N-30D 1 marshallform.htm Marshall Funds, Inc.

[Logo of Marshall Funds]

The Marshall Funds Family

Semi-Annual Report

The Investor Class of Shares

(Class Y)

  • Marshall Equity Income Fund
  • Marshall Large-Cap Growth & Income Fund
  • Marshall Mid-Cap Value Fund
  • Marshall Mid-Cap Growth Fund
  • Marshall Small-Cap Growth Fund
  • Marshall International Stock Fund
  • Marshall Government Income Fund
  • Marshall Intermediate Bond Fund
  • Marshall Intermediate Tax-Free Fund
  • Marshall Short-Term Income Fund
  • Marshall Money Market Fund

FEBRUARY 28, 2003

Table of Contents

President's Message     1
Commentaries    
Marshall Equity Income Fund   2
Marshall Large-Cap Growth & Income Fund   4
Marshall Mid-Cap Value Fund   6
Marshall Mid-Cap Growth Fund   8
Marshall Small-Cap Growth Fund   10
Marshall International Stock Fund   12
Marshall Government Income Fund   14
Marshall Intermediate Bond Fund   16
Marshall Intermediate Tax-Free Fund   18
Marshall Short-Term Income Fund   20
Marshall Money Market Fund   22
Financial Information    
Portfolio of Investments   24
Marshall Equity Income Fund   24
Marshall Large-Cap Growth & Income Fund   26
Marshall Mid-Cap Value Fund   28
Marshall Mid-Cap Growth Fund   30
Marshall Small-Cap Growth Fund   32
Marshall International Stock Fund   33
Marshall Government Income Fund   35
Marshall Intermediate Bond Fund   36
Marshall Intermediate Tax-Free Fund   39
Marshall Short-Term Income Fund   42
Marshall Money Market Fund   45
Notes to Portfolio of Investments   48
Statements of Assets and Liabilities   50
Statements of Operations   52
Statements of Changes in Net Assets   54
Financial Highlights   58
Notes to Financial Statements   60

[Logo of Marshall Funds]

Dear Marshall Fund Shareholder:

Good relative performance of your mutual fund investments can provide only so much comfort. A top-ranked fund with a negative return still feels like another step away from the accomplishment of your financial goals. Our higher-net-worth and institutional clients are hearing the siren songs of hedge funds and other alternative investments. Cash investments are at all time highs despite negative returns after inflation and taxes. Even IRA account owners are looking at annuity solutions for the allusive panacea of investing: stable, long-term, high, positive returns. In other words, markets that only go up dramatically without risk.

We do not offer such panaceas at the Marshall Funds or at its adviser, M&I Investment Management Corp. Allow us to provide some perspective on our commitment to the use of mutual funds in fully diversified portfolios.

Each senior officer of M&I Investment Management Corp. has almost 25 years of investment industry experience. We were front row observers of the Savings & Loan debacle that cost U.S. taxpayers over $200 billion. We followed the real estate joint venture craze all the way to its current penny-on-the-dollar trading on the internet. We watched the granddaddy of all hedge funds, Long-Term Capital Management, and its "orderly liquidation" by the Federal Reserve Board.

We take no glee in watching these disasters; the ripples to us as taxpayers and investors were rough waters, to say the least. We also believe that alternative investments and annuities can be appropriate in the right circumstances, with a complete understanding of benefits and risks, and if you are charged a fair price.

We are puzzled, however, that after six decades of outstanding service to investors in all kinds of market environments, the mutual fund industry continues to be challenged to make its case to U.S. investors. Recent criticisms include concerns over security turnover and sales charge breakpoints.

Security turnover in many equity portfolios has been increasing, raising concerns about the cost of trading more often. The primary reason for the high levels of turnover has been the record level of market volatility. Since the Marshall Funds use no affiliated broker-dealer to execute our trades, we have no built-in bias to increase trading. In fact, our Fund Managers have an incentive to minimize all costs to the Funds. Trading commissions directly affect the net performance of every Fund, and every Fund Manager's compensation is based on their net performance. As a result, every Marshall Fund Manager and every Marshall Fund shareholder is on the same side, focused on maximizing the Funds' total return.

Sales charge breakpoints relate solely to the Advisor Class of shares sold by M&I Brokerage Services. Clients with larger purchases receive breakpoints (discounts) on the shares purchased with the advice of an adviser. Recent, industry-wide, regulatory examinations reveal that some customers did not always receive the full amount of the breakpoint earned. We are pleased that no such errors were identified with any of our clients and are confident that the errors identified in the industry will be corrected soon. While the precise calculation of discounts is receiving great attention in the industry, we wonder why the lack of breakpoints for investment products similar to mutual funds is not receiving comparable regulator or media attention.

We hope you fully appreciate the reasons the mutual fund industry has grown substantially over 60 years. We also hope you fully appreciate the reasons Marshall Funds have grown to almost $6 billion over 10 years. Each Marshall Fund provides you with a clearly defined, true-to-style investment strategy that fits well with a broadly diversified asset allocation strategy. Each is led by an experienced, professional investment management team. Each has an expense ratio that is at or below the median for its respective mutual fund category. Each enjoys the full disclosure and regulatory oversight applied to the entire mutual fund industry.

As always, thank you for your investment in the Marshall Funds.

Sincerely,

/s/ John M. Blaser

John M. Blaser
President

Semi-Annual Report--Commentary

Fund Manager:      David J. Abitz, CFA
Investment Experience:   9 years
Education:   M.B.A. degree, University of Wisconsin-Madison;
B.B.A., University of Wisconsin-Oshkosh
Analysts:   Daniel P. Brown, CFA and Kenneth E. Mayer

Marshall Equity Income Fund

Fund Performance

For the six-months ended February 28, 2003, the Fund's total return was (9.19)%.* In comparison, the Standard & Poor's 500 Index (S&P 500) returned (7.29)%, while the Lipper Equity Income Funds Index (LEIFI) returned (8.30)%.**

Factors Affecting Performance

Over the past six months, investors have absorbed a wide spectrum of news and events, both positive and negative. For the most part, this has lead to a greater level of uncertainty in terms of the direction of the economy and financial markets and of a generally downward trending market environment. Factors include the accommodative monetary policy by the Federal Reserve Board (the "Fed"), a White House stimulus package, and generally growing cash reserves by Corporate America. Negative factors include growing geopolitical risks around the world, higher energy prices, and fairly lackluster economic numbers so far in this recovery.

The Fund's performance was enhanced due to its holdings within the telecommunication services group. In addition, the Fund benefited from its holdings within the energy sector as investors gravitated somewhat towards this group due to the low inventory levels and rumors of war. Conversely, the Fund's holdings within the consumer discretionary group posted poor results. During this time period, the stocks within this group were hindered as the market began to digest the declining consumer confidence numbers and the impact that might have on consumer spending. Finally, the utility sector also struggled as several of these companies continue to work down excess debt levels and seek to improve liquidity through asset sales and capital issuance.

Looking Ahead

Investor confidence has been strained due to challenges on both the economic and geopolitical front. However, we continue to feel confident in our disciplined, value-oriented approach and strongly believe investors will be rewarded for their patience through this challenging period. A key centerpiece to our approach is avoiding the emotions and opinions that seem desirable in the short run, but often prove costly over the long haul. We will continue our emphasis of owning well-established companies, which pay above average dividend yields.

As we have mentioned in the past, dividend income is not subject to investor emotions, market cycles, or other biases of the environment. Given the lessons from the past three years, investor expectations have declined to more realistic levels. The market volatility has reminded investors of the importance of the dividend as an important and more reliable component of total return.

* Past performance is no guarantee of future results. The line graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Investment return and principal value will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost.

** The S&P 500 and the LEIFI are not adjusted to reflect sales charges, expenses or other fees that the Securities and Exchange Commission requires to be reflected in a mutual fund's performance. These indexes are unmanaged. Actual investments may not be made in an index. The S&P 500 is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. Lipper indexes are an average of the total return of the 30 largest mutual funds designated by Lipper, Inc. as falling into the respective categories indicated.

Semi-Annual Report--Commentary

Fund Manager:     Mary Linehan
Investment Experience:   14 years
Education:   M.B.A. degree, Marquette University;
B.B.A. University of North Dakota

Marshall Large Cap Growth and Income Fund

Fund Performance

For the six-months ended February 28, 2003, the Fund's total return was (10.15)%.* For the same reporting period the Standard & Poor's 500 Index (S&P 500) returned (7.29)% and the Lipper Large-Cap Core Funds Index (LLCCFI) returned (7.48)%.**

Factors Affecting Performance

For the six month reporting period, the market remained extremely volatile. The market as measured by the S&P 500, bottomed early in October and moved higher over the subsequent seven weeks. The rally was lead by low priced, high beta, beaten up equities. The rally came to an end quickly in early December when a disappointing economic report finally tipped the market over. December, which has usually been the best performance month of the year for the S&P 500, turned in its worst performance in 70 years. The market, continuing its pattern of the last two years, had a sharp move up at the start of the year, but quickly gave it all back and then some by the end of February. This reporting period has also been marked by an unusually high level of political uncertainty with Iraq, the Middle East, and most recently North Korea taking center stage.

Several sectors accounted for the disappointing relative performance of the Fund. The three most disappointing sectors were financials, healthcare, and consumer discretionary, almost entirely from specific stocks rather than from overweighting or underweighting the sector. The financial area returned the weakest performance with the Fund's financial holdings down 13.7% versus the financial holdings in the S&P down only 9.6%. The healthcare sector was our second weakest sector. The Fund's largest healthcare holding, HCA, was hit when negative news came out on one of its competitors. The competitor's problems remain specific to that name and HCA continues to be one of the Fund's largest holdings. Finally, the Fund's industrial holdings were very strong relative to the sector average and the overweight position helped as well. The Fund also did well in the information technology area despite its underweight position relative to the sector.

Certain shifts in the portfolio occurred with the change in managers as of January. Concentrated telecommunication services and energy holdings were reduced and additional securities were purchased to broaden the exposure to those sectors. Exposure to the financial sector was reduced overall. Finally, certain other securities were sold to reposition the portfolio into holdings with more upside potential in advance of an improving economy.

Looking Ahead

Looking forward, with war looming, oil prices surging, and consumer confidence sagging, there is real risk that the economy stays soft for a prolonged period of time. However, we continue to believe that earnings growth will come in 2003, albeit at a very moderated level. Businesses continue to improve their balance sheets and corporate earnings appear to be the most realistic in 3 to 4 years. The Fund remains underweight in the consumer discretionary and staples areas, where the valuations appear to be full. Selective names will be added in the information technology area, but only when we believe valuations have bottomed. The energy area remains overweight because of the recent positive relative earnings revisions and what we believe to be a favorable fundamental outlook.

* Past performance is no guarantee of future results. The line graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Investment return and principal value will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost.

** The S&P 500 and the LLCCFI are not adjusted to reflect sales charges, expenses or other fees that the Securities and Exchange Commission requires to be reflected in a mutual fund's performance. These indexes are unmanaged. Actual investments may not be made in an index. The S&P 500 is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. Lipper indexes are an average of the total return of the 30 largest mutual funds designated by Lipper, Inc. as falling into the respective categories indicated.

Semi-Annual Report--Commentary

Fund Manager:     Matthew B. Fahey
Investment Experience:   22 years
Education:   M.B.A. degree, Marquette University;
B.B.A. University of Wisconsin-Milwaukee
Analyst:   Gregory S. Dirkse

Marshall Mid-Cap Value Fund

Fund Performance

For the six-months ended February 28, 2003, the Fund's total return was (5.93)%.* For the same reporting period the Russell Midcap® Value Index (RMCVI) returned (7.96)%, while the Lipper Mid-Cap Value Funds Index (LMCVFI) returned (7.21)%.**

Factors Affecting Performance

Stock prices generally bottomed in early October, and were aided by an interest rate cut by the Federal Reserve Board (the "Fed") in November and faint signs that the economy was stabilizing. December, usually a strong month for equities, showed one of its worst performances in recent history falling approximately 6%. The first two months of the calendar year each showed negative returns, although smaller in magnitude compared to December. Historically high energy prices, uncertainty in Iraq and North Korea, and profit taking from the October lows contributed to a poor ending to the reporting period.

The Fund's outperformance compared to its benchmarks was derived through a combination of stock selection, and to some degree sector selection. The Fund held underweight positions relative to the RMCVI in consumer discretionary and financials sectors, both of which were weak groups during the reporting period. Energy holdings which represent a slight overweight position in the Fund were on average up double-digits, which was greater than the average energy stock. Telecommunication services holdings Alltel (1.22)% and Citizens Communications (1.89)% showed positive returns, while the telecommunication services sector as a whole generated negative returns. Overweight positions in the industrial and material sectors detracted from performance. Several industrial and material holdings experienced double-digit declines, many due to reduced earning expectations on higher pension, insurance, and energy costs. Transportation holdings CSX (1.98)% (railroad) and Swift Transportation (1.73)% (trucking) were down due to higher fuel costs and slow economic activity. Surprising to many, the best performing sector (ex energy) was the information technology group. The sector was down low single-digits as many of the companies in the group experienced a stabilization in fundamentals and many of the stocks had been beaten down to attractive levels. The Fund held an overweight position in the sector, although the stock selection limited performance as the average holding was down more than the sector average.

Looking Ahead

Our continued strategy is to look for strong companies whose stock has temporarily fallen out-of-favor due to company specific issues, industry concerns, or general macro factors. We must then be convinced of two factors: that the company is financially strong through its balance sheet and cash flow to support the business until it is repaired, and that the company will overcome its current issues and will remain only temporarily out-of-favor.

In general, the portfolio is built by buying one stock at a time, rather than broad sweeping purchases of stocks based on their economic sector. We currently hold less consumer related stocks than index averages because we are not finding compelling valuations in that sector. Many of these stocks have performed well recently and do not appear to represent good value. Our underweight in financials has been driven by a lack of faith in the earnings estimated for many constituents of the sector. Falling interest rates have benefited the sector over the last several years and that does not seem sustainable to us. Our overweight position in industrial and basic material holdings has not produced desirable results. While our holdings generally have good valuation support, a slowing economy could pressure earnings growth and make it difficult for these stocks to improve in the near-term. Nonetheless, we believe these stocks will have their day in the sun.

* Past performance is no guarantee of future results. The line graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Investment return and principal value will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost.

** The RMCVI, LMCVFI and the S&P 400 are not adjusted to reflect sales charges, expenses or other fees that the Securities and Exchange Commission requires to be reflected in a mutual fund's performance. These indexes are unmanaged. Actual investments may not be made in an index. The RMCVI, measures the performance of those Russell Midcap companies with lower price-to-book ratios and lower forecasted growth values. Lipper indexes are an average of the total return of the 30 largest mutual funds designated by Lipper, Inc. as falling into the respective category indicated. The S&P 400 is a capitalization-weighted index of common stocks representing all major industries in the mid-range of the U.S. Stock market. The Fund has elected to change the benchmark index from the S&P 400 to the RMCVI. The RMCVI is more representative of the securities typically held by the Fund. This change was effective January 1, 2003.

Semi-Annual Report--Commentary

Fund Manager:      Michael D. Groblewski, CFA
Investment Experience:   11 years
Education:   M.B.A. degree, Syracuse University;
B.B.A. University of Wisconsin-Madison
Analyst:   Kenneth S. Salmon

Marshall Mid-Cap Growth Fund

Fund Performance

For the six months ended February 28, 2003, the Fund provided a total return of (0.86)%.* In comparison, the Russell Midcap® Growth Index (RMCGI) returned (1.36)% and the Lipper Mid-Cap Growth Funds Index (LMCGFI) returned (4.75)%.**

Factors Affecting Performance

U.S. equity markets remain under a cloud of uncertainty. The threat of military action against Iraq and diplomatic tensions with North Korea have driven domestic investors from equities toward short term fixed income securities. These concerns paired with a weak dollar have resulted in foreign investors also leaving the U.S. market. The same cloud that has depressed equity markets has muted the economic recovery. Uncertainty has resulted in corporate and consumer spending delays. Additionally, higher energy prices driven by Middle East tensions and Venezuelan strikes, threaten to further slow the economic recovery.

The silver lining in our minds, is the resulting low interest rate environment. Consumers have significantly lowered cost structures by refinancing their homes, as 30 year fixed rates have reached 40 year lows. Additionally, corporate America has repaid debt through a combination of cash flow and securing lower rate fixed debt. Therefore, we are encouraged as stronger consumer and corporate balance sheets should set the stage for a stronger economic recovery once the current geopolitical concerns are put to rest.

Significant energy and healthcare positions, along with select information technology holdings allowed the Fund to beat the indexes over the past six months. In healthcare, Biovail was our most notable gainer. The pharmaceutical maker increased 38% in the reporting period and remains our largest healthcare holding. In information technology, wireless semiconductor manufacturer Skyworks appreciated 190% by the end of November. Skyworks remains in the portfolio, however we used the opportunity in late fall to sell approximately two thirds of our position.

Looking Ahead

The U.S. economy appears to be on the road to recovery, even if the precise timing or pace is not entirely clear. However, we will continue to keep a close eye on unemployment as it is the single factor that concerns us the most and could have the greatest dampening effect. Once the geopolitical concerns are behind us, we believe the strength of the recovery should become more apparent.

In anticipation of a slow, steady economic recovery, we continue to favor economically sensitive sectors. Therefore, consumer discretionary names continue to represent a large part of the portfolio. Additionally, we have added to our information technology holdings, as we believe the recent Federal Budget delay has allowed us the opportunity to increase our position in the government information technology sector at attractive prices.

* Past performance is no guarantee of future results. The line graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Investment return and principal value will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost.

** The RMCGI, LMCGFI and the S&P 400 are not adjusted to reflect sales charges, expenses or other fees that the Securities and Exchange Commission requires to be reflected in a mutual fund's performance. These indexes are unmanaged. Actual investments may not be made in an index. The RMCGI measures the performance of those Russell Midcap companies with higher price-to-book ratios and higher forecasted growth values. The Lipper indexes are an average of the total return of the 30 largest mutual funds designated by Lipper, Inc. as falling into the respective categories indicated. The S&P 400 is a capitalization-weighted index of common stocks representing all major industries in the mid-range of the U.S. stock market. The Fund has elected to change the benchmark index from the S&P 400 to the RMCGI. The RMCGI is more representative of the securities typically held by the Fund. This change was effective January 1, 2003.

Semi-Annual Report--Commentary

Fund Manager:     Sean McLeod, CFA
Investment Experience:   6 years
Education:   M.S. and B.B.A. degree, University of Wisconsin-Madison
Analyst:   Robert S. McDougall, CFA

Marshall Small-Cap Growth Fund

Fund Performance

For the six months ended February 28, 2003, the Fund provided a total return of (5.26)%.* This exceeded the return of the Russell 2000 Growth Index (Russell 2000 GI) of (5.55)%, and the Lipper Small Cap Growth Funds Index (LSCGI) of (6.57)%.**

Factors Affecting Performance

Market sentiment changed quite dramatically during the previous six months. During the month of September, fears of a double dip recession, rising oil prices and poor consumer sentiment had sent many investors to the sidelines with the Russell 2000 GI down over 7%. Although we performed in line with the index during the month of September, we spent much of the month repositioning the portfolio to benefit from an improving economy by increasing our consumer discretionary, energy and information technology exposure with holdings including Outback Steakhouse (OSI), Horizon Offshore (HOFF), and Skyworks (SWKS) respectively. This strategy worked well during October and November when renewed optimism about an improving economy in 2003 sent the Russell 2000 GI up over 15% and the Fund over 20%. By December however, sentiment had begun to change as an impending war, fear of terrorism, and rising oil prices began to take a toll on investor psychology. From December through February the Russell 2000 GI declined 12%, w hile the Fund, still overweight in economically sensitive sectors, was down over 15%.

Looking Ahead

Fear of the unknown will, in all likelihood, continue to pressure equity valuations until there is resolution to the issues of the day--namely Iraq, North Korea, and the fear of impending terrorism. In times of uncertainty, investors tend to ascribe overly high probabilities to worse case scenarios. In the end, the worse case scenario rarely happens, and the equity market typically responds favorably. We feel this situation will be similar. Once there is some clarity as to how things will be resolved, we feel the market will appreciate, after which, we hope that stock valuations will once again rely upon underlying business fundamentals.

The Fund is positioned to take advantage of an economic rebound, as evidenced by our overweight positions in both consumer cyclicals and technology. In spite of increasing unemployment levels and the slump in corporate profitability, U.S. consumers continued to spend strongly throughout 2002. We remain confident that the U.S. consumer will continue to spend as the economy improves, leading to accelerating growth in revenue and earnings for these companies. The Fund also has recently increased its weighting in technology stocks. Investors had already become impatient with the pace of fundamental improvement in this group even before the current geopolitical concerns. This combination of negative events has, in our opinion, created a number of good buying opportunities in the group.

We continue to invest in sectors benefiting from attractive secular trends, and in companies with lasting competitive advantages, strong balance sheets, and good management teams. In addition, our sensitivity to stock valuations remains a major factor in our decision to over or underweight certain sectors. This approach has proven effective in 2001 and 2002, and we believe this discipline will again be an important factor for investors in 2003. We believe prudent investments in smaller-capitalization, growth-oriented stocks may result in strong long-term risk-adjusted returns.

*Past performance is no guarantee of future results. The line graph and table do not reflect the deduction of taxes that the shareholder would pay on Fund distributions or the redemption of Fund shares. Investment return and principal value will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost.

**The Russell 2000 GI, LSCGI and the Russell 2000 are not adjusted to reflect sales charges, expenses or other fees that the Securities and Exchange Commission requires to be reflected in a mutual fund's performance. These indexes are unmanaged. Actual investments may not be made in an index. The Russell 2000 GI measures the performance of those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values. Lipper indexes are an average of the total return of the 30 largest mutual funds designated by Lipper Inc., as falling into the respective categories indicated. The Russell 2000 is an index of common stocks whose market capitalizations generally range from $200 million to $5 billion. The Fund has elected to change the benchmark index from the Russell 2000 to the Russell 2000 GI. The Russell 2000 GI is more representative of the securities typically held by the Fund. This change was effective January 1, 2003.*** Small company stocks may be less liquid and subject to greater volatility than large capitalization stocks.

† The Marshall Small-Cap Growth Fund is the successor to a collective trust fund. The quoted performance data includes performance of the collective trust fund for periods before the Fund's registration statement became effective on August 30, 1996, as adjusted to reflect the Fund's anticipated expenses. The collective trust fund was not registered under the Investment Company Act of 1940 ("1940 Act") and therefore was not subject to certain diversification requirements and investment restrictions imposed by the 1940 Act and the Internal Revenue Code. If the collective trust fund had been subject to those restrictions registered under the 1940 Act, the performance may have been adversely affected.

Semi-Annual Report--Commentary

Fund Manager:      Daniel R. Jaworski, CFA
Investment Experience:   14 years
Education:   M.B.A. degree, University of Minnesota;
B.A. Concordia College
Analyst:   BPI Global Asset Management Team

Marshall International Stock Fund

Fund Performance

For the six months ended February 28, 2003, the Fund provided a total return of (15.15)%.* In comparison, the Morgan Stanley Capital International Europe, Australasia and Far East Index (EAFE) returned (11.04)% while the Lipper International Funds Index (LIFI) returned (11.04)%.**

Factors Affecting Performance

International equity markets vacillated over the last six months. We witnessed a significant sell-off last September, which was followed by an October-November rally and then three successive months of negative returns in December, January and February. Stimulative actions taken by governments and central banks during this span were unable to override investor concerns about the pace of economic recovery and geopolitical matters such as the conflict with Iraq. All major industrial sectors and geographic regions generated negative returns for the trailing six-month reporting period.

The primary factors contributing to the Fund's relative underperformance during this reporting period were its holdings in the telecommunication services and consumer discretionary sectors. In the telecommunication services sector, the Fund's holdings underperformed primarily because of the strong performance of several large European telecommunications companies which did not meet our buy criteria and the Fund did not hold. The stock prices of these highly-leveraged, lower-quality entities rose dramatically during the fourth quarter of 2002 on news that France Telecom would receive virtually unconditional loans from the government to sustain its operations for the near term. Effectively, the bankruptcy discount that had previously been built into the prices of these stocks went away. In the consumer discretionary sector, the Fund's stakes in companies such as video game software producer Sega in Japan, and media concern Pearson PLC in the United Kingdom detracted from performance.

On the positive side of the ledger, the Fund benefited from the performance of its holdings in the energy and materials sectors. In energy, the Fund held a significant position in YUKOS, a fully integrated oil-and-gas company headquartered in Moscow, Russia. We continue to believe that this company is a good long-term investment because of its vast oil reserves, low production costs, attractive valuation and new shareholder-friendly management team. In materials, iron ore producer Companhia Vale Do Rio Doce in Brazil, and paper producer, Sappi Ltd. in South Africa also contributed positively to Fund performance. In the aggregate, the Fund's holdings in emerging market stocks benefited performance more than any other region of the world.

Looking Ahead

On a sector basis we have increased exposure to the financials, information technology, telecommunication services and energy groups. We have identified several companies within these areas that have improving fundamentals and are taking market share from the weaker players in their respective industries. The source of funds for these purchases has come predominantly from sales of stocks in the consumer discretionary sector, where several company price targets were reached as fundamentals appeared to have hit a plateau. Our underweight positions in the healthcare, consumer staples, and utilities sectors remain intact. However, the valuations and business fundamentals are becoming more attractive in the healthcare group. We are looking to increase our exposure to this area as we find quality companies selling at discounts to their global industry peers.

Geographically the Fund remains underweight Japan and Europe, with the balance invested primarily in developing markets. We continue to identify attractive opportunities in markets such as Korea, Mexico, Brazil, Russia and Israel.

Semi-Annual Report--Commentary

Fund Manager:     Jason D. Weiner, CFA
Investment Experience:   13 years
Education:   B.S. degree, Marquette University
Analyst:   Salvadore D. Amato

Marshall Government Income Fund

Fund Performance

For the semi-annual period ended February 28, 2003, the Fund provided a total return of 2.28%.* In comparison, the Lehman Brothers Mortgage-Backed Securities Index (LMI) returned 3.01% while the Lipper U.S. Mortgage Funds Index (LUSMI) returned 2.67%.**

Factors Affecting Performance

Interest rates approached historic lows as a result of a difficult market environment caused by increased geopolitical and economic uncertainty. Bond investors were once again rewarded with solid returns over the last six months. Mortgage-backed securities (MBS) performed surprisingly well over this period as investors favored these securities given their high quality and attractive yields regardless of the inherent prepayment risk associated with them. The Fund's emphasis on call-protected securities as well as MBS added to portfolio performance by allowing us to benefit more directly from declining interest rates during this tumultuous period of time.

Looking Ahead

The mortgage market currently faces the potential of a significant increase in prepayment risk as rates have plummeted to generational lows. Record refinancing activity combined with an exceptionally strong housing market typically results in meaningful underperformance for mortgage securities. However, we believe mortgages will continue to perform well as demand from investors, particularly banks, will lend support to valuations. In addition, mortgage investors have grown accustomed to spikes in prepayment speeds and have adapted accordingly by developing sound methodologies to analyze these types of risk.

We remain committed to our predominant allocation to mortgage securities due to their compelling yields in today's historically low interest rate environment. Our emphasis will be to maintain good representation across the mortgage sector for the purpose of diversification. Selectivity will be of heightened importance as we focus on opportunistically enhancing yield and overall total return. Additionally, we will focus on mortgage securities with defensive characteristics as we expect interest rates will rise modestly from their historic lows. We must be mindful of the possibility of extension risk supplanting prepayment concerns as rates begin to climb in the second half of 2003. Near term, interest rates will remain fairly stable as the market continues to focus on the uncertainty surrounding the war with Iraq and the impact on the economy. Such a climate may create a favorable environment for mortgages over the next six months.

*Past performance is no guarantee of future results. The line graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Investment return and principal value will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost.

**The LMI and the LUSMI are not adjusted to reflect sales charges, expenses or other fees that the Securities and Exchange Commission requires to be reflected in a mutual fund's performance. These indexes are unmanaged. Actual investments may not be made in an index. The LMI is an index comprised of fixed rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA), Federal Home Loan Mortgage Corp. (FHLMC) and the Federal National Mortgage Association (FNMA). Lipper indexes are an average of the total return of the 30 largest mutual funds designated by Lipper, Inc. as falling into the respective categories indicated.

*** Duration is a measure of a security's price sensitivity to changes in interest rates. Securities with longer durations are more sensitive to changes in interest rates than securities of shorter durations.

Semi-Annual Report--Commentary

Fund Manager:     Jason D. Weiner, CFA
Investment Experience:   13 years
Education:   B.S. degree, Marquette University
Analysts:   Blane D. Dexheimer, CFA and Andrew M. Reed

Marshall Intermediate Bond Fund

Fund Performance

For the semi-annual period ended February 28, 2003, the Fund provided a total return of 4.47%.* In comparison, the Lehman Brothers Government/Credit Intermediate Index (LGCI) returned 4.97% while the Lipper Short/Intermediate Investment Grade Bond Funds Index (LSIBF) returned 4.13%.**

Factors Affecting Performance

Fixed income investors enjoyed solid portfolio returns as interest rates fell to historically low levels and corporate bonds staged an impressive rally that began in early October. Investors sought the relative safety of U.S. Treasuries during a difficult market environment caused by continued geopolitical and economic uncertainties. At the same time, investors discovered value in the battered corporate bond as an alternative to the low yields available for Treasury securities. This robust rally for corporate bonds offset some of the disastrous performance that the market posted through the first three-quarters of 2002.

Economic uncertainty, uninspiring fundamentals, geopolitical threats, and corporate governance issues caused unprecedented volatility that permeated the corporate bond marketplace throughout the year. This volatility caused corporate yields to increase to historically wide levels. We viewed this situation as an opportunity to capitalize on market weakness to add to our corporate bond allocation. We tactically added exposure to attractive industries whose debt was impacted by the carnage in the corporate bond market. In addition, we believed that accommodative monetary and fiscal policy, moderate growth in earnings, continued de-leveraging, improved liquidity, and low supply would provide the impetus for corporate bonds to outperform. Thus, the Fund captured the significant rally for corporate bonds, which lead to good relative returns over the last six months.

Looking Ahead

We expect the economy will gain traction in the second half of 2003 as the uncertainty currently infecting the markets will abate and should support corporate and mortgage bond valuations. We especially believe corporate bonds offer compelling total return potential but our enthusiasm is tempered by today's arduous market conditions. We will look to opportunistically add to our corporate bond allocation, particularly those rated BBB, in anticipation of an Iraqi resolution and a sustainable economic recovery. In the near term, prudence is warranted given the looming geopolitical dangers and a sluggish global economy. This type of environment requires a disciplined, well- diversified portfolio approach focusing on high quality sectors such as mortgage, asset-backed, and agency securities to complement our conservative corporate bond allocation. We are positioning the portfolio for an economic recovery in the next twelve months; a recovery that we anticipate will be gradual.

* Past performance is no guarantee of future results. The line graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Investment return and principal value will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost.

** The LGCI and the LSIBF are not adjusted to reflect sales charges, expenses or other fees that the Securities and Exchange Commission requires to be reflected in a mutual fund's performance. These indexes are unmanaged. Actual investments may not be made in an index. The LGCI is an index comprised of government and corporate bonds rated BBB or higher with maturities between 1-10 years. Lipper indexes are an average of the total return of the 30 largest mutual funds designated by Lipper, Inc. as falling into the respective categories indicated.

*** Duration is a measure of a security's price sensitivity to changes in interest rates. Securities with longer durations are more sensitive to changes in interest rates than securities of shorter durations.

Semi-Annual Report--Commentary

Fund Manager:     John D. Boritzke, CFA
Investment Experience:   19 years
Education:   B.S. and M.B.A. degree, Marquette University
Analyst:   Andrew M. Reed

Marshall Intermediate Tax-Free Fund

Fund Performance

For the six-month period ended February 28, 2003, the Fund produced a total return of 2.89%,* in comparison to the Lehman Brothers 7-Year General Obligations Index (L7GO) which was up 3.24%. Over the same reporting period, the Lipper Intermediate Municipal Funds Index (LIMI), which represents our peer group competition, returned 2.80%.**

Factors Affecting Performance

Continuing a trend begun in early 2001, the municipal bond yield curve steepened further under the influence of an aggressive Federal Reserve Board (the "Fed") decision to lower short-term interest rates by 50 basis points in November, 2002. Similarly, interest rates for municipal bonds maturing five years and shorter also declined by 50 basis points or more. Intermediate and longer maturity municipal bond yields moved lower also, but the magnitude of the move was much less pronounced. With overall yield levels already at multi-decade lows, we anticipate that the Fed cycle of rate reduction is nearing completion.

Overall demand for municipal bonds and bond funds remains healthy as investors have reached the point of frustration with low money market yields. Issuers are more than willing to meet strong demand with an increasing supply of new issuance, as low rate levels tempt municipal borrowers with an opportunity to plug budgetary gaps created by revenue shortfalls. Thus far in 2003, the first two months of municipal bond issuance continues at a record pace.

As the economy plods along, several state and local budgets have faced deficits for the last two fiscal years. Many states have raised the so-called sin taxes--taxes on alcohol and tobacco. But revenue enhancing measures alone are not enough. In many cases, spending cuts will need to be implemented in order to maintain adequate credit quality measures. Two of the largest problem states are California and New York, and their bonds have underperformed during recent months. The Fund has purposely been managed to minimize exposure to the largest potential problem areas. As many credit problems are not going away soon, continued emphasis is placed on maintaining a high credit quality profile within the Fund.

Looking Ahead

Almost by any measure, municipal yields are "cheap" versus taxable securities. This means most all taxpayers in the highest marginal brackets could enjoy superior taxable equivalent returns by owning municipal bonds. Despite the Bush administration idea of allowing dividend income to be tax-free to individuals, municipal bonds will remain the asset of choice for the truly risk averse investor. Coupon income is much more predictable than dividend cash flows, and maturity values are easier to forecast than the terminal value of a dividend paying stock. For those investors concerned that interest rates are set to rise sometime in 2003, be aware that municipal bonds have historically outperformed their taxable counterparts in bond bear markets. Aware that interest rates have likely touched their lows for this economic cycle, we will strategically maintain bonds with shorter durations to soften the impact of future market price deterioration.

* Past performance is no guarantee of future results. The line graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Investment return and principal value will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost.

** The L7GO and the LIMI are not adjusted to reflect sales charges, expenses or other fees that the Securities and Exchange Commission requires to be reflected in a mutual fund's performance. These indexes are unmanaged. Actual investments may not be made in an index. The L7GO is an index comprised of general obligation bonds rated A or better with maturities between six and eight years. Lipper indexes are an average of the total return of the 30 largest mutual funds designated by Lipper, Inc. as falling into the respective categories indicated.

*** Duration is a measure of a security's price sensitivity to changes in interest rates. Securities with longer durations are more sensitive to changes in interest rates than securities of shorter durations.

Income generated by the Fund may be subject to the federal alternative minimum tax.

Semi-Annual Report--Commentary

Fund Manager:      Richard M. Rokus, CFA
Investment Experience:   10 years
Education:   B.B.A. degree, University of Wisconsin-Whitewater
Analyst:   Blane D. Dexheimer, CFA

Marshall Short-Term Income Fund

Fund Performance

The Fund returned 2.54% for the last six months.* This compares with the Merrill Lynch 1-3 Year U.S. Government/Corporate Index (ML13) return of 2.67% and the Lipper Short-Term Investment Grade Bond Fund Index (LSTIBI) return of 2.53%.**

Factors Affecting Performance

As of the end of February, the Fund had a maturity of approximately 2 years. The Fund outperformed the index due to a combination of security selection and maturity management. Short-term interest rates finished the period lower by as much as 50 basis points. Bonds have rallied steadily since the beginning of the year. Fears over a pending war with Iraq and a heightened sensitivity to the terrorism threat have caused a flight to quality. Added to this mix is the concern over the possibility of disinflation. Disinflation is the phenomenon of widespread declining prices. This causes economic hardship for many sectors of the market from real estate to the corporate debt markets. The Federal Reserve Board lowered rates by 50 basis points to 1.25% in November as an insurance policy against both further deterioration in the economy and prospects for disinflation.

The corporate sector saw beginning of a recovery in November. In retrospect, the watershed event was the announced merger between HSBC and Household International. Bond spreads on Household had deteriorated to junk levels over the first 10 months of the year. After the announced merger, they tightened significantly, causing losses to those participants who had shorted their bonds. With this single event began a widespread tightening in corporate bond spreads. Spreads have returned to what some would call more realistic levels, future performance will have to be driven by fundamental balance sheet improvement.

Looking Ahead

Looking out over the next year we are looking for rates to move slightly higher. For the economy to strengthen, we must see some clarity around the larger issues of war and terrorism. While we believe rates will move higher in response to a stronger economy there still remains the possibility of shocks due to both terrorist attacks and uncertain corporate and consumer spending. As a result we plan at this juncture to keep the interest rate sensitivity close to that of the index and overweight corporates, mortgages, and asset backed securities to add yield.

* Past performance is no guarantee of future results. The line graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Investment return and principal value will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost.

** The ML13 and the LSTIBI are not adjusted to reflect sales charges, expenses or other fees that the Securities and Exchange Commission requires to be reflected in a mutual fund's performance. These indexes are unmanaged. Actual investments may not be made in an index. The ML13 is an index tracking short-term U.S. government and corporate securities with maturities between 1 and 2.99 years. The index is produced by Merrill Lynch Pierce Fenner & Smith. Lipper indexes are an average of the total return of the 30 largest mutual funds designated by Lipper, Inc. as falling into the respective categories indicated.

*** Duration is a measure of a security's price sensitivity to changes in interest rates. Securities with longer durations are more sensitive to changes in interest rates than securities of shorter durations.

Semi-Annual Report--Commentary

Fund Manager:     Richard M. Rokus, CFA
Investment Experience:   10 years
Education:   B.B.A. degree, University of Wisconsin-Whitewater
Analyst:   Blane D. Dexheimer, CFA

Marshall Money Market Fund

Fund Performance

For the six months ended February 28, 2003, the Fund provided a total return of 0.62%.* In comparison, the iMoneyNet, Inc. Money Fund Report AveragesTM (MFRA) returned 0.50%, while the Lipper Money Market Funds Index (LMMFI) returned 0.11%.** As of February 28, 2003, the Fund's 7-day net yield was 0.97%.***

Factors Affecting Performance

The most significant factor affecting the level of the Fund's yield was the change in interest rates by the Federal Reserve Board (the "Fed"). As the Fed controls short-term interest rates, the decision to cut rates from 1.75% to 1.25% had a direct effect on our rates. The Fed's action was done to head off any chance of a disinflationary spiral, similar to what has occurred in Japan over the last several years. While high levels of inflation are devastating to the economy, it seems the ramifications from a widespread decline in prices (disinflation) may be equally as dangerous. While most economists do not think the economy will slip back into a recession, they do believe any growth over the next year will be low, in the 1.0-2.5% range.

The Fund outperformed its competitive benchmarks primarily due to the greater use of floating rate notes and the Fund's lower expense ratio. The first element has been a successful part of our investment strategy, which we remain comfortable with in the current rate environment. The second element relates to our ability to increase the amount of assets managed in the Fund, which results in a significantly lower expense ratio than the average money market fund.

Looking Ahead

The current economic picture is clouded by geopolitical concerns. War with Iraq combined with increased sensitivity to terrorism concerns have combined to restrain both consumer and business spending. However, lower rates have allowed Americans to refinance their home mortgage at rates most of us cannot remember. Refinancing activity will put extra money in the pocket of consumers. At this point, a sustained economic expansion can only be envisioned once the larger safety concerns have resolved. Once that occurs, we believe the economy will expand both strongly and steadily. If the economy regains its footing, the Fed will no longer be expected to lower the federal funds target rate, which would stabilize money market rates.

* Past performance is no guarantee of future results. Yields may vary. Yields quoted for money market funds most closely reflect the fund's current earnings.

** Money Fund ReportTM, a service of iMoney Net, Inc. (formerly IBC Financial Data), publishes annualized yields of hundreds of money market funds on a weekly basis, and through its Money Market Insight publication reports monthly and year-to-date investments results for the same money funds. Lipper indexes are an average of the total return of the 30 largest mutual funds designated by Lipper, Inc. as falling into the respective categories indicated. They do not reflect sales charges.

*** The 7-day net annualized yield is based on the average net income per share for the 7 days ended on the date of calculation and the offering price on that date. The 7-day effective yield is annualized and reflects daily compounding of the 7-day net yield.

An investment in money market funds is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although money market funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in these funds.

 

February 28, 2003 (unaudited)

Portfolio of Investments

Equity Income Fund

  

Description

   

 

Shares

   

Value

Common Stocks -- 97.1%

 

 

 

 

 

 

Consumer Discretionary -- 4.0%

 

Advertising -- 0.3%

 

 

 

 

 

 

 

Interpublic Group Cos., Inc.

 

 

85,000

 

$

820,250

 

Auto Parts & Equipment -- 0.2%

 

Delphi Corp.

 

 

94,200

 

 

728,166

 

Automobile Manufacturers -- 0.8%

 

Ford Motor Co.

 

 

95,554

 

 

795,009

 

General Motors Corp.

 

 

47,100

 

 

1,590,567

 

 

 

 

 

 

 

2,385,576

 

Department Stores -- 0.8%

 

 

 

 

 

 

 

May Department Stores Co.

 

 

36,700

 

 

720,054

 

Sears, Roebuck & Co.

 

 

72,700

 

 

1,583,406

 

 

 

 

 

 

 

2,303,460

 

Household Appliances -- 0.8%

 

Maytag Corp.

 

 

53,000

 

 

1,277,300

 

Stanley Works

 

 

39,900

 

 

1,029,819

 

 

 

 

 

 

 

2,307,119

 

Leisure Products -- 0.4%

 

 

 

 

 

 

 

Brunswick Corp.

 

 

64,000

 

 

1,209,600

 

Photographic Products -- 0.5%

 

Eastman Kodak Co.

 

 

53,500

 

 

1,583,600

 

Publishing -- 0.2%

 

 

 

 

 

 

 

McGraw-Hill Cos., Inc.

 

 

13,500

 

 

759,240

 

Total Consumer Discretionary

 

 

 

 

 

12,097,011

Consumer Staples -- 12.0%

 

 

 

 

 

 

 

Brewers -- 0.2%

 

 

 

 

 

 

 

Anheuser-Busch Cos., Inc.

 

 

14,600

 

 

678,900

 

Food Distributors -- 0.3%

 

 

 

 

 

 

 

SUPERVALU, Inc.

 

 

75,000

 

 

1,044,000

 

Household Products -- 4.4%

 

 

 

 

 

 

 

Kimberly-Clark Corp.

 

 

111,600

 

 

5,114,628

 

Procter & Gamble Co.

 

 

103,000

 

 

8,431,580

 

 

 

 

 

 

 

13,546,208

 

Packaged Foods/Meats -- 1.5%

 

Campbell Soup Co.

 

 

79,400

 

 

1,646,756

 

General Mills, Inc.(1)

 

 

17,700

 

 

758,799

 

Heinz (H.J.) Co.

 

 

66,600

 

 

2,044,620

 

 

 

 

 

 

 

4,450,175

 

Personal Products -- 1.3%

 

 

 

 

 

 

 

Gillette Co.

 

 

132,300

 

 

3,994,137

 

Retail-Foods -- 0.2%

 

 

 

 

 

 

 

Albertson's, Inc.

 

 

30,500

 

 

574,315

 

Soft Drinks -- 2.0%

 

 

 

 

 

 

 

Coca-Cola Co.

 

 

154,000

 

 

6,193,880

 

Description

Shares

Value

Common Stocks (continued)

 

 

 

 

 

 

Consumer Staples (continued)

 

Tobacco -- 2.1%

 

 

 

 

 

 

 

Altria Group, Inc.

 

 

164,500

 

$

6,357,925

 

Total Consumer Staples

 

 

 

 

 

36,839,540

Energy -- 9.3%

 

 

 

 

 

 

 

Oil & Gas Equipment/Services -- 0.6%

 

Schlumberger Ltd.

 

 

44,300

 

 

1,843,323

 

Oil & Gas Integrated -- 8.4%

 

 

 

 

 

 

 

Amerada-Hess Corp.

 

 

16,000

 

 

712,480

 

ChevronTexaco Corp.

 

 

83,934

 

 

5,386,045

 

ConocoPhillips

 

 

55,094

 

 

2,793,266

 

Exxon Mobil Corp.

 

 

455,152

 

 

15,484,271

 

Occidental Petroleum Corp.

 

 

42,600

 

 

1,273,740

 

 

 

 

 

 

 

25,649,802

 

Oil & Gas Refining/Marketing -- 0.3%

 

Ashland, Inc.

 

 

38,000

 

 

1,056,780

 

Total Energy

 

 

 

 

 

28,549,905

Financials -- 27.0%

 

 

 

 

 

 

 

Banks -- 13.7%

 

 

 

 

 

 

 

Amsouth Bancorporation

 

 

29,300

 

 

603,580

 

Bank of America Corp.

 

 

122,600

 

 

8,488,824

 

Bank of New York Co., Inc.

 

 

116,300

 

 

2,649,314

 

Bank One Corp.

 

 

77,400

 

 

2,788,722

 

BB&T Corp.(1)

 

 

16,000

 

 

525,280

 

Comerica, Inc.

 

 

32,300

 

 

1,323,654

 

FleetBoston Financial Corp.

 

 

63,820

 

 

1,567,419

 

Mellon Financial Corp.

 

 

61,100

 

 

1,375,361

 

National City Corp.

 

 

74,900

 

 

2,068,738

 

PNC Financial Services Group, Inc.

 

 

32,500

 

 

1,460,225

 

Regions Financial Corp.

 

 

31,400

 

 

1,016,732

 

SouthTrust Corp.

 

 

21,300

 

 

574,887

 

SunTrust Banks, Inc.

 

 

34,000

 

 

1,912,500

 

Synovus Financial Corp.

 

 

43,300

 

 

833,525

 

U.S. Bancorp

 

 

165,500

 

 

3,462,260

 

Wachovia Corp.

 

 

72,800

 

 

2,582,944

 

Washington Mutual, Inc.

 

 

77,800

 

 

2,686,434

 

Wells Fargo & Co.

 

 

132,700

 

 

6,017,945

 

 

 

 

 

 

 

41,938,344

 

Consumer Finance -- 0.4%

 

 

 

 

 

 

 

Household International, Inc.

 

 

44,300

 

 

1,237,299

 

Diversified Financial Services -- 8.9%

 

Citigroup, Inc.

 

 

317,238

 

 

10,576,715

 

Fannie Mae

 

 

93,000

 

 

5,961,300

 

Freddie Mac

 

 

30,000

 

 

1,639,500

 

J.P. Morgan Chase & Co., Inc.

 

 

145,150

 

 

3,292,002

 

Merrill Lynch & Co., Inc.

 

 

59,600

 

 

2,031,168

 

Morgan Stanley Dean Witter & Co.

 

 

102,800

 

 

3,788,180

 

 

 

 

 

 

 

27,288,865

 

Description

Shares

Value

Common Stocks (continued)

 

 

 

 

 

 

Financials (continued)

 

 

 

 

 

 

 

Insurance-Brokers -- 0.8%

 

 

 

 

 

 

 

Marsh & McLennan Cos., Inc.

 

 

60,800

 

$

2,474,560

 

Insurance-Life/Health -- 1.1%

 

 

 

 

Jefferson-Pilot Corp.

 

 

33,200

 

 

1,251,640

 

Lincoln National Corp.

 

 

50,600

 

 

1,433,498

 

UNUM Provident Corp.

 

 

50,500

 

 

656,500

 

 

 

 

 

 

 

3,341,638

 

Insurance-Multi-line -- 0.5%

 

 

 

 

 

 

 

Hartford Financial Services Group, Inc.

 

 

43,600

 

 

1,575,268

 

Insurance-Property/Casualty -- 1.0%

 

Ace, Ltd.

 

 

32,400

 

 

897,804

 

Allstate Corp.

 

 

63,000

 

 

1,992,690

 

 

 

 

 

 

 

2,890,494

 

Real Estate Investment Trust -- 0.6%

 

Equity Office Properties Trust

 

 

79,000

 

 

1,937,870

 

Total Financials

 

 

 

 

 

82,684,338

Healthcare -- 15.2%

 

 

 

 

 

 

 

Healthcare Equipment -- 0.4%

 

 

 

 

 

Baxter International, Inc.

 

 

47,000

 

 

1,334,330

 

Pharmaceuticals -- 14.8%

 

 

 

 

 

 

 

Abbott Laboratories

 

 

117,450

 

 

4,183,569

 

Bristol-Myers Squibb Co.

 

 

267,600

 

 

6,235,080

 

Lilly (Eli) & Co.

 

 

89,150

 

 

5,042,324

 

Merck & Co., Inc.

 

 

178,700

 

 

9,426,425

 

Pfizer, Inc.(1)

 

 

383,900

 

 

11,447,898

 

Schering Plough Corp.

 

 

251,700

 

 

4,535,634

 

Wyeth

 

 

127,700

 

 

4,501,425

 

 

 

 

 

 

 

45,372,355

 

Total Healthcare

 

 

 

 

 

46,706,685

Industrials -- 13.6%

 

 

 

 

 

 

 

Aerospace/Defense -- 4.4%

 

 

 

 

 

 

 

Boeing Co.

 

 

91,400

 

 

2,518,984

 

General Dynamics Corp.

 

 

29,900

 

 

1,771,874

 

Goodrich Corp.

 

 

66,300

 

 

1,019,031

 

Honeywell International, Inc.

 

 

113,200

 

 

2,591,148

 

Northrop Grumman Corp.

 

 

22,000

 

 

1,907,400

 

Raytheon Co.(1)

 

 

54,000

 

 

1,462,320

 

United Technologies Corp.

 

 

40,600

 

 

2,378,348

 

 

 

 

 

 

 

13,649,105

 

Air Freight & Logistics -- 0.2%

 

Ryder Systems, Inc.

 

 

28,400

 

 

644,396

 

Commercial Printing -- 0.3%

 

 

 

 

 

 

 

Donnelley (R.R.) & Sons Co.

 

 

55,500

 

 

1,013,430

 

Electrical Components -- 0.9%

 

 

 

 

 

 

 

Emerson Electric Co.

 

 

57,100

 

 

2,687,697

 

Description

Shares

Value

Common Stocks (continued)

 

 

 

 

 

 

Industrials (continued)

 

 

 

 

 

 

 

Industrial Conglomerates -- 6.0%

 

3M Co.

 

 

24,600

 

$

3,084,102

 

General Electric Co.

 

 

640,000

 

 

15,392,000

 

 

 

 

 

 

 

18,476,102

 

Machinery Construction/ Farm -- 0.3%

 

Caterpillar, Inc.

 

 

19,200

 

 

902,400

 

Machinery Industrial -- 0.7%

 

 

 

 

 

 

 

Dover Corp.(1)

 

 

51,500

 

 

1,314,280

 

Eaton Corp.

 

 

10,700

 

 

759,165

 

 

 

 

 

 

 

2,073,445

 

Railroads -- 0.3%

 

 

 

 

 

 

 

Burlington Northern Santa Fe

 

 

40,300

 

 

1,007,500

 

Services Diversified/Commercial -- 0.2%

 

Deluxe Corp.

 

 

12,000

 

 

483,600

 

Services-Office/Supplies -- 0.3%

 

Pitney Bowes, Inc.

 

 

25,500

 

 

791,520

 

Total Industrials

 

 

 

 

 

41,729,195

Information Technology -- 1.4%

 

Computer Hardware -- 1.1%

 

 

 

 

 

 

 

Hewlett-Packard Co.

 

 

220,400

 

 

3,493,340

 

IT Consulting & Services -- 0.3%

 

Electronic Data Systems Corp.

 

 

50,000

 

 

778,500

 

Total Information Technology

 

 

 

 

 

4,271,840

Materials -- 4.0%

 

 

 

 

 

 

 

Aluminum -- 0.5%

 

 

 

 

 

 

 

Alcoa, Inc.

 

 

78,100

 

 

1,601,050

 

Chemicals Diversified -- 1.8%

 

 

 

 

Dow Chemical Co.

 

 

82,608

 

 

2,255,198

 

Du Pont (E.I.) de Nemours & Co.

 

 

90,700

 

 

3,325,969

 

 

 

 

 

 

 

5,581,167

 

Construction Materials -- 0.3%

 

Vulcan Materials Co.

 

 

26,800

 

 

849,560

 

Industrial Gases -- 0.5%

 

 

 

 

 

 

 

Air Products & Chemicals, Inc.

 

 

40,400

 

 

1,565,904

 

Paper Products -- 0.9%

 

 

 

 

 

 

 

Georgia-Pacific Corp.

 

 

40,900

 

 

613,909

 

International Paper Co.

 

 

28,900

 

 

1,012,367

 

MeadWestvaco Corp.

 

 

44,000

 

 

1,020,360

 

 

 

 

 

 

 

2,646,636

 

Total Materials

 

 

 

 

 

12,244,317

 

Description

Shares or
Principal
Amount

Value

Common Stocks (continued)

 

 

 

 

 

 

Telecommunications Services -- 6.4%

 

Integrated Telecommunication Services -- 6.4%

 

AT&T Corp.

 

 

30,000

 

$

556,200

 

Alltel Corp.

 

 

21,000

 

 

911,820

 

BellSouth Corp.

 

 

149,300

 

 

3,235,331

 

SBC Communications, Inc.

 

 

314,332

 

 

6,538,106

 

Verizon Communications, Inc.(1)

 

 

237,590

 

 

8,215,862

 

Total Telecommunications Services

 

 

 

 

 

19,457,319

Utilities -- 4.2%

 

 

 

 

 

 

 

Electric Utilities -- 3.6%

 

 

 

 

 

 

 

American Electric Power Co., Inc.

 

 

37,200

 

 

810,216

 

Consolidated Edison Co.

 

 

15,500

 

 

604,500

 

Dominion Resources, Inc.

 

 

22,500

 

 

1,212,750

 

Exelon Corp.

 

 

28,300

 

 

1,390,945

 

FPL Group, Inc.

 

 

28,400

 

 

1,590,684

 

FirstEnergy Corp.

 

 

61,100

 

 

1,802,450

 

Pinnacle West Capital Corp.

 

 

39,900

 

 

1,218,546

 

Progress Energy, Inc.

 

 

41,500

 

 

1,614,350

 

TECO Energy, Inc.

 

 

70,000

 

 

775,600

 

 

 

 

 

 

 

11,020,041

 

Multi-Utilities -- 0.6%

 

 

 

 

 

 

 

Duke Energy Corp.

 

 

132,300

 

 

1,787,373

 

Total Utilities

 

 

 

 

 

12,807,414

Total Common Stocks (identified cost $310,902,878)

 

 

 

 

 

297,387,564

U.S. Treasury Bill -- 0.2%(2)

 

 

 

 

 

 

4/10/2003 (identified cost $399,493)

 

$

400,000

 

 

399,513

Total Investment in Securities (identified cost $311,302,371)

 

 

 

 

 

297,787,077

Repurchase Agreement -- 1.5%

 

Interest in $184,609,342 joint repurchase agreement with Lehman Brothers, Inc., 1.320% dated 2/28/2003, to be repurchased at $4,635,795 on 3/3/2003, collateralized by a U.S. Government Agency Obligation maturing 5/14/2004 (at amortized cost)

 

4,635,285

 

4,635,285

Total Investments (identified cost $315,937,656) -- 98.8%

 

 

 

 

302,422,362

Other Net Assets and Liabilities -- 1.2%

 

 

 

 

3,793,959

Total Net Assets -- 100.0%

 

 

 

 

$

306,216,321

Large-Cap Growth & Income Fund

   

Description

   



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Common Stocks -- 98.5%

 

 

 

 

 

 

Consumer Discretionary -- 10.9%

 

Department Stores -- 1.3%

 

 

 

 

 

 

 

Kohl's Corp.(3)

 

 

58,500

 

$

2,860,650

 

Footwear -- 1.0%

 

 

 

 

 

 

 

Nike, Inc., Class B

 

 

50,000

 

 

2,318,500

 

General Merchandise -- 2.9%

 

 

 

 

 

 

 

Wal-Mart Stores, Inc.

 

 

135,930

 

 

6,532,796

 

Movies & Entertainment -- 2.6%

 

AOL Time Warner, Inc.(3)

 

 

130,250

 

 

1,474,430

 

Viacom, Inc., Class B(1)(3)

 

 

45,500

 

 

1,689,415

 

Walt Disney Co.

 

 

152,816

 

 

2,607,041

 

 

 

 

 

 

 

5,770,886

 

Retail-Computer & Electronics -- 0.9%

 

RadioShack Corp.

 

 

106,000

 

 

2,081,840

 

Retail-Home Improvement -- 1.7%

 

Lowe's Cos., Inc.

 

 

99,500

 

 

3,910,350

 

Specialty Stores -- 0.5%

 

 

 

 

 

 

 

Office Depot, Inc.(3)

 

 

90,000

 

 

1,056,600

 

Total Consumer Discretionary

 

 

 

 

 

24,531,622

Consumer Staples -- 7.9%

 

 

 

 

 

 

 

Brewers -- 1.0%

 

 

 

 

 

 

 

Anheuser-Busch Cos., Inc.

 

 

49,000

 

 

2,278,500

 

Household Products -- 1.3%

 

 

 

 

 

 

 

Procter & Gamble Co.

 

 

36,830

 

 

3,014,904

 

Personal Products -- 2.7%

 

 

 

 

 

 

 

Estee Lauder Cos., Inc., Class A

 

 

107,820

 

 

3,024,351

 

Gillette Co.

 

 

100,000

 

 

3,019,000

 

 

 

 

 

 

 

6,043,351

 

Soft Drinks -- 1.8%

 

 

 

 

 

 

 

Coca-Cola Co.

 

 

100,114

 

 

4,026,585

 

Tobacco -- 1.1%

 

 

 

 

 

 

 

Altria Group, Inc.

 

 

64,500

 

 

2,492,925

 

Total Consumer Staples

 

 

 

 

 

17,856,265

Energy -- 8.1%

 

 

 

 

 

 

 

Oil & Gas-Drilling -- 0.5%

 

 

 

 

 

 

 

Noble Corp.(1)(3)

 

 

28,350

 

 

1,029,105

 

Oil & Gas-Equipment & Services -- 0.4%

 

Baker Hughes, Inc.

 

 

31,870

 

 

988,607

 

Oil & Gas Exploration & Production -- 2.3%

 

Anadarko Petroleum Corp.(1)

 

 

51,500

 

 

2,373,120

 

Burlington Resources, Inc.

 

 

20,000

 

 

927,000
               

Description

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Common Stocks (continued)

 

 

 

 

 

 

Energy (continued)

 

Oil & Gas Exploration & Production (continued)

 

EOG Resources, Inc.(1)

 

 

45,100

 

$

1,862,630

 

 

 

 

 

 

 

5,162,750

 

Oil & Gas-Integrated -- 4.9%

 

 

 

 

 

 

 

BP PLC, ADR

 

 

53,000

 

 

2,019,830

 

ConocoPhillips

 

 

44,660

 

 

2,264,262

 

Exxon Mobil Corp.

 

 

200,342

 

 

6,815,635

 

 

 

 

 

 

 

11,099,727

 

Total Energy

 

 

 

 

 

18,280,189

Financials -- 19.4%

 

 

 

 

 

 

 

Banks -- 6.2%

 

 

 

 

 

 

 

Bank of America Corp.

 

 

63,600

 

 

4,403,664

 

Bank of New York Co., Inc.

 

 

123,740

 

 

2,818,797

 

Comerica, Inc.

 

 

55,600

 

 

2,278,488

 

Wells Fargo & Co.

 

 

98,780

 

 

4,479,673

 

 

 

 

 

 

 

13,980,622

 

Consumer Finance -- 0.5%

 

 

 

 

 

 

 

Capital One Financial Corp.(1)

 

 

34,350

 

 

1,063,820

 

Diversified Financial Services -- 9.5%

 

American Express Co.

 

 

157,660

 

 

5,294,223

 

Citigroup, Inc.

 

 

162,023

 

 

5,401,847

 

Federal Home Loan Mortgage Corp.

 

 

55,490

 

 

3,032,529

 

Goldman Sachs Group, Inc.

 

 

79,500

 

 

5,521,275

 

Morgan Stanley

 

 

56,000

 

 

2,063,600

 

 

 

 

 

 

 

21,313,474

 

Insurance-Multi-Line -- 1.6%

 

 

 

 

 

 

 

American International Group, Inc.

 

 

74,424

 

 

3,668,359

 

Insurance-Property & Casualty -- 1.6%

 

MGIC Investment Corp.

 

 

92,620

 

 

3,654,785

 

Total Financials

 

 

 

 

 

43,681,060

Healthcare -- 15.1%

 

 

 

 

 

 

 

Healthcare-Equipment -- 1.2%

 

Guidant Corp.(1)

 

 

77,600

 

 

2,774,976

 

Healthcare-Facility -- 3.2%

 

 

 

 

 

 

 

HCA-The Healthcare Corp.

 

 

173,500

 

 

7,155,140

 

Pharmaceuticals -- 10.7%

 

 

 

 

 

 

 

Abbott Laboratories

 

 

48,900

 

 

1,741,818

 

Johnson & Johnson

 

 

70,370

 

 

3,690,907

 

Lilly (Eli) & Co.

 

 

35,000

 

 

1,979,600

 

Merck & Co., Inc.

 

 

54,470

 

 

2,873,292

 

Pfizer, Inc.(1)

 

 

199,310

 

 

5,943,424

 

Pharmacia Corp.

 

 

153,570

 

 

6,345,512

 

Wyeth

 

 

42,140

 

 

1,485,435

 

 

 

 

 

 

 

24,059,988

 

Total Healthcare

 

 

 

 

 

33,990,104

Description

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Common Stocks (continued)

 

 

 

 

 

 

Industrials -- 13.2%

 

 

 

 

 

 

 

Aerospace & Defense -- 3.2%

 

 

 

 

 

 

 

Boeing Co.

 

 

106,000

 

$

2,921,360

 

Northrop Grumman Corp.

 

 

50,000

 

 

4,335,000

 

 

 

 

 

 

 

7,256,360

 

Machinery Construction & Farm -- 0.6%

 

Caterpillar, Inc.

 

 

30,000

 

 

1,410,000

 

Industrial Conglomerates -- 7.0%

 

3M Co.(1)(3)

 

 

49,500

 

 

6,205,815

 

General Electric Co.

 

 

400,010

 

 

9,620,240

 

 

 

 

 

 

 

15,826,055

 

Machinery Industrial -- 2.4%

 

 

 

 

 

 

 

Parker-Hannifin Corp.(1)

 

 

132,500

 

 

5,341,075

 

Total Industrials

 

 

 

 

 

29,833,490

Information Technology -- 13.2%

 

Computer Hardware -- 2.4%

 

 

 

 

 

 

 

International Business Machines Corp.

 

 

69,940

 

 

5,451,823

 

Exchange Traded Funds -- 1.9%

 

Technology Select Sector SPDR Fund(1)

 

 

300,000

 

 

4,356,000

 

Networking Equipment -- 1.2%

 

Cisco Systems, Inc.(3)

 

 

196,600

 

 

2,748,468

 

Semiconductors -- 2.0%

 

 

 

 

 

 

 

Intel Corp.

 

 

253,500

 

 

4,372,875

 

Semiconductor Equipment -- 0.4%

 

Applied Materials, Inc.(3)

 

 

60,000

 

 

778,800

 

Systems Software -- 5.3%

 

 

 

 

 

 

 

BMC Software, Inc.(3)

 

 

171,650

 

 

3,330,010

 

Microsoft Corp.(3)

 

 

365,940

 

 

8,672,778

 

 

 

 

 

 

 

12,002,788

 

Total Information Technology

 

 

 

 

 

29,710,754

Materials -- 5.2%

 

 

 

 

 

 

 

Aluminum -- 1.5%

 

 

 

 

 

 

 

Alcoa, Inc.

 

 

159,100

 

 

3,261,550

 

Industrial Gases -- 1.4%

 

 

 

 

 

 

 

Praxair, Inc.(1)

 

 

60,000

 

 

3,171,000

 

Forest Products -- 2.3%

 

 

 

 

 

 

 

Weyerhaeuser Co.(1)

 

 

106,000

 

 

5,284,100

 

Total Materials

 

 

 

 

 

11,716,650

Description

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Amount

Value

Common Stocks (continued)

 

 

 

 

 

 

Telecommunication Services -- 3.6%

 

Integrated Telecommunication Services -- 2.6%

 

BellSouth Corp.

 

 

53,000

 

$

1,148,510

 

SBC Communications, Inc.

 

 

80,000

 

 

1,664,000

 

Verizon Communications, Inc.

 

 

84,500

 

 

2,922,010

 

 

 

 

 

 

 

5,734,520

 

Wireless Telecom Services -- 1.0%

 

AT&T Wireless Services, Inc.(3)

 

 

370,000

 

 

2,186,700

 

Total Telecommunication Services

 

 

 

 

 

7,921,220

Utilities -- 1.9%

 

 

 

 

 

 

 

Exchange Traded Funds -- 1.9%

 

Amex Utilities Select Index

 

 

240,000

 

 

4,260,000

Total Common Stocks (identified cost $202,205,925)

 

 

 

 

 

221,781,354

Repurchase Agreement -- 1.4%

 

Interest in $184,609,342 joint repurchase agreement with Lehman Brothers, Inc., 1.320%, dated 2/28/2003, to be repurchased at $3,208,141 on 3/3/2003, collateralized by a U.S. Government Agency Obligation maturing 12/15/2005 (at amortized cost)

 

$

3,207,788

 

3,207,788

Total Investments (identified cost $205,413,713) -- 99.9%

 

 

 

 

224,989,142

Other Net Assets and Liabilities -- 0.1%

 

 

 

 

301,544

Total Net Assets -- 100.0%

 

 

 

 

$

225,290,686

Mid-Cap Value Fund

   

Description

   

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Value

Common Stocks -- 97.3%

 

 

 

 

 

 

Consumer Discretionary -- 6.7%

 

Auto Parts & Equipment -- 0.9%

 

Johnson Controls, Inc.

 

 

25,000

 

$

1,949,000

 

HomeBuilding -- 1.3%

 

 

 

 

 

 

 

Centex Corp.(1)

 

 

50,000

 

 

2,764,000

 

Housewares & Specialties -- 0.7%

 

Newell Rubbermaid, Inc.

 

 

50,000

 

 

1,410,000

Description

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Value

Common Stocks (continued)

 

 

 

 

 

 

Consumer Discretionary (continued)

 

 

 

 

Leisure Products -- 3.8%

 

 

 

 

 

 

 

Brunswick Corp.

 

 

225,000

 

$

4,252,500

 

Mattel, Inc.

 

 

166,100

 

 

3,541,252

 

 

 

 

 

 

 

7,793,752

 

Total Consumer Discretionary

 

 

 

 

 

13,916,752

Consumer Staples -- 6.3%

 

 

 

 

 

 

 

Food Distributors -- 1.0%

 

 

 

 

 

 

 

SUPERVALU, Inc.

 

 

153,500

 

 

2,136,720

 

Packaged Foods & Meats -- 1.1%

 

Smithfield Foods, Inc.(3)

 

 

120,300

 

 

2,229,159

 

Retail-Drugs -- 2.4%

 

 

 

 

 

 

 

CVS Corp.

 

 

200,000

 

 

4,980,000

 

Retail-Food -- 1.8%

 

 

 

 

 

 

 

Kroger Co.(3)

 

 

280,000

 

 

3,701,600

 

Total Consumer Staples

 

 

 

 

 

13,047,479

Energy -- 7.5%

 

 

 

 

 

 

 

Oil & Gas Drilling -- 1.9%

 

 

 

 

 

 

 

Noble Corp.(3)

 

 

110,000

 

 

3,993,000

 

Oil Gas-Equipment/ Services -- 1.3%

 

Cooper Cameron Corp.(3)

 

 

50,000

 

 

2,600,000

 

Oil & Gas Exploration & Products -- 4.3%

 

Burlington Resources, Inc.

 

 

100,000

 

 

4,635,000

 

Noble Energy, Inc.

 

 

120,000

 

 

4,236,000

 

 

 

 

 

 

 

8,871,000

 

Total Energy

 

 

 

 

 

15,464,000

Financials -- 12.8%

 

 

 

 

 

 

 

Banks -- 1.2%

 

 

 

 

 

 

 

Associated Banc Corp.(1)

 

 

74,650

 

 

2,582,144

 

Consumer Finance -- 2.5%

 

 

 

 

 

 

 

Countrywide Financial Corp.

 

 

95,000

 

 

5,072,050

 

Insurance-Life & Health -- 1.3%

 

Jefferson-Pilot Corp.

 

 

70,000

 

 

2,639,000

 

Insurance-Property & Casualty -- 5.9%

 

ACE Ltd.

 

 

107,000

 

 

2,964,970

 

MGIC Investment Corp.(1)

 

 

115,000

 

 

4,537,900

 

SAFECO Corp.

 

 

145,000

 

 

4,767,600

 

 

 

 

 

 

 

12,270,470

 

Reinsurance -- 1.9%

 

 

 

 

 

 

 

PartnerRe Ltd.

 

 

78,400

 

 

3,908,240

 

Total Financials

 

 

 

 

 

26,471,904

Healthcare -- 8.6%

 

 

 

 

 

 

 

Biotechnology -- 1.8%

 

 

 

 

 

 

 

Invitrogen Corp.(1)(3)

 

 

120,000

 

 

3,724,800

Description

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Common Stocks (continued)

 

 

 

 

 

 

Healthcare (continued)

 

 

 

 

 

 

 

Healthcare-Distribution Services -- 0.6%

 

Renal Care Group, Inc.(3)

 

 

45,000

 

$

1,317,150

 

Healthcare-Equipment -- 2.2%

 

 

 

 

Guidant Corp.(3)

 

 

130,000

 

 

4,648,800

 

Healthcare-Facility -- 1.7%

 

 

 

 

 

 

 

Manor Care, Inc.(3)

 

 

185,200

 

 

3,394,716

 

Healthcare-Supplies -- 2.3%

 

 

 

 

 

 

 

Bausch & Lomb, Inc.

 

 

153,000

 

 

4,712,400

 

Total Healthcare

 

 

 

 

 

17,797,866

Industrials -- 24.3%

 

 

 

 

 

 

 

Aerospace & Defense -- 1.5%

 

 

 

 

 

 

 

Northrop Grumman Corp.

 

 

35,000

 

 

3,034,500

 

Commercial Printing -- 1.4%

 

 

 

 

 

 

 

Donnelley (R.R.) & Sons Co.

 

 

158,600

 

 

2,896,036

 

Construction & Engineering -- 2.0%

 

Fluor Corp.(1)

 

 

145,000

 

 

4,093,350

 

Electrical Components -- 3.8%

 

 

 

 

 

 

Hubbell, Inc., Class B

 

 

143,700

 

 

4,420,212

 

Rockwell Automation, Inc.(1)

 

 

150,000

 

 

3,451,500

 

 

 

 

 

 

 

7,871,712

 

Machinery Industrial -- 2.0%

 

 

 

 

 

 

 

SPX Corp.(3)

 

 

114,000

 

 

4,147,320

 

Rail Roads -- 2.0%

 

 

 

 

 

 

 

CSX Corp.

 

 

153,000

 

 

4,109,580

 

Services-Data Processing -- 3.1%

 

Convergys Corp.(3)

 

 

305,600

 

 

3,758,880

 

Global Payments, Inc.(1)

 

 

97,200

 

 

2,715,768

 

 

 

 

 

 

 

6,474,648

 

Services-Diversified Commercials -- 3.2%

 

Viad Corp.

 

 

187,000

 

 

3,908,300

 

Watson Wyatt & Co. Holdings(3)

 

 

138,500

 

 

2,657,815

 

 

 

 

 

 

 

6,566,115

 

Services-Employment -- 1.6%

 

 

 

 

 

 

 

Manpower, Inc.(1)

 

 

113,100

 

 

3,434,847

 

Services-Environmental -- 2.0%

 

 

 

 

Republic Services, Inc.(3)

 

 

220,000

 

 

4,195,400

 

Trucking -- 1.7%

 

 

 

 

 

 

 

Swift Transportation Co.(3)

 

 

225,000

 

 

3,595,500

 

Total Industrials

 

 

 

 

 

50,419,008

Description

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Common Stocks (continued)

 

 

 

 

 

 

Information Technology -- 12.3%

 

Computer Storage & Peripheral -- 1.5%

 

Electronics for Imaging, Inc.(3)

 

 

190,000

 

$

3,152,100

 

IT Consulting & Services -- 4.8%

 

American Management System, Inc.(3)

 

 

324,400

 

 

3,438,640

 

Computer Sciences Corp.(3)

 

 

110,000

 

 

3,438,600

 

Keane, Inc.(1)(3)

 

 

385,000

 

 

3,083,850

 

 

 

 

 

 

 

9,961,090

 

Office Electronics -- 2.1%

 

 

 

 

 

 

 

IKON Office Solutions, Inc.

 

 

610,000

 

 

4,276,100

 

Semiconductors Equipment -- 1.1%

 

Teradyne, Inc.(1)(3)

 

 

205,000

 

 

2,375,950

 

Systems Software -- 1.9%

 

 

 

 

 

 

 

BMC Software, Inc.(3)

 

 

200,000

 

 

3,880,000

 

Telecommunications Equipment -- 0.9%

 

CommScope, Inc.(3)

 

 

225,000

 

 

1,764,000

 

Total Information Technology

 

 

 

 

 

25,409,240

Materials -- 10.3%

 

 

 

 

 

 

 

Construction Materials -- 1.6%

 

 

 

 

 

 

 

Martin Marietta Materials

 

 

117,100

 

 

3,229,618

 

Chemicals & Specialty -- 1.4%

 

 

 

 

 

H.B. Fuller Co.

 

 

130,400

 

 

2,875,320

 

Diversified Metal & Mining -- 2.0%

 

Arch Coal, Inc.(1)

 

 

207,800

 

 

4,135,220

 

Steel -- 2.3%

 

 

 

 

 

 

 

Nucor Corp.(1)

 

 

115,000

 

 

4,784,000

 

Paper Products -- 1.8%

 

 

 

 

 

 

 

Bowater, Inc.

 

 

100,000

 

 

3,795,000

 

Paper Packaging -- 1.2%

 

 

 

 

 

 

 

Packaging Corp. of America(3)

 

 

145,200

 

 

2,504,700

 

Total Materials

 

 

 

 

 

21,323,858

Telecommunication Services -- 3.1%

 

Integrated Telecommunication Services -- 3.1%

 

ALLTEL Corp.

 

 

58,000

 

 

2,518,360

 

Citizens Communications Co., Class B(1)(3)

 

 

400,000

 

 

3,924,000

 

Total Telecommunication Services

 

 

 

 

 

6,442,360

Description

Shares or
Principal
Amount

Value

Common Stocks (continued)

 

 

 

 

 

 

Utilities -- 5.4%

 

 

 

 

 

 

 

Electric Utilities -- 5.4%

 

 

 

 

 

 

 

ALLETE Inc.

 

 

210,000

 

$

4,069,800

 

Cinergy Corp.(1)

 

 

80,000

 

 

2,578,400

 

TECO Energy, Inc.(1)

 

 

185,000

 

 

2,049,800

 

Xcel Energy, Inc.

 

 

230,000

 

 

2,550,700

 

Total Utilities

 

 

 

 

 

11,248,700

Total Common Stocks (identified cost $208,189,018)

 

 

 

 

201,541,167

Repurchase Agreement -- 2.6%

 

 

 

 

 

Interest in $184,609,342 joint repurchase agreement with Lehman Brothers, Inc., 1.320% dated 2/28/2003, to be repurchased at $5,487,903 on 3/3/2003, collateralized by a U.S. Government Agency Obligation maturing 5/14/2004 (at amortized cost)

 

$

5,487,299

 

5,487,299

Total Investments (identified cost $213,676,317) -- 99.9%

 

 

 

 

207,028,466

Other Net Assets and Liabilities -- 0.1%

 

 

 

 

216,318

Total Net Assets -- 100.0%

 

 

 

 

$

207,244,784

Mid-Cap Growth Fund

   

Description

   

Shares

   

Value

Common Stocks -- 89.1%

 

 

 

 

 

 

Consumer Discretionary -- 25.1%

 

Advertising -- 2.0%

 

 

 

 

 

 

 

Lamar Advertising Co.(3)

 

 

120,000

 

$

3,764,400

 

Broadcasting & Cable -- 8.8%

 

 

 

 

 

 

 

Cox Radio, Inc., Class A(3)

 

 

183,500

 

 

3,926,900

 

Liberty Media Corp., Class A(3)

 

 

364,000

 

 

3,345,160

 

Mediacom Communications Corp.(1)(3)

 

 

475,000

 

 

3,985,250

 

Radio One, Inc., Class D(1)(3)

 

 

385,000

 

 

5,289,900

 

 

 

 

 

 

 

16,547,210

 

Leisure Facilities -- 1.8%

 

 

 

 

 

 

 

Six Flags, Inc.(3)

 

 

635,000

 

 

3,429,000

 

Leisure Products -- 3.2%

 

 

 

 

 

 

 

Brunswick Corp.

 

 

320,000

 

 

6,048,000

 

Restaurants -- 0.1%

 

 

 

 

 

 

 

Landry's Restaurants, Inc.

 

 

8,300

 

 

136,120

 

Retail-Apparel -- 3.1%

 

 

 

 

 

 

 

Stage Stores, Inc.(1)(3)

 

 

303,700

 

 

5,703,486

Description

Shares

Value

Common Stocks (continued)

 

 

 

 

 

 

Consumer
Discretionary (continued)

 

Retail-Internet -- 2.1%

 

 

 

 

 

 

 

USA Interactive(1)(3)

 

 

160,000

 

$

3,924,800

 

Specialty Stores -- 4.0%

 

 

 

 

 

 

 

Advance Auto Parts, Inc.(3)

 

 

115,000

 

 

4,487,300

 

Staples, Inc.(3)

 

 

170,000

 

 

2,942,700

 

 

 

 

 

 

 

7,430,000

 

Total Consumer Discretionary

 

 

 

 

 

46,983,016

Consumer Staples -- 1.6%

 

 

 

 

 

 

 

Food Distributors -- 1.0%

 

 

 

 

 

 

 

Performance Food Group Co.(1)(3)

 

 

60,000

 

 

1,889,400

 

Soft Drink -- 0.6%

 

 

 

 

 

 

 

Cott Corp.(1)(3)

 

 

60,000

 

 

1,017,000

 

Total Consumer Staples

 

 

 

 

 

2,906,400

Energy -- 9.4%

 

 

 

 

 

 

 

Oil & Gas Drilling -- 5.4%

 

 

 

 

 

 

 

Nabors Industries Ltd.(1)(3)

 

 

100,000

 

 

3,965,000

 

Noble Corp.(1)(3)

 

 

100,000

 

 

3,630,000

 

Pride International, Inc.(1)(3)

 

 

170,000

 

 

2,465,000

 

 

 

 

 

 

 

10,060,000

 

Oil & Gas Equipment & Services -- 0.9%

 

 

 

 

 

 

 

BJ Services Co.(1)(3)

 

 

50,000

 

 

1,718,500

 

Oil & Gas Exploration & Production -- 3.1%

 

 

 

 

 

 

 

Noble Energy, Inc.

 

 

100,000

 

 

3,530,000

 

Ocean Energy, Inc.

 

 

110,000

 

 

2,207,700

 

 

 

 

 

 

 

5,737,700

 

Total Energy

 

 

 

 

 

17,516,200

Financials -- 8.1%

 

 

 

 

 

 

 

Reinsurance -- 3.6%

 

 

 

 

 

 

 

PartnerRe Ltd.(1)

 

 

135,000

 

 

6,729,750

 

Insurance-Life & Health -- 1.4%

 

 

 

 

 

 

 

Lincoln National Corp.

 

 

95,000

 

 

2,691,350

 

Insurance-Property & Casualty -- 3.1%

 

 

 

 

 

 

 

MGIC Investment Corp.

 

 

80,000

 

 

3,156,800

 

Old Republic International Corp.

 

 

95,000

 

 

2,593,500

 

 

 

 

 

 

 

5,750,300

 

Total Financials

 

 

 

 

 

15,171,400

Healthcare -- 23.4%

 

 

 

 

 

 

 

Biotechnology -- 1.4%

 

 

 

 

 

 

 

Gilead Sciences, Inc.(1)(3)

 

 

75,000

 

 

2,550,000

Description

Shares

Value

Common Stocks (continued)

 

 

 

 

 

 

Healthcare (continued)

 

Healthcare-Distribution Services -- 10.8%

 

AdvancePCS(1)(3)

 

 

115,000

 

$

3,214,250

 

AmerisourceBergen Corp.(1)(3)

 

 

60,000

 

 

3,300,000

 

Covance, Inc.(3)

 

 

80,000

 

 

1,884,000

 

Omnicare, Inc.

 

 

100,000

 

 

2,528,000

 

Pediatrix Medical Group, Inc.(1)(3)

 

 

45,000

 

 

1,271,250

 

Pharmaceutical Product Development, Inc.(3)

 

 

80,000

 

 

2,509,600

 

Priority Healthcare Corp., Class B(3)

 

 

130,000

 

 

2,940,600

 

Quest Diagnostic, Inc.(1)(3)

 

 

50,000

 

 

2,638,000

 

 

 

 

 

 

 

20,285,700

 

Healthcare Equipment -- 1.5%

 

 

 

 

 

 

 

St. Jude Medical, Inc.(1)(3)

 

 

60,000

 

 

2,740,800

 

Healthcare-Facility -- 1.4%

 

 

 

 

 

 

 

United Surgical Partners International, Inc.(1)(3)

 

 

75,000

 

 

1,377,000

 

Universal Health Services, Inc., Class B(3)

 

 

35,000

 

 

1,359,400

 

 

 

 

 

 

 

2,736,400

 

Healthcare-Managed Care -- 1.6%

 

Caremark Rx, Inc.(3)

 

 

175,000

 

 

3,055,500

 

Pharmaceuticals -- 6.7%

 

 

 

 

 

 

 

Allergan, Inc.(1)

 

 

45,000

 

 

2,889,000

 

Barr Laboratories, Inc.(3)

 

 

35,000

 

 

2,726,850

 

Biovail Corp.(1)(3)

 

 

105,000

 

 

3,906,000

 

NPS Pharmaceuticals, Inc.(1)(3)

 

 

50,000

 

 

868,000

 

Teva Pharmaceutical Industries Ltd., ADR(1)

 

 

55,000

 

 

2,077,900

 

 

 

 

 

 

 

12,467,750

 

Total Healthcare

 

 

 

 

 

43,836,150

Industrials -- 5.9%

 

 

 

 

 

 

 

Airfreight & Logistics -- 0.8%

 

 

 

 

 

 

 

Expeditors International Washington, Inc.(1)

 

 

45,000

 

 

1,538,550

 

Electrical Components -- 0.6%

 

 

 

 

 

 

 

Rockwell Automation, Inc.(1)

 

 

50,000

 

 

1,150,500

 

Machinery Industrial -- 2.1%

 

 

 

 

 

 

 

ITT Industries, Inc.

 

 

30,000

 

 

1,686,900

 

SPX Corp.

 

 

60,000

 

 

2,182,800

 

 

 

 

 

 

 

3,869,700

Description

Shares or
Principal
Amount

Value

Common Stocks (continued)

 

 

 

 

 

 

Industrials (continued)

 

 

 

 

 

 

 

Services-Data Processing -- 1.3%

 

Bisys Group, Inc.(3)

 

 

100,000

 

$

1,564,000

 

Global Payments, Inc.(1)

 

 

30,000

 

 

838,200

 

 

 

 

 

 

 

2,402,200

 

Services-Diversified & Commercial -- 1.1%

 

Iron Mountain, Inc.(1)(3)

 

 

60,000

 

 

2,112,000

 

Total Industrials

 

 

 

 

 

11,072,950

Information Technology -- 15.6%

 

Electronic Equipment & Instrument -- 1.2%

 

Molex, Inc., Class A(1)

 

 

125,000

 

 

2,375,000

 

Internet Software & Services -- 2.4%

 

PEC Solutions, Inc.(3)

 

 

260,000

 

 

4,456,400

 

IT Consulting & Services -- 4.1%

 

Acxiom Corp.(1)(3)

 

 

135,000

 

 

2,060,100

 

Affiliated Computer Services, Inc., Class A(1)(3)

 

 

60,000

 

 

2,689,800

 

BearingPoint, Inc.(3)

 

 

150,000

 

 

984,000

 

Titan Corp.(3)

 

 

250,000

 

 

1,987,500

 

 

 

 

 

 

 

7,721,400

 

Semiconductors -- 4.0%

 

 

 

 

 

 

 

Intersil Corp., Class A(3)

 

 

355,000

 

 

5,555,750

 

Skyworks Solutions, Inc.(1)(3)

 

 

275,000

 

 

1,919,500

 

 

 

 

 

 

 

7,475,250

 

Semiconductors Equipment -- 3.9%

 

ATMI, Inc.(1)(3)

 

 

115,000

 

 

2,162,000

 

Entegris, Inc.(1)(3)

 

 

290,000

 

 

3,291,500

 

MKS Instruments, Inc.(1)(3)

 

 

135,000

 

 

1,788,750

 

 

 

 

 

 

 

7,242,250

 

Total Information Technology

 

 

 

 

 

29,270,300

Total Common Stocks (identified cost $186,964,755)

 

 

 

 

166,756,416

Repurchase Agreement -- 10.7%

 

Interest in $184,609,342 joint repurchase agreement with Lehman Brothers, Inc., 1.320%, dated 2/28/2003, to be repurchased at $20,105,790 on 3/3/2003, collateralized by U.S. Government Agency Obligations with various maturities to 1/15/2028 (at amortized cost)

$

20,103,578

 

20,103,578

Total Investments (identified cost $207,068,333) -- 99.8%

 

 

 

 

186,859,994

Other Net Assets and Liabilities -- 0.2%

 

 

 

 

312,604

Total Net Assets -- 100.0%

 

 

 

 

$

187,172,598

Small-Cap Growth Fund

   

Description

   

Shares

  

Value

Common Stocks -- 95.7%

 

 

 

 

 

 

Consumer Discretionary -- 27.8%

 

Broadcasting & Cable -- 6.0%

 

 

 

 

 

 

 

Alliance Atlantis Communications, Inc., Class B(3)

 

 

265,000

 

$

2,443,300

 

Spanish Broadcasting System, Inc., Class A(3)

 

 

300,000

 

 

1,827,000

 

 

 

 

 

 

 

4,270,300

Casino & Gaming -- 2.2%

 

 

 

 

 

 

 

Ameristar Casinos, Inc.(3)

 

 

120,000

 

 

1,051,200

 

Pinnacle Entertainment, Inc.(3)

 

 

133,900

 

 

531,583

 

 

 

 

 

 

 

1,582,783

 

Hotel/Resort/Cruise -- 7.3%

 

 

 

 

 

 

 

Intrawest Corp.

 

 

290,000

 

 

3,126,200

 

Orient-Express Hotels Ltd., Class A(1)(3)

 

 

225,000

 

 

2,103,750

 

 

 

 

 

 

 

5,229,950

 

Restaurants -- 6.2%

 

 

 

 

 

 

 

Buca, Inc.(1)(3)

 

 

225,000

 

 

1,278,000

 

Landry's Restaurants, Inc.

 

 

125,000

 

 

2,050,000

 

Outback Steakhouse, Inc.(1)

 

 

35,000

 

 

1,127,000

 

 

 

 

 

 

 

4,455,000

 

Retail-Apparel -- 1.6%

 

 

 

 

 

 

 

Abercrombie & Fitch Co., Class A(3)

 

 

40,000

 

 

1,100,000

 

Retail-Catalog -- 4.5%

 

 

 

 

 

 

 

Insight Enterprises, Inc.(1)(3)

 

 

425,000

 

 

3,238,500

 

Total Consumer Discretionary

 

 

 

 

 

19,876,533

Consumer Staples -- 3.0%

 

 

 

 

 

 

 

Personal Products -- 3.0%

 

 

 

 

 

 

 

Steiner Leisure Ltd.(3)

 

 

205,000

 

 

2,173,000

Energy -- 7.5%

 

 

 

 

 

 

 

Oil & Gas-Drilling--3.7%

 

 

 

 

 

 

 

Helmerich & Payne, Inc.(1)

 

 

30,000

 

 

825,000

 

National-Oilwell, Inc.(3)

 

 

40,000

 

 

900,000

 

Varco International, Inc.(3)

 

 

50,000

 

 

948,000

 

 

 

 

 

 

 

2,673,000

 

Oil & Gas-Equipment/Services -- 3.8%

 

Cal Dive International, Inc.(3)

 

 

50,000

 

 

933,500

 

Horizon Offshore, Inc.(1)(3)

 

 

250,000

 

 

960,000

 

Lone Star Technologies, Inc.(1)(3)

 

 

45,000

 

 

824,400

 

 

 

 

 

 

 

2,717,900

 

Total Energy

 

 

 

 

 

5,390,900

Financials -- 10.8%

 

 

 

 

 

 

 

Banks -- 9.1%

 

 

 

 

 

 

 

Cullen Frost Bankers, Inc.

 

 

60,000

 

 

1,869,600

 

City National Corp.

 

 

35,000

 

 

1,629,600
               

Description

Shares

Value

Common Stocks (continued)

 

 

 

 

 

 

Financials (continued)

 

 

 

 

 

 

 

Banks (continued)

 

 

 

 

 

 

 

Mercantile Bankshares Corp.

 

 

30,000

 

$

1,107,000

 

Southwest Bancorp. of Texas, Inc.(1)(3)

 

 

60,000

 

 

1,897,200

 

 

 

 

 

 

 

6,503,400

 

Insurance-Brokers -- 1.7%

 

 

 

 

 

 

 

Gallagher (Arthur J.) & Co.

 

 

50,000

 

 

1,223,500

 

Insurance-Property/Casualty -- 0.0%

 

Meadowbrook Insurance Group, Inc.(3)

 

 

10,000

 

 

22,600

 

Total Financials

 

 

 

 

 

7,749,500

Healthcare -- 18.1%

 

 

 

 

 

 

 

Biotechnology -- 5.8%

 

 

 

 

 

 

 

Celgene Corp.(3)

 

 

35,000

 

 

766,535

 

Cell Genesys, Inc.(1)(3)

 

 

40,000

 

 

317,600

 

Cephalon, Inc.(3)

 

 

6,000

 

 

288,900

 

CV Therapeutics, Inc.(1)(3)

 

 

20,000

 

 

352,800

 

Invitrogen Corp.(1)(3)

 

 

25,000

 

 

776,000

 

XOMA Ltd.(3)

 

 

450,000

 

 

1,624,500

 

 

 

 

 

 

 

4,126,335

 

Healthcare-Distribution/Services -- 2.9%

 

Covance, Inc.(3)

 

 

30,000

 

 

706,500

 

Priority HealthCare Corp., Class B(3)

 

 

60,000

 

 

1,357,200

 

 

 

 

 

 

 

2,063,700

 

Healthcare-Facility -- 7.8%

 

 

 

 

 

 

 

Amsurg Corp.(1)(3)

 

 

60,000

 

 

1,458,000

 

Community Health Systems, Inc.(1)(3)

 

 

90,000

 

 

1,687,500

 

HealthSouth Corp.(3)

 

 

300,000

 

 

1,074,000

 

Province Heathcare Co.(3)

 

 

200,000

 

 

1,332,000

 

 

 

 

 

 

 

5,551,500

 

Healthcare-Supplies -- 1.6%

 

 

 

 

 

 

 

Cooper Companies, Inc.(1)

 

 

40,000

 

 

1,162,000

 

Total Healthcare

 

 

 

 

 

12,903,535

Industrials -- 1.1%

 

 

 

 

 

 

 

Aerospace/Defense -- 1.1%

 

 

 

 

 

 

 

Aeroflex, Inc.(3)

 

 

125,000

 

 

761,250

Information Technology -- 27.4%

 

 

 

 

 

 

 

Application Software -- 10.6%

 

 

 

 

 

 

 

Activision, Inc.(1)(3)

 

 

85,000

 

 

1,266,500

 

Business Objects SA, ADR(3)

 

 

60,000

 

 

1,032,000

 

FactSet Research Systems(1)

 

 

45,000

 

 

1,151,550

 

Quest Software, Inc.(3)

 

 

80,000

 

 

790,400

 

SERENA Software, Inc.(3)

 

 

50,000

 

 

750,000

 

THQ, Inc.(1)(3)

 

 

95,000

 

 

1,159,950

 

Take-Two Interactive Software, Inc.(1)(3)

 

 

70,000

 

 

1,463,700

 

 

 

 

 

 

 

7,614,100

Description

Shares or
Principal
Amount

Value

Common Stocks (continued)

 

 

 

 

 

 

Information Technology (continued)

 

 

 

 

Computer Storage/Peripherals -- 1.5%

 

Applied Films Corp.(3)

 

 

70,000

 

$

1,052,800

 

Electronic Equipment/ Instrument -- 1.4%

 

Planar Systems, Inc.(3)

 

 

65,000

 

 

1,014,000

 

IT Consulting & Services -- 2.5%

 

 

 

 

 

 

 

BearingPoint, Inc.(3)

 

 

110,000

 

 

721,600

 

ManTech International Corp., Class A(1)(3)

 

 

70,000

 

 

1,089,900

 

 

 

 

 

 

 

1,811,500

 

Semiconductors -- 3.8%

 

 

 

 

 

 

 

ChipPAC, Inc.(3)

 

 

350,000

 

 

945,000

 

Integrated Device Technology, Inc.(3)

 

 

200,000

 

 

1,740,000

 

 

 

 

 

 

 

2,685,000

 

Semiconductor Equipment -- 3.9%

 

Entegris, Inc.(3)

 

 

50,000

 

 

567,500

 

MKS Instruments, Inc.(1)(3)

 

 

90,000

 

 

1,192,500

 

Varian Semiconductor Equipment Associates, Inc.(1)(3)

 

 

40,000

 

 

1,030,000

 

 

 

 

 

 

 

2,790,000

 

Telecommunication Equipment -- 3.7%

 

 

 

 

 

 

 

Polycom, Inc.(1)(3)

 

 

175,000

 

 

1,755,250

 

Powerwave Technologies, Inc.(3)

 

 

250,000

 

 

885,000

 

 

 

 

 

 

 

2,640,250

 

Total Information Technology

 

 

 

 

 

19,607,650

Total Common Stocks (identified cost $72,858,086)

 

 

 

 

68,462,368

Repurchase Agreement -- 4.5%

 

 

 

 

 

Interest in $184,609,342 joint repurchase agreement with Lehman Brothers, Inc., 1.320% dated 2/28/2003, to be repurchased at $3,223,448 on 3/3/2003, collateralized by a U.S. Government Agency Obligation maturing 12/15/2005

 

$

3,223,093

 

3,223,093

Total Investments (identified cost $76,081,179) -- 100.2%

 

 

 

 

71,685,461

Other Net Assets and Liabilities -- (0.2)%

 

 

 

 

(164,120)

Total Net Assets -- 100.0%

 

 

 

 

$

71,521,341

International Stock Fund

   

Description

   

Shares

   

Value

Common Stocks -- 98.5%

 

 

 

 

 

 

Australia -- 2.7%

 

 

 

 

 

 

 

National Australia Bank Ltd., Melbourne(1)

 

 

174,400

 

$

3,063,661

 

News Corp. Ltd.

 

 

423,400

 

 

2,622,536

 

Qantas Airways

 

 

748,300

 

 

1,400,951

 

Total Australia

 

 

 

 

 

7,087,148

Brazil -- 2.8%

 

 

 

 

 

 

 

Banco Itau SA, ADR

 

 

31,200

 

 

683,592

 

Companhia Vale Do Rio Doce, ADR(3)

 

 

24,200

 

 

701,800

 

Companhia Vale Do Rio Doce, ADR

 

 

152,350

 

 

4,151,537

 

Unibanco Uniao de Bancos Brasileiros SA, ADR

 

 

153,100

 

 

1,737,685

 

Total Brazil

 

 

 

 

 

7,274,614

Canada -- 1.6%

 

 

 

 

 

 

 

Royal Bank of Canada, Montreal

 

 

108,200

 

 

4,226,591

Finland -- 1.9%

 

 

 

 

 

 

 

Nokia OYJ

 

 

122,400

 

 

1,636,069

 

Nokia OYJ, Class A, ADR

 

 

239,500

 

 

3,168,585

 

Total Finland

 

 

 

 

 

4,804,654

France -- 6.4%

 

 

 

 

 

 

 

L'Air Liquide SA

 

 

18,692

 

 

2,399,750

 

Societe Generale, Paris

 

 

46,500

 

 

2,496,208

 

Total Fina SA, Class B(1)

 

 

39,460

 

 

5,214,901

 

Vivendi Environment(1)

 

 

273,849

 

 

5,195,440

 

Vivendi Environment, Warrants(1)(3)

 

 

48,300

 

 

4,165

 

Wanadoo(1)(3)

 

 

276,700

 

 

1,383,967

 

Total France

 

 

 

 

 

16,694,431

Germany -- 5.5%

 

 

 

 

 

 

 

Adidas-Salomon AG

 

 

73,300

 

 

5,896,794

 

Deutsche Boerse AG

 

 

59,000

 

 

2,284,477

 

Fresenius Medical Care AG

 

 

973

 

 

41,125

 

SAP AG (Systeme, Anwendungen, Produkte in der Datevnerarbeitung)

 

54,900

 

 

4,589,958

 

T-Online International AG(3)

 

 

228,800

 

 

1,418,151

 

Total Germany

 

 

 

 

 

14,230,505

Hong Kong -- 0.7%

 

 

 

 

 

 

 

Cathay Pacific Airways Ltd.

 

 

1,306,900

 

 

1,826,543

Ireland -- 3.1%

 

 

 

 

 

 

 

Bank of Ireland

 

 

599,900

 

 

6,628,286

 

Irish Life & Permanent PLC

 

 

136,400

 

 

1,337,994

 

Total Ireland

 

 

 

 

 

7,966,280

Israel -- 1.6%

 

 

 

 

 

 

 

Teva Pharmaceutical Industries Ltd., ADR

 

 

112,800

 

 

4,261,584

Description

Shares

Value

Common Stocks (continued)

 

 

 

 

 

 

Italy -- 5.0%

 

 

 

 

 

 

 

ENI SpA(1)

 

 

456,600

 

$

6,777,482

 

Riunione Adriatica di Sicurta SpA(1)

 

 

211,000

 

 

2,595,175

 

Telecom Italia SpA

 

 

718,200

 

 

3,522,535

 

Total Italy

 

 

 

 

 

12,895,192

Japan -- 8.6%

 

 

 

 

 

 

 

Canon, Inc.

 

 

121,000

 

 

4,370,596

 

Millea Holdings, Inc.

 

 

408

 

 

2,826,646

 

Nomura Holdings, Inc.

 

 

265,700

 

 

3,124,164

 

NTT DoCoMo, Inc.

 

 

2,754

 

 

5,195,128

 

Ricoh Co. Ltd.(1)

 

 

171,900

 

 

2,597,076

 

Yahoo Japan Corp.(3)

 

 

156

 

 

2,692,044

 

Yamato Transport

 

 

108,900

 

 

1,381,804

 

Total Japan

 

 

 

 

 

22,187,458

Korea, Republic of -- 4.6%

 

 

 

 

 

 

 

Kookmin Bank

 

 

77,863

 

 

2,380,932

 

Kookmin Bank, ADR

 

 

9,274

 

 

283,042

 

POSCO, ADR

 

 

26,000

 

 

600,600

 

Samsung Electronics Co.

 

 

27,100

 

 

6,345,621

 

SK Telecom Co. Ltd., ADR

 

 

159,100

 

 

2,448,549

 

Total Korea, Republic of

 

 

 

 

 

12,058,744

Mexico -- 4.2%

 

 

 

 

 

 

 

America Movil, SA de CV, Class L, ADR

 

 

185,800

 

 

2,564,040

 

Fomento Economico Mexicano, SA de CV, ADR(3)

 

 

62,500

 

 

2,015,625

 

Grupo Financiero BBVA Bancomer, SA de CV, Class B(3)

 

 

4,318,000

 

 

3,258,720

 

Grupo Modelo, SA de CV, Class C

 

 

663,200

 

 

1,371,578

 

Wal-Mart de Mexico, SA de CV

 

 

802,700

 

 

1,792,596

 

Total Mexico

 

 

 

 

 

11,002,559

Netherlands -- 4.4%

 

 

 

 

 

 

 

AEGON NV(1)

 

 

323,000

 

 

3,464,369

 

Royal Dutch Petroleum Co.

 

 

70,500

 

 

2,792,833

 

TPG NV(1)

 

 

226,100

 

 

3,168,418

 

VNU (Verenigde Nederlandse Uitgeversbedrijven)(1)

 

 

87,400

 

 

1,922,883

 

Total Netherlands

 

 

 

 

 

11,348,503

Russia -- 2.6%

 

 

 

 

 

 

 

YUKOS, ADR

 

 

40,450

 

 

6,628,744

Singapore -- 1.1%

 

 

 

 

 

 

 

Venture Corp. Ltd.

 

 

368,800

 

 

2,844,680

South Africa -- 1.0%

 

 

 

 

 

 

 

Sappi Ltd.(1)

 

 

192,600

 

 

2,663,101

Spain -- 3.8%

 

 

 

 

 

 

 

Banco Bilbao Vizcaya Argentaria, SA

 

 

311,900

 

 

2,659,441

 

Banco Santander Central Hispano, SA

 

 

675,400

 

 

4,331,881

 

Telefonica, SA(3)

 

 

301,512

 

 

2,925,133

 

Total Spain

 

 

 

 

 

9,916,455

Description

Shares or
Principal
Amount

Value

Common Stocks (continued)

 

 

 

 

 

 

Sweden -- 5.0%

 

 

 

 

 

 

 

Atlas Copco AB, Class A(1)

 

 

234,410

 

$

4,976,770

 

Sandvik AB

 

 

164,800

 

 

3,818,719

 

Skandinaviska Enskilda Banken AB, Class A

 

 

320,000

 

 

2,841,785

 

Telefonaktiebolaget LM Ericsson(1)

 

 

1,944,900

 

 

1,269,651

 

Total Sweden

 

 

 

 

 

12,906,925

Switzerland -- 10.8%

 

 

 

 

 

 

 

Compagnie Financiere Richemont AG

 

 

124,600

 

 

2,017,163

 

Credit Suisse Group(1)

 

 

60,300

 

 

1,122,967

 

Nestle SA(1)

 

 

35,630

 

 

7,174,090

 

Novartis AG(1)

 

 

172,030

 

 

6,318,615

 

Swiss Re(1)

 

 

100,640

 

 

5,418,534

 

UBS AG(1)

 

 

144,690

 

 

6,072,103

 

Total Switzerland

 

 

 

 

 

28,123,472

United Kingdom -- 21.1%

 

 

 

 

 

 

 

ARM Holdings PLC(3)

 

 

2,655,800

 

 

2,215,239

 

BG Group PLC

 

 

346,600

 

 

1,335,060

 

BP Amoco PLC

 

 

680,200

 

 

4,281,993

 

British American Tobacco PLC

 

 

151,400

 

 

1,477,294

 

British Sky Broadcasting Group PLC(3)

 

 

135,500

 

 

1,340,275

 

Diageo PLC

 

 

448,200

 

 

4,443,874

 

EasyJet PLC(3)

 

 

611,200

 

 

1,827,622

 

Exel PLC

 

 

146,500

 

 

1,299,215

 

HSBC Holdings PLC

 

 

268,800

 

 

2,893,575

 

Kingfisher PLC

 

 

680,718

 

 

2,450,630

 

Pearson PLC

 

 

257,400

 

 

1,944,461

 

Reed Elsevier PLC

 

 

142,400

 

 

1,038,745

 

Rexam PLC

 

 

439,800

 

 

2,233,937

 

Rio Tinto PLC

 

 

128,200

 

 

2,592,630

 

Royal Bank of Scotland PLC, Edinburgh

 

 

231,900

 

 

5,302,928

 

Smith & Nephew PLC

 

 

877,700

 

 

5,055,645

 

Smiths Group PLC

 

 

255,600

 

 

2,429,669

 

Standard Chartered PLC

 

 

283,100

 

 

3,105,432

 

Vodafone Group PLC

 

 

3,397,521

 

 

6,082,231

 

WPP Group PLC

 

 

209,700

 

 

1,289,576

 

Total United Kingdom

 

 

 

 

 

54,640,031

Total Common Stocks (identified cost $270,457,110)

 

 

 

 

 

255,588,214

Repurchase Agreement -- 3.1%

 

 

 

 

 

 

 

Agreement with State Street Corp., 0.500% dated 2/28/2003, to be repurchased at $8,139,339 on 3/3/2003, collateralized by U.S. Treasury Obligations with various maturities to 2/15/2020 (at amortized cost)

 

$

8,139,000

 

 

8,139,000

Total Investments (identified cost $278,596,110) -- 101.6%

 

 

 

 

 

263,727,214

Other Net Assets and Liabilities -- (1.6)%

 

 

 

 

 

(4,209,154)

Total Net Assets -- 100.0%

 

 

 

 

$

259,518,060
 

Industry

    

Industry
Diversification
Market Value

      

% of
net assets

Air Freight & Couriers

 

$

4,508,641

 

1.7

%

Banks

 

 

49,830,109

 

19.2

 

Beverages & Foods

 

 

15,005,167

 

5.8

 

Containers & Metal/Glass

 

 

2,233,937

 

0.9

 

Domestic & International Oil

 

 

18,918,471

 

7.3

 

Electronics

 

 

9,190,301

 

3.5

 

Financial Services

 

 

10,005,355

 

3.8

 

Gas Distribution

 

 

1,335,060

 

0.5

 

Healthcare

 

 

41,125

 

0.0

 

Healthcare Equipment & Supplies

 

 

5,055,645

 

2.0

 

Household Product/Wares

 

 

5,896,794

 

2.3

 

Industrial Gases

 

 

2,399,750

 

0.9

 

Industrial Services

 

 

8,795,489

 

3.4

 

Insurance

 

 

14,304,724

 

5.5

 

IT Consulting & Services

 

 

5,494,162

 

2.1

 

Manufacturing

 

 

4,644,908

 

1.8

 

Media

 

 

2,629,851

 

1.0

 

Metals & Mining

 

 

8,046,567

 

3.1

 

MultiMedia

 

 

7,528,625

 

2.9

 

Office Equipment

 

 

6,967,672

 

2.7

 

Oil & Gas Products

 

 

6,777,482

 

2.6

 

Paper & Forest Products

 

 

2,663,101

 

1.0

 

Pharmaceuticals & Healthcare

 

 

10,580,199

 

4.1

 

Retail

 

 

6,260,389

 

2.4

 

Software

 

 

4,589,958

 

1.8

 

Telecommunications

 

 

28,811,921

 

11.1

 

Tobacco

 

 

1,477,294

 

0.6

 

Transportation

 

 

6,395,912

 

2.5

 

Water Treatment

 

 

5,199,605

 

2.0

 

Total Common Stocks

 

 

255,588,214

 

98.5

 

Total Repurchase Agreement

 

 

8,139,000

 

3.1

 

Total Investments

 

 

263,727,214

 

101.6

 

Other Net Assets & Liabilities

 

 

(4,209,154

)

(1.6

)
Total Net Assets

 

$

259,518,060

 

100.0

%

Government Income Fund

   

Description

   

Principal
Amount

   

Value

Asset-Backed Securities -- 4.7%

 

 

 

 

 

Green Tree Home Equity Loan Trust 1998-B, Class B1, 7.810%, 11/15/2029

 

$

6,000,000

 

$

6,262,718

 

 

Greenwich Capital Acceptance 1995-BA1, Class A4, 7.150%, 8/10/2020

 

 

10,643,000

 

 

11,430,729

 

Total Asset-Backed Securities (identified cost $16,665,899)

 

 

 

 

 

17,693,447

 

Collateralized Mortgage Obligations -- 15.4%

 

 

Federal Home Loan Mortgage Corp., 1.463%, 3/24/2003, REMIC (Series T-32-A1)(4)(5)

 

 

11,947,816

 

 

11,914,351

 

Description

Principal
Amount

Value

Collateralized Mortgage Obligations (continued)

 

 

Federal Home Loan Mortgage Corp., 6.250%, 9/15/2023, REMIC (Series 1666H)

 

$

15,000,000

 

$

16,055,202

 

 

Federal Home Loan Mortgage Corp., 6.500%, 10/15/2016, REMIC (Series 1702-PK)(5)

 

 

10,000,000

 

 

10,701,999

 

 

Federal National Mortgage Association, 1.586%, 3/24/2003, REMIC (Series 2001-25FA)(4)(5)

 

 

19,436,195

 

 

19,487,761

 

Total Collateralized Mortgage Obligations (identified cost $54,528,046)

 

 

 

 

 

58,159,313

 

Corporate Bonds -- 1.6%

 

 

 

 

 

 

 

 

HSB Group, Inc. FRN, 2.286%, 4/15/2003(4)

 

 

3,000,000

 

 

2,805,822

 

 

TXU Capital FRN, 2.730%, 4/1/2003(4)

 

 

5,000,000

 

 

3,386,615

 

Total Corporate Bonds (identified cost $7,909,300)

 

 

 

 

 

6,192,437

 

Mortgage Backed Securities -- 54.2%

 

 

Federal Home Loan Mortgage Corporation -- 14.6%

 

 

5.000%, 8/1/2014(1)

 

 

11,054,899

 

 

11,454,196

 

 

6.000%, 6/15/2011

 

 

5,000,000

 

 

5,759,500

 

 

6.500%, 9/1/2016

 

 

2,666,810

 

 

2,825,059

 

 

6.500%, 2/1/2031(1)

 

 

8,697,978

 

 

9,110,782

 

 

6.500%, 4/1/2032(6)

 

 

15,000,000

 

 

15,698,430

 

 

7.000%, 11/1/2009

 

 

1,814,838

 

 

1,940,494

 

 

7.500%, 9/1/2013

 

 

580,194

 

 

624,199

 

 

7.500%, 4/1/2024

 

 

1,623,821

 

 

1,744,965

 

 

7.500%, 4/1/2027

 

 

1,133,344

 

 

1,212,692

 

 

8.000%, 8/1/2030

 

 

1,715,865

 

 

1,852,479

 

 

8.500%, 9/1/2024

 

 

684,934

 

 

745,556

 

 

9.000%, 6/1/2019

 

 

1,036,597

 

 

1,159,312

 

 

9.500%, 2/1/2025

 

 

952,559

 

 

1,066,305

 

 

 

 

 

 

 

 

55,193,969

 

 

Federal National Mortgage Association -- 22.9%

 

 

6.000%, 9/1/2013(1)

 

 

7,146,550

 

 

7,525,200

 

 

6.000%, 4/1/2017(6)

 

 

5,000,000

 

 

5,248,440

 

 

6.500%, 9/1/2016(1)

 

 

6,141,792

 

 

6,519,729

 

 

6.500%, 9/1/2016

 

 

3,462,245

 

 

3,675,295

 

 

6.500%, 12/1/2031(1)

 

 

2,976,040

 

 

3,114,620

 

 

6.500%, 5/1/2032(6)

 

 

25,000,000

 

 

26,109,375

 

 

7.000%, 12/1/2010

 

 

2,881,264

 

 

3,078,447

 

 

7.000%, 3/1/2029

 

 

2,932,870

 

 

3,097,768

 

 

7.000%, 7/1/2029(1)

 

 

6,768,796

 

 

7,149,366

 

 

7.000%, 2/1/2030(1)

 

 

5,385,055

 

 

5,687,826

 

 

7.500%, 12/1/2009

 

 

4,949,670

 

 

5,305,277

 

 

7.500%, 10/1/2030(5)

 

 

2,432,398

 

 

2,592,305

 

 

8.000%, 10/1/2028

 

 

4,228,497

 

 

4,619,770

 

 

8.000%, 4/1/2030

 

 

2,202,418

 

 

2,388,457

 

 

 

 

 

 

 

 

86,111,875

 

Description

Principal
Amount

Value

Mortgage Backed Securities (continued)

 

 

Government National Mortgage Association -- 16.7%

 

 

6.500%, 12/15/2029

 

$

3,714,168

 

$

3,921,379

 

 

6.500%, 9/15/2032

 

 

17,342,952

 

 

18,291,103

 

 

7.000%, 4/15/2029(1)

 

 

4,250,976

 

 

4,529,550

 

 

7.000%, 5/15/2029(1)

 

 

3,653,034

 

 

3,888,679

 

 

7.000%, 6/15/2029(1)

 

 

4,510,919

 

 

4,801,903

 

 

7.000%, 8/15/2031(1)

 

 

3,667,588

 

 

3,899,358

 

 

7.500%, 8/15/2025(1)

 

 

1,341,302

 

 

1,444,190

 

 

7.500%, 8/15/2025(1)

 

 

5,434,065

 

 

5,844,962

 

 

7.500%, 12/15/2025(1)

 

 

4,336,008

 

 

4,663,876

 

 

7.500%, 2/15/2027(1)

 

 

5,932,200

 

 

6,362,225

 

 

8.500%, 6/15/2010(1)

 

 

1,400,324

 

 

1,539,822

 

 

9.000%, 11/15/2009(1)

 

 

2,249,640

 

 

2,442,252

 

 

9.000%, 1/15/2010(1)

 

 

722,058

 

 

794,421

 

 

9.500%, 10/15/2024(1)

 

 

441,758

 

 

499,796

 

 

 

 

 

 

 

 

62,923,516

 

Total Mortgage Backed Securities (identified cost $194,449,283)

 

 

 

 

204,229,360

U.S. Treasury Note -- 10.8%

 

 

 

 

 

3.875%, 2/15/2013 (identified cost $40,384,336)

 

 

40,000,000

 

40,601,600

Total Investments in Securities (identified cost $313,936,864)

 

 

 

 

326,876,157

Repurchase Agreement -- 29.3%

 

Interest in $184,609,342 joint repurchase agreement with Lehman Brothers, Inc., 1.320%, dated 2/28/2003, to be repurchased at $110,519,516 on 3/3/2003, collateralized by U.S. Government Agency Obligations with various maturities to 4/15/2015 (at amortized cost)

 

 

110,507,360

 

110,507,360

Total Investments (identified cost $424,444,224) -- 116.0%

 

 

 

 

437,383,517

Other Net Assets and Liabilities -- (16.0)%

 

 

 

 

(60,398,755

)

Total Net Assets -- 100.0%

 

 

 

 

$

376,984,762

Intermediate Bond Fund

   

Description

   

Principal
Amount

   

Value

Asset-Backed Securities -- 7.2%

 

 

Citibank Credit Card Issuance Trust 2002-A1, Class A1, 4.950%, 2/9/2009

 

$

6,000,000

 

$

6,470,127
               

Description

Principal
Amount

Value

Asset-Backed Securities (continued)

 

 

Citibank Credit Card Master Trust I 1999-7, Class A, 6.650%, 11/15/2006

 

$

5,000,000

 

$

5,415,710

 

DLJ Commercial Mortgage Corp. 1998-STF2, Class A1, 1.990%, 11/5/2008(7)(8)

 

 

643,074

 

 

639,858

 

DaimlerChrysler Auto Trust, Class A3, 6.820%, 9/6/2004

 

 

1,556,339

 

 

1,571,125

 

First USA Credit Card Master Trust 1998-9, Class A, 5.280%, 9/18/2006

 

 

7,750,000

 

 

8,017,879

 

Ford Credit Auto Owner Trust 2000-G, Class A4, 6.620%, 7/15/2004(1)

 

 

2,894,227

 

 

2,934,872

 

Green Tree Home Equity Loan Trust 1998-B, Class B1, 7.810%, 11/15/2029

 

 

7,000,000

 

 

7,306,505

 

J.P. Morgan Commercial Mortgage Finance Corp. 1997-C5, Class A2, 7.069%, 9/15/2029

 

 

5,198,666

 

 

5,579,096

 

Pegasus Aviation Lease Securitization 1999-1A, Class A1, 6.300%, 3/25/2029(7)(8)

 

 

1,846,075

 

 

1,765,339

 

Systems 2001Asset Trust, Pass Thru Cert., 6.664%, 9/15/2013(7)(8)

 

 

5,962,234

 

 

6,502,571

Total Asset-Backed Securities (identified cost $43,926,304)

 

 

 

 

 

46,203,082

Collateralized Mortgage Obligations -- 2.8%

 

 

 

 

 

 

 

Criimi Mae CMBS Corp. 1998-1, Class A2, 6.009%, 2/20/2008(7)(8)

 

 

3,847,483

 

 

4,130,679

 

Criimi Mae CMBS Corp. 1998-1, Class A3, 6.306%, 6/20/2030(7)(8)

 

 

6,000,000

 

 

6,596,417

 

Fannie Mae, (Series 1993-137), Class PH, 6.550%, 12/25/2021

 

 

4,072,397

 

 

4,135,948

 

Government National Mortgage Association, Series 2000-12, Class AC, 7.500%, 11/16/2027

 

1,061,443

 

 

1,083,614

 

Government National Mortgage Association, Series 2001-5, Class PK, 5.950%, 7/20/2024

 

1,296,416

 

 

1,300,410

 

Prudential Home Mortgage Securities 1992-B, Class 2B, 6.757%, 9/28/2008(7)(8)

 

 

1,041,224

 

 

1,071,822

Total Collateralized Mortgage Obligations (identified cost $17,285,224)

 

 

 

 

 

18,318,890

Corporate Bonds & Notes -- 66.7%

 

Automotive & Related -- 7.9%

 

Ford Motor Credit Co., Note, 6.125%, 3/20/2004(1)

 

 

8,000,000

 

 

8,182,800

 

Ford Motor Credit Co., Note, 6.500%, 1/25/2007(1)

 

 

4,000,000

 

 

3,989,396

 

Ford Motor Credit Co., Note, 6.700%, 7/16/2004(1)

 

 

7,000,000

 

 

7,218,449
               

Description

Principal
Amount

Value

Corporate Bonds &
Notes (continued)

 

Automotive & Related (continued)

 

Ford Motor Credit Co., Note, 7.750%, 3/15/2005

 

$

5,000,000

 

$

5,186,815

 

General Motors Acceptance Corp., Note, 6.125%, 9/15/2006

 

 

5,000,000

 

 

5,199,940

 

General Motors Acceptance Corp., Note, 6.750%, 1/15/2006(1)

 

 

3,000,000

 

 

3,164,043

 

General Motors Acceptance Corp., Note, 6.875%, 9/15/2011

 

 

7,000,000

 

 

7,027,048

 

General Motors Acceptance Corp., Unsecd. Note, 7.000%, 6/6/2003

 

 

6,000,000

 

 

6,071,100

 

General Motors Corp., Note, 7.200%, 1/15/2011(1)

 

 

5,000,000

 

 

5,098,830

 

 

 

 

 

 

 

51,138,421

 

Banks -- 8.6%

 

 

 

 

 

 

 

BNP Paribas LLC, Company Guarantee, 5.125%, 1/15/2015(1)(7)(8)

 

 

5,000,000

 

 

5,143,080

 

Citicorp, Sub. Note, (Series F), 6.375%, 11/15/2008

 

 

7,000,000

 

 

7,925,428

 

Citigroup, Inc., 5.875%, 2/22/2033

 

 

7,000,000

 

 

7,098,917

 

Citigroup, Inc., Note, 3.500%, 2/1/2008(1)

 

 

10,000,000

 

 

10,107,940

 

Citigroup, Inc., Note, 5.750%, 5/10/2006(1)

 

 

5,000,000

 

 

5,505,715

 

J.P. Morgan Chase & Co., Note, 4.000%, 2/1/2008(1)

 

 

6,000,000

 

 

6,076,668

 

UBS Preferred Funding Trust, Bond, 8.622%, 10/1/2010(1)(4)

 

 

7,000,000

 

 

8,597,967

 

Washington Mutual, Inc., Note, 4.375%, 1/15/2008(1)

 

 

5,000,000

 

 

5,245,350

 

 

 

 

 

 

 

55,701,065

 

Beverages & Foods -- 4.3%

 

 

 

 

 

 

 

Anheuser-Busch Cos., Inc., Deb., 9.000%, 12/1/2009

 

 

5,000,000

 

 

6,491,930

 

General Mills, Inc., 3.875%, 11/30/2007

 

 

11,000,000

 

 

11,252,868

 

Kroger Co., Note, 5.50%, 2/1/2013(1)

 

 

4,000,000

 

 

4,112,008

 

Kroger Co., Note, 8.05%, 2/1/2010

 

 

5,000,000

 

 

5,890,045

 

 

 

 

 

 

 

27,746,851

 

Broker/Dealers -- 4.1%

 

 

 

 

 

 

 

Goldman Sachs Group, Inc., 6.125%, 2/15/2033

 

 

2,500,000

 

 

2,523,922

 

Goldman Sachs Group, Inc., Bond, 6.875%, 1/15/2011

 

 

2,000,000

 

 

2,285,370

 

Lehman Brothers Holdings, Inc., Note, 6.250%, 5/15/2006(1)

 

1,000,000

 

 

1,106,812

 

Merrill Lynch & Co., Inc., Note, (Series MTNB), 5.350%, 6/15/2004

 

 

6,500,000

 

 

6,806,482

Description

Principal
Amount

Value

Corporate Bonds & Notes (continued)

 

Broker/Dealers (continued)

 

 

 

 

 

 

 

Morgan Stanley, Note, 6.600%, 4/1/2012

 

$

7,000,000

 

$

7,835,436

 

PaineWebber Group, Inc., Note, 6.450%, 12/1/2003

 

 

6,000,000

 

 

6,230,598

 

 

 

 

 

 

 

26,788,620

 

Building -- 0.3%

 

 

 

 

 

 

 

Pulte Corp., 6.250%, 2/15/2013

 

 

2,000,000

 

 

2,089,176

 

Chemicals -- 0.6%

 

 

 

 

 

 

 

Dow Chemical Co., Note, 5.250%, 5/14/2004(1)(7)(8)

 

 

3,500,000

 

 

3,615,115

 

Construction Equipment -- 0.4%

 

CRH America, Inc., Note, 6.950%, 3/15/2012

 

 

2,000,000

 

 

2,276,634

 

Consumer Cyclical -- 0.4%

 

 

 

 

 

 

 

Tyco International Group, Note, 5.800%, 8/1/2006(1)

 

 

2,500,000

 

 

2,393,750

 

Domestic & International Oil -- 3.2%

 

Conoco, Inc., Sr. Note, 6.350%, 4/15/2009(1)

 

 

6,000,000

 

 

6,853,182

 

Occidental Petroleum Corp., Deb., 10.125%, 9/15/2009

 

 

5,000,000

 

 

6,620,120

 

Occidental Petroleum Corp., Note, 4.000%, 11/30/2007

 

 

2,500,000

 

 

2,542,523

 

PanCanadian Petroleum Ltd., Bond, 6.300%, 11/1/2011

 

 

4,000,000

 

 

4,445,420

 

 

 

 

 

 

 

20,461,245

 

Electrical Equipment -- 1.3%

 

General Electric Co., Note, 5.000%, 2/1/2013(1)

 

 

8,000,000

 

 

8,263,776

 

Financial Services -- 19.4%

 

 

 

 

 

 

 

Allstate Financial Global, Note, 7.125%, 9/26/2005(7)(8)

 

 

5,500,000

 

 

6,136,185

 

American Express Co., 3.750%, 11/20/2007(1)

 

 

4,000,000

 

 

4,092,840

 

American General Finance Corp., Note, (Series G), 4.500%, 11/15/2007

 

 

5,000,000

 

 

5,227,305

 

American General Finance Corp., Note, (Series G), 5.375%, 10/1/2012

 

 

2,500,000

 

 

2,600,350

 

Core Investments, 4.727%, 11/30/2007

 

 

8,000,000

 

 

8,284,920

 

Countrywide Financial Corp., Note, (Series K), 4.250%, 12/19/2007

 

 

7,000,000

 

 

7,235,662

 

Credit Suisse, London, Sub. Note, 7.900%, 5/29/2049(4)(7)(8)

 

 

5,000,000

 

 

5,441,810

 

EOP Operating LP, Note, 7.375%, 11/15/2003

 

 

4,000,000

 

 

4,156,440

Description

Principal
Amount

Value

Corporate Bonds & Notes (continued)

 

Financial Services (continued)

 

 

 

 

 

 

 

Fidelity Investments, 4.750%, 3/1/2013(1)(7)(8)

 

$

8,000,000

 

$

8,110,848

 

General Electric Capital Corp., Note, 6.800%, 11/1/2005

 

 

4,000,000

 

 

4,463,328

 

General Electric Capital Corp., Note, (Series A), 6.500%, 12/10/2007

 

 

5,000,000

 

 

5,694,700

 

Household Finance Corp., 6.400%, 6/17/2008(1)

 

 

4,000,000

 

 

4,437,292

 

Household Finance Corp., 7.000%, 5/15/2012

 

 

6,000,000

 

 

6,804,642

 

Household International Netherlands BV, Company Guarantee, 6.200%, 12/1/2003

 

 

4,000,000

 

 

4,117,540

 

MBNA Global Capital Securities, Jr. Sub. Deb., 2.150%, 5/1/2003(1)(4)

 

 

5,000,000

 

 

3,438,720

 

National Rural Utilities Cooperative Finance Corp., Note, 3.000%, 2/15/2006

 

 

7,000,000

 

 

7,078,687

 

National Rural Utilities Cooperative Finance Corp., Note, 3.875%, 2/15/2008

 

 

4,000,000

 

 

4,069,016

 

PHH Corp., 7.125%, 3/1/2013

 

 

6,000,000

 

 

6,088,872

 

SLM Corp., 5.625%, 4/10/2007

 

 

5,000,000

 

 

5,492,310

 

Student Loan Marketing Association, 5.375%, 1/15/2013

 

 

11,000,000

 

 

11,592,185

 

Wells Fargo Financial, Inc., 5.875%, 8/15/2008

 

 

10,000,000

 

 

11,246,940

 

 

 

 

 

 

 

125,810,592

 

Household Product/Wares -- 0.8%

 

Procter & Gamble Co., Unsub., 6.600%, 12/15/2004

 

 

5,000,000

 

 

5,426,695

 

Insurance -- 4.5%

 

 

 

 

 

 

 

AIG SunAmerica Global Financial, Bond, 5.850%, 8/1/2008(7)(8)

 

 

7,000,000

 

 

7,761,705

 

HSB Group, Inc., Company Guarantee, 2.285%, 4/15/2003(4)

 

 

4,000,000

 

 

3,741,096

 

John Hancock, Note, 6.500%, 3/1/2011(7)(8)

 

 

3,500,000

 

 

3,921,726

 

MGIC Investment Corp., Sr. Note, 6.000%, 3/15/2007(1)

 

 

3,000,000

 

 

3,207,981

 

Prudential Funding Corp., Note, 6.600%, 5/15/2008

 

 

5,000,000

 

 

5,582,345

 

Radian Group, Inc., Unsecd. Note, 5.625%, 2/15/2013

 

 

5,000,000

 

 

5,087,545

 

 

 

 

 

 

 

29,302,398

Description

Principal
Amount

Value

Corporate Bonds & Notes (continued)

 

Media -- 1.6%

 

 

 

 

 

 

 

AOL Time Warner, Inc., Note, 6.125%, 4/15/2006(1)

 

$

4,000,000

 

$

4,181,792

 

AOL Time Warner, Inc., Note, 6.875%, 5/1/2012(1)

 

 

3,000,000

 

 

3,170,208

 

Comcast Corp., Note, 6.750%, 1/30/2011(1)

 

 

3,000,000

 

 

3,254,130

 

 

 

 

 

 

 

10,606,130

 

Publishing -- 0.4%

 

 

 

 

 

 

 

Reed Elsevier, Capital, Company Guarantee, 6.125%, 8/1/2006

 

 

2,500,000

 

 

2,734,028

 

Telecommunications -- 3.9%

 

AT&T Wireless Services, Inc., Note, 8.125%, 5/1/2012(1)

 

 

2,000,000

 

 

2,154,202

 

British Telecommunication PLC, Note, 7.875%, 12/15/2005

 

 

5,000,000

 

 

5,649,790

 

British Telecommunication PLC, Note, 8.375%, 12/15/2010

 

 

5,000,000

 

 

6,069,675

 

Telstra Corp. Ltd., Note, 6.375%, 4/1/2012

 

 

5,000,000

 

 

5,586,360

 

Verizon Global Funding, Note, 7.250%, 12/1/2010(7)(8)

 

 

3,000,000

 

 

3,498,207

 

Verizon Global Funding, Note, 7.375%, 9/1/2012(1)

 

 

2,000,000

 

 

2,367,538

 

 

 

 

 

 

 

25,325,772

 

Transportation -- 1.4%

 

 

 

 

 

 

 

American Trans Air, Pass Thru Cert., 8.039%, 1/15/2016

 

 

4,484,899

 

 

4,643,868

 

Continental Airlines, Inc., Pass Thru Cert., 6.541%, 9/15/2009

 

 

2,918,766

 

 

1,695,817

 

Delta Air Lines, Inc., Equipment Trust, (Series 1993-A2), 10.500%, 4/30/2016

 

 

4,000,000

 

 

2,610,340

 

 

 

 

 

 

 

8,950,025

 

Utilities-Electric -- 2.8%

 

 

 

 

 

 

 

AEP Texas Central Co., Bond, 6.650%, 2/15/2033

 

 

2,000,000

 

 

2,059,516

 

Limestone Electronic Trust, Sr. Note, 8.625%, 3/15/2003(7)(8)

 

 

5,000,000

 

 

4,900,070

 

Pinnacle Partner, Sr. Note, 8.830%, 8/15/2004(7)(8)

 

 

3,000,000

 

 

2,969,985

 

Southern Power Co., Sr. Note, 6.250%, 7/15/2012(1)

 

 

3,000,000

 

 

3,290,325

 

TransAlta Corp., Note, 6.750%, 71/15/2012

 

 

5,000,000

 

 

5,132,970

 

 

 

 

 

 

 

18,352,866

 

Utilities-Natural Gas -- 0.8%

 

TXU Capital, 2.730%, 7/1/2028

 

 

7,000,000

 

 

4,741,261

Total Corporate Bonds & Notes (identified cost $417,679,044)

 

 

 

 

 

431,724,420

Description

Principal
Amount

Value

Government Agencies -- 7.8%

 

 

 

 

 

 

 

Federal Home Loan Bank -- 0.9%

 

Federal Home Loan Bank System, Bond, 5.430%, 11/17/2008

 

$

5,000,000

 

$

5,568,075

 

Federal National Mortgage Association -- 5.2%

 

5.500%, 2/15/2006

 

 

10,000,000

 

 

10,974,280

 

6.250%, 2/1/2011

 

 

10,000,000

 

 

11,356,490

 

7.000%, 7/15/2005

 

 

10,000,000

 

 

11,205,260

 

 

 

 

 

 

 

33,536,030

 

Tennessee Valley Authority -- 1.7%

 

5.625%, 1/18/2011

 

 

10,000,000

 

 

11,189,690

Total Government Agencies (identified cost $44,292,908)

 

 

 

 

 

50,293,795

Mortgage Backed Securities -- 5.8%

 

Federal Home Loan Mortgage Corp -- 0.8%

 

7.500%, 2/1/2031(1)

 

 

3,356,562

 

 

3,581,047

 

7.500%, 6/1/2031(1)

 

 

1,303,291

 

 

1,390,315

 

 

 

 

 

 

 

4,971,362

 

Federal National Mortgage Association -- 3.4%

 

 

 

 

 

 

 

6.500%, 10/1/2031(1)

 

 

11,182,879

 

 

11,703,611

 

7.000%, 12/1/2015(1)

 

 

4,959,138

 

 

5,296,639

 

7.635%, 8/1/2011(1)

 

 

4,674,319

 

 

5,319,002

 

 

 

 

 

 

 

22,319,252

 

Government National Mortgage Association -- 1.6%

 

7.000%, 3/15/2032

 

 

9,506,559

 

 

10,107,238

Total Mortgage Backed Securities (identified cost $36,044,218)

 

 

 

 

 

37,397,852

U.S. Treasury Securities -- 2.8%

 

U.S. Treasury Notes -- 2.8%

 

6.000%, 8/15/2004

 

 

2,000,000

 

 

2,135,626

 

7.250%, 5/15/2004

 

 

15,000,000

 

 

16,074,030

Total U.S. Treasury Securities (identified cost $18,146,485)

 

 

 

 

18,209,656

Total Investment in Securities (identified cost $577,374,183)

 

 

 

 

602,147,695

Description

Principal
Amount

Value

Repurchase Agreement -- 5.8%

 

Interest in $184,609,342 joint repurchase agreement with Lehman Brothers, Inc., 1.320% dated 2/28/2003, to be repurchased at $37,449,059 on 3/3/2003, collateralized by a U.S. Government Agency Obligation maturing 12/15/2005 (at amortized cost)

$

37,444,940

 

$

37,444,940

Total Investments (identified cost $614,819,123) -- 98.9%

 

 

 

 

639,592,635

Other Net Assets and Liabilities -- 1.1%

 

 

 

 

7,370,259

Total Net Assets -- 100.0%

 

 

 

 

$

646,962,894

Intermediate Tax-Free Fund

   

Description/Credit Rating(9)

   

Principal
Amount

   

Value

Long-Term Municipals -- 96.6%

 

 

 

 

 

 

 

Arizona -- 7.5%

 

 

 

 

 

 

 

Maricopa County, AZ, School District No. 214 Tolleson Unified High, GO UT, 5.100% (Financial Security Assurance, Inc. LOC)/(Original Issue Yield: 5.099%), 7/1/2010, AAA/Aaa

 

$

1,000,000

 

$

1,118,550

 

Maricopa County, AZ, School District No. 28 Kyrene Elementary, (Series A), 5.000% (MBIA Insurance Corp. LOC)/(Original Issue Yield: 4.590%), 7/1/2013, NR/Aaa

 

 

1,885,000

 

 

2,110,748

 

Mesa, AZ, Street and Highway, Refunding Revenue Bond, 4.000% (Financial Security Assurance, Inc. LOC), 7/1/2014, AAA/Aaa

 

 

2,120,000

 

 

2,151,270

 

Phoenix, AZ, Civic Improvement Corp., 5.125% (FGIC LOC)/(Original Issue Yield: 4.570%), 7/1/2014, AAA/Aaa

 

 

2,000,000

 

 

2,239,940

 

Phoenix, AZ, Civic Improvement Corp., Refunding Revenue Bonds, 5.250% (FGIC LOC)/(Original Issue Yield: 4.690%), 7/1/2016, AAA/Aaa

 

 

500,000

 

 

568,475

 

 

 

 

 

 

 

8,188,983

 

Arkansas -- 1.2%

 

 

 

 

 

 

 

Arkansas Development Finance Authority, Revenue Bonds, 5.000% (Ambac Financial Group, Inc. INS)/(Original Issue Yield: 5.055%), 7/1/2020, AAA/Aaa

 

 

1,255,000

 

 

1,310,295

Description/Credit Rating(9)

Principal
Amount

Value

Long-Term Municipals (continued)

 

 

 

 

 

 

Colorado -- 5.1%

 

 

 

 

 

 

 

El Paso County, CO School District No. 49, GO UT, 5.750% (FGIC LOC)/(Original Issue Yield: 4.750%), 12/1/2013, AAA/Aaa

 

$

1,875,000

 

$

2,179,425

 

Larimer County, CO School District, GO UT, 5.500% (FGIC LOC)/(Original Issue Yield: 4.420%), 12/15/2006, AAA/Aaa

 

 

3,000,000

 

 

3,417,690

 

 

 

 

 

 

 

5,597,115

 

Connecticut -- 1.8%

 

 

 

 

 

 

 

Connecticut State, (Series C), 5.000% (Original Issue Yield: 3.280%), 12/15/2007, AA/Aa2

 

 

1,700,000

 

 

1,917,991

 

Florida -- 1.0%

 

 

 

 

 

 

 

Orange County, FL, Health Facilities Authority, Refunding Revenue Bonds, 5.550% (Original Issue Yield: 5.750%), 11/15/2004, A-/A3

 

 

1,060,000

 

 

1,127,670

 

Hawaii -- 1.0%

 

 

 

 

 

 

 

Hawaii State Airport System, Refunding Revenue Bonds, 5.250% (FGIC LOC)/(Original Issue Yield: 4.770%), 7/1/2011, AAA/Aaa

 

 

1,000,000

 

 

1,106,330

 

Illinois -- 2.1%

 

 

 

 

 

 

 

Evanston, IL, (Series C), 5.250% (Original Issue Yield: 3.780%), 1/1/2014, Aaa

 

 

1,000,000

 

 

1,104,610

 

University of Illinois, Refunding Revenue Bonds, 5.250% (AMBAC INS)/(Original Issue Yield: 4.530%), 4/1/2013, AAA/Aaa

 

 

1,060,000

 

 

1,195,171

 

 

 

 

 

 

 

2,299,781

 

Indiana -- 3.4%

 

 

 

 

 

 

 

Indianapolis-Marion County, IN, Public Library, GO UT, 5.800%, 7/1/2012, NR/Aa2

 

 

1,425,000

 

 

1,667,777

 

Petersburg, IN, IPALCO, Refunding Revenue Bonds, 6.100% (MBIA Insurance Corp. LOC)/(Original Issue Yield: 6.099%), 1/1/2016, AAA/Aaa

 

 

2,000,000

 

 

2,049,440

 

 

 

 

 

 

 

3,717,217

 

Iowa -- 2.8%

 

 

 

 

 

 

 

Iowa Finance Authority, Revenue Bonds, 6.000% (Ipsco, Inc.), 6/1/2027, NR/NR

 

 

3,000,000

 

 

3,063,690

Description/Credit Rating(9)

Principal
Amount

Value

Long-Term Municipals (continued)

 

 

 

 

 

 

Kansas -- 1.1%

 

 

 

 

 

 

 

Sedgwick County, KS, University School District, District No. 259, 6.000%, 9/1/2008, AA/Aa3

 

$

1,000,000

 

$

1,176,230

 

Kentucky -- 2.8%

 

 

 

 

 

 

 

Kentucky State Property & Buildings Commission, Refunding Revenue Bonds, 6.000% (Financial Security Assurance, Inc. LOC)/(Original Issue Yield: 5.510%), 2/1/2011, AAA/Aaa

 

 

2,565,000

 

 

3,029,368

 

Massachusetts -- 6.4%

 

 

 

 

 

 

 

Commonwealth of Massachusetts, (Series A), 6.000% (Original Issue Yield: 5.670%), 2/1/2014, AAA/Aa2

 

 

2,500,000

 

 

2,972,875

 

Commonwealth of Massachusetts, GO UT, (Series E), 5.500%, 1/1/2014, AA-/Aa2

 

 

3,500,000

 

 

3,980,690

 

 

 

 

 

 

 

6,953,565

 

Michigan -- 7.4%

 

 

 

 

 

 

 

Detroit, MI, City School District, (Series B), 5.000% (FGIC LOC)/(Original Issue Yield: 4.500%), 5/1/2009, AAA/Aaa

 

 

3,300,000

 

 

3,695,868

 

Michigan Municipal Bond Authority, Revenue Clean Water, 4.000% (Original Issue Yield: 1.670%), 10/1/2004, AAA/Aaa

 

 

2,500,000

 

 

2,610,675

 

Michigan State Building Authority, (Series I), 5.500% (Original Issue Yield: 4.250%), 10/15/2009, AA+/Aa1

 

 

1,500,000

 

 

1,738,905

 

 

 

 

 

 

 

8,045,448

 

Minnesota -- 6.2%

 

 

 

 

 

 

 

Minneapolis/St. Paul, MN Housing Authority, Refunding Revenue Bonds, 6.750%, 12/1/2013, BBB+/Baa1

 

 

1,000,000

 

 

1,029,200

 

Minneapolis/St. Paul, MN Metropolitan Airports Commission, (Series B), 5.250% (FGIC LOC)/(Original Issue Yield: 4.070%), 1/1/2006, AAA/Aaa

 

 

3,000,000

 

 

3,248,970

 

Mounds View, MN Independent School District No. 621, GO UT, 5.000% (MBIA Insurance Corp. LOC)/(Original Issue Yield: 4.450%), 2/1/2013, NR/Aaa

 

 

2,235,000

 

 

2,471,530

 

 

 

 

 

 

 

6,749,700

Description/Credit Rating(9)

Principal
Amount

Value

Long-Term Municipals (continued)

 

 

 

 

 

 

Nevada -- 4.4%

 

 

 

 

 

 

 

Clark County, NV School District, GO UT, 5.250% (Original Issue Yield: 4.880%), 6/15/2013, AAA/Aaa

 

$

2,500,000

 

$

2,725,400

 

Clark County, NV School District, GO UT, (Series D), Refunding Bonds, 5.250%, (FGIC INS) 6/15/2014, AAA/Aaa

 

 

1,880,000

 

 

2,115,169

 

 

 

 

 

 

 

4,840,569

 

New Mexico -- 3.6%

 

 

 

 

 

 

 

New Mexico State Highway Commission, Refunding Revenue Bonds, 6.000% (Original Issue Yield: 5.370%), 6/15/2010, AA+/Aa2

 

 

3,325,000

 

 

3,883,434

 

New York -- 2.5%

 

 

 

 

 

 

 

Oswego County, NY, GO UT, 6.700% (Original Issue Yield: 6.800%), 6/15/2010, NR/A2

 

 

1,100,000

 

 

1,341,736

 

Oswego County, NY, GO UT, 6.700% (Original Issue Yield: 6.800%), 6/15/2011, NR/A2

 

 

1,100,000

 

 

1,351,889

 

 

 

 

 

 

 

2,693,625

 

North Dakota -- 4.7%

 

 

 

 

 

 

 

Fargo, ND, (Series A), 5.750% (Financial Security Assurance, Inc. LOC)/(Original Issue Yield: 5.300%), 6/1/2012,
AAA/Aaa

 

 

2,940,000

 

 

3,364,213

 

North Dakota State Water Authority, Revenue Bonds, (Series A), 6.000% (MBIA INS)/(Original Issue Yield: 5.390%), 8/1/2011, AAA/Aaa

 

 

1,545,000

 

 

1,791,721

 

 

 

 

 

 

 

5,155,934

 

Ohio -- 1.0%

 

 

 

 

 

 

 

Sidney, OH Industrial Development, Refunding Revenue Bonds, 5.400% (Fort Wayne National Corp. LOC)/(Perfection Bakeries, Inc.)/(Original Issue Yield: 5.399%), 9/15/2005, NR/NR

 

 

1,000,000

 

 

1,046,730

 

Oregon -- 1.0%

 

 

 

 

 

 

 

Salem-Keizer, OR, School District No. 24J, GO UT, 5.375% (FGIC COL), 6/1/2014, AAA/Aaa

 

 

1,000,000

 

 

1,088,430

Description/Credit Rating(9)

Principal
Amount

Value

Long-Term Municipals (continued)

 

 

 

 

 

 

Pennsylvania -- 6.3%

 

 

 

 

 

 

 

Commonwealth of Pennsylvania, 6.000% (Original Issue Yield: 5.540%), 1/15/2012, AA/Aa2

 

$

4,000,000

 

$

4,655,200

 

Pottsville, PA, Hospital Authority, 7.000% (Original Issue Yield: 7.500%), 7/1/2014, AAA/NR

 

 

2,000,000

 

 

2,191,040

 

 

 

 

 

 

 

6,846,240

 

South Carolina -- 4.0%

 

 

 

 

 

 

 

South Carolina State, GO UT Bonds, (Series B), 5.625%, 7/1/2011, AAA/Aaa

 

 

1,055,000

 

 

1,191,559

 

South Carolina State Public Service Authority, (Series A), 5.375% (MBIA Insurance Corp. LOC)/(Original Issue Yield: 4.800%), 1/1/2006, AAA/Aaa

 

 

2,835,000

 

 

3,124,964

 

 

 

 

 

 

 

4,316,523

 

South Dakota -- 1.4%

 

 

 

 

 

 

 

Heartland Consumers Power District, SD, Refunding Revenue Bonds, 5.900% (Financial Security Assurance, Inc. INS)/(Original Issue Yield: 6.000%), 1/1/2004, AAA/Aaa

 

 

1,500,000

 

 

1,559,625

 

Tennessee -- 1.2%

 

 

 

 

 

 

 

Putnam County, TN, GO UT, 5.250% (FGIC LOC)/(Original Issue Yield: 4.530%), 4/1/2013, NR/Aaa

 

 

1,200,000

 

 

1,355,184

 

Texas -- 3.2%

 

 

 

 

 

 

 

Tarrant County, TX, HFDC, Revenue Bonds, 5.750% (Texas Health Resources System)/(MBIA INS), 2/15/2009, AAA/Aaa

 

 

2,000,000

 

 

2,292,460

 

Texas Water Development Board, State Revolving Fund Senior Lien Revenue Bonds, (Series A), 5.250% (Original Issue Yield: 4.900%), 7/15/2004, AAA/Aaa

 

 

1,180,000

 

 

1,245,136

 

 

 

 

 

 

 

3,537,596

 

Virginia -- 3.8%

 

 

 

 

 

 

 

Loudoun County, VA, GO UT, (Series B), 5.750%, 1/1/2011, AA+/Aa1

 

 

2,190,000

 

 

2,532,341

 

Suffolk, VA Redevelopment & Housing Authority, Revenue Refunding Bonds, 4.850%, (Fannie Mae LIQ) 7/1/2031, NR/Aaa

 

 

1,500,000

 

 

1,601,460

 

 

 

 

 

 

 

4,133,801

Description/Credit Rating(9)

Principal
Amount
or Shares

Value

Long-Term Municipals (continued)

 

 

 

 

 

 

Washington -- 1.0%

 

 

 

 

 

 

 

Port Longview, WA Industrial Development Corp., IDC, Solid Waste Disposal Revenue Bonds, 6.875% (Weyerhaeuser Co.), 10/1/2008, BBB/NR

 

$

1,000,000

 

$

1,122,140

 

West Virginia -- 1.2%

 

 

 

 

 

 

 

West Virginia State Hospital Finance Authority, Pre-refunded Bonds, (Series B), 6.750% (Original Issue Yield: 6.950%), 9/1/2030, A2

 

 

1,000,000

 

 

1,248,690

 

Wisconsin -- 7.5%

 

 

 

 

 

 

 

Cedarburg, WI School District, (Series B), 5.375% (Financial Security Assurance, Inc. LOC)/(Original Issue Yield: 5.000%), 3/1/2016, NR/Aaa

 

 

940,000

 

 

1,022,278

 

Cedarburg, WI School District, GO UT, (Series B), Refunding Bonds, 5.375% (Original Issue Yield: 4.930%), 3/1/2015, NR/Aaa

 

 

895,000

 

 

977,805

 

Green Bay, WI Area Public School District, GO UT, 5.000% (Original Issue Yield: 4.740%), 4/1/2009, NR/Aa2

 

 

2,250,000

 

 

2,505,983

 

Kenosha County, WI, (Series A), 5.000% (FGIC LOC)/(Original Issue Yield: 4.500%), 3/1/2013, AAA/Aaa

 

 

1,535,000

 

 

1,640,316

 

Wisconsin State, GO UT, (Series C), Water Utility & Highway Improvement Bonds, 6.000%, 5/1/2014, AA/Aa3

 

 

1,750,000

 

 

2,077,075

 

 

 

 

 

 

 

8,223,457

 

Total Long-Term Municipals (identified cost $98,413,703)

 

 

 

 

 

105,335,361

 

Mutual Funds -- 2.6%

 

 

 

 

 

 

 

Tax-Free Obligations Fund

 

 

630,294

 

 

630,294

 

Fidelity Tax Exempt Money Market

 

 

2,183,438

 

2,183,438

 

Total Mutual Funds (shares at net asset value)

 

 

 

 

2,813,732

 

Total Investments (identified cost $101,227,435) -- 99.2% (10)

 

 

 

 

108,149,093

 

Other Net Assets and Liabilities -- 0.8%

 

 

 

 

834,441

 

Total Net Assets -- 100.0%

 

 

 

 

$

108,983,534

Short-Term Income Fund

   

Description

  

Principal
Amount

   

Value

Asset-Backed Securities -- 10.6%

 

 

 

 

Citibank Credit Card Master Trust I 1998-9, Class A, 5.300%, 1/9/2006

 

$

1,220,000

 

$

1,261,368

 

DLJ Commercial Mortgage Corp. 1998-STF2, Class A1, 1.990%, 11/5/2008(7)(8)

 

 

208,357

 

 

207,315

 

DaimlerChrysler Auto Trust, Class A3, 6.820%, 9/6/2004

 

 

504,254

 

 

509,045

 

First Franklin Mortgage Loan Asset Backed Certificates 2002-FF1, Class 1A2, 3.790%, 4/25/2032

 

 

1,600,000

 

 

1,635,117

 

Ford Credit Auto Owner Trust 2000-G, Class A4, 6.620%, 7/15/2004

 

 

334,903

 

 

339,607

 

Green Tree Home Equity Loan Trust 1998-B, Class B1, 7.810%, 11/15/2029

 

 

3,000,000

 

 

3,131,359

 

Honda Auto Receivables Owner Trust 2001-3, Class A4, 3.960%, 2/19/2007

 

 

1,300,000

 

 

1,344,549

 

Honda Auto Receivables Owner Trust 2003-1, Class A3, 1.920%, 11/20/2006

 

 

1,250,000

 

 

1,252,622

 

Household Automotive Trust 2002-3, Class A3A, 2.750%, 6/18/2007

 

 

1,100,000

 

 

1,120,178

 

Pegasus Aviation Lease Securitization 1999-1A, Class A1, 6.300%, 3/25/2029(7)(8)

 

 

750,737

 

 

717,905

 

Residential Asset Mortgage Products, Inc. 2002-RS5, Class AI3, 3.717%, 7/25/2027

 

 

1,100,000

 

 

1,124,980

 

Residential Asset Mortgage Products, Inc. 2002-RZ3, Class A3, 3.710%, 2/25/2029

 

 

1,300,000

 

 

1,328,861

Total Asset-Backed Securities (identified cost $13,693,739)

 

 

 

 

 

13,972,906

Collateralized Mortgage Obligations -- 7.4%

 

Federal Home Loan Mortgage Corporation -- 2.3%

 

5.250%, 1/15/2010, Series 2368, Class TQ

 

 

1,375,005

 

 

1,383,881

 

5.500%, 5/15/2011, Series 2368, Class OC

 

 

1,620,000

 

 

1,674,794

 

 

 

 

 

 

 

3,058,675

 

Federal National Mortgage Association -- 1.1%

 

6.550%, 12/25/2021, Series 1993-137, Class PH

 

 

1,413,703

 

 

1,435,765

 

Government National Mortgage Association -- 0.5%

 

5.950%, 7/20/2024, Series 2001-5, Class PK

 

 

210,668

 

 

211,317

 

7.500%, 11/16/2027, Series 2000-12, Class AC

 

 

494,849

 

 

505,185

 

 

 

 

 

 

 

716,502

Description

Principal
Amount

Value

Collateralized Mortgage Obligations (continued)

 

Other Financial -- 3.5%

 

 

 

 

 

 

 

Capital Asset Research Funding 1997-A, Class A 144A, 6.400%, 12/15/2004(7)(8)

 

$

388,053

 

$

388,053

 

Criimi Mae CMBS Corp. 1998-1, Class A2, 6.009%, 6/20/2030(7)(8)

 

 

2,493,169

 

 

2,676,680

 

Securitized Asset Sales, Inc. 1995-4, Class A5, 7.250%, 11/25/2005

 

 

169,759

 

 

169,581

 

Washington Mutual Mortgage Securities Corp. 2001-9, Class A6, 4.816%, 10/25/2032

 

 

1,350,000

 

 

1,395,883

 

 

 

 

 

 

 

4,630,197

Total Collateralized Mortgage Obligations (identified cost $9,649,581)

 

 

 

 

 

9,841,139

Mortgage Backed Pass-Through Securities -- 4.9%

 

Federal Home Loan Mortgage Corporation -- 0.4%

 

9.000%, 7/1/2014

 

 

107,087

 

 

117,062

 

11.000%, 8/1/2019

 

 

349,781

 

 

397,813

 

 

 

 

 

 

 

514,875

 

Federal National Mortgage Association -- 4.3%

 

7.000%, 12/1/2015

 

 

1,339,314

 

 

1,430,463

 

7.500%, 9/1/2015

 

 

1,177,023

 

 

1,260,727

 

8.000%, 8/1/2007

 

 

15,878

 

 

15,878

 

8.000%, 5/1/2008

 

 

336,240

 

 

355,449

 

9.000%, 7/1/2009

 

 

170,541

 

 

185,614

 

9.000%, 1/1/2015

 

 

63,525

 

 

70,778

 

9.500%, 12/1/2024

 

 

204,431

 

 

228,517

 

9.500%, 1/1/2025

 

 

425,100

 

 

475,184

 

9.500%, 1/1/2025

 

 

331,837

 

 

370,873

 

9.500%, 1/1/2025

 

 

205,484

 

 

229,694

 

10.000%, 7/1/2020

 

 

143,527

 

 

164,916

 

10.500%, 1/1/2022

 

 

173,763

 

 

202,112

 

11.000%, 12/1/2015

 

 

554,879

 

 

631,294

 

 

 

 

 

 

 

5,621,499

 

Government National Mortgage Association -- 0.2%

 

9.000%, 12/15/2019

 

 

276,817

 

 

310,046

Total Mortgage Backed Pass-Though Securities (identified cost $6,232,603)

 

 

 

 

 

6,446,420

Corporate Bonds & Notes -- 40.3%

 

Asset-Backed -- 0.3%

 

 

 

 

 

 

 

Regional Jet Equipment Trust, Note, Series 144A, 7.771%, 9/5/2004(7)

 

 

707,606

 

 

425,006

Description

Principal
Amount

Value

Corporate Bonds & Notes -- (continued)

 

Automotive & Related -- 0.9%

 

 

 

 

DaimlerChrysler North America Holding Corp., 3.400%, 12/15/2004

 

$

1,200,000

 

$

1,211,065

 

Banks -- 2.8%

 

 

 

 

 

 

 

First Chicago Corp., Sub. Note, 6.875%, 6/15/2003

 

 

1,220,000

 

 

1,238,149

 

J.P. Morgan Chase & Co., Note, 4.000%, 2/1/2008

 

 

1,200,000

 

 

1,215,334

 

NationsBank Corp., 6.125%, 7/15/2004

 

 

1,220,000

 

 

1,295,877

 

 

 

 

 

 

 

3,749,360

 

Beverages & Foods -- 0.9%

 

 

 

 

 

 

 

General Mills, Inc., 7.468%, 10/15/2004

 

 

1,100,000

 

 

1,184,564

 

Broker/Dealers -- 5.2%

 

 

 

 

 

 

 

Bear, Stearns and Co., Note, 7.330%, 10/28/2004

 

 

1,250,000

 

 

1,359,447

 

Credit Suisse First Boston USA, Inc., Note, 5.875%, 8/1/2006

 

 

1,220,000

 

 

1,329,583

 

Goldman Sachs Group, Inc., Bond, 7.625%, 8/17/2005

 

 

810,000

 

 

911,441

 

Merrill Lynch & Co., Inc., Note, 6.800%, 11/3/2003

 

 

810,000

 

 

838,792

 

Merrill Lynch & Co., Inc., Note, Series MTNB, 5.350%, 6/15/2004

 

 

1,050,000

 

 

1,099,509

 

Morgan Stanley Group, Inc., Note, 7.750%, 6/15/2005

 

 

450,000

 

 

505,420

 

Morgan Stanley, Unsub., 6.100%, 4/15/2006

 

 

810,000

 

 

890,694

 

 

 

 

 

 

 

6,934,886

 

Chemicals -- 1.3%

 

 

 

 

 

 

 

Dow Chemical Co., Note, 5.250%, 5/14/2004

 

 

1,620,000

 

 

1,673,282

 

Domestic & International Oil -- 0.8%

 

Occidental Petroleum Corp., 6.500%, 4/1/2005

 

 

970,000

 

 

1,046,137

 

Electric -- 2.9%

 

 

 

 

 

 

 

Dominion Resources, Inc., Note, 2.800%, 2/15/2005

 

 

1,350,000

 

 

1,354,718

 

Limestone Electronic Trust, Company Guarantee, 8.625%, 3/15/2003(7)(8)

 

 

820,000

 

 

803,611

 

TXU Capital, 2.730%, 7/1/2028(4)

 

 

2,430,000

 

 

1,645,895

 

 

 

 

 

 

 

3,804,224

 

Energy -- 0.3%

 

 

 

 

 

 

 

Osprey Trust, Sr. Secd. Note 144A, 8.310%, 1/15/2003(3)(7)

 

 

2,000,000

 

 

385,000

Description

Principal
Amount

Value

Corporate Bonds & Notes -- (continued)

 

Entertainment -- 1.3%

 

 

 

 

 

 

 

AOL Time Warner, Inc., Note, 6.125%, 4/15/2006

 

$

810,000

 

$

846,813

 

Walt Disney Co., 7.300%, 2/8/2005

 

 

810,000

 

 

881,418

 

 

 

 

 

 

 

1,728,231

 

Financial Services -- 2.9%

 

 

 

 

 

 

 

Allstate Financial Global, Note, Series 144A, 7.125%, 9/26/2005(7)(8)

 

 

750,000

 

 

836,752

 

Boeing Capital Corp., Sr. Note, 7.100%, 9/27/2005

 

 

610,000

 

 

675,781

 

MBNA Global Capital Securities, Jr. Sub. Deb., 2.150%, 5/1/2003(4)

 

 

1,000,000

 

 

687,744

 

PaineWebber Group, Inc., Note, 6.450%, 12/1/2003

 

 

810,000

 

 

841,131

 

Salomon Smith Barney Holdings, Inc., Note, 6.250%, 5/15/2003

 

 

810,000

 

 

817,706

 

 

 

 

 

 

 

3,859,114

 

Forest Products & Paper -- 0.4%

 

Reed Elsevier, Inc., Company Guarantee, 6.125%, 8/1/2006

 

 

490,000

 

 

535,869

 

Healthcare -- 1.3%

 

 

 

 

 

 

 

Abbott Laboratories, Note, 5.125%, 7/1/2004

 

 

1,620,000

 

 

1,697,750

 

Industrial Services -- 0.8%

 

 

 

 

 

 

 

Dayton-Hudson Corp., Note, 7.500%, 7/15/2006

 

 

600,000

 

 

690,703

 

Tyco International Group, Note, 5.800%, 8/1/2006

 

 

410,000

 

 

392,575

 

 

 

 

 

 

 

1,083,278

 

Insurance -- 1.8%

 

 

 

 

 

 

 

American General Finance Corp., Note, Series G, 4.500%, 11/15/2007

 

 

1,100,000

 

 

1,150,007

 

MGIC Investment Corp., Sr. Note, 7.500%, 10/15/2005

 

 

1,095,000

 

 

1,216,330

 

 

 

 

 

 

 

2,366,337

 

Leasing -- 1.8%

 

 

 

 

 

 

 

General Electric Capital Corp., Note, 5.000%, 6/15/2007

 

 

1,000,000

 

 

1,074,546

 

General Electric Capital Corp., Note, 5.375%, 4/23/2004

 

 

1,210,000

 

 

1,262,429

 

 

 

 

 

 

 

2,336,975

 

Media -- 0.8%

 

 

 

 

 

 

 

Gannett Co., Inc., Note, 4.950%, 4/1/2005

 

 

955,000

 

 

1,010,118

 

Metals -- 0.5%

 

 

 

 

 

 

 

Alcoa, Inc., Note, 5.875%, 6/1/2006

 

 

620,000

 

 

682,976

Description

Principal
Amount

Value

Corporate Bonds & Notes (continued)

 

Other Financial -- 3.8%

 

 

 

 

 

 

 

American Express Co., 3.750%, 11/20/2007

 

$

1,000,000

 

$

1,023,210

 

Core Investments, 4.727%, 11/30/2007

 

 

1,700,000

 

 

1,760,545

 

HSB Group, Inc., Company Guarantee, 2.285%, 4/15/2003(4)

 

 

2,430,000

 

 

2,272,716

 

 

 

 

 

 

 

5,056,471

 

Papers -- 0.8%

 

 

 

 

 

 

 

Weyerhaeuser Co., Note, 5.500%, 3/15/2005(7)(8)

 

 

1,010,000

 

 

1,064,158

 

Personal Credit -- 5.2%

 

 

 

 

 

 

 

Ford Motor Credit Co., Note, 7.500%, 6/15/2003

 

 

1,220,000

 

 

1,232,938

 

Ford Motor Credit Co., Sr. Note, 6.125%, 3/20/2004

 

 

1,620,000

 

 

1,657,017

 

General Motors Acceptance Corp., Note, 4.150%, 2/7/2005

 

 

2,600,000

 

 

2,608,676

 

Household Finance Corp., Note, 8.000%, 5/9/2005

 

 

1,200,000

 

 

1,329,588

 

 

 

 

 

 

 

6,828,219

 

Short-Term Business Credit -- 1.0%

 

CIT Group Inc., Sr. Note, 4.125%, 2/21/2006

 

 

1,275,000

 

 

1,280,354

 

Telecommunications -- 1.6%

 

 

 

 

 

 

 

British Telecommunication PLC, Note, 7.875%, 12/15/2005

 

 

570,000

 

 

644,076

 

France Telecommunications, Note, 8.700%, 3/1/2006

 

 

570,000

 

 

642,367

 

Verizon Global Funding, Note, 6.750%, 12/1/2005

 

 

810,000

 

 

897,090

 

 

 

 

 

 

 

2,183,533

 

Utilities -- 0.9%

 

 

 

 

 

 

 

National Rural Utilities Cooperative Finance Corp., Note, 3.000%, 2/15/2006

 

 

1,200,000

 

 

1,213,489

Total Corporate Bonds & Notes (identified cost $54,463,535)

 

 

 

 

 

53,340,396

Government Agencies -- 32.1%

 

Federal Home Loan Bank -- 4.0%

 

Federal Home Loan Bank System, Bond, 4.125%, 1/14/2005

 

 

5,000,000

 

 

5,231,325

 

Federal Home Loan Mortgage Corporation -- 15.4%

 

Federal Home Loan Mortgage Corp., 4.875%, 3/15/2007

 

 

2,000,000

 

 

2,180,264

 

Federal Home Loan Mortgage Corp., Note, 5.250%, 2/15/2004

 

 

5,000,000

 

 

5,188,920

Description

Principal
Amount

Value

Government Agencies (continued)

 

Federal Home Loan Mortgage Corporation (continued)

 

Federal Home Loan Mortgage Corp., Unsecd. Note, 3.250%, 11/15/2004

 

$

3,000,000

 

$

3,087,498

 

Federal Home Loan Mortgage Corp., Unsecd. Note, 3.500%, 9/15/2007

 

 

3,500,000

 

 

3,613,029

 

Federal Home Loan Mortgage Corp., Unsecd. Note, 4.250%, 6/15/2005

 

 

6,000,000

 

 

6,343,008

 

 

 

 

 

 

 

20,412,719

 

Federal National Mortgage Association -- 12.7%

 

Federal National Mortgage Association, Note, 3.125%, 11/15/2003

 

 

1,740,000

 

 

1,762,820

 

Federal National Mortgage Association, Note, 4.250%, 7/15/2007

 

 

4,500,000

 

 

4,787,032

 

Federal National Mortgage Association, Note, 4.375%, 10/15/2006

 

 

2,000,000

 

 

2,137,356

 

Federal National Mortgage Association, Note, 5.125%, 2/13/2004

 

 

1,430,000

 

 

1,481,650

 

Federal National Mortgage Association, Note, 5.500%, 2/15/2006

 

 

6,000,000

 

 

6,584,568

 

 

 

 

 

 

 

16,753,426

Total Government Agencies (identified cost $41,217,186)

 

 

 

 

 

42,397,470

Total Investments in Securities (identified cost $125,256,644)

 

 

 

 

 

125,998,331

Repurchase Agreement -- 4.2%

 

Agreement with Lehman Brothers, Inc., 1.320% dated 2/28/2003, to be repurchased at $5,532,926 on 3/3/2003, collateralized by a U.S. Government Agency Obligation maturing 12/15/2005

 

 

5,532,317

 

5,532,317

Total Investments (identified cost $130,788,961) -- 99.5%

 

 

 

 

131,530,648

Other Net Assets and Liabilities--0.5%

 

 

 

 

675,400

Total Net Assets -- 100.0%

 

 

 

 

$

132,206,048

Money Market Fund  

   

Description

   

Principal
Amount

   

Value

Commercial Paper -- 29.6%(11)

 

Asset-Backed -- 6.4%

 

 

 

 

 

 

 

Liquid Funding Ltd., 1.300%, 4/16/2003(7)(8)

 

$

35,000,000

 

$

34,941,861

 

Scaldis Capital Ltd., 1.360%, 3/24/2003(7)(8)

 

 

26,000,000

 

 

25,977,409

 

Tannehill Capital Co., 1.290% - 1.310%, 4/14/2003 - 4/22/2003(7)(8)

 

 

74,075,000

 

 

73,942,925

 

World Omni Vehicle Leasing, Inc., 1.300%, 3/21/2003(7)(8)

 

 

75,000,000

 

 

74,945,833

 

 

 

 

 

 

 

209,808,028

 

Diversified -- 2.2%

 

 

 

 

 

 

 

Concord Minutemen, 1.280% - 1.290%, 5/19/2003 -5/21/2003(7)(8)

 

 

74,878,000

 

 

74,662,820

 

Electric -- 2.3%

 

 

 

 

 

 

 

Wisconsin Energy Corp., 1.400% - 1.430%, 3/5/2003 - 3/17/2003(7)(8)

 

 

75,000,000

 

 

74,971,635

 

Foreign Banks -- 6.7%

 

 

 

 

 

 

 

Britannia Building Society, 1.400%, 3/6/2003 - 3/17/2003

 

 

69,500,000

 

 

69,468,446

 

Depfa-Bank, 1.320% - 1.350%, 3/19/2003 - 4/9/2003(7)(8)

 

 

75,000,000

 

 

74,924,400

 

Spintab-Swedmortgage AB, 1.330% , 4/11/2003

 

 

75,000,000

 

 

74,886,396

 

 

 

 

 

 

 

219,279,242

 

Healthcare -- 0.4%

 

 

 

 

 

 

 

Baxter International, Inc., 1.300%, 3/12/2003

 

 

12,500,000

 

 

12,495,035

 

Insurance -- 4.0%

 

 

 

 

 

 

 

Jefferson-Pilot Corp., 1.310%, 4/23/2003

 

 

69,000,000

 

 

68,866,926

 

Torchmark Corp., 1.310% - 1.380%, 3/4/2003 - 3/18/2003

 

 

62,600,000

 

 

62,573,768

 

 

 

 

 

 

 

131,440,694

 

Mortgage -- 2.3%

 

 

 

 

 

 

 

Mortgage Interest Networking Trust A1+/P1, 1.370%, 4/3/2003

 

 

75,000,000

 

 

74,905,813

Description

Principal
Amount

Value

Commercial Paper (continued)(11)

 

Personal Credit -- 2.3%

 

 

 

 

 

 

 

Household Finance Corp., 1.360%, 3/24/2003

 

$

75,000,000

 

$

74,934,833

 

Receivables -- 0.7%

 

 

 

 

 

 

 

Fairway Financial Corp., 1.340%, 3/24/2003(7)(8)

 

 

23,036,000

 

 

23,016,279

 

Telecommunications -- 2.3%

 

 

 

 

Verizon Global Funding, 1.470%, 3/15/2003(7)(8)

 

 

75,000,000

 

 

75,000,000

Total Commercial Paper

 

 

 

 

 

970,514,379

Corporate Bonds -- 3.4%

 

 

 

 

 

 

 

Banks -- 1.7%

 

 

 

 

 

 

 

Associated Banc Corp., 1.600%, 4/10/2003

 

 

55,000,000

 

 

55,013,381

 

Healthcare -- 1.2%

 

 

 

 

 

 

 

Lily (Eli) & Co., 4.226%, 3/22/2003(7)(8)

 

 

15,000,000

 

 

15,011,996

 

Merck & Co., Inc., 144A, 4.489%, 2/22/2004(7)(8)

 

 

25,000,000

 

 

25,787,699

 

 

 

 

 

 

 

40,799,695

 

Telecommunications -- 0.5%

 

 

 

 

SBC Communications, Inc., 144A, 4.295%, 6/5/2003(7)(8)

 

 

15,000,000

 

 

15,059,730

Total Corporate Bonds

110,872,806

Variable-Rate Notes -- 51.2%(4)

 

 

 

 

Banks -- 3.0%

 

 

 

 

 

 

 

American Express Centurion Bank, DE, 1.330%, 3/12/2003

 

 

15,000,000

 

 

15,000,000

 

Bank One, Illinois, N.A., 1.490%, 3/17/2003

 

 

28,500,000

 

 

28,517,707

 

SMM Trust, (Series 2002-H), 144A, 1.430% 3/24/2003(7)(8)

 

 

40,000,000

 

 

40,000,000

 

SMM Trust, (Series 2002-M), 144A, 1.440%, 3/15/2003(7)(8)

 

 

15,000,000

 

 

15,000,000

 

 

 

 

 

 

 

98,517,707

 

Broker/Dealers -- 12.6%

 

 

 

 

 

 

 

Bank of America, 1.442%, 6/2/2003

 

 

75,000,000

 

 

75,000,000

 

Bear Stearns Cos., Inc., 1.430%, 3/5/2003

 

 

75,000,000

 

 

75,000,000

 

Credit Suisse First Boston USA, Inc., 1.370%, 3/17/2003

 

 

75,000,000

 

 

75,000,000

 

Goldman Sachs Group, Inc., 1.368%, 3/18/2003

 

 

30,000,000

 

 

30,000,000

 

Goldman Sachs Group, Inc., 1.570%, 3/17/2003

 

 

5,000,000

 

 

5,000,351
               

Description

Principal
Amount

Value

Variable-Rate Notes (continued)(4)

 

 

 

 

Broker/Dealers (continued)

 

 

 

 

 

 

 

Goldman Sachs Group, Inc., 1.610%, 4/3/2003

 

$

30,000,000

 

$

30,006,487

 

Goldman Sachs Group LP, 1.750%, 3/17/2003

 

 

10,000,000

 

 

10,001,411

 

J.P. Morgan & Co., Inc., 1.390%, 3/3/2003(7)(8)

 

 

20,000,000

 

 

20,000,000

 

Merrill Lynch & Co., Inc., 1.370%, 3/11/2003

 

 

20,000,000

 

 

20,000,000

 

Merrill Lynch & Co., Inc., 1.540%, 4/30/2003

 

 

10,000,000

 

 

10,001,697

 

Merrill Lynch & Co., Inc., 1.630%, 5/5/2003

 

 

16,000,000

 

 

16,014,604

 

Morgan Stanley, 1.570%, 4/7/2003

 

 

48,525,000

 

 

48,535,260

 

 

 

 

 

 

 

414,559,810

 

Construction Equipment -- 2.3%

 

 

 

 

Caterpillar Financial Services Corp., 1.468%, 4/9/2003

 

 

75,000,000

 

 

75,000,000

 

Diversified Manufacturing -- 2.3%

 

 

 

 

Cargill, Inc., 144A, 1.390%, 4/14/2003(7)(8)

 

 

75,000,000

 

 

75,000,000

 

Drugs -- 1.8%

 

 

 

 

 

 

 

Bayer Corp., 4.450%, 3/19/2003(7)(8)

 

 

60,000,000

 

 

60,043,555

 

Foreign Banks -- 5.2%

 

 

 

 

 

 

 

Bank of Montreal, 1.480%, 3/18/2003

 

 

25,000,000

 

 

25,021,336

 

HBOS Treasury Services PLC, 144A, 1.330%, 5/20/2003(7)(8)

 

 

30,000,000

 

 

30,000,000

 

HBOS Treasury Services PLC, 1.360%, 5/14/2003

 

 

40,000,000

 

 

40,027,716

 

Northern Rock PLC, 1.340%, 5/19/2003(7)(8)

 

 

50,000,000

 

 

50,000,000

 

Northern Rock PLC, 144A, 1.373%, 4/16/2003

 

 

25,000,000

 

 

25,000,000

 

 

 

 

 

 

 

170,049,052

 

Insurance -- 10.9%

 

 

 

 

 

 

 

GE Life and Annuity Assurance Co., 1.440%, 4/21/2003(7)

 

 

75,000,000

 

 

75,000,000

 

Jackson National Life Insurance Co., 1.330%, 5/1/2003(7)(8)

 

 

40,000,000

 

 

40,000,000

 

John Hancock, Global Funding II, 144A, 1.440%, 3/3/2003(7)(8)

 

 

8,000,000

 

 

8,000,644

 

John Hancock, Global Funding II, 144A, 1.560%, 3/16/2003(7)(8)

 

 

35,000,000

 

 

35,027,412

 

Metropolitan Life Insurance Co., 1.416%, 3/2/2003(7)(8)

 

 

50,000,000

 

 

50,000,000

 

Monumental Life Insurance Co., 1.440%, 4/2/2003(7)

 

 

10,000,000

 

 

10,000,000
               

Description

Principal
Amount
or Shares

Value

Variable-Rate Notes (continued)(4)

 

 

 

 

Insurance (continued)

 

 

 

 

 

 

 

Monumental Life Insurance Co., 1.450%, 4/2/2003(7)

 

$

25,000,000

 

$

25,000,000

 

Monumental Life Insurance Co., 1.530%, 3/1/2003(7)

 

 

40,000,000

 

 

40,000,000

 

Pacific Life Funding LLC, 1.460%, 5/28/2003(7)(8)

 

 

25,000,000

 

 

24,975,847

 

Travelers Insurance Co., 1.410%, 5/1/2003(7)

 

 

50,000,000

 

 

50,000,000

 

 

 

 

 

 

 

358,003,903

 

Leasing -- 2.3%

 

 

 

 

 

 

 

Paccar Financial Corp., 1.390%, 5/15/2003

 

 

45,000,000

 

 

45,028,727

 

Paccar Financial Corp., 1.420%, 5/15/2003

 

 

30,000,000

 

 

30,019,875

 

 

 

 

 

 

 

75,048,602

 

Personal Credit -- 7.5%

 

 

 

 

 

 

 

American Express Credit Corp., 1.336%, 3/27/2003

 

45,000,000

 

 

45,000,000

 

American Honda Finance Corp., 144A, 1.334%, 4/21/2003(7)(8)

 

50,000,000

 

 

50,000,000

 

American Honda Finance Corp., 144A, 1.380%, 3/12/2003(7)(8)

 

 

25,000,000

 

 

25,000,000

 

Associates Corp. of North America, 1.470%, 3/26/2003

 

 

50,000,000

 

 

50,000,000

 

VW Credit, Inc., 1.544%, 4/22/2003(7)(8)

 

 

75,000,000

 

 

75,139,108

 

 

 

 

 

 

 

245,139,108

 

Telecommunications -- 3.3%

 

 

 

 

BellSouth Telecommunications, Inc., 1.463%, 3/4/2003

 

 

75,000,000

 

 

75,000,000

 

SBC Communications, Inc., 144A, 1.380%, 3/16/2003(7)(8)

 

 

35,000,000

 

 

35,000,000

 

 

 

 

 

 

 

110,000,000

Total Variable-Rate Notes

 

 

 

 

 

1,681,361,737

Mutual Funds -- 5.0%

 

 

 

 

 

 

 

American Select Cash Reserve Fund

 

 

103,795,981

 

 

103,795,981

 

Goldman Sachs Financial Square

 

 

62,194,579

 

 

62,194,579

Total Mutual Funds (Shares at net asset value)

 

 

 

 

 

165,990,560

Description

Principal
Amount

Value

Repurchase Agreements -- 10.7%

 

 

 

 

Agreement with First Union Securities, Inc., 1.380%, dated 2/28/2003, to be repurchased at $85,009,775 on 3/3/2003, collateralized by Corporate Bonds with various maturities to 7/26/2030

$

 

85,000,000

 

$

85,000,000

 

Agreement with Salomon Smith Barney Holdings, Inc., 1.363%, dated 2/28/2003, to be repurchased at $25,002,840 on 3/3/2003, collateralized by Corporate Bonds with various maturities to 7/1/2035

 

25,000,000

 

 

25,000,000

 

Agreement with Deutsche Bank Alex Brown, Inc., 1.373%, dated 2/28/2003, to be repurchased at $150,017,163 on 3/3/2003, collateralized by Corporate Bonds with various maturities to 3/15/2038

 

 

150,000,000

 

 

150,000,000

 

Agreement with Morgan Stanley & Co., Inc., 1.373%, dated 2/28/2003, to be repurchased at $90,010,298 on 3/3/2003, collateralized by Corporate Bonds with various maturities to 3/15/2036

 

90,000,000

 

 

90,000,000

Total Repurchase Agreements

 

 

 

 

350,000,000

Total Investments (at amortized cost) -- 99.9%

 

 

 

3,278,739,482

Other Net Assets and Liabilities -- 0.1%

 

3,871,857

Total Net Assets -- 100.0%

 

 

 

$

3,282,611,339

Notes to Portfolio of Investments

Note: The categories of investments are shown as a percentage of net assets for each Fund at February 28, 2003.

(1) Certain shares or principal amounts are temporarily on loan to unaffiliated broker-dealers.

(2) Represents the initial deposit within a margin account used to ensure the Fund is able to satisfy the obligations of its outstanding long futures contracts.

(3) Non-income producing.

(4) Current rate and next demand date shown.

(5) Securities held as collateral for dollar roll transactions.

(6) All or a portion of these securities are subject to dollar roll transactions.

(7) Denotes a restricted security which is subject to restrictions on resale under federal securities laws. At February 28, 2003, these securities
amounted to:

 

   

Amount

   

% of
Net Assets

Intermediate Bond Fund

 

$

72,205,417

 

11.2%

Short-Term Income Fund

 

 

7,504,480

 

5.7

Money Market Fund

 

 

1,421,429,153

 

43.3

(8) Denotes a restricted security which has been deemed liquid by criteria approved by the Fund's Board of Directors.

(9) Current credit ratings are unaudited. Please refer to the Statement of Additional Information for an explanation of the credit ratings.

(10) Securities that are subject to alternative minimum tax represent 8.9% of Intermediate Tax-Free Fund's portfolio as calculated based upon total
portfolio market value.

(11) Each issue shows the rate of discount at the time of purchase.

 

The following acronyms are used throughout this report:

ADR

--American Depository Receipt

AMBAC

--American Municipal Bond Assurance Corporation

COL

--Collateralized

FGIC

--Financial Guaranty Insurance Corporation

FRN

--Floating Rate Note

GO

--General Obligation

HFDC

--Health Facility Development Corporation

IDC

--Industrial Development Corporation

INS

--Insured

LIQ

--Liquidity Agreement

LOC

--Letter of Credit

MBIA

--Municipal Bond Insurance Association

MTN

--Medium Term Note

REMIC

--Real Estate Mortgage Investment Conduit

UT

--Unlimited Tax

 

Marshall

    

Cost of
Investments for
Federal Tax
Purposes

    

Net
Unrealized
Appreciation
(Depreciation)
for Federal Tax
Purposes

    

Gross
Unrealized
Appreciation for
Federal Tax
Purposes

    

Gross
Unrealized
Depreciation for
Federal Tax
Purposes

    

Total Net Assets

Equity Income Fund

  

$ 315,937,656

  

$ (13,515,294 )

  

$ 30,451,202

  

$ 43,966,496

  

$ 306,216,321

Large-Cap Growth & Income Fund

  

205,413,713

  

19,575,429

  

34,154,504

  

14,579,075

  

225,290,686

Mid-Cap Value Fund

  

213,676,317

  

(6,647,851 )

  

15,391,155

  

22,039,006

  

207,244,784

Mid-Cap Growth Fund

  

207,068,333

  

(20,208,339 )

  

8,891,584

  

29,099,923

  

187,172,598

Small-Cap Growth Fund

  

76,081,179

  

(4,395,718 )

  

3,878,194

  

8,273,912

  

71,521,341

International Stock Fund

  

278,596,110

  

(14,868,896 )

  

13,592,455

  

28,461,351

  

259,518,060

Government Income Fund

  

424,464,580

  

12,918,937

  

14,669,264

  

1,750,327

  

376,984,762

Intermediate Bond Fund

  

616,513,753

  

23,078,882

  

31,147,808

  

8,068,926

  

646,962,894

Intermediate Tax-Free Fund

  

101,223,262

  

6,925,831

  

6,934,672

  

8,841

  

108,983,534

Short-Term Income Fund

  

131,139,865

  

390,783

  

3,564,722

  

3,173,939

  

132,206,048

Money Market Fund

  

3,278,739,482
*

--

  

--

  

--

  

3,282,611,339

* at amortized cost

February 28, 2003 (unaudited)

Statements of Assets and Liabilities

 

   

Equity
Income
Fund

   

Large-Cap
Growth &
Income Fund

   

Mid-Cap
Value
Fund

   

Mid-Cap
Growth
Fund

 

Assets:

  

 

 

 

 

Investments in securities, at value

  

$ 297,787,077

  

$ 221,781,354

  

$ 201,541,167

  

$ 166,756,416

  

Investments in repurchase agreements

  

4,635,285

  

3,207,788

  

5,487,299

  

20,103,578

  

Short-term investments held as collateral for securities lending

  

14,703,500

  

23,072,500

  

34,494,043

  

67,800,457

  

Cash

  

--

  

--

  

--

  

--

  

Cash denominated in foreign currencies (identified cost, $24,602)

  

--

  

--

  

--

  

--

  

Income receivable

  

1,160,606

  

509,038

  

330,682

  

62,172

  

Receivable for investments sold

  

3,300,918

  

--

  

191,309

  

3,486,365

  

Total assets

  

321,587,386

  

248,570,680

  

242,044,500

  

258,208,988

  

Liabilities:

  

 

 

 

 

Payable for capital stock redeemed

  

--

  

--

  

--

  

--

  

Payable to bank

  

127,737

  

29,107

  

10,494

  

454

  

Payable for investments purchased

  

--

  

--

  

100,357

  

3,064,823

  

Payable on collateral due to broker

  

14,703,500

  

23,072,500

  

34,494,043

  

67,800,457

  

Options written, at value (premium received $417,227)

  

253,325

  

--

  

--

  

--

  

Payable for income distribution

  

--

  

--

  

--

  

--

  

Payable for dollar roll transactions

  

--

  

--

  

--

  

--

  

Accrued expenses

  

286,503

  

178,387

  

194,822

  

170,656

  

Total liabilities

  

15,371,065

  

23,279,994

  

34,799,716

  

71,036,390

  

Total Net Assets

  

$ 306,216,321

  

$ 225,290,686

  

$ 207,244,784

  

$ 187,172,598

  

Net Assets Consist of:

  

 

 

 

 

Paid-in-capital

  

328,004,626

  

270,296,902

  

212,236,388

  

296,088,623

  

Net unrealized appreciation (depreciation) on investments, options, futures contracts and foreign currency translation

  

(13,351,392)

  

19,575,429

  

(6,647,851)

  

(20,208,339)

  

Accumulated net realized gain (loss) on investments, options, futures contracts and foreign currency transactions

  

(9,829,797)

  

(65,185,116)

  

1,444,978

  

(88,033,514)

  

Undistributed net investment income (accumulated net operating loss)

  

1,392,884

  

603,471

  

211,269

  

(674,172)

  

Total Net Assets

  

$ 306,216,321

  

$ 225,290,686

  

$ 207,244,784

  

$ 187,172,598

  

Net Asset Value, Offering Price and Redemption Proceeds Per Share

  

 

 

 

 

Investor Class of Shares:

  

 

 

 

 

Net Asset Value, Offering Price and Redemption Proceeds Per Share

  

$ 10.92

  

$ 9.51

  

$ 10.01

  

$ 9.23

  

Advisor Class of Shares:

  

 

 

 

 

Net Asset Value and Redemption Proceeds Per Share

  

$ 10.92

  

$ 9.51

  

$ 10.01

  

$ 9.23

  

Offering Price Per Share

 

$ 11.59
*

$ 10.09
*

$ 10.62
*

$ 9.79
*

Institutional Class of Shares:

  

 

 

 

 

Net Asset Value, Offering Price and Redemption Proceeds Per Share

  

--

  

--

  

--

  

--

  

Net Assets:

  

 

 

 

 

Investor Class of Shares

  

$ 302,187,570

  

$ 220,712,862

  

$ 203,396,850

  

$ 184,599,661

  

Advisor Class of Shares

  

4,028,751

  

4,577,824

  

3,847,934

  

2,572,937

  

Institutional Class of Shares

  

--

  

--

  

--

  

--

  

Total Net Assets

  

$ 306,216,321

  

$ 225,290,686

  

$ 207,244,784

  

$ 187,172,598

  

Shares Outstanding:

  

 

 

 

 

Investor Class of Shares

 

27,675,147

  

23,196,970

  

20,310,116

  

20,001,889

  

Advisor Class of Shares

 

368,967

  

481,137

  

384,218

  

278,786

  

Institutional Class of Shares

 

--

  

--

  

--

  

--

  

Total Shares Outstanding

  

28,044,114

  

23,678,107

  

20,694,334

  

20,280,675

  

Investments, at identified cost

  

$ 315,937,656

  

$ 205,413,713

  

$ 213,676,317

  

$ 207,068,333

  

* Computation of offering price per share 100/94.25 of net asset value.

** Computation of offering price per share 100/95.25 of net asset value.

*** Computation of offering price per share 100/98.00 of net asset value.

 

Small-Cap
Growth
Fund

   

International
Stock
Fund

   

Government
Income
Fund

   

Intermediate
Bond
Fund

   

Intermediate
Tax-Free
Fund

   

Short-Term
Income
Fund

    

Money
Market
Fund

 

 

 

 

 

 

$ 68,462,368

  

$ 255,588,214

  

$ 326,876,157

  

$ 602,147,695

  

$ 108,149,093

  

$ 125,998,331

  

$ 2,928,739,482

3,223,093

  

8,139,000

  

110,507,360

  

37,444,940

  

--

  

5,532,317

  

350,000,000

18,532,726

  

32,537,850

  

93,274,000

  

103,173,262

  

--

  

--

  

--

388

  

203

  

5,911

  

--

  

--

  

194

  

--

--

  

24,715

  

--

  

--

  

--

  

--

  

--

23,768

  

439,587

  

1,226,405

  

7,355,217

  

1,191,303

  

1,180,580

  

7,641,460

1,339,872

  

2,161,900

  

--

  

3,029,660

  

--

  

--

  

--

91,582,215

  

298,891,469

  

531,889,833

  

753,150,774

  

109,340,396

  

132,711,422

  

3,286,380,942

 

 

 

 

 

 

--

  

1,303,794

  

--

  

--

  

--

  

--

  

--

--

  

--

  

--

  

169,089

  

--

  

--

  

67,487

1,432,961

  

5,245,375

  

18,482,252

  

--

  

--

  

--

  

--

18,532,726

  

32,537,850

  

93,274,000

  

103,173,262

  

--

  

--

  

--

--

  

--

  

--

  

--

  

--

  

--

  

--

--

  

--

  

1,170,462

  

2,461,135

  

305,636

  

452,932

  

2,746,717

--

  

--

  

41,712,667

  

--

  

--

  

--

  

--

95,187

  

286,390

  

265,690

  

384,394

  

51,226

  

52,442

  

955,399

20,060,874

  

39,373,409

  

154,905,071

  

106,187,880

  

356,862

  

505,374

  

3,769,603

$ 71,521,341

  

$ 259,518,060

  

$ 376,984,762

  

$ 646,962,894

  

$ 108,983,534

  

$ 132,206,048

  

$ 3,282,611,339

 

 

 

 

 

 

105,494,946

  

420,252,912

  

368,443,132

  

656,556,633

  

102,322,845

  

138,834,322

  

3,283,152,489

(4,395,718)

  

(14,837,642)

  

12,939,293

  

24,773,512

  

6,921,658

  

741,687

  

--

(29,064,587)

  

(144,913,959)

  

(3,993,711)

  

(33,144,912)

  

(269,789)

  

(6,998,117)

  

(541,150)

(513,300)

  

(983,251)

  

(403,952)

  

(1,222,339)

  

8,820

  

(371,844)

  

--

$ 71,521,341

  

$ 259,518,060

  

$ 376,984,762

  

$ 646,962,894

  

$ 108,983,534

  

$ 132,206,048

  

$ 3,282,611,339

 

 

 

 

 

 

 

 

 

 

 

 

$ 8.29

  

$ 7.90

  

$ 9.74

  

$ 9.62

  

$ 10.68

  

$ 9.45

  

$ 1.00

 

 

 

 

 

 

$ 8.29

  

$ 7.89

  

$ 9.74

  

$ 9.62

  

--

  

$ 9.45

  

$ 1.00

$ 8.80*

  

$ 8.37*

  

$ 10.23**

  

$ 10.10**

  

--

  

$ 9.92***

  

$ 1.00

 

 

 

 

 

 

--

  

$ 7.96

  

--

  

--

  

--

  

--

  

$ 1.00

 

 

 

 

 

 

$ 69,161,218

  

$ 164,751,005

  

$ 372,448,859

  

$ 641,963,601

  

$ 108,983,534

  

$ 130,887,190

  

$ 2,076,354,619

2,360,123

  

2,847,757

  

4,535,903

  

4,999,293

  

--

  

1,318,858

  

106,302,822

--

  

91,919,298

  

--

  

--

  

--

  

--

  

1,099,953,898

$ 71,521,341

  

$ 259,518,060

  

$ 376,984,762

  

$ 646,962,894

  

$ 108,983,534

  

$ 132,206,048

  

$ 3,282,611,339

 

 

 

 

 

 

8,345,912

  

20,859,583

  

38,243,284

  

66,746,267

  

10,206,037

  

13,850,290

  

2,076,702,526

284,809

  

360,880

  

465,747

  

519,776

  

--

  

139,554

  

106,331,429

--

  

11,547,424

  

--

  

--

  

--

  

--

  

1,100,118,534

8,630,721

  

32,767,887

  

38,709,031

  

67,266,043

  

10,206,037

  

13,989,844

  

3,283,152,489

$ 76,081,179

  

$ 278,596,110

  

$ 424,444,224

  

$ 614,819,123

  

$ 101,227,435

  

$ 130,788,961

  

$ 3,278,739,482

Six Months Ended February 28, 2003 (unaudited)

Statements of Operations

 

   

Equity
Income
Fund

   

Large-Cap
Growth &
Income
Fund

   

Mid-Cap
Value
Fund

   

Mid-Cap
Growth
Fund

Investment Income:

  

 

 

 

Interest income

  

$ 77,174(1)

  

$ 71,353(1)

  

$ 90,698(1)

  

$ 190,728 (1)

Dividend income

  

5,459,045

  

2,207,381(2)

  

1,406,787(2)

  

391,992(2)

Total income

  

5,536,219

  

2,278,734

  

1,497,485

  

582,720

Expenses:

  

 

 

 

Investment adviser fee

  

1,218,183

  

931,286

  

753,960

  

743,739

Shareholder services fees--

  

 

 

 

Investor Class of Shares

  

401,042

  

304,689

  

246,497

  

244,712

Advisor Class of Shares

  

5,020

  

5,740

  

4,823

  

3,201

Administrative fees

  

160,502

  

124,047

  

100,528

  

99,165

Portfolio accounting fees

 

46,871

  

41,304

  

34,590

  

35,337

Transfer and dividend disbursing agent fees

  

81,240

  

87,011

  

74,283

  

68,226

Custodian fees

  

28,640

  

24,585

  

20,106

  

19,833

Registration fees

  

13,808

  

13,544

  

13,045

  

12,820

Auditing fees

  

7,294

  

7,339

  

7,302

  

7,294

Legal fees

  

1,884

  

1,884

  

1,884

  

1,884

Printing and postage

  

10,804

  

16,355

  

9,408

  

11,904

Directors' fees

  

3,606

  

3,606

  

3,606

  

3,607

Insurance premiums

  

1,193

  

1,129

  

746

  

1,017

Distribution services fees--

  

 

 

 

Advisor Class of Shares

  

5,020

  

5,740

  

4,823

  

3,201

Miscellaneous

  

4,654

  

4,594

  

3,005

  

4,153

Total expenses

  

1,989,761

  

1,572,853

  

1,278,606

  

1,260,093

Deduct--

  

 

 

 

Waiver of investment adviser fee

  

--

  

--

  

--

  

--

Waiver of shareholder services fees--

  

 

 

 

Investor Class of Shares

  

--

  

--

  

--

  

--

Advisor Class of Shares

  

(5,020)

  

(5,740)

  

(4,823)

  

(3,201)

Total Waivers

  

(5,020)

  

(5,740)

  

(4,823)

  

(3,201)

Net expenses

  

1,984,741

  

1,567,113

  

1,273,783

  

1,256,892

Net investment income (net operating loss)

  

3,551,478

  

711,621

  

223,702

  

(674,172)

Net Realized and Unrealized Gain (Loss) on Investments, Options, Futures Contracts and Foreign Currency:

  

 

 

 

Net realized gain (loss) on investment transactions and options (identified cost basis)

  

(2,944,189)

  

(20,606,014)

  

3,999,292

  

(12,590,797)

Net realized gain (loss) on futures contracts (identified cost basis)

  

(936,195)

  

--

  

--

  

--

Net realized gain (loss) on foreign currency contracts (identified cost basis)

  

--

  

--

  

277

  

--

Net change in unrealized appreciation/depreciation on investments, options, futures contracts and foreign currency translation

  

(31,257,287)

  

(7,802,451)

  

(17,130,295)

  

11,476,054

Net realized and unrealized gain (loss) on investments, options, futures contracts and foreign currency

  

(35,137,671)

  

(28,408,465)

  

(13,130,726)

  

(1,114,743)

Change in net assets resulting from operations

  

$ (31,586,193)

  

$ (27,696,844)

  

$ (12,907,024)

  

$ (1,788,915)

(1) Including income on securities loaned of $20,865, $32,586, $29,444, $51,659, $14,758, $78,915, $57,389 and $85,470, respectively.

(2) Net of foreign taxes withheld of $2,210, $1,132, $1,789, $2,385 and $188,390, respectively.

(3) Net of dollar roll expense of $775,350.

 

Small-Cap
Growth
Fund

   

International
Stock
Fund

   

Government
Income
Fund

   

Intermediate
Bond
Fund

   

Intermediate
Tax-Free
Fund

   

Short-Term
Income
Fund

    

Money
Market
Fund

 

 

 

 

 

 

$ 47,341(1)

  

$ 79,519(1)

  

$ 8,967,430(1)(3)

  

$ 16,786,778(1)

  

$ 2,301,265

  

$ 2,735,938

  

$ 26,123,730

83,400(2)

  

1,780,579(2)

  

--

  

--

  

--

  

--

  

--

130,741

  

1,860,098

  

8,967,430

  

16,786,778

  

2,301,265

  

2,735,938

  

26,123,730

 

 

 

 

 

 

381,665

  

1,417,670

  

1,401,315

  

1,885,306

  

322,634

  

363,159

  

2,310,041

 

 

 

 

 

 

92,413

  

228,972

  

461,911

  

779,931

  

134,431

  

150,073

  

2,488,352

3,003

  

5,233

  

5,194

  

5,613

  

--

  

1,243

  

133,844

38,167

  

140,877

  

183,699

  

294,765

  

53,772

  

60,527

  

673,725

28,515

  

57,552

  

48,152

  

58,482

  

24,563

  

29,258

  

122,102

56,715

  

79,103

  

71,545

  

67,397

  

18,737

  

46,381

  

166,827

7,633

  

97,504

  

31,081

  

43,819

  

10,755

  

12,105

  

166,400

11,130

  

20,910

  

13,223

  

14,186

  

8,328

  

12,715

  

28,893

7,294

  

8,232

  

7,294

  

7,340

  

7,298

  

7,310

  

7,294

1,884

  

1,884

  

1,884

  

1,687

  

1,786

  

1,884

  

1,950

9,083

  

18,844

  

10,496

  

8,017

  

3,472

  

5,954

  

36,406

3,607

  

3,606

  

3,607

  

3,607

  

3,606

  

3,607

  

3,606

615

  

1,052

  

1,163

  

1,662

  

626

  

680

  

5,804

 

 

 

 

 

 

3,003

  

5,233

  

5,194

  

5,613

  

--

  

1,243

  

160,613

2,317

  

4,231

  

4,666

  

7,122

  

2,536

  

2,238

  

19,015

647,044

  

2,090,903

  

2,250,424

  

3,184,547

  

592,544

  

698,377

  

6,324,872

 

 

 

 

 

 

--

  

(34,712)

  

(186,842)

  

(188,531)

  

(145,185)

  

(205,790)

  

(462,008)

 

 

 

 

 

 

--

  

--

  

(424,958)

  

(717,537)

  

(123,676)

  

(138,067)

  

--

(3,003)

  

(5,233)

  

(5,194)

  

(5,613)

  

--

  

(1,243)

  

--

(3,003)

  

(39,945)

  

(616,994)

  

(911,681)

  

(268,861)

  

(345,100)

  

(462,008)

644,041

  

2,050,958

  

1,633,430

  

2,272,866

  

323,683

  

353,277

  

5,862,864

(513,300)

  

(190,860)

  

7,334,000

  

14,513,912

  

1,977,582

  

2,382,661

  

20,260,866

 

 

 

 

 

 

(722,411)

  

(40,575,320)

  

4,747,800

  

4,810,033

  

92,412

  

174,817

  

(388,321)

(223,090)

  

--

  

--

  

--

  

--

  

--

  

--

218

  

(25,039)

  

--

  

--

  

--

  

--

  

--

(2,810,835)

  

(3,888,783)

  

(3,784,502)

  

8,192,459

  

948,965

  

442,501

  

--

(3,756,118)

  

(44,489,142)

  

963,298

  

13,002,492

  

1,041,377

  

617,318

  

(388,321)

$ (4,269,418)

  

$ (44,680,002)

  

$ 8,297,298

  

$ 27,516,404

  

$ 3,018,959

  

$ 2,999,979

  

$ 19,872,545

Statements of Changes in Net Assets

    Equity
Income
Fund 		Large-Cap
Growth &
Income Fund
      Six Months
Ended
February 28,
2003
(unaudited) 		      Year Ended
August 31,
2002 		    Six Months
Ended
February 28,
2003
(unaudited) 		      Year Ended
August 31,
2002
Increase (Decrease) in Net Assets          
Operations--          
Net investment income (net operating loss)   $ 3,551,478     $ 4,890,124   $ 711,621   $ 34,705
Net realized gain (loss) on investments and options transactions   (2,944,189)     (1,549,327)   (20,606,014)   (18,836,919)
Net realized gain (loss) on futures contracts   (936,195)     (3,125,998)   --   (4,113,431)
Net realized gain (loss) on foreign currency contracts   --     --   --   --
Net change in unrealized appreciation/depreciation of investments, options, futures contracts and foreign currency translation   (31,257,287)     (51,947,249)   (7,802,451)   (64,752,578)
Change in net assets resulting from operations   (31,586,193)     (51,732,450)   (27,696,844)   (87,668,223)
Distributions to Shareholders--          
Distributions to shareholders from net investment income          
Investor Class of Shares   (2,529,895)     (5,044,081)   (119,681)   (164,935)
Advisor Class of Shares   (31,838)     (53,945)   (2,334)   (2,195)
Institutional Class of Shares   --     --   --   --
Distributions to shareholders from net realized gain on investments          
Investor Class of Shares   --     (14,838,709)   --   --
Advisor Class of Shares   --     (144,767)   --   --
Institutional Class of Shares   --     --   --   --
Change in net assets resulting from distributions to shareholders   (2,561,733)     (20,081,502)   (122,015)   (167,130)
Capital Stock Transactions--          
Proceeds from sale of shares   56,796,551     54,966,324   25,505,170   46,470,452
Net asset value of shares issued to shareholders in payment of distributions declared   1,232,319     17,657,653   79,059   107,936
Cost of shares redeemed   (60,536,423)     (76,217,323)   (52,398,767)   (70,501,282)
Change in net assets resulting from capital stock transactions   (2,507,553)     (3,593,346)   (26,814,538)   (23,922,894)
Change in net assets   (36,655,479)     (75,407,298)   (54,633,397)   (111,758,247)
Net Assets:          
Beginning of period   342,871,800     418,279,098   279,924,083   391,682,330
End of period   $306,216,321     $342,871,800   $225,290,686   $279,924,083
Undistributed net investment income (accumulated net operating loss) included in net assets at end of period   $ 1,392,884     $ 403,139   $ 603,471   $ 13,865
 
Mid-Cap
Value Fund 		Mid-Cap
Growth Fund 		Small-Cap
Growth Fund 		International
Stock Fund
Six Months
Ended
February 28,
2003
(unaudited) 		    Year Ended
August 31,
2002 		      Six Months
Ended
February 28,
2003
(unaudited) 		    Year Ended
August 31,
2002 		    Six Months
Ended
February 28,
2003
(unaudited) 		    Year Ended
August 31,
2002 		     Six Months
Ended
February 28,
2003
(unaudited) 		     Year Ended
August 31,
2002
                               
                               
$ 223,702   $ 268,317     $ (674,172)   $ (2,099,086)   $ (513,300)   $ (1,268,045)   $ (190,860)   $ 1,345,766
3,999,292   (707,386)     (12,590,797)   (68,371,719)   (722,411)   (25,427,634)   (40,575,320)   (59,392,247)
--   (1,778,463)     --   (4,375,822)   (223,090)   683,880   --   --
277   180     --   --   218   656   (25,039)   (882,998)
(17,130,295)   (11,109,533)     11,476,054   (29,473,408)   (2,810,835)   (6,435,693)   (3,888,783)   12,302,179
(12,907,024)   (13,326,885)     (1,788,915)   (104,320,035)   (4,269,418)   (32,446,836)   (44,680,002)   (46,627,300)
                               
                               
(172,252)   (146,095)     --   --   --   --   --   --
(3,414)   (2,090)     --   --   --   --   --   --
--   --     --   --   --   --   --   --
                               
--   (22,874,085)     --   (876,922)   --   (4,821,728)   --   --
--   (351,861)     --   (8,848)   --   (116,211)   --   --
--   --     --   --   --   --   --   --
(175,666)   (23,374,131)     --   (885,770)   --   (4,937,939)   --   --
                               
44,555,891   103,913,966     17,587,630   56,376,558   32,428,170   41,122,184   211,200,760   218,685,271
108,243   22,643,913     --   877,762   --   4,871,257   --   --
(24,546,035)   (64,654,487)     (34,231,700)   (83,212,079)   (36,790,626)   (36,251,186)   (208,914,324)   (229,717,274)
20,118,099   61,903,392     (16,644,070)   (25,957,759)   (4,362,456)   9,742,255   2,286,436   (11,032,003)
7,035,409   25,202,376     (18,432,985)   (131,163,564)   (8,631,874)   (27,642,520)   (42,393,566)   (57,659,303)
                               
200,209,375   175,006,999     205,605,583   336,769,147   80,153,215   107,795,735   301,911,626   359,570,929
$ 207,244,784   $ 200,209,375     $ 187,172,598   $ 205,605,583   $ 71,521,341   $ 80,153,215   $ 259,518,060   $ 301,911,626
$ 211,269   $ 163,233     $ (674,172)   $ --   $ (513,300)   $ --   $ (983,251)   $ (792,391)

Statements of Changes in Net Assets

    Government
Income
Fund 		Intermediate
Bond
Fund
      Six Months
Ended
February 28,
2003
(unaudited) 		    Year Ended
August 31,
2002 		    Six Months
Ended
February 28,
2003
(unaudited) 		     Year Ended
August 31,
2002
Increase (Decrease) in Net Assets        
Operations--        
Net investment income (net operating loss)   $ 7,334,000   $ 19,565,735   $ 14,513,912   $ 31,523,135
Net realized gain (loss) on investment and options transactions   4,747,800   512,709   4,810,033   (8,520,585)
Net realized gain (loss) on futures contracts   --   --   --   --
Net realized gain (loss) on foreign currency   --   --   --   --
Net change in unrealized appreciation (depreciation) of investments, options, futures contracts and foreign currency translation   (3,784,502)   7,386,534   8,192,459   6,202,161
Change in net assets resulting from operations   8,297,298   27,464,978   27,516,404   29,204,711
Distributions to Shareholders--        
Distributions to shareholders from net investment income        
Investor Class of Shares   (7,650,593)   (19,870,618)   (15,696,686)   (33,505,994)
Advisor Class of Shares   (81,199)   (152,957)   (107,921)   (187,339)
Institutional Class of Shares   --   --   --   --
Distributions to shareholders from net realized gain on investments        
Investor Class of Shares   --   --   --   --
Advisor Class of Shares   --   --   --   --
Institutional Class of Shares   --   --   --   --
Change in net assets resulting from distributions to shareholders   (7,731,792)   (20,023,575)   (15,804,607)   (33,693,333)
Capital Stock Transactions--        
Proceeds from sale of shares   72,947,991   95,178,601   154,819,540   161,234,207
Net asset value of shares issued to shareholders in payment of distributions declared   3,907,031   12,326,453   6,859,555   16,654,681
Cost of shares redeemed   (81,868,393)   (116,273,076)   (162,201,108)   (181,719,809)
Change in net assets resulting from capital stock transactions   (5,013,371)   (8,768,022)   (522,013)   (3,830,921)
Change in net assets   (4,447,865)   (1,326,619)   11,189,784   (8,319,543)
Net Assets:        
Beginning of period   381,432,627   382,759,246   635,773,110   644,092,653
End of period   $ 376,984,762   $ 381,432,627   $ 646,962,894   $ 635,773,110
Undistributed net investment income (distributions in excess of net investment income) included in net assets at end of period   $ (403,952)   $ (6,160)   $ (1,222,339)   $ 68,356

 

Intermediate
Tax-Free
Fund 		Short-Term
Income
Fund 		Money
Market
Fund
Six Months
Ended
February 28,
2003
(unaudited) 		    Year Ended
August 31,
2002 		    Six Months
Ended
February 28,
2003
(unaudited) 		    Year Ended
August 31,
2002 		    Six Months
Ended
February 28,
2003
(unaudited) 		     Year Ended
August 31,
2002
                     
                     
$ 1,977,582   $ 3,992,297   $ 2,382,661   $ 5,673,976   $ 20,260,866   $ 62,351,647
92,412   809,860   174,817   47,525   (388,321)   (7,007)
--   --   --   --   --   --
--   --   --   --   --   --
948,965   1,540,384   442,501   (1,316,104)   --   --
3,018,959   6,342,541   2,999,979   4,405,397   19,872,545   62,344,640
                     
                     
(1,968,743)   (3,989,466)   (2,665,108)   (6,239,624)   (12,434,233)   (37,389,606)
--   --   (20,755)   (21,027)   (514,134)   (2,174,238)
--   --   --   --   (7,312,499)   (22,787,803)
                     
--   --   --   --   --   --
--   --   --   --   --   --
--   --   --   --   --   --
(1,968,743)   (3,989,466)   (2,685,863)   (6,260,651)   (20,260,866)   (62,351,647)
                     
22,857,507   23,476,092   68,484,351   52,784,668   4,689,488,282   10,014,120,035
167,835   396,321   940,412   3,343,293   5,042,218   16,309,836
(24,784,676)   (18,832,499)   (52,676,602)   (65,233,789)   (4,293,337,102)   (9,888,216,033)
(1,759,334)   5,039,914   16,748,161   (9,105,828)   401,193,398   142,213,838
(709,118)   7,392,989   17,062,277   (10,961,082)   400,805,077   142,206,831
                     
109,692,652   102,299,663   115,143,771   126,104,853   2,881,806,262   2,739,599,431
$ 108,983,534   $ 109,692,652   $ 132,206,048   $ 115,143,771   $ 3,282,611,339   $ 2,881,806,262
$ 8,820   $ (19)   $ (371,844)   $ (68,642)   $ --   $ --

Financial Highlights-Investor Class of Shares (For a share outstanding throughout each period)

Year
Ended
August 31,		       Net asset
value,
beginning
of period		     Net
investment
income
(net
operating
loss)		     Net realized and
unrealized
gain (loss) on
investments,
options, futures
contracts and
foreign currency		      Total from
investment
operations		     Distributions to
shareholders
from net
investment
income		     Distributions to
shareholders from
net realized gain
on investments,
options, futures
contracts and
foreign currency		     Total
distributions		     Net asset
value, end
of period		     Total
return(1)		 Ratios to Average Net Assets     Net assets,
end of
period
(000 omitted)		    

Portfolio
turnover
rate
     Expenses      Net
investment
income
(net operating
loss)		     Expense
waiver(2)
Equity Income Fund

1998 $ 15.64 0.31 (0.19)(3) 0.12 (0.32) (1.27) (1.59) $ 14.17 0.04% 1.17% 2.01% -- $ 458,865

69%
1999 $ 14.17 0.28 3.59 3.87 (0.29) (1.04) (1.33) $ 16.71 27.92% 1.17% 1.73% -- $ 537,295

72%
2000 $ 16.71 0.23 (0.73) (0.50) (0.23) (1.36) (1.59) $ 14.62 (2.80)% 1.16% 1.54% -- $ 423,845

98%
2001 $ 14.62 0.16 0.16 0.32 (0.14) (0.10) (0.24) $ 14.70 2.20% 1.19% 1.07% -- $ 414,651

78%
2002 $ 14.70 0.14 (1.99) (1.85) (0.18) (0.55) (0.73) $ 12.12 (13.16)% 1.20% 1.28% -- $ 338,512

50%
2003(4) $ 12.12 0.12 (1.23) (1.11) (0.09) -- (0.09) $ 10.92 (9.19)% 1.22%(5) 2.19%(5) -- $ 302,188

27%
Large-Cap Growth & Income Fund

1998 $ 13.96 0.06 0.46 0.52 (0.06) (1.18) (1.24) $ 13.24 3.44% 1.21% 0.40% -- $ 274,821

33%
1999 $ 13.24 0.06 5.01 5.07 (0.06) (0.77) (0.83) $ 17.48 38.98% 1.20% 0.32% -- $ 407,031

32%
2000 $ 17.48 0.03 2.72 2.75 (0.02) (0.99) (1.01) $ 19.22 16.35% 1.18% 0.16% -- $ 510,195

71%
2001 $ 19.22 0.01 (4.66) (4.65) (0.01) (0.81) (0.82) $ 13.75 (24.79)% 1.19% 0.03% -- $ 386,911

63%
2002 $ 13.75 0.01 (3.16) (3.15) (0.01) -- (0.01) $ 10.59 (22.94)% 1.21% 0.01% -- $ 274,960

62%
2003(4) $ 10.59 0.03 (1.10) (1.07) (0.01) -- (0.01) $ 9.51 (10.15)% 1.26%(5) 0.57%(5) -- $ 220,713

31%
Mid-Cap Value Fund

1998 $ 13.14 0.10 (0.92) (0.82) (0.12) (1.95) (2.07) $ 10.25 (7.75)% 1.25% 0.96% -- $ 134,620

59%
1999 $ 10.25 0.11 2.10 2.21 (0.12) (0.94) (1.06) $ 11.40 21.92% 1.25% 0.96% -- $ 128,575

90%
2000 $ 11.40 0.09 0.79 0.88 (0.05) (1.38) (1.43) $ 10.85 9.29% 1.33% 0.86% -- $ 106,569

94%
2001 $ 10.85 0.02 2.62 2.64 (0.07) (0.70) (0.77) $ 12.72 25.80% 1.30% 0.16% -- $ 172,719

104%
2002 $ 12.72 0.02 (0.40) (0.38) (0.01) (1.68) (1.69) $ 10.65 (4.25)% 1.26% 0.13% -- $ 196,254

44%
2003(4) $ 10.65 0.01 (0.64) (0.63) (0.01) -- (0.01) $ 10.01 (5.93)% 1.27%(5) 0.22%(5) -- $ 203,397

20%
Mid-Cap Growth Fund

1998 $ 14.82 (0.13) (0.93) (1.06) -- (1.81) (1.81) $ 11.95 (8.77)% 1.23% (0.79)% -- $ 187,388

167%
1999 $ 11.95 (0.11) 6.26 6.15 -- (0.82) (0.82) $ 17.28 53.41% 1.21% (0.73)% -- $ 297,249

173%
2000 $ 17.28 (0.16)(6) 12.00 11.84 -- (1.69) (1.69) $ 27.43 71.91% 1.18% (0.66)% -- $ 541,805

108%
2001 $ 27.43 (0.06)(6) (8.67) (8.73) -- (4.97) (4.97) $ 13.73 (34.17)% 1.19% (0.39)% -- $ 333,718

118%
2002 $ 13.73 0.09(6) (4.29) (4.38) -- (0.04) (0.04) $ 9.31 (32.01)% 1.24% (0.72)% -- $ 203,010

167%
2003(4) $ 9.31 (0.03) (0.05) (0.08) -- -- -- $ 9.23 (0.86)% 1.27%(5) (0.68)%(5) -- $ 184,600

58%
Small-Cap Growth Fund

1998 $ 12.19 (0.22) (1.66) (1.88) -- (0.49) (0.49) $ 9.82 (16.25)% 1.60% (1.18)% -- $ 79,858

139%
1999 $ 9.82 (0.11) 2.69 2.58 -- (0.02) (0.02) $ 12.38 26.30% 1.59% (0.90)% -- $ 102,992

219%
2000 $ 12.38 (0.18)(6) 7.03 6.85 -- (0.41) (0.41) $ 18.82 56.14% 1.59% (1.03)% -- $ 159,336

105%
2001 $ 18.82 (0.08)(6) (4.52) (4.60) -- (1.63) (1.63) $ 12.59 (24.23)% 1.58% (0.62)% -- $ 105,397

287%
2002 $ 12.59 (0.14)(6) (3.12) (3.26) -- (0.58) (0.58) $ 8.75 (27.23)% 1.63% (1.20)% -- $ 77,713

292%
2003(4) $ 8.75 (0.06) (0.40) (0.46) -- -- -- $ 8.29 (5.26)% 1.69%(5) (1.34)%(5) -- $ 69,161

120%
International Stock Fund

1998 $ 13.20 0.26 (1.42) (1.16) (0.21) (0.29) (0.50) $ 11.54 (9.09)% 1.49% 2.01% -- $ 225,248

24%
1999 $ 11.54 0.09 2.45 2.54 (0.25) -- (0.25) $ 13.83 22.20% 1.51% 0.79% 0.01% $ 270,315

182%
2000 $ 13.83 (0.07)(6) 4.09 4.02 (0.16) (1.36) (1.52) $ 16.33 28.09% 1.50% (0.40)% 0.02% $ 351,242

225%
2001 $ 16.33 0.03 (6) (4.02) (3.99) -- (1.61) (1.61) $ 10.73 (26.36)% 1.46% 0.25% 0.02% $ 246,649

156%
2002 $ 10.73 0.03 (6) (1.45) (1.42) -- -- -- $ 9.31 (13.23)% 1.49% 0.32% 0.02% $ 195,496

83%
2003(4) $ 9.31 (0.01)(6) (1.40) (1.41) -- -- -- $ 7.90 (15.15)% 1.53%(5) (0.22)%(5) 0.02%(5) $ 164,751

60%
Government Income Fund

1998 $ 9.49 0.61 0.21 0.82 (0.61) -- (0.61) $ 9.70 8.92% 0.87% 6.38% 0.34% $ 280,313

353%
1999 $ 9.70 0.54 (0.48) 0.06 (0.54) -- (0.54) $ 9.22 0.62% 0.86% 5.69% 0.33% $ 317,284

232%
2000 $ 9.22 0.57 (0.02) 0.55 (0.57) -- (0.57) $ 9.20 6.20% 0.85% 6.28% 0.33% $ 357,229

192%
2001 $ 9.20 0.57 0.33 0.90 (0.57) -- (0.57) $ 9.53 10.02% 0.87% 6.04% 0.33% $ 380,308

122%
2002 $ 9.53 0.49(6)(7) 0.20(7) 0.69 (0.50) -- (0.50) $ 9.72 7.50% 0.87% 5.16%(7) 0.33% $ 377,594

76%
2003(4) $ 9.72 0.19 0.03 0.22 (0.20) -- (0.20) $ 9.74 2.28% 0.87%(5) 3.93%(5) 0.33%(5) $ 372,449

241%
Intermediate Bond Fund

1998 $ 9.44 0.58 0.16 0.74 (0.58) -- (0.58) $ 9.60 8.00% 0.71% 6.02% 0.29% $ 589,669

148%
1999 $ 9.60 0.55 (0.43) 0.12 (0.55) -- (0.55) $ 9.17 1.28% 0.71% 5.85% 0.28% $ 598,970

181%
2000 $ 9.17 0.57 (0.01) 0.56 (0.57) -- (0.57) $ 9.16 6.35% 0.70% 6.31% 0.29% $ 612,980

243%
2001 $ 9.16 0.55 0.35 0.90 (0.55) -- (0.55) $ 9.51 10.14% 0.72% 5.93% 0.29% $ 640,863

273%
2002 $ 9.51 0.47(6)(7) (0.04)(7) 0.43 (0.50) -- (0.50) $ 9.44 4.70% 0.72% 5.00%(7) 0.29% $ 631,518

187%
2003(4) $ 9.44 0.22 0.20 0.42 (0.24) -- (0.24) $ 9.62 4.47% 0.72%(5) 4.62%(5) 0.29%(5) $ 641,964

148%
Intermediate Tax-Free Fund

1998 $ 10.04 0.43 0.29 0.72 (0.43) -- (0.43) $ 10.33 7.31% 0.61% 4.22% 0.51% $ 101,592

68%
1999 $ 10.33 0.42 (0.41) 0.01 (0.42) (0.07) (0.49) $ 9.85 0.02% 0.61% 4.11% 0.48% $ 108,732

53%
2000 $ 9.85 0.43 0.10 0.53 (0.43) -- (0.43) $ 9.95 5.58% 0.60% 4.43% 0.49% $ 95,554

71%
2001 $ 9.95 0.43 0.40 0.83 (0.43) -- (0.43) $ 10.35 8.52% 0.62% 4.24% 0.50% $ 102,300

51%
2002 $ 10.35 0.40(7) 0.22(7) 0.62 (0.40) -- (0.40) $ 10.57 6.12% 0.62% 3.84%(7) 0.50% $ 109,693

27%
2003(4) $ 10.57 0.19 0.11 0.30 (0.19) -- (0.19) $ 10.68 2.89% 0.60%(5) 3.68%(5) 0.50%(5) $ 108,984

6%
Short-Term Income Fund

1998 $ 9.64 0.61 (0.03) 0.58 (0.61) -- (0.61) $ 9.61 6.22% 0.50% 6.40% 0.55% $ 133,186

90%
1999 $ 9.61 0.55 (0.21) 0.34 (0.55) -- (0.55) $ 9.40 3.59% 0.51% 5.74% 0.56% $ 134,943

163%
2000 $ 9.40 0.60 (0.19) 0.41 (0.60) -- (0.60) $ 9.21 4.46% 0.50% 6.43% 0.57% $ 122,503

72%
2001 $ 9.21 0.58 0.33 0.91 (0.58) -- (0.58) $ 9.54 10.16% 0.53% 6.16% 0.57% $ 126,008

79%
2002 $ 9.54 0.42(6)(7) (0.07)(7) 0.35 (0.47) -- (0.47) $ 9.42 3.77% 0.56% 4.51%(7) 0.57% $ 114,320

54%
2003(4) $ 9.42 0.19 0.05 0.24 (0.21) -- (0.21) $ 9.45 2.54% 0.58%(5) 3.94%(5) 0.57%(5) $ 130,887

25%
Money Market Fund

1998 $ 1.00 0.05 -- 0.05 (0.05) -- (0.05) $ 1.00 5.51% 0.41% 5.37% 0.25% $ 1,588,817

--
1999 $ 1.00 0.05 -- 0.05 (0.05) -- (0.05) $ 1.00 4.98% 0.41% 4.86% 0.25% $ 1,663,740

--
2000 $ 1.00 0.06 -- 0.06 (0.06) -- (0.06) $ 1.00 5.88% 0.44% 5.73% 0.16% $ 1,776,669

--
2001 $ 1.00 0.05 -- 0.05 (0.05) -- (0.05) $ 1.00 5.32% 0.46% 5.22% 0.05% $ 1,697,200

--
2002 $ 1.00 0.02 -- 0.02 (0.02) -- (0.02) $ 1.00 1.99% 0.45% 1.95% 0.04% $ 1,857,948

--
2003(4) $ 1.00 0.01 -- 0.01 (0.01) -- (0.01) $ 1.00 0.62% 0.45 %(5) 1.25%(5) 0.03%(5) $ 2,076,355

--

(1) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable.

(2) This voluntary expense decrease is reflected in both the expense and net investment income (net operating loss) ratios shown.

(3) The amount shown in this caption for a share outstanding does not correspond with the aggregate net realized and unrealized gain (loss) on investments, options, futures contracts and foreign currency for the period ended due to the timing of sales and repurchases of Fund shares in relation to fluctuating market values of the investments of the Fund.

(4) For the six months ended February 28, 2003 (unaudited).

(5) Computed on an annualized basis.

(6) Per share information is based on average shares outstanding.

(7) Effective September 1, 2001, the Government Income Fund, Intermediate Bond Fund, Intermediate Tax-Free Fund and Short-Term Income Fund adopted the provisions of the American Institute of Certified Public Accountants ("AICPA") Audit and Accounting Guide for Investment Companies and began accreting discount/amortizing premium on long-term debt securities. The effect of this change for the fiscal year ended August 31, 2002 was as follows:

    Net Investment
Income per Share 		    Net Realized/Unrealized
Gain/Loss per Share 		    Ratio of Net Investment Income
to Average Net Assets
Increase (Decrease)      
Government Income Fund   $(0.01)   $0.01       (0.12)%
Intermediate Bond Fund     (0.03)     0.03   (0.32)
Intermediate Tax-Free Fund     0.00     (0.00)   0.00
Short-Term Income Fund     (0.04)     0.04   (0.40)

Per share, ratios and supplemental data for periods prior September 1, 2001 have not been restated to reflect this change in presentation.

 

Notes to Financial Statements

1. Organization

Marshall Funds, Inc. (the "Corporation") is registered under the Investment Company Act of 1940, as amended, (the "Act"), as an open-end management investment company. The Corporation consists of eleven diversified portfolios (individually referred to as the "Fund", or collectively as the "Funds"), all of which are presented herein:

Portfolio Name

Investment Objective

Marshall Equity Income Fund ("Equity Income Fund")

To provide capital appreciation and above-average dividend income.

Marshall Large-Cap Growth & Income Fund
("Large-Cap Growth & Income Fund")

To provide capital appreciation and income.

Marshall Mid-Cap Value Fund ("Mid-Cap Value Fund")

To provide capital appreciation.

Marshall Mid-Cap Growth Fund ("Mid-Cap Growth Fund")

To provide capital appreciation.

Marshall Small-Cap Growth Fund ("Small-Cap Growth Fund")

To provide capital appreciation.

Marshall International Stock Fund ("International Stock Fund")

To provide capital appreciation.

Marshall Government Income Fund ("Government Income Fund")

To provide current income.

Marshall Intermediate Bond Fund ("Intermediate Bond Fund")

To maximize total return consistent with current income.

Marshall Intermediate Tax-Free Fund ("Intermediate
Tax-Free Fund")

To provide a high level of current income that is exempt from federal income tax and is consistent with preservation of capital.

Marshall Short-Term Income Fund ("Short-Term Income Fund")

To maximize total return consistent with current income.

Marshall Money Market Fund ("Money Market Fund")

To provide current income consistent with stability of principal.

The Funds (except Intermediate Tax-Free Fund) are offered in two classes of shares: Investor Class of Shares and Advisor Class of Shares. International Stock Fund and Money Market Fund offer three classes of shares: Investor Class of Shares, Advisor Class of Shares and Institutional Class of Shares. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The Financial Highlights of Advisor Class of Shares and Institutional Class of Shares of the Funds are presented in separate semi-annual reports.

2. Significant Accounting Policies

The following is a summary of significant accounting policies consistently followed by the Funds in the preparation of their financial statements. These policies are in conformity with accounting principles generally accepted in the United States.

Investment Valuations--Listed equity securities are valued at the last sale price reported on a national securities exchange. U.S. government securities, listed corporate bonds, other fixed income and asset-backed securities, and unlisted securities and private placement securities are generally valued at the mean of the latest bid and asked price as furnished by an independent pricing service. Municipal bonds are valued by an independent pricing service, taking into consideration yield, liquidity, risk, credit quality, coupon, maturity, type of issue, and any other factors or market data the pricing service deems relevant. Money Market Fund's use of the amortized cost method to value portfolio securities is in accordance with Rule 2a-7 under the Act. For fluctuating net asset value Funds within the Corporation, short-term securities are valued at the prices provided by an independent pricing service. However, short-term securities purchased with remaining maturities of 60 days or less may be valued at amortized cost, which approximates fair market value. Investments in other open-end regulated investment companies are valued at net asset value. Securities for which no quotations are readily available are valued at fair value as determined in good faith using methods approved by the Board of Directors (the "Directors").

Repurchase Agreements--It is the policy of the Funds to require the custodian bank to take possession, to have legally segregated in the Federal Reserve Book Entry System, or to have segregated within the custodian bank's vault, all securities held as collateral under repurchase agreement transactions. Additionally, procedures have been established by the Funds to monitor, on a daily basis, the market value of each repurchase agreement's collateral to ensure that the value of collateral at least equals the repurchase price to be paid under the repurchase agreement, including accrued interest.

The Funds will only enter into repurchase agreements with banks and other recognized financial institutions, such as broker/dealers, which are deemed by the Funds' adviser (or sub-adviser with respect to International Stock Fund) to be creditworthy pursuant to the guidelines and/or standards reviewed or established by the Directors. Risks may arise from the potential inability of counterparties to honor the terms of the repurchase agreement. Accordingly, the Funds could receive less than the repurchase price on the sale of collateral securities.

Investment Income, Expenses and Distributions--Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at fair market value. The Funds offer multiple classes of shares (except Intermediate Tax-Free Fund), which differ in their respective distribution and service fees. All shareholders bear the common expenses of the Funds based on average daily net assets of each class, without distinction between share classes. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.

Premium and Discount Amortization/Paydown Gain and Losses--All premiums and discount on fixed income securities are amortized/ accreted for financial statement purposes. Gains and losses realized on principal payments of mortgage-backed securities (paydown gains and losses) are classified as part of investment income.

Change in Accounting Policy--Effective September 1, 2001 the Corporation adopted the provisions of the revised AICPA Audit and Accounting Guide for Investment Companies (the "Guide"). For financial statement purposes, the revised Guide requires the Funds to amortize premium and discount on all fixed income securities and to classify gains and losses realized on principal payments received on mortgage-backed securities (pay-down gains and losses) as part of investment income.

Upon initial adoption, the Funds adjusted their cost of fixed income securities by the cumulative amount of amortization that would have been recognized had amortization been in effect from the purchase date of each holding with a corresponding reclassification between unrealized appreciation/depreciation on investments and undistributed net investment income. Adoption of these accounting principles does not affect the Funds' net asset value or distributions, but changes the classification of certain amounts between investment income and realized and unrealized gain/loss on the Statement of Operations. The cumulative effects to the Funds resulting from the adoption of premium and discount amortization and recognition of paydown gains and losses as part of investment income on the financial statements are as follows:

 

As of September 1, 2001

For the Year Ended
August 31, 2002

 

Cost of
Investments

Undistributed
Net Investment
Income

Accumulated
Net
Realized
Gain (Loss)

Net
Investment
Income

Unrealized
Appreciation
(Depreciation)

Net Realized
Gain (Loss)

Increase (Decrease)

Government Income Fund

$ 41,338

$ (427,302)

$ 468,640

$ (451,297)

$ (19,790)

$ 471,087

Intermediate Bond Fund

(258,062)

(1,788,825)

1,530,763

(2,005,509)

978,504

1,027,005

Intermediate Tax-Free Fund

6,155

6,155

--

2,446

4,140

(6,586)

Short-Term Income Fund

(19,907)

(333,171)

313,264

(504,599)

122,704

381,895

The Statements of Changes in Net Assets and Financial Highlights for prior periods have not been restated to reflect this change in presentation.

Federal Taxes--It is the Funds' policy to comply with the provisions of Subchapter M of the Internal Revenue Code, as amended (the "Code"), applicable to regulated investment companies and to distribute to shareholders each year substantially all of their income. Accordingly, no provisions for federal tax are necessary.

Withholding taxes on foreign dividends have been provided for in accordance with the applicable country's tax rules and rates.

When-Issued and Delayed Delivery Transactions--The Funds may engage in when-issued or delayed delivery transactions. The Funds record when-issued securities on the trade date and maintain security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked-to-market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.

Futures Contracts--Equity Income, Large-Cap Growth & Income Fund, Mid-Cap Value Fund, Mid-Cap Growth Fund and Small-Cap Growth Fund purchase stock index futures contracts to manage cashflows, enhance yield, and to potentially reduce transaction costs. Upon entering into a stock index futures contract with a broker, the Fund is required to deposit in a segregated account a specified amount of cash or U.S. government securities. Futures contracts are valued daily and unrealized gains or losses are recorded in a "variation margin" account. Daily, the Fund receives from or pays to the broker a specified amount of cash based upon changes in the variation margin account. When a contract is closed, the Fund recognizes a realized gain or loss. Futures contracts have market risks, including the risk that the change in the value of the contract may not correlate with changes in the value of the underlying securities.

At February 28, 2003, the Funds had no outstanding futures contracts.

Written Options Contracts--Equity Income Fund may write option contracts. A written option obligates the Fund to deliver a call, or to receive a put, for the contract amount upon exercise by the holder of the option. The value of the option contract is recorded as a liability and unrealized gain or loss is measured by the difference between the current value and the premium received. For the six months ended February 28, 2003, the Equity Income Fund had $602,094 in realized gain on written options.

The following is a summary of the Equity Income Fund's written option activity:

Contracts

Number of
Contracts

Premium

Outstanding @ 8/31/02

3,989

$ 390,950

Options written

15,701

1,269,458

Options expired

(9,343)

(819,300)

Options closed

(4,902)

(423,881)

Outstanding @ 2/28/03

5,445

$ 417,227

At February 28, 2003, the Equity Income Fund had the following outstanding options:

Contract

Type

Expiration Date

Exercise
Price

Number of
Contracts

Market
Value

Unrealized
Appreciation
(Depreciation)

Eastman Kodak Co.

Call

April 2003

$ 45.00

235

$ 2,350

$ 15,979

United Technologies Corp.

Call

March 2003

70.00

230

1,150

20,239

AT&T Corp.

Put

March 2003

17.50

600

18,000

16,549

Abbott Labs

Put

April 2003

32.50

400

29,000

9,799

Albertson's, Inc.

Put

March 2003

17.50

380

10,450

4,370

Coca Cola Co.

Put

March 2003

37.50

300

8,250

22,349

Eastman Kodak Co.

Put

April 2003

25.00

400

16,000

3,199

Home Depot Inc.

Put

May 2003

17.50

650

13,000

40,948

Ishares Trust

Put

March 2003

40.00

450

10,125

25,474

Ishares Trust

Put

April 2003

40.00

550

34,375

11,274

Sears Roebuck & Co.

Put

April 2003

20.00

500

65,000

(36,001)

Stanley Works

Put

April 2003

25.00

400

36,000

20,798

Union Pac Corp

Put

March 2003

50.00

350

9,625

8,925

Net Unrealized Appreciation on Written Options Contracts

5,445

$ 163,902

Foreign Exchange Contracts--International Stock Fund may enter into foreign currency exchange contracts as a way of managing foreign exchange rate risk. The International Stock Fund may enter into these contracts for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross hedge against either specific transactions or portfolio positions. The objective of the International Stock Fund's foreign currency hedging transactions is to reduce the risk that the U.S. dollar value of the International Stock Fund's foreign currency denominated securities will decline in value due to changes in foreign currency exchange rates. All foreign currency exchange contracts are "marked-to-market" daily at the applicable translation rates resulting in unrealized gains or losses. Realized gains or losses are recorded at the time the foreign currency exchange contract is offset by entering into a closing transaction or by the delivery or receipt of the currency. Risk may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar.

As of February 28, 2003, International Stock Fund had no outstanding foreign currency exchange contracts.

Foreign Currency Translation--The accounting records of the Funds are maintained in U.S. dollars. All assets and liabilities denominated in foreign currencies ("FCs") are translated into U.S. dollars based on the rate of exchange of such currencies against U.S. dollars on the date of valuation. Purchases and sales of securities, income and expenses are translated at the rate of exchange quoted on the respective date that such transactions are recorded. The Funds do not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.

Reported net realized foreign exchange gains or losses arise from sales of portfolio securities, sales and maturities of short-term securities, sales of FCs, currency gains or losses realized between the trade and settlement dates on securities transactions, the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Funds' books, and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities at fiscal year end, resulting from changes in the exchange rate.

Dollar Roll Transactions--The Funds, except for Money Market Fund, may enter into dollar roll transactions, with respect to mortgage securities issued by Government National Mortgage Association, Federal National Mortgage Association and Federal Home Loan Mortgage Corporation, in which the Funds loan mortgage securities to financial institutions and simultaneously agree to accept substantially similar (same type, coupon and maturity) securities at a later date at an agreed upon price. Dollar roll transactions are short-term financing arrangements which will not exceed twelve months. The Funds will use the proceeds generated from the transactions to invest in short-term investments, which may enhance the Funds' current yield and total return.

Information regarding dollar roll transactions for the Government Income Fund for the six months ended February 28, 2003 was as follows::

Maximum amount outstanding during the period

$ 61,957,007

Average amount outstanding during the period1

$ 39,269,811

Average monthly shares outstanding during the period

38,754,498

Average debt per share outstanding during the period

1.01

(1) The average amount outstanding during the period was calculated by adding the borrowings at the end of the day and dividing the sum by the number of days in six months ended February 28, 2003.

Securities Lending--The Funds participate in a securities lending program providing for the lending of corporate bonds, equity and government securities to qualified brokers. The Funds receive cash as collateral in return for the securities and record a corresponding payable for collateral due to the respective broker. The amount of cash collateral received is maintained at a minimum level of 100% of the prior day's market value on securities loaned. Collateral is reinvested in short-term securities including overnight repurchase agreements, commercial paper, master notes, floating rate corporate notes (with at least quarterly reset rates) and money market funds. On May 18, 2000, the Securities and Exchange Commission issued an order to the Marshall Funds that exempts certain securities lending activities from prohibitions under the Act. Under the terms of the exemptive order, (i) the Funds may pay a portion of net revenue to Marshall & Ilsley Trust Company N.A. ("M&I Trust") for its services as securities lending agent, and (ii) cash collateral received for a loan of one Fund's securities may be invested jointly with collateral received for loans of other Funds' securities.

As of February 28, 2003, the value of securities loaned, the payable on collateral due to broker and the value of reinvested cash collateral securities were as follows:

Fund

Market Value
of Securities
Loaned

Payable on
Collateral
Due to Broker

Reinvested
Collateral
Securities

Equity Income Fund

$ 14,411,144

$ 14,703,500

$ 14,703,500

Large-Cap Growth & Income Fund

22,603,131

23,072,500

23,072,500

Mid-Cap Value Fund

33,048,922

34,494,043

34,494,043

Mid-Cap Growth Fund

64,473,781

67,800,457

67,800,457

Small-Cap Growth Fund

17,867,115

18,532,726

18,532,726

International Stock Fund

30,968,803

32,537,850

32,537,850

Government Income Fund

91,238,475

93,274,000

93,274,000

Intermediate Bond Fund

99,206,541

103,173,262

103,173,262

Individual reinvested cash collateral securities at February 28, 2003 are as follows:

Investments

Equity
Income
Fund

Large-Cap
Growth &
Income
Fund

Mid-Cap
Value
Fund

Mid-Cap
Growth
Fund

Small-Cap
Growth
Fund

International
Stock Fund

Government
Income
Fund

Intermediate
Bond Fund

Total

Provident Money Market Fund

$ 58,010

$ 91,025

$ 136,087

$ 267,489

$ 73,116

$ 128,370

$ 367,987

$ 407,043

$ 1,529,127

Merrimac Money Market Fund

1,863,624

2,924,369

4,372,015

8,593,501

2,348,966

4,124,073

11,822,195

13,076,897

49,125,640

Dreyfus Cash Management Plus MMKT

1,888,389

2,963,230

4,430,112

8,707,696

2,380,181

4,178,876

11,979,295

13,250,670

49,778,449

JP Morgan Master Note

758,717

1,190,568

1,779,932

3,498,581

956,310

1,678,990

4,813,045

5,323,857

20,000,000

MetLife Funding Agreement

758,717

1,190,568

1,779,932

3,498,581

956,310

1,678,990

4,813,045

5,323,857

20,000,000

Wisconsin Public Service Master Note

379,359

595,284

889,966

1,749,290

478,155

839,495

2,406,522

2,661,929

10,000,000

Monumental Life Insurance Master Note

569,038

892,925

1,334,949

2,623,936

717,232

1,259,243

3,609,783

3,992,894

15,000,000

Homeside Lending Inc.

379,822

596,010

891,052

1,751,426

478,739

840,520

2,409,461

2,665,180

10,012,210

Syndicated Loan Fund

568,953

892,792

1,334,749

2,623,542

717,125

1,259,054

3,609,242

3,992,293

14,997,750

Merrill Lynch & Co.

758,717

1,190,567

1,779,932

3,498,581

956,310

1,678,990

4,813,045

5,323,858

20,000,000

BMW US Capital LLC

758,717

1,190,567

1,779,932

3,498,581

956,310

1,678,990

4,813,045

5,323,858

20,000,000

Wells Fargo & Company

379,359

595,284

889,966

1,749,290

478,155

839,495

2,406,522

2,661,929

10,000,000

Wisconsin Energy Corp. C/P

840,349

1,318,663

1,971,439

3,875,001

1,059,201

1,859,636

5,330,891

5,896,664

22,151,844

Goldman Sachs Group

758,717

1,190,567

1,779,932

3,498,581

956,310

1,678,990

4,813,045

5,323,858

20,000,000

John Deere Capital Corp.

568,967

892,813

1,334,781

2,623,606

717,142

1,259,085

3,609,331

3,992,393

14,998,118

Jackson National Life Global

758,535

1,190,282

1,779,505

3,497,741

956,080

1,678,587

4,811,890

5,322,580

19,995,200

American Express Centurion

758,717

1,190,568

1,779,932

3,498,581

956,310

1,678,990

4,813,045

5,323,857

20,000,000

American Express Credit

758,717

1,190,568

1,779,932

3,498,581

956,310

1,678,990

4,813,045

5,323,857

20,000,000

Canadian IMP BK Comm

569,038

892,925

1,334,949

2,623,936

717,232

1,259,243

3,609,783

3,992,894

15,000,000

General Electric Capital Corp.

569,038

892,925

1,334,949

2,623,936

717,232

1,259,243

3,609,783

3,992,894

15,000,000

Restricted Securities--Restricted securities are securities that may only be resold upon registration under federal securities laws or in transactions exempt from such registration. In some cases, the issuer of restricted securities has agreed to register such securities for resale, at the issuer's expense either upon demand by the Funds or in connection with another registered offering of the securities. Many restricted securities may be resold in the secondary market in transactions exempt from registration. Such restricted securities may be determined to be liquid under criteria established by the Directors. The Funds will not incur any registration costs upon such resales. The Intermediate Bond Fund's and Short-Term Income Fund's restricted securities are valued at the price provided by dealers in the secondary market or, if no market prices are available, the fair value as determined in good faith using methods approved by the Directors. The Money Market Fund's restricted securities are valued at amortized cost in accordance with Rule 2a-7 under the Act.

Additional information on each illiquid restricted security held by the Short-Term Income Fund at February 28, 2003 is as follows:

Security

Acquisition Date

Acquisition Cost

Osprey Trust

9/16/1999

$ 2,000,000

Regional Jet Equipment Trust

2/2/2000

707,606

Additional information on each illiquid restricted security held by the Money Market Fund at February 28, 2003 is as follows:

Security

Acquisition Date

Acquisition Cost

GE Life & Annuity Assurance Co.

4/22/2000

$ 75,000,000

Monumental Life Insurance Co.

8/2/1993-11/30/1993

40,000,000

Monumental Life Insurance Co.

10/15/1996

10,000,000

Monumental Life Insurance Co.

1/4/2000

25,000,000

Travelers Insurance Co.

1/19/2001

50,000,000

Other--Investment transactions are accounted for on a trade date basis.

3. Capital Stock

The Articles of Incorporation permit the Directors to issue an indefinite number of full and fractional shares of common stock, par value $0.0001 per share. At February 28, 2003, the capital paid-in was as follows:

Fund

Capital Paid-In

Equity Income Fund

$ 328,004,626

Large-Cap Growth & Income Fund

270,296,902

Mid-Cap Value Fund

212,236,388

Mid-Cap Growth Fund

296,088,623

Small-Cap Growth Fund

105,494,946

International Stock Fund

420,252,912

Government Income Fund

368,443,132

Intermediate Bond Fund

656,556,633

Intermediate Tax-Free Fund

102,322,845

Short-Term Income Fund

138,834,322

Money Market Fund

3,283,152,489

Transactions in capital stock were as follows:

 

 

Six Months Ended
February 28, 2003

 

 

Year Ended
August 31, 2002

 

 

Shares

 

 

 

Amount

 

 

Shares

 

 

 

Amount

 

EQUITY INCOME FUND--INVESTOR CLASS

 

 

 

 

 

 

 

 

 

 

 

 

Shares sold

 

4,859,007

 

 

$

55,989,194

 

 

3,954,436

 

 

$

52,646,401

 

Shares issued to shareholders in payment of distributions declared

 

105,454

 

 

 

1,201,904

 

 

1,256,721

 

 

 

17,467,488

 

Shares redeemed

 

(5,216,119

)

 

 

(59,821,539

)

 

(5,489,769

)

 

 

(75,258,161

)

Net change resulting from Investor Class of Shares transactions

 

(251,658

)

 

$

(2,630,441

)

 

(278,612

)

 

$

(5,144,272

)

EQUITY INCOME FUND--ADVISOR CLASS

 

 

 

 

 

 

 

 

Shares sold

 

69,910

 

 

$

807,357

 

 

169,201

 

 

$

2,319,923

 

Shares issued to shareholders in payment of distributions declared

 

2,668

 

 

 

30,415

 

 

13,715

 

 

 

190,165

 

Shares redeemed

 

(63,308

)

 

 

(714,884

)

 

(70,025

)

 

 

(959,162

)

Net change resulting from Advisor Class of Shares transactions

 

9,270

 

 

$

122,888

 

 

112,891

 

 

$

1,550,926

 

Net change resulting from Fund Share transactions

 

(242,388

)

 

$

(2,507,553

)

 

(165,721

)

 

$

(3,593,346

)

LARGE-CAP GROWTH & INCOME FUND--INVESTOR CLASS

 

 

 

 

 

 

 

 

Shares sold

 

2,472,828

 

 

$

24,811,100

 

 

3,423,301

 

 

$

43,997,592

 

Shares issued to shareholders in payment of distributions declared

 

7,743

 

 

 

76,426

 

 

8,575

 

 

 

105,741

 

Shares redeemed

 

(5,243,252

)

 

 

(51,839,124

)

 

(5,616,030

)

 

 

(69,582,834

)

Net change resulting from Investor Class of Shares transactions

 

(2,762,681

)

 

$

(26,951,598

)

 

(2,184,154

)

 

$

(25,479,501

)

LARGE-CAP GROWTH & INCOME FUND--ADVISOR CLASS

 

 

 

 

 

 

 

 

Shares sold

 

69,346

 

 

$

694,070

 

 

195,011

 

 

$

2,472,860

 

Shares issued to shareholders in payment of distributions declared

 

266

 

 

 

2,633

 

 

264

 

 

 

2,195

 

Shares redeemed

 

(57,207

)

 

 

(559,643

)

 

(73,575

)

 

 

(918,448

)

Net change resulting from Advisor Class of Shares transactions

 

12,405

 

 

$

137,060

 

 

121,700

 

 

$

1,556,607

 

Net change resulting from Fund Share transactions

 

(2,750,276

)

 

$

(26,814,538

)

 

(2,062,454

)

 

$

(23,922,894

)

MID-CAP VALUE FUND--INVESTOR CLASS

 

 

 

 

 

 

 

 

 

 

 

 

Shares sold

 

4,219,783

 

 

$

44,061,024

 

 

8,526,115

 

 

$

101,629,669

 

Shares issued to shareholders in payment of distributions declared

 

10,280

 

 

 

104,948

 

 

1,892,346

 

 

 

22,305,472

 

Shares redeemed

 

(2,350,441

)

 

 

(24,186,305

)

 

(5,564,460

)

 

 

(64,311,133

)

Net change resulting from Investor Class of Shares transactions

 

1,879,622

 

 

$

19,979,667

 

 

4,854,001

 

 

$

59,624,008

 

MID-CAP VALUE FUND--ADVISOR CLASS

 

 

 

 

 

 

 

 

 

 

 

 

Shares sold

 

48,087

 

 

$

494,867

 

 

192,014

 

 

$

2,284,297

 

Shares issued to shareholders in payment of distributions declared

 

323

 

 

 

3,295

 

 

28,716

 

 

 

338,441

 

Shares redeemed

 

(35,665

)

 

 

(359,730

)

 

(29,133

)

 

 

(343,354

)

Net change resulting from Advisor Class of Shares transactions

 

12,745

 

 

$

138,432

 

 

191,597

 

 

$

2,279,384

 

Net change resulting from Fund Share transactions

 

1,892,367

 

 

$

20,118,099

 

 

5,045,598

 

 

$

61,903,392

 

MID-CAP GROWTH FUND--INVESTOR CLASS

 

 

 

 

 

 

 

 

 

Shares sold

 

1,839,100

 

 

$

17,304,296

 

 

4,502,457

 

 

$

55,289,872

 

Shares issued to shareholders in payment of distributions declared

 

--

 

 

 

--

 

 

62,977

 

 

 

869,078

 

Shares redeemed

 

(3,634,027

)

 

 

(33,957,075

)

 

(7,078,048

)

 

 

(82,822,587

)

Net change resulting from Investor Class of Shares transactions

 

(1,794,927

)

 

$

(16,652,779

)

 

(2,512,614

)

 

$

(26,663,637

)

MID-CAP GROWTH FUND--ADVISOR CLASS

 

 

 

 

 

 

 

 

 

 

Shares sold

 

29,822

 

 

$

283,334

 

 

89,447

 

 

$

1,086,686

 

Shares issued to shareholders in payment of distributions declared

 

--

 

 

 

--

 

 

629

 

 

 

8,684

 

Shares redeemed

 

(29,704

)

 

 

(274,625

)

 

(33,654

)

 

 

(389,492

)

Net change resulting from Advisor Class of Shares transactions

 

118

 

 

$

8,709

 

 

56,422

 

 

$

705,878

 

Net change resulting from Fund Share transactions

 

(1,794,809

)

 

$

(16,644,070

)

 

(2,456,192

)

 

$

(25,957,759

)

SMALL-CAP GROWTH FUND--INVESTOR CLASS

 

 

 

 

 

 

 

 

Shares sold

 

3,611,053

 

 

$

32,029,139

 

 

3,415,230

 

 

$

38,996,606

 

Shares issued to shareholders in payment of distributions declared

 

--

 

 

 

--

 

 

386,177

 

 

 

4,757,712

 

Shares redeemed

 

(4,144,740

)

 

 

(36,455,131

)

 

(3,291,813

)

 

 

(35,067,094

)

Net change resulting from Investor Class of Shares transactions

 

(533,687

)

 

$

(4,425,992

)

 

509,594

 

 

$

8,687,224

 

SMALL-CAP GROWTH FUND--ADVISOR CLASS

 

 

 

 

 

 

 

 

Shares sold

 

45,396

 

 

$

399,031

 

 

182,325

 

 

$

2,125,578

 

Shares issued to shareholders in payment of distributions declared

 

--

 

 

 

--

 

 

9,216

 

 

 

113,545

 

Shares redeemed

 

(39,396

)

 

 

(335,495

)

 

(103,222

)

 

 

(1,184,092

)

Net change resulting from Advisor Class of Shares transactions

 

6,000

 

 

$

63,536

 

 

88,319

 

 

$

1,055,031

 

Net change resulting from Fund Share transactions

 

(527,687

)

 

$

(4,362,456

)

 

597,913

 

 

$

9,742,255

 

INTERNATIONAL STOCK FUND--INVESTOR CLASS

 

 

 

 

 

 

 

 

Shares sold

 

20,295,727

 

 

$

170,791,982

 

 

17,636,158

 

 

$

174,748,741

 

Shares redeemed

 

(20,433,775

)

 

 

(173,272,774

)

 

(19,632,221

)

 

 

(194,599,116

)

Net change resulting from Investor Class of Shares transactions

 

(138,048

)

 

$

(2,480,792

)

 

(1,996,063

)

 

$

(19,850,375

)

INTERNATIONAL STOCK FUND--ADVISOR CLASS

 

 

 

 

 

 

 

 

Shares sold

 

2,786,745

 

 

$

23,916,305

 

 

1,430,452

 

 

$

14,109,749

 

Shares redeemed

 

(2,875,438

)

 

 

(24,845,316

)

 

(1,312,246

)

 

 

(13,240,261

)

Net change resulting from Advisor Class of Shares transactions

 

(88,693

)

 

$

(929,011

)

 

118,206

 

 

$

869,488

 

INTERNATIONAL STOCK FUND--INSTITUTIONAL CLASS

 

 

 

 

 

 

 

 

Shares sold

 

1,938,397

 

 

$

$16,492,473

 

 

2,973,838

 

 

$

29,826,781

 

Shares redeemed

 

(1,300,020

)

 

 

(10,796,234

)

 

(2,217,162

)

 

 

(21,877,897

)

Net change resulting from Institutional Class of Shares transactions

 

638,377

 

 

$

$5,696,239

 

 

756,676

 

 

$

7,948,884

 

Net change resulting from Fund Share transactions

 

411,636

 

 

$

$2,286,436

 

 

(1,121,181

)

 

$

(11,032,003

)

GOVERNMENT INCOME FUND--INVESTOR CLASS

 

 

 

 

 

 

 

 

Shares sold

 

7,392,836

 

 

$

71,919,632

 

 

9,619,972

 

 

$

92,152,089

 

Shares issued to shareholders in payment of distributions declared

 

395,156

 

 

 

3,846,795

 

 

1,273,586

 

 

 

12,197,150

 

Shares redeemed

 

(8,376,959

)

 

 

(81,470,975

)

 

(11,955,890

)

 

 

(114,431,983

)

Net change resulting from Investor Class of Shares transactions

 

(588,967

)

 

$

(5,704,548

)

 

(1,062,332

)

 

$

(10,082,744

)

GOVERNMENT INCOME FUND--ADVISOR CLASS

 

 

 

 

 

 

 

 

Shares sold

 

105,734

 

 

$

1,028,359

 

 

316,703

 

 

$

3,026,512

 

Shares issued to shareholders in payment of distributions declared

 

6,188

 

 

 

60,236

 

 

13,493

 

 

 

129,303

 

Shares redeemed

 

(40,938

)

 

 

(397,418

)

 

(192,551

)

 

 

(1,841,093

)

Net change resulting from Advisor Class of Shares transactions

 

70,984

 

 

$

691,177

 

 

137,645

 

 

$

1,314,722

 

Net change resulting from Fund Share transactions

 

(517,983

)

 

$

(5,013,371

)

 

(924,687

)

 

$

(8,768,022

)

INTERMEDIATE BOND FUND--INVESTOR CLASS

 

 

 

 

 

 

 

 

Shares sold

 

16,272,298

 

 

$

153,900,704

 

 

16,880,357

 

 

$

158,501,362

 

Shares issued to shareholders in payment of distributions declared

 

714,998

 

 

 

6,775,689

 

 

1,756,483

 

 

 

16,480,250

 

Shares redeemed

 

(17,130,897

)

 

 

(161,853,677

)

 

(19,133,698

)

 

 

(179,853,591

)

Net change resulting from Investor Class of Shares transactions

 

(143,601

)

 

$

(1,177,284

)

 

(496,858

)

 

$

(4,871,979

)

INTERMEDIATE BOND FUND--ADVISOR CLASS

 

 

 

 

 

 

 

 

Shares sold

 

97,090

 

 

$

918,836

 

 

291,333

 

 

$

2,732,845

 

Shares issued to shareholders in payment of distributions declared

 

8,850

 

 

 

83,866

 

 

18,596

 

 

 

174,431

 

Shares redeemed

 

(36,862

)

 

 

(347,431

)

 

(198,831

)

 

 

(1,866,218

)

Net change resulting from Advisor Class of Shares transactions

 

69,078

 

 

$

655,271

 

 

111,098

 

 

$

1,041,058

 

Net change resulting from Fund Share transactions

 

(74,523

)

 

$

(522,013

)

 

(385,760

)

 

$

(3,830,921

)

INTERMEDIATE TAX-FREE FUND--INVESTOR CLASS

 

 

 

 

 

 

 

 

Shares sold

 

2,157,418

 

 

$

22,857,507

 

 

2,281,709

 

 

$

23,476,092

 

Shares issued to shareholders in payment of distributions declared

 

15,854

 

 

 

167,835

 

 

38,412

 

 

 

396,321

 

Shares redeemed

 

(2,344,648

)

 

 

(24,784,676

)

 

(1,825,913

)

 

 

(18,832,499

)

Net change resulting from Investor Class of Shares transactions

 

(171,376

)

 

$

(1,759,334

)

 

494,208

 

 

$

5,039,914

 

SHORT-TERM INCOME FUND--INVESTOR CLASS

 

 

 

 

 

 

 

 

Shares sold

 

7,213,383

 

 

$

67,901,280

 

 

5,454,176

 

 

$

51,537,360

 

Shares issued to shareholders in payment of distributions declared

 

98,293

 

 

 

924,918

 

 

353,190

 

 

 

3,323,105

 

Shares redeemed

 

(5,592,024

)

 

 

(52,568,801

)

 

(6,890,903

)

 

 

(64,691,429

)

Net change resulting from Investor Class of Shares transactions

 

1,719,652

 

 

$

16,257,397

 

 

(1,083,537

)

 

$

(9,830,964

)

SHORT-TERM INCOME FUND--ADVISOR CLASS

 

 

 

 

 

 

 

 

Shares sold

 

61,940

 

 

$

583,071

 

 

133,339

 

 

$

1,247,308

 

Shares issued to shareholders in payment of distributions declared

 

1,647

 

 

 

15,494

 

 

2,153

 

 

 

20,188

 

Shares redeemed

 

(11,495

)

 

 

(107,801

)

 

(58,185

)

 

 

(542,360

)

Net change resulting from Advisor Class of Shares transactions

 

52,092

 

 

$

490,764

 

 

77,307

 

 

$

725,136

 

Net change resulting from Fund Share transactions

 

1,771,744

 

 

$

16,748,161

 

 

(1,006,230

)

 

$

(9,105,828

)

MONEY MARKET FUND--INVESTOR CLASS

 

 

 

 

 

 

 

 

Shares sold

 

2,602,668,703

 

 

$

2,602,668,703

 

 

5,427,591,574

 

 

$

5,427,591,574

 

Shares issued to shareholders in payment of distributions declared

 

3,103,573

 

 

 

3,103,573

 

 

11,415,196

 

 

 

11,415,196

 

Shares redeemed

 

(2,387,119,653

)

 

 

(2,387,119,653

)

 

(5,278,253,683

)

 

 

(5,278,253,683

)

Net change resulting from Investor Class of Shares transactions

 

218,652,623

 

 

$

218,652,623

 

 

160,753,087

 

 

$

160,753,087

 

MONEY MARKET FUND--ADVISOR CLASS

 

 

 

 

 

 

 

 

Shares sold

 

101,165,558

 

 

$

101,165,558

 

 

281,645,796

 

 

$

281,645,796

 

Shares issued to shareholders in payment of distributions declared

 

455,183

 

 

 

455,183

 

 

2,132,999

 

 

 

2,132,999

 

Shares redeemed

 

(108,963,372

)

 

 

(108,963,372

)

 

(297,823,697

)

 

 

(297,823,697

)

Net change resulting from Advisor Class of Shares transactions

 

(7,342,631

)

 

$

(7,342,631

)

 

(14,044,902

)

 

$

(14,044,902

)

MONEY MARKET FUND--INSTITUTIONAL CLASS

 

 

 

 

 

 

 

 

Shares sold

 

1,985,654,021

 

 

$

1,985,654,021

 

 

4,304,882,665

 

 

$

4,304,882,665

 

Shares issued to shareholders in payment of distributions declared

 

1,483,462

 

 

 

1,483,462

 

 

2,761,641

 

 

 

2,761,641

 

Shares redeemed

 

(1,797,254,077

)

 

 

(1,797,254,077

)

 

(4,312,138,653

)

 

 

(4,312,138,653

)

Net change resulting from Institutional Class of Shares transactions

 

189,883,406

 

 

$

189,883,406

 

 

(4,494,347

)

 

$

(4,494,347

)

Net change resulting from Fund Share transactions

 

401,193,398

 

 

$

401,193,398

 

 

142,213,838

 

 

$

142,213,838

 

4. Federal Tax Information

At August 31, 2002, the Funds had capital loss carryforwards, which will reduce the Funds' taxable income arising from future net realized gain on investments, if any, to the extent permitted by the Code, and thus will reduce the amount of the distributions to shareholders which would otherwise be necessary to relieve the Funds of any liability for federal tax. Pursuant to the Code, such capital loss carryforward will expire as follows:

 

Capital Loss Carryforward to Expire In

Fund

2003

2004

2005

2006

2007

2008

2009

2010

Total

Equity Income Fund

$ --

$ --

$ --

$ --

$ --

$ --

$ --

$ 3,315,209

$ 3,315,209

Large Cap Growth & Income Fund

--

--

--

--

--

--

4,529,087

19,615,825

24,144,912

Mid-Cap Value Fund

--

--

--

--

--

--

--

405,788

405,788

Mid-Cap Growth Fund

--

--

--

--

--

--

--

6,610,904

6,610,904

Small Cap Growth Fund

--

--

--

--

--

--

--

4,808,611

4,808,611

International Stock Fund

--

--

--

--

--

--

2,042,934

63,689,740

65,732,674

Government Income Fund

--

--

--

--

--

8,554,228

--

--

8,554,228

Intermediate Bond Fund

10,386,677

6,100,494

--

--

--

2,990,074

--

6,283,428

25,760,673

Intermediate Tax-Free Fund

--

--

--

--

--

--

364,215

--

364,215

Short-Term Income Fund

1,898,650

556,158

545,815

618,371

952,637

222,218

928,524

944,182

6,666,555

Money Market Fund

--

--

--

--

--

--

--

145,822

145,822

5. Investment Adviser Fee and Other Transactions with Affiliates

Investment Adviser Fee--M&I Investment Management Corp., the Funds' investment adviser (the "Adviser"), receives for its services an annual investment adviser fee based on a percentage of each Fund's average daily net assets as listed below. The Adviser may voluntarily choose to waive any portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion.

Fund

Annual Rate

Equity Income Fund

0.75 %

Large-Cap Growth & Income Fund

0.75 %

Mid-Cap Value Fund

0.75 %

Mid-Cap Growth Fund

0.75 %

Small-Cap Growth Fund

1.00 %

International Stock Fund

1.00 %

Government Income Fund

0.75 %

Intermediate Bond Fund

0.60 %

Intermediate Tax-Free Fund

0.60%

Short-Term Income Fund

0.60 %

Money Market Fund

0.15 %

International Stock Fund's sub-adviser is BPI Global Asset Management LLP (the "Sub-Adviser"). The Adviser compensates the Sub-Adviser based on the level of average aggregate daily net assets of International Stock Fund.

Administrative Fee--M&I Trust, under the Administrative Services Agreement, provides the Funds with administrative personnel and services. The fee paid to M&I Trust is based on each Fund's average daily net assets as follows:

 

Maximum Fee

Fund's Average Daily Net Assets

0.100 %

on the first $250 million

0.095 %

on the next $250 million

0.080 %

on the next $250 million

0.060 %

on the next $250 million

0.040 %

on the next $500 million

0.020 %

on assets in excess of $1.5 billion

Federated Administrative Services is the sub-administrator and will be paid by M&I Trust, not by the Funds.

Distribution Services Fee--The Funds have adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Funds will compensate Edgewood Services, Inc., the principal distributor, from the net assets of the Funds to finance activities intended to result in the sale of shares of the Funds' Advisor Class of Shares. The Plan provides that the Funds may incur distribution expenses up to 0.25% of the average daily net assets of Funds' Advisor Class of Shares (except Money Market Fund's Advisor Class of Shares which may accrue up to 0.30%) annually, to compensate Edgewood Services, Inc.

Shareholder Services Fee--Under the terms of a Shareholder Services Agreement with Marshall Investor Services ("MIS"), a division of M&I Trust, each Fund will pay MIS up to 0.25% of average daily net assets of the Funds' Investor and Advisor Class of Shares for the period. The fee paid to MIS is used to finance certain services for shareholders and to maintain shareholder accounts. MIS may voluntarily choose to waive any portion of its fee. MIS can modify or terminate this voluntary waiver at any time at its sole discretion.

Transfer and Dividend Disbursing Agent Fees and Expenses--Federated Services Company ("FServ"), through its subsidiary Federated Shareholders Services Company ("FSSC"), serves as transfer and dividend disbursing agent for the Funds. The fee paid to FSSC is based on the size, type, and number of accounts and transactions made by shareholders.

Portfolio Accounting Fees--FServ maintains the Funds' accounting records for which it receives a fee. The fee is based on the level of each Fund's average daily net assets for the period, plus out-of-pocket expenses.

Custodian Fees--M&I Trust is the Funds' custodian. M&I Trust receives fees based on the level of each Fund's average daily net assets for the period. The custodian also charges a fee in connection with securities lending activities of the Funds.

General--Certain of the Officers and Directors of the Corporation are Officers and Directors or Trustees, of one or more of the above companies.

6. Investment Transactions

Purchases and sales of investments, excluding short-term securities and long-term U.S. government securities, for the six months ended February 28, 2003, were as follows:

Fund

Purchases

Sales

Equity Income Fund

$ 87,910,615

$ 87,313,615

Large-Cap Growth & Income Fund

75,667,706

109,210,301

Mid-Cap Value Fund

58,420,536

38,459,655

Mid-Cap Growth Fund

103,871,007

126,589,445

Small-Cap Growth Fund

87,886,920

93,194,820

International Stock Fund

167,567,881

171,501,697

Intermediate Bond Fund

225,708,696

121,278,210

Intermediate Tax-Free Fund

6,196,195

7,757,344

Short-Term Income Fund

22,648,283

11,167,738

Purchases and sales of long-term U.S. government securities, for the six months ended February 28, 2003, were as follows:

Fund

Purchases

Sales

Government Income Fund

$ 857,060,843

$ 914,570,110

Intermediate Bond Fund

660,359,523

763,362,705

Short-Term Income Fund

19,131,143

17,877,405

7. Line of Credit

Marshall Funds, Inc., on behalf of its respective Funds (expect for the Money Market Fund) entered into a $50,000,000 unsecured, committed revolving line of credit ("LOC") agreement with State Street Bank & Trust Company. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charge interest at a rate of 0.50% per annum over the Federal Funds Rate. The LOC includes a commitment fee of 0.10% per annum on the daily unused portion. The Funds did not utilize the LOC during the six months ended February 28, 2003.

Mutual funds are not bank deposits or obligations, are not guaranteed by any bank, and
are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance
Corporation, the Federal Reserve Board, or any other government agency. Investment in
mutual funds involves investment risk, including the possible loss of principal.

This report is authorized for distribution to prospective investors only when preceded
or accompanied by the Funds' prospectus, which contains facts concerning each
Fund's objective and policies, management fees, expenses, and other information.

[Logo of Marshall Funds]

Marshall Investor Services
P.O. Box 1348
Milwaukee,Wisconsin 53201-1348
800-236-FUND(3863)
TDD: Speech and Hearing Impaired Services
800-209-3520
www.marshallfunds.com
Edgewood Services, Inc., Distributor G00406-02 (4/03)
M&I Investment Management Corp., Investment Adviser
©2003 Marshall Funds, Inc.

321-314

 

[Logo of Marshall Funds]

The Marshall Funds Family

Semi-Annual Report

The Advisor Class of Shares

(Class A)

  • Marshall Equity Income Fund
  • Marshall Large-Cap Growth & Income Fund
  • Marshall Mid-Cap Value Fund
  • Marshall Mid-Cap Growth Fund
  • Marshall Small-Cap Growth Fund
  • Marshall International Stock Fund
  • Marshall Government Income Fund
  • Marshall Intermediate Bond Fund
  • Marshall Short-Term Income Fund
  • Marshall Money Market Fund

FEBRUARY 28, 2003

Table of Contents

President's Message     1
Commentaries    
Marshall Equity Income Fund   2
Marshall Large-Cap Growth & Income Fund   4
Marshall Mid-Cap Value Fund   6
Marshall Mid-Cap Growth Fund   8
Marshall Small-Cap Growth Fund   10
Marshall International Stock Fund   12
Marshall Government Income Fund   14
Marshall Intermediate Bond Fund   16
Marshall Short-Term Income Fund   18
Marshall Money Market Fund   20
Financial Information    
Portfolio of Investments   22
Marshall Equity Income Fund   22
Marshall Large-Cap Growth & Income Fund   24
Marshall Mid-Cap Value Fund   26
Marshall Mid-Cap Growth Fund   28
Marshall Small-Cap Growth Fund   30
Marshall International Stock Fund   31
Marshall Government Income Fund   33
Marshall Intermediate Bond Fund   34
Marshall Short-Term Income Fund   37
Marshall Money Market Fund   40
Notes to Portfolio of Investments   43
Statements of Assets and Liabilities   44
Statements of Operations   46
Statements of Changes in Net Assets   48
Financial Highlights   52
Notes to Financial Statements   54

[Logo of Marshall Funds]

Dear Marshall Fund Shareholder:

Good relative performance of your mutual fund investments can provide only so much comfort. A top-ranked fund with a negative return still feels like another step away from the accomplishment of your financial goals. Our higher-net-worth and institutional clients are hearing the siren songs of hedge funds and other alternative investments. Cash investments are at all time highs despite negative returns after inflation and taxes. Even IRA account owners are looking at annuity solutions for the allusive panacea of investing: stable, long-term, high, positive returns. In other words, markets that only go up dramatically without risk.

We do not offer such panaceas at the Marshall Funds or at its adviser, M&I Investment Management Corp. Allow us to provide some perspective on our commitment to the use of mutual funds in fully diversified portfolios.

Each senior officer of M&I Investment Management Corp. has almost 25 years of investment industry experience. We were front row observers of the Savings & Loan debacle that cost U.S. taxpayers over $200 billion. We followed the real estate joint venture craze all the way to its current penny-on-the-dollar trading on the internet. We watched the granddaddy of all hedge funds, Long-Term Capital Management, and its "orderly liquidation" by the Federal Reserve Board.

We take no glee in watching these disasters; the ripples to us as taxpayers and investors were rough waters, to say the least. We also believe that alternative investments and annuities can be appropriate in the right circumstances, with a complete understanding of benefits and risks, and if you are charged a fair price.

We are puzzled, however, that after six decades of outstanding service to investors in all kinds of market environments, the mutual fund industry continues to be challenged to make its case to U.S. investors. Recent criticisms include concerns over security turnover and sales charge breakpoints.

Security turnover in many equity portfolios has been increasing, raising concerns about the cost of trading more often. The primary reason for the high levels of turnover has been the record level of market volatility. Since the Marshall Funds use no affiliated broker-dealer to execute our trades, we have no built-in bias to increase trading. In fact, our Fund Managers have an incentive to minimize all costs to the Funds. Trading commissions directly affect the net performance of every Fund, and every Fund Manager's compensation is based on their net performance. As a result, every Marshall Fund Manager and every Marshall Fund shareholder is on the same side, focused on maximizing the Funds' total return.

Sales charge breakpoints relate solely to the Advisor Class of shares sold by M&I Brokerage Services. Clients with larger purchases receive breakpoints (discounts) on the shares purchased with the advice of an adviser. Recent, industry-wide, regulatory examinations reveal that some customers did not always receive the full amount of the breakpoint earned. We are pleased that no such errors were identified with any of our clients and are confident that the errors identified in the industry will be corrected soon. While the precise calculation of discounts is receiving great attention in the industry, we wonder why the lack of breakpoints for investment products similar to mutual funds is not receiving comparable regulator or media attention.

We hope you fully appreciate the reasons the mutual fund industry has grown substantially over 60 years. We also hope you fully appreciate the reasons Marshall Funds have grown to almost $6 billion over 10 years. Each Marshall Fund provides you with a clearly defined, true-to-style investment strategy that fits well with a broadly diversified asset allocation strategy. Each is led by an experienced, professional investment management team. Each has an expense ratio that is at or below the median for its respective mutual fund category. Each enjoys the full disclosure and regulatory oversight applied to the entire mutual fund industry.

As always, thank you for your investment in the Marshall Funds.

Sincerely,

/s/ John M. Blaser

John M. Blaser
President

Semi-Annual Report--Commentary

Fund Manager:     David J. Abitz, CFA
Investment Experience:   9 years
Education:   M.B.A. degree, University of Wisconsin-Madison;
B.B.A., University of Wisconsin-Oshkosh
Analysts:   Daniel P. Brown, CFA and Kenneth E. Mayer

Marshall Equity Income Fund

Fund Performance

For the six-months ended February 28, 2003, the Fund's total return at net asset value was (9.19)%.* In comparison, the Standard & Poor's 500 Index (S&P 500) returned (7.29)%, while the Lipper Equity Income Funds Index (LEIFI) returned (8.30)%.**

Factors Affecting Performance

Over the past six months, investors have absorbed a wide spectrum of news and events, both positive and negative. For the most part, this has lead to a greater level of uncertainty in terms of the direction of the economy and financial markets and of a generally downward trending market environment. Factors include the accommodative monetary policy by the Federal Reserve Board (the "Fed"), a White House stimulus package, and generally growing cash reserves by Corporate America. Negative factors include growing geopolitical risks around the world, higher energy prices, and fairly lackluster economic numbers so far in this recovery.

The Fund's performance was enhanced due to its holdings within the telecommunication services group. In addition, the Fund benefited from its holdings within the energy sector as investors gravitated somewhat towards this group due to the low inventory levels and rumors of war. Conversely, the Fund's holdings within the consumer discretionary group posted poor results. During this time period, the stocks within this group were hindered as the market began to digest the declining consumer confidence numbers and the impact that might have on consumer spending. Finally, the utility sector also struggled as several of these companies continue to work down excess debt levels and seek to improve liquidity through asset sales and capital issuance.

Looking Ahead

Investor confidence has been strained due to challenges on both the economic and geopolitical front. However, we continue to feel confident in our disciplined, value-oriented approach and strongly believe investors will be rewarded for their patience through this challenging period. A key centerpiece to our approach is avoiding the emotions and opinions that seem desirable in the short run, but often prove costly over the long haul. We will continue our emphasis of owning well-established companies, which pay above average dividend yields.

As we have mentioned in the past, dividend income is not subject to investor emotions, market cycles, or other biases of the environment. Given the lessons from the past three years, investor expectations have declined to more realistic levels. The market volatility has reminded investors of the importance of the dividend as an important and more reliable component of total return.

* Past performance is no guarantee of future results. The line graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Investment return and principal value will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost.

** The S&P 500 and the LEIFI are not adjusted to reflect sales charges, expenses or other fees that the Securities and Exchange Commission requires to be reflected in a mutual fund's performance. These indexes are unmanaged. Actual investments may not be made in an index. The S&P 500 is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. Lipper indexes are an average of the total return of the 30 largest mutual funds designated by Lipper, Inc. as falling into the respective categories indicated.

Semi-Annual Report--Commentary

Fund Manager:     Mary Linehan
Investment Experience:   14 years
Education:   M.B.A. degree, Marquette University;
B.B.A. University of North Dakota

Marshall Large-Cap Growth & Income Fund

Fund Performance

For the six-months ended February 28, 2003, the Fund's total return at net asset value was (10.15)%.* For the same reporting period the Standard & Poor's 500 Index (S&P 500) returned (7.29)% and the Lipper Large-Cap Core Funds Index (LLCCFI) returned (7.48)%.**

Factors Affecting Performance

For the six month reporting period, the market remained extremely volatile. The market as measured by the S&P 500, bottomed early in October and moved higher over the subsequent seven weeks. The rally was lead by low priced, high beta, beaten up equities. The rally came to an end quickly in early December when a disappointing economic report finally tipped the market over. December, which has usually been the best performance month of the year for the S&P 500, turned in its worst performance in 70 years. The market, continuing its pattern of the last two years, had a sharp move up at the start of the year, but quickly gave it all back and then some by the end of February. This reporting period has also been marked by an unusually high level of political uncertainty with Iraq, the Middle East, and most recently North Korea taking center stage.

Several sectors accounted for the disappointing relative performance of the Fund. The three most disappointing sectors were financials, healthcare, and consumer discretionary, almost entirely from specific stocks rather than from overweighting or underweighting the sector. The financial area returned the weakest performance with the Fund's financial holdings down 13.7% versus the financial holdings in the S&P down only 9.6%. The healthcare sector was our second weakest sector. The Fund's largest healthcare holding, HCA, was hit when negative news came out on one of its competitors. The competitor's problems remain specific to that name and HCA continues to be one of the Fund's largest holdings. Finally, the Fund's industrial holdings were very strong relative to the sector average and the overweight position helped as well. The Fund also did well in the information technology area despite its underweight position relative to the sector.

Certain shifts in the portfolio occurred with the change in managers as of January. Concentrated telecommunication services and energy holdings were reduced and additional securities were purchased to broaden the exposure to those sectors. Exposure to the financial sector was reduced overall. Finally, certain other securities were sold to reposition the portfolio into holdings with more upside potential in advance of an improving economy.

Looking Ahead

Looking forward, with war looming, oil prices surging, and consumer confidence sagging, there is real risk that the economy stays soft for a prolonged period of time. However, we continue to believe that earnings growth will come in 2003, albeit at a very moderated level. Businesses continue to improve their balance sheets and corporate earnings appear to be the most realistic in 3 to 4 years. The Fund remains underweight in the consumer discretionary and staples areas, where the valuations appear to be full. Selective names will be added in the information technology area, but only when we believe valuations have bottomed. The energy area remains overweight because of the recent positive relative earnings revisions and what we believe to be a favorable fundamental outlook

* Past performance is no guarantee of future results. The line graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Investment return and principal value will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost.

** The S&P 500 and the LLCCFI are not adjusted to reflect sales charges, expenses or other fees that the Securities and Exchange Commission requires to be reflected in a mutual fund's performance. These indexes are unmanaged. Actual investments may not be made in an index. The S&P 500 is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. Lipper indexes are an average of the total return of the 30 largest mutual funds designated by Lipper, Inc. as falling into the respective categories indicated.

Semi-Annual Report--Commentary

Fund Manager:      Matthew B. Fahey
Investment Experience:   22 years
Education:   M.B.A. degree, Marquette University;
B.B.A. University of Wisconsin-Milwaukee
Analyst:   Gregory S. Dirske

Marshall Mid-Cap Value Fund

Fund Performance

For the six-months ended February 28, 2003, the Fund's total return at net asset value was (5.93)%.* For the same reporting period the Russell Midcap® Value Index (RMCVI) returned (7.96)%, while the Lipper Mid-Cap Value Funds Index (LMCVFI) returned (7.21)%.**

Factors Affecting Performance

Stock prices generally bottomed in early October, and were aided by an interest rate cut by the Federal Reserve Board (the "Fed") in November and faint signs that the economy was stabilizing. December, usually a strong month for equities, showed one of its worst performances in recent history falling approximately 6%. The first two months of the calendar year each showed negative returns, although smaller in magnitude compared to December. Historically high energy prices, uncertainty in Iraq and North Korea, and profit taking from the October lows contributed to a poor ending to the reporting period.

The Fund's outperformance compared to its benchmarks was derived through a combination of stock selection, and to some degree sector selection. The Fund held underweight positions relative to the RMCVI in consumer discretionary and financials sectors, both of which were weak groups during the reporting period. Energy holdings which represent a slight overweight position in the Fund were on average up double-digits, which was greater than the average energy stock. Telecommunication services holdings Alltel (1.22)% and Citizens Communications (1.89)% showed positive returns, while the telecommunication services sector as a whole generated negative returns. Overweight positions in the industrial and material sectors detracted from performance. Several industrial and material holdings experienced double-digit declines, many due to reduced earning expectations on higher pension, insurance, and energy costs. Transportation holdings CSX (1.98)% (railroad) and Swift Transportation (1.73)% (trucking) were down due to higher fuel costs and slow economic activity. Surprising to many, the best performing sector (ex energy) was the information technology group. The sector was down low single-digits as many of the companies in the group experienced a stabilization in fundamentals and many of the stocks had been beaten down to attractive levels. The Fund held an overweight position in the sector, although the stock selection limited performance as the average holding was down more than the sector average.

Looking Ahead

Our continued strategy is to look for strong companies whose stock has temporarily fallen out-of-favor due to company specific issues, industry concerns, or general macro factors. We must then be convinced of two factors: that the company is financially strong through its balance sheet and cash flow to support the business until it is repaired, and that the company will overcome its current issues and will remain only temporarily out-of-favor.

In general, the portfolio is built by buying one stock at a time, rather than broad sweeping purchases of stocks based on their economic sector. We currently hold less consumer related stocks than index averages because we are not finding compelling valuations in that sector. Many of these stocks have performed well recently and do not appear to represent good value. Our underweight in financials has been driven by a lack of faith in the earnings estimated for many constituents of the sector. Falling interest rates have benefited the sector over the last several years and that does not seem sustainable to us. Our overweight position in industrial and basic material holdings has not produced desirable results. While our holdings generally have good valuation support, a slowing economy could pressure earnings growth and make it difficult for these stocks to improve in the near-term. Nonetheless, we believe these stocks will have their day in the sun.

* Past performance is no guarantee of future results. The line graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Investment return and principal value will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost.

** The RMCVI, LMCVFI and the S&P 400 are not adjusted to reflect sales charges, expenses or other fees that the Securities and Exchange Commission requires to be reflected in a mutual fund's performance. These indexes are unmanaged. Actual investments may not be made in an index. The RMCVI measures the performance of those Russell Midcap companies with lower price-to-book ratios and lower forecasted growth values. The Lipper indexes are an average of the total return of the 30 largest mutual funds designated by Lipper, Inc. as falling into the respective category indicated. The S&P 400 is a capitalization-weighted index of common stocks representing all major industries in the mid-range of the U.S. Stock Market. The Fund has elected to change the benchmark index from the S&P 400 to the RMCVI. The RMCVI is more represenative of the securities typically held by the Fund. This change was effective January 1, 2003.

Semi-Annual Report--Commentary

Fund Manager:     Michael D. Groblewski, CFA
Investment Experience:   11 years
Education:   M.B.A. degree, Syracuse University;
B.B.A. University of Wisconsin-Madison
Analyst:   Kenneth S. Salmon

Marshall Mid-Cap Growth Fund

Fund Performance

For the six months ended February 28, 2003, the Fund provided a total return at net asset value of (0.86)%.* In comparison, the Russell Midcap® Growth Index (RMCGI) returned (1.36)% and the Lipper Mid-Cap Growth Funds Index (LMCGFI) returned (4.75)%.**

Factors Affecting Performance

U.S. equity markets remain under a cloud of uncertainty. The threat of military action against Iraq and diplomatic tensions with North Korea have driven domestic investors from equities toward short term fixed income securities. These concerns paired with a weak dollar have resulted in foreign investors also leaving the U.S. market. The same cloud that has depressed equity markets has muted the economic recovery. Uncertainty has resulted in corporate and consumer spending delays. Additionally, higher energy prices driven by Middle East tensions and Venezuelan strikes, threaten to further slow the economic recovery.

The silver lining in our minds, is the resulting low interest rate environment. Consumers have significantly lowered cost structures by refinancing their homes, as 30 year fixed rates have reached 40 year lows. Additionally, corporate America has repaid debt through a combination of cash flow and securing lower rate fixed debt. Therefore, we are encouraged as stronger consumer and corporate balance sheets should set the stage for a stronger economic recovery once the current geopolitical concerns are put to rest.

Significant energy and healthcare positions, along with select information technology holdings allowed the Fund to beat the indexes over the past six months. In healthcare, Biovail was our most notable gainer. The pharmaceutical maker increased 38% in the reporting period and remains our largest healthcare holding. In information technology, wireless semiconductor manufacturer Skyworks appreciated 190% by the end of November. Skyworks remains in the portfolio, however we used the opportunity in late fall to sell approximately two thirds of our position.

Looking Ahead

The U.S. economy appears to be on the road to recovery, even if the precise timing or pace is not entirely clear. However, we will continue to keep a close eye on unemployment as it is the single factor that concerns us the most and could have the greatest dampening effect. Once the geopolitical concerns are behind us, we believe the strength of the recovery should become more apparent.

In anticipation of a slow, steady economic recovery, we continue to favor economically sensitive sectors. Therefore, consumer discretionary names continue to represent a large part of the portfolio. Additionally, we have added to our information technology holdings, as we believe the recent Federal Budget delay has allowed us the opportunity to increase our position in the government information technology sector at attractive prices.

* Past performance is no guarantee of future results. The line graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Investment return and principal value will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost.

** The RMCGI, LMCGFI and the S&P 400 are not adjusted to reflect sales charges, expenses or other fees that the Securities and Exchange Commission requires to be reflected in a mutual fund's performance. These indexes are unmanaged. Actual investments may not be made in an index. The RMCGI measures the performance of those Russell Midcap companies with higher price-to-book ratios and higher forecasted growth values. The Lipper indexes are an average of the total return of the 30 largest mutual funds designated by Lipper, Inc. as falling into the respective categories indicated. The S&P 400 is a capitalization-weighted index of common stocks representing all major industries in the mid-range of the U.S. stock market. The Fund has elected to change the benchmark index from the S&P 400 to the RMCGI. The RMCGI is more representative of the securities typically held by the Fund. This change was effective January 1, 2003.

Semi-Annual Report--Commentary

Fund Manager:     Sean McLeod, CFA
Investment Experience:   6 years
Education:   M.S. and B.B.A. degree, University of Wisconsin-Madison
Analyst:   Robert S. McDougall, CFA

Marshall Small-Cap Growth Fund

Fund Performance

For the six months ended February 28, 2003, the Fund provided a total return at net asset value of (5.26)%.* This exceeded the return of the Russell 2000 Growth Index (Russell 2000 GI) of (5.55)%, and the Lipper Small Cap Growth Funds Index (LSCGI)of (6.57)%.**

Factors Affecting Performance

Market sentiment changed quite dramatically during the previous six months. During the month of September, fears of a double dip recession, rising oil prices and poor consumer sentiment had sent many investors to the sidelines with the Russell 2000 GI down over 7%. Although we performed in line with the index during the month of September, we spent much of the month repositioning the portfolio to benefit from an improving economy by increasing our consumer discretionary, energy and information technology exposure with holdings including Outback Steakhouse (OSI), Horizon Offshore (HOFF), and Skyworks (SWKS) respectively. This strategy worked well during October and November when renewed optimism about an improving economy in 2003 sent the Russell 2000 GI up over 15% and the Fund over 20%. By December however, sentiment had begun to change as an impending war, fear of terrorism, and rising oil prices began to take a toll on investor psychology. From December through February the Russell 2000 GI declined 12%, w hile the Fund, still overweight in economically sensitive sectors, was down over 15%.

Looking Ahead

Fear of the unknown will, in all likelihood, continue to pressure equity valuations until there is resolution to the issues of the day -- namely Iraq, North Korea, and the fear of impending terrorism. In times of uncertainty, investors tend to ascribe overly high probabilities to worse case scenarios. In the end, the worse case scenario rarely happens, and the equity market typically responds favorably. We feel this situation will be similar. Once there is some clarity as to how things will be resolved, we feel the market will appreciate, after which, we hope that stock valuations will once again rely upon underlying business fundamentals.

The Fund is positioned to take advantage of an economic rebound, as evidenced by our overweight positions in both consumer cyclicals and information technology. In spite of increasing unemployment levels and the slump in corporate profitability, U.S. consumers continued to spend strongly throughout 2002. We remain confident that the U.S. consumer will continue to spend as the economy improves, leading to accelerating growth in revenue and earnings for these companies. The Fund also has recently increased its weighting in technology stocks. Investors had already become impatient with the pace of fundamental improvement in this group even before the current geopolitical concerns. This combination of negative events has, in our opinion, created a number of good buying opportunities in the group.

We continue to invest in sectors benefiting from attractive secular trends, and in companies with lasting competitive advantages, strong balance sheets, and good management teams. In addition, our sensitivity to stock valuations remains a major factor in our decision to over or underweight certain sectors. This approach has proven effective in 2001 and 2002, and we believe this discipline will again be an important factor for investors in 2003. We believe prudent investments in smaller-capitalization, growth-oriented stocks may result in strong long-term risk-adjusted returns.

* Past performance is no guarantee of future results. The line graph and table do not reflect the deduction of taxes that a shareholder would pay on the Fund distributions or the redemption of Fund shares. Investment return and principal value will fluctuate, so that investor's shares, when redeemed, may be worth more or less than their original cost.

** The Russell 2000 GI, LSCGI, and the Russell 2000 are not adjusted to reflect sales charges, expenses or other fees that the Securities and Exchange Commission requires to be reflected in a mutual fund's performance. These indexes are unmanaged. Actual investments may not be made in an index. The Russell 2000 GI measures the performance of those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values. Lipper indexes are an average of the total return of the 30 largest mutual funds designated by Lipper, Inc., as falling into the respective categories indicated. The Russell 2000 is an index of common stocks whose market capitalizations generally range from $200 million to $5 billion. The Fund has elected to change the benchmark index from the Russell 2000 to the Russell 2000 GI. The Russell 2000 GI is more representative of the securities typically held by the Fund. This change was effective January 1, 2003.

*** Small company stocks may be less liquid and subject to greater volatility than large capitalization stocks.

Semi-Annual Report--Commentary

Fund Manager:     Daniel R. Jaworski, CFA
Investment Experience:   14 years
Education:   M.B.A. degree, University of Minnesota;
B.A. Concordia College
Analyst:   BPI Global Asset Management Team

Marshall International Stock Fund

Fund Performance

For the six months ended February 28, 2003, the Fund provided a total return at net asset value of (15.16)%.* In comparison, the Morgan Stanley Capital International Europe, Australasia and Far East Index (EAFE) returned (11.04)% while the Lipper International Funds Index (LIFI) returned (11.04)%.**

Factors Affecting Performance

International equity markets vacillated over the last six months. We witnessed a significant sell-off last September, which was followed by an October-November rally and then three successive months of negative returns in December, January and February. Stimulative actions taken by governments and central banks during this span were unable to override investor concerns about the pace of economic recovery and geopolitical matters such as the conflict with Iraq. All major industrial sectors and geographic regions generated negative returns for the trailing six-month reporting period.

The primary factors contributing to the Fund's relative underperformance during this reporting period were its holdings in the telecommunication services and consumer discretionary sectors. In the telecommunication services sector, the Fund's holdings underperformed primarily because of the strong performance of several large European telecommunications companies which did not meet our buy criteria and the Fund did not hold. The stock prices of these highly-leveraged, lower-quality entities rose dramatically during the fourth quarter of 2002 on news that France Telecom would receive virtually unconditional loans from the government to sustain its operations for the near term. Effectively, the bankruptcy discount that had previously been built into the prices of these stocks went away. In the consumer discretionary sector, the Fund's stakes in companies such as video game software producer Sega in Japan, and media concern Pearson PLC in the United Kingdom detracted from performance.

On the positive side of the ledger, the Fund benefited from the performance of its holdings in the energy and materials sectors. In energy, the Fund held a significant position in YUKOS, a fully integrated oil-and-gas company headquartered in Moscow, Russia. We continue to believe that this company is a good long-term investment because of its vast oil reserves, low production costs, attractive valuation and new shareholder-friendly management team. In materials, iron ore producer Companhia Vale Do Rio Doce in Brazil, and paper producer, Sappi Ltd. in South Africa also contributed positively to Fund performance. In the aggregate, the Fund's holdings in emerging market stocks benefited performance more than any other region of the world.

Looking Ahead

On a sector basis we have increased exposure to the financials, information technology, telecommunication services and energy groups. We have identified several companies within these areas that have improving fundamentals and are taking market share from the weaker players in their respective industries. The source of funds for these purchases has come predominantly from sales of stocks in the consumer discretionary sector, where several company price targets were reached as fundamentals appeared to have hit a plateau. Our underweight positions in the healthcare, consumer staples, and utilities sectors remain intact. However, the valuations and business fundamentals are becoming more attractive in the healthcare group. We are looking to increase our exposure to this area as we find quality companies selling at discounts to their global industry peers.

Geographically the Fund remains underweight Japan and Europe, with the balance invested primarily in developing markets. We continue to identify attractive opportunities in markets such as Korea, Mexico, Brazil, Russia and Israel.

Semi-Annual Report--Commentary

Fund Manager:     Jason D. Weiner, CFA
Investment Experience:   13 years
Education:   B.S. degree, Marquette University
Analyst:   Salvatore D. Amato

Marshall Government Income Fund

Fund Performance

For the semi-annual period ended February 28, 2003, the Fund provided a total return at net asset value of 2.16%.* In comparison, the Lehman Brothers Mortgage-Backed Securities Index (LMI) returned 3.01% while the Lipper U.S. Mortgage Funds Index (LUSMI) returned 2.67%.**

Factors Affecting Performance

Interest rates approached historic lows as a result of a difficult market environment caused by increased geopolitical and economic uncertainty. Bond investors were once again rewarded with solid returns over the last six months. Mortgage-backed securities (MBS) performed surprisingly well over this period as investors favored these securities given their high quality and attractive yields regardless of the inherent prepayment risk associated with them. The Fund's emphasis on call-protected securities as well as MBS added to portfolio performance by allowing us to benefit more directly from declining interest rates during this tumultuous period of time.

Looking Ahead

The mortgage market currently faces the potential of a significant increase in prepayment risk as rates have plummeted to generational lows. Record refinancing activity combined with an exceptionally strong housing market typically results in meaningful underperformance for mortgage securities. However, we believe mortgages will continue to perform well as demand from investors, particularly banks, will lend support to valuations. In addition, mortgage investors have grown accustomed to spikes in prepayment speeds and have adapted accordingly by developing sound methodologies to analyze these types of risk.

We remain committed to our predominant allocation to mortgage securities due to their compelling yields in today's historically low interest rate environment. Our emphasis will be to maintain good representation across the mortgage sector for the purpose of diversification. Selectivity will be of heightened importance as we focus on opportunistically enhancing yield and overall total return. Additionally, we will focus on mortgage securities with defensive characteristics as we expect interest rates will rise modestly from their historic lows. We must be mindful of the possibility of extension risk supplanting prepayment concerns as rates begin to climb in the second half of 2003. Near term, interest rates will remain fairly stable as the market continues to focus on the uncertainty surrounding the war with Iraq and the impact on the economy. Such a climate may create a favorable environment for mortgages over the next six months.

* Past performance is no guarantee of future results. The line graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Investment return and principal value will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost.

** The LMI and the LUSMI are not adjusted to reflect sales charges, expenses or other fees that the Securities and Exchange Commission requires to be reflected in a mutual fund's performance. These indexes are unmanaged. Actual investments may not be made in an index. The LMI is an index comprised of fixed rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA), Federal Home Loan Mortgage Corp. (FHLMC) and the Federal National Mortgage Association (FNMA). Lipper indexes are an average of the total returns of the 30 largest mutual funds designated by Lipper, Inc. as falling into the respective categories indicated.

*** Duration is a measure of a security's price sensitivity to changes in interest rates. Securities with longer durations are more sensitive to changes in interest rates than securities of shorter durations.

Semi-Annual Report--Commentary

Fund Manager:     Jason D. Weiner, CFA
Investment Experience:   13 years
Education:   B.S. degree, Marquette University
Analysts:   Blane D. Dexheimer, CFA and Andrew M. Reed

Marshall Intermediate Bond Fund

Fund Performance

For the semi-annual period ended February 28, 2003, the Fund provided a total return at net asset value of 4.35%.* In comparison, the Lehman Brothers Government/Credit Intermediate Index (LGCI) returned 4.97% while the Lipper Short/Intermediate Investment Grade Bond Funds Index (LSIBF) returned 4.13%.**

Factors Affecting Performance

Fixed income investors enjoyed solid portfolio returns as interest rates fell to historically low levels and corporate bonds staged an impressive rally that began in early October. Investors sought the relative safety of U.S. Treasuries during a difficult market environment caused by continued geopolitical and economic uncertainties. At the same time, investors discovered value in the battered corporate bond as an alternative to the low yields available for Treasury securities. This robust rally for corporate bonds offset some of the disastrous performance that the market posted through the first three-quarters of 2002.

Economic uncertainty, uninspiring fundamentals, geopolitical threats, and corporate governance issues caused unprecedented volatility that permeated the corporate bond marketplace throughout the year. This volatility caused corporate yields to increase to historically wide levels. We viewed this situation as an opportunity to capitalize on market weakness to add to our corporate bond allocation. We tactically added exposure to attractive industries whose debt was impacted by the carnage in the corporate bond market. In addition, we believed that accommodative monetary and fiscal policy, moderate growth in earnings, continued de-leveraging, improved liquidity, and low supply would provide the impetus for corporate bonds to outperform. Thus, the Fund captured the significant rally for corporate bonds, which lead to good relative returns over the last six months.

Looking Ahead

We expect the economy will gain traction in the second half of 2003 as the uncertainty currently infecting the markets will abate and should support corporate and mortgage bond valuations. We especially believe corporate bonds offer compelling total return potential but our enthusiasm is tempered by today's arduous market conditions. We will look to opportunistically add to our corporate bond allocation, particularly those rated BBB, in anticipation of an Iraqi resolution and a sustainable economic recovery. In the near term, prudence is warranted given the looming geopolitical dangers and a sluggish global economy. This type of environment requires a disciplined, well-diversified portfolio approach focusing on high quality sectors such as mortgage, asset-backed, and agency securities to complement our conservative corporate bond allocation. We are positioning the portfolio for an economic recovery in the next twelve months; a recovery that we anticipate will be gradual.

* Past performance is no guarantee of future results. The line graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Investment return and principal value will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost.

** The LGCI and the LSIBF are not adjusted to reflect sales charges, expenses or other fees that the Securities and Exchange Commission requires to be reflected in a mutual fund's performance. These indexes are unmanaged. Actual investments may not be made in an index. The LGCI is an index comprised of government and corporate bonds rated BBB or higher with maturities between 1-10 years. Lipper indexes are an average of the total return of the 30 largest mutual funds designated by Lipper, Inc. as falling into the respective categories indicated.

*** Duration is a measure of a security's price sensitivity to changes in interest rates. Securities with longer durations are more sensitive to changes in interest rates than securities of shorter durations.

Semi-Annual Report--Commentary

Fund Manager:     Richard M. Rokus, CFA
Investment Experience:   10 years
Education:   B.B.A. degree, University of Wisconsin-Whitewater
Analyst:   Blane D. Dexheimer, CFA

Marshall Short-Term Income Fund

Fund Performance

The Fund returned 2.43% at net asset value for the last six months.* This compares with the Merrill Lynch 1-3 Year U.S. Government/Corporate Index (ML13) return of 2.67% and the Lipper Short-Term Investment Grade Bond Fund Index (LSTIBI) return of 2.53%.**

Factors Affecting Performance

As of the end of February, the Fund had a maturity of approximately 2 years. The Fund outperformed the index due to a combination of security selection and maturity management. Short-term interest rates finished the period lower by as much as 50 basis points. Bonds have rallied steadily since the beginning of the year. Fears over a pending war with Iraq and a heightened sensitivity to the terrorism threat have caused a flight to quality. Added to this mix is the concern over the possibility of disinflation. Disinflation is the phenomenon of widespread declining prices. This causes economic hardship for many sectors of the market from real estate to the corporate debt markets. The Federal Reserve Board lowered rates by 50 basis points to 1.25% in November as an insurance policy against both further deterioration in the economy and prospects for disinflation.

The corporate sector saw beginning of a recovery in November. In retrospect, the watershed event was the announced merger between HSBC and Household International. Bond spreads on Household had deteriorated to junk levels over the first 10 months of the year. After the announced merger, they tightened significantly, causing losses to those participants who had shorted their bonds. With this single event began a widespread tightening in corporate bond spreads. Spreads have returned to what some would call more realistic levels, future performance will have to be driven by fundamental balance sheet improvement.

Looking Ahead

Looking out over the next year we are looking for rates to move slightly higher. For the economy to strengthen, we must see some clarity around the larger issues of war and terrorism. While we believe rates will move higher in response to a stronger economy there still remains the possibility of shocks due to both terrorist attacks and uncertain corporate and consumer spending. As a result we plan at this juncture to keep the interest rate sensitivity close to that of the index and overweight corporates, mortgages, and asset backed securities to add yield.

* Past performance is no guarantee of future results. The line graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Investment return and principal value will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost.

** The ML13 and the LSTIBI are not adjusted to reflect sales charges, expenses or other fees that the Securities and Exchange Commission requires to be reflected in a mutual fund's performance. These indexes are unmanaged. Actual investments may not be made in an index. The ML13 is an index tracking short-term U.S. government and corporate securities with maturities between 1 and 2.99 years. The index is produced by Merrill Lynch Pierce Fenner & Smith. Lipper indexes are an average of the total return of the 30 largest mutual funds designated by Lipper, Inc. as falling into the respective categories indicated.

*** Duration is a measure of a security's price sensitivity to changes in interest rates. Securities with longer durations are more sensitive to changes in interest rates than securities of shorter durations.

Semi-Annual Report--Commentary

Fund Manager:     Richard M. Rokus, CFA
Investment Experience:   10 years
Education:   B.B.A. degree, University of Wisconsin-Whitewater
Analyst:   Blane D. Dexheimer, CFA

Marshall Money Market Fund

Fund Performance

For the six months ended February 28, 2003, the Fund provided a total return of 0.48%.* In comparison, the iMoneyNet, Inc. Money Fund Report Averages™ (MFRA) returned 0.50%, while the Lipper Money Market Funds Index (LMMFI) returned 0.11%.** As of February 28, 2003, the Fund's 7-day net yield was 0.67%.***

Factors Affecting Performance

The most significant factor affecting the level of the Fund's yield was the change in interest rates by the Federal Reserve Board (the "Fed"). As the Fed controls short-term interest rates, the decision to cut rates from 1.75% to 1.25% had a direct effect on our rates. The Fed's action was done to head off any chance of a disinflationary spiral, similar to what has occurred in Japan over the last several years. While high levels of inflation are devestating to the economy, it seems the ramifications from a widespread decline in prices (disinflation) may be equally as dangerous. While most economists do not think the economy will slip back into a recession, they do believe any growth over the next year will be low, in the 1.0-2.5% range.

The Fund outperformed its competitive benchmarks primarily due to the greater use of floating rate notes and the Fund's lower expense ratio. The first element has been a successful part of our investment strategy, which we remain comfortable with in the current rate environment. The second element relates to our ability to increase the amount of assets managed in the Fund, which results in a significantly lower expense ratio than the average money market fund.

Looking Ahead

The current economic picture is clouded by geopolitical concerns. War with Iraq combined with increased sensitivity to terrorism concerns have combined to restrain both consumer and business spending. However, lower rates have allowed Americans to refinance their home mortgage at rates most of us cannot remember. Refinancing activity will put extra money in the pocket of consumers. At this point, a sustained economic expansion can only be envisioned once the larger safety concerns have resolved. Once that occurs, we believe the economy will expand both strongly and steadily. If the economy regains its footing, the Fed will no longer be expected to lower the federal funds target rate, which would stabilize money market rates.

* Past performance is no guarantee of future results. Yields may vary. Yields quoted for money market funds most closely reflect the fund's current earnings.

** Money Fund Report™, a service of iMoney Net, Inc. (formerly IBC Financial Data), publishes annualized yields of hundreds of money market funds on a weekly basis, and through its Money Market Insight publication reports monthly and year-to-date investments results for the same money funds. Lipper indexes are an average of the total return of the 30 largest mutual funds designated by Lipper, Inc. as falling into the respective categories indicated. They do not reflect sales charges.

*** The 7-day net annualized yield is based on the average net income per share for the 7 days ended on the date of calculation and the offering price on that date. The 7-day effective yield is annualized and reflects daily compounding of the 7-day net yield.

An investment in money market funds is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although money market funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in these funds.

 

 

February 28, 2003 (unaudited)

Portfolio of Investments

Equity Income Fund

   

Description

   

Shares

    

Value

Common Stocks -- 97.1%

 

 

 

 

 

 

Consumer Discretionary -- 4.0%

 

Advertising -- 0.3%

 

 

 

 

 

 

 

Interpublic Group Cos., Inc.

 

 

85,000

 

$

820,250

 

Auto Parts & Equipment -- 0.2%

 

Delphi Corp.

 

 

94,200

 

 

728,166

 

Automobile Manufacturers -- 0.8%

 

Ford Motor Co.

 

 

95,554

 

 

795,009

 

General Motors Corp.

 

 

47,100

 

 

1,590,567

 

 

 

 

 

 

 

2,385,576

 

Department Stores -- 0.8%

 

 

 

 

 

 

 

May Department Stores Co.

 

 

36,700

 

 

720,054

 

Sears, Roebuck & Co.

 

 

72,700

 

 

1,583,406

 

 

 

 

 

 

 

2,303,460

 

Household Appliances -- 0.8%

 

Maytag Corp.

 

 

53,000

 

 

1,277,300

 

Stanley Works

 

 

39,900

 

 

1,029,819

 

 

 

 

 

 

 

2,307,119

 

Leisure Products -- 0.4%

 

 

 

 

 

 

 

Brunswick Corp.

 

 

64,000

 

 

1,209,600

 

Photographic Products -- 0.5%

 

Eastman Kodak Co.

 

 

53,500

 

 

1,583,600

 

Publishing -- 0.2%

 

 

 

 

 

 

 

McGraw-Hill Cos., Inc.

 

 

13,500

 

 

759,240

 

Total Consumer Discretionary

 

 

 

 

 

12,097,011

Consumer Staples -- 12.0%

 

 

 

 

 

 

 

Brewers -- 0.2%

 

 

 

 

 

 

 

Anheuser-Busch Cos., Inc.

 

 

14,600

 

 

678,900

 

Food Distributors -- 0.3%

 

 

 

 

 

 

 

SUPERVALU, Inc.

 

 

75,000

 

 

1,044,000

 

Household Products -- 4.4%

 

 

 

 

 

 

 

Kimberly-Clark Corp.

 

 

111,600

 

 

5,114,628

 

Procter & Gamble Co.

 

 

103,000

 

 

8,431,580

 

 

 

 

 

 

 

13,546,208

 

Packaged Foods/Meats -- 1.5%

 

Campbell Soup Co.

 

 

79,400

 

 

1,646,756

 

General Mills, Inc.(1)

 

 

17,700

 

 

758,799

 

Heinz (H.J.) Co.

 

 

66,600

 

 

2,044,620

 

 

 

 

 

 

 

4,450,175

 

Personal Products -- 1.3%

 

 

 

 

 

 

 

Gillette Co.

 

 

132,300

 

 

3,994,137

 

Retail-Foods -- 0.2%

 

 

 

 

 

 

 

Albertson's, Inc.

 

 

30,500

 

 

574,315

 

Soft Drinks -- 2.0%

 

 

 

 

 

 

 

Coca-Cola Co.

 

 

154,000

 

 

6,193,880

 

Description

Shares

Value

Common Stocks (continued)

 

 

 

 

 

 

Consumer Staples (continued)

 

Tobacco -- 2.1%

 

 

 

 

 

 

 

Altria Group, Inc.

 

 

164,500

 

$

6,357,925

 

Total Consumer Staples

 

 

 

 

 

36,839,540

Energy -- 9.3%

 

 

 

 

 

 

 

Oil & Gas Equipment/Services -- 0.6%

 

Schlumberger Ltd.

 

 

44,300

 

 

1,843,323

 

Oil & Gas Integrated -- 8.4%

 

 

 

 

 

 

 

Amerada-Hess Corp.

 

 

16,000

 

 

712,480

 

ChevronTexaco Corp.

 

 

83,934

 

 

5,386,045

 

ConocoPhillips

 

 

55,094

 

 

2,793,266

 

Exxon Mobil Corp.

 

 

455,152

 

 

15,484,271

 

Occidental Petroleum Corp.

 

 

42,600

 

 

1,273,740

 

 

 

 

 

 

 

25,649,802

 

Oil & Gas Refining/Marketing -- 0.3%

 

Ashland, Inc.

 

 

38,000

 

 

1,056,780

 

Total Energy

 

 

 

 

 

28,549,905

Financials -- 27.0%

 

 

 

 

 

 

 

Banks -- 13.7%

 

 

 

 

 

 

 

Amsouth Bancorporation

 

 

29,300

 

 

603,580

 

Bank of America Corp.

 

 

122,600

 

 

8,488,824

 

Bank of New York Co., Inc.

 

 

116,300

 

 

2,649,314

 

Bank One Corp.

 

 

77,400

 

 

2,788,722

 

BB&T Corp.(1)

 

 

16,000

 

 

525,280

 

Comerica, Inc.

 

 

32,300

 

 

1,323,654

 

FleetBoston Financial Corp.

 

 

63,820

 

 

1,567,419

 

Mellon Financial Corp.

 

 

61,100

 

 

1,375,361

 

National City Corp.

 

 

74,900

 

 

2,068,738

 

PNC Financial Services Group, Inc.

 

 

32,500

 

 

1,460,225

 

Regions Financial Corp.

 

 

31,400

 

 

1,016,732

 

SouthTrust Corp.

 

 

21,300

 

 

574,887

 

SunTrust Banks, Inc.

 

 

34,000

 

 

1,912,500

 

Synovus Financial Corp.

 

 

43,300

 

 

833,525

 

U.S. Bancorp

 

 

165,500

 

 

3,462,260

 

Wachovia Corp.

 

 

72,800

 

 

2,582,944

 

Washington Mutual, Inc.

 

 

77,800

 

 

2,686,434

 

Wells Fargo & Co.

 

 

132,700

 

 

6,017,945

 

 

 

 

 

 

 

41,938,344

 

Consumer Finance -- 0.4%

 

 

 

 

 

 

 

Household International, Inc.

 

 

44,300

 

 

1,237,299

 

Diversified Financial Services -- 8.9%

 

Citigroup, Inc.

 

 

317,238

 

 

10,576,715

 

Fannie Mae

 

 

93,000

 

 

5,961,300

 

Freddie Mac

 

 

30,000

 

 

1,639,500

 

J.P. Morgan Chase & Co., Inc.

 

 

145,150

 

 

3,292,002

 

Merrill Lynch & Co., Inc.

 

 

59,600

 

 

2,031,168

 

Morgan Stanley Dean Witter & Co.

 

 

102,800

 

 

3,788,180

 

 

 

 

 

 

 

27,288,865

 

Description

Shares

Value

Common Stocks (continued)

 

 

 

 

 

 

Financials (continued)

 

 

 

 

 

 

 

Insurance-Brokers -- 0.8%

 

 

 

 

 

 

 

Marsh & McLennan Cos., Inc.

 

 

60,800

 

$

2,474,560

 

Insurance-Life/Health -- 1.1%

 

 

 

 

 

 

Jefferson-Pilot Corp.

 

 

33,200

 

 

1,251,640

 

Lincoln National Corp.

 

 

50,600

 

 

1,433,498

 

UNUM Provident Corp.

 

 

50,500

 

 

656,500

 

 

 

 

 

 

 

3,341,638

 

Insurance-Multi-line -- 0.5%

 

 

 

 

 

 

 

Hartford Financial Services Group, Inc.

 

 

43,600

 

 

1,575,268

 

Insurance-Property/Casualty -- 1.0%

 

Ace, Ltd.

 

 

32,400

 

 

897,804

 

Allstate Corp.

 

 

63,000

 

 

1,992,690

 

 

 

 

 

 

 

2,890,494

 

Real Estate Investment Trust -- 0.6%

 

Equity Office Properties Trust

 

 

79,000

 

 

1,937,870

 

Total Financials

 

 

 

 

 

82,684,338

Healthcare -- 15.2%

 

 

 

 

 

 

 

Healthcare Equipment -- 0.4%

 

 

 

 

 

Baxter International, Inc.

 

 

47,000

 

 

1,334,330

 

Pharmaceuticals -- 14.8%

 

 

 

 

 

 

 

Abbott Laboratories

 

 

117,450

 

 

4,183,569

 

Bristol-Myers Squibb Co.

 

 

267,600

 

 

6,235,080

 

Lilly (Eli) & Co.

 

 

89,150

 

 

5,042,324

 

Merck & Co., Inc.

 

 

178,700

 

 

9,426,425

 

Pfizer, Inc.(1)

 

 

383,900

 

 

11,447,898

 

Schering Plough Corp.

 

 

251,700

 

 

4,535,634

 

Wyeth

 

 

127,700

 

 

4,501,425

 

 

 

 

 

 

 

45,372,355

 

Total Healthcare

 

 

 

 

 

46,706,685

Industrials -- 13.6%

 

 

 

 

 

 

 

Aerospace/Defense -- 4.4%

 

 

 

 

 

 

 

Boeing Co.

 

 

91,400

 

 

2,518,984

 

General Dynamics Corp.

 

 

29,900

 

 

1,771,874

 

Goodrich Corp.

 

 

66,300

 

 

1,019,031

 

Honeywell International, Inc.

 

 

113,200

 

 

2,591,148

 

Northrop Grumman Corp.

 

 

22,000

 

 

1,907,400

 

Raytheon Co.(1)

 

 

54,000

 

 

1,462,320

 

United Technologies Corp.

 

 

40,600

 

 

2,378,348

 

 

 

 

 

 

 

13,649,105

 

Air Freight & Logistics -- 0.2%

 

Ryder Systems, Inc.

 

 

28,400

 

 

644,396

 

Commercial Printing -- 0.3%

 

 

 

 

 

 

 

Donnelley (R.R.) & Sons Co.

 

 

55,500

 

 

1,013,430

 

Electrical Components -- 0.9%

 

 

 

 

Emerson Electric Co.

 

 

57,100

 

 

2,687,697

 

Description

Shares

Value

Common Stocks (continued)

 

 

 

 

 

 

Industrials (continued)

 

 

 

 

 

 

 

Industrial Conglomerates -- 6.0%

 

3M Co.

 

 

24,600

 

$

3,084,102

 

General Electric Co.

 

 

640,000

 

 

15,392,000

 

 

 

 

 

 

 

18,476,102

 

Machinery Construction/Farm -- 0.3%

 

Caterpillar, Inc.

 

 

19,200

 

 

902,400

 

Machinery Industrial -- 0.7%

 

 

 

 

 

 

 

Dover Corp.(1)

 

 

51,500

 

 

1,314,280

 

Eaton Corp.

 

 

10,700

 

 

759,165

 

 

 

 

 

 

 

2,073,445

 

Railroads -- 0.3%

 

 

 

 

 

 

 

Burlington Northern Santa Fe

 

 

40,300

 

 

1,007,500

 

Services Diversified/Commercial -- 0.2%

 

Deluxe Corp.

 

 

12,000

 

 

483,600

 

Services-Office/Supplies -- 0.3%

 

Pitney Bowes, Inc.

 

 

25,500

 

 

791,520

 

Total Industrials

 

 

 

 

 

41,729,195

Information Technology -- 1.4%

 

Computer Hardware -- 1.1%

 

 

 

 

 

 

 

Hewlett-Packard Co.

 

 

220,400

 

 

3,493,340

 

IT Consulting & Services -- 0.3%

 

Electronic Data Systems Corp.

 

 

50,000

 

 

778,500

 

Total Information Technology

 

 

 

 

 

4,271,840

Materials -- 4.0%

 

 

 

 

 

 

 

Aluminum -- 0.5%

 

 

 

 

 

 

 

Alcoa, Inc.

 

 

78,100

 

 

1,601,050

 

Chemicals Diversified -- 1.8%

 

 

 

 

 

Dow Chemical Co.

 

 

82,608

 

 

2,255,198

 

Du Pont (E.I.) de Nemours & Co.

 

 

90,700

 

 

3,325,969

 

 

 

 

 

 

 

5,581,167

 

Construction Materials -- 0.3%

 

Vulcan Materials Co.

 

 

26,800

 

 

849,560

 

Industrial Gases -- 0.5%

 

 

 

 

 

 

 

Air Products & Chemicals, Inc.

 

 

40,400

 

 

1,565,904

 

Paper Products -- 0.9%

 

 

 

 

 

 

 

Georgia-Pacific Corp.

 

 

40,900

 

 

613,909

 

International Paper Co.

 

 

28,900

 

 

1,012,367

 

MeadWestvaco Corp.

 

 

44,000

 

 

1,020,360

 

 

 

 

 

 

 

2,646,636

 

Total Materials

 

 

 

 

 

12,244,317

Description

Shares or
Principal
Amount

Value

Common Stocks (continued)

 

 

 

 

 

 

Telecommunications Services -- 6.4%

 

Integrated Telecommunication Services -- 6.4%

 

AT&T Corp.

 

 

30,000

 

$

556,200

 

Alltel Corp.

 

 

21,000

 

 

911,820

 

BellSouth Corp.

 

 

149,300

 

 

3,235,331

 

SBC Communications, Inc.

 

 

314,332

 

 

6,538,106

 

Verizon Communications, Inc.(1)

 

 

237,590

 

 

8,215,862

 

Total Telecommunications Services

 

 

 

 

 

19,457,319

Utilities -- 4.2%

 

 

 

 

 

 

 

Electric Utilities -- 3.6%

 

 

 

 

 

 

 

American Electric Power Co., Inc.

 

 

37,200

 

 

810,216

 

Consolidated Edison Co.

 

 

15,500

 

 

604,500

 

Dominion Resources, Inc.

 

 

22,500

 

 

1,212,750

 

Exelon Corp.

 

 

28,300

 

 

1,390,945

 

FPL Group, Inc.

 

 

28,400

 

 

1,590,684

 

FirstEnergy Corp.

 

 

61,100

 

 

1,802,450

 

Pinnacle West Capital Corp.

 

 

39,900

 

 

1,218,546

 

Progress Energy, Inc.

 

 

41,500

 

 

1,614,350

 

TECO Energy, Inc.

 

 

70,000

 

 

775,600

 

 

 

 

 

 

 

11,020,041

 

Multi-Utilities -- 0.6%

 

 

 

 

 

 

 

Duke Energy Corp.

 

 

132,300

 

 

1,787,373

 

Total Utilities

 

 

 

 

 

12,807,414

Total Common Stocks (identified cost $310,902,878)

 

 

 

 

297,387,564

U.S. Treasury Bill -- 0.2%(2)

 

 

 

 

 

4/10/2003 (identified cost $399,493)

 

$

400,000

 

399,513

Total Investment in Securities (identified cost $311,302,371)

 

 

 

 

297,787,077

Repurchase Agreement -- 1.5%

 

Interest in $184,609,342 joint repurchase agreement with Lehman Brothers, Inc., 1.320% dated 2/28/2003, to be repurchased at $4,635,795 on 3/3/2003, collateralized by a U.S. Government Agency Obligation maturing 5/14/2004 (at amortized cost)

 

4,635,285

 

4,635,285

Total Investments (identified cost $315,937,656) -- 98.8%

 

 

 

 

302,422,362

Other Net Assets and Liabilities -- 1.2%

 

 

 

 

3,793,959

Total Net Assets -- 100.0%

 

 

 

 

$

306,216,321

Large-Cap Growth & Income Fund

   

Description

   

Shares

   

Value

Common Stocks -- 98.5%

 

 

 

 

 

 

Consumer Discretionary -- 10.9%

 

Department Stores -- 1.3%

 

 

 

 

 

 

 

Kohl's Corp.(3)

 

 

58,500

 

$

2,860,650

 

Footwear -- 1.0%

 

 

 

 

 

 

 

Nike, Inc., Class B

 

 

50,000

 

 

2,318,500

 

General Merchandise -- 2.9%

 

 

 

 

 

 

 

Wal-Mart Stores, Inc.

 

 

135,930

 

 

6,532,796

 

Movies & Entertainment -- 2.6%

 

AOL Time Warner, Inc.(3)

 

 

130,250

 

 

1,474,430

 

Viacom, Inc., Class B(1)(3)

 

 

45,500

 

 

1,689,415

 

Walt Disney Co.

 

 

152,816

 

 

2,607,041

 

 

 

 

 

 

 

5,770,886

 

Retail-Computer & Electronics -- 0.9%

 

RadioShack Corp.

 

 

106,000

 

 

2,081,840

 

Retail-Home Improvement -- 1.7%

 

Lowe's Cos., Inc.

 

 

99,500

 

 

3,910,350

 

Specialty Stores -- 0.5%

 

 

 

 

 

 

 

Office Depot, Inc.(3)

 

 

90,000

 

 

1,056,600

 

Total Consumer Discretionary

 

 

 

 

 

24,531,622

Consumer Staples -- 7.9%

 

 

 

 

 

 

 

Brewers -- 1.0%

 

 

 

 

 

 

 

Anheuser-Busch Cos., Inc.

 

 

49,000

 

 

2,278,500

 

Household Products -- 1.3%

 

 

 

 

 

 

 

Procter & Gamble Co.

 

 

36,830

 

 

3,014,904

 

Personal Products -- 2.7%

 

 

 

 

 

 

 

Estee Lauder Cos., Inc., Class A

 

 

107,820

 

 

3,024,351

 

Gillette Co.

 

 

100,000

 

 

3,019,000

 

 

 

 

 

 

 

6,043,351

 

Soft Drinks -- 1.8%

 

 

 

 

 

 

 

Coca-Cola Co.

 

 

100,114

 

 

4,026,585

 

Tobacco -- 1.1%

 

 

 

 

 

 

 

Altria Group, Inc.

 

 

64,500

 

 

2,492,925

 

Total Consumer Staples

 

 

 

 

 

17,856,265

Energy -- 8.1%

 

 

 

 

 

 

 

Oil & Gas-Drilling -- 0.5%

 

 

 

 

 

 

 

Noble Corp.(1)(3)

 

 

28,350

 

 

1,029,105

 

Oil & Gas-Equipment & Services -- 0.4%

 

Baker Hughes, Inc.

 

 

31,870

 

 

988,607

 

Oil & Gas Exploration & Production -- 2.3%

 

Anadarko Petroleum Corp.(1)

 

 

51,500

 

 

2,373,120

 

Burlington Resources, Inc.

 

 

20,000

 

 

927,000
               

 

Description

Shares

Value

Common Stocks (continued)

 

 

 

 

 

 

Energy (continued)

 

Oil & Gas Exploration &
Production (continued)

 

EOG Resources, Inc.(1)

 

 

45,100

 

$

1,862,630

 

 

 

 

 

 

 

5,162,750

 

Oil & Gas-Integrated -- 4.9%

 

 

 

 

 

 

 

BP PLC, ADR

 

 

53,000

 

 

2,019,830

 

ConocoPhillips

 

 

44,660

 

 

2,264,262

 

Exxon Mobil Corp.

 

 

200,342

 

 

6,815,635

 

 

 

 

 

 

 

11,099,727

 

Total Energy

 

 

 

 

 

18,280,189

Financials -- 19.4%

 

 

 

 

 

 

 

Banks -- 6.2%

 

 

 

 

 

 

 

Bank of America Corp.

 

 

63,600

 

 

4,403,664

 

Bank of New York Co., Inc.

 

 

123,740

 

 

2,818,797

 

Comerica, Inc.

 

 

55,600

 

 

2,278,488

 

Wells Fargo & Co.

 

 

98,780

 

 

4,479,673

 

 

 

 

 

 

 

13,980,622

 

Consumer Finance -- 0.5%

 

 

 

 

 

 

 

Capital One Financial Corp.(1)

 

 

34,350

 

 

1,063,820

 

Diversified Financial Services -- 9.5%

 

American Express Co.

 

 

157,660

 

 

5,294,223

 

Citigroup, Inc.

 

 

162,023

 

 

5,401,847

 

Federal Home Loan Mortgage Corp.

 

 

55,490

 

 

3,032,529

 

Goldman Sachs Group, Inc.

 

 

79,500

 

 

5,521,275

 

Morgan Stanley

 

 

56,000

 

 

2,063,600

 

 

 

 

 

 

 

21,313,474

Insurance-Multi-Line -- 1.6%

 

 

 

 

 

 

 

American International Group, Inc.

 

 

74,424

 

 

3,668,359

 

Insurance-Property & Casualty -- 1.6%

 

MGIC Investment Corp.

 

 

92,620

 

 

3,654,785

 

Total Financials

 

 

 

 

 

43,681,060

Healthcare -- 15.1%

 

 

 

 

 

 

 

Healthcare-Equipment -- 1.2%

 

Guidant Corp.(1)

 

 

77,600

 

 

2,774,976

 

Healthcare-Facility -- 3.2%

 

 

 

 

 

 

 

HCA-The Healthcare Corp.

 

 

173,500

 

 

7,155,140

 

Pharmaceuticals -- 10.7%

 

 

 

 

 

 

 

Abbott Laboratories

 

 

48,900

 

 

1,741,818

 

Johnson & Johnson

 

 

70,370

 

 

3,690,907

 

Lilly (Eli) & Co.

 

 

35,000

 

 

1,979,600

 

Merck & Co., Inc.

 

 

54,470

 

 

2,873,292

 

Pfizer, Inc.(1)

 

 

199,310

 

 

5,943,424

 

Pharmacia Corp.

 

 

153,570

 

 

6,345,512

 

Wyeth

 

 

42,140

 

 

1,485,435

 

 

 

 

 

 

 

24,059,988

 

Total Healthcare

 

 

 

 

 

33,990,104

 

Description

Shares

Value

Common Stocks (continued)

 

 

 

 

 

 

Industrials -- 13.2%

 

 

 

 

 

 

 

Aerospace & Defense -- 3.2%

 

 

 

 

 

 

 

Boeing Co.

 

 

106,000

 

$

2,921,360

 

Northrop Grumman Corp.

 

 

50,000

 

 

4,335,000

 

 

 

 

 

 

 

7,256,360

 

Machinery Construction & Farm -- 0.6%

 

Caterpillar, Inc.

 

 

30,000

 

 

1,410,000

 

Industrial Conglomerates -- 7.0%

 

3M Co.(1)(3)

 

 

49,500

 

 

6,205,815

 

General Electric Co.

 

 

400,010

 

 

9,620,240

 

 

 

 

 

 

 

15,826,055

 

Machinery Industrial -- 2.4%

 

 

 

 

 

 

 

Parker-Hannifin Corp.(1)

 

 

132,500

 

 

5,341,075

 

Total Industrials

 

 

 

 

 

29,833,490

Information Technology -- 13.2%

 

Computer Hardware -- 2.4%

 

 

 

 

 

 

 

International Business Machines Corp.

 

 

69,940

 

 

5,451,823

 

Exchange Traded Funds -- 1.9%

 

Technology Select Sector SPDR Fund(1)

 

 

300,000

 

 

4,356,000

 

Networking Equipment -- 1.2%

 

Cisco Systems, Inc.(3)

 

 

196,600

 

 

2,748,468

 

Semiconductors -- 2.0%

 

 

 

 

 

 

 

Intel Corp.

 

 

253,500

 

 

4,372,875

 

Semiconductor Equipment -- 0.4%

 

Applied Materials, Inc.(3)

 

 

60,000

 

 

778,800

 

Systems Software -- 5.3%

 

 

 

 

 

 

 

BMC Software, Inc.(3)

 

 

171,650

 

 

3,330,010

 

Microsoft Corp.(3)

 

 

365,940

 

 

8,672,778

 

 

 

 

 

 

 

12,002,788

 

Total Information Technology

 

 

 

 

 

29,710,754

Materials -- 5.2%

 

 

 

 

 

 

 

Aluminum -- 1.5%

 

 

 

 

 

 

 

Alcoa, Inc.

 

 

159,100

 

 

3,261,550

 

Industrial Gases -- 1.4%

 

 

 

 

 

 

 

Praxair, Inc.(1)

 

 

60,000

 

 

3,171,000

 

Forest Products -- 2.3%

 

 

 

 

 

 

 

Weyerhaeuser Co.(1)

 

 

106,000

 

 

5,284,100

 

Total Materials

 

 

 

 

 

11,716,650

 

Description

Shares or
Princpal
Amount

Value

Common Stocks (continued)

 

 

 

 

 

 

Telecommunication Services -- 3.6%

 

Integrated Telecommunication Services -- 2.6%

 

BellSouth Corp.

 

 

53,000

 

$

1,148,510

 

SBC Communications, Inc.

 

 

80,000

 

 

1,664,000

 

Verizon Communications, Inc.

 

 

84,500

 

 

2,922,010

 

 

 

 

 

 

 

5,734,520

 

Wireless Telecom Services -- 1.0%

 

AT&T Wireless Services, Inc.(3)

 

 

370,000

 

 

2,186,700

 

Total Telecommunication Services

 

 

 

 

 

7,921,220

Utilities -- 1.9%

 

 

 

 

 

 

 

Exchange Traded Funds -- 1.9%

 

Amex Utilities Select Index

 

 

240,000

 

 

4,260,000

Total Common Stocks (identified cost $202,205,925)

 

 

 

 

221,781,354

Repurchase Agreement -- 1.4%

 

Interest in $184,609,342 joint repurchase agreement with Lehman Brothers, Inc., 1.320%, dated 2/28/2003, to be repurchased at $3,208,141 on 3/3/2003, collateralized by a U.S. Government Agency Obligation maturing 12/15/2005 (at amortized cost)

 

$

3,207,788

 

3,207,788

Total Investments (identified cost $205,413,713) -- 99.9%

 

 

 

 

224,989,142

Other Net Assets and Liabilities -- 0.1%

 

 

 

 

301,544

Total Net Assets -- 100.0%

 

 

 

 

$

225,290,686

Mid-Cap Value Fund

   

Description

   

Shares

   

Value

Common Stocks -- 97.3%

 

 

 

 

 

 

Consumer Discretionary -- 6.7%

 

Auto Parts & Equipment -- 0.9%

 

Johnson Controls, Inc.

 

 

25,000

 

$

1,949,000

 

HomeBuilding -- 1.3%

 

 

 

 

 

 

 

Centex Corp.(1)

 

 

50,000

 

 

2,764,000

 

Housewares & Specialties -- 0.7%

 

Newell Rubbermaid, Inc.

 

 

50,000

 

 

1,410,000

 

Description

Shares

Value

Common Stocks (continued)

 

 

 

 

 

 

Consumer Discretionary (continued)

 

 

 

 

Leisure Products -- 3.8%

 

 

 

 

 

 

 

Brunswick Corp.

 

 

225,000

 

$

4,252,500

 

Mattel, Inc.

 

 

166,100

 

 

3,541,252

 

 

 

 

 

 

 

7,793,752

 

Total Consumer Discretionary

 

 

 

 

 

13,916,752

Consumer Staples -- 6.3%

 

 

 

 

 

 

 

Food Distributors -- 1.0%

 

 

 

 

 

 

 

SUPERVALU, Inc.

 

 

153,500

 

 

2,136,720

 

Packaged Foods & Meats -- 1.1%

 

Smithfield Foods, Inc.(3)

 

 

120,300

 

 

2,229,159

 

Retail-Drugs -- 2.4%

 

 

 

 

 

 

 

CVS Corp.

 

 

200,000

 

 

4,980,000

 

Retail-Food -- 1.8%

 

 

 

 

 

 

 

Kroger Co.(3)

 

 

280,000

 

 

3,701,600

 

Total Consumer Staples

 

 

 

 

 

13,047,479

Energy -- 7.5%

 

 

 

 

 

 

 

Oil & Gas Drilling -- 1.9%

 

 

 

 

 

 

 

Noble Corp.(3)

 

 

110,000

 

 

3,993,000

 

Oil Gas-Equipment/ Services -- 1.3%

 

Cooper Cameron Corp.(3)

 

 

50,000

 

 

2,600,000

 

Oil & Gas Exploration & Products -- 4.3%

 

Burlington Resources, Inc.

 

 

100,000

 

 

4,635,000

 

Noble Energy, Inc.

 

 

120,000

 

 

4,236,000

 

 

 

 

 

 

 

8,871,000

 

Total Energy

 

 

 

 

 

15,464,000

Financials -- 12.8%

 

 

 

 

 

 

 

Banks -- 1.2%

 

 

 

 

 

 

 

Associated Banc Corp.(1)

 

 

74,650

 

 

2,582,144

 

Consumer Finance -- 2.5%

 

 

 

 

 

 

 

Countrywide Financial Corp.

 

 

95,000

 

 

5,072,050

 

Insurance-Life & Health -- 1.3%

 

Jefferson-Pilot Corp.

 

 

70,000

 

 

2,639,000

 

Insurance-Property & Casualty -- 5.9%

 

ACE Ltd.

 

 

107,000

 

 

2,964,970

 

MGIC Investment Corp.(1)

 

 

115,000

 

 

4,537,900

 

SAFECO Corp.

 

 

145,000

 

 

4,767,600

 

 

 

 

 

 

 

12,270,470

 

Reinsurance -- 1.9%

 

 

 

 

 

 

 

PartnerRe Ltd.

 

 

78,400

 

 

3,908,240

 

Total Financials

 

 

 

 

 

26,471,904

Healthcare -- 8.6%

 

 

 

 

 

 

 

Biotechnology -- 1.8%

 

 

 

 

 

 

 

Invitrogen Corp.(1)(3)

 

 

120,000

 

 

3,724,800

 

Description

Shares

Value

Common Stocks (continued)

 

 

 

 

 

 

Healthcare (continued)

 

 

 

 

 

 

 

Healthcare-Distribution Services -- 0.6%

 

Renal Care Group, Inc.(3)

 

 

45,000

 

$

1,317,150

 

Healthcare-Equipment -- 2.2%

 

 

 

 

 

 

 

Guidant Corp.(3)

 

 

130,000

 

 

4,648,800

 

Healthcare-Facility -- 1.7%

 

 

 

 

 

 

 

Manor Care, Inc.(3)

 

 

185,200

 

 

3,394,716

 

Healthcare-Supplies -- 2.3%

 

 

 

 

 

 

 

Bausch & Lomb, Inc.

 

 

153,000

 

 

4,712,400

 

Total Healthcare

 

 

 

 

 

17,797,866

Industrials -- 24.3%

 

 

 

 

 

 

 

Aerospace & Defense -- 1.5%

 

 

 

 

 

 

 

Northrop Grumman Corp.

 

 

35,000

 

 

3,034,500

 

Commercial Printing -- 1.4%

 

 

 

 

 

 

 

Donnelley (R.R.) & Sons Co.

 

 

158,600

 

 

2,896,036

 

Construction & Engineering -- 2.0%

 

Fluor Corp.(1)

 

 

145,000

 

 

4,093,350

 

Electrical Components -- 3.8%

 

 

 

 

 

 

Hubbell, Inc., Class B

 

 

143,700

 

 

4,420,212

 

Rockwell Automation, Inc.(1)

 

 

150,000

 

 

3,451,500

 

 

 

 

 

 

 

7,871,712

 

Machinery Industrial -- 2.0%

 

 

 

 

 

 

 

SPX Corp.(3)

 

 

114,000

 

 

4,147,320

 

Rail Roads -- 2.0%

 

 

 

 

 

 

 

CSX Corp.

 

 

153,000

 

 

4,109,580

 

Services-Data Processing -- 3.1%

 

Convergys Corp.(3)

 

 

305,600

 

 

3,758,880

 

Global Payments, Inc.(1)

 

 

97,200

 

 

2,715,768

 

 

 

 

 

 

 

6,474,648

 

Services-Diversified Commercials -- 3.2%

 

Viad Corp.

 

 

187,000

 

 

3,908,300

 

Watson Wyatt & Co. Holdings(3)

 

 

138,500

 

 

2,657,815

 

 

 

 

 

 

 

6,566,115

 

Services-Employment -- 1.6%

 

 

 

 

 

 

 

Manpower, Inc.(1)

 

 

113,100

 

 

3,434,847

 

Services-Environmental -- 2.0%

 

 

 

 

Republic Services, Inc.(3)

 

 

220,000

 

 

4,195,400

 

Trucking -- 1.7%

 

 

 

 

 

 

 

Swift Transportation Co.(3)

 

 

225,000

 

 

3,595,500

 

Total Industrials

 

 

 

 

 

50,419,008

 

Description

Shares

Value

Common Stocks (continued)

 

 

 

 

 

 

Information Technology -- 12.3%

 

Computer Storage & Peripheral -- 1.5%

 

Electronics for Imaging, Inc.(3)

 

 

190,000

 

$

3,152,100

 

IT Consulting & Services -- 4.8%

 

American Management System, Inc.(3)

 

 

324,400

 

 

3,438,640

 

Computer Sciences Corp.(3)

 

 

110,000

 

 

3,438,600

 

Keane, Inc.(1)(3)

 

 

385,000

 

 

3,083,850

 

 

 

 

 

 

 

9,961,090

 

Office Electronics -- 2.1%

 

 

 

 

 

 

 

IKON Office Solutions, Inc.

 

 

610,000

 

 

4,276,100

 

Semiconductors Equipment -- 1.1%

 

Teradyne, Inc.(1)(3)

 

 

205,000

 

 

2,375,950

 

Systems Software -- 1.9%

 

 

 

 

 

 

 

BMC Software, Inc.(3)

 

 

200,000

 

 

3,880,000

 

Telecommunications Equipment -- 0.9%

 

CommScope, Inc.(3)

 

 

225,000

 

 

1,764,000

 

Total Information Technology

 

 

 

 

 

25,409,240

Materials -- 10.3%

 

 

 

 

 

 

 

Construction Materials -- 1.6%

 

 

 

 

 

 

 

Martin Marietta Materials

 

 

117,100

 

 

3,229,618

 

Chemicals & Specialty -- 1.4%

 

 

 

 

 

 

H.B. Fuller Co.

 

 

130,400

 

 

2,875,320

 

Diversified Metal & Mining -- 2.0%

 

Arch Coal, Inc.(1)

 

 

207,800

 

 

4,135,220

 

Steel -- 2.3%

 

 

 

 

 

 

 

Nucor Corp.(1)

 

 

115,000

 

 

4,784,000

 

Paper Products -- 1.8%

 

 

 

 

 

 

 

Bowater, Inc.

 

 

100,000

 

 

3,795,000

 

Paper Packaging -- 1.2%

 

 

 

 

 

 

 

Packaging Corp. of America(3)

 

 

145,200

 

 

2,504,700

 

Total Materials

 

 

 

 

 

21,323,858

Telecommunication Services -- 3.1%

 

Integrated Telecommunication Services -- 3.1%

 

ALLTEL Corp.

 

 

58,000

 

 

2,518,360

 

Citizens Communications Co., Class B(1)(3)

 

 

400,000

 

 

3,924,000

 

Total Telecommunication Services

 

 

 

 

 

6,442,360

 

Description

Shares or
Principal
Amount

Value

Common Stocks (continued)

 

 

 

 

 

 

Utilities -- 5.4%

 

 

 

 

 

 

 

Electric Utilities -- 5.4%

 

 

 

 

 

 

 

ALLETE Inc.

 

 

210,000

 

$

4,069,800

 

Cinergy Corp.(1)

 

 

80,000

 

 

2,578,400

 

TECO Energy, Inc.(1)

 

 

185,000

 

 

2,049,800

 

Xcel Energy, Inc.

 

 

230,000

 

 

2,550,700

 

Total Utilities

 

 

 

 

 

11,248,700

Total Common Stocks (identified cost $208,189,018)

 

 

 

 

201,541,167

Repurchase Agreement -- 2.6%

 

 

 

 

 

Interest in $184,609,342 joint repurchase agreement with Lehman Brothers, Inc., 1.320% dated 2/28/2003, to be repurchased at $5,487,903 on 3/3/2003, collateralized by a U.S. Government Agency Obligation maturing 5/14/2004 (at amortized cost)

 

$

5,487,299

 

5,487,299

Total Investments (identified cost $213,676,317) -- 99.9%

 

 

 

 

207,028,466

Other Net Assets and Liabilities -- 0.1%

 

 

 

 

216,318

Total Net Assets -- 100.0%

 

 

 

 

$

207,244,784

Mid-Cap Growth Fund

   

Description

   

Shares

   

Value

Common Stocks -- 89.1%

 

 

 

 

 

 

Consumer Discretionary -- 25.1%

 

Advertising -- 2.0%

 

 

 

 

 

 

 

Lamar Advertising Co.(3)

 

 

120,000

 

$

3,764,400

 

Broadcasting & Cable -- 8.8%

 

 

 

 

 

 

 

Cox Radio, Inc., Class A(3)

 

 

183,500

 

 

3,926,900

 

Liberty Media Corp., Class A(3)

 

 

364,000

 

 

3,345,160

 

Mediacom Communications Corp.(1)(3)

 

 

475,000

 

 

3,985,250

 

Radio One, Inc., Class D(1)(3)

 

 

385,000

 

 

5,289,900

 

 

 

 

 

 

 

16,547,210

 

Leisure Facilities -- 1.8%

 

 

 

 

 

 

 

Six Flags, Inc.(3)

 

 

635,000

 

 

3,429,000

 

Leisure Products -- 3.2%

 

 

 

 

 

 

 

Brunswick Corp.

 

 

320,000

 

 

6,048,000

 

Restaurants -- 0.1%

 

 

 

 

 

 

 

Landry's Restaurants, Inc.

 

 

8,300

 

 

136,120

 

Retail-Apparel -- 3.1%

 

 

 

 

 

 

 

Stage Stores, Inc.(1)(3)

 

 

303,700

 

 

5,703,486

 

Description

Shares

Value

Common Stocks (continued)

 

 

 

 

 

 

Consumer Discretionary (continued)

 

Retail-Internet -- 2.1%

 

 

 

 

 

 

 

USA Interactive(1)(3)

 

 

160,000

 

$

3,924,800

 

Specialty Stores -- 4.0%

 

 

 

 

 

 

 

Advance Auto Parts, Inc.(3)

 

 

115,000

 

 

4,487,300

 

Staples, Inc.(3)

 

 

170,000

 

 

2,942,700

 

 

 

 

 

 

 

7,430,000

 

Total Consumer Discretionary

 

 

 

 

 

46,983,016

Consumer Staples -- 1.6%

 

 

 

 

 

 

 

Food Distributors -- 1.0%

 

 

 

 

 

 

 

Performance Food Group Co.(1)(3)

 

 

60,000

 

 

1,889,400

 

Soft Drink -- 0.6%

 

 

 

 

 

 

 

Cott Corp.(1)(3)

 

 

60,000

 

 

1,017,000

 

Total Consumer Staples

 

 

 

 

 

2,906,400

Energy -- 9.4%

 

 

 

 

 

 

 

Oil & Gas Drilling -- 5.4%

 

 

 

 

 

 

 

Nabors Industries Ltd.(1)(3)

 

 

100,000

 

 

3,965,000

 

Noble Corp.(1)(3)

 

 

100,000

 

 

3,630,000

 

Pride International, Inc.(1)(3)

 

 

170,000

 

 

2,465,000

 

 

 

 

 

 

 

10,060,000

 

Oil & Gas Equipment & Services -- 0.9%

 

 

 

 

 

 

 

BJ Services Co.(1)(3)

 

 

50,000

 

 

1,718,500

 

Oil & Gas Exploration & Production -- 3.1%

 

 

 

 

 

 

 

Noble Energy, Inc.

 

 

100,000

 

 

3,530,000

 

Ocean Energy, Inc.

 

 

110,000

 

 

2,207,700

 

 

 

 

 

 

 

5,737,700

 

Total Energy

 

 

 

 

 

17,516,200

Financials -- 8.1%

 

 

 

 

 

 

 

Reinsurance -- 3.6%

 

 

 

 

 

 

 

PartnerRe Ltd.(1)

 

 

135,000

 

 

6,729,750

 

Insurance-Life & Health -- 1.4%

 

 

 

 

 

 

 

Lincoln National Corp.

 

 

95,000

 

 

2,691,350

 

Insurance-Property & Casualty -- 3.1%

 

 

 

 

 

 

 

MGIC Investment Corp.

 

 

80,000

 

 

3,156,800

 

Old Republic International Corp.

 

 

95,000

 

 

2,593,500

 

 

 

 

 

 

 

5,750,300

 

Total Financials

 

 

 

 

 

15,171,400

Healthcare -- 23.4%

 

 

 

 

 

 

 

Biotechnology -- 1.4%

 

 

 

 

 

 

 

Gilead Sciences, Inc.(1)(3)

 

 

75,000

 

 

2,550,000

 

Description

Shares

Value

Common Stocks (continued)

 

 

 

 

 

 

Healthcare (continued)

 

Healthcare-Distribution Services -- 10.8%

 

AdvancePCS(1)(3)

 

 

115,000

 

$

3,214,250

 

AmerisourceBergen Corp.(1)(3)

 

 

60,000

 

 

3,300,000

 

Covance, Inc.(3)

 

 

80,000

 

 

1,884,000

 

Omnicare, Inc.

 

 

100,000

 

 

2,528,000

 

Pediatrix Medical Group, Inc.(1)(3)

 

 

45,000

 

 

1,271,250

 

Pharmaceutical Product Development, Inc.(3)

 

 

80,000

 

 

2,509,600

 

Priority Healthcare Corp., Class B(3)

 

 

130,000

 

 

2,940,600

 

Quest Diagnostic, Inc.(1)(3)

 

 

50,000

 

 

2,638,000

 

 

 

 

 

 

 

20,285,700

 

Healthcare Equipment -- 1.5%

 

 

 

 

 

 

 

St. Jude Medical, Inc.(1)(3)

 

 

60,000

 

 

2,740,800

 

Healthcare-Facility -- 1.4%

 

 

 

 

 

 

 

United Surgical Partners International, Inc.(1)(3)

 

 

75,000

 

 

1,377,000

 

Universal Health Services, Inc., Class B(3)

 

 

35,000

 

 

1,359,400

 

 

 

 

 

 

 

2,736,400

 

Healthcare-Managed Care -- 1.6%

 

Caremark Rx, Inc.(3)

 

 

175,000

 

 

3,055,500

 

Pharmaceuticals -- 6.7%

 

 

 

 

 

 

 

Allergan, Inc.(1)

 

 

45,000

 

 

2,889,000

 

Barr Laboratories, Inc.(3)

 

 

35,000

 

 

2,726,850

 

Biovail Corp.(1)(3)

 

 

105,000

 

 

3,906,000

 

NPS Pharmaceuticals, Inc.(1)(3)

 

 

50,000

 

 

868,000

 

Teva Pharmaceutical Industries Ltd., ADR(1)

 

 

55,000

 

 

2,077,900

 

 

 

 

 

 

 

12,467,750

 

Total Healthcare

 

 

 

 

 

43,836,150

Industrials -- 5.9%

 

 

 

 

 

 

 

Airfreight & Logistics -- 0.8%

 

 

 

 

 

 

 

Expeditors International Washington, Inc.(1)

 

 

45,000

 

 

1,538,550

 

Electrical Components -- 0.6%

 

 

 

 

 

 

 

Rockwell Automation, Inc.(1)

 

 

50,000

 

 

1,150,500

 

Machinery Industrial -- 2.1%

 

 

 

 

 

 

 

ITT Industries, Inc.

 

 

30,000

 

 

1,686,900

 

SPX Corp.

 

 

60,000

 

 

2,182,800

 

 

 

 

 

 

 

3,869,700

 

Description

Shares or
Principal
Amount

Value

Common Stocks (continued)

 

 

 

 

 

 

Industrials (continued)

 

 

 

 

 

 

 

Services-Data Processing -- 1.3%

 

Bisys Group, Inc.(3)

 

 

100,000

 

$

1,564,000

 

Global Payments, Inc.(1)

 

 

30,000

 

 

838,200

 

 

 

 

 

 

 

2,402,200

 

Services-Diversified & Commercial -- 1.1%

 

Iron Mountain, Inc.(1)(3)

 

 

60,000

 

 

2,112,000

 

Total Industrials

 

 

 

 

 

11,072,950

Information Technology -- 15.6%

 

Electronic Equipment & Instrument -- 1.2%

 

Molex, Inc., Class A(1)

 

 

125,000

 

 

2,375,000

 

Internet Software & Services -- 2.4%

 

PEC Solutions, Inc.(3)

 

 

260,000

 

 

4,456,400

 

IT Consulting & Services -- 4.1%

 

Acxiom Corp.(1)(3)

 

 

135,000

 

 

2,060,100

 

Affiliated Computer Services, Inc., Class A(1)(3)

 

 

60,000

 

 

2,689,800

 

BearingPoint, Inc.(3)

 

 

150,000

 

 

984,000

 

Titan Corp.(3)

 

 

250,000

 

 

1,987,500

 

 

 

 

 

 

 

7,721,400

 

Semiconductors -- 4.0%

 

 

 

 

 

 

 

Intersil Corp., Class A(3)

 

 

355,000

 

 

5,555,750

 

Skyworks Solutions, Inc.(1)(3)

 

 

275,000

 

 

1,919,500

 

 

 

 

 

 

 

7,475,250

 

Semiconductors Equipment -- 3.9%

 

ATMI, Inc.(1)(3)

 

 

115,000

 

 

2,162,000

 

Entegris, Inc.(1)(3)

 

 

290,000

 

 

3,291,500

 

MKS Instruments, Inc.(1)(3)

 

 

135,000

 

 

1,788,750

 

 

 

 

 

 

 

7,242,250

 

Total Information Technology

 

 

 

 

 

29,270,300

Total Common Stocks (identified cost $186,964,755)

 

 

 

 

166,756,416

Repurchase Agreement -- 10.7%

 

Interest in $184,609,342 joint repurchase agreement with Lehman Brothers, Inc., 1.320%, dated 2/28/2003, to be repurchased at $20,105,790 on 3/3/2003, collateralized by U.S. Government Agency Obligations with various maturities to 1/15/2028 (at amortized cost)

$

20,103,578

 

20,103,578

Total Investments (identified cost $207,068,333) -- 99.8%

 

 

 

 

186,859,994

Other Net Assets and Liabilities -- 0.2%

 

 

 

 

312,604

Total Net Assets -- 100.0%

 

 

 

 

$

187,172,598

Small-Cap Growth Fund

   

Description

   

Shares

   

Value

Common Stocks -- 95.7%

 

 

 

 

 

 

Consumer Discretionary -- 27.8%

 

Broadcasting & Cable -- 6.0%

 

 

 

 

 

 

 

Alliance Atlantis Communications, Inc., Class B(3)

 

 

265,000

 

$

2,443,300

 

Spanish Broadcasting System, Inc., Class A(3)

 

 

300,000

 

 

1,827,000

 

 

 

 

 

 

 

4,270,300

 

Casino & Gaming -- 2.2%

 

 

 

 

 

 

 

Ameristar Casinos, Inc.(3)

 

 

120,000

 

 

1,051,200

 

Pinnacle Entertainment, Inc.(3)

 

 

133,900

 

 

531,583

 

 

 

 

 

 

 

1,582,783

 

Hotel/Resort/Cruise -- 7.3%

 

 

 

 

 

 

 

Intrawest Corp.

 

 

290,000

 

 

3,126,200

 

Orient-Express Hotels Ltd., Class A(1)(3)

 

 

225,000

 

 

2,103,750

 

 

 

 

 

 

 

5,229,950

 

Restaurants -- 6.2%

 

 

 

 

 

 

 

Buca, Inc.(1)(3)

 

 

225,000

 

 

1,278,000

 

Landry's Restaurants, Inc.

 

 

125,000

 

 

2,050,000

 

Outback Steakhouse, Inc.(1)

 

 

35,000

 

 

1,127,000

 

 

 

 

 

 

 

4,455,000

 

Retail-Apparel -- 1.6%

 

 

 

 

 

 

 

Abercrombie & Fitch Co., Class A(3)

 

 

40,000

 

 

1,100,000

 

Retail-Catalog -- 4.5%

 

 

 

 

 

 

 

Insight Enterprises, Inc.(1)(3)

 

 

425,000

 

 

3,238,500

 

Total Consumer Discretionary

 

 

 

 

 

19,876,533

Consumer Staples -- 3.0%

 

 

 

 

 

 

 

Personal Products -- 3.0%

 

 

 

 

 

 

 

Steiner Leisure Ltd.(3)

 

 

205,000

 

 

2,173,000

Energy -- 7.5%

 

 

 

 

 

 

 

Oil & Gas-Drilling--3.7%

 

 

 

 

 

 

 

Helmerich & Payne, Inc.(1)

 

 

30,000

 

 

825,000

 

National-Oilwell, Inc.(3)

 

 

40,000

 

 

900,000

 

Varco International, Inc.(3)

 

 

50,000

 

 

948,000

 

 

 

 

 

 

 

2,673,000

 

Oil & Gas-Equipment/Services -- 3.8%

 

Cal Dive International, Inc.(3)

 

 

50,000

 

 

933,500

 

Horizon Offshore, Inc.(1)(3)

 

 

250,000

 

 

960,000

 

Lone Star Technologies, Inc.(1)(3)

 

 

45,000

 

 

824,400

 

 

 

 

 

 

 

2,717,900

 

Total Energy

 

 

 

 

 

5,390,900

Financials -- 10.8%

 

 

 

 

 

 

 

Banks -- 9.1%

 

 

 

 

 

 

 

Cullen Frost Bankers, Inc.

 

 

60,000

 

 

1,869,600

 

City National Corp.

 

 

35,000

 

 

1,629,600
               

 

Description

Shares

Value

Common Stocks (continued)

 

 

 

 

 

 

Financials (continued)

 

 

 

 

 

 

 

Banks (continued)

 

 

 

 

 

 

 

Mercantile Bankshares Corp.

 

 

30,000

 

$

1,107,000

 

Southwest Bancorp. of Texas, Inc.(1)(3)

 

 

60,000

 

 

1,897,200

 

 

 

 

 

 

 

6,503,400

 

Insurance-Brokers -- 1.7%

 

 

 

 

 

 

 

Gallagher (Arthur J.) & Co.

 

 

50,000

 

 

1,223,500

 

Insurance-Property/Casualty -- 0.0%

 

Meadowbrook Insurance Group, Inc.(3)

 

 

10,000

 

 

22,600

 

Total Financials

 

 

 

 

 

7,749,500

Healthcare -- 18.1%

 

 

 

 

 

 

 

Biotechnology -- 5.8%

 

 

 

 

 

 

 

Celgene Corp.(3)

 

 

35,000

 

 

766,535

 

Cell Genesys, Inc.(1)(3)

 

 

40,000

 

 

317,600

 

Cephalon, Inc.(3)

 

 

6,000

 

 

288,900

 

CV Therapeutics, Inc.(1)(3)

 

 

20,000

 

 

352,800

 

Invitrogen Corp.(1)(3)

 

 

25,000

 

 

776,000

 

XOMA Ltd.(3)

 

 

450,000

 

 

1,624,500

 

 

 

 

 

 

 

4,126,335

 

Healthcare-Distribution/Services -- 2.9%

 

Covance, Inc.(3)

 

 

30,000

 

 

706,500

 

Priority HealthCare Corp., Class B(3)

 

 

60,000

 

 

1,357,200

 

 

 

 

 

 

 

2,063,700

 

Healthcare-Facility -- 7.8%

 

 

 

 

 

 

 

Amsurg Corp.(1)(3)

 

 

60,000

 

 

1,458,000

 

Community Health Systems, Inc.(1)(3)

 

 

90,000

 

 

1,687,500

 

HealthSouth Corp.(3)

 

 

300,000

 

 

1,074,000

 

Province Heathcare Co.(3)

 

 

200,000

 

 

1,332,000

 

 

 

 

 

 

 

5,551,500

 

Healthcare-Supplies -- 1.6%

 

 

 

 

 

 

 

Cooper Companies, Inc.(1)

 

 

40,000

 

 

1,162,000

 

Total Healthcare

 

 

 

 

 

12,903,535

Industrials -- 1.1%

 

 

 

 

 

 

 

Aerospace/Defense -- 1.1%

 

 

 

 

 

 

 

Aeroflex, Inc.(3)

 

 

125,000

 

 

761,250

Information Technology -- 27.4%

 

 

 

 

 

 

 

Application Software -- 10.6%

 

 

 

 

 

 

 

Activision, Inc.(1)(3)

 

 

85,000

 

 

1,266,500

 

Business Objects SA, ADR(3)

 

 

60,000

 

 

1,032,000

 

FactSet Research Systems(1)

 

 

45,000

 

 

1,151,550

 

Quest Software, Inc.(3)

 

 

80,000

 

 

790,400

 

SERENA Software, Inc.(3)

 

 

50,000

 

 

750,000

 

THQ, Inc.(1)(3)

 

 

95,000

 

 

1,159,950

 

Take-Two Interactive Software, Inc.(1)(3)

 

 

70,000

 

 

1,463,700

 

 

 

 

 

 

 

7,614,100

 

Description

Shares or
Principal
Amount

Value

Common Stocks (continued)

 

 

 

 

 

 

Information Technology (continued)

 

 

 

 

Computer Storage/Peripherals -- 1.5%

 

Applied Films Corp.(3)

 

 

70,000

 

$

1,052,800

 

Electronic Equipment/Instrument -- 1.4%

 

Planar Systems, Inc.(3)

 

 

65,000

 

 

1,014,000

 

IT Consulting & Services -- 2.5%

 

 

 

 

 

 

 

BearingPoint, Inc.(3)

 

 

110,000

 

 

721,600

 

ManTech International Corp., Class A(1)(3)

 

 

70,000

 

 

1,089,900

 

 

 

 

 

 

 

1,811,500

 

Semiconductors -- 3.8%

 

 

 

 

 

 

 

ChipPAC, Inc.(3)

 

 

350,000

 

 

945,000

 

Integrated Device Technology, Inc.(3)

 

 

200,000

 

 

1,740,000

 

 

 

 

 

 

 

2,685,000

 

Semiconductor Equipment -- 3.9%

 

Entegris, Inc.(3)

 

 

50,000

 

 

567,500

 

MKS Instruments, Inc.(1)(3)

 

 

90,000

 

 

1,192,500

 

Varian Semiconductor Equipment Associates, Inc.(1)(3)

 

 

40,000

 

 

1,030,000

 

 

 

 

 

 

 

2,790,000

 

Telecommunication Equipment -- 3.7%

 

 

 

 

 

 

 

Polycom, Inc.(1)(3)

 

 

175,000

 

 

1,755,250

 

Powerwave Technologies, Inc.(3)

 

 

250,000

 

 

885,000

 

 

 

 

 

 

 

2,640,250

 

Total Information Technology

 

 

 

 

 

19,607,650

Total Common Stocks (identified cost $72,858,086)

 

 

 

 

68,462,368

Repurchase Agreement -- 4.5%

 

 

 

 

 

Interest in $184,609,342 joint repurchase agreement with Lehman Brothers, Inc., 1.320% dated 2/28/2003, to be repurchased at $3,223,448 on 3/3/2003, collateralized by a U.S. Government Agency Obligation maturing 12/15/2005

 

$

3,223,093

 

3,223,093

Total Investments (identified cost $76,081,179) -- 100.2%

 

 

 

 

71,685,461

Other Net Assets and Liabilities -- (0.2)%

 

 

 

 

(164,120)

Total Net Assets -- 100.0%

 

 

 

 

$

71,521,341

International Stock Fund

   

Description

   

Shares

   

Value

Common Stocks -- 98.5%

 

 

 

 

 

 

Australia -- 2.7%

 

 

 

 

 

 

 

National Australia Bank Ltd., Melbourne(1)

 

 

174,400

 

$

3,063,661

 

News Corp. Ltd.

 

 

423,400

 

 

2,622,536

 

Qantas Airways

 

 

748,300

 

 

1,400,951

 

Total Australia

 

 

 

 

 

7,087,148

Brazil -- 2.8%

 

 

 

 

 

 

 

Banco Itau SA, ADR

 

 

31,200

 

 

683,592

 

Companhia Vale Do Rio Doce, ADR(3)

 

 

24,200

 

 

701,800

 

Companhia Vale Do Rio Doce, ADR

 

 

152,350

 

 

4,151,537

 

Unibanco Uniao de Bancos Brasileiros SA, ADR

 

 

153,100

 

 

1,737,685

 

Total Brazil

 

 

 

 

 

7,274,614

Canada -- 1.6%

 

 

 

 

 

 

 

Royal Bank of Canada, Montreal

 

 

108,200

 

 

4,226,591

Finland -- 1.9%

 

 

 

 

 

 

 

Nokia OYJ

 

 

122,400

 

 

1,636,069

 

Nokia OYJ, Class A, ADR

 

 

239,500

 

 

3,168,585

 

Total Finland

 

 

 

 

 

4,804,654

France -- 6.4%

 

 

 

 

 

 

 

L'Air Liquide SA

 

 

18,692

 

 

2,399,750

 

Societe Generale, Paris

 

 

46,500

 

 

2,496,208

 

Total Fina SA, Class B(1)

 

 

39,460

 

 

5,214,901

 

Vivendi Environment(1)

 

 

273,849

 

 

5,195,440

 

Vivendi Environment, Warrants(1)(3)

 

 

48,300

 

 

4,165

 

Wanadoo(1)(3)

 

 

276,700

 

 

1,383,967

 

Total France

 

 

 

 

 

16,694,431

Germany -- 5.5%

 

 

 

 

 

 

 

Adidas-Salomon AG

 

 

73,300

 

 

5,896,794

 

Deutsche Boerse AG

 

 

59,000

 

 

2,284,477

 

Fresenius Medical Care AG

 

 

973

 

 

41,125

 

SAP AG (Systeme, Anwendungen, Produkte in der Datevnerarbeitung)

 

54,900

 

 

4,589,958

 

T-Online International AG(3)

 

 

228,800

 

 

1,418,151

 

Total Germany

 

 

 

 

 

14,230,505

Hong Kong -- 0.7%

 

 

 

 

 

 

 

Cathay Pacific Airways Ltd.

 

 

1,306,900

 

 

1,826,543

Ireland -- 3.1%

 

 

 

 

 

 

 

Bank of Ireland

 

 

599,900

 

 

6,628,286

 

Irish Life & Permanent PLC

 

 

136,400

 

 

1,337,994

 

Total Ireland

 

 

 

 

 

7,966,280

Israel -- 1.6%

 

 

 

 

 

 

 

Teva Pharmaceutical Industries Ltd., ADR

 

 

112,800

 

 

4,261,584

 

Description

Shares

Value

Common Stocks (continued)

 

 

 

 

 

 

Italy -- 5.0%

 

 

 

 

 

 

 

ENI SpA(1)

 

 

456,600

 

$

6,777,482

 

Riunione Adriatica di Sicurta SpA(1)

 

 

211,000

 

 

2,595,175

 

Telecom Italia SpA

 

 

718,200

 

 

3,522,535

 

Total Italy

 

 

 

 

 

12,895,192

Japan -- 8.6%

 

 

 

 

 

 

 

Canon, Inc.

 

 

121,000

 

 

4,370,596

 

Millea Holdings, Inc.

 

 

408

 

 

2,826,646

 

Nomura Holdings, Inc.

 

 

265,700

 

 

3,124,164

 

NTT DoCoMo, Inc.

 

 

2,754

 

 

5,195,128

 

Ricoh Co. Ltd.(1)

 

 

171,900

 

 

2,597,076

 

Yahoo Japan Corp.(3)

 

 

156

 

 

2,692,044

 

Yamato Transport

 

 

108,900

 

 

1,381,804

 

Total Japan

 

 

 

 

 

22,187,458

Korea, Republic of -- 4.6%

 

 

 

 

 

 

 

Kookmin Bank

 

 

77,863

 

 

2,380,932

 

Kookmin Bank, ADR

 

 

9,274

 

 

283,042

 

POSCO, ADR

 

 

26,000

 

 

600,600

 

Samsung Electronics Co.

 

 

27,100

 

 

6,345,621

 

SK Telecom Co. Ltd., ADR

 

 

159,100

 

 

2,448,549

 

Total Korea, Republic of

 

 

 

 

 

12,058,744

Mexico -- 4.2%

 

 

 

 

 

 

 

America Movil, SA de CV, Class L, ADR

 

 

185,800

 

 

2,564,040

 

Fomento Economico Mexicano, SA de CV, ADR(3)

 

 

62,500

 

 

2,015,625

 

Grupo Financiero BBVA Bancomer, SA de CV, Class B(3)

 

 

4,318,000

 

 

3,258,720

 

Grupo Modelo, SA de CV, Class C

 

 

663,200

 

 

1,371,578

 

Wal-Mart de Mexico, SA de CV

 

 

802,700

 

 

1,792,596

 

Total Mexico

 

 

 

 

 

11,002,559

Netherlands -- 4.4%

 

 

 

 

 

 

 

AEGON NV(1)

 

 

323,000

 

 

3,464,369

 

Royal Dutch Petroleum Co.

 

 

70,500

 

 

2,792,833

 

TPG NV(1)

 

 

226,100

 

 

3,168,418

 

VNU (Verenigde Nederlandse Uitgeversbedrijven)(1)

 

 

87,400

 

 

1,922,883

 

Total Netherlands

 

 

 

 

 

11,348,503

Russia -- 2.6%

 

 

 

 

 

 

 

YUKOS, ADR

 

 

40,450

 

 

6,628,744

Singapore -- 1.1%

 

 

 

 

 

 

 

Venture Corp. Ltd.

 

 

368,800

 

 

2,844,680

South Africa -- 1.0%

 

 

 

 

 

 

 

Sappi Ltd.(1)

 

 

192,600

 

 

2,663,101

Spain -- 3.8%

 

 

 

 

 

 

 

Banco Bilbao Vizcaya Argentaria, SA

 

 

311,900

 

 

2,659,441

 

Banco Santander Central Hispano, SA

 

 

675,400

 

 

4,331,881

 

Telefonica, SA(3)

 

 

301,512

 

 

2,925,133

 

Total Spain

 

 

 

 

 

9,916,455

 

Description

Shares or
Principal
Amount

Value

Common Stocks (continued)

 

 

 

 

 

 

Sweden -- 5.0%

 

 

 

 

 

 

 

Atlas Copco AB, Class A(1)

 

 

234,410

 

$

4,976,770

 

Sandvik AB

 

 

164,800

 

 

3,818,719

 

Skandinaviska Enskilda Banken AB, Class A

 

 

320,000

 

 

2,841,785

 

Telefonaktiebolaget LM Ericsson(1)

 

 

1,944,900

 

 

1,269,651

 

Total Sweden

 

 

 

 

 

12,906,925

Switzerland -- 10.8%

 

 

 

 

 

 

 

Compagnie Financiere Richemont AG

 

 

124,600

 

 

2,017,163

 

Credit Suisse Group(1)

 

 

60,300

 

 

1,122,967

 

Nestle SA(1)

 

 

35,630

 

 

7,174,090

 

Novartis AG(1)

 

 

172,030

 

 

6,318,615

 

Swiss Re(1)

 

 

100,640

 

 

5,418,534

 

UBS AG(1)

 

 

144,690

 

 

6,072,103

 

Total Switzerland

 

 

 

 

 

28,123,472

United Kingdom -- 21.1%

 

 

 

 

 

 

 

ARM Holdings PLC(3)

 

 

2,655,800

 

 

2,215,239

 

BG Group PLC

 

 

346,600

 

 

1,335,060

 

BP Amoco PLC

 

 

680,200

 

 

4,281,993

 

British American Tobacco PLC

 

 

151,400

 

 

1,477,294

 

British Sky Broadcasting Group PLC(3)

 

 

135,500

 

 

1,340,275

 

Diageo PLC

 

 

448,200

 

 

4,443,874

 

EasyJet PLC(3)

 

 

611,200

 

 

1,827,622

 

Exel PLC

 

 

146,500

 

 

1,299,215

 

HSBC Holdings PLC

 

 

268,800

 

 

2,893,575

 

Kingfisher PLC

 

 

680,718

 

 

2,450,630

 

Pearson PLC

 

 

257,400

 

 

1,944,461

 

Reed Elsevier PLC

 

 

142,400

 

 

1,038,745

 

Rexam PLC

 

 

439,800

 

 

2,233,937

 

Rio Tinto PLC

 

 

128,200

 

 

2,592,630

 

Royal Bank of Scotland PLC, Edinburgh

 

 

231,900

 

 

5,302,928

 

Smith & Nephew PLC

 

 

877,700

 

 

5,055,645

 

Smiths Group PLC

 

 

255,600

 

 

2,429,669

 

Standard Chartered PLC

 

 

283,100

 

 

3,105,432

 

Vodafone Group PLC

 

 

3,397,521

 

 

6,082,231

 

WPP Group PLC

 

 

209,700

 

 

1,289,576

 

Total United Kingdom

 

 

 

 

 

54,640,031

Total Common Stocks (identified cost $270,457,110)

 

 

 

 

255,588,214

Repurchase Agreement -- 3.1%

 

 

 

 

 

Agreement with State Street Corp., 0.500% dated 2/28/2003, to be repurchased at $8,139,339 on 3/3/2003, collateralized by U.S. Treasury Obligations with various maturities to 2/15/2020 (at amortized cost)

 

$

8,139,000

 

8,139,000

Total Investments (identified cost $278,596,110) -- 101.6%

 

 

 

 

263,727,214

Other Net Assets and Liabilities -- (1.6)%

 

 

 

 

(4,209,154)

Total Net Assets -- 100.0%

 

 

 

 

$

259,518,060

 

Industry

   

Industry
Diversification
Market Value

   

% of
net assets

Air Freight & Couriers

 

$

4,508,641

 

1.7

%

Banks

 

 

49,830,109

 

19.2

 

Beverages & Foods

 

 

15,005,167

 

5.8

 

Containers & Metal/Glass

 

 

2,233,937

 

0.9

 

Domestic & International Oil

 

 

18,918,471

 

7.3

 

Electronics

 

 

9,190,301

 

3.5

 

Financial Services

 

 

10,005,355

 

3.8

 

Gas Distribution

 

 

1,335,060

 

0.5

 

Healthcare

 

 

41,125

 

0.0

 

Healthcare Equipment & Supplies

 

 

5,055,645

 

2.0

 

Household Product/Wares

 

 

5,896,794

 

2.3

 

Industrial Gases

 

 

2,399,750

 

0.9

 

Industrial Services

 

 

8,795,489

 

3.4

 

Insurance

 

 

14,304,724

 

5.5

 

IT Consulting & Services

 

 

5,494,162

 

2.1

 

Manufacturing

 

 

4,644,908

 

1.8

 

Media

 

 

2,629,851

 

1.0

 

Metals & Mining

 

 

8,046,567

 

3.1

 

MultiMedia

 

 

7,528,625

 

2.9

 

Office Equipment

 

 

6,967,672

 

2.7

 

Oil & Gas Products

 

 

6,777,482

 

2.6

 

Paper & Forest Products

 

 

2,663,101

 

1.0

 

Pharmaceuticals & Healthcare

 

 

10,580,199

 

4.1

 

Retail

 

 

6,260,389

 

2.4

 

Software

 

 

4,589,958

 

1.8

 

Telecommunications

 

 

28,811,921

 

11.1

 

Tobacco

 

 

1,477,294

 

0.6

 

Transportation

 

 

6,395,912

 

2.5

 

Water Treatment

 

 

5,199,605

 

2.0

 

Total Common Stocks

 

 

255,588,214

 

98.5

 

Total Repurchase Agreement

 

 

8,139,000

 

3.1

 

Total Investments

 

 

263,727,214

 

101.6

 

Other Net Assets & Liabilities

 

 

(4,209,154

)

(1.6

)

Total Net Assets

 

$

259,518,060

 

100.0

%

Government Income Fund

   

Description

   

Principal
Amount

   

Value

Asset-Backed Securities -- 4.7%

 

 

 

 

 

Green Tree Home Equity Loan Trust 1998-B, Class B1, 7.810%, 11/15/2029

 

$

6,000,000

 

$

6,262,718

 

 

Greenwich Capital Acceptance 1995-BA1, Class A4, 7.150%, 8/10/2020

 

 

10,643,000

 

 

11,430,729

 

Total Asset-Backed Securities (identified cost $16,665,899)

 

 

 

 

 

17,693,447

 

Collateralized Mortgage Obligations -- 15.4%

 

 

Federal Home Loan Mortgage Corp., 1.463%, 3/24/2003, REMIC (Series T-32-A1)(4)(5)

 

 

11,947,816

 

 

11,914,351

 

 

Description

Principal
Amount

Value

Collateralized Mortgage Obligations (continued)

 

 

Federal Home Loan Mortgage Corp., 6.250%, 9/15/2023, REMIC (Series 1666H)

 

$

15,000,000

 

$

16,055,202

 

 

Federal Home Loan Mortgage Corp., 6.500%, 10/15/2016, REMIC (Series 1702-PK)(5)

 

 

10,000,000

 

 

10,701,999

 

 

Federal National Mortgage Association, 1.586%, 3/24/2003, REMIC (Series 2001-25FA)(4)(5)

 

 

19,436,195

 

 

19,487,761

 

Total Collateralized Mortgage Obligations (identified cost $54,528,046)

 

 

 

 

 

58,159,313

 

Corporate Bonds -- 1.6%

 

 

 

 

 

 

 

 

HSB Group, Inc. FRN, 2.286%, 4/15/2003(4)

 

 

3,000,000

 

 

2,805,822

 

 

TXU Capital FRN, 2.730%, 4/1/2003(4)

 

 

5,000,000

 

 

3,386,615

 

Total Corporate Bonds (identified cost $7,909,300)

 

 

 

 

 

6,192,437

 

Mortgage Backed Securities -- 54.2%

 

 

Federal Home Loan Mortgage Corporation -- 14.6%

 

 

5.000%, 8/1/2014(1)

 

 

11,054,899

 

 

11,454,196

 

 

6.000%, 6/15/2011

 

 

5,000,000

 

 

5,759,500

 

 

6.500%, 9/1/2016

 

 

2,666,810

 

 

2,825,059

 

 

6.500%, 2/1/2031(1)

 

 

8,697,978

 

 

9,110,782

 

 

6.500%, 4/1/2032(6)

 

 

15,000,000

 

 

15,698,430

 

 

7.000%, 11/1/2009

 

 

1,814,838

 

 

1,940,494

 

 

7.500%, 9/1/2013

 

 

580,194

 

 

624,199

 

 

7.500%, 4/1/2024

 

 

1,623,821

 

 

1,744,965

 

 

7.500%, 4/1/2027

 

 

1,133,344

 

 

1,212,692

 

 

8.000%, 8/1/2030

 

 

1,715,865

 

 

1,852,479

 

 

8.500%, 9/1/2024

 

 

684,934

 

 

745,556

 

 

9.000%, 6/1/2019

 

 

1,036,597

 

 

1,159,312

 

 

9.500%, 2/1/2025

 

 

952,559

 

 

1,066,305

 

 

 

 

 

 

 

 

55,193,969

 

 

Federal National Mortgage Association -- 22.9%

 

 

6.000%, 9/1/2013(1)

 

 

7,146,550

 

 

7,525,200

 

 

6.000%, 4/1/2017(6)

 

 

5,000,000

 

 

5,248,440

 

 

6.500%, 9/1/2016(1)

 

 

6,141,792

 

 

6,519,729

 

 

6.500%, 9/1/2016

 

 

3,462,245

 

 

3,675,295

 

 

6.500%, 12/1/2031(1)

 

 

2,976,040

 

 

3,114,620

 

 

6.500%, 5/1/2032(6)

 

 

25,000,000

 

 

26,109,375

 

 

7.000%, 12/1/2010

 

 

2,881,264

 

 

3,078,447

 

 

7.000%, 3/1/2029

 

 

2,932,870

 

 

3,097,768

 

 

7.000%, 7/1/2029(1)

 

 

6,768,796

 

 

7,149,366

 

 

7.000%, 2/1/2030(1)

 

 

5,385,055

 

 

5,687,826

 

 

7.500%, 12/1/2009

 

 

4,949,670

 

 

5,305,277

 

 

7.500%, 10/1/2030(5)

 

 

2,432,398

 

 

2,592,305

 

 

8.000%, 10/1/2028

 

 

4,228,497

 

 

4,619,770

 

 

8.000%, 4/1/2030

 

 

2,202,418

 

 

2,388,457

 

 

 

 

 

 

 

 

86,111,875

 

 

Description

Principal
Amount

Value

 

Mortgage Backed Securities (continued)

 

 

Government National Mortgage Association -- 16.7%

 

 

6.500%, 12/15/2029

 

$

3,714,168

 

$

3,921,379

 

 

6.500%, 9/15/2032

 

 

17,342,952

 

 

18,291,103

 

 

7.000%, 4/15/2029(1)

 

 

4,250,976

 

 

4,529,550

 

 

7.000%, 5/15/2029(1)

 

 

3,653,034

 

 

3,888,679

 

 

7.000%, 6/15/2029(1)

 

 

4,510,919

 

 

4,801,903

 

 

7.000%, 8/15/2031(1)

 

 

3,667,588

 

 

3,899,358

 

 

7.500%, 8/15/2025(1)

 

 

1,341,302

 

 

1,444,190

 

 

7.500%, 8/15/2025(1)

 

 

5,434,065

 

 

5,844,962

 

 

7.500%, 12/15/2025(1)

 

 

4,336,008

 

 

4,663,876

 

 

7.500%, 2/15/2027(1)

 

 

5,932,200

 

 

6,362,225

 

 

8.500%, 6/15/2010(1)

 

 

1,400,324

 

 

1,539,822

 

 

9.000%, 11/15/2009(1)

 

 

2,249,640

 

 

2,442,252

 

 

9.000%, 1/15/2010(1)

 

 

722,058

 

 

794,421

 

 

9.500%, 10/15/2024(1)

 

 

441,758

 

 

499,796

 

 

 

 

 

 

 

 

62,923,516

 

Total Mortgage Backed Securities (identified cost $194,449,283)

 

 

 

 

204,229,360

U.S. Treasury Note -- 10.8%

 

 

 

 

 

3.875%, 2/15/2013 (identified cost $40,384,336)

 

 

40,000,000

 

40,601,600

Total Investments in Securities (identified cost $313,936,864)

 

 

 

 

326,876,157

Repurchase Agreement -- 29.3%

 

Interest in $184,609,342 joint repurchase agreement with Lehman Brothers, Inc., 1.320%, dated 2/28/2003, to be repurchased at $110,519,516 on 3/3/2003, collateralized by U.S. Government Agency Obligations with various maturities to 4/15/2015 (at amortized cost)

 

 

110,507,360

 

110,507,360

Total Investments (identified cost $424,444,224) -- 116.0%

 

 

 

 

437,383,517

Other Net Assets and Liabilities -- (16.0)%

 

 

 

 

(60,398,755

)

Total Net Assets -- 100.0%

 

 

 

 

$

376,984,762

Intermediate Bond Fund

   

Description

   

Principal
Amount

   

Value

Asset-Backed Securities -- 7.2%

 

 

Citibank Credit Card Issuance Trust 2002-A1, Class A1, 4.950%, 2/9/2009

 

$

6,000,000

 

$

6,470,127
               

 

Description

Principal
Amount

Value

Asset-Backed Securities (continued)

 

 

Citibank Credit Card Master Trust I 1999-7, Class A, 6.650%, 11/15/2006

 

$

5,000,000

 

$

5,415,710

 

DLJ Commercial Mortgage Corp. 1998-STF2, Class A1, 1.990%, 11/5/2008(7)(8)

 

 

643,074

 

 

639,858

 

DaimlerChrysler Auto Trust, Class A3, 6.820%, 9/6/2004

 

 

1,556,339

 

 

1,571,125

 

First USA Credit Card Master Trust 1998-9, Class A, 5.280%, 9/18/2006

 

 

7,750,000

 

 

8,017,879

 

Ford Credit Auto Owner Trust 2000-G, Class A4, 6.620%, 7/15/2004(1)

 

 

2,894,227

 

 

2,934,872

 

Green Tree Home Equity Loan Trust 1998-B, Class B1, 7.810%, 11/15/2029

 

 

7,000,000

 

 

7,306,505

 

J.P. Morgan Commercial Mortgage Finance Corp. 1997-C5, Class A2, 7.069%, 9/15/2029

 

 

5,198,666

 

 

5,579,096

 

Pegasus Aviation Lease Securitization 1999-1A, Class A1, 6.300%, 3/25/2029(7)(8)

 

 

1,846,075

 

 

1,765,339

 

Systems 2001Asset Trust, Pass Thru Cert., 6.664%, 9/15/2013(7)(8)

 

 

5,962,234

 

 

6,502,571

Total Asset-Backed Securities (identified cost $43,926,304)

 

 

 

 

 

46,203,082

Collateralized Mortgage Obligations -- 2.8%

 

 

 

 

 

 

 

Criimi Mae CMBS Corp. 1998-1, Class A2, 6.009%, 2/20/2008(7)(8)

 

 

3,847,483

 

 

4,130,679

 

Criimi Mae CMBS Corp. 1998-1, Class A3, 6.306%, 6/20/2030(7)(8)

 

 

6,000,000

 

 

6,596,417

 

Fannie Mae, (Series 1993-137), Class PH, 6.550%, 12/25/2021

 

 

4,072,397

 

 

4,135,948

 

Government National Mortgage Association, Series 2000-12, Class AC, 7.500%, 11/16/2027

 

1,061,443

 

 

1,083,614

 

Government National Mortgage Association, Series 2001-5, Class PK, 5.950%, 7/20/2024

 

1,296,416

 

 

1,300,410

 

Prudential Home Mortgage Securities 1992-B, Class 2B, 6.757%, 9/28/2008(7)(8)

 

 

1,041,224

 

 

1,071,822

Total Collateralized Mortgage Obligations (identified cost $17,285,224)

 

 

 

 

 

18,318,890

Corporate Bonds & Notes -- 66.7%

 

Automotive & Related -- 7.9%

 

Ford Motor Credit Co., Note, 6.125%, 3/20/2004(1)

 

 

8,000,000

 

 

8,182,800

 

Ford Motor Credit Co., Note, 6.500%, 1/25/2007(1)

 

 

4,000,000

 

 

3,989,396

 

Ford Motor Credit Co., Note, 6.700%, 7/16/2004(1)

 

 

7,000,000

 

 

7,218,449
               

 

Description

Principal
Amount

Value

Corporate Bonds & Notes (continued)

 

Automotive & Related (continued)

 

Ford Motor Credit Co., Note, 7.750%, 3/15/2005

 

$

5,000,000

 

$

5,186,815

 

General Motors Acceptance Corp., Note, 6.125%, 9/15/2006

 

 

5,000,000

 

 

5,199,940

 

General Motors Acceptance Corp., Note, 6.750%, 1/15/2006(1)

 

 

3,000,000

 

 

3,164,043

 

General Motors Acceptance Corp., Note, 6.875%, 9/15/2011

 

 

7,000,000

 

 

7,027,048

 

General Motors Acceptance Corp., Unsecd. Note, 7.000%, 6/6/2003

 

 

6,000,000

 

 

6,071,100

 

General Motors Corp., Note, 7.200%, 1/15/2011(1)

 

 

5,000,000

 

 

5,098,830

 

 

 

 

 

 

 

51,138,421

 

Banks -- 8.6%

 

 

 

 

 

 

 

BNP Paribas LLC, Company Guarantee, 5.125%, 1/15/2015(1)(7)(8)

 

 

5,000,000

 

 

5,143,080

 

Citicorp, Sub. Note, (Series F), 6.375%, 11/15/2008

 

 

7,000,000

 

 

7,925,428

 

Citigroup, Inc., 5.875%, 2/22/2033

 

 

7,000,000

 

 

7,098,917

 

Citigroup, Inc., Note, 3.500%, 2/1/2008(1)

 

 

10,000,000

 

 

10,107,940

 

Citigroup, Inc., Note, 5.750%, 5/10/2006(1)

 

 

5,000,000

 

 

5,505,715

 

J.P. Morgan Chase & Co., Note, 4.000%, 2/1/2008(1)

 

 

6,000,000

 

 

6,076,668

 

UBS Preferred Funding Trust, Bond, 8.622%, 10/1/2010(1)(4)

 

 

7,000,000

 

 

8,597,967

 

Washington Mutual, Inc., Note, 4.375%, 1/15/2008(1)

 

 

5,000,000

 

 

5,245,350

 

 

 

 

 

 

 

55,701,065

 

Beverages & Foods -- 4.3%

 

 

 

 

 

 

 

Anheuser-Busch Cos., Inc., Deb., 9.000%, 12/1/2009

 

 

5,000,000

 

 

6,491,930

 

General Mills, Inc., 3.875%, 11/30/2007

 

 

11,000,000

 

 

11,252,868

 

Kroger Co., Note, 5.50%, 2/1/2013(1)

 

 

4,000,000

 

 

4,112,008

 

Kroger Co., Note, 8.05%, 2/1/2010

 

 

5,000,000

 

 

5,890,045

 

 

 

 

 

 

 

27,746,851

 

Broker/Dealers -- 4.1%

 

 

 

 

 

 

 

Goldman Sachs Group, Inc., 6.125%, 2/15/2033

 

 

2,500,000

 

 

2,523,922

 

Goldman Sachs Group, Inc., Bond, 6.875%, 1/15/2011

 

 

2,000,000

 

 

2,285,370

 

Lehman Brothers Holdings, Inc., Note, 6.250%, 5/15/2006(1)

 

1,000,000

 

 

1,106,812

 

Merrill Lynch & Co., Inc., Note, (Series MTNB), 5.350%, 6/15/2004

 

 

6,500,000

 

 

6,806,482
               

 

Description

Principal
Amount

Value

Corporate Bonds & Notes (continued)

 

Broker/Dealers (continued)

 

 

 

 

 

 

 

Morgan Stanley, Note, 6.600%, 4/1/2012

 

$

7,000,000

 

$

7,835,436

 

PaineWebber Group, Inc., Note, 6.450%, 12/1/2003

 

 

6,000,000

 

 

6,230,598

 

 

 

 

 

 

 

26,788,620

 

Building -- 0.3%

 

 

 

 

 

 

 

Pulte Corp., 6.250%, 2/15/2013

 

 

2,000,000

 

 

2,089,176

 

Chemicals -- 0.6%

 

 

 

 

 

 

 

Dow Chemical Co., Note, 5.250%, 5/14/2004(1)(7)(8)

 

 

3,500,000

 

 

3,615,115

 

Construction Equipment -- 0.4%

 

CRH America, Inc., Note, 6.950%, 3/15/2012

 

 

2,000,000

 

 

2,276,634

 

Consumer Cyclical -- 0.4%

 

 

 

 

 

 

 

Tyco International Group, Note, 5.800%, 8/1/2006(1)

 

 

2,500,000

 

 

2,393,750

 

Domestic & International Oil -- 3.2%

 

Conoco, Inc., Sr. Note, 6.350%, 4/15/2009(1)

 

 

6,000,000

 

 

6,853,182

 

Occidental Petroleum Corp., Deb., 10.125%, 9/15/2009

 

 

5,000,000

 

 

6,620,120

 

Occidental Petroleum Corp., Note, 4.000%, 11/30/2007

 

 

2,500,000

 

 

2,542,523

 

PanCanadian Petroleum Ltd., Bond, 6.300%, 11/1/2011

 

 

4,000,000

 

 

4,445,420

 

 

 

 

 

 

 

20,461,245

 

Electrical Equipment -- 1.3%

 

General Electric Co., Note, 5.000%, 2/1/2013(1)

 

 

8,000,000

 

 

8,263,776

 

Financial Services -- 19.4%

 

 

 

 

 

 

 

Allstate Financial Global, Note, 7.125%, 9/26/2005(7)(8)

 

 

5,500,000

 

 

6,136,185

 

American Express Co., 3.750%, 11/20/2007(1)

 

 

4,000,000

 

 

4,092,840

 

American General Finance Corp., Note, (Series G), 4.500%, 11/15/2007

 

 

5,000,000

 

 

5,227,305

 

American General Finance Corp., Note, (Series G), 5.375%, 10/1/2012

 

 

2,500,000

 

 

2,600,350

 

Core Investments, 4.727%, 11/30/2007

 

 

8,000,000

 

 

8,284,920

 

Countrywide Financial Corp., Note, (Series K), 4.250%, 12/19/2007

 

 

7,000,000

 

 

7,235,662

 

Credit Suisse, London, Sub. Note, 7.900%, 5/29/2049(4)(7)(8)

 

 

5,000,000

 

 

5,441,810

 

EOP Operating LP, Note, 7.375%, 11/15/2003

 

 

4,000,000

 

 

4,156,440
               

 

Description

Principal
Amount

Value

Corporate Bonds & Notes (continued)

 

Financial Services (continued)

 

 

 

 

 

 

 

Fidelity Investments, 4.750%, 3/1/2013(1)(7)(8)

 

$

8,000,000

 

$

8,110,848

 

General Electric Capital Corp., Note, 6.800%, 11/1/2005

 

 

4,000,000

 

 

4,463,328

 

General Electric Capital Corp., Note, (Series A), 6.500%, 12/10/2007

 

 

5,000,000

 

 

5,694,700

 

Household Finance Corp., 6.400%, 6/17/2008(1)

 

 

4,000,000

 

 

4,437,292

 

Household Finance Corp., 7.000%, 5/15/2012

 

 

6,000,000

 

 

6,804,642

 

Household International Netherlands BV, Company Guarantee, 6.200%, 12/1/2003

 

 

4,000,000

 

 

4,117,540

 

MBNA Global Capital Securities, Jr. Sub. Deb., 2.150%, 5/1/2003(1)(4)

 

 

5,000,000

 

 

3,438,720

 

National Rural Utilities Cooperative Finance Corp., Note, 3.000%, 2/15/2006

 

 

7,000,000

 

 

7,078,687

 

National Rural Utilities Cooperative Finance Corp., Note, 3.875%, 2/15/2008

 

 

4,000,000

 

 

4,069,016

 

PHH Corp., 7.125%, 3/1/2013

 

 

6,000,000

 

 

6,088,872

 

SLM Corp., 5.625%, 4/10/2007

 

 

5,000,000

 

 

5,492,310

 

Student Loan Marketing Association, 5.375%, 1/15/2013

 

 

11,000,000

 

 

11,592,185

 

Wells Fargo Financial, Inc., 5.875%, 8/15/2008

 

 

10,000,000

 

 

11,246,940

 

 

 

 

 

 

 

125,810,592

 

Household Product/Wares -- 0.8%

 

Procter & Gamble Co., Unsub., 6.600%, 12/15/2004

 

 

5,000,000

 

 

5,426,695

 

Insurance -- 4.5%

 

 

 

 

 

 

 

AIG SunAmerica Global Financial, Bond, 5.850%, 8/1/2008(7)(8)

 

 

7,000,000

 

 

7,761,705

 

HSB Group, Inc., Company Guarantee, 2.285%, 4/15/2003(4)

 

 

4,000,000

 

 

3,741,096

 

John Hancock, Note, 6.500%, 3/1/2011(7)(8)

 

 

3,500,000

 

 

3,921,726

 

MGIC Investment Corp., Sr. Note, 6.000%, 3/15/2007(1)

 

 

3,000,000

 

 

3,207,981

 

Prudential Funding Corp., Note, 6.600%, 5/15/2008

 

 

5,000,000

 

 

5,582,345

 

Radian Group, Inc., Unsecd. Note, 5.625%, 2/15/2013

 

 

5,000,000

 

 

5,087,545

 

 

 

 

 

 

 

29,302,398

 

Description

Principal
Amount

Value

Corporate Bonds & Notes (continued)

 

Media -- 1.6%

 

 

 

 

 

 

 

AOL Time Warner, Inc., Note, 6.125%, 4/15/2006(1)

 

$

4,000,000

 

$

4,181,792

 

AOL Time Warner, Inc., Note, 6.875%, 5/1/2012(1)

 

 

3,000,000

 

 

3,170,208

 

Comcast Corp., Note, 6.750%, 1/30/2011(1)

 

 

3,000,000

 

 

3,254,130

 

 

 

 

 

 

 

10,606,130

 

Publishing -- 0.4%

 

 

 

 

 

 

 

Reed Elsevier, Capital, Company Guarantee, 6.125%, 8/1/2006

 

 

2,500,000

 

 

2,734,028

 

Telecommunications -- 3.9%

 

AT&T Wireless Services, Inc., Note, 8.125%, 5/1/2012(1)

 

 

2,000,000

 

 

2,154,202

 

British Telecommunication PLC, Note, 7.875%, 12/15/2005

 

 

5,000,000

 

 

5,649,790

 

British Telecommunication PLC, Note, 8.375%, 12/15/2010

 

 

5,000,000

 

 

6,069,675

 

Telstra Corp. Ltd., Note, 6.375%, 4/1/2012

 

 

5,000,000

 

 

5,586,360

 

Verizon Global Funding, Note, 7.250%, 12/1/2010(7)(8)

 

 

3,000,000

 

 

3,498,207

 

Verizon Global Funding, Note, 7.375%, 9/1/2012(1)

 

 

2,000,000

 

 

2,367,538

 

 

 

 

 

 

 

25,325,772

 

Transportation -- 1.4%

 

 

 

 

 

 

 

American Trans Air, Pass Thru Cert., 8.039%, 1/15/2016

 

 

4,484,899

 

 

4,643,868

 

Continental Airlines, Inc., Pass Thru Cert., 6.541%, 9/15/2009

 

 

2,918,766

 

 

1,695,817

 

Delta Air Lines, Inc., Equipment Trust, (Series 1993-A2), 10.500%, 4/30/2016

 

 

4,000,000

 

 

2,610,340

 

 

 

 

 

 

 

8,950,025

 

Utilities-Electric -- 2.8%

 

 

 

 

 

 

 

AEP Texas Central Co., Bond, 6.650%, 2/15/2033

 

 

2,000,000

 

 

2,059,516

 

Limestone Electronic Trust, Sr. Note, 8.625%, 3/15/2003(7)(8)

 

 

5,000,000

 

 

4,900,070

 

Pinnacle Partner, Sr. Note, 8.830%, 8/15/2004(7)(8)

 

 

3,000,000

 

 

2,969,985

 

Southern Power Co., Sr. Note, 6.250%, 7/15/2012(1)

 

 

3,000,000

 

 

3,290,325

 

TransAlta Corp., Note, 6.750%, 71/15/2012

 

 

5,000,000

 

 

5,132,970

 

 

 

 

 

 

 

18,352,866

 

Utilities-Natural Gas -- 0.8%

 

TXU Capital, 2.730%, 7/1/2028

 

 

7,000,000

 

 

4,741,261

Total Corporate Bonds & Notes (identified cost $417,679,044)

 

 

 

 

 

431,724,420

 

Description

Principal
Amount

Value

Government Agencies -- 7.8%

 

 

 

 

 

 

 

Federal Home Loan Bank -- 0.9%

 

Federal Home Loan Bank System, Bond, 5.430%, 11/17/2008

 

$

5,000,000

 

$

5,568,075

 

Federal National Mortgage Association -- 5.2%

 

5.500%, 2/15/2006

 

 

10,000,000

 

 

10,974,280

 

6.250%, 2/1/2011

 

 

10,000,000

 

 

11,356,490

 

7.000%, 7/15/2005

 

 

10,000,000

 

 

11,205,260

 

 

 

 

 

 

 

33,536,030

 

Tennessee Valley Authority -- 1.7%

 

5.625%, 1/18/2011

 

 

10,000,000

 

 

11,189,690

Total Government Agencies (identified cost $44,292,908)

 

 

 

 

 

50,293,795

Mortgage Backed Securities -- 5.8%

 

Federal Home Loan Mortgage Corp -- 0.8%

 

7.500%, 2/1/2031(1)

 

 

3,356,562

 

 

3,581,047

 

7.500%, 6/1/2031(1)

 

 

1,303,291

 

 

1,390,315

 

 

 

 

 

 

 

4,971,362

 

Federal National Mortgage Association -- 3.4%

 

 

 

 

 

 

 

6.500%, 10/1/2031(1)

 

 

11,182,879

 

 

11,703,611

 

7.000%, 12/1/2015(1)

 

 

4,959,138

 

 

5,296,639

 

7.635%, 8/1/2011(1)

 

 

4,674,319

 

 

5,319,002

 

 

 

 

 

 

 

22,319,252

 

Government National Mortgage Association -- 1.6%

 

7.000%, 3/15/2032

 

 

9,506,559

 

 

10,107,238

Total Mortgage Backed Securities (identified cost $36,044,218)

 

 

 

 

 

37,397,852

U.S. Treasury Securities -- 2.8%

 

U.S. Treasury Notes -- 2.8%

 

6.000%, 8/15/2004

 

 

2,000,000

 

 

2,135,626

 

7.250%, 5/15/2004

 

 

15,000,000

 

 

16,074,030

Total U.S. Treasury Securities (identified cost $18,146,485)

 

 

 

 

18,209,656

Total Investment in Securities (identified cost $577,374,183)

 

 

 

 

602,147,695

 

Description

Principal
Amount

Value

Repurchase Agreement -- 5.8%

 

Interest in $184,609,342 joint repurchase agreement with Lehman Brothers, Inc., 1.320% dated 2/28/2003, to be repurchased at $37,449,059 on 3/3/2003, collateralized by a U.S. Government Agency Obligation maturing 12/15/2005 (at amortized cost)

$

37,444,940

 

$

37,444,940

Total Investments (identified cost $614,819,123) -- 98.9%

 

 

 

 

639,592,635

Other Net Assets and Liabilities -- 1.1%

 

 

 

 

7,370,259

Total Net Assets -- 100.0%

 

 

 

 

$

646,962,894

Short-Term Income Fund

   

Description

   

Principal
Amount

   

Value

Asset-Backed Securities -- 10.6%

 

 

 

 

Citibank Credit Card Master Trust I 1998-9, Class A, 5.300%, 1/9/2006

 

$

1,220,000

 

$

1,261,368

 

DLJ Commercial Mortgage Corp. 1998-STF2, Class A1, 1.990%, 11/5/2008(7)(8)

 

 

208,357

 

 

207,315

 

DaimlerChrysler Auto Trust, Class A3, 6.820%, 9/6/2004

 

 

504,254

 

 

509,045

 

First Franklin Mortgage Loan Asset Backed Certificates 2002-FF1, Class 1A2, 3.790%, 4/25/2032

 

 

1,600,000

 

 

1,635,117

 

Ford Credit Auto Owner Trust 2000-G, Class A4, 6.620%, 7/15/2004

 

 

334,903

 

 

339,607

 

Green Tree Home Equity Loan Trust 1998-B, Class B1, 7.810%, 11/15/2029

 

 

3,000,000

 

 

3,131,359

 

Honda Auto Receivables Owner Trust 2001-3, Class A4, 3.960%, 2/19/2007

 

 

1,300,000

 

 

1,344,549

 

Honda Auto Receivables Owner Trust 2003-1, Class A3, 1.920%, 11/20/2006

 

 

1,250,000

 

 

1,252,622

 

Household Automotive Trust 2002-3, Class A3A, 2.750%, 6/18/2007

 

 

1,100,000

 

 

1,120,178

 

Pegasus Aviation Lease Securitization 1999-1A, Class A1, 6.300%, 3/25/2029(7)(8)

 

 

750,737

 

 

717,905
               

 

Description

Principal
Amount

Value

Asset-Backed Securities (continued)

 

 

 

 

Residential Asset Mortgage Products, Inc. 2002-RS5, Class AI3, 3.717%, 7/25/2027

 

$

1,100,000

 

$

1,124,980

 

Residential Asset Mortgage Products, Inc. 2002-RZ3, Class A3, 3.710%, 2/25/2029

 

 

1,300,000

 

 

1,328,861

Total Asset-Backed Securities (identified cost $13,693,739)

 

 

 

 

 

13,972,906

Collateralized Mortgage Obligations -- 7.4%

 

Federal Home Loan Mortgage Corporation -- 2.3%

 

5.250%, 1/15/2010, Series 2368, Class TQ

 

 

1,375,005

 

 

1,383,881

 

5.500%, 5/15/2011, Series 2368, Class OC

 

 

1,620,000

 

 

1,674,794

 

 

 

 

 

 

 

3,058,675

 

Federal National Mortgage Association -- 1.1%

 

6.550%, 12/25/2021, Series 1993-137, Class PH

 

 

1,413,703

 

 

1,435,765

 

Government National Mortgage Association -- 0.5%

 

5.950%, 7/20/2024, Series 2001-5, Class PK

 

 

210,668

 

 

211,317

 

7.500%, 11/16/2027, Series 2000-12, Class AC

 

 

494,849

 

 

505,185

 

 

 

 

 

 

 

716,502

 

Other Financial -- 3.5%

 

 

 

 

 

 

 

Capital Asset Research Funding 1997-A, Class A, 144A, 6.400%, 12/15/2004(7)(8)

 

 

388,053

 

 

388,053

 

Criimi Mae CMBS Corp. 1998-1, Class A2, 6.009%, 6/20/2030(7)(8)

 

 

2,493,169

 

 

2,676,680

 

Securitized Asset Sales, Inc. 1995-4, Class A5, 7.250%, 11/25/2005

 

 

169,759

 

 

169,581

 

Washington Mutual Mortgage Securities Corp. 2001-9, Class A6, 4.816%, 10/25/2032

 

 

1,350,000

 

 

1,395,883

 

 

 

 

 

 

 

4,630,197

Total Collateralized Mortgage Obligations (identified cost $9,649,581)

 

 

 

 

 

9,841,139

Mortgage Backed Pass-Through Securities -- 4.9%

 

Federal Home Loan Mortgage Corporation -- 0.4%

 

9.000%, 7/1/2014

 

 

107,087

 

 

117,062

 

11.000%, 8/1/2019

 

 

349,781

 

 

397,813

 

 

 

 

 

 

 

514,875

 

Description

Principal
Amount

Value

Mortgage Backed Pass-Through Securities (continued)

 

Federal National Mortgage Association -- 4.3%

 

7.000%, 12/1/2015

 

$

1,339,314

 

$

1,430,463

 

7.500%, 9/1/2015

 

 

1,177,023

 

 

1,260,727

 

8.000%, 8/1/2007

 

 

15,878

 

 

15,878

 

8.000%, 5/1/2008

 

 

336,240

 

 

355,449

 

9.000%, 7/1/2009

 

 

170,541

 

 

185,614

 

9.000%, 1/1/2015

 

 

63,525

 

 

70,778

 

9.500%, 12/1/2024

 

 

204,431

 

 

228,517

 

9.500%, 1/1/2025

 

 

425,100

 

 

475,184

 

9.500%, 1/1/2025

 

 

331,837

 

 

370,873

 

9.500%, 1/1/2025

 

 

205,484

 

 

229,694

 

10.000%, 7/1/2020

 

 

143,527

 

 

164,916

 

10.500%, 1/1/2022

 

 

173,763

 

 

202,112

 

11.000%, 12/1/2015

 

 

554,879

 

 

631,294

 

 

 

 

 

 

 

5,621,499

 

Government National Mortgage Association -- 0.2%

 

9.000%, 12/15/2019

 

 

276,817

 

 

310,046

Total Mortgage Backed Pass-Though Securities (identified cost $6,232,603)

 

 

 

 

 

6,446,420

Corporate Bonds & Notes -- 40.3%

 

Asset-Backed -- 0.3%

 

 

 

 

 

 

 

Regional Jet Equipment Trust, Note, Series 144A, 7.771%, 9/5/2004(7)

 

 

707,606

 

 

425,006

 

Automotive & Related -- 0.9%

 

 

 

 

 

 

DaimlerChrysler North America Holding Corp., 3.400%, 12/15/2004

 

 

1,200,000

 

 

1,211,065

 

Banks -- 2.8%

 

 

 

 

 

 

 

First Chicago Corp., Sub. Note, 6.875%, 6/15/2003

 

 

1,220,000

 

 

1,238,149

 

J.P. Morgan Chase & Co., Note, 4.000%, 2/1/2008

 

 

1,200,000

 

 

1,215,334

 

NationsBank Corp., 6.125%, 7/15/2004

 

 

1,220,000

 

 

1,295,877

 

 

 

 

 

 

 

3,749,360

 

Beverages & Foods -- 0.9%

 

 

 

 

 

 

 

General Mills, Inc., 7.468%, 10/15/2004

 

 

1,100,000

 

 

1,184,564

 

Broker/Dealers -- 5.2%

 

 

 

 

 

 

 

Bear, Stearns and Co., Note, 7.330%, 10/28/2004

 

 

1,250,000

 

 

1,359,447

 

Credit Suisse First Boston USA, Inc., Note, 5.875%, 8/1/2006

 

 

1,220,000

 

 

1,329,583

 

Goldman Sachs Group, Inc., Bond, 7.625%, 8/17/2005

 

 

810,000

 

 

911,441

 

Merrill Lynch & Co., Inc., Note, 6.800%, 11/3/2003

 

 

810,000

 

 

838,792

 

Merrill Lynch & Co., Inc., Note, Series MTNB, 5.350%, 6/15/2004

 

 

1,050,000

 

 

1,099,509

 

Morgan Stanley Group, Inc., Note, 7.750%, 6/15/2005

 

 

450,000

 

 

505,420

 

Morgan Stanley, Unsub., 6.100%, 4/15/2006

 

 

810,000

 

 

890,694

 

 

 

 

 

 

 

6,934,886

 

Description

Principal
Amount

Value

Corporate Bonds & Notes (continued)

 

Chemicals -- 1.3%

 

 

 

 

 

 

 

Dow Chemical Co., Note, 5.250%, 5/14/2004

 

$

1,620,000

 

$

1,673,282

 

Domestic & International Oil -- 0.8%

 

Occidental Petroleum Corp., 6.500%, 4/1/2005

 

 

970,000

 

 

1,046,137

 

Electric -- 2.9%

 

 

 

 

 

 

 

Dominion Resources, Inc., Note, 2.800%, 2/15/2005

 

 

1,350,000

 

 

1,354,718

 

Limestone Electronic Trust, Company Guarantee, 8.625%, 3/15/2003(7)(8)

 

 

820,000

 

 

803,611

 

TXU Capital, 2.730%, 7/1/2028(4)

 

 

2,430,000

 

 

1,645,895

 

 

 

 

 

 

 

3,804,224

 

Energy -- 0.3%

 

 

 

 

 

 

 

Osprey Trust, Sr. Secd. Note 144A, 8.310%, 1/15/2003(3)(7)

 

 

2,000,000

 

 

385,000

 

Entertainment -- 1.3%

 

 

 

 

 

 

 

AOL Time Warner, Inc., Note, 6.125%, 4/15/2006

 

 

810,000

 

 

846,813

 

Walt Disney Co., 7.300%, 2/8/2005

 

 

810,000

 

 

881,418

 

 

 

 

 

 

 

1,728,231

 

Financial Services -- 2.9%

 

 

 

 

 

 

 

Allstate Financial Global, Note, Series 144A, 7.125%, 9/26/2005(7)(8)

 

 

750,000

 

 

836,752

 

Boeing Capital Corp., Sr. Note, 7.100%, 9/27/2005

 

 

610,000

 

 

675,781

 

MBNA Global Capital Securities, Jr. Sub. Deb., 2.150%, 5/1/2003(4)

 

 

1,000,000

 

 

687,744

 

PaineWebber Group, Inc., Note, 6.450%, 12/1/2003

 

 

810,000

 

 

841,131

 

Salomon Smith Barney Holdings, Inc., Note, 6.250%, 5/15/2003

 

 

810,000

 

 

817,706

 

 

 

 

 

 

 

3,859,114

 

Forest Products & Paper -- 0.4%

 

Reed Elsevier, Inc., Company Guarantee, 6.125%, 8/1/2006

 

 

490,000

 

 

535,869

 

Healthcare -- 1.3%

 

 

 

 

 

 

 

Abbott Laboratories, Note, 5.125%, 7/1/2004

 

 

1,620,000

 

 

1,697,750

 

Industrial Services -- 0.8%

 

 

 

 

 

 

 

Dayton-Hudson Corp., Note, 7.500%, 7/15/2006

 

 

600,000

 

 

690,703

 

Tyco International Group, Note, 5.800%, 8/1/2006

 

 

410,000

 

 

392,575

 

 

 

 

 

 

 

1,083,278

 

Description

Principal
Amount

Value

Corporate Bonds &
Notes (continued)

 

Insurance -- 1.8%

 

 

 

 

 

 

 

American General Finance Corp., Note, Series G, 4.500%, 11/15/2007

 

$

1,100,000

 

$

1,150,007

 

MGIC Investment Corp., Sr. Note, 7.500%, 10/15/2005

 

 

1,095,000

 

 

1,216,330

 

 

 

 

 

 

 

2,366,337

 

Leasing -- 1.8%

 

 

 

 

 

 

 

General Electric Capital Corp., Note, 5.000%, 6/15/2007

 

 

1,000,000

 

 

1,074,546

 

General Electric Capital Corp., Note, 5.375%, 4/23/2004

 

 

1,210,000

 

 

1,262,429

 

 

 

 

 

 

 

2,336,975

 

Media -- 0.8%

 

 

 

 

 

 

 

Gannett Co., Inc., Note, 4.950%, 4/1/2005

 

 

955,000

 

 

1,010,118

 

Metals -- 0.5%

 

 

 

 

 

 

 

Alcoa, Inc., Note, 5.875%, 6/1/2006

 

 

620,000

 

 

682,976

 

Other Financial -- 3.8%

 

 

 

 

 

 

 

American Express Co., 3.750%, 11/20/2007

 

 

1,000,000

 

 

1,023,210

 

Core Investments, 4.727%, 11/30/2007

 

 

1,700,000

 

 

1,760,545

 

HSB Group, Inc., Company Guarantee, 2.285%, 4/15/2003(4)

 

 

2,430,000

 

 

2,272,716

 

 

 

 

 

 

 

5,056,471

 

Papers -- 0.8%

 

 

 

 

 

 

 

Weyerhaeuser Co., Note, 5.500%, 3/15/2005(7)(8)

 

 

1,010,000

 

 

1,064,158

 

Personal Credit -- 5.2%

 

 

 

 

 

 

 

Ford Motor Credit Co., Note, 7.500%, 6/15/2003

 

 

1,220,000

 

 

1,232,938

 

Ford Motor Credit Co., Sr. Note, 6.125%, 3/20/2004

 

 

1,620,000

 

 

1,657,017

 

General Motors Acceptance Corp., Note, 4.150%, 2/7/2005

 

 

2,600,000

 

 

2,608,676

 

Household Finance Corp., Note, 8.000%, 5/9/2005

 

 

1,200,000

 

 

1,329,588

 

 

 

 

 

 

 

6,828,219

 

Short-Term Business Credit -- 1.0%

 

CIT Group Inc., Sr. Note, 4.125%, 2/21/2006

 

 

1,275,000

 

 

1,280,354

 

Telecommunications -- 1.6%

 

 

 

 

 

 

 

British Telecommunication PLC, Note, 7.875%, 12/15/2005

 

 

570,000

 

 

644,076

 

France Telecommunications, Note, 8.700%, 3/1/2006

 

 

570,000

 

 

642,367

 

Verizon Global Funding, Note, 6.750%, 12/1/2005

 

 

810,000

 

 

897,090

 

 

 

 

 

 

 

2,183,533

 

Description

Principal
Amount

Value

Corporate Bonds & Notes (continued)

 

Utilities -- 0.9%

 

 

 

 

 

 

 

National Rural Utilities Cooperative Finance Corp., Note, 3.000%, 2/15/2006

 

$

1,200,000

 

$

1,213,489

Total Corporate Bonds & Notes (identified cost $54,463,535)

 

 

 

 

 

53,340,396

Government Agencies -- 32.1%

 

Federal Home Loan Bank -- 4.0%

 

Federal Home Loan Bank System, Bond, 4.125%, 1/14/2005

 

 

5,000,000

 

 

5,231,325

 

Federal Home Loan Mortgage Corporation -- 15.4%

 

Federal Home Loan Mortgage Corp., 4.875%, 3/15/2007

 

 

2,000,000

 

 

2,180,264

 

Federal Home Loan Mortgage Corp., Note, 5.250%, 2/15/2004

 

 

5,000,000

 

 

5,188,920

 

Federal Home Loan Mortgage Corp., Unsecd. Note, 3.250%, 11/15/2004

 

 

3,000,000

 

 

3,087,498

 

Federal Home Loan Mortgage Corp., Unsecd. Note, 3.500%, 9/15/2007

 

 

3,500,000

 

 

3,613,029

 

Federal Home Loan Mortgage Corp., Unsecd. Note, 4.250%, 6/15/2005

 

 

6,000,000

 

 

6,343,008

 

 

 

 

 

 

 

20,412,719

 

Federal National Mortgage Association -- 12.7%

 

Federal National Mortgage Association, Note, 3.125%, 11/15/2003

 

 

1,740,000

 

 

1,762,820

 

Federal National Mortgage Association, Note, 4.250%, 7/15/2007

 

 

4,500,000

 

 

4,787,032

 

Federal National Mortgage Association, Note, 4.375%, 10/15/2006

 

 

2,000,000

 

 

2,137,356

 

Federal National Mortgage Association, Note, 5.125%, 2/13/2004

 

 

1,430,000

 

 

1,481,650

 

Federal National Mortgage Association, Note, 5.500%, 2/15/2006

 

 

6,000,000

 

 

6,584,568

 

 

 

 

 

 

 

16,753,426

Total Government Agencies (identified cost $41,217,186)

 

 

 

 

42,397,470

Total Investments in Securities (identified cost $125,256,644)

 

 

 

 

125,998,331

 

Description

Principal
Amount

Value

Repurchase Agreement -- 4.2%

 

Agreement with Lehman Brothers, Inc., 1.320% dated 2/28/2003, to be repurchased at $5,532,926 on 3/3/2003, collateralized by a U.S. Government Agency Obligation maturing 12/15/2005

 

$

5,532,317

 

$

5,532,317

Total Investments (identified cost $130,788,961) -- 99.5%

 

 

 

 

131,530,648

Other Net Assets and Liabilities--0.5%

 

 

 

 

675,400

Total Net Assets -- 100.0%

 

 

 

 

$

132,206,048

Money Market Fund

   

Description

    

Principal
Amount

    

Value

Commercial Paper -- 29.6%(9)

 

Asset-Backed -- 6.4%

 

 

 

 

 

 

 

Liquid Funding Ltd., 1.300%, 4/16/2003(7)(8)

 

$

35,000,000

 

$

34,941,861

 

Scaldis Capital Ltd., 1.360%, 3/24/2003(7)(8)

 

 

26,000,000

 

 

25,977,409

 

Tannehill Capital Co., 1.290% - 1.310%, 4/14/2003 - 4/22/2003(7)(8)

 

 

74,075,000

 

 

73,942,925

 

World Omni Vehicle Leasing, Inc., 1.300%, 3/21/2003(7)(8)

 

 

75,000,000

 

 

74,945,833

 

 

 

 

 

 

 

209,808,028

 

Diversified -- 2.2%

 

 

 

 

 

 

 

Concord Minutemen, 1.280% - 1.290%, 5/19/2003 -5/21/2003(7)(8)

 

 

74,878,000

 

 

74,662,820

 

Electric -- 2.3%

 

 

 

 

 

 

 

Wisconsin Energy Corp., 1.400% - 1.430%, 3/5/2003 - 3/17/2003(7)(8)

 

 

75,000,000

 

 

74,971,635

 

Foreign Banks -- 6.7%

 

 

 

 

 

 

 

Britannia Building Society, 1.400%, 3/6/2003 - 3/17/2003

 

 

69,500,000

 

 

69,468,446

 

Depfa-Bank, 1.320% - 1.350%, 3/19/2003 - 4/9/2003(7)(8)

 

 

75,000,000

 

 

74,924,400

 

Spintab-Swedmortgage AB, 1.330% , 4/11/2003

 

 

75,000,000

 

 

74,886,396

 

 

 

 

 

 

 

219,279,242

 

Description

Principal
Amount

Value

Commercial
Paper (continued)(9)

 

Healthcare -- 0.4%

 

 

 

 

 

 

 

Baxter International, Inc., 1.300%, 3/12/2003

 

$

12,500,000

 

$

12,495,035

 

Insurance -- 4.0%

 

 

 

 

 

 

 

Jefferson-Pilot Corp., 1.310%, 4/23/2003

 

 

69,000,000

 

 

68,866,926

 

Torchmark Corp., 1.310% - 1.380%, 3/4/2003 - 3/18/2003

 

 

62,600,000

 

 

62,573,768

 

 

 

 

 

 

 

131,440,694

 

Mortgage -- 2.3%

 

 

 

 

 

 

 

Mortgage Interest Networking Trust A1+/P1, 1.370%, 4/3/2003

 

 

75,000,000

 

 

74,905,813

 

Personal Credit -- 2.3%

 

 

 

 

 

 

 

Household Finance Corp., 1.360%, 3/24/2003

 

 

75,000,000

 

 

74,934,833

 

Receivables -- 0.7%

 

 

 

 

 

 

 

Fairway Financial Corp., 1.340%, 3/24/2003(7)(8)

 

 

23,036,000

 

 

23,016,279

 

Telecommunications -- 2.3%

 

 

 

 

Verizon Global Funding, 1.470%, 3/15/2003(7)(8)

 

 

75,000,000

 

 

75,000,000

Total Commercial Paper

970,514,379

Corporate Bonds -- 3.4%

 

 

 

 

 

 

 

Banks -- 1.7%

 

 

 

 

 

 

 

Associated Banc Corp., 1.600%, 4/10/2003

 

 

55,000,000

 

 

55,013,381

 

Healthcare -- 1.2%

 

 

 

 

 

 

 

Lily (Eli) & Co., 4.226%, 3/22/2003(7)(8)

 

 

15,000,000

 

 

15,011,996

 

Merck & Co., Inc., 144A, 4.489%, 2/22/2004(7)(8)

 

 

25,000,000

 

 

25,787,699

 

 

 

 

 

 

 

40,799,695

 

Telecommunications -- 0.5%

 

 

 

 

SBC Communications, Inc., 144A, 4.295%, 6/5/2003(7)(8)

 

 

15,000,000

 

 

15,059,730

Total Corporate Bonds

110,872,806

Variable-Rate Notes -- 51.2%(4)

 

 

 

 

Banks -- 3.0%

 

 

 

 

 

 

 

American Express Centurion Bank, DE, 1.330%, 3/12/2003

 

 

15,000,000

 

 

15,000,000

 

Bank One, Illinois, N.A., 1.490%, 3/17/2003

 

 

28,500,000

 

 

28,517,707

 

SMM Trust, (Series 2002-H), 144A, 1.430% 3/24/2003(7)(8)

 

 

40,000,000

 

 

40,000,000
               

 

Description

Principal
Amount

Value

Variable-Rate Notes (continued)(4)

 

 

 

 

Banks (continued)

 

 

 

 

 

 

 

SMM Trust, (Series 2002-M), 144A, 1.440%, 3/15/2003(7)(8)

 

$

15,000,000

 

$

15,000,000

 

 

 

 

 

 

 

98,517,707

 

Broker/Dealers -- 12.6%

 

 

 

 

 

 

 

Bank of America, 1.442%, 6/2/2003

 

 

75,000,000

 

 

75,000,000

 

Bear Stearns Cos., Inc., 1.430%, 3/5/2003

 

 

75,000,000

 

 

75,000,000

 

Credit Suisse First Boston USA, Inc., 1.370%, 3/17/2003

 

 

75,000,000

 

 

75,000,000

 

Goldman Sachs Group, Inc., 1.368%, 3/18/2003

 

 

30,000,000

 

 

30,000,000

 

Goldman Sachs Group, Inc., 1.570%, 3/17/2003

 

 

5,000,000

 

 

5,000,351

 

Goldman Sachs Group, Inc., 1.610%, 4/3/2003

 

 

30,000,000

 

 

30,006,487

 

Goldman Sachs Group LP, 1.750%, 3/17/2003

 

 

10,000,000

 

 

10,001,411

 

J.P. Morgan & Co., Inc., 1.390%, 3/3/2003(7)(8)

 

 

20,000,000

 

 

20,000,000

 

Merrill Lynch & Co., Inc., 1.370%, 3/11/2003

 

 

20,000,000

 

 

20,000,000

 

Merrill Lynch & Co., Inc., 1.540%, 4/30/2003

 

 

10,000,000

 

 

10,001,697

 

Merrill Lynch & Co., Inc., 1.630%, 5/5/2003

 

 

16,000,000

 

 

16,014,604

 

Morgan Stanley, 1.570%, 4/7/2003

 

 

48,525,000

 

 

48,535,260

 

 

 

 

 

 

 

414,559,810

 

Construction Equipment -- 2.3%

 

 

 

 

Caterpillar Financial Services Corp., 1.468%, 4/9/2003

 

 

75,000,000

 

 

75,000,000

 

Diversified Manufacturing -- 2.3%

 

 

 

 

Cargill, Inc., 144A, 1.390%, 4/14/2003(7)(8)

 

 

75,000,000

 

 

75,000,000

 

Drugs -- 1.8%

 

 

 

 

 

 

 

Bayer Corp., 4.450%, 3/19/2003(7)(8)

 

 

60,000,000

 

 

60,043,555

 

Foreign Banks -- 5.2%

 

 

 

 

 

 

 

Bank of Montreal, 1.480%, 3/18/2003

 

 

25,000,000

 

 

25,021,336

 

HBOS Treasury Services PLC, 144A, 1.330%, 5/20/2003(7)(8)

 

 

30,000,000

 

 

30,000,000

 

HBOS Treasury Services PLC, 1.360%, 5/14/2003

 

 

40,000,000

 

 

40,027,716

 

Northern Rock PLC, 1.340%, 5/19/2003(7)(8)

 

 

50,000,000

 

 

50,000,000

 

Northern Rock PLC, 144A, 1.373%, 4/16/2003

 

 

25,000,000

 

 

25,000,000

 

 

 

 

 

 

 

170,049,052

 

Description

Principal
Amount

Value

Variable-Rate Notes (continued)(4)

 

 

 

 

Insurance -- 10.9%

 

 

 

 

 

 

 

GE Life and Annuity Assurance Co., 1.440%, 4/21/2003(7)

 

$

75,000,000

 

$

75,000,000

 

Jackson National Life Insurance Co., 1.330%, 5/1/2003(7)(8)

 

 

40,000,000

 

 

40,000,000

 

John Hancock, Global Funding II, 144A, 1.440%, 3/3/2003(7)(8)

 

 

8,000,000

 

 

8,000,644

 

John Hancock, Global Funding II, 144A, 1.560%, 3/16/2003(7)(8)

 

 

35,000,000

 

 

35,027,412

 

Metropolitan Life Insurance Co., 1.416%, 3/2/2003(7)(8)

 

50,000,000

 

 

50,000,000

 

Monumental Life Insurance Co., 1.440%, 4/2/2003(7)

 

 

10,000,000

 

 

10,000,000

 

Monumental Life Insurance Co., 1.450%, 4/2/2003(7)

 

 

25,000,000

 

 

25,000,000

 

Monumental Life Insurance Co., 1.530%, 3/1/2003(7)

 

 

40,000,000

 

 

40,000,000

 

Pacific Life Funding LLC, 1.460%, 5/28/2003(7)(8)

 

 

25,000,000

 

 

24,975,847

 

Travelers Insurance Co., 1.410%, 5/1/2003(7)

 

 

50,000,000

 

 

50,000,000

 

 

 

 

 

 

 

358,003,903

 

Leasing -- 2.3%

 

 

 

 

 

 

 

Paccar Financial Corp., 1.390%, 5/15/2003

 

 

45,000,000

 

 

45,028,727

 

Paccar Financial Corp., 1.420%, 5/15/2003

 

 

30,000,000

 

 

30,019,875

 

 

 

 

 

 

 

75,048,602

 

Personal Credit -- 7.5%

 

 

 

 

 

 

 

American Express Credit Corp., 1.336%, 3/27/2003

 

45,000,000

 

 

45,000,000

 

American Honda Finance Corp., 144A, 1.334%, 4/21/2003(7)(8)

 

50,000,000

 

 

50,000,000

 

American Honda Finance Corp., 144A, 1.380%, 3/12/2003(7)(8)

 

 

25,000,000

 

 

25,000,000

 

Associates Corp. of North America, 1.470%, 3/26/2003

 

 

50,000,000

 

 

50,000,000

 

VW Credit, Inc., 1.544%, 4/22/2003(7)(8)

 

 

75,000,000

 

 

75,139,108

 

 

 

 

 

 

 

245,139,108

 

Telecommunications -- 3.3%

 

 

 

 

BellSouth Telecommunications, Inc., 1.463%, 3/4/2003

 

 

75,000,000

 

 

75,000,000

 

SBC Communications, Inc., 144A, 1.380%, 3/16/2003(7)(8)

 

 

35,000,000

 

 

35,000,000

 

 

 

 

 

 

 

110,000,000

Total Variable-Rate Notes

 

 

 

 

 

1,681,361,737

 

Description

Shares or
Principal
Amount

Value

Mutual Funds -- 5.0%

 

 

 

 

 

 

 

American Select Cash Reserve Fund

 

 

103,795,981

 

$

103,795,981

 

Goldman Sachs Financial Square

 

 

62,194,579

 

 

62,194,579

Total Mutual Funds (Shares at net asset value)

 

 

 

 

 

165,990,560

Repurchase Agreements -- 10.7%

 

 

 

 

Agreement with First Union Securities, Inc., 1.380%, dated 2/28/2003, to be repurchased at $85,009,775 on 3/3/2003, collateralized by Corporate Bonds with various maturities to 7/26/2030

$

 

85,000,000

 

 

85,000,000

 

Agreement with Salomon Smith Barney Holdings, Inc., 1.363%, dated 2/28/2003, to be repurchased at $25,002,840 on 3/3/2003, collateralized by Corporate Bonds with various maturities to 7/1/2035

 

 

25,000,000

 

 

25,000,000

 

Agreement with Deutsche Bank Alex Brown, Inc., 1.373%, dated 2/28/2003, to be repurchased at $150,017,163 on 3/3/2003, collateralized by Corporate Bonds with various maturities to 3/15/2038

 

 

150,000,000

 

 

150,000,000

 

Agreement with Morgan Stanley & Co., Inc., 1.373%, dated 2/28/2003, to be repurchased at $90,010,298 on 3/3/2003, collateralized by Corporate Bonds with various maturities to 3/15/2036

 

90,000,000

 

 

90,000,000

Total Repurchase Agreements

 

 

 

 

350,000,000

Total Investments (at amortized cost) -- 99.9%

 

 

 

3,278,739,482

Other Net Assets and Liabilities -- 0.1%

 

3,871,857

Total Net Assets -- 100.0%

 

 

 

$

3,282,611,339

Notes to Portfolio of Investments

Note: The categories of investments are shown as a percentage of net assets for each Fund at February 28, 2003.

(1) Certain shares or principal amounts are temporarily on loan to unaffiliated broker-dealers.

(2) Represents the initial deposit within a margin account used to ensure the Fund is able to satisfy the obligations of its outstanding long futures contracts.

(3) Non-income producing.

(4) Current rate and next demand date shown.

(5) Securities held as collateral for dollar roll transactions.

(6) All or a portion of these securities are subject to dollar roll transactions.

(7) Denotes a restricted security which is subject to restrictions on resale under federal securities laws. At February 28, 2003, these securities amounted to:

 

     

Amount

    

% of
Net Assets

Intermediate Bond Fund

 

$

72,205,417

 

11.2%

Short-Term Income Fund

 

 

7,504,480

 

5.7

Money Market Fund

 

 

1,421,429,153

 

43.3

(8) Denotes a restricted security which has been deemed liquid by criteria approved by the Fund's Board of Directors.

(9) Each issue shows the rate of discount at the time of purchase.

The following acronyms are used throughout this report:

ADR--American Depositary Receipt

FRN--Floating Rate Note

MTN--Medium Term Note

REMIC--Real Estate Mortgage Investment Conduit

 

Marshall

     

Cost of
Investments for
Federal Tax
Purposes

    

Net
Unrealized
Appreciation
(Depreciation)
for Federal Tax
Purposes

    

Gross
Unrealized
Appreciation for
Federal Tax
Purposes

    

Gross
Unrealized
Depreciation for
Federal Tax
Purposes

     

Total Net Assets

Equity Income Fund

  

$ 315,937,656

  

$ (13,515,294)

  

$ 30,451,202

  

$ 43,966,496

  

$ 306,216,321

Large-Cap Growth & Income Fund

  

205,413,713

  

19,575,429

  

34,154,504

  

14,579,075

  

225,290,686

Mid-Cap Value Fund

  

213,676,317

  

(6,647,851)

  

15,391,155

  

22,039,006

  

207,244,784

Mid-Cap Growth Fund

  

207,068,333

  

(20,208,339)

  

8,891,584

  

29,099,923

  

187,172,598

Small-Cap Growth Fund

  

76,081,179

  

(4,395,718)

  

3,878,194

  

8,273,912

  

71,521,341

International Stock Fund

  

278,596,110

  

(14,868,896)

  

13,592,455

  

28,461,351

  

259,518,060

Government Income Fund

  

424,464,580

  

12,918,937

  

14,669,264

  

1,750,327

  

376,984,762

Intermediate Bond Fund

  

616,513,753

  

23,078,882

  

31,147,800

  

8,068,926

  

646,962,894

Short-Term Income Fund

  

131,139,865

  

390,783

  

3,564,722

  

3,173,939

  

132,206,048

Money Market Fund

  

3,278,739,482*

  

--

  

--

  

--

  

3,282,611,339

* at amortized cost

Statements of Assets and Liabilities

 

   

Equity
Income
Fund

   

Large-Cap
Growth &
Income Fund

   

Mid-Cap
Value
Fund

    

Mid-Cap
Growth
Fund

Assets:

  

 

 

 

Investments in securities, at value

  

$ 297,787,077

  

$ 221,781,354

  

$ 201,541,167

  

$ 166,756,416

Investments in repurchase agreements

  

4,635,285

  

3,207,788

  

5,487,299

  

20,103,578

Short-term investments held as collateral for securities lending

  

14,703,500

  

23,072,500

  

34,494,043

  

67,800,457

Cash

  

--

  

--

  

--

  

--

Cash denominated in foreign currencies (identified cost, $24,602)

  

--

  

--

  

--

  

--

Income receivable

  

1,160,606

  

509,038

  

330,682

  

62,172

Receivable for investments sold

  

3,300,918

  

--

  

191,309

  

3,486,365

Total assets

  

321,587,386

  

248,570,680

  

242,044,500

  

258,208,988

Liabilities:

  

 

 

 

Payable for capital stock redeemed

  

--

  

--

  

--

  

--

Payable to bank

  

127,737

  

29,107

  

10,494

  

454

Payable for investments purchased

  

--

  

--

  

100,357

  

3,064,823

Payable on collateral due to broker

  

14,703,500

  

23,072,500

  

34,494,043

  

67,800,457

Options written, at value (premium received $417,227)

  

253,325

  

--

  

--

  

--

Payable for income distribution

  

--

  

--

  

--

  

--

Payable for dollar roll transactions

  

--

  

--

  

--

  

--

Accrued expenses

  

286,503

  

178,387

  

194,822

  

170,656

Total liabilities

  

15,371,065

  

23,279,994

  

34,799,716

  

71,036,390

Total Net Assets

  

$ 306,216,321

  

$ 225,290,686

  

$ 207,244,784

  

$ 187,172,598

Net Assets Consist of:

  

 

 

 

Paid-in-capital

  

328,004,626

  

270,296,902

  

212,236,388

  

296,088,623

Net unrealized appreciation (depreciation) on investments, options, futures contracts and foreign currency translation

  

(13,351,392)

  

19,575,429

  

(6,647,851)

  

(20,208,339)

Accumulated net realized gain (loss) on investments, options, futures contracts and foreign currency transactions

  

(9,829,797)

  

(65,185,116)

  

1,444,978

  

(88,033,514)

Undistributed net investment income (accumulated net operating loss)

  

1,392,884

  

603,471

  

211,269

  

(674,172)

Total Net Assets

  

$ 306,216,321

  

$ 225,290,686

  

$ 207,244,784

  

$ 187,172,598

Net Asset Value, Offering Price and Redemption Proceeds Per Share

 

 

 

 

Investor Class of Shares:

  

 

 

 

Net Asset Value, Offering Price and Redemption Proceeds Per Share

  

$ 10.92

  

$ 9.51

  

$ 10.01

  

$ 9.23

Advisor Class of Shares:

  

 

 

 

Net Asset Value and Redemption Proceeds Per Share

  

$ 10.92

  

$ 9.51

  

$ 10.01

  

$ 9.23

Offering Price Per Share

 

$ 11.59*

  

$ 10.09*

  

$ 10.62*

  

$ 9.79*

Institutional Class of Shares:

  

 

 

 

Net Asset Value, Offering Price and Redemption Proceeds Per Share

  

--

  

--

  

--

  

--

Net Assets:

  

 

 

 

Investor Class of Shares

  

$ 302,187,570

  

$ 220,712,862

  

$ 203,396,850

  

$ 184,599,661

Advisor Class of Shares

  

4,028,751

  

4,577,824

  

3,847,934

  

2,572,937

Institutional Class of Shares

  

--

  

--

  

--

  

--

Total Net Assets

  

$ 306,216,321

  

$ 225,290,686

  

$ 207,244,784

  

$ 187,172,598

Shares Outstanding:

  

 

 

 

Investor Class of Shares

 

27,675,147

  

23,196,970

  

20,310,116

  

20,001,889

Advisor Class of Shares

 

368,967

  

481,137

  

384,218

  

278,786

Institutional Class of Shares

 

--

  

--

  

--

  

--

Total Shares Outstanding

  

28,044,114

  

23,678,107

  

20,694,334

  

20,280,675

Investments, at identified cost

  

$ 315,937,656

  

$ 205,413,713

  

$ 213,676,317

  

$ 207,068,333

* Computation of offering price per share 100/94.25 of net asset value.

** Computation of offering price per share 100/95.25 of net asset value.

*** Computation of offering price per share 100/98.00 of net asset value.

Small-Cap
Growth
Fund

   

International
Stock
Fund

   

Government
Income
Fund

   

Intermediate
Bond
Fund

   

Short-Term
Income
Fund

    

Money
Market
Fund

 

 

 

 

 

$ 68,462,368

  

$ 255,588,214

  

$ 326,876,157

  

$ 602,147,695

  

$ 125,998,331

  

$ 2,928,739,482

3,223,093

  

8,139,000

  

110,507,360

  

37,444,940

  

5,532,317

  

350,000,000

18,532,726

  

32,537,850

  

93,274,000

  

103,173,262

  

--

  

--

388

  

203

  

5,911

  

--

  

194

  

--

--

  

24,715

  

--

  

--

  

--

  

--

23,768

  

439,587

  

1,226,405

  

7,355,217

  

1,180,580

  

7,641,460

1,339,872

  

2,161,900

  

--

  

3,029,660

  

--

  

--

91,582,215

  

298,891,469

  

531,889,833

  

753,150,774

  

132,711,422

  

3,286,380,942

 

 

 

 

 

--

  

1,303,794

  

--

  

--

  

--

  

--

--

  

--

  

--

  

169,089

  

--

  

67,487

1,432,961

  

5,245,375

  

18,482,252

  

--

  

--

  

--

18,532,726

  

32,537,850

  

93,274,000

  

103,173,262

  

--

  

--

--

  

--

  

--

  

--

  

--

  

--

--

  

--

  

1,170,462

  

2,461,135

  

452,932

  

2,746,717

--

  

--

  

41,712,667

  

--

  

--

  

--

95,187

  

286,390

  

265,690

  

384,394

  

52,442

  

955,399

20,060,874

  

39,373,409

  

154,905,071

  

106,187,880

  

505,374

  

3,769,603

$ 71,521,341

  

$ 259,518,060

  

$ 376,984,762

  

$ 646,962,894

  

$ 132,206,048

  

$ 3,282,611,339

 

 

 

 

 

105,494,946

  

420,252,912

  

368,443,132

  

656,556,633

  

138,834,322

  

3,283,152,489

(4,395,718)

  

(14,837,642)

  

12,939,293

  

24,773,512

  

741,687

  

--

(29,064,587)

  

(144,913,959)

  

(3,993,711)

  

(33,144,912)

  

(6,998,117)

  

(541,150)

(513,300)

  

(983,251)

  

(403,952)

  

(1,222,339)

  

(371,844)

  

--

$ 71,521,341

  

$ 259,518,060

  

$ 376,984,762

  

$ 646,962,894

  

$ 132,206,048

  

$ 3,282,611,339

 

 

 

 

 

 

 

 

 

 

$ 8.29

  

$ 7.90

  

$ 9.74

  

$ 9.62

  

$ 9.45

  

$ 1.00

 

 

 

 

 

$ 8.29

  

$ 7.89

  

$ 9.74

  

$ 9.62

  

$ 9.45

  

$ 1.00

$ 8.80*

  

$ 8.37*

  

$ 10.23**

  

$ 10.10**

  

$ 9.92***

  

$ 1.00

 

 

 

 

 

--

  

$ 7.96

  

--

  

--

  

--

  

$ 1.00

 

 

 

 

 

$ 69,161,218

  

$ 164,751,005

  

$ 372,448,859

  

$ 641,963,601

  

$ 130,887,190

  

$ 2,076,354,619

2,360,123

  

2,847,757

  

4,535,903

  

4,999,293

  

1,318,858

  

106,302,822

--

  

91,919,298

  

--

  

--

  

--

  

1,099,953,898

$ 71,521,341

  

$ 259,518,060

  

$ 376,984,762

  

$ 646,962,894

  

$ 132,206,048

  

$ 3,282,611,339

 

 

 

 

 

8,345,912

  

20,859,583

  

38,243,284

  

66,746,267

  

13,850,290

  

2,076,702,526

284,809

  

360,880

  

465,747

  

519,776

  

139,554

  

106,331,429

--

  

11,547,424

  

--

  

--

  

--

  

1,100,118,534

8,630,721

  

32,767,887

  

38,709,031

  

67,266,043

  

13,989,844

  

3,283,152,489

$ 76,081,179

  

$ 278,596,110

  

$ 424,444,224

  

$ 614,819,123

  

$ 130,788,961

  

$ 3,278,739,482

Statements of Operations

 

   

Equity
Income
Fund

   

Large-Cap
Growth &
Income
Fund

   

Mid-Cap
Value
Fund

    

Mid-Cap
Growth
Fund

Investment Income:

  

 

 

 

Interest income

  

$ 77,174(1)

  

$ 71,353(1)

  

$ 90,698(1)

  

$ 190,728(1)

Dividend income

  

5,459,045

  

2,207,381(2)

  

1,406,787(2)

  

391,992(2)

Total income

  

5,536,219

  

2,278,734

  

1,497,485

  

582,720

Expenses:

  

 

 

 

Investment adviser fee

  

1,218,183

  

931,286

  

753,960

  

743,739

Shareholder services fees--

  

 

 

 

Investor Class of Shares

  

401,042

  

304,689

  

246,497

  

244,712

Advisor Class of Shares

  

5,020

  

5,740

  

4,823

  

3,201

Administrative fees

  

160,502

  

124,047

  

100,528

  

99,165

Portfolio accounting fees

 

46,871

  

41,304

  

34,590

  

35,337

Transfer and dividend disbursing agent fees

  

81,240

  

87,011

  

74,283

  

68,226

Custodian fees

  

28,640

  

24,585

  

20,106

  

19,833

Registration fees

  

13,808

  

13,544

  

13,045

  

12,820

Auditing fees

  

7,294

  

7,339

  

7,302

  

7,294

Legal fees

  

1,884

  

1,884

  

1,884

  

1,884

Printing and postage

  

10,804

  

16,355

  

9,408

  

11,904

Directors' fees

  

3,606

  

3,606

  

3,606

  

3,607

Insurance premiums

  

1,193

  

1,129

  

746

  

1,017

Distribution services fees--

  

 

 

 

Advisor Class of Shares

  

5,020

  

5,740

  

4,823

  

3,201

Miscellaneous

  

4,654

  

4,594

  

3,005

  

4,153

Total expenses

  

1,989,761

  

1,572,853

  

1,278,606

  

1,260,093

Deduct--

  

 

 

 

Waiver of investment adviser fee

  

--

  

--

  

--

  

--

Waiver of shareholder services fees--

  

 

 

 

Investor Class of Shares

  

--

  

--

  

--

  

--

Advisor Class of Shares

  

(5,020)

  

(5,740)

  

(4,823)

  

(3,201)

Total Waivers

  

(5,020)

  

(5,740)

  

(4,823)

  

(3,201)

Net expenses

  

1,984,741

  

1,567,113

  

1,273,783

  

1,256,892

Net investment income (net operating loss)

  

3,551,478

  

711,621

  

223,702

  

(674,172)

Net Realized and Unrealized Gain (Loss) on Investments, Options, Futures Contracts and Foreign Currency:

  

 

 

 

Net realized gain (loss) on investment transactions and options (identified cost basis)

  

(2,944,189)

  

(20,606,014)

  

3,999,292

  

(12,590,797)

Net realized gain (loss) on futures contracts (identified cost basis)

  

(936,195)

  

--

  

--

  

--

Net realized gain (loss) on foreign currency contracts (identified cost basis)

  

--

  

--

  

277

  

--

Net change in unrealized appreciation/depreciation on investments, options, futures contracts and foreign currency translation

  

(31,257,287)

  

(7,802,451)

  

(17,130,295)

  

11,476,054

Net realized and unrealized gain (loss) on investments, options, futures contracts and foreign currency

  

(35,137,671)

  

(28,408,465)

  

(13,130,726)

  

(1,114,743)

Change in net assets resulting from operations

  

$ (31,586,193)

  

$ (27,696,844)

  

$ (12,907,024)

  

$ (1,788,915)

(1) Including income on securities loaned of $20,865, $32,586, $29,444, $51,659, $14,758, $78,915, $57,389, and $85,470, respectively.

(2) Net of foreign taxes withheld of $2,210, $1,132, $1,789, $2,385 and $188,390, respectively.

(3) Net of dollar roll expense of $775,350.

Small-Cap
Growth
Fund

   

International
Stock
Fund

   

Government
Income
Fund

   

Intermediate
Bond
Fund

   

Short-Term
Income
Fund

   

Money
Market
Fund

 

 

 

 

 

$ 47,341(1)

  

$ 79,519(1)

  

$ 8,967,430(1)(3)

  

$ 16,786,778(1)

  

$ 2,735,938

  

$ 26,123,730

83,400(2)

  

1,780,579(2)

  

--

  

--

  

--

  

--

130,741

  

1,860,098

  

8,967,430

  

16,786,778

  

2,735,938

  

26,123,730

 

 

 

 

 

381,665

  

1,417,670

  

1,401,315

  

1,885,306

  

363,159

  

2,310,041

 

 

 

 

 

92,413

  

228,972

  

461,911

  

779,931

  

150,073

  

2,488,352

3,003

  

5,233

  

5,194

  

5,613

  

1,243

  

133,844

38,167

  

140,877

  

183,699

  

294,765

  

60,527

  

673,725

28,515

  

57,552

  

48,152

  

58,482

  

29,258

  

122,102

56,715

  

79,103

  

71,545

  

67,397

  

46,381

  

166,827

7,633

  

97,504

  

31,081

  

43,819

  

12,105

  

166,400

11,130

  

20,910

  

13,223

  

14,186

  

12,715

  

28,893

7,294

  

8,232

  

7,294

  

7,340

  

7,310

  

7,294

1,884

  

1,884

  

1,884

  

1,687

  

1,884

  

1,950

9,083

  

18,844

  

10,496

  

8,017

  

5,954

  

36,406

3,607

  

3,606

  

3,607

  

3,607

  

3,607

  

3,606

615

  

1,052

  

1,163

  

1,662

  

680

  

5,804

 

 

 

 

 

3,003

  

5,233

  

5,194

  

5,613

  

1,243

  

160,613

2,317

  

4,231

  

4,666

  

7,122

  

2,238

  

19,015

647,044

  

2,090,903

  

2,250,424

  

3,184,547

  

698,377

  

6,324,872

 

 

 

 

 

--

  

(34,712)

  

(186,842)

  

(188,531)

  

(205,790)

  

(462,008)

 

 

 

 

 

--

  

--

  

(424,958)

  

(717,537)

  

(138,067)

  

--

(3,003)

  

(5,233)

  

(5,194)

  

(5,613)

  

(1,243)

  

--

(3,003)

  

(39,945)

  

(616,994)

  

(911,681)

  

(345,100)

  

(462,008)

644,041

  

2,050,958

  

1,633,430

  

2,272,866

  

353,277

  

5,862,864

(513,300)

  

(190,860)

  

7,334,000

  

14,513,912

  

2,382,661

  

20,260,866

 

 

 

 

 

(722,411)

  

(40,575,320)

  

4,747,800

  

4,810,033

  

174,817

  

(388,321)

(223,090)

  

--

  

--

  

--

  

--

  

--

218

  

(25,039)

  

--

  

--

  

--

  

--

(2,810,835)

  

(3,888,783)

  

(3,784,502)

  

8,192,459

  

442,501

  

--

(3,756,118)

  

(44,489,142)

  

963,298

  

13,002,492

  

617,318

  

(388,321)

$ (4,269,418)

  

$ (44,680,002)

  

$ 8,297,298

  

$ 27,516,404

  

$ 2,999,979

  

$ 19,872,545

 

Statements of Changes in Net Assets

 

Equity Income Fund Large-Cap Growth & Income Fund

 

Six Months Ended February 28, 2003 (unaudited) Year Ended August 31, 2002 Six Months Ended February 28, 2003 (unaudited) Year Ended August 31, 2002
Increase (Decrease) in Net Assets

Operations--

Net investment income (net operating loss)

$ 3,551,478

$ 4,890,124

$ 711,621

$ 34,705

Net realized gain (loss) on investments and options transactions

(2,944,189)

(1,549,327)

(20,606,014)

(18,836,919)
Net realized gain (loss) on futures contracts

(936,195)

(3,125,998)

--

(4,113,431)
Net realized gain (loss) on foreign currency contracts

--

--

--

--
Net change in unrealized appreciation/depreciation of investments, options, futures contracts and foreign currency translation

(31,257,287)

(51,947,249)

(7,802,451)

(64,752,578)
Change in net assets resulting from operations

(31,586,193)

(51,732,450)

(27,696,844)

(87,668,223)
Distributions to Shareholders--

Distributions to shareholders from net investment income

Investor Class of Shares

(2,529,895)

(5,044,081)

(119,681)

(164,935)
Advisor Class of Shares

(31,838)

(53,945)

(2,334)

(2,195)
Institutional Class of Shares

--

--

--

--
Distributions to shareholders from net realized gain on investments

Investor Class of Shares

--

(14,838,709)

--

--
Advisor Class of Shares

--

(144,767)

--

--
Institutional Class of Shares

--

--

--

--
Change in net assets resulting from distributions to shareholders

(2,561,733)

(20,081,502)

(122,015)

(167,130)
Capital Stock Transactions--

Proceeds from sale of shares

56,796,551

54,966,324

25,505,170

46,470,452

Net asset value of shares issued to
shareholders in payment of distributions declared

1,232,319

17,657,653

79,059

107,936

Cost of shares redeemed

(60,536,423)

(76,217,323)

(52,398,767)

(70,501,282)
Change in net assets resulting from capital stock transactions

(2,507,553)

(3,593,346)

(26,814,538)

(23,922,894)
Change in net assets

(36,655,479)

(75,407,298)

(54,633,397)

(111,758,247)
Net Assets:

Beginning of period

342,871,800

418,279,098

279,924,083

391,682,330

End of period

$ 306,216,321

$ 342,871,800

$ 225,290,686

$ 279,924,083

Undistributed net investment income (accumulated net operating loss) included in net assets at end of period

$ 1,392,884

$ 403,139

$ 603,471

$ 13,865

 
 

Mid-Cap
Value Fund

 

Mid-Cap
Growth Fund

 

Small-Cap
Growth Fund

 

International
Stock Fund

Six Months Ended February 28, 2003 (unaudited)

  

Year Ended August 31, 2002

  

Six Months Ended February 28, 2003 (unaudited)

  

Year Ended August 31, 2002

  

Six Months Ended February 28, 2003 (unaudited)

Year Ended August 31, 2002

  

Six Months Ended February 28, 2003 (unaudited)

Year Ended August 31, 2002

 

 

 

 

  

 

 

 

 

 

 

 

 

  

$ 223,702

 

$ 268,317

 

$ (674,172)

  

$ (2,099,086)

  

$ (513,300)

  

$ (1,268,045)

  

$ (190,860)

  

$ 1,345,766

3,999,292

 

(707,386)

  

(12,590,797)

  

(68,371,719)

  

(722,411)

  

(25,427,634)

  

(40,575,320)

  

(59,392,247)

--

  

(1,778,463)

  

--

  

(4,375,822)

  

(223,090)

  

683,880

 

--

  

--

277

 

180

 

--

  

--

  

218

 

656

 

(25,039)

  

(882,998)

(17,130,295)

  

(11,109,533)

  

11,476,054

 

(29,473,408)

  

(2,810,835)

  

(6,435,693)

  

(3,888,783)

  

12,302,179

(12,907,024)

  

(13,326,885)

  

(1,788,915)

  

(104,320,035)

  

(4,269,418)

  

(32,446,836)

  

(44,680,002)

  

(46,627,300)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(172,252)

  

(146,095)

  

--

  

--

  

--

  

--

  

--

  

--

(3,414)

  

(2,090)

  

--

  

--

  

--

  

--

  

--

  

--

--

  

--

  

--

  

--

  

--

  

--

  

--

  

--

 

 

 

 

 

 

 

--

  

(22,874,085)

  

--

  

(876,922)

  

--

  

(4,821,728)

  

--

  

--

--

  

(351,861)

  

--

  

(8,848)

  

--

  

(116,211)

  

--

  

--

--

  

--

  

--

  

--

  

--

  

--

  

--

  

--

(175,666)

  

(23,374,131)

  

--

  

(885,770)

  

--

 

(4,937,939)

  

--

  

--

 

 

 

 

 

 

 

44,555,891

 

103,913,966

 

17,587,630

 

56,376,558

 

32,428,170

 

41,122,184

 

211,200,760

 

218,685,271

108,243

 

22,643,913

 

--

  

877,762

 

--

  

4,871,257

 

--

  

--

(24,546,035)

  

(64,654,487)

  

(34,231,700)

  

(83,212,079)

  

(36,790,626)

  

(36,251,186)

  

(208,914,324)

  

(229,717,274)

20,118,099

 

61,903,392

 

(16,644,070)

  

(25,957,759)

  

(4,362,456)

  

9,742,255

 

2,286,436

 

(11,032,003)

7,035,409

 

25,202,376

 

(18,432,985)

  

(131,163,564)

  

(8,631,874)

  

(27,642,520)

  

(42,393,566)

  

(57,659,303)

 

 

 

 

 

 

 

200,209,375

 

175,006,999

 

205,605,583

 

336,769,147

 

80,153,215

 

107,795,735

 

301,911,626

  

359,570,929

$ 207,244,784

 

$ 200,209,375

 

$ 187,172,598

 

$ 205,605,583

 

$ 71,521,341

 

$ 80,153,215

 

$ 259,518,060

 

$ 301,911,626

$ 211,269

 

$ 163,233

 

$ (674,172)

  

$ --

  

$ (513,300)

  

$ --

  

$ (983,251)

  

$ (792,391)

Statements of Changes in Net Assets

 

Government
Income
Fund

 

   Six Months
Ended
February 28,
2003
(unaudited) 		   Year Ended
August 31,
2002
Increase (Decrease) in Net Assets  

 

Operations--  

 

Net investment income (net operating loss)  

$ 7,334,000

 

$ 19,565,735

Net realized gain (loss) on investment and options transactions  

4,747,800

 

512,709

Net realized gain (loss) on futures contracts  

--

  

--
Net realized gain (loss) on foreign currency  

--

  

--
Net change in unrealized appreciation (depreciation) of investments, options, futures contracts and foreign currency translation  

(3,784,502)

  

7,386,534

Change in net assets resulting from operations  

8,297,298

 

27,464,978

Distributions to Shareholders--  

 

Distributions to shareholders from net investment income  

 

Investor Class of Shares  

(7,650,593)

  

(19,870,618)
Advisor Class of Shares  

(81,199)

  

(152,957)
Institutional Class of Shares  

--

  

--
Distributions to shareholders from net realized gain on investments  

 

Investor Class of Shares  

--

  

--
Advisor Class of Shares  

--

  

--
Institutional Class of Shares  

--

  

--
Change in net assets resulting from distributions to shareholders  

(7,731,792)

  

(20,023,575)
Capital Stock Transactions--  

 

Proceeds from sale of shares  

72,947,991

 

95,178,601

Net asset value of shares issued to shareholders in payment of distributions declared  

3,907,031

 

12,326,453

Cost of shares redeemed  

(81,868,393)

  

(116,273,076)
Change in net assets resulting from capital stock transactions  

(5,013,371)

  

(8,768,022)
Change in net assets  

(4,447,865)

  

(1,326,619)
Net Assets:  

 

Beginning of period  

381,432,627

 

382,759,246

End of period  

$ 376,984,762

 

$ 381,432,627

Undistributed net investment income (distributions in excess of net investment income) included in net assets at end of period  

$ (403,952)

  

$ (6,160)

 

 
Intermediate
Bond
Fund 		Short-Term
Income
Fund 		Money
Market
Fund
Six Months
Ended
February 28,
2003
(unaudited) 		   Year Ended
August 31,
2002 		   Six Months
Ended
February 28,
2003
(unaudited) 		  Year Ended
August 31,
2002 		   Six Months
Ended
February 28,
2003
(unaudited) 		   Year Ended
August 31,
2002

 

 

  

 

 

 

 

 

 

 

$ 14,513,912

 

$ 31,523,135

  

$ 2,382,661

  

$ 5,673,976

  

$ 20,260,866

  

$ 62,351,647

4,810,033

 

(8,520,585)

  

174,817

  

47,525

  

(388,321)

  

(7,007)

--

  

--

  

--

  

--

  

--

  

--

--

  

--

  

--

  

--

  

--

  

--

8,192,459

 

6,202,161

  

442,501

  

(1,316,104)

  

--

  

--

27,516,404

 

29,204,711

  

2,999,979

  

4,405,397

  

19,872,545

  

62,344,640

 

 

 

 

 

 

 

 

 

 

(15,696,686)

  

(33,505,994)

  

(2,665,108)

  

(6,239,624)

  

(12,434,233)

  

(37,389,606)

(107,921)

  

(187,339)

  

(20,755)

  

(21,027)

  

(514,134)

  

(2,174,238)

--

  

--

  

--

  

--

  

(7,312,499)

  

(22,787,803)

 

 

 

 

 

--

  

--

  

--

  

--

  

--

  

--

--

  

--

  

--

  

--

  

--

  

--

--

  

--

  

--

  

--

  

--

  

--

(15,804,607)

  

(33,693,333)

  

(2,685,863)

  

(6,260,651)

  

(20,260,866)

  

(62,351,647)

 

 

 

 

 

154,819,540

 

161,234,207

  

68,484,351

  

52,784,668

  

4,689,488,282

  

10,014,120,035

6,859,555

 

16,654,681

  

940,412

  

3,343,293

  

5,042,218

  

16,309,836

(162,201,108)

  

(181,719,809)

  

(52,676,602)

  

(65,233,789)

  

(4,293,337,102)

  

(9,888,216,033)

(522,013)

  

(3,830,921)

  

16,748,161

  

(9,105,828)

  

401,193,398

  

142,213,838

11,189,784

 

(8,319,543)

  

17,062,277

  

(10,961,082)

  

400,805,077

  

142,206,831

 

 

 

 

 

635,773,110

 

644,092,653

  

115,143,771

  

126,104,853

  

2,881,806,262

  

2,739,599,431

$ 646,962,894

 

$ 635,773,110

  

$ 132,206,048

  

$ 115,143,771

  

$ 3,282,611,339

  

$ 2,881,806,262

$ (1,222,339)

  

$ 68,356

  

$ (371,844)

  

$ (68,642)

  

$ --

  

$ --

 

 
Year Ended August 31,    Net asset value, beginning
of period		   Net
investment income
(net
operating
loss)		   Net realized and
unrealized
gain (loss) on
investments,
options, futures
contracts and
foreign currency		   Total from
investment
operations		   Dividends to shareholders
from net
investment
income		   Distributions to
shareholders from
net realized gain
on investments,
options, futures
contracts and
foreign currency		   Total distributions   Net asset
value, end
of period		   Total return(1) Ratios to Average Net Assets   Net assets, end of
period
(000 omitted)		   Portfolio
turnover
rate
  Expenses   Net
investment income
(net operating loss)		   Expense waiver(2)
Equity Income Fund
  
 
 
 
 
 
 
 
 
 
 
 
1999(3)
  
$ 15.88
  
0.16
  
0.81
  
0.97
  
(0.14)
  
--
  
(0.14)
  
$ 16.71
  
6.13%
  
1.17%(4)
  
1.68%(4)
  
0.25%(4)
  
$ 755
  
72%
2000
  
$ 16.71
  
0.23
  
(0.73)
  
(0.50)
  
(0.23)
  
(1.36)
  
(1.59)
  
$ 14.62
  
(2.80)%
  
1.16%
  
1.55%
  
0.25%
  
$ 2,081
  
98%
2001
  
$ 14.62
  
0.16
  
0.16
  
0.32
  
(0.14)
  
(0.10)
  
(0.24)
  
$ 14.70
  
2.20%
  
1.19%
  
1.09%
  
0.25%
  
$ 3,628
  
78%
2002
  
$ 14.70
  
0.14
  
(1.99)
  
(1.85)
  
(0.18)
  
(0.55)
  
(0.73)
  
$ 12.12
  
(13.16)%
  
1.20%
  
1.30%
  
0.25%
  
$ 4,360
  
50%
2003(5)
  
$ 12.12
  
0.12
  
(1.23)
  
(1.11)
  
(0.09)
  
--
  
(0.09)
  
$ 10.92
  
(9.19)%
  
1.22%(4)
  
2.20%(4)
  
0.25%(4)
  
$ 4,029
  
27%
Large-Cap Growth & Income Fund
  
 
 
 
 
 
 
 
 
 
 
 
1999(3)
  
$ 16.34
  
0.02
  
1.14
  
1.16
  
(0.02)
  
--
  
(0.02)
  
$ 17.48
  
7.08%
  
1.20%(4)
  
0.15%(4)
  
0.25%(4)
  
$ 912
  
32%
2000
  
$ 17.48
  
0.03
  
2.72
  
2.75
  
(0.02)
  
(0.99)
  
(1.01)
  
$ 19.22
  
16.35%
  
1.18%
  
0.14%
  
0.25%
  
$ 3,615
  
71%
2001
  
$ 19.22
  
0.01
  
(4.66)
  
(4.65)
  
(0.01)
  
(0.81)
  
(0.82)
  
$ 13.75
  
(24.79)%
  
1.19%
  
0.05%
  
0.25%
  
$ 4,771
  
63%
2002
  
$ 13.75
  
0.01
  
(3.16)
  
(3.15)
  
(0.01)
  
--
  
(0.01)
  
$ 10.59
  
(22.94)%
  
1.21%
  
0.01%
  
0.25%
  
$ 4,964
  
62%
2003(5)
  
$ 10.59
  
0.03
  
(1.10)
  
(1.07)
  
(0.01)
  
--
  
(0.01)
  
$ 9.51
  
(10.15)%
  
1.26%(4)
  
0.59%(4)
  
0.25%(4)
  
$ 4,578
  
31%
Mid-Cap Value Fund
  
 
 
 
 
 
 
 
 
 
 
 
1999(3)
  
$ 10.77
  
0.05
  
0.62
  
0.67
  
(0.04)
  
--
  
(0.04)
  
$ 11.40
  
6.22%
  
1.26%(4)
  
0.71%(4)
  
0.25%(4)
  
$ 356
  
90%
2000
  
$ 11.40
  
0.09
  
0.79
  
0.88
  
(0.05)
  
(1.38)
  
(1.43)
  
$ 10.85
  
9.29%
  
1.33%
  
1.04%
  
0.25%
  
$ 1,054
  
94%
2001
  
$ 10.85
  
0.02
  
2.62
  
2.64
  
(0.07)
  
(0.70)
  
(0.77)
  
$ 12.72
  
25.80%
  
1.30%
  
0.17%
  
0.25%
  
$ 2,288
  
104%
2002
  
$ 12.72
  
0.02
  
(0.40)
  
(0.38)
  
(0.01)
  
(1.68)
  
(1.69)
  
$ 10.65
  
(4.25)%
  
1.26%
  
0.13%
  
0.25%
  
$ 3,956
  
44%
2003(5)
  
$ 10.65
  
0.01
  
(0.64)
  
(0.63)
  
(0.01)
  
--
  
(0.01)
  
$ 10.01
  
(5.93)%
  
1.27%(4)
  
0.22%(4)
  
0.25%(4)
  
$ 3,848
  
20%
Mid-Cap Growth Fund
  
 
 
 
 
 
 
 
 
 
 
 
1999(3)
  
$ 15.13
  
(0.02)
  
2.17
  
2.15
  
--
  
--
  
--
  
$ 17.28
  
14.21%
  
1.21%(4)
  
(0.74)%(4)
  
0.25%(4)
  
$ 278
  
173%
2000
  
$ 17.28
  
(0.16)(6)
  
12.00
  
11.84
  
--
  
(1.69)
  
(1.69)
  
$ 27.43
  
71.91%
  
1.18%
  
(0.63)%
  
0.25%
  
$ 2,726
  
108%
2001
  
$ 27.43
  
(0.06)(6)
  
(8.67)
  
(8.73)
  
--
  
(4.97)
  
(4.97)
  
$ 13.73
  
(34.17)%
  
1.19%
  
(0.39)%
  
0.25%
  
$ 3,051
  
118%
2002
  
$ 13.73
  
(0.09)(6)
  
(4.29)
  
(4.38)
  
--
  
(0.04)
  
(0.04)
  
$ 9.31
  
(32.01)%
  
1.24%
  
(0.73)%
  
0.25%
  
$ 2,596
  
167%
2003(5)
  
$ 9.31
  
(0.03)
  
(0.05)
  
(0.08)
  
--
  
--
  
--
  
$ 9.23
  
(0.86)%
  
1.27%(4)
  
(0.68)%(4)
  
0.25%(4)
  
$ 2,573
  
58%
Small-Cap Growth Fund
  
 
 
 
 
 
 
 
 
 
 
 
1999(3)
  
$ 12.73
  
(0.02)
  
(0.33)
  
(0.35)
  
--
  
--
  
--
  
$ 12.38
  
(2.75)%
  
1.59%(4)
  
(1.03)%(4)
  
0.25%(4)
  
$ 394
  
219%
2000
  
$ 12.38
  
(0.18)(6)
  
7.03
  
6.85
  
--
  
(0.41)
  
(0.41)
  
$ 18.82
  
56.14%
  
1.59%
  
(1.02)%
  
0.25%
  
$ 1,771
  
105%
2001
  
$ 18.82
  
(0.08)(6)
  
(4.52)
  
(4.60)
  
--
  
(1.63)
  
(1.63)
  
$ 12.59
  
(24.23)%
  
1.58%
  
(0.70)%
  
0.25%
  
$ 2,399
  
287%
2002
  
$ 12.59
  
(0.14)(6)
  
(3.12)
  
(3.26)
  
--
  
(0.58)
  
(0.58)
  
$ 8.75
  
(27.23)%
  
1.63%
  
(1.21)%
  
0.25%
  
$ 2,440
  
292%
2003(5)
  
$ 8.75
  
(0.06)
  
(0.40)
  
(0.46)
  
--
  
--
  
--
  
$ 8.29
  
(5.26)%
  
1.69%(4)
  
(1.34)%(4)
  
0.25%(4)
  
$ 2,360
  
120%
International Stock Fund
  
 
 
 
 
 
 
 
 
 
 
 
1999(3)
  
$ 12.69
  
0.00 (7)
  
1.14
  
1.14
  
--
  
--
  
--
  
$ 13.83
  
8.98%
  
1.50%(4)
  
0.13%(4)
  
0.27%(4)
  
$ 429
  
182%
2000
  
$ 13.83
  
(0.05)(6)
  
4.08
  
4.03
  
(0.17)
  
(1.36)
  
(1.53)
  
$ 16.33
  
28.11%
  
1.51%
  
(0.32)%
  
0.27%
  
$ 2,184
  
225%
2001
  
$ 16.33
  
0.04 (6)
  
(4.03)
  
(3.99)
  
--
  
(1.61)
  
(1.61)
  
$ 10.73
  
(26.36)%
  
1.46%
  
0.34%
  
0.27%
  
$ 3,555
  
156%
2002
  
$ 10.73
  
0.03 (6)
  
(1.46)
  
(1.43)
  
--
  
--
  
--
  
$ 9.30
  
(13.33)%
  
1.49%
  
0.30%
  
0.27%
  
$ 4,183
  
83%
2003(5)
  
$ 9.30
  
(0.01)(6)
  
(1.40)
  
(1.41)
  
--
  
--
  
--
  
$ 7.89
  
(15.16)%
  
1.53%(4)
  
(0.16)%(4)
  
0.27%(4)
  
$ 2,848
  
60%
Government Income Fund
  
 
 
 
 
 
 
 
 
 
 
 
1999(3)
  
$ 9.61
  
0.34
  
(0.39)
  
(0.05)
  
(0.34)
  
--
  
(0.34)
  
$ 9.22
  
(0.56)%
  
1.09%(4)
  
5.55%(4)
  
0.36%(4)
  
$ 754
  
232%
2000
  
$ 9.22
  
0.55
  
(0.02)
  
0.53
  
(0.55)
  
--
  
(0.55)
  
$ 9.20
  
5.96%
  
1.08%
  
6.06%
  
0.35%
  
$ 1,491
  
192%
2001
  
$ 9.20
  
0.55
  
0.33
  
0.88
  
(0.55)
  
--
  
(0.55)
  
$ 9.53
  
9.77%
  
1.10%
  
5.81%
  
0.35%
  
$ 2,451
  
122%
2002
  
$ 9.53
  
0.47 (6)(8)
  
0.20 (8)
  
0.67
  
(0.48)
  
--
  
(0.48)
  
$ 9.72
  
7.25%
  
1.10%
  
4.90%(8)
  
0.35%
  
$ 3,839
  
76%
2003(5)
  
$ 9.72
  
0.18
  
0.03
  
0.21
  
(0.19)
  
--
  
(0.19)
  
$ 9.74
  
2.16%
  
1.10%(4)
  
3.69%(4)
  
0.35%(4)
  
$ 4,536
  
241%
Intermediate Bond Fund
  
 
 
 
 
 
 
 
 
 
 
 
1999(3)
  
$ 9.53
  
0.35
  
(0.36)
  
(0.01)
  
(0.35)
  
--
  
(0.35)
  
$ 9.17
  
(0.09)%
  
0.94%(4)
  
5.79%(4)
  
0.31%(4)
  
$ 953
  
181%
2000
  
$ 9.17
  
0.55
  
(0.01)
  
0.54
  
(0.55)
  
--
  
(0.55)
  
$ 9.16
  
6.10%
  
0.93%
  
6.12%
  
0.31%
  
$ 1,969
  
243%
2001
  
$ 9.16
  
0.53
  
0.35
  
0.88
  
(0.53)
  
--
  
(0.53)
  
$ 9.51
  
9.89%
  
0.95%
  
5.67%
  
0.31%
  
$ 3,230
  
273%
2002
  
$ 9.51
  
0.45 (6)(8)
  
(0.04)(8)
  
0.41
  
(0.48)
  
--
  
(0.48)
  
$ 9.44
  
4.46%
  
0.95%
  
4.77%(8)
  
0.31%
  
$ 4,255
  
187%
2003(5)
  
$ 9.44
  
0.21
  
0.20
  
0.41
  
(0.23)
  
--
  
(0.23)
  
$ 9.62
  
4.35%
  
0.95%(4)
  
4.40%(4)
  
0.31%(4)
  
$ 4,999
  
148%
Short-Term Income Fund
  
 
 
 
 
 
 
 
 
 
 
 
2001(9)
  
$ 9.26
  
0.46
  
0.28
  
0.74
  
(0.46)
  
--
  
(0.46)
  
$ 9.54
  
8.15%
  
0.76%(4)
  
5.68%(4)
  
0.59%(4)
  
$ 97
  
79%
2002
  
$ 9.54
  
0.39 (6)(8)
  
(0.06)(8)
  
0.33
  
(0.45)
  
--
  
(0.45)
  
$ 9.42
  
3.53%
  
0.79%
  
4.21%(8)
  
0.59%
  
$ 824
  
54%
2003(5)
  
$ 9.42
  
0.17
  
0.06
  
0.23
  
(0.20)
  
--
  
(0.20)
  
$ 9.45
  
2.43%
  
0.81%(4)
  
3.71%(4)
  
0.59%(4)
  
$ 1,319
  
25%
Money Market Fund
  
 
 
 
 
 
 
 
 
 
 
 
1998
  
$ 1.00
  
0.05
  
--
  
0.05
  
(0.05)
  
--
  
(0.05)
  
$ 1.00
  
5.19%
  
0.71%
  
5.12%
  
0.25%
  
$ 105,125
  
--
1999
  
$ 1.00
  
0.05
  
--
  
0.05
  
(0.05)
  
--
  
(0.05)
  
$ 1.00
  
4.67%
  
0.71%
  
4.57%
  
0.25%
  
$ 118,352
  
--
2000
  
$ 1.00
  
0.05
  
--
  
0.05
  
(0.05)
  
--
  
(0.05)
  
$ 1.00
  
5.56%
  
0.74%
  
5.44%
  
0.16%
  
$ 140,787
  
--
2001
  
$ 1.00
  
0.05
  
--
  
0.05
  
(0.05)
  
--
  
(0.05)
  
$ 1.00
  
5.00%
  
0.76%
  
4.90%
  
0.05%
  
$ 127,707
  
--
2002
  
$ 1.00
  
0.02
  
--
  
0.02
  
(0.02)
  
--
  
(0.02)
  
$ 1.00
  
1.69%
  
0.75%
  
1.69%
  
0.04%
  
$ 113,662
  
--
2003(5)
  
$ 1.00
  
0.00 (7)
  
--
  
0.00 (7)
  
(0.00)(7)
  
--
  
(0.00)(7)
  
$ 1.00
  
0.48%
  
0.75%(4)
  
0.95%(4)
  
0.03%(4)
  
$ 106,303
  
--

(1) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable.

(2) This voluntary expense decrease is reflected in both the expense and net investment income (net operating loss) ratios.

(3) Reflects operations for the period from December 31, 1998 (start of performance) to August 31, 1999.

(4) Computed on an annualized basis.

(5) For the six months ended February 28, 2003 (unaudited).

(6) Per share information is based on average shares outstanding.

(7) Amount represents less than $0.01 per share.

(8) Effective September 1, 2001, the Government Income Fund, Intermediate Bond Fund and Short-Term Income Fund adopted the provisions of the American Institute of Certified Public Accountants ("AICPA") Audit and Accounting Guide for Investment Companies and began accreting discount/amortizing premium on long-term debt securities. The effect of this change for the fiscal year ended August 31, 2002 was as follows:

 

   Net Investment
Income per Share		    Net Realized/Unrealized
Gain/Loss per Share		    Ratio of Net Investment Income
to Average Net Assets
Increase (Decrease)            
Government Income Fund  
$(0.01)
$ 0.01
   (0.12)%
Intermediate Bond Fund  
(0.03)
0.03
(0.32)
Short-Term Income Fund  
(0.04)
0.04
(0.40)

Per share, ratios and supplemental data for periods prior September 1, 2001 have not been restated to reflect this change in presentation.

(9) Reflects operations for the period from October 31, 2000 (start of performance) to August 31, 2001.

 

Notes to Financial Statements

1. Organization

Marshall Funds, Inc. (the "Corporation") is registered under the Investment Company Act of 1940, as amended, (the "Act"), as an open-end management investment company. The Corporation consists of eleven diversified portfolios (individually referred to as the "Fund", or collectively as the "Funds"), ten of which are presented herein:

Portfolio Name
    
Investment Objective
Marshall Equity Income Fund ("Equity Income Fund")   To provide capital appreciation and above-average dividend income.
Marshall Large-Cap Growth & Income Fund ("Large-Cap Growth & Income Fund")   To provide capital appreciation and income.
Marshall Mid-Cap Value Fund ("Mid-Cap Value Fund")   To provide capital appreciation.
Marshall Mid-Cap Growth Fund ("Mid-Cap Growth Fund")   To provide capital appreciation.
Marshall Small-Cap Growth Fund ("Small-Cap Growth Fund")   To provide capital appreciation.
Marshall International Stock Fund ("International Stock Fund")   To provide capital appreciation.
Marshall Government Income Fund ("Government Income Fund")   To provide current income.
Marshall Intermediate Bond Fund ("Intermediate Bond Fund")   To maximize total return consistent with current income.
Marshall Short-Term Income Fund ("Short-Term Income Fund")   To maximize total return consistent with current income.
Marshall Money Market Fund ("Money Market Fund")   To provide current income consistent with stability of principal.

The Funds are offered in two classes of shares: Investor Class of Shares and Advisor Class of Shares. International Stock Fund and Money Market Fund offer three classes of shares: Investor Class of Shares, Advisor Class of Shares and Institutional Class of Shares. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The Financial Highlights of Investor Class of Shares and Institutional Class of Shares of the Funds are presented in separate semi-annual reports.

2. Significant Accounting Policies

The following is a summary of significant accounting policies consistently followed by the Funds in the preparation of their financial statements. These policies are in conformity with accounting principles generally accepted in the United States.

Investment Valuations--Listed equity securities are valued at the last sale price reported on a national securities exchange. U.S. government securities, listed corporate bonds, other fixed income and asset-backed securities, and unlisted securities and private placement securities are generally valued at the mean of the latest bid and asked price as furnished by an independent pricing service. Municipal bonds are valued by an independent pricing service, taking into consideration yield, liquidity, risk, credit quality, coupon, maturity, type of issue, and any other factors or market data the pricing service deems relevant. Money Market Fund's use of the amortized cost method to value portfolio securities is in accordance with Rule 2a-7 under the Act. For fluctuating net asset value Funds within the Corporation, short-term securities are valued at the prices provided by an independent pricing service. However, short-term securities purchased with remaining maturities of 60 days or less may be valued at amortized cost, which approximates fair market value. Investments in other open-end regulated investment companies are valued at net asset value. Securities for which no quotations are readily available are valued at fair value as determined in good faith using methods approved by the Board of Directors (the "Directors").

Repurchase Agreements--It is the policy of the Funds to require the custodian bank to take possession, to have legally segregated in the Federal Reserve Book Entry System, or to have segregated within the custodian bank's vault, all securities held as collateral under repurchase agreement transactions. Additionally, procedures have been established by the Funds to monitor, on a daily basis, the market value of each repurchase agreement's collateral to ensure that the value of collateral at least equals the repurchase price to be paid under the repurchase agreement, including accrued interest.

The Funds will only enter into repurchase agreements with banks and other recognized financial institutions, such as broker/dealers, which are deemed by the Funds' adviser (or sub-adviser with respect to International Stock Fund) to be creditworthy pursuant to the guidelines and/or standards reviewed or established by the Directors. Risks may arise from the potential inability of counterparties to honor the terms of the repurchase agreement. Accordingly, the Funds could receive less than the repurchase price on the sale of collateral securities.

Investment Income, Expenses and Distributions--Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at fair market value. The Funds offer multiple classes of shares, which differ in their respective distribution and service fees. All shareholders bear the common expenses of the Funds based on average daily net assets of each class, without distinction between share classes. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.

Premium and Discount Amortization/Paydown Gain and Losses--All premiums and discount on fixed income securities are amortized/accreted for financial statement purposes. Gains and losses realized on principal payments of mortgage-backed securities (paydown gains and losses) are classified as part of investment income.

Change in Accounting Policy--Effective September 1, 2001 the Corporation adopted the provisions of the revised AICPA Audit and Accounting Guide for Investment Companies (the "Guide"). For financial statement purposes, the revised Guide requires the Funds to amortize premium and discount on all fixed income securities and to classify gains and losses realized on principal payments received on mortgage-backed securities (pay-down gains and losses) as part of investment income.

Upon initial adoption, the Funds adjusted their cost of fixed income securities by the cumulative amount of amortization that would have been recognized had amortization been in effect from the purchase date of each holding with a corresponding reclassification between unrealized appreciation/depreciation on investments and undistributed net investment income. Adoption of these accounting principles does not affect the Funds' net asset value or distributions, but changes the classification of certain amounts between investment income and realized and unrealized gain/loss on the Statement of Operations. The cumulative effects to the Funds resulting from the adoption of premium and discount amortization and recognition of paydown gains and losses as part of investment income on the financial statements are as follows:

 

As of September 1, 2001

For the Year Ended
August 31, 2002

 

  

Cost of
Investments

    

Undistributed
Net Investment
Income

    

Accumulated
Net
Realized
Gain (Loss)

     

Net
Investment
Income

     

Unrealized
Appreciation
(Depreciation)

     

Net Realized
Gain (Loss)
Increase (Decrease)  
 
 
 
 
 
Government Income Fund  
$ 41,338
  
$ (427,302)
  
$ 468,640
  
$ (451,297)
  
$ (19,790)
  
$ 471,087
Intermediate Bond Fund  
(258,062)
  
(1,788,825)
  
1,530,763
  
(2,005,509)
  
978,504
  
1,027,005
Short-Term Income Fund  
(19,907)
  
(333,171)
  
313,264
  
(504,599)
  
122,704
  
381,895

The Statements of Changes in Net Assets and Financial Highlights for prior periods have not been restated to reflect this change in presentation.

Federal Taxes--It is the Funds' policy to comply with the provisions of Subchapter M of the Internal Revenue Code, as amended (the "Code"), applicable to regulated investment companies and to distribute to shareholders each year substantially all of their income. Accordingly, no provisions for federal tax are necessary.

Withholding taxes on foreign dividends have been provided for in accordance with the applicable country's tax rules and rates.

When-Issued and Delayed Delivery Transactions--The Funds may engage in when-issued or delayed delivery transactions. The Funds record when-issued securities on the trade date and maintain security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked-to-market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.

Futures Contracts--Equity Income, Large-Cap Growth & Income Fund, Mid-Cap Value Fund, Mid-Cap Growth Fund and Small-Cap Growth Fund purchase stock index futures contracts to manage cashflows, enhance yield, and to potentially reduce transaction costs. Upon entering into a stock index futures contract with a broker, the Fund is required to deposit in a segregated account a specified amount of cash or U.S. government securities. Futures contracts are valued daily and unrealized gains or losses are recorded in a "variation margin" account. Daily, the Fund receives from or pays to the broker a specified amount of cash based upon changes in the variation margin account. When a contract is closed, the Fund recognizes a realized gain or loss. Futures contracts have market risks, including the risk that the change in the value of the contract may not correlate with changes in the value of the underlying securities.

At February 28, 2003, the Funds had no outstanding futures contracts.

Written Options Contracts--Equity Income Fund may write option contracts. A written option obligates the Fund to deliver a call, or to receive a put, for the contract amount upon exercise by the holder of the option. The value of the option contract is recorded as a liability and unrealized gain or loss is measured by the difference between the current value and the premium received. For the six months ended February 28, 2003, the Equity Income Fund had $602,094 in realized gain on written options.

The following is a summary of the Equity Income Fund's written option activity:

Contracts

  

Number of
Contracts

     

Premium

Outstanding @ 8/31/02

     

3,989

  

$ 390,950

Options written

  

15,701

  

1,269,458

Options expired

  

(9,343)

  

(819,300)

Options closed

  

(4,902)

  

(423,881)

Outstanding @ 2/28/03

  

5,445

  

$ 417,227

At February 28, 2003, the Equity Income Fund had the following outstanding options:

Contract

  

Type

     

Expiration Date

     

Exercise
Price

     

Number of
Contracts

     

Market
Value

     

Unrealized
Appreciation
(Depreciation)

Eastman Kodak Co.

    

Call

  

April 2003

$ 45.00

235

$ 2,350

$ 15,979

United Technologies Corp.

  

Call

  

March 2003

70.00

230

1,150

20,239

AT&T Corp.

  

Put

  

March 2003

17.50

600

18,000

16,549

Abbott Labs

  

Put

  

April 2003

32.50

400

29,000

9,799

Albertson's, Inc.

  

Put

  

March 2003

17.50

380

10,450

4,370

Coca Cola Co.

  

Put

  

March 2003

37.50

300

8,250

22,349

Eastman Kodak Co.

  

Put

  

April 2003

25.00

400

16,000

3,199

Home Depot Inc.

  

Put

  

May 2003

17.50

650

13,000

40,948

Ishares Trust

  

Put

  

March 2003

40.00

450

10,125

25,474

Ishares Trust

  

Put

  

April 2003

40.00

550

34,375

11,274

Sears Roebuck & Co.

  

Put

  

April 2003

20.00

500

65,000

(36,001)

Stanley Works

  

Put

  

April 2003

25.00

400

36,000

20,798

Union Pac Corp

  

Put

  

March 2003

50.00

350

9,625

8,925

Net Unrealized Appreciation on Written Options Contracts

5,445

$ 163,902

Foreign Exchange Contracts--International Stock Fund may enter into foreign currency exchange contracts as a way of managing foreign exchange rate risk. The International Stock Fund may enter into these contracts for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross hedge against either specific transactions or portfolio positions. The objective of the International Stock Fund's foreign currency hedging transactions is to reduce the risk that the U.S. dollar value of the International Stock Fund's foreign currency denominated securities will decline in value due to changes in foreign currency exchange rates. All foreign currency exchange contracts are "marked-to-market" daily at the applicable translation rates resulting in unrealized gains or losses. Realized gains or losses are recorded at the time the foreign currency exchange contract is offset by entering into a closing transaction or by the delivery or receipt of the currency. Risk may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar.

As of February 28, 2003, International Stock Fund had no outstanding foreign currency exchange contracts.

Foreign Currency Translation--The accounting records of the Funds are maintained in U.S. dollars. All assets and liabilities denominated in foreign currencies ("FCs") are translated into U.S. dollars based on the rate of exchange of such currencies against U.S. dollars on the date of valuation. Purchases and sales of securities, income and expenses are translated at the rate of exchange quoted on the respective date that such transactions are recorded. The Funds do not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.

Reported net realized foreign exchange gains or losses arise from sales of portfolio securities, sales and maturities of short-term securities, sales of FCs, currency gains or losses realized between the trade and settlement dates on securities transactions, the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Funds' books, and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities at fiscal year end, resulting from changes in the exchange rate.

Dollar Roll Transactions--The Funds, except for Money Market Fund, may enter into dollar roll transactions, with respect to mortgage securities issued by Government National Mortgage Association, Federal National Mortgage Association and Federal Home Loan Mortgage Corporation, in which the Funds loan mortgage securities to financial institutions and simultaneously agree to accept substantially similar (same type, coupon and maturity) securities at a later date at an agreed upon price. Dollar roll transactions are short-term financing arrangements which will not exceed twelve months. The Funds will use the proceeds generated from the transactions to invest in short-term investments, which may enhance the Funds' current yield and total return.

Information regarding dollar roll transactions for the Government Income Fund for the six months ended February 28, 2003 was as follows:

Maximum amount outstanding during the period

      

$ 61,957,007

Average amount outstanding during the period1

 

$ 39,269,811

Average monthly shares outstanding during the period

  

38,754,498

Average debt per share outstanding during the period

  

1.01

(1) The average amount outstanding during the period was calculated by adding the borrowings at the end of the day and dividing the sum by the number of days in six months ended February 28, 2003.

Securities Lending--The Funds participate in a securities lending program providing for the lending of corporate bonds, equity and government securities to qualified brokers. The Funds receive cash as collateral in return for the securities and record a corresponding payable for collateral due to the respective broker. The amount of cash collateral received is maintained at a minimum level of 100% of the prior day's market value on securities loaned. Collateral is reinvested in short-term securities including overnight repurchase agreements, commercial paper, master notes, floating rate corporate notes (with at least quarterly reset rates) and money market funds. On May 18, 2000, the Securities and Exchange Commission issued an order to the Marshall Funds that exempts certain securities lending activities from prohibitions under the Act. Under the terms of the exemptive order, (i) the Funds may pay a portion of net revenue to Marshall & Ilsley Trust Company N.A. ("M&I Trust") for its services as securities lending agent, and (ii) cash collateral received for a loan of one Fund's securities may be invested jointly with collateral received for loans of other Funds' securities.

As of February 28, 2003, the value of securities loaned, the payable on collateral due to broker and the value of reinvested cash collateral securities were as follows:

Fund
      Market Value
of Securities
Loaned		      Payable on
Collateral
Due to Broker		      Reinvested
Collateral
Securities

Equity Income Fund

  

$ 14,411,144

  

$ 14,703,500

  

$ 14,703,500

Large-Cap Growth & Income Fund

  

22,603,131

  

23,072,500

  

23,072,500

Mid-Cap Value Fund

  

33,048,922

  

34,494,043

  

34,494,043

Mid-Cap Growth Fund

  

64,473,781

  

67,800,457

  

67,800,457

Small-Cap Growth Fund

  

17,867,115

  

18,532,726

  

18,532,726

International Stock Fund

  

30,968,803

  

32,537,850

  

32,537,850

Government Income Fund

  

91,238,475

  

93,274,000

  

93,274,000

Intermediate Bond Fund

  

99,206,541

  

103,173,262

  

103,173,262

Individual reinvested cash collateral securities at February 28, 2003 are as follows:

Investments
    Equity
Income
Fund		    Large-Cap
Growth &
Income
Fund		    Mid-Cap
Value
Fund		    Mid-Cap
Growth
Fund		    Small-Cap
Growth
Fund		    International
Stock Fund		    Government
Income
Fund		    Intermediate
Bond Fund		    Total
Provident Money Market Fund
$ 58,010
  
$ 91,025
$ 136,087
$ 267,489
$ 73,116
$ 128,370
$ 367,987
$ 407,043
$ 1,529,127
Merrimac Money Market Fund
1,863,624
2,924,369
4,372,015
8,593,501
2,348,966
4,124,073
11,822,195
13,076,897
49,125,640
Dreyfus Cash Management Plus MMKT
1,888,389
2,963,230
4,430,112
8,707,696
2,380,181
4,178,876
11,979,295
13,250,670
49,778,449
JP Morgan Master Note
758,717
1,190,568
1,779,932
3,498,581
956,310
1,678,990
4,813,045
5,323,857
20,000,000
MetLife Funding Agreement
758,717
1,190,568
1,779,932
3,498,581
956,310
1,678,990
4,813,045
5,323,857
20,000,000
Wisconsin Public Service Master Note
379,359
595,284
889,966
1,749,290
478,155
839,495
2,406,522
2,661,929
10,000,000
Monumental Life Insurance Master Note
569,038
892,925
1,334,949
2,623,936
717,232
1,259,243
3,609,783
3,992,894
15,000,000
Homeside Lending Inc.
379,822
596,010
891,052
1,751,426
478,739
840,520
2,409,461
2,665,180
10,012,210
Syndicated Loan Fund
568,953
892,792
1,334,749
2,623,542
717,125
1,259,054
3,609,242
3,992,293
14,997,750
Merrill Lynch & Co.
758,717
1,190,567
1,779,932
3,498,581
956,310
1,678,990
4,813,045
5,323,858
20,000,000
BMW US Capital LLC
758,717
1,190,567
1,779,932
3,498,581
956,310
1,678,990
4,813,045
5,323,858
20,000,000
Wells Fargo & Company
379,359
595,284
889,966
1,749,290
478,155
839,495
2,406,522
2,661,929
10,000,000
Wisconsin Energy Corp. C/P
840,349
1,318,663
1,971,439
3,875,001
1,059,201
1,859,636
5,330,891
5,896,664
22,151,844
Goldman Sachs Group
758,717
1,190,567
1,779,932
3,498,581
956,310
1,678,990
4,813,045
5,323,858
20,000,000
John Deere Capital Corp.
568,967
892,813
1,334,781
2,623,606
717,142
1,259,085
3,609,331
3,992,393
14,998,118
Jackson National Life Global
758,535
1,190,282
1,779,505
3,497,741
956,080
1,678,587
4,811,890
5,322,580
19,995,200
American Express Centurion
758,717
1,190,568
1,779,932
3,498,581
956,310
1,678,990
4,813,045
5,323,857
20,000,000
American Express Credit
758,717
1,190,568
1,779,932
3,498,581
956,310
1,678,990
4,813,045
5,323,857
20,000,000
Canadian IMP BK Comm
569,038
892,925
1,334,949
2,623,936
717,232
1,259,243
3,609,783
3,992,894
15,000,000
General Electric Capital Corp.
569,038
892,925
1,334,949
2,623,936
717,232
1,259,243
3,609,783
3,992,894
15,000,000

Restricted Securities--Restricted securities are securities that may only be resold upon registration under federal securities laws or in transactions exempt from such registration. In some cases, the issuer of restricted securities has agreed to register such securities for resale, at the issuer's expense either upon demand by the Funds or in connection with another registered offering of the securities. Many restricted securities may be resold in the secondary market in transactions exempt from registration. Such restricted securities may be determined to be liquid under criteria established by the Directors. The Funds will not incur any registration costs upon such resales. The Intermediate Bond Fund's and Short-Term Income Fund's restricted securities are valued at the price provided by dealers in the secondary market or, if no market prices are available, the fair value as determined in good faith using methods approved by the Directors. The Money Market Fund's restricted securities are valued at amortized cost in accordance with Rule 2a-7 under the Act.

Additional information on each illiquid restricted security held by the Short-Term Income Fund at February 28, 2003 is as follows:

Security

  

Acquisition Date

     

Acquisition Cost

Osprey Trust

      

9/16/1999

  

$ 2,000,000

Regional Jet Equipment Trust

  

2/2/2000

  

707,606

Additional information on each illiquid restricted security held by the Money Market Fund at February 28, 2003 is as follows:

Security
   Acquisition Date      Acquisition Cost
GE Life & Annuity Assurance Co.     
4/22/2000
$ 75,000,000
Monumental Life Insurance Co.  
8/2/1993-11/30/1993
40,000,000
Monumental Life Insurance Co.  
10/15/1996
10,000,000
Monumental Life Insurance Co.  
1/4/2000
25,000,000
Travelers Insurance Co.  
1/19/2001
50,000,000

Other--Investment transactions are accounted for on a trade date basis.

3. Capital Stock

The Articles of Incorporation permit the Directors to issue an indefinite number of full and fractional shares of common stock, par value $0.0001 per share. At February 28, 2003, the capital paid-in was as follows:

Fund   Capital
Paid-In
Equity Income Fund       
$ 328,004,626
Large-Cap Growth & Income Fund  
270,296,902
Mid-Cap Value Fund  
212,236,388
Mid-Cap Growth Fund  
296,088,623
Small-Cap Growth Fund  
105,494,946
International Stock Fund  
420,252,912
Government Income Fund  
368,443,132
Intermediate Bond Fund  
656,556,633
Short-Term Income Fund  
138,834,322
Money Market Fund  
3,283,152,489

Transactions in capital stock were as follows:

 

 

Six Months Ended
February 28, 2003

 

 

Year Ended
August 31, 2002

 

 

 

Shares

 

 

 

Amount

 

 

Shares

 

 

 

Amount

 

EQUITY INCOME FUND--INVESTOR CLASS

Shares sold

 

4,859,007

 

 

$

55,989,194

 

 

3,954,436

 

 

$

52,646,401

 

Shares issued to shareholders in payment of distributions declared

 

105,454

 

 

 

1,201,904

 

 

1,256,721

 

 

 

17,467,488

 

Shares redeemed

 

(5,216,119

)

 

 

(59,821,539

)

 

(5,489,769

)

 

 

(75,258,161

)

Net change resulting from Investor Class of Shares transactions

 

(251,658

)

 

$

(2,630,441

)

 

(278,612

)

 

$

(5,144,272

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EQUITY INCOME FUND--ADVISOR CLASS

Shares sold

 

69,910

 

 

$

807,357

 

 

169,201

 

 

$

2,319,923

 

Shares issued to shareholders in payment of distributions declared

 

2,668

 

 

 

30,415

 

 

13,715

 

 

 

190,165

 

Shares redeemed

 

(63,308

)

 

 

(714,884

)

 

(70,025

)

 

 

(959,162

)

Net change resulting from Advisor Class of Shares transactions

 

9,270

 

 

$

122,888

 

 

112,891

 

 

$

1,550,926

 

Net change resulting from Fund Share transactions

 

(242,388

)

 

$

(2,507,553

)

 

(165,721

)

 

$

(3,593,346

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LARGE-CAP GROWTH & INCOME FUND--INVESTOR CLASS

 

 

 

 

 

 

 

 

Shares sold

 

2,472,828

 

 

$

24,811,100

 

 

3,423,301

 

 

$

43,997,592

 

Shares issued to shareholders in payment of distributions declared

 

7,743

 

 

 

76,426

 

 

8,575

 

 

 

105,741

 

Shares redeemed

 

(5,243,252

)

 

 

(51,839,124

)

 

(5,616,030

)

 

 

(69,582,834

)

Net change resulting from Investor Class of Shares transactions

 

(2,762,681

)

 

$

(26,951,598

)

 

(2,184,154

)

 

$

(25,479,501

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LARGE-CAP GROWTH & INCOME FUND--ADVISOR CLASS

 

 

 

 

 

 

 

 

Shares sold

 

69,346

 

 

$

694,070

 

 

195,011

 

 

$

2,472,860

 

Shares issued to shareholders in payment of distributions declared

 

266

 

 

 

2,633

 

 

264

 

 

 

2,195

 

Shares redeemed

 

(57,207

)

 

 

(559,643

)

 

(73,575

)

 

 

(918,448

)

Net change resulting from Advisor Class of Shares transactions

 

12,405

 

 

$

137,060

 

 

121,700

 

 

$

1,556,607

 

Net change resulting from Fund Share transactions

 

(2,750,276

)

 

$

(26,814,538

)

 

(2,062,454

)

 

$

(23,922,894

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MID-CAP VALUE FUND--INVESTOR CLASS

 

 

 

 

 

 

 

 

 

 

 

 

Shares sold

 

4,219,783

 

 

$

44,061,024

 

 

8,526,115

 

 

$

101,629,669

 

Shares issued to shareholders in payment of distributions declared

 

10,280

 

 

 

104,948

 

 

1,892,346

 

 

 

22,305,472

 

Shares redeemed

 

(2,350,441

)

 

 

(24,186,305

)

 

(5,564,460

)

 

 

(64,311,133

)

Net change resulting from Investor Class of Shares transactions

 

1,879,622

 

 

$

19,979,667

 

 

4,854,001

 

 

$

59,624,008

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MID-CAP VALUE FUND--ADVISOR CLASS

 

 

 

 

 

 

 

 

 

 

 

 

Shares sold

 

48,087

 

 

$

494,867

 

 

192,014

 

 

$

2,284,297

 

Shares issued to shareholders in payment of distributions declared

 

323

 

 

 

3,295

 

 

28,716

 

 

 

338,441

 

Shares redeemed

 

(35,665

)

 

 

(359,730

)

 

(29,133

)

 

 

(343,354

)

Net change resulting from Advisor Class of Shares transactions

 

12,745

 

 

$

138,432

 

 

191,597

 

 

$

2,279,384

 

Net change resulting from Fund Share transactions

 

1,892,367

 

 

$

20,118,099

 

 

5,045,598

 

 

$

61,903,392

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MID-CAP GROWTH FUND--INVESTOR CLASS

 

 

 

 

 

 

 

 

 

Shares sold

 

1,839,100

 

 

$

17,304,296

 

 

4,502,457

 

 

$

55,289,872

 

Shares issued to shareholders in payment of distributions declared

 

--

 

 

 

--

 

 

62,977

 

 

 

869,078

 

Shares redeemed

 

(3,634,027

)

 

 

(33,957,075

)

 

(7,078,048

)

 

 

(82,822,587

)

Net change resulting from Investor Class of Shares transactions

 

(1,794,927

)

 

$

(16,652,779

)

 

(2,512,614

)

 

$

(26,663,637

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MID-CAP GROWTH FUND--ADVISOR CLASS

 

 

 

 

 

 

 

 

 

 

Shares sold

 

29,822

 

 

$

283,334

 

 

89,447

 

 

$

1,086,686

 

Shares issued to shareholders in payment of distributions declared

 

--

 

 

 

--

 

 

629

 

 

 

8,684

 

Shares redeemed

 

(29,704

)

 

 

(274,625

)

 

(33,654

)

 

 

(389,492

)

Net change resulting from Advisor Class of Shares transactions

 

118

 

 

$

8,709

 

 

56,422

 

 

$

705,878

 

Net change resulting from Fund Share transactions

 

(1,794,809

)

 

$

(16,644,070

)

 

(2,456,192

)

 

$

(25,957,759

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SMALL-CAP GROWTH FUND--INVESTOR CLASS

 

 

 

 

 

 

 

 

Shares sold

 

3,611,053

 

 

$

32,029,139

 

 

3,415,230

 

 

$

38,996,606

 

Shares issued to shareholders in payment of distributions declared

 

--

 

 

 

--

 

 

386,177

 

 

 

4,757,712

 

Shares redeemed

 

(4,144,740

)

 

 

(36,455,131

)

 

(3,291,813

)

 

 

(35,067,094

)

Net change resulting from Investor Class of Shares transactions

 

(533,687

)

 

$

(4,425,992

)

 

509,594

 

 

$

8,687,224

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SMALL-CAP GROWTH FUND--ADVISOR CLASS

 

 

 

 

 

 

 

 

Shares sold

 

45,396

 

 

$

399,031

 

 

182,325

 

 

$

2,125,578

 

Shares issued to shareholders in payment of distributions declared

 

--

 

 

 

--

 

 

9,216

 

 

 

113,545

 

Shares redeemed

 

(39,396

)

 

 

(335,495

)

 

(103,222

)

 

 

(1,184,092

)

Net change resulting from Advisor Class of Shares transactions

 

6,000

 

 

$

63,536

 

 

88,319

 

 

$

1,055,031

 

Net change resulting from Fund Share transactions

 

(527,687

)

 

$

(4,362,456

)

 

597,913

 

 

$

9,742,255

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTERNATIONAL STOCK FUND--INVESTOR CLASS

 

 

 

 

 

 

 

 

Shares sold

 

20,295,727

 

 

$

170,791,982

 

 

17,636,158

 

 

$

174,748,741

 

Shares redeemed

 

(20,433,775

)

 

 

(173,272,774

)

 

(19,632,221

)

 

 

(194,599,116

)

Net change resulting from Investor Class of Shares transactions

 

(138,048

)

 

$

(2,480,792

)

 

(1,996,063

)

 

$

(19,850,375

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTERNATIONAL STOCK FUND--ADVISOR CLASS

 

 

 

 

 

 

 

 

 

 

 

 

Shares sold

 

2,786,745

 

 

$

23,916,305

 

 

1,430,452

 

 

$

14,109,749

 

Shares redeemed

 

(2,875,438

)

 

 

(24,845,316

)

 

(1,312,246

)

 

 

(13,240,261

)

Net change resulting from Advisor Class of Shares transactions

 

(88,693

)

 

$

(929,011

)

 

118,206

 

 

$

869,488

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTERNATIONAL STOCK FUND--INSTITUTIONAL CLASS

 

 

 

 

 

 

 

 

Shares sold

 

1,938,397

 

 

$

$16,492,473

 

 

2,973,838

 

 

$

29,826,781

 

Shares redeemed

 

(1,300,020

)

 

 

(10,796,234

)

 

(2,217,162

)

 

 

(21,877,897

)

Net change resulting from Institutional Class of Shares transactions

 

638,377

 

 

$

$5,696,239

 

 

756,676

 

 

$

7,948,884

 

Net change resulting from Fund Share transactions

 

411,636

 

 

$

$2,286,436

 

 

(1,121,181

)

 

$

(11,032,003

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GOVERNMENT INCOME FUND--INVESTOR CLASS

 

 

 

 

 

 

 

 

Shares sold

 

7,392,836

 

 

$

71,919,632

 

 

9,619,972

 

 

$

92,152,089

 

Shares issued to shareholders in payment of distributions declared

 

395,156

 

 

 

3,846,795

 

 

1,273,586

 

 

 

12,197,150

 

Shares redeemed

 

(8,376,959

)

 

 

(81,470,975

)

 

(11,955,890

)

 

 

(114,431,983

)

Net change resulting from Investor Class of Shares transactions

 

(588,967

)

 

$

(5,704,548

)

 

(1,062,332

)

 

$

(10,082,744

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GOVERNMENT INCOME FUND--ADVISOR CLASS

 

 

 

 

 

 

 

 

Shares sold

 

105,734

 

 

$

1,028,359

 

 

316,703

 

 

$

3,026,512

 

Shares issued to shareholders in payment of distributions declared

 

6,188

 

 

 

60,236

 

 

13,493

 

 

 

129,303

 

Shares redeemed

 

(40,938

)

 

 

(397,418

)

 

(192,551

)

 

 

(1,841,093

)

Net change resulting from Advisor Class of Shares transactions

 

70,984

 

 

$

691,177

 

 

137,645

 

 

$

1,314,722

 

Net change resulting from Fund Share transactions

 

(517,983

)

 

$

(5,013,371

)

 

(924,687

)

 

$

(8,768,022

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTERMEDIATE BOND FUND--INVESTOR CLASS

 

 

 

 

 

 

 

 

Shares sold

 

16,272,298

 

 

$

153,900,704

 

 

16,880,357

 

 

$

158,501,362

 

Shares issued to shareholders in payment of distributions declared

 

714,998

 

 

 

6,775,689

 

 

1,756,483

 

 

 

16,480,250

 

Shares redeemed

 

(17,130,897

)

 

 

(161,853,677

)

 

(19,133,698

)

 

 

(179,853,591

)

Net change resulting from Investor Class of Shares transactions

 

(143,601

)

 

$

(1,177,284

)

 

(496,858

)

 

$

(4,871,979

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTERMEDIATE BOND FUND--ADVISOR CLASS

 

 

 

 

 

 

 

 

 

 

 

 

Shares sold

 

97,090

 

 

$

918,836

 

 

291,333

 

 

$

2,732,845

 

Shares issued to shareholders in payment of distributions declared

 

8,850

 

 

 

83,866

 

 

18,596

 

 

 

174,431

 

Shares redeemed

 

(36,862

)

 

 

(347,431

)

 

(198,831

)

 

 

(1,866,218

)

Net change resulting from Advisor Class of Shares transactions

 

69,078

 

 

$

655,271

 

 

111,098

 

 

$

1,041,058

 

Net change resulting from Fund Share transactions

 

(74,523

)

 

$

(522,013

)

 

(385,760

)

 

$

(3,830,921

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SHORT-TERM INCOME FUND--INVESTOR CLASS

 

 

 

 

 

 

 

 

Shares sold

 

7,213,383

 

 

$

67,901,280

 

 

5,454,176

 

 

$

51,537,360

 

Shares issued to shareholders in payment of distributions declared

 

98,293

 

 

 

924,918

 

 

353,190

 

 

 

3,323,105

 

Shares redeemed

 

(5,592,024

)

 

 

(52,568,801

)

 

(6,890,903

)

 

 

(64,691,429

)

Net change resulting from Investor Class of Shares transactions

 

1,719,652

 

 

$

16,257,397

 

 

(1,083,537

)

 

$

(9,830,964

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SHORT-TERM INCOME FUND--ADVISOR CLASS

 

 

 

 

 

 

 

 

Shares sold

 

61,940

 

 

$

583,071

 

 

133,339

 

 

$

1,247,308

 

Shares issued to shareholders in payment of distributions declared

 

1,647

 

 

 

15,494

 

 

2,153

 

 

 

20,188

 

Shares redeemed

 

(11,495

)

 

 

(107,801

)

 

(58,185

)

 

 

(542,360

)

Net change resulting from Advisor Class of Shares transactions

 

52,092

 

 

$

490,764

 

 

77,307

 

 

$

725,136

 

Net change resulting from Fund Share transactions

 

1,771,744

 

 

$

16,748,161

 

 

(1,006,230

)

 

$

(9,105,828

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MONEY MARKET FUND--INVESTOR CLASS

 

 

 

 

 

 

 

 

Shares sold

 

2,602,668,703

 

 

$

2,602,668,703

 

 

5,427,591,574

 

 

$

5,427,591,574

 

Shares issued to shareholders in payment of distributions declared

 

3,103,573

 

 

 

3,103,573

 

 

11,415,196

 

 

 

11,415,196

 

Shares redeemed

 

(2,387,119,653

)

 

 

(2,387,119,653

)

 

(5,278,253,683

)

 

 

(5,278,253,683

)

Net change resulting from Investor Class of Shares transactions

 

218,652,623

 

 

$

218,652,623

 

 

160,753,087

 

 

$

160,753,087

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MONEY MARKET FUND--ADVISOR CLASS

 

 

 

 

 

 

 

 

Shares sold

 

101,165,558

 

 

$

101,165,558

 

 

281,645,796

 

 

$

281,645,796

 

Shares issued to shareholders in payment of distributions declared

 

455,183

 

 

 

455,183

 

 

2,132,999

 

 

 

2,132,999

 

Shares redeemed

 

(108,963,372

)

 

 

(108,963,372

)

 

(297,823,697

)

 

 

(297,823,697

)

Net change resulting from Advisor Class of Shares transactions

 

(7,342,631

)

 

$

(7,342,631

)

 

(14,044,902

)

 

$

(14,044,902

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MONEY MARKET FUND--INSTITUTIONAL CLASS

 

 

 

 

 

 

 

 

Shares sold

 

1,985,654,021

 

 

$

1,985,654,021

 

 

4,304,882,665

 

 

$

4,304,882,665

 

Shares issued to shareholders in payment of distributions declared

 

1,483,462

 

 

 

1,483,462

 

 

2,761,641

 

 

 

2,761,641

 

Shares redeemed

 

(1,797,254,077

)

 

 

(1,797,254,077

)

 

(4,312,138,653

)

 

 

(4,312,138,653

)

Net change resulting from Institutional Class of Shares transactions

 

189,883,406

 

 

$

189,883,406

 

 

(4,494,347

)

 

$

(4,494,347

)

Net change resulting from Fund Share transactions

 

401,193,398

 

 

$

401,193,398

 

 

142,213,838

 

 

$

142,213,838

 

 

4. Federal Tax Information

At August 31, 2002, the Funds had capital loss carryforwards, which will reduce the Funds' taxable income arising from future net realized gain on investments, if any, to the extent permitted by the Code, and thus will reduce the amount of the distributions to shareholders which would otherwise be necessary to relieve the Funds of any liability for federal tax. Pursuant to the Code, such capital loss carryforward will expire as follows:

 

Capital Loss Carryforward to Expire in
Fund  

2003

  

2004

   

2005

   

2006

   

2007

   

2008

   

2009

   

2010

   

Total
Equity Income Fund   

$ --
  

$ --

$ --

$ --

$ --

$ --

$ --

$ 3,315,209

$ 3,315,209
Large Cap Growth & Income Fund  

--

--

--

--

--

--

4,529,087

19,615,825

24,144,912
Mid-Cap Value Fund  

--

--

--

--

--

--

--

405,788

405,788
Mid-Cap Growth Fund  

--

--

--

--

--

--

--

6,610,904

6,610,904
Small Cap Growth Fund  

--

--

--

--

--

--

--

4,808,611

4,808,611
International Stock Fund  

--

--

--

--

--

--

2,042,934

63,689,740

65,732,674
Government Income Fund  

--

--

--

--

--

8,554,228

--

--

8,554,228
Intermediate Bond Fund  

10,386,677

6,100,494

--

--

--

2,990,074

--

6,283,428

25,760,673
Short-Term Income Fund  

1,898,650

556,158

545,815

618,371

952,637

222,218

928,524

944,182

6,666,555
Money Market Fund  

--

--

--

--

--

--

--

145,822

145,822

5. Investment Adviser Fee and Other Transactions with Affiliates

Investment Adviser Fee--M&I Investment Management Corp., the Funds' investment adviser (the "Adviser"), receives for its services an annual investment adviser fee based on a percentage of each Fund's average daily net assets as listed below. The Adviser may voluntarily choose to waive any portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion.

Fund

       

Annual Rate

Equity Income Fund

  

0.75 %

Large-Cap Growth & Income Fund

  

0.75 %

Mid-Cap Value Fund

  

0.75 %

Mid-Cap Growth Fund

  

0.75 %

Small-Cap Growth Fund

  

1.00 %

International Stock Fund

 

1.00 %

Government Income Fund

  

0.75 %

Intermediate Bond Fund

  

0.60 %

Short-Term Income Fund

  

0.60 %

Money Market Fund

  

0.15 %

International Stock Fund's sub-adviser is BPI Global Asset Management LLP (the "Sub-Adviser"). The Adviser compensates the Sub-Adviser based on the level of average aggregate daily net assets of International Stock Fund.

Administrative Fee--M&I Trust, under the Administrative Services Agreement, provides the Funds with administrative personnel and services. The fee paid to M&I Trust is based on each Fund's average daily net assets as follows:

 

Maximum Fee

  

Fund's Average Daily Net Assets

0.100 %

  

on the first $250 million

0.095 %

  

on the next $250 million

0.080 %

         

on the next $250 million

0.060 %

  

on the next $250 million

0.040 %

  

on the next $500 million

0.020 %

  

on assets in excess of $1.5 billion

Federated Administrative Services is the sub-administrator and will be paid by M&I Trust, not by the Funds.

Distribution Services Fee--The Funds have adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Funds will compensate Edgewood Services, Inc., the principal distributor, from the net assets of the Funds to finance activities intended to result in the sale of shares of the Funds' Advisor Class of Shares. The Plan provides that the Funds may incur distribution expenses up to 0.25% of the average daily net assets of Funds' Advisor Class of Shares (except Money Market Fund's Advisor Class of Shares which may accrue up to 0.30%) annually, to compensate Edgewood Services, Inc.

Shareholder Services Fee--Under the terms of a Shareholder Services Agreement with Marshall Investor Services ("MIS"), a division of M&I Trust, each Fund will pay MIS up to 0.25% of average daily net assets of the Funds' Investor and Advisor Class of Shares for the period. The fee paid to MIS is used to finance certain services for shareholders and to maintain shareholder accounts. MIS may voluntarily choose to waive any portion of its fee. MIS can modify or terminate this voluntary waiver at any time at its sole discretion.

Transfer and Dividend Disbursing Agent Fees and Expenses--Federated Services Company ("FServ"), through its subsidiary Federated Shareholders Services Company ("FSSC"), serves as transfer and dividend disbursing agent for the Funds. The fee paid to FSSC is based on the size, type, and number of accounts and transactions made by shareholders.

Portfolio Accounting Fees--FServ maintains the Funds' accounting records for which it receives a fee. The fee is based on the level of each Fund's average daily net assets for the period, plus out-of-pocket expenses.

Custodian Fees--M&I Trust is the Funds' custodian. M&I Trust receives fees based on the level of each Fund's average daily net assets for the period. The custodian also charges a fee in connection with securities lending activities of the Funds.

General--Certain of the Officers and Directors of the Corporation are Officers and Directors or Trustees, of one or more of the above companies.

6. Investment Transactions

Purchases and sales of investments, excluding short-term securities and long-term U.S. government securities, for the six months ended February 28, 2003, were as follows:

Fund

       

Purchases

      

Sales

Equity Income Fund

  

$ 87,910,615

$ 87,313,615

Large-Cap Growth & Income Fund

  

75,667,706

109,210,301

Mid-Cap Value Fund

  

58,420,536

38,459,655

Mid-Cap Growth Fund

  

103,871,007

126,589,445

Small-Cap Growth Fund

  

87,886,920

93,194,820

International Stock Fund

  

167,567,881

171,501,697

Intermediate Bond Fund

  

225,708,696

121,278,210

Short-Term Income Fund

  

22,648,283

11,167,738

Purchases and sales of long-term U.S. government securities, for the six months ended February 28, 2003, were as follows:

Fund

      

Purchases

      

Sales

Government Income Fund

  

$ 857,060,843

$ 914,570,110

Intermediate Bond Fund

  

660,359,523

763,362,705

Short-Term Income Fund

  

19,131,143

17,877,405

7. Line of Credit

Marshall Funds, Inc., on behalf of its respective Funds (expect for the Money Market Fund) entered into a $50,000,000 unsecured, committed revolving line of credit ("LOC") agreement with State Street Bank & Trust Company. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charge interest at a rate of 0.50% per annum over the Federal Funds Rate. The LOC includes a commitment fee of 0.10% per annum on the daily unused portion. The Funds did not utilize the LOC during the six months ended February 28, 2003.

Mutual funds are not bank deposits or obligations, are not guaranteed by any bank, and
are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance
Corporation, the Federal Reserve Board, or any other government agency. Investment in
mutual funds involves investment risk, including the possible loss of principal.

This report is authorized for distribution to prospective investors only when preceded
or accompanied by the Funds' prospectus, which contains facts concerning each
Fund's objective and policies, management fees, expenses, and other information.

[Logo of Marshall Funds]

Marshall Investor Services
P.O. Box 1348
Milwaukee,Wisconsin 53201-1348
800-580-FUND(3863)
TDD: Speech and Hearing Impaired Services
800-209-3520
www.marshallfunds.com
Edgewood Services, Inc., Distributor G01126-02 (4/03)
M&I Investment Management Corp., Investment Adviser
©2003 Marshall Funds, Inc.

321-313

 

[Logo of Marshall Funds]

The Marshall Funds Family

Semi-Annual Report

The Institutional Class of Shares

(Class I)

  • Marshall International Stock Fund

FEBRUARY 28, 2003

 

Table of Contents

President's Message  
1
Commentary    
2
Financial Information  
Portfolio of Investments  
4
Statement of Assets and Liabilities  
6
Statement of Operations  
7
Statement of Changes in Net Assets  
8
Financial Highlights  
9
Notes to Financial Statements  
10

[Logo of Marshall Funds]

Dear Marshall Fund Shareholder:

Good relative performance of your mutual fund investments can provide only so much comfort. A top-ranked fund with a negative return still feels like another step away from the accomplishment of your financial goals. Our higher-net-worth and institutional clients are hearing the siren songs of hedge funds and other alternative investments. Cash investments are at all time highs despite negative returns after inflation and taxes. Even IRA account owners are looking at annuity solutions for the allusive panacea of investing: stable, long-term, high, positive returns. In other words, markets that only go up dramatically without risk.

We do not offer such panaceas at the Marshall Funds or at its adviser, M&I Investment Management Corp. Allow us to provide some perspective on our commitment to the use of mutual funds in fully diversified portfolios.

Each senior officer of M&I Investment Management Corp. has almost 25 years of investment industry experience. We were front row observers of the Savings & Loan debacle that cost U.S. taxpayers over $200 billion. We followed the real estate joint venture craze all the way to its current penny-on-the-dollar trading on the internet. We watched the granddaddy of all hedge funds, Long-Term Capital Management, and its "orderly liquidation" by the Federal Reserve Board.

We take no glee in watching these disasters; the ripples to us as taxpayers and investors were rough waters, to say the least. We also believe that alternative investments and annuities can be appropriate in the right circumstances, with a complete understanding of benefits and risks, and if you are charged a fair price.

We are puzzled, however, that after six decades of outstanding service to investors in all kinds of market environments, the mutual fund industry continues to be challenged to make its case to U.S. investors. Recent criticisms include concerns over security turnover and sales charge breakpoints.

Security turnover in many equity portfolios has been increasing, raising concerns about the cost of trading more often. The primary reason for the high levels of turnover has been the record level of market volatility. Since the Marshall Funds use no affiliated broker-dealer to execute our trades, we have no built-in bias to increase trading. In fact, our Fund Managers have an incentive to minimize all costs to the Funds. Trading commissions directly affect the net performance of every Fund, and every Fund Manager's compensation is based on their net performance. As a result, every Marshall Fund Manager and every Marshall Fund shareholder is on the same side, focused on maximizing the Funds' total return.

Sales charge breakpoints relate solely to the Advisor Class of shares sold by M&I Brokerage Services. Clients with larger purchases receive breakpoints (discounts) on the shares purchased with the advice of an adviser. Recent, industry-wide, regulatory examinations reveal that some customers did not always receive the full amount of the breakpoint earned. We are pleased that no such errors were identified with any of our clients and are confident that the errors identified in the industry will be corrected soon. While the precise calculation of discounts is receiving great attention in the industry, we wonder why the lack of breakpoints for investment products similar to mutual funds is not receiving comparable regulator or media attention.

We hope you fully appreciate the reasons the mutual fund industry has grown substantially over 60 years. We also hope you fully appreciate the reasons Marshall Funds have grown to almost $6 billion over 10 years. Each Marshall Fund provides you with a clearly defined, true-to-style investment strategy that fits well with a broadly diversified asset allocation strategy. Each is led by an experienced, professional investment management team. Each has an expense ratio that is at or below the median for its respective mutual fund category. Each enjoys the full disclosure and regulatory oversight applied to the entire mutual fund industry.

As always, thank you for your investment in the Marshall Funds.

Sincerely,

/s/ John M. Blaser

John M. Blaser
President

Semi-Annual Report--Commentary

Fund Manager:     Daniel R. Jaworski, CFA
Investment Experience:   14 years
Education:   M.B.A. degree, University of Minnesota;
    B.A. Concordia College
Analyst:   BPI Global Asset Management Team

Marshall International Stock Fund

Fund Performance

For the six months ended February 28, 2003, the Fund provided a total return of (15.05)%.* In comparison, the Morgan Stanley Capital International Europe, Australasia and Far East Index (EAFE) returned (11.04)% while the Lipper International Funds Index (LIFI) returned (11.04)%.**

Factors Affecting Performance

International equity markets vacillated over the last six months. We witnessed a significant sell-off last September, which was followed by an October-November rally and then three successive months of negative returns in December, January and February. Stimulative actions taken by governments and central banks during this span were unable to override investor concerns about the pace of economic recovery and geopolitical matters such as the conflict with Iraq. All major industrial sectors and geographic regions generated negative returns for the trailing six-month reporting period.

The primary factors contributing to the Fund's relative underperformance during this reporting period were its holdings in the telecommunication services and consumer discretionary sectors. In the telecommunication services sector, the Fund's holdings underperformed primarily because of the strong performance of several large European telecommunications companies which did not meet our buy criteria and the Fund did not hold. The stock prices of these highly-leveraged, lower-quality entities rose dramatically during the fourth quarter of 2002 on news that France Telecom would receive virtually unconditional loans from the government to sustain its operations for the near term. Effectively, the bankruptcy discount that had previously been built into the prices of these stocks went away. In the consumer discretionary sector, the Fund's stakes in companies such as video game software producer Sega in Japan, and media concern Pearson PLC in the United Kingdom detracted from performance.

On the positive side of the ledger, the Fund benefited from the performance of its holdings in the energy and materials sectors. In energy, the Fund held a significant position in YUKOS, a fully integrated oil-and-gas company headquartered in Moscow, Russia. We continue to believe that this company is a good long-term investment because of its vast oil reserves, low production costs, attractive valuation and new shareholder-friendly management team. In materials, iron ore producer, Companhia Vale Do Rio Doce in Brazil, and paper producer, Sappi Ltd. in South Africa also contributed positively to Fund performance. In the aggregate, the Fund's holdings in emerging market stocks benefited performance more than any other region of the world.

Looking Ahead

On a sector basis we have increased exposure to the financials, information technology, telecommunication services and energy groups. We have identified several companies within these areas that have improving fundamentals and are taking market share from the weaker players in their respective industries. The source of funds for these purchases has come predominantly from sales of stocks in the consumer discretionary sector, where several company price targets were reached as fundamentals appeared to have hit a plateau. Our underweight positions in the healthcare, consumer staples, and utilities sectors remain intact. However, the valuations and business fundamentals are becoming more attractive in the healthcare group. We are looking to increase our exposure to this area as we find quality companies selling at discounts to their global industry peers.

Geographically the Fund remains underweight Japan and Europe, with the balance invested primarily in developing markets. We continue to identify attractive opportunities in markets such as Korea, Mexico, Brazil, Russia and Israel.

 

 

February 28, 2003 (unaudited)

Portfolio of Investments

International Stock Fund

 

Description

   

Shares

   

Value

Common Stocks -- 98.5%

 

 

 

 

 

 

 

Australia -- 2.7%

 

 

 

 

 

 

 

National Australia Bank Ltd., Melbourne(1)

 

174,400

 

$

3,063,661

 

 

News Corp. Ltd.

 

423,400

 

 

2,622,536

 

 

Qantas Airways

 

748,300

 

 

1,400,951

 

 

Total Australia

 

 

 

 

7,087,148

 

 

Brazil -- 2.8%

 

 

 

 

 

 

 

Banco Itau SA, ADR

 

31,200

 

 

683,592

 

 

Companhia Vale Do Rio Doce, ADR (2)

 

24,200

 

 

701,800

 

 

Companhia Vale Do Rio Doce, ADR

 

152,350

 

 

4,151,537

 

 

Unibanco Uniao de Bancos Brasileiros SA, ADR

  

153,100

    

1,737,685

  

 

Total Brazil

 

 

 

 

7,274,614

 

 

Canada -- 1.6%

 

 

 

 

 

 

 

Royal Bank of Canada, Montreal

 

108,200

 

 

4,226,591

 

 

Finland -- 1.9%

 

 

 

 

 

 

 

Nokia OYJ

 

122,400

 

 

1,636,069

 

 

Nokia OYJ, Class A, ADR

 

239,500

 

 

3,168,585

 

 

Total Finland

 

 

 

 

4,804,654

 

 

France -- 6.4%

 

 

 

 

 

 

 

L'Air Liquide SA

 

18,692

 

 

2,399,750

 

 

Societe Generale, Paris

 

46,500

 

 

2,496,208

 

 

Total Fina SA, Class B (1)

 

39,460

 

 

5,214,901

 

 

Vivendi Environment (1)

 

273,849

 

 

5,195,440

 

 

Vivendi Environment,
Warrants (1)(2)

 

48,300

 

 

4,165

 

 

Wanadoo (1)(2)

 

276,700

 

 

1,383,967

 

 

Total France

 

 

 

 

16,694,431

 

 

Germany -- 5.5%

 

 

 

 

 

 

 

Adidas-Salomon AG

 

73,300

 

 

5,896,794

 

 

Deutsche Boerse AG

 

59,000

 

 

2,284,477

 

 

Fresenius Medical Care AG

 

973

 

 

41,125

 

 

SAP AG (Systeme, Anwendungen, Produkte in der Datevnerarbeitung)

 

54,900

 

 

4,589,958

 

 

T-Online International AG (2)

 

228,800

 

 

1,418,151

 

 

Total Germany

 

 

 

 

14,230,505

 

 

Hong Kong -- 0.7%

 

 

 

 

 

 

 

Cathay Pacific Airways Ltd.

 

1,306,900

 

 

1,826,543

 

 

Ireland -- 3.1%

 

 

 

 

 

 

 

Bank of Ireland

 

599,900

 

 

6,628,286

 

 

Irish Life & Permanent PLC

 

136,400

 

 

1,337,994

 

 

Total Ireland

 

 

 

 

7,966,280

 

 

Israel -- 1.6%

 

 

 

 

 

 

 

Teva Pharmaceutical Industries Ltd., ADR

  

112,800

    

4,261,584

 

 

Italy -- 5.0%

 

 

 

 

 

 

 

ENI SpA (1)

 

456,600

 

 

6,777,482

 

             

Common Stocks (continued)

 

 

 

 

 

 

 

Italy (continued)

 

 

 

 

 

 

 

Riunione Adriatica di Sicurta SpA (1)

 

211,000

 

$

2,595,175

 

 

Telecom Italia SpA

 

718,200

 

 

3,522,535

 

 

Total Italy

 

 

 

 

12,895,192

 

 

Japan -- 8.6%

 

 

 

 

 

 

 

Canon, Inc.

 

121,000

 

 

4,370,596

 

 

Millea Holdings, Inc.

 

408

 

 

2,826,646

 

 

Nomura Holdings, Inc.

 

265,700

 

 

3,124,164

 

 

NTT DoCoMo, Inc.

 

2,754

 

 

5,195,128

 

 

Ricoh Co. Ltd.(1)

 

171,900

 

 

2,597,076

 

 

Yahoo Japan Corp.(2)

 

156

 

 

2,692,044

 

 

Yamato Transport

 

108,900

 

 

1,381,804

 

 

Total Japan

 

 

 

 

22,187,458

 

 

Korea, Republic of -- 4.6%

 

 

 

 

 

 

 

Kookmin Bank

 

77,863

 

 

2,380,932

 

 

Kookmin Bank, ADR

 

9,274

 

 

283,042

 

 

POSCO, ADR

 

26,000

 

 

600,600

 

 

Samsung Electronics Co.

 

27,100

 

 

6,345,621

 

 

SK Telecom Co. Ltd., ADR

 

159,100

 

 

2,448,549

 

 

Total Korea, Republic of

 

 

 

 

12,058,744

 

 

Mexico -- 4.2%

 

 

 

 

 

 

 

America Movil, SA de CV,
Class L, ADR

 

185,800

 

 

2,564,040

 

 

Fomento Economico Mexicano, SA de CV, ADR(2)

 

62,500

 

 

2,015,625

 

 

Grupo Financiero BBVA Bancomer, SA de CV,
Class B(2)

 

4,318,000

 

 

3,258,720

 

 

Grupo Modelo, SA de CV, Class C

 

663,200

 

 

1,371,578

 

 

Wal-Mart de Mexico, SA de CV

 

802,700

 

 

1,792,596

 

 

Total Mexico

 

 

 

 

11,002,559

 

 

Netherlands -- 4.4%

 

 

 

 

 

 

 

AEGON NV(1)

 

323,000

 

 

3,464,369

 

 

Royal Dutch Petroleum Co.

 

70,500

 

 

2,792,833

 

 

TPG NV(1)

 

226,100

 

 

3,168,418

 

 

VNU (Verenigde Nederlandse Uitgeversbedrijven)(1)

  

87,400

    

1,922,883

 

 

Total Netherlands

 

 

 

 

11,348,503

 

 

Russia -- 2.6%

 

 

 

 

 

 

 

YUKOS, ADR

 

40,450

 

 

6,628,744

 

 

Singapore -- 1.1%

 

 

 

 

 

 

 

Venture Corp. Ltd.

 

368,800

 

 

2,844,680

 

 

South Africa -- 1.0%

 

 

 

 

 

 

 

Sappi Ltd. (1)

 

192,600

 

 

2,663,101

 

 

Spain -- 3.8%

 

 

 

 

 

 

 

Banco Bilbao Vizcaya Argentaria, SA

 

311,900

 

 

2,659,441

 

 

Banco Santander Central Hispano, SA

 

675,400

 

 

4,331,881

 

 

Telefonica, SA(2)

 

301,512

 

 

2,925,133

 

 

Total Spain

 

 

 

 

9,916,455

 

Common Stocks (continued)

 

 

 

 

 

 

 

Sweden -- 5.0%

 

 

 

 

 

 

 

Atlas Copco AB, Class A(1)

 

234,410

 

$

4,976,770

 

 

Sandvik AB

 

164,800

 

 

3,818,719

 

 

Skandinaviska Enskilda
Banken AB, Class A

 

320,000

 

 

2,841,785

 

 

Telefonaktiebolaget LM Ericsson(1)

  

1,944,900

 

 

1,269,651

 

 

Total Sweden

 

 

 

 

12,906,925

 

 

Switzerland -- 10.8%

 

 

 

 

 

 

 

Compagnie Financiere Richemont AG

 

124,600

 

 

2,017,163

 

 

Credit Suisse Group(1)

 

60,300

 

 

1,122,967

 

 

Nestle SA(1)

 

35,630

 

 

7,174,090

 

 

Novartis AG(1)

 

172,030

 

 

6,318,615

 

 

Swiss Re(1)

 

100,640

 

 

5,418,534

 

 

UBS AG(1)

 

144,690

 

 

6,072,103

 

 

Total Switzerland

 

 

 

 

28,123,472

 

 

United Kingdom -- 21.1%

 

 

 

 

 

 

 

ARM Holdings PLC(2)

 

2,655,800

 

 

2,215,239

 

 

BG Group PLC

 

346,600

 

 

1,335,060

 

 

BP Amoco PLC

 

680,200

 

 

4,281,993

 

 

British American Tobacco PLC

 

151,400

 

 

1,477,294

 

 

British Sky Broadcasting Group PLC(2)

 

135,500

 

 

1,340,275

 

 

Diageo PLC

 

448,200

 

 

4,443,874

 

 

EasyJet PLC(2)

 

611,200

 

 

1,827,622

 

 

Exel PLC

 

146,500

 

 

1,299,215

 

 

HSBC Holdings PLC

 

268,800

 

 

2,893,575

 

 

Kingfisher PLC

 

680,718

 

 

2,450,630

 

 

Pearson PLC

 

257,400

 

 

1,944,461

 

 

Reed Elsevier PLC

 

142,400

 

 

1,038,745

 

 

Rexam PLC

 

439,800

 

 

2,233,937

 

 

Rio Tinto PLC

 

128,200

 

 

2,592,630

 

 

Royal Bank of Scotland PLC, Edinburgh

 

231,900

 

 

5,302,928

 

 

Smith & Nephew PLC

 

877,700

 

 

5,055,645

 

 

Smiths Group PLC

 

255,600

 

 

2,429,669

 

 

Standard Chartered PLC

 

283,100

 

 

3,105,432

 

 

Vodafone Group PLC

 

3,397,521

 

 

6,082,231

 

 

WPP Group PLC

 

209,700

 

 

1,289,576

 

 

Total United Kingdom

 

 

 

 

54,640,031

 

Total Common Stocks
(identified cost $270,457,110)

  

 

 

 

255,588,214

 

Repurchase Agreement -- 3.1%            

 

Agreement with State Street Corp., 0.500% dated 2/28/2003, to be repurchased at $8,139,339 on 3/3/2003, collateralized by U.S. Treasury Obligations with various maturities to 2/15/2020 (at amortized cost)

$

8,139,000

 

$

8,139,000

 

Total Investments (identified cost $278,596,110)--101.6%(3)

 

 

 

 

263,727,214

 

Other Net Assets and Liabilities--(1.6)%

 

 

 

 

(4,209,154

)

Total Net Assets--100.0%

 

 

 

$

259,518,060

 

 



Industry



   

Industry
Diversification
Market Value



 



   


% of
net assets

Air Freight & Couriers

   

$ 4,508,641

 

 

1.7

%

Banks

 

49,830,109

 

 

19.2

 

Beverages & Foods

 

15,005,167

 

 

5.8

 

Containers & Metal/Glass

 

2,233,937

 

 

0.9

 

Domestic & International Oil

 

18,918,471

 

 

7.3

 

Electronics

 

9,190,301

 

 

3.5

 

Financial Services

 

10,005,355

 

 

3.8

 

Gas Distribution

 

1,335,060

 

 

0.5

 

Healthcare

 

41,125

 

 

0.0

 

Healthcare Equipment & Supplies

 

5,055,645

 

 

2.0

 

Household Product/Wares

 

5,896,794

 

 

2.3

 

Industrial Gases

 

2,399,750

 

 

0.9

 

Industrial Services

 

8,795,489

 

 

3.4

 

Insurance

 

14,304,724

 

 

5.5

 

IT Consulting & Services

 

5,494,162

 

 

2.1

 

Manufacturing

 

4,644,908

 

 

1.8

 

Media

 

2,629,851

 

 

1.0

 

Metals & Mining

 

8,046,567

 

 

3.1

 

MultiMedia

 

7,528,625

 

 

2.9

 

Office Equipment

 

6,967,672

 

 

2.7

 

Oil & Gas Products

 

6,777,482

 

 

2.6

 

Paper & Forest Products

 

2,663,101

 

 

1.0

 

Pharmaceuticals & Healthcare

 

10,580,199

 

 

4.1

 

Retail

 

6,260,389

 

 

2.4

 

Software

 

4,589,958

 

 

1.8

 

Telecommunications

 

28,811,921

 

 

11.1

 

Tobacco

 

1,477,294

 

 

0.6

 

Transportation

 

6,395,912

 

 

2.5

 

Water Treatment

 

5,199,605

 

 

2.0

 

Total Common Stocks

 

255,588,214

 

 

98.5

 

Total Repurchase Agreement

 

8,139,000

 

 

3.1

 

Total Investments

 

263,727,214

 

 

101.6

 

Other Net Assets & Liabilities

 

(4,209,154

)

 

(1.6

)

Total Net Assets

 

$259,518,060

 

 

100.0

%

(1) Certain shares or principal amounts are temporarily on loan to unaffiliated broker-dealers.

(2) Non-income producing.

(3) The cost of investments for federal tax purposes amounts to $278,596,110. The net unrealized depreciation of investments on a federal tax basis amounts to $14,868,896 which is comprised of $13,592,455 appreciation and $28,461,351 depreciation at February 28, 2003.

The following acronym is used throughout this report:

ADR--American Depositary Receipt

 

February 28, 2003 (unaudited)

Statement of Assets and Liabilities

 

    



 
Assets:    
Investments in securities, at value  
$ 263,727,214
Short-term investments held as collateral for securities lending  
32,537,850
Cash  
203
Cash denominated in foreign currencies (identified cost, $24,602)  
24,715
Income receivable  
439,587
Receivable for investments sold  
2,161,900
Total assets  
298,891,469
Liabilities:  
Payable for capital stock redeemed  
1,303,794
Payable for investments purchased  
5,245,375
Payable on collateral due to broker  
32,537,850
Accrued expenses  
286,390
Total liabilities  
39,373,409
Total Net Assets  
$ 259,518,060
Net Assets Consist of:  
Paid-in-capital  
420,252,912
Net unrealized depreciation on investments and foreign currency translation  
(14,837,642)
Accumulated net realized loss on investments and foreign currency transactions  
(144,913,959)
Accumulated net operating loss  
(983,251)
Total Net Assets  
$ 259,518,060
Net Asset Value, Offering Price and Redemption Proceeds Per Share  
Investor Class of Shares:  
Net Asset Value, Offering Price and Redemption Proceeds Per Share  
$ 7.90
Advisor Class of Shares:  
Net Asset Value and Redemption Proceeds Per Share  
$ 7.89
Offering Price Per Share  
$ 8.37*
Institutional Class of Shares:  
Net Asset Value, Offering Price and Redemption Proceeds Per Share  
$ 7.96
Net Assets:  
Investor Class of Shares  
$ 164,751,005
Advisor Class of Shares  
2,847,757
Institutional Class of Shares  
91,919,298
Total Net Assets  
$ 259,518,060
Shares Outstanding:  
Investor Class of Shares  
20,859,583
Advisor Class of Shares  
360,880
Institutional Class of Shares  
11,547,424
Total Shares Outstanding  
32,767,887
Investments, at identified cost  
$ 278,596,110

* Computation of offering price per share 100/94.25 of net asset value.

Six Months Ended February 28, 2003 (unaudited)

Statement of Operations

 

    



 

Investment Income:

  

Interest income

  

$ 79,519

Dividend income

  

1,780,579(1)

Total income

  

1,860,098

Expenses:

  

Investment adviser fee

  

1,417,670

Shareholder services fees--

  

Investor Class of Shares

  

228,972

Advisor Class of Shares

  

5,233

Administrative fees

  

140,877

Portfolio accounting fees

 

57,552

Transfer and dividend disbursing agent fees

  

79,103

Custodian fees

  

97,504

Registration fees

  

20,910

Auditing fees

  

8,232

Legal fees

  

1,884

Printing and postage

  

18,844

Directors' fees

  

3,606

Insurance premiums

  

1,052

Distribution services fees--

  

Advisor Class of Shares

  

5,233

Miscellaneous

  

4,231

Total expenses

  

2,090,903

Deduct--

  

Waiver of investment adviser fee

  

(34,712)

Waiver of shareholder services fees--

  

Advisor Class of Shares

  

(5,233)

Total Waivers

  

(39,945)

Net expenses

  

2,050,958

Net operating loss

 

(190,860)

Net Realized and Unrealized Loss on Investments and Foreign Currency:

  

Net realized loss on investment transactions (identified cost basis)

  

(40,575,320)

Net realized loss on foreign currency contracts (identified cost basis)

  

(25,039)

Net change in unrealized depreciation on investments and foreign currency translation

  

(3,888,783)

Net realized and unrealized loss on investments and foreign currency

  

(44,489,142)

Change in net assets resulting from operations

  

$ (44,680,002)

(1) Net of foreign taxes withheld of $188,390.

 

Statement of Changes in Net Assets

   
       Six Months
Ended
February 28,
2003
(unaudited)		      Year Ended
August 31,
2002
Increase (Decrease) in Net Assets        
Operations--        
Net investment income (net operating loss)   $ (190,860)   $ 1,345,766
Net realized loss on investments transactions   (40,575,320)   (59,392,247)
Net realized loss on foreign currency contracts   (25,039)   (882,998)
Net change in unrealized appreciation (depreciation) of investments and foreign currency translation   (3,888,783)   12,302,179
Change in net assets resulting from operations   (44,680,002)   (46,627,300)
Capital Stock Transactions--        
Proceeds from sale of shares   211,200,760   218,685,271
Cost of shares redeemed   (208,914,324)   (229,717,274)
Change in net assets resulting from capital stock transactions   2,286,436   (11,032,003)
Change in net assets   (42,393,566)   (57,659,303)
Net Assets:        
Beginning of period   301,911,626   359,570,929
End of period   $ 259,518,060   $ 301,911,626
Accumulated net operating loss included in net assets at end of period   $ (983,251)   $ (792,391)

Financial Highlights--Institutional Class of Shares
(For a share outstanding throughout each period)

Year
Ended
August 31,

   

Net asset
value,
beginning
of period

   

Net investment income
 (net operating loss)

   

Net realized and
unrealized
gain (loss) on
investments and
foreign currency

   

Total from
investment
operations

   

Distributions
to
shareholders
from net
investment
income

   

Distributions
to
shareholders from
net realized
gain on
investments
and
foreign currency
transactions

   

Total
distributions

   

Net
asset
value, end
of period

   

Total
return(1)

   

 

Ratios to Average Net Assets

   

Net assets,
end of
period
(000
omitted)

   

Portfolio
turnover
rate

Expenses

   

Net
investment
income
(net operating
loss)

   

Expense
waiver/
reimbursement(2)
International Stock Fund  

 

 

 

 

 

 

 

 

 

 

 

2000(3)  

$ 13.83

  

(0.02)(4)

  

4.08

  

4.06

  

(0.18)

  

(1.36)

  

(1.54)

  

$ 16.35

  

28.34%

  

1.26%

  

(0.12)%

  

0.02%

  

$ 134,920

  

225%
2001  

$ 16.35

  

0.07(4)

  

(4.04)

  

(3.97)

  

--

  

(1.61)

  

(1.61)

  

$ 10.77

  

(26.19)%

  

1.21%

  

0.55%

  

0.02%

  

$ 109,367

  

156%
2002  

$ 10.77

  

0.06(4)

  

(1.46)

  

(1.40)

  

--

  

--

  

--

  

$ 9.37

  

(13.00)%

  

1.24%

  

0.59%

  

0.02%

  

$ 102,233

  

83%
2003(5)  

$ 9.37

  

0.00(4)(6)

  

(1.41)

  

(1.41)

  

--

  

--

  

--

  

$ 7.96

  

(15.05)%

  

1.28%(7)

  

0.02%(7)

  

0.02%(7)

  

$ 91,919

  

60%

(1) Based on net asset value, which does not reflect the sales charge or contigent deferred sales charge, if applicable.

(2) This voluntary expense decrease is reflected in both the expense and net investment income (net operating loss) ratios.

(3) Reflects operations for the period from September 1, 1999 (start of performance) to August 31, 2000.

(4) Per share information is based on average shares outstanding.

(5) For the six months ended February 28, 2003 (unaudited).

(6) Represents less than $0.01.

(7) Computed on an annualized basis.

 

 

February 28, 2003 (unaudited)

Notes to Financial Statements

1. Organization

Marshall Funds, Inc. (the "Corporation") is registered under the Investment Company Act of 1940, as amended, (the "Act"), as an open-end management investment company. The Corporation consists of eleven diversified portfolios. The financial statements included herein are only those of Marshall International Stock Fund (the "Fund"). The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The investment objective of the Fund is to provide capital appreciation.

The Fund offers three classes of shares: Institutional Class of Shares, Investor Class of Shares and Advisor Class of Shares. The Financial Highlights of Investor Class of Shares and Advisor Class of Shares of the Fund are presented in separate semi-annual reports.

2. Significant Accounting Policies

The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with accounting principles generally accepted in the United States.

Investment Valuations--Foreign equity securities are valued at the last sale price reported in the market in which they are primarily traded. If no sale on the recognized exchange is reported or the security is traded over-the-counter, the foreign securities are valued at the mean between the last closing bid and asked prices. Short-term securities are valued at the prices provided by an independent pricing service. However, short-term securities purchased with remaining maturities of 60 days or less may be valued at amortized cost, which approximates fair market value. Investments in other open-end regulated investment companies are valued at net asset value. Securities for which no quotations are readily availiable are valued at fair value as determined in good faith using methods approved by the Board of Directors (the "Directors").

Repurchase Agreements--It is the policy of the Fund to require the custodian bank to take possession, to have legally segregated in the Federal Reserve Book Entry System, or to have segregated within the custodian bank's vault, all securities held as collateral under repurchase agreement transactions. Additionally, procedures have been established by the Fund to monitor, on a daily basis, the market value of each repurchase agreement's collateral to ensure that the value of collateral at least equals the repurchase price to be paid under the repurchase agreement, including accrued interest.

The Fund will only enter into repurchase agreements with banks and other recognized financial institutions, such as broker/dealers, which are deemed by the Fund's adviser or sub-advisor to be creditworthy pursuant to the guidelines and/or standards reviewed or established by the Directors. Risks may arise from the potential inability of counterparties to honor the terms of the repurchase agreement. Accordingly, the Fund could receive less than the repurchase price on the sale of collateral securities.

Investment Income, Expenses and Distributions--Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at fair market value. The Fund offers multiple classes of shares which differ in their respective distribution and service fees. All shareholders bear the common expense of the Fund based on average daily net assets of each class, without distinction between share classes. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.

Federal Taxes--It is the Fund's policy to comply with the provisions of Subchapter M of the Internal Revenue Code, as amended, (the "Code") applicable to regulated investment companies and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal tax is necessary.

Withholding taxes on foreign divdends have been provided for in accordance with the applicable country's tax rules and rates.

When-Issued and Delayed Delivery Transactions--The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked-to-market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.

Foreign Exchange Contracts--The Fund may enter into foreign currency exchange contracts as a way of managing foreign exchange rate risk. The Fund may enter into these contracts for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross hedge against either specific transactions or portfolio positions. The objective of the Fund's foreign currency hedging transactions is to reduce the risk that the U.S. dollar value of the Fund's foreign currency denominated securities will decline in value due to changes in foreign currency exchange rates. All foreign currency exchange contracts are "marked-to-market" daily at the applicable translation rates resulting in unrealized gains or losses. Realized gains or losses are recorded at the time the foreign currency exchange contract is offset by entering into a closing transaction or by the delivery or receipt of the currency. Risk may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. At February 28, 2003, the Fund had no outstanding foreign currency exchange contracts.

Foreign Currency Translation--The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities denominated in foreign currencies ("FCs") are translated into U.S. dollars based on the rate of exchange of such currencies against U.S. dollars on the date of valuation. Purchases and sales of securities, income and expenses are translated at the rate of exchange quoted on the respective date that such transactions are recorded. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.

Reported net realized foreign exchange gains or losses arise from sales of portfolio securities, sales and maturities of short-term securities, sales of FCs, currency gains or losses realized between the trade and settlement dates on securities transactions, the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund's books, and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities at fiscal year end, resulting from changes in the exchange rate.

Other--Investment transactions are accounted for on a trade date basis.

Securities Lending--The Fund participates in a securities lending program providing for the lending of corporate bonds, equity and government securities to qualified brokers. The Fund receives cash as collateral in return for the securities and record a corresponding payable for collateral due to the respective broker. The amount of cash collateral received is maintained at a minimum level of 100% of the prior day's market value on securities loaned. Collateral is reinvested by the Fund in short-term securities including overnight repurchase agreements, commercial paper, master notes, floating rate corporate notes (with at least quarterly reset rates) and money market funds. On May 18, 2000, the Securities and Exchange Commission issued an order to the Marshall Funds that exempts certain securities lending activities from prohibitions under the Act. Under the terms of the exemptive order, (i) the Fund may pay a portion of net revenue to Marshall & Ilsley Trust Company N.A., ("M&I Trust") for its service as securities lending agent, and (ii) cash collateral received for a loan of the Fund's securities may be invested jointly with collateral received for loans of other Marshall Fund's securities.

As of February 28, 2003, the value of securities loaned, the payable on collateral due to broker and the value of reinvested cash collateral securities were as follows:

Market Value of
Securities Loaned

     

Payable on Collateral
Due to Broker

     

Reinvested Collateral
Securities
$30,968,803
$ 32,537,850
$ 32,537,850

Individual reinvested cash collateral securities at February 28, 2003 are as follows:

Investments

     

Total
Provident Money Market Fund  
$ 128,370
Merrimac Money Market Fund  
4,124,073
Dreyfus Cash Management Plus MMKT  
4,178,876
JP Morgan Master Note  
1,678,990
MetLife Funding Agreement  
1,678,990
Wisconsin Public Service Master Note  
839,495
Monumental Life Insurance Master Note  
1,259,243
Homeside Lending Inc.  
840,520
Syndicated Loan Fund  
1,259,054
Merrill Lynch & Co.  
1,678,990
BMW US Capital LLC  
1,678,990
Wells Fargo & Company  
839,495
Wisconsin Energy Corp. C/P  
1,859,636
Goldman Sachs Group  
1,678,990
John Deere Capital Corp.  
1,259,085
Jackson National Life Global  
1,678,587
American Express Centurion  
1,678,990
American Express Credit  
1,678,990
Canadian IMP BK Comm  
1,259,243
General Electric Capital Corp.  
1,259,243

3. Capital Stock

The Articles of Incorporation permit the Directors to issue an indefinite number of full and fractional shares of common stock, par value $0.0001 per share. At February 28, 2003, the capital paid-in was $420,252,912.

Transactions in capital stock were as follows:

 

Six Months Ended
February 28, 2003

Year Ended
August 31, 2002

Investor Class

  

Shares

     

Amount

     

Shares

     

Amount
Shares sold     

20,295,727

$ 170,791,982

17,636,158

$ 174,748,741
Shares redeemed  

(20,433,775)

(173,272,774)

(19,632,221)

(194,599,116)
Net change resulting from Investor Class of Shares transactions  

(138,048)

$ (2,480,792)

(1,996,063)

$ (19,850,375)
 

 

Six Months Ended
February 28, 2003

Year Ended
August 31, 2002

Advisor Class

     

Shares

     

Amount

     

Shares

  

Amount
Shares sold  

2,786,745

  

$ 23,916,305

  

1,430,452

     

$ 14,109,749
Shares redeemed  

(2,875,438)

  

(24,845,316)

  

(1,312,246)

  

(13,240,261)
Net change resulting from Advisor Class of Shares transactions  

(88,693)

  

$ (929,011)

  

118,206

  

$ 869,488
 

 

Six Months Ended
February 28, 2003

Year Ended
August 31, 2002

Institutional Class

     

Shares

     

Amount

     

Shares

     

Amount
Shares sold  

1,938,397

  

$ 16,492,473

  

2,973,838

  

$ 29,826,781
Shares redeemed  

(1,300,020)

  

(10,796,234)

  

(2,217,162)

  

(21,877,897)
Net change resulting from Institutional Class of Shares transactions  

638,377

  

$ 5,696,239

  

756,676

  

$ 7,948,884
Net change resulting from Fund Share transactions  

411,636

  

$ 2,286,436

  

(1,121,181)

  

$ (11,032,003)

4. Federal Tax Information

At August 31, 2002, the Fund had a capital loss carryforward of $65,732,674 which will reduce the Fund's taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Code, and thus will reduce the amount of the distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal tax. Pursuant to the Code such capital loss carryforward will expire as follows:

Expiration Year

     

Expiration Amount
2009  
$ 2,042,934
2010  
63,689,740

5. Investment Adviser Fee and Other Transactions with Affiliates

Investment Adviser Fee--M&I Investment Management Corp., the Fund's investment adviser (the "Adviser"), receives for its services an annual investment adviser fee equal to 1.00% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive any portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion.

The Fund's sub-adviser is BPI Global Asset Management LLP (the "Sub-Adviser"). The Adviser compensates the Sub-Adviser based on the level of average aggregate daily net assets of the Fund.

Administrative Fee--M&I Trust, under the Administrative Services Agreement, provides the Fund with Administrative personnel and services. The fee paid to M&I Trust is based on the Fund's average daily net assets ("ADNA") as follows:

Maximum Fee

 

Fund's ADNA

0.100 %      on the first $250 million
0.095 %   on the next $250 million
0.080 %   on the next $250 million
0.060 %   on the next $250 million
0.040 %   on the next $500 million
0.020 %   on assets in excess of $1.5 billion

Federated Administrative Services is the sub-administrator and will be paid by M&I Trust, not by the Fund.

Distribution Services Fee--The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will compensate Edgewood Services, Inc., the principal distributor, from the net assets of the Fund to finance activities intended to result in the sale of shares of the Fund's Advisor Class of Shares. The Plan provides that the Fund may incur distribution expenses up to 0.25% of the average daily net assets of Fund's Advisor Class of Shares annually, to compensate Edgewood Services, Inc.

Shareholder Services Fee--Under the terms of a Shareholder Services Agreement with Marshall Investor Services ("MIS"), a division of M&I Trust, the Fund will pay MIS up to 0.25% of average daily net assets of the Fund's Investor and Advisor Class of shares for the period. MIS may voluntarily choose to waive any portion of its fee. MIS can modify or terminate this voluntary waiver at any time at its sole discretion.

Transfer and Dividend Disbursing Agent Fees and Expenses--Federated Services Company ("FServ"), through its subsidiary, Federated Shareholder Services Company ("FSSC"), serves as transfer and dividend disbursing agent for the Fund. The fee paid to FSSC is based on the size, type, and number of accounts and transactions made by shareholders.

Portfolio Accounting Fees--FServ maintains the Fund's accounting records for which it receives a fee. The fee is based on the level of the Fund's average daily net assets for the period, plus out-of-pocket expenses.

Custodian Fees--M&I Trust is the Fund's custodian. The fee is based on the level of the Fund's average daily net assets for the period. The custodian also charges a fee in connection with securities lending activities of the Fund.

General--Certain of the Officers and Directors of the Corporation are Officers and Directors or Trustees of one or more of the above companies.

6. Investment Transactions

Purchases and sales of investments, excluding short-term securities, for the six months ended February 28, 2003, were as follows:

Purchases      $167,567,881
Sales   $171,501,697

7. Line of Credit

Marshall Funds, Inc., on behalf of its respective Funds (expect for the Money Market Fund) entered into a $50,000,000 unsecured, committed revolving line of credit ("LOC") agreement with State Street Bank & Trust Company. The LOC was made available for extraordinary or emergency purposes, primarily for financing redemption payments. Borrowings are charge interest at a rate of 0.50% per annum over the Federal Funds Rate. The LOC includes a commitment fee of 0.10% per annum on the daily unused portion. The Fund did not utilize the LOC during the six months ended February 28, 2003.

 

 

 

 

 

 

Mutual funds are not bank deposits or obligations, are not guaranteed by any bank, and
are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance
Corporation, the Federal Reserve Board, or any other government agency. Investment in
mutual funds involves investment risk, including the possible loss of principal.

This report is authorized for distribution to prospective investors only when preceded
or accompanied by the Funds' prospectus, which contains facts concerning each
Fund's objective and policies, management fees, expenses, and other information.

 

[Logo of Marshall Funds]

Marshall Investor Services
P.O. Box 1348
Milwaukee,Wisconsin 53201-1348
800-236-FUND(3863)
TDD: Speech and Hearing Impaired Services
800-209-3520
www.marshallfunds.com
Edgewood Services, Inc., Distributor 25330 (4/03)
M&I Investment Management Corp., Investment Adviser
©2003 Marshall Funds, Inc.

321-316

 

The Marshall Funds Family

Semi-Annual Report

The Institutional Class of Shares

(Class I)

 

  •  Marshall Money Market Fund

 

FEBRUARY 28 , 2003

Table of Contents

President's Message    
1
Commentary  
2
Financial Information  
Portfolio of Investments  
4
Statement of Assets and Liabilities  

7
Statement of Operations  
8
Statement of Changes in Net Assets  
9
Financial Highlights  
10
Notes to Financial Statements  
11

 

[Logo of Marshall Funds]

 

Dear Marshall Fund Shareholder:

Good relative performance of your mutual fund investments can provide only so much comfort. A top-ranked fund with a negative return still feels like another step away from the accomplishment of your financial goals. Our higher-net-worth and institutional clients are hearing the siren songs of hedge funds and other alternative investments. Cash investments are at all time highs despite negative returns after inflation and taxes. Even IRA account owners are looking at annuity solutions for the allusive panacea of investing: stable, long-term, high, positive returns. In other words, markets that only go up dramatically without risk.

We do not offer such panaceas at the Marshall Funds or at its adviser, M&I Investment Management Corp. Allow us to provide some perspective on our commitment to the mutual funds in fully diversified portfolios.

Each senior officer of M&I Investment Management Corp. has almost 25 years of investment industry experience. We were front row observers of the Savings & Loan debacle that cost U.S. taxpayers over $200 billion. We followed the real estate joint venture craze all the way to its current penny-on-the-dollar trading on the internet. We watched the granddaddy of all hedge funds, Long-Term Capital Management, and its "orderly liquidation" by the Federal Reserve Board.

We take no glee in watching these disasters; the ripples to us as taxpayers and investors were rough waters, to say the least. We also believe that alternative investments and annuities can be appropriate in the right circumstances, with a complete understanding of benefits and risks, and if you are charged a fair price.

We are puzzled, however, that after six decades of outstanding service to investors in all kinds of market environments, the mutual fund industry continues to be challenged to make its case to U.S. investors. Recent criticisms include concerns over security turnover and sales charge breakpoints.

Security turnover in many equity portfolios has been increasing, raising concerns about the cost of trading more often. The primary reason for the high levels of turnover has been the record level of market volatility. Since the Marshall Funds use no affiliated broker-dealer to execute our trades, we have no built-in bias to increase trading. In fact, our Fund Managers have an incentive to minimize all costs to the Funds. Trading commissions directly affect the net performance of every Fund, and every Fund Manager's compensation is based on their net performance. As a result, every Marshall Fund Manager and every Marshall Fund shareholder is on the same side, focused on maximizing the Funds' total return.

Sales charge breakpoints relate solely to the Advisor Class of shares sold by M&I Brokerage Services. Clients with larger purchases receive breakpoints (discounts) on the shares purchased with the advice of an adviser. Recent, industry-wide, regulatory examinations reveal that some customers did not always receive the full amount of the breakpoint earned. We are pleased that no such errors were identified with any of our clients and are confident that the errors identified in the industry will be corrected soon. While the precise calculation of discounts is receiving great attention in the industry, we wonder why the lack of breakpoints for investment products similar to mutual fund is not receiving comparable regulator or media attention.

We hope you fully appreciate the reasons the mutual fund industry has grown substantially over 60 years. We also hope you fully appreciate the reasons Marshall Funds have grown to almost $6 billion over 10 years. Each Marshall Fund provides you with a clearly defined, true-to-style investment strategy that fits well with a broadly diversified asset allocation strategy. Each is led by an experienced, professional investment management team. Each has an expense ratio that is at or below the median for its respective mutual fund category. Each enjoys the full disclosure and regulatory oversight applied to the entire mutual fund industry.

As always, thank you for your investment in the Marshall Funds.

Sincerely,

/s/ John M. Blaser

John M. Blaser
President

Semi-Annual Report--Commentary

Fund Manager:     Richard M. Rokus, CFA
Investment Experience:   10 years
Education:   B.B.A. degree, University of Wisconsin-Whitewater
Analyst:   Blane D. Dexheimer, CFA

 

Marshall Money Market Fund

Fund Performance

For the six months ended February 28, 2003, the Fund provided a total return of 0.75%.* In comparison, the iMoneyNet, Inc. Money Fund Report AveragesTM (MFRA) returned 0.50%, while the Lipper Money Market Funds Index (LMMFI) returned 0.11%.** As of February 28, 2003, the Fund's 7-day net yield was 1.22%.***

Factors Affecting Performance

The most significant factor affecting the level of the Fund's yield was the change in interest rates by the Federal Reserve Board (the "Fed"). As the Fed controls short-term interest rates, the decision to cut rates from 1.75% to 1.25% had a direct effect on our rates. The Fed's action was done to head off any chance of a disinflationary spiral, similar to what has occurred in Japan over the last several years. While high levels of inflation are devastating to the economy, it seems the ramifications from a widespread decline in prices (disinflation) may be equally as dangerous. While most economists do not think the economy will slip back into a recession, they do believe any growth over the next year will be low, in the 1.0-2.5% range.

The Fund outperformed its competitive benchmarks primarily due to the greater use of floating rate notes and the Fund's lower expense ratio. The first element has been a successful part of our investment strategy, which we remain comfortable with in the current rate environment. The second element relates to our ability to increase the amount of assets managed in the Fund, which results in a significantly lower expense ratio than the average money market fund.

Looking Ahead

The current economic picture is clouded by geopolitical concerns. War with Iraq combined with increased sensitivity to terrorism concerns have combined to restrain both consumer and business spending. However, lower rates have allowed Americans to refinance their home mortgage at rates most of us cannot remember. Refinancing activity will put extra money in the pocket of consumers. At this point, a sustained economic expansion can only be envisioned once the larger safety concerns have resolved. Once that occurs, we believe the economy will expand both strongly and steadily. If the economy regains its footing, the Fed will no longer be expected to lower the federal funds target rate, which would stabilize money market rates.

 

 

* Past performance is no guarantee of future results. Yields may vary. Yields quoted for money market funds most closely reflect the fund's current earnings.

** Money Fund ReportTM, a service of iMoney Net, Inc. (formerly IBC Financial Data), publishes annualized yields of hundreds of money market funds on a weekly basis, and through its Money Market Insight publication reports monthly and year-to-date investments results for the same money funds. Lipper indexes are an average of the total return of the 30 largest mutual funds designated by Lipper, Inc. as falling into the respective categories indicated. They do not reflect sales charges.

*** The 7-day net annualized yield is based on the average net income per share for the 7 days ended on the date of calculation and the offering price on that date. The 7-day effective yield is annualized and reflects daily compounding of the 7-day net yield.

An investment in money market funds is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although money market funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in these funds.

 

February 28, 2003 (unaudited)

Portfolio of Investments

Money Market Fund 

Description

 

Principal
Amount

Value

Commercial Paper -- 29.6%(1)

 

Asset-Backed -- 6.4%

 

 

 

 

 

 

 

Liquid Funding Ltd., 1.300%, 4/16/2003(2)(3)

 

$

35,000,000
   

$

34,941,861

 

Scaldis Capital Ltd., 1.360%, 3/24/2003(2)(3)

 

 

26,000,000

 

 

25,977,409

 

Tannehill Capital Co., 1.290% - 1.310%, 4/14/2003 - 4/22/2003(2)(3)

 

 

74,075,000

 

 

73,942,925

 

World Omni Vehicle Leasing, Inc., 1.300%, 3/21/2003(2)(3)

 

 

75,000,000

 

 

74,945,833

 

 

 

 

 

 

 

209,808,028

 

Diversified -- 2.2%

 

 

 

 

 

 

  Concord Minutemen, 1.280% - 1.290%, 5/19/2003 -5/21/2003(2)(3)  
74,878,000
74,662,820

 

Electric -- 2.3%

 

 

 

 

 

 

  Wisconsin Energy Corp., 1.400% - 1.430%, 3/5/2003 - 3/17/2003(2)(3)  
75,000,000
74,971,635

 

Foreign Banks -- 6.7%

 

 

 

 

 

 

 

Britannia Building Society, 1.400%, 3/6/2003 - 3/17/2003

 

 

69,500,000

 

 

69,468,446

 

Depfa-Bank, 1.320% - 1.350%, 3/19/2003 - 4/9/2003(2)(3)

 

 

75,000,000

 

 

74,924,400
  Spintab-Swedmortgage AB, 1.330% , 4/11/2003  
75,000,000
74,886,396

 

 

 

 

 

 

 

219,279,242

 

Healthcare -- 0.4%

 

 

 

 

 

 

  Baxter International, Inc., 1.300%, 3/12/2003  
12,500,000
12,495,035

 

Insurance -- 4.0%

 

 

 

 

 

 

 

Jefferson-Pilot Corp., 1.310%, 4/23/2003

 

 

69,000,000

 

 

68,866,926
  Torchmark Corp., 1.310% - 1.380%, 3/4/2003 - 3/18/2003  
62,600,000
62,573,768

 

 

 

 

 

 

 

131,440,694

 

Mortgage -- 2.3%

 

 

 

 

 

 

  Mortgage Interest Networking Trust A1+/P1, 1.370%, 4/3/2003  
75,000,000
74,905,813

 

Personal Credit -- 2.3%

 

 

 

 

 

 

  Household Finance Corp., 1.360%, 3/24/2003  
75,000,000
74,934,833

Commercial Paper (continued)(1)

 

Receivables -- 0.7%

 

 

 

 

 

 

  Fairway Financial Corp., 1.340%, 3/24/2003(2)(3)  
$
23,036,000
$
23,016,279

 

Telecommunications -- 2.3%

 

 

 

  Verizon Global Funding, 1.470%, 3/15/2003(2)(3)  
75,000,000
75,000,000

 

Total Commercial Paper

 

 

 

 

 

970,514,379

Corporate Bonds -- 3.4%

 

 

 

 

 

 

Banks -- 1.7%

 

 

 

 

 

 

  Associated Banc Corp., 1.600%, 4/10/2003  
55,000,000
55,013,381

 

Healthcare -- 1.2%

 

 

 

 

 

 

 

Lily (Eli) & Co., 4.226%, 3/22/2003(2)(3)

 

 

15,000,000

 

 

15,011,996
  Merck & Co., Inc., 144A, 4.489%, 2/22/2004(2)(3)  
25,000,000
25,787,699

 

 

 

 

 

 

 

40,799,695

 

Telecommunications -- 0.5%

 

 

 

  SBC Communications, Inc., 144A, 4.295%, 6/5/2003(2)(3)  
15,000,000
15,059,730

 

Total Corporate Bonds

 

 

 

 

 

110,872,806

Variable-Rate Notes -- 51.2%(4)

 

 

 

 

Banks -- 3.0%

 

 

 

 

 

 

 

American Express Centurion Bank, DE, 1.330%, 3/12/2003

 

 

15,000,000

 

 

15,000,000

 

Bank One, Illinois, N.A., 1.490%, 3/17/2003

 

 

28,500,000

 

 

28,517,707

 

SMM Trust, (Series
2002-H), 144A, 1.430% 3/24/2003(2)(3)

 

 

40,000,000

 

 

40,000,000
  SMM Trust, (Series
2002-M), 144A, 1.440%, 3/15/2003(2)(3) 		 
15,000,000
15,000,000

 

 

 

 

 

 

 

98,517,707

 

Broker/Dealers -- 12.6%

 

 

 

 

 

 

 

Bank of America, 1.442%, 6/2/2003

 

 

75,000,000

 

 

75,000,000

 

Bear Stearns Cos., Inc., 1.430%, 3/5/2003

 

 

75,000,000

 

 

75,000,000

 

Credit Suisse First Boston USA, Inc., 1.370%, 3/17/2003

 

 

75,000,000

 

 

75,000,000

 

Goldman Sachs Group, Inc., 1.368%, 3/18/2003

 

 

30,000,000

 

 

30,000,000

 

Goldman Sachs Group, Inc., 1.570%, 3/17/2003

 

 

5,000,000

 

 

5,000,351

 

Goldman Sachs Group, Inc., 1.610%, 4/3/2003

 

 

30,000,000

 

 

30,006,487

 

Goldman Sachs Group LP, 1.750%, 3/17/2003

 

 

10,000,000

 

 

10,001,411

 

J.P. Morgan & Co., Inc., 1.390%, 3/3/2003(2)(3)

 

 

20,000,000

 

 

20,000,000

Variable-Rate Notes (continued)(4)

 

 

 

 

Broker/Dealers (continued)

 

 

 

 

 

Merrill Lynch & Co., Inc., 1.370%, 3/11/2003

 

$

20,000,000

 

$

20,000,000

 

Merrill Lynch & Co., Inc., 1.540%, 4/30/2003

 

 

10,000,000

 

 

10,001,697

 

Merrill Lynch & Co., Inc., 1.630%, 5/5/2003

 

 

16,000,000

 

 

16,014,604
  Morgan Stanley, 1.570%, 4/7/2003  
48,525,000
48,535,260

 

 

 

 

 

 

 

414,559,810

Construction Equipment -- 2.3%

 

 

 

 

Caterpillar Financial Services Corp., 1.468%, 4/9/2003

 

 

75,000,000

 

 

75,000,000

 

Diversified Manufacturing -- 2.3%

 

 

 

  Cargill, Inc., 144A, 1.390%, 4/14/2003(2)(3)  
75,000,000
75,000,000

 

Drugs -- 1.8%

 

 

 

 

 

 

  Bayer Corp., 4.450%, 3/19/2003(2)(3)  
60,000,000
60,043,555

 

Foreign Banks -- 5.2%

 

 

 

 

 

 

 

Bank of Montreal, 1.480%, 3/18/2003

 

 

25,000,000

 

 

25,021,336

 

HBOS Treasury Services PLC, 144A, 1.330%, 5/20/2003(2)(3)

 

 

30,000,000

 

 

30,000,000

 

HBOS Treasury Services PLC, 1.360%, 5/14/2003

 

 

40,000,000

 

 

40,027,716

 

Northern Rock PLC, 1.340%, 5/19/2003(2)(3)

 

 

50,000,000

 

 

50,000,000
  Northern Rock PLC, 144A, 1.373%, 4/16/2003  
25,000,000
25,000,000

 

 

 

 

 

 

 

170,049,052

 

Insurance -- 10.9%

 

 

 

 

 

 

 

GE Life and Annuity Assurance Co., 1.440%, 4/21/2003(2)

 

 

75,000,000

 

 

75,000,000

 

Jackson National Life Insurance Co., 1.330%, 5/1/2003(2)(3)

 

 

40,000,000

 

 

40,000,000

 

John Hancock, Global Funding II, 144A, 1.440%, 3/3/2003(2)(3)

 

 

8,000,000

 

 

8,000,644

 

John Hancock, Global Funding II, 144A, 1.560%, 3/16/2003(2)(3)

 

 

35,000,000

 

 

35,027,412

 

Metropolitan Life Insurance Co., 1.416%, 3/2/2003(2)(3)

 

 

50,000,000

 

 

50,000,000

 

Monumental Life Insurance Co., 1.440%, 4/2/2003(2)

 

 

10,000,000

 

 

10,000,000

 

Monumental Life Insurance Co., 1.450%, 4/2/2003(2)

 

 

25,000,000

 

 

25,000,000

 

 

Description

Principal
Amount
or Shares

Value

Variable-Rate Notes (continued)(4)

 

 

 

 

Insurance (continued)

 

 

 

 

 

 

 

Monumental Life Insurance Co., 1.530%, 3/1/2003(2)

 

$

40,000,000

 

$

40,000,000

 

Pacific Life Funding LLC, 1.460%, 5/28/2003(2)(3)

 

 

25,000,000

 

 

24,975,847
  Travelers Insurance Co., 1.410%, 5/1/2003(2)  
50,000,000
50,000,000

 

 

 

 

 

 

 

358,003,903

 

Leasing -- 2.3%

 

 

 

 

 

 

 

Paccar Financial Corp., 1.390%, 5/15/2003

 

 

45,000,000

 

 

45,028,727
  Paccar Financial Corp., 1.420%, 5/15/2003  
30,000,000
30,019,875

 

 

 

 

 

 

 

75,048,602

 

Personal Credit -- 7.5%

 

 

 

 

 

 

 

American Express Credit Corp., 1.336%, 3/27/2003

 

 

45,000,000

 

 

45,000,000

 

American Honda Finance Corp., 144A, 1.334%, 4/21/2003(2)(3)

 

 

50,000,000

 

 

50,000,000

 

American Honda Finance Corp., 144A, 1.380%, 3/12/2003(2)(3)

 

 

25,000,000

 

 

25,000,000

 

Associates Corp. of North America, 1.470%, 3/26/2003

 

 

50,000,000

 

 

50,000,000
  VW Credit, Inc., 1.544%, 4/22/2003(2)(3)  
75,000,000
75,139,108

 

 

 

 

 

 

 

245,139,108

 

Telecommunications -- 3.3%

 

 

 

 

BellSouth Telecommunications, Inc., 1.463%, 3/4/2003

 

 

75,000,000

 

 

75,000,000
  SBC Communications, Inc., 144A, 1.380%, 3/16/2003(2)(3)  
35,000,000
35,000,000

 

 

 

 

 

 

 

110,000,000

  Total Variable-Rate Notes  
1,681,361,737

Mutual Funds -- 5.0%

 

 

 

 

 

 

 

American Select Cash Reserve Fund

 

 

103,795,981

 

 

103,795,981
  Goldman Sachs Financial Square  
62,194,579
62,194,579

Total Mutual Funds (Shares at net asset value)

 

 

 

 

 

165,990,560

 
Description
   
Principal
Amount
Value
Repurchase Agreements -- 10.7%      
  Agreement with First Union Securities, Inc., 1.380%, dated 2/28/2003, to be repurchased at $85,009,775 on 3/3/2003, collateralized by Corporate Bonds with various maturities to 7/26/2030  
$
  85,000,000
$
85,000,000
  Agreement with Salomon Smith Barney Holdings, Inc., 1.363%, dated 2/28/2003, to be repurchased at $25,002,840 on 3/3/2003, collateralized by Corporate Bonds with various maturities to 7/1/2035  
    25,000,000
25,000,000
  Agreement with Deutsche Bank Alex Brown, Inc., 1.373%, dated 2/28/2003, to be repurchased at $150,017,163 on 3/3/2003, collateralized by Corporate Bonds with various maturities to 3/15/2038  
  150,000,000
150,000,000
Repurchase Agreements (continued)
  Agreement with Morgan Stanley & Co., Inc., 1.373%, dated 2/28/2003, to be repurchased at $90,010,298 on 3/3/2003, collateralized by Corporate Bonds with various maturities to 3/15/2036  
$
90,000,000
$
90,000,000
Total Repurchase Agreements
350,000,000
Total Investments
(at amortized cost) -- 99.9%
3,278,739,482
Other Net Assets and Liabilities -- 0.1%
3,871,857
Total Net Assets -- 100.0%
$
3,282,611,339

(1) Each issue shows the rate of discount at the time of purchase.

(2) Denotes a restricted security which is subject to restrictions on resale under federal securities laws. At February 28, 2003, these securities amounted to $1,421,429,153 which represents 43.3% of net assets.

(3) Denotes a restricted security which have been deemed liquid by criteria approved by the Fund's Board of Directors.

(4) Current rate and next demand rate shown.

February 28, 2003 (unaudited)

Statement of Assets and Liabilities

Assets:  

Investments in securities, at amortized cost and value     

$ 2,928,739,482
Investments in repurchase agreements  

350,000,000
Income receivable  

7,641,460
Total assets  

3,286,380,942
Liabilities:  

Payable for income distribution  

2,746,717
Payable to bank  

67,487
Accrued expenses  

955,399
Total liabilities  

3,769,603
Total Net Assets  

$ 3,282,611,339
Net Assets Consist of:  

Paid-in-capital  

3,283,152,489
Accumulated net realized loss on investments  

(541,150 )
Total Net Assets  

$ 3,282,611,339
Net Asset Value, Offering Price and Redemption Proceeds Per Share  

Investor Class of Shares:  

Net Asset Value, Offering Price and Redemption proceeds Per Share  

$ 1.00
Advisor Class of Shares:  

Net Asset Value, Offering Price and Redemption proceeds Per Share  

$ 1.00
Institutional Class of Shares:  

Net Asset Value, Offering Price and Redemption proceeds Per Share  

$ 1.00
Net Assets:  

Investor Class of Shares  

$ 2,076,354,619
Advisor Class of Shares  

106,302,822
Institutional Class of Shares:  

1,099,953,898
Total Net Assets  

$ 3,282,611,339
Shares Outstanding:  

Investor Class of Shares  

2,076,702,526
Advisor Class of Shares  

106,331,429
Institutional Class of Shares  

1,100,118,534
Total Shares Outstanding  

3,283,152,489
Investments, at identified cost  

$ 3,278,739,482

Six Months Ended February 28, 2003 (unaudited)

Statement of Operations

Investment Income:  

Interest income      

$ 26,123,730
Expenses:  

Investment adviser fee  

2,310,041
Shareholder services fees--  

Investor Class of Shares  

2,488,352
Advisor Class of Shares  

133,844
Administrative fees  

673,725
Custodian fees  

166,400
Portfolio accounting fees  

122,102
Transfer and dividend disbursing agent fees  

166,827
Registration fees  

28,893
Auditing fees  

7,294
Legal fees  

1,950
Printing and postage  

36,406
Directors' fees  

3,606
Insurance premiums  

5,804
Distribution services fees--  

Advisor Class of Shares  

160,613
Miscellaneous  

19,015
Total expenses  

6,324,872
Deduct--  

Waiver of investment adviser fee  

(462,008)
Net expenses  

5,862,864
Net investment income  

20,260,866
Net Realized Loss on Investments:  

Net realized loss on investment transactions  

(388,321)
Change in net assets resulting from operations  

$ 19,872,545

 

Statement of Changes in Net Assets

 

   

Six Months
Ended
February 28,
2003
(unaudited)

   

 

 

Year Ended
August 31,
2002

Increase (Decrease) in Net Assets  

 

Operations--  

 

Net investment income  

$ 20,260,866

  

$ 62,351,647
Net realized loss on investment transactions  

(388,321 )

  

(7,007)
Change in net assets resulting from operations  

19,872,545

  

62,344,640
Distributions to Shareholders--  

 

Distributions to shareholders from net investment income  

 

Investor Class of Shares  

(12,434,233)

  

(37,389,606)
Advisor Class of Shares  

(514,134)

  

(2,174,238)
Institutional Class of Shares  

(7,312,499)

  

(22,787,803)
Change in net assets resulting from distributions to shareholders  

(20,260,866)

  

(62,351,647)
Capital Stock Transactions--  

 

Proceeds from sale of shares  

4,689,488,282

  

10,014,120,035
Net asset value of shares issued to shareholders in payment of dividends declared  

5,042,218

  

16,309,836
Cost of shares redeemed  

(4,293,337,102)

  

(9,888,216,033)
Change in net assets resulting from capital stock transactions  

401,193,398

  

142,213,838
Change in net assets  

400,805,077

  

142,206,831
Net Assets:  

 

Beginning of period  

2,881,806,262

  

2,739,599,431
End of period  

$ 3,282,611,339

  

$ 2,881,806,262

Financial Highlights--Institutional Class of Shares (For a share outstanding throughout each period)

Year
Ended
August 31,

   

Net asset
value,
beginning
of period

   

Net
investment
income

   

Dividends to
shareholders
from net
investment
income

   

Net asset
value, end
of period

  

 

 

Ratios to Average Net Assets

   

Net assets,
end
of period
(000 omitted)
  

Total
return (1)

   

Expenses

   

Net investment
income

   

Expense
waiver (2)
2000 (3)  

$ 1.00

  

0.03

  

(0.03)

  

$ 1.00

  

2.63%

  

0.24 %(4)

  

6.51 %(4)

  

0.05 %(4)

  

$ 141,909
2001  

$ 1.00

  

0.05

  

(0.05)

  

$ 1.00

  

5.58%

  

0.21%

  

4.98%

  

0.05%

  

$ 914,693
2002  

$ 1.00

  

0.02

  

(0.02)

  

$ 1.00

  

2.25%

  

0.20%

  

2.24%

  

0.04 %

  

$ 910,196
2003 (5)  

$1.00

  

0.01

  

(0.01)

  

$1.00

  

0.75%

  

0.20%(4)

  

1.50%(4)

  

0.03%(4)

  

$1,099,954

(1) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable.

(2) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above.

(3) Reflects operations for the period from April 3, 2000 (start of performance) to August 31, 2000.

(4) Computed on an annualized basis.

(5) For the six months ended February 28, 2003 (unaudited).

 

February 28, 2003 (unaudited)

Notes to Financial Statements

1. Organization

Marshall Funds, Inc. (the "Corporation") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Corporation consists of eleven diversified portfolios. The financial statements included herein are only those of Marshall Money Market Fund (the "Fund"). The financial statements of the other portfolios are presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. The investment objective of the Fund is to provide current income consistent with stability of principal.

The Fund offers three classes of shares: Investor Class of Shares, Advisor Class of Shares and Institutional Class of Shares. The Financial Highlights of Investor Class of Shares and Advisor Class of Shares of the Funds are presented in separate semi-annual reports.

2. Significant Accounting Policies

The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with accounting principles generally accepted in the United States.

Investment Valuations--Short-term securities are valued at the prices provided by an independent pricing service. However, short-term securities purchased with remaining maturities of 60 days or less may be valued at amortized cost, which approximates fair market value. The Fund's use of the amortized cost method to value portfolio securities is in accordance with Rule 2a-7 under the Act. Investments in other open-end regulated investment companies are valued at net asset value.

Repurchase Agreements--It is the policy of the Fund to require the custodian bank to take possession, to have legally segregated in the Federal Reserve Book Entry System, or to have segregated within the custodian bank's vault, all securities held as collateral under repurchase agreement transactions. Additionally, procedures have been established by the Fund to monitor, on a daily basis, the market value of each repurchase agreement's collateral to ensure that the value of collateral at least equals the repurchase price to be paid under the repurchase agreement, including accrued interest.

The Fund will only enter into repurchase agreements with banks and other recognized financial institutions, such as broker/dealers, which are deemed by the Fund's adviser to be creditworthy pursuant to the guidelines and/or standards reviewed or established by the Board of Directors (the "Directors"). Risks may arise from the potential inability of counterparties to honor the terms of the repurchase agreement. Accordingly, the Fund could receive less than the repurchase price on the sale of collateral securities.

Investment Income, Expenses and Distributions--Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at fair market value. The Fund offers multiple classes of shares, which differ in their respective distribution and service fees. All shareholders bear the common expense of the Fund based on average daily net assets of each class, without distinction between share classes. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.

Premium and Discount Amortization--All premiums and discount are amortized/accreted.

Federal Taxes--It is the Fund's policy to comply with the provisions of Subchapter M of the Internal Revenue Code, as amended, (the "Code") applicable to regulated investment companies and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal tax is necessary.

When-Issued and Delayed Delivery Transactions--The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked-to-market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.

Restricted Securities--Restricted securities are securities that may only be resold upon registration under federal securities laws or in transactions exempt from such registration. Many restricted securities may be resold in the secondary market in transactions exempt from registration. In some cases, the restricted securities may be resold without registration upon exercise of a demand feature. Such restricted securities may be determined to be liquid under criteria established by the Directors. The Fund will not incur any registration costs upon such resales. Restricted securities are valued at amortized cost in accordance with Rule 2a-7 under the Act.

Additional information on each illiquid restricted security held at February 28, 2003 is as follows:

Security

    

Acquisition Date

    

Acquisition Cost

GE Life & Annuity Assurance Co.

  

4/22/2000

  
$ 75,000,000

Monumental Life Insurance Co.

  

8/2/1993-11/30/1993

  
40,000,000

Monumental Life Insurance Co.

  

10/15/1996

  
10,000,000

Monumental Life Insurance Co.

  

1/4/2000

  
25,000,000

Travelers Insurance Co.

  

1/19/2001

  
50,000,000

Other--Investment transactions are accounted for on a trade date basis.

3. Capital Stock

The Articles of Incorporation permit the Directors to issue an indefinite number of full and fractional shares of common stock, par value $0.0001 per share. At February 28, 2003, the capital paid-in for the Fund was $3,283,152,489.

Transactions in capital stock were as follows:

 

Six Months Ended
February 28, 2003

Year Ended
August 31, 2002

Investor Class

   

Shares

    

Amount

    

Shares

    

Amount

Shares sold

  

2,602,668,703

  

$ 2,602,668,703

  

5,427,591,574

  

$ 5,427,591,574

Shares issued to shareholders in payment of distributions declared

  

3,103,573

  

3,103,573

  

11,415,196

  

11,415,196

Shares redeemed

  

(2,387,119,653)

  

(2,387,119,653)

  

(5,278,253,683)

  

(5,278,253,683)

Net change resulting from Investor Class of Shares transactions

  

218,652,623

  

$ 218,652,623

  

160,753,087

  

$ 160,753,087
 

 

Six Months Ended
February 28, 2003

Year Ended
August 31, 2002

Advisor Class

  

Shares

  

Amount

    

Shares

    

Amount
Shares sold    

101,165,558

    

$ 101,165,558

  

281,645,796

  

$ 281,645,796
Shares issued to shareholders in payment of distributions declared  

455,183

  

455,183

  

2,132,999

  

2,132,999
Shares redeemed  

(108,963,372)

  

(108,963,372)

  

(297,823,697)

  

(297,823,697)
Net change resulting from Advisor Class of Shares transactions  

(7,342,631)

  

$ (7,342,631)

  

(14,044,902)

  

$ (14,044,902)
 

 

Six Months Ended
February 28, 2003

Year Ended
August 31, 2002

Institutional Class

  

Shares

    

Amount

    

Shares

    

Amount
Shares sold  

1,985,654,021

  

$ 1,985,654,021

  

4,304,882,665

  

$ 4,304,882,665
Shares issued to shareholders in payment of distributions declared    

1,483,462

  

1,483,462

  

2,761,641

  

2,761,641
Shares redeemed  

(1,797,254,077)

  

(1,797,254,077)

  

(4,312,138,653)

  

(4,312,138,653)
Net change resulting from Institutional Class of Shares transactions  

189,883,406

  

$ 189,883,406

  

(4,494,347)

  

$ (4,494,347)
Net change resulting from Fund Share transactions  

401,193,398

  

401,193,398

  

142,213,838

  

$ 142,213,838

4. Federal Tax Information

At August 31, 2002, the Fund had a capital loss carryforward of $145,822, which will reduce the Fund's taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Code and thus will reduce the amount of distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal tax. Pursuant to the Code, such capital loss carryforward will expire as follows:

Expiration Year

         

Expiration Amount

2010
$ 145,822

5. Investment Adviser Fee and Other Transactions with Affiliates

Investment Adviser Fee--M&I Investment Management Corp., the Fund's investment adviser (the "Adviser"), receives for its services an annual investment adviser fee equal to 0.15% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive any portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion.

Administrative Fee--Marshall & Ilsley Trust Company N.A. ("M&I Trust"), under the Administrative Services Agreement, provides the Fund with administrative personnel and services. The fee paid to M&I Trust is based on the Fund's average daily net assets ("ADNA") as follows:

Maximum Fee

 

Fund's ADNA

0.100%

      

on the first $250 million

0.095 %

  

on the next $250 million

0.080 %

  

on the next $250 million

0.060 %

  

on the next $250 million

0.040 %

  

on the next $500 million

0.020 %

  

on assets in excess of $1.5 billion

Federated Administrative Services is the sub-administrator and will be paid by M&I Trust, not by the Fund.

Distribution Services Fee--The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will compensate Edgewood Services, Inc., the principal distributor, from the net assets of the Fund to finance activities intended to result in the sale of shares of the Fund's Advisor Class of Shares. The Plan provides that the Fund may incur distribution expenses up to 0.25% of the average daily net assets of the Fund's Advisor Class of Shares (except Money Market Fund's Advisor Class of Shares which may accrue to 0.30%) annually, to compensate Edgewood Services, Inc.

Shareholder Services Fee--Under the terms of a Shareholder Services Agreement with Marshall Investor Services ("MIS"), a division of M&I Trust, the Fund will pay MIS up to 0.25% of average daily net assets of the Fund's Investor and Advisor Class of Shares for the period. The fee paid to MIS is used to finance certain services for shareholders and maintain shareholder accounts. MIS may voluntarily choose to waive any portion of its fee. MIS can modify or terminate this voluntary waiver at any time at its sole discretion.

Transfer and Dividend Disbursing Agent Fees and Expenses--Federated Services Company ("FServ"), through its subsidiary, Federated Shareholder Services Company ("FSSC"), serves as transfer and dividend disbursing agent for the Fund. The fee paid to FSSC is based on the size, type, and number of accounts and transactions made by shareholders.

Portfolio Accounting Fees--FServ maintains the Fund's accounting records for which it receives a fee. The fee is based on the level of each Fund's average daily net assets for the period, plus out-of-pocket expenses.

Custodian Fees--M&I Trust is the Fund's custodian. M&I Trust receives fees based on the level of each Fund's average daily net assets for the period.

General--Certain of the Officers and Directors of the Corporation are Officers and Directors or Trustees of one or more of the above companies.

 

 

Mutual funds are not bank deposits or obligations, are not guaranteed by any bank, and
are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance
Corporation, the Federal Reserve Board, or any other government agency. Investment in
mutual funds involves investment risk, including the possible loss of principal.

This report is authorized for distribution to prospective investors only when preceded
or accompanied by the Funds' prospectus, which contains facts concerning each
Fund's objective and policies, management fees, expenses, and other information.

 

[Logo of Marshall Funds]

 

Marshall Investor Services
P.O. Box 1348
Milwaukee,Wisconsin 53201-1348
800-236-FUND(3863)
TDD: Speech and Hearing Impaired Services
800-209-3520
www.marshallfunds.com
Edgewood Services, Inc., Distributor I-25800(4/03)
M&I Investment Management Corp., Investment Adviser
©2003 Marshall Funds, Inc.

321-315