UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT

INVESTMENT COMPANIES

Investment Company Act File Number 811-58433

Marshall Funds, Inc.

(Exact name of registrant as specified in charter)

1000 North Water Street

Milwaukee, WI 53202

(Address of principal executive offices) (Zip code)

John M. Blaser

M&I Investment Management Corp.

1000 North Water Street

Milwaukee, WI 53202

(Name and address of agent for service)

Registrant’s telephone number, including area code: (414) 287-8658

Date of fiscal year end: August 31

Date of reporting period: February 28, 2005

Item 1. Reports to Stockholders

The following is a copy of the report transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1)

The Marshall Funds Family

Semi-Annual Report

FEBRUARY 28, 2005

Ø  Marshall Equity Income Fund

Ø  Marshall Large-Cap Growth & Income Fund

Ø  Marshall Mid-Cap Value Fund

Ø  Marshall Mid-Cap Growth Fund

Ø  Marshall Small-Cap Growth Fund

Ø  Marshall International Stock Fund

Ø  Marshall Government Income Fund

Ø  Marshall Intermediate Bond Fund

Ø  Marshall Intermediate Tax-Free Fund

Ø  Marshall Short-Term Income Fund

Ø  Marshall Government Money Market Fund

Ø  Marshall Money Market Fund

Ø  Marshall Tax-Free Money Market Fund

Table of Contents

Financial Information
Expense Example	1
Portfolio of Investments	3
Marshall Equity Income Fund	3
Marshall Large-Cap Growth & Income Fund	5
Marshall Mid-Cap Value Fund	8
Marshall Mid-Cap Growth Fund	10
Marshall Small-Cap Growth Fund	12
Marshall International Stock Fund	13
Marshall Government Income Fund	16
Marshall Intermediate Bond Fund	17
Marshall Intermediate Tax-Free Fund	20
Marshall Short-Term Income Fund	24
Marshall Government Money Market Fund	26
Marshall Money Market Fund	27
Marshall Tax-Free Money Market Fund	30
Notes to Portfolio of Investments	33
Statements of Assets and Liabilities	35
Statements of Operations	37
Statements of Changes in Net Assets	39
Statement of Cash Flows	43
Financial Highlights	44
Notes to Financial Statements	50

Expense Example (Unaudited)

For the Six Months Ended February 28, 2005

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; distribution [and/or service] (12b-1) fees; and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire six month period ended February 28, 2005 (9/1/04-2/28/05).

Actual Expenses

The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

	Advisor								Investor								Institutional
Fund	Beginning account value 9/1/04		Ending account value 2/28/05		Annualized Expense Ratio		Expenses paid during period 9/1/04- 2/28/05(1)		Beginning account value 9/1/04		Ending account value 2/28/05		Annualized Expense Ratio		Expenses paid during period 9/1/04- 2/28/05(1)		Beginning account value 9/1/04		Ending account value 2/28/05		Annualized Expense Ratio		Expenses paid during period 9/1/04- 2/28/05(1)
Equity Income
Actual	$	1,000.00	$	1,077.80	1.2084	%	$	6.23	$	1,000.00	$	1,077.70	1.2087	%	$	6.23	$	—	$	—	—	%	$	—
Hypothetical (5% return before expenses)		1,000.00		1,019.01	1.2084			6.05		1,000.00		1,019.01	1.2087			6.05		—		—	—			—
Large-Cap Growth & Income
Actual		1,000.00		1,110.10	1.2485			6.53		1,000.00		1,110.10	1.2488			6.53		—		—	—			—
Hypothetical (5% return before expenses)		1,000.00		1,018.81	1.2485			6.25		1,000.00		1,018.81	1.2488			6.25		—		—	—			—
Mid-Cap Value
Actual		1,000.00		1,138.20	1.2064			6.40		1,000.00		1,137.50	1.2063			6.39		—		—	—			—
Hypothetical (5% return before expenses)		1,000.00		1,019.02	1.2064			6.04		1,000.00		1,019.02	1.2063			6.04		—		—	—			—

(See Notes which are an integral part of the Financial Statements)

1

Expense Example (Unaudited) (continued)

	Advisor								Investor								Institutional
Fund	Beginning account value 9/1/04		Ending account value 2/28/05		Annualized Expense Ratio		Expenses paid during period 9/1/04- 2/28/05(1)		Beginning account value 9/1/04		Ending account value 2/28/05		Annualized Expense Ratio		Expenses paid during period 9/1/04- 2/28/05(1)		Beginning account value 9/1/04		Ending account value 2/28/05		Annualized Expense Ratio		Expenses paid during period 9/1/04- 2/28/05(1)
Mid-Cap Growth
Actual	$	1,000.00	$	1,176.70	1.2384	%	$	6.68	$	1,000.00	$	1,176.70	1.2388	%	$	6.69	$	—	$	—	—	%	$	—
Hypothetical (5% return before expenses)		1,000.00		1,018.86	1.2384			6.20		1,000.00		1,018.86	1.2388			6.20		—		—	—			—
Small-Cap Growth
Actual		1,000.00		1,243.70	1.5361			8.55		1,000.00		1,244.40	1.5363			8.55		—		—	—			—
Hypothetical (5% return before expenses)		1,000.00		1,017.38	1.5361			7.68		1,000.00		1,017.38	1.5363			7.68		—		—	—			—
International Stock
Actual		1,000.00		1,167.30	1.4966			8.04		1,000.00		1,167.30	1.4967			8.04		1,000.00		1,168.60	1.2468			6.70
Hypothetical (5% return before expenses)		1,000.00		1,017.58	1.4966			7.49		1,000.00		1,017.58	1.4967			7.49		1,000.00		1,018.82	1.2468			6.24
Government Income
Actual		1,000.00		1,011.60	1.0974			5.47		1,000.00		1,012.80	0.8675			4.33		—		—	—			—
Hypothetical (5% return before expenses)		1,000.00		1,019.56	1.0974			5.50		1,000.00		1,020.70	0.8675			4.35		—		—	—			—
Intermediate Bond
Actual		1,000.00		1,005.40	0.9482			4.71		1,000.00		1,006.60	0.7183			3.57		—		—	—			—
Hypothetical (5% return before expenses)		1,000.00		1,020.30	0.9482			4.75		1,000.00		1,021.44	0.7183			3.60		—		—	—			—
Intermediate Tax-Free
Actual		—		—	—			—		1,000.00		1,004.40	0.6190			3.08		—		—	—			—
Hypothetical (5% return before expenses)		—		—	—			—		1,000.00		1,021.93	0.6190			3.10		—		—	—			—
Short-Term Income
Actual		1,000.00		1,001.50	0.7683			3.81		1,000.00		1,003.70	0.5392			2.68		—		—	—			—
Hypothetical (5% return before expenses)		1,000.00		1,021.19	0.7683			3.85		1,000.00		1,022.33	0.5392			2.70		—		—	—			—
Government Money Market
Actual		—		—	—			—		1,000.00		1,008.00	0.4497			2.24		1,000.00		1,009.30	0.1997			1.00
Hypothetical (5% return before expenses)		—		—	—			—		1,000.00		1,022.77	0.4497			2.26		1,000.00		1,024.01	0.1997			1.00
Money Market
Actual		1,000.00		1,006.80	0.7501			3.73		1,000.00		1,008.30	0.4498			2.24		1,000.00		1,009.50	0.2001			1.00
Hypothetical (5% return before expenses)		1,000.00		1,021.28	0.7501			3.76		1,000.00		1,022.77	0.4498			2.26		1,000.00		1,024.01	0.2001			1.00
Tax-Free Money Market(2)
Actual		—		—	—			—		1,000.00		1,005.70	0.4494			1.98		—		—	—			—
Hypothetical (5% return before expenses)		—		—	—			—		1,000.00		1,023.03	0.4494			1.99		—		—	—			—

(1) Expenses are equal to the Funds’ expense ratios multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).

(2) The Fund commenced operations on September 22, 2004. Therefore, the multiplier is 160/365 (to reflect the period since commencement).

2

February 28, 2005 (Unaudited)

Portfolio of Investments

Equity Income Fund

Description	Shares	Value
Common Stocks — 99.1%
Consumer Discretionary — 6.2%
Auto Parts & Equipment — 0.3%
Dana Corp.	78,900	$	1,137,738
Automobile Manufacturers — 0.5%
General Motors Corp.	52,300		1,865,541
Department Stores — 0.5%
Nordstrom, Inc.	35,100		1,886,976
Distributors — 1.2%
Genuine Parts Co.	97,100		4,202,488
Homebuilding — 1.1%
D.R. Horton, Inc.	89,600		3,920,896
Housewares & Specialties — 0.4%
Fortune Brands, Inc.	19,000		1,539,000
Movies & Entertainment — 0.6%
Walt Disney Co.	78,100		2,182,114
Retail-Apparel — 0.6%
Limited Brands, Inc.	80,000		1,902,400
Retail-Computer & Electronic — 0.6%
Best Buy Co., Inc.	40,500		2,187,810
Retail-Home Improvement — 0.4%
Home Depot, Inc.	30,000		1,200,600
Total Consumer Discretionary			22,025,563
Consumer Staples — 5.4%
Agricultural Products — 0.8%
Archer-Daniels-Midland Co.	121,800		2,935,380
Packaged Foods/Meats — 1.2%
ConAgra Foods, Inc.	95,000		2,595,400
Heinz (H.J.) Co.	47,000		1,769,080
			4,364,480
Tobacco — 3.4%
Altria Group, Inc.	145,939		9,580,895
UST, Inc.	46,150		2,522,098
			12,102,993
Total Consumer Staples			19,402,853
Energy — 15.5%
Oil & Gas-Exploration and Production — 0.9%
Kerr-McGee Corp.	39,525		3,069,512
Oil & Gas-Integrated — 14.2%
ChevronTexaco Corp.	289,500		17,972,160
ConocoPhillips	165,400		18,341,206
Exxon Mobil Corp.	231,000		14,624,610
			50,937,976
Oil & Gas-Refining/ Manufacturing — 0.4%
Kinder Morgan, Inc.	17,550		1,406,984
Total Energy			55,414,472

Description	Shares	Value
Common Stocks (continued)
Financials — 31.6%
Diversified Banks — 1.5%
Bank of America Corp.	31,200	$	1,455,480
U.S. Bancorp	41,225		1,226,444
Wachovia Corp.	23,750		1,258,988
Wells Fargo & Co. (1)	21,200		1,258,856
			5,199,768
Diversified Financial Services — 9.5%
Citigroup, Inc.	358,800		17,121,936
J.P. Morgan Chase & Co.	458,992		16,776,158
			33,898,094
Insurance-Life/Health — 2.0%
Lincoln National Corp.	108,925		5,103,136
MetLife, Inc.	52,400		2,150,496
			7,253,632
Insurance-Property & Casualty — 2.3%
Chubb Corp.	20,500		1,621,755
St. Paul Travelers Companies, Inc.	171,300		6,564,216
			8,185,971
Investment Banking & Brokerage — 0.8%
Goldman Sachs Group, Inc. (1)	27,200		2,959,360
Real Estate Investment Trusts — 4.8%
Equity Office Properties Trust (1)	43,583		1,314,899
Equity Residential Properties Trust	52,246		1,714,191
Plum Creek Timber Co., Inc. (REIT)	307,175		11,534,421
Rayonier, Inc.	29,100		1,396,800
Simon Property Group, Inc.	20,322		1,259,151
			17,219,462
Regional Banks — 6.8%
AmSouth Bancorporation	48,600		1,214,028
BB&T Corp.	287,072		11,238,869
KeyCorp	38,479		1,269,807
National City Corp.	46,034		1,646,636
PNC Financial Services Group	168,359		8,862,418
			24,231,758
Thrifts & Mortgage Financials — 3.9%
Fannie Mae (1)	175,000		10,230,500
New York Community Bancorp, Inc.	134,000		2,460,240
Washington Mutual Bank FA	31,725		1,331,181
			14,021,921
Total Financials			112,969,966
Healthcare — 4.0%
Healthcare Equipment — 0.4%
PerkinElmer, Inc.	66,550		1,476,079
Pharmaceuticals — 3.6%
Bristol-Myers Squibb Co.	135,975		3,403,454
Johnson & Johnson	20,000		1,312,000
Merck & Co., Inc.	250,444		7,939,075
			12,654,529
Total Healthcare			14,130,608

(See Notes which are an integral part of the Financial Statements)

3

Marshall Funds

Equity Income Fund (continued)

Description	Shares	Value
Common Stocks (continued)
Industrials — 11.8%
Aerospace & Defense — 1.9%
General Dynamics Corp.	23,700	$	2,496,795
Northrop Grumman Corp.	78,400		4,147,360
			6,644,155
Commercial Printing — 2.3%
Donnelley (R.R.) & Sons Co.	246,285		8,179,125
Electrical Equipment — 1.5%
Emerson Electric Co.	83,100		5,511,192
Industrial Conglomerate — 5.2%
Carlisle Companies, Inc.	18,200		1,265,628
General Electric Co.	487,470		17,158,944
			18,424,572
Machinery-Construction & Farming — 0.5%
Cummins, Inc.	24,900		1,827,909
Services-Diversified/ Commercial — 0.4%
Deluxe Corp.	41,100		1,604,544
Total Industrials			42,191,497
Information Technology — 5.4%
Application Software — 0.7%
AutoDesk, Inc.	81,170		2,412,372
Communications Equipment — 1.0%
Harris Corp. (1)	21,575		1,439,052
Motorola, Inc.	73,200		1,146,312
Qualcomm, Inc.	28,876		1,042,712
			3,628,076
Computer Hardware — 1.1%
IBM Corp. (1)	40,700		3,768,006
Semiconductors — 1.0%
Intel Corp. (1)	54,250		1,300,915
Silicon Laboratories, Inc. (1)(2)	62,100		2,179,710
			3,480,625
Services-Data Processing — 0.3%
Global Payments, Inc. (1)	21,890		1,215,333
System Software — 1.3%
Microsoft Corp.	191,500		4,821,970
Total Information Technology			19,326,382
Materials — 6.6%
Chemicals-Commodity — 0.6%
Lyondell Chemical Co.	65,400		2,213,790
Chemicals-Diversified — 5.5%
Dow Chemical Co./The	204,930		11,301,889
Du Pont (E.I.) de Nemours & Co.	101,400		5,404,620
PPG Industries, Inc.	39,404		2,835,118
			19,541,627

Description	Shares or Principal Amount		Value
Common Stocks (continued)
Materials (continued)
Diversified Metal/Mining — 0.5%
Phelps Dodge Corp. (1)		17,800	$	1,894,810
Total Materials				23,650,227
Telecommunication Services — 5.7%
Integrated Telecommunication Services — 5.7%
BellSouth Corp.		117,500		3,031,500
Citizens Communications Co. (1)		132,400		1,766,216
SBC Communications, Inc. (1)		146,985		3,534,989
Sprint Corp.		244,395		5,787,274
Verizon Communications		178,363		6,415,717
Total Telecommunications				20,535,696
Utilities — 6.9%
Electric Utilities — 4.9%
American Electric Power Co., Inc.		37,174		1,241,612
DTE Energy Co.		30,000		1,326,600
FirstEnergy Corp.		32,518		1,341,042
Great Plains Energy, Inc.		91,800		2,844,882
Progress Energy, Inc.		78,300		3,393,522
Southern Co.		37,607		1,207,937
WPS Resources Corp.		117,800		6,139,735
				17,495,330
Multi-Utilities — 2.0%
Constellation Energy Group		34,600		1,780,862
Dominion Resources, Inc.		18,548		1,336,012
Duke Energy Corp.		147,453		3,979,756
				7,096,630
Total Utilities				24,591,960
Total Common Stocks (identified cost $308,718,347)				354,239,224
Purchased Put Option — 0.0%
May Department Stores Co., 3/19/2005, Strike Price $30 (identified cost $104,880) (2)		1,140		5,700
Collateral Pool Investment for Securities on Loan — 4.3% (See Note 2 of the Financial Statements) (identified cost $15,225,984)				15,225,984
Repurchase Agreement — 0.9%
Agreement with Lehman Brothers, Inc., 2.510%, dated 2/28/2005, to be repurchased at $3,374,127 on 3/1/2005, collateralized by U.S. Government Agency Obligations with various maturities to 7/15/2018, with a market value of $3,443,957 (at amortized cost)	$	3,373,892		3,373,892
Total Investments — 104.3% (identified cost $327,423,103)				372,844,800
Other Net Assets and Liabilities — (4.3)%				(15,509,028	)
Total Net Assets — 100.0%			$	357,335,772

(See Notes which are an integral part of the Financial Statements)

4

February 28, 2005 (Unaudited)

Portfolio of Investments

Equity Income Fund (continued)

Portfolio Sector Allocations*
Sector	Fund
Consumer Discretionary	6.2%
Consumer Staples	5.4%

Energy	15.5%
Financials	31.6%
Healthcare	4.0%

Industrials	11.8%
Information Technology	5.4%
Material	6.6%
Telecommunications	5.7%

Utilities	6.9%
Other Assets and Liabilities	0.9%
Total	100.0%

Large-Cap Growth & Income Fund

Description	Shares	Value
Common Stocks — 98.5%
Consumer Discretionary — 10.9%
Apparel Retail — 1.1%
American Eagle Outfitters	17,500	$	947,275
Chico’s FAS, Inc. (1)(2)	32,200		948,290
Urban Outfitters, Inc. (1)(2)	21,400		890,026
			2,785,591
Broadcasting & Cable — 2.0%
Comcast Corp., Class A (2)	160,200		5,214,510
Consumer Electronics — 0.3%
Harman International Industries, Inc.	7,600		852,492
Department Stores — 0.3%
Kohl’s Corp. (2)	19,000		909,530
General Merchandise — 0.3%
Target Corp.	17,900		909,678
Homebuilding — 1.2%
DR Horton, Inc.	23,400		1,023,984
MDC Holdings, Inc. (1)	11,830		941,905
NVR, Inc. (1)(2)	1,300		1,029,925
			2,995,814
Hotels — 0.7%
Carnival Corp.	16,700		908,146
Starwood Hotels & Resorts Worldwide, Inc. (1)	16,000		915,840
			1,823,986
Motorcycle Manufacturers — 0.4%
Harley-Davidson, Inc.	15,200		940,576
Movies & Entertainment — 1.4%
Time Warner, Inc. (2)	160,000		2,756,800
Walt Disney Co.	31,400		877,316
			3,634,116

Description	Shares	Value
Common Stocks (continued)
Consumer Discretionary (continued)
Restaurants — 0.7%
McDonald’s Corp. (1)	28,900	$	956,012
Starbucks Corp. (2)	18,300		948,123
			1,904,135
Retail-Home Improvement — 1.4%
Home Depot, Inc.	69,200		2,769,384
Lowe’s Cos., Inc. (1)	15,800		928,724
			3,698,108
Retail-Internet — 0.4%
eBay, Inc. (2)	21,400		916,776
Specialty Stores — 0.7%
Carmax, Inc. (2)	30,200		996,600
Williams Sonoma, Inc. (2)	25,500		884,595
			1,881,195
Total Consumer Discretionary			28,466,507
Consumer Staples — 13.0%
Agricultural Products — 0.3%
Archer-Daniels-Midland Co.	36,900		889,290
Household Products — 4.4%
Procter & Gamble Co.	215,000		11,414,350
Hypermarkets & Supercenters — 3.4%
Wal-Mart Stores, Inc. (1)	169,900		8,768,539
Packaged Foods/Meats — 0.7%
Heinz (H.J.) Co.	24,400		918,416
Sara Lee Corp.	38,300		857,920
			1,776,336
Personal Products — 0.4%
Gillette Co.	20,500		1,030,125
Retail-Drugs — 0.4%
Walgreen Co.	23,600		1,010,788
Retail-Food — 0.4%
7-Eleven, Inc. (2)	40,600		1,019,872
Soft Drinks — 2.0%
PepsiCo, Inc.	94,300		5,078,998
Tobacco — 1.0%
Altria Group, Inc.	23,800		1,562,470
UST, Inc.	17,400		950,910
			2,513,380
Total Consumer Staples			33,501,678
Energy — 9.7%
Oil & Gas-Drilling — 0.8%
Nabors Industries, Ltd. (2)	18,500		1,061,900
Transocean, Inc. (2)	19,000		921,120
			1,983,020
Oil & Gas-Equipment and Services — 0.4%
Halliburton Co.	23,800		1,046,486

(See Notes which are an integral part of the Financial Statements)

5

Marshall Funds

Large-Cap Growth & Income Fund (continued)

Description	Shares	Value
Common Stocks (continued)
Energy (continued)
Oil & Gas-Exploration and Production — 1.6%
Anadarko Petroleum Corp.	13,800	$	1,060,668
Devon Energy Corp.	23,500		1,099,565
EOG Resources, Inc.	10,900		993,208
XTO Energy, Inc.	22,600		1,028,752
			4,182,193
Oil & Gas-Integrated — 5.7%
ConocoPhillips	8,900		986,921
Exxon Mobil Corp.	220,000		13,928,200
			14,915,121
Oil & Gas-Refining and Marketing — 1.2%
Ashland, Inc.	15,700		1,025,053
Sunoco, Inc. (1)	9,600		951,360
Valero Energy Corp.	14,500		1,032,980
			3,009,393
Total Energy			25,136,213
Financials — 20.0%
Asset Management & Custody Banking — 0.6%
SEI Investments Co.	21,800		805,728
State Street Corp.	19,900		872,615
			1,678,343
Consumer Finance — 1.0%
American Express Co.	16,800		909,720
Capital One Financial Corp.	11,300		866,484
MBNA Corp.	34,300		870,191
			2,646,395
Diversified Banks — 2.6%
Bank of America Corp.	141,820		6,615,903
Diversified Financial Services — 4.8%
Citigroup, Inc.	261,600		12,483,552
Insurance-Life & Health — 0.3%
Prudential Financial, Inc.	15,600		889,200
Insurance-Multi-Line — 4.5%
American International Group, Inc.	158,650		10,597,820
Hartford Financial Services Group, Inc.	13,900		1,000,105
			11,597,925
Insurance-Property & Casualty — 1.4%
Chubb Corp.	12,200		965,142
St. Paul Travelers Companies, Inc.	24,900		954,168
WR Berkley Corp.	17,400		893,664
XL Capital Ltd.	11,700		877,500
			3,690,474

Description	Shares	Value
Common Stocks (continued)
Financials (continued)
Investment Banking & Brokerage — 2.1%
Goldman Sachs Group, Inc. (1)	23,400	$	2,545,920
Lehman Brothers Holdings, Inc.	10,900		993,862
Merrill Lynch & Co., Inc.	18,490		1,083,144
Morgan Stanley	16,400		926,108
			5,549,034
Real Estate Investment Trusts — 0.3%
Plum Creek Timber Co., Inc. (REIT)	24,000		901,200
Regional Banks — 0.7%
Synovus Financial Corp.	32,600		885,416
TCF Financial Corp.	33,200		917,980
			1,803,396
Thrifts & Mortgage Finance — 1.7%
Countrywide Financial Corp.	25,800		896,550
Federal Home Loan Mortgage Corp.	13,500		837,000
Fremont General Corp.	38,900		977,946
MGIC Investment Corp.	13,800		865,812
Radian Group, Inc.	17,500		845,775
			4,423,083
Total Financials			52,278,505
Healthcare — 12.0%
Biotechnology — 3.2%
Amgen, Inc. (2)	104,500		6,438,245
Cephalon, Inc. (1)(2)	19,200		942,144
Gilead Sciences, Inc. (2)	26,800		925,940
			8,306,329
Healthcare-Distributors — 1.1%
AmerisourceBergen Corp.	45,500		2,725,450
Healthcare-Equipment — 0.7%
Fisher Scientific International (1)(2)	15,700		952,205
Zimmer Holdings, Inc. (2)	11,000		944,900
			1,897,105
Healthcare-Facilities — 0.4%
Triad Hospitals, Inc. (2)	21,400		934,538
Healthcare-Managed — 0.4%
UnitedHealth Group, Inc.	10,300		938,948
Pharmaceuticals — 6.2%
Johnson & Johnson	173,200		11,361,920
Lilly (Eli) & Co.	21,800		1,220,800
MGI Pharma, Inc. (2)	33,000		755,700
Wyeth	69,800		2,849,236
			16,187,656
Total Healthcare			30,990,026
Industrials — 9.4%
Aerospace & Defense — 1.4%
L-3 Communications Holdings, Inc.	12,300		886,830
United Technologies Corp.	26,500		2,646,820
			3,533,650

(See Notes which are an integral part of the Financial Statements)

6

February 28, 2005 (Unaudited)

Portfolio of Investments

Large-Cap Growth & Income Fund (continued)

Description	Shares	Value
Common Stocks (continued)
Industrials (continued)
Diversified Commercial Service — 0.4%
Laureate Education, Inc. (2)	21,500	$	932,885
Industrial Conglomerates — 5.0%
General Electric Co.	342,700		12,063,040
Tyco International Ltd.	27,300		914,004
			12,977,044
Machinery-Construction & Farm — 0.7%
Caterpillar, Inc. (1)	9,800		931,490
Cummins, Inc.	11,800		866,238
			1,797,728
Machinery-Industrial — 1.1%
Illinois Tool Works, Inc.	10,400		933,400
Ingersoll-Rand Co., Class A	11,800		994,150
Parker-Hannifin Corp.	12,200		802,760
			2,730,310
Railroads — 0.8%
Burlington Northern Santa Fe Corp.	20,100		1,010,427
Norfolk Southern Corp.	26,600		954,674
			1,965,101
Total Industrials			23,936,718
Information Technology — 16.7%
Application Software — 2.2%
AutoDesk, Inc.	149,800		4,452,056
Parametric Technology Corp. (2)	210,800		1,212,100
			5,664,156
Computer Hardware — 3.7%
Apple Computer, Inc. (1)(2)	191,800		8,604,148
Gateway, Inc. (2)	229,900		1,080,530
			9,684,678
Electronic Equipment Manufacturing — 2.0%
Flir Systems, Inc. (1)(2)	167,100		5,221,875
Home Entertainment Software — 1.9%
Activision, Inc. (2)	231,300		5,056,218
Internet Software & Service — 1.8%
Yahoo!, Inc. (1)(2)	148,700		4,798,549
Semiconductors — 3.1%
Advanced Micro Devices, Inc. (1)(2)	175,700		3,065,965
Cree, Inc. (1)(2)	129,500		3,045,840
Silicon Laboratories, Inc. (1)(2)	54,400		1,909,440
			8,021,245
Semiconductor Equipment — 1.0%
Lam Research Corp. (1)(2)	85,200		2,678,688
Systems Software — 1.0%
McAfee, Inc. (2)	117,600		2,720,088
Total Information Technology			43,845,497

Description	Shares or Principal Amount		Value
Common Stocks (continued)
Materials — 3.1%
Aluminum — 0.4%
Alcoa, Inc. (1)		28,600	$	918,632
Chemicals-Diversified — 0.8%
Dow Chemical Co./The		18,700		1,031,305
Du Pont (E.I.) de Nemours & Co.		19,600		1,044,680
				2,075,985
Diversified Metals & Mining — 0.4%
Phelps Dodge Corp.		9,700		1,032,565
Forest Products — 0.4%
Louisiana-Pacific Corp.		34,700		911,569
Steel — 1.1%
Nucor Corp. (1)		15,400		960,036
United States Steel Corp.		16,300		1,016,468
Worthington Industries		45,900		961,605
				2,938,109
Total Materials				7,876,860
Telecommunications — 3.0%
Integrated Telecommunication Service — 3.0%
Sprint Corp.		82,500		1,953,600
Verizon Communications, Inc.		159,100		5,722,827
Total Telecommunications				7,676,427
Utilities — 0.7%
Electric Utilities — 0.4%
Allegheny Energy, Inc. (1)(2)		48,500		918,105
Multi-Utilities — 0.3%
Dynegy, Inc. (2)		204,800		851,968
Total Utilities				1,770,073
Total Common Stocks (identified cost $227,786,146)				255,478,504
Collateral Pool Investment for Securities on Loan — 10.0% (See Note 2 of the Financial Statements) (identified cost $26,009,959)				26,009,959
Repurchase Agreement — 1.3%
Agreement with Lehman Brothers, Inc., 2.510% dated 2/28/2005, to be repurchased at $3,318,827 on 3/1/2005, collateralized by a U.S. Government Agency Obligation with a maturity of 7/15/2020, with a market value of $3,386,418 (at amortized cost)	$	3,318,596		3,318,596
Total Investments — 109.8% (identified cost $257,114,701)				284,807,059
Other Net Assets and Liabilities — (9.8)%				(25,390,346	)
Total Net Assets — 100.0%			$	259,416,713

(See Notes which are an integral part of the Financial Statements)

7

Marshall Funds

Large-Cap Growth & Income Fund (continued)

Portfolio Sector Allocations*
Sector	Fund
Consumer Discretionary	10.9%
Consumer Staples	13.0%

Energy	9.7%
Financials	20.0%
Healthcare	12.0%
Industrials	9.4%

Information Technology	16.7%
Material	3.1%
Telecommunications	3.0%
Utilities	0.7%

Other Assets and Liabilities	1.5%
Total	100.0%

Mid-Cap Value Fund

Description	Shares	Value
Common Stocks — 92.7%
Consumer Discretionary — 13.5%
Apparel/Accessories — 3.2%
Jones Apparel Group, Inc.	290,000	$	9,213,300
Liz Claiborne, Inc.	226,000		9,559,800
			18,773,100
Auto Parts & Equipment — 0.7%
Johnson Controls, Inc.	65,000		3,841,500
Home Furnishings — 1.8%
Furniture Brands International, Inc. (1)	446,000		10,360,580
Household Appliances — 1.7%
Snap-On Tools Corp.	297,500		9,847,250
Leisure Products — 2.2%
Brunswick Corp.	140,000		6,529,600
Mattel, Inc.	300,000		6,276,000
			12,805,600
Photographic Products — 1.3%
Eastman Kodak Co. (1)	215,000		7,307,850
Publishing — 1.1%
Scholastic Corp. (2)	174,500		6,191,260
Specialty Stores — 1.5%
Pier 1 Imports, Inc.	475,000		8,668,750
Total Consumer Discretionary			77,795,890
Consumer Staples — 6.8%
Packaged Foods/Meats — 1.4%
Smithfield Foods, Inc. (2)	235,500		8,018,775
Retail-Drugs — 1.8%
CVS Corp.	210,100		10,469,283
Retail-Food — 2.2%
Kroger Co. (1)(2)	405,000		7,285,950
SUPERVALU, Inc.	177,400		5,635,998
			12,921,948

Description	Shares	Value
Common Stocks (continued)
Consumer Staples (continued)
Soft Drinks — 1.4%
Coca-Cola Enterprises, Inc.	380,000	$	8,113,000
Total Consumer Staples			39,523,006
Energy — 7.0%
Oil & Gas-Drilling — 3.3%
ENSCO International, Inc. (1)	220,000		8,861,600
Noble Corp.	171,500		9,787,505
			18,649,105
Oil & Gas-Exploration and Production — 3.7%
Burlington Resources, Inc.	224,000		11,117,120
Noble Energy, Inc. (1)	153,000		10,348,920
			21,466,040
Total Energy			40,115,145
Financials — 9.7%
Insurance-Life/Health — 2.7%
Jefferson-Pilot Corp.	113,300		5,547,168
Protective Life Corp.	247,500		9,890,100
			15,437,268
Insurance-Property/Casualty — 3.1%
ACE Ltd. (1)	207,500		9,225,450
SAFECO Corp.	180,080		8,588,015
			17,813,465
Reinsurance — 2.6%
PartnerRe Ltd.	173,000		10,838,450
RenaissanceRe Holding Ltd. (1)	95,150		4,531,043
			15,369,493
Thrifts & Mortgage Finance — 1.3%
MGIC Investment Corp.	120,000		7,528,800
Total Financials			56,149,026
Healthcare — 10.0%
Healthcare-Distributors — 2.0%
AmerisourceBergen Corp.	194,800		11,668,520
Healthcare-Facilities — 2.0%
Universal Health Services, Inc.	237,000		11,186,400
Healthcare-Services — 3.4%
Apria Healthcare Group, Inc. (2)	344,000		11,166,240
Omnicare, Inc.	250,000		8,622,500
			19,788,740
Healthcare-Supplies — 1.7%
Bausch & Lomb, Inc. (1)	140,000		9,910,600
Pharmaceuticals — 0.9%
Barr Pharmaceuticals, Inc. (2)	111,400		5,318,236
Total Healthcare			57,872,496
Industrials — 17.3%
Aerospace & Defense — 1.4%
Northrop Grumman Corp.	152,000		8,040,800
Building Products — 0.6%
York International Corp. (1)	88,500		3,422,295

(See Notes which are an integral part of the Financial Statements)

8

February 28, 2005 (Unaudited)

Portfolio of Investments

Mid-Cap Value Fund (continued)

Description	Shares	Value
Common Stocks (continued)
Industrials (continued)
Commercial Printing — 1.6%
Donnelley (R.R.) & Sons Co.	269,850	$	8,961,719
Electrical Components — 1.7%
Hubbell, Inc., Class B	184,500		9,926,100
Machinery Industrial — 1.3%
Parker-Hannifin Corp.	114,500		7,534,100
Railroads — 1.2%
CSX Corp.	170,000		7,022,700
Services-Diversified Commercials — 3.3%
Adesa, Inc.	390,000		8,802,300
Watson Wyatt & Co. Holdings	375,000		10,260,000
			19,062,300
Services-Employment — 1.8%
Manpower, Inc.	230,000		10,051,000
Services-Environmental — 1.5%
Republic Services, Inc.	275,000		8,720,250
Trade Companies & Distribution — 1.3%
Grainger (W.W.), Inc.	121,000		7,596,380
Trucking — 1.6%
Swift Transportation Co. (1)(2)	389,000		9,227,080
Total Industrials			99,564,724
Information Technology — 12.8%
Computer Storage/Peripheral — 1.8%
Imation Corp.	300,000		10,317,000
IT Consulting & Services — 2.0%
ProQuest Co. (1)(2)	315,700		11,538,835
Office Electronics — 1.8%
IKON Office Solutions, Inc.	178,800		1,886,340
Xerox Corp. (2)	555,000		8,658,000
			10,544,340
Services-Data Processing — 6.2%
Bisys Group, Inc. (2)	635,000		9,410,700
Computer Sciences Corp. (2)	160,000		7,396,800
Convergys Corp. (1)(2)	468,000		7,015,320
SunGard Data Systems, Inc. (2)	455,100		11,882,661
			35,705,481
Systems Software — 1.0%
BMC Software, Inc. (1)(2)	405,300		6,059,235
Total Information Technology			74,164,891
Materials — 6.6%
Diversified Metal/Mining — 1.7%
Arch Coal, Inc. (1)	221,000		9,854,390
Paper Packaging — 1.8%
Packaging Corp. of America	365,000		8,949,800
Smurfit-Stone Container Corp. (2)	79,300		1,318,759
			10,268,559

Description	Shares or Principal Amount		Value
Common Stocks (continued)
Materials (continued)
Paper Products — 1.5%
Bowater, Inc.		218,000	$	8,464,940
Steel — 1.6%
Nucor Corp.		150,000		9,351,000
Total Materials				37,938,889
Telecommunication Services — 3.7%
Integrated Telecommunication Services — 3.7%
Alltel Corp.		177,000		10,124,400
Citizens Communications Co., Class B (1)		855,000		11,405,700
Total Telecommunication Services				21,530,100
Utilities — 5.3%
Electric Utilities — 3.8%
Cinergy Corp.		200,000		8,090,000
TECO Energy, Inc. (1)		357,000		5,672,730
Xcel Energy, Inc. (1)		455,000		8,062,600
				21,825,330
Multi-Utilities — 1.5%
Constellation Energy Group		170,800		8,791,076
Total Utilities				30,616,406
Total Common Stocks (identified cost $424,285,520)				535,270,573
Mutual Fund — 2.4%
iSHARES Russell Midcap Value (identified cost $12,304,800) (1)		120,000		13,680,000
U.S. Treasury Bill — 0.2%
3/17/2005 (identified cost $999,049)	$	1,000,000		998,944
Collateral Pool Investments for Securities on Loan — 15.9% (See Note 2 of the Financial Statements) (identified cost $91,732,771)				91,732,771
Repurchase Agreement — 3.8%
Agreement with Lehman Brothers, Inc., 2.510%, dated 2/28/2005, to be repurchased at $22,121,045 on 3/1/2005, collateralized by U.S. Government Agency Obligations with various maturities to 7/15/2018, with a market value of $22,562,756 (at amortized cost)		22,119,502		22,119,502
Total Investments — 115.0% (identified cost $551,441,642)				663,801,790
Other Net Assets and Liabilities — (15.0)%				(86,790,402	)
Total Net Assets — 100.0%			$	577,011,388

(See Notes which are an integral part of the Financial Statements)

9

Marshall Funds

Mid-Cap Value Fund (continued)

Portfolio Sector Allocations*
Sector	Fund
Consumer Discretionary	13.5%
Consumer Staples	6.8%

Energy	7.0%
Financials	9.7%
Healthcare	10.0%
Industrials	17.3%

Information Technology	12.8%
Materials	6.6%
Telecommunications	3.7%
Utilities	5.3%

Other Assets & Liabilities	7.3%
Total	100.0%

Mid-Cap Growth Fund

Description	Shares	Value
Common Stocks — 97.6%
Consumer Discretionary — 14.5%
Auto Parts & Equipment — 1.8%
Autoliv, Inc.	65,000	$	3,246,100
Department Stores — 3.4%
Kohl’s Corp. (2)	50,000		2,393,500
Penney (J.C.) Co., Inc. (1)	85,000		3,781,650
			6,175,150
Home Furnishings — 2.0%
Tempur-Pedic International, Inc. (1)(2)	190,000		3,638,500
Hotel/Resort/Cruise — 2.4%
Hilton Hotels Corp.	105,000		2,211,300
Marriott International, Inc., Class A (1)	35,000		2,243,500
			4,454,800
Retail-Apparel — 1.3%
The Children’s Place Retail Stores, Inc. (2)	60,000		2,399,400
Specialty Stores — 3.6%
Advance Auto Parts, Inc. (2)	45,000		2,267,100
Guitar Center, Inc. (2)	25,000		1,514,500
Michaels Stores, Inc.	85,000		2,710,650
			6,492,250
Total Consumer Discretionary			26,406,200
Energy — 8.0%
Oil & Gas-Exploration and Production — 5.9%
Chesapeake Energy Corp. (1)	195,000		4,229,550
Denbury Resources, Inc. (1)(2)	110,000		3,736,700
Harvest Natural Resources, Inc. (2)	225,000		2,823,750
			10,790,000

Description	Shares	Value
Common Stocks (continued)
Energy (continued)
Oil & Gas-Refining and Marketing — 2.1%
Sasol Ltd., ADR (1)	150,000	$	3,808,500
Total Energy			14,598,500
Financials — 7.2%
Asset Management — 1.4%
Affiliated Managers Group, Inc. (2)	40,000		2,590,400
Diverse Financial Services — 2.6%
CapitalSource, Inc. (2)	100,000		2,300,000
The First Marblehead Corp. (2)	35,000		2,434,250
			4,734,250
Regional Banks — 1.5%
Commerce Bancorp, Inc. (1)	45,000		2,757,600
Thrifts & Mortgage Financial — 1.7%
Doral Financial Corp. (1)	75,000		2,974,500
Total Financials			13,056,750
Healthcare — 21.7%
Biomedical Supplies — 1.5%
Invitrogen Corp. (1)(2)	40,000		2,798,400
Biotechnology — 2.4%
Amylin Pharmaceuticals, Inc. (1)(2)	100,000		2,142,000
OSI Pharmaceuticals, Inc. (2)	40,000		2,185,200
			4,327,200
Healthcare-Equipment — 7.7%
Cytyc Corp. (2)	100,000		2,280,000
Fisher Scientific International, Inc. (1)(2)	45,000		2,729,250
Kinetic Concepts, Inc. (1)(2)	55,000		3,587,650
Stryker Corp.	55,000		2,731,300
Varian Medical Services, Inc. (1)(2)	75,000		2,694,750
			14,022,950
Healthcare-Managed Care — 3.9%
Aetna, Inc.	25,000		3,650,500
Centene Corp. (2)	105,000		3,502,800
			7,153,300
Healthcare-Services — 2.1%
Caremark Rx, Inc. (2)	100,000		3,828,000
Healthcare-Supplies — 2.1%
The Cooper Companies, Inc.	45,000		3,705,750
Pharmaceuticals — 2.0%
Sepracor, Inc. (1)(2)	55,000		3,545,850
Total Healthcare			39,381,450
Industrials — 12.7%
Aerospace & Defense — 2.1%
Precision Castparts Corp.	50,000		3,763,000
Construction & Engineering — 1.2%
Jacobs Engineering Group, Inc. (2)	40,000		2,239,200

(See Notes which are an integral part of the Financial Statements)

10

February 28, 2005 (Unaudited)

Portfolio of Investments

Mid-Cap Growth Fund (continued)

Description	Shares	Value
Common Stocks (continued)
Industrials (continued)
Industrial Conglomerates — 2.1%
Textron, Inc.	50,000	$	3,867,500
Machinery-Construction/Farming — 1.7%
Oshkosh Truck Corp.	40,000		2,986,000
Machinery-Industrial — 3.3%
Ingersol-Rand Co., Class A	35,000		2,948,750
Pentair, Inc.	75,000		3,108,000
			6,056,750
Railroads — 1.0%
Norfolk Southern Corp.	50,000		1,794,500
Trading Companies & Distributors — 1.3%
MSC Industrial Direct Co., Inc., Class A	70,000		2,264,500
Total Industrials			22,971,450
Information Technology — 27.0%
Application Software — 8.9%
Amdocs Ltd. (2)	110,000		3,228,500
AutoDesk, Inc.	85,000		2,526,200
Cognos, Inc. (1)(2)	85,000		3,647,350
Macromedia, Inc. (2)	90,000		3,050,100
Mercury Interactive Corp. (2)	80,000		3,670,400
			16,122,550
Communications Equipment — 4.0%
Comverse Technology, Inc. (2)	160,000		3,713,600
Harris Corp. (1)	55,000		3,668,500
			7,382,100
Computer Hardware — 1.7%
Apple Computer, Inc. (2)	70,000		3,140,200
Information Technology Consulting & Services — 2.1%
Cognizant Technology Solutions Corp. (2)	80,000		3,778,400
Internet Software & Services — 6.4%
Ask Jeeves, Inc. (1)(2)	125,000		2,857,500
InfoSpace, Inc. (2)	55,000		2,280,300
j2 Global Communications, Inc. (1)(2)	85,000		3,256,350
VeriSign, Inc. (2)	120,000		3,290,400
			11,684,550
Services-Data Processing — 3.9%
Checkfree Corp. (2)	60,000		2,312,400
Global Payments, Inc. (1)	35,000		1,943,200
Hewitt Associates, Inc., Class A (2)	90,000		2,766,600
			7,022,200
Total Information Technology			49,130,000

Description	Shares or Principal Amount		Value
Common Stocks (continued)
Materials — 4.9%
Chemicals-Commodity — 3.3%
Huntsman Corp. (1)(2)		110,000	$	3,141,600
Methanex Corp.		160,000		2,886,400
				6,028,000
Chemicals-Fertilizers & Agricultural Chemicals — 1.6%
Monsanto Co.		50,000		2,939,000
Total Materials				8,967,000
Utilities — 1.6%
Gas Utilities — 1.6%
Kinder Morgan Management LLC (2)		65,971		2,831,470
Total Utilities				2,831,470
Total Common Stocks (identified cost $151,954,657)				177,342,820
Collateral Pool Investment for Securities on Loan — 23.9% (See Note 2 of the Financial Statements) (identified cost $43,317,783)				43,317,783
Repurchase Agreement — 1.9%
Agreement with Lehman Brothers, Inc., 2.510% dated 2/28/2005, to be repurchased at $3,443,688 on 3/1/2005, collateralized by a U.S. Government Agency Obligation with a maturity of 4/15/2030, with a market value of $3,513,058 (at amortized cost)	$	3,443,448		3,443,448
Total Investments — 123.4% (identified cost $198,715,888)				224,104,051
Other Net Assets and Liabilities — (23.4)%				(42,467,267	)
Total Net Assets — 100.0%			$	181,636,784

Portfolio Sector Allocations*
Sector	Fund
Consumer Discretionary	14.5%
Energy	8.0%

Financials	7.2%
Healthcare	21.7%
Industrials	12.7%

Information Technology	27.0%
Materials	4.9%
Utilities	1.6%

Other Assets and Liabilities	2.4%
Total	100.0%

(See Notes which are an integral part of the Financial Statements)

11

Marshall Funds

Small-Cap Growth Fund

Description	Shares	Value
Common Stocks — 94.7%
Consumer Discretionary — 15.1%
Auto Parts & Equipment — 1.0%
IMPCO Technologies, Inc. (2)	275,000	$	1,595,000
Broadcasting Service — 1.5%
New Frontier Media, Inc. (2)	325,000		2,453,750
Casinos & Gaming — 1.3%
Century Casinos, Inc. (2)	235,000		2,060,950
Home Furnishings — 2.0%
Tempur-Pedic International, Inc. (1)(2)	170,000		3,255,500
Hotel/Resort/Cruise — 1.2%
Great Wolf Resorts, Inc. (2)	80,000		1,988,000
Leisure Facilities — 1.8%
LIFE TIME FITNESS, Inc. (1)(2)	115,000		2,885,350
Movies & Entertainment — 2.5%
Imax Corp. (1)(2)	375,000		4,035,000
Retail-Apparel — 2.6%
Jos. A. Bank Clothiers, Inc. (1)(2)	60,000		1,628,400
Pacific Sunwear of California (2)	95,000		2,447,200
			4,075,600
Specialty Stores — 1.2%
PETCO Animal Supplies, Inc. (2)	55,000		1,949,200
Total Consumer Discretionary			24,298,350
Consumer Staples — 1.6%
Food Distributors — 1.6%
Central European Distribution Corp. (1)(2)	65,000		2,503,800
Total Consumer Staples			2,503,800
Energy — 11.0%
Oil & Gas-Exploration and Production — 9.7%
Contango Oil & Gas Co. (1)(2)	422,400		3,632,640
Gasco Energy, Inc. (1)(2)	900,000		3,375,000
Harvest Natural Resources, Inc. (2)	190,000		2,384,500
The Exploration Co. of Delaware (2)	600,000		3,402,000
Toreador Resources Corp. (2)	115,000		2,796,800
			15,590,940
Oil & Gas-Integrated — 1.3%
Canadian Superior Energy, Inc. (1)(2)	1,000,000		2,120,000
Total Energy			17,710,940
Financials — 6.3%
Diverse Financial Services — 3.2%
CB Richard Ellis Group, Inc. (2)	85,000		3,066,800
Trammell Crow Co. (2)	105,000		2,031,750
			5,098,550

Description	Shares	Value
Common Stocks (continued)
Financials (continued)
Insurance-Property & Casualty — 1.6%
Infinity Property & Casualty	80,000	$	2,570,400
Investment Bank & Brokerage — 1.5%
MCF Corp. (1)(2)	1,613,500		2,452,520
Total Financials			10,121,470
Healthcare — 21.8%
Biotechnology — 1.2%
Amylin Pharmaceuticals, Inc. (1)(2)	90,000		1,927,800
Healthcare-Equipment — 3.4%
Cutera, Inc. (2)	215,000		3,551,800
I-Flow Corp. (1)(2)	110,000		1,877,700
			5,429,500
Healthcare-Managed Care — 3.5%
Centene Corp. (2)	95,000		3,169,200
Wellcare Health Plans, Inc. (2)	80,000		2,511,200
			5,680,400
Healthcare-Services — 9.2%
Amedisys, Inc. (1)(2)	95,000		3,034,300
American Healthways, Inc. (1)(2)	90,000		3,058,200
Emageon, Inc. (1)(2)	160,000		2,384,000
Matria Healthcare, Inc. (1)(2)	100,000		2,880,000
SFBC International, Inc. (1)(2)	80,000		3,476,000
			14,832,500
Healthcare-Supplies — 2.0%
Immucor, Inc. (2)	105,000		3,119,025
Pharmaceutical — 2.5%
CV Therapeutics, Inc. (1)(2)	90,000		1,973,700
Santarus, Inc. (1)(2)	300,000		2,097,000
			4,070,700
Total Healthcare			35,059,925
Industrials — 9.8%
Electrical Components — 2.1%
WESCO International, Inc. (2)	95,000		3,413,350
Machinery-Construction/Farming — 1.6%
Oshkosh Truck Corp.	35,000		2,612,750
Machinery-Industrial — 2.1%
Joy Global, Inc.	90,000		3,307,500
Services-Diversified/ Commercial — 1.7%
Navigant Consulting, Inc. (2)	105,000		2,703,750
Services-Employment — 1.1%
Korn/Ferry International (1)(2)	90,000		1,726,200
Trading Companies & Distributors — 1.2%
MSC Industrial Direct Co.	60,000		1,941,000
Total Industrials			15,704,550

(See Notes which are an integral part of the Financial Statements)

12

February 28, 2005 (Unaudited)

Portfolio of Investments

Small-Cap Growth Fund (continued)

Description	Shares	Value
Common Stocks (continued)
Information Technology — 28.1%
Application Software — 10.3%
Hyperion Solutions Corp. (2)	60,000	$	3,028,800
Kronos, Inc. (2)	55,000		3,071,200
Macromedia, Inc. (2)	77,000		2,609,530
Motive, Inc. (2)	220,000		2,417,800
TIBCO Software, Inc. (2)	305,000		2,976,800
Witness Systems, Inc. (2)	125,000		2,338,750
			16,442,880
Communications Equipment — 2.7%
AudioCodes Ltd. (2)	165,000		2,097,150
Westell Technologies, Inc. (2)	350,000		2,198,000
			4,295,150
Computer Storage/Peripheral — 3.8%
Avid Technology, Inc. (1)(2)	55,000		3,679,500
Brocade Communications Systems, Inc. (2)	395,000		2,449,000
			6,128,500
Electronic Equipment — 1.5%
Identix, Inc. (2)	400,000		2,392,000
Intellectual Property — 0.8%
Acacia Research Corp. (2)	230,000		1,350,100
Internet Software & Services — 3.2%
Ask Jeeves, Inc. (1)(2)	115,000		2,628,900
j2 Global Communications, Inc. (1)(2)	65,000		2,490,150
			5,119,050
IT Services — 3.2%
DiamondCluster International, Inc. (2)	165,000		2,826,450
Ness Technologies, Inc. (2)	180,000		2,365,200
			5,191,650
Services-Data Processing — 2.6%
Global Payments, Inc. (1)	35,000		1,943,200
Open Solutions (2)	110,000		2,244,000
			4,187,200
Total Information Technology			45,106,530
Materials — 1.0%
Chemicals-Specialty — 1.0%
Aceto Corp.	172,500		1,543,875
Total Materials			1,543,875
Utilities — 0.0%
Gas Utilities — 0.0%
Kinder Morgan Management LLC (2)	—		6
Total Utilities			6
Total Common Stocks (identified cost $126,690,271)			152,049,446

Description	Shares or Principal Amount		Value
Collateral Pool Investment for Securities on Loan — 28.4% (See Note 2 of the Financial Statements) (identified cost $45,630,781)			$	45,630,781
Repurchase Agreement — 2.9%
Agreement with Lehman Brothers, Inc., 2.510% dated 2/28/2005, to be repurchased at $4,642,972 on 3/1/2005, collateralized by a U.S. Government Agency Obligation with a maturity of 7/15/2008, with a market value of $4,736,329 (at amortized cost)	$	4,642,649		4,642,649
Total Investments — 126.0% (identified cost $176,963,701)				202,322,876
Other Net Assets and Liabilities — (26.0)%				(41,722,290	)
Total Net Assets — 100.0%			$	160,600,586

Portfolio Sector Allocations*
Sector	Fund
Consumer Discretionary	15.1%
Consumer Staples	1.6%

Energy	11.0%
Financials	6.3%
Healthcare	21.8%
Industrials	9.8%

Information Technology	28.1%
Materials	1.0%
Utilities	—

Liabilities less Other Assets	5.3%
Total	100.0%

International Stock Fund

Description	Shares	Value
Common Stocks — 96.9%
Australia — 1.7%
News Corp. Ltd. (1)	471,450	$	8,160,353
Belgium — 1.0%
UCB SA	96,510		4,842,283
Brazil — 2.4%
Petroleo Brasileiro SA, ADR	160,300		7,822,640
Unibanco — Uniao de Bancos Brasileiros SA, GDR	88,100		3,321,370
			11,144,010
Canada — 1.1%
Precision Drilling Corp. (2)	70,234		5,360,259
China — 0.9%
China Petroleum and Chemical Corp. (Sinopec)	9,081,000		4,129,846

(See Notes which are an integral part of the Financial Statements)

13

Marshall Funds

International Stock Fund (continued)

Description	Shares	Value
Common Stocks (continued)
France — 8.4%
Accor SA (1)	122,600	$	5,737,634
AXA SA	207,400		5,565,645
BNP Paribas SA	74,300		5,386,885
Sanofi-Aventis	83,400		6,670,134
Schneider Electric SA	61,700		4,920,143
Total SA	23,220		5,522,272
Vivendi Universal SA (1)	185,100		5,841,090
			39,643,803
Germany — 3.7%
Deutsche Telekom AG (1)	339,800		7,113,984
Metro AG (1)	86,200		4,833,105
Siemens AG (1)	72,300		5,667,792
			17,614,881
Hong Kong — 4.3%
Cheung Kong (Holdings) Limited	377,000		3,567,342
Esprit Holdings Ltd.	605,000		4,299,967
Sun Hung Kai Properties	447,000		4,150,832
Swire Pacific Ltd., Class A	736,500		6,002,757
Wharf Holdings Ltd.	613,000		2,078,126
			20,099,024
India — 1.4%
Reliance Industries Ltd., GDR	198,561		5,202,298
State Bank of India, GDR	29,520		1,322,496
			6,524,794
Indonesia — 1.3%
PT Telekomunikasi Indonesia	12,960,000		6,201,594
Italy — 3.2%
Banco Popolare di Verona e Novara Scrl	265,000		5,187,318
Eni SpA (1)	95,000		2,473,361
Saipem SpA	540,300		7,287,516
			14,948,195
Japan — 24.4%
Asahi Glass Co. Ltd.	425,000		4,669,929
Canon, Inc.	52,000		2,751,641
Credit Saison Co. Ltd.	252,100		8,945,527
Fast Retailing Co. Ltd.	77,900		5,137,549
Hoya Corp.	33,000		3,587,816
Keyence Corp.	9,900		2,402,442
Konica Minolta Holdings, Inc.	303,000		3,588,176
Leopalace21 Corp.	134,000		2,220,087
Mitsubishi Estate Co. Ltd.	501,000		6,107,174
Mitsubishi Tokyo Financial Group, Inc.	872		7,991,822
Mitsui Trust Holdings, Inc.	460,000		4,841,605
NEC Electronics Corp.	801,000		5,214,938
NIDEC Corp.	19,000		2,322,375
Nitori Co.	31,800		1,939,611
NTT DoCoMo, Inc.	2,679		4,546,241
Omron Corp.	187,800		4,359,617
Orix Corp.	55,300		7,196,334
SMC Corp.	71,800		8,730,434
Sumitomo Mitsui Financial Group, Inc. (1)	824		5,703,614
Sumitomo Realty & Development Co. Ltd.	169,000		2,152,329

Description	Shares	Value
Common Stocks (continued)
Japan (continued)
Suzuki Motor Corp. Ltd.	175,800	$	3,315,475
Toyota Motor Corp.	208,600		8,113,524
Yamada Denki (1)	186,100		9,267,840
			115,106,100
Korea, Republic of — 1.3%
Samsung Electronics Co. Ltd. (2)	5,700		2,966,191
Shinsegae Department Store Co. (2)	9,170		2,960,689
			5,926,880
Netherlands — 5.0%
ASML Holding NV (2)	246,000		4,543,183
ING Groep NV	227,000		6,968,126
Koninklijke (Royal) Philips Electronics NV	241,500		6,671,105
VNU NV	173,000		5,409,960
			23,592,374
Norway — 4.5%
Norsk Hydro ASA (1)	86,700		7,488,469
Statoil ASA	314,100		5,712,176
Tandberg ASA (1)	327,800		3,653,494
Yara International ASA	306,900		4,434,699
			21,288,838
Spain — 0.8%
Gestevision Telecinco SA (2)	170,100		3,744,286
Sweden — 2.9%
Atlas Copco AB, Class A (1)	116,610		5,801,641
Telefonaktiebolaget LM Ericsson, Class B (1)	2,581,100		7,583,319
			13,384,960
Switzerland — 10.7%
Adecco SA	80,300		4,390,899
Credit Suisse Group (1)	217,900		9,484,892
Nestle SA (1)	25,180		6,987,966
Roche Holding AG (1)	30,100		3,170,410
Swiss Life Holding	44,300		6,759,165
Swiss Re	85,900		6,301,182
Syngenta AG	54,700		6,145,851
UBS AG (1)	84,500		7,336,764
			50,577,129
Taiwan, Province of China — 0.6%
Taiwan Semiconductor Manufacturing Co. Ltd. (2)	1,649,000		2,927,321
Thailand — 2.7%
PTT Public Co. Ltd.	665,800		3,760,795
Siam Cement Co. Ltd.	1,121,716		8,736,485
			12,497,280
United Kingdom — 14.6%
Amvescap PLC	1,100,200		7,219,538
AstraZeneca PLC	162,000		6,424,487
British Sky Broadcasting PLC	634,300		6,893,950
Compass Group PLC	815,000		3,914,960
Diageo PLC	377,100		5,365,464
iSoft Group PLC	200,731		1,362,570
Misys PLC	650,800		2,847,030

(See Notes which are an integral part of the Financial Statements)

14

February 28, 2005 (Unaudited)

Portfolio of Investments

International Stock Fund (continued)

Description	Shares or Principal Value		Value
Common Stocks (continued)
United Kingdom (continued)
Royal Bank of Scotland Group PLC		173,000	$	5,925,398
Smith & Nephew PLC		764,300		7,841,454
Tesco PLC		776,443		4,552,270
Vodafone Group PLC		4,088,199		10,720,013
WPP Group PLC		510,900		5,863,285
				68,930,419
Total Common Stocks (identified cost $385,943,046)				456,644,629
Collateral Pool Investment for Securities on Loan — 18.6% (See Note 2 of the Financial Statements) (identified cost $87,612,788)				87,612,788
Repurchase Agreement — 3.1%
Agreement with IBT Corp., 1.750%, dated 2/28/2005, to be repurchased at $14,387,819 on 3/1/2005, collateralized by various U.S. Government Agency Obligations with various maturities to 1/25/2016, with a market value of $14,896,563 (at amortized cost)	$	14,387,120		14,387,120
Total Investments — 118.6% (identified cost $487,942,954)				558,644,537
Other Net Assets and Liabilities — (18.6)%				(87,356,971	)
Total Net Assets — 100.0%			$	471,287,566

Industry Division

(Unaudited)

Industry	Market Value			% of Total Net Assets
Advertising	$	5,863,285		1.2%
Automobiles		11,428,999		2.4
Beverages		5,365,464		1.2
Chemicals		15,782,848		3.3
Commercial Banks		56,502,164		12.0
Commercial Services		4,390,899		0.9
Construction Materials		13,406,414		2.8
Distribution/Wholesale		4,299,967		0.9
Diversified Financial Services		23,361,399		5.0
Diversified Holding Companies		8,080,883		1.7
Diversified Manufacturing		9,255,968		2.0
Electronics		21,614,293		4.6
Food & Staple Retailing		20,288,301		4.4
Healthcare Equipment & Supplies		11,429,270		2.4
Hotels/Restaurants & Leisure		5,737,634		1.2
Insurance		25,594,118		5.4
Machinery		21,774,593		4.6
Media		30,049,639		6.4
Oil & Gas		49,557,334		10.5
Office & Business Equipment		2,751,641		0.6
Pharmaceuticals		21,107,313		4.5
Real Estate		18,197,764		3.9
Semiconductor Equipment & Products		7,470,504		1.6
Software		4,209,600		0.9
Specialty Retail		19,305,689		4.1
Telecommunications		39,818,645		8.4
Total Common Stocks		456,644,629		96.9
Investment for Collateral Pool for Securities on Loan		87,612,788		18.6
Repurchase Agreement		14,387,120		3.1
Total Investments		558,644,537		118.6
Other Net Assets and Liabilities		(87,356,971	)	(18.6	)
Total Net Assets	$	471,287,566		100.0%

(See Notes which are an integral part of the Financial Statements)

15

Marshall Funds

Government Income Fund

Description	Principal Amount		Value
Asset-Backed Securities — 5.2%
Countrywide Alternative Loan Trust, Class 1A2, 3.230%, 6/25/2034 (5)	$	3,500,000	$	3,471,923
Green Tree Home Equity Loan Trust 1998-B, Class B1, 7.810%, 11/15/2029 (5)		6,000,000		6,016,050
Greenwich Capital Acceptance 1995-BA1, Class A4, 7.150%, 8/10/2020 (5)		10,643,000		10,957,096
Total Asset-Backed Securities (identified cost $20,100,787)				20,445,069
Collateralized Mortgage Obligations — 20.9%
Credit Suisse First Boston Mortgage Securities Corp., 6.250%, 1/25/2032		270,787		270,876
Federal Home Loan Mortgage Corp., 2.820%, 8/25/2031, REMIC (Series T-32-A1) (4)(5)		2,780,273		2,794,041
Federal Home Loan Mortgage Corp., 5.000%, 10/15/2029, REMIC (Series 2745-AY)		5,000,000		5,001,665
Federal Home Loan Mortgage Corp., 5.000%, 10/15/2034, REMIC (Series 2876-DQ)		956,584		956,760
Federal Home Loan Mortgage Corp., 5.500%, 7/15/2032, REMIC (Series 2686-QH)		6,000,000		6,091,812
Federal Home Loan Mortgage Corp., 6.000%, 7/15/2013, REMIC (Series 2504-VA)		256,480		256,441
Federal Home Loan Mortgage Corp., 6.250%, 9/15/2023, REMIC (Series 1666H)		10,030,872		10,274,381
Federal Home Loan Mortgage Corp., 6.500%, 10/15/2016, REMIC (Series 1702-PK) (5)		9,232,411		9,400,339
Federal National Mortgage Association, 2.940%, 1/15/2031, REMIC (Series 2001-25-FA) (4)(5)		4,735,119		4,744,608
Federal National Mortgage Association, 4.000%, 10/25/2032, REMIC (Series 2003-28-GA) (5)		836,025		821,919
Federal National Mortgage Association, 5.000%, 10/25/2016, REMIC (Series 2003-16-PD)		5,000,000		5,065,065
Federal National Mortgage Association, 5.000%, 10/15/2031, REMIC (Series 2543-LN) (5)		6,520,981		6,559,416
Federal National Mortgage Association, 5.000%, 5/15/2033, REMIC (Series 2791-BL) (5)		3,452,113		3,448,191
Government National Mortgage Association, 4.500%, 11/16/2028, REMIC (Series 2003-77-TE) (5)		2,500,000		2,506,145

Description	Principal Amount		Value
Collateralized Mortgage Obligations (continued)
Master Asset Securitization Trust, 5.000%, 3/25/2034 REMIC (Series 2004-3-4A5) (5)	$	15,215,000	$	15,092,717
Salomon Brothers Mortgage Securities VII 2003-CDCA A2 FRN, 2.910%, 2/15/2015 (4)(5)(7)		1,068,328		1,069,135
Structured Asset Securities Corporation, 5.250%, 8/25/2033, (Series 2003-21-2A2) (5)		4,120,781		4,017,514
Washington Mutual, 3.530%, 10/25/2033, REMIC (Series 2003-AR10-A3A) (5)		3,500,000		3,490,519
Total Collateralized Mortgage Obligations (identified cost $80,520,056)				81,861,544
Corporate Bonds — 7.2%
American Express Credit Corp., 2.660%, 10/14/2005 (4)(5)		4,000,000		4,001,944
DaimlerChrysler North America Holding Corp. FRN, 3.349%, 9/26/2005 (4)(5)		4,000,000		4,015,728
Ford Motor Credit Co., 7.600%, 8/1/2005 (5)		5,000,000		5,081,095
FPL Group, Inc. FRN, 2.850%, 3/30/2005 (4)(5)		4,000,000		3,999,936
General Motors Acceptance Corp. FRN, 4.750%, 5/19/2005 (4)(5)		4,000,000		4,013,160
HSB Capital I FRN, 3.570%, 7/15/2027 (4)		3,000,000		2,990,121
SLM Corp. FRN, 2.690%, 9/15/2006 (4)(5)		4,000,000		4,012,552
Total Corporate Bonds (identified cost $28,046,613)				28,114,536
Government Agencies — 14.0%
Federal Home Loan Bank — 14.0%
Federal Home Loan Bank Discount Note 2.510%, 3/1/2005 (at amortized cost)		55,000,000		55,000,000
Mortgage Backed Securities —57.8%
Federal Home Loan Mortgage Corp. — 5.5%
5.000%, 8/1/2014		5,773,740		5,839,647
5.000%, 10/1/2033		5,034,043		4,982,565
5.500%, 11/1/2018		6,763,491		6,942,554
6.500%, 9/1/2016		522,390		549,043
7.000%, 11/1/2009		432,751		448,560
7.500%, 9/1/2013		199,222		213,551
7.500%, 4/1/2024		454,377		488,449
7.500%, 4/1/2027		289,732		310,652
8.000%, 8/1/2030		417,774		450,069
8.500%, 9/1/2024		241,820		267,102
9.000%, 6/1/2019		481,215		533,020
9.500%, 2/1/2025		403,717		450,543
				21,475,755

(See Notes which are an integral part of the Financial Statements)

16

February 28, 2005 (Unaudited)

Portfolio of Investments

Government Income Fund (continued)

Description	Principal Amount		Value
Mortgage Backed Securities (continued)
Federal National Mortgage Association — 44.3%
5.000%, 5/1/2018	$	3,917,766	$	3,951,028
5.000%, 3/1/2020 (6)		6,000,000		6,041,250
5.000%, 3/1/2035 (6)		25,000,000		24,640,625
5.500%, 1/1/2023		4,412,295		4,482,076
5.500%, 10/1/2024		4,806,811		4,877,659
5.500%, 2/1/2033		2,590,227		2,617,515
5.500%, 3/1/2035 (6)		40,000,000		40,337,520
6.000%, 9/1/2013		2,124,047		2,218,030
6.000%, 10/1/2016		1,163,192		1,212,037
6.000%, 3/1/2035 (6)		60,000,000		61,556,280
6.500%, 9/1/2016		1,345,597		1,415,473
6.500%, 9/1/2016		845,926		889,854
6.500%, 8/1/2030 (1)		7,898,693		8,238,518
6.500%, 12/1/2031		530,355		552,851
7.000%, 12/1/2010 (5)		826,338		855,776
7.000%, 3/1/2029		719,097		759,378
7.000%, 7/1/2029 (5)		1,918,812		2,026,296
7.000%, 2/1/2030 (5)		1,544,488		1,631,004
7.500%, 12/1/2009 (5)		1,703,968		1,789,458
7.500%, 10/1/2030		412,146		441,406
8.000%, 10/1/2028 (5)		2,154,201		2,330,266
8.000%, 4/1/2030		634,606		683,650
				173,547,950
Government National Mortgage Association — 8.0%
5.000%, 4/15/2034		3,504,056		3,492,973
5.500%, 9/15/2033		9,544,690		9,717,859
6.000%, 12/20/2033		11,216,748		11,576,974
6.500%, 9/15/2032		3,242,741		3,405,335
7.000%, 6/15/2029		595,360		631,351
7.000%, 8/15/2031		581,560		616,218
8.500%, 6/15/2010		554,139		589,862
9.000%, 11/15/2009 (5)		963,080		1,011,650
9.000%, 1/15/2010		295,784		312,342
9.500%, 10/15/2024		164,974		185,890
				31,540,454
Total Mortgage Backed Securities (identified cost $225,353,705)				226,564,159
U.S. Treasury Notes — 36.9%
1.125%, 6/30/2005		50,000,000		49,738,300
1.250%, 5/31/2005 (5)		20,000,000		19,932,820
1.500%, 7/31/2005		10,000,000		9,945,710
1.625%, 4/30/2005		50,000,000		49,925,800
4.250%, 8/15/2014 (1)		5,000,000		4,955,665
4.250%, 11/15/2014 (1)		10,000,000		9,908,210
Total U.S. Treasury Notes (identified cost $144,384,961)				144,406,505
Total Investments in Securities — 142.0% (identified cost $553,406,122)				556,391,813
Collateral Pool Investments for Securities on Loan — 4.7% (See Note 2 of the Financial Statements) (identified cost $18,396,089)				18,396,089

Description	Principal Amount		Value
Repurchase Agreement — 4.5%
Agreement with Lehman Brothers, Inc., 2.510% dated 2/28/2005, to be repurchased at $17,701,609 on 3/1/2005, collateralized by U.S. Government Agency Obligations with various maturities to 7/15/2026, with a market value of $18,054,481 (at amortized cost)	$	17,700,374	$	17,700,374
Total Investments — 151.2% (identified cost $589,502,585)				592,488,276
Other Net Assets and Liabilities — (51.2)%				(200,751,836	)
Total Net Assets — 100.0%			$	391,736,440

Portfolio Sector Allocations*
Sector	Fund
Asset-Backed Securities	5.2%
Collateralized Mortgage Obligations	20.9%

Corporate Bonds	7.2%
Government Agencies	14.0%
Mortgage Backed Securities	57.8%
U.S. Treasury Notes	36.9%

Other Assets and Liabilities	(42.0)%
Total	100.0%

Intermediate Bond Fund

Description	Principal Amount		Value
Asset-Backed Securities — 2.1%
Citibank Credit Card Issuance Trust 2002-A1, Class A1, 4.950%, 2/9/2009	$	6,000,000	$	6,122,388
Green Tree Home Improvement Loan Trust 1998-B, Class HEB1, 7.810%, 11/15/2029		7,000,000		7,018,725
Total Asset-Backed Securities (identified cost $13,004,649)				13,141,113
Collateralized Mortgage Obligations — 6.9%
Countrywide Alternative Loan Trust 2004-J4, Class 1A2, 3.230%, 6/25/2034		5,000,000		4,959,890
Criimi Mae CMBS Corp. 1998-1, Class A3, 6.306%, 6/20/2030 (7)		917,455		919,234
CS First Boston Mortgage Securities Corp. 2003-11, Class 1A3, 4.500%, 6/25/2033		4,480,000		4,492,974
Federal Home Loan Mortgage Corp., Class MH, (Series 2686), 5.500%, 7/15/2032		4,000,000		4,061,208
5.500%, 7/15/2032		10,000,000		10,153,020

(See Notes which are an integral part of the Financial Statements)

17

Marshall Funds

Intermediate Bond Fund (continued)

Description	Principal Amount		Value
Collateralized Mortgage Obligations (continued)
Federal National Mortgage Association, Pass-Thru INT, 15-year, 5.500%, 11/1/2018 (1)	$	14,948,590	$	15,328,418
Federal National Mortgage Association, Pass-Thru INT, 30-year, 6.500%, 10/1/2031		1,384,698		1,443,434
Federal National Mortgage Association, Pass-Thru INT, 15-year, 7.000%, 12/1/2015		1,179,855		1,246,227
Prudential Home Mortgage Securities 1993-H, Class 2B, 6.827%, 9/28/2008 (7)		132,360		132,221
Total Collateralized Mortgage Obligations (identified cost $42,582,876)				42,736,626
Corporate Bonds & Notes — 56.7%
Automotive & Related — 4.9%
DaimlerChrysler North America Holding Corp., Note, (Series MTND), 3.349%, 9/26/2005 (4)(5)		6,000,000		6,023,592
Ford Motor Credit Co., Global Bond, 6.875%, 2/1/2006		5,000,000		5,119,330
General Motors Acceptance Corp., Note, 6.875%, 8/28/2012 (1)		5,000,000		4,918,320
General Motors Acceptance Corp., Note, (Series MTN), 4.230%, 5/16/2005		6,000,000		6,019,740
General Motors Acceptance Corp., Note, (Series MTN), 4.375%, 12/10/2007		5,000,000		4,863,000
General Motors Acceptance Corp., Note, 6.750%, 1/15/2006		3,000,000		3,062,097
				30,006,079
Banks — 5.3%
Citicorp, Sub. Note, (Series F), 6.375%, 11/15/2008 (1)		7,000,000		7,527,660
NationsBank Corp., Sub. Note, 7.800%, 9/15/2016		2,000,000		2,444,176
UBS Preferred Funding Trust, Bond, 8.622%, 10/29/2049		7,000,000		8,242,794
Wachovia Bank NA, 4.875%, 2/1/2015		10,000,000		9,922,060
World Savings Bank FSB, Sr. Note, (Series BKN1), 2.535%, 3/2/2009		5,000,000		5,006,535
				33,143,225
Beverages & Foods — 3.0%
General Mills, Inc., Note, 3.875%, 11/30/2007		5,000,000		4,952,970
Kraft Foods, Inc., Note, 5.250%, 6/1/2007		5,000,000		5,125,480
Kroger Co., 8.050%, 2/1/2010		5,000,000		5,727,845
Miller Brewing Co., Note, (Series 144A), 5.500%, 8/15/2013 (7)		3,000,000		3,101,217
				18,907,512

Description	Principal Amount		Value
Corporate Bonds & Notes (continued)
Broadcasting — 0.8%
Univision Communications, Inc., Sr. Note, 3.500%, 10/15/2007	$	5,000,000	$	4,886,425
Broker/Dealers — 5.4%
Goldman Sachs Group, Inc., Note, 5.000%, 10/1/2014		3,000,000		2,982,711
Merrill Lynch & Co., Note, (Series MTNC), 2.990%, 2/5/2010		7,000,000		7,000,000
Merrill Lynch & Co., Note, (Series MTNC), 5.000%, 1/15/2015 (1)		5,000,000		4,955,575
Merrill Lynch & Co., Sr. Note, (Series MTNC), 3.000%, 4/30/2007		7,000,000		6,869,002
Morgan Stanley Group, Inc., Note, 3.625%, 4/1/2008		5,000,000		4,876,750
Morgan Stanley, Sr. Note, (Series MTNF), 2.795%, 1/18/2008		7,000,000		7,013,825
				33,697,863
Computer Services — 0.8%
Computer Associates, Inc., Sr. Note, (Series 144A), 5.625%, 12/1/2014 (7)		5,000,000		5,078,100
Construction Equipment — 0.4%
CRH America, Inc., Note, 6.950%, 3/15/2012		2,000,000		2,252,478
Consumer Cyclical — 0.4%
Tyco International Group, Note, 5.800%, 8/1/2006		2,500,000		2,560,780
Corporate-Other — 1.0%
Core Investment Grade Trust, Pass Thru Cert., 4.727%, 11/30/2007 (1)		6,000,000		6,054,030
Domestic & International Oil — 1.6%
Enterprise Products Operating LP, Sr. Note, (Series 144A), 5.600%, 10/15/2014 (7)		3,000,000		3,072,579
Occidental Petroleum Corp., Note, 4.000%, 11/30/2007		2,500,000		2,483,853
Pancanadian Petroleum Ltd., Bond, 6.300%, 11/1/2011		4,000,000		4,365,916
				9,922,348
Electrical Equipment — 0.8%
General Electric Co., Note, 5.000%, 2/1/2013		5,000,000		5,083,070
Energy — 0.3%
Halliburton Co., Note, 5.500%, 10/15/2010		2,000,000		2,085,322
Financial Services — 12.9%
Allstate Financial Global, Note, (Series 144A), 7.125%, 9/26/2005 (5)(7)		5,500,000		5,614,318
American Express Credit, Note, (Series MTNB), 2.660%, 10/14/2005		6,000,000		6,002,916

(See Notes which are an integral part of the Financial Statements)

18

February 28, 2005 (Unaudited)

Portfolio of Investments

Intermediate Bond Fund (continued)

Description	Principal Amount		Value
Corporate Bonds & Notes (continued)
Financial Services (continued)
American General Finance Corp., Note, (Series G), 4.500%, 11/15/2007 (1)	$	5,000,000	$	5,035,660
American General Finance Corp., Note, (Series G), 5.375%, 10/1/2012		2,500,000		2,573,515
Bunge Ltd. Finance Corp., Note, 5.350%, 4/15/2014		2,500,000		2,539,497
Countrywide Home Loan, Company Guarantee, (Series MTNL), 4.000%, 3/22/2011		5,000,000		4,785,870
Countrywide Home Loans, Global Bond, 2.875%, 2/15/2007		5,000,000		4,887,120
Credit Suisse, London, Sub. Note, (Series 144A), 7.900%, 5/29/2049 (7)		5,000,000		5,363,755
General Electric Capital Corp., Note, (Series A), 6.800%, 11/1/2005 (5)		4,000,000		4,092,144
General Electric Capital Corp., Note, (Series A), 6.500%, 12/10/2007 (1)		5,000,000		5,311,525
Household Finance Corp., Sr. Unsub., 3.080%, 11/16/2009		6,000,000		6,027,228
Household Finance Corp., Note, 7.000%, 5/15/2012		3,000,000		3,388,437
MBNA Capital B, Jr. Sub. Note, (Series B), 3.543%, 2/1/2027 (4)		3,000,000		2,859,933
National Rural Utilities Cooperative Finance Corp., Note, 3.000%, 2/15/2006		7,000,000		6,958,259
National Rural Utilities Cooperative Finance Corp., Note, 3.875%, 2/15/2008		4,000,000		3,970,336
SLM Corp., Note (Series MTNA), 5.625%, 9/15/2006		5,000,000		5,015,690
SLM Corp., Note (Series MTNA), 5.625%, 4/10/2007		5,000,000		5,152,300
				79,578,503
Insurance — 4.8%
AIG SunAmerica Global Financial, Bond, (Series 144A), 5.850%, 8/1/2008 (7)		7,000,000		7,369,292
GE Global Insurance Holding, Note, 7.500%, 6/15/2010		5,000,000		5,574,235
HSB Capital I, Company Guarantee, (Series B), 3.570%, 7/15/2027 (4)		4,000,000		3,986,828
Protective Life Corp., Unsecd. Note, 4.000%, 4/1/2011		8,000,000		7,704,184
Prudential Funding Corp., Note, (Series MTN), 6.600%, 5/15/2008 (7)		5,000,000		5,344,330
				29,978,869
Leasing — 0.3%
International Lease Finance Corp., Note, 4.500%, 5/1/2008		2,000,000		1,998,194

Description	Principal Amount		Value
Corporate Bonds & Notes (continued)
Media — 1.4%
AOL Time Warner, Inc., Note, 6.125%, 4/15/2006	$	4,000,000	$	4,100,848
Comcast Cable Communications, Sr. Note, 6.750%, 1/30/2011		3,000,000		3,314,886
Comcast Corp., Company Guarantee, 5.500%, 3/15/2011 (1)		1,000,000		1,041,905
				8,457,639
Publishing — 0.4%
Reed Elsevier, Inc., Company Guarantee, 6.125%, 8/1/2006		2,500,000		2,564,312
Real Estate — 1.3%
Centex Corp., Note, (Series MTN), 2.993%, 8/1/2007		8,000,000		8,008,928
REITS-Diversified — 0.7%
Vornado Realty Trust, Bond, 5.625%, 6/15/2007		4,000,000		4,114,768
Services-Diversified Commercials — 1.3%
Cendant Corp., Note, 6.250%, 3/15/2010		3,500,000		3,721,413
Interpublic Group of Cos., Inc., Note, 6.250%, 11/15/2014 (1)		4,000,000		4,066,204
				7,787,617
Short-Term Business Credit — 0.8%
CIT Group, Inc., Sr. Note, 3.650%, 11/23/2007		5,000,000		4,918,355
Telecommunications — 6.5%
BellSouth Corp., Note, 4.750%, 11/15/2012		3,000,000		2,993,292
British Telecommunication PLC, Note, 7.875%, 12/15/2005		5,000,000		5,161,130
Intelsat, Ltd., Sr. Note, 5.250%, 11/1/2008 (1)		2,000,000		1,895,000
SBC Communications, Note, 5.100%, 9/15/2014 (1)		7,000,000		7,008,239
Sprint Capital Corp., 7.125%, 1/30/2006		5,000,000		5,145,320
Telecom Italia Capital, Company Guarantee, (Series 144A), 5.250%, 11/15/2013 (1)		5,000,000		5,050,375
Telecom Italia Capital, Company Guarantee, (Series 144A), 4.950%, 9/30/2014 (7)		7,000,000		6,872,138
Telefonos de Mexico, S.A., Note, (Series 144A), 5.500%, 1/27/2015		3,000,000		2,972,121
Verizon Global Funding, Note, 7.375%, 9/1/2012		3,000,000		3,474,504
				40,572,119
Transportation — 1.0%
Delta Air Lines, Inc., Equip. Trust, (Series 1993-A2), 10.500%, 4/30/2016		2,000,000		1,280,590

(See Notes which are an integral part of the Financial Statements)

19

Marshall Funds

Intermediate Bond Fund (continued)

Description	Principal Amount		Value
Corporate Bonds & Notes (continued)
Transportation (continued)
Systems 2001 Asset Trust, Pass Thru Cert., (Series 144A), 6.664%, 9/15/2013 (7)	$	4,727,093	$	5,154,918
				6,435,508
Utilities-Electric — 0.6%
FPL Group Capital, Inc., Company Guarantee, 2.850%, 3/30/2005 (4)		4,000,000		3,999,936
Total Corporate Bonds & Notes (identified cost $349,921,166)				352,091,980
Government Agencies — 16.2%
Federal Home Loan Bank System — 12.9%
2.510%, 3/1/2005		75,000,000		75,000,000
5.430%, 11/17/2008 (1)		5,000,000		5,242,265
				80,242,265
Federal National Mortgage Association — 3.3%
5.500%, 2/15/2006		10,000,000		10,196,140
7.000%, 7/15/2005		10,000,000		10,153,990
				20,350,130
Total Government Agencies (identified cost $100,138,651)				100,592,395
Mortgage Backed Securities — 10.3%
Federal Home Loan Mortgage Corp. — 0.2%
7.500%, 2/1/2031		792,782		849,090
7.500%, 6/1/2031		316,326		338,647
				1,187,737
Federal National Mortgage Association — 9.9%
5.500%, 3/15/2035 (6)		20,000,000		20,168,760
6.000%, 3/15/2035 (6)		40,000,000		41,037,520
				61,206,280
Government National Mortgage Association — 0.2%
7.000%, 3/15/2032		1,378,165		1,460,248
Total Mortgage Backed Securities (identified cost $63,445,122)				63,854,265
U.S. Treasury Securities — 12.2%
U.S. Treasury Notes — 12.2%
1.625%, 3/31/2005 (5)		30,000,000		29,985,960
1.625%, 4/30/2005 (1)		30,000,000		29,955,480
4.250%, 11/15/2014 (1)		16,000,000		15,853,136
Total U.S. Treasury Securities (identified cost $75,831,702)				75,794,576
Total Investment in Securities — 104.4% (identified cost $644,924,166)				648,210,955

Description	Principal Amount		Value
Collateral Pool Investment for Securities on Loan — 17.2% (See Note 2 of the Financial Statements) (identified cost $106,904,271)			$	106,904,271
Repurchase Agreement — 4.8%
Agreement with Lehman Brothers, Inc., 2.510% dated 2/28/2005, to be repurchased at $29,992,226 on 3/1/2005, collateralized by U.S. Government Agency Obligations with various maturities to 10/15/2016, with a market value of $30,590,141 (at amortized cost)	$	29,990,135		29,990,135
Total Investments — 126.4% (identified cost $781,818,572)				785,105,361
Other Net Assets and Liabilities — (26.4)%				(163,989,528	)
Total Net Assets — 100.0%			$	621,115,833

Portfolio Sector Allocations*
Sector	Fund
Asset-Backed Securities	2.1%
Collateralized Mortgage Obligations	6.9%

Corporate Bonds	56.7%
Government Agencies	16.2%
Mortgage Backed Securities	10.3%
U.S. Treasury Notes	12.2%

Other Assets and Liabilities	(4.4)%
Total	100.0%

Intermediate Tax-Free Fund

Description/Credit Rating (9)	Principal Amount		Value
Municipals — 99.5%
Arizona — 4.1%
Maricopa County, AZ, School District No. 28 Kyrene Elementary, (Series A), GO UT Refunding, 5.000% (MBIA Insurance Corp.)/(Original Issue Yield: 4.59%), 7/1/2013 NR/Aaa	$	1,885,000	$	2,074,763
Phoenix, AZ, Civic Improvement Corp., Excise Tax Revenue Subordinate Bonds, (Series A), 5.000% (MBIA Insurance Corp.), 7/1/2015 AAA/Aaa		1,000,000		1,091,640
Phoenix, AZ, Civic Improvement Corp., Water System Revenue Refunding Jr. Lien Bonds, 5.250% (FGIC)/(Original Issue Yield: 4.69%), 7/1/2016 AAA/Aaa		500,000		565,715
				3,732,118

(See Notes which are an integral part of the Financial Statements)

20

February 28, 2005 (Unaudited)

Portfolio of Investments

Intermediate Tax-Free Fund (continued)

Description/Credit Rating (9)	Principal Amount		Value
Municipals (continued)
Arkansas — 1.9%
Arkansas Development Finance Authority, Revenue Bonds, 5.000% (AMBAC INS)/(Original Issue Yield: 5.055%), 7/1/2020 AAA/Aaa	$	700,000	$	717,178
University of Arkansas, Refunding Revenue Bonds, (Series A), 4.000% (MBIA GO of Brd)/(Original Issue Yield: 2.75%), 11/1/2009 NA/Aaa		1,000,000		1,040,950
				1,758,128
California — 1.2%
California State, Economic Recovery Bonds, (Series B), GO UT, 5.000% (Original Issue Yield: 3.02%), 7/1/2023 (Mandatory Tender 7/1/2008), AA-/Aa3		1,000,000		1,063,830
Colorado — 5.3%
El Paso County, CO, School District No. 49 Falcon, GO UT, 5.750% (FGIC State Aid Withholding)/(Original Issue Yield: 4.75%), 12/1/2013 AAA/Aaa		1,875,000		2,127,581
Larimer County, CO, School District No. R-1 Poudre, GO UT, 5.250% (FGIC State Aid Withholding)/(Original Issue Yield: 4.65%), 12/15/2009 AA-/Aa3		2,500,000		2,688,525
				4,816,106
Georgia — 3.3%
De Kalb County, GA, GO UT, (Series A), 5.000% (Original Issue Yield: 2.15%), 1/1/2007 AA+/Aaa		1,790,000		1,868,760
Georgia Municipal Electric Authority, Revenue Bonds Subordinate, (Series A), 5.250% (MBIA Insurance Corp.)/(Original Issue Yield: 4.70%), 1/1/2014 AAA/Aaa		1,000,000		1,118,170
				2,986,930
Hawaii — 1.2%
Hawaii State Airport System, Refunding Revenue Bonds, 5.250% (FGIC)/(Original Issue Yield: 4.77%), 7/1/2011 AAA/Aaa		1,000,000		1,086,090
Illinois — 2.6%
Kendall, Kane & Will Counties, IL, Community United School District No. 308, GO UT, 5.250% (FSA Insurance Corp.)/(Original Issue Yield: 4.38%), 10/1/2016 NR/Aaa		1,125,000		1,255,860

Description/Credit Rating (9)	Principal Amount		Value
Municipals (continued)
Illinois (continued)
University of Illinois, Auxiliary Facilities System Refunding Revenue Bonds, (Series A), 5.250%, (AMBAC INS)/(Original Issue Yield: 4.53%), 4/1/2013 AAA/Aaa	$	1,060,000	$	1,176,907
				2,432,767
Indiana — 3.9%
Indianapolis-Marion County, IN, Public Library, GO UT, 5.800%, (Original Issue Yield: 5.74%), 7/1/2012 (Prerefunded 1/1/2009), AAA/Aa2		1,425,000		1,588,049
Petersburg, IN, Pollution Control Refunding Revenue Bonds, (Indianapolis Power & Light Co.), 6.100%, (MBIA Insurance Corp.)/(Original Issue Yield: 6.099%), 1/1/2016 AAA/Aaa		2,000,000		2,030,040
				3,618,089
Iowa — 3.4%
Iowa Finance Authority, Solid Waste Disposal Revenue Bonds, (Ipsco, Inc.) 6.000%, 6/1/2027 (Mandatory Tender 6/1/2007) NR		3,000,000		3,114,930
Kansas — 3.0%
Manhattan, KS, Commercial Development, Refunding Revenue Holiday Inn Sub (Series B), 11.000%, 7/1/2016 (Escrowed to Maturity), NR/#Aaa		1,000,000		1,627,540
Sedgwick County, KS, Unified School District No. 259 Wichita, GO UT, 6.000%, (Original Issue Yield: 4.64%), 9/1/2008 AA/Aa3		1,000,000		1,103,360
				2,730,900
Massachusetts — 7.4%
Commonwealth of Massachusetts, GO Ltd., Consolidated Loan, (Series A), 6.000%, (Original Issue Yield: 5.67%), 2/1/2014 (Prerefunded 2/1/2010), AAA/Aa2		2,500,000		2,839,550
Commonwealth of Massachusetts, GO Ltd., Consolidated Loan, (Series E), 5.500%, (Original Issue Yield: 4.10%), 1/1/2014 (Prerefunded 1/1/2013), AA-/Aa2		3,500,000		3,932,180
				6,771,730
Michigan — 3.9%
Detroit, MI, City School District, (Series B), GO UT, 5.000%, (FGIC Q-SBLF)/(Original Issue Yield: 4.50%), 5/1/2009 AAA/Aaa		3,300,000		3,561,624

(See Notes which are an integral part of the Financial Statements)

21

Marshall Funds

Intermediate Tax-Free Fund (continued)

Description/Credit Rating (9)	Principal Amount		Value
Municipals (continued)
Minnesota — 3.5%
Minneapolis/St. Paul, MN, Metropolitan Airports Commission Airport Revenue Bonds, (Series B), 5.250% (FGIC)/(Original Issue Yield: 4.07%), 1/1/2006 AAA/Aaa	$	1,000,000	$	1,023,440
Minneapolis/St. Paul, MN, Metropolitan Airports Commission Airport Revenue Bonds, (Series B), 5.500% (FGIC)/(Original Issue Yield: 4.75%), 1/1/2011 AAA/Aaa		2,000,000		2,206,900
				3,230,340
Nevada — 2.3%
Clark County, NV, School District, GO Ltd., Refunding Bonds (Series D), 5.250% (FGIC)/(Original Issue Yield: 4.48%), 6/15/2014 AAA/Aaa		1,880,000		2,108,646
New Mexico — 2.5%
Belen, NM, Consolidated School District No. 002, Refunding Bonds, GO UT, (Series A), 4.000% (MBIA State Aid Withholding)/(Original Issue Yield: 2.42%), 8/1/2006 NR/Aaa		1,150,000		1,173,587
New Mexico State Highway Commission, Senior Subordinate Lien Tax Revenue Bonds, 6.000%, (Original Issue Yield: 5.37%), 6/15/2010 (Prerefunded 6/15/2009), AA+/Aa2		1,000,000		1,120,120
				2,293,707
New York — 9.5%
Metropolitan Transit Authority, NY, Revenue Bonds, (Series A), 5.500% (AMBAC)/(Original Issue Yield: 3.61%), 11/15/2016 AAA/Aaa		1,500,000		1,732,815
New York, NY, Refunding Bonds, (Series C), GO UT, 5.500%, (Original Issue Yield: 4.80%), 8/1/2015 A/A2		2,000,000		2,211,660
Oswego County, NY, GO UT, 6.700%, (Original Issue Yield: 6.80%), 6/15/2010 (Econ Defeased to Maturity), NR/A3		1,100,000		1,273,547
Oswego County, NY, GO UT, 6.700%, (Original Issue Yield: 6.80%), 6/15/2011 (Econ Defeased to Maturity), NR/A3		1,100,000		1,292,181
White Plains, NY, GO UT, Public Improvement Refunding Bonds, (Series B), 3.500%, (Original Issue Yield: 2.31%), 1/15/2007 Aa1		1,365,000		1,389,215

Description/Credit Rating (9)	Principal Amount		Value
Municipals (continued)
New York (continued)
White Plains, NY, GO UT, Public Improvement Refunding Bonds, (Series B), 3.500%, (Original Issue Yield: 2.66%), 1/15/2008 Aa1	$	820,000	$	836,826
				8,736,244
North Dakota — 5.5%
Fargo, ND, Health System Revenue Bonds (Meritcare), (Series A), 5.750% (FSA, Inc.)/(Original Issue Yield: 5.30%), 6/1/2012 AAA/Aaa		2,940,000		3,280,276
North Dakota State Water Commission, Water Development and Management Program Revenue Bonds, (Series A), 6.000% (MBIA Ins.)/(Original Issue Yield: 5.39%), 8/1/2011 AAA/Aaa		1,545,000		1,752,571
				5,032,847
Ohio — 4.1%
Ohio State Building Authority, Revenue Refunding Bonds, (Series B), 5.000% (MBIA Ins.)/(Original Issue Yield: 2.27%), 10/1/2009 AAA/Aaa		2,000,000		2,164,520
Olentangy, OH, Local School District, (Series B), GO UT, 5.500% (FGIC)/(Original Issue Yield: 4.48%), 12/1/2016 AAA/Aaa		1,000,000		1,129,750
Sidney, OH, Industrial Development, Revenue Bonds (Perfection Bakeries, Inc. Project), 5.400% (Fort Wayne National Corp. LOC)/(Original Issue Yield: 5.399%), 9/15/2005 NR		425,000		433,815
				3,728,085
Oregon — 1.2%
Salem-Keizer, OR, School District No. 24J, GO UT, 5.375% (FGIC School Bond Guaranty), 6/1/2014 (Prerefunded 6/1/2009), AAA/Aaa		1,000,000		1,099,390
Pennsylvania — 5.0%
Commonwealth of Pennsylvania, First Series GO UT, 6.000%, (Original Issue Yield: 5.54%), 1/15/2012 (Prerefunded 1/15/2010), AAA/Aa2		4,000,000		4,568,200
Puerto Rico — 1.6%
Puerto Rico Commonwealth Highway and Transportation Authority, Subordinate Transportation Revenue Bonds, 5.000% (CIFG-TCRS)/(Original Issue Yield: 3.61%), 7/1/2009 AAA/Aaa		1,335,000		1,445,939

(See Notes which are an integral part of the Financial Statements)

22

February 28, 2005 (Unaudited)

Portfolio of Investments

Intermediate Tax-Free Fund (continued)

Description/Credit Rating (9)	Principal Amount		Value
Municipals (continued)
South Carolina — 3.2%
South Carolina State Public Service Authority Revenue Bonds, (Series A), 5.375% (MBIA Insurance Corp.)/(Original Issue Yield: 4.80%), 1/1/2006 AAA/Aaa	$	2,835,000	$	2,905,733
Tennessee — 1.5%
Putnam County, TN, Refunding GO UT, 5.250% (FGIC)/(Original Issue Yield: 4.53%), 4/1/2013 NR/Aaa		1,200,000		1,343,040
Texas — 3.6%
Dallas, TX, Waterworks & Sewer System, Refunding Revenue Bonds, 5.500%, (Original Issue Yield: 5.22%), 10/1/2014 AA+/Aa2		1,000,000		1,099,450
Tarrant County, TX, HFDC, Health System Revenue Bonds, 5.75% (Texas Health Resources System Series A)/(MBIA Insurance Corp. INS)/(Original Issue Yield: 5.05%), 2/15/2009 AAA/Aaa		2,000,000		2,188,980
				3,288,430
Utah — 1.7%
Alpine, Utah, School District, Utah School Board Guaranty Program, GO UT, 4.000%, (School Board Guaranty), 3/15/2006 NR/Aaa		1,525,000		1,550,208
Virginia — 4.4%
Loudoun County, VA, GO UT, Public Improvement Bonds (Series B), 5.750% (State Aid Withholding)/(Original Issue Yield: 5.00%), 1/1/2011 AA+/Aaa		2,190,000		2,474,503
Suffolk, VA, Redevelopment & Housing Authority, Multi Family Housing Revenue Refunding Bonds (Windsor at Potomac Project), 4.850% (Fannie Mae — Stanby Liq Fac)/(Original Issue Yield: 4.85%)/(Mandatory Tender 7/1/2011), 7/1/2031 NR/Aaa		1,500,000		1,592,970
				4,067,473
Washington — 1.2%
Port Longview, WA, Industrial Development Corp., Solid Waste Disposal Revenue Bonds, 6.875% (Original Issue Yield: 6.874%)/(Weyerhaeuser Co.), 10/1/2008 BBB/NR		1,000,000		1,091,430

Description/Credit Rating (9)	Principal Amount or Shares		Value
Municipals (continued)
West Virginia — 1.3%
West Virginia State Hospital Finance Authority, Hospital Revenue (Series B), (Oak Hill Hospital, Inc.), 6.750%, (Original Issue Yield: 6.95%), 9/1/2030, (Prerefunded 9/1/2010), AAA/Aaa	$	1,000,000	$	1,187,640
Wisconsin — 6.2%
Cedarburg, WI, School District, Refunding GO UT, (Series B), 5.375% (Financial Security Assurance, Inc.)/(Original Issue Yield: 5.00%), 3/1/2016, (Prerefunded 3/1/2011), NR/Aaa		940,000		1,050,713
Cedarburg, WI, School District, Refunding GO UT, (Series B), 5.375% (Financial Security Assurance, Inc.)/(Original Issue Yield: 4.93%), 3/1/2015, (Prerefunded 3/1/2011), NR/Aaa		895,000		1,000,413
Kenosha County, WI, Refunding GO UT, (Series A), 5.000% (FGIC)/(Original Issue Yield: 4.50%), 3/1/2013 AAA/Aaa		1,535,000		1,633,148
Wisconsin State, GO UT, (Series C), 6.000%, (Original Issue Yield: 5.750%), 5/1/2014, (Prerefunded 5/1/2010), AA-/Aa3		1,750,000		1,996,523
				5,680,797
Total Municipals (identified cost $87,330,672)				91,031,391
Mutual Funds — 5.1%
Federated Tax-Free Obligations Fund		1,302,371		1,302,371
Fidelity Tax Exempt Money Market		3,376,718		3,376,716
Total Mutual Funds (shares at net asset value)				4,679,087
Total Investments — 104.6% (identified cost $92,009,761) (10)				95,710,478
Other Net Assets and Liabilities — (4.6)%				(4,238,174	)
Total Net Assets — 100.0%			$	91,472,304

Portfolio Credit Quality Allocations*
Credit Quality	Fund
AAA	58.9%
AA	29.3%

A	6.6%
BAA2	1.2%
NR	3.9%

Other Assets and Liabilities	0.1%
Total	100.0%

(See Notes which are an integral part of the Financial Statements)

23

Marshall Funds

Short-Term Income Fund

Description	Principal Amount		Value
Asset-Backed Securities — 10.3%
BMW Vehicle Owner Trust 2003-A, Class A3, 1.940%, 2/25/2007	$	672,715	$	670,395
Capital Auto Receivables Asset Trust 2003-2, Class A3A, 1.440%, 2/15/2007		803,185		797,411
Capital Auto Receivables Asset Trust 2004-1, Class A4, Class A, 2.640%, 11/17/2008		1,000,000		973,120
CNH Equipment Trust 2003-A, Class A3B, 1.890%, 7/16/2007		1,050,937		1,045,526
Core Investment Grade Bond, 4.727%, 11/30/2007 (1)		1,700,000		1,715,308
DaimlerChrysler Auto Trust 2004-B, Class A3, 3.180%, 9/8/2008		1,000,000		993,134
Honda Auto Receivables Owner Trust 2003-1, Class A3, 1.920%, 11/20/2006		707,825		706,065
Household Automotive Trust 2002-3, Class A3A, 2.750%, 6/18/2007		448,238		448,323
Household Automotive Trust 2003-1, Class A3, 1.730%, 12/17/2007		902,596		897,702
John Deere Owner Trust 2001-A, Class A3, 1.790%, 4/15/2007		1,329,667		1,320,743
Long Beach Acceptance Auto Receivables Trust 2003-A, Class A3, 2.021%, 7/15/2007		1,037,419		1,034,616
Pegasus Aviation Lease Securitization 1999-1A, Class A1, 6.300%, 3/25/2029		750,654		405,259
Residential Asset Mortgage Products, Inc. 2004-RS2, Series RS2, 3.350%, 8/25/2029		1,500,000		1,471,105
USAA Auto Owner Trust 2004-2, Class A3, 3.030%, 6/16/2008		1,750,000		1,735,214
WFS Financial Owner Trust 2004-1, Class A4, 2.810%, 8/22/2011		1,150,000		1,121,907
Total Asset-Backed Securities (identified cost $15,794,694)				15,335,828
Collateralized Mortgage Obligations — 24.7%
Government National Mortgage Association — 3.2%
2.866%, Series 0348, Class AB, 2/16/2020		868,025		843,005
3.206%, Series 2003-72, Class A, 4/16/2018 (1)		1,780,690		1,742,093
3.313%, Series 2002-83, Class A, 4/16/2017		1,283,464		1,263,006
3.590%, Series 2004-78, Class A, 11/16/2017		978,737		961,409
				4,809,513

Description	Principal Amount		Value
Collateralized Mortgage Obligations (continued)
Federal Home Loan Mortgage Corporation — 1.3%
3.150%, Class A3, 5/15/2010	$	2,000,000	$	1,939,098
Other Financial — 20.0%
CS First Boston Mortgage Securities Corp. 2003-11, Class 1A3, 4.500%, 6/25/2033		1,000,000		1,002,896
CS First Boston Mortgage Securities Corp. 2004-C1, Class A1, 2.254%, 1/15/2037		1,608,097		1,567,796
Countrywide Alternative Loan Trust 2004-J9, Class 1A2, 4.586%, 10/25/2034		2,400,000		2,386,853
Deutsche Mortgage Securities, Inc. 2004-2, Class A2, 3.080%, 1/25/2034		1,500,000		1,493,729
Green Tree Home Equity Loan Trust 1998-B, Class B1, 7.810%, 11/15/2029		3,000,000		3,008,025
GSR Mortgage Loan Trust 2004-12, Class 3A3, 4.568%, 12/25/2034		1,600,000		1,590,814
Impac Secured Assets Common Owner Trust 2004-2, Class A3, 4.995%, 8/25/2034		1,200,000		1,197,439
JP Morgan Chase Commercial Mortgage Securities, Class A1, 3.053%, 1/15/2038		1,333,849		1,292,868
LB-UBS Commercial Mortgage Trust 2004-C1, Class A1, 2.964%, 1/15/2029		1,422,180		1,380,429
Master Adjustable Rate Mortgages Trust 2004-13, Class 3A4, 3.787%, 11/21/2034		1,900,000		1,881,093
Morgan Stanley Capital, Inc. 2003-IQ6, Class A1, 2.800%, 12/15/2041		1,389,649		1,363,463
Wachovia Bank Commercial Mortgage Trust, Class A1, 3.065%, 2/15/2041		1,662,362		1,613,424
Wachovia Bank Commercial Mortgage Trust, Class A1, 3.291%, 12/15/2035		2,167,308		2,121,537
Washington Mutual 2002-R10, Class A6, 4.820%, 10/25/2032		438,209		437,328
Washington Mutual 2003-AR5, Class A4, 3.641%, 6/25/2033		1,125,550		1,124,235
Washington Mutual 2004-AR7, Class A4, 3.963%, 7/25/2034		3,000,000		2,973,393
Wells Fargo Mortgage Backed Securities 2004-N, Class A2, 3.599%, 8/25/2034		2,000,000		1,997,344
Wells Fargo Mortgage Backed Securities 2004-W, Class A4, 4.626%, 11/25/2034		1,600,000		1,602,160
				30,034,826
Total Collateralized Mortgage Obligations (identified cost $37,255,495)				36,783,437

(See Notes which are an integral part of the Financial Statements)

24

February 28, 2005 (Unaudited)

Portfolio of Investments

Short-Term Income Fund (continued)

Description	Principal Amount		Value
Corporate Bonds & Notes — 38.4%
Banks — 2.8%
Bank of New York Co., Inc., Note, 2.200%, 5/12/2006	$	1,100,000	$	1,081,052
Union Planters Bank, Note, 5.125%, 6/15/2007		1,500,000		1,539,765
Wachovia Corp., Note, 4.950%, 11/1/2006		1,600,000		1,628,763
				4,249,580
Broadcasting — 1.0%
Clear Channel Communications, Inc., 6.000%, 11/1/2006 (1)		1,500,000		1,543,929
Brokers/Dealers — 2.9%
Credit Suisse First Boston USA, Inc., Note, 5.875%, 8/1/2006 (1)		1,220,000		1,256,044
Goldman Sachs Group, Inc., Note, Series MTNB, 2.850%, 10/27/2006		1,900,000		1,870,662
Morgan Stanley Group, Inc., Note, 7.750%, 6/15/2005		450,000		456,044
Morgan Stanley, Unsubordinated, 6.100%, 4/15/2006		810,000		831,393
				4,414,143
Computer Services — 1.0%
IBM Corp., Unsecured Note, 2.375%, 11/1/2006		1,500,000		1,469,949
Construction Equipment — 0.8%
Caterpillar Financial Services Corp., Note, Series MTNF, 2.350%, 9/15/2006		1,300,000		1,272,224
Electric — 2.7%
Alabama Power Co., 2.800%, 12/1/2006		1,250,000		1,227,130
CalEnergy Co., Inc., Sr. Note, 7.630%, 10/15/2007		1,000,000		1,079,405
FPL Group, Inc., Company Guarantee, 7.625%, 9/15/2006		1,600,000		1,689,238
				3,995,773
Energy — 1.0%
Marathon Oil Corp., Note, 5.375%, 6/1/2007		1,500,000		1,540,130
Entertainment — 1.1%
AOL Time Warner, Inc., Note, 6.125%, 4/15/2006		1,610,000		1,650,591
Financial Services — 3.3%
Allstate Financial Global, Note, (Series 144A), 7.125%, 9/26/2005 (1)(7)(8)		750,000		765,589
Cendant Corp., Unsecured Note, 6.875%, 8/15/2006		1,550,000		1,613,206
MBNA Corp., 6.250%, 1/17/2007		1,290,000		1,339,780

Description	Principal Amount		Value
Corporate Bonds & Notes (continued)
Financial Services (continued)
National City Bank, Indiana, Note, 2.375%, 8/15/2006	$	1,275,000	$	1,248,898
				4,967,473
Forest Products & Paper — 0.3%
Reed Elsevier, Inc., Company Guarantee, 6.125%, 8/1/2006		490,000		502,605
Industrial Services — 2.9%
Dayton-Hudson Corp., Note, 7.500%, 7/15/2006		1,700,000		1,782,071
FedEx Corp., Note, 2.650%, 4/1/2007		2,200,000		2,137,370
Tyco International Group, Note, 5.800%, 8/1/2006		410,000		419,968
				4,339,409
Insurance — 2.4%
HSB Capital I, Company Guarantee, 3.570%, 7/15/2027		2,430,000		2,421,998
MGIC Investment Corp., Sr. Note, 6.000%, 3/15/2007		1,100,000		1,141,994
				3,563,992
Leasing — 0.7%
General Electric Capital Corp., 5.350%, 3/30/2006		1,000,000		1,018,425
Media — 2.4%
Cox Communications, Inc., 7.750%, 8/15/2006		1,500,000		1,574,500
Gannett Co., Inc., Note, 4.950%, 4/1/2005		955,000		956,453
Liberty Media Corp., Note, 3.500%, 9/25/2006 (1)		1,050,000		1,038,158
				3,569,111
Other Financial — 0.8%
National Rural Utilities Cooperative Finance Corp., Note, 3.000%, 2/15/2006		1,200,000		1,192,844
Papers — 0.2%
Weyerhaeuser Co., Note, 5.500%, 3/15/2005		303,000		303,172
Personal Credit — 5.4%
Ford Motor Credit Co., Sr. Note, 4.950%, 1/15/2008		2,300,000		2,278,178
Ford Motor Credit Co., Note, 7.600%, 8/1/2005		780,000		792,651
Ford Motor Credit Co., Note, 6.875%, 2/1/2006		1,100,000		1,126,253
General Motors Acceptance Corp., Note, 6.125%, 9/15/2006		2,600,000		2,652,075
Household Finance Corp., Note, 8.000%, 5/9/2005		1,200,000		1,211,263
				8,060,420
Real Estate — 4.2%
Duke Realty Corp., Note, 3.350%, 1/15/2008		1,500,000		1,455,161

(See Notes which are an integral part of the Financial Statements)

25

Marshall Funds

Short-Term Income Fund (continued)

Description	Principal Amount		Value
Corporate Bonds & Notes (continued)
Real Estate (continued)
ERP Operating LP, Note, 6.630%, 4/13/2005	$	1,400,000	$	1,405,376
Kimco Realty Corp., Note, Series MTN, 7.460%, 5/29/2007		1,700,000		1,826,971
Vornado Realty Trust, Bond, 5.625%, 6/15/2007		1,500,000		1,543,038
				6,230,546
Short-Term Business Credit — 0.9%
CIT Group, Inc., Sr. Note, 4.125%, 2/21/2006		1,275,000		1,281,821
Telecommunications — 1.3%
British Telecommunication PLC, Note, 7.875%, 12/15/2005		570,000		588,369
France Telecommunications, Note, 8.200%, 3/1/2006		570,000		589,757
Verizon Global Funding, Note, 6.750%, 12/1/2005 (1)		810,000		829,223
				2,007,349
Total Corporate Bonds & Notes (identified cost $57,615,633)				57,173,486
Government Agencies — 20.3%
Federal Home Loan Bank — 13.5%
Federal Home Loan Bank, Discount Note, 2.510%, 3/1/2005		20,000,000		20,000,000
Federal National Mortgage Association — 6.8%
Federal National Mortgage Association, Note, 4.250%, 6/15/2005 (1)		5,000,000		5,020,490
5.500%, 2/15/2006 (1)		5,000,000		5,098,070
				10,118,560
Total Government Agencies (identified cost $30,068,255)				30,118,560
Mortgage Backed Pass-Through Securities — 1.5%
Federal Home Loan Mortgage Corporation — 0.1%
9.000%, 7/1/2014		51,471		53,819
11.000%, 8/1/2019		119,236		130,681
				184,500
Federal National Mortgage Association — 1.3%
7.000%, 12/1/2015		318,643		336,569
7.500%, 9/1/2015		361,480		382,418
8.000%, 8/1/2007		721		745
8.000%, 5/1/2008		91,152		93,585
9.000%, 7/1/2009		60,937		64,532
9.500%, 12/1/2024		39,045		43,962
9.500%, 1/1/2025		155,319		175,281
9.500%, 1/1/2025		186,986		210,533
9.500%, 1/1/2025		87,318		98,314
10.000%, 7/1/2020		106,051		120,046
10.500%, 1/1/2022		26,064		29,873
11.000%, 12/1/2015		282,543		312,772
				1,868,630

Description	Principal Amount		Value
Mortgage Backed Pass-Through Securities (continued)
Government National Mortgage Association — 0.1%
9.000%, 12/15/2019	$	107,003	$	118,871
Total Mortgage Backed Pass-Through Securities (identified cost $2,099,891)				2,172,001
Total Investments in Securities — 95.2% (identified cost $142,833,968)				141,583,312
Collateral Pool Investment for Securities on Loan — 10.0% (See Note 2 of the Financial Statements) (identified cost $14,822,626)				14,822,626
Repurchase Agreements — 5.3%
Agreement with Lehman Brothers, Inc., 2.510%, dated 2/28/2005, to be repurchased at $7,932,571 on 3/1/2005, collateralized by a U.S. Government Agency Obligation with a maturity of 10/15/2016, with a market value of $8,092,752 (at amortized cost)		7,932,018		7,932,018
Total Investments — 110.5% (identified cost $165,588,612)				164,337,956
Other Assets and Liabilities — (10.5)%				(15,569,202	)
Total Net Assets — 100.0%			$	148,768,754

Portfolio Sector Allocations*
Sector	Fund
Asset-Backed Securities	10.3%
Collateralized Mortgage Obligations	24.7%

Corporate Bonds	38.4%
Government Agencies	20.3%
Mortgage Backed Securities	1.5%

Other Assets and Liabilities	4.8%
Total	100.0%

Government Money Market

Description	Principal Amount		Value
Government Agencies — 64.5%
Federal Home Loan Bank — 41.4%
Federal Home Loan Bank, 2.450%, 3/21/2005	$	40,000,000	$	40,000,389
Federal Home Loan Bank, 2.250%, 6/23/2005		1,000,000		999,690
Federal Home Loan Bank, 2.375%, 11/1/2005		2,000,000		1,997,918
Federal Home Loan Bank, 2.765%, 8/26/2005		21,600,000		21,592,824

(See Notes which are an integral part of the Financial Statements)

26

February 28, 2005 (Unaudited)

Portfolio of Investments

Government Money Market (continued)

Description	Principal Amount		Value
Government Agencies (continued)
Federal Home Loan Bank (continued)
Federal Home Loan Bank, 1.750%, 8/15/2005	$	4,220,000	$	4,210,112
Federal Home Loan Bank, 3.000%, 8/15/2005		3,000,000		3,010,687
				71,811,620
Federal National Mortgage Association — 23.1%
Federal National Mortgage Association, 2.455%, 7/6/2005		40,000,000		39,995,502
Total Government Agencies				111,807,122
Repurchase Agreements — 35.3%
Agreement with Deutsche Bank Alex Brown, Inc., 2.620%, dated 2/28/2005, to be repurchased at $25,001,819 on 3/1/2005, collateralized by a U.S. Government Agency Obligation with a maturity of 6/15/2011, with a market value of $25,219,330		25,000,000		25,000,000
Agreement with Morgan Stanley & Co., Inc., 2.610%, dated 2/28/2005, to be repurchased at $25,001,813 on 3/1/2005, collateralized by a U.S. Government Agency Obligation with a maturity of 6/15/2006, with a market value of $25,504,898		25,000,000		25,000,000
Agreement with State Street Bank & Trust Co., Inc., 2.500%, dated 2/28/2005, to be repurchased at $11,137,954 on 3/1/2005, collateralized by a U.S. Government Agency Obligation with a maturity of 5/13/2005, with a market value of $11,362,641		11,137,180		11,137,180
Total Repurchase Agreements				61,137,180
Total Investments — 99.8% (at amortized cost)				172,944,302
Other Net Assets and Liabilities — 0.2%				399,435
Total Net Assets — 100.0%			$	173,343,737

Portfolio Sector Allocations*
Sector	Fund
Government Agencies	64.5%
Repurchase Agreements	35.3%

Other Assets and Liabilities	0.2%
Total	100.0%

Money Market Fund

Description	Principal Amount		Value
Certificate of Deposit — 3.0%
Banks — 3.0%
Washington Mutual, Inc., 2.440%, 3/23/2005	$	50,000,000	$	50,000,000
Washington Mutual, Inc., 2.780%, 5/19/2005		50,000,000		50,000,000
Total Certificate of Deposit				100,000,000
Collateralized Loan Agreements — 8.3%
Banking — 5.3%
Deutsche Bank Alex Brown, Inc., 2.685%, 2/28/2005		75,000,000		75,000,000
Wachovia, Inc., 2.690%, 2/28/2005		100,000,000		100,000,000
				175,000,000
Brokerage — 3.0%
Morgan Stanley & Co., Inc., 2.685%, 2/28/2005		100,000,000		100,000,000
Total Collateralized Loan Agreements				275,000,000
Commercial Paper — 23.5%
Asset-Backed — 12.6%
Atlantis One Funding Corp., 144A, 2.000%, 3/1/2005 (7)(8)		25,000,000		25,000,000
Atlantis One Funding Corp., 144A, 2.380%, 4/20/2005 (7)(8)		25,000,000		24,917,361
Beta Finance, 2.730%, 5/10/2005		7,550,000		7,509,922
CC USA, Inc., 144A, 2.550%, 3/24/2005 (7)(8)		27,291,000		27,246,538
Clipper Rec LLC, 2.640%, 4/21/2005		50,000,000		49,813,000
Dorada Finance, Inc., 144A, 2.450%, 3/16/2005 (7)(8)		23,500,000		23,476,011
Dorada Finance, Inc., 144A, 2.600%, 4/13/2005 (7)(8)		18,500,000		18,442,547
Fairway Finance, 144A, 2.570%, 4/7/2005 (7)(8)		14,303,000		14,265,221
Liquid Funding Ltd., 144A, 2.360%, 3/1/2005 (7)(8)		50,000,000		50,000,000
Liquid Funding Ltd., 144A, 2.650%, 10/26/2005 (7)(8)		50,000,000		50,000,000
Scaldis Capital Ltd., 144A, 2.000%, 3/2/2005 (7)(8)		29,660,000		29,658,353
World Omni Vehicle Leasing, Inc., 2.560%, 3/7/2005		53,909,000		53,886,005
World Omni Vehicle Leasing, Inc., 2.560%, 3/9/2005		22,316,000		22,303,305
World Omni Vehicle Leasing, Inc., 144A, 2.550%, 3/15/2005 (7)(8)		22,908,000		22,885,283
				419,403,546
Broker/Dealers — 0.8%
Goldman Sachs Group, Inc., 144A, 2.700%, 7/29/2005 (7)(8)		25,000,000		25,000,000

(See Notes which are an integral part of the Financial Statements)

27

Marshall Funds

Money Market Fund (continued)

Description	Principal Amount		Value
Commercial Paper (continued)
Diversified — 2.9%
Sigma Financial, Inc., 2.650%, 4/12/2005	$	17,130,000	$	17,077,040
Sigma Financial, Inc., 2.408%, 12/5/2005		50,000,000		49,991,826
Tannehill Capital Co., 144A, 2.140%, 3/21/2005 (7)(8)		28,478,000		28,443,698
				95,512,564
Foreign Banks — 2.7%
Britannia Building Society, 2.640%, 4/14/2005		13,800,000		13,755,472
UBS Finance, 2.590%, 3/1/2005		76,457,000		76,457,000
				90,212,472
Insurance — 1.0%
Torchmark Corp., 2.550%, 3/8/2005		20,000,000		19,990,084
Torchmark Corp., 2.570%, 3/15/2005		15,000,000		14,985,008
				34,975,092
Short-Term Business Credit — 0.8%
Citigroup, Inc., 2.810%, 6/14/2005		25,000,000		24,795,104
Telecommunications — 2.7%
SBC Communications, 2.600%, 3/14/2005		90,000,000		89,915,500
Total Commercial Paper				779,814,278
Corporate Bonds — 2.9%
Automotive — 0.7%
BMW US Capital LLC, 144A, 4.231%, 6/7/2005 (7)(8)		25,000,000		25,136,895
Banks — 0.6%
Wells Fargo & Co., 7.250%, 8/24/2005		17,995,000		18,842,924
Personal Credit — 0.7%
Household Financial Corp., 8.000%, 5/9/2005		6,200,000		6,264,831
Household Financial Corp., 8.875%, 2/15/2006		15,966,000		16,789,555
				23,054,386
Short-Term Business Credit — 0.2%
Citicorp Lease, 144A, 7.220%, 6/15/2005		5,203,289		5,267,465
Student Loans — 0.7%
SLM Corporate, (Series MTNA), 2.496%, 7/1/2005		25,000,000		25,017,848
Total Corporate Bonds				97,319,518
Government Agencies — 3.8%
Federal Home Loan Bank Systems — 2.3%
Federal Home Loan Bank System, 1.400%, 3/29/2005		25,000,000		25,000,000

Description	Principal Amount		Value
Government Agencies (continued)
Federal Home Loan Bank Systems (continued)
Federal Home Loan Bank System, 1.350%, 4/15/2005	$	25,000,000	$	25,000,000
Federal Home Loan Bank System, 1.375%, 5/2/2005		25,000,000		25,000,000
				75,000,000
Federal National Mortgage Association — 1.5%
Federal National Mortgage Association, 1.550%, 5/4/2005		25,000,000		25,000,000
Federal National Mortgage Association, 1.610%, 5/13/2005		10,000,000		10,000,000
Federal National Mortgage Association, 1.650%, 5/16/2005		15,000,000		15,000,000
				50,000,000
Total Government Agencies				125,000,000
Notes-Variable — 55.6%
Automotive — 0.6%
BMW US Capital LLC, 144A, 2.659%, 6/24/2005 (7)(8)		20,000,000		20,007,511
Banks — 1.4%
J.P. Morgan Chase & Co., 2.600%, 1/1/2020		20,000,000		20,000,000
SMM Trust, (Series 2004-H), 144A, 2.530%, 9/23/2005 (7)(8)		17,487,179		17,487,179
SMM Trust, (Series 2004-M), 144A, 2.553%, 1/10/2006		8,536,000		8,536,000
				46,023,179
Broker/Dealers — 14.3%
Bank of America Securities, LLC, 144A, 2.920%, 5/31/2005 (7)(8)		100,000,000		100,000,000
Bear Stearns Master Note, 144A, 2.900%, 5/31/2005		100,000,000		100,000,000
Credit Suisse First Boston USA, Inc., (Series YCD), 2.640%, 7/8/2005		65,000,000		65,013,899
Credit Suisse First Boston USA, Inc., (Series YCD), 2.690%, 7/21/2005		20,000,000		20,003,403
Credit Suisse First Boston USA, Inc., 2.570%, 12/29/2005		13,100,000		13,103,279
First Clearing LLC, 2.690%, 6/6/2005		25,000,000		25,000,000
Goldman Sachs Group, Inc., 144A, (Series MTN), 2.640%, 3/15/2006		75,000,000		75,054,529
Merrill Lynch & Co., Inc., (Series MTNB), 2.820%, 9/21/2005		56,000,000		56,102,691

(See Notes which are an integral part of the Financial Statements)

28

February 28, 2005 (Unaudited)

Portfolio of Investments

Money Market Fund (continued)

Description	Principal Amount		Value
Notes-Variable (continued)
Broker/Dealers (continued)
Merrill Lynch & Co., Inc., (Series MTN5), 2.740%, 2/10/2006	$	20,000,000	$	20,000,000
				474,277,801
Foreign Banks — 6.5%
Depfa-Bank PLC, 144A, 1.860%, 12/15/2005 (7)(8)		50,000,000		50,000,000
HBOS Treasury Services, PLC (Series MTN), 144A, 2.490%, 6/10/2005 (7)(8)		10,000,000		10,002,219
HBOS Treasury Services, PLC, (Series MTN), 144A, 2.900%, 12/20/2005 (7)(8)		30,000,000		30,000,000
Northern Rock PLC, 144A, 2.660%, 7/13/2005 (7)(8)		25,550,000		25,553,478
Northern Rock PLC, 144A, 2.490%, 8/8/2005 (7)(8)		50,000,000		50,000,000
Spintab-Swedmortgage AB, 2.700%, 7/27/2005		50,500,000		50,504,446
				216,060,143
Industrial Services — 3.0%
Caterpillar Financial Services Corp., (Series MTNF), 2.730%, 7/9/2005		75,000,000		75,000,000
Caterpillar Financial Services Corp., (Series MTNF), 2.854%, 8/15/2005		25,000,000		25,011,100
				100,011,100
Insurance — 13.4%
AIG SunAmerica Institutional Funding II, (Series EMTN), 2.620%, 9/14/2005 (7)(8)		45,000,000		45,037,001
GE Life and Annuity Assurance Co., 144A, 2.730%, 4/20/2005 (7)		75,000,000		75,000,000
Jackson National Life Insurance Co., 144A, 2.640%, 3/11/2005 (7)(8)		60,000,000		60,003,237
Jackson National Life Insurance Co., 144A, 2.720%, 5/20/2005 (7)(8)		40,000,000		40,000,000
Metropolitan Life Insurance Co., 144A, 2.461%, 6/1/2005 (7)		65,000,000		65,000,000
Metropolitan Life Insurance Co., 144A, 2.970%, 8/26/2005 (7)(8)		35,000,000		35,018,623
Monumental Life Insurance Co., 144A, 2.630%, 4/1/2005 (7)		25,000,000		25,000,000
Monumental Life Insurance Co., 144A, 2.620%, 10/14/2005 (7)		10,000,000		10,000,000
Monumental Life Insurance Co., 144A, 2.940%, 11/1/2005 (7)		40,000,000		40,000,000
Travelers Insurance Co., 144A, 2.800%, 2/1/2006 (7)		50,000,000		50,000,000
				445,058,861

Description	Principal Amount		Value
Notes-Variable (continued)
Mortgage Banking — 2.9%
Countrywide Home Loans, (Series MTNM), 2.930%, 5/20/2005	$	25,000,000	$	25,000,000
Countrywide Home Loans, (Series MTNK), 3.400%, 5/20/2005		51,000,000		51,054,151
Countrywide Home Loans, (Series MTNM), 2.960%, 8/26/2005		3,070,000		3,072,287
Countrywide Home Loans, (Series MTNM), 2.980%, 8/26/2005		18,350,000		18,348,397
				97,474,835
Personal Credit — 4.4%
American Honda Finance Corp., (Series MTN), 144A, 2.510%, 9/8/2005 (7)(8)		30,000,000		30,012,734
American Honda Finance Corp., (Series MTN1), 144A, 2.570%, 10/12/2005 (7)(8)		40,000,000		40,000,000
American Honda Finance Corp., (Series MTN), 144A, 2.740%, 10/20/2005 (7)(8)		25,000,000		25,016,373
Associates First Capital Corp., 2.649%, 6/27/2005		50,000,000		50,000,000
				145,029,107
Short-Term Business Credit — 3.1%
Cit Group, Inc., (Series MTN), 2.980%, 11/4/2005		60,350,000		60,450,746
National Rural Utilities Cooperative Finance Corp., (Series MTNC), 2.810%, 3/10/2005		43,600,000		43,603,758
				104,054,504
Student Loans — 2.3%
SLM Corp., (Series MTNA), 2.570%, 8/15/2005		40,000,000		40,021,095
SLM Corp., (Series MTN), 144A, 2.620%, 3/2/2006 (7)(8)		15,000,000		15,002,208
SLM Corp., (Series MTNA), 2.690%, 3/15/2006		20,000,000		20,045,610
				75,068,913
Telecommunications — 2.2%
Verizon Global Funding, 144A, 2.600%, 10/14/2005 (7)(8)		75,000,000		75,000,000
Toiletries — 1.5%
Procter & Gamble Co., 144A, 2.420%, 10/7/2005 (7)(8)		50,000,000		50,000,000
Total Notes-Variable				1,848,065,954

(See Notes which are an integral part of the Financial Statements)

29

Marshall Funds

Money Market Fund (continued)

Description	Principal Amount		Value
Repurchase Agreements — 2.8%
Agreement with State Street Bank & Trust Co., Inc., 2.500%, dated 2/28/2005, to be repurchased at $93,408,881 on 3/1/2005, collateralized by Corporate Bonds with various maturities to 7/15/2005, with a market value of $95,210,695	$	93,402,395	$	93,402,395
Total Investments — 99.9% (at amortized cost)				3,318,602,145
Other Net Assets and Liabilities — 0.1%				4,912,062
Total Net Assets — 100.0%			$	3,323,514,207

Portfolio Sector Allocations*
Sector	Fund
Certificate of Deposit	3.0%
Collateralized Loan Agreements	8.3%

Commercial Paper	23.5%
Corporate Bonds	2.9%
Government Agencies	3.8%
Notes-Variable	55.6%

Repurchase Agreements	2.8%
Other Assets and Liabilities	0.1%
Total	100.0%

Tax-Free Money Market

Description	Principal Amount		Value
Municipals — 88.1%
Alaska — 0.8%
Valdez Alaska Marine Term., Refunding Revenue Bonds (Series B), 1.810%, 7/1/2037	$	900,000	$	900,000
Arizona — 4.4%
Northern Arizona Cap. Facilities Financial Corp. Student Housing, Revenue Bonds (Series A), 1.970%, 8/1/2033		5,200,000		5,200,000
California — 2.4%
California State Municipal Securities TR Receipts, GO UT (Series JPMC3), 1.820%, 6/1/2013		2,800,000		2,800,000
District of Columbia — 0.8%
District of Columbia, Revenue Bonds, 1.920%, 3/1/2028		970,000		970,000
Delaware — 3.7%
Delaware State Economic Development Authority, Revenue Bonds, 1.950%, 12/1/2032		4,400,000		4,400,000

Description	Principal Amount		Value
Municipals (continued)
Florida — 2.1%
Pinellas County, Florida Industrial Development Authority, Revenue Bonds, 1.920%, 7/1/2024	$	2,500,000	$	2,500,000
Georgia — 4.1%
Albany-Dougherty County, GA Hospital Authority, Revenue Bonds, 1.930%, 9/1/2020		1,500,000		1,500,000
Bibb County, Georgia Development Authority, Revenue Bonds, 1.930%, 6/1/2026		290,000		290,000
De Kalb County, Georgia Development Authority, Revenue Bonds, 1.920%, 10/1/2022		960,000		960,000
Gainesville & Hall County, Georgia Development Authority, Revenue Bonds, 1.840%, 11/15/2030		2,100,000		2,100,000
				4,850,000
Illinois — 12.6%
Chicago, Illinois Tender Notes, 2.300%, 2/2/2007		1,000,000		1,000,000
Illinois Health Facilities Authority, Revenue Bonds (Series B), 1.920%, 11/15/2029		900,000		900,000
Lakemoor, Illinois Multifamily, Revenue Bonds (Series A), 1.980%, 12/1/2020		9,000,000		9,000,000
Phoenix Realty SPL Account-U LP Illinois, Multifamily, Refunding Revenue Bonds, 2.070%, 4/1/2020		4,075,000		4,075,000
				14,975,000
Louisiana — 6.3%
Lafayette Parish Louisiana Industrial Development Board, Inc., Revenue Bonds, 1.950%, 12/15/2014		755,000		755,000
Louisiana Public Facilities Authority, Revenue Bonds, 1.910%, 9/1/2028		3,200,000		3,200,000
Louisiana Public Facilities Authority, Revenue Bonds, 1.950%, 7/1/2021		3,500,000		3,500,000
				7,455,000
Maryland — 1.7%
Anne Arundel County, Maryland Economic, Revenue Bonds, 2.020%, 12/1/2015		2,000,000		2,000,000
Minnesota — 2.9%
Coon Rapids, Minnesota Hospital, Revenue Bonds, 2.000%, 8/1/2015		1,700,000		1,700,000
Northern Municipal Power Agency Minnesota Elec. System, Revenue Bonds (Series II-R-32), 1.900%, 1/1/2013		1,700,000		1,700,000
				3,400,000

(See Notes which are an integral part of the Financial Statements)

30

February 28, 2005 (Unaudited)

Portfolio of Investments

Tax-Free Money Market (continued)

Description	Principal Amount		Value
Municipals (continued)
Montana — 3.4%
Montana State Health Facility Authority Facility, Refunding Revenue Bonds (Series FX 1), 2.030%, 2/15/2016	$	4,100,000	$	4,100,000
New Hampshire — 1.1%
New Hampshire Health & Education Facilities Authority, Revenue Bonds, 1.930%, 6/1/2031		1,340,000		1,340,000
New York — 1.9%
Cayuga County, New York Hospital Impt Corp., Certificate Participation (Series L1-Reg D), 1.950%, 1/1/2021		2,205,000		2,205,000
Ohio — 4.0%
Montgomery County, Ohio Industrial Development, Refunding Revenue Bonds, 1.960%, 10/1/2009		4,700,000		4,700,000
Pennsylvania — 5.8%
Allegheny County, Pennsylvania Industrial Development Authority Health & Housing Facilities, Revenue Bonds, 1.960%, 7/1/2010		3,100,000		3,100,000
Bucks County, Pennsylvania Industrial Development Authority, Revenue Bonds, 1.960%, 9/1/2019		1,405,000		1,405,000
Montgomery County, Pennsylvania Industrial Development Authority Retirement Community, Revenue Bonds, 1.840%, 11/15/2029		2,400,000		2,400,000
				6,905,000
Tennessee — 2.5%
Rutherford County, Tennessee Industrial Development Board, Revenue Bonds, 1.960%, 7/1/2010		1,000,000		1,000,000
Tennergy Corp. Tennessee Gas, Revenue Bonds, 5.000%, 6/1/2005		2,000,000		2,016,107
				3,016,107
Texas — 16.1%
Bell County, Texas Health Facilities Development Corp., Revenue Bonds, 1.800%, 8/15/2029		2,600,000		2,600,000
Dallas, Texas Waterworks & Sewer System, Revenue Bonds, 4.000%, 10/1/2005		1,000,000		1,013,613
Frisco, Texas Independent School District, GO UT (Series DB-106), 1.900%, 8/15/2034		1,000,000		1,000,000

Description	Principal Amount		Value
Municipals (continued)
Texas (continued)
Sam Rayburn Texas Municipal Power Agency, Refunding Revenue Bonds, 1.910%, 10/1/2021	$	6,630,000	$	6,630,000
Strategic Housing Financial Corp., Travis County, Texas Lease Pur., Revenue Bonds, 2.020%, 1/1/2010		5,400,000		5,400,000
Tarrant County, Texas Health Facilities Development Corp., Revenue Bonds (Series 173), 1.960%, 11/15/2008		2,415,000		2,415,000
				19,058,613
Utah — 4.0%
Davis County, Utah Housing Authority Multi-Family Housing, Refunding Revenue Bonds (Series A), 1.920%, 8/15/2039		4,240,000		4,240,000
Eagle Mountain, Utah Gas & Electric, Refunding Revenue Bonds, 1.880%, 12/1/2025		525,000		525,000
				4,765,000
Virginia — 0.9%
Suffolk, Virginia Redevelopment & Housing Authority Multi-Family Housing, Revenue Bonds, 1.970%, 9/1/2019		1,105,000		1,105,000
Washington — 2.4%
Energy Northwest Washington Elec., Revenue Bonds (Series 255Z), 1.900%, 7/1/2018		2,195,000		2,195,000
Washington State Health Care Facilities Authority, Revenue Bonds, (Series L26J-Reg D), 1.930%, 12/1/2005		680,000		680,000
				2,875,000
Wisconsin — 3.9%
Janesville, Wisconsin, Promissory Notes, GO UT, 4.400%, 5/1/2005		590,000		592,590
Manitowoc, Wisconsin Elec., Revenue Bonds (Series DB-110), 1.900%, 10/1/2029		2,000,000		2,000,000
Wisconsin Health & Educational Facilities, Authority Health Facilities, Revenue Bonds, 1.880%, 8/15/2034		2,100,000		2,100,000
				4,692,590
Wyoming — 0.3%
Albany County, Wyoming Impts Stat Tr., Certificate Participation, 3.000%, 7/15/2005		350,000		351,138
Total Municipals				104,563,448

(See Notes which are an integral part of the Financial Statements)

31

Marshall Funds

Tax-Free Money Market (continued)

Description	Principal Amount		Value
Municipals (continued)
Mutual Funds — 8.4%
Federated Tax-Free Obligations Fund	$	4,818,967	$	4,818,967
Fidelity Tax Exempt Money Market		5,100,000		5,100,000
Total Mutual Funds				9,918,967
Total Investments — 96.5% (at amortized cost)				114,482,415
Other Net Assets and Liabilities — 3.5%				4,186,803
Total Net Assets — 100.0%			$	118,669,218

Portfolio Credit Quality Allocations*
Credit Quality	Fund
AAA	22.6%
AA	58.6%

A	5.7%
NR	4.7%
Other Assets and Liabilities	8.4%
Total	100.0%

(See Notes which are an integral part of the Financial Statements)

32

February 28, 2005 (Unaudited)

Notes to Portfolio of Investments

* Portfolio composition will change due to ongoing management of the Fund. The portfolio sector allocation percentages are based on net assets at the close of business on February 28, 2005 and may not necessarily reflect adjustments that are routinely made when presenting net assets for formal financial statement processes.

Note: The categories of investments are shown as a percentage of total net assets for each Fund as of February 28, 2005.

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

(2) Non-income producing.

(3) 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.

(4) Floating rate securities are securities whose yields vary with a designated market index or market rate. These securities are shown at their current rates as of February 28, 2005.

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

(6) Denotes a security subject to dollar roll transactions and deemed a when-issued security.

(7) Denotes a restricted security which is subject to restrictions on resale under federal securities law. At February 28, 2005, these securities amounted to:

	Amount		% of Total Net Assets
Government Income	$	1,069,135	0.27	%
Intermediate Bond		48,022,102	7.73
Short-Term Income		765,589	0.51
Money Market		1,347,612,470	40.55

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

(9) 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 9.79% of Intermediate Tax-Free Fund’s portfolio as calculated based upon total portfolio market value.

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

The following acronyms are used throughout this report:

ADR —American Depositary Receipt

AMBAC—American Municipal Bond Assurance Corporation

CFC —Cooperative Finance Corporation

CIFG —CDC IXIS Financial Guaranty

COL —Collateralized

FGIC —Financial Guaranty Insurance Corporation

FRN —Floating Rate Note

GDR —Global Depository Receipt

GO —General Obligation

HFDC —Health Facility Development Corporation

IDC —Industrial Development Corporation

INS —Insured

LIQ —Liquidity Agreement

LP —Limited Partnership

LOC —Letter of Credit

MTN —Medium Term Note

PCA —Pollution Control Authority

PLC —Public Limited Company

REITs —Real Estate Investment Trusts

REMIC —Real Estate Mortgage Investment Conduit

TCRs —Transferable Custody Receipts

TRANs —Tax and Revenue Anticipation Notes

UT —Unlimited Tax

VRNs —Variable Rate Notes

Fund	Cost of Investments for Federal Tax Purposes		Gross Unrealized Appreciation for Federal Tax Purposes		Gross Unrealized (Depreciation) for Federal Tax Purposes			Net Unrealized Appreciation (Depreciation) for Federal Tax Purposes
Equity Income Fund	$	329,035,445	$	51,184,058	$	(7,374,702	)	$	43,809,356
Large-Cap Growth & Income Fund		259,900,250		34,983,408		(10,076,599	)		24,906,809
Mid-Cap Value Fund		551,793,773		118,383,072		(6,375,055	)		112,008,017
Mid-Cap Growth Fund		198,968,254		27,866,358		(2,730,561	)		25,135,797
Small-Cap Growth Fund		177,059,600		29,294,132		(4,030,856	)		25,263,276
International Stock Fund		489,244,902		72,735,073		(3,335,438	)		69,399,635
Government Income Fund		589,539,137		4,455,697		(1,506,559	)		2,949,138
Intermediate Bond Fund		677,379,915		6,368,649		(5,547,474	)		821,175
Intermediate Tax-Free Fund		92,008,068		3,838,073		(135,663	)		3,702,410
Short-Term Income Fund		167,214,697		254,998		(3,131,739	)		(2,876,741	)
Government Money Market Fund*		172,944,303		—		—			—
Money Market Fund*		3,318,602,145		—		—			—
Tax-Free Money Market Fund*		114,482,415		—		—			—

* at amortized cost

(See Notes which are an integral part of the Financial Statements)

33

Marshall Funds

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34

February 28, 2005 (Unaudited)

Statements of Assets and Liabilities

	Equity Income Fund			Large-Cap Growth & Income Fund			Mid-Cap Value Fund			Mid-Cap Growth Fund			Small-Cap Growth Fund
Assets:
Investments in securities, at value	$	369,470,908	(1)	$	281,488,463	(1)	$	641,682,288	(1)	$	220,660,603	(1)	$	197,680,227	(1)
Investments in repurchase agreements		3,373,892			3,318,596			22,119,502			3,443,448			4,642,649
Cash		—			—			—			—			—
Cash denominated in foreign currencies (identified cost, $1,089,734)		—			—			—			—			—
Income receivable		1,186,131			305,284			603,813			40,990			5,124
Receivable for investments sold		4,440			577,169			5,624,630			15,579,393			5,785,081
Receivable for capital stock sold		55,340			71,017			509,176			106,866			244,056
Receivable for daily variation margin		—			—			—			—			—
Net receivable for foreign currency exchange contracts		—			—			—			—			—
Prepaid expenses		15,213			15,988			63,957			12,778			13,551
Total assets		374,105,924			285,776,517			670,603,366			239,844,078			208,370,688
Liabilities:
Payable for capital stock redeemed		332,746			82,494			404,392			100,187			55,543
Payable to bank		—			—			—			—			—
Payable for investments purchased		—			—			877,162			14,654,874			1,900,498
Payable on collateral due to broker		15,225,984			26,009,959			91,732,771			43,317,783			45,630,781
Options written, at value (premium received $457,173)		869,830			—			—			—			—
Payable for income distribution		—			—			—			—			—
Payable for dollar roll transactions		—			—			—			—			—
Payable to affiliates (Note 5)		315,753			247,727			538,966			124,321			174,009
Payable for portfolio accounting fees (Note 5)		7,773			5,440			11,742			4,485			3,928
Payable for transfer and dividend disbursing agent fees (Note 5)		10,447			7,461			19,699			—			—
Net payable for foreign currency exchange contracts		—			—			—			—			—
Accrued expenses		7,619			6,723			7,246			5,644			5,343
Total liabilities		16,770,152			26,359,804			93,591,978			58,207,294			47,770,102
Total Net Assets	$	357,335,772		$	259,416,713		$	577,011,388		$	181,636,784		$	160,600,586
Net Assets Consist of:
Paid-in-capital	$	284,321,107		$	217,684,816		$	457,105,634		$	213,648,057		$	128,838,993
Net unrealized appreciation on investments, options, futures contracts and foreign currency translation		45,009,040			27,692,358			112,360,148			25,388,163			25,359,175
Accumulated net realized gain (loss) on investments, options, futures contracts and foreign currency transactions		25,709,354			14,015,863			7,523,646			(56,712,591	)		7,353,324
Undistributed net investment income (distributions in excess of net investment income)		2,296,271			23,676			21,960			(686,845	)		(950,906	)
Total Net Assets	$	357,335,772		$	259,416,713		$	577,011,388		$	181,636,784		$	160,600,586
Net Asset Value, Offering Price and Redemption Proceeds Per Share
Investor Class of Shares:
Net Asset Value, Offering Price and Redemption Proceeds Per Share	$	14.36		$	13.34		$	15.14		$	13.12		$	15.68
Advisor Class of Shares:
Net Asset Value and Redemption Proceeds Per Share	$	14.36		$	13.34		$	15.15		$	13.12		$	15.67
Offering Price Per Shares	$	15.24	(2)	$	14.15	(2)	$	16.07	(2)	$	13.92	(2)	$	16.63	(2)
Institutional Class of Shares:
Net Asset Value, Offering Price and Redemption Proceeds Per Share		—			—			—			—			—
Net Assets:
Investor Class of Shares	$	345,698,012		$	250,448,476		$	566,237,801		$	176,763,709		$	154,284,885
Advisor Class of Shares		11,637,760			8,968,237			10,773,587			4,873,075			6,315,701
Institutional Class of Shares		—			—			—			—			—
Total Net Assets	$	357,335,772		$	259,416,713		$	577,011,388		$	181,636,784		$	160,600,586
Shares Outstanding:
Investor Class of Shares		24,078,812			18,772,165			37,401,075			13,468,846			9,840,925
Advisor Class of Shares		810,592			672,154			711,314			371,283			403,079
Institutional Class of Shares		—			—			—			—			—
Total Shares Outstanding		24,889,404			19,444,319			38,112,389			13,840,129			10,244,004
Investments, at identified cost	$	327,423,103		$	257,114,701		$	551,441,642		$	198,715,888		$	176,963,701

(1) Including $14,691,808, $25,097,446, $88,514,492, $41,798,056, $44,029,907, $84,539,051, $17,750,695, $103,153,727 and $14,302,601, respectively, of securities loaned.

(2) Computation of offering price per share 100/94.25 of net asset value.

(3) Computation of offering price per share 100/95.25 of net asset value.

(4) Computation of offering price per share 100/98.00 of net asset value.

(See Notes which are an integral part of the Financial Statements)

35

Marshall Funds

International Stock Fund			Government Income Fund			Intermediate Bond Fund			Intermediate Tax-Free Fund			Short- Term Income Fund			Government Money Market Fund		Money Market Fund			Tax-Free Money Market Fund
$	544,257,417	(1)	$	574,787,902	(1)	$	755,115,226	(1)	$	91,031,389		$	156,405,938	(1)	$	89,214,608	$	2,950,199,750		$	104,563,448
	14,387,120			17,700,374			29,990,135			4,679,089			7,932,018			83,729,694		368,402,395			9,918,967
	150,000			—			5,805			—			—			124,531		89,901			—
	894,335			—			—			—			—			—		—			—
	434,389			1,582,792			5,304,687			1,003,375			1,018,749			373,992		9,762,128			313,709
	4,455,359			—			—			—			—			—		—			4,019,093
	100,447			1,622,129			263,060			58,565			145,973			—		814,961			8,116
	—			—			—			—			—			—		—			—
	—			—			—			—			—			—		—			—
	10,086			37,021			21,443			14,097			14,276			38,104		107,635			14,727
	564,689,153			595,730,218			790,700,356			96,786,515			165,516,954			173,480,929		3,329,376,770			118,838,060
	628,155			1,589,115			26,998			412,555			1,593,771			—		606,947			—
	—			—			—			—			—			—		—			—
	3,889,268			55,914,690			—			4,610,670			—			—		—			—
	87,612,788			18,396,089			106,904,271			—			14,822,626			—		—			—
	—			—			—			—			—			—		—			—
	—			476,431			833,364			250,924			272,188			104,033		4,268,299			118,314
	—			127,379,873			61,530,973			—			—			—		—			—
	551,896			213,227			275,603			39,105			56,843			27,489		934,737			34,729
	6,432			5,964			9,171			(540	)		(1,109	)		4,206		28,588			1,176
	46,505			18,389			—			(2,642	)		(3,408	)		1,464		—			2,552
	3,160			—			—			—			—			—		—			—
	663,383			—			4,143			4,139			7,289			—		23,992			12,071
	93,401,587			203,993,778			169,584,523			5,314,211			16,748,200			137,192		5,862,563			168,842
$	471,287,566		$	391,736,440		$	621,115,833		$	91,472,304		$	148,768,754		$	173,343,737	$	3,323,514,207		$	118,669,218
$	467,951,725		$	389,997,384		$	633,394,245		$	86,915,127		$	159,310,326		$	173,343,737	$	3,323,953,997		$	118,669,210
	70,713,630			2,985,691			3,286,789			3,702,410			(1,250,656	)		—		—			—
	(65,273,585	)		(652,591	)		(14,933,526	)		854,939			(8,673,773	)		—		(448,724	)		—
	(2,104,204	)		(594,044	)		(631,675	)		(172	)		(617,143	)		—		8,934			8
$	471,287,566		$	391,736,440		$	621,115,833		$	91,472,304		$	148,768,754		$	173,343,737	$	3,323,514,207		$	118,669,218
$	12.77		$	9.56		$	9.38		$	10.46		$	9.08		$	1.00	$	1.00		$	1.00
$	12.77		$	9.56		$	9.38		$	10.46		$	9.07		$	1.00	$	1.00			—
$	13.55	(2)	$	10.04	(3)	$	9.85	(3)		—		$	9.26	(4)		—		—			—
$	12.91			—			—			—			—			—	$	1.00			—
$	224,530,979		$	385,683,745		$	614,005,737		$	91,472,304		$	145,841,486		$	99,921,118	$	2,152,487,185		$	118,669,218
	5,383,892			6,052,695			7,110,096			—			2,927,268			—		87,930,590			—
	241,372,695			—			—			—			—			73,422,619		1,083,096,432			—
$	471,287,566		$	391,736,440		$	621,115,833		$	91,472,304		$	148,768,754		$	173,343,737	$	3,323,514,207		$	118,669,218
	17,577,362			40,363,233			65,429,660			8,746,978			16,068,679			99,921,118		2,152,979,328			118,669,210
	421,555			633,443			757,663			—			322,615			—		87,964,021			—
	18,690,479			—			—			—			—			73,422,619		1,083,010,648			—
	36,689,396			40,996,676			66,187,323			8,746,978			16,391,295			173,343,737		3,323,953,997			118,669,210
$	487,942,954		$	589,502,585		$	781,818,572		$	92,009,761		$	165,588,612		$	172,944,302	$	3,318,602,145		$	114,482,415

36

Six Months Ended February 28, 2005 (Unaudited)

Statements of Operations

	Equity Income Fund			Large-Cap Growth & Income Fund			Mid-Cap Value Fund			Mid-Cap Growth Fund			Small-Cap Growth Fund
Investment Income:
Interest income	$	72,328	(1)	$	50,820	(1)	$	532,546	(1)	$	63,674	(1)	$	107,516	(1)
Dividend income		7,479,710			2,925,207	(3)		3,219,264			412,911	(3)		89,866
Total income		7,552,038			2,976,027			3,751,810			476,585			197,382
Expenses:
Investment adviser fee (Note 5)		1,359,727			986,829			1,949,406			704,263			746,376
Shareholder services fees (Note 5)—
Investor Class of Shares		439,781			318,407			637,770			229,028			179,469
Advisor Class of Shares		13,461			10,535			12,029			5,726			7,123
Institutional Shares		—			—			—			—			—
Administrative fees (Note 5)		178,431			131,196			250,977			93,902			74,637
Portfolio accounting fees		60,625			47,697			78,605			37,687			31,908
Transfer and dividend disbursing agent fees		57,123			51,915			67,103			60,329			49,249
Custodian fees (Note 5)		30,527			25,555			38,390			18,776			14,921
Registration fees		7,346			8,350			10,206			6,808			5,897
Auditing fees		12,677			12,908			12,675			12,895			12,875
Legal fees		3,266			2,290			2,398			2,441			2,467
Printing and postage		11,675			14,971			17,210			14,508			10,479
Directors’ fees		6,353			6,349			6,320			6,274			6,273
Insurance premiums		4,544			3,417			5,476			2,763			2,000
Distribution services fees (Note 5)—
Advisor Class of Shares		13,461			10,535			12,031			5,726			7,123
Miscellaneous		9,576			24,894			57,742			(30,494	)		5,891
Total expenses		2,208,573			1,655,848			3,158,338			1,170,632			1,156,688
Deduct (Note 5)—
Waiver of investment adviser fee		—			—			—			—			—
Waiver of administrative fee		(3,749	)		(2,148	)		(6,062	)		(1,476	)		(1,277	)
Waiver of shareholder services fees—
Investor Class of Shares		—			—			—			—			—
Advisor Class of Shares		(13,461	)		(10,535	)		(12,029	)		(5,726	)		(7,123	)
Institutional Shares		—			—			—			—			—
Total Waivers		(17,210	)		(12,683	)		(18,091	)		(7,202	)		(8,400	)
Net expenses		2,191,363			1,643,165			3,140,247			1,163,430			1,148,288
Net investment income (loss)		5,360,675			1,332,862			611,563			(686,845	)		(950,906	)
Net Realized and Unrealized Gain (Loss) on Investments, Options, Futures Contracts and Foreign Currency:
Net realized gain on investment transactions and options (identified cost basis)		28,535,023			34,523,031			14,114,782			12,425,984			8,272,000
Net realized gain (loss) on futures contract (identified cost basis)		—			87,794			1,945,332			169,068			137,605
Net realized loss on foreign currency contracts (identified cost basis)		—			—			—			—			—
Net change in unrealized appreciation/depreciation on investments, options, futures contracts and foreign currency translation		(6,628,600	)		(8,012,719	)		50,079,614			19,640,728			24,572,698
Net realized and unrealized gain (loss) on investments, options, futures contracts and foreign currency		21,906,423			26,598,106			66,139,728			32,235,780			32,982,303
Change in net assets resulting from operations	$	27,267,098		$	27,930,968		$	66,751,291		$	31,548,935		$	32,031,397

(1) Including income on securities loaned of $28,323, $29,232, $189,018, $46,162, $94,752, $46,178, $106,585 and $10,060, respectively.

(2) Net of dollar roll expense of $1,491,177 and $485,670, respectively.

(3) Net of foreign taxes withheld of $1,074, $5,280 and $197,157, respectively.

(4) Net of foreign taxes withheld of $449,577.

(5) Commenced operations on September 22, 2004.

(See Notes which are an integral part of the Financial Statements)

37

Marshall Funds

International Stock Fund			Government Income Fund			Intermediate Bond Fund			Intermediate Tax-Free Fund			Short-Term Income Fund			Government Money Market Fund			Money Market Fund			Tax-Free Money Market Fund(5)
$	136,150	(1)	$	8,742,766	(1)(2)	$	13,531,961	(1)	$	2,000,999		$	2,602,081	(1)	$	1,798,444		$	36,550,259		$	895,064
	2,906,133	(3)		—			—			—			—			—			—			—
	3,042,283			8,742,766			13,531,961			2,000,999			2,602,081			1,798,444			36,550,259			895,064
	2,366,476			1,369,767			1,866,311			281,613			468,364			174,076			2,597,580			101,792
	278,776			449,486			768,852			117,344			191,566			—			2,672,261			127,841
	6,102			7,102			8,772			—			3,586			—			110,236			—
	—			—			—			—			—			140,852			—			—
	231,346			179,703			292,230			46,938			78,060			34,344			684,006			20,122
	38,984			60,969			89,176			14,081			32,939			26,749			194,922			10,179
	95,259			67,282			62,849			16,115			24,530			19,009			337,272			13,159
	189,382			30,659			43,507			9,388			15,612			17,289			185,569			10,179
	15,539			9,634			9,709			6,663			7,434			27,235			21,571			3,094
	11,774			12,677			12,677			12,677			12,677			15,711			12,895			6,299
	2,456			2,231			2,231			2,327			2,437			1,826			2,453			1,921
	21,048			9,155			8,293			2,823			5,784			6,801			39,700			5,596
	6,240			6,353			6,349			6,349			6,274			5,185			6,274			5,473
	5,699			4,452			7,447			1,588			2,289			1,490			39,793			838
	6,100			7,102			8,772			—			3,586			—			132,340			—
	4,582			(17,095	)		(36,270	)		1,479			15,275			1,750			39,498			(76,492	)
	3,279,763			2,199,477			3,150,905			519,385			870,413			472,317			7,076,370			230,001
	(34,713	)		(182,636	)		(186,630	)		(120,609	)		(265,406	)		(157,100	)		(692,688	)		—
	(5,466	)		(4,214	)		(6,062	)		(750	)		(1,235	)		(289	)		(5,580	)		(193	)
	(6,100	)		(413,526	)		(707,345	)		(107,956	)		(176,241	)		—			—			—
	—			(7,102	)		(8,772	)		—			(3,586	)		—			—			—
	—			—			—			—			—			—			—			—
	(46,279	)		(607,478	)		(908,809	)		(229,315	)		(446,468	)		(157,389	)		(698,268	)		(193	)
	3,233,484			1,591,999			2,242,096			290,070			423,945			314,928			6,378,102			229,808
	(191,201	)		7,150,767			11,289,865			1,710,929			2,178,136			1,483,516			30,172,157			665,256
	29,861,439	(4)		2,904,537			(473,284	)		880,593			(71,361	)		—			6,472			—
	—			—			—			—			—			—			—			—
	(843,258	)		—			—			—			—			—			—			—
	46,146,721			(5,839,435	)		(6,475,981	)		(2,176,213	)		(1,609,115	)		—			—			—
	75,164,902			(2,934,898	)		(6,949,265	)		(1,295,620	)		(1,680,476	)		—			6,472			—
$	74,973,701		$	4,215,869		$	4,340,600		$	415,309		$	497,660		$	1,483,516		$	30,178,629		$	665,256

38

Statements of Changes in Net Assets

	Equity Income Fund						Large-Cap Growth & Income Fund
	Six Months Ended February 28, 2005 (Unaudited)			Year Ended August 31, 2004			Six Months Ended February 28, 2005 (Unaudited)			Year Ended August 31, 2004
Increase (Decrease) in Net Assets
Operations—
Net investment income (loss)	$	5,360,675		$	8,356,233		$	1,332,862		$	542,936
Net realized gain (loss) on investments and options transactions		28,535,023			29,870,501			34,523,031			44,876,998
Net realized gain (loss) on futures contracts		—			—			87,794			(7,812	)
Net realized gain (loss) on foreign currency contracts		—			—			—			—
Net change in unrealized appreciation/depreciation of investments, options, futures contracts and foreign currency translation		(6,628,600	)		13,962,212			(8,012,719	)		(27,034,264	)
Change in net assets resulting from operations		27,267,098			52,188,946			27,930,968			18,377,858
Distributions to Shareholders—
Distributions to shareholders from net investment income
Investor Class of Shares		(4,777,375	)		(7,957,144	)		(1,784,678	)		(469,883	)
Advisor Class of Shares		(144,138	)		(177,982	)		(60,787	)		(12,444	)
Institutional Class of Shares		—			—			—			—
Distributions to shareholders from net realized gain on investments
Investor Class of Shares		(17,406,313	)		—			—			—
Advisor Class of Shares		(533,830	)		—			—			—
Institutional Class of Shares		—			—			—			—
Change in net assets resulting from distributions to shareholders		(22,861,656	)		(8,135,126	)		(1,845,465	)		(482,327	)
Capital Stock Transactions—
Proceeds from sale of shares		14,134,706			42,060,067			8,309,622			34,550,479
Net asset value of shares issued to shareholders in payment of distributions declared		20,265,945			4,151,908			1,239,704			312,105
Cost of shares redeemed		(50,079,693	)		(70,888,769	)		(42,028,143	)		(47,583,170	)
Redemption fees		443			—			260			—
Change in net assets resulting from capital stock transactions		(15,678,599	)		(24,676,794	)		(32,478,557	)		(12,720,586	)
Change in net assets		(11,273,157	)		19,377,026			(6,393,054	)		5,174,945
Net Assets:
Beginning of period		368,608,929			349,231,903			265,809,767			260,634,822
End of period	$	357,335,772		$	368,608,929		$	259,416,713		$	265,809,767
Undistributed net investment income (accumulated net operating loss) included in net assets at end of period	$	2,296,271		$	1,857,109		$	23,676		$	536,279

(See Notes which are an integral part of the Financial Statements)

39

Marshall Funds

Mid-Cap Value Fund						Mid-Cap Growth Fund						Small-Cap Growth Fund
Six Months Ended February 28, 2005 (Unaudited)			Year Ended August 31, 2004			Six Months Ended February 28, 2005 (Unaudited)			Year Ended August 31, 2004			Six Months Ended February 28, 2005 (Unaudited)			Year Ended August 31, 2004
$	611,563		$	1,680,417		$	(686,845	)	$	(2,032,706	)	$	(950,906	)	$	(1,642,466	)
	14,114,782			27,849,871			12,425,984			23,446,181			8,272,000			18,778,875
	1,945,332			241,300			169,068			874,523			137,605			(376,649	)
	—			—			—			—			—			—
	50,079,614			22,110,524			19,640,728			(29,018,748	)		24,572,698			(14,441,239	)
	66,751,291			51,882,112			31,548,935			(6,730,750	)		32,031,397			2,318,521
	(2,172,992	)		(214,761	)		—			—			—			—
	(41,607	)		(4,092	)		—			—			—			—
	—			—			—			—			—			—
	(32,166,898	)		(10,460,779	)		—			—			—			—
	(594,236	)		(206,381	)		—			—			—			—
	—			—			—			—			—			—
	(34,975,733	)		(10,886,013	)		—			—			—			—
	69,510,202			180,983,806			6,579,659			34,871,554			11,010,980			64,142,279
	33,920,384			10,681,712			—			—			(17,174,429	)		—
	(29,756,837	)		(33,837,652	)		(45,334,080	)		(79,943,090	)		—			(25,618,044	)
	1,369			—			331			—			298			—
	73,675,118			157,827,866			(38,754,090	)		(45,071,536	)		(6,163,151	)		38,524,235
	105,450,676			198,823,965			(7,205,155	)		(51,802,286	)		25,868,246			40,842,756
	471,560,712			272,736,747			188,841,939			240,644,225			134,732,340			93,889,584
$	577,011,388		$	471,560,712		$	181,636,784		$	188,841,939		$	160,600,586		$	134,732,340
$	21,960		$	1,624,996		$	(686,845	)	$	—		$	(950,906	)	$	—

40

Statements of Changes in Net Assets

	International Stock Fund						Government Income Fund						Intermediate Bond Fund
	Six Months Ended February 28, 2005 (Unaudited)			Year Ended August 31, 2004			Six Months Ended February 28, 2005 (Unaudited)			Year Ended August 31, 2004			Six Months Ended February 28, 2005 (Unaudited)			Year Ended August 31, 2004
Increase (Decrease) in Net Assets
Operations—
Net investment income (loss)	$	(191,201	)	$	654,186		$	7,150,767		$	16,365,878		$	11,289,865		$	25,487,793
Net realized gain (loss) on investment and options transactions		29,861,439			40,981,046			2,904,537			2,311,798			(473,284	)		5,968,063
Net realized gain (loss) on futures contracts		—			—			—			—			—			—
Net realized gain (loss) on foreign currency contracts		(843,258	)		(292,121	)		—			—			—			—
Net change in unrealized appreciation/depreciation of investments, options, futures contracts and foreign currency translation		46,146,721			(16,867,097	)		(5,839,435	)		1,567,045			(6,475,981	)		(2,327,529	)
Change in net assets resulting from operations		74,973,701			24,476,014			4,215,869			20,244,721			4,340,600			29,128,327
Distributions to Shareholders—
Distributions to shareholders from net investment income
Investor Class of Shares		(1,270,574	)		(901,293	)		(7,618,818	)		(17,741,574	)		(11,947,937	)		(27,053,287	)
Advisor Class of Shares		(28,611	)		(15,538	)		(114,036	)		(241,813	)		(128,306	)		(250,740	)
Institutional Class of Shares		(1,325,794	)		(742,973	)		—			—			—			—
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		(2,624,979	)		(1,659,804	)		(7,732,854	)		(17,983,387	)		(12,076,243	)		(27,304,027	)
Capital Stock Transactions—
Proceeds from sale of shares		38,424,146			240,052,273			63,785,090			65,350,191			33,992,603			85,941,509
Net asset value of shares issued to shareholders in payment of distributions declared		1,966,320			1,227,206			4,745,039			11,190,302			6,776,929			15,013,754
Cost of shares redeemed		(104,082,200	)		(126,442,773	)		(23,109,335	)		(115,872,240	)		(44,692,263	)		(105,073,105	)
Redemption fees		4,221			—			1,236			—			621			—
Change in net assets resulting from capital stock transactions		(63,687,513	)		114,836,706			45,422,030			(39,331,747	)		(3,922,110	)		(4,117,842	)
Change in net assets		8,661,209			137,652,916			41,905,045			(37,070,413	)		(11,657,753	)		(2,293,542	)
Net Assets:
Beginning of period		462,626,357			324,973,441			349,831,395			386,901,808			632,773,586			635,067,128
End of period	$	471,287,566		$	462,626,357		$	391,736,440		$	349,831,395		$	621,115,833		$	632,773,586
Undistributed net investment income (distributions in excess of net investment income) included in net assets at end of period	$	(2,104,204	)	$	711,975		$	(594,044	)	$	(11,957	)	$	2,141,345		$	154,703

(1) Commenced operations on May 17, 2004.

(2) Commenced operations on September 22, 2004.

(See Notes which are an integral part of the Financial Statements)

41

Marshall Funds

Intermediate Tax-Free Fund						Short-Term Income Fund						Government Money Market Fund						Money Market Fund						Tax-Free Money Market Fund
Six Months Ended February 28, 2005 (Unaudited)			Year Ended August 31, 2004			Six Months Ended February 28, 2005 (Unaudited)			Year Ended August 31, 2004			Six Months Ended February 28, 2005 (Unaudited)			Period Ended August 31, 2004(1)			Six Months Ended February 28, 2005 (Unaudited)			Year Ended August 31, 2004			Period Ended February 28, 2005(2) (Unaudited)
$	1,710,929		$	3,518,118		$	2,178,136		$	4,549,192		$	1,483,516		$	324,441		$	30,172,157		$	28,408,714		$	665,256
	880,593			36,273			(71,361	)		210,834			—			—			6,472			85,954			—
	—			—			—			—			—			—			—			—			—
	—			—			—			—			—			—			—			—			—
	(2,176,213	)		1,268,154			(1,609,115	)		(628,409	)		—			—			—			—			—
	415,309			4,822,545			497,660			4,131,617			1,483,516			324,441			30,178,629			28,494,668			665,256
	(1,710,577	)		(3,517,412	)		(2,766,020	)		(5,954,090	)		(578,065	)		(177,991	)		(17,838,785	)		(15,807,589	)		(665,248	)
	—			—			(48,766	)		(94,197	)		—			—			(602,865	)		(416,176	)		—
	—			—			—			—			(905,451	)		(146,450	)		(11,730,749	)		(12,166,537	)		—
	(49,146	)		(226,477	)		—			—			—			—			—			—			—
	—			—			—			—			—			—			—			—			—
	—			—			—			—			—			—			—			—			—
	(1,759,723	)		(3,743,889	)		(2,814,786	)		(6,048,287	)		(1,483,516	)		(324,441	)		(30,172,399	)		(28,390,302	)		(665,248	)
	5,847,843			12,569,890			25,974,429			38,376,373			1,617,132,492			556,169,297			6,382,012,208			13,819,939,566			287,785,310
	254,337			589,749			1,128,372			2,355,810			1,102,305			159,270			7,436,888			7,269,119			42,151
	(10,237,912	)		(20,002,508	)		(27,665,922	)		(39,674,869	)		(1,627,504,101	)		(373,715,526	)		(6,806,583,332	)		(13,371,399,228	)		(169,158,251	)
	—			—			80			—			—			—			—			—			—
	(4,135,732	)		(6,842,869	)		(563,041	)		1,057,314			(9,269,304	)		182,613,041			(417,134,236	)		455,809,457			118,669,210
	(5,480,146	)		(5,764,213	)		(2,880,167	)		(859,356	)		(9,269,304	)		182,613,041			(417,128,006	)		455,913,823			118,669,218
	96,952,450			102,716,663			151,648,921			152,508,277			182,613,041			—			3,740,642,213			3,284,728,390			—
$	91,472,304		$	96,952,450		$	148,768,754		$	151,648,921		$	173,343,737		$	182,613,041		$	3,323,514,207		$	3,740,642,213		$	118,669,218
$	(172	)	$	(524	)	$	(617,143	)	$	19,507		$	—		$	—		$	8,934		$	9,176		$	8

42

Statement of Cash Flows

	Government Income Fund
	Six Months Ended February 28, 2005 (Unaudited)
Increase (Decrease) in Cash
Cash Flows from Operating Activities
Change in net assets resulting from operations	$	4,215,869
Adjustments to Reconcile Change in Net Assets Resulting from Operations to Net Cash Used in Operating Activities:
Purchases of investment securities		(1,354,408,496	)
Paydown on investment securities		26,882,052
Realized loss on paydowns		144,312
Proceeds from sale of investment securities		1,282,951,735
Net change in short term investment securities		(13,971,710	)
Decrease in income receivable		14,846
Decrease in accrued expenses		(16,747	)
Increase in prepaid expenses		(37,021	)
Decrease in receivable for investments sold		7,939,477
Increase in payable for investments purchased		38,604,204
Net realized gain on investments		(2,904,537	)
Net amortization/accretion of premium/discount		459,534
Net unrealized depreciation on investments		5,839,435
NET CASH USED IN OPERATING ACTIVITIES		(4,287,047	)
Cash Flows From Financing Activities:
Cash received from dollar roll transactions, net		(33,257,671	)
Proceeds from sale of shares		62,417,869
Cash distributions paid		(3,143,068	)
Payment of shares redeemed		(21,702,616	)
NET CASH USED IN FINANCING ACTIVITIES		4,314,514
NET CHANGE IN CASH		27,467
Cash:
Beginning of period (payable to bank)		(27,467	)
End of period	$	(0	)

Supplemental disclosure of cash flow information. Non-cash financing not included herein consists of reinvestment of dividend and distributions of $4,745,039.

(See Notes which are an integral part of the Financial Statements)

43

Financial Highlights—Advisor Class of Shares (For a share outstanding throughout each period)

Period Ended August 31,	Net asset value, beginning of period		Net investment income (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 (loss)	Expense waiver(2)
Equity Income Fund
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(3)	$	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(3)	$	12.12	0.24		0.42		0.66		(0.20	)	—		(0.20	)	$	12.58	5.56%	1.23%		2.03%	0.25%		$	5,757	62%
2004(3)	$	12.58	0.30		1.62		1.92		(0.30	)	—		(0.30	)	$	14.20	15.39%	1.22%		2.30%	0.25%		$	10,255	103%
2005(8)	$	14.20	1.72		0.16		1.88		(1.00	)	(0.72	)	(1.72	)	$	14.36	7.78%	1.21%	(7)	2.96%(7)	0.25%	(7)	$	11,638	61%
Large-Cap Growth & Income Fund
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(3)	$	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(3)	$	10.59	0.04		0.71		0.75		(0.02	)	—		(0.02	)	$	11.32	7.11%	1.28%		0.37%	0.25%		$	6,349	73%
2004(3)	$	11.32	0.02		0.78		0.80		(0.02	)	—		(0.02	)	$	12.10	7.08%	1.25%		0.20%	0.25%		$	8,126	129%
2005(8)	$	12.10	0.06		1.27		1.33		(0.09	)	—		(0.09	)	$	13.34	11.01%	1.25%	(7)	1.01%(7)	0.25%	(7)	$	8,968	106%
Mid-Cap Value Fund
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(3)	$	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(3)	$	10.65	0.01		1.86		1.87		(0.01	)	—		(0.01	)	$	12.51	17.63%	1.27%		0.13%	0.25%		$	5,428	39%
2004(3)	$	12.51	0.05		2.14		2.19		(0.01	)	(0.45	)	(0.46	)	$	14.24	17.76%	1.22%		0.42%	0.25%		$	8,456	33%
2005(8)	$	14.24	0.01		1.92		1.93		(0.06	)	(0.96	)	(1.02	)	$	15.15	13.82%	1.21%	(7)	0.23%(7)	0.25%	(7)	$	10,774	15%
Mid-Cap Growth Fund
2000	$	17.28	(0.16	)(4)	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	)(4)	(8.67	)	(8.73	)	—		(4.97	)	(4.97	)	$	13.73	(34.17)%	1.19%		(0.39)%	0.25%		$	3,051	118%
2002(3)	$	13.73	(0.09	)(4)	(4.29	)	(4.38	)	—		(0.04	)	(0.04	)	$	9.31	(32.01)%	1.24%		(0.73)%	0.25%		$	2,596	167%
2003(3)	$	9.31	(0.08	)(4)	2.34		2.26		—		—		—		$	11.57	24.27%	1.28%		(0.79)%	0.25%		$	3,663	121%
2004(3)	$	11.57	(0.10	)(4)	(0.32	)	(0.42	)	—		—		—		$	11.15	(3.63)%	1.24%		(0.84)%	0.25%		$	4,209	240%
2005(8)	$	11.15	(0.05	)	2.02		1.97		—		—		—		$	13.12	17.67%	1.24%	(7)	(0.73)%(7)	0.25%	(7)	$	4,873	79%
Small-Cap Growth Fund
2000	$	12.38	(0.18	)(4)	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	)(4)	(4.52	)	(4.60	)	—		(1.63	)	(1.63	)	$	12.59	(24.23)%	1.58%		(0.70)%	0.25%		$	2,399	287%
2002(3)	$	12.59	(0.14	)(4)	(3.12	)	(3.26	)	—		(0.58	)	(0.58	)	$	8.75	(27.23)%	1.63%		(1.21)%	0.25%		$	2,440	292%
2003(3)	$	8.75	(0.07	)(4)	3.15		3.08		—		—		—		$	11.83	35.20%	1.72%		(0.76)%	0.25%		$	3,763	248%
2004(3)	$	11.83	(0.17	)(4)	0.94		0.77		—		—		—		$	12.60	6.51%	1.58%		(1.29)%	0.25%		$	4,857	267%
2005(8)	$	12.60	(0.09	)	3.16		3.07		—		—		—		$	15.67	24.37%	1.54%	(7)	(1.27)%(7)	0.25%	(7)	$	6,316	81%
International Stock Fund
2000	$	13.83	(0.05	)(4)	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	(4)	(4.03	)	(3.99	)	—		(1.61	)	(1.61	)	$	10.73	(26.36)%	1.46%		0.34%	0.27%		$	3,555	156%
2002(3)	$	10.73	0.03	(4)	(1.46	)	(1.43	)	—		—		—		$	9.30	(13.33)%	1.49%		0.30%	0.27%		$	4,183	83%
2003(3)	$	9.30	0.05	(4)	0.66		0.71		—		—		—		$	10.01	7.63%	1.54%		0.59%	0.27%		$	3,735	171%
2004(3)	$	10.01	0.00	(4)	1.03		1.03		(0.04	)	—		(0.04	)	$	11.00	10.28%	1.50%		0.03%	0.27%		$	4,455	137%
2005(8)	$	11.00	0.05		1.79		1.84		(0.07	)	—		(0.07	)	$	12.77	16.73%	1.50%	(7)	(0.46)%(7)	0.27%	(7)	$	5,384	51%
Government Income Fund
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(3)	$	9.53	0.47	(4)(5)	0.20	(5)	0.67		(0.48	)	—		(0.48	)	$	9.72	7.25%	1.10%		4.90%(5)	0.35%		$	3,839	76%
2003(3)	$	9.72	0.30	(4)	(0.09	)	0.21		(0.33	)	—		(0.33	)	$	9.60	2.22%	1.10%		3.06%	0.35%		$	4,615	539%
2004(3)	$	9.60	0.41	(4)	0.08		0.49		(0.45	)	—		(0.45	)	$	9.64	5.26%	1.10%		4.30%	0.35%		$	5,579	113%
2005(8)	$	9.64	0.23		(0.12	)	0.11		(0.19	)	—		(0.19	)	$	9.56	1.16%	1.10%	(7)	4.00%(7)	0.35%	(7)	$	6,053	260%

(See Notes which are an integral part of the Financial Statements)

44

Financial Highlights—Advisor Class of Shares (For a share outstanding throughout each period)

Period Ended August 31,	Net asset value, beginning of period		Net investment income (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 (loss)		Expense waiver(2)
Intermediate Bond Fund
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(3)	$	9.51	0.45	(4)(5)	(0.04	)(5)	0.41	(0.48	)	—	(0.48	)	$	9.44	4.46%	0.95%		4.77%	(5)	0.31%		$	4,255	187%
2003(3)	$	9.44	0.39	(4)	0.06		0.45	(0.42	)	—	(0.42	)	$	9.47	4.86%	0.95%		4.05%		0.31%		$	5,403	317%
2004(3)	$	9.47	0.39	(4)	0.02		0.41	(0.38	)	—	(0.38	)	$	9.50	4.44%	0.95%		4.06%		0.31%		$	—	279%
2005(8)	$	9.50	(0.04	)	0.09		0.05	(0.17	)	—	(0.17	)	$	9.38	0.54%	0.95%		3.64%		0.31%		$	7,110	162%
Short-Term Income Fund
2001(6)	$	9.26	0.46		0.28		0.74	(0.46	)	—	(0.46	)	$	9.54	8.15%	0.76%	(7)	5.68%	(7)	0.59%	(7)	$	97	79%
2002(3)	$	9.54	0.39	(4)(5)	(0.06	)(5)	0.33	(0.45	)	—	(0.45	)	$	9.42	3.53%	0.79%		4.21%	(5)	0.59%		$	824	54%
2003(3)	$	9.42	0.30	(4)	(0.02	)	0.28	(0.38	)	—	(0.38	)	$	9.32	2.99%	0.81%		3.19%		0.59%		$	2,207	43%
2004(3)	$	9.32	0.25	(4)	(0.02	)	0.23	(0.34	)	—	(0.34	)	$	9.21	2.51%	0.77%		2.70%		0.59%		$	2,914	40%
2005(8)	$	9.21	0.29		(0.28	)	0.01	(0.15	)	—	(0.15	)	$	9.07	0.15%	0.77%	(7)	3.40%	(7)	0.59%	(7)	$	2,927	15%
Money Market Fund
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	$	1.00	0.01		—		0.01	(0.01	)	—	(0.01	)	$	1.00	0.75%	0.75%		0.74%		0.03%		$	93,059	—
2004	$	1.00	0.01	(4)	—		0.00	(0.01	)	—	(0.01	)	$	1.00	0.46%	0.75%		0.45%		0.04%		$	84,397	—
2005(8)	$	1.00	0.01		—		0.01	(0.01	)	—	(0.01	)	$	1.00	0.68%	0.75%	(7)	1.36%	(7)	0.04%	(7)	$	87,931	—

(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 (loss) ratios.

(3) Effective September 1, 2001, the Funds adopted the provisions of the revised American Institute of Certified Public Accountants (“AICPA”) Audit and Accounting Guide for Investment Companies which requires the disclosure of the per share effect of redemption fees. Redemption fees consisted of the following per share amounts:

	Per Share Amount
Fund	2002		2003		2004		2005
International Stock Fund	$	0.01	$	0.01	$	0.01	$	—

Funds not shown had redemption fees of less than $0.01. Periods prior to September 1, 2001 have not been restated to reflect this change.

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

(5) Effective September 1, 2001, the Government Income Fund, Intermediate Bond Fund and Short-Term Income Fund adopted the provisions of the revised AICPA Audit and Accounting Guide for Investment Companies and began accreting discount/amortizing 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 to September 1, 2001 have not been restated to reflect this change in presentation.

(6) Reflects operations for the period from October 31, 2000 (start of performance) to August 31, 2001.

(7) Computed on an annualized basis.

(8) For the six months ended February 28, 2005 (unaudited).

(See Notes which are an integral part of the Financial Statements)

45

Financial Highlights—Institutional Class of Shares (For a share outstanding throughout each period)

Period Ended August 31,	Net asset value, beginning of period		Net investment income (loss)		Net realized and unrealized gain (loss) on investments and foreign currency		Total from investment operations		Dividends 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 (loss)	Expense waiver(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(5)	$	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	0.08	(4)	0.66		0.74		—		—		—		$	10.11	7.90%	1.29%		0.90%	0.02%		$	116,761	171%
2004(5)	$	10.11	0.04	(4)	1.02		1.06		(0.06	)	—		(0.06	)	$	11.11	10.52%	1.25%		0.36%	0.02%		$	242,089	137%
2005(10)	$	11.11	0.05		1.82		1.87		(0.07	)	—		(0.07	)	$	12.91	16.86%	1.25%	(7)	0.05%(7)	0.02%	(7)	$	241,373	51%
Government Money Market Fund
2004(8)	$	1.00	—		—		—		—		—		—		$	1.00	0.28%(9)	0.20%	(7)	1.18%(7)	0.17%	(7)	$	64,212	—
2005(10)	$	1.00	—		—		—		—		—		—		$	1.00	0.93%	0.20%	(7)	1.41%(7)	0.17%	(7)	$	73,423	—
Money Market Fund
2000(6)	$	1.00	0.03		—		0.03		(0.03	)	—		(0.03	)	$	1.00	2.63%	0.24%	(7)	6.51%(7)	0.05%	(7)	$	141,909	—
2001	$	1.00	0.05		—		0.05		(0.05	)	—		(0.05	)	$	1.00	5.58%	0.21%		4.98%	0.05%		$	914,693	—
2002	$	1.00	0.02		—		0.02		(0.02	)	—		(0.02	)	$	1.00	2.25%	0.20%		2.24%	0.04%		$	910,196	—
2003	$	1.00	0.01		—		0.01		(0.01	)	—		(0.01	)	$	1.00	1.30%	0.20%		1.26%	0.03%		$	1,302,242	—
2004	$	1.00	0.01	(4)	—		0.00		(0.01	)	—		(0.01	)	$	1.00	1.01%	0.20%		1.01%	0.04%		$	1,532,640	—
2005(10)	$	1.00	0.01		—		0.01		(0.01	)	—		(0.01	)	$	1.00	0.95%	0.20%	(7)	1.10%(7)	0.04%	(7)	$	1,083,096	—

(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 (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)   Effective September 1, 2001, the Funds adopted the provisions of the revised American Institute of Certified Public Accountants (“AICPA”) Audit and Accounting Guide for Investment Companies   which requires the disclosure of the per share effect of redemption fees. Redemption fees consisted of the following per share amounts:

	Per Share Amount
Fund	2002		2003		2004		2005
International Stock Fund	$	0.01	$	0.01	$	—	$	—

  Funds not shown had redemption fees of less than $0.01. Periods prior to September 1, 2001 have not been restated to reflect this change.

(6)   Reflects operations for the period from April 3, 2000 (start of performance) to August 31, 2000.

(7)   Computed on an annualized basis.

(8)   Reflects operations for the period from May 28, 2004 (start of performance) to August 31, 2004.

(9)   Not annualized for periods less than a year.

(10) For the six months ended February 28, 2005 (unaudited).

(See Notes which are an integral part of the Financial Statements)

46

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 (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 (loss)	Expense waiver(2)
Equity Income Fund
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(3)	$	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(3)	$	12.12	0.24		0.42		0.66		(0.20	)	—		(0.20	)	$	12.58	5.56%	1.23%		2.04%	—		$	343,475	62%
2004(3)	$	12.58	0.30		1.62		1.92		(0.30	)	—		(0.30	)	$	14.20	15.39%	1.22%		2.27%	—		$	358,354	103%
2005(10)	$	14.20	1.72		0.16		1.88		(1.00	)	(0.72	)	(1.72	)	$	14.36	7.77%	1.21%	(9)	2.96%(9)	—		$	345,698	61%
Large-Cap Growth & Income Fund
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(3)	$	13.75	0.01		(3.16	)	(3.15	)	(0.01	)	—		(0.01	)	$	10.59	(22.94)%	1.21%		0.01%	—		$	274,960	62%
2003(3)	$	10.59	0.04		0.71		0.75		(0.02	)	—		(0.02	)	$	11.32	7.11%	1.28%		0.38%	—		$	254,286	73%
2004(3)	$	11.32	0.02		0.78		0.80		(0.02	)	—		(0.02	)	$	12.10	7.08%	1.25%		0.20%	—		$	257,684	129%
2005(10)	$	12.10	0.07		1.26		1.33		(0.09	)	—		(0.09	)	$	13.34	11.01%	1.25%	(9)	1.01%(9)	—		$	250,448	106%
Mid-Cap Value Fund
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(3)	$	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(3)	$	10.65	0.01		1.86		1.87		(0.01	)	—		(0.01	)	$	12.51	17.63%	1.27%		0.13%	—		$	267,309	39%
2004(3)	$	12.51	0.05		2.14		2.19		(0.01	)	(0.45	)	(0.46	)	$	14.24	17.76%	1.22%		0.44%	—		$	463,104	33%
2005(10)	$	14.24	0.01		1.91		1.92		(0.06	)	(0.96	)	(1.02	)	$	15.14	13.75%	1.21%	(9)	0.23%(9)	—		$	566,238	15%
Mid-Cap Growth Fund
2000	$	17.28	(0.16	)(4)	12.00		11.84		—		(1.69	)	(1.69	)	$	27.43	71.91%	1.18%		(0.66)%	—		$	541,805	108%
2001	$	27.43	(0.06	)(4)	(8.67	)	(8.73	)	—		(4.97	)	(4.97	)	$	13.73	(34.17)%	1.19%		(0.39)%	—		$	333,718	118%
2002(3)	$	13.73	(0.09	)(4)	(4.29	)	(4.38	)	—		(0.04	)	(0.04	)	$	9.31	(32.01)%	1.24%		(0.72)%	—		$	203,010	167%
2003(3)	$	9.31	(0.08	)(4)	2.34		2.26		—		—		—		$	11.57	24.27%	1.28%		(0.78)%	—		$	236,981	121%
2004(3)	$	11.57	(0.10	)(4)	(0.32	)	(0.42	)	—		—		—		$	11.15	(3.63)%	1.24%		(0.85)%	—		$	184,632	240%
2005(10)	$	11.15	(0.05	)	2.02		1.97		—		—		—		$	13.12	17.67%	1.24%	(9)	(0.73)%(9)	—		$	176,764	79%
Small-Cap Growth Fund
2000	$	12.38	(0.18	)(4)	7.03		6.85		—		(0.41	)	(0.41	)	$	18.82	56.14%	1.59%		(1.03)%	—		$	159,336	105%
2001	$	18.82	(0.08	)(4)	(4.52	)	(4.60	)	—		(1.63	)	(1.63	)	$	12.59	(24.23)%	1.58%		(0.62)%	—		$	105,397	287%
2002(3)	$	12.59	(0.14	)(4)	(3.12	)	(3.26	)	—		(0.58	)	(0.58	)	$	8.75	(27.23)%	1.63%		(1.20)%	—		$	77,713	292%
2003(3)	$	8.75	(0.07	)(4)	3.15		3.08		—		—		—		$	11.83	35.20%	1.72%		(0.82)%	—		$	90,126	248%
2004(3)	$	11.83	(0.17	)(4)	0.94		0.77		—		—		—		$	12.60	6.51%	1.58%		(1.28)%	—		$	129,875	267%
2005(10)	$	12.60	(0.09	)	3.17		3.08		—		—		—		$	15.68	24.44%	1.54%	(9)	(1.27)%(9)	—		$	154,285	81%
International Stock Fund
2000	$	13.83	(0.07	)(4)	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	(4)	(4.02	)	(3.99	)	—		(1.61	)	(1.61	)	$	10.73	(26.36)%	1.46%		0.25%	0.02%		$	246,649	156%
2002(3)	$	10.73	0.03	(4)	(1.45	)	(1.42	)	—		—		—		$	9.31	(13.23)%	1.49%		0.32%	0.02%		$	195,496	83%
2003(3)	$	9.31	0.06	(4)	0.65		0.71		—		—		—		$	10.02	7.63%	1.54%		0.65%	0.02%		$	204,477	171%
2004(3)	$	10.02	0.00	(4)	1.02		1.02		(0.04	)	—		(0.04	)	$	11.00	10.20%	1.50%		0.00%(5)	0.02%		$	216,082	137%
2005(10)	$	11.00	0.05		1.79		1.84		(0.07	)	—		(0.07	)	$	12.77	16.73%	1.50%	(9)	(0.20)%(9)	0.02%	(9)	$	224,531	51%
Government Income Fund
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(3)	$	9.53	0.49	(4)(6)	0.20	(6)	0.69		(0.50	)	—		(0.50	)	$	9.72	7.50%	0.87%		5.16%(6)	0.33%		$	377,594	76%
2003(3)	$	9.72	0.32	(4)	(0.08	)	0.24		(0.36	)	—		(0.36	)	$	9.60	2.45%	0.87%		3.30%	0.33%		$	382,287	539%
2004(3)	$	9.60	0.43	(4)	0.09		0.52		(0.48	)	—		(0.48	)	$	9.64	5.50%	0.87%		4.49%	0.33%		$	344,253	113%
2005(10)	$	9.64	0.24		(0.12	)	0.12		(0.20	)	—		(0.20	)	$	9.56	1.28%	0.87%	(9)	4.24%(9)	0.33%	(9)	$	385,683	260%

(See Notes which are an integral part of the Financial Statements)

47

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 (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 (loss)		Expense waiver(2)
Intermediate Bond Fund
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(3)	$	9.51	0.47	(4)(6)	(0.04	)(6)	0.43	(0.50	)	—		(0.50	)	$	9.44	4.70%		0.72%		5.00%	(6)	0.29%		$	631,518	187%
2003(3)	$	9.44	0.41	(4)	0.07		0.48	(0.45	)	—		(0.45	)	$	9.47	5.10%		0.72%		4.30%		0.29%		$	629,664	317%
2004(3)	$	9.47	0.38	(4)	0.06		0.44	(0.41	)	—		(0.41	)	$	9.50	4.68%		0.72%		3.98%		0.29%		$	625,908	278%
2005(10)	$	9.50	—		0.06		0.06	(0.18	)	—		(0.18	)	$	9.38	0.66%		0.72%	(9)	3.83%	(9)	0.29%	(9)	$	614,006	162%
Intermediate Tax-Free Fund
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(3)	$	10.35	0.40	(6)	0.22	(6)	0.62	(0.40	)	—		(0.40	)	$	10.57	6.12%		0.62%		3.84%	(6)	0.50%		$	109,693	27%
2003(3)	$	10.57	0.38		(0.07	)	0.31	(0.38	)	—		(0.38	)	$	10.50	2.95%		0.60%		3.57%		0.50%		$	102,717	17%
2004(3)	$	10.50	0.37		0.13		0.50	(0.37	)	(0.02	)	(0.39	)	$	10.61	4.88%		0.62%		3.51%		0.50%		$	96,952	8%
2005(10)	$	10.61	0.19		(0.14	)	0.05	(0.19	)	(0.01	)	(0.20	)	$	10.46	0.44%		0.62%	(9)	4.28%	(9)	0.50%	(9)	$	91,472	20%
Short-Term Income Fund
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(3)	$	9.54	0.42	(4)(6)	(0.07	)(6)	0.35	(0.47	)	—		(0.47	)	$	9.42	3.77%		0.56%		4.51%	(6)	0.57%		$	114,320	54%
2003(3)	$	9.42	0.33	(4)	(0.03	)	0.30	(0.40	)	—		(0.40	)	$	9.32	3.22%		0.58%		3.47%		0.57%		$	150,302	43%
2004(3)	$	9.32	0.27	(4)	(0.02	)	0.25	(0.36	)	—		(0.36	)	$	9.21	2.75%		0.54%		2.94%		0.57%		$	148,735	40%
2005(10)	$	9.21	0.25		(0.22	)	0.03	(0.16	)	—		(0.16	)	$	9.08	0.37%		0.54%	(9)	3.63%	(9)	0.57%	(9)	$	145,841	15%
Government Money Market Fund
2004(7)	$	1.00	0.00		—		0.00	0.00		—		0.00		$	1.00	0.23%	(8)	0.45%	(9)	0.96%	(9)	0.17%	(9)	$	118,401	—
2005(10)	$	1.00	—		—		—	—		—		—		$	1.00	0.80%		0.45%	(9)	1.67%	(9)	0.17%	(9)	$	99,921	—
Money Market Fund
2000	$	1.00	0.06		—		0.06	(0.06	)	—		(0.06	)	$	1.00	5.88%		0.45%		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	$	1.00	0.01		—		0.01	(0.01	)	—		(0.01	)	$	1.00	1.05%		0.45%		1.04%		0.03%		$	1,889,427	—
2004	$	1.00	0.01	(4)	—		0.00	(0.01	)	—		(0.01	)	$	1.00	0.76%		0.45%		0.76%		0.04%		$	2,123,605	—
2005(10)	$	1.00	0.01		—		0.01	(0.01	)	—		(0.01	)	$	1.00	0.83%		0.45%	(9)	1.66%	(9)	0.04%	(9)	$	2,152,487	—
Tax-Free Money Market Fund
2005(11)	$	1.00	0.01		—		0.01	(0.01	)	—		(0.01	)	$	1.00	0.57%		0.45%	(9)	1.86%	(9)	—		$	118,669	—

(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 (loss) ratios shown.

(3) Effective September 1, 2001, the Funds adopted the provisions of the revised American Institute of Certified Public Accountants (“AICPA”) Audit and Accounting Guide for Investment Companies which requires the disclosure of the per share effect of redemption fees. Redemption fees consisted of the following per share amounts:

	Per Share Amount
Fund	2002		2003		2004		2005
International Stock Fund	$	0.01	$	0.01	$	—	$	—
Intermediate Tax-Free Fund		0.01		0.01		—		—

Funds not shown had redemption fees of less than $0.01. Periods prior to September 1, 2001 have not been restated to reflect this change.

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

(5)   Represents less than 0.001%.

(See Notes which are an integral part of the Financial Statements)

48

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

(6)   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 revised 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 to September 1, 2001 have not been restated to reflect this change in presentation.

(7)   Reflects operations for the period from May 17, 2004 (start of performance) to August 31, 2004.

(8)   Not annualized for periods less than a year.

(9)   Computed on an annualized basis.

(10) For the six months ended February 28, 2005 (unaudited).

(11) Reflects operations for the period from September 22, 2004 (start of performance) to February 28, 2005.

(See Notes which are an integral part of the Financial Statements)

49

February 28, 2005 (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 thirteen diversified portfolios (individually referred to as the “Fund,” or collectively as the “Funds”), all of which are presented herein:

Portfolio Name	Class A	Class Y	Class I	Investment Objective
Marshall Equity Income Fund (“Equity Income Fund”)	X	X	—	To provide capital appreciation and above-average dividend income.
Marshall Large-Cap Growth & Income Fund (“Large-Cap Growth & Income Fund”)	X	X	—	To provide capital appreciation.
Marshall Mid-Cap Value Fund (“Mid-Cap Value Fund”)	X	X	—	To provide capital appreciation.
Marshall Mid-Cap Growth Fund (“Mid-Cap Growth Fund”)	X	X	—	To provide capital appreciation.
Marshall Small-Cap Growth Fund (“Small-Cap Growth Fund”)	X	X	—	To provide capital appreciation.
Marshall International Stock Fund (“International Stock Fund”)	X	X	X	To provide capital appreciation.
Marshall Government Income Fund (“Government Income Fund”)	X	X	—	To provide current income.
Marshall Intermediate Bond Fund (“Intermediate Bond Fund”)	X	X	—	To maximize total return consistent with current income.
Marshall Intermediate Tax-Free Fund (“Intermediate Tax-Free Fund”)	—	X	—	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”)	X	X	—	To maximize total return consistent with current income.
Marshall Government Money Market Fund (“Government Money Market Fund”)	—	X	X	To provide current income consistent with stability of principal.
Marshall Money Market Fund (“Money Market Fund”)	X	X	X	To provide current income consistent with stability of principal.
Marshall Tax-Free Money Market Fund (“Tax-Free Money Market Fund”)	—	X	—	To provide current income that is exempt from federal income tax and is consistent with stability of principal.

2. Significant Accounting Policies

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

Investment Valuations—Listed equity securities are valued at the last sale price or official closing price reported on a national securities exchange or NASDAQ. U.S. government securities, listed corporate bonds, other fixed income and asset-backed securities, and unlisted securities are generally valued at the mean of the latest bid and asked price as furnished by an independent pricing service. Private placement securities are valued at the mean of the latest bid and asked prices as furnished by an independent pricing service. Securities listed on a foreign exchange are valued at the last closing price on the principal exchange on which they are traded immediately prior to the time for determination of NAV. 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. The Money Market Funds’ use the amortized cost method to value portfolio securities 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 market quotations are not readily available, or are deemed not to reflect fair value, are valued at fair value as determined in good faith using methods approved by the Board of Directors (the “Directors”). The Directors have established a Pricing Committee, which is responsible for determinations of fair value, subject to the supervision of the Directors. In determining fair value, the Pricing Committee takes into account all information available and any factors it deems appropriate. Consequently, the price of securities used by a Fund to calculate its NAV may differ from quoted or published prices for the same securities. Fair value pricing involves subjective judgments and it is possible that the fair value determined for a security is materially different than the value that could be realized upon the sale of that security and the differences may be material to the NAV of the respective Fund or the financial statements presented.

50

Notes to Financial Statements (continued)

Securities held in the Marshall International Stock Fund may be listed on foreign exchanges that do not value their listed securities at the same time that the Fund calculates its NAV. Most foreign markets close well before the Fund values its securities, generally 3:00 p.m. (Central Time). The earlier close of these foreign markets gives rise to the possibility that significant events, including broad market moves, may have occurred in the interim, which may affect a security’s value.

The Pricing Committee may determine that a security needs to be fair valued if, among other things, it believes the value of the security might have been materially affected by events occurring after the close of the market in which the security was principally traded, but before the time for determination of the NAV (“a subsequent event”). A subsequent event might include a company-specific development (for example, announcement of a merger that is made after the close of the foreign market), a development that might affect an entire market or region (for example, weather related events) or a potentially global development (such as a terrorist attack that may be expected to have an impact on investor expectations worldwide). The Directors have retained an independent fair value pricing service to assist in valuing foreign securities. The service utilizes statistical data based on historical performance of securities, markets and other data in developing factors used to estimate a fair value. As of February 28, 2005, 77.6% of the total investments of the International Stock Fund were fair valued; none of the securities held in the other Funds were fair valued.

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 and Tax-Free Money Market 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.

Income, non-class specific expenses and realized and unrealized gains and losses are allocated daily to each class of shares based on the average daily net assets of each class, without distinction between share classes. Expenses attributable to a particular class of shares, such as transfer agency fees, shareholder servicing fees and registration fees, are allocated directly to that class.

Premium and Discount Amortization/Paydown Gains and Losses—All premiums and discounts 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.

Federal Income Taxes—It is the Funds’ policy to comply with the Subchapter M provision of the Internal Revenue Code (the “Code”) 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 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—The Equity Income Fund, 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, 2005, the Funds had no outstanding futures contracts.

Written Options Contracts—Equity Income Fund and Large-Cap Growth & 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 period ended February 28, 2005, the Equity Income Fund had

51

Marshall Funds

$2,052,282 in realized losses on written options and Large-Cap Growth & Income Fund had $152,943 in realized gains on written options.

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

Contracts	Number of Contracts		Premium
Outstanding @ 8/31/04	10,030		$	896,988
Options written	15,285			2,127,487
Options expired	(600	)		(58,599	)
Options exercised	(633	)		(72,959	)
Options closed	(21,531	)		(2,435,744	)
Outstanding @ 2/28/05	2,551		$	457,173

The following is a summary of the Large-Cap Growth & Income Fund’s written option activity:

Contracts	Number of Contracts		Premium
Outstanding @ 8/31/04	—		$	—
Options written	566			168,098
Options expired	—			—
Options exercised	(531	)		(157,703	)
Options closed	(35	)		(10,395	)
Outstanding @ 2/28/05	—		$	—

At February 28, 2005, the Equity Income Fund had the following outstanding options:

Contract	Type	Expiration Date	Exercise Price		Number of Contracts	Market Value		Unrealized Appreciation (Depreciation)
Altria Group, Inc.	Call	June 2005	$	60.00	700	$	448,000	$	(177,106	)
Altria Group, Inc.	Call	June 2005		70.00	300		36,000		(11,542	)
ConocoPhilips	Call	March 2005		110.00	100		33,000		(26,650	)
D.R. Horton, Inc.	Call	March 2005		45.00	450		49,500		(12,675	)
Kerr-McGee Corp.	Call	July 2005		80.00	100		38,000		(8,801	)
Phelps Dodge Corp.	Call	March 2005		110.00	75		14,625		(8,775	)
Phelps Dodge Corp.	Call	March 2005		115.00	80		5,600		(1,160	)
Silicon Laboratories, Inc.	Call	March 2005		40.00	300		3,000		13,025
Federal National Mortgage Association	Put	March 2005		65.00	350		234,500		(180,800	)
Kerr-McGee Corp.	Put	April 2005		70.00	75		7,500		(315	)
Marathon Oil Corp.	Put	April 2005		35.00	21		105		2,142
Net Unrealized Depreciation on Written Options Contracts					2,551			$	(412,657	)

At February 28, 2005, the Large-Cap Growth & Income Fund had no outstanding options.

52

Notes to Financial Statements (continued)

Foreign Exchange Contracts—International Stock Fund may enter into foreign currency exchange contracts as a way of managing foreign exchange rate risk. 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 International Stock Fund’s foreign currency hedging transactions is to reduce the risk that the U.S. dollar value of 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. At February 28, 2005, the International Stock Fund had outstanding foreign spot currency exchange contracts as set forth below:

Settlement Date	Foreign Currency Units to Deliver/Receive	In Exchange For		Contract at Value		Unrealized Appreciation
Contracts Bought:
3/1/2005	1,120,678 Euro Dollar	$	1,482,657	$	1,483,946	$	1,289
3/1/2005	177,007 British Pound		338,615		340,234		1,619
3/1/2005	401,308 Norwegian Krone		64,405		64,616		211
Contracts Sold:
3/1/2005	638,205 British Pound		1,220,887		1,226,726		(5,839	)
3/1/2005	106,082 British Pound		203,465		203,905		(440	)
Net Unrealized Depreciation on Foreign Currency Exchange Contracts						$	(3,160	)

Foreign Currency Translation—The accounting records of the Funds are maintained in U.S. dollars. All assets and liabilities denominated in foreign currencies (“FC”) 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 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 the money market funds, 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 Intermediate Bond Fund for the period ended February 28, 2005, was as follows:

Maximum amount outstanding during the period	$	61,786,845
Average amount outstanding during the period (1)	$	61,509,550
Average shares outstanding during the period		66,305,948
Average debt per share outstanding during the period		0.93

Information regarding dollar roll transactions for the Government Income Fund for the period ended February 28, 2005, was as follows:

Maximum amount outstanding during the period	$	170,476,678
Average amount outstanding during the period (1)	$	133,956,530
Average shares outstanding during the period		38,288,444
Average debt per share outstanding during the period		3.50

(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 the period ended February 28, 2005.

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

53

Marshall Funds

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, 2005, 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	$	14,691,808	$	15,225,984	$	15,225,984
Large-Cap Growth & Income Fund		25,097,446		26,009,959		26,009,959
Mid-Cap Value Fund		88,514,492		91,732,771		91,732,771
Mid-Cap Growth Fund		41,798,056		43,317,783		43,317,783
Small-Cap Growth Fund		44,029,907		45,630,781		45,630,781
International Stock Fund		84,539,051		87,612,788		87,612,788
Government Income Fund		17,750,695		18,396,089		18,396,089
Intermediate Bond Fund		103,153,727		106,904,271		106,904,271
Short-Term Income Fund		14,302,601		14,822,626		14,822,626

Individual reinvested cash collateral jointly pooled with collateral received from other loans of the securities lending at February 28, 2005, are as follows (2):

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		Short-Term Income Fund		Total
Allstate Life Glob FB II	$	1,100,381	$	1,879,738	$	6,629,522	$	3,130,575	$	3,297,734	$	6,331,771	$	1,329,484	$	7,725,965	$	1,071,230	$	32,496,400
American Express Credit		1,693,081		2,892,225		10,200,395		4,816,802		5,073,999		9,742,265		2,045,587		11,887,417		1,648,229		50,000,000
Bayerische Landesbank NY		677,232		1,156,890		4,080,158		1,926,720		2,029,600		3,896,906		818,235		4,754,967		659,292		20,000,000
Bear Stearns Co., Inc.		507,924		867,668		3,060,118		1,445,040		1,522,200		2,922,680		613,676		3,566,225		494,469		15,000,000
Canadian IMP BK Comm		304,754		520,601		1,836,071		867,024		913,320		1,753,608		368,206		2,139,735		296,681		9,000,000
Dorada Finance, Inc.		677,232		1,156,890		4,080,158		1,926,720		2,029,600		3,896,906		818,235		4,754,967		659,292		20,000,000
General Electric Cap Corp.		677,233		1,156,890		4,080,157		1,926,720		2,029,600		3,896,906		818,235		4,754,967		659,292		20,000,000
Goldman Sachs Group		677,233		1,156,890		4,080,157		1,926,720		2,029,600		3,896,906		818,235		4,754,967		659,292		20,000,000
HBOS Treasury Services PLC		507,924		867,668		3,060,118		1,445,040		1,522,200		2,922,680		613,676		3,566,225		494,469		15,000,000
IBM Corp.		677,233		1,156,890		4,080,158		1,926,720		2,029,599		3,896,906		818,235		4,754,967		659,292		20,000,000
Jackson National Life Global		613,549		1,048,102		3,696,479		1,745,540		1,838,745		3,530,459		741,291		4,307,835		597,292		18,119,292
JP Morgan Repo		338,616		578,445		2,040,079		963,361		1,014,800		1,948,453		409,117		2,377,483		329,646		10,000,000
Merrill Lynch & Co		677,233		1,156,890		4,080,158		1,926,720		2,029,599		3,896,906		818,235		4,754,967		659,292		20,000,000
Metlife Funding Agreement		677,233		1,156,890		4,080,158		1,926,720		2,029,599		3,896,906		818,235		4,754,967		659,292		20,000,000
Monumental Life Ins Master Note		677,233		1,156,890		4,080,158		1,926,720		2,029,599		3,896,906		818,235		4,754,967		659,292		20,000,000
Northern Rock PLC		677,070		1,156,612		4,079,179		1,926,259		2,029,112		3,895,971		818,038		4,753,826		659,133		19,995,200
Provident Money Market Fund		677,233		1,156,890		4,080,158		1,926,720		2,029,599		3,896,906		818,235		4,754,967		659,292		20,000,000
Prudential Financial Funding		507,924		867,668		3,060,118		1,445,040		1,522,200		2,922,680		613,676		3,566,225		494,469		15,000,000
RMAC 2004-NS2A A1		338,616		578,445		2,040,079		963,360		1,014,800		1,948,454		409,117		2,377,483		329,646		10,000,000
SLMA Corp.		678,660		1,159,329		4,088,759		1,930,782		2,033,878		3,905,121		819,960		4,764,990		660,681		20,042,160
Wachovia Securities Master Note		677,233		1,156,890		4,080,158		1,926,720		2,029,599		3,896,906		818,235		4,754,967		659,292		20,000,000
Wells Fargo & Company		677,233		1,156,890		4,080,158		1,926,720		2,029,599		3,896,906		818,235		4,754,967		659,292		20,000,000
Westpac Banking Corp.		507,924		867,668		3,060,118		1,445,040		1,522,200		2,922,680		613,676		3,566,225		494,469		15,000,000
	$	15,225,984	$	26,009,959	$	91,732,771	$	43,317,783	$	45,630,781	$	87,612,788	$	18,396,089	$	106,904,271	$	14,822,626	$	449,653,052

(2) The collateral pool is managed by the Fund Manager of the Short-Term Income Fund and Money Market Fund.

54

Notes to Financial Statements (continued)

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 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 funds’ 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 Money Market Fund at February 28, 2005, is as follows:

Security	Acquisition Date	Acquisition Cost
GE Life & Annuity Assurance Co.	4/22/2000	$	75,000,000
Metropolitan Life Insurance Co.	5/3/2004		65,000,000
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

Redemption Fees—The Funds impose a 2.00% redemption fee to shareholders of the Investor and Advisor Class of Shares (except for the Money Market Fund, Government Money Market Fund, and Tax-Free Money Market Fund) who redeem shares held for 90 days or less. The redemption fee for the Advisor Class of Shares became effective on October 31, 2003. All redemption fees are recorded by the Funds as paid in capital.

Other—Investment transactions are accounted for on a trade date basis. Net realized gains and losses on securities are computed on the basis of specific security lot identification.

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, 2005, the capital paid-in was as follows:

Fund	Capital Paid-In
Equity Income Fund	$	284,321,107
Large-Cap Growth & Income Fund		217,684,816
Mid-Cap Value Fund		457,105,633
Mid-Cap Growth Fund		213,648,057
Small-Cap Growth Fund		128,838,993
International Stock Fund		467,951,725
Government Income Fund		389,997,384
Intermediate Bond Fund		633,394,245
Intermediate Tax-Free Fund		86,915,127
Short-Term Income Fund		160,422,641
Government Money Market Fund		173,343,737
Money Market Fund		3,323,953,999
Tax-Free Money Market Fund		118,669,210

Transactions in capital stock were as follows:

	Period Ended February 28, 2005					Year Ended August 31, 2004
	Shares		Amount			Shares		Amount
EQUITY INCOME FUND—INVESTOR CLASS
Shares sold	894,239		$	12,724,271		2,741,025		$	37,778,310
Shares issued to shareholders in payment of distributions declared	1,405,413			19,604,960		293,269			3,980,832
Shares redeemed	(3,454,721	)		(49,236,177	)	(5,103,880	)		(70,081,425	)
Net change resulting from Investor Class of Shares transactions	(1,155,069	)	$	(16,906,946	)	(2,069,586	)	$	(28,322,283	)

55

Marshall Funds

	Period Ended February 28, 2005					Year Ended August 31, 2004
	Shares		Amount			Shares		Amount
EQUITY INCOME FUND—ADVISOR CLASS
Shares sold	99,639		$	1,410,435		310,490		$	4,281,757
Shares issued to shareholders in payment of distributions declared	47,306			660,985		12,539			171,076
Shares redeemed	(58,480	)		(843,516	)	(58,516	)		(807,344	)
Net change resulting from Advisor Class of Shares transactions	88,465		$	1,227,904		264,513		$	3,645,489
Net change resulting from Fund Share transactions	(1,066,604	)	$	(15,679,042	)	(1,805,073	)	$	(24,676,794	)
LARGE-CAP GROWTH & INCOME FUND—INVESTOR CLASS
Shares sold	602,220		$	7,703,430		2,639,217		$	3,213,310
Shares issued to shareholders in payment of distributions declared	88,525			1,180,035		25,633			299,936
Shares redeemed	(3,215,075	)		(41,373,514	)	(3,826,467	)		(46,497,407	)
Net change resulting from Investor Class of Shares transactions	(2,524,330	)	$	(32,490,049	)	(1,161,617	)	$	(14,063,761	)
LARGE-CAP GROWTH & INCOME FUND—ADVISOR CLASS
Shares sold	47,318		$	606,192		199,314		$	2,416,769
Shares issued to shareholders in payment of distributions declared	4,476			59,669		1,038			12,169
Shares redeemed	(51,224	)		(654,629	)	(89,535	)		(1,085,763	)
Net change resulting from Advisor Class of Shares transactions	570		$	11,232		110,817		$	1,343,175
Net change resulting from Fund Share transactions	(2,523,760	)	$	(32,478,817	)	(1,050,800	)	$	(12,720,586	)
MID-CAP VALUE FUND—INVESTOR CLASS
Shares sold	4,569,903		$	67,887,469		12,736,947		$	178,118,031
Shares issued to shareholders in payment of distributions declared	2,280,717			33,306,266		791,037			10,480,301
Shares redeemed	(1,972,325	)		(29,243,349	)	(2,364,424	)		(32,992,703	)
Net change resulting from Investor Class of Shares transactions	4,878,295		$	71,950,386		11,163,560		$	155,605,629
MID-CAP VALUE FUND—ADVISOR CLASS
Shares sold	109,816		$	1,622,733		204,684		$	2,865,755
Shares issued to shareholders in payment of distributions declared	42,031			614,118		15,204			201,411
Shares redeemed	(34,382	)		(513,488	)	(59,786	)		(844,949	)
Net change resulting from Advisor Class of Shares transactions	117,465		$	1,723,363		160,102		$	2,222,237
Net change resulting from Fund Share transactions	4,995,760		$	73,673,749		11,323,662		$	157,827,866

56

Notes to Financial Statements (continued)

	Period Ended February 28, 2005					Year Ended August 31, 2004
	Shares		Amount			Shares		Amount
MID-CAP GROWTH FUND—INVESTOR CLASS
Shares sold	498,564		$	6,303,656		2,810,084		$	33,686,426
Shares issued to shareholders in payment of distributions declared	—			—		—			—
Shares redeemed	(3,584,748	)		(44,987,873	)	(6,739,434	)		(79,500,073	)
Net change resulting from Investor Class of Shares transactions	(3,086,184	)	$	(38,684,217	)	(3,929,350	)	$	(45,813,647	)
MID-CAP GROWTH FUND—ADVISOR CLASS
Shares sold	21,608		$	276,003		98,013		$	1,185,128
Shares issued to shareholders in payment of distributions declared	—			—		—			—
Shares redeemed	(27,762	)		(346,207	)	(37,230	)		(443,017	)
Net change resulting from Advisor Class of Shares transactions	(6,154	)	$	(70,204	)	60,783		$	742,111
Net change resulting from Fund Share transactions	(3,092,338	)	$	(38,754,421	)	(3,868,567	)	$	(45,071,536	)
SMALL-CAP GROWTH FUND—INVESTOR CLASS
Shares sold	702,664		$	10,470,551		4,561,925		$	62,581,165
Shares issued to shareholders in payment of distributions declared	—			—		—			—
Shares redeemed	(1,172,837	)		(16,895,680	)	(1,868,066	)		(24,985,041	)
Net change resulting from Investor Class of Shares transactions	(470,173	)	$	(6,425,129	)	2,693,859		$	37,596,124
SMALL-CAP GROWTH FUND—ADVISOR CLASS
Shares sold	36,376		$	540,429		114,578		$	1,561,114
Shares issued to shareholders in payment of distributions declared	—			—		—			—
Shares redeemed	(18,922	)		(278,749	)	(47,011	)		(633,003	)
Net change resulting from Advisor Class of Shares transactions	17,454		$	261,680		67,567		$	928,111
Net change resulting from Fund Share transactions	(452,719	)	$	(6,163,449	)	2,761,426		$	38,524,235
INTERNATIONAL STOCK FUND—INVESTOR CLASS
Shares sold	1,160,042		$	13,802,350		6,249,462		$	70,851,998
Shares issued to shareholders in payment of distributions declared	51,159			639,999		45,234			507,979
Shares redeemed	(3,280,998	)		(39,535,817	)	(7,056,123	)		(79,589,160	)
Net change resulting from Investor Class of Shares transactions	(2,069,797	)	$	(25,093,468	)	(761,427	)	$	(8,229,183	)

57

Marshall Funds

	Period Ended February 28, 2005					Year Ended August 31, 2004
	Shares		Amount			Shares		Amount
INTERNATIONAL STOCK FUND—ADVISOR CLASS
Shares sold	33,298		$	400,819		109,396		$	1,209,456
Shares issued to shareholders in payment of distributions declared	2,240			28,002		1,344			15,096
Shares redeemed	(19,191	)		(230,011	)	(78,547	)		(859,038	)
Net change resulting from Advisor Class of Shares transactions	16,347		$	198,810		32,193		$	365,514
INTERNATIONAL STOCK FUND—INSTITUTIONAL CLASS
Shares sold	2,002,307		$	24,220,977		14,248,394		$	167,990,819
Shares issued to shareholders in payment of distributions declared	102,715			1,298,319		62,148			704,131
Shares redeemed	(5,210,098	)		(64,316,372	)	(4,064,377	)		(45,994,575	)
Net change resulting from Institutional Class of Shares transactions	(3,105,076	)	$	(38,797,076	)	10,246,165		$	122,700,375
Net change resulting from Fund Share transactions	(5,158,526	)	$	(63,691,734	)	9,516,931		$	114,836,706
GOVERNMENT INCOME FUND—INVESTOR CLASS
Shares sold	6,556,489		$	63,036,283		6,565,063		$	63,254,815
Shares issued to shareholders in payment of distributions declared	482,887			4,639,051		1,138,179			10,965,325
Shares redeemed	(2,369,435	)		(22,784,115	)	(11,836,142	)		(114,493,275	)
Net change resulting from Investor Class of Shares transactions	4,669,941		$	44,891,219		(4,132,900	)	$	(40,273,135	)
GOVERNMENT INCOME FUND—ADVISOR CLASS
Shares sold	77,827		$	748,807		216,874		$	2,095,376
Shares issued to shareholders in payment of distributions declared	11,032			105,988		23,371			224,977
Shares redeemed	(33,828	)		(325,220	)	(142,617	)		(1,378,965	)
Net change resulting from Advisor Class of Shares transactions	55,031		$	529,575		97,628		$	941,388
Net change resulting from Fund Share transactions	4,724,972		$	45,420,794		(4,035,272	)	$	(39,331,747	)
INTERMEDIATE BOND FUND—INVESTOR CLASS
Shares sold	3,528,226		$	33,365,123		8,749,706		$	83,651,024
Shares issued to shareholders in payment of distributions declared	704,605			6,655,142		1,548,441			14,776,342
Shares redeemed	(4,678,644	)		(44,276,274	)	(10,891,361	)		(104,003,775	)
Net change resulting from Investor Class of Shares transactions	(445,813	)	$	(4,256,009	)	(593,214	)	$	(5,576,409	)

58

Notes to Financial Statements (continued)

	Period Ended February 28, 2005					Year Ended August 31, 2004
	Shares		Amount			Shares		Amount
INTERMEDIATE BOND FUND—ADVISOR CLASS
Shares sold	66,299		$	627,480		239,351		$	2,290,485
Shares issued to shareholders in payment of distributions declared	12,894			121,787		24,892			237,412
Shares redeemed	(44,096	)		(415,989	)	(112,122	)		(1,069,330	)
Net change resulting from Advisor Class of Shares transactions	35,097		$	333,278		152,121		$	1,458,567
Net change resulting from Fund Share transactions	(410,716	)	$	(3,922,731	)	(441,093	)	$	(4,117,842	)
INTERMEDIATE TAX-FREE FUND—INVESTOR CLASS
Shares sold	553,970		$	5,847,843		1,182,570		$	12,569,890
Shares issued to shareholders in payment of distributions declared	24,117			254,337		55,664			589,749
Shares redeemed	(970,591	)		(10,237,912	)	(1,885,018	)		(20,002,508	)
Net change resulting from Fund Share transactions	(392,504	)	$	(4,135,732	)	(646,784	)	$	(6,842,869	)
SHORT-TERM INCOME FUND—INVESTOR CLASS
Shares sold	2,796,518		$	25,653,868		4,012,043		$	37,321,299
Shares issued to shareholders in payment of distributions declared	118,530			1,082,715		244,404			2,269,967
Shares redeemed	(2,995,030	)		(27,356,129	)	(4,238,901	)		(39,272,137	)
Net change resulting from Investor Class of Shares transactions	(79,982	)	$	(619,546	)	17,546		$	319,129
SHORT-TERM INCOME FUND—ADVISOR CLASS
Shares sold	35,057		$	320,561		113,834		$	1,055,074
Shares issued to shareholders in payment of distributions declared	5,000			45,657		9,250			85,843
Shares redeemed	(33,782	)		(309,793	)	(43,564	)		(402,732	)
Net change resulting from Advisor Class of Shares transactions	6,275		$	56,425		79,520		$	738,185
Net change resulting from Fund Share transactions	(73,707	)	$	(563,121	)	97,066		$	1,057,314
GOVERNMENT MONEY MARKET FUND—INVESTOR CLASS(1)
Shares sold	963,634,079		$	963,634,079		403,273,899		$	403,273,899
Shares issued to shareholders in payment of distributions declared	893,859			893,859		159,270			159,270
Shares redeemed	(983,007,519	)		(983,007,519	)	(285,032,470	)		(285,032,470	)
Net change resulting from Investor Class of Shares transactions	(18,479,581	)	$	(18,479,581	)	118,400,699		$	118,400,699

59

Marshall Funds

	Period Ended February 28, 2005					Year Ended August 31, 2004
	Shares		Amount			Shares		Amount
GOVERNMENT MONEY MARKET FUND—INSTITUTIONAL(2)
Shares sold	653,498,413		$	653,498,413		152,895,398		$	152,895,398
Shares issued to shareholders in payment of distributions declared	208,446			208,446		—			—
Shares redeemed	(644,496,582	)		(644,496,582	)	(88,683,056	)		(88,683,056	)
Net change resulting from Investor Class of Shares transactions	9,210,277		$	9,210,277		64,212,342		$	64,212,342
Net change resulting from Fund Share transactions	(9,269,304	)	$	(9,269,304	)	182,613,041		$	182,613,041
MONEY MARKET FUND—INVESTOR CLASS
Shares sold	2,299,134,078		$	2,299,134,078		5,386,558,293		$	5,386,558,293
Shares issued to shareholders in payment of distributions declared	3,899,796			3,899,796		3,446,804			3,446,804
Shares redeemed	(2,273,932,472	)		(2,273,932,472	)	(5,155,898,795	)		(5,155,898,795	)
Net change resulting from Investor Class of Shares transactions	29,101,402		$	29,101,402		234,106,302		$	234,106,302
MONEY MARKET FUND—ADVISOR CLASS
Shares sold	98,627,571		$	98,627,571		196,960,000		$	196,960,000
Shares issued to shareholders in payment of distributions declared	589,109			589,109		410,608			410,608
Shares redeemed	(95,683,477	)		(95,683,477	)	(206,036,407	)		(206,036,407	)
Net change resulting from Advisor Class of Shares transactions	3,533,203		$	3,533,203		(8,665,799	)	$	(8,665,799	)
MONEY MARKET FUND—INSTITUTIONAL CLASS
Shares sold	3,984,250,559		$	3,984,250,559		8,236,423,301		$	8,236,423,301
Shares issued to shareholders in payment of distributions declared	2,947,983			2,947,983		3,411,707			3,411,707
Shares redeemed	(4,436,967,383	)		(4,436,967,383	)	(8,009,466,054	)		(8,009,466,054	)
Net change resulting from Institutional Class of Shares transactions	(449,768,841	)	$	(449,768,841	)	230,368,954		$	230,368,954
Net change resulting from Fund Share transactions	(417,134,236	)	$	(417,134,236	)	455,809,457		$	455,809,457
TAX-FREE MONEY MARKET FUND—INVESTOR CLASS(3)
Shares sold	287,785,310		$	287,785,310
Shares issued to shareholders in payment of distributions declared	42,151			42,151
Shares redeemed	(169,158,251	)		(169,158,251	)
Net change resulting from Fund Share transactions	118,669,210		$	118,669,210

(1) Commenced operations on May 17, 2004.

(2) Commenced operations on May 28, 2004.

(3) Commenced operations on September 22, 2004.

60

Notes to Financial Statements (continued)

4. Federal Tax Information

The tax character of distributions reported on the Statement of Changes in Net Assets for the years ended August 31, 2004 and 2003 was as follows:

	2004						2003
Fund Name	Ordinary Income4		Tax-Free Income		Long-Term Capital Gains		Ordinary Income4		Tax-Free Income		Long-Term Capital Gains
Equity Income Fund	$	8,135,126	$	—	$	—	$	5,496,584	$	—	$	—
Large-Cap Growth & Income Fund		482,327		—		—		477,108		—		—
Mid-Cap Value Fund		1,165,030		—		9,720,983		277,336		—		—
Mid-Cap Growth Fund		—		—		—		—		—		—
Small-Cap Growth Fund		—		—		—		—		—		—
International Stock Fund		1,659,805		—		—		—		—		—
Government Income Fund		17,983,387		—		—		13,992,230		—		—
Intermediate Bond Fund		27,304,027		—		—		30,034,639		—		—
Intermediate Tax-Free Fund		15,134		3,517,764		210,991		—		3,852,260		—
Short-Term Income Fund		6,048,287		—		—		5,603,390		—		—
Government Money Market Fund		324,441		—		—		—		—		—
Money Market Fund		28,390,302		—		—		35,469,167		—		—

(4) For tax purposes short-term capital gain distributions are considered ordinary income.

At August 31, 2004, the Funds had capital loss carryforwards, which will reduce the Funds’ 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 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	2005		2006		2007		2008		2009		2010		2011		2012		Total
Large-Cap Growth & Income Fund	$	—	$	—	$	—	$	—	$	—	$	—	$	17,417,170	$	—	$	17,417,170
Mid-Cap Growth Fund		—		—		—		—		—		—		68,106,078		—		68,106,078
Small-Cap Growth Fund		—		—		—		—		—		—		480,171		—		480,171
International Stock Fund		—		—		—		—		—		44,976,187		48,782,441		—		93,758,628
Government Income Fund		—		—		—		3,297,536		—		—		—		—		3,297,536
Intermediate Bond Fund		—		—		—		2,980,047		—		6,283,428		3,131,248		—		12,394,723
Short-Term Income Fund		545,815		618,371		952,637		222,218		928,524		944,182		322,004		1,989,874		6,523,625
Money Market Fund		—		—		—		—		—		59,868		395,328		—		455,196

Under current tax regulations, capital and currency losses realized after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. As of August 31, 2004, for federal income tax purposes, post October capital and currency losses as follows were deferred to September 1, 2004.

Fund	Capital Loss
Short-Term Income Fund	$	473,385

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	%
Government Money Market	0.20	%
Money Market Fund	0.15	%
Tax-Free Money Market Fund	0.20	%

61

Marshall Funds

The 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 the 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 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

M&I Trust may voluntarily choose to waive any portion of its fee. M&I Trust can modify or terminate this voluntary waiver at any time at its sole discretion.

UMB Fund Services, Inc. serves as the fund sub-administrator to the Funds.

Distribution Services Fee—The Funds have adopted a Distribution Plan (the “Plan”) pursuant to Rule 12b-1 under the Act. The Plan authorizes payments by 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 the Fund’s Advisor Class of Shares (except Money Market Fund’s Advisor Class of Shares which may accrue up to 0.30%) annually.

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 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 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.

Custodian Fees—M&I Trust is the Funds’ custodian. M&I Trust receives fees, except for the International Stock Fund for which Investors Bank & Trust maintains custody, 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 long-term U.S. government securities and short-term obligations (in-kind contributions), for the period ended February 28, 2005, were as follows:

Fund	Purchases		Sales
Equity Income Fund	$	218,732,272	$	253,657,633
Large-Cap Growth & Income Fund		278,569,410		314,232,501
Mid-Cap Value Fund		122,490,645		73,698,063
Mid-Cap Growth Fund		146,060,356		175,948,215
Small-Cap Growth Fund		117,640,724		123,141,538
International Stock Fund		257,349,415		321,737,223
Government Income Fund		48,988,357		16,155,456
Intermediate Bond Fund		151,699,349		145,461,654
Intermediate Tax-Free Fund		17,896,676		20,796,294
Short-Term Income Fund		15,618,522		31,223,252

7. Line of Credit

Marshall Funds, Inc., on behalf of its respective Funds, entered into a $25,000,000 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 charged 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 Mid-Cap Growth Fund, Large-Cap Growth & Income Fund, and the Small-Cap Growth Fund utilized the LOC during the period ending February 28, 2005. The interest expense was $3,837, $16, and $50, respectively. There were no outstanding LOC for the period ended February 28, 2005.

62

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.

Proxy Voting

A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities is available without charge, upon request, by calling toll free, 1-800-236-FUND (3863) and by accessing the SEC’s website at http://www.sec.gov.

Each Fund’s proxy voting record, for the most recent 12-month period ended June 30 if applicable, is available without charge, upon request, by calling toll free, 1-800-236-FUND (3863) and by accessing the SEC’s website at http://www.sec.gov.

Disclosure of Portfolio Holdings

The Funds file complete schedules of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Each Fund’s Form N-Q is available on the SEC’s website at www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.

63

PRSRT STD

U.S. POSTAGE

PAID

LANCASTER, PA

PERMIT NO. 1377

Marshall Funds Investor Services

P.O. Box 1348

Milwaukee, Wisconsin 53201-1348

1-800-580-FUND(3863)

TDD: Speech and Hearing Impaired Services

1-800-209-3520

www.marshallfunds.com

Grand Distribution Services, LLC, Distributor

M&I Investment Management Corp., Investment Adviser

^©2005 Marshall Funds, Inc.

321-666

Item 2. Code of Ethics

Not applicable to semi-annual reports.

Item 3. Audit Committee Financial Expert

Not applicable to semi-annual reports.

Item 4. Principal Accountant Fees and Services

Not applicable to semi-annual reports.

Item 5. Audit Committee of Listed Registrants

Not applicable.

Item 6. Schedule of Investments

Included as part of the report to shareholders filed under Item 1 of this Form N-CSR.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies

Not applicable to open-end investment companies.

Item 8. Portfolio Managers of Closed-End Management Investment Companies.

Not applicable to open-end investment companies.

Item 9. Purchase of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers

Not applicable to open-end investment companies.

Item 10. Submission of Matters to a Vote of Security Holders

No material changes to report.

Item 11. Controls and Procedures

(a) The Registrant’s principal executive officer and principal financial officer have reviewed the Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended, (the “Act”)) as of a date within 90 days of the

filing of this report, as required by Rule 30a-3(b) under the Act. Based on their review, such officers have concluded that the disclosure controls and procedures were effective in ensuring that information required to be disclosed in this report was appropriately recorded, processed, summarized and reported and made known to them by others within the Registrant and by the Registrant’s service providers.

(b) There were no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Act that occurred during the Registrant’s last fiscal quarter that ended February 28, 2005 that materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

Item 12. Exhibits

(a) (1) Not applicable to semi-annual reports.

(a) (2) Certifications required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 are filed herewith.

(a) (3) Not applicable to open end investment companies.

(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Furnished herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Marshall Funds, Inc.

/s/ John M. Blaser

John M. Blaser

President

April 25, 2005

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/ John M. Blaser

John M. Blaser

President

(Principal Executive Officer)

April 25, 2005

/s/ Joseph P. Bree

Joseph P. Bree

Treasurer

(Principal Financial Officer)

April 25, 2005