[ ] MARSHALL FUNDS
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Dear Shareholder:
I am pleased to present the Marshall Funds Semi-Annual Report for the period
ended February 29, 1996.
I encourage you to review the materials in this report relating to the funds
you own, as well as the information concerning other Marshall Funds that may
fit your investment needs. In particular, you might consider the Marshall
Equity Income Fund which ranked 16th among 135 equity income funds, based on
total return, for the one-year period ended March 31, 1996, according to Lipper
Analytical Services, Inc. In addition, the Marshall Mid-Cap Stock Fund's one-
year total return of 37.48%* ranked 27th, based on total return, among 121 mid-
cap stock funds for the one-year period ended March 31, 1996, according to
Lipper Analytical Services, Inc.
Our Marshall International Stock Fund turned in an impressive performance
record over the past twelve months as well, with a one-year total rate of
return of 18.24%,* placing it in the top 32% among the 279 international stock
funds for the one-year period ended March 31, 1996, according to Lipper
Analytical Services, Inc. The Marshall Money Market Fund-- A Shares continued
also as a top performer ranking 19th among 272 taxable money market funds for
the one-year period ended March 31, 1996, according to Lipper Analytical
Services, Inc., placing it in the top 5% in its category.
We hope you consider these or any of the Marshall Funds while assessing your
investment needs. Please contact a representative of Marshall Funds Investor
Services at 800-236-8554 if you would like more information regarding any of
the Marshall Funds. We appreciate your business and look forward to continuing
to serve your investment needs.
Very truly yours,
James F. Duca, II President April 15, 1996
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* Performance quoted represents past performance. Investment return and
principal value will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than their original cost. The annualized total
return for the Marshall Mid-Cap Stock Fund since its inception on October 3,
1993 through March 31, 1996 was 14.86%. The annualized total return of the
Marshall International Stock Fund since its inception on September 1, 1994
through March 31, 1996 was 6.31%.
All rankings are based on total return. During the period covered by these
rankings the investment advisor waived some or all of its fee and/or reimbursed
certain of the Funds for some of their expenses. By taking this action, the
Funds' income increases, resulting in a higher return to investors. Otherwise,
total return would have been lower. Money market mutual funds seek to maintain
a net asset value of $1.00 per share. There is no guarantee they will be able
to do so. An investment in the Funds is neither insured nor guaranteed by the
U.S. government.
NO BANK GUARANTEE NOT FDIC INSURED MAY LOSE VALUE
SEMI-ANNUAL REPORT--COMMENTARY
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EQUITY INCOME FUND
The Marshall Equity Income Fund (the "Fund") seeks to provide above-average
dividend income with appreciation of capital. In the pursuit of competitive
long-term performance, it is a primary goal to construct a diversified
portfolio of stocks having an average dividend yield at least 1% (100 basis
points) greater than the dividend yield of the Standard & Poor's 500 Index (the
"S&P 500"). On February 29, 1996, the average yield of the investments held in
the Fund was 3.73%, and the average 30-day yield of the Fund was 2.65%,* while
the S&P 500 was yielding 2.15%.
The Fund continued its excellent performance during the first six months of
its fiscal year. Over this time period (9/01/95-2/29/96), the Fund provided a
total return of 16.38% versus 15.32% for the S&P 500.* For the twelve months
ended February 29, 1996, the Fund returned 31.29%. The Fund was ranked 16th out
of 135 equity income funds followed by Lipper Analytical Services, Inc. for the
one-year period ended March 31, 1996. This placed the Fund in the top 12% of
the Lipper Equity Income Fund universe.
Over the past few months, a sharp rise in interest rates has caused the
bond market to decline and has increased the day-to-day volatility of the U.S.
stock market. This has added an air of caution. Aided by record cash inflows
into equity mutual funds, the stock market has shrugged off the weak bond
market and continues to move erratically higher. Based on history, a stock
market correction of at least 10% is overdue; however, with favorable monetary
policy, plenty of liquidity, and low inflation, the conditions seem to favor
higher prices.
In 1995, corporate America experienced an earnings explosion. In the fourth
quarter, earnings growth started to slow and dropped to a still healthy 10%
year-over-year. As we move into 1996, earnings comparisons become more
difficult. Because of the potential for earnings disappointments, we feel that
now is a period warranting greater than normal diversification. On February 29,
1996, the portfolio held 109 individual securities, with the largest holding
(General Electric) representing only 3.6% of the portfolio. We continue to hold
full positions in energy (17.8%) and financials (15.0%) and continue to
underweigh electric utilities (4.4%) and telecommunications (4.7%).
GROWTH OF $10,000 INVESTED IN MARSHALL EQUITY INCOME FUND
The graph below illustrates the hypothetical investment of $10,000 in the
Marshall Equity Income Fund (the "Fund") from September 30, 1993 (start of
performance) to February 29, 1996 compared to the Standard & Poor's 500 Index
(SP500) and the Lipper Equity Income Funds Index (LEIFI).*
"Graphic representation A omitted. See Appendix."
* Past performance is not predictive of future performance. Your investment
return and principal value will fluctuate so when shares are redeemed, they
may be worth more or less than original cost. Standard & Poor's 500 Index is
an unmanaged broad-based index measuring changes in stock market conditions
based on the average performance of 500 widely held common stocks. Lipper
figures represent the average of the total returns reported by all of the
mutual funds designated by Lipper Analytical Services, Inc. as falling into
the respective categories indicated. These indices are not adjusted to
reflect sales loads, expenses, or other fees that the SEC requires to be
reflected in a mutual fund's performance. These indices are unmanaged. Actual
investments may not be made in an index.
** Represents a hypothetical investment of $10,000 in the Fund. The Fund's
performance assumes the reinvestment of all dividends and distributions. The
SP500 and the LEIFI have been adjusted to reflect reinvestment of dividends
on securities in the indices.
MARSHALL FUNDS
VALUE EQUITY FUND
The Marshall Value Equity Fund (the "Fund"), introduced on September 30, 1993,
utilizes a value-oriented approach in purchasing common stocks. These stocks
are typically characterized as being undervalued, out-of-favor, or neglected.
For the fiscal first half ended February 29, 1996, the Fund produced a total
return of 8.64%.* This compares to total returns of 15.32% and 14.53% for the
Standard & Poor's 500 Index ("S&P 500") and the S&P/BARRA Value Index,
respectively.* Since the Fund's inception, the Fund, the S&P 500, and the
S&P/BARRA Value Index generated cumulative total returns of 36.45%, 48.86%, and
42.12%, respectively, as of February 29, 1996.*
During this period, the stock market experienced its single best yearly
gain in 38 years as measured by the 37.5% return for the S&P 500 during the
1995 calendar year. To add perspective, this gain comes on top of 15 of the
best years (1981 through 1995) for common stock investing since the mid-1920's
and creates one of the longest bull markets in history. It is safe to say
investors have been rewarded for buying stocks over the past decade and a half.
Seasoned investors, however, realize that just as trees do not grow to the
sky, stocks do not always produce spectacular returns. In fact, reversion to
the mean does occur over time and as history reveals, bull markets are usually
followed by bear markets. Fortunately, at present, the basic ingredients that
contribute to the type of market we may expect (interest rates, inflation, and
corporate profits to name a few) continue to favor investing in financial
assets. But the risks are gradually mounting that one or more of these
ingredients could be less positive in the future. Market volatility, which
usually creates uncertainty, is increasing, but on the other hand, breadth (the
number of stocks participating in the move up) seems to be widening, which is
positive.
The Fund is beginning to benefit from this improvement in breadth. Unlike
the past several quarters where most of the gains in stocks have been awarded
to the largest, most liquid names, and from our view, the most expensive,
investors now seem willing to look beyond these "blue chips." Recently, we have
begun to see stocks that were previously out-of-favor attract a lot of
attention. For instance, several quarters ago we invested heavily in companies
in the oil services business. Prior to our involvement, these stocks had
languished for years and had become very undervalued. Yet, during this period,
two of our stocks, Tidewater and Baker Hughes, generated returns of 38% and
17%, respectively. Also, undervalued gold stocks did well. Our position in
Pegasus Gold generated an attractive return of over 25% during the period, as
investors began to build positions in these overly depressed names.
Looking forward, we think the investment climate is becoming more
uncertain, and the greatest opportunity for capital gains exists in the stocks
that have been the least appreciated and exhibit the best value
characteristics. This should be of significant benefit to the Fund.
GROWTH OF $10,000 INVESTED IN MARSHALL VALUE EQUITY FUND
The graph below illustrates the hypothetical investment of $10,000 in the
Marshall Value Equity Fund (the "Fund") from September 30, 1993 (start of
performance) to February 29, 1996 compared to the Standard & Poor's 500 Index
(SP500) and the Lipper Growth and Income Funds Index (LGIFI).*
"Graphic representation B omitted. See Appendix."
* Past performance is not predictive of future performance. Your investment
return and principal value will fluctuate so when shares are redeemed, they
may be worth more or less than original cost. The SP500 and LGIFI are not
adjusted to reflect sales loads, expenses, or other fees that the SEC
requires to be reflected in a mutual fund's performance. These indices are
unmanaged. Actual investments may not be made in an index. Standard & Poor's
500 Index is an unmanaged broad-based index measuring changes in stock market
conditions based on the average performance of 500 widely held common stocks.
S&P/BARRA Value Index contains companies with lower price-to-book ratios and
has 50% of the capitalization of the S&P 500. Lipper figures represent the
average of the total returns reported by all of the mutual funds designated
by Lipper Analytical Services, Inc. as falling into the respective categories
indicated.
** Represents a hypothetical investment of $10,000 in the Fund. The Fund's
performance assumes the reinvestment of all dividends and distributions. The
SP500 and the LGIFI have been adjusted to reflect reinvestment of dividends
on securities in the indices.
SEMI-ANNUAL REPORT--COMMENTARY
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STOCK FUND
The Marshall Stock Fund (the "Fund") invests in large capitalization stocks
with a growth and income orientation. The Fund holdings are well diversified,
with representation in the major sectors of the economy. Companies held are
typically leaders in their respective industries and have records of above-
average financial performance.
During the second half of the Fund's fiscal year, the equity market enjoyed
the best of all worlds--falling interest rates, respectable economic growth,
moderate inflation, and strong corporate earnings. Investors responded
favorably to this backdrop by pouring record amounts into equity mutual funds.
However, as the Fund's fiscal year progressed, the equity markets became much
more narrow in character, with fewer market sectors and individual equities
participating in the market's upward move. For example, from September through
December of 1995, only 22 equities out of the 500 stocks in the S&P 500 Index
were responsible for the Index's entire appreciation.
The Fund posted a total return of 10.02%* during the second half of the
fiscal year (9/01/95 to 2/29/96). During that same period, the Standard &
Poor's 500 Index (the "S&P 500") had a total return of 15.32%.* Most of the
relative under-performance of the Fund versus the S&P 500 was experienced in
the January through February 1996 time period. During that time, the Fund was
transitioning away from smaller market capitalization and more volatile
equities toward larger market capitalization and higher quality companies.
Looking forward, the portfolio is very diversified, with no economic sector
or individual security heavily concentrated. This is by design, unlike 1990 or
1993, when the financial and health care sectors stood out as particularly
undervalued. No such environment exists today. In addition, the rapid rotation
of the equity market through different industry sectors and the lack of any
sustainable signals as to economic direction requires a more diversified
investment approach. The Fund is balancing a number of cyclical holdings, such
as papers, chemicals, and electrical equipment companies, against less
economically sensitive sectors, such as foods, drugs, and consumer products.
Near-term corporate earnings growth is slowing; the question will be how much.
As such, an earnings-driven group such as technology is somewhat underweighted
in the Fund. Finally, the current emphasis remains on high quality, well
managed, top tier companies regardless of their respective industry.
GROWTH OF $10,000 INVESTED IN MARSHALL STOCK FUND
The graph below illustrates the hypothetical investment of $10,000 in the
Marshall Stock Fund (the "Fund") from November 20, 1992 (start of performance)
to February 29, 1996 compared to the Standard & Poor's 500 Index (SP500) and
the Lipper Growth and Income Funds Index (LGIFI).*
"Graphic representation C omitted. See Appendix."
* Past performance is not predictive of future performance. Your investment
return and principal value will fluctuate so when shares are redeemed, they
may be worth more or less than original cost. The SP500 and LGIFI are not
adjusted to reflect sales loads, expenses, or other fees that the SEC
requires to be reflected in a mutual fund's performance. These indices are
unmanaged. Actual investments may not be made in an index. Standard & Poor's
500 Index is an unmanaged composite index of common stocks in industry,
transportation, financial, and public utility. Lipper figures represent the
average of the total returns reported by all of the mutual funds designated
by Lipper Analytical Services, Inc. as falling into the respective
categories.
** Represents a hypothetical investment of $10,000 in the Fund. The Fund's
performance assumes the reinvestment of all dividends and distributions. The
SP500 and the LGIFI have been adjusted to reflect reinvestment of dividends
on securities in the indices.
MARSHALL FUNDS
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MID-CAP STOCK FUND
The objective of the Marshall Mid-Cap Stock Fund (the "Fund") is to seek
capital appreciation. The Fund pursues this objective by investing in companies
with market capitalizations between $200 million and $7.5 billion. In addition,
the Fund seeks investments in companies exhibiting strong financial
characteristics and expected growth significantly above the average
corporation.
For the six-month period ended February 29, 1996, the Fund had a total
return of 10.24% versus the Standard & Poor's Midcap 400 Stock Price Index of
8.98%.* On a trailing twelve-month basis through February 29, 1996, the Fund
has achieved a 35.19% return versus the S&P Midcap 400 Stock Price Index return
of 29.17%.*
Performance during the period was influenced by the passage of the
telecommunications deregulation bill, which had a positive impact on the market
value of issues
held by the Fund such as Tellabs, Infinity Broadcasting, and Westwood One. The
move into consumer issues paid off as above-average returns were achieved in
Kohls Department Stores, Outback Steakhouse, Callaway Golf, and Mirage Hotels.
The liquidation of positions in commodity semi-conductor stocks, while not
perfectly timed, provided some insulation to the November-to-January slide in
technology stocks. We continue to maintain a sizeable technology position;
however, our emphasis is on software, services, and telecommunications.
We are encouraged by the broadening of the market with improving activity
in smaller capitalization issues. Our hopes of additional impetus from a
capital gains cut are diminishing as the 1996 elections loom ahead. However, we
expect rapidly growing companies to be rewarded in a lower growth economy.
GROWTH OF $10,000 INVESTED IN MARSHALL MID-CAP STOCK FUND
The graph below illustrates the hypothetical investment of $10,000 in the
Marshall Mid-Cap Stock Fund (the "Fund") from September 30, 1993 (start of
performance) to February 29, 1996 compared to the Standard & Poor's Midcap 400
Index (SPMC) and the Lipper Mid-Cap Funds Index (LMCFI).*
"Graphic representation D omitted. See Appendix."
* Past performance is not predictive of future performance. Your investment
return and principal value will fluctuate so when shares are redeemed, they
may be worth more or less than original cost. The SPMC and the LMCFI are not
adjusted to reflect sales loads, expenses, or other fees that the SEC
requires to be reflected in a mutual fund's performance. These indices are
unmanaged. Actual investments may not be made in an index. Standard & Poor's
Midcap 400 Stock Price Index ("SPMC") is an unmanaged composite index of 400
common stocks with market capitalizations between $200 million and $7.5
billion in industry, transportation, financial, and public utility. Lipper
figures represent the average of the total returns reported by all of the
mutual funds designated by Lipper Analytical Services, Inc. as falling into
the respective categories indicated.
** Represents a hypothetical investment of $10,000 in the Fund. The Fund's
performance assumes the reinvestment of all dividends and distributions. The
SPMC and the LMCFI have been adjusted to reflect reinvestment of dividends
on securities in the indices.
SEMI-ANNUAL REPORT--COMMENTARY
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INTERNATIONAL STOCK FUND
For the six-month period ended February 29, 1996, the Marshall International
Stock Fund (the "Fund"), which is sub-advised by Templeton Investment Counsel,
Inc., continued to perform favorably relative to its benchmark index, the
Morgan Stanley Capital International Europe, Australia and Far East Index* and
peer funds with similar investment mandates. These positive results are
attributable to several factors, including an underweighting in Japanese shares
and participation in emerging markets investments. Alternatively, recent US
dollar currency appreciation has negatively affected the value of Fund
investments stated in US dollars. Nevertheless, despite this currency trend,
the Fund and many international markets in US dollar terms compare favorably to
the US stock markets after having underperformed in 1995.
The Japanese market continues to underperform most global markets despite
the benefits of a weaker yen. Yen depreciation, if sustainable, should result
in better profitability for Japanese companies that sell their products abroad.
The Fund's Japanese investments are primarily exporters and should, therefore,
be beneficiaries of this trend despite adverse currency translation of the
investments. A weaker currency may also encourage additional Japanese economic
growth. Adverse political events have also subsided and the business
environment in Japan is improving. Unfortunately, it remains difficult for us
to identify "bargains" given high valuations for most Japanese shares compared
to global peers.
Performance for many emerging markets has improved after underperforming
developed markets for nearly two years. These results are well received and
have, as noted, enhanced the Fund's performance this year. Our long-term
outlook for these markets remains positive, yet despite recent results we
remain cautiously optimistic this year and next. We continue to identify
investment opportunities, but they are less numerous than those identified five
years ago. Overall, investment opportunities in the Eastern European emerging
markets are currently favored.
The foreign exchange markets also remain volatile, a trend that began early
last year with a reversal in the direction of the US dollar. This volatility,
which has resulted in a stronger US dollar, has adversely affected the Fund's
returns stated in US dollars. It also remains possible, however, given historic
trends and current valuations of overseas shares that further currency
translation erosion may be offset by acceptable local currency market returns.
The "developed" overseas markets also continue to offer selective
investment opportunities in Far Eastern and European shares. These
opportunities include, for example, the French market, which we believe offers
good long-term value despite being penalized for current political and
macroeconomics restructuring concerns.
Our overall expectation for stocks as an asset class is unchanged today
compared to our views expressed last year. Stocks, in general, are considered
by us to be fairly valued. This conclusion is based on fundamental research and
seems reasonable, given good performance of many US and non-US stocks over the
past five years. We believe international stocks compared to US stocks,
however, are more attractive, given good relative stock valuations and better
economic growth prospects. Furthermore, many overseas markets, in local
currency terms, significantly underperformed the US market in 1994 and 1995.
Finally, we realize your expectations are high. We respect the confidence you
have shown by placing your assets in our care and we remain, as always,
dedicated to the tasks at hand. In the 1990's international investing should
continue to offer opportunity.
GROWTH OF $10,000 INVESTED IN MARSHALL INTERNATIONAL STOCK FUND
The graph below illustrates the hypothetical investment of $10,000 in the
Marshall International Stock Fund (the "Fund") from September 1, 1994 (start of
performance) to February 29, 1996 compared to the Morgan Stanley Capital
Europe, Australia, Far East Index (EAFE) and the Lipper International Funds
Index (LIFI).*
"Graphic representation E omitted. See Appendix."
Past performance is not predictive of future performance. Your investment
return and principal value will fluctuate so when shares are redeemed, they may
be worth more or less than original cost.
* The EAFE and the LIFI are not adjusted to reflect sales loads, expenses, or
other fees that the SEC requires to be reflected in a mutual fund's
performance. These indices are unmanaged. Actual investments may not be made
in an index. Morgan Stanley Capital International Europe, Australia and Far
East Index ("EAFE") is an unmanaged market capitalization weighted foreign
securities index, which is widely used to measure the performance of
European, Australian and New Zealand and Far Eastern stock markets. Lipper
figures represent the average of the total returns reported by all of the
mutual funds designated by Lipper Analytical Services, Inc. as falling into
the respective categories indicated.
** Represents a hypothetical investment of $10,000 in the Fund. The Fund's
performance assumes the reinvestment of all dividends and distributions. The
EAFE and the LIFI have been adjusted to reflect reinvestment of dividends on
securities in the indices.
MARSHALL FUNDS
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SHORT-TERM INCOME FUND
The Marshall Short-Term Income Fund (the "Fund") benefited as yields on short-
term bonds fell more than 40 basis points during the latest six-month period.
This decline in rates coupled with an emphasis on yield, enabled the Fund to
return 3.22%* during the six-month period ended February 29, 1996. An emphasis
on short mortgage- and asset-backed securities has allowed the Fund to maintain
its yield advantage without sacrificing quality. The Fund was positioned to
benefit from a continued decline in short rates resulting from further Federal
Reserve Board (the "Fed") easing. This position helped as rates fell through
the end of 1995 but hindered performance in 1996 as February brought the
release of economic data indicating some strength. This data called further Fed
easing moves into question and caused short rates to rise. Going forward we
expect the trend toward lower rates to continue but are cautious in the very
near term. If the current backup in interest rates develops into a trend toward
higher rates, the Fund may employ further strategies to maximize yield and
minimize its price exposure. This would likely take the form of a reduction of
the Fund's Treasury allocation and an increase in its mortgage/asset-backed
exposure.
GROWTH OF $10,000 INVESTED IN MARSHALL SHORT-TERM INCOME FUND
The graph below illustrates the hypothetical investment of $10,000 in the
Marshall Short-Term Income Fund (the "Fund") from November 1, 1992 (start of
performance) to February 29, 1996 compared to the Lipper Short-Term Investment
Grade Bond Funds Index (LSTIBI), IBC/Donoghue's Taxable Money Fund Average
(DMFA), and the Short-Term Fund Benchmark (STFB).**
"Graphic representation F omitted. See Appendix."
* Past performance is not predictive of future performance. Your investment
return and principal value will fluctuate so when shares are redeemed, they
may be worth more or less than original cost.
** The LSTIBI, DMFA and STFB are not adjusted to reflect sales loads, expenses,
or other fees that the SEC requires to be reflected in a mutual fund's
performance. These indices are unmanaged. Actual investments may not be made
in an index. The Short-Term Fund Benchmark consists of a 50% weighted
average of both the Lehman Brothers 1-3 Year Government Bond Index and the
IBC/Donoghue's Taxable Money Fund Average. Lipper figures represent the
average of the total returns reported by all of the mutual funds designated
by Lipper Analytical Services, Inc. as falling into the respective
categories indicated.
*** Represents a hypothetical investment of $10,000 in the Fund. The Fund's
performance assumes the reinvestment of all dividends and distributions.
The LSTIBI, DMFA and STFB have been adjusted to reflect reinvestment of
dividends on securities in the indices.
SEMI-ANNUAL REPORT--COMMENTARY
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INTERMEDIATE BOND FUND
The Marshall Intermediate Bond Fund (the "Fund") matched the performance of its
benchmark for the six-month period ended February 29, 1996. Both the Fund and
the Lehman Intermediate Government/Corporate Bond Index returned 3.91% during
this period.* The Fund was positioned with a longer duration to benefit from
falling interest rates. The longer duration helped performance through the end
of 1995 but has hindered performance so far in 1996 as interest rates have
backed up sharply. While we believe it is likely the current back up in rates
is a short-term correction rather than a trend reversal, negative price
momentum warrants a duration closer to the benchmark. Additionally, a position
in 15-year pass-through mortgage securities was initiated as a hedge against
rising interest rates. Until a clearer trend emerges from the markets current
volatility, maximizing yield potential will be important. In addition to the
mortgage positions, an overweighing in corporate bonds and asset-backed
securities improves the Fund's yield relative to its benchmark. Exposure to the
bank/finance sector has benefited performance as bank fundamentals remain
strong due to continued consolidations and increasing profitability.
GROWTH OF $10,000 INVESTED IN MARSHALL INTERMEDIATE BOND FUND
The graph below illustrates the hypothetical investment of $10,000 in the
Marshall Intermediate Bond Fund (the "Fund") from November 20, 1992 (start of
performance) to February 29, 1996 compared to the Lehman Brothers Intermediate
Government/Corporate Bond Index (LGCI) and the Lipper Intermediate Investment
Grade Bond Funds Index (LIBF).*
"Graphic representation G omitted. See Appendix."
* Past performance is not predictive of future performance. Your investment
return and principal value will fluctuate so when shares are redeemed, they
may be worth more or less than original cost. The LGCI and the LIBF are not
adjusted to reflect sales loads, expenses, or other fees that the SEC
requires to be reflected in a mutual fund's performance. These indices are
unmanaged. Actual investments may not be made in an index. Lehman Brothers
Intermediate Government/Corporate Bond Index ("LGCI") is an unmanaged index
comprised of government and corporate bonds rated BBB or higher with
maturities between 1-10 years. Lipper figures represent the average of the
total returns reported by all of the mutual funds designated by Lipper
Analytical Services, Inc. as falling into the respective categories
indicated.
** Represents a hypothetical investment of $10,000 in the Fund. The Fund's
performance assumes the reinvestment of all dividends and distributions. The
LGCI and the LIBF have been adjusted to reflect reinvestment of dividends on
securities in the indices.
MARSHALL FUNDS
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GOVERNMENT INCOME FUND
The Marshall Government Income Fund (the "Fund") generated a total return of
3.74%* for the six-month period ended February 29, 1996. A bullish outlook for
lower interest rates led us to add long Treasury Zero Coupon Bonds last August.
The strategy was richly rewarded until February when the market reversed,
sending interest rates 50 basis points higher for the month. The position in
Zeroes caused the Fund to underperform the benchmark. We view the back up in
interest rates as a consolidation from an overextended market that produced
returns ranking as one of the best on record in 1995. Adding to the market
weakness was the shock from distorted economic data impacted by the government
shutdown and the Blizzard of '96. Investors were forced to the sidelines to
wait for economic data confirming the need for additional Federal Reserve Board
easing. With momentum turning negative, we were forced to take a more cautious
stance by reducing the Fund's duration to neutral. Until market psychology
turns positive, the strategy will be to maximize yield on a neutral duration
basis. Mortgage-related securities, as a sector, offer attractive yields and
barring a significant rally from current rates the threat of early prepayment
will diminish. We would favor 30-year discounts and current coupon mortgages at
these levels.
GROWTH OF $10,000 INVESTED IN MARSHALL GOVERNMENT INCOME FUND
The graph below illustrates the hypothetical investment of $10,000 in the
Marshall Government Income Fund (the "Fund") from December 13, 1992 (start of
performance) to February 29, 1996 compared to the Lehman Brothers Mortgage-
Backed Securities Index (LMI) and the Lipper U.S. Mortgage Funds Index
(LUSMI).**
"Graphic representation H omitted. See Appendix."
* Past performance is not predictive of future performance. Your investment
return and principal value will fluctuate so when shares are redeemed, they
may be worth more or less than original cost.
** The LMI and the LUSMI are not adjusted to reflect sales loads, expenses, or
other fees that the SEC requires to be reflected in a mutual fund's
performance. These indices are unmanaged. Actual investments may not be made
in an index. Lehman Brothers Mortgage-Backed Securities Index is an
unmanaged index comprised of fixed rate securities backed by mortgage pools
of Government National Mortgage Association (GNMA), Federal Home Loan
Mortgage Corp. (FHLMC), and Federal National Mortgage Association (FNMA).
Lipper figures represent the average of the total returns reported by all of
the mutual funds designated by Lipper Analytical Services, Inc. as falling
into the respective categories indicated.
*** Represents a hypothetical investment of $10,000 in the Fund. The Fund's
performance assumes the reinvestment of all dividends and distributions.
The LMI and the LUSMI have been adjusted to reflect reinvestment of
dividends on securities in the indices.
SEMI-ANNUAL REPORT--COMMENTARY
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SHORT-TERM TAX-FREE FUND
Marshall Short-Term Tax-Free Fund (the "Fund") has gradually moved closer to
its stated maximum average maturity of three years. We anticipate that this
strategy will be profitable to the extent short-term interest rate levels are
driven down further, a prospect we deem likely as the Federal Reserve Board
(the "Fed") remains in an easing mode.
For the six-month period ended February 29, 1996, the Fund had a total return
of 2.33%.* Although it is never wise to annualize a six-month return number, we
believe that investors should not fear that the level of short-term rates will
rise dramatically during the balance of the Fund's fiscal year. During this
political election year, it would be especially difficult for the Fed to
engineer interest rate increases.
As short-term interest rates have fallen, those investors with cash in
money-market funds may now feel compelled to extend the maturity of their
investments
somewhat further. The Fund should experience net cash inflows in this
environment, and history shows this to be true. As evidence, the Fund has grown
in asset size by over 13% during the six-month period ended February 29, 1996.
As inflows occur, the assets will be invested so as to maintain the average
maturity of the Fund close to its maximum target.
Although the prospect of radical tax reform such as the "flat-tax" concept
has faded somewhat, the level of short-term municipal bond rates remains an
average value compared to taxable yields in the same range. For upper-bracket
taxpayers, the Fund continues to represent an attractive alternative for the
conservative, income oriented shareholder.
GROWTH OF $10,000 INVESTED IN MARSHALL SHORT-TERM TAX-FREE FUND
The graph below illustrates the hypothetical investment of $10,000 in the
Marshall Short-Term Tax-Free Fund (the "Fund") from February 2, 1994 (start of
performance) to February 29, 1996 compared to the Lehman Brothers 3-Year
General Obligations Bonds Index (L3GO) and the Lipper Short-Term Municipal
Funds Index (LSTMI).**
"Graphic representation I omitted. See Appendix."
* Past performance is not predictive of future performance. Your investment
return and principal value will fluctuate so when shares are redeemed, they
may be worth more or less than original cost.
** The L3GO and the LSTMI are not adjusted to reflect sales loads, expenses, or
other fees that the SEC requires to be reflected in a mutual fund's
performance. These indices are unmanaged. Actual investments may not be made
in an index. Lehman Brothers 3-Year General Obligations Bonds Index is an
unmanaged index comprised of all state and general obligation debt issues
with maturities between two and four years. Lipper figures represent the
average of the total returns reported by all of the mutual funds designated
by Lipper Analytical Services, Inc. as falling into the respective
categories indicated.
*** Represents a hypothetical investment of $10,000 in the Fund. The Fund's
performance assumes the reinvestment of all dividends and distributions.
The L3GO and the LSTMI have been adjusted to reflect reinvestment of
dividends on securities in the indices.
MARSHALL FUNDS
[ ]
-
INTERMEDIATE TAX-FREE FUND
The Marshall Intermediate Tax-Free Fund (the "Fund") exceeded the performance
of its benchmark for the six-month period ended February 29, 1996. The Fund's
total return was 3.29% versus the Lehman Brothers 5-year General Obligations
Bonds Index of 3.0%.* This relative advantage can be attributed to the
lengthening of maturities within the Fund as a strategic move based upon our
interest rate outlook. As with taxable bonds, municipal bonds rallied as the
economic outlook shifted from strength to a moderate growth expectation.
During this latest period, the municipal yield curve flattened as long-term
interest rates declined more than short-term interest rates. The net result was
the Fund's holdings that were positioned out near the longer end of the
maturity spectrum performed particularly well. Looking ahead, although we
remain bullish on the prospect for lower interest rates, the probability of the
yield curve steepening increases. The Federal Reserve Board may drive the level
of short-term rates lower with the subsequent effect of forcing investors
further out the yield curve with new purchases.
In 1995, the tax reform debate buffeted prices of municipal securities at
times whenever the political rhetoric received media attention. With the recent
demise of Steve Forbes' campaign, the likelihood of radical tax reform has
diminished significantly. However, if a Republican wins the Presidency,
municipal investors need to be cognizant of any ideas that would tend to lower
marginal tax rates. For now, it appears that the municipal market has already
factored in the possibility of tax reform. Municipal bond yields must remain
competitive to alternative bond investments for upper-bracket taxpayers. We
believe the demise of the municipal bond market has been greatly exaggerated.
We will continue to seek out value for our shareholders.
GROWTH OF $10,000 INVESTED IN MARSHALL INTERMEDIATE TAX-FREE FUND
The graph below illustrates the hypothetical investment of $10,000 in the
Marshall Intermediate Tax-Free Fund (the "Fund") from February 2, 1994 (start
of performance) to February 29, 1996 compared to the Lehman Brothers 5-Year
General Obligations Bonds Index (L5GO) and the Lipper Intermediate Municipal
Funds Index (LIMI).*
"Graphic representation J omitted. See Appendix."
* Past performance is not predictive of future performance. Your investment
return and principal value will fluctuate so when shares are redeemed, they
may be worth more or less than original cost. The L5GO and the LIMI are not
adjusted to reflect sales loads, expenses, or other fees that the SEC
requires to be reflected in a mutual fund's performance. These indices are
unmanaged. Actual investments may not be made in an index. Lehman Brothers 5-
Year General Obligations Bonds Index ("L5GO)") is an unmanaged index
comprised of all state general obligation debt issues with maturities between
four and six years. Lipper figures represent the average of the total returns
reported by all of the mutual funds designated by Lipper Analytical Services,
Inc. as falling into the respective categories indicated.
** Represents a hypothetical investment of $10,000 in the Fund. The Fund's
performance assumes the reinvestment of all dividends and distributions. The
L5GO and the LIMI have been adjusted to reflect reinvestment of dividends on
securities in the indices.
SEMI-ANNUAL REPORT--COMMENTARY
[ ]
-
MONEY MARKET FUND
For the six-month period ended February 29, 1996, the Marshall Money Market
Fund (the "Fund") provided a total return of 2.73% for the Class A shares and
2.57% for the Class B shares.* This compares to a return of 2.59% for the
IBC/Donoghue's Taxable Money Fund Average ("Donoghue's").** While the Fund
began the period with an average maturity of 52 days, it ended the period with
an average maturity of 78 days in response to a declining interest rate
environment. With interest rates on the decline since the beginning of the
period, the longer average maturity relative to Donoghue's has been one of the
many reasons for the out-performance of the Fund. Over the last six months the
Federal Reserve Board (the "Fed") has reduced the Fed Funds rate twice, thus
bringing the Fed Funds rate down to 5.25%. The rationale behind the moves has
been sluggish economic growth combined with benign inflation.
Since the January 31st meeting of the Fed, when rates were last lowered,
there have been several signs that economic activity has been picking up. Among
the data showing a stronger economy was the February Employment Report which
showed that there were 624,000 new jobs and an unemployment rate of 5.5%. In
addition to the employment numbers, both new vehicle and retail sales have
strengthened. In response to these numbers, the bond market, which had been
expecting another interest rate cut, has changed course and priced in a
tightening of the Fed Funds rate by the end of one year. We do not believe the
Fed will tighten rates any time soon, and thus it looks like any interest rate
moves will be on hold for the near future.
* Performance quoted represents past performance and is not indicative of
future results. Although money market funds seek to maintain a stable net
asset value of $1.00 per share, there is no assurance that they will be able
to do so. An investment in the Fund is neither insured nor guaranteed by the
U.S. government.
** IBC/Donoghue's Money Fund Report publishes annualized yields of hundreds of
money market funds on a weekly basis and through its Money Market Insight
publication reports monthly and year-to-date investment results for the same
money funds.
[This Page Intentionally Left Blank]
February 29, 1996 (unaudited)
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
EQUITY INCOME FUND
<TABLE>
<CAPTION>
---------------------------------------------------------
Shares Value
---------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 84.5%
CAPITAL GOODS -- 10.5%
AEROSPACE AND DEFENSE
13,500 United Technologies Corp. $1,451,250
----------
ELECTRICAL EQUIPMENT
18,300 Amp, Inc. 780,038
12,600 Emerson Electric Co. 981,225
73,300 General Electric Co. 5,534,150
----------
Total 7,295,413
----------
ELECTRONICS
32,700 EG & G Inc. 780,713
21,000 General Signal Corp. 763,875
----------
Total 1,544,588
----------
MACHINERY & MACHINE TOOLS
10,000 Cooper Industries, Inc. 386,250
----------
MANUFACTURING
21,000 Eastman Kodak Co. 1,501,500
----------
OTHER CAPITAL GOODS
22,400 Minnesota Mining & Manufacturing Co. 1,458,800
41,000 Ogden Corp. 876,375
30,000 Tenneco, Inc. 1,676,250
----------
Total 4,011,425
----------
Total Capital Goods 16,190,426
----------
CONSUMER DURABLES -- 3.0%
APPLIANCES
20,000 Maytag Corp. 392,500
12,900 Whirlpool Corp. 717,563
----------
Total 1,110,063
----------
AUTOMOTIVE & RELATED
26,300 Chrysler Corp. 1,482,663
11,400 Dana Corp. 344,850
52,800 Ford Motor Co. 1,650,000
----------
Total 3,477,513
----------
Total Consumer Durables 4,587,576
----------
CONSUMER NON-DURABLES -- 19.6%
BEVERAGES & FOODS
12,700 Campbell Soup Co. 784,225
11,000 General Mills, Inc. 632,500
----------
Total 1,416,725
----------
COSMETICS/TOILETRIES
24,100 Tambrands, Inc. 1,162,825
----------
HEALTH CARE
17,000 American Home Products Corp. 1,674,500
18,500 Bausch & Lomb, Inc. 719,188
26,700 Baxter International, Inc. 1,221,525
40,500 Bristol Myers Squibb Co. 3,447,563
23,000 Merck & Co., Inc. 1,523,750
66,000 Pharmacia & Upjohn, Inc. 2,763,750
14,600 Schering Plough Corp. 819,425
17,000 U.S. Healthcare, Inc. 828,750
----------
Total 12,998,451
----------
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------
Shares Value
------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (continued)
CONSUMER NON-DURABLES (continued)
RETAIL
8,000 Dayton Hudson Corp. $595,000
16,300 May Department Stores Co. 759,988
25,600 Penney J C Inc. 1,216,000
24,500 Sears Roebuck & Co. 1,111,686
----------
Total 3,682,674
----------
SERVICES
16,400 Block H&R, Inc. 580,150
12,800 Dun & Bradstreet Corp. 809,600
----------
Total 1,389,750
----------
TOBACCO
23,900 American Brands, Inc. 1,084,462
50,100 Philip Morris Cos., Inc. 4,959,900
84,800 RJR Nabisco Holdings 2,851,400
29,000 Schweitzer-Mauduit International, Inc. 822,875
----------
Total 9,718,637
----------
Total Consumer Non-Durables 30,369,062
----------
ENERGY -- 17.8%
DOMESTIC & INTERNATIONAL OIL
19,000 Amoco Corp. 1,320,500
21,000 Ashland, Inc. 769,125
13,300 Atlantic Richfield Co. 1,456,350
15,200 British Pete PLC 1,525,700
27,200 Chevron Corp. 1,513,000
17,000 Consolidated Natural Gas Co. 731,000
20,000 ENI SPA ADR 752,500
42,700 Exxon Corp. 3,394,650
34,500 Mobil Corp. 3,782,062
96,200 Occidental Petroleum Corp. 2,212,600
17,900 Pennzoil Co. 684,675
19,600 Royal Dutch Petroleum Co. 2,699,900
14,299 Sun Co., Inc. 416,458
20,700 Texaco, Inc. 1,650,825
20,200 Ultramar Corp. 578,225
123,300 USX--Marathon Group 2,281,050
----------
Total 25,768,620
----------
OIL SERVICE
21,500 Dresser Industries, Inc. 604,688
15,800 Schlumberger LTD 1,151,425
----------
Total 1,756,113
----------
Total Energy 27,524,733
----------
FINANCIAL -- 15.0%
BANKS
52,910 Banc One Corp. 1,884,919
23,400 Bankamerica Corp. 1,667,250
10,800 Baybanks, Inc. 1,128,600
33,300 Chase Manhattan Corp. 2,480,850
10,700 Citicorp 834,600
12,500 Crestar Financial Corp. 731,250
36,500 Fleet Financial Group, Inc. 1,501,061
17,500 First Chicago NBD Corp. 759,063
22,000 First Tennessee National Corp. 693,000
29,000 Nationsbank Corp. 2,138,750
30,500 UJB Financial Corp. 1,159,000
9,400 Victoria Bankshares, Inc. 354,850
----------
Total 15,333,193
----------
</TABLE>
(See Notes to Portfolio of Investments)
[ ] MARSHALL FUNDS
-
- --------------------------------------------------------------------------------
EQUITY INCOME FUND (continued)
<TABLE>
<CAPTION>
------------------------------------------------------------
Shares Value
------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (continued)
FINANCIAL (continued)
INSURANCE
25,600 Aetna Life & Casualty Co. $1,936,000
26,000 American General Corp. 945,750
24,500 Cigna Corp. 2,903,250
19,400 Safeco Corp. 708,100
----------
Total 6,493,100
----------
OTHER FINANCIAL
10,200 Hospitality Properties Trust 283,050
40,000 Storage Trust Realty 890,000
15,000 Summit Properties, Inc. 303,750
----------
Total 1,476,800
----------
Total Financial 23,303,093
----------
RAW MATERIALS/INTERMEDIATE GOODS -- 6.9%
CHEMICALS
16,400 Betz Laboratories, Inc. 717,500
16,900 Dow Chemicals Co. 1,356,225
32,000 Du Pont (E.I.) DeNemours 2,448,000
4,900 Goodrich B.F. Co. 373,013
22,500 Nalco Chemicals Co. 714,375
9,200 Olin Corp. 761,300
10,750 PPG Industries, Inc. 498,531
5,000 Rohm & Haas Co. 348,125
----------
Total 7,217,069
----------
OTHER RAW MATERIALS
101,200 Hanson PLC, ADR 1,492,700
----------
PAPERS
10,000 Kimberly Clark Corp. 763,750
9,900 Union Camp Corp. 461,586
20,200 International Paper Co. 719,625
----------
Total 1,944,961
----------
Total Raw Materials/Intermediate Goods 10,654,730
----------
UTILITIES -- 10.9%
ELECTRIC
25,600 Central & South West Corp. 710,400
41,000 Edison International 717,500
33,600 Entergy Corp. 953,400
22,400 General Public Utilities Corp. 747,600
13,800 New York State Electric & Gas Corp. 326,025
17,900 Nipsco Industries, Inc. 675,725
27,500 Pinnacle West Capital Corp. 780,312
24,000 Public Services Enterprise Group 675,000
14,300 Texas Utilities Co. 577,363
13,900 Wisconsin Energy Corp. 401,363
9,100 WPS Resources Corp. 300,300
----------
Total 6,864,988
----------
GAS DISTRIBUTION
24,300 Enron Corp. 889,988
31,400 Sonat, Inc. 1,051,900
23,000 Wicor, Inc. 759,000
----------
Total 2,700,888
----------
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Shares or
Principal
Amount Value
------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (continued)
UTILITIES (continued)
TELECOMMUNICATIONS
30,000 AT & T Corp. $1,908,750
24,400 Bellsouth Corp. 972,950
54,900 Frontier Corp. 1,647,000
20,000 GTE Corp. 857,500
33,500 Sprint Corp. 1,440,500
14,100 U.S. West, Inc. 461,775
------------
Total 7,288,475
------------
Total Utilities 16,854,351
------------
TRANSPORTATION -- 0.8%
RAILROAD
19,000 Union Pacific Corp. 1,254,000
------------
TOTAL COMMON STOCKS (identified cost, $109,667,914) 130,737,971
------------
CONVERTIBLE PREFERRED STOCKS -- 1.2%
FINANCE -- COMMERCIAL -- 0.7%
20,000 Merrill Lynch & Co., Inc., 6.50% STRYPES, due
8/15/1998 1,080,000
------------
SERVICES -- 0.5%
23,500 Browning Ferris Industries, Inc., 7.25% ACES
Converts 6/30/1998 766,688
------------
TOTAL PREFERRED STOCKS (identified cost,
$1,797,188) 1,846,688
------------
(G)U.S. TREASURY BILLS -- 0.1%
$100,000 6/27/1996 (at amortized
cost $98,446) 98,464
------------
(B)REPURCHASE AGREEMENT -- 14.5%
22,490,000 Goldman Sachs & Co., 5.35%, dated 2/29/1996, due
3/1/1996 (at amortized cost) 22,490,000
------------
TOTAL INVESTMENTS
(identified cost, $134,053,548) $155,173,123
============
</TABLE>
(See Notes to Portfolio of Investments)
February 29, 1996 (unaudited)
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
VALUE EQUITY FUND
<TABLE>
-------------------------------------------------------
<CAPTION>
Shares Value
-------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 89.2%
CAPITAL GOODS -- 5.2%
AEROSPACE AND RELATED
55,300 Raytheon Co. $2,771,912
----------
MACHINERY AND MACHINE TOOLS
257,650 Giddings & Lewis, Inc. 4,315,637
----------
OFFICE EQUIPMENT
47,000 (c)Apple Computers 1,292,500
----------
OTHER CAPITAL GOODS
49,000 (d)Crown Cork & Seal Co., Inc. 2,309,125
----------
Total Capital Goods 10,689,174
----------
CONSUMER DURABLES -- 4.2%
AUTOMOTIVE AND RELATED
56,000 Ford Motor Company 1,750,000
----------
BUILDING AND FOREST PRODUCTS
56,000 (d)Louisiana-Pacific Corp. 1,295,000
----------
HOMEBUILDERS
109,000 Kaufman & Broad Home Corp. 1,675,875
----------
HOUSEHOLD PRODUCTS/WARES
40,000 Rubbermaid, Inc. 1,125,000
179,000 Sunbeam Corp. 2,886,375
----------
Total 4,011,375
----------
Total Consumer Durables 8,732,250
----------
CONSUMER NON-DURABLES -- 29.0%
BEVERAGES AND FOODS
280,000 (c)(d)Darden Restaurants, Inc. 3,430,000
247,300 (d)Fleming Companies, Inc. 4,946,000
105,200 International Multifoods Corp. 1,959,350
93,000 Smith's Food & Drug Centers, Inc. 2,255,250
93,900 Supervalu, Inc. 3,028,275
----------
Total 15,618,875
----------
OTHER CONSUMER NON-DURABLES
18,500 (c)Fruit of the Loom, Inc. 469,438
----------
PHARMACEUTICALS AND HEALTH CARE
185,400 (c)(d)Acuson Corp. 2,757,825
164,850 (d)Caremark International, Inc. 4,203,675
25,600 (d)Ciba-Geigy AG, ADR 1,139,200
41,100 (c)FHP International Corp. 1,346,025
103,050 Mallinckrodt Group, Inc. 4,044,712
191,200 (c)Tenet Healthcare Corp. 4,278,100
100,000 (c)Value Health, Inc. 2,587,500
----------
Total 20,357,037
----------
RETAIL
60,500 (d)Dayton-Hudson Corp. 4,499,687
52,500 Dillard Department Stores, Inc. 1,640,625
150,000 (d)K Mart Corp. 1,050,000
143,000 Limited, Inc. 2,502,500
35,700 Lowe's Companies 1,106,700
46,000 Melville Corp. 1,466,250
278,000 (c)(d)Price Costco, Inc. 4,795,500
30,000 (c)Toys R Us, Inc. 716,250
71,455 (c)U.S. Industries, Inc. 1,384,440
----------
Total 19,161,952
----------
SERVICES
96,000 WMX Technologies, Inc. 2,736,000
----------
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------------------
Shares Value
--------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (continued)
CONSUMER NON-DURABLES (continued)
TOBACCO
55,000 RJR Nabisco Holdings Corp. $1,849,375
----------
Total Consumer Non-Durables 60,192,677
----------
ENERGY -- 10.9%
INTERNATIONAL OIL
27,400 (d)Royal Dutch Petroleum Co. 3,774,350
----------
OIL & GAS EQUIPMENT AND SERVICES
127,900 (d)Baker Hughes, Inc. 3,373,362
25,000 El Paso Natural Gas Co. 843,750
91,400 (d)Tidewater, Inc. 3,119,025
----------
Total 7,336,137
----------
OIL & GAS PRODUCTS
41,000 Coastal Corp. 1,506,750
18,700 Mobil Corp. 2,049,988
56,000 Occidental Petroleum Corp. 1,288,000
32,400 Texaco, Inc. 2,583,900
217,120 USX-Marathon Group 4,016,720
----------
Total 11,445,358
----------
Total Energy 22,555,845
----------
FINANCIAL -- 9.8%
BANKS
105,900 (d)Ahmanson (H.F.) & Co. 2,409,225
24,700 Chase Manhattan Corp. 1,840,150
16,000 Citicorp 1,248,000
80,400 (d)PNC Bank Corp. 2,462,250
----------
Total 7,959,625
----------
INSURANCE
91,196 Allstate Corp. 3,910,029
16,750 Cigna Corp. 1,984,875
20,000 MBIA, Inc. 1,520,000
63,000 Prudential Reinsurance Holdings 1,543,500
40,400 Torchmark Corp. 1,873,550
49,800 (d)Washington Mutual, Inc. 1,494,000
----------
Total 12,325,954
----------
Total Financial 20,285,579
----------
RAW MATERIALS/INTERMEDIATE GOODS -- 18.0%
CHEMICALS
314,000 Calgon Carbon Corp. 3,532,500
26,975 (d)Eastman Chemical Co. 1,942,200
52,200 (d)IMC Global, Inc. 2,153,250
90,250 (d)Imperial Chemical Industries PLC, ADR 5,020,156
35,000 (d)Nalco Chemical Co. 1,111,250
58,800 (c)Pegasus Gold, Inc. 926,100
50,000 Wellman, Inc. 1,131,250
----------
Total 15,816,706
----------
INTERMEDIATE GOODS
213,000 Canadian Pacific Ltd. 4,206,750
394,100 (d)Hanson PLC, ADR 5,812,975
----------
Total 10,019,725
----------
METALS
34,000 (d)AK Steel Holding Corp. 1,228,250
467,950 Horsham Corp. 6,902,263
267,300 (c)LTV Corp. 3,408,075
----------
Total 11,538,588
----------
Total Raw Materials/Intermediate Goods 37,375,019
----------
</TABLE>
(See Notes to Portfolio of Investments)
[ ] MARSHALL FUNDS
-
- --------------------------------------------------------------------------------
VALUE EQUITY FUND (continued)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------
Shares or
Principal
Amount Value
--------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (continued)
TELECOMMUNICATIONS -- 4.7%
SERVICES
57,500 GTE Corp. $2,465,313
140,000 MCI Communications Corp. 4,095,000
34,000 (d)U.S. West, Inc. 1,113,500
98,000 (c)(d)U.S. West Media Group 2,045,750
-----------
Total Telecommunications 9,719,563
-----------
TRANSPORTATION -- 2.9%
OTHER TRANSPORTATION
137,250 Alexander & Baldwin, Inc. 3,225,375
136,100 (d)American President Cos., Ltd. 2,858,100
-----------
Total Transportation 6,083,475
-----------
UTILITIES -- 4.5%
ELECTRIC DISTRIBUTION
50,000 AT&T $3,181,250
142,500 (d)Entergy Corp. 4,043,438
48,000 Telephone & Data Systems, Inc. 2,214,000
-----------
Total Utilities 9,438,688
-----------
TOTAL COMMON STOCKS (identified cost,
$167,147,901) 185,072,270
-----------
(I)COLLATERAL FOR SECURITIES LENDING -- 21.4%
$2,000,000 American Honda Finance Co., 5.373%, 5/15/1996 2,000,000
3,000,000 Bear, Stearns & Co., Inc., 5.613%, 8/7/1997 3,000,000
2,812,500 Carco Auto Trust, 5.385%, 10/15/2000 2,821,781
3,000,000 Chrysler Corp., 5.463%, 7/31/1997 2,998,290
2,000,000 Citicorp, 5.388%, 1/30/1998 1,993,540
3,000,000 Donaldson, Lufkin & Jenrette Securities Corp.,
5.425%, 3/1/1996 3,000,000
937,500 General Electric Capital Corp., 4.938%, 8/5/1996 937,500
2,000,000 General Electric Capital Corp., 6.37%, 4/25/1997 1,997,200
3,500,000 GMAC, 5.284%, 3/1/1996 3,500,000
3,000,000 Heller Financial Corp., 6.36%, 6/13/1997 3,000,000
2,000,000 J.P. Morgan Securities, Inc., 5.487%, 3/1/1996 2,000,000
12,000,000 Lehman Brothers, 5.52%, 3/1/1996 12,000,000
208,155 Lehman Institutional Prime Money Fund (at net
asset value) 208,155
3,000,000 Sears, Roebuck & Co., 5.413%, 5/12/1997 2,997,480
2,000,000 Superior Wholesale Inventory Financing Trust,
5.463%, 1/15/1999 2,001,200
-----------
TOTAL COLLATERAL FOR SECURITIES LENDING
(identified cost, $44,455,146) 44,455,146
-----------
</TABLE>
(See Notes to Portfolio of Investments)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
Principal
Amount Value
-----------------------------------------------------------------------------
<C> <S> <C>
(B)REPURCHASE AGREEMENT -- 8.7%
$18,125,000 Goldman Sachs & Co., 5.35%, dated 2/29/1996 due
3/1/1996 (at amortized cost) $ 18,125,000
------------
TOTAL INVESTMENTS (identified cost, $229,728,047) $247,652,416
============
</TABLE>
February 29, 1996 (unaudited)
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
STOCK FUND
<TABLE>
<CAPTION>
-----------------------------------------------------------
Shares Value
-----------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 94.8%
BASIC INDUSTRIES -- 6.5%
CHEMICALS
50,000 Du Pont (E.I.) De Nemours $3,825,000
135,000 Nalco Chemical Co. 4,286,250
----------
Total 8,111,250
----------
PAPER
66,000 Georgia-Pacific Corp. 4,166,250
70,000 Kimberly-Clark Corp. 5,346,250
----------
Total 9,512,500
----------
Total Basic Industries 17,623,750
----------
CAPITAL GOODS -- 20.8%
AEROSPACE AND RELATED
75,000 Boeing Co. 6,084,375
60,000 General Dynamics Corp. 3,577,500
----------
Total 9,661,875
----------
COMPUTER SERVICES
90,000 General Motors Corp. Class E 5,141,250
70,000 First Data Corp. 4,847,500
32,500 International Business Machines Corp. 3,985,312
34,000 (c)Microsoft Corp. 3,355,375
----------
Total 17,329,437
----------
ELECTRICAL EQUIPMENT
75,000 Emerson Electric Co. 5,840,625
100,000 General Electric Co. 7,550,000
50,000 Grainger (W.W.), Inc. 3,418,750
----------
Total 16,809,375
----------
ELECTRONICS
49,000 Intel Corp. 2,881,813
----------
OTHER CAPITAL GOODS
60,000 Fluor Corp. 4,027,500
200,000 WMX Technologies, Inc. 5,700,000
----------
Total 9,727,500
----------
Total Capital Goods 56,410,000
----------
CONSUMER DURABLES -- 1.4%
AUTOMOTIVE
75,000 General Motors Corp. 3,843,750
----------
CONSUMER NON-DURABLES -- 32.2%
BEVERAGES & FOODS
65,000 CPC International, Inc. 4,501,250
80,000 General Mills, Inc. 4,600,000
105,000 McDonalds Corp. 5,250,000
70,000 Pepsico, Inc. 4,427,500
133,000 Quaker Oats Co. 4,571,875
----------
Total 23,350,625
----------
COSMETICS/TOILETRIES
118,000 Tambrands, Inc. 5,693,500
----------
ENTERTAINMENT
30,000 Disney (Walt) Co. 1,965,000
----------
HEALTH CARE
115,000 Abbott Laboratories 4,801,250
70,000 (c)Foundation Health Corp. 2,730,000
95,000 Mallinckrodt Group, Inc. 3,728,750
60,000 Merck & Co., Inc. 3,975,000
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------------
Shares Value
--------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (continued)
CONSUMER NON-DURABLES (continued)
HEALTH CARE (continued)
70,000 Schering-Plough $3,928,750
----------
Total 19,163,750
----------
MEDIA
40,000 Capital Cities/ABC, Inc. 5,090,000
55,000 Gannett Co. 3,740,000
----------
Total 8,830,000
----------
RETAIL
100,000 Home Depot, Inc. 4,325,000
70,000 (c)Kohls Corp. 4,331,250
145,000 Walgreen Co. 4,785,000
----------
Total 13,441,250
----------
SERVICES
65,000 Eastman Kodak Co. 4,647,500
----------
TOBACCO
55,000 Philip Morris Cos., Inc. 5,445,000
140,000 RJR Nabisco Holdings Corp. 4,707,500
----------
Total 10,152,500
----------
Total Consumer Non-Durables 87,244,125
----------
ENERGY -- 9.5%
INTERNATIONAL OIL & GAS
70,000 Amoco Corp. 4,865,000
70,000 Exxon Corp. 5,565,000
190,000 Occidental Petroleum Corp. 4,370,000
30,000 Royal Dutch Petroleum Co. 4,132,500
40,000 Texaco, Inc. 3,190,000
----------
Total 22,122,500
----------
OIL & GAS PRODUCTS
100,000 Enron Corp. 3,662,500
----------
Total Energy 25,785,000
----------
FINANCIAL -- 11.4%
BANKING
80,000 BankAmerica Corp. 5,700,000
75,000 Chase Manhattan Corp. 5,587,500
----------
Total 11,287,500
----------
INSURANCE
55,000 American International Group, Inc. 5,314,375
55,000 Chubb Corp. 5,341,875
----------
Total 10,656,250
----------
OTHER FINANCIAL
120,000 American Express Company 5,520,000
40,000 Federal Home Loan Mortgage Corp. 3,300,000
----------
Total 8,820,000
----------
Total Financial 30,763,750
----------
RAW MATERIALS/INTERMEDIATE GOODS -- 2.3%
INTERMEDIATE GOODS
425,000 Hanson PLC, ADR 6,268,750
----------
UTILITIES -- 9.6%
ELECTRIC
100,000 Duke Power Co. 4,887,500
175,000 Wisconsin Energy Corp. 5,053,125
----------
Total 9,940,625
----------
</TABLE>
(See Notes to Portfolio of Investments)
[ ] MARSHALL FUNDS
-
- --------------------------------------------------------------------------------
STOCK FUND (continued)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
Shares or
Principal
Amount Value
-----------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (continued)
UTILITIES (continued)
TELECOMMUNICATIONS
85,000 Ameritech Corp. $4,898,125
110,000 AT & T Corp. 6,998,750
100,000 GTE Corp. 4,287,500
------------
Total 16,184,375
------------
Total Utilities 26,125,000
------------
TRANSPORTATION -- 1.1%
RAILROAD
40,000 Conrail, Inc. 2,885,000
------------
TOTAL COMMON STOCKS (identified cost,
$234,498,483) 256,949,125
------------
(B)REPURCHASE AGREEMENT -- 7.1%
$19,167,000 Goldman Sachs & Co., 5.35%, dated 2/29/1996 due
3/1/1996 (at amortized cost) 19,167,000
------------
TOTAL INVESTMENTS (identified cost, $253,665,483) $276,116,125
============
</TABLE>
- --------------------------------------------------------------------------------
MID-CAP STOCK FUND
<TABLE>
<CAPTION>
------------------------------------------------------------------------
Shares Value
------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 97.4%
CAPITAL GOODS -- 10.3%
COMPUTERS
50,000 (c)Informix Corp. $1,762,500
80,000 (c)Transaction Systems Architects--Class A 2,820,000
----------
Total 4,582,500
----------
ELECTRICAL EQUIPMENT
15,000 (c)Altera Corp. 978,750
40,000 (c)Cadence Design Systems, Inc. 1,785,000
30,000 Linear Technology Corp. 1,395,000
15,000 (c)Parametric Technology Corp. 1,115,625
----------
Total 5,274,375
----------
OFFICE EQUIPMENT
55,000 Danka Business Systems--ADR 2,406,250
----------
Total Capital Goods 12,263,125
----------
CONSUMER DURABLES -- 1.1%
AUTOMOTIVE AND RELATED
35,000 Harley-Davidson, Inc. 1,255,625
----------
CONSUMER NON-DURABLES -- 61.8%
BROADCASTING
35,000 A.H. Belo Corp. 1,225,000
50,000 (c)Argyle Television, Inc. 1,137,500
35,000 (c)Children's Broadcasting Corp. 332,500
70,000 (c)Infinity Broadcasting Corp. 2,887,500
75,000 (c)Westwood One, Inc. 1,256,250
30,000 (c)United States Satellite Broadcast Company, Inc. 975,000
----------
Total 7,813,750
----------
COMMERCIAL SERVICES
37,500 (c)ABR Information Services, Inc. 1,415,625
60,000 (c)BDM International, Inc. 2,422,500
50,000 (c)Ceridian Corp. 2,150,000
50,000 (c)Fritz Companies, Inc. 1,950,000
20,000 (c)FYI, Inc. 345,000
60,000 (c)Sitel Corp. 2,295,000
----------
Total 10,578,125
----------
COSMETICS AND TOILETRIES
50,000 Estee Lauder, Inc. 1,831,250
28,000 (c)Inbrand Corp. 686,000
----------
Total 2,517,250
----------
DRUGS
30,000 (c)Alza Corp. 997,500
30,000 (c)Biogen, Inc. 1,961,250
20,000 (c)Elan PLC 1,160,000
20,000 (c)Neopath 470,000
25,000 (c)Neuromedical Systems, Inc. 503,125
110,000 (c)North American Vaccine, Inc. 1,622,500
----------
Total 6,714,375
----------
</TABLE>
(See Notes to Portfolio of Investments)
February 29, 1996 (unaudited)
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
MID-CAP STOCK FUND (continued)
<TABLE>
<CAPTION>
--------------------------------------------------------
Shares Value
--------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (continued)
CONSUMER NON-DURABLES (continued)
ENERGY
30,000 Apache Corp. $780,000
60,000 (c)Input/Output, Inc. 1,785,000
30,000 NGC Corp. 341,250
50,000 (c)Nabors Industries, Inc. 643,750
----------
Total 3,550,000
----------
ENVIRONMENTAL
70,000 (c)Sanifill, Inc. 2,738,750
----------
FOREST PRODUCTS & PAPER
20,000 Consolidated Papers, Inc. 1,022,500
----------
HEALTHCARE
50,000 (c)Healthsouth Corp. 1,750,000
55,000 (c)Health Management Association 1,725,625
50,000 (d)Humana, Inc. 1,225,000
40,000 (d)Omnicare, Inc. 1,930,000
20,000 (c)Pacificare Health Systems, Inc. 1,880,000
20,000 United States Surgical Corp. 567,500
----------
Total 9,078,125
----------
LEISURE AND RECREATION
75,000 (d)Callaway Golf Co. 1,781,250
70,000 (c)Circus Circus Enterprises 2,231,250
40,000 (c)Mirage Resorts, Inc. 1,855,000
----------
Total 5,867,500
----------
MANUFACTURING
30,000 Industrie Natuzzi Spa--ADR 1,500,000
----------
RESTAURANTS
50,000 (c)(d)Boston Market, Inc. 1,793,750
50,000 (c)Outback Steakhouse, Inc. 1,775,000
45,000 (c)(d)Rainforest Cafe, Inc. 1,091,250
----------
Total 4,660,000
----------
RETAIL
50,000 (c)Autozone, Inc. 1,287,500
70,000 (c)Bed, Bath & Beyond, Inc. 3,123,750
20,000 Casey's General Stores, Inc. 450,000
100,000 (c)Department 56, Inc. 2,012,500
60,000 (c)Kohl's Corp. 3,712,500
50,000 (c)O'Reilly Automotive, Inc. 1,725,000
40,000 (c)Tommy Hilfiger Corp. 1,585,000
----------
Total 13,896,250
----------
SERVICES
85,000 (c)Apollo Group, Inc.--Class A 3,400,000
----------
Total Consumer Non-Durables 73,336,625
----------
FINANCIAL -- 7.3%
60,000 Advanta Corp--Class B 2,700,000
25,000 Bear Stearns, Inc. 606,250
50,000 (c)Credit Acceptance Corp. 937,500
23,000 Firstar Corp. 1,037,875
10,100 Franklin Resources, Inc. 582,013
50,000 Mercury Finance Co. 687,500
40,000 Northern Trust Corp. 2,110,000
----------
Total Financial 8,661,138
----------
</TABLE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
Shares or
Principal
Amount Value
-----------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (continued)
INSURANCE -- 2.1%
25,000 CapMAC Holdings, Inc. $606,250
30,000 (d)MGIC Investment Corp. 1,747,500
9,000 (c)Riscorp, Inc. 193,500
------------
Total Insurance 2,547,250
------------
TELECOMMUNICATIONS -- 12.6%
40,000 (c)ADC Telecommunications, Inc. 1,590,000
25,000 (c)Gilat Satellite Networks, LTD 621,875
40,000 (c)MFS Communications, Inc. 2,420,000
35,000 (c)Newbridge Networks Corp. 1,710,625
45,000 (c)Paging Network, Inc. 1,192,500
55,000 (c)Periphonics Corp. 1,320,000
60,000 (c)Tellabs, Inc. 2,835,000
55,000 (c)Transaction Network Services, Inc. 1,663,750
40,000 (c)Worldcom, Inc. 1,575,000
------------
Total Telecommunications 14,928,750
------------
TRANSPORTATION -- 2.2%
RAILROAD
35,000 Wisconsin Central Transportation Corp. 2,598,750
------------
TOTAL COMMON STOCKS (identified cost, $94,840,549) 115,591,263
------------
(G)U.S. TREASURY BILL -- 0.1%
$100,000 4/18/1996 (at amortized cost $99,347) 99,360
------------
(I)COLLATERAL FOR SECURITIES LENDING -- 4.6%
5,000,000 Lehman Brothers Corporate Repo 5.52%, dated
2/29/1996 due 3/1/1996 5,000,000
422,500 Lehman Brothers Institutional Value Money Fund (at
net asset value) 422,500
------------
TOTAL COLLATERAL FOR SECURITIES LENDING (identified
cost, $5,422,500) 5,422,500
------------
(B)REPURCHASE AGREEMENT -- 4.3%
5,153,000 Goldman Sachs & Co., 5.35%, dated 2/29/1996 due
3/1/1996 (at amortized cost) 5,153,000
------------
TOTAL INVESTMENTS (identified
cost, $105,515,396) $126,266,123
============
</TABLE>
(See Notes to Portfolio of Investments)
[ ] MARSHALL FUNDS
-
- --------------------------------------------------------------------------------
INTERNATIONAL STOCK FUND
<TABLE>
<CAPTION>
----------------------------------------------------------------------
Shares Value
----------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 77.6%
AUSTRALIA -- 4.1%
AIR TRAVEL -- 0.7%
47,000 Qantas Airways, Ltd., ADR $855,330
---------
BANKING -- 0.9%
225,200 Westpac Bank Corp. 1,063,937
---------
BROADCASTING -- 0.3%
64,235 News Corp., Ltd. 365,345
---------
BUSINESS SERVICES -- 0.8%
72,000 Brambles Industries Ltd. 897,179
---------
CONSTRUCTION MATERIALS -- 1.1%
436,200 Pioneer International Ltd. 1,293,828
---------
INDUSTRIAL MACHINERY -- 0.3%
85,120 BTR PLC 416,458
---------
Total Australia 4,892,077
---------
AUSTRIA -- 2.2%
ELECTRIC UTILITIES -- 1.1%
9,900 Evn Energ-Versorg 1,313,104
---------
INDUSTRIAL MACHINERY -- 1.1%
11,000 VA Technologie AG 1,391,961
---------
Total Austria 2,705,065
---------
BELGIUM -- 2.0%
CHEMICALS -- 1.1%
2,200 Solvay 1,290,370
---------
NON-FERROUS METALS -- 0.9%
15,900 (c)NV Union Miniere SA 1,157,512
---------
Total Belgium 2,447,882
---------
BRAZIL -- 0.9%
BROADCASTING -- 0.9%
20,700 Telecomunicacoes Brasileiras, ADR 1,086,750
---------
CANADA -- 3.1%
BANKING -- 1.4%
56,000 Canada Imperial Bank of Commerce 1,663,387
---------
ELECTRONICS -- 1.0%
25,000 (c)Newbridge Networks Corp. 1,227,768
---------
INSURANCE -- 0.3%
18,600 London Insurance Group, Inc. 379,619
---------
MINING -- 0.4%
58,000 (c)Inmet Mining Corp. 449,195
---------
Total Canada 3,719,969
---------
CHILE -- 0.6%
TELEPHONE -- 0.6%
9,500 Companhia De Telecomunicacion, ADR 786,125
---------
CHINA -- 0.8%
ELECTRIC UTILITIES -- 0.8%
94,100 Shandong Huaneng Power Company Ltd., Class N, ADR 905,713
---------
CZECH REPUBLIC -- 1.7%
BANKING -- 0.2%
4,000 Komercni Banka A.S. 273,882
---------
ELECTRIC UTILITIES -- 0.8%
24,815 (c)CEZ (Cesk En Zavody) 891,345
---------
</TABLE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------
Shares Value
-----------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (continued)
CZECH REPUBLIC (continued)
TELECOMMUNICATIONS -- 0.7%
8,600 SPT Telekom A.S. $885,943
---------
Total Czechoslavakia 2,051,170
---------
FINLAND -- 1.3%
CONGLOMERATES -- 0.6%
43,500 Amer Group, Ltd., Class A 736,915
---------
PAPER -- 0.7%
14,700 Metsa-Serla Oy, Class B 456,009
198,800 Tampella AB 336,779
---------
Total 792,788
---------
Total Finland 1,529,703
---------
FRANCE -- 8.3%
AUTOMOBILES -- 1.3%
52,000 Renault (Regie Nationale) 1,526,043
---------
BANKING -- 1.4%
44,600 Banque Nationale de Paris 1,725,698
---------
CHEMICALS -- 1.6%
77,500 Rhone-Poulenc, Class A 1,933,002
---------
ELECTRICAL EQUIPMENT -- 1.3%
17,100 Alcatel Alsthom 1,517,037
---------
GAS EXPLORATION -- 1.3%
22,992 Soc Elf Aquitaine 1,586,725
---------
INSURANCE -- 1.4%
24,629 AXA 1,591,667
---------
Total France 9,880,172
---------
GERMANY -- 3.3%
BANKING -- 1.3%
31,950 Deutsche Bank, AG 1,609,670
---------
CHEMICALS -- 1.4%
5,350 Bayer AG 1,632,074
---------
ELECTRIC UTILITIES -- 0.6%
3,600 Veba Intl Finance 740,716
---------
Total Germany 3,982,460
---------
GREAT BRITAIN -- 7.4%
BANKING -- 1.0%
100,000 Barclays PLC 1,189,090
---------
BUSINESS SERVICES -- 1.0%
109,166 Welsh Water PLC 1,239,534
---------
ELECTRICAL EQUIPMENT -- 1.3%
337,500 The BICC Group 1,504,942
---------
FOOD & BEVERAGES -- 2.2%
1,793,900 Albert Fisher Group PLC 1,209,494
525,933 Hillsdown Holdings PLC 1,382,124
---------
Total 2,591,618
---------
GAS & PIPELINE UTILITIES -- 1.0%
343,800 British Gas PLC 1,252,505
---------
POLLUTION CONTROL -- 0.3%
30,000 (c)Waste Management International PLC, ADR 303,750
---------
RETAIL TRADE -- 0.6%
100,600 Kwik Save Group PLC 710,643
---------
Total Great Britain 8,792,082
---------
</TABLE>
(See Notes to Portfolio of Investments)
February 29, 1996 (unaudited)
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
INTERNATIONAL STOCK FUND (continued)
<TABLE>
<CAPTION>
----------------------------------------------------------------
Shares Value
----------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (continued)
HONG KONG -- 5.6%
BANKING -- 1.4%
104,807 HSBC Holdings $1,681,055
----------
CONGLOMERATES -- 2.3%
210,000 Hutchinson Whampoa 1,331,022
171,500 Swire Pacific, Ltd. 1,497,400
----------
Total 2,828,422
----------
FINANCIAL SERVICES -- 1.4%
485,500 Jardine Strategic Holdings, Ltd. 1,650,700
----------
RETAIL TRADE -- 0.5%
560,371 Dairy Farm International
Holdings, Ltd. 546,362
----------
Total Hong Kong 6,706,539
----------
HUNGARY -- 0.7%
OIL & GAS -- 0.7%
66,814 MOL Magyar Olay, ADR 805,109
----------
INDONESIA -- 0.5%
BANKING -- 0.1%
114,000 Pan Indonesia Bank 127,952
----------
FOREST PRODUCTS -- 0.4%
599,500 Barito Pacific Timber 524,061
----------
Total Indonesia 652,013
----------
ITALY -- 2.3%
PAPER -- 0.8%
170,000 Burgo (Cartiere) S.P.A. 918,049
----------
TELEPHONE -- 1.5%
795,000 STET-Societa Finanziaria Telefonica S.P.A. 1,806,064
----------
Total Italy 2,724,113
----------
JAPAN -- 4.0%
ELECTRICAL EQUIPMENT -- 1.8%
62,000 Hitachi Koki Co. 580,502
151,000 Hitachi, Ltd. 1,523,003
----------
Total 2,103,505
----------
ENGINEERING & CONSTRUCTION -- 1.0%
55,000 Daito Trust Construction 622,770
47,000 Kyudenko, Co., Ltd. 603,740
----------
Total 1,226,510
----------
HOUSEHOLD APPLIANCES & FURNISHINGS -- 1.2%
25,000 Sony Corp. 1,465,341
----------
Total Japan 4,795,356
----------
MEXICO -- 0.3%
CONTAINER & GLASS -- 0.3%
182,400 Vitro SA 322,853
----------
NETHERLANDS -- 4.7%
CHEMICALS -- 1.5%
10,500 Azko Nobel NV 1,167,801
20,000 European Vinyls Corp., International N.V. 647,513
----------
Total 1,815,314
----------
INSURANCE -- 2.7%
34,465 Aegon N.V. 1,482,186
25,500 International Nederlanden 1,692,978
----------
Total 3,175,164
----------
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------------
Shares Value
-------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (continued)
NETHERLANDS (continued)
RETAIL TRADE -- 0.5%
9,000 Koninklijke Bijenkorf Beheer $579,481
---------
Total Netherlands 5,569,959
---------
NEW ZEALAND -- 2.4%
FOREST PRODUCTS -- 1.1%
550,000 Fletcher Challenge, Ltd. 1,262,453
---------
INVESTMENT COMPANIES -- 1.3%
1,803,600 Brierley Investments, Ltd. 1,566,131
---------
Total New Zealand 2,828,584
---------
NORWAY -- 2.9%
COMMERCIAL SERVICES -- 0.5%
39,500 Unitor Ships Service 616,937
---------
DRUGS & HEALTHCARE -- 1.2%
53,500 Hafslund Nycomed, Class B 1,428,873
---------
NON-FERROUS METALS -- 0.6%
56,000 Elkem A.S. 673,476
---------
PETROLEUM SERVICES -- 0.6%
60,500 Saga Petroleum A.S., Class A 737,044
---------
Total Norway 3,456,330
---------
SPAIN -- 8.2%
BANKING -- 2.9%
44,500 Banco Bilbao Vizcaya 1,733,183
76,000 Corporacion Bancaria de Espana SA, ADR 1,719,500
---------
Total 3,452,683
---------
ELECTRIC UTILITIES -- 2.3%
18,000 Empresa Nac De Electridad 1,025,413
178,000 Iberdrola SA 1,754,757
---------
Total 2,780,170
---------
PETROLEUM SERVICES -- 1.4%
46,000 Repsol SA 1,680,094
---------
TELEPHONE -- 1.6%
118,500 Telefonica de Espana 1,948,588
---------
Total Spain 9,861,535
---------
SWEDEN -- 6.8%
AUTOMOBILES -- 1.3%
73,500 Volvo Auto Receivables
1992-B 1,572,885
---------
BANKING -- 2.4%
70,000 Stadshypotek AB 1,409,869
75,000 Svenska Handelsbanken, Stockholm 1,443,931
---------
Total 2,853,800
---------
DRUG & HEALTHCARE -- 1.3%
34,500 Astra AB, Class B 1,578,772
---------
FOREST PRODUCTS -- 1.1%
98,000 Stora Kopparbergs, Class B 1,262,662
---------
OFFICE & BUSINESS EQUIPMENT -- 0.7%
47,000 Esselte AB, Class A 807,417
---------
Total Sweden 8,075,536
---------
SWITZERLAND -- 3.5%
BUSINESS SERVICES -- 1.1%
720 SGS Holding 1,381,266
---------
1,350 BBC Brown Boveri 1,616,982
---------
</TABLE>
(See Notes to Portfolio of Investments)
[ ] MARSHALL FUNDS
-
- --------------------------------------------------------------------------------
INTERNATIONAL STOCK FUND (continued)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Shares or
Principal
Amount Value
------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (continued)
SWITZERLAND (continued)
ELECTRICAL EQUIPMENT -- 1.4%
INSURANCE -- 0.5%
2,100 Zurich Versicherungsgesellschaft $572,775
----------
LEISURE -- 0.5%
350 Reiseburo Kuoni AG, Class B 642,255
----------
Total Switzerland 4,213,278
----------
TOTAL COMMON STOCKS (identified cost, $84,204,703) 92,790,373
----------
PREFERRED STOCKS -- 0.9%
AUSTRALIA -- 0.4%
BROADCASTING -- 0.4%
81,572 News Corp., Ltd. 411,570
----------
GREAT BRITAIN -- 0.1%
BUSINESS SERVICES -- 0.1%
107,100 Welsh Water PLC. 163,292
----------
PHILIPPINES -- 0.4%
TELEPHONE -- 0.4%
14,820 Philippines Long Distance Telephone Co., GDR 496,470
----------
TOTAL PREFERRED STOCKS (identified cost, $885,614) 1,071,332
----------
CLOSED-END INVESTMENT COMPANIES -- 3.7%
26,000 Chile Fund, Inc. 630,500
381 Creditanstalt Czech Investment Fund 8,649
353,400 India Fund 647,124
12 (c)Korea International Trust 684,000
9,000 Singapore Fund 130,500
57,064 Thailand Fund, Inc. 1,376,669
69,000 (c)Turkish Growth Fund 957,375
----------
TOTAL CLOSED-END INVESTMENT COMPANIES (identified
cost, $4,782,677) 4,434,817
----------
CONVERTIBLE BONDS -- 4.0%
GREAT BRITAIN -- 1.7%
$1,145,000 National Power Co. PLC, Conv. Sub. Deb., 6.25%,
9/23/2008 1,986,994
----------
UNITED STATES -- 2.3%
835,000 CS Holding Finance, Conv. Deb., 4.875%, 11/19/2002 1,229,538
1,790,000 PIV Investment Finance, Conv. Deb., 4.50%, 12/1/2000 1,558,428
----------
Total 2,787,966
----------
TOTAL CONVERTIBLE BONDS (identified cost, $4,679,466) 4,774,960
----------
CONVERTIBLE PREFERRED STOCKS -- 2.5%
ARGENTINA -- 1.0%
37,178 Nacional Financiera, SNC, 11.25% PRIDES 1,236,169
----------
MEXICO -- 0.9%
19,680 Cointel, Telefonica de Argentina SA, $5.04 PRIDES $1,047,960
----------
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
Shares or
Principal
Amount Value
----------------------------------------------------------------------------
<C> <S> <C>
CONVERTIBLE PREFERRED STOCKS (continued)
PHILIPPINES -- 0.6%
19,500 Philippine Long Distance Telephone Co., Series II,
$1.44 $653,250
------------
TOTAL CONVERTIBLE PREFERRED STOCKS (identified
cost, $2,908,104) 2,937,379
------------
GOVERNMENT AGENCIES -- 10.4%
FEDERAL HOME LOAN MORTGAGE DISCOUNT
NOTES -- 7.0%
$935,000 5.35%, 3/7/1996 934,166
260,000 5.26%, 3/20/1996 259,278
3,175,000 5.30%, 3/25/1996 3,163,782
345,000 5.10%-5.11%, 3/27/1996 343,728
1,725,000 4.98%, 5/2/1996 1,710,205
845,000 4.98%, 5/13/1996 836,467
1,120,000 4.98%, 5/15/1996 1,108,380
------------
Total (at amortized cost) 8,356,006
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION DISCOUNT
NOTES -- 3.4%
2,250,000 5.24%, 4/2/1996 2,239,520
385,000 5.09%, 4/4/1996 383,149
1,500,000 5.08%, 4/12/1996 1,491,110
------------
Total (at amortized cost) 4,113,779
------------
TOTAL GOVERNMENT AGENCIES (amortized cost,
$12,469,785) 12,469,785
------------
U.S. TREASURY SECURITIES -- 1.6%
1,077,000 Treasury Bill, 4/4/1996 1,071,909
682,000 Treasury Bill, 4/11/1996 678,200
225,000 Treasury Bill, 5/2/1996 223,136
------------
TOTAL U.S. TREASURY SECURITIES
(at amortized cost) 1,973,245
------------
TOTAL INVESTMENTS (identified
cost, $111,903,594) $120,451,891
============
</TABLE>
(See Notes to Portfolio of Investments)
February 29, 1996 (unaudited)
PORTFOLIO OF INVESTMENTS
(See Notes to Portfolio of Investments)
- --------------------------------------------------------------------------------
SHORT-TERM INCOME FUND
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Principal
Amount Value
------------------------------------------------------------------------------
<C> <S> <C>
ASSET-BACKED SECURITIES -- 21.1%
$ 2,125,000 Contimortgage Home Equity Loan Trust, Series 1995-4,
Class A3, 6.20%, 10/15/2010 $2,115,703
1,862,936 Equicon Home Equity Loan Trust, Series 1992-7, Class
A, 5.90%, 9/18/2005 1,865,563
520,644 Ford Credit Grantor Trust, Series 1993-B, Class A,
4.30%, 7/15/1998 517,208
1,586,655 Green Tree Acceptance Corp., Series 1994-4, Class
A1, 6.55%, 7/15/2019 1,595,572
157,248 Green Tree Acceptance Corp., Series 1993-1, Class
A1, 4.90%, 4/15/2018 156,970
2,450,000 The Money Store Home Equity Loan Trust, Series 1995-
C, Class A2, 6.25%, 8/15/2016 2,437,750
1,651,493 Olympic Automobile Receivables, Series 1994, Class
A, 5.65%, 1/15/2001 1,650,651
2,144,621 Olympic Automobile Receivables, Series 1995, Class
B, 7.35%, 10/15/2001 2,186,589
1,007,488 Premier Auto Trust, Series 1993-4, Class A2, 4.65%,
2/2/1999 1,001,604
250,082 (f) Revolving Home Equity Loan Trust, Series 1992-1,
Class A, 5.7424%, 3/15/1996 250,702
2,199,610 UCFC Home Equity Loan, Series 1994-C1, Class A2,
7.275%, 6/10/2007 2,232,844
1,919,783 Western Financial Grantor Trust, Series 1994-2,
Class A1, 6.375%, 9/1/1999 1,938,655
----------
TOTAL ASSET-BACKED SECURITIES (identified cost,
$17,798,470) 17,949,811
----------
CORPORATE BONDS -- 10.6%
BANKING -- 2.2%
1,800,000 Nationsbank Corp., 7.50%, 2/15/1997 1,832,454
----------
FINANCE -- 0.5%
430,050 Heller Financial Inc., 6.45%, 2/15/1997 432,390
----------
FINANCE -- AUTOMOTIVE -- 3.7%
3,000,000 Ford Holdings, 9.25%, 7/15/1997 3,142,080
----------
RETAIL -- 2.1%
1,755,000 Dayton Hudson Corp., 4.65%, 3/11/1996 1,755,930
----------
TELECOMMUNICATIONS -- 2.1%
1,800,000 Northern Telecom, 8.25%, 6/13/1996 1,815,264
----------
TOTAL CORPORATE BONDS (identified cost, $8,973,897) 8,978,118
----------
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
Principal
Amount Value
----------------------------------------------------------------------------
<C> <S> <C>
MORTGAGE-BACKED SECURITIES -- 37.6%
FEDERAL HOME LOAN MORTGAGE CORP. -- 5.3%
$ 1,450,000 7.84%, 4/26/2000 $1,455,380
800,000 6.00%, 7/15/2010 (Series 1468-C) 800,568
671,030 7.75%, 1/15/2018 (Series 1259-H) 675,653
1,535,290 10.00%, 7/15/2018, REMIC (Series 10-D) 1,569,619
----------
Total 4,501,220
----------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION -- 13.1%
2,200,000 8.00%, 3/15/2000 2,201,034
1,829,229 8.00%, 8/01/2007 1,890,947
3,755,372 8.00%, 5/01/2008 3,882,078
1,971,738 7.50%, 4/25/2014, REMIC (Series 1991-06-K) 1,984,712
425,120 7.25%, 9/25/2018, REMIC (Series 1991-G34-C) 424,342
722,769 6.00%, 7/25/2019, REMIC (Series 1992-009-G) 720,790
----------
Total 11,103,903
----------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION -- 1.7%
1,433,782 7.50%, 10/17/2015, CMO (Class E) 1,435,574
----------
OTHER -- 17.5%
1,971,303 Citicorp Mortgage Securities, Inc. Series 1992-19,
Class A2, 7.50%, 1/25/2019 1,974,383
3,080,753 CMC Securities Corp., III, Series 1994-E, Class
AM, 6.00%, 3/25/2024 3,052,622
925,890 GE Capital Mortgage Services, Inc., Series 1994-
10, Class A1, 5.00%, 3/25/2024 922,667
1,773,439 PaineWebber CMO Trust, Class 0-4, 9.50%, 6/1/2017 1,812,472
2,157,535 PNC Mortgage Securities Corp., Series 1994-1,
Class T7, 6.00%, 2/25/2024 2,120,452
359,420 Prudential Home Mortgage Securities Co., Series
1993-53, Class A1, 6.00%, 1/25/2009 358,691
2,175,000 Prudential Home Mortgage Securities Co., Series
1992-32, Class A4, 7.15%, 10/25/2022 2,182,895
2,526,738 Residential Funding Mortgage Securities I, Series
1993-S41, Class A1, 6.84927%, 11/15/2017 2,503,049
----------
Total 14,927,231
----------
TOTAL MORTGAGE-BACKED SECURITIES (identified cost,
$32,156,955) 31,967,928
----------
U.S. TREASURY-AGENCY -- 23.5%
5,000,000 5.875%, 8/15/1998 5,041,050
5,000,000 6.25%, 8/31/2000 5,096,400
</TABLE>
(See Notes to Portfolio of Investments)
[ ] MARSHALL FUNDS
-
- --------------------------------------------------------------------------------
SHORT-TERM INCOME FUND (continued)
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
Principal
Amount Value
---------------------------------------------------------------------------
<C> <S> <C>
U.S. TREASURY-AGENCY (continued)
$10,000,000 5.25%, 1/31/2001 $9,794,400
-----------
TOTAL U.S. TREASURY-AGENCY (identified cost,
$20,006,875) 19,931,850
-----------
(B)REPURCHASE AGREEMENT -- 7.1%
5,991,000 Goldman Sachs & Co., 5.35%, dated 2/29/1996, due
3/1/1996 (at amortized cost) 5,991,000
-----------
TOTAL INVESTMENTS (identified cost, $84,927,197) $84,818,707
===========
</TABLE>
- --------------------------------------------------------------------------------
INTERMEDIATE BOND FUND
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
Principal
Amount Value
-----------------------------------------------------------------------------
<C> <S> <C>
ASSET-BACKED SECURITIES -- 13.3%
$4,690,000 American Express Master Trust, Series 1994-2, Class
A, 7.60%, 8/15/2002 $4,983,031
5,000,000 Chemical Master Credit Card Trust I, Series 1995-3,
Class A, 6.23%, 4/15/2005 4,991,095
14,630,000 Citibank Credit Card Master Trust I, Series 1996-1,
Class Association, 2/7/2003 10,874,205
5,000,000 Contimortgage Home Equity Loan Trust, Series 1995-4,
Class A5, 6.56%, 12/15/2010 4,935,937
2,840,380 Ford Credit Grantor Trust, Series 1994-B, Class A,
7.30%, 10/15/1999 2,895,285
4,325,000 Green Tree Financial Corp., Series 1994-7, Class A4,
8.35%, 3/15/2020 4,685,268
7,251,856 Mortgage Capital Funding, Inc., Series 1995-MC1,
Class A1A, 7.70%, 5/25/2027 7,464,879
3,006,807 Olympic Automobile Receivables Trust, Series 1994-A,
5.65%, 1/15/2001 3,005,274
5,840,000 Olympic Automobile Receivables Trust, Series 1995-D,
Class A4, 6.05%, 11/15/2000 5,851,863
----------
TOTAL ASSET-BACKED SECURITIES (identified cost,
$48,985,889) 49,686,837
----------
CORPORATE BONDS -- 41.3%
BANKING -- 19.6%
7,000,000 BCH Cayman Islands, LP, 6.50%, 2/15/2006 6,744,360
9,000,000 BankAmerica Corp., 6.20%, 2/15/2006 8,660,340
9,137,000 Chemical Banking Corp., 7.875%, 7/15/2006 9,868,051
9,000,000 Citicorp, 6.375%, 1/15/2006 8,761,590
7,000,000 Donaldson, Lufkin and Jenrette Securities Corp.,
5.625%, 2/15/2016 6,834,870
8,000,000 Fleet Financial Group, Inc., 8.125%, 7/1/2004 8,729,920
10,000,000 Goldman Sachs Group, LP, 6.25%, 2/1/2003 9,748,438
8,000,000 Provident Bank, 6.125%, 12/15/2000 7,925,520
6,000,000 Toronto-Dominion Bank, 7.875%, 8/15/2004 6,303,840
----------
Total 73,576,929
----------
CONSUMER SERVICES -- 4.0%
7,150,000 Carnival Cruise Lines, Inc., 7.05%, 5/15/2005 7,265,472
5,000,000 Marriott International, Inc., Series B, 7.875%,
4/15/2005 5,323,350
</TABLE>
(See Notes to Portfolio of Investments)
February 29, 1996 (unaudited)
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
INTERMEDIATE BOND FUND (continued)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
Principal
Amount Value
----------------------------------------------------------------------------
<C> <S> <C>
CORPORATE BONDS (continued)
CONSUMER SERVICES (continued)
$2,500,000 Marriott International, Inc., Series C, 7.125%,
6/1/2007 $2,512,075
-----------
Total 15,100,897
-----------
FINANCE -- 8.4%
5,000,000 Ford Motor Credit Co., 8.24%, 1/15/2002 5,428,750
6,750,000 Ford Motor Credit Co., 6.25%, 12/20/2002 6,656,513
5,165,000 General Motors Acceptance Corp., 7.00%, 6/6/2003 5,249,086
6,700,000 General Motors Acceptance Corp., 7.50%, 6/9/2000 7,006,056
7,090,000 Sears Roebuck Acceptance Corp., Series 1, 6.40%,
9/25/2000 7,118,927
-----------
Total 31,459,332
-----------
INDUSTRIAL SERVICES -- 6.1%
6,000,000 WMX Technologies, Inc., 6.25%, 10/15/2000 6,027,000
9,000,000 Dayton-Hudson Corp., 6.40%, 2/15/2003 8,728,110
7,000,000 Dayton-Hudson Corp., 9.75%, 7/1/2002 8,033,620
-----------
Total 22,788,730
-----------
UTILITIES-GAS -- 1.5%
5,590,000 Burlington Resources, Inc., 7.15%, 5/1/1999 5,762,004
-----------
UTILITIES-TELEPHONE -- 1.7%
6,070,000 NYNEX Capital Funding Co., Series B, 8.10%,
11/1/1999 6,440,998
-----------
TOTAL CORPORATE BONDS (identified cost,
$155,873,721) 155,128,890
-----------
MORTGAGE-BACKED SECURITIES -- 12.7%
FEDERAL HOME LOAN MORTGAGE
ASSOCIATION -- 12.0%
20,562 8.75%, 4/1/2001 21,372
25,000,000 (h)6.50%, 4/1/2099 24,757,500
20,000,000 (h)7.00%, 4/1/2099 20,143,400
-----------
Total 44,922,272
-----------
GOVERMENT NATIONAL MORTGAGE
ASSOCIATION -- 0.7%
2,778,239 7.50%, 10/17/2015 2,781,711
-----------
TOTAL MORTGAGE BACKED SECURITIES (identified cost,
$47,756,122) 47,703,983
-----------
U.S. TREASURY SECURITIES-AGENCY -- 36.5%
FEDERAL HOME LOAN BANK -- 1.6%
5,810,000 7.26%, 9/6/2001 6,150,989
-----------
(D)TREASURY BONDS -- 3.5%
10,000,000 10.375%, 11/15/2012 13,244,600
-----------
(D)TREASURY NOTES -- 31.4%
10,265,000 7.875%, 1/15/1998 10,704,650
27,000,000 6.125%, 5/15/1998 27,363,420
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
Shares or
Principal
Amount Value
----------------------------------------------------------------------------
<C> <S> <C>
U.S. TREASURY SECURITIES-AGENCY (continued)
(D)TREASURY NOTES (continued)
$26,000,000 6.375%, 1/15/2000 $26,637,000
28,480,000 7.125%, 2/28/2000 29,921,088
10,000,000 6.25%, 8/31/2000 10,192,800
3,000,000 5.50%, 12/31/2000 2,967,360
10,000,000 5.875%, 11/15/2005 9,802,300
-----------
Total 117,588,618
-----------
TOTAL U.S. TREASURY SECURITIES-AGENCY (identified
cost, $136,406,945) 136,984,207
-----------
(I)COLLATERAL FOR SECURITIES LENDING -- 27.8%
3,000,000 American Honda Finance Co., 5.3725%, 3/15/1996 3,000,000
5,000,000 Bear Stearns & Co., Inc., 5.61328%, 3/11/1996 5,000,000
3,748,828 Carco Auto Trust, 5.385%, 3/15/1996 3,762,375
4,997,150 Chrysler Corp., 5.4625%, 3/20/1996 4,997,150
3,987,080 Citicorp, 5.3875%, 3/29/1996 3,987,080
7,000,000 Donaldson Lufkin & Jenrette Securities Corp.,
Master Note, 5.425%, 3/1/1996 7,000,000
3,750,000 Federal Signal Corporation, Master Note, 5.36%,
3/1/1996 3,750,000
15,009,525 Ford Motor Credit Co., 6.125%, 5/27/1997 15,132,001
1,250,000 General Electric Capital Corp., 4.9375%, 5/1/1996 1,250,000
2,995,800 General Electric Capital Corp., 6.37%, 4/25/1997 2,995,800
10,000,000 GMAC Master Note, 5.2839%, 3/1/1996 10,000,000
260,071 Goldman Sachs Financial Square Money Market Fund
(at net asset value) 260,071
5,000,000 Heller Financial Corp., 6.36%, 3/1/1996 5,000,000
6,950,000 JP Morgan Securities, Inc., Master Note, 5.4866%,
3/1/1996 6,950,000
12,000,000 Lehman Brothers, Inc., Repo, 5.52%, 3/1/1996 12,000,000
785,396 Lehman Institutional Prime Value Money Market
Fund (at net asset value) 785,396
3,000,000 Republic New York Securities Corp., Master Note,
5.5875%, 3/1/1996 3,000,000
2,500,000 Sears Roebuck Acceptance Corp., Master Note,
5.253336%, 3/5/1996 2,500,000
4,995,800 Sears Roebuck & Co., 5.819%, 5/12/1997 4,995,800
3,002,813 Superior Wholesale Inventory Financing Trust,
5.4625%, 3/15/1996 3,001,800
</TABLE>
(See Notes to Portfolio of Investments)
[ ] MARSHALL FUNDS
-
- --------------------------------------------------------------------------------
INTERMEDIATE BOND FUND (continued)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Principal
Amount Value
------------------------------------------------------------------------------
<C> <S> <C>
(I)COLLATERAL FOR SECURITIES LENDING (continued)
$5,000,000 Willamette Industries Inc., Master Note, 6.30%,
3/1/1996 $ 5,000,000
------------
TOTAL COLLATERAL FOR SECURITIES LENDING (identified
cost, $104,367,473) 104,367,473
------------
(B)REPURCHASE AGREEMENT -- 7.6%
28,614,000 Goldman Sachs & Co., 5.35%, dated 2/29/96, due
3/1/1996 (at amortized cost) 28,614,000
------------
TOTAL INVESTMENTS (identified
cost, $522,004,150) $522,485,390
============
</TABLE>
- --------------------------------------------------------------------------------
GOVERNMENT INCOME FUND
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
Principal
Amount Value
---------------------------------------------------------------------------
<C> <S> <C>
ASSET-BACKED SECURITIES -- 2.4%
$3,000,000 EQCC Home Equity Loan Trust, 7.80%, 12/15/2010,
(Series 1995-2A-A4) (identified cost, $2,992,969) $3,097,560
----------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 18.8%
3,194,397 Chase Mortgage Finance Corp., 6.25%, 11/25/2008,
(Series 1993-M-CL-A6) 3,101,277
5,675,958 Citicorp Mortgage Securities, Inc., 7.50%,
1/25/2019, (Series 1992-19-CL-A2) 5,684,826
3,831,069 GE Capital Mortgage Services, Inc., 6.50%,
1/25/2024, (Series 1994-3-A12) 3,500,023
4,882,203 PNC Mortgage Securities Corp., 6.00%, 2/25/2024,
(Series 1994-1-CL-T7) 4,798,290
4,000,000 Prudential Home Mortgage Securities Corp., 7.15%,
10/25/2022, (Series 1992-32-CL-A4) 4,014,520
3,500,000 Resolution Trust Corp., 7.50%, 10/25/2028, REMIC,
(Series 1995-1-A2D) 3,460,625
----------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(identified cost, $24,332,058) 24,559,561
----------
MORTGAGE-BACKED SECURITIES -- 93.5%
FEDERAL HOME LOAN MORTGAGE CORP. -- 34.9%
6,860,000 6.00%, 2/1/2011 6,658,385
8,000,000 (h) 6.50%, TBA 7,922,400
5,500,000 7.00%, 12/15/2020 5,448,850
3,000,000 7.00%, 8/15/2021 2,970,900
6,050,530 7.50%, 5/1/2024 6,133,664
5,000,000 7.95%, 12/15/2020 5,173,650
134,102 8.75%, 4/1/2001 139,380
10,000,000 (h) 9.00%, TBA 10,506,100
742,368 9.00%, 5/1/2017 792,470
16,116 9.50%, 2/1/2001 16,988
28,495 10.50%, 10/1/2000 30,294
----------
Total 45,793,081
----------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION -- 31.2%
5,669,160 6.50%, 7/1/2008 5,621,255
6,000,000 7.00%, 10/1/2009 6,052,440
6,000,000 (h) 7.00%, TBA 5,926,800
2,195,074 8.00%, 8/1/2007 2,269,136
9,203,748 8.00%, 4/1/2022 9,494,126
3,762,883 8.00%, 5/1/2008 3,889,842
5,561,145 8.50%, 8/1/2022 5,832,140
905,650 11.00%, 6/1/2020 1,023,718
660,691 11.50%, 10/1/2015 755,340
----------
Total 40,864,797
----------
</TABLE>
(See Notes to Portfolio of Investments)
February 29, 1996 (unaudited)
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
GOVERNMENT INCOME FUND (continued)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
Principal
Amount Value
-----------------------------------------------------------------------------
<C> <S> <C>
MORTGAGE-BACKED SECURITIES (continued)
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION -- 27.4%
$8,000,000 6.50%, 12/20/1999 $7,665,040
687,116 7.50%, 10/17/2015 687,975
8,748,027 8.00%, 8/15/2024 8,993,934
8,040,190 8.50%, 12/15/2022 8,424,511
8,000,000 9.00%, 12/15/1999 8,429,840
584,675 9.50%, 7/15/2019 636,378
799,511 10.00%, 11/15/2020 883,700
21,990 10.50%, 10/15/2000 23,701
41,540 10.50%, 10/15/2000 44,772
55,095 11.00%, 11/15/2000 59,828
------------
Total 35,849,679
------------
TOTAL MORTGAGE-BACKED SECURITIES (identified cost,
$122,905,738) 122,507,557
------------
AGENCY BONDS -- 3.8%
4,266,708 Jordan Aid, 8.75%, 9/1/2019 (identified cost,
$4,940,194) 4,920,879
------------
U.S. TREASURY NOTE -- 4.0%
3,000,000 10.375%, 11/15/2012
(identified cost, $5,248,906) 5,297,840
------------
U.S. TREASURY STRIPS -- 3.9%
9,500,000 2/15/2006 (identified cost, $5,217,487) 5,089,720
------------
(B) REPURCHASE AGREEMENT -- 5.5%
7,182,000 Goldman Sachs & Co., 5.35%, dated 2/29/1996, due
3/1/1996 (at amortized cost) 7,182,000
------------
TOTAL INVESTMENTS (identified
cost, $172,819,352) $172,655,117
============
</TABLE>
- --------------------------------------------------------------------------------
SHORT-TERM TAX-FREE FUND
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
Principal Credit
Amount Rating(a) Value
-----------------------------------------------------------------------------
<C> <S> <C> <C>
MUNICIPAL SECURITIES -- 99.5%
ARIZONA -- 7.5%
$300,000 Mesa, AZ, 7.125% UT GO Bonds, 7/1/1999, Pre-
refunded 7/1/1996 @ 102 A+ $309,804
1,000,000 Salt River Project, AZ, 4.45% Revenue Bonds,
(Series B), 1/1/2000 AA 1,008,330
500,000 Scottsdale, AZ, 5.40% Special Assessment
Bonds (No. I3704 Bell Road), 1/1/1999 A 515,375
---------
Total 1,833,509
---------
COLORADO -- 4.1%
1,000,000 Colorado Health Facilities Authority, 3.25%,
(Boulder Community Hospital Project-C),
Weekly Adjustable Rate, Weekly Put,
10/1/2014 (MBIA Insured) AAA 1,000,000
---------
FLORIDA -- 3.1%
750,000 Cape Coral, FL 4.75% UT GO Bonds, Water &
Sewer Project, (FGIC Insured), 1/1/1999 AAA 765,427
---------
IDAHO -- 4.2%
1,000,000 Idaho Student Loan Fund Marketing
Association, 6.25% Revenue Bonds, 4/1/1998 NR 1,014,250
---------
ILLINOIS -- 7.1%
1,000,000 Cook County, IL, 4.85% UT GO Bonds, School
District 211, 12/1/1996 Aa1 1,010,630
750,000 Illinois State, 3.50% UT GO Bonds, 6/1/2001 AA- 709,928
---------
Total 1,720,558
---------
IOWA -- 5.1%
1,235,000 Le Claire, IA, 4.125%, Electric Revenue
Bonds, 9/1/2026, Mandatory Put 9/1/1996 Sp1+ 1,239,891
---------
MAINE -- 7.3%
750,000 Maine Municipal Bond Bank, 4.70% (Series A),
11/1/2000 A+ 765,345
1,000,000 Maine State, 4.70% UT GO Bonds, 7/1/2000 AA+ 1,019,120
---------
Total 1,784,465
---------
</TABLE>
(See Notes to Portfolio of Investments)
[ ] MARSHALL FUNDS
-
- --------------------------------------------------------------------------------
SHORT-TERM TAX-FREE FUND (continued)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Principal Credit
Amount Rating(a) Value
------------------------------------------------------------------------------
<C> <S> <C> <C>
MUNICIPAL SECURITIES -- (continued)
MARYLAND -- 2.2%
$500,000 Maryland State Department of Transportation,
6.60% Revenue Bonds, 11/15/1997 AA $524,325
---------
MASSACHUSETTS -- 2.1%
500,000 New England Educational Loan Marketing Corp.,
MA, 6.60% Student Loan Revenue Bonds,
9/1/2002, Subject to AMT A 521,095
---------
MISSISSIPPI -- 4.2%
1,000,000 Raleigh, MS, 6.00% Urban Renewal Revenue
Bonds, (Phase II Redevelopment Project),
12/5/2017, Mandatory Put, 12/5/1997 Sp1+ 1,029,640
---------
OHIO -- 4.1%
1,000,000 Cincinnati, OH, 4.10% UT GO Bonds, 12/1/1997 AA+ 1,009,480
---------
OKLAHOMA -- 4.2%
1,000,000 Grand River Dam Authority, OK, 5.00% Revenue
Bonds, 6/1/1999 A- 1,023,310
---------
PUERTO RICO -- 6.9%
625,000 Puerto Rico Electric Power Authority, 4.25%
Revenue Bonds (Series W)/(MBIA Insured),
7/1/1999 AAA 629,781
1,000,000 Puerto Rico Municipal Finance Agency, 5.10%
Revenue Bonds, (Series A)/(FSA Insured),
7/1/2000 AAA 1,031,980
---------
Total 1,661,761
---------
SOUTH CAROLINA -- 2.1%
500,000 Charleston County, SC, 6.10% UT GO Bonds,
6/1/1998 AA 523,765
---------
SOUTH DAKOTA -- 2.9%
700,000 Rapid City, SD, 4.60% Revenue Bonds, (Series
C), (FGIC Insured), 12/1/1999 AAA 710,276
---------
TENNESSEE -- 7.4%
750,000 Metropolitan Government Nashville & Davidson
County, TN, 4.625% UT GO Bonds, 5/15/2000 AA 761,804
</TABLE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
Principal
Amount Credit
or Shares Rating(a) Value
-----------------------------------------------------------------------------
<C> <S> <C> <C>
MUNICIPAL SECURITIES (continued)
TENNESSEE (continued)
$1,000,000 Tennessee State, 5.00% UT GO Bonds,
(Series C), 3/1/2002 AA+ $1,032,870
-----------
Total 1,794,674
-----------
TEXAS -- 3.1%
750,000 Texas Water Development Board, 4.40%
Revenue Bonds, 7/15/2001 AAA 754,230
-----------
VIRGINIA -- 2.1%
500,000 Fairfax County, VA 4.60% UT GO Refunding
Bonds (State Aid Withholding)/
(Series C), 5/1/2001 AAA 508,925
-----------
WASHINGTON -- 4.1%
1,000,000 Washington State Public Power Supply,
4.10% Revenue Bonds (Nuclear Project No.
3)/(Series C), 7/1/1998 AA 998,190
-----------
WISCONSIN -- 15.7%
1,000,000 Milwaukee, WI, 5.00% UT GO Notes, (Area
Technical College District)/(Series B),
6/1/1997 AA 1,017,240
500,000 Wausau WI, School District, 4.35% UT GO
Bonds, 3/1/2000 Aa 500,360
500,000 West Bend, WI, 5.75% UT GO Bonds, School
District No. 1, 4/1/1997 A1 513,160
1,000,000 Wisconsin Housing & Economic Development
Authority, 6.00% Revenue Bonds, (Series
Association), G.O. of Authority,
11/1/2000 A 1,040,570
750,000 Wisconsin State, 4.50% UT GO Bonds,
(Series 1), 11/1/1997 AA 763,140
-----------
Total 3,834,470
-----------
TOTAL LONG-TERM MUNICIPALS (identified cost,
$23,989,637) 24,252,241
-----------
MUTUAL FUNDS -- 8.7%
1,061,801 Fidelity Tax Exempt Money Market 1,061,801
1,048,917 Goldman Sachs Financial Square Tax Exempt
Money Market 1,048,917
-----------
TOTAL MUTUAL FUND SHARES
(at net asset value) 2,110,718
-----------
TOTAL INVESTMENTS (identified cost, $26,100,355) $26,362,959
===========
</TABLE>
(See Notes to Portfolio of Investments)
February 29, 1996 (unaudited)
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Principal Credit
Amount Rating(a) Value
------------------------------------------------------------------------------
<C> <S> <C> <C>
LONG-TERM MUNICIPALS -- 100.4%
ARIZONA -- 7.2%
$1,100,000 Glendale, AZ, School District, 4.60%,
District No 205 School Improvement, (FGIC
Insured)/(Series B), 7/1/2000 AAA $1,120,647
1,000,000 Maricopa County, AZ, 6.00%, UT GO Bonds,
(Series A), Community College District,
7/1/2006, Callable 7/1/2003 @ 101 AA 1,078,410
500,000 Maricopa County, AZ, School District, 6.75%
(District No. 48 Scottsdale Improvement),
7/1/2010, Prerefunded 7/1/2001 @ 101 AA 561,670
1,000,000 Salt River Project Arizona Agriculture,
4.45%, Refunding Revenue Bonds, (Series
B), 1/1/2000 AA 1,008,330
----------
Total 3,769,057
----------
CONNECTICUT -- 2.4%
750,000 Connecticut State, 5.80% (Series B),
11/15/1999 AA- 795,623
150,000 Connecticut State, 6.00% (Series B),
11/15/2001 AA- 163,062
300,000 South Central, CT, Regional Water
Authority, 5.40%, (Water System)/(FGIC
Insured), 8/1/2002 AAA 314,526
----------
Total 1,273,211
----------
HAWAII -- 3.4%
750,000 Hawaii State, 5.25%, (Series BZ), 10/1/2000 AA 778,627
1,000,000 Hawaii State, 5.50%, (Series CA), 1/1/2012 AA 1,017,930
----------
Total 1,796,557
----------
ILLINOIS -- 6.1%
1,500,000 Arlington Heights, IL, 4.55%, Refunding UT
GO Bonds, (Series A), 12/1/2001 AA 1,512,720
525,000 Illinois State, 3.50%, Public Improvements,
6/1/2001, Callable 6/1/1996 @ 101 AA- 496,949
1,085,000 Waukegan, IL, 6.40%, UT GO Bonds, (MBIA
Insured), 12/30/2004, Callable 12/30/2002
@ 100 AAA 1,200,119
----------
Total 3,209,788
----------
INDIANA -- 3.9%
1,000,000 Indiana Bond Bank, 4.65%, Common School
Funding, (AMBAC Insured), 2/1/2000 AAA 1,009,910
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Principal Credit
Amount Rating(a) Value
------------------------------------------------------------------------------
<C> <S> <C> <C>
MUNICIPAL SECURITIES -- (continued)
INDIANA -- (continued)
$1,000,000 Indiana University, 5.00%, University and
College Improvements, Refunding Revenue
Bonds, (Student Fee)/(Series K), 8/1/2001 AA- $1,026,600
----------
Total 2,036,510
----------
IOWA -- 2.1%
1,050,000 Cedar Rapids, IA, 5.20%, Airport and Marina
Improvements, Public and Water Utility
Improvements, (Series B), 6/1/2007,
Callable 6/1/2004 @ 100 AAA 1,076,785
----------
LOUISIANA -- 2.0%
1,000,000 Louisiana Public Facility Revenue
Authority, 6.75%, Refunding Revenue Bonds,
(Student Loan)/(Series A-2), 9/1/2006,
Callable 9/1/2002 @ 102, (Subject to AMT) AAA 1,065,030
----------
MARYLAND -- 5.9%
1,000,000 Maryland State, 5.20%, State and Local
Facilities Loan Bond, 3/15/2003 AAA 1,047,890
1,000,000 Maryland State Transportation, 4.20%,
(Series 1993), 12/15/2001 AA 994,870
1,000,000 Northeast Maryland Waste Disposal
Authority, 6.00%, Resource Recovery
Revenue Bonds, 7/1/2007, (Subject to AMT) A 1,065,960
----------
Total 3,108,720
----------
MASSACHUSETTS -- 2.0%
1,000,000 New England Education Loan Marketing Corp.,
MA, 6.60%, Student Loan Revenue Bonds,
(Series F), 9/1/2002, (Subject to AMT) A 1,042,190
----------
MICHIGAN -- 1.0%
500,000 Chelsea, MI, School District, 5.25%, (FGIC
Insured), 5/1/2001 AAA 521,020
----------
</TABLE>
(See Notes to Portfolio of Investments)
[ ] MARSHALL FUNDS
-
- --------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND (continued)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Principal Credit
Amount Rating(a) Value
------------------------------------------------------------------------------
<C> <S> <C> <C>
MUNICIPAL SECURITIES (continued)
MINNESOTA -- 2.8%
$1,400,000 Minnesota State, 5.00%, Public
Improvements, UT GO, 8/1/2003 AA+ $1,445,388
----------
MISSISSIPPI -- 2.1%
1,000,000 Mississippi River Bridge Authority, 6.625%,
Revenue Bonds, 11/1/2006, Callable
11/1/2002 @ 102, Mandatory Sinking Fund
11/1/2003 @ 100 A- 1,111,970
----------
MISSOURI -- 2.2%
1,000,000 Missouri State Environmental Improvement
and Energy Resource Authority, 6.65%,
Water Pollution Control Revenue Bonds,
(State Revolving Fund Program)/(Series B),
7/1/2006, Callable 7/1/2004 @ 102 AA 1,149,520
----------
NEBRASKA -- 2.0%
1,000,000 Nebraska Higher Education Loan Program,
6.65%, Revenue Bonds, (Sr. Sub.
Lien)/(Series A-5), 6/1/2008, (Subject to
AMT), Mandatory Sinking Fund 6/1/2003 @
100 AA 1,050,870
----------
NEVADA -- 2.9%
1,500,000 Las Vegas, NV, 4.875%, Refunding Revenue
Bonds, (MBIA Insured)/(Series B),
1/1/2006, Callable 1/1/2003 @ 101 AAA 1,494,690
----------
NEW JERSEY -- 0.5%
250,000 New Jersey State, 6.25%, 9/15/2000 AA+ 271,143
----------
NEW YORK -- 3.1%
1,500,000 New York State Environmental Facilities
Corp. Pollution Control Revolving Fund,
5.70%, Refunding Revenue Bonds, 6/15/2006,
Callable 6/15/2004 @ 102 AA 1,598,355
----------
OHIO -- 4.9%
1,500,000 Columbus, OH, 4.65%, Recreational Public
Improvements, LT GO, 6/15/2001 AAA 1,530,855
1,000,000 Columbus, OH, 4.90% GO Bonds, 9/15/2001 AAA 1,033,700
----------
Total 2,564,555
----------
</TABLE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
Principal Credit
Amount Rating(a) Value
-----------------------------------------------------------------------------
<C> <S> <C> <C>
MUNICIPAL SECURITIES -- (continued)
OKLAHOMA -- 3.9%
$2,000,000 Oklahoma Housing Finance Agency, 5.50%,
Refunding Revenue Bonds, (FNMA
Collateral)/ (Series A-3), 11/1/2025,
Callable 5/1/2005 @ 100, Mandatory Put
11/1/2005 @ 100 AAA $2,012,700
----------
OREGON -- 2.0%
1,000,000 Metro, OR, 5.00%, Open Spaces Program, UT
GO, (Series A), 9/1/2002 AA+ 1,037,540
----------
PUERTO RICO -- 3.5%
1,500,000 Puerto Rico Municipal Financial Agency,
5.10%, Revenue Bonds, (Series A), (FSA
Insured), 7/1/2000 AAA 1,547,970
250,000 Puerto Rico Public Building Authority,
6.10%, Refunding Revenue Bonds, (Series
K), ( FGIC Insured), 7/1/2002 AAA 275,533
----------
Total 1,823,503
----------
SOUTH CAROLINA -- 2.9%
1,000,000 South Carolina State, 4.10%, Refunding UT
GO Bonds, 4/1/2001 AA+ 995,890
500,000 South Carolina State, 4.30%, Refunding UT
GO Bonds, 4/1/2003 AA+ 499,380
----------
Total 1,495,270
----------
TEXAS -- 12.9%
1,000,000 Arlington, TX, ISD, 6.50%, Refunding UT GO
Bonds, (PSF Guaranteed), 2/15/2002 AAA 1,106,560
1,000,000 Dallas, TX, Dallas Denton and Collin Co.,
4.50%, GO Bonds, 2/15/2000 AAA 1,016,230
100,000 Dallas/Ft. Worth, TX, Regional Airport,
5.875% (Long Opt. Period)/(Series A CR
104), (FGIC Insured), 11/1/2006, Optional
Put 5/1/1998 @ 100, Callable 5/1/2004 @
102 AAA 103,599
700,000 El Paso, TX, ISD, 7.50%, PSF GTD.,
8/15/2000 AAA 790,622
500,000 Lewisville, TX, 4.95%, Refunding LT GO
Bonds, (FGIC Insured), 2/15/2002 AAA 516,345
</TABLE>
(See Notes to Portfolio of Investments)
February 29, 1996 (unaudited)
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND (continued)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Principal Credit
Amount Rating(a) Value
------------------------------------------------------------------------------
<C> <S> <C> <C>
MUNICIPAL SECURITIES -- (continued)
TEXAS (continued)
$500,000 Lewisville, TX, 5.00%, Refunding LT GO Bonds,
(FGIC Insured), 2/15/2003, Callable
8/15/2002 @ 100 AAA $516,095
1,220,000 Tarrant County, TX, Junior College District,
5.30%, University and College Improvements,
2/15/2009, Callable 2/15/2006 @ 100 AA 1,219,951
1,475,000 Texas Water Development Board, 4.40%, Revenue
Bonds, (State Revolving Fund Program/Sr.
Lien), 7/15/2001 AAA 1,483,319
---------
Total 6,752,721
---------
VIRGINIA -- 8.5%
1,730,000 Chesapeake, VA, School, Recreational and
Public Improvements, 5.60%, 5/1/2006,
Callable 5/1/2004 @ 101 AA 1,825,721
1,000,000 Fairfax, VA, 4.60%, Refunding UT GO Bonds,
(Series C), 5/1/2001 AAA 1,017,850
1,500,000 Virginia State Housing Development Authority,
6.40%, Revenue Bonds, (Commonwealth
Mortgage)/(Series A), 7/1/2002, (Subject to
AMT) AA+ 1,585,035
---------
Total 4,428,606
---------
WISCONSIN -- 10.2%
1,000,000 Racine County,WI, 4.80%, UT GO Notes,
6/1/2000 AA 1,023,010
500,000 Wausau, WI, School District, 4.35%, School
Improvements, 3/1/2000 AA 500,360
1,000,000 Wausau, WI, School District, 4.40%, School
Improvements, 3/1/2003 AA 986,390
1,000,000 Wisconsin Housing and Economic Development
Authority, 6.00%, Refunding Revenue Bonds,
(Series A), 11/1/2000, (GO of Authority) A1 1,040,570
</TABLE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
Shares or
Principal Credit
Amount Rating(a) Value
-----------------------------------------------------------------------------
<C> <S> <C> <C>
MUNICIPAL SECURITIES -- (continued)
WISCONSIN (continued)
$1,000,000 Wisconsin State, 5.00%, University and
College Improvements, (Series C),
5/1/2002 AA $1,039,090
750,000 Wisconsin State Transportation Revenue
Bonds, 5.00% (Series B), 7/1/2000 A1 769,860
-----------
Total 5,359,280
-----------
TOTAL LONG-TERM MUNICIPALS
(identified cost,
$51,239,271) 52,494,979
-----------
MUTUAL FUNDS -- 2.5%
398,793 Fidelity Tax Exempt Money Market 398,793
927,660 Goldman Sachs Financial Square Tax Exempt
Money Market 927,660
-----------
TOTAL MUTUAL FUND SHARES
(at net asset value) 1,326,453
-----------
TOTAL INVESTMENTS
(identified cost,
$52,565,724) $53,821,432
===========
</TABLE>
(See Notes to Portfolio of Investments)
[ ] MARSHALL FUNDS
-
- --------------------------------------------------------------------------------
MONEY MARKET FUND
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
Principal
Amount Value
---------------------------------------------------------------------------
<C> <S> <C>
CERTIFICATE OF DEPOSITS -- 8.7%
BANKING -- 8.7%
$25,000,000 Fuji Bank Ltd., NY, 5.33%, 3/18/1996 $25,000,118
25,000,000 Sanwa Bank Ltd., NY, 5.29%, 3/27/1996 25,000,180
50,000,000 Sumitomo Bank Ltd.,
Osaka, 5.33%,
3/11/1996-3/22/1996 50,000,000
-----------
TOTAL CERTIFICATE OF DEPOSITS 100,000,298
-----------
(E)COMMERCIAL PAPER -- 23.5%
ASSET-BACKED SECURITIES -- 3.6%
7,575,000 Beta Finance, Inc., 5.65%, 3/25/1996 7,546,468
25,000,000 CXC, Inc., 5.30%, 4/25/1996 24,797,569
9,450,000 Preferred Receivables Funding Corp., 5.30%,
4/24/1996 9,374,873
-----------
Total 41,718,910
-----------
BANKING -- 5.2%
50,875,000 Bankers Trust New York Corp., 5.22%-5.64%,
3/6/1996-7/19/1996 50,347,231
9,300,000 Government Development Bank for Puerto Rico,
5.23%, 3/6/1996 9,293,245
-----------
Total 59,640,476
-----------
CONSUMER DURABLES -- 4.6%
53,000,000 Whirlpool Corp.,
5.20%-5.55%,
3/15/1996-4/26/1996 52,579,178
-----------
DRUGS -- 1.8%
21,325,000 American Home Food Products, 5.35%, 4/8/1996 21,204,573
-----------
PERSONAL CREDIT -- 1.7%
20,000,000 American Honda Finance Corp., 5.65%-5.66%,
4/23/1996 19,833,492
-----------
SHORT-TERM BUSINESS CREDIT-- 5.3%
12,000,000 American Express Credit Corp., 5.415%, 3/15/1996 11,974,730
25,000,000 Heller Financial, Inc., 5.30%, 3/13/1996 24,955,833
25,000,000 Sears Roebuck Acceptance Corp., 5.50%, 6/7/1996 24,625,694
-----------
Total 61,556,257
-----------
SOFT DRINK BOTTLERS/DISTRIBUTORS -- 1.3%
15,000,000 Coca-Cola Enterprises, Inc., 5.09%, 5/20/1996 14,830,333
-----------
TOTAL COMMERCIAL PAPER 271,363,219
-----------
CORPORATE BONDS -- 3.5%
BANKING -- 2.2%
25,260,000 Society National Bank, Cleveland, OH, 6.875%,
10/15/1996 25,427,034
-----------
</TABLE>
<TABLE>
---------------------------------------------------------------------------
<CAPTION>
Principal
Amount Value
---------------------------------------------------------------------------
<C> <S> <C>
CORPORATE BONDS (continued)
SHORT-TERM BUSINESS CREDIT -- 1.3%
$14,950,000 Ford Motor Co., 7.875%, 10/15/1996 $15,136,202
-----------
TOTAL CORPORATE BONDS 40,563,236
-----------
CORPORATE NOTES -- 16.3%
BANKING -- 2.1%
5,000,000 NCNB Corp., 8.50%, 11/1/1996 5,082,758
14,000,000 Security Pacific Corp., 7.75%, 12/1/1996 14,218,131
5,000,000 Wachovia Bank & Trust Co., 4.25%, 10/15/1996 4,958,287
-----------
Total 24,259,176
-----------
BROKER/DEALERS -- 0.9%
10,000,000 Bear, Stearns and Co. Inc., 5.25%, 2/26/1997 10,000,000
-----------
FOOD & BEVERAGES -- 0.4%
5,000,000 Caterpillar Financial Services, 4.75%, 2/21/1997 4,989,709
-----------
INSURANCE -- 1.3%
10,000,000 American General Finance Corp., 5.00%, 6/15/1996 9,976,476
5,000,000 CIT Group Holdings, Inc., 8.00%, 1/13/1997 5,114,685
-----------
Total 15,091,161
-----------
LEASING -- 0.9%
10,200,000 International Lease Finance Corp., 6.625%-7.90%,
6/1/1996-10/1/1996 10,269,175
-----------
OIL -- 0.8%
9,105,000 Texaco Capital, Inc., 9.00%, 11/15/1996 9,317,987
-----------
PERSONAL CREDIT -- 4.7%
53,230,000 General Motors Acceptance Corp., 5.05%-8.00%,
10/1/1996-2/20/1997 53,969,808
-----------
SHORT-TERM BUSINESS CREDIT -- 5.2%
25,000,000 General Electric Capital Corp., 5.12%, 1/27/1997 24,984,212
25,000,000 IBM Credit Corp., 5.68%, 10/30/1996 25,020,301
10,000,000 Sears, Roebuck & Co., 5.24%, 2/25/1997 9,999,537
-----------
Total 60,004,050
-----------
TOTAL CORPORATE NOTES 187,901,066
-----------
(F)VARIABLE RATE NOTES -- 44.1%
BANKING -- 3.8%
43,650,000 Boatmen's Credit Card Bank, 5.875%, 3/4/1996 43,649,816
-----------
BROKER/DEALERS -- 11.0%
30,000,000 Bear, Stearns and Co. Inc., 5.875%, 5/8/1996 30,000,000
52,200,000 J.P. Morgan Securities, Inc., 5.487%, 3/1/1996 52,200,000
</TABLE>
(See Notes to Portfolio of Investments)
February 29, 1996 (unaudited)
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
MONEY MARKET FUND (continued)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Principal
Amount Value
------------------------------------------------------------------------------
<C> <S> <C>
(F)VARIABLE RATE NOTES (continued)
BROKER/DEALERS (continued)
$25,000,000 Merrill Lynch & Co., Inc., 5.793%, 9/19/1996 $24,997,240
10,200,000 Morgan Stanley Group, Inc., 5.755%, 4/20/1996 10,218,735
10,000,000 Republic National Bank of New York, 5.588%,
3/1/1996 10,000,000
--------------
Total 127,415,975
--------------
DIVERSIFIED MANUFACTURING-- 0.4%
5,000,000 Danaher Corp., 5.375%, 3/1/1996 5,000,000
--------------
FOREST PRODUCTS & PAPER-- 1.3%
15,000,000 Willamette Industries, Inc., 6.30%, 3/1/1996 15,000,000
--------------
GOVERNMENT AGENCY -- 3.1%
35,585,000 Student Loan Marketing Association, 5.14%-5.20%,
3/5/1996 35,585,694
--------------
INSURANCE -- 11.3%
40,000,000 Commonwealth Life Insurance, 5.61%, 3/1/1996 40,000,000
40,000,000 Transamerica Life Insurance and Annuity Co.,
5.625%, 3/1/1996 40,000,000
50,000,000 Travelers Insurance Co., 5.55%,4/19/1996 50,000,000
--------------
Total 130,000,000
--------------
LEASING -- 3.0%
35,000,000 USL Capital Corp., 5.375%, 4/30/1996 35,029,201
--------------
MORTGAGE BANKING -- 2.7%
31,400,000 Fleet Mortgage Group, Inc., 5.218%, 5/20/1996 31,386,389
--------------
OFFICE EQUIPMENT/SUPPLIES-- 1.7%
20,000,000 Haworth Inc., 5.558%, 3/1/1996 20,000,000
--------------
PERSONAL CREDIT -- 4.9%
56,000,000 American Honda Finance Corp., 5.27%-5.875%,
3/1/1996-5/1/1996 55,990,000
--------------
UTILITIES -- 0.9%
10,000,000 Wisconsin Public Service Corp., 5.23%, 3/1/1996 10,000,000
--------------
TOTAL -- VARIABLE RATE NOTES 509,057,075
--------------
(B)REPURCHASE AGREEMENT -- 5.6%
65,032,000 Goldman Sachs & Co., 5.35%, dated 2/29/1996, due
3/1/1996 (at amortized cost) 65,032,000
--------------
TOTAL INVESTMENTS
(at amortized cost) $1,173,916,894
==============
</TABLE>
(See Notes to Portfolio of Investments)
NOTES TO PORTFOLIOS OF INVESTMENTS
(a) Current credit ratings are unaudited. Please refer to the Statement of
Additional Information for an explanation of the credit ratings.
(b) The repurchase agreements are fully collateralized by U.S. Government
and/or agency obligations based on market prices at the date of the
portfolio.
(c) Non-income producing.
(d) Certain shares or principal amounts on loan to broker.
(e) Each issue shows the rate of discount at the time of purchase.
(f) Current rate and next demand date shown.
(g) Represents securities held as collateral within a margin account, used to
ensure the Fund is able to satisfy the obligations of its outstanding long
futures contracts.
(h) Includes securities subject to dollar roll transactions.
(i) Shares purchased with cash collateral proceeds from securities on loan to
brokers.
The following abbreviations are used in these portfolios:
- --------------------------------------------------------------------------------
ACES -- Adjustable Convertible Extendable Securities
ADR -- American Depositary Receipts
AMBAC -- American Municipal Bond Assurance Corporation
AMT -- Alternative Minimum Tax
CMO -- Collateralized Mortgage Obligation
ETM -- Escrowed to Maturity
FGIC -- Financial Guaranty Insurance Company
FNMA -- Federal National Mortgage Association
FSA -- Financial Security Assurance
GO -- General Obligation
GDR -- Global Depository Receipts
GTD -- Guaranteed
ISD -- Independent School District
LP -- Limited Partnership
LT -- Limited Tax
LTD -- Limited
PLC -- Public Limited Company
PRIDES -- Preferred Redeemable Increased Dividend
Equity Securities
PSF -- Permanent School Fund
MBIA -- Municipal Bond Investors Insurance
REMIC -- Real Estate Mortgage Investment
Conduit
SPA -- Standby Purchase Agreement
STRYPES -- Structured Yield Product Exchangeable
for Stock
TBA -- To Be Announced
UT -- Unlimited Tax
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COST OF NET UNREALIZED GROSS GROSS
INVESTMENTS APPRECIATION/ UNREALIZED UNREALIZED
FOR (DEPRECIATION) APPRECIATION DEPRECIATION TOTAL
FEDERAL TAX FOR FEDERAL FOR FEDERAL FOR FEDERAL NET
MARSHALL FUNDS PURPOSES TAX PURPOSES TAX PURPOSES TAX PURPOSES ASSETS**
------------- -------------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
Equity Income Fund $134,053,548 $21,119,575 $21,738,898 $619,323 $154,739,641
Value Equity Fund 229,728,047 17,924,369 22,566,227 4,641,858 207,507,820
Stock Fund 253,665,483 22,450,642 27,067,722 4,617,080 270,928,641
Mid-Cap Stock Fund 105,515,396 20,750,727 22,702,242 1,951,515 118,733,061
International Stock Fund 111,903,594 8,548,297 13,575,674 5,027,377 119,607,975
Short-Term Income Fund 84,927,197 (108,490) 396,204 504,694 84,967,695
Intermediate Bond Fund 522,004,150 481,240 4,041,172 3,559,932 374,914,545
Government Income Fund 172,819,352 (164,235) 733,813 898,048 130,965,398
Short-Term Tax-Free Fund 26,100,355 262,604 288,191 25,587 24,369,446
Intermediate Tax-Free 52,565,724 1,255,708 1,317,535 61,827 52,306,268
Fund
Money Market Fund 1,173,916,894* 0 0 0 1,152,795,588
</TABLE>
* At amortized cost.
**The categories of investments are shown as a percentage of net assets at
February 29, 1996.
(See Notes which are an integral part of the Financial Statements)
February 29, 1996 (unaudited)
STATEMENTS OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
------- ------- ------- ------- -------
EQUITY VALUE MID-CAP INTERNATIONAL
INCOME EQUITY STOCK STOCK STOCK
FUND FUND FUND FUND FUND
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments in
securities, at value $132,683,123 $229,527,416 $256,949,125 $121,113,123 $120,451,891
Investments in
repurchase
agreements 22,490,000 18,125,000 19,167,000 5,153,000 --
Cash 203 216 650 810 32,313
Income receivable 476,025 434,354 623,703 25,546 508,575
Receivable for
investments sold 7,975 3,980,906 -- 2,714,062 20,219
Receivable for
foreign currency
sold -- -- -- -- 11,382
Deferred expenses 14,802 46,346 35,346 16,004 30,192
------------ ------------ ------------ ------------ ------------
Total assets 155,672,128 252,114,238 276,775,824 129,022,545 121,054,572
------------ ------------ ------------ ------------ ------------
LIABILITIES:
Payable to Bank -- -- -- -- --
Payable to Adviser 90,551 -- -- -- 92,688
Payable to Custodian -- -- -- -- 99,421
Income distribution
payable -- -- -- -- --
Payable for
investments
purchased 776,976 -- 5,644,031 4,716,429 1,172,820
Payable on collateral
due to broker -- 44,455,146 -- 5,422,500 --
Payable for daily
variation margin 13,125 -- -- 48,000 --
Payable for funds
borrowed -- -- -- -- --
Payable for foreign
currency purchased -- -- -- -- 11,414
Taxes payable -- -- -- -- 28,428
Accrued expenses 51,835 151,272 203,152 102,555 41,826
------------ ------------ ------------ ------------ ------------
Total liabilities 932,487 44,606,418 5,847,183 10,289,484 1,446,597
------------ ------------ ------------ ------------ ------------
NET ASSETS CONSIST OF:
Paid-in-capital 127,536,419 176,860,007 218,119,546 94,053,619 110,741,201
Net unrealized
appreciation
(depreciation) on
investments,
collateral, futures
contracts and
foreign currency
transactions 21,086,387 17,924,369 22,450,642 20,821,625 8,541,702
Accumulated net
realized gain (loss)
on investments,
futures contracts
and foreign currency
transactions 5,511,508 12,178,079 29,840,927 4,130,170 273,832
Undistributed net
investment income 605,327 545,365 517,526 (272,353) 51,240
------------ ------------ ------------ ------------ ------------
Total Net Assets $154,739,641 $207,507,820 $270,928,641 $118,733,061 $119,607,975
------------ ------------ ------------ ------------ ------------
NET ASSET VALUE,
Offering Price, and
Redemption Proceeds
Per Share:
Class A Shares $12.66 $12.09 $12.08 $12.57 $10.63
Class B Shares -- -- -- -- --
------------ ------------ ------------ ------------ ------------
SHARES OUTSTANDING:
Class A Shares 12,226,956 17,168,505 22,432,181 9,448,261 11,251,265
Class B Shares -- -- -- -- --
------------ ------------ ------------ ------------ ------------
Total shares
outstanding
($0.0001 par
value) 12,226,956 17,168,505 22,432,181 9,448,261 11,251,265
============ ============ ============ ============ ============
Investments, at
identified and tax
cost $134,053,548 $229,728,047 $253,665,483 $105,515,396 $111,903,594
============ ============ ============ ============ ============
</TABLE>
(See Notes which are an integral part of the Financial Statements)
[ ] MARSHALL FUNDS
-
<TABLE>
<CAPTION>
----------- ------- ------- ------- ------- -------
SHORT-TERM INTERMEDIATE GOVERNMENT SHORT-TERM INTERMEDIATE MONEY
INCOME BOND INCOME TAX-FREE TAX-FREE MARKET
FUND FUND FUND FUND FUND FUND
----------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$78,827,707 $493,871,390 $165,473,117 $26,362,959 $53,821,432 $1,108,884,894
5,991,000 28,614,000 7,182,000 -- -- 65,032,000
227 14 902 -- -- 552
560,833 4,181,327 1,023,469 294,250 694,949 8,605,683
-- -- 17,005,521 1,005,430 -- --
-- -- -- -- -- --
9,981 37,270 17,058 12,309 15,026 289,313
----------- ------------ ------------ ----------- ----------- --------------
85,389,748 526,704,001 190,702,067 27,674,948 54,531,407 1,182,812,442
----------- ------------ ------------ ----------- ----------- --------------
-- -- -- -- -- 81,214
-- -- -- -- -- --
-- -- -- -- -- --
384,104 1,761,613 706,053 62,903 175,409 4,669,817
-- 25,111,891 40,989,538 3,242,599 2,012,849 24,990,000
-- 104,367,473 -- -- -- --
-- -- -- -- -- --
-- 20,373,699 17,948,020 -- -- --
-- -- -- -- -- --
-- -- -- -- -- --
37,949 174,780 93,058 -- 36,881 275,823
----------- ------------ ------------ ----------- ----------- --------------
422,053 151,789,456 59,736,669 3,305,502 2,225,139 30,016,854
----------- ------------ ------------ ----------- ----------- --------------
87,689,247 391,280,904 132,771,606 24,163,316 51,503,048 1,152,795,588
-- --
(108,490) 481,240 (164,235) 262,604 1,255,708 --
(2,613,062) (16,847,599) (1,641,973) (56,474) (452,488) --
-- -- -- -- -- --
----------- ------------ ------------ ----------- ----------- --------------
$84,967,695 $374,914,545 $130,965,398 $24,369,446 $52,306,268 $1,152,795,588
----------- ------------ ------------ ----------- ----------- --------------
$9.74 $9.58 $9.55 $10.08 $10.02 $1.00
-- -- -- -- -- $1.00
----------- ------------ ------------ ----------- ----------- --------------
8,721,190 39,138,019 13,714,782 2,417,788 5,220,845 1,062,126,209
-- -- -- -- -- 90,669,379
=========== ============ ============ =========== =========== ==============
8,721,190 39,138,019 13,714,782 2,417,788 5,220,845 1,152,795,588
=========== ============ ============ =========== =========== ==============
$84,927,197 $522,004,150 $172,819,352 $26,100,355 $52,565,724 $1,173,916,894
=========== ============ ============ =========== =========== ==============
</TABLE>
Six Months Ended February 29, 1996 (unaudited)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
------- ------- ------- ------- --------
EQUITY VALUE STOCK MID-CAP INTERNATIONAL
INCOME FUND EQUITY FUND FUND STOCK FUND STOCK FUND
------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 483,663 $ 667,367 $ 435,739 $ 159,526 $ 471,711
Dividend income 2,054,437 2,036,645 2,332,578 118,511 740,456(a)
----------- ----------- ----------- ----------- ----------
Total income 2,538,100 2,704,012 2,768,317 278,037 1,212,167
----------- ----------- ----------- ----------- ----------
EXPENSES:
Investment advisory
fee 480,293 797,895 1,004,304 410,704 515,774
Directors' fees 1,335 1,098 1,039 955 1,499
Administrative
personnel and
services fees 57,499 95,555 120,267 49,179 46,314
Custodian fees 12,808 21,277 25,822 13,961 34,837
Portfolio accounting
fees 25,721 28,548 32,424 19,055 32,607
Transfer and dividend
disbursing agent fees
and expenses 13,519 10,269 26,923 13,985 16,734
Shareholder services
fees 12,808 21,277 26,781 10,952 10,315
Capital stock
registration costs 9,178 18,944 24,740 9,412 16,033
Auditing fees 6,687 4,806 5,925 5,080 9,359
Legal fees 3,802 2,251 3,089 2,745 3,745
Printing and postage 9,123 10,793 7,635 5,934 14,215
Insurance premiums 2,373 1,243 3,274 1,810 3,404
Distribution services
fees -- -- -- -- --
Taxes 5,491 6,138 9,942 4,735 3,737
Miscellaneous 2,554 7,295 3,786 1,883 1,088
----------- ----------- ----------- ----------- ----------
Total expenses 643,191 1,027,389 1,295,951 550,390 709,661
DEDUCT--
Waiver of investment
advisory fee -- -- -- -- --
Waiver of
administrative
personnel and
services fees -- -- -- -- --
----------- ----------- ----------- ----------- ----------
NET EXPENSES 643,191 1,027,389 1,295,951 550,390 709,661
----------- ----------- ----------- ----------- ----------
NET INVESTMENT INCOME 1,894,909 1,676,623 1,472,366 (272,353) 502,506
----------- ----------- ----------- ----------- ----------
REALIZED AND UNREALIZED
GAIN (LOSS) ON
INVESTMENTS, FOREIGN
CURRENCY AND FUTURES
CONTRACTS:
Net realized gain
(loss) on investment
transactions
(identified cost
basis) 7,324,767 13,860,018 33,630,421 7,713,504 908,030
Net realized gain
(loss) on foreign
currency -- -- -- -- 245,930
Net realized gain on
futures contracts
(identified cost
basis) -- -- -- 167,933 --
Net change in
unrealized
appreciation
(depreciation) on
investments,
collateral, futures
contracts and foreign
currency transactions 10,033,825 1,593,701 (9,638,183) 3,289,820 5,874,572
----------- ----------- ----------- ----------- ----------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS 17,358,592 15,453,719 23,992,238 11,171,257 7,028,532
----------- ----------- ----------- ----------- ----------
CHANGE IN NET ASSETS
RESULTING FROM
OPERATIONS $19,253,501 $17,130,342 $25,464,604 $10,898,904 $7,531,038
=========== =========== =========== =========== ==========
</TABLE>
(a)Net of Foreign taxes withheld of $92,216.
(b)Net of dollar roll interest expense of $993,192.
(c)Net of dollar roll interest expense of $514,321.
(See Notes which are an integral part of the Financial Statements)
[ ] MARSHALL FUNDS
-
<TABLE>
<CAPTION>
- ---------- ------- ------- ------- ------- -------
SHORT-
SHORT-TERM INTERMEDIATE GOVERNMENT TERM INTERMEDIATE MONEY
INCOME BOND INCOME TAX-FREE TAX-FREE MARKET
FUND FUND FUND FUND FUND FUND
- ---------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$2,977,755 $12,432,049(b) $4,302,734(c) $488,781 $1,196,387 $32,424,337
-- -- -- -- -- --
- ---------- ----------- ---------- -------- ---------- -----------
2,977,755 12,432,049 4,302,734 488,781 1,196,387 32,424,337
- ---------- ----------- ---------- -------- ---------- -----------
252,166 1,067,954 433,683 53,636 146,392 2,784,475
1,063 1,583 857 1,552 1,188 1,800
37,747 159,850 51,921 24,863 24,863 500,140
8,406 30,231 11,565 2,145 4,880 68,121
23,892 43,563 25,273 17,926 23,814 49,031
13,522 14,884 36,415 9,528 12,884 54,137
8,406 35,599 11,565 2,145 4,880 111,379
9,625 26,958 16,775 4,834 5,787 47,964
6,897 7,268 7,521 4,337 6,168 5,498
3,404 3,721 3,501 1,027 1,497 2,944
6,364 5,322 5,348 3,054 6,184 6,528
2,916 4,729 2,832 1,820 2,427 6,500
-- -- -- -- -- 80,949
4,377 16,509 5,344 441 1,410 81,277
3,844 21,066 3,028 1,370 1,703 7,866
- ---------- ----------- ---------- -------- ---------- -----------
382,629 1,439,237 615,628 128,678 244,077 3,808,609
168,111 160,193 115,649 53,636 96,270 1,447,927
-- -- -- 20,082 -- --
- ---------- ----------- ---------- -------- ---------- -----------
214,518 1,279,044 499,979 54,960 147,807 2,360,682
- ---------- ----------- ---------- -------- ---------- -----------
2,763,237 11,153,005 3,802,755 433,821 1,048,580 30,063,655
- ---------- ----------- ---------- -------- ---------- -----------
165,865 8,271,039 682,639 15,455 198,041 --
-- -- -- -- -- --
-- -- -- -- -- --
(252,256) (6,108,180) (672,345) 23,219 310,951 --
- ---------- ----------- ---------- -------- ---------- -----------
(86,391) 2,162,859 10,294 38,674 508,992 --
- ---------- ----------- ---------- -------- ---------- -----------
$2,676,846 $13,315,864 $3,813,049 $472,495 $1,557,572 $30,063,655
========== =========== ========== ======== ========== ===========
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
-------------------------- --------------------------
EQUITY VALUE
INCOME EQUITY
FUND FUND
-------------------------- --------------------------
Six Months Six Months
Ended Year Ended Year
February 29, Ended February 29, Ended
1996 August 31, 1996 August 31,
(unaudited) 1995 (unaudited) 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS
OPERATIONS--
Net investment income $ 1,894,909 $ 2,689,393 $ 1,676,623 $ 4,197,972
Net realized gain
(loss) on investment
transactions 7,324,767 797,876 13,860,018 13,637,946
Net realized gain
(loss) on foreign
currency transactions -- -- -- --
Net realized gain on
futures contracts -- -- -- --
Net change in
unrealized
appreciation
(depreciation) of
investments,
collateral, futures
contracts and foreign
currency transactions 10,033,825 10,665,976 1,593,701 8,615,958
------------ ------------ ------------ ------------
Change in net assets
resulting from
operations 19,253,501 14,153,245 17,130,342 26,451,876
------------ ------------ ------------ ------------
DISTRIBUTIONS TO
SHAREHOLDERS--
Dividends to
shareholders from net
investment income (1,749,453) (2,460,822) (1,871,067) (3,775,982)
Distributions to
shareholders from net
realized gain
on investments (2,218,321) -- (14,826,135) (2,160,660)
Distributions to
shareholders in excess
of net investment
income -- -- -- --
------------ ------------ ------------ ------------
Change in net assets
from distributions to
shareholders (3,967,774) (2,460,822) (16,697,202) (5,936,642)
------------ ------------ ------------ ------------
CAPITAL STOCK
TRANSACTIONS
Proceeds from sales of
shares 41,001,692 71,731,172 20,054,753 67,783,603
Net asset value of
shares issued to
shareholders in
payment
of dividends declared 1,906,954 1,212,846 10,045,037 2,806,140
Cost of shares redeemed (10,953,410) (26,533,320) (43,461,138) (89,424,324)
------------ ------------ ------------ ------------
Change in net assets
from capital stock
transactions 31,955,236 46,410,698 (13,361,348) (18,834,581)
------------ ------------ ------------ ------------
Change in net assets 47,240,963 58,103,121 (12,928,208) 1,680,653
NET ASSETS:
Beginning of period 107,498,678 49,395,557 220,436,028 218,755,375
------------ ------------ ------------ ------------
End of period 154,739,641 107,498,678 207,507,820 220,436,028
============ ============ ============ ============
Undistributed net
investment income
included in net assets
at end of period $ 605,327 $ 459,871 $ 545,365 $ 739,809
Net gain (loss) as
computed for federal
tax purposes $ 7,324,767 $ 556,941 $ 13,860,018 $ 13,549,583
============ ============ ============ ============
</TABLE>
*For the period from September 2, 1994 (date of initial public investment) to
August 31, 1995.
(See Notes which are an integral part of the Financial Statements)
[ ] MARSHALL FUNDS
-
<TABLE>
<CAPTION>
-------------------------- ------------------------- -------------------------- --------------------------
MID-CAP SHORT-TERM
STOCK INTERNATIONAL INCOME
STOCK FUND FUND STOCK FUND FUND
-------------------------- ------------------------- -------------------------- --------------------------
Six Months Six Months Six Months Six Months
Ended Year Ended Year Ended Period Ended Year
February 29, Ended February 29, Ended February 29, Ended February 29, Ended
1996 August 31, 1996 August 31, 1996 August 31, 1996 August 31,
(unaudited) 1995 (unaudited) 1995 (unaudited) 1995* (unaudited) 1995
------------ ------------ ------------ ----------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 1,472,366 $ 2,119,476 $ (272,353) $ (102,721) $ 502,506 $ 1,758,012 $ 2,763,237 $ 5,173,889
33,630,421 14,035,870 7,713,504 5,757,618 908,030 (472,259) 165,865 (774,594)
-- -- -- -- 245,930 (178,615) -- --
-- -- 167,933 146,087 -- -- -- --
(9,638,183) 22,181,832 3,289,820 16,659,161 5,874,572 2,667,130 (252,256) 910,517
------------ ------------ ------------ ----------- ------------ ------------ ------------ ------------
25,464,604 38,337,178 10,898,904 22,460,145 7,531,038 3,774,268 2,676,846 5,309,812
------------ ------------ ------------ ----------- ------------ ------------ ------------ ------------
(1,294,803) (2,156,613) -- (43,289) (2,228,753) (354,783) (2,763,237) (5,299,534)
(14,368,059) -- (8,032,341) -- (281,633) (8,672) -- --
-- -- -- (21,475) -- -- -- --
------------ ------------ ------------ ----------- ------------ ------------ ------------ ------------
(15,662,862) (2,156,613) (8,032,341) (64,764) (2,510,386) (363,455) (2,763,237) (5,299,534)
------------ ------------ ------------ ----------- ------------ ------------ ------------ ------------
30,556,241 83,952,870 24,259,614 69,072,658 28,704,427 129,883,397 23,786,238 60,772,757
12,346,841 1,642,441 4,740,167 35,263 1,224,349 216,668 1,435,082 2,867,333
(38,795,622) (114,911,373) (21,389,348) (36,889,162) (9,389,007) (39,463,324) (24,440,400) (79,829,347)
------------ ------------ ------------ ----------- ------------ ------------ ------------ ------------
4,107,460 (29,316,062) 7,610,433 32,218,759 20,539,769 90,636,741 780,920 (16,189,257)
------------ ------------ ------------ ----------- ------------ ------------ ------------ ------------
13,909,202 6,864,503 10,476,996 54,614,140 25,560,421 94,047,554 694,529 (16,178,979)
257,019,439 250,154,936 108,256,065 53,641,925 94,047,554 -- 84,273,166 100,452,145
------------ ------------ ------------ ----------- ------------ ------------ ------------ ------------
270,928,641 257,019,439 118,733,061 108,256,065 119,607,975 94,047,554 84,967,695 84,273,166
============ ============ ============ =========== ============ ============ ============ ============
$ 517,526 $ 339,963 $ (272,353) -- $ 51,240 $ 1,777,487 -- --
$ 33,630,421 $ 10,625,913 $ 7,881,437 $ 4,632,874 $ 1,153,960 $ 8,481 $ 165,865 $ (1,898,650)
============ ============ ============ =========== ============ ============ ============ ============
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
--------------------------
INTERMEDIATE
BOND FUND
--------------------------
Six Months
Ended Year
February 29, Ended
1996 August 31,
(unaudited) 1995
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS--
Net investment income $ 11,153,005 $ 22,151,927
Net realized gain (loss) on investments 8,271,039 (10,004,792)
Net change in unrealized appreciation
(depreciation) of investments,
collateral and futures contracts (6,108,180) 15,428,567
------------ ------------
Change in net assets resulting from operations 13,315,864 27,575,702
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS--
Dividends to shareholders from net investment
income:
Class A Shares (11,153,005) (22,676,934)
Class B Shares -- --
Distributions to shareholders from net realized
gain on investments: -- --
------------ ------------
Change in net assets from distributions to
shareholders (11,153,005) (22,676,934)
------------ ------------
CAPITAL STOCK TRANSACTIONS--
Proceeds from sale of capital stock 70,328,469 145,019,009
Net asset value of shares issued to shareholders
in payment of dividends declared 5,813,957 13,873,286
Cost of shares redeemed (47,461,422) (177,460,054)
------------ ------------
Change in net assets from capital stock
transactions 28,681,004 (18,567,759)
------------ ------------
Change in net assets 30,843,863 (13,668,991)
------------ ------------
NET ASSETS:
Beginning of period 344,070,682 357,739,673
------------ ------------
End of period 374,914,545 344,070,682
============ ============
Undistributed net investment income included in
net assets at end of period -- --
Net gain (loss) as computed for federal tax
purposes $ 8,271,039 ($16,531,233)
============ ============
</TABLE>
(See Notes which are an integral part of the Financial Statements)
[ ] MARSHALL FUNDS
-
<TABLE>
<CAPTION>
--------------------------- -------------------------- -------------------------- --------------------------------
GOVERNMENT SHORT-TERM INTERMEDIATE MONEY
INCOME TAX-FREE TAX-FREE MARKET
FUND FUND FUND FUND
--------------------------- -------------------------- -------------------------- --------------------------------
Six Months Six Months Six Months Six Months
Ended Year Ended Year Ended Year Ended Year
February 29, Ended February 29, Ended February 29, Ended February 29, Ended
1996 August 31, 1996 August 31, 1996 August 31, 1996 August 31,
(unaudited) 1995 (unaudited) 1995 (unaudited) 1995 (unaudited) 1995
------------ ------------- ------------ ------------ ------------ ------------ --------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 3,802,755 $ 5,539,282 $ 433,821 $ 914,542 $ 1,048,580 $ 1,768,807 $ 30,063,655 $ 59,092,790
682,639 838,530 15,455 (60,957) 198,041 (440,633) -- --
(672,345) 2,289,136 23,219 320,938 310,951 1,354,952 -- --
------------ ------------- ----------- ------------ ----------- ------------ --------------- ---------------
3,813,049 8,666,948 472,495 1,174,523 1,557,572 2,683,126 30,063,655 59,092,790
------------ ------------- ----------- ------------ ----------- ------------ --------------- ---------------
(3,802,755) (5,651,424) (433,821) (914,542) (1,048,580) (1,768,807) (28,682,329) (57,991,992)
-- -- -- -- -- -- (1,381,326) (1,100,798)
-- -- -- -- -- -- -- --
------------ ------------- ----------- ------------ ----------- ------------ --------------- ---------------
(3,802,755) (5,651,424) (433,821) (914,542) (1,048,580) (1,768,807) (30,063,655) (59,092,790)
------------ ------------- ----------- ------------ ----------- ------------ --------------- ---------------
34,598,544 65,993,189 6,087,419 8,203,098 9,519,376 21,065,244 1,767,914,445 3,145,304,448
1,747,087 3,624,389 160,301 423,192 101,659 141,974 5,858,551 7,699,494
(9,098,103) (33,748,572) (3,338,776) (12,367,466) (3,874,568) (11,282,666) (1,779,930,877) (2,973,967,126)
------------ ------------- ----------- ------------ ----------- ------------ --------------- ---------------
27,247,528 35,869,006 2,908,944 (3,741,176) 5,746,467 9,924,552 (6,157,881) 179,036,816
------------ ------------- ----------- ------------ ----------- ------------ --------------- ---------------
27,257,822 38,884,530 2,947,618 (3,481,195) 6,255,459 10,838,871 (6,157,881) 179,036,816
------------ ------------- ----------- ------------ ----------- ------------ --------------- ---------------
103,707,576 64,823,046 21,421,828 24,903,023 46,050,809 35,211,938 1,158,953,469 979,916,653
------------ ------------- ----------- ------------ ----------- ------------ --------------- ---------------
130,965,398 103,707,576 24,369,446 21,421,828 52,306,268 46,050,809 1,152,795,588 1,158,953,469
============ ============= =========== ============ =========== ============ =============== ===============
-- -- -- -- -- -- -- --
$ 682,639 ($ 1,806,126) $ 15,455 ($ 16,364) $ 198,041 ($ 254,695) -- --
============ ============= =========== ============ =========== ============ =============== ===============
</TABLE>
FINANCIAL HIGHLIGHTS
For a Share Outstanding Throughout Each Period
<TABLE>
<CAPTION>
Net Realized Distributions to
and Dividends to Shareholders Distributions to
Period Net Asset Unrealized Shareholders from Net Shareholders in
Ended Value, Net Gain/(Loss) Total from from Net Realized Gain on excess of Net
February beginning Investment on Investment Investment Investment Investment
29, of period Income Investments Operations Income Transactions Income
- -------- --------- ---------- ------------ ---------- ------------ ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
EQUITY INCOME FUND
1994(c) $10.00 0.28 (0.09) 0.19 (0.23) -- --
1995 $ 9.96 0.33 1.26 1.59 (0.33) -- --
1996(a) $11.22 0.18 1.64 1.82 (0.17) (0.21)
VALUE EQUITY FUND
1994(c) $10.00 0.12 0.93 1.05 (0.10) -- --
1995 $10.95 0.22 1.22 1.44 (0.20) (0.11) --
1996(a) $12.08 0.10 0.90 1.00 (0.11) (0.88) --
STOCK FUND
1993(b) $10.00 0.10 0.07 0.17 (0.09) -- --
1994 $10.08 0.07 (0.03) 0.04 (0.07) -- --
1995 $10.05 0.09 1.59 1.68 (0.09) -- --
1996(a) $11.64 0.07 1.09 1.16 (0.06) (0.66) --
MID-CAP STOCK FUND
1994(c) $10.00 0.02 (0.29) (0.27) (0.01) (0.03) --
1995 $ 9.69 0.00 2.61 2.61 (0.01) -- --
1996(a) $12.30 (0.03) 1.22 1.19 -- (0.92) --
INTERNATIONAL STOCK FUND
1995(h) $10.00 0.20 0.01 0.21 (0.05) 0.00 --
1996(a) $10.16 0.04 0.68 0.72 (0.22) (0.03) --
SHORT-TERM INCOME FUND
1993(d) $10.00 0.40 (0.05) 0.35 (0.40) -- --
1994 $ 9.95 0.45 (0.25) 0.20 (0.44) -- --
1995 $ 9.71 0.56 0.05 0.61 (0.58) -- --
1996(a) $ 9.74 0.31 0.00 0.31 (0.31) -- --
INTERMEDIATE BOND FUND
1993(b) $10.00 0.46 0.33 0.79 (0.39) -- --
1994 $10.40 0.61 (0.81) (0.20) (0.67) (0.17) --
1995 $ 9.36 0.61 0.16 0.77 (0.62) -- --
1996(a) $ 9.51 0.30 0.07 0.37 (0.30) -- -
GOVERNMENT INCOME FUND
1993(e) $10.00 0.47 0.16 0.63 (0.41) -- --
1994 $10.22 0.64 (0.78) (0.14) (0.68) (0.14) --
1995 $ 9.26 0.60 0.26 0.86 (0.62) -- --
1996(a) $ 9.51 0.32 0.04 0.36 (0.32) -- --
SHORT-TERM TAX-FREE FUND
1994(f) $10.00 0.18 (0.08) 0.10 (0.18) -- --
1995 $ 9.92 0.39 0.13 0.52 (0.39) -- --
1996(a) $10.05 0.20 0.03 0.23 (0.20)
INTERMEDIATE TAX-FREE FUND
1994(f) $10.00 0.19 (0.29) (0.10) (0.19) -- --
1995 $ 9.71 0.42 0.20 0.62 (0.42) -- --
1996(a) $ 9.91 0.21 0.11 0.32 (0.21)
MONEY MARKET FUND--CLASS A SHARES
1993(b) $ 1.00 0.02 -- 0.02 (0.02) -- --
1994 $ 1.00 0.03 -- 0.03 (0.03) -- --
1995 $ 1.00 0.05 -- 0.05 (0.05) -- --
1996(a) $ 1.00 0.03 -- 0.03 (0.03) -- --
MONEY MARKET FUND--CLASS B SHARES
1993(g) $ 1.00 0.02 -- 0.02 (0.02) -- --
1994 $ 1.00 0.03 -- 0.03 (0.03) -- --
1995 $ 1.00 0.05 -- 0.05 (0.05) -- --
1996(a) $ 1.00 0.03 -- 0.03 (0.03) -- --
</TABLE>
(a) Six months ended February 29, 1996 (unaudited).
Reflects operations for the period from November 23, 1992
(date of initial public
(b) investment) to August 31, 1993.
Reflects operations for the period from October 1, 1993
(date of initial public investment)
(c) to August 31, 1994.
Reflects operations for the period from November 2, 1992
(date of initial public
(d) investment) to August 31, 1993.
Reflects operations for the period from December 14, 1992
(date of initial public
(e) investment) to August 31, 1993.
Reflects operations for the period from February 2, 1994
(date of initial public
(f) investment) to August 31, 1994.
Reflects operations for the period from December 17, 1992
(date of initial public
(g) investment) to August 31, 1993.
Reflects operations for the period from September 2, 1994
(date of initial public
(h) investment) to August 31, 1995.
(i) Based on net asset value.
(j) Computed on an annualized basis.
This voluntary expense decrease is reflected in both the expense and net
investment income
(k) ratios.
(See Notes which are an integral part of the Financial Statements)
[ ] MARSHALL FUNDS
-
<TABLE>
<CAPTION>
Ratios to Average Net Assets
---------------------------------
Net Assets, Average
Net Asset Net end of Commission Portfolio
Total Value, end Total Investment Expense period Rate turnover
Distributions of period Return(i) Expenses Income Waiver(k) (000 omitted) Paid rate
- ------------- ---------- --------- -------- ---------- --------- ------------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(0.23) $ 9.96 2.02% 1.01%(j) 3.30%(j) 0.16%(j) $ 49,396 -- 44%
(0.33) $11.22 16.40% 1.01% 3.45% 0.09% $ 107,499 -- 43%
(0.38) $12.66 16.38% 1.00%(j) 2.96%(j) -- $ 154,740 $0.0528 33%
(0.10) $10.95 10.59% 1.00%(j) 1.82%(j) 0.15%(j) $ 218,755 -- 39%
(0.31) $12.08 13.57% 0.96% 1.98% -- $ 220,436 -- 78%
(0.99) $12.09 8.64% 0.96%(j) 1.57%(j) -- $ 207,508 $0.0591 33%
(0.09) $10.08 1.67% 0.94%(j) 1.39%(j) 0.03%(j) $ 309,128 -- 98%
(0.07) $10.05 0.44% 0.99% 0.77% 0.01% $ 250,155 -- 86%
(0.09) $11.64 16.85% 0.98% 0.88% 0.01% $ 257,019 -- 79%
(0.72) $12.08 10.02% 0.97%(j) 1.10%(j) -- $ 270,929 $0.0596 112%
(0.04) $ 9.69 (2.74%) 1.01%(j) 0.23%(j) 0.28%(j) $ 53,642 -- 113%
(0.01) $12.30 27.06% 1.01% (0.13%) 0.08% $ 108,256 -- 157%
(0.92) $12.57 10.24% 1.01%(j) (0.50%)(j) -- $ 118,733 $0.0255 99%
(0.05) $10.16 2.11% 1.54%(j) 2.42%(j) 0.04%(j) $ 94,048 -- 61%
(0.25) $10.63 7.18% 1.38%(j) 0.97%(j) -- $ 119,608 $0.0228 11%
(0.40) $ 9.95 3.57% 0.50%(j) 4.91%(j) 0.51%(j) $ 74,742 79%
(0.44) $ 9.71 2.05% 0.50% 4.58% 0.39% $ 100,452 185%
(0.58) $ 9.74 6.47% 0.51% 5.78% 0.40% $ 84,273 194%
(0.31) $ 9.74 3.22% 0.51%(j) 6.57%(j) 0.40%(j) $ 84,968 53%
(0.39) $10.40 7.99% 0.70%(j) 6.08%(j) 0.10%(j) $ 346,808 220%
(0.84) $ 9.36 (2.02%) 0.71% 6.26% 0.11% $ 357,740 228%
(0.62) $ 9.51 8.58% 0.71% 6.50% 0.08% $ 344,071 232%
(0.30) $ 9.58 3.91% 0.72%(j) 6.27%(j) 0.09%(j) $ 374,915 90%
(0.41) $10.22 6.40% 0.85%(j) 6.56%(j) 0.33%(j) $ 57,822 218%
(0.82) $ 9.26 (1.34%) 0.86% 6.58% 0.40% $ 64,823 175%
(0.62) $ 9.51 9.78% 0.86% 6.54% 0.26% $ 103,708 360%
(0.32) $ 9.55 3.74% 0.86%(j) 6.58%(j) 0.20%(j) $ 130,965 105%
(0.18) $ 9.92 0.98% 0.52%(j) 3.22%(j) 0.71%(j) $ 24,903 37%
(0.39) $10.05 5.41% 0.51% 3.95% 0.78% $ 21,422 71%
(0.20) $10.08 2.33% 0.51%(j) 4.04%(j) 0.69%(j) $ 24,369 29%
(0.19) $ 9.71 (0.94%) 0.62%(j) 3.58%(j) 0.59%(j) $ 35,212 45%
(0.42) $ 9.91 6.58% 0.61% 4.35% 0.47% $ 46,051 105%
(0.21) $10.02 3.29% 0.61%(j) 4.30%(j) 0.39%(j) $ 52,306 29%
(0.02) $ 1.00 2.33% 0.40%(j) 2.97%(j) 0.28%(j) $ 775,890 --
(0.03) $ 1.00 3.41% 0.40% 3.40% 0.29% $ 967,988 --
(0.05) $ 1.00 5.57% 0.41% 5.44% 0.26% $1,128,623 --
(0.03) $ 1.00 2.73% 0.41%(j) 5.42%(j) 0.26%(j) $1,062,126 --
(0.02) $ 1.00 1.89% 0.72%(j) 2.72%(j) 0.28%(j) $ 1,980 --
(0.03) $ 1.00 3.11% 0.70% 3.39% 0.29% $ 11,929 --
(0.05) $ 1.00 5.25% 0.71% 5.21% 0.26% $ 30,331 --
(0.03) $ 1.00 2.57% 0.71%(j) 5.12%(j) 0.26%(j) $ 90,669 --
</TABLE>
As of February 29, 1996 (unaudited)
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
Marshall Funds, Inc. (the "Corporation") is registered under the Investment
Company Act of 1940, as amended (the "Act") as an open-end management
investment company. The Corporation consists of eleven diversified portfolios
(individually referred to as the "Fund", or collectively as the "Funds") which
are presented herein:
<TABLE>
<CAPTION>
PORTFOLIO NAME INVESTMENT OBJECTIVE
-------------- --------------------
<S> <C>
Marshall Equity Income Fund ("Equity Income Fund") Above-average dividend income with appreciation of capital.
Marshall Value Equity Fund ("Value Equity Fund") Long-term capital growth and income.
Marshall Stock Fund ("Stock Fund") Growth of capital and income.
Marshall Mid-Cap Stock Fund ("Mid-Cap Stock Fund") Appreciation of capital.
Marshall International Stock Fund ("International
Stock Fund") Long-term capital growth.
Marshall Short-Term Income Fund ("Short-Term Income
Fund") Maximize total return consistent with current income.
Marshall Intermediate Bond Fund ("Intermediate Bond
Fund") Maximize total return consistent with current income.
Marshall Government Income Fund ("Government Income
Fund") Current income.
Marshall Short-Term Tax-Free Fund ("Short-Term Tax-
Free Fund") Current income that is exempt from federal income tax.
Marshall Intermediate Tax-Free Fund ("Intermediate Provide as high a level of income that is exempt from federal
Tax-Free Fund") income tax as is consistent with preservation of capital.
Marshall Money Market Fund ("Money Market Fund") Current income consistent with stability of principal.
</TABLE>
Money Market Fund is offered in two classes of shares: Class A Shares and
Class B Shares. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held.
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.
Investment Valuations--Short-term securities with remaining maturities of
sixty days or less at the time of purchase may be valued at amortized cost,
which approximates fair market value. Investments in other open-end investment
companies are valued at net asset value. All other securities are valued at
prices provided by an independent pricing service.
Money Market Fund's use of the amortized cost method to value its portfolio
securities is in accordance with Rule 2a-7 under the Act.
Repurchase Agreements--It is the policy of the Funds to require the custodian
bank to take possession, to have legally segregated in the Federal Reserve Book
Entry System, or to have segregated within the custodian bank's vault, all
securities held as collateral under repurchase agreement transactions.
Additionally, procedures have been established by the Funds to monitor, on a
daily basis, the market value of each repurchase agreement's collateral to
ensure that the value of collateral at least equals the repurchase price to be
paid under the repurchase agreement transaction, 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' investment adviser (or sub-adviser with respect to International
Stock Fund) to be creditworthy pursuant to guidelines and/or standards reviewed
or established by the Board of Directors (the "Directors"). Risks may arise
from the potential inability of counterparties to honor the terms of the
repurchase agreement. Accordingly, the Funds could receive less than the
repurchase price on the sale of collateral securities.
Investment Income, Expenses and Distributions--Dividend income and
distributions to shareholders are recorded on the ex-dividend date. Interest
income and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue Code, as amended
(the "Code").
Federal Taxes--It is the Funds' policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of their income. Accordingly, no
provisions for federal tax are necessary.
However, federal taxes may be imposed on the International Stock Fund upon
the disposition of certain investments in passive foreign investment companies.
Withholding taxes on foreign dividends have been provided for in accordance
with the International Stock Fund's understanding of the applicable country's
tax rules and rates.
At August 31, 1995, Short-Term Income Fund, Intermediate Bond Fund,
Government Income Fund, Short-Term Tax-Free Fund, and Intermediate Tax-Free
Fund had capital loss carryforwards of $2,201,055, $16,531,233, $2,327,619,
$16,364, and $254,695, respectively for federal tax purposes, which will reduce
each Fund's taxable income arising from future net realized gain on
investments, if any, to the extent permitted by the Code, and thus will reduce
the amount of the distributions to shareholders which would otherwise be
necessary to relieve each Fund of any liability for federal tax. Pursuant to
the Code, such capital loss carryforwards will expire as listed below:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CAPITAL LOSS CAPITAL LOSS
CARRYFORWARD CARRYFORWARD
TO EXPIRE IN TO EXPIRE IN
FUND 2002 2003
---- ------------ ------------
<S> <C> <C>
Short-Term Income Fund $302,405 $1,898,650
Intermediate Bond Fund -- 16,531,233
Government Income Fund 521,493 1,806,126
Short-Term Tax-Free Fund -- 16,364
Intermediate Tax-Free Fund -- 254,695
</TABLE>
- --------------------------------------------------------------------------------
Net realized losses on Equity Income Fund, International Stock Fund, Short-
Term Income Fund, Intermediate Bond Fund, Short-Term Tax-Free Fund, and
Intermediate Tax-Free Fund of $94,192, $454,951, $590,410, $8,598,994, $55,564
and $395,834, attributable to security transactions incurred after October 31,
1994, are treated as arising on the first day of each Fund's next taxable year
(September 1, 1995).
In addition, net realized losses on International Stock Fund of $117,247
attributable to foreign currency transactions incurred after October 31, 1994,
are treated as arising on the first day of the International Stock Fund's next
taxable year (September 1, 1995).
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.
Deferred Expenses--The costs incurred by each Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and are being amortized
using the straight-line method over a period of five years from each Funds'
commencement date.
Futures Contracts--Upon entering into a financial futures contract with a
broker, the Funds are required to deposit in a segregated account an amount of
cash or U.S. government securities equal to a percentage of the contract value.
The Funds agree to receive from or to pay to the broker an amount of cash equal
to a specific dollar amount multiplied by the difference between the closing
value and the price at which the contract was made. On a daily basis, the value
of the financial futures contracts are determined and any difference between
such value and the original futures contracts values are reflected in the
"daily variation margin" account. Daily variation margin adjustments, arising
from this "marking to market" process, are recorded by the Funds as unrealized
gains or losses.
The Funds may decide to close their position on a contract at any time prior
to the contract's expiration. When a contract is closed, the Funds recognize a
realized gain or loss. Risks of entering into futures contracts include the
possibility that a change in the value of the contract may not correlate with
changes in the value of the underlying securities. This may cause the futures
contracts to react differently than the portfolio securities to market changes.
In addition, the Funds may lose money on a futures contract if the Funds'
Adviser or Sub-Adviser incorrectly predicts the direction or extent of market
factors such as interest and currency exchange movements. At February 29, 1996,
Equity Income Fund and Mid-Cap Stock Fund had outstanding futures contracts as
set forth below:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNREALIZED
EXPIRATION CONTRACTS APPRECIATION
FUND DATE TO RECEIVE POSITION (DEPRECIATION)
------------- ---------- --------------- -------- --------------
<S> <C> <C> <C> <C>
Equity Income March 1996 S&P 500 Futures Long $(33,188)
Mid-Cap Stock March 1996 S&P 400 Futures Long $70,898
</TABLE>
- --------------------------------------------------------------------------------
Foreign Currency Commitments--The International Stock Fund may enter into
foreign currency commitments for the delayed delivery of securities or foreign
currency exchange transactions. Risks may arise upon entering into these
transactions from the potential inability of counterparties to meet the terms
of their commitments and from unanticipated movements in security prices or
foreign exchange rates. The foreign currency transactions are adjusted by the
daily exchange rate of the underlying currency and any gains or losses are
recorded for financial statement purposes as unrealized until the settlement
date. At February 29, 1996, the International Stock Fund had outstanding
foreign currency commitments as set forth below:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SETTLEMENT COMMITMENTS TO UNREALIZED
DATE DELIVER/RECEIVE IN EXCHANGE FOR (DEPRECIATION)
------------- ---------------------------- --------------- --------------
<S> <C> <C> <C>
March 4, 1996 26,293,020 Indonesian Rupiah $11,382 ($32)
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Foreign Currency Translation--The accounting records of International Stock
Fund 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. Differences between income and expense amounts recorded and collected
or paid are adjusted when reported by the custodian bank. The Funds 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 and
maturities of short-term securities, sales of FCs, currency gains or losses
realized between the trade and settlement dates on securities transactions, the
difference between the amounts of dividends, interest, and foreign withholding
taxes recorded on the Funds' books, and the U.S. dollar equivalent of the
amounts actually received or paid. Net unrealized foreign exchange gains and
losses arise from changes in the value of assets and liabilities other than
investments in securities at fiscal year end, resulting from changes in the
exchange rate.
Dollar Roll Transactions--The Funds, except for Money Market Fund, may enter
into dollar roll transactions, with respect to mortgage securities issued by
Government National Mortgage Association, Federal National Mortgage
Association, and Federal Home Loan Mortgage Corporation, in which the Funds
loan mortgage securities to financial institutions and simultaneously agree to
accept substantially similar (same type, coupon and maturity) securities at a
later date at an agreed upon price. Dollar roll transactions are short-term
financing arrangements which will not exceed twelve months. The Funds will use
the proceeds generated from the transactions to invest in short-term
investments, which may enhance the Funds' current yield and total return.
Securities Lending--The Funds participate in a securities lending program
providing for the lending of corporate bonds, equity and government securities
to qualified brokers. Collateral received for securities loaned must be in cash
or government securities. Collateral is maintained at a minimum level of 100%
of the market value on securities loaned, plus interest, if applicable. The
Funds reimburse the custodian for the costs directly associated with the Funds'
participation in the securities lending program, subject to a maximum.
As of February 29, 1996, collateral held for securities loaned was as
follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET VALUE OF MARKET VALUE
FUND SECURITIES LOANED OF COLLATERAL
---- ----------------- -------------
<S> <C> <C>
Value Equity Fund $43,046,731 $ 44,455,146
Mid-Cap Stock Fund $ 5,248,675 $ 5,422,500
Intermediate Bond Fund $99,959,670 $104,367,473
</TABLE>
- --------------------------------------------------------------------------------
Reclassification--The Funds adopted Statement of Position 93-2 Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain, and
Return of Capital Distributions by Investment Companies ("SOP 93-2").
Accordingly, permanent book and tax differences have been reclassified to the
accounts discussed below. These differences are attributable to differing
book/tax treatments for net operating losses, distributions in excess of net
investment income, and foreign currency translations. Amounts as of August 31,
1995, have been reclassified to reflect the following:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INCREASE (DECREASE)
--------------------------------------------------
UNDISTRIBUTED NET
INVESTMENT
ACCUMULATED INCOME/ACCUMULATED
PAID-IN NET REALIZED DISTRIBUTIONS IN EXCESS OF
FUND NAME CAPITAL GAIN/LOSS NET INVESTMENT INCOME
--------- --------- ------------ --------------------------
<S> <C> <C> <C>
Mid-Cap Stock Fund -- ($124,196) $124,196
International Stock Fund ($435,309) $61,051 $374,258
</TABLE>
- --------------------------------------------------------------------------------
Net investment income, net realized gains/losses, and net assets were not
affected by this change.
Use of Estimates--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts of assets, liabilities, expenses and
revenues reported in the financial statements. Actual results could differ from
those estimated.
Other--Investment transactions are accounted for on the trade date.
3. CAPITAL STOCK
The Articles of Incorporation permit the Directors to issue 50 billion full
and fractional shares of common stock, par value $0.0001 per share. At February
29, 1996, the capital paid-in was as follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FUND CAPITAL PAID-IN
---- ---------------
<S> <C>
Equity Income Fund $ 127,536,419
Value Equity Fund 176,860,007
Stock Fund 218,119,546
Mid-Cap Stock Fund 94,053,619
International Stock Fund 110,741,201
Short-Term Income Fund 87,689,247
Intermediate Bond Fund 391,280,904
Government Income Fund 132,771,606
Short-Term Tax-Free Fund 24,163,316
Intermediate Tax-Free Fund 51,503,048
Money Market Fund 1,152,795,588
</TABLE>
- --------------------------------------------------------------------------------
Transactions in capital stock were as follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
--------------------------------- --------------------------------- ---------------------------------
EQUITY INCOME FUND VALUE EQUITY FUND STOCK FUND
--------------------------------- --------------------------------- ---------------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED
FEBRUARY 29, 1996 AUGUST 31, 1995 FEBRUARY 29, 1996 AUGUST 31, 1995 FEBRUARY 29, 1996 AUGUST 31, 1995
----------------- --------------- ----------------- --------------- ----------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 3,396,651 7,087,265 1,667,682 6,271,401 2,528,433 8,136,287
Shares issued to
shareholders in
payment of
distributions
declared 158,500 118,743 869,399 268,477 1,024,972 159,631
Shares redeemed (913,395) (2,580,728) (3,612,116) (8,276,005) (3,201,577) (11,113,456)
--------- ---------- ---------- ---------- ---------- -----------
Net change
resulting from
share
transactions 2,641,756 4,625,280 (1,075,035) (1,736,127) 351,828 (2,817,538)
========= ========== ========== ========== ========== ===========
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
--------------------------------- ---------------------------------- ---------------------------------
MID-CAP STOCK FUND INTERNATIONAL STOCK FUND SHORT-TERM INCOME FUND
--------------------------------- ---------------------------------- ---------------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED PERIOD ENDED ENDED YEAR ENDED
FEBRUARY 29, 1996 AUGUST 31, 1995 FEBRUARY 29, 1996 AUGUST 31, 1995* FEBRUARY 29, 1996 AUGUST 31, 1995
----------------- --------------- ----------------- ---------------- ----------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 1,988,486 6,886,800 2,788,192 13,379,463 2,433,290 6,280,358
Shares issued to
shareholders in
payment
of distributions
declared 406,184 3,751 120,388 23,373 134,020 296,781
Shares redeemed (1,750,861) (3,622,137) (915,248) (4,144,903) (2,500,178) (8,263,080)
---------- ----------- --------- ---------- ---------- ----------
Net change
resulting from
share
transactions 643,809 3,268,414 1,993,332 9,257,933 67,132 (1,685,941)
========== =========== ========= ========== ========== ==========
</TABLE>
- --------------------------------------------------------------------------------
*For the period from September 2, 1994 (date of initial public investment) to
August 31, 1995.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
--------------------------------- --------------------------------- ---------------------------------
INTERMEDIATE BOND FUND GOVERNMENT INCOME FUND SHORT-TERM TAX-FREE FUND
--------------------------------- --------------------------------- ---------------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED
FEBRUARY 29, 1996 AUGUST 31, 1995 FEBRUARY 29, 1996 AUGUST 31, 1995 FEBURARY 29, 1996 AUGUST 31, 1995
----------------- --------------- ----------------- --------------- ----------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 7,262,805 15,646,570 3,567,131 7,182,308 602,449 826,416
Shares issued to
shareholders in
payment of
distributions
declared 599,913 1,495,282 180,288 393,550 15,890 42,680
Shares redeemed (4,922,811) (19,146,997) (941,414) (3,668,777) (331,218) (1,249,332)
---------- ----------- --------- ---------- -------- ----------
Net change
resulting from
share
transactions 2,939,907 (2,005,145) 2,806,005 3,907,081 287,121 (380,236)
========== =========== ========= ========== ======== ==========
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
---------------------------------
INTERMEDIATE TAX-FREE FUND
---------------------------------
SIX MONTHS
ENDED YEAR ENDED
FEBRUARY 29, 1996 AUGUST 31, 1995
----------------- ---------------
<S> <C> <C>
Shares sold 950,097 2,185,693
Shares issued to shareholders in payment
of distributions declared 10,146 14,635
Shares redeemed (386,285) (1,180,355)
-------- ----------
Net change resulting from share
transactions 573,958 1,019,973
======== ==========
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
---------------------------------
MONEY MARKET FUND
---------------------------------
SIX MONTHS
ENDED YEAR ENDED
CLASS A SHARES FEBRUARY 29, 1996 AUGUST 31, 1995
----------------- ---------------
<S> <C> <C>
Shares sold 1,528,253,052 3,007,907,156
Shares issued to shareholders in payment
of distributions declared 4,698,498 6,704,839
Shares redeemed (1,599,448,177) (2,853,976,863)
-------------- --------------
Net change resulting from Class A Share
transactions (66,496,627) 160,635,132
============== ==============
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
---------------------------------
MONEY MARKET FUND
---------------------------------
SIX MONTHS
ENDED YEAR ENDED
CLASS B SHARES FEBRUARY 29, 1996 AUGUST 31, 1995
----------------- ---------------
<S> <C> <C>
Shares sold 239,661,393 137,397,292
Shares issued to shareholders in payment
of distributions declared 1,160,053 994,655
Shares redeemed (180,482,700) (119,990,263)
------------ ------------
Net change resulting from Class B Share
transactions 60,338,746 18,401,684
------------ ------------
Net change resulting from Fund Share
transactions (6,157,881) 179,036,816
============ ============
</TABLE>
- --------------------------------------------------------------------------------
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Investment Advisory Fee--M&I Investment Management Corp., the Funds'
investment adviser (the "Adviser"), receives for its services an annual
investment advisory 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.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FUND ANNUAL RATE
---- -----------
<S> <C>
Equity Income Fund 0.75%
Value Equity Fund 0.75%
Stock Fund 0.75%
Mid-Cap Stock Fund 0.75%
International Stock Fund 1.00%
Short-Term Income Fund 0.60%
Intermediate Bond Fund 0.60%
Government Income Fund 0.75%
Short-Term Tax-Free Fund 0.50%
Intermediate Tax-Free Fund 0.60%
Money Market Fund 0.50%
</TABLE>
- --------------------------------------------------------------------------------
Templeton Investment Counsel, Inc., is the sub-adviser ("Sub-Adviser") for
International Stock Fund. The Adviser compensates the Sub-Adviser based on the
level of average aggregate daily net assets of International Stock Fund.
Administrative Fee--Federated Administrative Services ("FAS") provides the
Funds with certain administrative personnel and services. This fee is based on
the level of average aggregate net assets of the Corporation for the period.
FAS may voluntarily choose to waive a portion of its fee.
Distribution Services Fee--International Stock Fund and Money Market Fund
have adopted Distribution Plans (the "Plans") pursuant to Rule 12b-1 under the
Act. Under the terms of the Plans, the Funds will compensate Federated
Securities Corp. ("FSC"), the principal distributor, from the net assets of
each Fund to finance activities intended to result in the sale of International
Stock Fund's shares and Money Market Fund's Class B Shares. The Plans provide
that the Funds may incur distribution expenses up to 0.25 of 1% and 0.30 of 1%.
respectively, of the average daily net assets of International Stock Fund and
Money Market Fund's Class B Shares annually, to compensate FSC.
Shareholder Services Fee--Marshall Funds Investors Services ("MFIS") is the
Funds' shareholder servicing agent. Under the terms of a shareholder service
agreement with MFIS, the Funds will pay MFIS a fee to obtain certain services
for shareholders and for the maintenance of shareholder accounts. The fee is
based on the level of each Fund's average net assets for the period.
Transfer Agent Fees--Federated Shareholder Services Company serves as
transfer and dividend disbursing agent for the Funds for which it receives a
fee. This fee is based on the size, type, and number of accounts and
transactions made by shareholders.
Portfolio Accounting Fees--FAS maintains the Funds' accounting records for
which it receives a fee. The fee is based on the level of each Fund's average
daily net assets for the period, plus out-of-pocket expenses.
Custodian Fees--Marshall & Ilsley Trust Co. is the custodian for all Funds'
except International Stock Fund. State Street Bank & Trust Co. is the custodian
for International Stock Fund. Marshall & Ilsley Trust Co. and State Street Bank
& Trust Co. receive fees based on the level of each fund's average daily net
assets for the period. The custodian also charges a fee in connection with
securities lending activities of the Funds.
Organizational Expenses--Organizational expenses were borne initially by FAS.
The Funds have agreed to reimburse FAS for the organizational expenses during
the five year period following each Fund's effective date. For the six months
ended February 29, 1996, the following amounts were paid pursuant to this
agreement:
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
ORGANIZATIONAL ORGANIZATIONAL
FUND EXPENSES EXPENSES PAID
---- -------------- --------------
<S> <C> <C>
Equity Income Fund $18,857 $ 1,886
Value Equity Fund 18,485 1,848
Stock Fund 30,018 3,548
Mid-Cap Stock Fund 16,434 1,643
International Stock Fund 18,401 722
Short-Term Income Fund 23,033 2,981
Intermediate Bond Fund 23,413 2,647
Government Income Fund 22,735 2,560
Short-Term Tax-Free Fund 17,646 1,525
Intermediate Tax-Free Fund 16,416 1,503
Money Market Fund 59,536 7,224
</TABLE>
- --------------------------------------------------------------------------------
General--Certain of the Officers and Directors of the Corporation are
Officers and Directors of the above companies.
5. INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
six months ended February 29, 1996, were as follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FUND PURCHASES SALES
---- ------------ ------------
<S> <C> <C>
Equity Income Fund $ 59,030,176 $ 36,740,392
Value Equity Fund 62,917,218 90,918,713
Stock Fund 280,449,256 289,579,276
Mid-Cap Stock Fund 105,558,054 105,464,364
International Stock Fund 23,730,238 9,809,882
Short-Term Income Fund 43,664,086 49,945,260
Intermediate Bond Fund 376,447,291 345,925,941
Government Income Fund 204,072,726 142,305,672
Short-Term Tax-Free Fund 10,067,590 6,059,557
Intermediate Tax-Free Fund 19,836,299 13,859,996
</TABLE>
- --------------------------------------------------------------------------------
6. CONCENTRATION OF CREDIT RISK
International Stock Fund invests in equity and fixed income securities of
non-U.S. issuers. Although the Fund maintains a diversified investment
portfolio, the political or economic developments within a particular country
or region may have an adverse effect on the ability of domiciled issuers to
meet their obligations. Additionally, political or economic developments may
have an effect on the liquidity and volatility of portfolio securities and
currency holdings.
At February 29, 1996, the diversification of common and preferred stock was
as follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY % OF NET ASSETS INDUSTRY % OF NET ASSETS
-------- --------------- -------- ---------------
<S> <C> <C> <C>
Air Travel 0.7% Forest Products 2.6%
Automobiles 2.6% Gas & Pipeline Utilities 1.0%
Banking 13.0% Gas Exploration 1.3%
Broadcasting 1.5% Household Appliances & Furnishings 1.2%
Business Services 3.0% Industrial Machinery 1.5%
Chemicals 5.6% Insurance 4.9%
Commercial Services 0.5% Investment Companies 1.3%
Conglomerates 2.9% Leisure 0.5%
Container & Glass 0.3% Mining 0.4%
Construction Materials 1.1% Non-Ferrous Metals 1.5%
Drugs & Healthcare 2.5% Office & Business Equipment 0.7%
Electric Utilities 5.6% Oil & Gas 0.7%
Electrical Equipment 5.8% Paper 1.5%
Electronics 1.0% Petroleum Services 2.0%
Engineering & Construction 1.0% Pollution Control 0.3%
Financial Services 1.3% Retail Trade 1.6%
Food and Beverage 2.2% Telecommunications 0.7%
Telephone 4.2%
</TABLE>
- --------------------------------------------------------------------------------
DIRECTORS OFFICERS
Ody J. Fish Edward C. Gonzales
John DeVincentis Chairman and Treasurer
Edward C. Gonzales
Paul E. Hassett James F. Duca, II
President
Joseph S. Machi
Vice President and Assistant Treasurer
Peter J. Germain
Secretary
C. Todd Gibson
Assistant Secretary
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. Although money market funds seek to
maintain a stable net asset value of $1.00 per share, there is no assurance
that they will be able to do so.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus, which contains facts
concerning the Fund's objective and policies, management fees, expenses, and
other information.
A. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left
corner. The Marshall Equity Income Fund is represented by a broken line,
whereas the Standard & Poor's 500 Index is represented by a broken dotted
line and the Lipper Equity Income Funds Index is represented by a solid line.
The line graph is a visual representation of a comparison of change in the
value of a hypothetical investment of $10,000 in the Fund and Standard &
Poor's 500 Index and Lipper Equity Income Funds Index from September 30, 1993
(start of performance) to February 29, 1996. The "y" axis reflects the cost
of the investment. The "x" axis reflects computation periods from the ending
value of the hypothetical investment in the Fund as compared to Standard &
Poor's 500 Index and Lipper Equity Income Funds Index; the ending values
are$13,820; $14,886; and $13,410, respectively. Beneath the line graph are
the folling total return data for the Fund: average annual total return for
the six-month period ended February 29, 1996, and total return figures for
the one-year period, inception-to-date cumulative total return, and
inception-to-date average annualized total return for the period ended March
31, 1996 are as follows: 16.38%; 29.66%; 40.06%; and 14.41%, respectively.
The performance disclaimer and footnotes are listed directly under the
graphic presentation.
B. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left
corner. The Marshall Value Equity Fund is represented by a broken line,
whereas the Standard & Poor's 500 Index is represented by a broken dotted
line and the Lipper Growth and Income Funds Index is represented by a solid
line. The line graph is a visual representation of a comparison of change in
the value of the hypothetical investment of $10,000 in the Fund and Standard
& Poor's 500 Index and Lipper Growth and Income Funds Index from September
30, 1993 (start of performance) to February 29, 1996. The "y" axis reflects
the cost of the investment. The "x" axis reflects computation periods from
the ending value of the hypothetical investment in the Fund as compared to
Standard & Poor's 500 Index and Lipper Growth and Income Funds Index; the
ending values are $13,645; $14, 886; and $13,898, respectively. Beneath the
line graph are the following total return data for the Fund: average annual
total return for the six-month period ended February 29, 1996, and total
return figures for the one-year period, inception-to-date cumulative total
return, and inception-to-date average annualized total return for the period
ended March 31, 1996 are as follows: 8.64%; 22.98%; 39.82%; and 14.33%,
respectively. The performance disclaimer and footnotes are listed directly
under the graphic presentation.
C. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left
corner. The Marshall Stock Fund is represented by a broken line, whereas the
Standard & Poor's 500 Index is represented by a broken dotted line and the
Lipper Growth and Income Funds Index is represented by a solid line. The line
graph is a visual representation of a comparison of change in the value of a
hypothetical investment of $10,000 in the Fund and Standard & Poor's 500
Index and Lipper Growth and Income Funds Index from November 20, 1992 (start
of performance) to February 29, 1996. The "y" axis reflects the cost of the
investment. The "x" axis reflects computation periods from the ending value
of the hypothetical investment in the Fund as compared to Standard & Poor's
500 Index and Lipper Growth and Income Funds Index; the ending values are
$13,128; $16,214; and $15,818, respectively. Beneath the line graph are the
following total return data for the Fund: average annual total return for
the six-month period ended February 29, 1996 and total return figures for the
one-year period, inception-to-date cumulative total return, and inception-to-
date average annualized total return for the period ended March 31, 1996 are
as follows: 10.02%; 23.07%; 32.52%; and 8.74%, respectively. The performance
disclaimer and footnotes are listed directly under the graphic presentation.
D. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left
corner. The Marshall Mid-Cap Stock Fund is represented by a broken line,
whereas the Standard & Poor's Midcap 400 Index is represented by a broken
dotted line and the Lipper Mid-Cap Funds Index is represented by a solid
line. The line graph is a visual representation of a comparison of change in
the value of a hypothetical investment of $10,000 in the Fund and Standard &
Poor's Midcap 400 Index and Lipper Mid-Cap Funds Index from September 30,
1993 (start of performance) to February 29, 1996. The "y" axis reflects the
cost of the investment. The "x" axis reflects computation periods from the
ending value of the hypothetical investment in the Fund as compared to
Standard & Poor's 500 Index and Lipper Mid-Cap Fund Index; the ending values
are $13,597; $13,622; and $13,841, respectively. Beneath the line graph are
the following total return data for the Fund: average annual total return
for the six-month period ended February 29, 1996, and total return figures
for the one-year period, inception-to-date cumulative total return, and
inception-to-date average annualized total return for the period ended March
31, 1996 are as follows: 10.24%; 37.48%; 41.43%; and 14.86%, respectively.
The performance disclaimer and footnotes are listed directly under the
graphic presentation.
E. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left
corner. The Marshall International Stock Fund is represented by a broken
line, whereas the Morgan Stanley Capital Europe, Australia, Far East Index is
represented by a broken dotted line and the Lipper International Funds Index
is represented by a solid line. The line graph is a visual representation of
a comparison of change in the value of a hypothetical investment of $10,000
in the Fund and Morgan Stanley Capital Europe, Australia, Far East Index and
Lipper International Funds Index from September 1, 1994 (start of
performance) to February 29, 1996. The "y" axis reflects the cost of the
investment. The "x" axis reflects computation periods from the ending value
of the hypothetical investment in the Fund as compared to Morgan Stanley
Capital Europe, Australia, Far East Index and Lipper International Funds
Index; the ending values are $10,945; $10,741; and $10,470, respectively.
Beneath the line graph are the following total return data for the Fund:
average annual total return for the six-month period ended Februay 29, 1996,
and total return figures for the one-year period, inception-to-date
cumulative total return, and inception-to-date average annualized total
return for the period ended March 31, 1996 are as follows: 7.18%; 18.24%;
10.15%; and 6.31%, respectively. The performance disclaimer and footnotes are
listed directly under the graphic presentation.
F. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left
corner. The Marshall Short-Term Income Fund is represented by a broken line,
whereas the Short-Term Fund Benchmark is represented by a broken dotted line,
the Lipper Short-Term Investment Grade Bond Funds Index is represented by a
solid line and the IBC/Donoghue's Taxable Money Fund Average is represented
by a dotted line. The line graph is a visual representation of a comparison
of change in the value of a hypothetical investment of $10,000 in the Fund
and the Short-Term Fund Benchmark, Lipper Short-Term Investment Grade Bond
Funds Index and IBC/Donoghue's Taxable Money Fund Average from November 1,
1992 (start of performance) to February 29, 1996. The "y" axis reflects the
cost of the investment. The "x" axis reflects computation periods from the
ending value of the hypothetical investment in the Fund as compared to Short-
Term Fund Benchmark, Lipper Short-Term Investment Grade Bond Funds Index and
IBC/Donoghue's Taxable Money Fund Average; the ending values are $11,612;
$11,649; $11,848; and $11,385, respectively. Beneath the line graph are the
following total return data for the Fund: average annual total return for
the six-month period ended February 29, 1996, and total return firgures for
the one-year period, inception-to-date cumualtive total return, and
inception-to-date average annualized total return for the period ended March
31, 1996 are as follows: 3.22%; 6.76%; 16.03%; and 4.45%, respectively. The
performance disclaimer and footnotes are listed directly under the graphic
presentation.
G. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left
corner. The Marshall Intermediate Bond Fund is represented by a broken line,
whereas the Lehman Brothers Intermediate Government/Corporate Bond Index is
represented by a dotted line and Lipper Intermediate Investment Grade Bond
Funds Index is represented by a solid line. The line graph is a visual
representation of a comparison of change in the value of a hypothetical
investment of $10,000 in the Fund and the Lehman Brothers Intermediate
Government/Corporate Bond Index and Lipper Intermediate Investment Grade Bond
Funds Index from November 20, 1992 (start of performance) to February 29,
1996. The "y" axis reflects the cost of the investment. The "x" axis reflects
computation periods from the ending value of the hypothetical investment in
the Fund as compared to Lehman Brothers Government/Corporate Bond Index and
Lipper Intermediate Investment Grade Bond Funds Index; the ending values are
$11,939; $12,425; and $12,473, respectively. Beneath the line graph are the
following total return data for the Fund: average annual total return for
the six-month period ended February 29, 1996, and total return figures for
the one-year period, inception-to-date cumualtive total return, and
inception-to-date average annualized total return for the period ended March
31, 1996 are as follows: 3.91%; 8.86%; 18.35%; and 5.14%, respectively.The
performance disclaimer and footnotes are listed directly under the graphic
presentation.
H. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left
corner. The Marshall Government Income Fund is represented by a broken line,
whereas the Lehman Brothers Mortgage Backed Securities Index is represented
by a dotted line and Lipper U.S. Mortgage Funds Index is represented by a
solid line. The line graph is a visual representation of a comaprison of
change int the value of a hypothetical investment of $10,000 in the Fund and
Lehman Brothers Mortgage-Backed Securities Index and Lipper U.S. Mortgage
Funds Index from December 13, 1992 (start of performance) to February 29,
1996. The "y" axis reflects the cost of the investment. The "x" axis reflects
computation periods from the ending value of the hypothetical investment in
the Fund as compared to Lehman Brothers Mortgage-Backed Securities Index and
Lipper U.S. Mortgage Funds Index; the ending values are $11,957; $12,427; and
$11,910, respectively. Beneath the line graph are the following total return
data for the Fund: average annual total return for the six-month period
ended February 29, 1996, and total return figures for the one-year period,
inception-to-date cumulative total return, and inception-to-date average
annualized total return for the period ended March 31, 1996 are as follows:
3.74%; 9.16%; 18.69%; and 5.32%, respectively. The performance disclaimer and
footnotes are listed directly under the graphic presentation.
I. The graphic presentation here displayed consists of a line graph. The
correpsonding components of the line graph are listed in the upper left
corner. The Marshall Short-Term Tax-Free Fund is represented by a broken
line, whereas the Lehman Brothers 3-Year General Obligations Bonds Index is
represented by a broken dotted line and Lipper Short-Term Municipal Funds
Index is represented by a solid line. The line graph is a visual
representaiton of a comparison of change in the value of a hypothetical
investment of $10,000 in the Fund and Lehman Brothers 3-Year General
Obligations Index from February 2, 1994 (start of performance) to February
29, 1996. The "y" axis reflects the cost of the investment. The "x" axis
reflects computation periods from the ending value of the hypothetical
investment in the Fund as compared to Lehman Brothers 3-Year General
Obligations Bonds Index and Lipper Short-Term Municipal Funds Index; the
ending values are $10,892; $10,973; and $10,761, respectively. Beneath the
line graph are the following total return data for the Fund: average annual
total return for the six-month period ended February 29, 1996, and total
return firgures for the one-year period, inception-to-date cumulative total
return, and inception-to-date average annualized total return for the period
ended March 31, 1996 are as follows: 2.33%; 4.99%; 8.63%; and 3.91%,
respectively. The performance disclaimer and footnotes are listed directly
under the graphic presentation.
J. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left
corner. The Marshall Intermediate Tax-Free Fund is represented by a broken
line, whereas the Lehman Brothers 5-Year General Obligations Bonds Index is
represented by a broken dotted line and Lipper Intermediate Municipal Funds
Index is represented by a solid line. The line graph is a visual
representation of a comparison of change in the value of a hypothetical
investment of $10,000 in the Fund and Lehman Brothers 5-Year General
Obligations Bonds Index and Lipper Intermediate Municipal Funds Index from
February 2, 1994 (start of performance) to February 29, 1996. The "y" axis
reflects the cost of the investment. The "x" axis reflects computation
periods from the ending value of the hypothetical investment in the Fund as
compared to Lehman Brothers 5-Year General Obligations Bonds Index and Lipper
Intermediate Municipal Funds Index; the ending values are $10,729; $10,906;
and $10,999, respectively. Beneath the line graph are the following total
return data for the Fund: average annual total return for the six-month
period ended February 29, 1996, and total return figures for the one-year
period, inception-to-date cumulative total return, and inception-to-date
average annualized total return for the period ended March 31, 1996 are as
follows: 3.29%; 6.26%; 8.03%; and 3.64%, respectively. The performance
disclaimer and footnotes are listed directly under the graphic presentation.
