROWTH FUND -- CLASS II SHARES 4.49 (1.93) 18.29 19.13 6.04 N/A (3.56) $307.08
Russell 1000 Growth Index 6.16 3.10 13.15 14.80 1.66 n/a (7.17)
Inception Date: 8/11/00
TIP MID CAP FUND(1) 15.79 14.48 31.98 33.23 N/A N/A 30.02 $ 1.33
Russell Midcap Index 10.14 7.62 21.54 27.87 n/a n/a 23.33
Inception Date: 1/2/03
CONSTELLATION TIP HEALTH CARE &
BIOTECHNOLOGY FUND(1)(4) 0.99 (0.56) 12.97 17.90 12.25 N/A 10.89 $ 71.36
S&P 500 Healthcare Index 2.70 1.25 8.45 7.61 1.13 n/a (0.41)
Inception Date: 2/28/01
CONSTELLATION INTERNATIONAL EQUITY FUND 15.09 8.75 24.94 31.72 6.79 4.08 5.93 $145.92
MSCI All Country World ex-U.S. Index 14.58 9.76 28.12 33.51 11.78 7.35 7.96
Inception Date: 8/4/00(2)
CONSTELLATION SMALL CAP VALUE
OPPORTUNITIES FUND(1) 12.81 12.78 27.55 35.24 N/A N/A 22.81 $204.26
Russell 2000 Value Index 14.26 13.50 23.77 30.75 n/a n/a 15.30
Inception Date: 3/4/02
CONSTELLATION STRATEGIC VALUE AND
HIGH INCOME FUND 7.60 7.62 16.52 20.75 N/A N/A 19.42 $ 1.25
50/50 Blend of the Russell 2000 Value Index
and Merrill Lynch High Yield, Cash Pay Index 8.88 8.12 15.45 21.11 n/a n/a 20.46
S&P 500 Index 6.38 4.21 11.73 17.22 n/a n/a 13.79
Inception Date: 10/31/02
THE CONSTELLATION FUNDS ARE DISTRIBUTED BY TOUCHSTONE SECURITIES,
INC., CINCINNATI, OH. THE INVESTOR SHOULD CONSIDER THE INVESTMENT OBJECTIVES,
RISKS, CHARGES AND EXPENSES CAREFULLY 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 THESE
FUNDS, CAN BE OBTAINED BY CALLING (866) 242-5742. READ THE PROSPECTUS CAREFULLY
BEFORE INVESTING. 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) For periods prior to August 2000, when the Fund began operating, the
performance data quoted represents past performance of 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.
(3) Class I Shares for the periods prior to the inception date shown reflect
the performance of the Fund's Class II Shares.
(4) Funds that take a focus or sector specific approach are subject to greater
risk from downturns affecting a specific issuer or industry.
(5) Effective March 1, 2006, Touchstone Advisors, Inc. replaced Constellation
Investment Management Company, LP as Investment Advisor to the
Constellation Funds.
Constellation Funds 2006 Semi-Annual 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 VALUE ACCOUNT VALUE EXPENSE PAID DURING
10/01/05 3/31/06 RATIOS PERIOD*
------------- ------------- ---------- -----------
CONSTELLATION CLOVER CORE VALUE FUND
Actual Fund Return $1,000.00 $1,051.90 1.21% $6.19
Hypothetical Fund Return 1,000.00 1,018.90 1.21 6.09
CONSTELLATION CLOVER SMALL CAP VALUE FUND
Actual Fund Return 1,000.00 1,141.30 1.32 7.05
Hypothetical Fund Return 1,000.00 1,018.35 1.32 6.64
CONSTELLATION CLOVER CORE FIXED INCOME FUND
Actual Fund Return 1,000.00 996.60 0.84 4.18
Hypothetical Fund Return 1,000.00 1,020.74 0.84 4.23
CONSTELLATION CHARTWELL ULTRA SHORT DURATION FIXED INCOME FUND
Actual Fund Return 1,000.00 1,014.60 0.69 3.47
Hypothetical Fund Return 1,000.00 1,021.49 0.69 3.48
CONSTELLATION CHARTWELL SHORT DURATION FIXED INCOME FUND
Actual Fund Return 1,000.00 1,003.90 0.70 3.50
Hypothetical Fund Return 1,000.00 1,021.44 0.70 3.53
CONSTELLATION HLAM LARGE CAP QUALITY STOCK FUND
Actual Fund Return 1,000.00 1,066.80 1.20 6.18
Hypothetical Fund Return 1,000.00 1,018.95 1.20 6.04
4 Constellation Funds 2006 Semi-Annual Report
DISCLOSURE OF FUND EXPENSES (unaudited)
BEGINNING ENDING ANNUALIZED EXPENSES
ACCOUNT VALUE ACCOUNT VALUE EXPENSE PAID DURING
10/01/05 3/31/06 RATIOS PERIOD*
------------- ------------- ---------- -----------
CONSTELLATION PITCAIRN DIVERSIFIED VALUE FUND
Actual Fund Return $1,000.00 $1,066.10 1.02% $5.25
Hypothetical Fund Return 1,000.00 1,019.85 1.02 5.14
CONSTELLATION PITCAIRN SELECT VALUE FUND
Actual Fund Return 1,000.00 1,067.00 1.05 5.41
Hypothetical Fund Return 1,000.00 1,019.70 1.05 5.29
CONSTELLATION PITCAIRN DIVERSIFIED GROWTH FUND
Actual Fund Return 1,000.00 1,057.50 1.00 5.13
Hypothetical Fund Return 1,000.00 1,019.95 1.00 5.04
CONSTELLATION PITCAIRN SMALL CAP FUND
Actual Fund Return 1,000.00 1,128.30 1.01 5.36
Hypothetical Fund Return 1,000.00 1,019.90 1.01 5.09
CONSTELLATION PITCAIRN FAMILY HERITAGE(R) FUND
Actual Fund Return 1,000.00 1,030.80 1.20 6.08
Hypothetical Fund Return 1,000.00 1,018.95 1.20 6.04
CONSTELLATION PITCAIRN TAXABLE BOND FUND
Actual Fund Return 1,000.00 993.50 0.83 4.13
Hypothetical Fund Return 1,000.00 1,020.79 0.83 4.18
CONSTELLATION PITCAIRN TAX-EXEMPT BOND FUND
Actual Fund Return 1,000.00 1,007.20 0.66 3.30
Hypothetical Fund Return 1,000.00 1,021.64 0.66 3.33
CONSTELLATION SANDS CAPITAL SELECT GROWTH FUND -- CLASS I
Actual Fund Return 1,000.00 1,047.40 1.18 6.02
Hypothetical Fund Return 1,000.00 1,019.05 1.18 5.94
CONSTELLATION SANDS CAPITAL SELECT GROWTH FUND -- CLASS II
Actual Fund Return 1,000.00 1,044.90 1.43 7.29
Hypothetical Fund Return 1,000.00 1,017.80 1.43 7.19
CONSTELLATION TIP MID CAP FUND
Actual Fund Return 1,000.00 1,157.90 0.90 4.84
Hypothetical Fund Return 1,000.00 1,020.44 0.90 4.53
CONSTELLATION TIP HEALTHCARE & BIOTECHNOLOGY FUND
Actual Fund Return 1,000.00 1,009.90 1.86 9.32
Hypothetical Fund Return 1,000.00 1,015.66 1.86 9.35
CONSTELLATION INTERNATIONAL EQUITY FUND
Actual Fund Return 1,000.00 1,150.90 1.37 7.35
Hypothetical Fund Return 1,000.00 1,018.10 1.37 6.89
CONSTELLATION SMALL CAP VALUE OPPORTUNITIES FUND
Actual Fund Return 1,000.00 1,128.10 1.56 8.28
Hypothetical Fund Return 1,000.00 1,017.15 1.56 7.85
CONSTELLATION STRATEGIC AND HIGH INCOME FUND
Actual Fund Return 1,000.00 1,076.00 0.25 1.29
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).
Constellation Funds 2006 Semi-Annual Report 5
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation Clover Core Value Fund
March 31, 2006
SECTOR WEIGHTINGS+
[CHART]
Financials 27.6%
Cash Equivalents++ 19.5%
Energy 9.3%
Industrials 8.9%
Information Technology 7.0%
Health Care 6.8%
Consumer Staples 6.4%
Utilities 5.3%
Consumer Discretionary 4.9%
Materials 2.5%
Telecommunication Services 1.8%
+ Percentages are 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 (97.6%)
CONSUMER DISCRETIONARY (5.9%)
Barnes & Noble (A) 31,300 $ 1,448
Clear Channel Communications 14,100 409
JC Penney 26,200 1,583
McDonald's 27,100 931
Walt Disney (A)* 54,900 1,531
-------
5,902
-------
CONSUMER STAPLES (7.8%)
Altria Group 20,000 1,417
Constellation Brands, Cl A(A)* 42,000 1,052
CVS 64,900 1,939
Dean Foods* 46,500 1,806
HJ Heinz 41,600 1,577
-------
7,791
-------
ENERGY (11.3%)
Chesapeake Energy (A) 30,400 955
ConocoPhillips (A) 45,600 2,880
Exxon Mobil (A) 16,500 1,004
National Oilwell Varco* 35,800 2,295
Noble Energy 27,000 1,186
Valero Energy 50,100 2,995
-------
11,315
-------
VALUE
SHARES (000)
------ -------
FINANCIALS (33.4%)**
ACE 39,600 $ 2,060
Assurant 40,500 1,995
Bank of New York 47,600 1,715
Citigroup 56,900 2,687
Federated Investors, Cl B 73,600 2,874
Freddie Mac 16,600 1,013
Goldman Sachs Group 10,300 1,617
Hartford Financial Services Group 34,100 2,747
Loews 28,300 2,864
Merrill Lynch (A) 44,200 3,481
Morgan Stanley 23,700 1,489
Radian Group 29,000 1,747
Sovereign Bancorp 97,100 2,127
Torchmark 39,200 2,238
Wells Fargo (A) 43,800 2,798
-------
33,452
-------
HEALTH CARE (8.3%)
Aetna 36,000 1,769
Biogen Idec* 41,500 1,955
Community Health Systems* 26,900 972
Sanofi-Aventis (A)* 44,600 2,116
WellPoint* 18,700 1,448
-------
8,260
-------
INDUSTRIALS (10.8%)
Burlington Northern Santa Fe 28,300 2,358
Deere 25,700 2,032
Dun & Bradstreet* 18,800 1,442
Honeywell International 39,500 1,689
Republic Services 37,900 1,611
Terex* 21,700 1,720
-------
10,852
-------
INFORMATION TECHNOLOGY (8.5%)
BISYS Group* 99,000 1,335
Digital Insight* 46,525 1,694
eFunds* 55,900 1,444
EMC* 86,000 1,172
Fairchild Semiconductor
International (A)* 96,500 1,840
Ingram Micro, Cl A* 49,900 998
-------
8,483
-------
MATERIALS (3.0%)
Lubrizol 39,100 1,675
Syngenta ADR (A) 47,900 1,347
-------
3,022
-------
TELECOMMUNICATION SERVICES (2.2%)
AT&T(A) 82,700 2,236
-------
The accompanying notes are an integral part of the financial statements.
6 Constellation Funds 2006 Semi-Annual Report
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation Clover Core Value Fund
March 31, 2006
VALUE
SHARES (000)
---------- ----------
UTILITIES (6.4%)
Constellation Energy Group 24,800 $ 1,357
Dominion Resources 14,100 973
Duke Energy 34,500 1,006
Edison International 23,300 959
Exelon 19,500 1,032
National Fuel Gas 31,300 1,024
----------
6,351
----------
TOTAL COMMON STOCK
(COST $85,768) 97,664
==========
SHORT-TERM INVESTMENT HELD AS
COLLATERAL FOR LOANED SECURITIES (19.6%)
BlackRock Institutional Money
Market Trust 19,668,362 19,668
----------
TOTAL SHORT-TERM INVESTMENT HELD AS
COLLATERAL FOR LOANED SECURITIES
(COST $19,668) 19,668
==========
CASH EQUIVALENT (3.9%)
BlackRock TempCash Fund,
Institutional Shares, 4.65% (B) 3,924,957 3,925
----------
TOTAL CASH EQUIVALENT
(COST $3,925) 3,925
==========
TOTAL INVESTMENTS (121.1%)
(COST $109,361) 121,257
==========
OTHER ASSETS AND LIABILITIES (-21.1%)
Obligation to return securities lending collateral (19,668)
Payable for investment securities purchased (1,519)
Payable for capital shares redeemed (111)
Payable due to Investment Adviser (63)
Payable due to Administrator (12)
Other assets and liabilities 232
TOTAL OTHER ASSETS AND LIABILITIES (21,141)
----------
NET ASSETS(100.0%) $ 100,116
==========
VALUE
(000)
-----------
NET ASSETS CONSIST OF:
Portfolio capital of Class I Shares
(unlimited authorization - no par value) $ 72,797
Accumulated net realized gain on investments 15,423
Net unrealized appreciation on investments 11,896
----------
NET ASSETS $ 100,116
==========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-CLASS I SHARES
($100,115,522 / 5,437,874 SHARES) $ 18.41
==========
* Non-income producing security.
** More narrow industries are utilized for compliance purposes, whereas broad
sectors are utilized for reporting purposes.
(A) The security or a portion of this security waso n loan at March 31, 2006.
The total value of securities on loan at March 31, 2006 was $18,966,502.
(B) The rate shown was the 7-day effective yield as of March 31, 2006.
ADR - American Depositary Receipt
Cl - Class
The accompanying notes are an integral part of the financial statements.
Constellation Funds 2006 Semi-Annual Report 7
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation Clover Small Cap Value Fund
March 31, 2006
SECTOR WEIGHTINGS+
[CHART]
Financials 27.1%
Industrials 18.7%
Consumer Discretionary 11.0%
Cash Equivalents++ 10.5%
Information Technology 10.2%
Energy 5.6%
Utilities 4.7%
Health Care 4.5%
Materials 3.9%
Consumer Staples 2.6%
Telecommunication Services 1.2%
+ Percentages are 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 (97.5%)
CONSUMER DISCRETIONARY (12.0%)
Aftermarket Technology* 63,625 $ 1,439
Brown Shoe 44,450 2,333
Callaway Golf (A) 121,475 2,089
Dollar Thrifty Automotive Group* 72,975 3,313
Dollar Tree Stores* 56,675 1,568
Domino's Pizza 103,700 2,961
Genesco* 39,575 1,539
Group 1 Automotive* 29,800 1,417
Guess?* 28,900 1,130
Loews - Carolina Group 43,425 2,053
Monro Muffler 55,725 2,070
Multimedia Games* 105,100 1,564
Phillips-Van Heusen 86,675 3,312
Playtex Products* 111,700 1,169
RC2* 31,750 1,264
Select Comfort* 31,100 1,230
Steiner Leisure* 43,550 1,764
Too* 56,400 1,937
Valuevision Media, Cl A* 144,050 1,841
Wolverine World Wide 108,200 2,394
-------
38,387
-------
VALUE
SHARES (000)
------- -------
CONSUMER STAPLES (2.8%)
Andersons 27,250 $ 2,132
Church & Dwight 46,600 1,721
Energizer Holdings* 24,775 1,313
Pantry* 38,200 2,383
Performance Food Group (A)* 47,675 1,487
-------
9,036
-------
ENERGY (6.1%)
Cabot Oil & Gas 47,025 2,254
Denbury Resources* 57,100 1,808
Encore Acquisition* 55,800 1,730
Giant Industries* 25,650 1,784
Grey Wolf* 191,500 1,425
Helmerich & Payne 37,100 2,590
Oceaneering International* 22,975 1,316
Reliant Energy* 114,900 1,216
SEACOR Holdings* 25,375 2,010
Tesoro (A) 21,900 1,497
Whiting Petroleum (A)* 45,800 1,877
-------
19,507
-------
FINANCIALS (29.5%)**
Advanta 86,475 3,188
Affiliated Managers Group (A)* 12,325 1,314
AG Edwards 20,500 1,022
AmerUs Group 41,550 2,503
Bankunited Financial, Cl A 27,125 733
Cash America International 65,125 1,955
CBL & Associates Properties 38,450 1,632
Colonial BancGroup 166,425 4,161
CompuCredit (A)* 30,075 1,107
East West Bancorp 29,975 1,156
Ezcorp, Cl A* 44,000 1,299
FelCor Lodging Trust* 312,075 6,585
Financial Federal 69,325 2,031
Fpic Insurance Group* 54,450 2,058
Greater Bay Bancorp 72,700 2,017
Hanover Insurance Group 67,795 3,554
HCC Insurance Holdings (A) 97,425 3,390
Home Properties of New York 52,050 2,660
Investment Technology Group* 42,700 2,126
Jackson Hewitt Tax Service 78,250 2,471
Jefferies Group 43,175 2,526
LTC Properties 68,950 1,604
MeriStar Hospitality* 188,275 1,954
Mid-America Apartment Communities 46,100 2,524
Navigators Group* 36,550 1,813
Nelnet, Cl A* 36,725 1,530
Northwest Bancorp 74,875 1,854
Ohio Casualty 70,275 2,228
PFF Bancorp 116,675 3,933
Phoenix* 108,200 1,764
Portfolio Recovery Associates* 28,475 1,333
Potlatch 23,951 1,026
ProAssurance* 54,975 2,859
The accompanying notes are an integral part of the financial statements.
8 Constellation Funds 2006 Semi-Annual Report
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation Clover Small Cap Value Fund
March 31, 2006
VALUE
SHARES (000)
------- -------
Reckson Associates Realty (A) 68,300 $ 3,129
Selective Insurance Group 16,675 884
Stancorp Financial Group 30,000 1,623
State Auto Financial 24,350 821
Sterling Bancshares 158,275 2,857
Sterling Financial 38,605 1,120
Strategic Hotel Capital 55,875 1,301
Tanger Factory Outlet Centers 61,900 2,130
Trammell Crow* 44,350 1,581
United America Indemnity, Cl A* 100,100 2,292
West Coast Bancorp 54,525 1,524
Zenith National Insurance 26,750 1,287
-------
94,459
-------
HEALTH CARE (5.0%)
Alkermes* 77,675 1,713
American Dental Partners* 27,700 374
Cerner (A)* 31,125 1,477
Community Health Systems* 60,450 2,185
LCA-Vision (A) 45,075 2,259
Lincare Holdings* 39,525 1,540
Odyssey HealthCare* 135,700 2,335
PetMed Express* 92,625 1,646
VCAAntech* 58,100 1,655
Viropharma* 81,100 1,030
-------
16,214
-------
INDUSTRIALS (20.3%)
AAR (A)* 61,975 1,765
Alderwoods Group* 135,200 2,420
Aviall* 25,950 988
Brightpoint* 46,562 1,446
CIRCOR International 33,225 970
CNF 33,900 1,693
Eagle Materials (A) 29,050 1,852
EGL* 30,875 1,389
EMCOR Group* 66,550 3,305
Equifax 23,600 879
Flowserve* 54,000 3,150
FTI Consulting* 62,625 1,787
Gardner Denver* 22,925 1,495
Genesee & Wyoming, Cl A* 49,887 1,531
Greenbrier 35,900 1,438
HUB Group* 32,950 1,502
John Wiley & Sons, Cl A 11,325 429
Labor Ready* 87,325 2,091
Laidlaw International 69,550 1,892
Mesa Air Group* 267,350 3,058
Molecular Devices* 31,350 1,040
Moog, Cl A* 27,975 993
NS Group* 25,900 1,192
Orbital Sciences* 133,175 2,107
Pacer International* 77,450 2,531
Quanta Services (A)* 137,275 2,199
Reliance Steel & Aluminum (A) 31,000 2,911
Shaw Group* 40,100 1,219
VALUE
SHARES (000)
------- -------
Teleflex 29,300 $ 2,099
Terex* 38,800 3,074
United Rentals* 117,325 4,048
Universal Forest Products 34,650 2,200
URS* 41,750 1,680
Washington Group International* 23,500 1,349
Waste Connections* 33,900 1,350
-------
65,072
-------
INFORMATION TECHNOLOGY (11.1%)
Aeroflex* 165,125 2,267
Carreker* 149,800 963
Checkpoint Systems* 74,250 1,996
CSG Systems International* 52,775 1,228
Cymer* 47,200 2,145
eFunds* 56,400 1,457
Fairchild Semiconductor
International* 236,150 4,503
Integrated Silicon Solutions* 101,750 676
LSI Logic* 282,150 3,262
Neoware Systems* 95,350 2,824
ON Semiconductor* 220,350 1,600
Polycom* 68,225 1,479
Rudolph Technologies* 66,450 1,133
Seachange International* 167,100 1,298
Semtech* 62,775 1,123
SonicWALL* 166,050 1,177
THQ* 111,787 2,894
Vignette* 83,750 1,235
Zoran* 100,525 2,200
-------
35,460
-------
MATERIALS (4.3%)
Cleveland-Cliffs (A) 21,400 1,864
Commercial Metals 39,975 2,138
Crown Holdings* 53,150 943
HB Fuller 73,600 3,779
Pioneer* 46,650 1,423
Quanex 17,800 1,186
Texas Industries 18,200 1,101
US Concrete* 85,525 1,237
-------
13,671
-------
TELECOMMUNICATION SERVICES (1.3%)
Nice Systems ADR* 42,900 2,186
Talk America Holdings* 109,175 931
West* 23,975 1,071
-------
4,188
-------
UTILITIES (5.1%)
Allegheny Energy* 35,075 1,187
Avista 97,975 2,023
Centerpoint Energy 95,625 1,141
CMS Energy (A)* 139,275 1,804
El Paso Electric 96,625 1,840
The accompanying notes are an integral part of the financial statements.
Constellation Funds 2006 Semi-Annual Report 9
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation Clover Small Cap Value Fund
March 31, 2006
VALUE
SHARES (000)
------ ---------
Headwaters (A)* 30,475 $ 1,212
Nicor (A) 43,975 1,740
NRG Energy (A)* 46,275 2,092
Sierra Pacific Resources* 86,975 1,201
Southern Union* 81,465 2,023
--------
16,263
--------
TOTAL COMMON STOCK
(COST $236,362) 312,257
--------
SHORT-TERM INVESTMENT HELD AS
COLLATERAL FOR LOANED SECURITIES (9.8%)
BlackRock Institutional Money
Market Trust 31,436,183 31,436
--------
TOTAL SHORT-TERM INVESTMENT HELD
AS COLLATERAL FOR LOANED SECURITIES
(COST $31,436) 31,436
--------
CASH EQUIVALENT (1.6%)
BlackRock TempCash Fund,
Institutional Shares, 4.65% (B) 5,077,668 5,078
--------
TOTAL CASH EQUIVALENT
(COST $5,078) 5,078
--------
TOTAL INVESTMENTS (108.9%)
(COST $272,876) 348,771
--------
OTHER ASSETS AND LIABILITIES (-8.9%)
Obligation to return securities lending collateral (31,436)
Payable for investment securities purchased (5,400)
Payable for capital shares redeemed (315)
Payable due to Investment Adviser (233)
Payable due to Administrator (40)
Other assets and liabilities, net 9,057
--------
TOTAL OTHER ASSETS AND LIABILITIES (28,367)
--------
NET ASSETS(100.0%) $320,404
========
VALUE
(000)
---------
NET ASSETS CONSIST OF:
Portfolio capital of Class I Shares
(unlimited authorization - no par value) $203,160
Accumulated net investment loss (554)
Accumulated net realized gain on investments 41,903
Net unrealized appreciation on investments 75,895
--------
NET ASSETS $320,404
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-CLASS I SHARES
($320,403,831 / 12,132,937) $ 26.41
========
* Non-income producing security.
** More narrow industries are utilized for compliance purposes, whereas broad
sectors are utilized for reporting purposes.
(A) The security or a portion of this security was on loan at March 31, 2006.
The total value of securities on loan at March 31, 2006 was $30,373,359.
(B) The rate shown was the 7-day effective yield as of March 31, 2006.
ADR - American Depositary Receipt
Cl - Class
The accompanying notes are an integral part of the financial statements.
10 Constellation Funds 2006 Semi-Annual Report
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation Clover Core Fixed Income Fund
March 31, 2006
SECTOR WEIGHTINGS+
[CHART]
Government Mortgage-Backed Obligations 39.3%
Corporate Bonds 29.8%
U.S. Treasury Obligations 13.5%
Asset-Backed Securities 7.3%
U.S. Government Agency Obligations 5.1%
Cash Equivalent 1.8%
Convertible Bonds 1.7%
Municipal Bond 1.5%
+ Percentages are based on total investments.
FACE AMOUNT VALUE
(000) (000)
----------- ------
U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS (38.8%)
FHLMC CMO/REMIC
Ser 2882, Cl OI IO
5.000%, 02/15/30 $1,055 $ 159
FHLMC CMO/REMIC
Ser 2882, Cl YI IO
5.000%, 03/15/24 4,492 369
FHLMC Pool #C01844
4.500%, 04/01/34 616 569
FHLMC Pool #G08062
5.000%, 06/01/35 719 685
FHLMC Pool #G11570
5.000%, 04/01/19 400 390
FNMA CMO/REMIC
Ser 1994-17, Cl H
6.000%, 02/25/09 169 170
FNMA Pool #254759
4.500%, 06/01/18 1,287 1,233
FNMA Pool #255111
5.500%, 03/01/34 790 773
FNMA Pool #369214
5.000%, 04/01/09 26 26
FNMA Pool #535301
6.500%, 04/01/15 74 76
FNMA Pool #689022
5.000%, 05/01/33 889 849
FNMA Pool #694431
5.000%, 03/01/18 540 528
FNMA Pool #738783
7.000%, 02/01/25 550 567
FACE AMOUNT VALUE
(000) (000)
----------- ------
FNMA Pool #835760
4.500%, 09/01/35 $ 760 $ 702
GNMA CMO/REMIC
Ser 2004-59, Cl DA
5.000%, 06/16/34 170 166
GNMA Pool #13125
8.000%, 10/15/06 1 1
GNMA Pool #196477
10.000%, 04/15/10 12 13
GNMA Pool #202886
8.000%, 03/15/17 20 21
GNMA Pool #221235
8.500%, 07/15/17 12 12
GNMA Pool #331786
8.000%, 08/15/22 17 18
GNMA Pool #376400
6.500%, 02/15/24 103 106
GNMA Pool #439478
7.000%, 01/15/27 80 83
GNMA Pool #457921
5.500%, 12/15/28 186 185
GNMA Pool #462622
6.500%, 03/15/28 127 132
GNMA Pool #533974
6.500%, 05/15/32 70 73
GNMA Pool #553328
4.500%, 07/15/18 559 540
GNMA Pool #570400
6.500%, 09/15/31 164 170
GNMA Pool #604616
4.500%, 09/15/18 634 613
GNMA Pool #781029
6.500%, 05/15/29 45 47
GNMA Pool #781096
6.500%, 12/15/28 216 224
GNMA Pool #781231
7.000%, 12/15/30 104 108
GNMA Pool #781276
6.500%, 04/15/31 167 174
GNMA Pool #781328
7.000%, 09/15/31 101 106
------
TOTAL U.S. GOVERNMENT
MORTGAGE-BACKED OBLIGATIONS
(COST $10,099) 9,888
------
CORPORATE BONDS (29.4%)
CONSUMER STAPLES (4.6%)
Conagra Foods
7.875%, 09/15/10 700 755
Sysco
7.250%, 04/15/07 405 411
------
1,166
------
The accompanying notes are an integral part of the financial statements.
Constellation Funds 2006 Semi-Annual Report 11
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation Clover Core Fixed Income Fund
March 31, 2006
FACE AMOUNT VALUE
(000) (000)
----------- ------
ENERGY (2.0%)
XTO Energy
7.500%, 04/15/12 $ 475 $ 519
FINANCIALS (3.6%)
Marsh & McClennan
7.125%, 06/15/09 600 624
US Bancorp
6.875%, 09/15/07 300 306
------
930
------
INDUSTRIALS (4.4%)
Om Group
9.250%, 12/15/11 400 414
Thermo Electron
7.625%, 10/30/08 665 697
------
1,111
------
UTILITIES (14.8%)
Carolina Power & Light
5.125%, 09/15/13 685 665
Consolidated Edison,
Ser 97-B
6.450%, 12/01/07 300 305
Consolidated Natural Gas,
Ser C
6.250%, 11/01/11 415 424
Emerson Electric
7.125%, 08/15/10 400 427
Kinder Morgan Energy
5.125%, 11/15/14 500 474
PPL Electric Utilities
4.300%, 06/01/13 525 482
Scana, MTN, Ser B
5.810%, 10/23/08 1,000 1,008
------
3,785
------
TOTAL CORPORATE BONDS
(COST $7,664) 7,511
------
U.S. TREASURY OBLIGATIONS (13.4%)
U.S. TREASURY BONDS (8.9%)
7.500%, 11/15/16 850 1,027
6.250%, 08/15/23 650 737
6.000%, 02/15/26 450 502
------
2,266
------
U.S. TREASURY NOTES (4.5%)
5.000%, 02/15/11 400 403
4.375%, 12/15/10 750 736
------
1,139
------
TOTAL U.S. TREASURY OBLIGATIONS
(COST $3,508) 3,405
------
FACE AMOUNT VALUE
(000) (000)
----------- ------
ASSET-BACKED SECURITIES (7.2%)
CS First Boston Mortgage Securities,
Ser 2005-C5, Cl A3 (A)
5.100%, 08/15/38 $ 500 $ 486
Countrywide Alternative Loan Trust,
Ser 2005-J13, Cl 2A8
5.500%, 11/25/35 300 284
Merrill Lynch Mortgage Investors,
Ser 1998-C1, Cl A3 (A)
6.720%, 11/15/26 500 530
Wachovia Bank Commercial
Mortgage Trust,
Ser 2003-C5, Cl B
4.107%, 06/15/35 600 546
------
TOTAL ASSET-BACKED SECURITIES
(COST $1,907) 1,846
------
U.S. GOVERNMENT AGENCY OBLIGATIONS (5.1%)
FHLB
3.750%, 02/06/08 500 488
TVA
5.880%, 04/01/36 750 803
------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(COST $1,368) 1,291
------
CONVERTIBLE BONDS (1.6%)
BEA Systems, CV to 28.8600 Shares
4.000%, 12/15/06 410 406
Quebecor World, CV to 30.5880 Shares
6.000%, 10/01/07 13 13
------
TOTAL CONVERTIBLE BONDS
(COST $420) 419
------
MUNICIPAL BOND (1.5%)
VIRGINIA (1.5%)
State Housing Authority RB,
Taxable Rental, Ser C
5.000%, 05/01/13 400 389
------
TOTAL MUNICIPAL BOND
(COST $405) 389
------
The accompanying notes are an integral part of the financial statements.
12 Constellation Funds 2006 Semi-Annual Report
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation Clover Core Fixed Income Fund
March 31, 2006
VALUE
SHARES (000)
------- -------
CASH EQUIVALENT (1.7%)
BlackRock TempCash Fund,
Institutional Shares, 4.65% (B) 442,874 $ 443
-------
TOTAL CASH EQUIVALENT
(COST $443) 443
-------
TOTAL INVESTMENTS (98.7%)
(COST $25,814) 25,192
-------
OTHER ASSETS AND LIABILITIES (1.3%)
Payable for capital shares redeemed (80)
Payable due to Investment Adviser (10)
Income distribution payable (4)
Payable due to Administrator (3)
Other assets and liabilities, net 422
TOTAL OTHER ASSETS AND LIABILITIES 325
=======
NET ASSETS (100.0%) $25,517
=======
NET ASSETS CONSIST OF:
Portfolio capital of Class I Shares
(unlimited authorization - no par value) $26,218
Accumulated net realized loss on investments (79)
Net unrealized depreciation on investments (622)
-------
NET ASSETS $25,517
=======
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-CLASS I SHARES
($25,516,797 / 2,691,241 SHARES) $ 9.48
=======
(A) Variable rate security - the rate reflected on the Statement of Net
Assets was the rate in effect on March 31, 2006.
(B) The rate shown was the 7-day effective yield as of March 31, 2006.
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 2006 Semi-Annual Report 13
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation Chartwell Ultra Short Duration Fixed Income Fund
March 31, 2006
SECTOR WEIGHTINGS+
[CHART]
U.S. Government Mortgage-Backed Obligations 83.6%
U.S. Government Agency Obligations 8.3%
Cash Equivalents 8.1%
+ Percentages are based on total investments.
FACE AMOUNT VALUE
(000) (000)
----------- ------
U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS (83.5%)
FHLMC CMO/REMIC
Ser 1106, Cl E
7.500%, 07/15/06 $ -- $ --
FHLMC CMO/REMIC
Ser 1377, Cl F (A)
5.250%, 09/15/07 104 104
FHLMC CMO/REMIC
Ser 1544, Cl L (A)
4.670%, 07/15/08 85 85
FHLMC CMO/REMIC
Ser 2440, Cl OG
6.500%, 12/15/30 799 800
FHLMC CMO/REMIC
Ser 2463, Cl PE
6.000%, 03/15/28 80 80
FHLMC CMO/REMIC
Ser 2520, Cl BD
5.250%, 10/15/31 1,198 1,188
FHLMC CMO/REMIC
Ser 2537, Cl LA
4.250%, 05/15/30 979 968
FHLMC CMO/REMIC
Ser 2571, Cl FN (A)
5.399%, 08/15/32 8,840 8,999
FHLMC CMO/REMIC
Ser 2575, Cl LM
4.500%, 05/15/32 1,777 1,725
FHLMC CMO/REMIC
Ser 2586, Cl WA
4.000%, 12/15/32 2,791 2,658
FHLMC CMO/REMIC
Ser 2590, Cl UL
3.750%, 03/15/32 1,784 1,700
FACE AMOUNT VALUE
(000) (000)
----------- ------
FHLMC CMO/REMIC
Ser 2594, Cl YA
4.000%, 04/15/23 $2,274 $2,178
FHLMC CMO/REMIC
Ser 2640, Cl OT
2.000%, 04/15/22 2,721 2,634
FHLMC CMO/REMIC
Ser 2649, Cl PJ
3.500%, 06/15/33 2,078 1,997
FHLMC CMO/REMIC
Ser 2684, Cl GN
3.250%, 05/15/23 2,546 2,492
FHLMC CMO/REMIC
Ser 2715, Cl QB
3.500%, 09/15/22 1,336 1,315
FHLMC CMO/REMIC
Ser 2744, Cl JX
3.500%, 01/15/23 3,314 3,238
FHLMC CMO/REMIC
Ser 2750, Cl FG (A)
5.149%, 02/15/34 4,440 4,481
FHLMC CMO/REMIC
Ser 2770, Cl FH (A)
5.149%, 03/15/34 4,329 4,382
FHLMC CMO/REMIC
Ser 2778, Cl FV (A)
5.349%, 03/15/34 901 905
FHLMC CMO/REMIC
Ser 2799, Cl F (A)
5.349%, 05/15/34 4,050 4,019
FHLMC CMO/REMIC
Ser 2822, Cl FP (A)
5.349%, 11/15/32 2,578 2,581
FHLMC CMO/REMIC
Ser 2827, Cl FW (A)
5.549%, 07/15/34 1,980 1,983
FHLMC CMO/REMIC
Ser 2858, Cl HF (A)
5.299%, 09/15/34 2,517 2,526
FHLMC CMO/REMIC
Ser 2876, Cl FH (A)
5.299%, 10/15/34 4,072 4,062
FHLMC CMO/REMIC
Ser 2878, Cl FD (A)
5.349%, 10/15/34 767 767
FHLMC CMO/REMIC
Ser 2886, Cl BF (A)
5.249%, 11/15/34 2,319 2,321
FHLMC CMO/REMIC
Ser 2892, Cl KF (A)
5.399%, 11/15/34 6,483 6,517
The accompanying notes are an integral part of the financial statements.
14 Constellation Funds 2006 Semi-Annual Report
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation Chartwell Ultra Short Duration Fixed Income Fund
March 31, 2006
FACE AMOUNT VALUE
(000) (000)
----------- -------
FHLMC CMO/REMIC
Ser 2894, Cl FB (A)
5.349%, 11/15/34 $ 1,633 $ 1,630
FHLMC CMO/REMIC
Ser 2921, Cl JF (A)
5.249%, 01/15/35 4,780 4,848
FHLMC CMO/REMIC
Ser 2925, Cl CF (A)
5.249%, 01/15/35 418 414
FHLMC CMO/REMIC
Ser 3033, Cl BY (A)
6.880%, 09/15/35 1,491 1,445
FHLMC CMO/REMIC,
Ser 3025, Cl FC (A)
6.630%, 08/15/35 2,871 2,772
FHLMC Pool #184967
7.750%, 08/01/08 14 14
FHLMC Pool #B15413
8.000%, 03/01/11 506 527
FHLMC Pool #E00746
7.000%, 09/01/14 1,619 1,665
FHLMC Pool #E64944
7.000%, 07/01/11 226 233
FHLMC Pool #G10665
7.000%, 03/01/12 1,798 1,851
FHLMC Pool #G10822
7.000%, 07/01/13 3,348 3,446
FHLMC Pool #G11072
7.500%, 12/01/15 628 655
FHLMC Pool #G11656
7.000%, 06/01/17 3,131 3,220
FHLMC Pool #G11673
7.000%, 12/01/12 4,724 4,862
FHLMC Pool #M90686
5.500%, 12/01/06 142 143
FNMA CMO/REMIC
Ser 2002-67, Cl AM
5.000%, 11/25/15 2,247 2,231
FNMA CMO/REMIC
Ser 2002-81, Cl F (A)
5.318%, 04/25/32 15,000 15,244
FNMA CMO/REMIC
Ser 2002-82, Cl FP(A)
5.318%, 02/25/32 5,000 5,072
FNMA CMO/REMIC
Ser 2002-87, Cl FB (A)
5.328%, 10/25/31 2,000 2,021
FNMA CMO/REMIC
Ser 2002-87, Cl PY
3.920%, 09/25/27 1,866 1,835
FNMA CMO/REMIC
Ser 2003-19, Cl ME
4.000%, 01/25/33 1,083 1,026
FACE AMOUNT VALUE
(000) (000)
----------- -------
FNMA CMO/REMIC
Ser 2003-33, Cl AM
4.250%, 05/25/33 $ 1,138 $ 1,093
FNMA CMO/REMIC
Ser 2003-33, Cl AU
4.000%, 03/25/33 1,751 1,655
FNMA CMO/REMIC
Ser 2003-34, Cl AD
4.000%, 01/25/32 1,486 1,433
FNMA CMO/REMIC
Ser 2003-34, Cl FX (A)
5.930%, 05/25/33 413 419
FNMA CMO/REMIC
Ser 2003-61, Cl FK (A)
6.318%, 08/25/33 10,868 11,218
FNMA CMO/REMIC
Ser 2003-69, Cl NF (A)
6.130%, 07/25/33 3,844 3,878
FNMA CMO/REMIC
Ser 2003-76, Cl FB (A)
5.268%, 08/25/33 3,232 3,267
FNMA CMO/REMIC
Ser 2003-81, Cl FE (A)
5.318%, 09/25/33 5,758 5,856
FNMA CMO/REMIC
Ser 2003-119, Cl PU
4.000%, 11/25/33 2,464 2,386
FNMA CMO/REMIC
Ser 2004-96, Cl LF (A)
5.818%, 12/25/34 3,338 3,324
FNMA CMO/REMIC
Ser 2005-16, Cl FW (A)
5.718%, 01/25/35 4,326 4,351
FNMA CMO/REMIC
Ser 2005-93, Cl XT (A)
7.000%, 10/25/35 3,675 3,675
FNMA CMO/REMIC
Ser 2005-108, Cl GU
5.750%, 07/25/35 2,277 2,274
FNMA Pool #190054
7.000%, 10/01/13 384 393
FNMA Pool #190658
7.000%, 02/01/09 1,100 1,116
FNMA Pool #253472
7.500%, 09/01/10 231 238
FNMA Pool #519992
7.000%, 10/01/14 236 242
FNMA Pool #534851
7.500%, 04/01/15 385 403
FNMA Pool #535219
7.500%, 03/01/15 284 297
FNMA Pool #535635
8.500%, 06/01/12 430 438
The accompanying notes are an integral part of the financial statements.
Constellation Funds 2006 Semi-Annual Report 15
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation Chartwell Ultra Short Duration Fixed Income Fund
March 31, 2006
FACE AMOUNT VALUE
(000) (000)
----------- --------
FNMA Pool #555646
7.500%, 09/01/16 $ 1,659 $ 1,737
FNMA Pool #704214
7.500%, 12/01/27 1,611 1,682
GNMA ARM Pool #8103 (A)
4.625%, 02/20/16 57 58
GNMA ARM Pool #8287 (A)
5.125%, 11/20/17 51 51
GNMA ARM Pool #8297 (A)
5.125%, 12/20/17 92 92
GNMA ARM Pool #8321 (A)
4.625%, 02/20/18 211 210
GNMA ARM Pool #8333 (A)
4.625%, 03/20/18 156 157
GNMA ARM Pool #8345 (A)
4.875%, 04/20/18 88 88
GNMA ARM Pool #8366 (A)
4.375%, 06/20/18 96 96
GNMA ARM Pool #8404 (A)
4.750%, 09/20/18 5 5
GNMA ARM Pool #8405 (A)
5.000%, 09/20/18 44 45
GNMA ARM Pool #8462 (A)
4.375%, 02/20/19 10 10
GNMA ARM Pool #8489 (A)
4.875%, 04/20/19 76 76
GNMA CMO/REMIC
Ser 2003-34, Cl PM
4.000%, 04/20/33 5,219 5,066
--------
TOTAL U.S. GOVERNMENT
MORTGAGE-BACKED OBLIGATIONS
(COST $178,635) 179,188
--------
U.S. GOVERNMENT AGENCY OBLIGATIONS (8.3%)
FHLB (A)
6.070%, 05/19/10 10,000 9,850
4.750%, 09/29/14 3,000 2,879
4.260%, 02/22/07 5,000 4,992
--------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(COST $17,998) 17,721
--------
REPURCHASE AGREEMENT (8.1%)
PNC Capital Markets, 4.51%
dated 03/31/06, to be
repurchased on 04/03/06,
repurchase price $17,456,558
(collateralized by a U.S.
Government obligation, par
value $18,297,000, 4.00%,
09/22/09, total market
value $17,637,942) (B) 17,450 17,450
--------
TOTAL REPURCHASE AGREEMENT
(COST $17,450) 17,450
--------
VALUE
SHARES (000)
------ ---------
CASH EQUIVALENTS(0.0%)
BlackRock FedFund,
Institutional Shares, 4.56% (C) 419 $ --
--------
BlackRock T-Fund,
Institutional Shares, 4.49% (C) 420 1
--------
TOTAL CASH EQUIVALENTS
(COST $1) 1
--------
TOTAL INVESTMENTS (99.9%)
(COST $214,084) 214,360
--------
OTHER ASSETS AND LIABILITIES(0.1%)
Payable for capital shares redeemed (228)
Payable due to Investment Adviser (46)
Income distribution payable (31)
Payable due to Administrator (27)
Other assets and liabilities, net 652
--------
TOTAL OTHER ASSETS AND LIABILITIES 320
========
NET ASSETS (100.0%) $214,680
========
NET ASSETS CONSIST OF:
Portfolio capital of Class I Shares
(unlimited authorization - no par value) $222,336
Accumulated net realized loss on investments (7,932)
Net unrealized appreciation on investments 276
--------
NET ASSETS $214,680
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-CLASS I SHARES
($214,679,564 / 21,430,999) $ 10.02
========
(A) Variable rate security - the rate reflected on the Statement of Net Assets
is the rate in effect on March 31, 2006.
(B) Tri-Party Repurchase Agreement
(C) The rate shown was the 7-day effective yield as of March 31, 2006.
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 listed as "-" are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
16 Constellation Funds 2006 Semi-Annual Report
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation Chartwell Short Duration Fixed Income Fund
March 31, 2006
SECTOR WEIGHTINGS+
[CHART]
U.S. Government Mortgage-Backed Obligations 65.1%
Cash Equivalents++ 14.3%
U.S. Treasury Obligations 11.8%
Government Agency Obligations 8.8%
+ Percentages are 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 (74.0%)
FHLMC CMO/REMIC
Ser 1093, Cl F
7.500%, 06/15/06 $ 1 $ 1
FHLMC CMO/REMIC
Ser 1538, Cl J
6.500%, 06/15/08 160 161
FHLMC CMO/REMIC
Ser 2509, Cl EA
4.000%, 12/15/12 665 660
FHLMC CMO/REMIC
Ser 2510, Cl TA
4.000%, 06/15/32 997 948
FHLMC CMO/REMIC
Ser 2515, Cl ED
5.000%, 03/15/17 2,316 2,298
FHLMC CMO/REMIC
Ser 2537, Cl LA
4.250%, 05/15/30 969 958
FHLMC CMO/REMIC
Ser 2543, Cl YJ
4.500%, 03/15/32 1,880 1,814
FHLMC CMO/REMIC
Ser 2566, Cl LM
4.500%, 04/15/32 1,293 1,250
FHLMC CMO/REMIC
Ser 2575, Cl QP
4.500%, 11/15/31 1,462 1,427
FHLMC CMO/REMIC
Ser 2583, Cl ND
4.250%, 12/15/10 883 859
FHLMC CMO/REMIC
Ser 2590, Cl QY
3.750%, 04/15/28 1,171 1,114
FACE AMOUNT VALUE
(000) (000)
----------- ------
FHLMC CMO/REMIC
Ser 2590, Cl UL
3.750%, 03/15/32 $2,242 $2,135
FHLMC CMO/REMIC
Ser 2596, Cl QE
4.000%, 03/15/33 1,595 1,504
FHLMC CMO/REMIC
Ser 2649, Cl PJ
3.500%, 06/15/33 3,744 3,598
FHLMC CMO/REMIC
Ser 2744, Cl TA
5.500%, 03/15/26 3,843 3,839
FHLMC Pool #C46122
7.000%, 01/01/26 985 1,016
FHLMC Pool #C66916
7.000%, 05/01/32 138 142
FHLMC Pool #D94598
6.500%, 04/01/21 266 273
FHLMC Pool #E97227
7.000%, 09/01/14 418 430
FHLMC Pool #G10288
6.000%, 09/01/09 40 40
FHLMC Pool #G10446
6.500%, 02/01/11 61 63
FHLMC Pool #G30085
7.500%, 10/01/17 293 308
FHLMC Pool #M90771
5.000%, 12/01/07 651 651
FNMA CMO/REMIC
Ser 1991-72, Cl G
8.000%, 07/25/06 2 2
FNMA CMO/REMIC
Ser 1991-133, Cl Z
8.000%, 09/25/06 9 9
FNMA CMO/REMIC
Ser 1994-27, Cl PJ
6.500%, 06/25/23 198 199
FNMA CMO/REMIC
Ser 1999-15, Cl PC
6.000%, 09/25/18 42 42
FNMA CMO/REMIC
Ser 2002-71, Cl AP
5.000%, 11/25/32 1,365 1,333
FNMA CMO/REMIC
Ser 2002-72, Cl A
5.000%, 10/25/15 266 265
FNMA CMO/REMIC
Ser 2003-19, Cl ME
4.000%, 01/25/33 946 896
The accompanying notes are an integral part of the financial statements.
Constellation Funds 2006 Semi-Annual Report 17
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation Chartwell Short Duration Fixed Income Fund
March 31, 2006
FACE AMOUNT VALUE
(000) (000)
----------- -------
FNMA CMO/REMIC
Ser 2003-30, Cl MB
4.000%, 06/25/27 $ 2,090 $ 2,050
FNMA CMO/REMIC
Ser 2003-34, Cl GJ
4.000%, 02/25/33 4,146 3,906
FNMA CMO/REMIC
Ser 2003-42, Cl CA
4.000%, 05/25/33 1,247 1,188
FNMA CMO/REMIC
Ser 2003-119, Cl PU
4.000%, 11/25/33 1,056 1,022
FNMA CMO/REMIC
Ser 2005-93, Cl XT(A)
7.000%, 10/25/35 4,915 4,915
FNMA Pool #190054
7.000%, 10/01/13 737 754
FNMA Pool #250477
6.000%, 01/01/11 32 33
FNMA Pool #303096
7.500%, 12/01/09 83 85
FNMA Pool #313429
7.000%, 03/01/12 262 269
FNMA Pool #323441
7.000%, 12/01/13 479 492
FNMA Pool #323493
7.500%, 12/01/28 1,713 1,791
FNMA Pool #323832
7.500%, 07/01/29 291 304
FNMA Pool #334593
7.000%, 05/01/24 20 20
FNMA Pool #404993
7.500%, 11/01/27 1,279 1,338
FNMA Pool #535560
7.000%, 08/01/14 4,131 4,244
FNMA Pool #546474
7.000%, 01/01/15 692 711
FNMA Pool #6222
9.000%, 04/01/16 31 32
FNMA Pool #647567
6.000%, 06/01/17 671 680
FNMA Pool #665773
7.500%, 06/01/31 571 597
FNMA Pool #704214
7.500%, 12/01/27 912 953
FNMA Pool #725284
7.000%, 11/01/18 1,877 1,928
FNMA Pool #743490
4.000%, 10/01/33 1,002 895
FNMA Pool #794717
7.500%, 06/01/31 3,117 3,259
FNMA Pool #8245
8.000%, 12/01/08 43 44
FNMA Pool #838790
4.500%, 08/01/35 3,570 3,294
FACE AMOUNT VALUE
(000) (000)
----------- -------
GNMA ARM Pool #8426 (A)
5.125%, 11/20/18 $ 31 $ 31
GNMA CMO/REMIC
Ser 2002-72, Cl AB
4.500%, 10/20/32 1,489 1,425
GNMA Pool #2707
5.500%, 01/20/14 14 14
GNMA Pool #2802
5.500%, 07/20/14 17 17
GNMA Pool #2843
5.500%, 11/20/14 191 191
GNMA Pool #344233
8.000%, 02/15/23 119 128
GNMA Pool #345123
8.000%, 12/15/23 266 285
GNMA Pool #351122
6.500%, 07/15/08 29 30
GNMA Pool #357343
6.500%, 10/15/08 15 15
GNMA Pool #462486
6.500%, 01/15/13 59 61
GNMA Pool #569337
6.500%, 04/15/22 84 87
GNMA Pool #578189
6.000%, 02/15/32 79 80
GNMA Pool #780322
8.000%, 11/15/22 147 157
GNMA Pool #780327
8.000%, 11/15/17 74 79
GNMA Pool #780604
7.000%, 07/15/12 988 1,021
GNMA Pool #814
8.000%, 08/20/17 174 184
-------
TOTAL U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS
(COST $68,201) 66,844
-------
U.S. TREASURY OBLIGATIONS (13.4%)
U.S. Treasury Notes (C)
4.125%, 05/15/15 2,500 2,363
4.000%, 04/15/10 10,000 9,697
-------
TOTAL U.S. TREASURY OBLIGATIONS
(COST $12,517) 12,060
-------
U.S. GOVERNMENT AGENCY OBLIGATIONS (10.0%)
FHLB (A)
6.000%, 04/26/19 500 472
6.000%, 03/30/20 5,000 4,761
4.750%, 09/29/14 4,000 3,839
-------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(COST $9,472) 9,072
-------
The accompanying notes are an integral part of the financial statements.
18 Constellation Funds 2006 Semi-Annual Report
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation Chartwell Short Duration Fixed Income Fund
March 31, 2006
FACE AMOUNT VALUE
(000)/SHARES (000)
------------ --------
SHORT-TERM INVESTMENT HELD AS
COLLATERAL FOR LOANED SECURITIES (13.9%)
BlackRock Institutional Money
Market Trust 12,574,281 $ 12,574
--------
TOTAL SHORT-TERM INVESTMENT HELD
AS COLLATERAL FOR LOANED SECURITIES
(COST $12,574) 12,574
--------
REPURCHASE AGREEMENT (2.4%)
PNC Capital Markets, 4.51%, dated 03/31/06, to be
repurchased on 04/03/06, repurchase price $2,134,802
(collateralized by U.S. Government obligation, par
value $2,238,000, 4.00%, 09/22/09, total market
value $2,157,387) (B) $ 2,134 2,134
--------
TOTAL REPURCHASE AGREEMENT
(COST $2,134) 2,134
--------
CASH EQUIVALENTS(0.0%)
BlackRock FedFund,
Institutional Shares, 4.56% (D) 307 1
BlackRock T-Fund,
Institutional Shares, 4.49% (D) 307 --
--------
TOTAL CASH EQUIVALENTS
(COST $1) 1
TOTAL INVESTMENTS (113.7%)
(COST $104,899) 102,685
--------
VALUE
(000)
--------
OTHER ASSETS AND LIABILITIES(-13.7%)
Obligation to return securities lending collateral $(12,574)
Payable for capital shares redeemed (268)
Payable due to Investment Adviser (20)
Payable due to Administrator (12)
Income distribution payable (4)
Other assets and liabilities, net 499
--------
TOTAL OTHER ASSETS AND LIABILITIES (12,379)
========
NET ASSETS (100.0%) $ 90,306
========
NET ASSETS CONSIST OF:
Portfolio capital of Class I Shares
(unlimited authorization - no par value) $ 96,027
Undistributed net investment income 1
Accumulated net realized loss on investments (3,508)
Net unrealized depreciation on investments (2,214)
--------
NET ASSETS $ 90,306
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-CLASS I SHARES
($90,306,096 / 9,310,026) $ 9.70
========
(A) Variable rate security - the rate reflected on the Statement of Net
Assets was the rate in effect on March 31, 2006.
(B) Tri-Party Repurchase Agreement
(C) The security or a portion of this security was on loan at March 31, 2006.
The total value of securities on loan at March 31, 2006 was $12,286,111.
(D) The rate shown was the 7-day effective yield as of March 31, 2006.
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 listed as "-" are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
Constellation Funds 2006 Semi-Annual Report 19
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation HLAM Large Cap Quality Stock Fund
March 31, 2006
SECTOR WEIGHTINGS+
[CHART]
Cash Equivalents++ 20.7%
Financials 18.9%
Consumer Discretionary 18.7%
Information Technology 15.9%
Health Care 15.6%
Consumer Staples 6.9%
Industrials 3.3%
+ Percentages are 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 (98.8%)
CONSUMER DISCRETIONARY (23.3%)
Comcast, Cl A* 17,590 $ 460
Gannett 1,275 76
Harley-Davidson 9,702 503
Home Depot (A) 15,910 673
International Game Technology 5,370 189
Mattel 10,840 197
Nike, Cl B (A) 1,290 110
Omnicom Group 6,552 545
TJX (A) 7,900 196
Viacom, Cl B* 2,160 84
Walt Disney (A)* 8,530 238
------
3,271
------
CONSUMER STAPLES (8.5%)
CVS 10,100 302
PepsiCo (A) 7,764 449
Procter & Gamble 3,610 208
Walgreen 5,640 243
------
1,202
------
FINANCIALS (23.5%)
American International Group 10,313 682
Berkshire Hathaway* 6 542
Cincinnati Financial 4,490 189
Freddie Mac 5,473 334
VALUE
SHARES (000)
--------- ------
JPMorgan Chase 5,585 $ 233
Morgan Stanley 5,355 336
Synovus Financial 17,703 480
US Bancorp 8,870 270
Washington Mutual (A) 5,775 246
------
3,312
------
HEALTH CARE (19.4%)
Allergan (A) 2,220 241
Amgen* 3,805 277
Cardinal Health (A) 3,640 271
Johnson & Johnson 6,959 412
Pfizer 13,283 331
Teva Pharmaceutical Industries
ADR (A) 5,545 228
Varian Medical Systems (A)* 3,715 209
Waters* 13,015 562
Wyeth 4,060 197
------
2,728
------
INDUSTRIALS (4.2%)
Cintas 3,140 134
Dover 4,920 239
Tyco International 8,015 215
------
588
------
INFORMATION TECHNOLOGY (19.9%)
Applied Materials* 16,940 297
Automatic Data Processing 11,256 514
CDW 3,825 225
Cisco Systems (A)* 10,475 227
EMC* 13,045 178
First Data 9,001 421
Microsoft 17,000 462
Nokia Oyj ADR (A) 11,855 246
Texas Instruments 6,960 226
------
2,796
------
TOTAL COMMON STOCK
(COST $10,175) 13,897
======
SHORT-TERM INVESTMENT HELD AS
COLLATERAL FOR LOANED SECURITIES (24.4%)
BlackRock Institutional Money
Market Trust 3,430,495 3,430
------
TOTAL SHORT-TERM INVESTMENT HELD AS
COLLATERAL FOR LOANED SECURITIES
(COST $3,430) 3,430
======
The accompanying notes are an integral part of the financial statements.
20 Constellation Funds 2006 Semi-Annual Report
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation HLAM Large Cap Quality Stock Fund
March 31, 2006
VALUE
SHARES (000)
------- --------
CASH EQUIVALENT (1.4%)
BlackRock TempCash Fund,
Institutional Shares, 4.65% (B) 199,944 $ 200
-------
TOTAL CASH EQUIVALENT
(COST $200) 200
=======
TOTAL INVESTMENTS (124.6%)
(COST $13,805) 17,527
=======
OTHER ASSETS AND LIABILITIES (-24.6%)
Obligation to return securities lending collateral (3,430)
Payable for capital shares redeemed (31)
Payable to Investment Adviser (4)
Payable due to Shareholder Servicing Agent (3)
Payable due to Administrator (2)
Other assets and liabilities, net 4
-------
TOTAL OTHER ASSETS AND LIABILITIES (3,466)
=======
NET ASSETS (100.0%) $14,061
=======
NET ASSETS CONSIST OF:
Portfolio capital of Class I Shares
(unlimited authorization - no par value) $ 9,473
Accumulated net realized gain on investments 866
Net unrealized appreciation on investments 3,722
-------
NET ASSETS $14,061
=======
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-CLASS I SHARES
($14,061,176/875,603 SHARES) $ 16.06
=======
* Non-income producing security.
(A) The security or a portion of this security was on loan at March 31, 2006.
The total value of securities on loan at March 31, 2006 was $3,314,305.
(B) The rate shown was the 7-day effective yield as of March 31, 2006.
ADR - American Depositary Receipt
Cl - Class
The accompanying notes are an integral part of the financial statements.
Constellation Funds 2006 Semi-Annual Report 21
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation Pitcairn Diversified Value Fund
March 31, 2006
SECTOR WEIGHTINGS+
[CHART]
Financials 31.3%
Cash Equivalents++ 14.7%
Energy 12.2%
Consumer Discretionary 6.3%
Health Care 5.8%
Consumer Staples 5.5%
Industrials 5.3%
Utilities 5.1%
Information Technology 4.8%
Telecommunication Services 4.8%
Materials 2.9%
Exchange Traded Fund 1.3%
+Percentages are 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%)
CONSUMER DISCRETIONARY (7.4%)
CBS, Cl B 35,330 $ 847
Home Depot (A) 81,235 3,436
Viacom, Cl B* 35,330 1,371
Walt Disney (A)* 241,305 6,730
-------
12,384
-------
CONSUMER STAPLES (6.5%)
Alberto-Culver 43,600 1,929
Altria Group 69,100 4,896
General Mills 51,220 2,596
Wal-Mart Stores 30,505 1,441
-------
10,862
-------
ENERGY (14.2%)
Devon Energy 48,900 2,991
ENSCO International 53,250 2,740
Exxon Mobil (A) 206,900 12,592
Marathon Oil 72,200 5,499
-------
23,822
-------
FINANCIALS (36.6%)**
Bank of New York 217,500 7,839
Bear Stearns 56,300 7,809
Capital One Financial 65,200 5,250
CapitalSource 101,574 2,527
VALUE
SHARES (000)
------- -------
Citigroup 162,430 $ 7,672
CompuCredit (A)* 61,700 2,271
Everest Re Group 31,620 2,952
First Industrial Realty Trust 64,865 2,769
JPMorgan Chase 172,700 7,191
Radian Group 46,380 2,794
Torchmark 58,300 3,329
Washington Mutual 37,125 1,582
Wells Fargo (A) 113,820 7,270
-------
61,255
-------
HEALTH CARE (6.8%)
Mylan Laboratories 102,500 2,398
Pfizer 286,400 7,137
UnitedHealth Group 33,225 1,856
-------
11,391
-------
INDUSTRIALS (6.2%)
3M 39,410 2,983
General Dynamics 41,880 2,680
Norfolk Southern 46,200 2,498
Pentair (A) 53,800 2,192
-------
10,353
-------
INFORMATION TECHNOLOGY (5.7%)
Microsoft 98,305 2,675
Motorola (A) 61,550 1,410
Unisys* 322,850 2,224
Vishay Intertechnology* 98,000 1,396
Xerox* 117,155 1,781
-------
9,486
-------
MATERIALS (3.4%)
Air Products & Chemicals 42,675 2,867
Alcoa 48,130 1,471
Weyerhaeuser (A) 18,885 1,368
-------
5,706
-------
TELE COMMUNICATION SERVICES (5.7%)
AT&T (A) 184,790 4,997
Sprint Nextel 174,490 4,509
-------
9,506
-------
UTILITIES (6.0%)
FPL Group 86,610 3,477
Pepco Holdings 144,000 3,282
PG&E (A) 83,220 3,237
-------
9,996
-------
TOTAL COMMON STOCK
(COST $139,794) 164,761
-------
EXCHANGE TRADED FUND (1.5%)
iShares Russell 1000 Value
Index Fund 34,100 2,492
-------
TOTAL EXCHANGE TRADED FUND
(COST $2,440) 2,492
-------
The accompanying notes are an integral part of the financial statements.
22 Constellation Funds 2006 Semi-Annual Report
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation Pitcairn Diversified Value Fund
March 31, 2006
VALUE
SHARES (000)
---------- --------
SHORT-TERM INVESTMENT HELD AS COLLATERAL
FOR LOANED SECURITIES (16.6%)
BlackRock Institutional Money
Market Trust 27,853,569 $ 27,854
--------
TOTAL SHORT-TERM INVESTMENT HELD AS
COLLATERAL FOR LOANED SECURITIES
(COST $27,854) 27,854
--------
CASH EQUIVALENT (0.5%)
PNC Bank Money Market
Fund, 4.26% (B) 888,472 888
--------
TOTAL CASH EQUIVALENT
(COST $888) 888
--------
TOTAL INVESTMENTS (117.1%)
(COST $170,976) 195,995
--------
OTHER ASSETS AND LIABILITIES (-17.1%)
Obligation to return securities lending collateral (27,854)
Income distribution payable (457)
Payable for investment securities purchased (296)
Payable due to Investment Adviser (81)
Payable for capital shares redeemed (65)
Payable due to Shareholder Servicing Agent (35)
Payable due to Administrator (21)
Other assets and liabilities, net 216
--------
TOTAL OTHER ASSETS AND LIABILITIES (28,593)
========
NET ASSETS (100.0%) $167,402
========
NET ASSETS CONSIST OF:
Portfolio capital of Class II Shares
(unlimited authorization - no par value) $135,797
Distributions in excess of net investment income (1)
Accumulated net realized gain on investments 6,587
Net unrealized appreciation on investments 25,019
--------
NET ASSETS $167,402
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-CLASS II SHARES
($167,401,999 / 13,655,582 SHARES) $ 12.26
========
* Non-income producing security.
** More narrow industries are utilized for compliance purposes, whereas broad
sectors are utilized for reporting purposes.
(A) The security or a portion of this security was on loan at March 31, 2006.
The total value of securities on loan at March 31, 2006 was $26,821,163.
(B) The rate shown was the 7-day effective yield as of March 31, 2006.
Cl - Class
The accompanying notes are an integral part of the financial statements.
Constellation Funds 2006 Semi-Annual Report 23
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation Pitcairn Select Value Fund
March 31, 2006
SECTOR WEIGHTINGS+
[CHART]
Financials 28.0%
Cash Equivalents++ 20.5%
Energy 11.8%
Consumer Discretionary 7.2%
Information Technology 6.6%
Health Care 5.9%
Utilities 5.6%
Telecommunication Services 4.5%
Industrials 3.5%
Consumer Staples 3.4%
Materials 2.8%
Exchange Traded Fund 0.2%
+ Percentages are 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 (100.1%)
CONSUMER DISCRETIONARY (9.1%)
Home Depot (A) 54,210 $ 2,293
Viacom, Cl B* 52,020 2,018
Walt Disney (A)* 46,900 1,308
-------
5,619
-------
CONSUMER STAPLES (4.3%)
Altria Group 16,525 1,171
General Mills 29,000 1,470
-------
2,641
-------
ENERGY (14.8%)
Exxon Mobil 69,725 4,244
Marathon Oil 65,070 4,956
-------
9,200
-------
FINANCIALS (35.3%)**
Bank of New York 77,985 2,811
Bear Stearns 24,745 3,432
Capital One Financial (A) 20,270 1,632
CompuCredit (A)* 53,800 1,980
First Industrial Realty Trust 53,650 2,290
JPMorgan Chase 60,900 2,536
Radian Group 36,080 2,174
VALUE
SHARES (000)
---------- -------
Torchmark 27,810 $ 1,588
Wells Fargo (A) 54,235 3,464
-------
21,907
-------
HEALTH CARE (7.5%)
Pfizer 141,670 3,531
United Health Group 20,000 1,117
-------
4,648
-------
INDUSTRIALS (4.5%)
3M 36,860 2,790
-------
INFORMATION TECHNOLOGY (8.3%)
Microsoft 122,245 3,326
Unisys* 101,805 701
Xerox* 73,270 1,114
-------
5,141
-------
MATERIALS (3.6%)
Weyerhaeuser (A) 30,465 2,207
-------
TELECOMMUNICATION SERVICES (5.7%)
AT&T (A) 71,490 1,933
Sprint Nextel 61,590 1,591
-------
3,524
-------
UTILITIES (7.0%)
PG&E (A) 112,290 4,368
-------
TOTAL COMMON STOCK
(COST $58,240) 62,045
=======
EXCHANGE TRADED FUND (0.2%)
iShares Russell 1000 Value
Index Fund 1,970 144
-------
TOTAL EXCHANGE TRADED FUND
(COST $131) 144
-------
SHORT-TERM INVESTMENT HELD AS
COLLATERAL FOR LOANED SECURITIES (25.9%)
BlackRock Institutional Money
Market Trust 16,056,813 16,057
-------
TOTAL SHORT-TERM INVESTMENT HELD
AS COLLATERAL FOR LOANED SECURITIES
(COST $16,057) 16,057
-------
CASH EQUIVALENT (0.0%)
PNC Bank Money Market
Fund, 4.26% (B) 5,884 6
-------
TOTAL CASH EQUIVALENT
(COST $6) 6
-------
TOTAL INVESTMENTS (126.2%)
(COST $74,434) 78,252
-------
The accompanying notes are an integral part of the financial statements.
24 Constellation Funds 2006 Semi-Annual Report
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation Pitcairn Select Value Fund
March 31, 2006
VALUE
(000)
--------
OTHER ASSETS AND LIABILITIES (-26.2%)
Obligation to return securities lending collateral $(16,057)
Income distribution payable (124)
Payable for capital shares redeemed (122)
Payable due to Investment Adviser (31)
Payable due to Shareholder Servicing Agent (13)
Payable due to Administrator (8)
Other assets and liabilities, net 98
--------
TOTAL OTHER ASSETS AND LIABILITIES (16,257)
========
NET ASSETS (100.0%) $ 61,995
========
NET ASSETS CONSIST OF:
Portfolio capital of Class II Shares
(unlimited authorization - no par value) $ 52,087
Accumulated net realized gain on investments 6,090
Net unrealized appreciation on investments 3,818
--------
NET ASSETS $ 61,995
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-CLASS II SHARES
($61,995,078 / 5,580,084 SHARES) $ 11.11
========
* Non-income producing security.
** More narrow industries are utilized for compliance purposes, whereas broad
sectors are utilized for reporting purposes.
(A) The security or a portion of this security was on loan at March 31, 2006.
The total value of securities on loan at March 31, 2006 was $15,437,963.
(B) The rate shown was the 7-day effective yield as of March 31, 2006.
Cl - Class
The accompanying notes are an integral part of the financial statements.
Constellation Funds 2006 Semi-Annual Report 25
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation Pitcairn Diversified Growth Fund
March 31, 2006
SECTOR WEIGHTINGS+
[CHART]
Information Technology 24.1%
Cash Equivalent++ 19.5%
Health Care 14.5%
Consumer Discretionary 10.6%
Consumer Staples 10.3%
Industrials 8.7%
Financials 6.3%
Energy 2.3%
Material 2.0%
Exchange Traded Fund 1.0%
Telecommunication Services 0.7%
+ Percentages are 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%)
CONSUMER DISCRETIONARY (13.2%)
Brinker International 23,330 $ 986
Centex 19,005 1,178
Harley-Davidson 18,750 973
Hilton Hotels 59,278 1,509
Home Depot (A) 87,098 3,684
Jarden (A)* 35,555 1,168
Men's Wearhouse 37,515 1,348
Michaels Stores 72,485 2,724
Walt Disney (A)* 89,770 2,504
-------
16,074
-------
CONSUMER STAPLES (12.8%)
Altria Group 26,860 1,903
Hansen Natural (A)* 11,900 1,500
PepsiCo 41,375 2,391
Procter & Gamble 88,115 5,077
Wal-Mart Stores 99,532 4,702
-------
15,573
-------
ENERGY (2.8%)
Apache 25,460 1,668
ENSCO International 34,722 1,786
-------
3,454
-------
VALUE
SHARES (000)
------- -------
FINANCIALS (7.8%)
Bear Stearns 17,075 $ 2,369
Capital One Financial (A) 31,110 2,505
Everest Re Group 13,215 1,234
First Marblehead (A) 26,612 1,151
Host Marriott (A) 47,955 1,026
Wells Fargo (A) 19,230 1,228
-------
9,513
-------
HEALTH CARE (17.9%)
Amgen* 52,332 3,807
Barr Pharmaceuticals (A)* 20,993 1,322
Cytyc (A)* 37,540 1,058
Eli Lilly (A) 58,826 3,253
Johnson & Johnson 44,581 2,640
Laboratory Corp of America
Holdings (A)* 25,905 1,515
Medtronic 75,947 3,854
Resmed (A)* 34,537 1,519
UnitedHealth Group 51,100 2,855
-------
21,823
-------
INDUSTRIALS (10.7%)
Cintas 23,345 995
Dover 31,600 1,535
FedEx 18,035 2,037
General Electric 77,644 2,700
Goodrich (A) 26,630 1,161
L-3 Communications Holdings 15,165 1,301
Pentair (A) 34,350 1,400
United Technologies 33,425 1,938
-------
13,067
-------
INFORMATION TECHNOLOGY (29.9%)**
Alliance Data Systems* 40,175 1,879
Apple Computer* 21,715 1,362
Cisco Systems (A)* 173,532 3,761
Citrix Systems* 85,000 3,222
EMC* 171,795 2,342
Google, Cl A* 4,775 1,862
Intel (A) 204,131 3,950
Jabil Circuit* 25,674 1,100
Micron Technology* 107,480 1,582
Microsoft 170,626 4,643
Motorola 101,579 2,327
Oracle* 106,654 1,460
Paychex 68,205 2,841
Qualcomm 30,869 1,562
Unisys* 174,293 1,201
Yahoo!* 40,435 1,304
-------
36,398
-------
MATERIALS (2.5%)
Air Products & Chemicals 23,425 1,574
Sealed Air* 25,165 1,456
-------
3,030
-------
The accompanying notes are an integral part of the financial statements.
26 Constellation Funds 2006 Semi-Annual Report
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation Pitcairn Diversified Growth Fund
March 31, 2006
VALUE
SHARES (000)
---------- --------
TELECOMMUNICATION SERVICES (0.9%)
Sprint Nextel 40,840 $ 1,055
--------
TOTAL COMMON STOCK
(COST $117,820) 119,987
--------
EXCHANGE TRADED FUND (1.3%)
iShares S&P MidCap 400 Growth
Index Fund (A) 19,500 1,570
--------
TOTAL EXCHANGE TRADED FUND
(COST $1,368) 1,570
--------
SHORT-TERM INVESTMENT HELD AS
COLLATERAL FOR LOANED SECURITIES (24.2%)
BlackRock Institutional Money
Market Trust 29,478,936 29,479
--------
TOTAL SHORT-TERM INVESTMENT HELD
AS COLLATERAL FOR LOANED SECURITIES
(COST $29,479) 29,479
--------
CASH EQUIVALENT (0.0%)
PNC Bank Money Market
Fund, 4.26% (B) 8,871 9
--------
TOTAL CASH EQUIVALENT
(COST $9) 9
TOTAL INVESTMENTS (124.0%)
--------
(COST $148,676) 151,045
--------
VALUE
(000)
--------
OTHER ASSETS AND LIABILITIES(-24.0%)
Obligation to return securities lending collateral $(29,479)
Payable for investment securities purchased (4,617)
Payable due to Investment Adviser (59)
Income distribution payable (34)
Payable for capital shares redeemed (32)
Payable due to Shareholder Servicing Agent (26)
Payable due to Administrator (15)
Other assets and liabilities, net 4,987
--------
TOTAL OTHER ASSETS AND LIABILITIES (29,275)
========
NET ASSETS(100.0%) $121,770
========
NET ASSETS CONSIST OF:
Portfolio capital of Class II Shares
(unlimited authorization - no par value) $187,505
Distributions in excess of net investment income (2)
Accumulated net realized loss on investments (68,102)
Net unrealized appreciation on investments 2,369
--------
NET ASSETS $121,770
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-CLASS II SHARES
($121,770,383 / 19,857,849) $ 6.13
========
* Non-income producing security.
** More narrow industries are utilized for compliance purposes, whereas broad
sectors are utilized for reporting purposes.
(A) The security or a portion of this security was on loan at March 31, 2006.
The total value of securities on loan at March 31, 2006 was $28,321,191.
(B) The rate shown was the 7-day effective yield as of March 31, 2006.
Cl - Class
The accompanying notes are an integral part of the financial statements.
Constellation Funds 2006 Semi-Annual Report 27
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation Pitcairn Small Cap Fund
March 31, 2006
[CHART]
SECTOR WEIGHTINGS+
Information Technology 21.1%
Financials 16.6%
Consumer Discretionary 11.7%
Health Care 11.4%
Insustrials 11.2%
Cash Equivalent++ 11.1%
Energy 6.9%
Materials 4.3%
Utilities 2.8%
Consumer Staples 2.1%
Exchange Traded Fund 0.8%
+ Percentages are based on total investments.
++ Cash equivalent includes a short-term investment held as collateral for
loaned securities (see Note 9 in the Notes to Financial Statements).
VALUE
SHARES (000)
------ -------
COMMON STOCK (98.8%)
CONSUMER DISCRETIONARY (13.1%)
Aaron Rents 57,719 $ 1,568
America's Car-Mart (A)* 51,537 1,108
Charming Shoppes* 89,802 1,335
Jarden (A)* 30,616 1,006
McCormick & Schmick's Seafood Restaurants* 49,546 1,262
Men's Wearhouse 29,098 1,046
Orient-Express Hotels, Cl A 49,430 1,939
Tuesday Morning 41,468 957
WMS Industries* 37,964 1,143
Wolverine World Wide 50,093 1,109
-------
12,473
-------
CONSUMER STAPLES (2.4%)
Central European Distribution* 24,354 937
Hain Celestial Group* 51,476 1,348
-------
2,285
-------
ENERGY (7.7%)
Forest Oil* 21,787 810
Giant Industries* 13,192 917
Lufkin Industries 32,204 1,786
Oceaneering International* 13,037 747
W-H Energy Services* 69,660 3,099
-------
7,359
-------
VALUE
SHARES (000)
------ -------
FINANCIALS (18.6%)
American Equity Investment Life Holding (A) 88,022 $ 1,262
Central Pacific Financial 66,189 2,431
Community Banks 57,445 1,635
CompuCredit (A)* 25,212 928
First Industrial Realty Trust 52,240 2,230
First Marblehead (A) 51,128 2,211
Flagstar Bancorp 35,110 530
Innkeepers USA Trust 78,866 1,337
IPC Holdings 29,563 829
LaSalle Hotel Properties 34,436 1,412
Southwest Bancorp 43,156 960
Trico Bancshares 67,563 1,913
-------
17,678
-------
HEALTH CARE (12.8%)
Allion Healthcare* 58,516 794
Healthcare Services Group 37,529 802
Integra LifeSciences Holdings* 24,169 990
Matria Healthcare (A)* 105,099 3,990
Medicines* 68,881 1,417
Par Pharmaceutical* 66,933 1,886
Serologicals* 51,327 1,255
Ventiv Health (A)* 32,246 1,071
-------
12,205
-------
INDUSTRIALS (12.6%)
Barrett Business Services* 67,890 1,833
Chicago Bridge & Iron (A) 108,610 2,606
ElkCorp 40,590 1,370
Greenbrier 32,601 1,306
Orbital Sciences* 100,559 1,591
Pacer International* 47,288 1,545
Tenneco* 77,592 1,683
-------
11,934
-------
INFORMATION TECHNOLOGY (23.7%)
Advanced Digital Information* 89,962 790
Aeroflex* 301,478 4,139
Agere Systems* 40,254 605
Airspan Networks* 297,360 2,007
Credence Systems* 143,116 1,050
Digital River* 59,830 2,609
Hyperion Solutions* 35,837 1,168
j2 Global Communications (A)* 24,972 1,174
Paxar* 36,779 720
RF Micro Devices* 144,623 1,251
Unisys* 491,227 3,385
Veeco Instruments* 47,901 1,119
Vishay Intertechnology* 95,205 1,356
webMethods* 132,989 1,120
-------
22,493
-------
The accompanying notes are an integral part of the financial statements.
28 Constellation Funds 2006 Semi-Annual Report
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation Pitcairn Small Cap Fund
March 31, 2006
VALUE
SHARES (000)
---------- --------
MATERIALS (4.8%)
Aleris International (A)* 33,247 $ 1,598
Crown Holdings* 59,382 1,053
RPM International 106,109 1,904
--------
4,555
--------
UTILITIES (3.1%)
Northwest Natural Gas 83,369 2,959
--------
TOTAL COMMON STOCK (COST $79,154) 93,941
--------
EXCHANGE TRADED FUND (0.9%)
iShares Russell 2000 Index Fund 11,242 854
--------
TOTAL EXCHANGE TRADED FUND (COST $796) 854
--------
SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED
SECURITIES (12.4%)
BlackRock Institutional Money Market Trust 11,796,802 11,797
--------
TOTAL SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR
LOANED SECURITIES (COST $11,797) 11,797
--------
TOTAL INVESTMENTS (112.1%) (COST $91,747) 106,592
========
VALUE
(000)
--------
OTHER ASSETS AND LIABILITIES (-12.1%)
Obligation to return securities lending collateral $(11,797)
Bank overdraft (47)
Payable due to Investment Adviser (43)
Payable for capital shares redeemed (27)
Payable due to Shareholder Servicing Agent (20)
Payable due to Administrator (12)
Other assets and liabilities, net 435
--------
TOTAL OTHER ASSETS AND LIABILITIES (11,511)
========
NET ASSETS (100.0%) $ 95,081
========
NET ASSETS CONSIST OF:
Portfolio capital of Class II Shares (unlimited
authorization - no par value) $ 72,958
Accumulated net investment loss (9)
Accumulated net realized gain on investments 7,287
Net unrealized appreciation on investments 14,845
--------
NET ASSETS $ 95,081
========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER
SHARE-CLASS II SHARES ($95,081,179 / 5,871,320) $ 16.19
========
* Non-income producing security.
(A) The security or a portion of this security was on loan at March 31, 2006.
The total value of securities on loan at March 31, 2006 was $11,350,283.
Cl - Class
The accompanying notes are an integral part of the financial statements.
Constellation Funds 2006 Semi-Annual Report 29
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation Pitcairn Family Heritage(R) Fund
March 31, 2006
SECTOR WEIGHTINGS+
[CHART]
Financials 19.2%
Cash Equivalents++ 17.0%
Information Technology 15.7%
Health Care 10.4%
Consumer Discretionary 9.2%
Consumer Staples 8.8%
Energy 6.5%
Industrials 5.5%
Materials 3.6%
Utilities 2.4%
Telecommunication Services 1.7%
+ Percentages are 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 (100.1%)
CONSUMER DISCRETIONARY (11.1%)
Aaron Rents 31,781 $ 864
Best Buy 19,159 1,072
Carnival 33,489 1,586
Comcast, Cl A(A)* 48,333 1,264
Marriott International, Cl A 18,060 1,239
Men's Wearhouse 23,409 841
Nike, Cl B 14,738 1,254
Viacom, Cl B* 30,146 1,170
-------
9,290
-------
CONSUMER STAPLES (10.6%)
Alberto-Culver 47,488 2,101
Central European Distribution* 34,589 1,330
Hansen Natural* 6,078 766
Wal-Mart Stores 53,202 2,513
Wm. Wrigley Jr 33,661 2,154
-------
8,864
-------
ENERGY (7.8%)
Apache 17,554 1,150
CARBO Ceramics 19,531 1,111
Chesapeake Energy (A) 41,896 1,316
Devon Energy 22,041 1,348
Murphy Oil 32,910 1,640
-------
6,565
-------
VALUE
SHARES (000)
------ -------
FINANCIALS (23.1%)
Berkshire Hathaway, Cl B* 725 $ 2,184
Capital One Financial (A) 32,293 2,600
CapitalSource 81,942 2,039
Commerce Bancshares 43,479 2,247
CompuCredit (A)* 56,475 2,079
Federated Investors, Cl B 60,820 2,375
Flagstar Bancorp 92,614 1,398
Philadelphia Consolidated Holding* 23,700 809
Progressive 8,074 842
TCF Financial (A) 107,387 2,765
-------
19,338
-------
HEALTH CARE (12.5%)
Cephalon (A)* 31,797 1,916
Eli Lilly (A) 74,354 4,112
Stryker 67,418 2,989
Universal Health Services, Cl B (A) 28,523 1,449
-------
10,466
-------
INDUSTRIALS (6.7%)
Danaher (A) 20,270 1,288
General Dynamics 27,590 1,765
Illinois Tool Works 18,066 1,740
Werner Enterprises 43,418 798
-------
5,591
-------
INFORMATION TECHNOLOGY (19.0%)
Dell (A)* 65,170 1,939
Fiserv* 26,720 1,137
Marvell Technology Group* 36,386 1,969
Microsoft 39,275 1,069
Molex 52,400 1,557
Oracle* 192,193 2,631
Paychex (A) 49,788 2,074
Qualcomm 32,180 1,629
Vishay Intertechnology* 58,143 828
Yahoo!* 32,501 1,048
-------
15,881
-------
MATERIALS (4.3%)
EI Du Pont de Nemours 50,861 2,147
Worthington Industries 74,088 1,486
-------
3,633
-------
TELECOMMUNICATION SERVICES (2.1%)
Telephone & Data Systems * 46,233 1,745
-------
UTILITIES (2.9%)
AES* 143,341 2,446
-------
TOTAL COMMON STOCK
(COST $69,655) 83,819
-------
The accompanying notes are an integral part of the financial statements.
30 Constellation Funds 2006 Semi-Annual Report
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation Pitcairn Family Heritage(R) Fund
March 31, 2006
VALUE
SHARES (000)
---------- ----------
SHORT-TERM INVESTMENT HELD AS
COLLATERAL FOR LOANED SECURITIES(20.3%)
BlackRock Institutional Money
Market Trust 17,027,822 $ 17,028
---------
TOTAL SHORT-TERM INVESTMENT HELD AS
COLLATERAL FOR LOANED SECURITIES
(COST $17,028) 17,028
---------
CASH EQUIVALENT (0.1%)
PNC Bank Money Market
Fund, 4.26% (B) 87,197 87
---------
TOTAL CASH EQUIVALENT
(COST $87) 87
---------
TOTAL INVESTMENTS (120.5%)
(COST $86,770) 100,934
---------
OTHER ASSETS AND LIABILITIES(-20.5%)
Obligation to return securities lending collateral (17,028)
Payable for capital shares redeemed (77)
Payable due to Investment Adviser (54)
Income distribution payable (26)
Payable due to Shareholder Servicing Agent (18)
Payable due to Administrator (11)
Other assets and liabilities, net 29
---------
TOTAL OTHER ASSETS AND LIABILITIES (17,185)
=========
NET ASSETS(100.0%) $ 83,749
=========
NET ASSETS CONSIST OF:
Portfolio capital of Class II Shares
(unlimited authorization - no par value) $ 81,743
Distributions in excess of net investment income (1)
Accumulated net realized loss on investments (12,157)
Net unrealized appreciation on investments 14,164
---------
NET ASSETS $ 83,749
=========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-CLASS II SHARES
($83,748,677 /8,181,117) $ 10.24
=========
* Non-income producing security.
(A) The security or a portion of this security was on loan at March 31, 2006.
The total value of securities on loan at March 31, 2006 was $16,349,989.
(B) The rate shownwasthe 7-day effective yield as of March 31, 2006.
Cl - Class
The accompanying notes are an integral part of the financial statements.
Constellation Funds 2006 Semi-Annual Report 31
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation Pitcairn Taxable Bond Fund
March 31, 2006
SECTOR WEIGHTINGS+
[CHART]
Corporate Bonds 49.6%
U.S. Government Agency Obligations 25.0%
U.S. Treasury Obligations 15.5%
Cash Equivalents++ 4.0%
Municipal Bonds 3.4%
Asset-Backed Securities 2.5%
+ Percentages are 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 (51.2%)
CONSUMER DISCRETIONARY (4.7%)
Harman International
7.320%, 07/01/07 $ 1,143 $ 1,160
May Department Stores
7.450%, 09/15/11 947 1,020
-------
2,180
-------
CONSUMER STAPLES (2.3%)
H.J. Heinz
6.000%, 03/15/08 1,045 1,053
-------
ENERGY (4.3%)
Burlington Resources Finance
5.600%, 12/01/06 1,000 1,002
Entergy Louisiana
5.830%, 11/01/10 1,000 993
-------
1,995
-------
FINANCIALS (22.0%)
American General Finance, MTN,
Ser I
4.625%, 05/15/09 1,000 979
CIT Group
7.750%, 04/02/12 1,000 1,102
5.500%, 11/30/07 1,500 1,504
FACE AMOUNT VALUE
(000) (000)
----------- -------
Colonial Realty
8.050%, 07/15/06 $ 400 $ 403
Ford Motor Credit
7.375%, 10/28/09 904 850
6.500%, 01/25/07 1,250 1,245
HSBC Finance
4.750%, 05/15/09 1,000 982
Heller Financial
7.375%, 11/01/09 500 532
Kimco Realty, MTN, Ser B
7.900%, 12/07/07 450 469
Lehman Brothers Holdings
7.000%, 02/01/08 1,316 1,354
Merrill Lynch
4.000%, 09/15/08 750 735
-------
10,155
-------
INDUSTRIALS (12.1%)
First Data
3.900%, 10/01/09 1,500 1,425
Gannet
6.375%, 04/01/12 1,000 1,029
Honeywell International
7.500%, 03/01/10 1,052 1,130
Tyco International Group
6.000%, 11/15/13 2,000 2,009
-------
5,593
-------
SOVERIGN BOND (1.1%)
Aid-Israel
5.500%, 04/26/24 500 511
-------
TELECOMMUNICATION SERVICES (4.7%)
GTE
8.750%, 11/01/21 1,000 1,180
Telecomde Puerto Rico
6.800%, 05/15/09 1,000 1,013
-------
2,193
-------
TOTAL CORPORATE BONDS
(COST $24,014) 23,680
-------
U.S. GOVERNMENT AGENCY OBLIGATIONS (25.8%)
FHLB
5.125%, 06/26/18 1,635 1,542
5.000%, 08/10/10 1,000 984
FHLB, Ser EX10
5.000%, 09/01/10 1,500 1,476
FHLMC
6.250%, 03/05/12 1,500 1,512
5.200%, 03/05/19 1,000 949
FHLMC, MTN
5.050%, 01/26/15 1,000 980
FHLMC, MTN (B)
6.881%, 04/04/36 5,000 635
6.165%, 03/04/19 1,000 452
The accompanying notes are an integral part of the financial statements.
32 Constellation Funds 2006 Semi-Annual Report
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation Pitcairn Taxable Bond Fund
March 31, 2006
FACE AMOUNT VALUE
(000)/SHARES (000)
------------ -------
FNMA
8.200%, 03/10/16 $ 1,000 $ 1,230
4.010%, 10/21/09 1,000 963
TVA
6.235%, 07/15/45 1,175 1,196
-------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(COST $11,923) 11,919
=======
U.S. TREASURY OBLIGATIONS (16.1%)
U.S. Treasury Bonds
8.750%, 05/15/17 1,500 1,980
8.125%, 08/15/19 1,500 1,946
7.875%, 02/15/21 615 794
7.625%, 11/15/22 913 1,172
7.500%, 11/15/16 830 1,003
5.375%, 02/15/31 (A) 500 526
-------
TOTAL U.S. TREASURY OBLIGATIONS
(COST $6,894) 7,421
=======
MUNICIPAL BONDS (3.6%)
MARYLAND (2.6%)
Baltimore, Consolidated Public
Improvement GO, Ser B, AMBAC
5.000%, 10/15/10 1,185 1,176
-------
NEW YORK (1.0%)
Sales Tax Asset Receivable RB,
Ser B, FGIC
4.760%, 10/15/15 500 473
-------
TOTAL MUNICIPAL BONDS
(COST $1,721) 1,649
=======
ASSET-BACKED SECURITIES (2.6%)
Standard Credit Card Master Trust,
Ser 1994-2, Cl A
7.250%, 04/07/06 1,199 1,199
-------
TOTAL ASSET-BACKED SECURITIES
(COST $1,199) 1,199
=======
CASH EQUIVALENT (2.9%)
PNC Bank Money Market
Fund, 4.26% (C) 1,333,208 1,333
-------
TOTAL CASH EQUIVALENT
(COST $1,333) 1,333
=======
VALUE
SHARES (000)
------- --------
SHORT-TERM INVESTMENT HELD AS
COLLATERAL FOR LOANED SECURITIES (1.2%)
BlackRock Institutional Money
Market Trust 568,750 $ 569
-------
TOTAL SHORT-TERM INVESTMENT HELD AS
COLLATERAL FOR LOANED SECURITIES
(COST $569) 569
=======
TOTAL INVESTMENTS (103.4%)
(COST $47,653) 47,770
=======
OTHER ASSETS AND LIABILITIES (-3.4%)
Payable for investment securities purchased (1,613)
Obligation to return securities lending collateral (569)
Income distribution payable (139)
Payable due to Investment Adviser (12)
Payable due to Shareholder Servicing Agent (10)
Payable due to Administrator (6)
Other assets and liabilities, net 799
-------
TOTAL OTHER ASSETS AND LIABILITIES (1,550)
=======
NET ASSETS (100.0%) $46,220
=======
NET ASSETS CONSIST OF:
Portfolio capital of Class II Shares
(unlimited authorization - no par value) $46,889
Accumulated net realized loss on investments (786)
Net unrealized appreciation on investments 117
-------
NET ASSETS $46,220
=======
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-CLASS II SHARES
($46,219,794 / 4,530,504) $ 10.20
=======
(A) The security or a portion of this security was on loan at March 31, 2006.
The total value of securities on loan at March 31, 2006 was $526,328.
(B) The rate reported is the effective yield as of March 31, 2006.
(C) The rate shown was the 7-day effective yield as of March 31, 2006.
AMBAC - American Municipal Bond Assurance Corporation
Cl - Class
FGIC - Financial Guaranty Insurance Corporation
FHLB - Federal Home Loan Bank
FHLMC - Federal Home Loan Mortgage Corporation
FNMA - Federal National Mortgage Association
GO - General Obligation
MTN - Medium Term Note
RB - Revenue Bond
Ser - Series
TVA - Tennessee Valley Authority
The accompanying notes are an integral part of the financial statements.
Constellation Funds 2006 Semi-Annual Report 33
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation Pitcairn Tax-Exempt Bond Fund
March 31, 2006
SECTOR WEIGHTINGS+
[CHART]
Higher Education 15.6%
General Obligations 11.2%
Medical 10.5%
Transportation 9.6%
Utilities 9.5%
Water 8.4%
Development 5.6%
General Revenue 5.0%
Facilities 4.1%
Power 4.1%
Education 3.1%
Single Family Housing 1.4%
Multi-Family Housing 0.9%
Pollution 0.9%
Cash Equivalent 0.1%
+ Percentages are based on total investments.
FACE AMOUNT VALUE
(000) (000)
----------- -------
MUNICIPAL BONDS (99.1%)
ALABAMA (0.9%)
Bessemer RB, AMBAC,
Callable 02/01/10 @ 102
5.600%, 02/01/30 $1,000 $ 1,068
-------
ARIZONA (0.9%)
Arizona School Facilities Board
COP, MBIA, Pre-Refunded
03/01/13 @ 100
5.250%, 09/01/17 1,000 1,081
-------
CALIFORNIA (9.5%)
California Community College Finance
Authority RB, Mission Community
College, MBIA, Callable
05/01/07 @ 102
5.500%, 05/01/17 1,000 1,040
California Health Facilities Finance
Authority RB, St. Francis
Memorial Hospital, Ser C, ETM
5.875%, 11/01/23 2,000 2,399
California State GO,
AMBAC, Callable 04/01/14 @ 100
5.000%, 04/01/31 3,000 3,101
California State GO,
Callable 02/01/13 @ 100
5.250%, 02/01/33 1,840 1,923
FACE AMOUNT VALUE
(000) (000)
----------- -------
California State, Economic Recovery
GO, Ser A, Callable 07/01/11 @ 100
5.000%, 07/01/17 $2,000 $ 2,090
Stockton Housing Facility
RB, O'Connor Woods Project,
Ser A, ETM, GNMA, Callable
05/06/05 @ 100
5.200%, 09/20/09 550 555
-------
11,108
-------
COLORADO (0.9%)
South Suburban Park & Recreation
District GO, AMBAC,
Callable 09/15/10 @ 100
5.375%, 09/15/18 1,000 1,060
-------
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 1,034
-------
DISTRICT OFCOLUMBIA (1.1%)
District of Columbia RB,
Howard University Project, MBIA
5.500%, 10/01/16 1,000 1,113
Washington D.C., Convention Center
Authority RB, Dedicated Tax
Revenue, Senior Lien, AMBAC,
Callable 10/01/08 @ 101
5.250%, 10/01/09 200 209
-------
1,322
-------
FLORIDA (2.2%)
Orlando Utilities Commission,
Water & Electric RB,
Callable 10/01/11 @ 101
5.250%, 10/01/20 1,090 1,162
Tampa Water & Sewer Revenue RB,
Pre-Refunded 10/01/09 @ 101
5.500%, 10/01/29 1,300 1,390
-------
2,552
-------
GEORGIA (2.1%)
Henry County, Water &
Sewer Authority RB, AMBAC
6.150%, 02/01/20 2,000 2,406
-------
HAWAII (3.9%)
Honolulu, City & County GO,
Ser B, ETM
8.000%, 10/01/10 1,680 1,972
University of Hawaii RB, Ser A,
FGIC, Callable 07/15/12 @ 100
5.500%, 07/15/21 2,385 2,577
-------
4,549
-------
The accompanying notes are an integral part of the financial statements.
34 Constellation Funds 2006 Semi-Annual Report
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation Pitcairn Tax-Exempt Bond Fund
March 31, 2006
FACE AMOUNT VALUE
(000) (000)
ILLINOIS (10.4%) ----------- -------
Chicago GO, FGIC,
Callable 01/01/08 @ 102
5.500%, 01/01/21 $ 400 $ 420
Chicago GO, FGIC,
Pre-Refunded 01/01/08 @ 102
5.500%, 01/01/21 1,100 1,156
Chicago, Park District GO, Aquarium
& Museum Project, FGIC,
Callable 01/01/08 @ 100
5.500%, 01/01/10 1,000 1,030
Illinois Development Finance
Authority RB, Elgin School District
Project, FSA (B)
4.300%, 01/01/18 2,350 1,389
Illinois Health Facilities Authority RB,
Hospital Sisters Services Project,
Ser A, MBIA, Callable
06/01/08 @ 101
5.250%, 06/01/12 1,000 1,037
Illinois State Toll Highway Authority RB,
Toll Highway Revenue,
Senior Priority Ser A,
Callable 07/01/2015 @ 100
5.000%, 01/01/18 3,000 3,173
Metropolitan Pier & Exposition
Authority RB, Illinois Dedicated
State Tax Revenue, AMBAC,
Callable 06/01/07 @ 101
5.125%, 06/01/13 1,200 1,232
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%, 12/15/23 500 565
Will County, Community School District
GO, USD #365, FSA (B)
5.230%, 11/01/12 2,000 1,528
-------
12,100
-------
INDIANA (1.9%)
Indiana Transportation Finance
Authority RB, Ser A, MBIA
6.800%, 12/01/16 1,000 1,171
Indianapolis, Public Improvement
Authority RB, Ser A,
Callable 01/01/10 @ 101
6.000%, 01/01/25 1,000 1,089
-------
2,260
-------
FACE AMOUNT VALUE
(000) (000)
----------- -------
KENTUCKY (1.0%)
Kentucky State, Property &
Buildings Commission RB,
Project Number 67,
Pre-Refunded 09/01/10 @ 100
5.625%, 09/01/13 $1,050 $ 1,131
-------
LOUISIANA (1.9%)
Louisiana Public Facilities Authority RB,
Franciscan Missionaries
Project, Ser A, FSA
5.500%, 07/01/11 2,115 2,262
-------
MASSACHUSETTS (2.8%)
Massachusetts State, Housing Finance
Agency RB, Ser B, MBIA,
Callable 06/01/08 @ 101
5.300%, 12/01/17 1,000 1,023
Massachusetts State, Special
Obligation RB, Consolidated Loan,
Ser A, Callable 06/01/08 @ 101
5.000%, 06/01/15 70 72
Massachusetts State, Special
Obligation RB, Consolidated Loan,
Ser A, Pre-Refunded 06/01/08 @ 101
5.000%, 06/01/15 930 966
Massachusetts State, Water Resources
Authority RB, Ser D, MBIA, GOA
6.000%, 08/01/14 1,060 1,205
-------
3,266
-------
MICHIGAN (0.9%)
Michigan State, Building
Authority RB, Facilities Program,
Ser II, MBIA, Callable
10/15/13 @ 100
5.000%, 10/15/23 1,000 1,045
-------
MISSISSIPPI (0.9%)
Mississippi Development Bank RB,
Capital Project & Equipment
Acquisition, Ser A2, AMBAC
5.000%, 07/01/24 1,000 1,087
-------
NEVADA (3.6%)
Clark County, Industrial Development,
Nevada Power Authority RB, AMBAC,
Callable 05/06/05 @ 100
7.200%, 10/01/22 2,000 2,090
Nevada Systems, Higher Education
University RB, Ser B, AMBAC,
Callable, 01/01/16 @ 100
5.000%, 07/01/35 2,000 2,070
-------
4,160
-------
The accompanying notes are an integral part of the financial statements.
Constellation Funds 2006 Semi-Annual Report 35
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation Pitcairn Tax-Exempt Bond Fund
March 31, 2006
FACE AMOUNT VALUE
(000) (000)
----------- -------
NEW JERSEY (2.2%)
New Jersey State GO, Ser D
6.000%, 02/15/11 $ 150 $ 165
New Jersey State, Educational Facilities
Authority RB, Princeton University,
Callable 07/01/13 @ 100
5.000%, 07/01/15 2,000 2,130
New Jersey State, Transportation
System RB, Ser A
5.625%, 06/15/14 250 274
-------
2,569
-------
NEW YORK (8.8%)
New York City, Municipal Financial
Water & Sewer System Revenue, RB,
Ser B, Callable 06/15/16 @ 100
5.000%, 06/15/36 1,750 1,811
New York City, Municipal Water
Authority, Water And Sewer Systems
Revenue, RB, Ser D, Callable
06/15/15 @ 100
5.000%, 06/15/39 3,000 3,097
New York City, Transitional Finance
Authority RB, Ser A, Callable
11/01/11 @ 100 (A)
5.500%, 11/01/26 2,000 2,156
New York State, Mortgage Agency RB,
Homeowner Mortgage, Ser 80,
Callable 03/01/09 @ 101
5.100%, 10/01/17 1,000 1,027
New York State, Thruway Authority RB,
Highway and Bridge Project,
Callable 04/01/12 @ 100
5.500%, 04/01/15 2,000 2,163
-------
10,254
-------
NORTH CAROLINA (2.1%)
North Carolina State, Eastern
Municipal Power Authority RB,
Ser B, MBIA, Callable
01/01/07 @ 102
5.800%, 01/01/16 1,000 1,036
University of North Carolina
Wilmington, RB, AMBAC,
Callable 01/01/13 @ 100
5.250%, 01/01/21 1,380 1,478
-------
2,514
-------
OHIO (2.6%)
Ohio State University, General
Receipts, RB, Ser A,
Callable 06/01/15 @ 100
4.750%, 06/01/30 3,000 3,034
-------
FACE AMOUNT VALUE
(000) (000)
----------- -------
OKLAHOMA (1.7%)
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 $ 2,049
-------
PENNSYLVANIA (14.2%)
Allegheny County, Sanitary Authority
Sewer RB, MBIA, Pre-Refunded
12/01/10 @ 101
5.750%, 12/01/18 1,660 1,803
Bucks County, GO
5.000%, 06/01/15 1,250 1,333
Montgomery County Higher
Education & Health Authority RB,
Pottstown Healthcare, Pre-Refunded
01/01/09 @ 101
5.000%, 01/01/27 2,000 2,090
Norwin Penn School District GO,
FGIC, Pre-Refunded
04/01/10 @ 100
6.000%, 04/01/24 2,000 2,160
Pennsbury Penn School District GO,
FSA, Callable 08/01/14 @ 100
5.000%, 08/01/25 2,000 2,093
Pennsylvania State, Higher
Educational Facilities Authority RB,
Saint Joseph's University,
Callable 05/01/06 @ 100
(LOC: Allied Irish Banks PLC) (A)
5.000%, 05/01/11 1,470 1,472
Pennsylvania State, Higher Educational
Facilities Authority RB, University
Properties Student Housing,
Callable 08/01/16 @ 100
5.000%, 08/01/35 1,000 1,035
Pennsylvania State, Public School
Building Authority RB, Harrisburg Area
Community College Project, AMBAC,
Callable 04/01/14 @ 100
5.250%, 04/01/24 1,000 1,070
Philadelphia, Authority for Industrial
Development Lease Revenue RB,
Ser B, FSA, Callable 10/01/11 @ 101
5.500%, 10/01/12 1,500 1,630
Philadelphia, Hospital & Higher
Education Authority RB,
Presbyterian Medical Center
Project, ETM
6.500%, 12/01/11 1,300 1,403
Philadelphia, Water &
Waste Water RB, MBIA
6.250%, 08/01/09 525 566
-------
16,655
-------
The accompanying notes are an integral part of the financial statements.
36 Constellation Funds 2006 Semi-Annual Report
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation Pitcairn Tax-Exempt Bond Fund
March 31, 2006
FACE AMOUNT VALUE
(000) (000)
----------- --------
PUERTO RICO (0.7%)
Puerto Rico, Commonwealth
Public Improvements, Ser A
5.000%, 07/01/09 $ 250 $ 258
Puerto Rico Electric Power Authority RB,
Ser RR, Callable 07/01/15 @ 100
5.000%, 07/01/29 500 520
--------
778
--------
RHODE ISLAND (1.1%)
Rhode Island, Depositors Economic
Protection Authority RB, Special
Obligation, Ser A, ETM
6.375%, 08/01/22 1,000 1,238
--------
SOUTH CAROLINA (3.3%)
Darlington County, Water & Sewer
Authority RB, AMBAC,
Callable 12/01/12 @ 101
5.625%, 12/01/23 2,530 2,770
Piedmont, Municipal Power Agency
Authority RB, South Carolina Electric
Project, MBIA, ETM
6.250%, 01/01/09 1,000 1,068
--------
3,838
--------
TEXAS (9.7%)
Cypress-Fairbanks, Independent
School District, GO, PSF-GTD,
Callable 02/15/16 @ 100
4.750%, 02/15/30 1,100 1,106
Amarillo, Independent School District,
School Building, GO, PSF-GTD, Ser A,
Callable 02/01/13 @ 100
5.000%, 02/01/24 2,000 2,075
Duncanville, Independent School District,
GO, PSF-GTD,
Callable 02/15/13 @ 100
5.650%, 02/15/28 10 11
Duncanville, Independent School District,
GO, PSF-GTD, Pre-Refunded
02/15/13 @ 100
5.650%, 02/15/28 1,340 1,480
Fort Worth Water & Sewer RB,
Partially Pre-Refunded
08/15/10 @ 100
5.750%, 02/15/14 2,000 2,156
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 1,963
FACE AMOUNT VALUE
(000) (000)
----------- --------
Houston, Water & Sewer
Systems Authority RB,
Junior Lien, Ser C, FGIC,
Pre-Refunded 12/01/07 @ 101
5.375%, 12/01/27 $ 1,140 $ 1,184
San Antonio GO, ETM
5.000%, 08/01/07 15 15
Texas Water Development Board RB,
Revolving Fund, Senior Lein, Ser B,
Callable 01/15/10 @ 100
5.500%, 07/15/15 1,250 1,323
--------
11,313
--------
VIRGINIA (3.2%)
Amherst, Industrial Development
Authority, RB, Sweet Briar Institute,
Callable 09/01/16 @ 100
4.750%, 09/01/30 500 489
Virginia Commonwealth Transfer Bond,
Federal Highway Reimbursement, RB
5.000%, 09/28/15 3,000 3,217
--------
3,706
--------
WASHINGTON (3.7%)
Central Puget Sound, Regional
Transportation Authority RB, Sales
Tax & Motor Project, FGIC
5.250%, 02/01/21 1,000 1,097
Clark County, School District
No. 177 GO, AMBAC
5.250%, 12/01/14 1,000 1,087
Washington State GO, Ser A, FSA
5.000%, 07/01/20 1,000 1,055
Washington State, Economic
Development Finance Authority,
Biomedical Research Property II RB,
MBIA, Callabe 12/01/15 @ 100
5.250%, 06/01/19 1,000 1,074
--------
4,313
--------
TOTAL MUNICIPAL BONDS
(COST $112,144) 115,752
--------
CASH EQUIVALENT (0.1%)
ABN Amro Tax Exempt Money
Market Fund, 2.79% (C) 115,892 116
--------
TOTAL CASH EQUIVALENT
(COST $116) 116
--------
TOTAL INVESTMENTS (99.2%)
(COST $112,260) 115,868
--------
The accompanying notes are an integral part of the financial statements.
Constellation Funds 2006 Semi-Annual Report 37
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation Pitcairn Tax-Exempt Bond Fund March 31, 2006
VALUE
(000)
--------
OTHER ASSETS AND LIABILITIES(0.8%)
Payable for investment securities purchased $ (4,147)
Income distribution payable (397)
Payable due to Shareholder Servicing Agent (25)
Payable due to Investment Adviser (17)
Payable due to Administrator (14)
Other assets and liabilities, net 5,563
--------
TOTAL OTHER ASSETS AND LIABILITIES 963
--------
NET ASSETS(100.0%) $116,831
--------
NET ASSETS CONSIST OF:
Portfolio capital of Class II Shares
(unlimited authorization - no par value) $112,573
Undistributed net investment income 210
Accumulated net realized gain on investments 440
Net unrealized appreciation on investments 3,608
--------
NET ASSETS $116,831
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-CLASS II SHARES
($116,830,522 /11,297,404) $ 10.34
========
(A) Variable rate security - the rate reflected on the Statement of Net Assets
was the rate in effect on March 31, 2006.
(B) Zero coupon security. The rate reported on the Statement of Net Assets was
the effective yield at time of purchase.
(C) The rate shown was the 7-day effective yield as of March 31, 2006.
AMBAC - American Municipal Bond Assurance Corporation
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 Limited Company
PSF-GTD - Permanent School Fund - Guaranteed
RB - Revenue Bond
Ser - Series
USD - Unified School District
The accompanying notes are an integral part of the financial statements.
38 Constellation Funds 2006 Semi-Annual Report
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation Sands Capital Select Growth Fund
March 31, 2006
SECTOR WEIGHTINGS+
[CHART]
Health Care 29.9%
Consumer Discretionary 21.1%
Cash Equivalents++ 19.3%
Information Technology 18.3%
Financials 8.9%
Consumer Staples 2.5%
+ Percentages are 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 (98.0%)
CONSUMER DISCRETIONARY (25.6%)
Apollo Group, Cl A(A)* 379,600 $ 19,933
Bed Bath & Beyond * 267,200 10,260
eBay (A)* 885,500 34,588
Lowe's (A) 309,800 19,963
Starbucks (A)* 1,077,300 40,550
--------
125,294
--------
CONSUMER STAPLES (3.0%)
Walgreen (A) 346,900 14,962
--------
FINANCIALS (10.8%)
Capital One Financial (A) 142,200 11,450
Chicago Mercantile Exchange
Holdings (A) 48,300 21,614
Moody's (A) 276,600 19,766
--------
52,830
--------
HEALTH CARE (36.4%)
Allergan (A) 175,800 19,074
American Pharmaceutical
Partners (A)* 193,900 5,524
Amgen (A)* 210,700 15,328
Genentech (A)* 374,000 31,607
Genzyme* 346,500 23,292
Intuitive Surgical (A)* 62,500 7,375
Medtronic 308,500 15,656
Patterson* 172,800 6,083
VALUE
SHARES (000)
----------- --------
Stryker 249,100 $ 11,045
Teva Pharmaceutical
Industries ADR (A) 589,100 24,259
Varian Medical Systems (A)* 185,300 10,407
Zimmer Holdings* 121,500 8,213
--------
177,863
--------
INFORMATION TECHNOLOGY (22.2%)
Dell (A)* 342,600 10,196
Google, Cl A(A)* 102,600 40,014
Iron Mountain* 143,100 5,830
Qualcomm 445,600 22,552
Red Hat* 462,800 12,949
Yahoo!* 526,600 16,988
--------
108,529
--------
TOTAL COMMON STOCK
(COST $436,707) 479,478
--------
SHORT-TERM INVESTMENT HELD AS COLLATERAL
FOR LOANED SECURITIES (21.3%)
BlackRock Institutional Money
Market Trust 103,986,932 103,987
TOTAL SHORT-TERM INVESTMENT HELD AS
COLLATERAL FOR LOANED SECURITIES
(COST $103,987) 103,987
--------
CASH EQUIVALENT (2.2%)
BlackRock TempCash Fund,
Institutional Shares, 4.65% (B) 10,962,209 10,962
--------
TOTAL CASH EQUIVALENT
(COST $10,962) 10,962
--------
TOTAL INVESTMENTS (121.5%)
(COST $551,656) 594,427
--------
The accompanying notes are an integral part of the financial statements.
Constellation Funds 2006 Semi-Annual Report 39
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation Sands Capital Select Growth Fund
March 31, 2006
VALUE
(000)
---------
OTHER ASSETS AND LIABILITIES(-21.5%)
Obligation to return securities lending collateral $(103,987)
Payable for investment securities purchased (5,988)
Payable due to Investment Adviser (314)
Payable for capital shares redeemed (141)
Payable due to Shareholder Servicing Agent (61)
Payable due to Administrator (57)
Other assets and liabilities, net 5,306
---------
TOTAL OTHER ASSETS AND LIABILITIES (105,242)
=========
NET ASSETS(100.0%) $ 489,185
---------
NET ASSETS CONSIST OF:
Portfolio capital
(unlimited authorization - no par value) $ 477,304
Accumulated net investment loss (1,821)
Accumulated net realized loss on investments (29,069)
Net unrealized appreciation on investments 42,771
---------
NET ASSETS $ 489,185
=========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-CLASS I SHARES
($182,107,014 / 22,262,830) $ 8.18
=========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-CLASS II SHARES
($307,078,015 / 37,674,871) $ 8.15
=========
* Non-income producing security.
(A) The security or a portion of this security was on loan at March 31, 2006.
The total value of securities on loan at March 31, 2006 was $100,562,476.
(B) The rate shown was the 7-day effective yield as of March 31, 2006.
ADR - American Depositary Receipt
Cl - Class
The accompanying notes are an integral part of the financial statements.
40 Constellation Funds 2006 Semi-Annual Report
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation TIP Mid Cap Fund
March 31, 2006
SECTOR WEIGHTINGS
[CHART]
Industrials 22.6%
Financials 15.8%
Information Technology 14.2%
Health Care 12.8%
Consumer Discretionary 10.4%
Energy 8.4%
Materials 5.6%
Telecommunication Services 4.2%
Cash Equivalent 2.3%
Exchange Traded Fund 1.4%
Consumer Staples 1.3%
Utilities 1.0%
+ Percentages are based on total investments.
VALUE
SHARES (000)
------ -----
COMMON STOCK (96.0%)
CONSUMER DISCRETIONARY (10.3%)
Chico's FAS* 330 $ 14
Claire's Stores 530 19
Gaylord Entertainment* 340 16
Petsmart 580 16
RH Donnelley* 160 9
Sonic* 280 10
Station Casinos 240 19
Tractor Supply* 260 17
Warner Music Group 810 18
----
138
----
CONSUMER STAPLES (1.3%)
Hormel Foods 510 17
----
ENERGY (8.4%)
Consol Energy 230 17
Cooper Cameron* 380 17
Covanta Holding* 1,330 22
FMC Technologies* 330 17
Range Resources 625 17
Stolt Offshore ADR* 1,430 22
----
112
----
FINANCIALS (15.8%)
Assurant 500 25
CBL & Associates Properties 390 17
City National 240 18
VALUE
SHARES (000)
------ -----
Fidelity National Financial 340 $ 12
Hanover Insurance Group 380 20
Investment Technology Group* 460 23
People's Bank 492 16
Reckson Associates Realty 410 19
SL Green Realty 200 20
Stancorp Financial Group 360 19
SVB Financial Group* 400 21
----
210
----
HEALTH CARE (12.8%)
Covance* 310 18
Cytyc* 520 15
Dade Behring Holdings 430 15
DaVita* 440 26
Helix Energy Solutions* 350 13
IMS Health 630 16
Invitrogen* 240 17
PDL BioPharma* 510 17
Sierra Health Services* 480 20
Universal Health Services, Cl B 250 13
----
170
----
INDUSTRIALS (22.6%)
Amerco* 130 13
Ametek 290 13
Copart* 590 16
Equifax 400 15
Harsco 210 17
JLG Industries 520 16
Joy Global 392 23
Laidlaw International 680 18
Oshkosh Truck 340 21
Pentair 310 13
Precision Castparts 450 27
Roper Industries 340 17
Ryanair Holdings ADR* 310 17
Trinity Industries 390 21
W.W. Grainger 260 20
Walter Industries 490 33
----
300
----
INFORMATION TECHNOLOGY (14.1%)
Akamai Technologies* 670 22
Amphenol, Cl A 250 13
BEA Systems* 1,460 19
Comverse Technology* 540 13
Global Payments 380 20
Harris 450 21
Intersil, Cl A 670 19
MEMC Electronic Materials* 540 20
PMC - Sierra* 1,360 17
Tellabs* 1,510 24
----
188
----
MATERIALS (5.6%)
Allegheny Technologies 360 22
Martin Marietta Materials 200 21
The accompanying notes are an integral part of the financial statements.
Constellation Funds 2006 Semi-Annual Report 41
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation TIP Mid Cap Fund
March 31, 2006
VALUE
SHARES (000)
------ ------
Scotts Miracle-Gro, Cl A 260 $ 12
Sonoco Products 560 19
------
74
------
TELECOMMUNICATION SERVICES (4.1%)
Leap Wireless International* 460 20
NII Holdings* 590 35
------
55
------
UTILITIES (1.0%)
MDU Resources Group 380 13
------
TOTAL COMMON STOCK (COST $1,070) 1,277
------
EXCHANGE TRADED FUND (1.5%)
iShares Russell Midcap Index Fund 210 20
------
TOTAL EXCHANGE TRADED FUND (COST $20) 20
CASH EQUIVALENT (2.3%)
BlackRock TempCash Fund, Institutional Shares, 4.65% (A) 30,697 31
------
TOTAL CASH EQUIVALENT (COST $31) 31
------
TOTAL INVESTMENTS (99.8%) (COST $1,121) 1,328
------
OTHER ASSETS AND LIABILITIES (0.2%)
Receivable from Investment Adviser 4
Payable for investment securities purchased (37)
Other assets and liabilities, net 35
------
TOTAL OTHER ASSETS AND LIABILITIES 2
======
NET ASSETS (100.0%) $1,330
======
NET ASSETS CONSIST OF:
Portfolio capital of Class I Shares (unlimited authorization -
no par value) $1,063
Accumulated net realized gain on investments 60
Net unrealized appreciation on investments 207
------
NET ASSETS $1,330
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE-CLASS
I SHARES ($1,330,192 / 80,533) $16.52
======
* Non-income producing security.
(A) The rate shown was the 7-day effective yield as of March 31, 2006.
ADR - American Depositary Receipt
Cl - Class
The accompanying notes are an integral part of the financial statements.
42 Constellation Funds 2006 Semi-Annual Report
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation TIP Healthcare & Biotechnology Fund
March 31, 2006
SECTOR WEIGHTINGS+
[CHART]
Health Care 76.1%
Cash Equivalents++ 23.9%
+ Percentages are 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 (93.5%)
HEALTH CARE (93.5%)
Alcon Inc 18,640 $ 1,943
Allergan (A) 7,180 779
Amgen* 9,650 702
Amylin Pharmaceuticals (A)* 26,520 1,298
Anadys Pharmaceuticals* 29,130 469
Arena Pharmaceuticals (A)* 24,800 449
Barr Pharmaceuticals (A)* 16,340 1,029
Bausch & Lomb 7,360 469
Boston Scientific (A)* 28,800 664
Caremark Rx* 65,160 3,205
Celgene (A)* 34,740 1,536
Cephalon (A)* 37,430 2,255
Cerner (A)* 41,050 1,948
DaVita* 18,230 1,098
Fisher Scientific International* 23,310 1,586
Forest Laboratories* 16,200 723
Genentech (A)* 20,790 1,757
Genzyme* 17,570 1,181
Gilead Sciences* 57,470 3,576
Henry Schein* 44,122 2,112
Humana* 25,290 1,332
Intuitive Surgical (A)* 15,530 1,833
Johnson & Johnson 29,940 1,773
Myogen* 83,900 3,040
VALUE
SHARES (000)
---------- -------
New River Pharmaceuticals* 28,960 $ 962
Omnicare 27,940 1,536
Pfizer 159,590 3,977
Pharmaceutical Product Development* 21,040 728
Pozen* 22,460 375
Quality Systems (A) 46,120 1,527
Quest Diagnostics 34,200 1,754
Regeneron Pharmaceuticals* 20,690 344
Resmed (A)* 37,500 1,649
Roche Holdings ADR 19,190 1,425
SFBC International (A)* 27,910 680
Shire ADR 47,228 2,196
Sierra Health Services* 12,840 523
St. Jude Medical* 23,710 972
Sybron Dental Specialties* 12,690 523
United Surgical Partners International* 19,490 690
United Therapeutics* 13,650 905
UnitedHealth Group 59,239 3,309
Varian Medical Systems (A)* 10,140 569
Vertex Pharmaceuticals* 36,880 1,349
WellCare Health Plans* 11,040 502
WellPoint* 20,390 1,579
Wyeth 38,290 1,858
-------
66,689
-------
TOTAL COMMON STOCK
(COST $58,286) 66,689
-------
SHORT-TERM INVESTMENT HELD AS COLLATERAL
FOR LOANED SECURITIES (23.3%)
BlackRock Institutional Money
Market Trust 16,596,744 16,597
-------
TOTAL SHORT-TERM INVESTMENT HELD AS
COLLATERAL FOR LOANED SECURITIES
(COST $16,597) 16,597
-------
CASH EQUIVALENTS (6.1%)
BlackRock TempCash Fund,
Institutional Shares, 4.65% (B) 3,550,287 3,550
BlackRock TempFund,
Institutional Shares, 4.62% (B) 832,807 833
-------
TOTAL CASH EQUIVALENTS
(COST $4,383) 4,383
-------
TOTAL INVESTMENTS (122.9%)
(COST $79,266) 87,669
-------
The accompanying notes are an integral part of the financial statements.
Constellation Funds 2006 Semi-Annual Report 43
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation TIP Healthcare & Biotechnology Fund
March 31, 2006
VALUE
(000)
---------
OTHER ASSETS AND LIABILITIES (-22.9%)
Obligation to return securities lending collateral $(16,597)
Payable for capital shares redeemed (93)
Payable due to Investment Adviser (61)
Payable due to Shareholder Servicing Agent (15)
Payable due to Administrator (9)
Other assets and liabilities, net 461
--------
TOTAL OTHER ASSETS AND LIABILITIES (16,314)
========
NET ASSETS (100.0%) $ 71,355
========
NET ASSETS CONSIST OF:
Portfolio capital of Class II Shares
(unlimited authorization - no par value) $ 63,788
Accumulated net investment loss (337)
Accumulated net realized loss on investments (499)
Net unrealized appreciation on investments 8,403
--------
NET ASSETS $ 71,355
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-CLASS II SHARES
($71,355,081 / 4,503,106) $ 15.85
========
* Non-income producing security.
(A) The security or a portion of this security was on loan at March 31, 2006.
The total value of securities on loan at March 31, 2006 was $16,155,435.
(B) The rate shown was the 7-day effective yield as of March 31, 2006.
ADR - American Depositary Receipt
The accompanying notes are an integral part of the financial statements.
44 Constellation Funds 2006 Semi-Annual Report
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation International Equity Fund
March 31, 2006
[CHART]
SECTOR WEIGHTINGS+
Financials** 30.3%
Industrials 21.5%
Energy 9.4%
Materials 8.4%
Consumer Discretionary 8.1%
Telecommunication Services 5.9%
Health Care 5.5%
Utilities 4.1%
Consumer Staples 3.1%
Information Technology 2.9%
Cash Equivalent 0.8%
+ Percentages are based on total investments.
** More narrow Industries are utilized for compliance purposes, whereas broad
sectors are utilized for reporting purposes.
VALUE
SHARES (000)
------- ------
COMMON STOCK (96.7%)
AUSTRALIA (3.9%)
ABB Grain 15,216 $ 84
Adelaide Bank 7,332 68
Adelaide Brighton 37,858 71
Alesco 10,123 70
Amcor 29,644 157
Australia & New Zealand
Banking Group 35,451 672
Australian Pharmaceutical Industries 28,944 47
AWB 20,136 56
BHP Billiton 13,986 280
Boral 20,951 134
Commonwealth Bank of Australia 22,263 722
DCA Group 32,263 85
Downer EDI 3,858 24
Futuris 43,995 71
Insurance Australia Group 33,177 130
Leighton Holdings 6,940 88
Lend Lease 13,121 130
Lion Nathan 16,913 98
National Australia Bank 11,959 323
New Hope 82,357 82
OAMPS 21,974 50
Oil Search 41,277 117
Promina Group 36,957 145
Qantas Airways 50,064 127
QBE Insurance Group 1,605 25
Rio Tinto 1,426 80
VALUE
SHARES (000)
---------- -------
Santos 21,201 $ 173
Smorgon Steel Group 59,232 58
Suncorp-Metway 15,283 212
Symbion Health 40,467 100
TABCORP Holdings 13,454 149
Telstra Corp 138,854 372
Westpac Banking 38,693 659
------
5,659
------
AUSTRIA (0.9%)
Austrian Airlines* 4,911 50
IMMOFINANZ Immobilien Anlagen* 27,000 280
OMV* 9,200 616
Voestalpine 2,773 388
------
1,334
------
BELGIUM (1.5%)
Delhaize Group* 5,100 366
Fortis 33,800 1,206
Solvay* 4,000 462
Umicore 1,000 138
------
2,172
------
CANADA (6.8%)
Agrium 8,700 220
Alcan 11,000 503
Astral Media 3,900 111
Atco, Cl I 4,100 123
ATI Technologies* 16,000 275
Bank of Montreal 6,600 375
Bank of Nova Scotia 1,600 64
Biovail 9,900 240
Canada Bread 300 15
Canadian Imperial Bank of Commerce 7,800 575
Canadian National Railway 5,200 236
Canadian Natural Resources 11,200 623
Canadian Utilities, Cl A 7,800 257
Canfor* 9,600 118
Celestica* 14,100 161
CGI Group* 26,400 175
Cinram International 2,200 54
Corus Entertainment, Cl B 3,100 95
Dundee Wealth Management 1,300 13
EnCana 1,300 61
George Weston 2,900 209
Inmet Mining 3,100 92
IPSCO 2,500 259
Kingsway Financial Services 3,300 67
Kinross Gold* 22,500 245
LionOre Mining International* 15,600 69
Manulife Financial 2,700 169
MI Developments, Cl A 3,400 118
National Bank of Canada 7,200 394
Norbord 9,800 101
Open Text* 100 2
Petro-Canada 12,500 593
The accompanying notes are an integral part of the financial statements.
Constellation Funds 2006 Semi-Annual Report 45
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation International Equity Fund
March 31, 2006
VALUE
SHARES (000)
------ -------
Royal Bank of Canada 20,400 $ 860
Sobeys 4,100 133
Sun Life Financial 13,200 561
Suncor Energy 100 8
Talisman Energy 9,300 494
Teck Cominco, Cl B 4,400 283
TELUS 10,300 399
Toronto-Dominion Bank 6,700 373
Torstar, Cl B 5,400 106
Transcontinental, Cl A 6,200 104
-------
9,933
-------
CHINA (0.3%)
Angang New Steel, Cl H 52,000 49
China Petroleum & Chemical, Cl H 240,000 139
PetroChina, Cl H 216,000 226
-------
414
-------
DENMARK (1.0%)
AP Moller - Maersk 102 876
Codan* 184 14
FLSmidth, Cl B* 6,000 241
Monberg & Thorsen, Cl B 2,600 275
-------
1,406
-------
FINLAND (1.5%)
Finnair 13,500 211
Nokia 84,300 1,745
Wartsila, Cl B 8,060 299
-------
2,255
-------
FRANCE (6.9%)
Alcatel* 3,000 46
Bouygues 11,000 585
Cap Gemini* 7,200 392
Casino Guichard Perrachon* 5,200 364
Cie de Saint-Gobain* 11,600 810
Ciments Francais* 2,100 329
CNP Assurances 5,200 524
Compagnie Generale des
Etablissements Michelin, Cl B* 7,200 452
LDC 858 68
Natexis Banques Populaires 2,150 580
Remy Cointreau 4,500 224
Safran* 2,400 61
Sanofi-Aventis* 7,600 723
Societe Generale* 8,800 1,323
Sodexho Alliance 4,000 190
Total* 11,450 3,020
Valeo* 7,200 301
Veolia Environnement* 2,551 142
-------
10,134
-------
GERMANY (5.9%)
Allianz* 4,500 751
Bayer* 22,700 909
Bilfinger Berger* 3,600 236
VALUE
SHARES (000)
------ -------
DaimlerChrysler* 2,400 $ 138
Deutsche Bank* 11,800 1,347
E.ON* 12,700 1,397
Fresenius* 2,500 427
Fresenius Medical Care* 2,800 334
Infineon Technologies* 37,800 390
Merck* 3,300 314
Mobilcom 7,723 187
Norddeutsche Affinerie 1,284 40
Rheinmetall* 1,200 93
Siemens 15,900 1,484
ThyssenKrupp 21,500 621
-------
8,668
-------
GREECE (0.6%)
Bank of Greece* 1,666 230
Coca Cola Hellenic Bottling* 11,100 345
Hellenic Petroleum* 18,900 270
-------
845
-------
HONG KONG (1.4%)
Bank of East Asia 51,300 185
Cathay Pacific Airways 19,000 33
Cheung Kong Holdings 6,000 64
Chevalier International Holdings 38,000 40
Chinese Estates Holdings 95,415 137
CLP Holdings 45,500 266
Esprit Holdings 15,500 121
Guoco Group 10,000 128
Hong Kong Ferry Holdings 11,000 13
Hongkong & Shanghai Hotels 12,588 14
HongKong Electric Holdings 42,500 200
Hopson Development Holdings 48,000 103
Jardine Strategic Holdings 15,000 166
Kerry Properties 34,500 126
Next Media 124,000 70
Sun Hung Kai 33,000 19
SUNeVision Holdings 246,500 44
TAI Cheung Holdings 63,000 36
Tomson Group 64,000 25
Transport International Holdings 18,000 100
Vtech Holdings 16,000 72
Wheelock Properties 105,000 81
Wing On Co International 23,100 36
Winsor PropertiesHoldings 21,000 34
-------
2,113
-------
INDIA (0.0%)
Hindalco Industries GDR 15,500 61
-------
IRELAND (0.1%)
Dragon Oil* 47,445 172
-------
ITALY (3.9%)
Banca Intesa* 149,100 891
Buzzi Unicem 15,900 379
Caltagirone 813 9
The accompanying notes are an integral part of the financial statements.
46 Constellation Funds 2006 Semi-Annual Report
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation International Equity Fund
March 31, 2006
VALUE
SHARES (000)
------- ------
Cam Finanziara 151,100 $ 376
Cementir 56,700 412
CIR-Compagnie Industriali Riunite 77,500 234
Danieli 4,172 43
ENI* 29,400 836
Fondiaria-Sai* 8,400 336
Gruppo Coin* 84,500 426
Italcementi* 15,200 364
Telecom Italia* 387,700 1,131
UniCredito Italiano* 26,800 194
------
5,631
------
JAPAN (23.5%)
Acom 4,530 266
Aderans 2,800 82
Aichi Bank 700 84
Airport Facilities 3,600 24
Alfresa Holdings 1,800 109
Alpine Electronics 4,200 62
Alps Electric 10,100 163
Amada* 20,000 218
Aoyama Trading* 3,900 129
Arc Land Sakamoto 1,400 22
Arcs 2,700 37
Asahi Breweries 19,400 275
Asahi Glass 35,000 523
Asunaro Aoki Construction 3,500 32
BMB 6,000 29
BML 1,500 28
Brother Industries 15,000 164
CAC 1,500 18
Canon 15,400 1,019
Canon Marketing Japan 7,000 151
Central Glass 14,000 81
Chiyoda Integre* 1,000 27
Chudenko 3,900 69
Citizen Watch 15,400 145
Coca-Cola Central Japan 6 53
COMSYS Holdings 4,000 57
CRC Solutions 2,400 27
Dai-Dan 4,000 30
Daisyo 1,500 24
Daiwa House Industry 20,000 347
Daiwa Kosho Lease 10,000 71
Daiwa Securities Group 43,000 577
Doutor Coffee 1,500 29
East Japan Railway 40 296
Foster Electric 300 6
Fuji Electric Holdings 34,000 185
Fuji Heavy Industries 33,000 194
Fuji Machine Manufacturing 3,200 59
Fuji Photo Film 1,300 43
Fujitec 7,000 45
Fujitsu 19,000 160
Fujitsu Business Systems 1,800 32
Fujitsu Devices 3,000 46
VALUE
SHARES (000)
------- ------
Fukuda Denshi 1,300 $ 47
Futaba 3,100 80
Haseko* 41,500 157
Hitachi 104,000 736
Hokkaido Electric Power 9,200 197
Hokuriku Electric Power 9,300 194
Horiba 2,700 84
Inabata 4,300 39
Inpex Holdings* (A) 46 388
Japan Airport Terminal 6,600 62
Japan Tobacco 130 457
JFE Holdings 18,100 731
JS Group 12,100 260
Kagawa Bank 6,000 38
Kamei 3,000 30
Kandenko 12,000 90
Kansai Electric Power 28,500 633
Kasumi 5,000 34
Keihanshin Real Estate 4,000 36
Keio 6,000 40
Kinden 14,000 127
Kobe Steel 100,000 380
Kohnan Shoji 1,700 24
Komatsu 31,000 591
Komori 5,000 117
Kumagai Gumi* 10,000 41
Kurabo Industries 18,000 64
Kyudenko 6,000 39
Leopalace21 6,200 233
Maeda 12,000 72
Maeda Road Construction 7,000 55
Maezawa Kasei Industries 1,100 22
Maezawa Kyuso Industries 1,200 20
Makita 7,100 219
Marubeni 11,000 58
Maruwa 800 21
Maruzen Showa Unyu 7,000 26
Matsushita Electric Industrial 47,000 1,044
Matsushita Electric Works 24,000 288
Matsuya Foods 1,300 26
Meiji Seika Kaisha 22,000 112
Meiwa Estate 1,700 31
Melco Holdings 1,700 51
Mikuni Coca-Cola Bottling 3,600 39
Minebea 1,000 7
Mitsubishi 16,500 376
Mitsubishi Chemical Holdings 43,000 265
Mitsubishi Heavy Industries 107,000 509
Mitsubishi Materials 46,000 246
Mitsubishi UFJ Financial Group 123 1,881
Mitsubishi UFJ Securities 18,000 289
Mitsui Sumitomo Insurance 28,000 381
Mitsuuroko 5,000 35
Miura 1,500 38
Mizuho Financial Group 141 1,154
The accompanying notes are an integral part of the financial statements.
Constellation Funds 2006 Semi-Annual Report 47
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation International Equity Fund
March 31, 2006
VALUE
SHARES (000)
------- ------
Nagase 9,000 $ 121
Nagoya Railroad 44,000 166
Nanto Bank 17,000 107
NEC Fielding 3,500 61
NEC Networks & System Integration 2,900 38
New Japan Radio 3,000 21
Nichias 9,000 62
Nichicon 5,200 66
Nichiden 1,100 41
Nihon Yamamura Glass 9,000 32
Nikko Cordial 30,000 497
Nippo 8,000 62
Nippon Chemi-Con 9,000 61
Nippon Denko* 8,000 28
Nippon Denwa Shisetsu 5,000 24
Nippon Konpo Unyu Soko 5,000 70
Nippon Mining Holdings* 33,500 283
Nippon Oil 45,000 353
Nippon Sheet Glass 26,000 145
Nippon Shokubai 11,000 131
Nippon Steel 210,000 814
Nippon Telegraph & Telephone 146 626
Nippon Yusen 44,000 269
Nipro 5,000 77
Nishi-Nippon Railroad 25,000 95
Nissei 2,200 29
Nisshin Fudosan 1,400 20
Nisshin Seifun Group 13,000 133
Nisshin Steel 50,000 173
Nissin 8,000 31
Noritake 10,000 67
Noritz 3,400 66
NTTDoCoMo 152 225
Ohmoto Gumi* 3,000 27
Oiles 1,500 32
Okinawa Electric Power 1,200 72
Okuwa 3,000 43
Omron 9,800 281
Ono Pharmaceutical 5,000 236
Onoken 1,400 22
Orient 40,000 152
Paramount Bed 2,100 49
Patlite 1,500 17
Ricoh 24,000 469
Riso Kagaku 1,100 20
Rohm 2,200 233
Royal Holdings 2,900 47
Ryosan 2,500 67
Sagami Railway 26,000 89
Sakata INX 5,000 25
San-Ai Oil 6,000 28
San-In Godo Bank 11,000 114
Sanshin Electronics 3,000 36
Sanwa Shutter 14,000 92
Sanyo Shinpan Finance 2,140 133
VALUE
SHARES (000)
------- ------
Satori Electric 1,300 $ 28
Sazaby League 1,400 40
Secom Joshinetsu 800 19
Sega Sammy Holdings 1,400 57
Seino Holdings 10,000 104
Sekisui Chemical 21 6,000 51
Sekisui House 24,000 358
Sekisui Jushi 4,000 34
Shidax 23 30
Shimachu 3,300 104
Shindengen Electric Manufacturing 6,000 37
Shinmaywa Industries 8,000 46
Shinsei Bank 32,000 224
Shobunsha Publications* 1,200 21
Showa Shell Sekiyu 14,600 166
Sinanen 6,000 36
Sintokogio 4,000 58
Sohgo Security Services* 6,100 98
Sojitz* 22,300 132
STB Leasing 1,400 27
Sumitomo Chemical 7,000 57
Sumitomo Electric Industries 22,500 357
Sumitomo Metal Mining 6,000 84
Sumitomo Mitsui Financial Group 120 1,326
Sumitomo Osaka Cement 28,000 102
Suzuken 4,900 154
Tadano 9,000 85
Taihei Dengyo Kaisha 3,000 27
Taiheiyo Cement 44,000 213
Taiho Kogyo 1,800 24
Takachiho Electric 1,300 20
Takefuji 4,670 294
Tamura Taiko Holdings 5,000 30
TDK 3,300 249
Teijin 38,000 253
Tekken 11,000 25
TKC 2,000 40
Toagosei 17,000 74
Toei 10,000 77
Tokai 1,100 17
Tokai Carbon 14,000 88
Tokyo Energy & Systems 3,000 28
Tokyo Leasing 3,900 63
Tokyo Steel Manufacturing 2,900 59
Tokyo Style 7,000 83
Tokyu Community 1,000 29
Tomy 3,300 24
Toshiba 50,000 291
Toshiba TEC 3,000 16
Tosho Printing 1,000 5
TOTO 19,000 176
Towa Real Estate Development* 7,500 53
Toyota Motor 14,200 776
Trusco Nakayama 2,200 51
Ube Industries 53,000 156
The accompanying notes are an integral part of the financial statements.
48 Constellation Funds 2006 Semi-Annual Report
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation International Equity Fund
March 31, 2006
VALUE
SHARES (000)
------ -------
UNY 10,000 $ 160
Wakachiku Construction 9,000 22
Wakita* 4,000 39
West Japan Railway 72 304
Yamaichi Electronics 1,300 17
Yamato Kogyo 4,800 102
Yamazaki Baking* 2,000 16
Yuraku Real Estate 4,000 28
Yurtec 6,000 35
-------
34,329
-------
NETHERLANDS (4.7%)
ABN AMRO Holding* 4,500 135
Aegon* 49,200 910
Akzo Nobel* 3,300 175
Buhrmann* 14,900 264
European Aeronautic Defence
and Space* 12,522 528
Fortis Bank Nederland Holding* 3,125 --
Heijmans* 8,300 398
ING Groep 6,000 237
Koninklijke DSM 9,800 447
OPG Groep* 4,800 431
Royal Dutch Shell, Cl B 73,700 2,397
TNT* 16,900 585
Unilever* 5,600 389
-------
6,896
-------
NEW ZEALAND (0.1%)
Mainfreight 5,279 15
New Zealand Refining 13,658 57
-------
72
-------
PORTUGAL (0.4%)
Energias de Portugal* 146,100 574
-------
SINGAPORE (0.5%)
Asia Food & Properties* 31,000 14
CapitaLand* 67,000 201
DBS Group Holdings* 13,000 131
Guocoland 36,000 56
Jardine Cycle & Carriage* 11,000 75
Neptune Orient Lines* 22,000 30
Overseas Union Enterprise* 7,000 51
Singapore Airlines 13,000 113
United Overseas Bank* 6,000 58
WBL Corp* 2,000 10
-------
739
-------
SOUTH KOREA (3.0%)
Daelim Industrial 1,300 103
Daewoo Engineering & Construction 9,510 137
DC Chemical 2,270 82
Doosan Heavy Industries and Construction 1,220 40
Green Cross Holdings 1,180 86
VALUE
SHARES (000)
------ -------
Hankook Tire 7,960 $ 120
Honam Petrochemical 1,510 92
Hyundai Department Store 1,150 107
Hyundai Development 1,620 74
Hyundai Engineering & Construction* 3,120 159
Hyundai Marine & Fire Insurance 3,200 40
Hyundai Merchant Marine* 6,190 88
Hyundai Motor 4,060 341
Hyundai Steel 3,900 116
Kookmin Bank 520 45
Korea Iron & Steel 1,600 52
Korea Zinc 1,250 98
Korean Reinsurance 3,672 40
LG Insurance 920 13
Lotte Samkang 90 20
LS Cable 2,270 84
Meritz Fire & Marine Insurance 13,390 63
Namyang Dairy Products 150 104
POSCO 2,107 543
S-Oil 1,540 118
Samsung Electronics 900 584
Samsung Heavy Industries 7,260 130
Samsung Securities 2,240 120
Shinhan Financial Group 7,160 321
SK Telecom ADR 1,130 224
Woori Finance Holdings 11,250 224
-------
4,368
-------
SPAIN (4.6%)
Acciona (A) 3,000 480
Banco Bilbao Vizcaya Argentaria (A)* 8,000 172
Banco Santander Central Hispano (A) 117,300 1,760
Cementos Portland Valderrivas (A) 2,600 280
Cia Espanola de Petroleos (A) 8,900 490
Corp Mapfre (A) 9,745 204
Fomento de Construcciones y
Contratas (A) 6,000 456
Iberdrola* (A) 30,400 1,008
Inmobiliaria Urbis 11,900 230
Telefonica (A) 98,837 1,594
-------
6,674
-------
SWEDEN (2.1%)
Boliden* 27,800 427
NCC 1,709 46
Nordea Bank* 81,500 1,007
Saab, Cl B 10,900 274
SAS* 5,512 77
Tele2, Cl B 27,800 329
Telefonaktiebolaget LM
Ericsson, Cl B* 35,000 133
TeliaSonera 131,200 787
-------
3,080
-------
The accompanying notes are an integral part of the financial statements.
Constellation Funds 2006 Semi-Annual Report 49
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation International Equity Fund
March 31, 2006
VALUE
SHARES (000)
------- --------
SWITZERLAND (7.1%)
Bobst Group 1,207 $ 51
Ciba Specialty Chemicals 5,400 323
Compagnie Financiere
Richemont, Cl A 15,500 743
Credit Suisse Group* 22,700 1,274
Gurit-Heberlein* 320 344
Holcim* 8,000 637
Implenia* 3,054 64
Kardex* 4,400 224
Nestle* 1,250 371
Novartis 20,400 1,134
Roche Holding 7,300 1,087
Serono* 480 335
Sulzer* 390 266
Swiss Life Holding 1,890 396
Swiss Reinsurance* 10,700 748
UBS* 3,600 395
Waadt Versicherungen Holding 340 38
Xstrata 20,700 670
Zueblin Immobilien Holding* 21,900 196
Zurich Financial Services* 4,450 1,045
--------
10,341
--------
UNITED KINGDOM (16.0%)
3i Group 28,000 457
Amec 33,800 237
Amvescap 42,700 398
Anglo American 33,700 1,298
Antofagasta 9,600 356
Arla Foods 8,475 10
Arriva 20,600 220
AstraZeneca 10,400 524
Aviva 73,100 1,015
BAE Systems 41,000 300
Barclays 39,200 459
BHP Billiton 70,400 1,286
BP 97,600 1,121
British Airways* 10,124 62
Compass Group 107,400 426
Corus Group 277,300 424
Expro International Group 31,800 409
Filtronic 5,512 16
First Choice Holidays 60,000 224
Firstgroup 39,000 288
Gallaher Group 31,000 452
GlaxoSmithKline 36,000 941
Greene King 703 9
Hanson 13,573 178
HBOS 73,400 1,225
Henderson Group 147,071 219
HSBC Holdings 63,064 1,057
Investec 6,503 332
VALUE
SHARES (000)
------- --------
Legal & General Group 250,500 $ 618
Liberty International 2,406 49
LogicaCMG 45,000 153
Old Mutual 170,000 594
Prudential 80,500 933
Rio Tinto 23,100 1,173
Royal Bank of Scotland Group 59,600 1,939
SABMiller 35,800 707
Scottish & Newcastle 26,783 242
Scottish Power 66,600 673
Shire 25,700 394
Stagecoach Group 25,419 51
Stolt-Nielsen* 6,632 206
Taylor Woodrow 44,700 314
Unilever* 89,500 916
Vodafone Group 202,800 425
--------
23,330
--------
TOTAL COMMON STOCK
(COST $127,065) 141,200
--------
CASH EQUIVALENTS(0.8%)
BlackRock TempCash
Fund, Institutional
Shares, 4.65% (B) 55,701 56
BlackRock Temp Fund,
4.62% (B) 55,701 56
PNC Bank Money Market
Fund, 4.26% (B) 998,654 998
--------
TOTAL CASH EQUIVALENTS (COST $1,110) 1,110
--------
TOTAL INVESTMENTS (97.5%) (COST $128,175) 142,310
The accompanying notes are an integral part of the financial statements.
50 Constellation Funds 2006 Semi-Annual Report
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation International Equity Fund
March 31, 2006
VALUE
(000)
---------
OTHER ASSETS AND LIABILITIES (2.5%)
Payable for investment securities purchased $ (269)
Payable due to Investment Adviser (92)
Payable due to Shareholder Servicing Agent (30)
Payable for capital shares redeemed (24)
Payable due to Administrator (18)
Other assets and liabilities, net 4,041
--------
TOTAL OTHER ASSETS AND LIABILITIES 3,608
========
NET ASSETS (100.0%) $145,918
========
NET ASSETS CONSIST OF:
Portfolio capital of Class II Shares (unlimited authorization -
no par value) $129,054
Distributions in excess of net investment income (754)
Accumulated net realized gain on investments 3,462
Net unrealized appreciation on investments 14,135
Net unrealized appreciation on foreign currency and translation of
other assets and liabilities in foreign currency investments 21
--------
NET ASSETS $145,918
========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE-CLASS II
SHARES ($145,918,044 / 14,685,770) $ 9.94
========
* Non-income producing security.
(A) Security fair valued using methods determined in good faith by the
Valuation Committee of the Board of Trustees. The total value of such
securities as of March 31, 2006 was $6,832 (000), or represented 4.68% of
net assets.
(B) The rate shown was the 7-day effective yield as of March 31, 2006.
ADR - American Depositary Receipt
Cl - Class
GDR - Global Depositary Receipts
Amounts listed as "-" are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
Constellation Funds 2006 Semi-Annual Report 51
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation Small Cap Value Opportunities Fund
March 31, 2006
SECTOR WEIGHTINGS+
[CHART]
Industrials 21.6%
Financials 19.8%
Consumer Discretionary 11.9%
Energy 11.7%
Cash Equivalents++ 11.6%
Information Technology 8.1%
Materials 6.0%
Health Care 5.3%
Consumer Staples 1.7%
Utilities 1.6%
Telecommunication Services 0.7%
+ Percentages are 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%)
CONSUMER DISCRETIONARY (12.4%)
American Greetings, Cl A 108,500 $ 2,346
Belo, Cl A 81,600 1,622
Benihana* 14,207 436
Benihana, Cl A* 21,815 675
Bob Evans Farms 39,630 1,177
Callaway Golf 94,500 1,625
Charming Shoppes* 68,470 1,018
Domino's Pizza 63,700 1,819
DSW* 45,480 1,424
Finish Line, Cl A 75,000 1,234
Isle of Capri Casinos* 37,650 1,253
Men's Wearhouse 40,490 1,455
Orient-Express Hotels, Cl A 35,790 1,404
Phillips-Van Heusen 37,330 1,426
Pinnacle Entertainment* 45,270 1,275
Polaris Industries 22,500 1,228
Source Interlink* 60,150 686
Steiner Leisure* 19,400 786
Too* 44,070 1,514
United Auto Group 19,100 821
-------
25,224
-------
CONSUMER STAPLES (1.7%)
Casey's General Stores 36,160 827
Del Monte Foods* 68,500 812
VALUE
SHARES (000)
------- -------
Flowers Foods 43,240 $ 1,284
WD-40 20,700 639
-------
3,562
-------
ENERGY (12.2%)
Berry Petroleum, Cl A 23,700 1,622
Cimarex Energy* 76,900 3,327
Comstock Resources* 42,450 1,260
Covanta Holding* 103,770 1,730
Encore Acquisition* 83,600 2,592
Helmerich & Payne 22,600 1,578
Hydril* 20,530 1,600
James River Coal* 46,800 1,590
Lone Star Technologies* 24,300 1,347
Lufkin Industries 17,800 987
Oil States International* 41,770 1,539
Remington Oil & Gas* 37,700 1,629
Southwestern Energy* 25,000 805
Tidewater 29,500 1,629
Whiting Petroleum* 38,500 1,578
-------
24,813
-------
FINANCIALS (20.6%)
1st Source 22,800 684
Advanta 50,360 1,857
Alexandria Real Estate Equities 16,370 1,561
Beverly Hills Bancorp 71,330 756
BioMed Realty Trust 51,880 1,538
Cardinal Financial 69,300 938
Columbia Equity Trust 68,720 1,208
Commercial Capital Bancorp 86,000 1,209
Corporate Office Properties Trust 35,790 1,637
Delphi Financial Group, Cl A 20,270 1,046
EastGroup Properties 32,570 1,545
Fidelity Bankshares 39,260 1,320
First Midwest Bancorp 23,240 850
First Republic Bank 40,945 1,548
Fpic Insurance Group* 36,360 1,374
Hanmi Financial 27,800 502
Heritage Commerce* 66,390 1,660
Kilroy Realty 17,100 1,321
MAF Bancorp 16,192 709
Maguire Properties 38,140 1,392
MarketAxess Holdings* 100,600 1,210
Navigators Group* 27,150 1,347
Nelnet, Cl A* 30,190 1,257
Ohio Casualty 50,520 1,601
Platinum Underwriters Holdings 48,500 1,411
ProAssurance* 24,890 1,294
Provident Bankshares 25,450 928
Republic Property Trust* 109,060 1,284
Signature Bank* 50,270 1,638
UMB Financial 24,190 1,699
United America Indemnity, Cl A* 63,350 1,451
The accompanying notes are an integral part of the financial statements.
52 Constellation Funds 2006 Semi-Annual Report
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation Small Cap Value Opportunities Fund March 31, 2006
VALUE
SHARES (000)
---------- --------
Virginia Commerce Bancorp* 38,405 $ 1,381
WSFS Financial 15,900 999
42,155
--------
HEALTH CARE (5.5%)
Analogic 35,140 2,326
Angitech Pharmaceuticals* 89,850 1,330
Apria Healthcare Group* 54,000 1,241
Horizon Health* 25,560 506
Manor Care 18,400 816
PolyMedica 35,480 1,503
Thoratec* 47,970 924
Trizetto Group* 39,900 702
West Pharmaceutical Services 55,390 1,923
--------
11,271
--------
INDUSTRIALS (22.5%)
ACCO Brands* 74,000 1,643
Actuant, Cl A 25,590 1,567
Airtran Holdings* 36,400 659
Amerco* 25,090 2,483
American Commercial Lines* 46,077 2,175
Astec Industries* 29,850 1,072
Aviall* 35,630 1,357
Brightpoint* 40,957 1,272
Brink's 32,100 1,629
Consolidated Graphics* 26,180 1,364
DRS Technologies (A) 22,950 1,259
Ennis 42,000 819
EnPro Industries* 30,360 1,041
Federal Signal 50,890 941
FTI Consulting* 38,420 1,096
Gardner Denver* 26,400 1,721
Greenbrier 30,500 1,222
Griffon* 79,790 1,982
Kaman 75,230 1,893
Kaydon 20,100 811
KHD Humboldt Wedag
International, ADR* 27,130 673
Kirby (A)* 26,220 1,786
Lincoln Electric Holdings 19,100 1,031
Nordson 35,840 1,787
PHH* 43,850 1,171
Tetra Tech* 53,180 1,015
Trinity Industries 25,000 1,360
US Airways Group* 52,600 2,104
Wabtec 41,780 1,362
Walter Industries (A) 50,520 3,366
Washington Group International* 41,630 2,389
--------
46,050
--------
INFORMATION TECHNOLOGY (8.5%)
Benchmark Electronics* 38,010 1,458
Brocade Communications Systems* 251,760 1,682
CalAmp* 89,840 1,055
Electronics for Imaging* 47,800 1,337
VALUE
SHARES (000)
---------- --------
Foundry Networks* 74,250 $ 1,348
Gerber Scientific* 65,200 674
Gevity HR 52,000 1,272
Lionbridge Technologies* 177,690 1,405
MoneyGram International 52,500 1,613
NAM TAI Electronics 33,690 772
Standard Microsystems* 42,130 1,094
THQ* 56,110 1,453
Varian Semiconductor
Equipment Associates* 45,090 1,266
Xyratex* 26,780 844
--------
17,273
--------
MATERIALS (6.2%)
Aleris International (A)* 36,240 1,742
Bowater 54,500 1,612
Century Aluminum* 39,300 1,668
Cleveland-Cliffs (A) 11,830 1,031
Foundation Coal Holdings 36,240 1,491
Hawk, Cl A* 74,660 1,039
Ladish* 46,540 1,348
Martin Marietta Materials 7,700 824
Texas Industries (A) 32,540 1,969
--------
12,724
--------
TELECOMMUNICATION SERVICES (0.8%)
Arris Group* 111,230 1,531
--------
UTILITIES (1.7%)
Allete 24,840 1,158
El Paso Electric 58,110 1,106
WPS Resources 24,600 1,211
--------
3,475
--------
TOTAL COMMON STOCK
(COST $166,867) 188,078
--------
CASH EQUIVALENT (9.3%)
PNC Bank Money Market
Fund, 4.26% (B) 19,063,020 19,063
--------
TOTAL CASH EQUIVALENT
(COST $19,063) 19,063
--------
SHORT-TERM INVESTMENT HELD AS COLLATERAL
FOR LOANED SECURITIES (2.8%)
BlackRock Institutional Money
Market Trust 5,677,856 5,678
--------
TOTAL SHORT-TERM INVESTMENT HELD AS
COLLATERAL FOR LOANED SECURITIES
(COST $5,678) 5,678
--------
TOTAL INVESTMENTS (104.2%)
(COST $191,608) 212,819
--------
The accompanying notes are an integral part of the financial statements.
Constellation Funds 2006 Semi-Annual Report 53
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation Small Cap Value Opportunities Fund March 31, 2006
VALUE
(000)
--------
OTHER ASSETS AND LIABILITIES (-4.2%)
Obligation to return securities lending collateral $ (5,678)
Payable for investment securities purchased (5,783)
Payable due to Investment Adviser (147)
Payable for capital shares redeemed (29)
Payable due to Shareholder Servicing Agent (39)
Payable due to Administrator (23)
Other assets and liabilities, net 3,140
--------
TOTAL OTHER ASSETS AND LIABILITIES (8,559)
========
NET ASSETS (100.0%) $204,260
--------
NET ASSETS CONSIST OF:
Portfolio capital of Class II Shares
(unlimited authorization - no par value) $180,624
Distributions in excess of net investment income (276)
Accumulated net realized gain on investments 2,701
Net unrealized appreciation on investments 21,211
--------
NET ASSETS $204,260
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-CLASS II SHARES
($204,259,701 /10,023,265) $ 20.38
========
* Non-income producing security.
(A) The security or a portion of this security was on loan at March 31, 2006.
The total value of securities on loan at March 31, 2006 was $5,350,036.
(B) The rate shown was the 7-day effective yield as of March 31, 2006.
ADR - American Depositary Receipt
Cl - Class
The accompanying notes are an integral part of the financial statements.
54 Constellation Funds 2006 Semi-Annual Report
FINANCIAL STATEMENTS (unaudited)
STATEMENT OF NET ASSETS
Constellation Strategic Value and High Income Fund March 31, 2006
SECTOR WEIGHTINGS+
[CHART]
Affiliated Equity Fund 62.8%
Affiliated Fixed Income Funds 37.2%
+Percentages are based on total investments.
VALUE
SHARES (000)
------ ------
AFFILIATED EQUITY FUND (63.0%)
Constellation Clover Small Cap
Value Fund, Class I Shares 38,698 $ 788
------
TOTAL AFFILIATED EQUITY FUND
(COST $585) 788
======
AFFILIATED FIXED INCOME FUNDS (37.6%)
Constellation Chartwell Ultra Short
Duration Fixed Income Fund,
Class I Shares 23,792 238
Constellation Clover Core Fixed
Income Fund, Class I Shares 24,420 232
------
TOTAL AFFILIATED FIXED INCOME FUNDS
(COST $476) 470
======
TOTAL INVESTMENTS (100.6%)
(COST $1,061) 1,258
======
VALUE
(000)
------
OTHER ASSETS AND LIABILITIES (-0.6%)
Receivable from Investment Adviser $ 2
Payable for investment securities purchased (37)
Other assets and liabilities, net 28
------
TOTAL OTHER ASSETS AND LIABILITIES (7)
======
NET ASSETS (100.0%) $1,251
======
NET ASSETS CONSIST OF:
Portfolio capital of Class I Shares
(unlimited authorization - no par value) $1,047
Accumulated net realized gain on investments 7
Net unrealized appreciation on investments 197
------
NET ASSETS $1,251
======
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-CLASS I SHARES
($1,251,066 / 83,174) $15.04
======
The accompanying notes are an integral part of the financial statements.
Constellation Funds 2006 Semi-Annual Report 55
FINANCIAL STATEMENTS (unaudited)
STATEMENTS OF OPERATIONS (000)
Constellation
Constellation Constellation Clover Core
Clover Core Clover Small Fixed Income
Value Fund Cap Value Fund Fund
-------------- -------------- --------------
6 months ended 6 months ended 6 months ended
3/31/06 3/31/06 3/31/06
-------------- -------------- --------------
Investment Income:
Dividend $ 922 $ 1,741 $ 8
Interest -- -- 632
Securities lending 14 97 --
Foreign taxes withheld (2) -- --
------- ------- -----
Total Investment income 934 1,838 640
------- ------- -----
Expenses:
Investment advisory fees 532 1,584 59
Administrator fees 92 272 19
Trustees' fees 4 12 1
Shareholder servicing fees(1) -- -- --
Transfer agent fees 73 397 22
Professional fees 19 43 9
Registration fees 13 63 4
Custodian fees 12 42 2
Printing fees 9 27 2
Insurance and other fees 9 25 2
------- ------- -----
Total expenses 763 2,465 120
------- ------- -----
Less:
Investment advisory fees waived -- -- (10)
------- ------- -----
Net expenses 763 2,465 110
------- ------- -----
Net investment income (loss) 171 (627) 530
------- ------- -----
Net realized gain (loss) from investment
securities sold 13,675 42,781 (66)
Net change in unrealized appreciation
(depreciation) of investment
securities (8,324) 2,281 (545)
------- ------- -----
Net realized and unrealized gain (loss)
on investments 5,351 45,062 (611)
------- ------- -----
Net increase (decrease) in net assets
resulting from operations $ 5,522 $44,435 $ (81)
======= ======= =====
- ----------
(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.
56 Constellation Funds 2006 Semi-Annual Report
FINANCIAL STATEMENTS (unaudited)
Constellation
Chartwell Ultra Constellation Constellation
Short Duration Chartwell Short HLAM Large Constellation Constellation
Fixed Income Duration Fixed Cap Quality Pitcairn Diversified Pitcairn Select
Fund Income Fund Stock Fund Value Fund Value Fund
--------------- --------------- -------------- -------------------- ---------------
6 months ended 6 months ended 6 months ended 6 months ended 6 months ended
3/31/06 3/31/06 3/31/06 3/31/06 3/31/06
--------------- --------------- -------------- -------------------- ---------------
Investment Income:
Dividend $ 2 $ -- $ 115 $ 2,172 $ 828
Interest 6,073 2,291 -- -- --
Securities lending -- 8 2 27 11
Foreign taxes withheld -- -- (1) -- --
------- ------- ------- -------- -------
Total Investment income 6,075 2,299 116 2,199 839
------- ------- ------- -------- -------
Expenses:
Investment advisory fees 325 128 54 510 187
Administrator fees 190 75 11 121 46
Trustees' fees 7 3 1 5 2
Shareholder servicing fees(1) -- -- 19 206 78
Transfer agent fees 236 105 23 27 15
Professional fees 32 16 7 22 12
Registration fees 52 22 3 23 10
Custodian fees 20 9 5 7 3
Printing fees 19 7 1 12 4
Insurance and other fees 16 7 1 10 4
------- ------- ------- -------- -------
Total expenses 897 372 125 943 361
------- ------- ------- -------- -------
Less:
Investment advisory fees waived (4) (15) (33) (102) (33)
------- ------- ------- -------- -------
Net expenses 893 357 92 841 328
------- ------- ------- -------- -------
Net investment income (loss) 5,182 1,942 24 1,358 511
------- ------- ------- -------- -------
Net realized gain (loss) from investment
securities sold (784) (187) 1,031 6,676 6,104
Net change in unrealized appreciation
(depreciation) of investment
securities (760) (1,329) (39) 2,525 (2,620)
------- ------- ------- -------- -------
Net realized and unrealized gain (loss)
on investments (1,544) (1,516) 992 9,201 3,484
------- ------- ------- -------- -------
Net increase (decrease) in net assets
resulting from operations $ 3,638 $ 426 $ 1,016 $ 10,559 $ 3,995
======= ======= ======= ======== =======
Constellation Funds 2006 Semi-Annual Report 57
FINANCIAL STATEMENTS (unaudited)
STATEMENTS OF OPERATIONS (000)
Constellation
Pitcairn Constellation Constellation
Diversified Pitcairn Small Pitcairn Family
Growth Fund Cap Fund Heritage(R) Fund
-------------- -------------- ----------------
6 months ended 6 months ended 6 months ended
3/31/06 3/31/06 3/31/06
-------------- -------------- ----------------
Investment Income:
Dividend $ 628 $ 391 $ 714
Interest -- -- --
Securities lending 34 56 12
Foreign taxes withheld (1) (1) --
------ ------- ------
Total Investment income 661 446 726
------ ------- ------
Expenses:
Investment advisory fees 357 278 340
Administrator fees 86 68 62
Trustees' fees 3 2 2
Shareholder servicing fees(1) 148 116 106
Transfer agent fees 18 23 23
Professional fees 18 15 14
Registration fees 15 13 12
Custodian fees 6 7 4
Printing fees 9 7 6
Insurance and other fees 7 6 5
------ ------- ------
Total expenses 667 535 574
------ ------- ------
Less:
Investment advisory fees waived (74) (67) (65)
Reimbursement from adviser -- -- --
------ ------- ------
Net expenses 593 468 509
------ ------- ------
Net investment income (loss) 68 (22) 217
------ ------- ------
Net realized gain (loss) from investment securities sold 4,393 7,308 2,720
Net change in unrealized appreciation (depreciation)
of investment securities 2,165 3,851 (404)
------ ------- ------
Net realized and unrealized gain (loss)
on investments 6,558 11,159 2,316
------ ------- ------
Net increase (decrease) in net assets
resulting from operations $6,626 $11,137 $2,533
====== ======= ======
- ----------
(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.
58 Constellation Funds 2006 Semi-Annual Report
FINANCIAL STATEMENTS (unaudited)
Constellation
Constellation Constellation Sands Capital
Pitcairn Taxable Pitcairn Tax-Exempt Select Growth Constellation
Bond Fund Bond Fund Fund TIP Mid Cap Fund
---------------- ------------------- -------------- ----------------
6 months ended 6 months ended 6 months ended 6 months ended
3/31/06 3/31/06 3/31/06 3/31/06
---------------- ------------------- -------------- ----------------
Investment Income:
Dividend $ 6 $ -- $ 552 $ 6
Interest 1,238 2,658 -- --
Securities lending 4 -- 53 --
Foreign taxes withheld -- -- (14) --
------- ------- ------- -----
Total Investment income 1,248 2,658 591 6
------- ------- ------- -----
Expenses:
Investment advisory fees 78 147 1,674 4
Administrator fees 34 83 263 1
Trustees' fees 1 3 8 --
Shareholder servicing fees(1) 59 141 289 --
Transfer agent fees 14 18 97 12
Professional fees 11 17 43 6
Registration fees 7 16 25 --
Custodian fees 3 6 23 4
Printing fees 3 8 26 --
Insurance and other fees 3 7 17 --
------- ------- ------- -----
Total expenses 213 446 2,465 27
------- ------- ------- -----
Less:
Investment advisory fees waived (18) (73) (53) (4)
Reimbursement from adviser -- -- -- (19)
------- ------- ------- -----
Net expenses 195 373 2,412 4
------- ------- ------- -----
Net investment income (loss) 1,053 2,285 (1,821) 2
------- ------- ------- -----
Net realized gain (loss) from investment securities sold (155) 607 1,267 59
Net change in unrealized appreciation (depreciation)
of investment securities (1,208) (2,104) 8,718 91
------- ------- ------- -----
Net realized and unrealized gain (loss)
on investments (1,363) (1,497) 9,985 150
------- ------- ------- -----
Net increase (decrease) in net assets
resulting from operations $ (310) $ 788 $ 8,164 $ 152
======= ======= ======= =====
Constellation Funds 2006 Semi-Annual Report 59
FINANCIAL STATEMENTS (unaudited)
STATEMENTS OF OPERATIONS (000)
Constellation
TIP
Healthcare & Constellation
Biotechnology International
Fund Equity Fund
-------------- --------------
6 months ended 6 months ended
3/31/06 3/31/06
-------------- --------------
Investment Income:
Dividend $ 261 $ 1,432
Securities lending 17 --
Foreign taxes withheld (3) (87)
------ --------
Total Investment income 275 1,345
------ --------
Expenses:
Investment advisory fees 390 581
Administrator fees 48 97
Trustees' fees 2 3
Shareholder servicing fees(1) 82 166
Transfer agent fees 59 18
Professional fees 12 18
Registration fees 6 17
Custodian fees 5 108
Printing fees 5 9
Insurance and other fees 4 16
------ --------
Total expenses 613 1,033
------ --------
Less:
Investment advisory fees waived -- (120)
Reimbursement from adviser -- --
------ --------
Net expenses 613 913
------ --------
Net investment income (loss) (338) 432
------ --------
Net realized gain (loss) from investment
securities sold (399) 28,671
Net realized loss from foreign currency
transactions -- (94)
Net change in unrealized appreciation
(depreciation) of investment securities 1,200 (10,085)
Net change in unrealized appreciation on
translation of foreign currency and
other assets and liabilities denominated
in foreign currency -- 22
------ --------
Net realized and unrealized gain on
investments 801 18,514
------ --------
Net increase in net assets resulting from
operations $ 463 $ 18,946
====== ========
- ----------
* 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 2006 Semi-Annual Report
FINANCIAL STATEMENTS (unaudited)
Constellation
Constellation Strategic
Small Cap Value Value and
Opportunities High Income
Fund Fund
--------------- --------------
6 months ended 6 months ended
3/31/06 3/31/06
--------------- --------------
Investment Income:
Dividend $ 664 $ 13*
Securities lending 17 --
Foreign taxes withheld -- --
------- ----
Total Investment income 681 13
------- ----
Expenses:
Investment advisory fees 625 1
Administrator fees 91 1
Trustees' fees 2 --
Shareholder servicing fees(1) 155 --
Transfer agent fees 68 12
Professional fees 16 6
Registration fees 5 --
Custodian fees 32 --
Printing fees 7 --
Insurance and other fees 6 --
------- ----
Total expenses 1,007 20
------- ----
Less:
Investment advisory fees waived (40) (1)
Reimbursement from adviser -- (17)
------- ----
Net expenses 967 2
------- ----
Net investment income (loss) (286) 11
------- ----
Net realized gain (loss) from investment
securities sold 3,030 9*
Net realized loss from foreign currency
transactions -- --
Net change in unrealized appreciation
(depreciation) of investment securities 15,780 60*
Net change in unrealized appreciation on
translation of foreign currency and
other assets and liabilities
denominated in foreign currency -- --
Net realized and unrealized gain on
investments 18,810 69
------- ----
Net increase in net assets resulting from
operations $18,524 $ 80
======= ====
Constellation Funds 2006 Semi-Annual Report 61
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS (000)
Constellation Clover
Core Value Fund
-------------------------
6 months ended year ended
3/31/06* 9/30/05
-------------- ----------
Investment activities:
Net investment income (loss) $ 171 $ 235
Net realized gain (loss) from securities sold 13,675 12,077
Net change in unrealized appreciation
(depreciation) of investments (8,324) 9,515
-------- --------
Net increase (decrease) in net assets resulting from
operations 5,522 21,827
-------- --------
Dividends and distributions to shareholders:
Net investment income
Class I Shares (170) (247)
Class II Shares -- --
Realized capital gains
Class I Shares (9,232) (5,134)
-------- --------
Total dividends and distributions (9,402) (5,381)
-------- --------
Capital share transactions:
Class I
Proceeds from shares issued 15,902 124,720
Proceeds from shares issued in lieu of cash
distributions 9,132 5,275
Proceeds from shares issued in connection with
conversion into Class I Shares(1) -- --
Cost of shares redeemed (92,289) (34,904)
-------- --------
Net increase (decrease) in net assets from Class I
Shares transactions (67,255) 95,091
-------- --------
Class II Shares
Proceeds from shares issued -- --
Proceeds from shares issued in lieu of cash
distributions -- --
Cost of shares redeemed in connection with
conversion into Class I Shares(1) -- --
Cost of shares redeemed -- --
-------- --------
Net decrease in net assets from Class II Shares
transactions -- --
-------- --------
Net increase (decrease) in net assets from capital
share transactions (67,255) 95,091
-------- --------
Total increase (decrease) in net assets (71,135) 111,537
-------- --------
Net assets:
Beginning of period 171,251 59,714
-------- --------
End of period $100,116 $171,251
======== ========
Undistributed net investment income (Accumulated
net investment loss/Distributions in excess of
net investment income) $ -- $ (1)
Shares issued and redeemed:
Class I
Issued 872 7,026
Issued in lieu of cash distributions 515 307
Proceeds in connection with conversion into
Class I Shares(1) -- --
Redeemed (4,960) (1,939)
-------- --------
Increase (decrease) in Class I Shares (3,573) 5,394
-------- --------
Class II Shares
Issued -- --
Issued in lieu of cash distributions -- --
Redeemed in connection with conversion into
Class I Shares(1) -- --
Redeemed -- --
-------- --------
Decrease in Class II Shares -- --
-------- --------
Net increase (decrease) in share transaction (3,573) 5,394
======== ========
- ----------
* Unaudited
(1) 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.
62 Constellation Funds 2006 Semi-Annual Report
FINANCIAL STATEMENTS
Constellation Chartwell
Constellation Clover Constellation Clover Ultra Short Duration
Small Cap Value Fund Core Fixed Income Fund Fixed Income Fund
------------------------- ------------------------- -------------------------
6 months ended year ended 6 months ended year ended 6 months ended year ended
3/31/06* 9/30/05 3/31/06* 9/30/05 3/31/06* 9/30/05
-------------- ---------- -------------- ---------- -------------- ----------
Investment activities:
Net investment income (loss) $ (627) $ (2,461) $ 530 $ 1,152 $ 5,182 $ 10,308
Net realized gain (loss) from securities sold 42,781 71,862 (66) 664 (784) 171
Net change in unrealized appreciation
(depreciation) of investments 2,281 8,593 (545) (1,101) (760) (1,071)
--------- --------- ------- -------- --------- ---------
Net increase (decrease) in net assets resulting from
operations 44,435 77,994 (81) 715 3,638 9,408
--------- --------- ------- -------- --------- ---------
Dividends and distributions to shareholders:
Net investment income
Class I Shares -- -- (540) (1,211) (5,282) (10,513)
Class II Shares -- -- -- -- -- (63)
Realized capital gains
Class I Shares (60,867) -- (609) (395) -- --
--------- --------- ------- -------- --------- ---------
Total dividends and distributions (60,867) -- (1,149) (1,606) (5,282) (10,576)
--------- --------- ------- -------- --------- ---------
Capital share transactions:
Class I
Proceeds from shares issued 17,617 90,562 3,026 10,191 19,661 110,726
Proceeds from shares issued in lieu of cash
distributions 59,758 -- 1,113 1,529 5,098 10,207
Proceeds from shares issued in connection with
conversion into Class I Shares(1) -- -- -- -- -- 7,625
Cost of shares redeemed (190,550) (258,823) (3,558) (16,997) (113,657) (214,111)
--------- --------- ------- -------- --------- ---------
Net increase (decrease) in net assets from Class I
Shares transactions (113,175) (168,261) 581 (5,277) (88,898) (85,553)
--------- --------- ------- -------- --------- ---------
Class II Shares
Proceeds from shares issued -- -- -- -- -- 1,265
Proceeds from shares issued in lieu of cash
distributions -- -- -- -- -- 40
Cost of shares redeemed in connection with
conversion into Class I Shares(1) -- -- -- -- -- (7,625)
Cost of shares redeemed -- -- -- -- -- (2,566)
--------- --------- ------- -------- --------- ---------
Net decrease in net assets from Class II Shares
transactions -- -- -- -- -- (8,886)
--------- --------- ------- -------- --------- ---------
Net increase (decrease) in net assets from capital
share transactions (113,175) (168,261) 581 (5,277) (88,898) (94,439)
--------- --------- ------- -------- --------- ---------
Total increase (decrease) in net assets (129,607) (90,267) (649) (6,168) (90,542) (95,607)
--------- --------- ------- -------- --------- ---------
Net assets:
Beginning of period 450,011 540,278 26,166 32,334 305,222 400,829
--------- --------- ------- -------- --------- ---------
End of period $ 320,404 $ 450,011 $25,517 $ 26,166 $ 214,680 $ 305,222
========= ========= ======= ======== ========= =========
Undistributed net investment income (Accumulated
net investment loss/Distributions in excess of
net investment income) $ (554) $ 46 $ -- $ -- $ -- $ 1
--------- --------- ------- -------- --------- ---------
Shares issued and redeemed:
Class I
Issued 683 3,505 311 1,014 1,957 10,957
Issued in lieu of cash distributions 2,558 -- 115 152 508 1,010
Proceeds in connection with conversion into
Class I Shares(1) -- -- -- -- -- 755
Redeemed (7,393) (9,957) (368) (1,682) (11,313) (21,188)
--------- --------- ------- -------- --------- ---------
Increase (decrease) in Class I Shares (4,152) (6,452) 58 (516) (8,848) (8,466)
--------- --------- ------- -------- --------- ---------
Class II Shares
Issued -- -- -- -- -- 124
Issued in lieu of cash distributions -- -- -- -- -- 4
Redeemed in connection with conversion into
Class I Shares(1) -- -- -- -- -- (752)
Redeemed -- -- -- -- -- (252)
--------- --------- ------- -------- --------- ---------
Decrease in Class II Shares -- -- -- -- -- (876)
--------- --------- ------- -------- --------- ---------
Net increase (decrease) in share transaction (4,152) (6,452) 58 (516) (8,848) (9,342)
========= ========= ======= ======== ========= =========
Constellation Funds 2006 Semi-Annual Report 63
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS (000)
Constellation Chartwell
Short Duration
Fixed Income Fund
---------------------------
6 months ended year ended
3/31/06* 9/30/05
-------------- ----------
Investment activities:
Net investment income (loss) $ 1,942 $ 4,455
Net realized gain (loss) from securities sold (187) (180)
Net change in unrealized appreciation
(depreciation) of investments (1,329) (1,390)
-------- --------
Net increase (decrease) in net assets resulting
from operations 426 2,885
-------- --------
Dividends and distributions to shareholders:
Net investment income
Class I Shares (2,182) (5,053)
Class II Shares -- (195)
Realized capital gains
Class I Shares -- --
Class II/Investor A Shares -- --
-------- --------
Total dividends and distributions (2,182) (5,248)
-------- --------
Capital share transactions:
Class I
Proceeds from shares issued 1,721 9,316
Proceeds from shares issued in lieu of cash
distributions 2,154 4,885
Proceeds from shares issued in connection with
conversion into Class I Shares(1) -- 25,880
Cost of shares redeemed (24,646) (97,355)
-------- --------
Net decrease in net assets from Class I Shares
transactions (20,771) (57,274)
-------- --------
Class II/Investor A Shares
Proceeds from shares issued -- 24,452
Proceeds from shares issued in lieu of cash
distributions -- 119
Cost of shares redeemed in connection with
conversion into Class I Shares(1) -- (25,880)
Proceeds issued in connection with conversion
into Class II Shares(3) -- --
Cost of shares redeemed -- (1,337)
-------- --------
Net increase (decrease)in net assets from Class II
/Investor A Shares transactions -- (2,646)
-------- --------
Investor B Shares
Proceeds from shares issued -- --
Proceeds issued in connection with conversion
into Class II Shares(3) -- --
Cost of shares redeemed -- --
Net decrease in net assets from Investor B Shares
transactions -- --
-------- --------
Net increase (decrease)in net assets from capital
share transactions (20,771) (59,920)
-------- --------
Total increase (decrease) in net assets (22,527) (62,283)
-------- --------
Net assets:
Beginning of period 112,833 175,116
-------- --------
End of period $ 90,306 $112,833
======== ========
Undistributed net investment income (Distributions
in excess of net investment income) $ 1 $ (4)
======== ========
Shares issued and redeemed:
Class I
Issued 176 934
Issued in lieu of cash distributions 220 490
Issued in connection with conversion into Class
I Shares(1) -- 2,606
Redeemed (2,520) (9,747)
-------- --------
Decrease in Class I Shares (2,124) (5,717)
-------- --------
Class II/Investor A Shares
Issued -- 2,445
Issued in lieu of cash distributions -- 12
Redeemed in connection with conversion into
Class I Shares(1) -- (2,613)
Issued in connection with conversion into Class
II Shares(3) -- --
Redeemed -- (134)
-------- --------
Increase (decrease) in Class II/Investor A
Shares -- (290)
-------- --------
Investor B Shares
Issued -- --
Redeemed in connection with conversion into
Class II Shares(3) -- --
Redeemed -- --
-------- --------
Decrease in Investor B Shares -- --
-------- --------
Net increase (decrease) in share transaction (2,124) (6,007)
======== ========
- ----------
* Unaudited
(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) 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 it fiscal year end from December 31, to
September 30.
64 Constellation Funds 2006 Semi-Annual Report
FINANCIAL STATEMENTS
Constellation
HLAM Large
Cap Quality Constellation Pitcairn
Stock Fund Diversified Value Fund
-------------------------------------------- ---------------------------
6 months ended 1/1/05 thru year ended 6 months ended year ended
3/31/06* 9/30/05 12/31/04(2) 3/31/06* 9/30/05
-------------- ------------- ----------- -------------- ----------
Investment activities:
Net investment income (loss) $ 24 $ (10) $ (35) $ 1,358 $ 1,691
Net realized gain (loss) from securities sold 1,031 3,698 6,721 6,676 13,595
Net change in unrealized appreciation (39) (4,183) (5,981) 2,525 5,032
(depreciation) of investments
------- ------- -------- -------- --------
Net increase (decrease) in net assets resulting 1,016 (495) 705 10,559 20,318
from operations ------- ------- -------- -------- --------
Dividends and distributions to shareholders:
Net investment income
Class I Shares -- -- -- -- --
Class II Shares (24) -- -- (1,371) (1,707)
Realized capital gains
Class I Shares -- -- -- -- --
Class II/Investor A Shares (3,853) (956) (3,543) (13,479) --
------- ------- -------- -------- --------
Total dividends and distributions (3,877) (956) (3,543) (14,850) (1,707)
------- ------- -------- -------- --------
Capital share transactions:
Class I
Proceeds from shares issued -- -- -- -- --
Proceeds from shares issued in lieu of cash
distributions -- -- -- -- --
Proceeds from shares issued in connection with
conversion into Class I Shares(1) -- -- -- -- --
Cost of shares redeemed -- -- -- -- --
------- ------- -------- -------- --------
Net decrease in net assets from Class I Shares
transactions -- -- -- -- --
------- ------- -------- -------- --------
Class II/Investor A Shares
Proceeds from shares issued 308 971 1,180 5,503 6,497
Proceeds from shares issued in lieu of cash
distributions 3,736 916 3,377 4,126 113
Cost of shares redeemed in connection with
conversion into Class I Shares(1) -- -- -- -- --
Proceeds issued in connection with conversion
into Class II Shares(3) -- -- 3,415 -- --
Cost of shares redeemed (3,262) (5,255) (20,003) (6,478) (8,881)
------- ------- -------- -------- --------
Net increase (decrease)in net assets from Class II
/Investor A Shares transactions 782 (3,368) (12,031) 3,151 (2,271)
------- ------- -------- -------- --------
Investor B Shares
Proceeds from shares issued -- -- 60 -- --
Proceeds issued in connection with conversion
into Class II Shares(3) -- -- (3,415) -- --
Cost of shares redeemed -- -- (2,463) -- --
------- ------- -------- -------- --------
Net decrease in net assets from Investor B Shares
transactions -- -- (5,818) -- --
------- ------- -------- -------- --------
Net increase (decrease) in net assets from capital
share transactions 782 (3,368) (17,849) 3,151 (2,271)
------- ------- -------- -------- --------
Total increase (decrease) in net assets (2,079) (4,819) (20,687) (1,140) 16,340
------- ------- -------- -------- --------
Net assets:
Beginning of period 16,140 20,959 41,646 168,542 152,202
------- ------- -------- -------- --------
End of period $14,061 $16,140 $ 20,959 $167,402 $168,542
======= ======= ======== ======== ========
Undistributed net investment income (Distributions
in excess of net investment income) $ -- $ -- $ -- $ (1) $ --
======= ======= ========= ======== ========
Shares issued and redeemed:
Class I -- -- -- -- --
Issued -- -- -- -- --
Issued in lieu of cash distributions -- -- -- -- --
Issued in connection with conversion into Class
I Shares(1) -- -- -- -- --
Redeemed ------- ------- -------- -------- --------
-- -- -- -- --
Decrease in Class I Shares ------- ------- -------- -------- --------
Class II/Investor A Shares
Issued 19 45 46 450 537
Issued in lieu of cash distributions 238 46 156 351 9
Redeemed in connection with conversion into
Class I Shares(1) -- -- -- -- --
Issued in connection with conversion into Class
II Shares(3) -- -- 137 -- --
Redeemed (191) (252) (816) (525) (735)
------- ------- -------- -------- --------
Increase (decrease) in Class II/Investor A
Shares 66 (161) (477) 276 (189)
------- ------- -------- -------- --------
Investor B Shares
Issued -- -- 3 -- --
Redeemed in connection with conversion into
Class II Shares(3) -- -- (144) -- --
Redeemed -- -- (106) -- --
------- ------- -------- -------- --------
Decrease in Investor B Shares -- -- (247) -- --
------- ------- -------- -------- --------
Net increase (decrease) in share transaction 66 (161) (724) 276 (189)
======= ======= ========= ======== ========
(3) 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 2006 Semi-Annual Report 65
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS (000)
Constellation Pitcairn
Select Value Fund
--------------------------
6 months ended year ended
3/31/06* 9/30/05
-------------- ----------
Investment activities:
Net investment income (loss) $ 511 $ 405
Net realized gain from securities sold 6,104 6,622
Net change in unrealized appreciation
(depreciation) of investments (2,620) (1,620)
------- -------
Net increase in net assets resulting from
operations 3,995 5,407
------- -------
Dividends and distributions to shareholders:
Net investment income
Class II Shares (518) (407)
Realized capital gains
Class II Shares (6,049) (884)
------- -------
Total dividends and distributions (6,567) (1,291)
------- -------
Capital share transactions:
Class II Shares
Proceeds from shares issued 1,477 3,929
Proceeds from shares issued in lieu of
cash distributions 2,130 486
Cost of shares redeemed (4,440) (4,948)
------- -------
Net increase (decrease)in net assets from
Class II Shares transactions (833) (533)
------- -------
Total increase (decrease) in net assets (3,405) 3,583
------- -------
Net assets:
Beginning of period 65,400 61,817
------- -------
End of period $61,995 $65,400
======= =======
Undistributed net investment income
(Accumulated net investment
loss/Distributions in excess of net
investment income) $ -- $ --
======= =======
Shares issued and redeemed:
Class II Shares
Issued 135 348
Issued in lieu of cash distributions 200 42
Redeemed (394) (440)
------- -------
Increase (decrease) in Class II Shares (59) (50)
======= =======
- ----------
* Unaudited
Amounts designated as "-" are either $0 or have been rounded to $0
The accompanying notes are an integral part of the financial statements.
66 Constellation Funds 2006 Semi-Annual Report
FINANCIAL STATEMENTS
Constellation Pitcairn Constellation Pitcairn Constellation Pitcairn
Diversified Growth Fund Small Cap Fund Family Heritage(R) Fund
-------------------------- -------------------------- --------------------------
6 months ended year ended 6 months ended year ended 6 months ended year ended
3/31/06* 9/30/05 3/31/06* 9/30/05 3/31/06* 9/30/05
-------------- ---------- -------------- ---------- -------------- ----------
Investment activities:
Net investment income (loss) $ 68 $ 535 $ (22) $ (261) $ 217 $ 413
Net realized gain from securities sold 4,393 147 7,308 12,671 2,720 4,188
Net change in unrealized appreciation 2,165 8,563 3,851 (4,457) (404) 645
(depreciation) of investments
-------- -------- -------- ------- ------- -------
Net increase in net assets resulting from
operations 6,626 9,245 11,137 7,953 2,533 5,246
-------- -------- -------- ------- ------- -------
Dividends and distributions to shareholders:
Net investment income
Class II Shares (71) (536) -- -- (221) (418)
Realized capital gains
Class II Shares -- -- (12,656) (732) -- --
-------- -------- -------- ------- ------- -------
Total dividends and distributions (71) (536) (12,656) (732) (221) (418)
-------- -------- -------- ------- ------- -------
Capital share transactions:
Class II Shares
Proceeds from shares issued 5,114 13,521 1,806 2,648 930 5,302
Proceeds from shares issued in lieu of
cash distributions 4 58 4,109 359 28 52
Cost of shares redeemed (6,463) (10,256) (5,254) (7,137) (3,969) (3,837)
-------- -------- -------- ------- ------- -------
Net increase (decrease)in net assets from
Class II Shares transactions (1,345) 3,323 661 (4,130) (3,011) 1,517
-------- -------- -------- ------- ------- -------
Total increase (decrease) in net assets 5,210 12,032 (858) 3,091 (699) 6,345
-------- -------- -------- ------- ------- -------
Net assets:
Beginning of period 116,560 104,528 95,939 92,848 84,448 78,103
-------- -------- -------- ------- ------- -------
End of period $121,770 $116,560 $ 95,081 $95,939 $83,749 $84,448
======== ======== ======== ======= ======= =======
Undistributed net investment income
(Accumulated net investment
loss/Distributions in excess of net
investment income) $ (2) $ -- $ (9) $ -- $ (1) $ 1
======== ======== ======== ======= ======= =======
Shares issued and redeemed:
Class II Shares
Issued 853 2,375 114 165 92 542
Issued in lieu of cash distributions 1 10 280 21 2 5
Redeemed (1,093) (1,798) (334) (443) (390) (394)
-------- -------- -------- ------- ------- -------
Increase (decrease) in Class II Shares (239) 587 60 (257) (296) 153
======== ======== ======== ======= ======= =======
Constellation Funds 2006 Semi-Annual Report 67
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS (000)
Constellation Pitcairn
Taxable Bond Fund
---------------------------
6 months ended year ended
3/31/06* 9/30/05
-------------- ----------
Investment activities:
Net investment income (loss) $ 1,053 $ 1,951
Net realized gain (loss) from securities sold (155) (111)
Net change in unrealized appreciation (depreciation) of investments (1,208) (1,116)
------- -------
Net increase (decrease) in net assets resulting from operations (310) 724
------- -------
Dividends and distributions to shareholders:
Net investment income
Class I Shares -- --
Class II Shares (1,055) (1,946)
Realized capital gains
Class I Shares -- --
Class II Shares -- --
------- -------
Total dividends and distributions (1,055) (1,946)
------- -------
Capital share transactions:
Class I
Proceeds from shares issued -- --
Proceeds from shares issued in lieu of cash distributions -- --
Cost of shares redeemed -- --
------- -------
Net increase in net assets from Class I Shares transactions -- --
------- -------
Class II Shares
Proceeds from shares issued 1,821 9,455
Proceeds from shares issued in lieu of cash distributions 260 491
Cost of shares redeemed (2,465) (3,994)
------- -------
Net increase (decrease) in net assets from Class II Shares transactions (384) 5,952
------- -------
Net increase (decrease) in net assets from capital share transactions (384) 5,952
------- -------
Total increase (decrease) in net assets (1,749) 4,730
------- -------
Net assets:
Beginning of period 47,969 43,239
------- -------
End of period $46,220 $47,969
======= =======
Undistributed net investment income (Accumulated net investment loss) $ -- $ 2
======= =======
Shares issued and redeemed:
Class I
Issued -- --
Issued in lieu of cash distributions -- --
Redeemed -- --
------- -------
Increase in Class I Shares -- --
------- -------
Class II Shares
Issued 176 882
Issued in lieu of cash distributions 25 46
Redeemed (237) (375)
------- -------
Increase (decrease) in Class II Shares (36) 553
------- -------
Net increase (decrease) in share transaction (36) 553
======= =======
- ----------
* Unaudited
Amounts designated as "-" are either $0 or have been rounded to $0
The accompanying notes are an integral part of the financial statements.
68 Constellation Funds 2006 Semi-Annual Report
Constellation Pitcairn Constellation Sands
Tax-Exempt Bond Fund Capital Select Growth Fund
--------------------------- ---------------------------
6 months ended year ended 6 months ended year ended
3/31/06* 9/30/05 3/31/06* 9/30/05
-------------- ---------- -------------- ----------
Investment activities:
Net investment income (loss) $ 2,285 $ 4,383 $ (1,821) $ (1,193)
Net realized gain (loss) from securities sold 607 1,242 1,267 (3,399)
Net change in unrealized appreciation (depreciation) of investments (2,104) (2,509) 8,718 24,744
-------- -------- -------- --------
Net increase (decrease) in net assets resulting from operations 788 3,116 8,164 20,152
-------- -------- -------- --------
Dividends and distributions to shareholders:
Net investment income
Class I Shares -- -- -- --
Class II Shares (2,184) (4,403) -- --
Realized capital gains
Class I Shares -- -- -- --
Class II Shares (1,409) (716) -- --
-------- -------- -------- --------
Total dividends and distributions (3,593) (5,119) -- --
-------- -------- -------- --------
Capital share transactions:
Class I
Proceeds from shares issued -- -- 105,264 53,246
Proceeds from shares issued in lieu of cash distributions -- -- -- --
Cost of shares redeemed -- -- (7,363) (11,009)
-------- -------- -------- --------
Net increase in net assets from Class I Shares transactions -- -- 97,901 42,237
-------- -------- -------- --------
Class II Shares
Proceeds from shares issued 13,769 10,981 160,261 109,776
Proceeds from shares issued in lieu of cash distributions 396 336 -- --
Cost of shares redeemed (6,104) (11,619) (22,116) (29,808)
-------- -------- -------- --------
Net increase (decrease) in net assets from Class II Shares transactions 8,061 (302) 138,145 79,968
-------- -------- -------- --------
Net increase (decrease) in net assets from capital share transactions 8,061 (302) 236,046 122,205
-------- -------- -------- --------
Total increase (decrease) in net assets 5,256 (2,305) 244,210 142,357
-------- -------- -------- --------
Net assets:
Beginning of period 111,575 113,880 244,975 102,618
-------- -------- -------- --------
End of period $116,831 $111,575 $489,185 $244,975
======== ======== ======== ========
Undistributed net investment income (Accumulated net investment loss) $ 210 $ 109 $ (1,821) $ --
======== ======== ======== ========
Shares issued and redeemed:
Class I
Issued -- -- 12,669 7,212
Issued in lieu of cash distributions -- -- -- --
Redeemed -- -- (897) (1,513)
-------- -------- -------- --------
Increase in Class I Shares -- -- 11,772 5,699
-------- -------- -------- --------
Class II Shares
Issued 1,316 1,023 19,447 14,797
Issued in lieu of cash distributions 38 31 -- --
Redeemed (583) (1,089) (2,682) (4,180)
-------- -------- -------- --------
Increase (decrease) in Class II Shares 771 (35) 16,765 10,617
-------- -------- -------- --------
Net increase (decrease) in share transaction 771 (35) 28,537 16,316
======== ======== ======== ========
Constellation Funds 2006 Semi-Annual Report 69
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS (000)
Constellation TIP
Mid Cap Fund
--------------------------------------------
6 months ended 1/1/05 thru(1) year ended
3/31/06* 9/30/05 12/31/04
-------------- -------------- ----------
Investment activities:
Net investment income (loss) $ 2 $ -- $ 2
Net realized gain (loss) from securities sold 59 62 63
Net realized loss from foreign currency transactions -- -- --
Net change in unrealized appreciation (depreciation) of investments 91 56 8
Net change in unrealized appreciation (depreciation) on translation
of foreign currency and other assets and liabilities denominated
in foreign currency -- -- --
------ ----- ----
Net increase in net assets resulting from operations 152 118 73
------ ----- ----
Dividends and distributions to shareholders:
Net investment income
Class I Shares (2) -- (2)
Class II Shares -- -- --
Realized capital gains
Class I Shares (61) (21) (58)
Class II Shares -- -- --
------ ----- ----
Total dividends and distributions (63) (21) (60)
------ ----- ----
Capital share transactions:
Class I
Proceeds from shares issued 368 481 --
Proceeds from shares issued in lieu of cash distributions 63 21 60
Cost of shares redeemed (32) (167) --
------ ----- ----
Net increase in net assets from Class I Shares transactions 399 335 60
------ ----- ----
Class II 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 II Shares transactions -- -- --
------ ----- ----
Net increase (decrease)in net assets from capital share transactions 399 335 60
------ ----- ----
Total increase in net assets 488 432 73
------ ----- ----
Net assets:
Beginning of period 842 410 337
------ ----- ----
End of period $1,330 $ 842 $410
====== ===== ====
Undistributed net investment income (Accumulated net investment loss/
Distributions in excess of net investment income) $ -- $ -- $ --
====== ===== ====
Shares issued and redeemed:
Class I
Issued 24 34 --
Issued in lieu of cash distributions 4 1 5
Redeemed (2) (11) --
------ ----- ----
Increase in Class I Shares 26 24 5
------ ----- ----
Class II Shares
Issued -- -- --
Issued in lieu of cash distributions -- -- --
Redeemed -- -- --
Increase (decrease) in Class II Shares -- -- --
------ ----- ----
Net increase (decrease) in share transaction 26 24 5
====== ===== ====
- -----------
* Unaudited
(1) On April 15, 2005 the Constellation Funds acquired the assets and
liabilities of the Constellation Institutional Portfolios TIP Midcap Core
Portfolio in a tax-free reorganization. See Note 10 in Notes to Financial
Statements for additional information. Effective January 1, 2005, the Fund
changed it fiscal year end from December 31, to September 30.
Amounts designated as "-" are either $0 or have been rounded to $0
The accompanying notes are an integral part of the financial statements.
70 Constellation Funds 2006 Semi-Annual Report
FINANCIAL STATEMENTS
Constellation
TIP Healthcare & Constellation International
Biotechnology Fund Equity Fund
--------------------------- ---------------------------
6 months ended year ended 6 months ended year ended
3/31/06* 9/30/05 3/31/06* 9/30/05
-------------- ---------- -------------- ----------
Investment activities:
Net investment income (loss) $ (338) $ (577) $ 432 $ 943
Net realized gain (loss) from securities sold (399) 2,459 28,671 13,833
Net realized loss from foreign currency transactions -- -- (94) (213)
Net change in unrealized appreciation (depreciation) of investments 1,200 6,019 (10,085) 10,818
Net change in unrealized appreciation (depreciation) on translation
of foreign currency and other assets and liabilities denominated
in foreign currency -- -- 22 (28)
------- -------- -------- --------
Net increase in net assets resulting from operations 463 7,901 18,946 25,353
------- -------- -------- --------
Dividends and distributions to shareholders:
Net investment income
Class I Shares -- -- -- --
Class II Shares -- -- (1,725) (238)
Realized capital gains
Class I Shares -- -- -- --
Class II Shares (1,786) (1,234) -- --
------- -------- -------- --------
Total dividends and distributions (1,786) (1,234) (1,725) (238)
------- -------- -------- --------
Capital share transactions:
Class I
Proceeds from shares issued -- -- -- --
Proceeds from shares issued in lieu of cash distributions -- -- -- --
Cost of shares redeemed -- -- -- --
------- -------- -------- --------
Net increase in net assets from Class I Shares transactions -- -- -- --
------- -------- -------- --------
Class II Shares
Proceeds from shares issued 18,575 34,841 5,484 22,188
Proceeds from shares issued in lieu of cash distributions 1,767 1,219 166 27
Cost of shares redeemed (7,406) (18,356) (4,882) (26,402)
------- -------- -------- --------
Net increase (decrease)in net assets from Class II Shares transactions 12,936 17,704 768 (4,187)
------- -------- -------- --------
Net increase (decrease)in net assets from capital share transactions 12,936 17,704 768 (4,187)
------- -------- -------- --------
Total increase in net assets 11,613 24,371 17,989 20,928
------- -------- -------- --------
Net assets:
Beginning of period 59,742 35,371 127,929 107,001
------- -------- -------- --------
End of period $71,355 $ 59,742 $145,918 $127,929
======= ======== ======== ========
Undistributed net investment income (Accumulated net investment loss/
Distributions in excess of net investment income) $ (337) $ -- $ (754) $ 633
======= ======== ======== ========
Shares issued and redeemed:
Class I
Issued -- -- -- --
Issued in lieu of cash distributions -- -- -- --
Redeemed -- -- -- --
------- -------- -------- --------
Increase in Class I Shares -- -- -- --
------- -------- -------- --------
Class II Shares
Issued 1,147 2,321 582 2,725
Issued in lieu of cash distributions 110 84 18 3
Redeemed (459) (1,265) (540) (3,251)
------- -------- -------- --------
Increase (decrease) in Class II Shares 798 1,140 60 (523)
------- -------- -------- --------
Net increase (decrease) in share transaction 798 1,140 60 (523)
======= ======== ======== ========
Constellation Funds 2006 Semi-Annual Report 71
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS (000)
Constellation Small Cap
Value Opportunities Fund
---------------------------
6 months ended year ended
3/31/06* 9/30/05
-------------- ----------
Investment activities:
Net investment income (loss) $ (286) $ 86
Net realized gain from securities sold 3,030 1,491
Net change in unrealized appreciation of investments 15,780 3,583
-------- --------
Net increase in net assets resulting from operations 18,524 5,160
-------- --------
Dividends and distributions to shareholders:
Net investment income
Class I Shares -- --
Class II Shares (124) --
Realized capital gains
Class I Shares -- --
Class II/Investor A Shares (1,644) (1,990)
-------- --------
Total dividends and distributions (1,768) (1,990)
-------- --------
Capital share transactions:
Class I
Proceeds from shares issued -- --
Proceeds from shares issued in lieu of cash distributions -- --
Cost of shares redeemed -- --
-------- --------
Net increase in net assets from Class I Shares transactions -- --
-------- --------
Class II
Proceeds from shares issued
Proceeds from shares issued in lieu of cash distributions 126,008 86,351
Cost of shares redeemed 1,751 1,947
(14,490) (31,766)
-------- --------
Net increase in net assets from Class II Shares transactions 113,269 56,532
-------- --------
Net increase in net assets from capital share transactions 113,269 56,532
-------- --------
Total increase in net assets 130,025 59,702
-------- --------
Net assets:
Beginning of period 74,235 14,533
-------- --------
End of period $204,260 $ 74,235
======== ========
Undistributed net investment income
(Distributions in excess of net investment income) $ (276) $ 123
======== ========
Shares issued and redeemed:
Class I
Issued -- --
Issued in lieu of cash distributions -- --
Redeemed -- --
-------- --------
Increase in Class I Shares -- --
-------- --------
Class II
Issued 6,657 4,968
Issued in lieu of cash distributions 96 116
Redeemed (775) (1,935)
-------- --------
Increase in Class II Shares 5,978 3,149
-------- --------
Net increase in Shares transactions 5,978 3,149
======== ========
- ----------
* Unaudited
** 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.
Amounts designated as "-" are either $0 or have been rounded to $0
The accompanying notes are an integral part of the financial statements.
72 Constellation Funds 2006 Semi-Annual Report
FINANCIAL STATEMENTS
Constellation
Strategic Value and
High Income Fund
---------------------------
6 months ended year ended
3/31/06* 9/30/05
-------------- ----------
Investment activities:
Net investment income (loss) $ 11** $ 50**
Net realized gain from securities sold 9** 4**
Net change in unrealized appreciation of investments 60** 51**
------ -----
Net increase in net assets resulting from operations 80 105
------ -----
Dividends and distributions to shareholders:
Net investment income
Class I Shares (11) (50)
Class II Shares -- --
Realized capital gains
Class I Shares (6) (64)
Class II/Investor A Shares -- --
------ -----
Total dividends and distributions (17) (114)
------ -----
Capital share transactions:
Class I
Proceeds from shares issued 752 911
Proceeds from shares issued in lieu of cash distributions 17 113
Cost of shares redeemed (387) (915)
------ -----
Net increase in net assets from Class I Shares transactions 382 109
------ -----
Class II
Proceeds from shares issued -- --
Proceeds from shares issued in lieu of cash distributions -- --
Cost of shares redeemed -- --
------ -----
Net increase in net assets from Class II Shares transactions -- --
------ -----
Net increase in net assets from capital share transactions 382 109
------ -----
Total increase in net assets 445 100
------ -----
Net assets:
Beginning of period 806 706
------ -----
End of period $1,251 $ 806
====== =====
Undistributed net investment income
(Distributions in excess of net investment income) $ -- $ --
====== =====
Shares issued and redeemed:
Class I
Issued 51 66
Issued in lieu of cash distributions 1 8
Redeemed (26) (67)
------ -----
Increase in Class I Shares 26 7
------ -----
Class II
Issued -- --
Issued in lieu of cash distributions -- --
Redeemed -- --
------ -----
Increase in Class II Shares -- --
------ -----
Net increase in Shares transactions 26 7
====== =====
Constellation Funds 2006 Semi-Annual Report 73
FINANCIAL STATEMENTS
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each period
Net asset Realized and
value, Net unrealized Total from Dividends from Distributions
beginning investment gains (losses) investment net investment from capital Total dividends
of period income (loss) on investments activities income gains and distributions
--------- ------------- -------------- ---------- -------------- ------------- -----------------
Constellation Clover Core Value Fund - Class I Shares
2006* $19.00 0.03 0.90 0.93 (0.03) (1.49) (1.52)
2005 $16.51 0.04 3.90 3.94 (0.04) (1.41) (1.45)
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)
Constellation Clover Small Cap Value Fund - Class I Shares
2006* $27.63 (0.05) 3.36 3.31 -- (4.53) (4.53)
2005 $23.76 (0.14) 4.01 3.87 -- -- --
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)
Constellation Clover Core Fixed Income Fund - Class I Shares
2006* $ 9.94 0.20 (0.23) (0.03) (0.20) (0.23) (0.43)
2005 $10.27 0.42 (0.19) 0.23 (0.42) (0.14) (0.56)
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(6) $ 9.62 0.54 0.58 1.12 (0.54) -- (0.54)
Constellation Chartwell Ultra Short Duration Fixed Income Fund - Class I Shares
2006* $10.08 0.21 (0.06) 0.15 (0.21) -- (0.21)
2005(7) $10.12 0.30 (0.03) 0.27 (0.31) -- (0.31)
2004(1) $10.17 0.21 (0.05) 0.16 (0.21) -- (0.21)
2003 $10.23 0.08(8) 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)
- ----------
* For the six month period ended March 31, 2006 (unaudited). All ratios for
the period have been annualized. Effective March 1, 2006, Touchstone
Advisors Inc. replaced Constellation Investment Management Company, LP as
the adviser to the Funds.
+ Inclusive of fees paid indirectly, waivers, reimbursements and expense
offsets.
++ 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.
74 Constellation Funds 2006 Semi-Annual Report
FINANCIAL STATEMENTS
Ratio of
Ratio of Ratio of net investment
Net asset Net assets net expenses total expenses income (loss) Portfolio
value, Total end of period to average to average to average turnover
end of period return (000) net assets+ net assets net assets+ rate++
------------- ------ ------------- ------------ -------------- -------------- ---------
Constellation Clover Core Value Fund - Class I Shares
2006* $18.41 5.19% $100,116 1.21% 1.21% 0.27% 41%
2005 $19.00 24.83% $171,251 1.13% 1.13% 0.24% 75%
2004(1) $16.51 20.75% $ 59,714 1.08% 1.08% 0.39% 55%
2003(2) $14.18 21.61% $ 46,673 1.13% 1.13% 0.43% 67%
2002 $11.71 (6.37)% $ 43,571 1.10% 1.13% 0.56% 103%
2001(3) $14.85 4.50% $ 41,715 1.10% 1.16% 0.30% 128%
Constellation Clover Small Cap Value Fund - Class I Shares
2006* $26.41 14.13% $320,404 1.32% 1.32% (0.34)% 43%
2005 $27.63 16.29% $450,011 1.23% 1.23% (0.48)% 78%
2004(1) $23.76 23.72% $540,278 1.22% 1.22% (0.09)% 61%
2003 $19.23 26.66% $394,946 1.27% 1.27% 0.08% 52%
2002 $15.20 (8.69)% $464,576 1.26% 1.26% 0.31% 38%
2001(5) $16.69 12.15% $178,164 1.28% 1.28% 0.37% 120%
Constellation Clover Core Fixed Income Fund - Class I Shares
2006* $ 9.48 (0.34)% $ 25,517 0.84% 0.92% 4.04% 25%
2005 $ 9.94 2.27% $ 26,166 0.80% 0.86% 3.91% 70%
2004(1) $10.27 2.97% $ 32,334 0.80% 0.85% 3.94% 45%
2003 $10.40 3.37% $ 43,391 0.78% 0.87% 4.25% 46%
2002 $10.55 8.85% $ 42,924 0.75% 0.87% 5.03% 49%
2001(6) $10.20 11.99% $ 34,074 0.75% 1.01% 5.50% 34%
Constellation Chartwell Ultra Short Duration Fixed Income Fund - Class I Shares
2006* $10.02 1.46% $214,680 0.69% 0.69% 3.99% 15%
2005(7) $10.08 2.67% $305,222 0.59% 0.62% 2.93% 68%
2004(1) $10.12 1.63% $391,934 0.46% 0.58% 2.08% 44%
2003 $10.17 1.40% $462,567 0.41% 0.62% 0.78% 222%
2002 $10.23 2.95% $470,021 0.36% 0.60% 2.27% 71%
2001 $10.22 7.09% $ 93,531 0.36% 0.87% 5.09% 119%
- ----------
(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 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.
(7) On January 28, 2005, Class II Shares merged into Class I Shares. See Note
10 in Notes to Financial Statements for additional information.
(8) 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 2006 Semi-Annual Report 75
FINANCIAL STATEMENTS
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each period
Net asset Realized and
value, Net unrealized Total from Dividends from Distributions
beginning investment gains (losses) investment net investment from capital Total dividends
of period income (loss) on investments activities income gains and distributions
--------- ------------- -------------- ---------- -------------- ------------- -----------------
Constellation Chartwell Short Duration Fixed Income Fund - Class I Shares
2006* $ 9.87 0.21 (0.17) 0.04 (0.21) -- (0.21)
2005(1) $10.04 0.31 (0.10) 0.21 (0.38) -- (0.38)
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)
Constellation HLAM Large Cap Quality Stock Fund - Class II/Investor A Shares
2006* $19.92 0.03 1.18 1.21 (0.03) (5.04) (5.07)
2005(4)(5) $21.58 (0.01) (0.43) (0.44) -- (1.22) (1.22)
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 Pitcairn Diversified Value Fund - Class II Shares
2006* $12.60 0.10 0.68 0.78 (0.10) (1.02) (1.12)
2005 $11.22 0.13 1.38 1.51 (0.13) -- (0.13)
2004(2)(6) $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(7) $10.00 0.01(3) 0.51 0.52 -- -- --
Constellation Pitcairn Select Value Fund - Class II Shares
2006* $11.60 0.09 0.62 0.71 (0.09) (1.11) (1.20)
2005 $10.87 0.07 0.89 0.96 (0.07) (0.16) (0.23)
2004(2)(6) $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(8) $10.00 0.02 0.95 0.97 (0.01) -- (0.01)
- ----------
* For the six month period ended March 31, 2006 (unaudited). All ratios for
the period have been annualized. Effective March 1, 2006, Touchstone
Advisors Inc. replaced Constellation Investment Management Company, LP as
the adviser to the Funds.
+ Returns are for the period indicated and have not been annualized.
++ Inclusive of fees paid indirectly, 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.
76 Constellation Funds 2006 Semi-Annual Report
Ratio of Ratio of Ratio of net
Net assets net expenses total expenses investment income Portfolio
Net asset value, Total end of period to average to average (loss) to average turnover
end of period return (000) net assets++ net assets net assets++ rate+++
---------------- ------ ------------- ------------ -------------- ----------------- ---------
Constellation Chartwell Short Duration Fixed Income Fund - Class I Shares
2006* $ 9.70 0.39% $ 90,306 0.70% 0.73% 3.79% 1%
2005(1) $ 9.87 2.12% $112,833 0.61% 0.66% 3.18% 46%
2004(2) $10.04 1.84% $172,213 0.46% 0.60% 2.49% 84%
2003 $10.14 2.15% $252,772 0.41% 0.62% 1.65% 200%
2002 $10.24 4.69% $264,010 0.36% 0.60% 3.27% 178%
2001 $10.16 9.35% $ 68,405 0.36% 0.72% 5.65% 104%
Constellation HLAM Large Cap Quality Stock Fund - Class II/Investor A Shares
2006* $16.06 6.68% $ 14,061 1.20% 1.62% 0.31% 5%
2005(4)(5) $19.92 (2.09)%+ $ 16,140 1.25% 1.65% (0.08)% 37%
2004 $21.58 4.73% $ 20,959 1.30% 1.97% 0.04% 7%
2003 $24.73 19.07% $ 35,806 1.30% 1.82% (0.27)% 28%
2002 $24.02 (22.20)% $ 34,963 1.29% 1.46% (0.32)% 19%
2001 $30.89 (8.85)% $ 51,402 1.25% 1.44% (0.36)% 19%
2000 $33.89 0.53% $ 62,884 1.29% 1.37% (0.17)% 34%
Constellation Pitcairn Diversified Value Fund - Class II Shares
2006* $12.26 6.61% $167,402 1.02% 1.14% 1.64% 30%
2005 $12.60 13.47% $168,542 1.09% 1.21% 1.04% 64%
2004(2)(6) $11.22 10.50%+ $152,202 1.02% 1.14% 1.06% 75%
2003 $10.26 22.43% $143,641 1.01% 1.14% 1.32% 59%
2002 $ 8.50 (6.43)% $122,391 1.02% 1.13% 1.17% 26%
2001 $ 9.19 (11.87)% $139,767 1.00% 1.16% 0.92% 48%
2000(7) $10.52 5.24%+ $165,823 1.00% 1.22% 0.73% 12%
Constellation Pitcairn Select Value Fund - Class II Shares
2006* $11.11 6.70% $ 61,995 1.05% 1.16% 1.63% 96%
2005 $11.60 8.82% $ 65,400 1.14% 1.24% 0.63% 94%
2004(2)(6) $10.87 7.16%+ $ 61,817 1.03% 1.19% 0.84% 111%
2003 $10.38 25.48% $ 58,133 1.02% 1.23% 0.86% 104%
2002 $ 8.36 (15.77)% $ 48,455 1.02% 1.19% 0.92% 110%
2001 $10.01 (7.90)% $ 60,986 1.00% 1.19% 0.85% 104%
2000(8) $10.96 9.70%+ $ 62,392 1.00% 1.33% 0.95% 27%
- ----------
(4) 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.
(5) For the nine-month period ended September 30, 2005. All ratios for the
period have been annualized. Effective January 1, 2005, the Fund changed
its fiscal year end from December 31 to September 30.
(6) 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.
(7) Commenced operations on August 4, 2000. All ratios for the period have been
annualized.
(8) 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 2006 Semi-Annual Report 77
FINANCIAL STATEMENTS
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each period
Net asset Realized and
value, Net unrealized Total from Dividends from Distributions
beginning investment gains (losses) investment net investment from capital Total dividends
of period income (loss) on investments activities income gains and distributions
--------- ------------- -------------- ---------- -------------- ------------- -----------------
Constellation Pitcairn Diversified Growth Fund - Class II Shares
2006* $ 5.80 -- 0.33 0.33 --(3) -- --
2005 $ 5.36 0.03 0.44 0.47 (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
2006* $16.51 -- 1.89 1.89 -- (2.21) (2.21)
2005 $15.30 (0.04) 1.37 1.33 -- (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
2006* $ 9.96 0.03 0.28 0.31 (0.03) -- (0.03)
2005 $ 9.38 0.05 0.58 0.63 (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
2006* $10.50 0.23 (0.30) (0.07) (0.23) -- (0.23)
2005 $10.77 0.43 (0.27) 0.16 (0.43) -- (0.43)
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
2006* $10.60 0.20 (0.13) 0.07 (0.20) (0.13) (0.33)
2005 $10.78 0.41 (0.11) 0.30 (0.41) (0.07) (0.48)
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
2006* $ 7.81 (0.04) 0.41 0.37 -- -- --
2005 $ 6.80 (0.06) 1.07 1.01 -- -- --
2004(9) $ 6.74 -- 0.06 0.06 -- -- --
Constellation Sands Capital Select Growth Fund - Class II Shares
2006* $ 7.80 (0.03) 0.38 0.35 -- -- --
2005 $ 6.80 (0.03) 1.03 1.00 -- -- --
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) -- -- --
- ----------
* For the six month period ended March 31, 2006 (unaudited). All ratios for
the period have been annualized. Effective March 1, 2006, Touchstone
Advisors Inc. replaced Constellation Investment Management Company, LP as
the adviser to the Funds.
** Includes return capital of $0.0003.
+ Returns are for the period indicated and have not been annualized.
++ Inclusive of fees paid indirectly, 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.
78 Constellation Funds 2006 Semi-Annual Report
FINANCIAL STATEMENTS
Ratio of Ratio of Ratio of net
Net assets net expenses total expenses investment income Portfolio
Net asset value, Total end of period to average to average (loss) to average turnover
end of period return (000) net assets++ net assets net assets++ rate+++
---------------- ------ ------------- ------------ -------------- ----------------- ---------
Constellation Pitcairn Diversified Growth Fund - Class II Shares
2006* $ 6.13 5.75% $121,770 1.00% 1.13% 0.12% 46%
2005 $ 5.80 8.71% $116,560 1.10% 1.23% 0.48% 56%
2004(1)(2) $ 5.36 2.14%+ $104,528 1.02% 1.15% --% 53%
2003 $ 5.25 19.32% $ 95,724 1.01% 1.16% 0.05% 70%
2002 $ 4.40 (22.26)% $ 82,368 1.01% 1.14% (0.15)% 35%
2001 $ 5.66 (38.34)% $107,141 1.00% 1.17% (0.44)% 37%
2000(4) $ 9.18 (8.20)%+ $174,960 1.00% 1.22% (0.68)% 6%
Constellation Pitcairn Small Cap Fund - Class II Shares
2006* $16.19 12.83% $ 95,081 1.01% 1.15% (0.05)% 76%
2005 $16.51 8.69% $ 95,939 1.10% 1.24% (0.27)% 100%
2004(1)(2) $15.30 11.03%+ $ 92,848 1.08% 1.15% (0.26)% 72%
2003 $13.78 39.65% $ 87,520 1.20%(6) 1.17% (0.04)% 149%
2002 $ 9.87 (6.78)% $ 50,096 1.28%(6) 1.38% 0.58% 93%
2001 $10.67 5.80% $ 62,227 1.16%(6) 1.19% 0.93% 96%
2000(7) $10.18 1.80%+ $ 67,651 1.22%(6) 1.33% 1.11% 10%
Constellation Pitcairn Family Heritage(R) Fund - Class II Shares
2006* $10.24 3.08% $ 83,749 1.20% 1.36% 0.51% 19%
2005 $ 9.96 6.72% $ 84,448 1.29% 1.44% 0.50% 25%
2004(1)(2) $ 9.38 9.77%+ $ 78,103 1.23% 1.37% 0.01% 19%
2003 $ 8.55 22.67% $ 73,490 1.23% 1.38% 0.06% 12%
2002 $ 6.97 (10.87)% $ 66,126 1.27% 1.36% (0.18)% 24%
2001 $ 7.82 (20.77)% $ 77,295 1.20% 1.37% (0.19)% 37%
2000(4) $ 9.87 (1.30)%+ $ 98,420 1.20% 1.44% (0.29)% 1%
Constellation Pitcairn Taxable Bond Fund - Class II Shares
2006* $10.20 (0.65)% $ 46,220 0.83% 0.91% 4.50% 19%
2005 $10.50 1.50% $ 47,969 0.89% 0.96% 4.05% 37%
2004(1)(2) $10.77 4.42%+ $ 43,239 0.75% 0.94% 4.36% 26%
2003 $10.73 7.44% $ 43,432 0.73% 0.97% 4.74% 24%
2002 $10.47 1.46% $ 40,058 0.78% 0.98% 5.35% 58%
2001 $10.98 15.19% $ 35,562 0.70% 0.99% 5.63% 54%
2000(4) $10.09 2.36%+ $ 37,212 0.70% 1.10% 6.51% 7%
Constellation Pitcairn Tax-Exempt Bond Fund - Class II Shares
2006* $10.34 0.72% $116,831 0.66% 0.79% 4.04% 28%
2005 $10.60 2.78% $111,575 0.69% 0.82% 3.80% 38%
2004(1)(2) $10.78 4.20%+ $113,880 0.62% 0.75% 3.97% 25%
2003 $10.77 4.96% $111,470 0.60% 0.74% 4.06% 14%
2002 $10.71 5.41% $115,905 0.60% 0.74% 4.19% 14%
2001 $10.60 10.30% $113,071 0.60% 0.77% 4.35% 23%
2000(8) $10.04 1.43%+ $ 99,187 0.60% 0.86% 4.88% 10%
Constellation Sands Capital Select Growth Fund - Class I Shares
2006* $ 8.18 4.74% $182,107 1.18% 1.21% (0.85)% 8%
2005 $ 7.81 14.85% $ 81,976 1.11% 1.19% (0.62)% 24%
2004(9) $ 6.80 0.89%+ $ 32,591 1.10% 1.10% (0.79)% 11%
Constellation Sands Capital Select Growth Fund - Class II Shares
2006* $ 8.15 4.49% $307,078 1.43% 1.46% (1.10)% 8%
2005 $ 7.80 14.71% $162,999 1.36% 1.44% (0.84)% 24%
2004(1)(2) $ 6.80 10.93%+ $ 70,027 1.20% 1.35% (0.95)% 11%
2003 $ 6.13 27.44% $ 43,878 1.17% 1.45% (0.81)% 28%
2002 $ 4.81 (13.33)% $ 32,818 1.16% 1.43% (0.69)% 24%
2001 $ 5.55 (38.44)% $ 39,326 1.15% 1.43% (0.63)% 37%
2000(8) $ 9.02 (9.80)%+ $ 54,794 1.15% 1.50% (0.61)% 13%
- ----------
(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 2006 Semi-Annual Report 79
FINANCIAL STATEMENTS
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each period
Net asset Realized and
value, Net unrealized Total from Dividends from Distributions
beginning investment gains (losses) investment net investment from capital Total dividends
of period income (loss) on investments activities income gains and distributions
--------- ------------- -------------- ---------- -------------- ------------- -----------------
Constellation TIP Mid Cap Fund - Class I Shares
2006* $15.36 0.03 2.24 2.27 (0.03) (1.08) (1.11)
2005(3)(4) $13.29 (0.01) 2.47 2.46 -- (0.39) (0.39)
2004 $12.79 0.08 2.70 2.78 (0.09) (2.19) (2.28)
2003(5) $10.00 0.01 3.99 4.00 -- (1.21) (1.21)
Constellation TIP Healthcare & Biotechnology Fund - Class II Shares
2006* $16.13 (0.07) 0.23 0.16 -- (0.44) (0.44)
2005 $13.79 (0.16) 3.02 2.86 -- (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(6) $10.00 (0.03) 1.18 1.15 -- -- --
Constellation International Equity Fund - Class II Shares
2006* $ 8.75 (0.01) 1.32 1.31 (0.12) -- (0.12)
2005 $ 7.06 0.07 1.64 1.71 (0.02) -- (0.02)
2004(1)(7) $ 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(8) $10.00 (0.01) (0.71) (0.72) -- -- --
Constellation Small Cap Value Opportunities Fund - Class II Shares
2006* $18.35 (0.03) 2.35 2.32 (0.02) (0.27) (0.29)
2005 $16.21 0.02 3.76 3.78 -- (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 Strategic Value and High Income Fund(9) - Class I Shares
2006* $14.21 0.15 0.92 1.07 (0.15) (0.09) (0.24)
2005 $14.01 0.72 1.18 1.90 (0.72) (0.98) (1.70)
2004(1) $12.58 0.47 1.53 2.00 (0.47) (0.10) (0.57)
2003(10) $10.00 0.25 2.58 2.83 (0.25) -- (0.25)
- ----------
* For the six month period ended March 31, 2006 (unaudited). All ratios for
the period have been annualized. Effective March 1, 2006, Touchstone
Advisors Inc. replaced Constellation Investment Management Company, LP as
the adviser to the Funds.
+ Returns are for the period indicated and have not been annualized.
++ Inclusive of fees paid indirectly, 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 April 15, 2005, the Constellation Funds aquired the assets and
liabilities of the Constellation Institutional Portfolios TIP Midcap Core
Portfolio in a tax-free reorganization. See Note 10 in Notes to Financial
Statements for additional information.
(4) For the nine-month period ended September 30, 2005. All ratios for the
period have been annualized. Effective January 1, 2005, the Fund changed
its fiscal year end from December 31 to September 30.
(5) Commenced operations on January 2, 2003. All ratios for the period have
been annualized.
80 Constellation Funds 2006 Semi-Annual Report
FINANCIAL STATEMENTS
Ratio of Ratio of Ratio of net
Net assets net expenses total expenses investment income Portfolio
Net asset value, Total end of period to average to average (loss) to average turnover
end of period return (000) net assets++ net assets net assets++ rate+++
---------------- ------ ------------- ------------ -------------- ----------------- ---------
Constellation TIP Mid Cap Fund - Class I Shares
2006* $16.52 15.79% $ 1,330 0.90% 5.67% 0.39% 65%
2005(3)(4) $15.36 18.53%+ $ 842 1.00% 8.23% (0.02)% 120%
2004 $13.29 21.78% $ 410 0.90% 0.90% 0.59% 193%
2003(5) $12.79 40.24%+ $ 337 0.90% 0.90% 0.12% 141%
Constellation TIP Healthcare & Biotechnology Fund - Class II Shares
2006* $15.85 0.99% $ 71,355 1.86% 1.86% (1.03)% 68%
2005 $16.13 21.10% $ 59,742 1.88% 1.88% (1.35)% 169%
2004(1) $13.79 12.12% $ 35,371 1.61% 1.84% (1.10)% 163%
2003 $12.31 25.23% $ 14,853 1.47% 1.63% (1.16)% 274%
2002 $ 9.83 (11.66)% $ 9,288 1.87% 2.33% (1.44)% 202%
2001(6) $11.15 11.50%+ $ 1,192 1.50% 13.70% (0.79)% 95%
Constellation International Equity Fund - Class II Shares
2006* $ 9.94 15.09% $145,918 1.37% 1.56% 0.65% 101%
2005 $ 8.75 24.19% $127,929 1.44% 1.64% 0.80% 53%
2004(1)(7) $ 7.06 11.97%+ $107,001 1.35% 1.60% 0.90% 62%
2003 $ 6.47 24.40% $ 97,817 1.30% 1.60% 1.15% 128%
2002 $ 5.23 (14.68)% $ 83,513 1.32% 1.48% 0.63% 69%
2001 $ 6.19 (32.91)% $108,777 1.25% 1.45% 0.16% 44%
2000(8) $ 9.28 (7.20)%+ $175,029 1.25% 1.53% (0.37)% 10%
Constellation Small Cap Value Opportunities Fund - Class II Shares
2006* $20.38 12.81% $204,260 1.56% 1.62% (0.46)% 55%
2005 $18.35 24.32% $ 74,235 1.46% 2.04% 0.29% 193%
2004(1) $16.21 29.36% $ 14,533 1.45% 1.82% (0.23)% 272%
2003 $12.72 37.29% $ 5,740 1.40% 3.64% (0.26)% 245%
2002(2) $ 9.27 (7.30)%+ $ 913 1.45% 6.18% 0.08% 142%
Constellation Strategic Value and High Income Fund(9) - Class I Shares
2006* $15.04 7.60% $ 1,251 0.25% 3.83% 2.28% 90%
2005 $14.21 14.22% $ 806 0.25% 4.71% 5.51% 130%
2004(1) $14.01 16.04% $ 706 0.25% 1.36% 3.23% 411%
2003(10) $12.58 28.57%+ $ 443 0.25% 21.93% 3.27% 397%
- ----------
(6) Commenced operations on February 28, 2001. All ratios for the period have
been annualized.
(7) 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.
(8) Commenced operations on August 4, 2000. All ratios for the period have been
annualized.
(9) 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.
(10) 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 2006 Semi-Annual Report 81
NOTES TO FINANCIAL STATEMENTS (unaudited)
NOTES TO FINANCIAL STATEMENTS
March 31, 2006
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 19 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 Core Fixed Income Fund,
the Constellation Chartwell Ultra Short Duration Fixed Income Fund, the
Constellation Chartwell Short Duration Fixed Income Fund, the Constellation HLAM
Large Cap Quality Stock 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 Mid Cap
Fund, the Constellation TIP Healthcare & Biotechnology Fund, the Constellation
International Equity Fund, the Constellation Small Cap Value Opportunities Fund
(formerly the Constellation TIP Small Cap Value Opportunities 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 Stock 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 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 generally accepted accounting principles 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 increases and decreases in net
assets from operations 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
82 Constellation Funds 2006 Semi-Annual 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 Fair Value
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 Fair Value Committee meeting should be called based
on the information provided.
The Constellation International Equity Fund also uses a third-party fair
valuation vendor. The vendor provides a fair value for foreign securities
held by the Fund based on certain factors and methodologies (involving,
generally, tracking valuation correlations between the U.S. market and each
non-U.S. security). Values from the fair value vendor are applied in the
event that there is a movement in the U.S. market that exceeds a specific
threshold that has been established by the Fair Value Committee. The Fair
Value Committee has also established a "confidence interval" which is used
to determine the level of historical correlation between the value of a
specific foreign security and movements in the U.S. market before a
particular security will be fair valued when the threshold is exceeded. In
the event that the threshold established by the Fair Value Committee is
exceeded on a specific day, the Fund will value the non-U.S. securities in
its portfolio that exceed the applicable "confidence interval" based upon
the adjusted prices provided by the fair valuation vendor.
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 counterparty and the value of the
collateral declines or if the counterparty enters an insolvency proceeding,
realization of the collateral by the Funds may be delayed or limited.
Delayed delivery transactions - The Funds may purchase or sell securities
on a when-issued or delayed delivery basis. These transactions involve a
commitment by the Funds to purchase or sell securities for a predetermined
price or yield, with payment and delivery taking place beyond the customary
settlement period. When delayed delivery purchases are outstanding, the
Funds will set aside liquid assets in an amount sufficient to meet the
purchase price. When purchasing a security on a delayed delivery basis, the
Funds assume the rights and risks of ownership of the security, including
the risk of price and yield fluctuations, and take such
Constellation Funds 2006 Semi-Annual Report 83
NOTES TO FINANCIAL STATEMENTS (unaudited)
fluctuations into account when determining net asset value. The Funds may
dispose of or renegotiate a delayed delivery transaction after it is
entered into, and may sell when-issued securities before they are
delivered, which may result in a capital gain or loss. When the Funds have
sold a security on a delayed delivery basis, the Funds do not participate
in future gains and losses with respect to the security.
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 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 income 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 Mid Cap, Constellation
TIP Healthcare & Biotechnology, Constellation International Equity and
Constellation Small Cap Value Opportunities 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 HLAM Large Cap Quality Stock, 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 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, Constellation Chartwell Short Duration
Fixed Income Fund and Constellation TIP Mid Cap Fund, may charge a
redemption fee up to 2% of redemption proceeds, which will automatically be
paid to the Fund. The board has approved but not implemented the redemption
fee policy. There were no redemption fees collected during the six-month
period ended March 31, 2006.
3. TRANSACTIONS WITH AFFILIATES:
Certain trustees and officers of the Trust are also officers of Touchstone
Advisors, Inc. ("Touchstone Advisors" or the "Adviser"), Touchstone Securities,
Inc. ("Touchstone Securities" or the "Distributor") and SEI Investments Global
Funds Services ("SEI"). With the exception of the Chief Compliance Officer's
fees, 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.
84 Constellation Funds 2006 Semi-Annual Report
NOTES TO FINANCIAL STATEMENTS (unaudited)
4. ADMINISTRATION, SHAREHOLDER SERVICING, AND DISTRIBUTION AGREEMENTS:
Effective March 1, 2006, Touchstone Advisors provides administrative services
for the Funds. For its services, Touchstone Advisors 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.
Prior to March 1, 2006, Constellation Investment Management Company, LP
("CIMCO") provided administrative services for the Funds. For its services,
CIMCO received 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. This fee was then allocated among the Funds
on the basis of relative daily net assets.
Effective March 1, 2006, under a separate Sub-Administration Agreement between
Touchstone Advisors and SEI, SEI provides sub-administration services to the
Trust.
Prior to March 1, 2006 there was a separate sub-administration agreement between
CIMCO and SEI.
For the six-month period ended March 31, 2006, SEI was paid $842,217 for its
services.
Effective March 1, 2006, Touchstone Securities provides distribution services to
the Funds under a Distribution Agreement. Touchstone Securities also provides
shareholder servicing services to the Funds under a shareholder servicing plan
and agreement.
Prior to March 1, 2006, Constellation Investment Distribution Company, Inc.
provided distribution and shareholder services to the funds under separate
distribution and shareholder servicing plans and agreements.
The Constellation HLAM Large Cap Quality Stock, 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
Mid Cap, Constellation TIP Healthcare & Biotechnology, Constellation
International Equity, Constellation Small Cap Value Opportunities 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. No fees are currently being paid for distribution services. Under the
Class II Plan, Touchstone Advisors currently receives fees equal to 0.25% of
each Fund's Class II Shares' average daily net assets to provide or procure
shareholder services.
DST Systems, Inc. serves as the transfer agent and dividend disbursing agent for
the Funds under a transfer agency agreement with the Trust. The following Funds
reimbursed Touchstone Advisors for amounts paid to third parties that provide
sub-transfer agency and other administrative services to the Funds:
AMOUNT
(000)
------
Constellation Clover Core Value Fund $ 42
Constellation Clover Small Cap Value Fund 345
Constellation Clover Core Fixed Income Fund 11
Constellation Chartwell Ultra Short Duration Fixed Income Fund 206
Constellation Chartwell Short Duration Fixed Income Fund 88
Constellation HLAM Large Cap Quality Stock Fund --
Constellation Pitcairn Diversified Value Fund 6
Constellation Pitcairn Select Value Fund --
Constellation Pitcairn Diversified Growth Fund --
Constellation Pitcairn Small Cap Fund 7
Constellation Pitcairn Family Heritage(R) Fund 7
Constellation Pitcairn Taxable Bond Fund --
Constellation Pitcairn Tax-Exempt Bond Fund --
Constellation Sands Capital Select Growth Fund 58
Constellation TIP Mid Cap Fund --
Constellation TIP Healthcare & Biotechnology Fund 44
Constellation International Equity Fund --
Constellation Small Cap Value Opportunities Fund 45
Constellation Strategic Value and High Income Fund --
Amounts designated as "-" are either $0 or have been rounded to $0.
Effective March 1, 2006, the Trust and Touchstone Advisors are parties to an
Investment Advisory Agreement under which Touchstone Advisors receives a fee,
that is calculated daily and paid monthly.
For its services, Touchstone Advisors is entitled to receive base investment
advisory fees at an annualized rate, based on the average daily net assets of
each Fund. Touchstone Advisors has contractually 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. The waivers and operating expense
reimbursements are in effect until March 1, 2008.
Constellation Funds 2006 Semi-Annual Report 85
NOTES TO FINANCIAL STATEMENTS (unaudited)
"OTHER
ADVISORY EXPENSE"
FEES CAP
-------- --------
Constellation Clover Core Value Fund 0.74% n/a
Constellation Clover Small Cap Value Fund 0.85 n/a
Constellation Clover Core Fixed Income Fund 0.45 n/a
Constellation Chartwell Ultra Short
Duration Fixed Income Fund 0.25 n/a
Constellation Chartwell Short Duration
Fixed Income Fund 0.25 n/a
Constellation HLAM Large Cap Quality Stock Fund 0.75 0.50%
Constellation Pitcairn Diversified Value Fund 0.70 0.40
Constellation Pitcairn Select Value Fund 0.70 0.45
Constellation Pitcairn Diversified Growth Fund 0.70 0.40
Constellation Pitcairn Small Cap Fund 0.70 0.40(1)
Constellation Pitcairn Family Heritage(R) Fund 0.90 0.40
Constellation Pitcairn Taxable Bond Fund 0.40 0.50
Constellation Pitcairn Tax-Exempt Bond Fund 0.30 0.40
Constellation Sands Capital Select Growth
Fund -- Class I Shares 0.85 0.25
Constellation Sands Capital Select Growth
Fund -- Class II Shares 0.85 0.50
Constellation TIP Mid Cap Fund 0.80 0.10
Constellation TIP Healthcare & Biotechnology Fund 1.00 n/a
Constellation International Equity Fund 0.95 0.50(1)
Constellation Small Cap Value Opportunities Fund 0.95 n/a
Constellation Strategic Value and High Income Fund 0.10 0.15
(1) 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 Sands Capital Select Growth Fund, 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 month.
The performance comparison is made for a rolling 12-month period, consisting of
the current month for which performance is available plus the previous 11
months.
This comparison is made at the end of each month, with appropriate
performance-based adjustments added to (or subtracted from) the advisory fee.
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 overperformance) 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
Sands Capital Russell
Select Growth 1000 Growth
Fund 0.85% +/-0.15% Index +/-2.50%
(1) See the Funds' Prospectus and Statement of Additional Information for more
information regarding the Fund's benchmark performance.
During the period March 1, 2006 through March 31, 2006, the Funds' advisory fees
were adjusted in accordance with the policy described above:
PERFORMANCE NET ADVISER FEE
BASE ADVISER FEE ADJUSTMENT BEFORE WAIVERS
---------------- ----------- ---------------
Constellation
Sands Capital
Growth Fund $334,498 $ -- $334,498
Prior to March 1, 2006, CIMCO served as investment adviser to the Trust and were
parties to an Investment Advisory Agreement under which CIMCO received a fee,
calculated daily and paid monthly. For its services, CIMCO was entitled to
receive base investment advisory fees at an annualized rate, based on the
average daily net assets of each Fund. CIMCO 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"
FEES CAP
--------- --------
Constellation Clover Core Value Fund 0.74%(7) 0.50%(1)
Constellation Clover Small Cap Value Fund 0.85(7) 0.50(1)
Constellation Clover Core Fixed Income Fund 0.45(7) 0.35(1)
Constellation Chartwell Ultra Short Duration
Fixed Income Fund 0.25(7) 0.43(2)
Constellation Chartwell Short Duration
Fixed Income Fund 0.25(7) 0.43(2)
Constellation HLAM Large Cap Quality Stock Fund 0.75(7) 0.50(3)
Constellation Pitcairn Diversified Value Fund 0.70(7) 0.40(4)
Constellation Pitcairn Select Value Fund 0.70(7) 0.45(4)
Constellation Pitcairn Diversified Growth Fund 0.70(7) 0.40(4)
Constellation Pitcairn Small Cap Fund 0.70(7) 0.40(4)(5)
Constellation Pitcairn Family Heritage(R) Fund 0.90(7) 0.40(4)
Constellation Pitcairn Taxable Bond Fund 0.40(7) 0.50(4)
Constellation Pitcairn Tax-Exempt Bond Fund 0.30(7) 0.40(4)
Constellation Sands Capital Select Growth
Fund -- Class I Shares 0.85(7) 0.25(4)
Constellation Sands Capital Select Growth
Fund -- Class II Shares 0.85(7) 0.50
Constellation TIP Mid Cap Fund 0.80 0.10(6)
Constellation TIP Healthcare & Biotechnology Fund 1.00(7) 0.75
Constellation International Equity Fund 0.95(7) 0.50(4)(5)
Constellation Small Cap Value Opportunities Fund 0.95(7) 0.50(2)
Constellation Strategic Value and High Income Fund 0.10(7) 0.15(2)
(1) Represented a voluntary cap.
(2) Represented a contractual cap effective through January 31, 2006.
(3) Represented a contractual cap effective through October 1, 2007.
(4) Represented a contractual cap effective through July 31, 2007.
(5) This fee waiver obligation was potentially 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.
(6) Represented a contractual cap effective through April 30, 2006.
(7) Represented the base fee which is subject to a performance adjustment
relative to the Fund's performance relative to the performance of the
Fund's benchmark.
86 Constellation Funds 2006 Semi-Annual Report
NOTES TO FINANCIAL STATEMENTS (unaudited)
For the certain Funds, the advisory fees were comprised of a base fee and a
performance adjustment that increased or decreased the total fee depending upon
the performance of the Fund relative to the Fund's performance benchmark. The
Fund's base fee was accrued daily and paid monthly, based on the Fund's average
net assets during the current month. The performance comparison was made for a
rolling 12-month period, consisting of the current month for which performance
was available plus the previous 11 months. This comparison was made at the end
of each month, with appropriate performance-based adjustments added to (or
subtracted from ) the advisory fee.
The performance adjustment was 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 was
then multiplied by a fraction, the numerator of which was the number of days in
the month and the denominator of which was 365 (366 in leap years). The
resulting amount was then added to (in the case of overperformance) 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 prior to March 1, 2006 were as
follows:
BASE ANNUAL
ADVISORY ADJUSTMENT
FEES RATE BENCHMARK BENCHMARK THRESHOLD(1)
-------- ----------- -------------------------- ------------------------------
+/-0.03125% +/-2.01 to 3.00% = +/-0.03125%
Constellation Clover +/-0.0625 +/-3.01 to 4.00% = +/-0.0625
Core Value +/-0.09375 Russell +/-4.01 to 5.00% = +/-0.09375
Fund 0.74% +/-0.125 3000 Index +/-5.01 and above = +/-0.125
+/-0.0375 +/-2.01 to 3.00% = +/-0.0375
Constellation Clover +/-0.075 +/-3.01 to 4.00% = +/-0.0750
Small Cap +/-0.1125 Russell 2000 +/-4.01 to 5.00% = +/-0.1125
Value Fund 0.85 +/-0.15 Value Index +/-5.01 and above = +/-0.15
+/-0.02 +/-2.01 to 3.00% = +/-0.02
Constellation Clover +/-0.04 Lehman +/-3.01 to 4.00% = +/-0.04
Core Fixed +/-0.06 Aggregate +/-4.01 to 5.00% = +/-0.06
Income Fund 0.45 +/-0.08 Bond Index +/-5.01 and above = +/-0.08
Constellation
Chartwell Ultra Merrill Lynch
Short Duration 3-Month U.S.
Fixed Income Fund 0.25 +/-0.06 Treasury Bill Index +/-0.76
Constellation
Chartwell Short Lehman 1-3 Year
Duration Fixed Income Fund 0.25 +/-0.06 U.S. Government Bond Index +/-1.51
Constellation
HLAM Large Cap Quality Stock Fund(2) 0.75 +/-0.10 Russell 1000 Growth Index +/-3.01
Constellation
Pitcairn Diversified Value Fund 0.70 +/-0.10 Russell 1000 Value Index +/-2.00
Constellation
Pitcairn Select Value Fund 0.70 +/-0.10 Russell 1000 Value Index +/-3.00
Constellation
Pitcairn Diversified Growth Fund 0.70 +/-0.10 Russell 1000 Growth Index +/-2.00
Constellation
Pitcairn Small Cap Fund 0.70 +/-0.10 Russell 2000 Index +/-2.50
Constellation
Family Heritage(R) Fund 0.90 +/-0.10 Wilshire 5000 Index +/-2.50
Constellation Lehman U.S.
Pitcairn Taxable Government/
Bond Fund 0.40 +/-0.08 Credit Index +/-1.00
Constellation Lehman
Pitcairn Tax-Exempt Municipal
Bond Fund 0.30 +/-0.06 Bond Index +/-1.00
Constellation
Sands Capital Select Growth Fund 0.85 +/-0.15 Russell 1000 Growth Index +/-2.50
Constellation
Healthcare & Biotechnology Fund 1.00 +/-0.25 S&P 500 Healthcare Index +/-3.01
Constellation MSCI All Country World
International Equity Fund 0.95 +/-0.10 U.S. Index +/-2.00
Constellation
Small Cap Value
Opportunities Russell 2000
Fund 0.95 +/-0.15 Value Index +/-3.01
Constellation Strategic
Value and High 50%/50% blend of the
Income Fund 0.10 +/-0.05 Russell 2000 Value Index +/-3.01
and the Merrill Lynch
High Yield, Cash Pay Index
- ----------
((1) See the Funds' Prospectus and Statement of Additional Information for more
information regarding the Fund's benchmark performance.
(2) Fund began its perfomance based fee calculation on December 1, 2005.
Constellation Funds 2006 Semi-Annual Report 87
NOTES TO FINANCIAL STATEMENTS (unaudited)
During the period October 1, 2005 through February 28, 2006, the Funds' advisory
fees were adjusted in accordance with the policy described above:
BASE NET ADVISER
ADVISER PERFORMANCE FEE BEFORE
FEE ADJUSTMENT WAIVERS
---------- ----------- -----------
Constellation Clover Core
Value Fund $ 404,319 $ 64,602 $ 468,921
Constellation Clover Small
Cap Value Fund 1,350,900 -- 1,350,900
Constellation Clover Core
Fixed Income Fund 48,934 -- 48,934
Constellation Chartwell Ultra
Short Duration Fixed
Income Fund 278,411 -- 278,411
Constellation Chartwell Short
Duration Fixed Income
Fund 108,365 -- 108,365
Constellation HLAM Large
Cap Quality Stock Fund (1) 48,630 (4,149) 44,481
Constellation Pitcairn Diversified
Value Fund 478,898 (67,826) 411,072
Constellation Pitcairn Select
Value Fund 182,138 (31,882) 150,256
Constellation Pitcairn Diversified
Growth Fund 341,147 (56,472) 284,675
Constellation Pitcairn Small
Cap Fund 269,869 (47,431) 222,438
Constellation Pitcairn Family
Heritage(R) Fund 315,947 (41,064) 274,883
Constellation Pitcairn Taxable
Bond Fund 77,881 (15,778) 62,103
Constellation Pitcairn Tax-Exempt
Bond Fund 139,661 (22,993) 116,668
Constellation Sands Capital
Select Growth Fund 1,193,170 145,997 1,339,167
Constellation TIP Healthcare
& Biotechnology Fund 268,983 60,160 329,143
Constellation International
Equity Fund 516,983 (50,033) 466,950
Constellation Small Cap Value
Opportunities Fund 443,514 34,626 478,140
Constellation Strategic Value
and High Income Fund 392 -- 392
(1) Fund began its perfomance based fee calculation on December 1, 2005.
Touchstone Advisors has entered into investment subadvisory agreements with the
following parties:
Clover Capital Management, Inc.
Constellation Clover Core Value Fund
Constellation Clover Small Cap Value Fund
Constellation Clover Core Fixed Income Fund
Chartwell Investment Partners
Constellation Chartwell Ultra Short Duration Fixed Income Fund
Constellation Chartwell Short Duration Fixed Income Fund
Hilliard Lyons Asset Management
Constellation HLAM Large Cap Quality Stock 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, LP.
Constellation Sands Capital Select Growth Fund
Turner Investment Partners, Inc.
Constellation Small Cap Value Opportunities Fund
Constellation TIP Mid Cap Fund
Constellation TIP Healthcare & Biotechnology Fund
AXA Rosenberg Investment Management LLC
Constellation International Equity Fund
Diamond Hill Capital Management, Inc.
Constellation Small Cap Value Opportunities Fund
Touchstone Advisors pays sub-advisory fees to each Sub- Adviser from its
advisory fee, if any. Similar to the advisory fee paid to Touchstone Advisors,
the subadvisory fee paid to Clover Capital Management, Inc., Chartwell
Investment Partners, Pitcairn Investment Management, Hilliard Lyons Asset
Management, Sands Capital Management, LP, 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 Diamond
Hill Capital Management, Inc. and AXA Rosenberg Investment LLC are not subject
to a performance adjustment.
Prior to March 1, 2006, CIMCO was a party to the above sub-advisory agreements
and paid the sub-advisor from its advisory fee.
88 Constellation Funds 2006 Semi-Annual 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 year or period ended
March 31, 2006, were as follows:
PURCHASES SALES
(000) (000)
--------- --------
Constellation Clover Core Value Fund $ 51,938 $113,569
Constellation Clover Small Cap Value Fund 159,473 333,123
Constellation HLAM Large Cap Quality Growth Fund 705 3,846
Constellation Pitcairn Diversified Value Fund 50,035 60,133
Constellation Pitcairn Select Value Fund 59,493 65,905
Constellation Pitcairn Diversified Growth Fund 53,810 54,799
Constellation Pitcairn Small Cap Fund 71,687 84,720
Constellation Pitcairn Family Heritage(R) Fund 15,916 18,761
Constellation Pitcairn Taxable Bond Fund 8,051 8,637
Constellation Pitcairn Tax-Exempt Bond Fund 37,914 30,560
Constellation Sands Capital Select Growth Fund 256,671 26,665
Constellation TIP Mid Cap Fund 947 629
Constellation TIP Healthcare & Biotechnology Fund 55,552 42,070
Constellation International Equity Fund 131,330 128,977
Constellation Small Cap Value Opportunities Fund 165,355 65,773
Constellation Strategic Value and High Income Fund 1,110 935
PURCHASES (000) SALES (000)
---------------- -----------------
GOV'T OTHER GOV'T OTHER
------- ------ ------- -------
Constellation Clover Core
Fixed Income Fund $ 4,817 $1,467 $ 5,656 $ 765
Constellation Chartwell
Ultra Short Duration
Fixed Income Fund 21,423 -- 48,090 4,940
Constellation Chartwell
Short Duration Fixed
Income Fund 896 -- 19,531 --
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.
Constellation Funds 2006 Semi-Annual Report 89
NOTES TO FINANCIAL STATEMENTS (unaudited)
The tax character of dividends and distributions declared during the periods
ended September 30, 2005 and September 30, 2004 (unless otherwise noted) were as
follows (000):
ORDINARY LONG-TERM TAX EXEMPT RETURN
INCOME CAPITAL GAIN INCOME OF CAPITAL TOTAL
-------- ------------ ---------- ---------- -------
Constellation Clover Core Value Fund
2005 $ 274 $5,107 $ -- $-- $ 5,381
2004 468 1,442 -- -- 1,910
Constellation Clover Small Cap Value Fund
2005 -- -- -- -- --
2004 652 -- -- -- 652
Constellation Clover Core Fixed Income Fund
2005 1,211 395 -- -- 1,606
2004 1,530 -- -- -- 1,530
Constellation Chartwell Ultra Short Duration Fixed Income Fund
2005 10,576 -- -- -- 10,576
2004 8,779 -- -- -- 8,779
Constellation Chartwell Short Duration Fixed Income Fund
2005 5,248 -- -- -- 5,248
2004 5,810 -- -- -- 5,810
Constellation HLAM Large Cap Quality Stock Fund
2005(1) -- 956 -- -- 956
2004(2) -- 3,543 -- -- 3,543
2003(2) 4 5,861 -- -- 5,865
Constellation Pitcairn Diversified Value Fund
2005 1,707 -- -- -- 1,707
2004(3) 1,559 -- -- -- 1,559
2003(4) 1,782 -- -- -- 1,782
Constellation Pitcairn Select Value Fund
2005 409 882 -- -- 1,291
2004(3) 492 902 -- -- 1,394
2003(4) 509 -- -- -- 509
Constellation Pitcairn Diversified Growth Fund
2005 536 -- -- -- 536
2004(3) 46 -- -- -- 46
2003(4) -- -- -- -- --
Constellation Pitcairn Small Cap Fund
2005 -- 732 -- -- 732
2004(3) -- 3 -- -- 3
2003(4) 17 -- -- -- 17
Constellation Pitcairn Family Heritage(R) Fund
2005 418 -- -- -- 418
2004(3) 38 -- -- 2 40
2003(4) -- -- -- -- --
Constellation Pitcairn Taxable Bond Fund
2005 1,946 -- -- -- 1,946
2004(3) 1,725 -- -- -- 1,725
2003(4) 1,858 -- -- -- 1,858
Constellation Pitcairn Tax-Exempt Bond Fund
2005 27 716 4,376 -- 5,119
2004(3) 41 432 4,034 -- 4,507
2003(4) 12 294 4,611 -- 4,917
Constellation TIP Mid Cap Fund
2005 16 5 -- -- 21
2004(1) 32 28 -- -- 60
2003(2) -- 29 -- -- 29
Constellation TIP Healthcare & Biotechnology Fund
2005 162 1,072 -- -- 1,234
2004 5 9 -- -- 14
Constellation International Equity Fund
2005 238 -- -- -- 238
2004(3) 2,621 -- -- -- 2,621
2003(4) 459 -- -- -- 459
Constellation Small Cap Value Opportunities Fund
2005 1,664 326 -- -- 1,990
2004 223 -- -- -- 223
Constellation Strategic Value and High Income Fund
2005 112 2 -- -- 114
2004 125 -- -- -- 125
(1) From the period January 1, 2005 through September 30, 2005. The Fund
changed its fiscal year end from December 31 to September 30.
(2) For the year ended December 31.
(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.
90 Constellation Funds 2006 Semi-Annual Report
NOTES TO FINANCIAL STATEMENTS (unaudited)
As of September 30, 2005, the components of distributable earnings (accumulated
losses) on a tax basis were as follows (000):
TOTAL
CAPITAL POST- DISTRIBUTABLE
LONG-TERM LOSS POST- OCTOBER UNREALIZED OTHER EARNINGS
ORDINARY CAPITAL TAX-EXEMPT CARRY OCTOBER CURRENCY APPRECIATION TEMPORARY (ACCUMULATED)
INCOME GAIN INCOME FORWARD LOSSES LOSSES (DEPRECIATION DIFFERENCE (LOSSES)
-------- --------- ---------- -------- ------- -------- ------------- ---------- -------------
Constellation Clover Core
Value Fund $1,767 $ 9,269 $ -- $ -- $ -- $ -- $20,165 $ (2) $ 31,199
Constellation Clover Small
Cap Value Fund -- 60,167 -- -- -- -- 73,509 -- 133,676
Constellation Clover Core
Fixed Income Fund 174 521 -- -- -- -- (79) (87) 529
Constellation Chartwell
Ultra Short Duration
Fixed Income Fund 910 -- -- (6,706) (342) -- 1,036 (910) (6,012)
Constellation Chartwell
Short Duration Fixed
Income Fund 363 -- -- (2,090) (986) -- (885) (367) (3,965)
Constellation HLAM Large
Cap Quality Stock Fund 101 3,593 -- -- -- -- 3,755 -- 7,449
Constellation Pitcairn
Diversified Value Fund 3,704 10,085 -- -- -- -- 22,417 (310) 35,896
Constellation Pitcairn
Select Value Fund 1,911 4,224 -- -- -- -- 6,431 (86) 12,480
Constellation Pitcairn
Diversified Growth Fund 10 -- -- (71,911) (241) -- (138) (10) (72,290)
Constellation Pitcairn Small
Cap Fund -- 12,655 -- -- -- -- 10,987 -- 23,642
Constellation Pitcairn
Family Heritage(R) Fund 1 -- -- (14,860) -- -- 14,553 -- (306)
Constellation Pitcairn
Taxable Bond Fund 153 -- -- (473) (126) -- 1,292 (150) 696
Constellation Pitcairn
Tax-Exempt Bond Fund -- 1,241 358 -- -- -- 5,818 (354) 7,063
Constellation Sands Capital
Select Growth Fund -- -- -- (26,131) (3,469) -- 33,317 -- 3,717
Constellation TIP Mid
Cap Fund 38 24 -- -- -- -- 116 -- 178
Constellation TIP Healthcare
& Biotechnology Fund 955 830 -- -- -- -- 7,105 -- 8,890
Constellation International
Equity Fund 1,724 -- -- (24,106) -- (217) 22,242 -- (357)
Constellation Small Cap
Value Opportunities Fund 628 1,141 -- -- -- -- 5,111 -- 6,880
Constellation Strategic
Value and High Income
Fund 8 1 -- -- -- -- 135 (3) 141
Post-October losses represent losses realized on investment transactions from
November 1, 2004 through September 30, 2005 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 carry forwards
may be carried forward and applied against future capital gains.
Constellation Funds 2006 Semi-Annual Report 91
NOTES TO FINANCIAL STATEMENTS (unaudited)
At September 30, 2005, the following 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 2013 TOTAL
---- ------ ------- ------- ------- ------ ------ -------
Constellation Chartwell Ultra Short
Duration Fixed Income Fund $-- $ -- $ -- $ -- $ -- $6,706 $ -- $ 6,706
Constellation Chartwell Short
Duration Fixed Income Fund -- -- -- -- -- 1,994 96 2,090
Constellation Pitcairn Diversified
Growth Fund -- -- 23,304 35,399 11,331 -- 1,877 71,911
Constellation Pitcairn Family
Heritage(R) Fund -- 1,614 3,678 2,799 4,941 -- 1,828 14,860
Constellation Pitcairn Taxable
Bond Fund -- -- -- 473 -- -- -- 473
Constellation Sands Capital
Select Growth Fund -- -- 8,045 12,366 5,720 -- -- 26,131
Constellation International
Equity Fund -- -- -- 15,580 8,526 -- -- 24,106
During the year ended September 30, 2005, the following Funds utilized capital
loss carryforwards to offset capital gains (000):
AMOUNT
-------
Constellation Clover Small Cap
Value Fund $11,559
Constellation Chartwell Ultra Short
Duration Fixed Income Fund 13
Constellation Pitcairn Diversified
Value Fund 172
Constellation Pitcairn Taxable
Bond Fund 17
Constellation Sands Capital Select
Growth Fund 135
Constellation International
Equity Fund 12,975
92 Constellation Funds 2006 Semi-Annual Report
NOTES TO FINANCIAL STATEMENTS (unaudited)
At March 31, 2006, 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
FUND TAX COST APPRECIATION DEPRECIATION (DEPRECIATION)
- -------------------------------------- -------- ------------ ------------ --------------
Constellation Clover Core
Value Fund $109,494 $13,148 $ (1,385) $ 11,763
Constellation Clover Small Cap
Value Fund 273,029 79,033 (3,291) 75,742
Constellation Clover Core Fixed
Income Fund 25,814 118 (740) (622)
Constellation Chartwell Ultra Short
Duration Fixed Income Fund 214,084 1,435 (1,159) 276
Constellation Chartwell Short Duration
Fixed Income Fund 104,899 200 (2,414) (2,214)
Constellation HLAM Large Cap Quality
Stock Fund 13,817 3,980 (270) 3,710
Constellation Pitcairn Diversified
Value Fund 171,025 27,421 (2,451) 24,970
Constellation Pitcairn Select
Value Fund 74,499 4,334 (581) 3,753
Constellation Pitcairn Diversified
Growth Fund 149,000 14,945 (12,900) 2,045
Constellation Pitcairn Small
Cap Fund 91,796 16,283 (1,487) 14,796
Constellation Pitcairn Family
Heritage(R) Fund 86,785 18,559 (4,410) 14,149
Constellation Pitcairn Taxable
Bond Fund 47,653 939 (822) 117
Constellation Pitcairn Tax-Exempt
Bond Fund 112,260 4,184 (576) 3,608
Constellation Sands Capital Select
Growth Fund 553,562 66,820 (25,955) 40,865
Constellation TIP Mid Cap Fund 1,121 213 (6) 207
Constellation TIP Healthcare &
Biotechnology Fund 79,463 9,685 (1,479) 8,206
Constellation International
Equity Fund 128,175 15,820 (1,685) 14,135
Constellation Small Cap Value
Opportunities Fund 191,962 22,015 (1,158) 20,857
Constellation Strategic Value and
High Income Fund 1,062 202 (6) 196
Constellation Funds 2006 Semi-Annual Report 93
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 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 Stock 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 Stock 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 Stock Fund equal in dollar value to
Hilliard Lyons Growth Fund, Inc. The Constellation HLAM Large Cap Quality Stock
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.
Effective April 15, 2005, the Constellation Institutional Portfolios TIP Midcap
Core Portfolio was reorganized as a separate series of the Constellation Funds
in a tax-free reorganization and was renamed the Constellation TIP Mid Cap Fund.
Each shareholder received a number a shares equal in dollar value and in the
number of shares of the Constellation Institutional Portfolios TIP Mid cap Core
Portfolio. The Constellation TIP Mid Cap Fund has the same investment objective
and policies and substantially the same risks, policies, restrictions and
limitations as the Constellation Institutional Portfolios TIP Midcap Core
Portfolio.
11. SUBSEQUENT EVENT
On May 9, 2006, KPMG LLP (KPMG) resigned as independent registered public
accounting firm of the Trust at the request of the Trust. On May 17, 2006, the
Board of Trustees of the Trust, upon the recommendation of the Trust's Audit
Committee, engaged Ernst & Young LLP as independent registered public accounting
firm for the Funds' fiscal year ending September 30, 2006. KPMG's audit reports
on the Fund's financial statements for the prior fiscal years ended September
30, 2005, and 2004, contained no adverse opinion or disclaimer of opinion; nor
were its reports qualified or modified as to uncertainty, audit scope, or
accounting principles. Further, in connection with the audits for the fiscal
years ended September 30, 2005 and 2004, and the subsequent interim period
through May 9, 2006, (1) there were no disagreements between the Trust and KPMG
on accounting principles or practices, financial statement disclosure or audit
scope or procedure, which if not resolved to the satisfaction of KPMG would have
caused it to make reference to the disagreement in its report, and (2) there
were no reportable events.
94 Constellation Funds 2006 Semi-Annual Report
BOARD CONSIDERATIONS REGARDING NEW ADVISORY (unaudited)
AND SUB-ADVISORY AGREEMENTS
INVESTMENT ADVISORY AGREEMENT: The Board held in-person meetings on October 12
and October 21, 2005, to discuss a proposal to appoint Touchstone Advisors, Inc.
(Touchstone) as investment adviser to the Constellation Funds (the "Funds"). At
those meetings, the Board requested and considered information regarding the
following: (a) the nature of Touchstone's investment management and other
services proposed to be provided to the Funds, as well as those it provides to
the Touchstone Strategic Trust, Touchstone Tax Free Trust, Touchstone Variable
Series Trust and Touchstone Investment Trust (collectively, the "Touchstone
Funds"); (b) Touchstone's investment management personnel, including its use
of sub-advisers to manage the day-to-day investment operations of the Touchstone
Funds and its intention to utilize the Funds' roster of sub-advisers to serve as
investment sub-advisers for the Funds; (c) Touchstone's operations and financial
condition; (d) the level and structure of the advisory fees that Touchstone
proposed to charge the Funds; (e) Touchstone's comprehensive compliance program
and the qualifications of its chief compliance officer and compliance staff; (f)
Touchstone's reputation, expertise and resources as an investment manager; and
(g) its future plans for the Funds and Touchstone's past experience in
successfully integrating other mutual funds into the Touchstone Funds complex.
The Board also considered Touchstone's capacity to successfully distribute the
Funds to a broad investor base through its existing network of selling dealers
and captive distribution force, the commitment of the Touchstone organization to
its mutual fund and asset management business, and Touchstone's representation
that current Fund shareholders would be grandfathered into the existing no load
structure in the event of a future reorganization of the Funds into the
Touchstone Funds complex
At its meeting held on October 21, 2005, the Board unanimously determined that
the proposal to approve Touchstone as the new investment adviser for the Funds
would be in the best interests of the Funds and their shareholders. In
determining to approve the new Advisory Agreement and to recommend its approval
to shareholders, the Board considered the following factors, in addition to all
other information it deemed relevant, and drew the following conclusions:
(i) the proposed scope of services was satisfactory and comparable to
those services provided by the Funds' current investment adviser,
Constellation Investment Management Company, LP (CIMCO);
(ii) preservation of continuity of day-to-day portfolio management would be
beneficial to shareholders;
(iii) the fees proposed to be paid to Touchstone pursuant to the terms
of the proposed new Advisory Agreement were reasonable in light of the
services to be provided;
(iv) Touchstone had demonstrated an institutional commitment to the success
of its mutual fund business, and that its personnel and resources were
adequate based on Touchstone's use of sub-advisers to manage assets on
a day-to-day basis;
(v) Touchstone's distribution program, if successful, had the potential to
benefit shareholders through the potential for increased Fund assets
and potential economies that may result; and
(vi) the current and historic asset levels of the Funds, both individually
and in the aggregate, and the Board's conclusion that asset levels
were not of a sufficient magnitude as to represent a likelihood of
economies of scale being realized in the near-term by Touchstone, and,
thus, did not deem it necessary to make a determination as to whether
the advisory fees proposed to be paid to Touchstone under the proposed
new Advisory Agreement made accommodations for such economies of
scale.
The Board did not consider Touchstone's historical investment performance to be
relevant to its considerations because Touchstone had represented that it
intended to use those sub-advisers previously hired by CIMCO. Further, the Board
did not make a close comparative analysis of the proposed new Advisory Agreement
with the Trust's then-existing advisory agreement with CIMCO, because the
proposed new Advisory Agreement followed the same form and contained the same
substantive provisions as the existing Advisory Agreement, with the exception
of the elimination of any performance-based adjustment for all Funds other than
the Constellation Sands Capital Select Growth Fund.
In drawing its conclusions with regard to the above factors and in determining
to approve the proposed new Advisory Agreement, subject to shareholder approval
and the closing of the transaction between CIMCO and Touchstone, the Board did
not identify any single piece of information that was all-important, controlling
or determinative of its decision.
NEW SUB-ADVISORY AGREEMENTS. At meetings held on October 12, 2005, October 21,
2005, November 29, 2005 and December 13, 2005, the Board also considered and
approved new sub-advisory agreements between Touchstone and various of the
Trust's then-current sub-advisers (other than the three firms that had been
sub-advising the Constellation International Equity Fund). The Board also
approved new sub-advisory agreements between CIMCO and AXA Rosenberg Investment
Management LLC ("ARIM") with respect to the Constellation International Equity
Fund (said contract to take effect on January 31, 2006), and CIMCO and Diamond
Hill Capital Management, Inc. ("DHCM"), with respect to
Constellation Funds 2006 Semi-Annual Report 95
BOARD CONSIDERATIONS REGARDING NEW ADVISORY (unaudited)
AND SUB-ADVISORY AGREEMENTS
the Constellation Small Cap Value Opportunities Fund (said contract to take
effect on January 17, 2006), and voted to approve similar agreements between
Touchstone and ARIM and DHCM, respectively, to become effective only upon the
effectiveness of Touchstone's Advisory Agreement with the Trust.
As the Board was considering the proposed sub-advisory agreements between CIMCO
and Touchstone with respect to ARIM and DHCM, respectively, the Board was
provided with various written materials that provided detailed information about
each sub-adviser's: (a) investment management services proposed to be provided
to the applicable Fund; (b) investment strategies and investment management
personnel; (c) operating history, infrastructure and financial condition; (d)
brokerage practices (including any soft dollar arrangements); (e) proposed
sub-advisory fees that would be paid to the sub-adviser; (f) comprehensive
compliance program and the qualifications of its compliance staff; and (g)
reputation, expertise and resources as an investment manager. CIMCO also
provided written and oral information stating the basis for its recommendation
to engage the sub-advisers. Representatives from each proposed sub-adviser
attended the November 29, 2005 meeting and presented additional oral and written
information to the Board to assist it in its deliberations.
The Board did not deem it necessary to request information from the Trust's
other current Sub-Advisers, as it concluded that it was sufficiently familiar
with the services provided by each Sub-Adviser, its personnel and prior
performance as a result of its regular monitoring process, as well as the
reports it receives from CIMCO, and the fact that the termination of the
Sub-Advisory Agreements with CIMCO would occur solely as a result of the
proposed transaction involving CIMCO and Touchstone. Further, the Board relied
on the fact that the terms of each proposed new Sub-Advisory Agreement were
materially similar to those contained in the respective current Sub-Advisory
Agreements, with the exception of the change in effective date and parties and
the elimination of any performance-based fee adjustment with respect to every
Sub-Adviser other than Sands Capital Management, LLC.
For each of the Funds and their respective Sub-Advisers, the Board considered
the Fund's performance relative to its benchmark and its peers, the Fund's
expense ratios relative to other Funds and the nature and scope of advisory
services provided under the current Sub-Advisory Agreement that were anticipated
to carry forward under the new Sub-Advisory Agreement. In addition, Touchstone
affirmed that there were no material business arrangements between Touchstone or
any of its affiliates and any of the Sub-Advisers that the Board should consider
in the course of evaluating the proposed Sub-Advisory contracts. The Board
unanimously determined that the proposals to approve new Sub-Advisory Agreements
for the Funds would function in the best interests of the shareholders and the
Funds. In determining whether to approve the proposed new Sub-Advisory
Agreements and to recommend their approval to shareholders, the Board
considered, with the assistance of independent legal counsel, the following
factors, in addition to all other information it deemed relevant, and drew the
following conclusions:
(i) Touchstone's intention to continue to utilize the same group
of Sub-Advisers currently responsible for the day-to-day management
of the Funds' respective investments at the time it becomes adviser to
the Funds, and the Board's conclusion that the preservation
of continuity of management would be beneficial to shareholders;
(ii) the nature of each respective Sub-Adviser's investment management
services proposed to be provided to the Funds, and the Board's
conclusion that the intended scope of services would be identical to
those currently provided by that Sub-Adviser pursuant to its current
Sub-Advisory Agreement with CIMCO;
(iii) the investment performance that each respective Sub-Adviser had
achieved for its Fund in the past;
(iv) the fees proposed to be paid by Touchstone to the various Sub-Advisers
pursuant to the terms of each new Sub-Advisory Agreement were
reasonable in light of the services to be provided; and
(v) the current and historic asset levels of the Funds, both individually
and in the aggregate, and the Board's conclusion that asset levels
were not of a sufficient magnitude as to represent a likelihood of
economies of scale being realized in the near-term by any Sub-Adviser,
and, thus, did not deem it necessary to make a determination as to
whether the sub-advisory fees proposed to be paid to each Sub-Adviser
under its respective new Sub-Advisory Agreement made accommodations
for such economies of scale.
In drawing its conclusions with regard to the above factors and determining to
approve the new Sub- Advisory Agreements, subject to shareholder approval and
the closing of the proposed transaction between CIMCO and Touchstone, the Board
did not identify any single piece of information that was all-important,
controlling or determinative of its decision.
96 Constellation Funds 2006 Semi-Annual Report
SHAREHOLDER VOTING RESULTS (unaudited)
There was a special meeting of shareholders held on February 17, 2006, at which
the shareholders of each Fund were asked to consider several proposals:
1. To elect Trustees of the Trust.
Number of % of Outstanding % of Shares
Shares Shares Voted
--------------- ---------------- -----------
PHILLIP R. COX
Affirmative 143,356,373.298 74.476% 99.235%
Withhold 1,105,359.459 0.574% 0.765%
--------------- ------ -------
144,461,732.757 75.050% 100.000%
DONALD C. SIEKMANN
Affirmative 143,302,938.298 74.448% 99.198%
Withhold 1,158,794.459 0.602% 0.802%
--------------- ------ -------
144,461,732.757 75.050% 100.000%
ROBERT E. STAUTBERG
Affirmative 143,295,619.298 74.445% 99.193%
Withhold 1,166,113.459 0.605% 0.807%
--------------- ------ -------
144,461,732.757 75.050% 100.000%
JILL T. MCGRUDER
Affirmative 143,301,942.334 74.448% 99.197%
Withhold 1,159,790.423 0.602% 0.803%
--------------- ------ -------
144,461,732.757 75.050% 100.000%
--------------- ------ -------
TOTAL 144,461,732.757 75.050% 100.000%
2(a) To approve a new investment advisory between the Trust, on behalf of the
Fund and Touchstone Advisors, Inc. and/or
2(b) To approve a new investment sub-advisory agreement for the Fund.
Number of % of Outstanding % of Shares
Shares Shares Voted
------------- ---------------- -----------
CONSTELLATION CLOVER CORE VALUE FUND
2(a) Advisory Agreement
Affirmative 3,327,146.689 40.068% 55.578%
Against 70,735.983 0.852% 1.182%
Abstain 93,314.239 1.124% 1.559%
Broker Non-Votes 2,495,215.000 30.050% 41.681%
TOTAL 5,986,411.911 72.094% 100.000%
2(b) Sub-Advisory Agreement
Affirmative 3,335,284.656 40.166% 55.714%
Against 73,984.828 0.891% 1.236%
Abstain 81,927.427 0.987% 1.369%
Broker Non-Votes 2,495,215.000 30.050% 41.681%
TOTAL 5,986,411.911 72.094% 100.000%
Constellation Funds 2006 Semi-Annual Report 97
SHAREHOLDER VOTING RESULTS (unaudited)
Number of % of Outstanding % of Shares
Shares Shares Voted
-------------- ---------------- -----------
CONSTELLATION CLOVER SMALL CAP VALUE FUND
2(a) Advisory Agreement
Affirmative 5,499,167.212 39.943% 72.299%
Against 166,214.623 1.208% 2.185%
Abstain 152,543.427 1.108% 2.006%
Broker Non-Votes 1,788,256.000 12.989% 23.510%
TOTAL 7,606,181.262 55.248% 100.000%
2(b) Sub-Advisory Agreement
Affirmative 5,483,337.203 39.828% 72.091%
Against 174,390.632 1.267% 2.292%
Abstain 160,197.427 1.164% 2.107%
Broker Non-Votes 1,788,256.000 12.989% 23.510%
TOTAL 7,606,181.262 55.248% 100.000%
CONSTELLATION CLOVER CORE FIXED INCOME FUND
2(a) Advisory Agreement
Affirmative 1,656,445.634 62.111% 88.679%
Against 19,661.955 0.737% 1.052%
Abstain 15,644.289 0.587% 0.838%
Broker Non-Votes 176,170.000 6.606% 9.431%
TOTAL 1,867,921.878 70.041% 100.000%
2(b) Sub-Advisory Agreement
Affirmative 1,656,650.693 62.119% 88.690%
Against 20,923.896 0.784% 1.120%
Abstain 14,177.289 0.532% 0.759%
Broker Non-Votes 176,170.000 6.606% 9.431%
TOTAL 1,867,921.878 70.041% 100.000%
CONSTELLATION CHARTWELL ULTRA SHORT DURATION FIXED INCOME FUND
2(a) Advisory Agreement
Affirmative 9,459,567.547 34.320% 67.452%
Against 365,107.948 1.325% 2.603%
Abstain 397,728.376 1.443% 2.836%
Broker Non-Votes 3,801,806.000 13.793% 27.109%
TOTAL 14,024,209.871 50.881% 100.000%
2(b) Sub-Advisory Agreement
Affirmative 9,059,884.528 32.870% 64.602%
Against 379,217.948 1.376% 2.704%
Abstain 783,301.395 2.842% 5.585%
Broker Non-Votes 3,801,806.000 13.793% 27.109%
TOTAL 14,024,209.871 50.881% 100.000%
98 Constellation Funds 2006 Semi-Annual Report
SHAREHOLDER VOTING RESULTS (unaudited)
Number of % of Outstanding % of Shares
Shares Shares Voted
-------------- ---------------- -----------
CONSTELLATION CHARTWELL SHORT DURATION FIXED INCOME FUND
2(a) Advisory Agreement
Affirmative 3,638,727.869 33.280% 80.460%
Against 146,055.308 1.336% 3.230%
Abstain 167,636.492 1.533% 3.706%
Broker Non-Votes 569,964.000 5.213% 12.604%
TOTAL 4,522,383.669 41.362% 100.000%
2(b) Sub-Advisory Agreement
Affirmative 3,604,019.869 32.963% 79.693%
Against 160,109.308 1.464% 3.540%
Abstain 188,290.492 1.722% 4.164%
Broker Non-Votes 569,964.000 5.213% 12.603%
TOTAL 4,522,383.669 41.362% 100.000%
CONSTELLATION HLAM LARGE CAP QUALITY STOCK FUND
2(a) Advisory Agreement
Affirmative 312,383.778 39.938% 42.607%
Against 7,584.000 0.969% 1.034%
Abstain 6,358.000 0.813% 0.868%
Broker Non-Votes 406,855.000 52.016% 55.491%
TOTAL 733,180.778 93.736% 100.000%
2(b) Sub-Advisory Agreement
Affirmative 312,013.778 39.891% 42.556%
Against 7,350.000 0.939% 1.003%
Abstain 6,962.000 0.890% 0.949%
Broker Non-Votes 406,855.000 52.016% 55.492%
TOTAL 733,180.778 93.736% 100.000%
CONSTELLATION PITCAIRN DIVERSIFIED VALUE FUND
2(a) Advisory Agreement
Affirmative 12,648,918.550 95.504% 99.033%
Against 471.000 0.003% 0.004%
Abstain 1,398.000 0.011% 0.011%
Broker Non-Votes 121,662.000 0.918% 0.952%
TOTAL 12,772,449.550 96.436% 100.000%
2(b) Sub-Advisory Agreement
Affirmative 12,648,918.550 95.504% 99.033%
Against 471.000 0.003% 0.004%
Abstain 1,398.000 0.011% 0.011%
Broker Non-Votes 121,662.000 0.918% 0.952%
TOTAL 12,772,449.550 96.436% 100.000%
Constellation Funds 2006 Semi-Annual Report 99
SHAREHOLDER VOTING RESULTS (unaudited)
Number of % of Outstanding % of Shares
Shares Shares Voted
-------------- ---------------- -----------
CONSTELLATION PITCAIRN SELECT VALUE FUND
2(a) Advisory Agreement
Affirmative 5,127,175.447 92.387% 99.355%
Against 0.000 0.000% 0.000%
Abstain 0.000 0.000% 0.000%
Broker Non-Votes 33,299.000 0.600% 0.645%
TOTAL 5,160,474.447 92.987% 100.000%
2(b) Sub-Advisory Agreement
Affirmative 5,127,175.447 92.387% 99.355%
Against 0.000 0.000% 0.000%
Abstain 0.000 0.000% 0.000%
Broker Non-Votes 33,299.000 0.600% 0.645%
TOTAL 5,160,474.447 92.987% 100.000%
CONSTELLATION PITCAIRN DIVERSIFIED GROWTH FUND
2(a) Advisory Agreement
Affirmative 18,992,159.739 95.479% 99.976%
Against 0.000 0.000% 0.000%
Abstain 0.000 0.000% 0.000%
Broker Non-Votes 4,536.000 0.023% 0.024%
TOTAL 18,996,695.739 95.502% 100.000%
2(b) Sub-Advisory Agreement
Affirmative 18,992,159.739 95.479% 99.976%
Against 0.000 0.000% 0.000%
Abstain 0.000 0.000% 0.000%
Broker Non-Votes 4,536.000 0.023% 0.024%
TOTAL 18,996,695.739 95.502% 100.000%
CONSTELLATION PITCAIRN SMALL CAP FUND
2(a) Advisory Agreement
Affirmative 5,562,034.151 96.354% 99.308%
Against 510.000 0.009% 0.009%
Abstain 397.000 0.007% 0.007%
Broker Non-Votes 37,844.000 0.655% 0.676%
TOTAL 5,600,785.151 97.025% 100.000%
2(b) Sub-Advisory Agreement
Affirmative 5,562,034.151 96.354% 99.308%
Against 510.000 0.009% 0.009%
Abstain 397.000 0.007% 0.007%
Broker Non-Votes 37,844.000 0.655% 0.676%
TOTAL 5,600,785.151 97.025% 100.000%
100 Constellation Funds 2006 Semi-Annual Report
SHAREHOLDER VOTING RESULTS (unaudited)
Number of % of Outstanding % of Shares
Shares Shares Voted
------------- ---------------- -----------
CONSTELLATION PITCAIRN FAMILY HERITAGE(R) FUND
2(a) Advisory Agreement
Affirmative 7,936,572.783 94.385% 98.386%
Against 403.910 0.005% 0.005%
Abstain 0.000 0.000% 0.000%
Broker Non-Votes 129,759.000 1.543% 1.609%
TOTAL 8,066,735.693 95.933% 100.000%
2(b) Sub-Advisory Agreement
Affirmative 7,936,572.783 94.385% 98.386%
Against 403.910 0.005% 0.005%
Abstain 0.000 0.000% 0.000%
Broker Non-Votes 129,759.000 1.543% 1.609%
TOTAL 8,066,735.693 95.933% 100.000%
CONSTELLATION PITCAIRN TAXABLE BOND FUND
2(a) Advisory Agreement
Affirmative 3,366,212.083 73.584% 99.993%
Against 0.000 0.000% 0.000%
Abstain 0.000 0.000% 0.000%
Broker Non-Votes 240.000 0.005% 0.007%
TOTAL 3,366,452.083 73.589% 100.000%
2(b) Sub-Advisory Agreement
Affirmative 3,366,212.083 73.584% 99.993%
Against 0.000 0.000% 0.000%
Abstain 0.000 0.000% 0.000%
Broker Non-Votes 240.000 0.005% 0.007%
TOTAL 3,366,452.083 73.589% 100.000%
CONSTELLATION PITCAIRN TAX-EXEMPT BOND FUND
2(a) Advisory Agreement
Affirmative 9,939,108.008 95.373% 99.988%
Against 0.000 0.000% 0.000%
Abstain 0.000 0.000% 0.000%
Broker Non-Votes 1,170.000 0.011% 0.012%
TOTAL 9,940,278.008 95.384% 100.000%
2(b) Sub-Advisory Agreement
Affirmative 9,939,108.008 95.373% 99.988%
Against 0.000 0.000% 0.000%
Abstain 0.000 0.000% 0.000%
Broker Non-Votes 1,170.000 0.011% 0.012%
TOTAL 9,940,278.008 95.384% 100.000%
Constellation Funds 2006 Semi-Annual Report 101
SHAREHOLDER VOTING RESULTS (unaudited)
Number of % of Outstanding % of Shares
Shares Shares Voted
-------------- ---------------- -----------
CONSTELLATION SANDS CAPITAL SELECT GROWTH FUND
2(a) Advisory Agreement
Affirmative 16,923,484.183 46.349% 62.147%
Against 107,972.276 0.296% 0.396%
Abstain 136,351.000 0.373% 0.501%
Broker Non-Votes 10,063,760.000 27.562% 36.956%
TOTAL 27,231,567.459 74.580% 100.000%
2(b) Sub-Advisory Agreement
Affirmative 16,892,894.183 46.265% 62.034%
Against 104,857.276 0.287% 0.385%
Abstain 170,056.000 0.466% 0.625%
Broker Non-Votes 10,063,760.000 27.562% 36.956%
TOTAL 27,231,567.459 74.580% 100.000%
CONSTELLATION TIP MID CAP FUND
2(a) Advisory Agreement
Affirmative 29,501.482 53.829% 99.977%
Against 6.707 0.012% 0.023%
Abstain 0.000 0.000% 0.000%
TOTAL 29,508.189 53.841% 100.000%
2(b) Sub-Advisory Agreement
Affirmative 29,501.482 53.829% 99.977%
Against 6.707 0.012% 0.023%
Abstain 0.000 0.000% 0.000%
TOTAL 29,508.189 53.841% 100.000%
CONSTELLATION TIP HEALTHCARE & BIOTECHNOLOGY FUND
2(a) Advisory Agreement
Affirmative 1,074,424.404 27.616% 57.784%
Against 74,418.477 1.913% 4.003%
Abstain 39,815.490 1.023% 2.141%
Broker Non-Votes 670,712.000 17.240% 36.072%
TOTAL 1,859,370.371 47.792% 100.000%
2(b) Sub-Advisory Agreement
Affirmative 1,069,648.616 27.494% 57.527%
Against 74,613.265 1.917% 4.013%
Abstain 44,396.490 1.141% 2.388%
Broker Non-Votes 670,712.000 17.240% 36.072%
TOTAL 1,859,370.371 47.792% 100.000%
102 Constellation Funds 2006 Semi-Annual Report
SHAREHOLDER VOTING RESULTS (unaudited)
Number of % of Outstanding % of Shares
Shares Shares Voted
-------------- ---------------- -----------
CONSTELLATION INTERNATIONAL EQUITY FUND
2(a) Advisory Agreement
Affirmative 13,351,746.184 92.468% 99.940%
Against 0.000 0.000% 0.000%
Abstain 0.000 0.000% 0.000%
Broker Non-Votes 7,976.000 0.055% 0.060%
TOTAL 13,359,722.184 92.523% 100.000%
2(b) Sub-Advisory Agreement
Affirmative 13,351,746.184 92.468% 99.940%
Against 0.000 0.000% 0.000%
Abstain 0.000 0.000% 0.000%
Broker Non-Votes 7,976.000 0.055% 0.060%
TOTAL 13,359,722.184 92.523% 100.000%
CONSTELLATION SMALL CAP VALUE OPPORTUNITIES FUND
2(a) Advisory Agreement
Affirmative 1,946,119.509 34.476% 59.297%
Against 69,304.282 1.228% 2.112%
Abstain 67,259.695 1.192% 2.049%
Broker Non-Votes 1,199,309.000 21.246% 36.542%
TOTAL 3,281,992.486 58.142% 100.000%
CONSTELLATION STRATEGIC VALUE AND HIGH INCOME FUND
2(a) Advisory Agreement
Affirmative 42,689.028 66.358% 77.039%
Against 0.000 0.000% 0.000%
Abstain 0.000 0.000% 0.000%
Broker Non-Votes 12,723.000 19.777% 22.961%
TOTAL 55,412.028 86.135% 100.000%
3. To approve a new sub-advisory agreement between Touchstone Advisors, Inc.
and Turner Investment Partners, Inc.
CONSTELLATION SMALL CAP VALUE OPPORTUNITIES FUND
Number of % of Outstanding % of Shares
Shares Shares Voted
------------- ---------------- -----------
Affirmative 1,939,094.760 34.352% 59.083%
Against 74,513.031 1.320% 2.270%
Abstain 69,075.695 1.224% 2.105%
Broker Non-Votes 1,199,309.000 21.246% 36.542%
TOTAL 3,281,992.486 58.142% 100.000%
Constellation Funds 2006 Semi-Annual Report 103
SHAREHOLDER VOTING RESULTS (unaudited)
4. To approve a new sub-advisory agreement between Touchstone Advisors, Inc.
and Diamond Hill Capital Management, Inc.
CONSTELLATION SMALL CAP VALUE OPPORTUNITIES FUND
Number of % of Outstanding % of Shares
Shares Shares Voted
------------- ---------------- -----------
Affirmative 1,920,813.905 34.028% 58.526%
Against 92,781.282 1.644% 2.827%
Abstain 69,088.299 1.224% 2.105%
Broker Non-Votes 1,199,309.000 21.246% 36.542%
TOTAL 3,281,992.486 58.142% 100.000%
104 Constellation Funds 2006 Semi-Annual Report
INVESTMENT ADVISER
Touchstone Advisors, Inc.
Cincinnati, Ohio
DISTRIBUTOR
Touchstone Securities, Inc.
Cincinnati, Ohio
ADMINISTRATOR
Touchstone Advisors, Inc.
Cincinnati, Ohio
LEGAL COUNSEL
Morgan, Lewis & Bockius LLP
Philadelphia, Pennsylvania
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Ernst & Young LLP
Cincinnati, Ohio
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 WEB SITE 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' WEB SITE, WWW.CONSTELLATIONFUNDSGROUP.COM; AND (II)
ON THE COMMISSION'S WEB SITE 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/ Jill McGruder
-----------------------------------------
Jill McGruder, President
Date May 25, 2006
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/ Jill McGruder
-----------------------------------------
Jill McGruder, President
Date May 25, 2006
By (Signature and Title)* /s/ Terrie Wiedenheft
-----------------------------------------
Terrie Wiedenheft, Controller & Treasurer
Date May 25, 2006
* Print the name and title of each signing officer under his or her
signature.