The
Marshall Family
of Funds
SEMI-ANNUAL REPORT FOR CLASS Y SHARES
DATED FEBRUARY 28, 1999
Marshall Equity Income Fund
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Marshall Large-Cap Growth & Income Fund
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Marshall Mid-Cap Value Fund
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Marshall Mid-Cap Growth Fund
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Marshall Small-Cap Growth Fund
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Marshall International Stock Fund
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Marshall Short-Term Income Fund
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Marshall Intermediate Bond Fund
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Marshall Government Income Fund
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Marshall Intemediate Tax-Free Fund
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Marshall Money Market Fund
Marshall Funds
Table of Contents
<TABLE>
<S> <C>
President's Message....................................................... 1
Commentaries
Marshall Equity Income Fund............................................. 2
Marshall Large-Cap Growth & Income Fund ................................ 4
Marshall Mid-Cap Value Fund............................................. 6
Marshall Mid-Cap Growth Fund............................................ 8
Marshall Small-Cap Growth Fund.......................................... 10
Marshall International Stock Fund....................................... 12
Marshall Short-Term Income Fund......................................... 14
Marshall Intermediate Bond Fund......................................... 16
Marshall Government Income Fund......................................... 18
Marshall Intermediate Tax-Free Fund..................................... 20
Marshall Money Market Fund.............................................. 22
Financial Information
Portfolio of Investments................................................ 23
Marshall Equity Income Fund........................................... 23
Marshall Large-Cap Growth & Income Fund............................... 24
Marshall Mid-Cap Value Fund........................................... 26
Marshall Mid-Cap Growth Fund.......................................... 27
Marshall Small-Cap Growth Fund........................................ 28
Marshall International Stock Fund..................................... 29
Marshall Short-Term Income Fund....................................... 32
Marshall Intermediate Bond Fund....................................... 33
Marshall Government Income Fund....................................... 35
Marshall Intermediate Tax-Free Fund................................... 37
Marshall Money Market Fund............................................ 40
Statements of Assets and Liabilities.................................... 44
Statements of Operations................................................ 46
Statements of Changes in Net Assets..................................... 48
Financial Highlights.................................................... 52
Notes to Financial Statements........................................... 54
Directors & Officers...................................................... 62
</TABLE>
President's Message
Dear Marshall Funds Shareholder:
We are pleased to present each Marshall Fund shareholder with the enclosed
semi-annual report for the six month reporting period ended February 28, 1999.
With all the news and hype surrounding the financial markets over the past
several years, many investors have found themselves chasing a select group of
large-company and technology stocks instead of sticking to a well thought out
investment strategy.
Clearly defined, consistently executed: At the Marshall Funds, we're proud that
our funds are overseen by managers who follow a distinct, disciplined approach.
An approach specially developed to pursue the objectives of your fund, and your
objectives.
I think you'll agree our philosophy of following a strict discipline has proven
effective. We continue to believe that allocations between large and small
companies, growth and value investment styles, domestic and international
markets, and equity and fixed income investments are essential in achieving the
long-range financial goals of most investors. Diversification is a hedge against
volatility; your specific goals, timetables, and risk tolerances will influence
your allocations.
To better serve investors in the Marshall International Stock Fund, our board of
directors has approved, and our shareholders are being asked to approve, the
appointment of BPI Global Asset Management LLP, as sub-adviser to the fund. We
eagerly look forward to a long relationship with BPI as the new sub-adviser.
Their approach to investing, and their commitment to client service should
deliver benefits to all the funds' shareholders.
We extend our deepest appreciation to three of the original members of the board
of directors of the Marshall Funds: Ody Fish, Ed Gonzalez and Paul Hassett, who
are departing our fund family. Each of these gentlemen has served the Marshall
Funds shareholders admirably through a dynamic period of growth in the industry
and substantial growth in the size and number of Marshall Funds.
As always, we wish you continued success on your investment strategy, and thank
you for making the Marshall Funds part of your strategy. If you have any
questions regarding Marshall Funds, please call your M&I Trust & Investment
Management Relationship Manager or 1-800-236-3863. You can also visit our web
site at www.marshallfunds.com.
Sincerely,
/s/ John M. Blaser
John M. Blaser
President, Marshall Funds
Semi-Annual Report--Commentary
[-]
Marshall Equity Income Fund
The Marshall Equity Income Fund (the "Fund") seeks capital appreciation and
current income through a conservative and disciplined approach of investing in a
broadly diversified portfolio of common stocks with above-average dividend
yields. The Fund's investments are structured to produce a portfolio which
yields at least 100 basis points (1%) more than the Standard & Poor's 500 Index
(S&P 500).* As of February 28, 1999, the portfolio had a yield before fees and
expenses of 2.98% and an SEC 30-day yield of 1.79%.**
For the six months ended February 28, 1999, the Fund provided a total return of
17.12%,** while the Lipper Equity Income Funds Index* provided a total return of
16.69% and the S&P 500 returned 32.28%. The Fund's Class Y Shares was awarded a
four star Morningstar Rating(TM) for its overall performance versus 2,947
domestic equity funds as of March 31, 1999.+
Market characterized by high valuations
By historical standards, the stock market appears richly valued. The S&P 500 is
currently trading at all time valuation highs on the basis of earnings (27 times
estimated 1999 earnings) and at all time lows based on dividend yield (1.3%).
Investors have been willing to pay higher prices for stocks because they expect
inflation to remain benign, interest rates to remain low, and corporate earnings
to continue to grow.
Economic growth in the United States has been surprisingly strong despite
economic problems in Asia and Latin America, and inflation has remained quite
low. This combination provided a favorable backdrop for equity prices. If you
scratch below the surface, however, you find that the S&P 500's performance was
concentrated in a small group of large capitalization growth companies. As
evidence of this narrowness, more than 50% of the S&P 500's return, for the six
month period ended February 28, 1999, was accounted for by only 24 stocks. As a
result, the price-earnings ratios (P/E) of these select growth stocks have been
driven to large premiums. If history is a guide, the market should eventually
correct this valuation disparity. Broader market participation would favor value
investors generally and the Fund specifically.
"Graphic representation "1A" omitted. See Appendix."
Energy, autos and food stocks play an important role
Falling inflation, driven in part by falling commodity prices, is one of the
reasons behind the market's rising valuation. This comes, however, to the
detriment of commodity industries like energy companies. At current stock
prices, energy stocks are attractively valued based on future earnings
expectations and dividends. Oil and natural gas prices appear unsustainably low.
The Fund continues to hold a significant weight in energy stocks (14.83%) in
anticipation of improved energy prices.
Auto stocks (4.76% of the Fund), the beneficiaries of low interest rates and
falling commodity prices, were up 36.54% for the six months ended February 28,
1999. With the help of low interest rates and fuel prices, customer demand
exceeded expectations. Falling raw material costs, such as steel, also helped
United States auto manufacturers report better than expected earnings.
Recently, the Fund has been increasing its investments in food stocks (4.24% of
the portfolio). This typically defensive group dramatically underperformed the
S&P 500 since the beginning of 1998. Growth expectations which were too high a
year ago now appear more reasonable and the stocks offer attractive dividend
yields and valuations that offer good total return potential.
Disciplined approach may help to reduce volatility
As disciplined equity investors, our approach remains unchanged. Investing in
attractively priced companies paying above average dividends is the cornerstone
of our investment approach. The portfolio's above average dividend yield
combined with its low historic volatility should help reassure our investors
that participation in any further market advance will be built around an
investment style designed to conserve their assets during periods of stock
market corrections.
Sincerely,
/s/ Bruce P. Hutson
Bruce P. Hutson
Manager, Marshall Equity Income Fund
[PHOTO APPEARS HERE]
[_] Marshall Equity Income Fund
"Graphic representation "2A" omitted. See Appendix."
"Graphic representation "3A" omitted. See Appendix."
This graph illustrates the hypothetical investment of $10,000 in the Fund from
its
inception on September 30, 1993 to February 28, 1999, compared to the S&P 500
and the LEIFI.*
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*The S&P 500 and LEIFI are not adjusted to reflect sales charges, 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 S&P 500 is a capitalization-weighted index of 500 stocks
designed to measure performance of the broad domestic economy through changes
in the aggregate market value of 500 stocks representing all major
industries. Lipper 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 figures do
not reflect sales charges.
**Performance quoted represents past performance and is not indicative of
future results. 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.
***Represents a hypothetical investment of $10,000 in the Fund. The Fund's
performance assumes the reinvestment of all dividends and distributions. The
S&P 500 and LEIFI have been adjusted to reflect reinvestment of dividends on
securities in the indices.
+Morningstar proprietary ratings reflect historical risk-adjusted performance
as of 3/31/99. They are subject to change every month. Past performance is no
guarantee of future results. Ratings are calculated from the funds' 3-, 5-
and 10-year average annual return in excess of 90-day Treasury bill returns
with appropriate fee adjustments, and a risk factor that reflects fund
performance below 90-day T-bill returns. The Fund's Class Y Shares received 3
stars and 4 stars for the three-year and five-year periods and was rated
among 2,947 and 1,810 domestic equity funds, respectively. The top ten
percent of funds in a rating universe receive 5 stars, the next 22.5% receive
4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the
bottom 10% receive 1 star.
Semi-Annual Report--Commentary
[-]
Marshall Large-Cap Growth & Income Fund
The Marshall Large-Cap Growth & Income Fund (the "Fund") invests in a
diversified portfolio of common stocks of large-sized companies whose market
capitalization exceed $10 billion and that have a history of stable earnings
and/or growing dividends. The adviser looks for companies that are typically
leaders in their industry and have records of above-average financial
performance and proven superior management.
Outperforming the category average
The Fund's solid performance over the past quarter, and over the past year was a
result of our focus on high-quality, large-cap companies that delivered superior
relative earnings gains.
Compared to its benchmarks, the Fund performed well. As of February 28, 1999 the
Fund was up 29.24% over the past six months and 17.38% over the past 12 months.*
Over those same time periods the Lipper Growth and Income Funds Index returned
19.90% and 5.30%, respectively. The S&P 500 Index advanced 32.28% and 19.74%,
respectively.**
Focus on earnings growth
Over the past year we have been concerned about a slowing of corporate earnings
growth. To address these concerns, we underweighted the Fund's holdings in
vulnerable sectors such as capital goods, energy and commodities where earnings
growth was slowing. We also placed a strong emphasis on companies' ability to
deliver expected earnings rather than on their absolute market valuation.
"Graphic representation "1B" omitted. See Appendix."
Multi-nationals gaining favor again
The worst of the Asian situation seems to have passed and many multi-national
companies' earnings have already been adjusted downward to reflect this
slowdown. As we progress through 1999, the earnings of many of these same
multi-nationals should begin accelerating, and should once again gain the
attention of investors who flocked into a few select growth stocks during the
worst of the Asian situation.
We are maintaining our focus on high-quality companies with good earnings
growth. And as always, in an attempt to maximize shareholder return, the Fund
will continue to maintain a diversified portfolio of quality, large-cap
companies.
Sincerely,
/s/ William J. O'Connor
William J. O'Connor
Manager, Marshall Large-Cap Growth & Income Fund
[PHOTO APPEARS HERE]
[_] Marshall Large-Cap Growth & Income Fund
"Graphic representation "2B" omitted. See Appendix."
"Graphic representation "3B" omitted. See Appendix."
This graph illustrates the hypothetical investment of $10,000 in the Fund from
its
inception on November 20, 1992 to February 28, 1999, compared to the S&P 500
and the LGIFI.**
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*Performance quoted represents past performance and is not indicative of
future results. Investment return and principal value will fluctuate, so that
an investor's shares, when redeemed, may be worth more or less than their
original cost.
**The S&P 500 and LGIFI are not adjusted to reflect sales charges, 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. S&P 500 is a capitalization-weighted index of 500 stocks
designed to measure performance of the broad domestic economy through changes
in the aggregate market value of 500 stocks representing all major
industries. Lipper 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 figures do
not reflect sales charges.
***Represents a hypothetical investment of $10,000 in the Fund. The Fund's
performance assumes the reinvestment of all dividends and distributions. The
S&P 500 and LGIFI have been adjusted to reflect reinvestment of dividends on
securities in the indices.
Semi-Annual Report--Commentary
[-]
Marshall Mid-Cap Value Fund
The Marshall Mid-Cap Value Fund (the "Fund") invests in a diversified portfolio
of common stocks of companies similar in size to those within the S&P Mid-Cap
400 Index (SPMC).* The adviser selects companies that exhibit traditional value
characteristics, such as a price-to-earnings ratio less than stocks in the S&P
500 Index,* higher-than-average dividend yields or a lower-than-average price-
to-book value. In addition, these companies may have under appreciated assets,
or be involved in company turnarounds or corporate restructurings.
Fund performance
For the six months ended February 28, 1999, the Fund provided a total return of
9.13%.** For the same period, the Standard & Poor's Mid-Cap 400 Barra/Value
Index (SPMCBV)* returned 12.17%.
A strict value discipline
Our approach to stock picking remains true: Buy out-of-favor, undervalued stocks
and patiently wait for the company to implement strategies that have the ability
to enhance shareholder returns. De-emphasizing sector rotation and group
momentum, our approach pursues our shareholders' objectives through an authentic
mid-cap value fund.
We maintain that market momentum should not necessarily influence our value-
oriented investment style. For example, as the growth-oriented stocks in the
SPMC moved sharply higher over the past six months, we increased our exposure to
out-of-favor value stocks in the energy, cyclical and health care sectors. Each
of these sectors currently contains companies that possess attractive valuations
and strong business franchises. In the utility sector, improving regulatory
developments and strong cash flow returns have also resulted in attractive
investments for the Fund.
Concentrating on three value scenarios
The Fund's focus on undervalued, out-of-favor stocks that display asset
recognition, a major turn-around or restructuring has rewarded investors.
"Graphic representation "1C" omitted. See Appendix."
1. Asset recognition: We look for stocks with significant financial, tangible or
intangible, assets that are not currently recognized in the market. For example,
more than two years ago, the market abandoned cable stocks in favor of satellite
networks. We recognized the in-ground assets of the cable industry, allocated
resources towards that industry, and were rewarded by holding
Telecommunications, Inc. until the company was purchased by AT&T.
2. Turn-arounds: Frequently we find value opportunities when a company
institutes more effective ways to conduct its core business. Last year Darden
Restaurants, Inc. refocused their energies on in-store management at their Olive
Garden and Red Lobster franchises. This focus continued to bear fruit, yielding
higher guest counts and profitability trends.
3. Restructurings: When companies change their business strategy or shift to a
different business segment, patient value investors may be rewarded. In mid-
1999, Silicon Graphics will complete its transformation into a leading provider
of computer servers and graphical workstations.
Maintaining our patient stance
In an environment where the market continues to focus on companies with large
market capitalizations, we continue to look for value opportunities. Valuation
spreads between the very large companies and those of small mid-size companies
are extremely wide. We expect this valuation gap to close, as it has
historically, and we expect the Fund will strongly benefit when this does occur.
We are committed to our value approach and look forward to enhancing shareholder
return potential with our unwavering discipline. We thank you for your continued
commitment to the Marshall Mid-Cap Value Fund.
Sincerely,
/s/ Matthew B. Fahey
Matthew B. Fahey
Co-Manager, Marshall Mid-Cap Value Fund
/s/ John C. Potter, C.F.A.
John C. Potter, C.F.A.
Co-Manager, Marshall Mid-Cap Value Fund
[PHOTO APPEARS HERE]
[_] Marshall Mid-Cap Value Fund
"Graphic representation "2C" omitted. See Appendix."
"Graphic representation "3C" omitted. See Appendix."
This graph illustrates the hypothetical investment of $10,000 in the Fund from
its
inception on September 30, 1993 to February 28, 1999, compared to the SPMC and
LMCFI.*
- --------------------------------------------------------------------------------
*The SPMC, S&P 500, SPMCBV and the LMCFI are not adjusted to reflect sales
charges, expenses or other fees that the SEC requires to be reflected in the
Fund's performance. These indices are unmanaged. Actual investments may not
be made in an index. SPMC is a capitalization-weighted index of common stocks
representing all major industries in the mid-range of the U.S. stock market.
S&P 500 is a capitalization-weighted index of 500 stocks designed to measure
performance of the broad domestic economy through changes in the aggregate
market value of 500 stocks representing all major industries. SPMCBV is a
capitalization-weighted index of the stocks in the SPMC having the highest
book to price ratios. 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
figures do not reflect sales charges.
**Performance quoted represents past performance and is not indicative of
future results. 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.
***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 LMCFI have been adjusted to reflect reinvestment of dividends on
securities in the indices.
Semi-Annual Report--Commentary
[-]
Marshall Mid-Cap Growth Fund
The Marshall Mid-Cap Growth Fund (the "Fund") invests in a diversified portfolio
of common stocks of companies similar in size to those within the S&P Mid-Cap
400 Index (SPMC).* The adviser selects stocks of companies with above-average
earnings growth potential or where significant changes are taking place, such as
significant new products, services, or methods of distribution, as well as
overall business restructuring.
Fund performance
The Fund's performance, relative to other mid-cap stock funds, was above
average. For the six months ended February 28, 1999, the Fund provided a total
return of 33.79%** compared to 27.65% for the SPMC and 28.47% for the Lipper
Mid-Cap Funds Index.*
Large-caps remain market darlings
Large-company stocks have fueled the market's rally for the past few years, and
especially over the past six months. Over that time, the mid-size company stocks
in which the Fund invests performed less in absolute terms, as uneasy investors
sought the relative safety of blue-chip stocks. A select group of large-cap
stocks with unusually high valuations dominated the performance of the S&P 500
Index.*
Last year, a wave of concern gripped the market. Its causes were primarily: debt
default from the Russian government, the collapse of some highly leveraged hedge
funds and a realization that domestic corporate profit growth was slipping.
However, amid a growing concern of a credit crunch, the Federal Reserve Board
aggressively lowered the federal funds rate, which allowed the market to cease
its negative concerns. This allowed a market recovery in which the Fund provided
outstanding returns.
"Graphic representation "1D" omitted. See Appendix."
Maintaining our focus
Throughout these perceived crises, we maintained our focus of looking for
outstanding companies that have superior growth potential. Currently industries
such as technology, broadcasting, education and health care hold the most
promising prospects for future growth. We are closely monitoring government
health care policies and how those policies may affect certain companies.
We have been keeping a close eye on our technology holdings and how the year
2000 may affect those companies, as preparation for the date change grows more
intense.
Mid-caps should regain favor
We anticipate that mid-caps will continue to gain favor with the investment
community. In a steady economy experiencing modest growth, investors should
benefit from a shift from large-cap stocks to mid- and small-cap stocks. Mid-
caps should enjoy a renewed interest among investors, as higher relative growth
rates in earnings become apparent.
We remain committed to our strategy of investing in quality, rapidly growing
companies because we believe this strategy will continue to reward long-term
investors.
Sincerely,
/s/ Steve D. Hayward
Steve D. Hayward
Manager, Marshall Mid-Cap Growth Fund
[PHOTO APPEARS HERE]
[_] Marshall Mid-Cap Growth Fund
"Graphic representation "2D" omitted. See Appendix."
"Graphic representation "3D" omitted. See Appendix."
This graph illustrates the hypothetical investment of $10,000 in the Fund from
its
inception on September 30, 1993 to February 28, 1999, compared to the SPMC and
the LMCFI.*
- --------------------------------------------------------------------------------
*The SPMC, S&P 500 and the LMCFI are not adjusted to reflect sales charges,
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. SPMC is a capitalization-weighted index of common stocks
representing all major industries in the mid-range of the U.S. stock market.
S&P 500 is a capitalization-weighted index of 500 stocks designed to measure
performance of the broad domestic economy through changes in the aggregate
market value of 500 stocks representing all major industries. Lipper 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 figures do not reflect sales charges.
**Performance quoted represents past performance and is not indicative of
future results. 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.
***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 LMCFI have been adjusted to reflect reinvestment of dividends on
securities in the indices.
Semi-Annual Report--Commentary
[-]
Marshall Small-Cap Growth Fund
The Marshall Small-Cap Growth Fund (the "Fund") invests in a diversified
portfolio of common stocks of small-sized companies similar in size to those
within the Russell 2000 Index (Russell 2000).+ The adviser selects stocks of
companies with above-average earnings growth potential or where significant
changes are taking place, such as new products, services or methods of
distribution, as well as overall business restructuring.
Fund performance
Although the Fund's performance fell short of its larger-cap brethren, it did
perform well relative to other funds in the small-cap stock fund category. For
the six months ended February 28, 1999, the Fund provided a total return of
16.31%* compared to 16.79% for the Russell 2000** and 15.92% for the Lipper
Small-Cap Funds Index.**
Small-caps out of favor
The trend of large-cap dominance, which began in 1995, continued throughout this
recent 6-month period. Mutual fund inflows continued to be heavily weighted
towards large-cap funds, providing additional buying power in the largest, most
liquid U.S. stocks.
The most significant market event of the last six months was a series of rate
cuts by the Federal Reserve Board. The short-term effect of the rate cuts was
very positive on small-cap stocks as investors rushed to take advantage of the
many values that had been created over the preceding months. Over the long run,
lower interest rates should bolster economic growth and also provide for a more
favorable valuation environment for small-cap growth stocks.
"Graphic representation "1E" omitted. See Appendix."
Unwavering strategy
The Fund's strategy remained constant as we continued to invest in high quality
companies with sustainable earnings growth opportunities. The industries where
we are currently finding such opportunities include technology, broadcasting,
education and healthcare.
While we remain cautious on companies with inflated valuations, we have found
some opportunities among internet stocks as well as those companies benefiting
from the internet's growth. This includes companies that develop applications
and equipment dedicated to increasing bandwidth available to corporations and
individuals.
Bright outlook for small-caps
We are excited about the outlook for small-cap growth stocks in 1999. Recent
setbacks have left small-caps at extremely attractive valuation levels relative
to large-caps, levels that by some measures we have not seen since the late
1970s. This, coupled with our positive outlook on interest rates, should bode
well for the small-cap market.
We remain committed to our strategy of investing in quality, rapidly growing
companies because we believe this strategy will continue to reward long-term
investors.
Sincerely,
/s/Steve D. Hayward
Steve D. Hayward
Manager, Marshall Small-Cap Growth Fund
[PHOTO APPEARS HERE]
[_] Marshall Small-Cap Growth Fund
"Graphic representation "2E" omitted. See Appendix."
"Graphic representation "3E" omitted. See Appendix."
This graph illustrates the hypothetical investment of $10,000 in the Fund from
its
inception on November 1, 1995++ to February 28, 1999, compared to the Russell
2000 and the LSCFI.**
- --------------------------------------------------------------------
+ Small-cap funds may experience a higher degree of market volatility.
*Performance quoted represents past performance and is not indicative of
future results. Investment return and principal value will fluctuate, so that
an investor's shares, when redeemed, may be worth more or less than their
original cost.
**The Russell 2000 and LSCFI are not adjusted to reflect sales charges,
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 Russell 2000 is an index of common stocks whose
market capitalizations generally range from $200 million to $5 billion.
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 figures do not reflect sales
charges.
***Represents a hypothetical investment of $10,000 in the Fund. The Fund's
performance assumes the reinvestment of all dividends and distributions. The
Russell 2000 and LSCFI have been adjusted to reflect reinvestment of
dividends on securities in the indices.
++The Marshall Small-Cap Growth Fund is the successor to a collective trust
fund. The quoted performance data includes performance of the collective
trust fund for periods before the Fund's registration statement became
effective on August 30, 1996, as adjusted to reflect the Fund's anticipated
expenses. The collective trust fund was not registered under the Investment
Company Act of 1940 ("1940 Act") and therefore was not subject to certain
investment restrictions imposed by the 1940 Act. If the collective trust fund
had been registered under the 1940 Act, the performance may have been
adversely affected.
Semi-Annual Report--Commentary
[-]
Marshall International Stock Fund
The Marshall International Stock Fund (the "Fund") invests primarily in a
diversified portfolio of common stocks of companies of any size outside the
United States.+ The Fund uses a value-oriented approach and invests in companies
selling at a discount to their long-term earning potential.
During the six months ended February 28, 1999, the Fund* underperformed the
Morgan Stanley Capital International Europe, Australia and Far East Index (EAFE
Index),** 9.74% versus 14.00%. In addition to the Fund's value style being out
of favor, negative contributors to the Fund included exposure to depressed
cyclical stocks and currency fluctuations in Latin America, specifically Brazil
which devalued its currency in January 1999.
A challenge to overseas investors
The last six months have continued to challenge international value investors.
The volatility of developing markets continued to send investors to the safety
of large liquid expensive stocks. Financial markets worldwide reacted to
Russia's economic crisis by posting dismal third quarter results with Asia down
29% followed by Latin America down 40% and Europe finishing up 9%. However, by
the fourth quarter, global markets started to stabilize and recover.
As of February 28, 1999, the Fund's largest regional exposures were to Europe
(59%), Asia (17%) and Latin America (6%). Over the last six months we have been
trimming our European holdings and reallocating those funds, on a selective
basis, to Asia and Latin America. Since August 1998, the Fund's weightings have
decreased in Europe (60% to 59%), increased in Asia (12% to 17%) and increased
in Latin America (5% to 6%).
A comeback in Asia
In Asia, a number of countries, notably Korea and Thailand both early victims of
the Asian currency crisis, have made serious efforts to reform their banking
systems. On the back of these reforms their markets registered impressive gains
over the last six months. The Fund benefited from weightings in Korea and
Thailand and with an overall Asian exposure of 17% for the period ending
February 28, 1999.
Japan has been slowly introducing reforms to its devastated financial system. We
believe these structural changes will lead Japan out of its economic malaise.
Accordingly, we have been selectively uncovering Japanese bargains, increasing
the Fund's weighting over the last six months from 2% to 5%.
Strong performers throughout Europe
The European financial and telecommunications sectors continued to contribute
positively to the Fund. Our holdings in Telecom Italia SPA, an Italian
telecommunications company, and Argentaria, a Spanish bank, contributed
significantly to the portfolio.
Europe remained a strong performing market where we will continue to trim into
strength, as stocks become fully valued and take advantage of opportunities as
the market reacts to emerging market volatility.
Sincerely,
/s/ Gary R. Clemons
Gary R. Clemons
Manager, Marshall International Stock Fund
"Graphic representation "1F" omitted. See Appendix."
[_] Marshall International Stock Fund
"Graphic representation "2F" omitted. See Appendix."
"Graphic representation "3F" omitted. See Appendix."
This graph illustrates the hypothetical investment of $10,000 in the Fund from
its
inception on September 1, 1994 to February 28, 1999, compared to the EAFE Index
and the LIFI.**
- --------------------------------------------------------------------
+Foreign investing involves special risks including currency risk, increased
volatility of foreign securities, and differences in auditing and other
financial standards.
*Performance quoted represents past performance and is not indicative of
future results. 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 EAFE Index and the LIFI are not adjusted to reflect sales charges,
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 EAFE Index is a market capitalization-weighted
foreign securities index, which is widely used to measure the performance of
European, Australian and New Zealand, and Far East stock markets. Lipper
figures represent the average of the total returns reported by all the mutual
funds designated by Lipper Analytical Services, Inc. as falling into the
respective categories indicated. These figures do not reflect sales charges.
***Represents a hypothetical investment of $10,000 in the Fund. The Fund's
performance assumes the reinvestment of all dividends and distributions. The
EAFE Index and LIFI have been adjusted to reflect reinvestment of dividends
on securities in the indices.
Semi-Annual Report--Commentary
[-]
Marshall Short-Term Income Fund
The Marshall Short-Term Income Fund (the "Fund") invests in short- to
intermediate-term investment grade bonds and notes, including corporate, asset-
backed, mortgage-backed and United States government securities. The adviser
changes the Fund's weightings in these sectors as it deems appropriate and uses
macro- economic credit and market analysis to select portfolio securities. The
Fund will maintain an average dollar-weighted maturity of six months to three
years.
Fund performance
For the six months ended February 28, 1999, the Fund provided a total return of
1.31%*, compared to a return of 1.80% for the Lipper Short-Term Investment Grade
Bond Fund Index.**
Bonds performed poorly during the reporting period as interest rates rose. The
Federal Reserve Board, having declared victory over domestic inflation, turned
its healing hand toward the global liquidity crisis and lowered interest rates
three times (a total of 0.75 percent). The rate cuts had the desired effects on
global liquidity but fueled an already red-hot domestic economy.
"Graphic representation "1G" omitted. See Appendix."
Investors flock to risk assets
The United States economy grew at a 6.10% pace during the fourth quarter. With
the global financial markets calming and the realization that the United States
was an oasis of prosperity, investors sold Treasuries and bought risk assets
(stocks and corporate bonds).
The subsequent unwinding of a massive flight to quality sent Treasury yields
higher and prices tumbling. As the reporting period drew to a close, Treasury
yields were about 0.50% higher, corporate bonds recouped about half of their
losses, and stocks were hitting new highs.
Poised for the future
The Fund continued to emphasize yield through investments in high quality
corporate, mortgage, and asset backed securities. The Fund's yield maximizing
strategy generally favors these types of securities relative to Treasuries. And
while this strategy held performance down during the reporting period, as these
securities lagged, we believe that the long term benefits of maximizing yield
potential should bear fruit.
Sincerely,
/s/ Mark D. Pittman
Mark D. Pittman
Manager, Marshall Short-Term Income Fund
[PHOTO APPEARS HERE]
[_] Marshall Short-Term Income Fund
"Graphic representation "2G" omitted. See Appendix."
"Graphic representation `3G" omitted. See Appendix."
The graph illustrates the hypothetical investment of $10,000 in the Fund from
its
inception on November 1, 1992 to February 28, 1999, compared to LSTIBI and
DMFA.**
- --------------------------------------------------------------------------------
*Performance quoted represents past performance and is not indicative of
future results. 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 LSTIBI and DMFA are not adjusted to reflect sales charges, 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. IBC/Donoghue's Money Fund Report(TM) 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. 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 figures do not reflect sales charges.
***Represents a hypothetical investment of $10,000 in the Fund. The Fund's
performance assumes the reinvestment of all dividends and distributions. The
LSTIBI and DMFA have been adjusted to reflect reinvestment of dividends on
securities in the indices.
+Duration is a commonly used measure of the potential volatility of the price
of a debt security, or the aggregate market value of a portfolio of debt
securities, prior to maturity. Securities with longer durations generally
have more volatile prices than securities of comparable quality with shorter
durations.
Semi-Annual Report--Commentary
[-]
Marshall Intermediate Bond Fund
The Marshall Intermediate Bond Fund (the "Fund") invests in intermediate-term
investment grade bonds and notes, including corporate, asset-backed,
mortgage-backed and United States government securities. The adviser's strategy
to achieve total return is to adjust the Fund's weightings in these sectors as
it deems appropriate and uses macroeconomic, credit and market analysis to
select portfolio securities. The Fund will maintain an average dollar-weighted
maturity of three to 10 years.
Fund performance
For the six months ended February 28, 1999, the Fund provided a total return of
0.69%*, compared to a return of 1.54% for the Lipper Intermediate Investment
Grade Bond Funds Index** and 1.86% for the Lehman Brothers Intermediate
Government/Corporate Bond Index.**
A bond market in turmoil
Global instability gave rise to a tumultuous bond market. In September 1998,
Treasury prices soared and corporate bond prices tumbled as investors scrambled
for safety and liquidity. The Federal Reserve Board, having declared victory
over domestic inflation, turned its healing hand toward the global liquidity
crisis and lowered interest rates three times (a total of 0.75 percent). The
rate cuts had the desired effects on global liquidity but were also fuel for an
already red-hot domestic economy.
"Graphic representation "1H" omitted. See Appendix."
The United States economy grew at a 6.10% pace during the fourth quarter. With
the global financial markets calming and the realization that the United States
actually was an oasis of prosperity, investors sold Treasuries and bought risk
assets (stocks and corporate bonds).
The subsequent unwinding of the massive flight to quality sent Treasury yields
higher and prices tumbling. As the reporting period drew to a close, Treasury
yields were about 0.50% higher, corporate bonds recouped about half of their
losses, and stocks were hitting new highs.
Short-term bond performance lags
In general, bonds performed poorly. Corporate, mortgage and asset backed bonds
were especially laggards. As a result, our yield maximizing strategy, while
bearing fruit longer-term, held us back during this period.
We believe high quality corporate bonds, mortgage securities, and asset-backed
securities offer tremendous value and we continue to favor them relative to
Treasuries. With interest rates near historic lows, we believe that yields will
again dominate bond returns and yield maximizing strategies should prove
successful.
Sincerely,
/s/ Mark D. Pittman
Mark D. Pittman
Manager, Marshall Intermediate Bond Fund
[PHOTO APPEARS HERE]
[_] Marshall Intermediate Bond Fund
"Graphic representation "2H" omitted. See Appendix."
"Graphic representation "3H" omitted. See Appendix."
This graph illustrates the hypothetical investment of $10,000 in the Fund from
its
inception on November 23, 1992 to February 28, 1999, compared to the LGCI and
the LIBF.**
- --------------------------------------------------------------------------------
*Performance quoted represents past performance and is not indicative of
future results. Investment return and principal value will fluctuate, so that
an investor's shares, when redeemed, may be worth more or less than their
original cost.
**The LGCI and the LIBF are not adjusted to reflect sales charges, 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. LGCI is an 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. These figures do not reflect sales charges.
***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.
+Duration is a commonly used measure of the potential volatility of the price
of a debt security, or the aggregate market value of a portfolio of debt
securities, prior to maturity. Securities with longer durations generally
have more volatile prices than securities of comparable quality with shorter
durations.
Semi-Annual Report--Commentary
[-]
Marshall Government Income Fund
The Marshall Government Income Fund (the "Fund") invests in securities issued by
the United States government and its agencies and instrumentalities,
particularly mortgage-related securities. The adviser considers macroeconomic
conditions and uses credit and market analysis in developing the overall
portfolio strategy. Current and historical interest rate relationships are used
to evaluate market sectors and individual securities. The Fund will generally
maintain an average dollar-weighted maturity of four to 12 years.
Fund performance
For the six months ended February 28, 1999, the Fund provided a total return of
1.00%*, compared to a return of 1.42% by the Lipper U.S. Mortgage Funds Index
(LUSMI)** and 2.33% provided by the Lehman Brothers Mortgage-Backed Securities
Index (LMI).**
Volatility and a flight to quality
During the last six months the financial markets experienced a considerable
amount of volatility. The Federal Reserve Board (the "Fed"), concerned that the
economy in Japan and problems throughout many of the emerging market countries
would push the United States economy into recession, lowered the federal funds
rate three separate times for a total decline of 0.75%. Many investors became
risk averse and re-allocated their investments emphasizing the safety of U.S.
Treasury securities.
"Graphic representation "1I" omitted. See Appendix."
During this "flight to quality" the yield on the 30-year treasury bond fell to
the lowest level over the past three decades. After interest rates reached these
low levels, we took a more defensive posture and reduced the Fund's sensitivity
to an increase in interest rates.
Lower rates stimulate mortgage prepayments
The low level of interest rates was the stimulus for a record level of
prepayments of residential mortgages. This high level of prepayments combined
with the risk averse attitude of many investors led mortgage-backed securities
(along with most other sectors) to underperform treasuries. This trend finally
reversed course in November 1998 when rates began to rise and investors became
less risk averse.
The economy continued to deliver positive growth at the same time that inflation
remained low. We expect the Fed will keep short-term rates steady with a small
bias to increase rates. We plan to continue to increase the allocation to
residential mortgage-backed securities and by doing so increase the yield
potential of the Fund. As always, we will emphasize high credit quality and
liquidity while attempting to maximize the total return of the Fund.
Sincerely,
/s/ Joseph M. Cullen, CFA
Joseph M. Cullen, CFA
Manager, Marshall Government Income Fund
[PHOTO APPEARS HERE]
[_] Marshall Government Income Fund
"Graphic representation "2I" omitted. See Appendix."
"Graphic representation "3I" omitted. See Appendix."
This graph illustrates the hypothetical investment of $10,000 in the Fund from
its
inception on December 13, 1992 to February 28, 1999, compared to the LMI and
the LUSMI.**
- --------------------------------------------------------------------------------
*Performance quoted represents past performance and is not indicative of
future results. Investment return and principal value will fluctuate, so that
an investor's shares, when redeemed, may be worth more or less than their
original cost.
**The LMI and LUSMI are not adjusted to reflect sales charges, 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. LMI is an 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. These figures do not
reflect sales charges.
***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 LUSMI have been adjusted to reflect reinvestment of dividends on
securities in the indices.
+Duration is a commonly used measure of the potential volatility of the price
of a debt security, or the aggregate market value of a portfolio of debt
securities, prior to maturity. Securities with longer durations generally
have more volatile prices than securities of comparable quality with shorter
durations.
Semi-Annual Report--Commentary
[-]
Marshall Intermediate Tax-Free Fund
The Marshall Intermediate Tax-Free Fund (the "Fund") invests in investment-
grade municipal securities, which includes tax-free debt obligations of states,
territories and possessions of the United States and political subdivisions and
financing authorities of these entities. The Fund's assets are invested
primarily in municipal securities providing income that is exempt from federal
income tax (including the federal alternative minimum tax). The adviser selects
Fund investments after assessing factors such as the cyclical trend in interest
rates, the shape of the municipal yield curve, tax rates, sector valuation and
municipal bond supply factors. The Fund will maintain an average dollar-weighted
portfolio maturity of three to 10 years.
The primary goal of the Fund is to generate income exempt from federal income
tax.+ For the past six months, shareholders have reached this goal. Remarkably,
municipal interest rates are little changed when measured over the past six
months--however, the ride was not entirely smooth.
Fund performance
For the six-month period ended February 28, 1999, the Fund provided a total
return of 2.32%*, comparing favorably to the market as represented by the Lipper
Intermediate Municipal Funds Index (LIMI)** return of 2.25%. For the past 12
months, the Fund generated a return of 5.32%*, versus a return of 5.29% for the
LIMI. The Lehman Brothers 7-Year General Obligations Index (L7GO)** reported a
six-month return of 2.72% and a 12 month return of 5.72%.
Municipal bonds: attractive over the long-term
The municipal bond market has exhibited defensive characteristics over the past
year. Whenever the stock market traded lower for a period of time, municipal
bonds tended to rally. As important, when most other interest rates rose
periodically, municipal bond yields adjusted slower. Thus, we were able to
maintain a longer duration stance in the Fund without subjecting shareholders to
wild swings in net asset value. As the municipal market has recently
outperformed most other bond sectors, municipal yields may no longer be as
attractive compared to taxable bonds as they were just a couple of months ago,
but municipals remain valuable based on a longer view.
"Graphic representation "1J" omitted. See Appendix."
+Income may be subject to state and local taxes.
An ample supply of new bond issues
From a fiscal perspective, municipal issuers have rarely been healthier.
Continued economic prosperity leads to higher levels of tax revenue collection,
and credit rating agencies have noticed. For the last three years, the number of
credit rating upgrades has far exceeded the number of downgrades.
For many municipal issuers, the prolonged expansion allows for a cushion to be
built in order to withstand the next economic slowdown. However, the strong
economy can also mask the underlying problems of some issuers. We continue to
believe municipal investors are not rewarded with enough extra yield to invest
in lower rated investment grade securities. For this reason, the Fund expects to
maintain an average quality rating of AA or higher.
Inflation keeps the bond market in check
The Fund will continue to be positioned with an average maturity approximating
eight years, as the municipal yield curve remains quite steep from one year to
15 years. Venturing into longer maturities may add yield to the portfolio, but
will only remain a viable strategy until the bond market senses that inflation
will rise faster than current measures indicate. For now, inflationary trends
favor a well-behaved bond market.
For shareholders willing to ride the inevitable ups and downs of the overall
bond market, we expect municipal bonds to act favorably.
Sincerely,
/s/ John D. Boritzke
John D. Boritzke
Manager, Marshall Intermediate Tax-Free Fund
[PHOTO APPEARS HERE]
[_] Marshall Intermediate Tax-Free Fund
"Graphic representation "2J" omitted. See Appendix."
"Graphic representation "3J" omitted. See Appendix."
This graph illustrates the hypothetical investment of $10,000 in the Fund from
its
inception on February 2, 1994 to February 28, 1999, compared to the LIMI and
L7GO.**
- --------------------------------------------------------------------------------
*Performance quoted represents past performance and is not indicative of
future results. 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 LIMI and L7GO are not adjusted to reflect sales charges, 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. L7GO is an index comprised of general obligation bonds rated A
or better with maturities between six and eight 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. These figures do not reflect sales charges.
***Represents a hypothetical investment of $10,000 in the Fund. The Fund's
performance assumes the reinvestment of all dividends and distributions. The
LIMI and L7GO have been adjusted to reflect reinvestment of dividends on
securities in the indices.
++Duration is a commonly used measure of the potential volatility of a debt
security, or the aggregate market value of a portfolio of debt securities,
prior to maturity. Securities with longer durations generally have more
volatile prices than securities of comparable quality with shorter durations.
Semi-Annual Report--Commentary
[-]
Marshall Money Market Fund
The Marshall Money Market Fund (the "Fund") invests in high quality, short-term
money market instruments.* The adviser uses a "bottom-up" approach, meaning that
the fund manager looks primarily at individual companies against the context of
broader market factors.
Fund performance
For the six months ended February 28, 1999, the Fund's Class Y Shares (formerly,
Class A Shares) provided a total return of 2.52%** compared to a total return of
2.31% for the IBC Donogue's Taxable Money Fund Average,*** and 2.37% for the
Lipper Money Market Funds Index.*** As of February 28, 1999, the 7-day net yield
for the Fund's Class Y Shares was 4.71%.** For the past 12 months, the Fund
returned 5.32% versus 4.93% for the IBC Donogue's Taxable Money Fund Average,
and 5.00% for the Lipper Money Market Funds Index.
Federal Reserve Board continues to set the course
As it is right now, economic reports show a picture of the domestic economy
growing at a very robust pace--a pace that has been fueled by an easing of the
monetary policy last fall to manage emerging market debt problems and a
potential credit crunch. However, as inflation remains in check and the economy
continues to grow, there are concerns that the Federal Reserve Board (the "Fed")
may begin to tighten their monetary policy. As has been the case for some time
now, Fed policy will continue to dictate the direction of the Fund.
"Graphic representation "K" omitted. See Appendix."
Maintaining our successful strategy
We continue to limit the Fund's exposure to commercial paper, which is expensive
relative to other investment alternatives. The Fund's exposure to repurchase
agreements also remains somewhat lower than that of other money market funds.
Instead, the Fund has maintained an over-weighted position in floating rate
securities which has led to enhanced shareholder return over the past two years.
The Fund remains poised for any action the Fed may take. Over the next several
months, market volatility should continue to be fueled by strong economic growth
with low inflation, international issues and worries about how long the economy
can grow at this pace without increasing inflation.
Sincerely,
/s/ Richard M. Rokus
Richard M. Rokus
Manager, Marshall Money Market Fund
[PHOTO APPEARS HERE]
*An investment in money market funds is neither insured nor guaranteed bvy the
Federal Deposit Insurance Corporation or any other government agency.
Although money market funds seek to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the Fund.
**Performance quoted represents past performance and is not indicative of
future results. Yields will vary. Yields quoted for money market funds most
closely reflect the Fund's current earnings.
***IBC/Donoghue's Money Fund Report(TM) 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. 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 figures do
not reflect sales charges.
+The 7-day net annualized yield is based on the average net income per share
for the 7 days ended on the date of calculation and the offering price on
that date. The 7-day effective yield is based on the 7-day net yield and is
then compounded and annualized.
February 28, 1999 (unaudited)
Portfolio of Investments
- --------------------------------------------------------------------------------
Equity Income Fund
<TABLE>
----------------------------------------------------------
<CAPTION>
Shares Description Value
----------------------------------------------------------
<C> <S> <C>
Common Stocks -- 96.1%
CapitalGoods -- 5.4%
Aerospace & Defense
65,000 (1)Allied-Signal, Inc. $2,689,375
57,000 Boeing Co. 2,027,062
60,000 Lockheed Martin Corp. 2,261,250
20,500 Northrop Grumman Corp. 1,277,406
45,000 (1)Raytheon Co., Class B 2,404,687
67,000 (1)Textron, Inc. 5,226,000
----------
Total 15,885,780
----------
Diversified Manufacturing
22,000 Minnesota Mining & Manufacturing Co. 1,629,375
----------
Electrical Equipment
50,000 Emerson Electric Co. 2,871,875
----------
Machinery & Machine Tools
30,000 Cooper Industries, Inc. 1,312,500
----------
Other Capital Goods
50,000 Honeywell, Inc. 3,496,875
84,800 Tenneco, Inc. 2,538,700
----------
Total 6,035,575
----------
Total Capital Goods 27,735,105
----------
Consumer Durables -- 6.0%
Automotive & Related
72,000 Dana Corp. 2,718,000
121,000 Ford Motor Co. 7,176,813
127,500 General Motors Corp. 10,526,719
80,000 Genuine Parts Co. 2,395,000
27,700 Johnson Controls, Inc. 1,703,550
----------
Total 24,520,082
----------
Household Product/Wares
58,400 Fortune Brands, Inc. 1,759,300
97,000 Masco Corp. 2,546,250
----------
Total 4,305,550
----------
Manufacturing
50,000 Whirlpool Corp. 2,175,000
----------
Total Consumer Durables 31,000,632
----------
Consumer Non-Durables -- 19.0%
Beverages & Foods
45,000 (1)BestFoods 2,112,187
52,000 Campbell Soup Co. 2,089,750
102,000 (1)ConAgra, Inc. 3,072,750
45,000 Heinz (H.J.) Co. 2,449,687
105,000 International Multifoods Corp. 2,270,625
101,000 (1)PepsiCo, Inc. 3,800,125
35,000 Quaker Oats Co. 1,911,875
125,000 (1)Sara Lee Corp. 3,398,437
10,100 Unilever N.V., ADR 731,619
----------
Total 21,837,055
----------
Clothing & Textiles
60,000 Kellwood Co. 1,533,750
----------
Health Care
182,100 American Home Products Corp. 10,834,950
28,100 Bausch & Lomb, Inc. 1,694,781
141,500 Baxter International, Inc. 9,958,063
70,800 (1)Bristol-Myers Squibb Co. 8,916,375
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------------
Shares Description Value
-------------------------------------------------------------
<C> <S> <C>
Common Stocks (continued)
Consumer Non-Durables (continued)
Health Care (continued)
121,200 (1)Merck & Co., Inc. $9,908,100
----------
Total 41,312,269
----------
Photography
85,000 Eastman Kodak Co. 5,625,938
----------
Retail
23,800 May Department Stores Co. 1,410,150
31,600 (1)Penney (J.C.) Co., Inc. 1,141,550
34,000 (1)Sears, Roebuck & Co. 1,381,250
----------
Total 3,932,950
----------
Services
180,000 Browning-Ferris Industries, Inc. 5,670,000
----------
Tobacco
300,000 Philip Morris Cos., Inc. 11,737,500
212,000 UST, Inc. 6,267,250
----------
Total 18,004,750
----------
Total Consumer Non-Durables 97,916,712
----------
Energy -- 14.8%
Domestic & International Oil
201,000 Atlantic Richfield Co. 10,979,625
124,526 (1)BP Amoco PLC, ADR 10,584,710
68,000 Chevron Corp. 5,227,500
229,300 (1)Exxon Corp. 15,262,781
85,200 Mobil Corp. 7,087,575
219,600 (1)Royal Dutch Petroleum Co., ADR 9,634,950
80,000 Sunoco, Inc. 2,435,000
152,200 (1)Texaco, Inc. 7,086,813
307,500 USX-Marathon Group 6,361,406
100,000 Valero Energy Corp. 1,756,250
----------
Total Energy 76,416,610
----------
Financial -- 23.4%
Banks
128,500 (1)Bank One Corp. 6,906,875
96,300 (1)Bank of New York Co., Inc. 3,364,481
185,283 (1)BankAmerica Corp. 12,101,296
50,000 BankBoston Corp. 2,021,875
138,000 (1)Chase Manhattan Corp. 10,988,250
52,000 First American Corp. 2,109,250
103,000 (1)First Union Corp. 5,491,188
120,400 Fleet Financial Group, Inc. 5,169,674
92,000 (1)KeyCorp 2,967,000
38,000 (1)Mellon Bank Corp. 2,569,750
85,000 Mercantile Bancorporation, Inc. 3,878,125
129,000 (1)Washington Mutual, Inc. 5,160,000
230,000 (1)Wells Fargo Co. 8,452,500
----------
Total 71,180,264
----------
Financial Services
82,000 Federal National Mortgage Association 5,740,000
----------
Insurance
100,000 Allstate Corp. 3,750,000
71,100 CIGNA Corp. 5,581,350
100,800 Hartford Financial Services Group, Inc. 5,449,500
30,000 (1)Lincoln National Corp. 2,840,625
33,000 (1)Marsh & McLennan Cos., Inc. 2,336,813
</TABLE>
(See Notes to Portfolios of Investments)
[_] Marshall Funds
- --------------------------------------------------------------------------------
Equity Income Fund (continued)
<TABLE>
<CAPTION>
----------------------------------------------------------------
Shares Description Value
----------------------------------------------------------------
<C> <S> <C>
Common Stocks (continued)
Financial (continued)
Insurance (continued)
111,200 SAFECO Corp. $4,468,850
-----------
Total 24,427,138
-----------
Other Financial
70,000 (1)Equity Office Properties Trust 1,802,500
68,000 Equity Residential Properties Trust 2,788,000
134,500 (1)Glenborough Realty Trust, Inc. 2,429,406
94,700 HRPT Properties Trust 1,296,206
117,300 Prentiss Properties Trust 2,346,000
155,400 (1)Public Storage, Inc. 3,962,700
111,600 Simon Property Group, Inc. 2,838,825
59,000 Storage Trust Realty 1,268,500
-----------
Total 18,732,137
-----------
Total Financial 120,079,539
-----------
Raw Materials/Intermediate Goods -- 7.3%
Chemicals
51,000 Air Products & Chemicals, Inc. 1,638,375
100,000 Du Pont (E.I.) de Nemours & Co. 5,131,250
42,000 Eastman Chemical Co. 1,981,875
61,300 (1)Goodrich (B.F.) Co. 2,091,863
68,500 (1)Imperial Chemical Industries, PLC, ADR 2,406,063
-----------
Total 13,249,426
-----------
Metals
100,000 (1)AK Steel Holding Corp. 2,181,250
116,000 Alcoa, Inc. 4,698,000
106,000 Allegheny Teledyne, Inc. 2,186,250
90,000 USX-U.S. Steel Group, Inc. 2,278,125
-----------
Total 11,343,625
-----------
Papers
60,000 Bowater, Inc. 2,527,500
52,200 Consolidated Papers, Inc. 1,161,450
110,000 Kimberly-Clark Corp. 5,197,500
134,000 Mead Corp. 4,078,625
-----------
Total 12,965,075
-----------
Total Raw Materials/
Intermediate Goods 37,558,126
-----------
Utilities -- 20.2%
Electric
70,000 CMS Energy Corp. 2,896,250
96,000 (1)Cinergy Corp. 2,802,000
64,600 (1)Duke Energy Corp. 3,674,125
264,000 Edison International 6,732,000
89,000 FPL Group, Inc. 4,577,938
98,600 NIPSCO Industries, Inc. 2,557,438
105,000 Northern States Power Co. 2,710,312
164,300 Pinnacle West Capital Corp. 5,935,338
104,000 (1)Southern Co. 2,606,500
102,700 Texas Utilities Co. 4,358,331
-----------
Total 38,850,232
-----------
Gas Distribution
118,200 (1)Enron Corp. 7,683,000
67,800 WICOR, Inc. 1,432,275
77,000 Williams Cos., Inc. (The) 2,849,000
-----------
Total 11,964,275
-----------
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Shares or
Principal
Amount Description Value
------------------------------------------------------------------------------
<C> <S> <C>
Common Stocks (continued)
Utilities (continued)
Telecommunications
175,000 (1)AT&T Corp. $14,371,875
48,000 Alltel Corp. 2,874,000
95,000 (1)Bell Atlantic Corp. 5,456,562
162,000 GTE Corp. 10,509,750
230,560 SBC Communications, Inc. 12,190,860
50,800 (1)Sprint Corp. 4,359,275
66,000 U.S. West, Inc. 3,518,625
------------
Total 53,280,947
------------
Total Utilities 104,095,454
------------
Total Common Stocks (identified cost $401,167,500) 494,802,178
------------
(3)Repurchase Agreement -- 3.7%
$19,227,840 Lehman Brothers, Inc., 4.78%, dated 2/26/1999, due
3/1/1999 (at amortized cost) 19,227,840
------------
Total Investments (identified cost $420,395,340) $514,030,018
============
- -------------------------------------------------------------------------------
</TABLE>
Large-Cap Growth & Income Fund
<TABLE>
<CAPTION>
-----------------------------------------------------------
Shares Description Value
-----------------------------------------------------------
<C> <S> <C>
Common Stocks -- 91.9%
Basic Industries -- 4.6%
Chemicals
91,600 Air Products & Chemicals, Inc. $2,942,650
65,000 Du Pont (E.I.) de Nemours & Co. 3,335,312
----------
Total 6,277,962
----------
Industrial Services
82,287 (1)(4)Waste Management, Inc. 4,021,786
----------
Paper
136,800 (1)Kimberly-Clark Corp. 6,463,800
----------
Total Basic Industries 16,763,548
----------
Capital Goods -- 15.6%
Aerospace & Related
92,300 Boeing Co. 3,282,419
----------
Computer Services
79,900 (1)Compaq Computer Corp. 2,816,475
41,600 International Business Machines Corp. 7,072,000
275,000 (1)(4)Maxtor Corp. 2,268,750
78,500 (4)Microsoft Corp. 11,784,813
79,900 (4)Sun Microsystems, Inc. 7,775,269
----------
Total 31,717,307
----------
Electrical Equipment
119,600 General Electric Co. 11,997,375
----------
Electronics
98,300 (4)Applied Materials, Inc. 5,467,937
38,700 Intel Corp. 4,641,581
----------
Total 10,109,518
----------
Total Capital Goods 57,106,619
----------
</TABLE>
(See Notes to Portfolios of Investments)
February 28, 1999 (unaudited)
Portfolio of Investments
- --------------------------------------------------------------------------------
Large-Cap Growth & Income Fund (continued)
<TABLE>
<CAPTION>
--------------------------------------------------------------
Shares Description Value
--------------------------------------------------------------
<C> <S> <C>
Common Stocks (continued)
Consumer Durables -- 3.3%
Automotive
75,000 General Motors Corp. $6,192,187
-----------
Building & Forest Products
82,600 Georgia-Pacific Corp. 6,050,450
-----------
Total Consumer Durables 12,242,637
-----------
Consumer Non-Durables -- 35.2%
Beverages & Foods
95,000 (1)Coca-Cola Co. 6,074,062
139,000 (1)PepsiCo, Inc. 5,229,875
105,100 Quaker Oats Co. 5,741,088
199,800 Whitman Corp. 3,796,200
-----------
Total 20,841,225
-----------
Broadcasting
140,000 Infinity Broadcasting Corp.,
Class A 3,325,000
-----------
Consumer Cyclical
100,800 (1)Nike, Inc., Class B 5,405,400
-----------
Drugs
98,300 American Home Products Corp. 5,848,850
93,000 (1)Merck & Co., Inc. 7,602,750
51,100 (1)SmithKline Beecham Corp., ADR 3,634,488
-----------
Total 17,086,088
-----------
Entertainment
136,500 (1)Disney (Walt) Co. 4,803,094
-----------
Health Care
160,200 Abbott Laboratories 7,439,287
199,800 Columbia/HCA Healthcare Corp. 3,571,425
95,800 Schering Plough Corp. 5,358,813
-----------
Total 16,369,525
-----------
Media
95,900 Gannett Co., Inc. 6,089,650
179,400 New York Times Co., Class A 5,561,400
108,400 (1)Time Warner, Inc. 6,991,800
-----------
Total 18,642,850
-----------
Medical Supplies
125,000 Boston Scientific Corp. 3,312,500
74,900 (1)Johnson & Johnson 6,394,587
-----------
Total 9,707,087
-----------
Retail
124,300 (1)(4)Federated Department Stores, Inc. 4,731,169
59,500 Kohl's Corp. 4,105,500
125,000 Saks, Inc. 4,492,188
115,400 (1)(4)Safeway, Inc. 6,664,350
271,600 Walgreen Co. 8,691,200
-----------
Total 28,684,407
-----------
Tobacco
96,700 Philip Morris Co., Inc. 3,783,388
-----------
Total Consumer Non-Durables 128,648,064
-----------
Energy -- 5.5%
International Oil & Gas
117,500 (1)Exxon Corp. 7,821,094
122,900 Occidental Petroleum Corp. 1,851,181
</TABLE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
Shares or
Principal
Amount Description Value
-----------------------------------------------------------------------------
<C> <S> <C>
Common Stocks (continued)
Energy (continued)
International Oil & Gas (continued)
120,300 (1)Royal Dutch Petroleum Co., ADR $5,278,163
50,000 (1)Schlumberger Ltd. 2,428,125
58,300 Texaco, Inc. 2,714,594
------------
Total Energy 20,093,157
------------
Financial -- 15.6%
Banks
170,400 (1)Bank of New York Co., Inc. 5,953,350
84,756 (1)BankAmerica Corp. 5,535,626
87,200 (1)Chase Manhattan Corp. 6,943,300
74,900 (1)Mellon Bank Corp. 5,065,112
90,000 (1)Washington Mutual, Inc. 3,600,000
------------
Total 27,097,388
------------
Insurance
76,125 American International Group, Inc. 8,673,492
116,000 (1)Provident Co., Inc. 3,799,000
------------
Total 12,472,492
------------
Other Financial
48,800 American Express Co. 5,294,800
80,000 Citigroup, Inc. 4,700,000
80,000 Federal Home Loan Mortgage Corp. 4,710,000
85,000 MGIC Investment Corp. 2,895,312
------------
Total 17,600,112
------------
Total Financial 57,169,992
------------
Utilities -- 12.1%
Electric
64,000 (1)Duke Energy Corp. 3,640,000
------------
Telecommunications
73,700 (1)AT&T Corp. 6,052,612
92,900 Ameritech Corp. 6,073,337
85,800 GTE Corp. 5,566,275
109,900 (1)MCI Worldcom, Inc. 9,066,750
111,800 Motorola, Inc. 7,853,950
111,700 SBC Communications, Inc. 5,906,138
------------
Total 40,519,062
------------
Total Utilities 44,159,062
------------
Total Common Stocks (identified cost $204,308,754) 336,183,079
------------
(5)U.S. Treasury Bill -- 0.3%
$1,255,000 United States Treasury Bill, 7/8/1999 (identified
cost $1,235,460) 1,235,158
------------
Total Investments in Securities (identified cost
$205,544,214) 337,418,237
------------
(3)Repurchase Agreement -- 8.5%
30,928,055 Lehman Brothers, Inc., 4.78%, dated 2/26/1999, due
3/1/1999 (at amortized cost) 30,928,055
------------
Total Investments (identified cost $236,472,269) $368,346,292
============
</TABLE>
(See Notes to Portfolios of Investments)
[_] Marshall Funds
- --------------------------------------------------------------------------------
Mid-Cap Value Fund
<TABLE>
<CAPTION>
-------------------------------------------------------------
Shares Description Value
-------------------------------------------------------------
<C> <S> <C>
Common Stocks -- 95.6%
Capital Goods -- 9.5%
Aerospace & Defense
10,000 Northrop Corp. $623,125
----------
Computers
227,500 (4)Silicon Graphics, Inc. 3,625,781
----------
Electronics
75,000 AVX Corp. 1,026,562
60,000 (1)(4)Arrow Electronics, Inc. 851,250
----------
Total 1,877,812
----------
Other Capital Goods
52,500 Brady (W.H.) Co. 1,253,437
45,000 Flowserve Corp. 745,312
60,000 Raychem Corp. 1,368,750
65,000 Snap-On Tools Corp. 1,836,250
50,700 (1)Steelcase, Inc., Class A 773,175
----------
Total 5,976,924
----------
Total Capital Goods 12,103,642
----------
Consumer Durables -- 2.4%
Building & Forest Products
35,000 Champion International Corp. 1,295,000
----------
Household Product/Wares
76,000 Jostens, Inc. 1,781,250
----------
Total Consumer Durables 3,076,250
----------
Consumer Non-Durables -- 35.1%
Beverages & Foods
59,900 Darden Restaurants, Inc. 1,317,800
25,000 (1)(4)Del Monte Foods Co. 342,187
264,000 Food Lion, Inc., Class B 2,574,000
175,000 International Multifoods Corp. 3,784,375
105,000 (4)Ralcorp Holdings, Inc. 1,870,313
----------
Total 9,888,675
----------
Commercial Services
31,000 American Greetings Corp., Class A 734,312
----------
Pharmaceuticals & Health Care
100,000 (4)First Health Group Corp. 1,600,000
50,000 (4)Healthsouth Corp. 581,250
80,000 Mallinckrodt, Inc. 2,475,000
281,700 (4)Perrigo Co. 2,359,238
131,500 (4)Quorum Health Group, Inc. 1,216,375
104,700 (1)(4)Tenet Healthcare Corp. 2,061,281
----------
Total 10,293,144
----------
Retail
40,000 (1)(4)Federated Department Stores, Inc. 1,522,500
35,100 (4)Lands' End, Inc. 1,063,969
40,000 (4)Payless Shoe Source, Inc. 2,195,000
100,000 (1)Pier 1 Imports, Inc. 862,500
----------
Total 5,643,969
----------
Services
72,000 (4)Bell & Howell Group, Inc. 2,385,000
65,000 Deluxe Corp. 2,201,875
65,000 (1)Dun & Bradstreet Corp. 2,226,250
65,000 Ikon Office Solutions, Inc. 918,125
99,500 (4)Interim Services, Inc. 1,890,500
61,934 (1)(4)TCI Ventures Group, Class A 1,714,799
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------------
Shares Description Value
---------------------------------------------------------------
<C> <S> <C>
Common Stocks (continued)
Consumer Non-Durables (continued)
Services (continued)
100,000 Viad Corp. $2,643,750
30,139 (1)(4)Waste Management, Inc. 1,473,038
----------
Total 15,453,337
----------
Tobacco
96,000 UST, Inc. 2,838,000
----------
Total Consumer Non-Durables 44,851,437
----------
Energy -- 8.2%
Oil & Gas Products
67,000 (4)Cooper Cameron Corp. 1,549,375
120,000 Noble Affiliates, Inc. 2,715,000
181,000 (1)(4)Rowan Companies, Inc. 1,561,125
103,320 USX Corp. -- Marathon Oil 2,137,433
89,500 (1)Unocal Corp. 2,522,781
----------
Total Energy 10,485,714
----------
Financial -- 14.2%
Banking
45,000 Mercantile Bankshares Corp. 1,639,688
17,000 Northern Trust Corp. 1,519,375
----------
Total 3,159,063
----------
Insurance
80,000 Ace, Ltd. 2,180,000
87,600 Everest Re Holdings, Inc. 2,907,225
109,500 IPC Holdings Ltd. 2,299,500
60,400 Torchmark Corp. 2,008,300
----------
Total 9,395,025
----------
Other Financial
65,000 (1)CMAC Investment Corp. 2,685,312
36,000 MGIC Investment Corp. 1,226,250
88,720 (1)Trizec Hahn Corp. 1,724,494
----------
Total 5,636,056
----------
Total Financial 18,190,144
----------
Raw Materials/Intermediate Goods -- 14.4%
Chemicals
225,000 Agrium, Inc. 1,800,000
48,150 (1)Imperial Chemical Industries, PLC, ADR 1,691,269
----------
Total 3,491,269
----------
Intermediate Goods
101,000 Canadian Pacific Ltd. 1,874,813
99,327 Hanson PLC, ADR 4,035,159
----------
Total 5,909,972
----------
Other Raw Materials
30,000 Fuller (H.B.) Co. 1,271,250
100,000 Millennium Chemicals, Inc. 1,806,250
----------
Total 3,077,500
----------
Paper & Related Products
91,000 Consolidated Papers, Inc. 2,024,750
76,800 Mead Corp. 2,337,600
----------
Total 4,362,350
----------
Steel
60,000 USX-U.S. Steel Group, Inc. 1,518,750
----------
Total Raw Materials/Intermediate Goods 18,359,841
----------
</TABLE>
(See Notes to Portfolios of Investments)
February 28, 1999 (unaudited)
Portfolio of Investments
- --------------------------------------------------------------------------------
Mid-Cap Value Fund (continued)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
Shares or
Principal
Amount Description Value
-----------------------------------------------------------------------------
<C> <S> <C>
Common Stocks (continued)
Transportation -- 1.9%
Other Transportation
120,180 Alexander and Baldwin, Inc. $2,373,555
------------
Utilities -- 9.9%
Electric
95,000 NIPSCO Industries, Inc. 2,464,063
75,000 Pinnacle West Capital Corp. 2,709,375
59,400 Texas Utilities Co. 2,520,788
------------
Total 7,694,226
------------
Electric Distribution
60,000 Telephone and Data System, Inc. 3,015,000
------------
Other
135,000 USEC, Inc. 1,915,313
------------
Total Utilities 12,624,539
------------
Total Common Stocks (identified cost $115,960,367) 122,065,122
------------
(3)Repurchase Agreement -- 3.7%
$4,746,016 Lehman Brothers, Inc., 4.78%, dated 2/26/1999, due
3/1/1999 (at amortized cost) 4,746,016
------------
Total Investments (identified cost $120,706,383) $126,811,138
============
- ------------------------------------------------------------------------------
</TABLE>
Mid-Cap Growth Fund
<TABLE>
<CAPTION>
----------------------------------------------------------------------
Shares Description Value
----------------------------------------------------------------------
<C> <S> <C>
Common Stocks -- 92.6%
Capital Goods -- 24.8%
Computer Services
50,000 America Online, Inc. $4,446,875
20,000 (1)Excite, Inc. 2,050,000
150,000 (1)FIserv, Inc. 7,050,000
160,000 (4)Transaction Systems Architects, Inc., Class A 6,290,000
----------
Total 19,836,875
----------
Computers
75,000 (4)Lexmark Intl. Group, Class A 7,739,062
----------
Electrical Equipment
100,000 (1)Molex, Inc. 2,675,000
----------
Semi-Conductor
100,000 Altera Corp. 4,862,500
60,000 SDL, Inc. 3,270,000
65,000 (1)(4)Uniphase Corp. 5,728,125
----------
Total 13,860,625
----------
Technology
75,000 Celestica, Inc. 2,095,312
65,000 CSG Systems International, Inc. 4,631,250
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------------
Shares Description Value
---------------------------------------------------------------
<C> <S> <C>
Common Stocks (continued)
Capital Goods (continued)
Technology (continued)
50,000 Gemstar International Group Ltd. $3,200,000
180,000 Jabil Circuit, Inc. 5,872,500
30,000 Veritas Software Corp. 2,130,000
----------
Total 17,929,062
----------
Total Capital Goods 62,040,624
----------
Consumer Non-Durables -- 51.6%
Broadcasting
100,000 (1)Chancellor Media Corp., Class A 4,375,000
110,000 (1)(4)Clear Channel Communications, Inc. 6,600,000
85,000 Cox Radio, Inc., Class A 3,750,625
125,000 (4)Heftel Broadcasting Corp., Class A 5,156,250
50,000 Infinity Broadcasting Corp., Class A 1,187,500
125,000 (4)Westwood One, Inc. 3,046,875
----------
Total 24,116,250
----------
Business Services
75,000 (1)Acxiom Corp. 1,795,312
----------
Commercial Services
90,000 (4)Republic Services, Inc. 1,569,375
----------
Drugs
40,000 Biogen, Inc. 3,845,000
175,000 (4)North American Vaccine, Inc. 1,334,375
----------
Total 5,179,375
----------
Health Care
235,000 (4)Health Management Association, Class A 3,040,312
200,000 (1)Omnicare, Inc. 4,787,500
150,000 (1)(4)Sunrise Assisted Living, Inc. 5,793,750
----------
Total 13,621,562
----------
Leisure & Recreation
100,000 Harley Davidson, Inc. 5,781,250
200,000 Royal Caribbean Cruises, Ltd. 6,600,000
100,000 (1)(4)Speedway Motorsports, Inc. 3,568,750
225,000 (4)Steiner Leisure Ltd. 6,637,500
----------
Total 22,587,500
----------
Lodging
70,000 Four Seasons Hotels, Inc. 2,476,250
----------
Manufacturing
160,000 MSC Industrial Direct Co. 2,860,000
129,500 (4)Novel Denim Holdings Ltd. 1,732,062
175,000 (1)(4)Rayovac Corp. 4,845,312
----------
Total 9,437,374
----------
Medical Supplies
100,000 Biomet, Inc. 3,668,750
110,000 (1)(4)Henry Schein, Inc. 2,818,750
100,000 Sybron International Corp. 2,456,250
----------
Total 8,943,750
----------
Retail
125,000 (4)99 Cents Only Stores 5,914,063
200,000 (4)Bed Bath & Beyond, Inc. 5,887,500
150,000 (4)Kohl's Corp. 10,350,000
100,000 (1)Office Depot, Inc. 3,568,750
75,000 Williams-Sonoma, Inc. 2,564,063
----------
Total 28,284,376
----------
</TABLE>
(See Notes to Portfolios of Investments)
[_] Marshall Funds
- --------------------------------------------------------------------------------
Mid-Cap Growth Fund (continued)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
Shares or
Principal
Amount Description Value
-----------------------------------------------------------------------------
<C> <S> <C>
Common Stocks (continued)
Consumer Non-Durables (continued)
Services
125,000 American Tower Systems Corp. $3,351,563
105,000 Crown Castle International Corp. 1,785,000
100,000 (4)ITT Educational Services, Inc. 3,643,750
150,000 Stewart Enterprises, Inc., Class A 2,250,000
------------
Total 11,030,313
------------
Total Consumer Non-Durables 129,041,437
------------
Financial -- 3.0%
25,000 First Tennessee National Corp. 951,563
100,000 (1)Zions Bancorp 6,400,000
------------
Total 7,351,563
------------
Telecommunications -- 10.9%
100,000 ADC Telecommunications, Inc. 4,050,000
60,000 Ascend Communications 4,616,250
100,000 L-3 Communications Corp. 4,287,500
70,000 (1)(4)NEXTEL Communications, Inc., Class A 2,104,375
55,000 (1)Qwest Communications International, Inc. 3,379,063
110,000 (4)Tellabs, Inc. 8,806,875
------------
Total 27,244,063
------------
Utilities -- 2.3%
Electric
50,000 Montana Power Co. 3,043,750
------------
Gas Distribution
75,000 Williams Cos., Inc. (The) 2,775,000
------------
Total 5,818,750
------------
Total Common Stocks (identified cost $183,109,050) 231,496,437
------------
(5)U.S. Treasury Bill -- 0.3%
$700,000 7/8/1999 (identified cost $689,101) 688,933
------------
Total Investments in Securities (identified cost
$183,798,151) 232,185,370
------------
(3)Repurchase Agreement -- 6.1%
15,195,225 Lehman Brothers, Inc., 4.78%, dated 2/26/1999, due
3/1/1999 (at amortized cost) 15,195,225
------------
Total Investments (identified cost $198,993,376) $247,380,595
============
</TABLE>
- --------------------------------------------------------------------------------
Small-Cap Growth Fund
<TABLE>
<CAPTION>
----------------------------------------------------------------------
Shares Description Value
----------------------------------------------------------------------
<C> <S> <C>
Common Stocks -- 88.5%
Capital Goods -- 15.3%
Computer Services
60,000 (4)Apex PC Solutions, Inc. $1,470,000
15,000 Digital River, Inc. 577,500
12,000 DoubleClick, Inc. 1,078,500
25,000 Maxtor Corp. 206,250
20,000 Smith-Gardner & Associates, Inc. 255,000
75,000 (4)Transaction Systems Architects, Inc., Class A 2,948,437
----------
Total 6,535,687
----------
Electronics
50,000 Cymer, Inc. 1,143,750
18,500 Power Integrations, Inc. 446,313
30,000 SDL, Inc. 1,635,000
60,000 Semtech Corp. 1,822,500
10,000 Uniphase Corp. 881,250
----------
Total 5,928,813
----------
Other Capital Goods
80,000 (4)Kellstrom Industries, Inc. 1,295,000
105,000 Watsco, Inc. 1,227,188
----------
Total 2,522,188
----------
Total Capital Goods 14,986,688
----------
Consumer Non-Durables -- 68.1%
Beverages & Foods
95,000 Golden State Vintners, Inc., Class B 1,151,875
----------
Broadcasting
105,000 (4)American Tower Systems Corp. 2,815,312
60,000 (4)Heftel Broadcasting Corp., Class A 2,475,000
50,000 Jacor Communications, Inc., Class A 3,487,500
60,000 Pinnacle Holdings, Inc. 851,250
65,000 Westwood One, Inc. 1,584,375
----------
Total 11,213,437
----------
Commercial Services
55,000 Lason Holdings, Inc. 2,980,313
20,000 Metzler Group, Inc. 850,000
65,000 MSC Industrial Direct Co. 1,161,875
70,000 (4)NOVA Corp. 1,750,000
70,000 Quanta Services, Inc. 1,890,000
90,000 SteriGenics International, Inc. 1,608,750
60,000 Superior Services, Inc. 1,205,625
90,000 United Road Services, Inc. 1,485,000
----------
Total 12,931,563
----------
Drugs
75,000 (4)North American Vaccine, Inc. 571,875
----------
Health Care
130,000 (4)Province Heathcare Co. 1,974,375
35,000 Renal Care Group, Inc. 693,438
61,000 (4)Sunrise Assisted Living, Inc. 2,356,125
----------
Total 5,023,938
----------
Leisure & Recreation
30,000 (4)American Classic Voyages 697,500
50,000 Dover Downs Entertainment 706,250
20,000 Speedway Motorsports, Inc. 713,750
130,000 Steiner Leisure Ltd. 3,835,000
----------
Total 5,952,500
----------
</TABLE>
(See Notes to Portfolios of Investments)
February 28, 1999 (unaudited)
Portfolio of Investments
- --------------------------------------------------------------------------------
Small-Cap Growth Fund
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
Shares or
Principal
Amount Description Value
---------------------------------------------------------------------------
<C> <S> <C>
Common Stocks (continued)
Consumer Non-Durables (continued)
Manufacturing
65,000 Eclipse Surgical Technologies, Inc. $731,250
99,300 (4)Novel Denim Holdings Ltd. 1,328,137
50,000 Packaged Ice, Inc. 425,000
115,000 (4)Rayovac Corp. 3,184,063
-----------
Total 5,668,450
-----------
Medical Supplies
80,000 (4)Henry Schein, Inc. 2,050,000
80,000 Sybron International Corp. 1,965,000
60,000 Xomed Surgical Products, Inc. 2,182,500
-----------
Total 6,197,500
-----------
Retail
55,000 (4)99 Cents Only Stores 2,602,188
60,000 Casey's General Stores, Inc. 772,500
-----------
Total 3,374,688
-----------
Services
30,000 (4)Brightpoint, Inc. 446,250
20,000 (4)CSG Systems International, Inc. 1,425,000
90,000 (4)Carey International, Inc. 1,580,625
84,500 (4)Carriage Services, Inc. 1,547,406
92,500 (4)Casella Waste Systems, Inc. 1,942,500
60,000 (4)Coach USA, Inc. 1,410,000
20,000 Navarre Corp. 320,000
100,000 Quest Education Corp. 900,000
150,000 Stewart Enterprises, Inc., Class A 2,250,000
-----------
Total 11,821,781
-----------
Transportation
60,000 Eagle USA Airfreight, Inc. 1,732,500
25,000 SkyWest, Inc. 785,937
-----------
Total 2,518,437
-----------
Total Consumer Non-Durables 66,426,044
-----------
Energy -- 0.6%
Oil & Gas Equipment & Services
35,000 Evergreen Resources, Inc. 549,062
-----------
Telecommunications -- 4.5%
40,000 Com21, Inc. 942,500
30,000 Plantronics, Inc. 1,815,000
40,000 Polycom, Inc. 810,000
25,000 Terayon Communication Systems, Inc. 776,562
-----------
Total 4,344,062
-----------
Total Common Stocks (identified cost $85,748,426) 86,305,856
-----------
(5)U.S. Treasury -- 0.5%
$475,000 United States Treasury Bill, 7/8/1999 (identified
cost $467,604) 467,490
-----------
Total Investments in Securities (identified cost
$86,216,030) 86,773,346
-----------
(3)Repurchase Agreement -- 10.1%
9,858,232 Lehman Brothers, Inc., 4.78%, dated 2/26/1999, due
3/1/1999 (at amortized cost) 9,858,232
-----------
Total Investments (identified cost $96,074,262) $96,631,578
===========
</TABLE>
- --------------------------------------------------------------------------------
International Stock Fund
<TABLE>
<CAPTION>
------------------------------------------------------------------------
Shares Description Value
------------------------------------------------------------------------
<C> <S> <C>
Common Stocks -- 94.9%
Argentina -- 3.3%
113,910 (1)Telefonica de Argentina SA, ADR $3,331,868
145,500 YPF Sociedad Anonima, ADR 4,219,500
----------
Total 7,551,368
----------
Australia -- 2.7%
737,120 Cable & Wireless Optus Ltd. 1,620,440
489,500 David Jones Ltd. 462,048
460,700 Mayne Nickless Ltd. 1,501,997
862,501 Pacific Dunlop Ltd. 1,505,072
481,200 Pioneer International Ltd. 969,687
----------
Total 6,059,244
----------
Austria -- 0.9%
9,900 EVN AG 1,306,087
11,000 VA Technologie AG 852,585
----------
Total 2,158,672
----------
Belgium -- 0.2%
15,900 NV Union Miniere SA 518,820
----------
Bermuda -- 3.1%
170,000 Jardine Matheson Holdings Ltd. 445,400
83,000 PartnerRe Ltd. 3,589,750
48,100 (1)XL Capital Ltd. 2,946,125
----------
Total 6,981,275
----------
Brazil -- 1.3%
111,200 (1)Petroleo Brasileiro SA, ADR 857,430
34,150 (1)Telecomunicacoes Brasileiras SA, ADR 2,204,810
----------
Total 3,062,240
----------
Canada -- 2.5%
170,400 Agrium, Inc. 1,363,200
40,000 Canadian Imperial Bank of Commerce 942,908
184,760 (1)Laidlaw, Inc. 1,420,343
37,000 Newbridge Networks Corp. 899,178
380,700 Ranger Oil Ltd. 1,070,719
----------
Total 5,696,348
----------
Chile -- 0.6%
88,850 Gener SA, ADR 1,332,750
----------
Finland -- 3.3%
47,500 Amer Group, Ltd., Class A 704,990
850,000 (1)MeritaNordbanken OYJ. 4,980,832
73,500 (1)Metsa-Serla OYJ, Class B 509,885
142,239 (1)Stora Enso Oyj 1,259,444
----------
Total 7,455,151
----------
France -- 8.6%
30,119 Axa 3,933,804
18,842 Alcatel 2,030,060
49,700 (1)Alcatel, ADR 1,077,869
65,881 Banque Nationale de Paris 5,265,630
15,000 Compagnie Generale d'Industrie et de Participation 815,480
25,592 Elf Aquitaine SA 2,672,905
82,332 Rhone-Poulenc SA 3,779,035
----------
Total 19,574,783
----------
Germany -- 1.7%
53,500 Bayer AG 1,896,877
</TABLE>
(See Notes to Portfolios of Investments)
[_] Marshall Funds
- --------------------------------------------------------------------------------
International Stock Fund (continued)
<TABLE>
<CAPTION>
------------------------------------------------------------------
Shares Description Value
------------------------------------------------------------------
<C> <S> <C>
Common Stocks (continued)
Germany (continued)
37,650 Deutsche Bank, AG $1,968,209
----------
Total 3,865,086
----------
Great Britain -- 16.4%
1,960,406 Albert Fisher Group PLC 172,833
248,576 BG PLC 1,454,360
870,624 BTR Siebe PLC 3,642,993
211,400 British Airways PLC 1,951,336
189,800 (1)British Steel PLC, ADR 3,736,688
925,000 Caradon PLC 2,268,574
880,800 (4)Centrica PLC 1,648,367
146,466 Fairview Holdings PLC 220,691
292,932 Hillsdown Holdings PLC 319,297
125,166 Hyder PLC 1,596,050
322,000 Marks & Spencer PLC 2,172,990
1,500,000 Medeva PLC 2,528,732
264,434 National Power Co. PLC 2,106,655
347,200 Next PLC 4,062,771
300,000 Peninsular & Oriental Steam Navigation Co. 3,517,673
219,000 Rolls-Royce PLC 957,478
170,450 Somerfield PLC 1,021,853
516,900 Tate & Lyle PLC 3,769,968
146,466 Terranova Foods PLC 190,170
----------
Total 37,339,479
----------
Hong Kong -- 7.7%
382,000 Cathay Pacific Airways 426,499
116,107 HSBC Holdings PLC 3,267,032
628,000 Hong Kong Electric Holdings Ltd. 1,787,338
455,000 Hong Kong Ferry Holdings 469,829
2,238,400 Hong Kong Telecommunications Ltd. 3,755,946
210,000 Hutchison Whampoa 1,456,922
485,500 Jardine Strategic Holdings Ltd. 703,975
894,000 South China Morning Post Holdings Ltd. 383,678
752,500 Swire Pacific Ltd., Class A 3,078,961
1,246,000 Varitronix International Ltd. 2,203,317
----------
Total 17,533,497
----------
Hungary -- 1.0%
88,814 (1)(2)(4)MOL Magyar Olay, GDR 2,186,130
----------
Israel -- 1.1%
63,300 Teva Pharmaceutical Industries Ltd., ADR 2,559,694
----------
Italy -- 3.5%
170,000 (1)Burgo (Cartiere) SpA 971,870
1,120,900 (1)Fiat SpA 3,376,550
535,600 Telecom Italia SpA 3,621,358
----------
Total 7,969,778
----------
Japan -- 4.9%
55,000 Daito Trust Construction Co. 475,781
300 Nippon Telegraph & Telephone Corp. 2,473,758
258,000 Nomura Securities Co. Ltd. 2,482,833
85,000 (1)Ono Pharmaceutical Co. Ltd. 3,117,491
33,300 Sony Corp. 2,521,260
----------
Total 11,071,123
----------
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------
Shares Description Value
--------------------------------------------------------------------
<C> <S> <C>
Common Stocks (continued)
Korea -- 3.1%
243,500 (1)Pohang Iron and Steel Co. Ltd., ADR $3,804,688
315,765 (1)SK Telecom Co. Ltd., ADR 3,197,117
----------
Total 7,001,805
----------
Mexico -- 2.6%
346,000 Alfa, SA de CV, Class A 853,418
854,200 Industrias Penoles SA 2,562,686
42,978 (1)Telefonos de Mexico, Class L, ADR 2,457,804
----------
Total 5,873,908
----------
Netherlands -- 5.3%
46,800 Akzo Nobel NV 1,777,664
18,135 Ballast Nedam NV 514,391
19,400 European Vinyls Corp., International NV 114,107
76,950 ING Groep, NV 4,314,541
74,000 (1)Philips Electronics NV 5,166,081
8,676 Vendex NV 232,737
----------
Total 12,119,521
----------
New Zealand -- 0.6%
802,000 (1)Air New Zealand Ltd., Class B 1,332,291
----------
Norway -- 1.7%
56,000 (1)Elkem A.S., Class A 760,823
61,800 Kvaerner A.S., Class B 976,303
178,665 (1)Nycomed Amersham PLC 1,174,164
60,500 Saga Petroleum AS, Class A 508,468
39,500 Unitor Ships Service 349,447
----------
Total 3,769,205
----------
Peru -- 0.2%
43,700 CPT Telefonica del Peru SA, Class B, ADR 516,206
----------
Philippines -- 0.5%
48,205 (1)Philippine Long Distance Telephone Co., ADR 1,144,869
----------
Portugal -- 1.0%
34,500 BPI-SGPS SA 1,199,325
52,320 Banco Pinto & Sotto Mayor 1,050,902
----------
Total 2,250,227
----------
Singapore -- 0.3%
588,229 Dairy Farm International Holdings Ltd. 629,405
----------
Spain -- 6.7%
91,500 (1)Corporacion Bancaria de Espana SA, ADR 4,346,250
98,000 Endesa SA 2,600,873
191,500 Iberdrola SA 3,000,125
53,500 (1)Repsol SA 2,817,378
54,648 Telefonica SA 2,499,329
----------
Total 15,263,955
----------
Sweden -- 5.2%
89,600 (1)Autoliv, Inc. 3,404,800
28,600 Autoliv, Inc., ADR 1,079,311
47,000 (1)Esselte AB, Class A 726,124
59,100 (1)Granges AB 815,620
139,650 (4)Saab AB, Class B 1,227,992
75,000 (1)Svenska Handelsbanken, Stockholm 2,656,326
</TABLE>
(See Notes to Portfolios of Investments)
February 28, 1999 (unaudited)
Portfolio of Investments
- --------------------------------------------------------------------------------
International Stock Fund (continued)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Shares or
Principal
Amount Description Value
------------------------------------------------------------------------------
<C> <S> <C>
Common Stocks (continued)
Sweden (continued)
76,500 (1)Volvo AB, Class B $1,985,375
------------
Total 11,895,548
------------
Switzerland -- 3.3%
13,800 Credit Suisse Group 2,143,301
3,935 Swisscom AG 1,556,399
5,700 Zurich Allied AG 3,785,049
------------
Total 7,484,749
------------
Thailand -- 0.9%
1,145,200 (1)Bangkok Bank Public Co., Ltd. 1,932,697
------------
Venezuela -- 0.7%
107,900 (1)Compania Anonima Nacional Telefonos de
Venezuela, Class D, ADR 1,679,194
------------
Total Common Stocks (identified cost $197,574,636) 215,809,018
------------
Preferred Stocks -- 3.5%
Australia -- 2.3%
66,614 National Australia Bank, Ltd., Melbourne,
Exchangeable Capital Unit, $1.97 2,019,237
491,572 News Corp. Ltd., Pfd. 3,217,505
------------
Total 5,236,742
------------
Germany -- 0.4%
37,363 Moebel Walther AG, Pfd. 842,076
------------
Great Britain -- 0.1%
107,100 Hyder PLC, Pfd. 213,093
------------
United States -- 0.7%
33,700 SBC Communications, Inc., Conv. Pfd., $3.07 1,685,000
------------
Total Preferred Stocks (identified cost $7,091,698) 7,976,911
------------
Government Agencies -- 1.5%
$1,965,000 (6)Federal Home Loan Mortgage Corp., Discount Note,
4.71% 3/15/1999 1,961,401
1,408,000 (6)Federal Home Loan Mortgage Corp., Discount Note,
4.75% 4/22/1999 1,398,340
------------
Total Government Agencies (identified cost
$3,359,740) 3,359,741
------------
U.S. Treasury Issues -- 0.9%
1,177,000 United States Treasury Bill, 4/22/1999 1,169,220
336,000 United States Treasury Bill, 4/29/1999 333,591
367,000 United States Treasury Bill, 5/13/1999 363,734
239,000 United States Treasury Bill, 5/27/1999 236,448
------------
Total U.S. Treasury Issues (identified cost
$2,103,146) 2,102,993
------------
Total Investments (identified cost $210,129,220) $229,248,663
============
</TABLE>
INDUSTRY DIVERSIFICATION
<TABLE>
<CAPTION>
Percentage of
Net Assets
-------------------------------------------------
<S> <C>
Telecommunications 14.4%
Banking 11.3%
Financial Services 7.7%
Electric 4.7%
Insurance 4.6%
Services 4.1%
Diversified Manufacturing 3.8%
Retail Trade 3.7%
Automotive & Related 3.5%
Chemicals 3.3%
Steel 3.3%
Medical/Drugs 3.0%
Oil & Gas Products 3.0%
Electronic Technology 2.7%
Gas Distribution 2.5%
Consumer Basics 2.3%
Aerospace & Defense 2.1%
Oil 1.9%
Broadcasting 1.6%
Other 1.6%
Construction Equipment 1.5%
Other Financial 1.4%
Paper 1.2%
Household Products 1.1%
Non-Ferrous Metals 1.1%
Pharmaceuticals & Healthcare 1.1%
Air Travel 1.0%
Automobile 0.9%
Electrical Equipment 0.9%
Energy 0.9%
U.S. Treasury Securities 0.9%
Food & Beverages 0.8%
Utilities 0.8%
Non-Energy Minerals 0.6%
Industrial Services 0.4%
Metals 0.4%
Office Equipment 0.3%
Commercial Services 0.2%
Process Industries 0.2%
Other Assets and Liabilities, Net (0.8)%
-------
Total 100.00%
=======
</TABLE>
(See Notes to Portfolios of Investments)
[_] Marshall Funds
- --------------------------------------------------------------------------------
Short-Term Income Fund
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Principal
Amount Description Value
------------------------------------------------------------------------------
<C> <S> <C>
Asset-Backed Securities -- 19.4%
$3,000,000 ARG Funding Corp., Class A2, 5.88%, 5/20/2003 $2,993,430
1,342,101 CPS Auto Grantor Trust 1997-2, Class A, 6.65%,
10/15/2002 1,355,240
1,910,274 Capital Asset Research Funding, Series 1997, Class A,
6.40%, 12/15/2004 1,920,417
616,423 Contitrade Services Home Equity Loan Trust 1991-1,
Class A, 8.80%, 1/15/2006 615,686
1,504,523 Contitrade Services Home Equity Loan Trust 1991-2,
Class A, 7.70%, 9/15/2006 1,502,500
2,000,000 DLJ Commercial Mortgage Corp. 1998-STF2, Class A1,
5.6134%, 11/5/2000 2,001,260
2,000,000 DLJ Leverage Loan Funding, Class B1, 7.2375%,
9/15/2005 1,950,000
1,320,000 Delta Funding Home Equity Loan Trust, Series 1997-3,
Class A2F, 6.59%, 9/25/2012 1,319,030
155,931 Equicon Home Equity Loan Trust 1992-7, Class A,
5.90%, 9/18/2005 152,134
1,206,908 Green Tree Home Equity Loan 96-C, Class A2, 7.10%,
6/15/2026 1,213,763
3,000,000 Green Tree Home Equity Loan Trust, Series 98-B, Class
B1, 7.81%, 11/15/2029 2,969,340
594,900 New York City Tax Lien, Class B, 6.56%, 5/25/2005 599,921
399,851 Olympic Automobile Receivables Trust 1995-B, Class
A2, 7.35%, 10/15/2001 402,938
1,143,482 TMS Home Equity Trust Series 1992-D2, Class A3,
7.55%, 1/15/2018 1,125,312
519,483 The Money Store Home Equity Trust 1995-C, Class A2,
6.25%, 8/15/2016 519,013
3,730,900 UCFC Home Equity Loan 1995-A1, Class A5, 8.55%,
1/10/2020 3,846,984
874,096 UCFC Home Equity Loan 1996-A, Class A4, 6.30%,
9/15/2010 873,113
----------
Total Asset-Backed Securities (identified cost
$25,581,646) 25,360,081
----------
Collateralized Mortgage Obligations -- 18.4%
Federal Home Loan Mortgage Corporation -- 3.4%
2,766,055 6.05%, 9/15/2020, Series 1818, Class A 2,730,650
1,748,543 7.00%, 1/15/2020, Series 1834, Class A 1,756,866
----------
Total 4,487,516
----------
Other Financial -- 15.0%
1,825,584 Collateralized Mortgage Securities Corp., Series
1990-5, Class H, 9.25%, 7/20/2020 1,822,992
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
Principal
Amount Description Value
----------------------------------------------------------------------------
<C> <S> <C>
Collateralized Mortgage Obligations (continued)
Other Financial (continued)
$4,000,000 (2)Criimi Mae CMBS Corp., Series 1998-1, Class A2,
6.009%, 2/20/2005 $3,788,600
5,000,000 DLJ Commercial Mortgage Corp., Series 1998-STF,
Class A3, 6.2575%, 1/8/2011 4,931,725
363,280 GE Capital Mortgage Services, Inc., Series 1997-6, Class A18,
9.00%, 7/25/2027 369,906
727,514 Independent National Mortgage Corp., Series 1995-R,
Class A1, 7.25%, 11/25/2010 732,901
1,132,593 PNC Mortgage Securities Corp. 1994-1, Class T7,
6.00%, 2/25/2024 1,120,185
254,558 Residential Asset Securitization Trust 1996-A8,
Class A1, 8.00%, 12/25/2026 255,104
4,000,000 Sasco, Series 1998-C3A, Class A1B, 5.6887%,
6/25/2000 4,000,000
2,482,976 Securitized Asset Sales, Inc., Series 1995-4, Class
A5, 7.25%, 11/25/2025 2,523,846
----------
Total 19,545,259
----------
Total Collateralized Mortgage Obligations
(identified cost $24,223,542) 24,032,775
----------
Mortgage-Backed -- Pass Through Securities -- 10.9%
Federal Home Loan Mortgage
Corporation -- 1.7%
443,838 9.00%, 7/1/2014 474,073
1,521,848 11.00%, 8/1/2019 1,695,430
----------
Total 2,169,503
----------
Federal National Mortgage Association -- 9.2%
612,002 8.00%, 8/1/2007 628,643
2,187,642 8.00%, 5/1/2008 2,171,181
593,284 9.00%, 7/1/2009 633,698
468,960 9.00%, 1/1/2015 497,829
1,404,522 9.50%, 1/1/2025 1,508,414
1,015,432 9.50%, 1/1/2025 1,089,639
823,842 9.50%, 1/1/2025 884,781
853,065 9.50%, 12/1/2024 916,166
677,934 10.00%, 7/1/2020 732,223
917,684 10.50%, 1/1/2022 1,016,904
1,821,931 11.00%, 12/1/2015 2,014,947
----------
Total 12,094,425
----------
Total Mortgage-Backed -- Pass Through Securities
(identified cost $14,267,357) 14,263,928
----------
Corporate Bonds -- 44.9%
Broker/Dealers -- 6.0%
2,000,000 (2)Donaldson, Lufkin and Jenrette Securities Corp., Note, 6.00%,
12/1/2001 1,999,960
</TABLE>
February 28, 1999 (unaudited)
Portfolio of Investments
- --------------------------------------------------------------------------------
Short-Term Income Fund (continued)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
Principal
Amount Description Value
----------------------------------------------------------------------------
<C> <S> <C>
Corporate Bonds (continued)
Broker/Dealers (continued)
$3,000,000 Lehman Brothers Holdings, Inc., Note, 6.90%,
1/29/2001 $3,006,810
3,000,000 Lehman Brothers Holdings, Inc., 5.57672%, 9/3/2002 2,917,500
-----------
Total 7,924,270
-----------
Domestic & International Oil -- 1.9%
2,500,000 Occidental Petroleum Corp., Note, 6.40%, 4/1/2003 2,445,075
-----------
Finance -- 2.1%
2,700,000 FINOVA Capital Corp., Note, 6.25%, 11/1/2002 2,692,440
-----------
Industrial -- 8.4%
3,000,000 Enserch Corp., 6.42609%, 7/1/2028 2,971,830
3,000,000 IMC Global, Inc., Note, 6.625%, 10/15/2001 2,976,480
3,000,000 Marlin Water Trust, Sr. Note, 7.09%, 12/15/2001 2,990,901
2,000,000 WorldCom, Inc., Sr. Note, 6.125%, 8/15/2001 2,014,700
-----------
Total 10,953,911
-----------
Other Financial -- 23.5%
3,000,000 Conseco, Inc., Note, 6.40%, 6/15/2001 2,924,610
5,000,000 (2)Edison Funding Co., Sr. Note, 6.75%, 12/17/1999 5,030,505
3,000,000 (2)EOP Operating LP, Sr. Note, 6.375%, 2/15/2003 2,964,660
3,250,000 (2)Florida Windstorm Under, Bond, 6.50%, 8/25/2002 3,237,163
5,000,000 (2)Household Capital Trust III, Company Guarantee,
6.25625%, 6/26/2004 4,992,530
4,000,000 HSB Group, Inc., Company Guarantee, 5.94016%,
7/15/2027 3,856,200
1,000,000 MBNA Global Capital Securities, Jr. Sub. Deb.,
5.76969%, 2/1/2027 926,400
3,000,000 Old Kent Capital Trust I, 5.76969%, 2/1/2027 2,972,337
4,000,000 (2)Skandinaviska Enskilda, Sub. Note, Series 144A,
6.50%, 12/29/2049 3,792,252
-----------
Total 30,696,657
-----------
Utilities--3.0%
4,000,000 Avista Corp., 6.13625%, 6/1/2037 3,939,000
-----------
Total Corporate Bonds (identified cost
$59,128,864) 58,651,353
-----------
U.S. Treasury Note -- 3.9%
5,000,000 5.50%, 5/31/2003 (identified cost $5,107,031) 5,035,250
-----------
Total Investments in Securities (identified cost
$128,308,440) 127,343,387
-----------
</TABLE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
Principal
Amount Description Value
-----------------------------------------------------------------------------
<C> <S> <C>
(3)Repurchase Agreement -- 2.1%
$2,692,327 Lehman Brothers, Inc., 4.78%, dated 2/26/1999, due
3/1/1999 (at amortized cost) $2,692,327
------------
Total Investments (identified cost $131,000,767) $130,035,714
============
- ------------------------------------------------------------------------------
</TABLE>
Intermediate Bond Fund
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Principal
Amount Description Value
------------------------------------------------------------------------------
<C> <S> <C>
Asset-Backed Securities -- 12.4%
$5,500,000 ARG Funding Corp., Class A2, 5.88%, 5/20/2002 $5,487,955
10,000,000 Bridgestone/Firestone Master Trust 1996-1, Class A,
6.17%, 7/1/2003 10,099,200
513,742 ContiMortgage Home Equity Loan Trust 1995-4, Class
A5, 6.56%, 12/15/2010 512,969
5,000,000 DLJ Commercial Mortgage Corp. 1998-STF2, Class A1,
5.588%, 11/5/2000 5,003,150
6,000,000 (2)DLJ Leverage Loan Funding, Class B1, 6.77%,
9/15/2005 5,850,000
7,750,000 First USA Credit Card Master Trust 1998-9, Class A,
5.28%, 9/18/2006 7,566,403
2,646,660 Green Tree Financial Corp. 1996-6, Class A3, 6.75%,
9/15/2027 2,650,723
12,000,000 J.P. Morgan Commercial Mortgage Finance Corp. 1997-
C5, Class A2, 7.069%, 9/15/2029 12,491,580
10,000,000 Metris Master Trust 1997-1, Class A, 6.87%,
11/20/2005 10,300,100
990,332 Olympic Automobile Receivables Trust 1995-D, Class
A4, 6.05%, 11/15/2000 991,570
12,000,000 TMS Home Equity Trust 1996-B, Class A7, 7.55%,
2/15/2020 12,222,840
----------
Total Asset-Backed Securities
(identified cost $72,564,707) 73,176,490
----------
Collateralized Mortgage Obligations -- 13.2% 5,000,000 (2)Criimi
Mae CMBS Corp., Series 1998-1, Class A2,
6.009%, 2/20/2005 4,735,750
6,000,000 (2)Criimi Mae CMBS Corp., Series 1998-1, Class A3,
6.306%, 12/20/2007 5,527,020
9,000,000 DLJ Commercial Mortgage Corp., Series 1998-CG1, Class
A1B, 6.410%, 5/10/2008 9,010,845
7,185,000 Delta Funding Home Equity Loan Trust, Series 1997-3,
Class A2F, 6.59%, 9/25/2012 7,179,719
</TABLE>
(See Notes to Portfolios of Investments)
[_] Marshall Funds
- --------------------------------------------------------------------------------
Intermediate Bond Fund (continued)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
Principal
Amount Description Value
----------------------------------------------------------------------------
<C> <S> <C>
Collateralized Mortgage Obligations (continued)
$8,230,242 Federal Home Loan Mortgage Corp., Series 1829,
Class H, 6.50%, 10/15/2021 $8,269,623
4,243,419 Federal Home Loan Mortgage Corp., Series 1834,
Class A, 7.00%, 1/15/2020 4,263,618
15,000,000 Federal National Mortgage Association, Series 1997- 17, Class PD,
7.00%, 4/18/2021 15,103,950
1,409,156 GE Capital Mortgage Services, Inc., Series 1997-6, Class A18,
9.00%, 7/25/2027 1,434,859
10,540,000 GMAC Commercial Mortgage Securities, Inc. 1998-C2,
Series 1998-C2, Class A2, 6.42%, 8/15/2008 10,556,179
4,607,593 Green Tree Financial Corp., Series 1994-7, Class
A4, 8.35%, 3/15/2020 4,684,678
7,000,000 Green Tree Home Equity Loan Trust, Series 98-B,
Class B1, 7.81%, 11/15/2029 6,928,460
----------
Total Collateralized Mortgage Obligations
(identified cost $78,016,709) 77,694,701
----------
Corporate Bonds -- 49.6%
Banking -- 11.7%
12,550,000 Firstar Capital Trust I, Company Guarantee, 8.32%,
12/15/2026 13,277,022
7,000,000 Fleet Capital Trust V, 6.226%, 12/18/2028 6,969,900
5,000,000 Mercantile Capital Trust I, Company Guarantee,
5.820%, 2/1/2027 4,954,025
12,000,000 Old Kent Capital Trust I, 5.769%, 2/1/2027 11,889,348
10,000,000 (2)Skandinaviska Enskilda, Sub. Note, Series 144A,
6.50%, 12/29/2049 9,480,630 12,500,000 Starbank Capital Trust,
5.986%, 6/15/2027 12,424,488 10,000,000 Toronto-Dominion Bank, Sub. Note,
7.875%, 8/15/2004 10,126,900
----------
Total 69,122,313
----------
Broker/Dealers -- 6.2%
8,000,000 Bear Stearns Cos., Inc., Sr. Note, 7.00%, 1/15/2027 7,916,480
9,000,000 Lehman Brothers Holdings, Inc., Note, 6.90%,
1/29/2001 9,020,430
5,000,000 Lehman Brothers, Inc., Sr. Sub. Note, 7.50%,
8/1/2026 5,125,500
10,000,000 (1)Merrill Lynch & Co., Inc., Sr. Unsub. Note,
6.00%, 2/17/2009 9,648,300
5,000,000 PaineWebber Group, Inc., Note, 6.45%, 12/1/2003 4,941,100
----------
Total 36,651,810
----------
Finance -- 15.8%
10,000,000 Aristar, Inc., Note, 6.30%, 10/1/2002 10,022,100
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Principal
Amount Description Value
------------------------------------------------------------------------------
<C> <S> <C>
Corporate Bonds (continued)
Finance (continued)
$15,000,000 (1)Conseco, Inc., Note, 6.80%, 6/15/2005 $14,011,950
12,000,000 (2)Credit Suisse, London, Sub. Note, 7.90%,
4/29/2049 11,786,136
10,000,000 (2)Edison Funding Co., Sr. Note, 6.75%, 12/17/1999 10,061,010
4,000,000 FINOVA Capital Corp., Note, 6.25%, 11/1/2002 3,988,800
10,000,000 (2)Florida Windstorm Under, Bond, 6.50%, 8/25/2002 9,960,500
8,165,000 General Motors Acceptance Corp., Unsecd. Note,
7.00%, 6/6/2003 8,456,980
4,000,000 HSB Group, Inc., Company Guarantee, 5.94%,
7/15/2027 3,856,200
4,000,000 Household Netherlands BV, Company Guarantee, 6.20%,
12/1/2003 3,958,120
5,000,000 MBNA Global Capital Securities, Jr. Sub. Deb.,
5.769%, 2/1/2027 4,632,000
12,000,000 Sears Roebuck Acceptance Corp., Note, Series III,
7.01%, 9/19/2002 12,317,640
-----------
Total 93,051,436
-----------
Industrial Services -- 11.4%
5,000,000 Dayton-Hudson Corp., Unsecd. Note, 6.40%, 2/15/2003 5,079,750
10,000,000 Dayton-Hudson Corp., Unsecd. Note, 9.75%, 7/1/2002 11,154,600
7,000,000 Enserch Corp., 6.426%, 7/1/2028 6,934,270
10,000,000 IMC Global, Inc., Deb., 6.875%, 7/15/2007 9,681,200
12,000,000 (2)Marlin Water Trust, Sr. Note, 7.09%, 12/15/2001 11,963,604
10,000,000 (1)Tyco International Group, Note, 5.875%,
11/1/2004 9,820,640
7,000,000 Waste Management, Inc., Unsecd. Note 7.70%,
10/1/2002 7,332,430
5,000,000 Waste Management, Inc., Note, 6.625%, 7/15/2002 5,065,800
-----------
Total 67,032,294
-----------
Transportation -- 1.6%
4,604,239 Continental Airlines, Inc., Pass Thru Cert.,
6.541%, 9/15/2008 4,442,952
4,000,000 Delta Air Lines, Inc., Equip. Trust, Series 1993-
A2, 10.50%, 4/30/2016 5,139,520
-----------
Total 9,582,472
-----------
Utilities -- Telephone -- 2.9%
10,000,000 Telephone and Data System, Inc., Bond, 7.00%,
8/1/2006 10,141,100
</TABLE>
(See Notes to Portfolios of Investments)
February 28, 1999 (unaudited)
Portfolio of Investments
- --------------------------------------------------------------------------------
Intermediate Bond Fund (continued)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
Principal
Amount Description Value
-----------------------------------------------------------------------------
<C> <S> <C>
Corporate Bonds (continued)
Utilities -- Telephone (continued)
$7,000,000 (1)WorldCom, Inc., Sr. Note, 6.125%, 8/15/2001 $7,051,450
------------
Total 17,192,550
------------
Total Corporate Bonds
(identified cost $295,148,696) 292,632,875
------------
Corporate Notes -- 3.8%
Broker/Dealers -- 2.1%
12,000,000 Bear Stearns Cos., Inc., Sr. Note, 6.75%, 5/1/2001 12,164,280
------------
Tobacco -- 1.7%
10,000,000 Philip Morris Cos., Inc., Note, 7.25%, 9/15/2001 10,257,800
------------
Total Corporate Notes
(identified cost $21,921,780) 22,422,080
------------
U.S. Agency Notes -- 1.9%
Federal Home Loan Bank
5,000,000 5.43%, 11/17/2008 4,814,950
6,500,000 5.58%, 8/17/2001 6,526,065
------------
Total U.S. Agency Notes
(identified cost $11,565,695) 11,341,015
------------
Mortgage Backed Securities -- 0.9%
Federal Home Loan Mortgage Corporation -- 0.0%
109,598 8.75%, 4/1/2001 111,534
------------
Federal National Mortgage Association -- 0.9%
4,894,883 7.635%, 8/1/2011 5,240,559
------------
Total Mortgage Backed Securities (identified
cost $5,380,359) 5,352,093
------------
U.S. Treasury Notes -- 15.9%
5,000,000 (1)4.25%, 11/15/2003 4,797,250
5,000,000 (1)4.75%, 11/15/2008 4,801,150
10,000,000 (1)5.75%, 11/15/2000 10,096,100
6,000,000 (1)5.75%, 8/15/2003 6,103,560
5,000,000 (1)6.25%, 2/15/2007 5,264,150
10,000,000 (1)6.25%, 8/31/2000 10,159,700
12,000,000 (1)6.50%, 10/15/2006 12,792,480
17,000,000 (1)6.625%, 5/15/2007 18,331,780
5,000,000 (1)7.25%, 8/15/2004 5,444,900
15,000,000 (1)7.875%, 8/15/2001 15,915,750
------------
Total U.S. Treasury Notes
(identified cost $95,630,898) 93,706,820
------------
Total Investments in Securities
(identified cost $580,228,844) 576,326,074
------------
(3)Repurchase Agreement -- 0.8%
4,711,129 Lehman Brothers, Inc., 4.78%, dated 2/26/1999, due
3/1/1999 (at amortized cost) 4,711,129
------------
Total Investments (identified cost $584,939,973) $581,037,203
============
</TABLE>
- --------------------------------------------------------------------------------
Government Income Fund
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Principal
Amount Description Value
------------------------------------------------------------------------------
<C> <S> <C>
Asset-Backed Securities -- 9.5%
$750,929 Contitrade Services Home Equity Loan Trust, 7.700%,
9/15/2006, (Series 1991-2) $749,919
3,000,000 (2)DLJ Leverage Loan Funding, 6.770%, 9/15/2005 2,925,000 182,082
Green Tree Financial Corp., 6.750%, 9/15/2027 (Series
1996-6) 182,361
6,000,000 Green Tree Home Equity Loan Trust, 7.810%, 11/15/2029
(Series 1998-B) 5,938,680
10,643,000 Greenwich Capital Acceptance, 7.150%, 8/10/2020 10,758,583
4,955,714 (2)MLMI, 5.188%, 4/1/2011 (Series 1998-HI) 4,952,641 2,485,754
(2)Nationscredit Home Equity Loan Trust, 6.500%,
10/15/2028 2,495,076
328,720 Residential Asset Securitization Trust, 8.000%,
12/25/2026, (Series 1996-A8) 329,425
----------
Total Asset-Backed Securities (identified cost
$28,379,664) 28,331,685
----------
Collateralized Mortgage Obligations -- 18.0%
2,739,847 Chase Mortgage Finance Corp., 6.250%, 11/25/2009,
(Series 1993-M) 2,735,422
5,000,000 Federal Home Loan Mortgage Corp., 6.500%, 4/15/2021,
REMIC (Series 1574-G) 5,013,850
13,400,000 Federal Home Loan Mortgage Corp., 8.000%, 6/15/2023,
REMIC (Series 1748-B) 13,770,778
1,475,095 Federal National Mortgage Association, 6.100%,
9/25/2004, REMIC (Series 1992-179-E) 1,472,042
605,467 GE Capital Mortgage Services, Inc. 1997-6, 9.000%,
7/25/2027 616,510
5,150,784 IMC Excess Cashflow Securities Trust 1997-A, 7.410%,
11/26/2028 4,853,017
1,226,622 Independent National Mortgage Corp., 7.250%,
11/25/2010 1,235,705
6,450,000 Independent National Mortgage Corp., 7.500%,
9/25/2025 6,533,915
4,177,400 (2)Prudential Home Mortgage Securities 1992-B,
7.400%, 5/25/2007 4,220,005
9,991,638 Residential Funding Mortgage Securities I 1996-S25,
7.500%, 5/25/2027 10,103,644
2,931,379 Saxon Mortgage Securities Corp. 1993-10, 5.680%,
11/25/2023 2,894,136
----------
Total Collateralized Mortgage Obligations (identified
cost $53,661,917) 53,449,024
----------
</TABLE>
(See Notes to Portfolios of Investments)
[_] Marshall Funds
- --------------------------------------------------------------------------------
Government Income Fund (continued)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
Principal
Amount Description Value
----------------------------------------------------------------------------
<C> <S> <C>
Commercial Mortgage Backed Securities -- 6.6%
$1,658,000 Chase Commercial Mortgage Securities Corp. 1997-2,
6.600%, 11/19/2007 $1,673,892
3,300,000 (2)DLJ Commercial Mortgage Corp. 1998-STFA, 6.770%,
9/15/2005 3,206,462
1,150,000 GMAC Commercial Mortgage Securities, Inc.,
6.853%,9/15/2006, (Series 1997-C1) 1,174,397
5,500,000 GMAC Commercial Mortgage Securities, Inc., 6.566%,
11/15/2007, (Series 1997-C2) 5,568,283
8,000,000 (2)Nomura Depositor Trust Commercial Mortgage Pass-
Thru 1998-ST I Floating Rate Note, 5.356%,
1/15/2003 7,995,040
----------
Total Commercial Mortgage Backed Securities
(identified cost $19,707,677) 19,618,074
----------
Mortgage Backed Securities -- 45.1%
Federal Home Loan Mortgage Corporation -- 12.5%
6,392,221 7.000%, 11/1/2009 6,522,047
4,390,392 7.000%, 5/1/2027 4,446,633
4,191,642 7.500%, 5/1/2024 4,325,272
4,576,334 8.000%, 2/1/2010 4,725,065
4,226,869 8.000%, 4/1/2008 4,364,242
4,066,880 8.000%, 4/1/2026 4,233,378
596,179 8.000%, 8/1/2025 620,587
651,951 8.500%, 2/1/2009 684,346
2,776,200 8.500%, 9/1/2024 2,924,560
15,916 8.750%, 4/1/2001 16,197
327,012 9.000%, 5/1/2017 348,575
3,700,655 9.000%, 6/1/2019 3,942,344
3,879 9.500%, 2/1/2001 3,952
6,071 10.500%, 10/1/2000 6,159
----------
Total 37,163,357
----------
Federal National Mortgage Association -- 10.4%
10,000,000 5.500%, TBA 9,715,600
10,000,000 7.500%, TBA 10,300,000
5,246,058 6.340%, 2/1/2008 5,311,560
1,877,372 8.000%, 5/1/2025 1,962,435
734,403 8.000%, 8/1/2007 754,371
752,998 8.500%, 3/1/2023 797,674
368,596 11.000%, 6/1/2020 411,099
168,816 11.500%, 10/1/2015 190,445
867,011 11.500%, 5/20/2021 1,000,860
643,071 11.500%, 7/1/2006 688,086
----------
Total 31,132,130
----------
Government National Mortgage Association -- 22.2%
20,000,000 (7)6.000%, TBA, 30 Year 19,406,200
24,976,437 6.500%, 1/15/2029 24,843,812
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Principal
Amount Description Value
------------------------------------------------------------------------------
<C> <S> <C>
Mortgage Backed Securities (continued)
Government National Mortgage Association (continued)
$2,225,124 7.000%, 6/15/2023 $2,257,121
646,328 8.000%, 6/15/2022 670,364
539,441 8.000%, 7/15/2022 559,503
601,154 8.000%, 8/15/2022 623,511
4,094,005 8.000%, 8/15/2024 4,269,270
9,727,240 8.500%, 9/15/2028 10,326,049
680,767 9.000%, 2/15/2020 729,701
1,668,051 9.500%, 10/15/2024 1,803,062
271,267 9.500%, 7/15/2019 293,224
229,801 10.000%, 11/15/2020 251,489
4,908 10.500%, 10/15/2000 5,018
3,881 10.500%, 10/15/2000 3,968
9,571 11.000%, 11/15/2000 9,847
------------
Total 66,052,139
------------
Total Mortgage Backed Securities (identified cost
$134,766,391) 134,347,626
------------
Government Agencies -- 9.5%
13,000,000 Federal Home Loan Bank System, 5.125%, 9/15/2003 12,721,280
11,000,000 Federal National Mortgage Association, 5.750%,
4/15/2003 11,068,860
3,858,100 National Archive Facility Trust, 8.500%, 9/1/2019 4,610,237
------------
Total Government Agencies (identified cost
$29,120,171) 28,400,377
------------
(8)Variable Rate Notes -- 4.2%
5,000,000 Enserch Corp. Floating Rate Note, 6.426%, 4/1/1999 4,953,050
4,000,000 HSB Group, Inc. Floating Rate Note, 5.940%,
4/15/1999 3,856,200
4,000,000 MBNA Global Capital Securities, 5.770%, 5/4/1999 3,705,600
------------
Total Variable Rate Notes (identified cost
$12,659,735) 12,514,850
------------
U.S. Treasury Note -- 1.7%
5,000,000 (1)United States Treasury Note, 5.250%, 8/15/2003
(identified cost $5,236,719) 4,994,200
------------
Total Investments in Securities (identified cost
$283,532,274) 281,655,836
------------
(3)Repurchase Agreement -- 20.0%
59,410,063 Lehman Brothers, Inc., 4.780%, dated 2/26/1999, due
3/1/1999 (at amortized cost) 59,410,063
------------
Total Investments (identified cost $342,942,337) $341,065,899
============
</TABLE>
(See Notes to Portfolios of Investments)
February 28, 1999 (unaudited)
Portfolio of Investments
- --------------------------------------------------------------------------------
Intermediate Tax-Free Fund
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Principal Credit
Amount Description Rating(9) Value
------------------------------------------------------------------------------
<C> <S> <C> <C>
Long-Term Municipals -- 96.5%
Arizona -- 7.4%
$1,975,000 Glendale, AZ University High School
District No. 205, GO UT Refunding Bonds,
4.875% (FGIC LOC), 7/1/2013 Aaa $2,020,978
1,000,000 Maricopa County, AZ Community College
District, GO UT Bonds (Series A), 6.00%,
7/1/2006 AA 1,086,290
1,000,000 Maricopa County, AZ School District No. 4,
GO UT Bonds, 5.375% (FGIC INS)/(Original
Issue Yield: 5.40%), 7/1/2009 AAA 1,069,010
2,000,000 Maricopa County, AZ Unified School District
No. 41, Certificate Participation, 5.00%
(FSA INS), 1/1/2002 AAA 2,069,640
1,000,000 Maricopa County, AZ Unified School District
No. 97, GO UT (Series F), 4.50% (MBIA INS
LOC)/(Original Issue Yield: 4.60%),
7/1/2010 Aaa 1,003,730
1,155,000 Pima County, AZ Unified School District No.
6, GO UT Refunding Bonds, 4.75% (FGIC
LOC)/(Original Issue Yield: 4.80%),
7/1/2012 AAA 1,165,014
----------
Total 8,414,662
----------
Arkansas -- 3.3%
2,585,000 Arkansas Development Finance Authority,
Revenue Bonds, 5.00% (AMBAC INS)/(Original
Issue Yield: 5.055%), 7/1/2020 AAA 2,609,764
1,070,000 University of Arkansas, Revenue Refunding
Bonds, 4.60%, 9/15/2004 A1 1,105,866
----------
Total 3,715,630
----------
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Principal Credit
Amount Description Rating(9) Value
------------------------------------------------------------------------------
<C> <S> <C> <C>
Long-Term Municipals (continued)
California -- 0.9%
$1,000,000 California Health Facilities Financing
Authority, Refunding Revenue Bonds (Series
A), 5.00% (Casa De Las
Campanas)/(California Mortgage Insurance
INS), 8/1/2004 A+ $1,048,190
----------
Colorado -- 1.9%
1,950,000 Castle Rock Ranch, CO Public Improvement
Authority, Revenue Bonds, 5.70%, 12/1/2006 AA+ 2,142,894
----------
Florida -- 4.7%
3,000,000 Dade County, FL, Aviation Revenue Bonds,
5.00% (Miami International Airport)/(FSA
INS), 10/1/2005 AAA 3,168,360
2,000,000 Florida State, GO UT Bonds, 5.125%
(Original Issue Yield: 5.25%), 7/1/2009 AA+ 2,118,660
----------
Total 5,287,020
----------
Hawaii -- 1.0%
1,000,000 Hawaii State, GO UT Bonds (Series CA),
5.50% (Original Issue Yield: 6.00%),
1/1/2012 A+ 1,079,350
----------
Illinois -- 3.2%
1,500,000 Arlington Heights, IL, GO UT Refunding
Bonds (Series B), 4.55%, 12/1/2001 Aa2 1,542,390
800,000 Illinois State, GO UT Refunding Bonds,
5.125% (FGIC INS)/(Original Issue Yield:
5.15%), 12/1/2007 AAA 854,848
1,085,000 Waukegan, IL, GO UT Bonds, 6.40% (MBIA
INS)/ (Original Issue Yield: 6.45%),
12/30/2004 AAA 1,176,834
----------
Total 3,574,072
----------
Iowa -- 3.8%
1,050,000 Cedar Rapids, IA, GO UT Bonds (Series B),
5.20% (Original Issue Yield: 5.25%),
6/1/2007 Aaa 1,104,443
</TABLE>
(See Notes to Portfolios of Investments)
[_] Marshall Funds
- --------------------------------------------------------------------------------
Intermediate Tax-Free Fund (continued)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Principal Credit
Amount Description Rating(9) Value
------------------------------------------------------------------------------
<C> <S> <C> <C>
Long-Term Municipals (continued)
Iowa (continued)
$3,000,000 Iowa Finance Authority, Revenue Bonds,
6.00% (Ipsco, Inc.), Mandatory Tender,
6/1/2027 NR $3,150,780
----------
Total 4,255,223
----------
Maryland -- 2.0%
2,190,000 Washington Suburban Sanitation District,
MD, Refunding Bonds GO UT, 5.00%, 6/1/2007 AA 2,329,722
----------
Michigan -- 5.3%
2,000,000 Roseville, MI School District, GO UT Bonds, 4.60% (FSA
INS)/(Original Issue Yield:
4.70%), 5/1/2009 AAA 2,028,280
1,500,000 Wayland, MI University School District, GO
UT, 5.125% (FGIC INS), 5/1/2017 AAA 1,506,345
1,000,000 Ypsilanti, MI School District, GO UT Refunding Bonds, 5.00% (FGIC
LOC),
5/1/2017 AAA 994,030
1,500,000 Ypsilanti, MI School District, GO UT Refunding Bonds, 5.00% (FGIC
LOC),
5/1/2016 AAA 1,502,265
----------
Total 6,030,920
----------
Minnesota -- 1.0%
1,000,000 Minneapolis/St. Paul, MN Housing Authority,
Refunding Revenue Bonds, 6.75%, 12/1/2013 A- 1,082,040
----------
Mississippi -- 3.4%
3,600,000 Mississippi State, GO UT Bonds, 5.00%,
6/1/2004 AA 3,799,944
----------
Missouri -- 1.0%
1,000,000 Missouri State Environmental Improvement &
Energy Authority, Water Pollution Control
State Revolving Fund Program Revenue Bonds
(Series B), 6.65%, 7/1/2006 Aa1 1,138,520
----------
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
Principal Credit
Amount Description Rating(9) Value
----------------------------------------------------------------------------
<C> <S> <C> <C>
Long-Term Municipals (continued)
Nevada -- 1.4%
$1,500,000 Las Vegas, NV, GO LT Sewer Refunding
Revenue Bonds (Series B), 4.875% (MBIA
INS)/(Original Issue Yield: 5.05%),
1/1/2006 AAA $1,555,170
----------
New Mexico -- 4.3%
710,000 Albuquerque, NM Educational Facilities,
Refunding Revenue Bonds, 4.45% (Original
Issue Yield: 4.55%), 10/15/2012 AA- 693,663
740,000 Albuquerque, NM Educational Facilities,
Refunding Revenue Bonds, 4.55% (Original
Issue Yield: 4.65%), 10/15/2013 AA- 722,210
775,000 Albuquerque, NM Educational Facilities,
Refunding Revenue Bonds, 4.65% (Original
Issue Yield: 4.75%), 10/15/2014 AA- 755,641
715,000 Albuquerque, NM Educational Facilities,
Refunding Revenue Bonds, 4.70% (Original
Issue Yield: 4.80%), 10/15/2015 AA- 696,453
2,000,000 New Mexico Mortgage Finance Authority,
(Series A) Highway Improvement Revenue
Bonds, 4.70% (AMBAC LOC)/(Original Issue
Yield: 4.78%), 9/1/2013 AAA 1,991,680
----------
Total 4,859,647
----------
New York -- 8.0%
3,000,000 New York State Environmental Facilities
Corp., Revenue Bonds, 4.55% (General
Electric Capital Corp.), 12/1/2018 AAA 3,061,050
</TABLE>
(See Notes to Portfolios of Investments)
February 28, 1999 (unaudited)
Portfolio of Investments
- --------------------------------------------------------------------------------
Intermediate Tax-Free Fund (continued)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Principal Credit
Amount Description Rating(9) Value
------------------------------------------------------------------------------
<C> <S> <C> <C>
Long-Term Municipals (continued)
New York (continued)
$1,500,000 New York State Environmental Facilities
Corp., Revenue Bonds, 5.70% (Original
Issue Yield: 5.75%), 6/15/2006 Aa1 $1,646,100
1,100,000 Oswego County, NY, GO UT, 6.70% (Original
Issue Yield: 6.80%), 6/15/2010 A2 1,320,847
1,100,000 Oswego County, NY, GO UT, 6.70% (Original
Issue Yield: 6.80%), 6/15/2011 A2 1,324,037
1,500,000 Triborough Bridge & Tunnel Authority, NY,
Refunding Revenue Bonds, 5.50% (FGIC INS),
1/1/2008 AAA 1,637,880
----------
Total 8,989,914
----------
North Carolina -- 2.8%
3,000,000 Charlotte, NC,
GO UT Water
Utility and Sewer Improvements, 4.75%,
2/1/2010 AAA 3,119,130
----------
Ohio -- 6.2%
2,055,000 Cleveland, OH Parking Facilities, Revenue
Bonds, 7.60% (United States Treasury PRF),
9/15/2002 (@102) AAA 2,354,249
1,110,000 Ohio HFA, Revenue Refunding Bonds, 5.05%
(GNMA COL), 9/1/2001 AAA 1,131,856
1,390,000 Ohio HFA, Revenue Refunding Bonds, 5.15%
(GNMA COL), 9/1/2002 AAA 1,427,044
2,000,000 Ohio State Water Development Authority,
Revenue Bonds, 5.00% (MBIA INS), 6/1/2009 AAA 2,103,040
----------
Total 7,016,189
----------
Oklahoma -- 1.9%
2,000,000 Oklahoma HFA, Refunding Revenue Bonds
(Series A-3), 5.50% (Federal National
Mortgage Association COL), 11/1/2005
(@100) AAA 2,095,480
----------
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Principal Credit
Amount Description Rating(9) Value
------------------------------------------------------------------------------
<C> <S> <C> <C>
Long-Term Municipals (continued)
Oregon -- 3.1%
$3,500,000 Oregon State Department Administrative
Services, Revenue Bonds (Series A), 4.25%
(FSA LOC)/(Original Issue Yield: 3.85%),
4/1/2005 AAA $3,561,845
----------
South Carolina -- 1.0%
1,055,000 South Carolina State, GO UT Bonds (Series
B), 5.625%, 7/1/2011 AAA 1,153,959
----------
South Dakota -- 1.4%
1,500,000 Heartland Consumers Power District, SD,
Refunding Revenue Bonds , 5.90% (FSA
INS)/(Original Issue Yield: 6.00%),
1/1/2004 AAA 1,625,880
----------
Tennessee -- 2.7%
1,545,000 Johnson City, TN, GO UT Refunding Bonds, 4.75% (FGIC
INS)/(Original Issue Yield:
4.85%), 6/1/2014 AAA 1,539,917
1,520,000 Johnson City, TN, GO UT Revenue Refunding
Bonds, 4.75% (FGIC INS)/(Original Issue
Yield: 4.85%), 6/1/2014 AAA 1,529,743
----------
Total 3,069,660
----------
Texas -- 12.3%
2,000,000 Garland, TX, GO LT, 4.50%, 2/15/2010 AA 2,017,560 3,470,000
Killeen, TX Independent School District, GO
UT Refunding Bonds, 4.75% (PSFG
INS)/(Original Issue Yield: 4.80%),
2/15/2010 AAA 3,540,927
945,000 San Angelo, TX Independent School District,
GO UT Bonds, 5.30% (PSFG GTD), 2/15/2007 AAA 1,005,905
2,000,000 Tarrant County, TX HFDC, Revenue Bonds,
5.75% (Texas Health Resources
System)/(MBIA INS), 2/15/2009 AAA 2,208,840
</TABLE>
(See Notes to Portfolios of Investments)
[_] Marshall Funds
- --------------------------------------------------------------------------------
Intermediate Tax-Free Fund (continued)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Principal Credit
Amount Description Rating(9) Value
------------------------------------------------------------------------------
<C> <S> <C> <C>
Long-Term Municipals (continued)
Texas (continued)
$5,000,000 Texas State Public Finance Authority, GO UT
Refunding Bonds, 5.00% (Original Issue
Yield: 5.05%), 10/1/2012 AA $5,165,600
----------
Total 13,938,832
----------
Utah -- 3.7%
2,020,000 Jordan, UT School District, GO UT, 5.00%,
6/15/2003 AAA 2,125,484
1,000,000 Washington County, UT School District, GO
UT, 5.00%, 3/1/2007 AAA 1,062,920
1,000,000 Washington County, UT School District, GO
UT, 5.00%, 3/1/2008 AAA 1,057,330
----------
Total 4,245,734
----------
Virginia -- 1.4%
1,500,000 Virginia State Housing Development
Authority, Mortgage Revenue Bonds (Series
A1), 6.40%, 7/1/2002 AA+ 1,568,190
----------
Washington -- 1.0%
1,000,000 Port Longview, WA Industrial Development
Corp., Solid Waste Disposal Revenue Bonds,
6.875% (Weyerhaeuser Co.), 10/1/2008 A 1,149,490
----------
Wisconsin -- 6.4%
1,400,000 Mequon-Thiensville, WI School District,
School Improvements, 4.50% (Original Issue
Yield: 4.60%), 3/1/2012 Aa1 1,374,338
1,650,000 Southeast WI, Professional Baseball Park
District, Sales Tax Revenue Bonds, 5.45%
(MBIA INS), 12/15/2012 AAA 1,747,680
1,000,000 Wisconsin Health and Educational Facilities
Authority, Refunding Revenue Bonds, 5.125%
(Lawrence University, WI)/(Original Issue
Yield: 5.25%), 10/15/2018 A3 974,000
</TABLE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
Principal
Amount Credit
or Shares Description Rating(9) Value
-----------------------------------------------------------------------------
<C> <S> <C> <C>
Long-Term Municipals (continued)
Wisconsin (continued)
$2,950,000 Wisconsin State, GO UT Bonds (Series C),
5.30% (Original Issue Yield: 5.40%),
5/1/2008 AA $3,182,667
------------
Total 7,278,685
------------
Total Long-Term Municipals (identified cost
$105,884,769) 109,125,992
------------
Mutual Funds -- 6.4%
4,363,004 Federated Tax-Free Obligations Fund 4,363,004
2,907,255 Fidelity Tax Exempt Money Market 2,907,255
------------
Total Mutual Funds
(shares at net asset value) 7,270,259
------------
(10)Total Investments
(identified cost $113,155,028) $116,396,251
============
- ------------------------------------------------------------------------------
</TABLE>
Money Market Fund
<TABLE>
<CAPTION>
--------------------------------------------------
Principal
Amount Description Value
--------------------------------------------------
<C> <S> <C>
Certificate Of
Deposit -- 0.5%
Banking -- 0.5%
$10,000,000 Deutsche Bank, AG,
5.770%, 3/30/1999 $9,999,429
----------
(6)Commercial Paper --
2.7%
Beverages & Foods --
2.7%
50,000,000 Coca-Cola Co., 4.896%,
4/23/1999 49,642,986
----------
Corporate Bonds -- 5.5%
Asset-Backed -- 1.4%
25,000,000 Beta Finance, Inc.,
5.140%, 1/13/2000 24,998,693
----------
Beverages & Foods --
0.1%
2,500,000 PepsiCo, Inc., 6.250%,
9/1/1999 2,505,838
----------
Broker/Dealers -- 2.5%
35,000,000 Merrill Lynch & Co.,
Inc., 5.200%, 3/22/1999 35,063,545
11,100,000 Morgan Stanley Group,
Inc., 5.625%, 3/1/1999 11,100,000
----------
Total 46,163,545
----------
Personal Credit -- 1.5%
1,595,000 Associates Corp. of
North America, 6.750%,
10/15/1999 1,607,995
10,000,000 General Motors
Acceptance Corp.,
4.625%, 10/1/1999 10,146,339
</TABLE>
(See Notes to Portfolios of Investments)
February 28, 1999 (unaudited)
Portfolio of Investments
- --------------------------------------------------------------------------------
Money Market Fund (continued)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
Principal
Amount Description Value
-----------------------------------------------------------------------------
<C> <S> <C>
Corporate Bonds (continued)
Personal Credit (continued)
$15,000,000 General Motors Acceptance Corp., 4.949%, 5/3/1999 $15,000,783
-----------
Total 26,755,117
-----------
Total Corporate Bonds 100,423,193
-----------
Corporate Notes -- 13.0%
Asset-Backed -- 2.2%
25,000,000 Centauri Communications, Inc., 5.330%, 3/6/2000 25,000,000
15,000,000 Sigma Finance, 5.890%, 5/5/1999 15,000,000
-----------
Total 40,000,000
-----------
Banking -- 2.6%
25,000,000 Bankers Trust Co., New York, 5.190%, 2/22/2000 24,995,268
23,000,000 CCC Putable Asset Trust, 6.450%, 10/18/1999 23,188,795
-----------
Total 48,184,063
-----------
Broker/Dealers -- 2.8%
25,000,000 Bear, Stearns and Co., 5.004%, 5/26/1999 25,000,000
6,000,000 Lehman Brothers Holdings, Inc., 7.120%, 7/30/1999 6,032,595
5,000,000 Merrill Lynch & Co., Inc., 5.250%, 5/25/1999 5,003,150
15,000,000 Republic National Bank of New York, 5.038%,
3/1/1999 15,000,000
-----------
Total 51,035,745
-----------
Financial -- 0.3%
5,000,000 Paccar Financial Corp., 6.060%, 3/15/1999 5,001,387
-----------
Foreign Banks -- 1.2%
22,000,000 AB Spintab, 4.919%, 5/3/1999 21,994,078
-----------
Forest Products -- 3.8%
70,000,000 Willamette Industries, Inc., 4.810%, 3/1/1999 70,000,000
-----------
Short-Term Business Credit -- 0.1%
2,000,000 McDonnell Douglas Finance Corp., 6.750%, 9/17/1999 2,010,572
-----------
Total Corporate Notes 238,225,845
-----------
Governments/Agencies -- 0.5%
Foreign Banks -- 0.5%
8,700,000 African Development Bank, 6.750%, 7/30/1999 8,732,619
-----------
(8)Variable Rate Notes -- 68.8%
Asset-Backed -- 8.1%
25,000,000 Bishop's Gate Residential Mortgage Trust 1998-2,
Class A-1, 5.139%, 3/10/1999 25,000,000
62,000,000 Liberty Lighthouse US Capital Co., 4.990%,
7/15/1999 62,000,000
60,000,000 Sigma Finance, 4.910%, 3/1/1999 60,000,000
-----------
Total 147,000,000
-----------
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Principal
Amount Description Value
------------------------------------------------------------------------------
<C> <S> <C>
(8)Variable Rate Notes (continued)
Banking -- 8.3%
$12,000,000 Banc One Corp., 5.201%, 3/15/1999 $11,994,616
25,000,000 Bankers Trust Co., New York, 4.970%, 3/1/1999 24,994,046
40,000,000 Citicorp, 5.199%, 3/1/1999 40,000,000
75,000,000 SMM Trust, 5.320%, 3/15/1999 75,000,000
-----------
Total 151,988,662
-----------
Broker/Dealers -- 10.1%
40,000,000 Bear, Stearns and Co., (Series B), 5.444%,
3/10/1999 40,000,000
71,200,000 (2)Goldman Sachs & Co., 5.066%, 3/1/1999 71,200,000
74,000,000 J.P. Morgan & Co., Inc., 4.800%, 3/1/1999 74,000,000
-----------
Total 185,200,000
-----------
Construction Equipment -- 3.3%
50,000,000 Caterpillar Financial Services Corp., 5.011%,
5/7/1999 50,017,242
10,000,000 Caterpillar Financial Services Corp., 5.038%,
3/15/1999 9,996,335
-----------
Total 60,013,577
-----------
Diversified Manufacturing -- 0.2%
3,000,000 Danaher Corp., 4.938%, 3/5/1999 3,000,000
-----------
Insurance -- 21.3%
25,000,000 (2)Combined Insurance Corp. of America, 5.251%,
3/5/1999 25,000,000
20,000,000 (2)Combined Insurance Corp. of America, 5.147%,
5/3/1999 20,000,000
40,000,000 (2)Commonwealth Life Insurance, 5.110%, 3/1/1999 40,000,000
10,000,000 (2)Commonwealth Life Insurance, 5.410%, 4/1/1999 10,000,000
35,000,000 First Allmerica Financial Life Insurance Co.,
5.110%, 5/4/1999 35,000,000
60,000,000 (2)General American Life Insurance Co., 4.990%,
3/1/1999 60,000,000
50,000,000 (2)Jackson National Life Insurance Co., 4.980%,
5/1/1999 50,000,000
60,000,000 (2)Transamerica Life Insurance and Annuity Co.,
5.076%, 3/5/1999 60,000,000
50,000,000 (2)Travelers Insurance Co., 5.011%, 4/1/1999 50,000,000
40,000,000 (2)Western National Life Insurance Co., 5.000%,
3/5/1999 40,000,000
-----------
Total 390,000,000
-----------
Leasing -- 3.3%
50,000,000 General Electric Capital Corp., (Series A), 5.189%,
3/9/1999 50,000,000
</TABLE>
(See Notes to Portfolios of Investments)
[_] Marshall Funds
- --------------------------------------------------------------------------------
Money Market Fund (continued)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------
Principal
Amount Description Value
--------------------------------------------------------------------------
<C> <S> <C>
(8)Variable Rate Notes (continued)
Leasing (continued)
$10,000,000 U.S. Leasing Capital Corp., 5.140%, 4/19/1999 $10,001,815
-----------
Total 60,001,815
-----------
Personal Credit -- 6.0%
50,000,000 American Honda Finance Corp., 4.970%, 4/21/1999 49,977,671
34,000,000 American Honda Finance Corp., 4.972%, 4/20/1999 33,984,863
25,000,000 Household Finance Corp., 5.375%, 3/4/1999 25,009,438
-----------
Total 108,971,972
-----------
Short-Term Business Credit -- 6.9%
30,000,000 CIT Group, Inc., 4.940%, 3/1/1999 29,979,888
25,000,000 CIT Group, Inc., 5.035%, 4/14/1999 24,987,901
72,000,000 (2)Heller Financial, Inc., 5.327%, 3/1/1999 72,000,000
-----------
Total 126,967,789
-----------
</TABLE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
Principal
Amount Description Value
-----------------------------------------------------------------------------
<C> <S> <C>
(8)Variable Rate Notes (continued)
Utilities -- 1.3%
$13,822,000 Consolidated Edison Co., 5.264%, 4/1/1999 $13,826,348
10,000,000 (2)Wisconsin Public Service, 4.888%, 3/1/1999 10,000,000
--------------
Total 23,826,348
--------------
Total Variable Rate Notes 1,256,970,163
--------------
Total Investments in Securities 1,663,994,235
--------------
(3)Repurchase Agreement -- 10.0%
182,918,334 Lehman Brothers, Inc., 4.780%, dated 2/26/1999,
due 3/1/1999 182,918,334
--------------
Total Investments (at amortized cost) $1,846,912,569
==============
</TABLE>
(See Notes to Portfolios of Investments)
Notes to Portfolios of Investments
(1) Certain shares or principal amounts on loan to broker.
(2) Securities exempt from registration under the Securities Act of 1933, as
amended and may only be sold to dealers and other exempt investors. These
securities have been determined to be liquid according to guidelines
established by the board of directors.
(3) The repurchase agreements are fully collateralized by U.S. Government
and/or agency obligations based on market prices at date of the portfolio.
(4) Non-income producing.
(5) Represents the initial deposit within a margin account used to ensure the
Fund is able to satisfy the obligations of its outstanding long futures
contracts.
(6) Each issue shows the rate of discount at the time of purchase.
(7) Includes securities subject to dollar roll transactions.
(8) Current rate and next reset date shown.
(9) Current credit ratings are unaudited. Please refer to the Statement of
Additional Information for an explanation of the credit ratings.
(10) Securities that are subject to alternative minimum tax represent 9.9% of
Intermediate Tax-Free Fund's portfolio as calculated based upon total
portfolio market value.
The following acronyms are used throughout this portfolio:
- --------------------------------------------------------------------------------
ADR--American Depositary Receipt INS--Insured
AMBAC--American Municipal Bond LOC--Letter of Credit
Assurance Corporation LT--Limited Tax
COL--Collateralized MBIA--Municipal Bond Investors Assurance
FGIC--Financial Guaranty Insurance PRF--Prerefunded
Company PSFG--Permanent School Fund Guarantee
FSA--Financial Security Assurance REMIC--Real Estate Mortgage Investment
GO--General Obligation Conduit
GDR--Global Depositary Receipt TBA--To Be Announced
GNMA--Government National Mortgage UT--Unlimited Tax
Association
GTD--Guaranty
HFA--Housing Finance Authority
HFDC--Health Facilities Development
Corporation
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Unrealized Gross Gross
Cost of Appreciation Unrealized Unrealized
Investments for (Depreciation) Appreciation Depreciation
Federal Tax for Federal for Federal for Federal Total Net
Marshall Purposes Tax Purposes Tax Purposes Tax Purposes Assets**
- -------- --------------- -------------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
Equity Income Fund $420,395,340 $93,634,678 $108,683,938 $15,049,260 $515,139,339
Large-Cap Growth &
Income Fund 236,472,269 131,874,023 136,570,754 4,696,731 365,859,362
Mid-Cap Value Fund 120,706,383 6,104,755 14,671,532 8,566,777 127,729,268
Mid-Cap Growth Fund 198,993,376 48,387,219 56,555,373 8,168,154 249,904,616
International Stock Fund 210,129,220 19,119,443 50,652,214 31,532,771 227,510,722
Small-Cap Growth Fund 96,074,262 557,316 10,519,635 9,962,319 97,535,255
Short-Term Income Fund 131,000,767 (965,053) 295,523 1,260,576 130,502,700
Intermediate Bond Fund 584,939,973 (3,902,770) 4,357,212 8,259,982 589,550,401
Government Income Fund 342,942,337 (1,876,438) 1,277,337 3,153,775 297,731,231
Intermediate Tax-Free
Fund 113,155,028 3,241,223 3,325,675 84,452 113,027,505
Money Market Fund 1,846,912,569* -- -- -- 1,828,051,137
</TABLE>
*At amortized cost
**The categories of investments are shown as a percentage of net assets at
February 28, 1999.
(See Notes which are an integral part of the Financial Statements)
February 28, 1999 (unaudited)
Statements of Assets and Liabilities
<TABLE>
<CAPTION>
------- ------- ------- ------- -------
Equity Large-Cap Mid-Cap Mid-Cap Small-Cap
Income Growth & Income Value Growth Growth
Fund Fund Fund Fund Fund
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Assets:
Investments in
securities, at value $494,802,178 $337,418,237 $122,065,122 $232,185,370 $86,773,346
Investments in
repurchase agreements 19,227,840 30,928,055 4,746,016 15,195,225 9,858,232
Short-term investments
held as collateral
for securities
lending 145,802,813 91,093,270 12,651,889 51,024,010 --
Cash 1,076 -- 27,776 25,571 26,234
Cash denominated in
foreign currencies
(at cost, $139,301) -- -- -- -- --
Income receivable 1,520,834 400,717 266,377 43,915 3,927
Receivable for
investments sold 4,216,864 -- 1,235,207 6,947,904 3,424,520
Receivable for capital
stock sold -- -- -- -- --
Receivable for daily
variation margin -- -- -- -- 23,625
Deferred
organizational costs -- -- -- -- 18,785
Deferred expenses -- -- -- -- --
------------ ------------ ------------ ------------ -----------
Total assets 665,571,605 459,840,279 140,992,387 305,421,995 100,128,669
------------ ------------ ------------ ------------ -----------
Liabilities:
Payable to Bank -- 1,360 -- -- --
Income distribution
payable -- -- -- -- --
Net payable for
foreign currency
exchange contracts
purchased -- -- -- -- --
Payable for
investments purchased 3,880,274 2,230,914 400,563 3,978,475 2,390,280
Payable on collateral
due to broker 145,802,813 91,093,270 12,651,889 51,024,010 --
Payable for daily
variation margin -- 108,000 -- 132,189 --
Payable for dollar
roll transactions -- -- -- -- --
Accrued expenses 749,179 547,373 210,667 382,705 203,134
------------ ------------ ------------ ------------ -----------
Total liabilities 150,432,266 93,980,917 13,263,119 55,517,379 2,593,414
------------ ------------ ------------ ------------ -----------
Net Assets Consist of:
Paid-in-capital 406,568,388 225,225,933 111,498,326 192,608,634 99,443,795
Net unrealized
appreciation
(depreciation) on
investments,
collateral, futures
contracts and foreign
currency translation 93,634,678 133,287,018 6,104,755 48,244,529 362,625
Accumulated net
realized gain (loss)
on investments,
futures contracts and
foreign currency
transactions 14,346,948 7,165,023 10,047,452 9,810,274 (1,906,244)
Undistributed net
investment
income/(net operating
loss) 589,325 181,388 78,735 (758,821) (364,921)
------------ ------------ ------------ ------------ -----------
Total Net Assets $515,139,339 $365,859,362 $127,729,268 $249,904,616 $97,535,255
------------ ------------ ------------ ------------ -----------
Net Asset Value,
Offering Price, and
Redemption Proceeds Per
Share
Class Y Shares:
Net Asset Value and
Redemption Proceeds
Per Share $15.43 $16.27 $10.24 $15.07 $11.40
Offering Price Per
Share $15.43 $16.27 $10.24 $15.07 $11.40
Class A Shares:
Net Asset Value and
Redemption Proceeds
Per Share $15.43 $16.27 $10.24 $15.07 $11.40
Offering Price Per
Share(a) $16.37* $17.26* $10.86* $15.99* $12.10*
------------ ------------ ------------ ------------ -----------
Net Assets:
Class Y Shares $515,139,242 $365,859,262 $127,729,176 $249,904,511 $97,535,164
Class A Shares 97 100 92 105 91
------------ ------------ ------------ ------------ -----------
Total Net Assets $515,139,339 $365,859,362 $127,729,268 $249,904,616 $97,535,255
============ ============ ============ ============ ===========
Shares Outstanding:
Class Y Shares 33,394,353 22,482,878 12,479,629 16,587,524 8,559,126
Class A Shares 6 6 9 7 8
------------ ------------ ------------ ------------ -----------
Total shares
outstanding ($0.0001
par value) 33,394,359 22,482,884 12,479,638 16,587,531 8,559,134
============ ============ ============ ============ ===========
Investments, at
identified cost $420,395,340 $236,472,269 $120,706,383 $198,993,376 $96,074,262
============ ============ ============ ============ ===========
Investments, at tax cost $420,395,340 $236,472,269 $120,706,383 $198,993,376 $96,074,262
============ ============ ============ ============ ===========
</TABLE>
* Computation of offering price per share 100/94.25 of net asset value.
** Computation of offering price per share 100/95.25 of net asset value.
(a) See "What Do Shares Cost?" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
[_] Marshall Funds
<TABLE>
<CAPTION>
------- ------- ------- ------- ------- -------
International Short-Term Intermediate Government Intermediate Money
Stock Income Bond Income Tax-Free Market
Fund Fund Fund Fund Fund Fund
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$229,248,663 $127,343,387 $576,326,074 $281,655,836 $116,396,251 $1,663,994,235
-- 2,692,327 4,711,129 59,410,063 -- 182,918,334
59,517,900 -- 130,461,334 5,150,000 -- --
-- -- -- -- 24,433 --
133,040 -- -- -- -- --
1,134,246 1,335,278 7,092,537 2,342,190 1,304,581 14,436,402
-- 84,172 4,860,455 6,103,631 35,000 --
206,792 -- -- -- -- --
-- -- -- -- -- --
3,016 -- -- -- -- --
3,517 -- -- -- -- 200,000
------------ ------------ ------------ ------------ ------------ --------------
290,247,174 131,455,164 723,451,529 354,661,720 117,760,265 1,861,548,971
------------ ------------ ------------ ------------ ------------ --------------
255,372 274,340 330,314 72,296 -- 1,090,209
-- 609,236 2,729,958 1,295,042 345,672 6,698,717
2,108 -- -- -- -- --
2,569,680 -- -- 30,525,599 4,308,000 25,000,000
59,517,900 -- 130,461,334 5,150,000 -- --
-- -- -- -- -- --
-- -- -- 19,630,873 -- --
391,392 68,888 379,522 256,679 79,088 708,908
------------ ------------ ------------ ------------ ------------ --------------
62,736,452 952,464 133,901,128 56,930,489 4,732,760 33,497,834
------------ ------------ ------------ ------------ ------------ --------------
197,872,551 136,578,228 615,366,908 300,660,067 109,572,774 1,828,051,137
19,089,737 (965,053) (3,902,770) (1,876,438) 3,241,223 --
9,851,556 (5,110,475) (21,913,737) (1,052,398) 211,402 --
696,878 -- -- -- 2,106 --
------------ ------------ ------------ ------------ ------------ --------------
$227,510,722 $130,502,700 $589,550,401 $297,731,231 $113,027,505 $1,828,051,137
------------ ------------ ------------ ------------ ------------ --------------
$12.42 $9.45 $9.39 $9.52 $10.29 $1.00
$12.42 $9.45 $9.39 $9.52 $10.29 $1.00
$12.42 -- $9.39 $9.52 -- $1.00
$13.18* -- $9.86** $9.99** -- $1.00
------------ ------------ ------------ ------------ ------------ --------------
$227,510,624 $130,502,700 $589,549,361 $297,731,132 $113,027,505 $1,714,358,895
98 -- 1,040 99 -- 113,692,242
------------ ------------ ------------ ------------ ------------ --------------
$227,510,722 $130,520,700 $589,550,401 $297,731,231 $113,027,505 $1,828,051,137
============ ============ ============ ============ ============ ==============
18,322,789 13,804,096 62,805,126 31,281,030 10,988,709 1,714,358,895
8 -- 111 10 -- 113,692,242
------------ ------------ ------------ ------------ ------------ --------------
18,322,797 13,804,096 62,805,237 31,281,040 10,988,709 1,828,051,137
============ ============ ============ ============ ============ ==============
$210,129,220 $131,000,767 $584,939,973 $342,942,337 $113,155,028 $1,846,912,569
============ ============ ============ ============ ============ ==============
$210,129,220 $131,000,767 $584,939,973 $342,942,337 $113,155,028 $1,846,912,569
============ ============ ============ ============ ============ ==============
</TABLE>
Six Months Ended February 28, 1999 (unaudited)
Statements of Operations
<TABLE>
<CAPTION>
------- ------- ------- ------- -------
Large-Cap
Equity Growth & Mid-Cap Mid-Cap Small-Cap
Income Fund Income Fund Value Fund Growth Fund Growth Fund
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Investment Income:
Interest income $ 1,132,967 $ 806,166 $ 378,285 $ 485,242 $ 377,496
Dividend income 6,750,851 1,965,451 1,201,536 134,064 13,600
----------- ----------- ----------- ----------- -----------
Total income 7,883,818 2,771,617 1,579,821 619,306 391,096
----------- ----------- ----------- ----------- -----------
Expenses:
Investment advisory fee 1,913,740 1,234,226 518,290 838,760 476,846
Directors' fees 981 1,197 1,371 1,364 1,463
Administrative fees 215,527 142,153 57,241 97,230 57,460
Custodian fees 37,604 29,319 17,231 21,902 9,637
Portfolio accounting
fees 43,603 38,322 22,675 30,179 20,777
Transfer and dividend
disbursing agent fees
and expenses 56,722 54,493 42,661 46,056 36,911
Shareholder services
fees--Class Y Shares 637,913 411,409 172,763 279,587 119,212
Class A Shares -- -- -- -- --
Registration fees 9,745 12,035 8,331 7,854 7,182
Auditing fees 5,000 7,064 6,615 6,691 6,235
Legal fees 2,564 2,360 2,489 2,576 2,144
Printing and postage 3,189 7,705 7,988 10,341 5,721
Insurance premiums 6,018 1,757 1,461 1,798 1,278
Distribution services
fees--Class A Shares -- -- -- -- --
Taxes 20,174 14,107 5,395 14,655 3,591
Miscellaneous 31,553 19,905 10,011 19,134 7,560
----------- ----------- ----------- ----------- -----------
Total expenses 2,984,333 1,976,052 874,522 1,378,127 756,017
----------- ----------- ----------- ----------- -----------
Deduct--
Waiver of investment
advisory fee -- -- -- -- --
Waiver of shareholder
services fees--
Class Y Shares -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Total Waivers -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Net expenses 2,984,333 1,976,052 874,522 1,378,127 756,017
----------- ----------- ----------- ----------- -----------
Net investment income
(net operating loss) 4,899,485 795,565 705,299 (758,821) (364,921)
----------- ----------- ----------- ----------- -----------
Realized and Unrealized
Gain (Loss) on
Investments,
Collateral, Foreign
Currency and Futures
Contracts:
Net realized gain
(loss) on investment
transactions
(identified cost
basis) 14,353,644 8,095,607 10,236,211 8,054,854 (3,025,929)
Net realized gain on
foreign currency
transactions -- -- -- -- --
Net realized gain on
futures contracts
(identified cost
basis) -- 971,733 -- 2,166,386 1,029,633
Net change in
unrealized
appreciation
(depreciation) on
investments,
collateral, futures
contracts and foreign
currency translation 58,438,972 70,557,868 1,644,080 54,889,457 16,116,338
----------- ----------- ----------- ----------- -----------
Net realized and
unrealized gain (loss)
on investments
collateral, foreign
currency and futures
contracts 72,792,616 79,625,208 11,880,291 65,110,697 14,120,042
----------- ----------- ----------- ----------- -----------
Change in net assets
resulting from
operations $77,692,101 $80,420,773 $12,585,590 $64,351,876 $13,755,121
=========== =========== =========== =========== ===========
</TABLE>
(a) Net of Foreign taxes withheld of $87,589.
(b) Net of dollar roll interest expense of $1,823,594.
(See Notes which are an integral part of the Financial Statements)
[_] Marshall Funds
<TABLE>
<CAPTION>
------- ------- ------- ------- ------- -------
Intermediate Money
International Short-Term Intermediate Government Tax-Free Market
Stock Fund Income Fund Bond Fund Income Fund Fund Fund
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$ 364,113 $ 4,488,641 $ 19,305,278 $ 9,636,440(b) $2,505,970 $48,053,250
2,037,239(a) -- -- -- -- --
----------- ----------- ------------ ----------- ---------- -----------
2,401,352 4,488,641 19,305,278 9,636,440 2,505,970 48,053,250
----------- ----------- ------------ ----------- ---------- -----------
1,142,617 403,721 1,756,987 1,076,541 322,434 4,424,604
507 1,376 1,232 865 1,366 1,517
98,827 57,633 244,975 122,449 50,521 744,307
62,215 13,457 41,680 26,751 10,748 102,594
32,895 22,624 50,736 36,066 25,282 82,595
41,019 18,188 26,443 40,297 14,462 103,193
285,654 168,217 740,173 358,847 134,347 166,333
-- -- -- -- -- 10,651
1,401 7,091 24,977 7,673 8,380 86,325
7,741 7,606 7,296 7,340 6,104 7,951
2,436 1,620 2,396 1,883 2,219 3,827
5,312 7,729 5,466 12,600 7,983 7,640
1,736 1,613 2,114 1,212 1,285 5,231
-- -- -- -- -- 159,769
5,958 4,619 18,982 9,880 2,756 59,688
2,576 3,194 25,160 6,400 2,334 5,325
----------- ----------- ------------ ----------- ---------- -----------
1,690,894 718,688 2,948,617 1,708,804 590,221 5,971,550
----------- ----------- ------------ ----------- ---------- -----------
-- (222,010) (175,699) (143,539) (140,745) (2,211,838)
-- (154,760) (681,606) (330,140) (123,600) --
----------- ----------- ------------ ----------- ---------- -----------
-- (376,770) (857,305) (473,679) (264,345) (2,211,838)
----------- ----------- ------------ ----------- ---------- -----------
1,690,894 341,918 2,091,312 1,235,125 325,876 3,759,712
----------- ----------- ------------ ----------- ---------- -----------
710,458 4,146,723 17,213,966 8,401,315 2,180,094 44,293,538
----------- ----------- ------------ ----------- ---------- -----------
10,462,619 (251,340) (172,672) 645,905 448,280 --
(245,392) -- -- -- -- --
-- -- -- -- -- --
10,134,985 (1,987,518) (13,392,291) (6,292,830) (279,447) --
----------- ----------- ------------ ----------- ---------- -----------
20,352,212 (2,238,858) (13,564,963) (5,646,925) 168,833 --
----------- ----------- ------------ ----------- ---------- -----------
$21,062,670 $ 1,907,865 $ 3,649,003 $ 2,754,390 $2,348,927 $44,293,538
=========== =========== ============ =========== ========== ===========
</TABLE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
--------------------------- --------------------------
Equity Large-Cap
Income Growth &
Fund Income Fund
--------------------------- --------------------------
Six Months Six Months
Ended Year Ended Year
February 28, Ended February 28, Ended
1999 August 31, 1999 August 31,
(unaudited) 1998 (unaudited) 1998
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets
Operations--
Net investment income (net operating loss) $ 4,899,485 $ 9,626,902 $ 795,565 $ 1,227,848
Net realized gain (loss) on investment transactions 14,353,644 40,283,486 8,095,607 18,456,573
Net realized gain (loss) on foreign currency transactions -- -- -- --
Net realized gain (loss) on futures contracts -- -- 971,733 (844,292)
Net change in unrealized appreciation (depreciation) of investments,
collateral, futures contracts and foreign currency translation 58,438,972 (23,760,894) 70,557,868 (9,032,687)
------------ ------------- ------------ ------------
Change in net assets resulting from operations 77,692,101 26,149,494 80,420,773 9,807,442
------------ ------------- ------------ ------------
Distributions to Shareholders--
Dividends to shareholders from net investment income
Class Y Shares (4,957,695) (9,687,514) (858,873) (1,128,306)
Distributions to shareholders from net realized gain on investments
Class Y Shares (33,129,352) (27,002,639) (16,057,392) (23,055,255)
------------ ------------- ------------ ------------
Change in net assets from distributions to shareholders (38,087,047) (36,690,153) (16,916,265) (24,183,561)
------------ ------------- ------------ ------------
Capital Stock Transactions--
Proceeds from sale of shares 34,595,642 212,523,763 33,657,720 59,962,072
Net asset value of shares issued to shareholders in payment of
distributions declared 34,426,343 29,988,247 16,371,223 23,601,015
Cost of shares redeemed (52,352,486) (104,836,067) (22,495,493) (63,972,861)
------------ ------------- ------------ ------------
Change in net assets from capital stock transactions 16,669,499 137,675,943 27,533,450 19,590,226
------------ ------------- ------------ ------------
Change in net assets 56,274,553 127,135,284 91,037,958 5,214,107
Net Assets:
Beginning of period 458,864,786 331,729,502 274,821,404 269,607,297
------------ ------------- ------------ ------------
End of period $515,139,339 $ 458,864,786 $365,859,362 $274,821,404
============ ============= ============ ============
Undistributed net investment income included in net assets
at end of period $ 589,325 $ 647,535 $ 181,388 $ 244,696
============ ============= ============ ============
Net gain (loss) as computed for federal tax purposes $ 14,353,644 $ 40,283,486 $ 9,067,340 $ 15,866,698
============ ============= ============ ============
</TABLE>
(See Notes which are an integral part of the Financial Statements)
[_] Marshall Funds
<TABLE>
<CAPTION>
- -------------------------- -------------------------- -------------------------- ---------------------------
Small-Cap
Mid-Cap Mid-Cap Growth International
Value Fund Growth Fund Fund Stock Fund
- -------------------------- -------------------------- -------------------------- ---------------------------
Six Months Six Months Six Months Six Months
Ended Year Ended Year Ended Year Ended Year
February 28, Ended February 28, Ended February 28, Ended February 28, Ended
1999 August 31, 1999 August 31, 1999 August 31, 1999 August 31,
(unaudited) 1998 (unaudited) 1998 (unaudited) 1998 (unaudited) 1998
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 705,299 $ 1,595,862 $ (758,821) $ (1,775,264) $ (364,921) $ (1,015,186) $ 710,458 $ 5,028,964
10,236,211 11,719,164 8,054,854 17,091,286 (3,025,929) 3,744,474 10,462,619 309,389
-- -- 2,166,386 -- -- -- (245,392) (233,199)
-- -- -- 264,890 1,029,633 (200,587) -- --
1,644,080 (16,549,975) 54,889,457 (36,178,485) 16,116,338 (23,578,293) 10,134,985 (29,288,960)
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ -------------
12,585,590 (3,234,949) 64,351,876 (20,597,573) 13,755,121 (21,049,592) 21,062,670 (24,183,806)
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ -------------
(998,368) (1,713,554) -- -- -- -- (4,598,552) (3,675,610)
(11,607,868) (21,031,640) (12,958,800) (23,952,792) (187,364) (2,485,675) -- (4,959,734)
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ -------------
(12,606,236) (22,745,194) (12,958,800) (23,952,792) (187,364) (2,485,675) (4,598,552) (8,635,344)
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ -------------
7,208,782 57,448,236 41,638,675 99,091,260 24,938,182 76,581,765 60,179,495 163,353,256
11,879,368 21,339,106 12,799,676 23,567,478 185,274 2,464,966 2,562,588 6,828,038
(25,958,046) (63,330,825) (43,315,226) (87,703,412) (21,013,963) (32,078,052) (76,943,989) (138,963,126)
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ -------------
(6,869,896) 15,456,517 11,123,125 34,955,326 4,109,493 46,968,679 (14,201,906) 31,218,168
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ -------------
(6,890,542) (10,523,626) 62,516,201 (9,595,039) 17,677,250 23,433,412 2,262,212 (1,600,982)
134,619,810 145,143,436 187,388,415 196,983,454 79,858,005 56,424,593 225,248,510 226,849,492
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ -------------
$127,729,268 $134,619,810 $249,904,616 $187,388,415 $ 97,535,255 $ 79,858,005 $227,510,722 $ 225,248,510
============ ============ ============ ============ ============ ============ ============ =============
$ 78,735 $ 371,804 $ -- -- $ -- -- $ 696,878 $ 4,584,972
============ ============ ============ ============ ============ ============ ============ =============
$ 10,236,211 $ 11,887,632 $ 10,221,240 $ 17,342,069 $ (1,996,296) $ 2,972,697 $ 10,217,227 $ 673,502
============ ============ ============ ============ ============ ============ ============ =============
<CAPTION>
---------------------------
Short-Term
Income
Fund
---------------------------
Six Months
Ended Year
February 28, Ended
1999 August 31,
(unaudited) 1998
------------- -------------
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations--
Net investment income (net operating loss) $ 4,146,723 $ 9,021,548
Net realized gain (loss) on investment transactions (251,340) (1,166,498)
Net realized gain (loss) on foreign currency transactions -- --
Net realized gain (loss) on futures contracts -- --
Net change in unrealized appreciation (depreciation) of investments,
collateral, futures contracts and foreign currency translation (1,987,518) 619,229
------------ ------------
Change in net assets resulting from operations 1,907,865 8,474,279
------------ ------------
Distributions to Shareholders--
Dividends to shareholders from net investment income
Class Y Shares (4,146,723) (9,021,548)
Distributions to shareholders from net realized gain on investments
Class Y Shares -- --
------------ ------------
Change in net assets from distributions to shareholders (4,146,723) (9,021,548)
------------ ------------
Capital Stock Transactions--
Proceeds from sale of shares 34,787,715 68,282,147
Net asset value of shares issued to shareholders in payment of
distributions declared 1,982,558 4,343,981
Cost of shares redeemed (37,214,864) (87,673,401)
------------ ------------
Change in net assets from capital stock transactions (444,591) (15,047,273)
------------ ------------
Change in net assets (2,683,449) (15,594,542)
Net Assets:
Beginning of period 133,186,149 148,780,691
------------ ------------
End of period $130,502,700 $133,186,149
============ ============
Undistributed net investment income included in net assets
at end of period -- --
============ ============
Net gain (loss) as computed for federal tax purposes $ (251,340) $ (618,371)
============ ============
</TABLE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
--------------------------
Intermediate
Bond Fund
--------------------------
Six Months
Ended Year
February 28, Ended
1999 August 31,
(unaudited) 1998
------------ ------------
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations--
Net investment income $ 17,213,966 $ 31,179,790
Net realized gain (loss) on investment transactions (172,672) 1,740,828
Net change in unrealized appreciation (depreciation) of investments, collateral,
futures contracts, and foreign currency translation (13,392,291) 7,755,997
------------ ------------
Change in net assets resulting from operations 3,649,003 40,676,615
------------ ------------
Distributions to Shareholders--
Dividends to shareholders from net investment income:
Class Y Shares (17,213,963) (31,179,790)
Class A Shares (3) --
Distributions from shareholders from net realized gain on investments
Class Y Shares -- --
------------ ------------
Change in net assets from distributions to shareholders (17,213,966) (31,179,790)
------------ ------------
Capital Stock Transactions--
Proceeds from sale of shares 55,803,528 256,079,048
Net asset value of shares issued to shareholders in payment of dividends declared 5,648,003 13,270,752
Cost of shares redeemed (48,005,194) (87,411,885)
------------ ------------
Change in net assets from capital stock transactions 13,446,337 181,937,915
------------ ------------
Change in net assets (118,626) 191,434,740
Net Assets:
Beginning of period 589,669,027 398,234,287
------------ ------------
End of period $589,550,401 $589,669,027
============ ============
Undistributed net investment income included in net assets at end of period -- --
============ ============
Net gain (loss) as computed for federal tax purposes $ (172,672) $ 760,870
============ ============
</TABLE>
(See Notes which are an integral part of the Financial Statements)
[_] Marshall Funds
<TABLE>
<CAPTION>
-------------------------- -------------------------- ------------------------------
Government Intermediate Money
Income Tax-Free Market
Fund Fund Fund
-------------------------- -------------------------- ------------------------------
Six Months Six Months Six Months
Ended Year Ended Year Ended Year
February 28, Ended February 28, Ended February 28, Ended
1999 August 31, 1999 August 31, 1999 August 31,
(unaudited) 1998 (unaudited) 1998 (unaudited) 1998
------------ ------------ ------------ ------------ -------------- --------------
<S> <C> <C> <C> <C> <C>
$ 8,401,315 $ 15,508,284 $ 2,180,094 $ 4,014,103 $ 44,293,538 $ 82,839,430
645,905 1,854,374 448,280 825,890 -- --
(6,292,830) 3,216,704 (279,447) 1,904,633 -- --
------------ ------------ ------------ ------------ -------------- --------------
2,754,390 20,579,362 2,348,927 6,744,626 44,293,538 82,839,430
------------ ------------ ------------ ------------ -------------- --------------
(8,401,314) (15,508,284) (2,181,497) (4,010,594) (41,771,208) (78,163,550)
(1) -- -- -- (2,522,330) (4,675,880)
(83,554) -- (728,088) -- -- --
------------ ------------ ------------ ------------ -------------- --------------
(8,484,869) (15,508,284) (2,909,585) (4,010,594) (44,293,538) (82,839,430)
------------ ------------ ------------ ------------ -------------- --------------
40,830,789 98,456,886 15,168,479 27,565,906 3,344,512,622 5,479,189,898
4,196,291 8,809,411 852,937 369,721 10,740,166 18,085,713
(21,877,984) (35,667,208) (4,025,365) (17,185,505) (3,221,143,396) (5,183,477,454)
------------ ------------ ------------ ------------ -------------- --------------
23,149,096 71,599,089 11,996,051 10,750,122 134,109,392 313,798,157
------------ ------------ ------------ ------------ -------------- --------------
17,418,617 76,670,167 11,435,393 13,484,154 134,109,392 313,798,157
280,312,614 203,642,447 101,592,112 $ 88,107,958 1,693,941,745 1,380,143,588
------------ ------------ ------------ ------------ -------------- --------------
$297,731,231 $280,312,614 $113,027,505 $101,592,112 $1,828,051,137 $1,693,941,745
============ ============ ============ ============ ============== ==============
-- -- $ 2,106 $ 3,509 -- --
============ ============ ============ ============ ============== ==============
$ 645,905 $ 1,948,002 $ 448,280 $ 825,890 -- --
============ ============ ============ ============ ============== ==============
</TABLE>
Financial Highlights--Class Y Shares
*****
<TABLE>
<CAPTION>
Distributions to
shareholders from
Net realized and net realized gain
unrealized on investment
Net gain/(loss) on Dividends to transactions,
Net Asset investment investments, shareholders futures
Period value, income/ collateral, futures Total from from net contracts, and Net Asset
Ended beginning operating contracts and investment investment foreign currency Total value, end Total
August 31, of period (loss) foreign currency operations income transactions distributions of period return(e)
- ---------- --------- ---------- ------------------- ---------- ------------ ----------------- ------------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Equity Income Fund
1994(a) $10.00 0.28 (0.09) 0.19 (0.23) -- (0.23) $ 9.96 2.02%
1995 $ 9.96 0.33 1.26 1.59 (0.33) -- (0.33) $11.22 16.40%
1996 $11.22 0.34 2.00 2.34 (0.35) (0.21) (0.56) $13.00 21.20%
1997 $13.00 0.33 3.51 3.84 (0.34) (0.86) (1.20) $15.64 30.95%
1998 $15.64 0.31 (0.19)(h) 0.12 (0.32) (1.27) (1.59) $14.17 0.04%
1999(k) $14.17 0.15 2.30 2.45 (0.15) (1.04) (1.19) $15.43 17.12%
Large-Cap Growth & Income Fund
1994 $10.08 0.07 (0.03) 0.04 (0.07) -- (0.07) $10.05 0.44%
1995 $10.05 0.09 1.59 1.68 (0.09) -- (0.09) $11.64 16.85%
1996 $11.64 0.16 1.17 1.33 (0.15) (0.66) (0.81) $12.16 11.56%
1997 $12.16 0.10 3.76 3.86 (0.12) (1.94) (2.06) $13.96 34.50%
1998 $13.96 0.06 0.46 0.52 (0.06) (1.18) (1.24) $13.24 3.44%
1999(k) $13.24 0.04 3.80 3.84 (0.04) (0.77) (0.81) $16.27 29.24%
Mid-Cap Value Fund
1994(a) $10.00 0.12 0.93 1.05 (0.10) -- (0.10) $10.95 10.59%
1995 $10.95 0.22 1.22 1.44 (0.20) (0.11) (0.31) $12.08 13.57%
1996 $12.08 0.21 0.78 0.99 (0.21) (0.88) (1.09) $11.98 8.53%
1997 $11.98 0.15 3.05 3.20 (0.15) (1.89) (2.04) $13.14 30.20%
1998 $13.14 0.10 (0.92) (0.82) (0.12) (1.95) (2.07) $10.25 (7.75%)
1999(k) $10.25 0.06 0.95 1.01 (0.08) (0.94) (1.02) $10.24 9.13%
Mid-Cap Growth Fund
1994(a) $10.00 0.02 (0.29) (0.27) (0.01) (0.03) (0.04) $ 9.69 (2.74)%
1995 $ 9.69 (0.00) 2.62 2.62 (0.01) -- (0.01) $12.30 27.06%
1996 $12.30 (0.06) 2.24 2.18 -- (0.92) (0.92) $13.56 18.92%
1997 $13.56 (0.08) 2.56 2.48 -- (1.22) (1.22) $14.82 19.14%
1998 $14.82 (0.13) (0.93) (1.06) -- (1.81) (1.81) $11.95 (8.77)%
1999(k) $11.95 (0.05) 3.99 3.94 -- (0.82) (0.82) $15.07 33.79%
Small-Cap Growth Fund
1997(b) $10.00 (0.08) 2.27 2.19 -- -- -- $12.19 21.90%
1998 $12.19 (0.22) (1.66) (1.88) -- (0.49) (0.49) $ 9.82 (16.25)%
1999(k) $ 9.82 (0.04) 1.64 1.60 -- (0.02) (0.02) $11.40 16.31%
International Stock Fund
1995(c) $10.00 0.20 0.01 0.21 (0.05) -- (0.05) $10.16 2.11%
1996 $10.16 0.21 0.96 1.17 (0.22) (0.03) (0.25) $11.08 11.71%
1997 $11.08 0.18 2.29 2.47 (0.26) (0.09) (0.35) $13.20 22.73%
1998 $13.20 0.26 (1.42) (1.16) (0.21) (0.29) (0.50) $11.54 (9.09%)
1999(k) $11.54 0.05 1.08 1.13 (0.25) -- (0.25) $12.42 9.74%
<CAPTION>
Ratios to Average Net Assets
------------------------------------
Net Assets,
Period Net end Portfolio
Ended investment Expense of period turnover
August 31, Expenses income waiver(g) (000 omitted) rate
- ----------- ---------- ------------- ----------- ------------- ---------
<S> <C> <C> <C> <C> <C>
Equity Income Fund
1994(a) 1.01%(f) 3.30%(f) 0.16%(f) $ 49,396 44%
1995 1.01% 3.45% 0.09% $107,499 43%
1996 0.98% 2.83% -- $173,402 60%
1997 1.22% 2.31% -- $331,730 61%
1998 1.17% 2.01% -- $458,865 69%
1999(k) 1.17%(f) 1.92%(f) -- $515,139 35%
Large-Cap Growth & Income Fund
1994 0.99% 0.77% 0.01% $250,155 86%
1995 0.98% 0.88% 0.01% $257,019 79%
1996 0.97% 1.28% -- $251,583 147%
1997 1.23% 0.78% -- $269,607 43%
1998 1.21% 0.40% -- $274,821 33%
1999(k) 1.20%(f) 0.48%(f) -- $365,859 14%
Mid-Cap Value Fund
1994(a) 1.00%(f) 1.82%(f) 0.15%(f) $218,755 39%
1995 0.96% 1.98% -- $220,436 78%
1996 0.98% 1.68% -- $195,066 67%
1997 1.23% 1.20% -- $145,143 55%
1998 1.25% 0.96% -- $134,620 59%
1999(k) 1.27%(f) 1.02%(f) -- $127,729 64%
Mid-Cap Growth Fund
1994(a) 1.01%(f) 0.23%(f) 0.28%(f) $ 53,642 113%
1995 1.01% (0.13%) 0.08% $108,256 157%
1996 1.01% (0.47%) -- $143,236 189%
1997 1.24% (0.52%) -- $196,983 211%
1998 1.23% (0.79%) -- $187,388 167%
1999(k) 1.23%(f) (0.68%)(f) -- $249,905 105%
Small-Cap Growth Fund
1997(b) 1.80%(f) (0.94%)(f) -- $ 56,425 183%
1998 1.60% (1.18%) -- $ 79,858 139%
1999(k) 1.59%(f) (0.77%)(f) -- $ 97,535 98%
International Stock Fund
1995(c) 1.54%(f) 2.42%(f) 0.04%(f) $ 94,048 61%
1996 1.35% 2.58% -- $143,783 26%
1997 1.59% 1.80% -- $226,849 26%
1998 1.49% 2.01% -- $225,248 24%
1999(k) 1.48%(f) 0.62%(f) -- $227,511 14%
</TABLE>
<TABLE>
<CAPTION>
Short-Term Income Fund
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994 $ 9.95 0.45 (0.25) 0.20 (0.44) -- (0.44) $ 9.71 2.05% 0.50% 4.58% 0.39% $ 100,452 185%
1995 $ 9.71 0.56 0.05 0.61 (0.58) -- (0.58) $ 9.74 6.47% 0.51% 5.78% 0.40% $ 84,273 194%
1996 $ 9.74 0.62 (0.15) 0.47 (0.62) -- (0.62) $ 9.59 4.92% 0.51% 6.16% 0.40% $ 100,846 144%
1997 $ 9.59 0.63 0.04 0.67 (0.62) -- (0.62) $ 9.64 7.20% 0.49% 6.46% 0.59% $ 148,781 101%
1998 $ 9.64 0.61 (0.03) 0.58 (0.61) -- (0.61) $ 9.61 6.22% 0.50% 6.40% 0.55% $ 133,186 90%
1999(k) $ 9.61 0.29 (0.16) 0.13 (0.29) -- (0.29) $ 9.45 1.31% 0.51%(f) 6.16%(f) 0.56%(f) $ 130,503 65%
Intermediate Bond Fund
1994 $10.40 0.61 (0.81) (0.20) (0.67) (0.17) (0.84) $ 9.36 (2.02%) 0.71% 6.26% 0.11% $ 357,740 228%
1995 $ 9.36 0.61 0.16 0.77 (0.62) -- (0.62) $ 9.51 8.58% 0.71% 6.50% 0.08% $ 344,071 232%
1996 $ 9.51 0.58 (0.25) 0.33 (0.58) -- (0.58) $ 9.26 3.52% 0.72% 6.14% 0.09% $ 403,657 201%
1997 $ 9.26 0.58 0.18 0.76 (0.58) -- (0.58) $ 9.44 8.42% 0.72% 6.17% 0.31% $ 398,234 144%
1998 $ 9.44 0.58 0.16 0.74 (0.58) -- (0.58) $ 9.60 8.00% 0.71% 6.02% 0.29% $ 589,669 148%
1999(k) $ 9.60 0.28 (0.21) 0.07 (0.28) -- (0.28) $ 9.39 0.69% 0.71%(f) 5.88%(f) 0.29%(f) $ 589,549 71%
Government Income Fund
1994 $10.22 0.64 (0.78) (0.14) (0.68) (0.14) (0.82) $ 9.26 (1.34%) 0.86% 6.58% 0.40% $ 64,823 175%
1995 $ 9.26 0.60 0.27 0.87 (0.62) -- (0.62) $ 9.51 9.78% 0.86% 6.54% 0.26% $ 103,708 360%
1996 $ 9.51 0.62 (0.24) 0.38 (0.62) -- (0.62) $ 9.27 4.02% 0.86% 6.51% 0.19% $ 138,458 268%
1997 $ 9.27 0.62 0.22 0.84 (0.62) -- (0.62) $ 9.49 9.35% 0.86% 6.62% 0.38% $ 203,642 299%
1998 $ 9.49 0.61 0.21 0.82 (0.61) -- (0.61) $ 9.70 8.92% 0.87% 6.38% 0.34% $ 280,313 353%
1999(k) $ 9.70 0.31 (0.22) 0.09 (0.27) (0.00)(i) (0.27) $ 9.52 1.00% 0.86%(f) 5.85%(f) 0.33%(f) $ 297,731 65%
Intermediate Tax-Free Fund
1994(d) $10.00 0.19 (0.29) (0.10) (0.19) -- (0.19) $ 9.71 (0.94%) 0.62%(f) 3.58%(f) 0.59%(f) $ 35,212 45%
1995 $ 9.71 0.42 0.20 0.62 (0.42) -- (0.42) $ 9.91 6.58% 0.61% 4.35% 0.47% $ 46,051 105%
1996 $ 9.91 0.43 (0.08) 0.35 (0.43) -- (0.43) $ 9.83 3.57% 0.61% 4.34% 0.37% $ 65,927 41%
1997 $ 9.83 0.43 0.21 0.64 (0.43) -- (0.43) $10.04 6.67% 0.61% 4.35% 0.54% $ 88,108 53%
1998 $10.04 0.43 0.29 0.72 (0.43) -- (0.43) $10.33 7.31% 0.61% 4.22% 0.51% $ 101,592 68%
1999(k) $10.33 0.22 0.03 0.25 (0.22) (0.07) (0.29) $10.29 2.32% 0.61%(f) 4.06%(f) 0.49%(f) $ 113,028 13%
Money Market Fund(j)
1994 $ 1.00 0.03 -- 0.03 (0.03) -- (0.03) $ 1.00 3.41% 0.40% 3.40% 0.29% $ 967,988 --
1995 $ 1.00 0.05 -- 0.05 (0.05) -- (0.05) $ 1.00 5.57% 0.41% 5.44% 0.26% $1,128,623 --
1996 $ 1.00 0.05 -- 0.05 (0.05) -- (0.05) $ 1.00 5.39% 0.41% 5.29% 0.26% $1,039,659 --
1997 $ 1.00 0.05 -- 0.05 (0.05) -- (0.05) $ 1.00 5.35% 0.41% 5.22% 0.26% $1,290,659 --
1998 $ 1.00 0.05 -- 0.05 (0.05) -- (0.05) $ 1.00 5.51% 0.41% 5.37% 0.25% $1,588,817 --
1999(k) $ 1.00 0.02 -- 0.02 (0.02) -- (0.02) $ 1.00 2.52% 0.41%(f) 5.02%(f) 0.25%(f) $1,714,359 --
</TABLE>
(a) Reflects operations for the (g) This voluntary expense decrease is period
from October 1, 1993 reflected in both the expense and net (date of initial
public investment income ratios shown above. investment) to August 31, (h)
The amount shown in this caption for a 1994. share outstanding does not
correspond
(b) Reflects operations for the with the aggregate net realized and period from
September 3, 1996 unrealized gain (loss) on investments, (date of initial
public collateral, Futures Contracts and investment) to August 31, foreign
currency for the period ended 1997. due to the timing of sales and
(c) Reflects operations for the repurchases of Fund shares in relation
period from September 2, 1994 to fluctuating market values of the
(date of initial public investments of the Fund.
investment) to August 31, (i) Distributions less than one cent per
1995. share.
(d) Reflects operations for the (j) Effective December 1998, Class A Shares
period from February 2, 1994 changed its share class name to Class Y (date
of initial public shares. investment) to August 31, (k) Six months ended
February 28, 1999 1994. (unaudited).
(e) Based on net asset value.
(f) Computed on an annualized
basis.
February 28, 1999 (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
-------------- --------------------
<C> <S>
Marshall Equity Income Fund ("Equity Income Fund") Above-average dividend income with appreciation of capital.
Marshall Large-Cap Growth & Income Fund Growth of capital and income.
("Large-Cap Growth & Income Fund")
Marshall Mid-Cap Value Fund ("Mid-Cap Value Fund") Long-term capital growth and income.
Marshall Mid-Cap Growth Fund ("Mid-Cap Growth Fund") Appreciation of capital.
Marshall Small-Cap Growth Fund ("Small-Cap Growth 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 Intermediate Tax-Free Fund ("Intermediate Tax-Free Fund") Provide as high a level of income that is exempt from federal
income tax as is consistent with preservation of capital.
Marshall Money Market Fund ("Money Market Fund") Current income consistent with
stability of principal.
</TABLE>
The Funds (except Short-Term Income Fund and Intermediate Tax-Free Fund) are
offered in two classes of shares: Class Y Shares and Class A Shares. The assets
of each portfolio are segregated and a shareholder's interest is limited to the
portfolio in which shares are held.
On December 22, 1997, the Equity Income Fund, Mid-Cap Value Fund, and
Intermediate Bond Fund each acquired portfolios of a common trust fund managed
by the Adviser. The acquisition was accomplished by a tax-free exchange at fair
market value.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Fund Shares Value of Shares
- ---- ---------- ---------------
<S> <C> <C>
Equity Income Fund 10,643,152 $162,840,218
Mid-Cap Value Fund 3,632,596 $ 40,794,056
Intermediate Bond Fund 14,808,934 $140,979,572
</TABLE>
- --------------------------------------------------------------------------------
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--Municipal bonds are valued by an independent pricing
service, taking into consideration yield, liquidity, risk, credit quality,
coupon, maturity, type of issue, and any other factors or market data the
pricing service deems relevant. U.S. government securities, listed corporate
bonds, other fixed income and asset-backed securities, and unlisted securities
and private placement securities are generally valued at the mean of the latest
bid and asked price as furnished by an independent pricing service. Listed
equity securities and investments in closed end investment companies are valued
at the last sale price reported on a national securities exchange. Money Market
Fund's use of the amortized cost method to value portfolio securities is in
accordance with Rule 2a-7 under the Act. For fluctuating net asset value funds
within the Corporation, short-term securities are valued at the prices provided
by an independent pricing service. However, short-term securities purchased with
remaining maturities of sixty days or less may be valued at amortized cost,
which approximates fair market value. Investments in other open-end regulated
investment companies are valued at net asset value.
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.
[_] Marshall Funds
The Funds will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed by
the Funds' adviser (or sub-adviser with respect to International Stock Fund) to
be creditworthy pursuant to the guidelines and/or standards reviewed or
established by the 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--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"). Dividend income
and distributions to shareholders are recorded on the ex-dividend date.
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 International Stock Fund upon the
disposition of 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, 1998, the following Funds had capital loss carryforwards 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 Capital Loss Capital Loss Capital Loss
Carryforward Carryforward Carryforward Carryforward Carryforward Total
to Expire in to Expire in to Expire in to Expire in to Expire in Capital Loss
Fund 2002 2003 2004 2005 2006 Carryforward
- ---- ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Short-Term Income Fund $302,405 $ 1,898,650 $ 556,158 $ 545,815 $618,371 $ 3,921,399
Intermediate Bond Fund -- 15,641,683 6,100,494 -- -- 21,742,177
Government Income Fund -- 13,905 -- 1,184,492 -- 1,198,397
</TABLE>
- -------------------------------------------------------------------------------
Net realized capital losses on Short-Term Income Fund, and Government Income
Fund of $937,735, and $416,086, respectively, attributable to security
transactions incurred after October 31, 1997, were treated as arising on the
first day of each Fund's next taxable year (September 1, 1998).
Net realized losses on International Stock Fund of $364,576, attributable to
foreign currency transactions incurred after October 31, 1997, were treated as
arising on the first day of International Stock Fund's next taxable year
(September 1, 1998).
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 their shares in their first fiscal year, excluding the initial
expense of registering their shares, have been deferred and are being amortized
over a period not to exceed five years from each Fund's commencement date.
Futures Contracts--Large-Cap Growth & Income Fund, Mid-Cap Value Fund, Mid-
Cap Growth Fund and Small-Cap Growth Fund purchase stock index futures contracts
to manage cashflows, enhance yield, and to potentially reduce transaction costs.
Upon entering into a stock index futures contract with a broker, the Fund is
required to deposit in a segregated account a specified amount of cash or U.S.
government securities. Futures contracts are valued daily and unrealized gains
or losses are recorded in a "variation margin" account. Daily, the Fund receives
from or pays to the broker a specified amount of cash based upon changes in the
variation margin account. When a contract is closed, the Fund recognizes a
realized gain or loss. Futures contracts have market risks, including the risk
that the change in the value of the contract may not correlate with changes in
the value of the underlying securities.
At February 28, 1999, the Mid-Cap Value Fund had no outstanding futures
contracts.
Notes to Financial Statements (continued)
At February 28, 1999, the Large-Cap Growth & Income Fund had outstanding
futures contracts as set forth below:
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expiration Date Contracts to Receive Position Unrealized Appreciation
- --------------- -------------------- -------- -----------------------
<S> <C> <C> <C>
March 1999 72 S&P 500 Long $1,412,995
</TABLE>
- -------------------------------------------------------------------------------
At February 28, 1999, the Mid-Cap Growth Fund had outstanding futures
contracts as set forth below:
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expiration Date Contracts to Receive Position Unrealized (Depreciation)
- --------------- -------------------- -------- -------------------------
<S> <C> <C> <C>
March 1999 10 S&P 500 Long ($142,690)
</TABLE>
- -------------------------------------------------------------------------------
At February 28, 1999, the Small-Cap Growth Fund had outstanding futures
contracts as set forth below:
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expiration Date Contracts to Receive Position Unrealized (Depreciation)
- --------------- -------------------- -------- -------------------------
<S> <C> <C> <C>
March 1999 35 Russell 2000 Long ($194,691)
</TABLE>
- -------------------------------------------------------------------------------
Foreign Exchange Contracts--International Stock Fund may enter into foreign
currency exchange contracts as a way of managing foreign exchange rate risk. The
Fund may enter into these contracts for the purchase or sale of a specific
foreign currency at a fixed price on a future date as a hedge or cross hedge
against either specific transactions or portfolio positions. The objective of
the Fund's foreign currency hedging transactions is to reduce the risk that the
U.S. dollar value of the Fund's foreign currency denominated securities will
decline in value due to changes in foreign currency exchange rates. All foreign
currency exchange contracts are "marked to market" daily at the applicable
translation rates resulting in unrealized gains or losses. Realized gains or
losses are recorded at the time the foreign currency exchange contract is offset
by entering into a closing transaction or by the delivery or receipt of the
currency. Risk may arise upon entering into these contracts from the potential
inability of counterparties to meet the terms of their contracts and from
unanticipated movements in the value of a foreign currency relative to the U.S.
dollar. As of February 28, 1999, International Stock Fund had outstanding
foreign exchange contracts as set forth below:
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Foreign Currency Contracts at Unrealized
Settlement Date Units to Receive In Exchange For Value (Depreciation)
- --------------- ---------------------- --------------- ------------ --------------
<S> <C> <C> <C> <C>
Contracts Purchased:
3/1/1999--3/3/1999 682,282 Pound Sterling $1,095,771 $1,093,663 ($2,108)
</TABLE>
- -------------------------------------------------------------------------------
Foreign Currency Translation--The accounting records of International Stock
Fund are maintained in U.S. dollars. All assets and liabilities denominated in
foreign currencies ("FCs") are translated into U.S. dollars based on the rate of
exchange of such currencies against U.S. dollars on the date of valuation.
Purchases and sales of securities, income and expenses are translated at the
rate of exchange quoted on the respective date that such transactions are
recorded. Differences between income and expense amounts recorded and collected
or paid are adjusted when reported by the custodian bank. The Funds do not
isolate that portion of the results of operations resulting from changes in
foreign exchange rates on investments from the fluctuations arising from changes
in market prices of securities held. Such fluctuations are included with the net
realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
FCs, currency gains or losses realized between the trade and settlement dates on
securities transactions, the difference between the amounts of dividends,
interest, and foreign withholding taxes recorded on the Funds' books, and the
U.S. dollar equivalent of the amounts actually received or paid. Net unrealized
foreign exchange gains and losses arise from changes in the value of assets and
liabilities other than investments in securities at fiscal year end, resulting
from changes in the exchange rate.
Dollar Roll Transactions--The Funds, except for Money Market Fund, may enter
into dollar roll transactions, with respect to mortgage securities issued by
Government National Mortgage Association, Federal National Mortgage Association
and Federal Home Loan Mortgage Corporation, in which the Funds loan mortgage
securities to financial institutions and simultaneously agree to accept
substantially similar (same type, coupon and maturity) securities at a later
date at an agreed upon price. Dollar roll transactions are short-term financing
arrangements which will not exceed twelve months. The Funds will use the
proceeds generated from the transactions to invest in short-term investments,
which may enhance the Funds' current yield and total return.
[_] Marshall Funds
Securities Lending--The Funds participate in a securities lending program
providing for the lending of corporate bonds, equity and government securities
to qualified brokers. The Funds receive cash as collateral in return for the
securities and record a corresponding payable for collateral due to the
respective broker. The amount of cash collateral received is maintained at a
minimum level of 100% of the market value on securities loaned, plus interest.
Collateral is reinvested in short-term securities including overnight repurchase
agreements, commercial paper, master notes, floating rate corporate notes (with
at least quarterly reset rates) and money market funds. The Funds reimburse the
custodian for the costs directly associated with the Funds' participation in the
securities lending program.
As of February 28, 1999, the value of securities loaned plus interest, the
payable on collateral due to broker and the value of reinvested cash collateral
securities were as follows:
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value of
Market Value of Payable on Collateral Reinvested Collateral
Fund Securities Loaned Due to Broker Securities
- ---- ----------------- --------------------- ---------------------
<S> <C> <C> <C>
Equity Income Fund $141,313,619 $145,802,813 $145,802,813
Large-Cap Growth &
Income Fund $ 87,958,949 $ 91,093,270 $ 91,093,270
Mid-Cap Value Fund $ 12,120,386 $ 12,651,889 $ 12,651,889
Mid-Cap Growth Fund $ 50,211,333 $ 51,024,010 $ 51,024,010
International Stock Fund $ 53,808,298 $ 59,517,900 $ 59,517,900
Intermediate Bond Fund $127,462,928 $130,461,334 $130,461,334
Government Income Fund $ 5,002,350 $ 5,150,000 $ 5,150,000
</TABLE>
- -------------------------------------------------------------------------------
Individual reinvested cash collateral securities in excess of 5% of fund net
assets at February 28, 1999 are as follows:
- -------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Repurchase Agreements:
Bank of America, 4.975%, 3/1/99 (Secured by asset-backed
securities and corporate bonds and notes) Large-Cap Growth & Income Fund $40,000,000
Mid-Cap Growth Fund $25,000,000
Morgan Stanley Co., Inc., 5.000%, 3/1/99 (Secured by asset-backed
securities and corporate bonds and notes) Large-Cap Growth & Income Fund $30,000,000
International Stock Fund $20,000,000
Intermediate Bond Fund $45,000,000
Investment Companies:
Dreyfus Cash Management Plus International Stock Fund $12,754,932
Prudential Institutional Liquidity Portfolio Equity Income Fund $45,000,000
Mid-Cap Value Fund $10,000,000
Prudential Securities Group Fund Agreement International Stock Fund $15,000,000
Merrimac Cash Fund Equity Income Fund $43,000,000
</TABLE>
- -------------------------------------------------------------------------------
Restricted Securities--Restricted securities are securities that may only be
resold upon registration under federal securities laws or in transactions exempt
from such registration. In some cases, the issuer of restricted securities has
agreed to register such securities for resale, at the issuer's expense either
upon demand by the Fund or in connection with another registered offering of the
securities. Many restricted securities may be resold in the secondary market in
transactions exempt from registration. Such restricted securities may be
determined to be liquid under criteria established by the Directors. The Fund
will not incur any registration costs upon such resales. The Funds' restricted
securities are valued at the price provided by dealers in the secondary market
or, if no market prices are available, at the fair value as determined by the
Funds' pricing committee.
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.
Notes to Financial Statements (continued)
3. Capital Stock
The Articles of Incorporation permit the Directors to issue an indefinite
number of full and fractional shares of common stock, par value $0.0001 per
share. At February 28, 1999, the capital paid-in was as follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Capital Paid-
Fund In
- ---- --------------
<S> <C>
Equity Income Fund $ 406,568,388
Large-Cap Growth & Income Fund $ 225,225,933
Mid-Cap Value Fund $ 111,498,326
Mid-Cap Growth Fund $ 192,608,634
Small-Cap Growth Fund $ 99,443,795
International Stock Fund $ 197,872,551
Short-Term Income Fund $ 136,578,228
Intermediate Bond Fund $ 615,366,908
Government Income Fund $ 300,660,067
Intermediate Tax-Free Fund $ 109,572,774
Money Market Fund $1,828,051,137
</TABLE>
- --------------------------------------------------------------------------------
Transactions in capital stock were as follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Large-Cap Growth
Equity Income Fund & Income Fund Mid-Cap Value Fund
----------------------- ----------------------- -----------------------
Six-Months Six-Months Six-Months
Ended Year Ended Ended Year Ended Ended Year Ended
February 28, August 31, February 28, August 31, February 28, August 31,
1999 1998 1999 1998 1999 1998
Class Y Shares ------------ ---------- ------------ ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 2,201,642 15,738,873 2,157,916 4,089,991 666,139 5,453,000
Shares issued to
shareholders in payment
of distributions
declared 2,168,876 1,937,827 1,042,350 1,725,616 1,071,333 1,866,937
Shares redeemed (3,360,638) (6,501,126) (1,468,083) (4,377,201) (2,390,978) (5,229,996)
---------- ---------- ---------- ---------- ---------- ----------
Net change resulting
from Class Y Share
transactions 1,009,880 11,175,574 1,732,183 1,438,406 (653,506) 2,089,941
========== ========== ========== ========== ========== ==========
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Large-Cap Growth
Equity Income Fund & Income Fund Mid-Cap Value Fund
----------------------- ----------------------- -----------------------
Period Ended Year Ended Period Ended Year Ended Period Ended Year Ended
February 28, August 31, February 28, August 31, February 28, August 31,
1999* 1998 1999* 1998 1999* 1998
Class A Shares ------------ ---------- ------------ ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 6 -- 6 -- 9 --
--------- ---------- --------- --------- -------- ---------
Net change resulting
from Class A Share
transactions 6 -- 6 -- 9 --
========= ========== ========= ========= ======== =========
Net change resulting
from Fund Share
transactions 1,009,886 11,175,574 1,732,189 1,438,406 (653,497) 2,089,941
========= ========== ========= ========= ======== =========
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Small-Cap International
Mid-Cap Growth Fund Growth Fund Stock Fund
----------------------- ----------------------- ------------------------
Six-Months Six-Months Six Months
Ended Year Ended Ended Year Ended Ended Year Ended
February 28, August 31, February 28, August 31, February 28, August 31,
1999 1998 1999 1998 1999 1998
Class Y Shares ------------ ---------- ------------ ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 3,035,407 6,547,612 2,244,753 5,767,967 4,906,327 11,989,024
Shares issued to
shareholders in payment
of distributions
declared 950,942 1,710,267 15,715 199,269 201,461 545,806
Shares redeemed (3,080,963) (5,865,009) (1,834,356) (2,462,788) (6,304,076) (10,197,589)
---------- ---------- ---------- ---------- ---------- -----------
Net change resulting
from Class Y Share
transactions 905,386 2,392,870 426,112 3,504,448 (1,196,288) 2,337,241
========== ========== ========== ========== ========== ===========
</TABLE>
- --------------------------------------------------------------------------------
*For the period from December 31, 1998 (start of performance) to February 28,
1999.
[_] Marshall Funds
<TABLE>
<CAPTION>
Small-Cap International
Mid-Cap Growth Fund Growth Fund Stock Fund
----------------------- ----------------------- -----------------------
Period Ended Year Ended Period Ended Year Ended Period Ended Year Ended
February 28, August 31, February 28, August 31, February 28, August 31,
1999* 1998 1999* 1998 1999* 1998
Class A Shares ------------ ---------- ------------ ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 7 -- 8 -- 8 --
------- --------- ------- --------- ---------- ---------
Net change resulting
from Class A Share
transactions 7 -- 8 -- 8 --
======= ========= ======= ========= ========== =========
Net change resulting
from Fund Share
transactions 905,393 2,392,870 426,120 3,504,448 (1,196,280) 2,337,241
======= ========= ======= ========= ========== =========
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Intermediate Government
Bond Fund Income Fund
----------------------- -----------------------
Six-Months Six-Months
Ended Year Ended Ended Year Ended
February 28, August 31, February 28, August 31,
1999 1998 1999 1998
Class Y Shares ------------ ---------- ------------ ----------
<S> <C> <C> <C> <C>
Shares sold 5,830,401 26,987,634 4,228,425 10,236,771
Shares issued to
shareholders in payment of
distributions declared 590,356 1,392,283 434,748 916,492
Shares redeemed (5,025,355) (9,172,629) (2,272,311) (3,711,734)
---------- ---------- ---------- ----------
Net change resulting from
Class Y Share transactions 1,395,402 19,207,288 2,390,862 7,441,529
========== ========== ========== ==========
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Intermediate Government
Bond Fund Income Fund
----------------------- -----------------------
Period Ended Year Ended Period Ended Year Ended
February 28, August 31, February 28, August 31,
1999* 1998 1999* 1998
Class A Shares ------------ ---------- ------------ ----------
<S> <C> <C> <C> <C>
Shares sold 111 -- 10 --
--------- ---------- --------- ---------
Net change resulting from
Class A Share transactions 111 -- 10 --
========= ========== ========= =========
Net change resulting from Fund
Share transactions 1,395,513 19,207,288 2,390,872 7,441,529
========= ========== ========= =========
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Short-Term Intermediate
Income Fund Tax-Free Fund
----------------------- -----------------------
Six-Months Six-Months
Ended Year Ended Ended Year Ended
February 28, August 31, February 28, August 31,
1999 1998 1999 1998
Class Y Shares ------------ ---------- ------------ ----------
<S> <C> <C> <C> <C>
Shares sold 3,653,851 7,082,890 1,464,379 2,704,411
Shares issued to
shareholders in payment of
distributions declared 208,272 451,547 82,803 36,231
Shares redeemed (3,913,856) (9,105,232) (388,851) (1,685,066)
---------- ---------- --------- ----------
Net change resulting from
Class Y Share transactions (51,733) (1,570,795) 1,158,331 1,055,576
========== ========== ========= ==========
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Money Market Fund
------------------------------
Six-Months
Ended Year Ended
February 28, August 31,
1999 1998
Class Y Shares -------------- --------------
<S> <C> <C>
Shares sold 3,094,058,012 4,913,792,441
Shares issued to shareholders in payment of
distributions declared 8,610,132 13,477,063
Shares redeemed (2,977,126,237) (4,629,111,222)
-------------- --------------
Net change resulting from Class Y Share
transactions 125,541,907 298,158,282
============== ==============
</TABLE>
- --------------------------------------------------------------------------------
*For the period from December 31, 1998 (start of performance) to February 28,
1999.
Notes to Financial Statements (continued)
<TABLE>
<CAPTION>
Money Market Fund
--------------------------
Six-Months
Ended Year Ended
February 28, August 31,
1999 1998
Class A Shares ------------ ------------
<S> <C> <C>
Shares sold 250,454,610 565,397,457
Shares issued to shareholders in payment of
distributions declared 2,130,034 4,608,650
Shares redeemed (244,017,159) (554,366,232)
------------ ------------
Net change resulting from Class A Share
transactions 8,567,485 15,639,875
============ ============
Net change resulting from Fund Share transactions 134,109,392 313,798,157
============ ============
</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%
Large-Cap Growth & Income Fund 0.75%
Mid-Cap Value Fund 0.75%
Mid-Cap Growth Fund 0.75%
Small-Cap Growth Fund 1.00%
International Stock Fund 1.00%
Short-Term Income Fund 0.60%
Intermediate Bond Fund 0.60%
Government Income Fund 0.75%
Intermediate Tax-Free Fund 0.60%
Money Market Fund 0.50%
</TABLE>
- --------------------------------------------------------------------------------
Templeton Investment Counsel, Inc., was the sub-adviser (the "Sub-Adviser")
for International Stock Fund for the period ended February 28, 1999. Effective
March 29, 1999, International Stock Fund changed its Sub-Adviser to BPI Global
Asset Management LLP. 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"), under the
Administrative Services Agreement, provides the Funds with administrative
personnel and services. The fee paid to FAS is based on the level of average
aggregate daily net assets of the Corporation for the period except for the
Small-Cap Growth Fund, which is based on the Fund's average daily net assets.
Distribution Services Fee--The Funds have adopted a Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the
Funds will compensate Federated Securities Corp. ("FSC"), the principal
distributor, from their net assets to finance activities intended to result in
the sale of shares of the Funds' Class A Shares. The Plan provides that the
Funds may incur distribution expenses up 0.25% of the average daily net assets
of the Funds' Class A Shares (except for Money Market Fund's Class A Shares
which may accrue up to 0.30%) annually, to compensate FSC.
Shareholder Services Fee--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services Company ("FSSC"), the Funds' Class Y Shares
(except for Money Market Fund) will pay FSSC up to 0.25% of average daily net
assets of the Funds' Class Y Shares for the period. The fee paid to FSSC is used
to finance certain services for shareholders and to maintain shareholder
accounts. FSSC may voluntarily choose to waive any portion of its fee. FSSC can
modify or terminate this voluntary waiver at any time at its sole discretion.
Marshall Funds Investor Services ("MFIS") is the shareholder servicing agent for
the Money Market Fund. The Money Market Fund may pay MFIS a fee equal to
approximately 0.02% of the average daily net assets of the Money Market Fund's
Class Y Shares for which MFIS provides shareholder services. MFIS may
voluntarily choose to waive any portion of its fee. MFIS can modify or terminate
this voluntary waiver at any time at its sole discretion.
[_] Marshall Funds
Transfer and Dividend Disbursing Agent Fees and Expenses--Federated Services
Company ("FServ") through its subsidiary, FSSC, serves as transfer and dividend
disbursing agent for the Funds. The fee paid to FSSC is based on the size, type,
and number of accounts and transactions made by shareholders.
Portfolio Accounting Fees--FServ maintains the Funds' accounting records for
which it receives a fee. The fee is based on the level of each Fund's average
daily net assets for the period, plus out-of-pocket expenses. FServ may
voluntarily choose to waive any portion of its fee.
Custodian Fees--Marshall & Ilsley Trust Co. is the Funds' custodian.
Marshall & Ilsley Trust Co. receives fees based on the level of each Fund's
average daily net assets for the period. The custodian also charges a fee in
connection with securities lending activities of the Funds.
Organizational Expenses--Organizational expenses were borne initially by FAS.
The Funds have reimbursed FAS for these expenses. These expenses have been
deferred and are being amortized over the five-year period following each Fund's
effective date. For the period ended February 28, 1999, the Fund's expensed the
following pursuant to this agreement:
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Organizational Organizational
Fund Expenses Expenses Paid
- ---- -------------- --------------
<S> <C> <C>
Small-Cap Growth Fund $35,592 $3,716
International Stock Fund $18,401 $2,970
Intermediate Tax-Free Fund $16,416 $1,616
</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
period ended February 28, 1999, were as follows:
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Fund Purchases Sales
- ---- ------------ ------------
<S> <C> <C>
Equity Income Fund $176,080,140 $165,665,718
Large-Cap Growth & Income Fund $ 56,300,901 $ 42,617,771
Mid-Cap Value Fund $ 80,089,467 $ 83,339,391
Mid-Cap Growth Fund $224,517,162 $225,593,612
Small-Cap Growth Fund $ 83,639,128 $ 82,182,824
International Stock Fund $ 32,647,062 $ 47,442,066
Short-Term Income Fund $ 80,817,026 $ 81,577,392
Intermediate Bond Fund $434,918,414 $391,288,318
Government Income Fund $263,497,060 $208,152,885
Intermediate Tax-Free Fund $ 23,646,687 $ 13,974,190
</TABLE>
- -------------------------------------------------------------------------------
6. Risk of Foreign Investing
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.
7. Year 2000
Similar to other financial organizations, the Funds could be adversely
affected if the computer systems used by the Funds' service providers do not
properly process and calculate date-related information and data from and after
January 1, 2000. The Funds' Adviser and administrator are taking measures that
they believe are reasonably designed to address the Year 2000 issue with respect
to computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Funds' other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Funds.
Directors Officers
Ody J. Fish John M. Blaser
President
John DeVincentis
Jo A. Dales
Paul E. Hassett Vice President
Brooke J. Billick
Secretary
Ann K. Peirick
Treasurer
Janet D. Olsen
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.
Thisreport is authorized for distribution to prospective investors only when
preceded or accompanied by the Funds' prospectus, which contains facts
concerning each Fund's objective and policies, management
fees, expenses, and other information.
Marshall Funds
Marshall Funds Investor Services
1000 North Water Street
P.O. Box 1348
Milwaukee, Wisconsin 53201-1348
1-800-236-FUND (3863) or 414-287-8595
TDD: Speech and Hearing Impaired Services
800-209-3520
www.marshallfunds.com
Federated Securities Corp., Distributor G00406-02 (4/99)
953-270
The
Marshall Family
of Funds
SEMI-ANNUAL REPORT FOR CLASS A SHARES
DATED FEBRUARY 28, 1999
Marshall Equity Income Fund
-------------------------
Marshall Large-Cap Growth & Income Fund
-------------------------
Marshall Mid-Cap Value Fund
-------------------------
Marshall Mid-Cap Growth Fund
-------------------------
Marshall Small-Cap Growth Fund
-------------------------
Marshall International Stock Fund
-------------------------
Marshall Intermediate Bond Fund
-------------------------
Marshall Government Income Fund
-------------------------
Marshall Money Market Fund
Marshall Funds
President's Message
Dear Marshall Funds Shareholder:
We are pleased to present each Marshall Fund shareholder with the enclosed
semi-annual report for the six month reporting period ended February 28, 1999.
With all the news and hype surrounding the financial markets over the past
several years, many investors have found themselves chasing a select group of
large-company and technology stocks instead of sticking to a well thought out
investment strategy.
Clearly defined, consistently executed: At the Marshall Funds, we're proud that
our funds are overseen by managers who follow a distinct, disciplined approach.
An approach specially developed to pursue the objectives of your fund, and your
objectives.
I think you'll agree our philosophy of following a strict discipline has proven
effective. We continue to believe that allocations between large and small
companies, growth and value investment styles, domestic and international
markets, and equity and fixed income investments are essential in achieving the
long-range financial goals of most investors. Diversification is a hedge against
volatility; your specific goals, timetables, and risk tolerances will influence
your allocations.
To better serve investors in the Marshall International Stock Fund, our board of
directors has approved, and our shareholders are being asked to approve, the
appointment of BPI Global Asset Management LLP, as sub-adviser to the fund. We
eagerly look forward to a long relationship with BPI as the new sub-adviser.
Their approach to investing, and their commitment to client service should
deliver benefits to all the funds' shareholders.
We extend our deepest appreciation to three of the original members of the board
of directors of the Marshall Funds: Ody Fish, Ed Gonzalez and Paul Hassett, who
are departing our fund family. Each of these gentlemen has served the Marshall
Funds shareholders admirably through a dynamic period of growth in the industry
and substantial growth in the size and number of Marshall Funds.
As always, we wish you continued success on your investment strategy, and thank
you for making the Marshall Funds part of your strategy. If you have any
questions regarding Marshall Funds, please call your M&I Brokerage Services
Investment Professional or 1-800-580-3863.
Sincerely,
/s/ John M. Blaser
John M. Blaser
President, Marshall Funds
Table of Contents
<TABLE>
<S> <C>
Financial Information
Portfolio of Investments................................................ 3
Marshall Equity Income Fund........................................... 3
Marshall Large-Cap Growth & Income Fund............................... 4
Marshall Mid-Cap Value Fund........................................... 6
Marshall Mid-Cap Growth Fund.......................................... 7
Marshall Small-Cap Growth Fund........................................ 8
Marshall International Stock Fund..................................... 9
Marshall Intermediate Bond Fund....................................... 12
Marshall Government Income Fund....................................... 13
Marshall Money Market Fund............................................ 15
Statements of Assets and Liabilities.................................... 18
Statements of Operations................................................ 20
Statements of Changes in Net Assets..................................... 22
Financial Highlights.................................................... 26
Notes to Financial Statements........................................... 27
Directors & Officers...................................................... 35
</TABLE>
February 28, 1999 (unaudited)
Portfolio of Investments
- --------------------------------------------------------------------------------
Equity Income Fund
<TABLE>
<CAPTION>
----------------------------------------------------------
Shares Description Value
----------------------------------------------------------
<C> <S> <C>
Common Stocks -- 96.1%
CapitalGoods -- 5.4%
Aerospace & Defense
65,000 (1)Allied-Signal, Inc. $2,689,375
57,000 Boeing Co. 2,027,062
60,000 Lockheed Martin Corp. 2,261,250
20,500 Northrop Grumman Corp. 1,277,406
45,000 (1)Raytheon Co., Class B 2,404,687
67,000 (1)Textron, Inc. 5,226,000
----------
Total 15,885,780
----------
Diversified Manufacturing
22,000 Minnesota Mining & Manufacturing Co. 1,629,375
----------
Electrical Equipment
50,000 Emerson Electric Co. 2,871,875
----------
Machinery & Machine Tools
30,000 Cooper Industries, Inc. 1,312,500
----------
Other Capital Goods
50,000 Honeywell, Inc. 3,496,875
84,800 Tenneco, Inc. 2,538,700
----------
Total 6,035,575
----------
Total Capital Goods 27,735,105
----------
Consumer Durables -- 6.0%
Automotive & Related
72,000 Dana Corp. 2,718,000
121,000 Ford Motor Co. 7,176,813
127,500 General Motors Corp. 10,526,719
80,000 Genuine Parts Co. 2,395,000
27,700 Johnson Controls, Inc. 1,703,550
----------
Total 24,520,082
----------
Household Product/Wares
58,400 Fortune Brands, Inc. 1,759,300
97,000 Masco Corp. 2,546,250
----------
Total 4,305,550
----------
Manufacturing
50,000 Whirlpool Corp. 2,175,000
----------
Total Consumer Durables 31,000,632
----------
Consumer Non-Durables -- 19.0%
Beverages & Foods
45,000 (1)BestFoods 2,112,187
52,000 Campbell Soup Co. 2,089,750
102,000 (1)ConAgra, Inc. 3,072,750
45,000 Heinz (H.J.) Co. 2,449,687
105,000 International Multifoods Corp. 2,270,625
101,000 (1)PepsiCo, Inc. 3,800,125
35,000 Quaker Oats Co. 1,911,875
125,000 (1)Sara Lee Corp. 3,398,437
10,100 Unilever N.V., ADR 731,619
----------
Total 21,837,055
----------
Clothing & Textiles
60,000 Kellwood Co. 1,533,750
----------
Health Care
182,100 American Home Products Corp. 10,834,950
28,100 Bausch & Lomb, Inc. 1,694,781
141,500 Baxter International, Inc. 9,958,063
70,800 (1)Bristol-Myers Squibb Co. 8,916,375
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------------
Shares Description Value
-------------------------------------------------------------
<C> <S> <C>
Common Stocks (continued)
Consumer Non-Durables (continued)
Health Care (continued)
121,200 (1)Merck & Co., Inc. $9,908,100
----------
Total 41,312,269
----------
Photography
85,000 Eastman Kodak Co. 5,625,938
----------
Retail
23,800 May Department Stores Co. 1,410,150
31,600 (1)Penney (J.C.) Co., Inc. 1,141,550
34,000 (1)Sears, Roebuck & Co. 1,381,250
----------
Total 3,932,950
----------
Services
180,000 Browning-Ferris Industries, Inc. 5,670,000
----------
Tobacco
300,000 Philip Morris Cos., Inc. 11,737,500
212,000 UST, Inc. 6,267,250
----------
Total 18,004,750
----------
Total Consumer Non-Durables 97,916,712
----------
Energy -- 14.8%
Domestic & International Oil
201,000 Atlantic Richfield Co. 10,979,625
124,526 (1)BP Amoco PLC, ADR 10,584,710
68,000 Chevron Corp. 5,227,500
229,300 (1)Exxon Corp. 15,262,781
85,200 Mobil Corp. 7,087,575
219,600 (1)Royal Dutch Petroleum Co., ADR 9,634,950
80,000 Sunoco, Inc. 2,435,000
152,200 (1)Texaco, Inc. 7,086,813
307,500 USX-Marathon Group 6,361,406
100,000 Valero Energy Corp. 1,756,250
----------
Total Energy 76,416,610
----------
Financial -- 23.4%
Banks
128,500 (1)Bank One Corp. 6,906,875
96,300 (1)Bank of New York Co., Inc. 3,364,481
185,283 (1)BankAmerica Corp. 12,101,296
50,000 BankBoston Corp. 2,021,875
138,000 (1)Chase Manhattan Corp. 10,988,250
52,000 First American Corp. 2,109,250
103,000 (1)First Union Corp. 5,491,188
120,400 Fleet Financial Group, Inc. 5,169,674
92,000 (1)KeyCorp 2,967,000
38,000 (1)Mellon Bank Corp. 2,569,750
85,000 Mercantile Bancorporation, Inc. 3,878,125
129,000 (1)Washington Mutual, Inc. 5,160,000
230,000 (1)Wells Fargo Co. 8,452,500
----------
Total 71,180,264
----------
Financial Services
82,000 Federal National Mortgage Association 5,740,000
----------
Insurance
100,000 Allstate Corp. 3,750,000
71,100 CIGNA Corp. 5,581,350
100,800 Hartford Financial Services Group, Inc. 5,449,500
30,000 (1)Lincoln National Corp. 2,840,625
33,000 (1)Marsh & McLennan Cos., Inc. 2,336,813
</TABLE>
(See Notes to Portfolios of Investments)
[_] Marshall Funds
- --------------------------------------------------------------------------------
Equity Income Fund (continued)
<TABLE>
<CAPTION>
----------------------------------------------------------------
Shares Description Value
----------------------------------------------------------------
<C> <S> <C>
Common Stocks (continued)
Financial (continued)
Insurance (continued)
111,200 SAFECO Corp. $4,468,850
-----------
Total 24,427,138
-----------
Other Financial
70,000 (1)Equity Office Properties Trust 1,802,500
68,000 Equity Residential Properties Trust 2,788,000
134,500 (1)Glenborough Realty Trust, Inc. 2,429,406
94,700 HRPT Properties Trust 1,296,206
117,300 Prentiss Properties Trust 2,346,000
155,400 (1)Public Storage, Inc. 3,962,700
111,600 Simon Property Group, Inc. 2,838,825
59,000 Storage Trust Realty 1,268,500
-----------
Total 18,732,137
-----------
Total Financial 120,079,539
-----------
Raw Materials/Intermediate Goods -- 7.3%
Chemicals
51,000 Air Products & Chemicals, Inc. 1,638,375
100,000 Du Pont (E.I.) de Nemours & Co. 5,131,250
42,000 Eastman Chemical Co. 1,981,875
61,300 (1)Goodrich (B.F.) Co. 2,091,863
68,500 (1)Imperial Chemical Industries, PLC, ADR 2,406,063
-----------
Total 13,249,426
-----------
Metals
100,000 (1)AK Steel Holding Corp. 2,181,250
116,000 Alcoa, Inc. 4,698,000
106,000 Allegheny Teledyne, Inc. 2,186,250
90,000 USX-U.S. Steel Group, Inc. 2,278,125
-----------
Total 11,343,625
-----------
Papers
60,000 Bowater, Inc. 2,527,500
52,200 Consolidated Papers, Inc. 1,161,450
110,000 Kimberly-Clark Corp. 5,197,500
134,000 Mead Corp. 4,078,625
-----------
Total 12,965,075
-----------
Total Raw Materials/
Intermediate Goods 37,558,126
-----------
Utilities -- 20.2%
Electric
70,000 CMS Energy Corp. 2,896,250
96,000 (1)Cinergy Corp. 2,802,000
64,600 (1)Duke Energy Corp. 3,674,125
264,000 Edison International 6,732,000
89,000 FPL Group, Inc. 4,577,938
98,600 NIPSCO Industries, Inc. 2,557,438
105,000 Northern States Power Co. 2,710,312
164,300 Pinnacle West Capital Corp. 5,935,338
104,000 (1)Southern Co. 2,606,500
102,700 Texas Utilities Co. 4,358,331
-----------
Total 38,850,232
-----------
Gas Distribution
118,200 (1)Enron Corp. 7,683,000
67,800 WICOR, Inc. 1,432,275
77,000 Williams Cos., Inc. (The) 2,849,000
-----------
Total 11,964,275
-----------
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Shares or
Principal
Amount Description Value
------------------------------------------------------------------------------
<C> <S> <C>
Common Stocks (continued)
Utilities (continued)
Telecommunications
175,000 (1)AT&T Corp. $14,371,875
48,000 Alltel Corp. 2,874,000
95,000 (1)Bell Atlantic Corp. 5,456,562
162,000 GTE Corp. 10,509,750
230,560 SBC Communications, Inc. 12,190,860
50,800 (1)Sprint Corp. 4,359,275
66,000 U.S. West, Inc. 3,518,625
------------
Total 53,280,947
------------
Total Utilities 104,095,454
------------
Total Common Stocks (identified cost $401,167,500) 494,802,178
------------
(3)Repurchase Agreement -- 3.7%
$19,227,840 Lehman Brothers, Inc., 4.78%, dated 2/26/1999, due
3/1/1999 (at amortized cost) 19,227,840
------------
Total Investments (identified cost $420,395,340) $514,030,018
============
- -------------------------------------------------------------------------------
</TABLE>
Large-Cap Growth & Income Fund
<TABLE>
<CAPTION>
-----------------------------------------------------------
Shares Description Value
-----------------------------------------------------------
<C> <S> <C>
Common Stocks -- 91.9%
Basic Industries -- 4.6%
Chemicals
91,600 Air Products & Chemicals, Inc. $2,942,650
65,000 Du Pont (E.I.) de Nemours & Co. 3,335,312
----------
Total 6,277,962
----------
Industrial Services
82,287 (1)(4)Waste Management, Inc. 4,021,786
----------
Paper
136,800 (1)Kimberly-Clark Corp. 6,463,800
----------
Total Basic Industries 16,763,548
----------
Capital Goods -- 15.6%
Aerospace & Related
92,300 Boeing Co. 3,282,419
----------
Computer Services
79,900 (1)Compaq Computer Corp. 2,816,475
41,600 International Business Machines Corp. 7,072,000
275,000 (1)(4)Maxtor Corp. 2,268,750
78,500 (4)Microsoft Corp. 11,784,813
79,900 (4)Sun Microsystems, Inc. 7,775,269
----------
Total 31,717,307
----------
Electrical Equipment
119,600 General Electric Co. 11,997,375
----------
Electronics
98,300 (4)Applied Materials, Inc. 5,467,937
38,700 Intel Corp. 4,641,581
----------
Total 10,109,518
----------
Total Capital Goods 57,106,619
----------
</TABLE>
(See Notes to Portfolios of Investments)
February 28, 1999 (unaudited)
Portfolio of Investments
- --------------------------------------------------------------------------------
Large-Cap Growth & Income Fund (continued)
<TABLE>
<CAPTION>
--------------------------------------------------------------
Shares Description Value
--------------------------------------------------------------
<C> <S> <C>
Common Stocks (continued)
Consumer Durables -- 3.3%
Automotive
75,000 General Motors Corp. $6,192,187
-----------
Building & Forest Products
82,600 Georgia-Pacific Corp. 6,050,450
-----------
Total Consumer Durables 12,242,637
-----------
Consumer Non-Durables -- 35.2%
Beverages & Foods
95,000 (1)Coca-Cola Co. 6,074,062
139,000 (1)PepsiCo, Inc. 5,229,875
105,100 Quaker Oats Co. 5,741,088
199,800 Whitman Corp. 3,796,200
-----------
Total 20,841,225
-----------
Broadcasting
140,000 Infinity Broadcasting Corp.,
Class A 3,325,000
-----------
Consumer Cyclical
100,800 (1)Nike, Inc., Class B 5,405,400
-----------
Drugs
98,300 American Home Products Corp. 5,848,850
93,000 (1)Merck & Co., Inc. 7,602,750
51,100 (1)SmithKline Beecham Corp., ADR 3,634,488
-----------
Total 17,086,088
-----------
Entertainment
136,500 (1)Disney (Walt) Co. 4,803,094
-----------
Health Care
160,200 Abbott Laboratories 7,439,287
199,800 Columbia/HCA Healthcare Corp. 3,571,425
95,800 Schering Plough Corp. 5,358,813
-----------
Total 16,369,525
-----------
Media
95,900 Gannett Co., Inc. 6,089,650
179,400 New York Times Co., Class A 5,561,400
108,400 (1)Time Warner, Inc. 6,991,800
-----------
Total 18,642,850
-----------
Medical Supplies
125,000 Boston Scientific Corp. 3,312,500
74,900 (1)Johnson & Johnson 6,394,587
-----------
Total 9,707,087
-----------
Retail
124,300 (1)(4)Federated Department Stores, Inc. 4,731,169
59,500 Kohl's Corp. 4,105,500
125,000 Saks, Inc. 4,492,188
115,400 (1)(4)Safeway, Inc. 6,664,350
271,600 Walgreen Co. 8,691,200
-----------
Total 28,684,407
-----------
Tobacco
96,700 Philip Morris Co., Inc. 3,783,388
-----------
Total Consumer Non-Durables 128,648,064
-----------
Energy -- 5.5%
International Oil & Gas
117,500 (1)Exxon Corp. 7,821,094
122,900 Occidental Petroleum Corp. 1,851,181
</TABLE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
Shares or
Principal
Amount Description Value
-----------------------------------------------------------------------------
<C> <S> <C>
Common Stocks (continued)
Energy (continued)
International Oil & Gas (continued)
120,300 (1)Royal Dutch Petroleum Co., ADR $5,278,163
50,000 (1)Schlumberger Ltd. 2,428,125
58,300 Texaco, Inc. 2,714,594
------------
Total Energy 20,093,157
------------
Financial -- 15.6%
Banks
170,400 (1)Bank of New York Co., Inc. 5,953,350
84,756 (1)BankAmerica Corp. 5,535,626
87,200 (1)Chase Manhattan Corp. 6,943,300
74,900 (1)Mellon Bank Corp. 5,065,112
90,000 (1)Washington Mutual, Inc. 3,600,000
------------
Total 27,097,388
------------
Insurance
76,125 American International Group, Inc. 8,673,492
116,000 (1)Provident Co., Inc. 3,799,000
------------
Total 12,472,492
------------
Other Financial
48,800 American Express Co. 5,294,800
80,000 Citigroup, Inc. 4,700,000
80,000 Federal Home Loan Mortgage Corp. 4,710,000
85,000 MGIC Investment Corp. 2,895,312
------------
Total 17,600,112
------------
Total Financial 57,169,992
------------
Utilities -- 12.1%
Electric
64,000 (1)Duke Energy Corp. 3,640,000
------------
Telecommunications
73,700 (1)AT&T Corp. 6,052,612
92,900 Ameritech Corp. 6,073,337
85,800 GTE Corp. 5,566,275
109,900 (1)MCI Worldcom, Inc. 9,066,750
111,800 Motorola, Inc. 7,853,950
111,700 SBC Communications, Inc. 5,906,138
------------
Total 40,519,062
------------
Total Utilities 44,159,062
------------
Total Common Stocks (identified cost $204,308,754) 336,183,079
------------
(5)U.S. Treasury Bill -- 0.3%
$1,255,000 United States Treasury Bill, 7/8/1999 (identified
cost $1,235,460) 1,235,158
------------
Total Investments in Securities (identified cost
$205,544,214) 337,418,237
------------
(3)Repurchase Agreement -- 8.5%
30,928,055 Lehman Brothers, Inc., 4.78%, dated 2/26/1999, due
3/1/1999 (at amortized cost) 30,928,055
------------
Total Investments (identified cost $236,472,269) $368,346,292
============
</TABLE>
(See Notes to Portfolios of Investments)
[_] Marshall Funds
- --------------------------------------------------------------------------------
Mid-Cap Value Fund
<TABLE>
<CAPTION>
-------------------------------------------------------------
Shares Description Value
-------------------------------------------------------------
<C> <S> <C>
Common Stocks -- 95.6%
Capital Goods -- 9.5%
Aerospace & Defense
10,000 Northrop Corp. $623,125
----------
Computers
227,500 (4)Silicon Graphics, Inc. 3,625,781
----------
Electronics
75,000 AVX Corp. 1,026,562
60,000 (1)(4)Arrow Electronics, Inc. 851,250
----------
Total 1,877,812
----------
Other Capital Goods
52,500 Brady (W.H.) Co. 1,253,437
45,000 Flowserve Corp. 745,312
60,000 Raychem Corp. 1,368,750
65,000 Snap-On Tools Corp. 1,836,250
50,700 (1)Steelcase, Inc., Class A 773,175
----------
Total 5,976,924
----------
Total Capital Goods 12,103,642
----------
Consumer Durables -- 2.4%
Building & Forest Products
35,000 Champion International Corp. 1,295,000
----------
Household Product/Wares
76,000 Jostens, Inc. 1,781,250
----------
Total Consumer Durables 3,076,250
----------
Consumer Non-Durables -- 35.1%
Beverages & Foods
59,900 Darden Restaurants, Inc. 1,317,800
25,000 (1)(4)Del Monte Foods Co. 342,187
264,000 Food Lion, Inc., Class B 2,574,000
175,000 International Multifoods Corp. 3,784,375
105,000 (4)Ralcorp Holdings, Inc. 1,870,313
----------
Total 9,888,675
----------
Commercial Services
31,000 American Greetings Corp., Class A 734,312
----------
Pharmaceuticals & Health Care
100,000 (4)First Health Group Corp. 1,600,000
50,000 (4)Healthsouth Corp. 581,250
80,000 Mallinckrodt, Inc. 2,475,000
281,700 (4)Perrigo Co. 2,359,238
131,500 (4)Quorum Health Group, Inc. 1,216,375
104,700 (1)(4)Tenet Healthcare Corp. 2,061,281
----------
Total 10,293,144
----------
Retail
40,000 (1)(4)Federated Department Stores, Inc. 1,522,500
35,100 (4)Lands' End, Inc. 1,063,969
40,000 (4)Payless Shoe Source, Inc. 2,195,000
100,000 (1)Pier 1 Imports, Inc. 862,500
----------
Total 5,643,969
----------
Services
72,000 (4)Bell & Howell Group, Inc. 2,385,000
65,000 Deluxe Corp. 2,201,875
65,000 (1)Dun & Bradstreet Corp. 2,226,250
65,000 Ikon Office Solutions, Inc. 918,125
99,500 (4)Interim Services, Inc. 1,890,500
61,934 (1)(4)TCI Ventures Group, Class A 1,714,799
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------------
Shares Description Value
---------------------------------------------------------------
<C> <S> <C>
Common Stocks (continued)
Consumer Non-Durables (continued)
Services (continued)
100,000 Viad Corp. $2,643,750
30,139 (1)(4)Waste Management, Inc. 1,473,038
----------
Total 15,453,337
----------
Tobacco
96,000 UST, Inc. 2,838,000
----------
Total Consumer Non-Durables 44,851,437
----------
Energy -- 8.2%
Oil & Gas Products
67,000 (4)Cooper Cameron Corp. 1,549,375
120,000 Noble Affiliates, Inc. 2,715,000
181,000 (1)(4)Rowan Companies, Inc. 1,561,125
103,320 USX Corp. -- Marathon Oil 2,137,433
89,500 (1)Unocal Corp. 2,522,781
----------
Total Energy 10,485,714
----------
Financial -- 14.2%
Banking
45,000 Mercantile Bankshares Corp. 1,639,688
17,000 Northern Trust Corp. 1,519,375
----------
Total 3,159,063
----------
Insurance
80,000 Ace, Ltd. 2,180,000
87,600 Everest Re Holdings, Inc. 2,907,225
109,500 IPC Holdings Ltd. 2,299,500
60,400 Torchmark Corp. 2,008,300
----------
Total 9,395,025
----------
Other Financial
65,000 (1)CMAC Investment Corp. 2,685,312
36,000 MGIC Investment Corp. 1,226,250
88,720 (1)Trizec Hahn Corp. 1,724,494
----------
Total 5,636,056
----------
Total Financial 18,190,144
----------
Raw Materials/Intermediate Goods -- 14.4%
Chemicals
225,000 Agrium, Inc. 1,800,000
48,150 (1)Imperial Chemical Industries, PLC, ADR 1,691,269
----------
Total 3,491,269
----------
Intermediate Goods
101,000 Canadian Pacific Ltd. 1,874,813
99,327 Hanson PLC, ADR 4,035,159
----------
Total 5,909,972
----------
Other Raw Materials
30,000 Fuller (H.B.) Co. 1,271,250
100,000 Millennium Chemicals, Inc. 1,806,250
----------
Total 3,077,500
----------
Paper & Related Products
91,000 Consolidated Papers, Inc. 2,024,750
76,800 Mead Corp. 2,337,600
----------
Total 4,362,350
----------
Steel
60,000 USX-U.S. Steel Group, Inc. 1,518,750
----------
Total Raw Materials/Intermediate Goods 18,359,841
----------
</TABLE>
(See Notes to Portfolios of Investments)
February 28, 1999 (unaudited)
Portfolio of Investments
- --------------------------------------------------------------------------------
Mid-Cap Value Fund (continued)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
Shares or
Principal
Amount Description Value
-----------------------------------------------------------------------------
<C> <S> <C>
Common Stocks (continued)
Transportation -- 1.9%
Other Transportation
120,180 Alexander and Baldwin, Inc. $2,373,555
------------
Utilities -- 9.9%
Electric
95,000 NIPSCO Industries, Inc. 2,464,063
75,000 Pinnacle West Capital Corp. 2,709,375
59,400 Texas Utilities Co. 2,520,788
------------
Total 7,694,226
------------
Electric Distribution
60,000 Telephone and Data System, Inc. 3,015,000
------------
Other
135,000 USEC, Inc. 1,915,313
------------
Total Utilities 12,624,539
------------
Total Common Stocks (identified cost $115,960,367) 122,065,122
------------
(3)Repurchase Agreement -- 3.7%
$4,746,016 Lehman Brothers, Inc., 4.78%, dated 2/26/1999, due
3/1/1999 (at amortized cost) 4,746,016
------------
Total Investments (identified cost $120,706,383) $126,811,138
============
- ------------------------------------------------------------------------------
</TABLE>
Mid-Cap Growth Fund
<TABLE>
<CAPTION>
----------------------------------------------------------------------
Shares Description Value
----------------------------------------------------------------------
<C> <S> <C>
Common Stocks -- 92.6%
Capital Goods -- 24.8%
Computer Services
50,000 America Online, Inc. $4,446,875
20,000 (1)Excite, Inc. 2,050,000
150,000 (1)FIserv, Inc. 7,050,000
160,000 (4)Transaction Systems Architects, Inc., Class A 6,290,000
----------
Total 19,836,875
----------
Computers
75,000 (4)Lexmark Intl. Group, Class A 7,739,062
----------
Electrical Equipment
100,000 (1)Molex, Inc. 2,675,000
----------
Semi-Conductor
100,000 Altera Corp. 4,862,500
60,000 SDL, Inc. 3,270,000
65,000 (1)(4)Uniphase Corp. 5,728,125
----------
Total 13,860,625
----------
Technology
75,000 Celestica, Inc. 2,095,312
65,000 CSG Systems International, Inc. 4,631,250
50,000 Gemstar International Group Ltd. 3,200,000
180,000 Jabil Circuit, Inc. 5,872,500
30,000 Veritas Software Corp. 2,130,000
----------
Total 17,929,062
----------
Total Capital Goods 62,040,624
----------
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------------
Shares Description Value
---------------------------------------------------------------
<C> <S> <C>
Common Stocks (continued)
Consumer Non-Durables -- 51.6%
Broadcasting
100,000 (1)Chancellor Media Corp., Class A $4,375,000
110,000 (1)(4)Clear Channel Communications, Inc. 6,600,000
85,000 Cox Radio, Inc., Class A 3,750,625
125,000 (4)Heftel Broadcasting Corp., Class A 5,156,250
50,000 Infinity Broadcasting Corp., Class A 1,187,500
125,000 (4)Westwood One, Inc. 3,046,875
----------
Total 24,116,250
----------
Business Services
75,000 (1)Acxiom Corp. 1,795,312
----------
Commercial Services
90,000 (4)Republic Services, Inc. 1,569,375
----------
Drugs
40,000 Biogen, Inc. 3,845,000
175,000 (4)North American Vaccine, Inc. 1,334,375
----------
Total 5,179,375
----------
Health Care
235,000 (4)Health Management Association, Class A 3,040,312
200,000 (1)Omnicare, Inc. 4,787,500
150,000 (1)(4)Sunrise Assisted Living, Inc. 5,793,750
----------
Total 13,621,562
----------
Leisure & Recreation
100,000 Harley Davidson, Inc. 5,781,250
200,000 Royal Caribbean Cruises, Ltd. 6,600,000
100,000 (1)(4)Speedway Motorsports, Inc. 3,568,750
225,000 (4)Steiner Leisure Ltd. 6,637,500
----------
Total 22,587,500
----------
Lodging
70,000 Four Seasons Hotels, Inc. 2,476,250
----------
Manufacturing
160,000 MSC Industrial Direct Co. 2,860,000
129,500 (4)Novel Denim Holdings Ltd. 1,732,062
175,000 (1)(4)Rayovac Corp. 4,845,312
----------
Total 9,437,374
----------
Medical Supplies
100,000 Biomet, Inc. 3,668,750
110,000 (1)(4)Henry Schein, Inc. 2,818,750
100,000 Sybron International Corp. 2,456,250
----------
Total 8,943,750
----------
Retail
125,000 (4)99 Cents Only Stores 5,914,063
200,000 (4)Bed Bath & Beyond, Inc. 5,887,500
150,000 (4)Kohl's Corp. 10,350,000
100,000 (1)Office Depot, Inc. 3,568,750
75,000 Williams-Sonoma, Inc. 2,564,063
----------
Total 28,284,376
----------
Services
125,000 American Tower Systems Corp. 3,351,563
105,000 Crown Castle International Corp. 1,785,000
100,000 (4)ITT Educational Services, Inc. 3,643,750
</TABLE>
(See Notes to Portfolios of Investments)
[_] Marshall Funds
- --------------------------------------------------------------------------------
Mid-Cap Growth Fund (continued)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
Shares or
Principal
Amount Description Value
-----------------------------------------------------------------------------
<C> <S> <C>
Common Stocks (continued)
Consumer Non-Durables (continued)
Services (continued)
150,000 Stewart Enterprises, Inc., Class A $2,250,000
------------
Total 11,030,313
------------
Total Consumer Non-Durables 129,041,437
------------
Financial -- 3.0%
25,000 First Tennessee National Corp. 951,563
100,000 (1)Zions Bancorp 6,400,000
------------
Total 7,351,563
------------
Telecommunications -- 10.9%
100,000 ADC Telecommunications, Inc. 4,050,000
60,000 Ascend Communications 4,616,250
100,000 L-3 Communications Corp. 4,287,500
70,000 (1)(4)NEXTEL Communications, Inc., Class A 2,104,375
55,000 (1)Qwest Communications International, Inc. 3,379,063
110,000 (4)Tellabs, Inc. 8,806,875
------------
Total 27,244,063
------------
Utilities -- 2.3%
Electric
50,000 Montana Power Co. 3,043,750
------------
Gas Distribution
75,000 Williams Cos., Inc. (The) 2,775,000
------------
Total 5,818,750
------------
Total Common Stocks (identified cost $183,109,050) 231,496,437
------------
(5)U.S. Treasury Bill -- 0.3%
$700,000 7/8/1999 (identified cost $689,101) 688,933
------------
Total Investments in Securities (identified cost
$183,798,151) 232,185,370
------------
(3)Repurchase Agreement -- 6.1%
15,195,225 Lehman Brothers, Inc., 4.78%, dated 2/26/1999, due
3/1/1999 (at amortized cost) 15,195,225
------------
Total Investments (identified cost $198,993,376) $247,380,595
============
</TABLE>
- --------------------------------------------------------------------------------
Small-Cap Growth Fund
<TABLE>
<CAPTION>
----------------------------------------------------------------------
Shares Description Value
----------------------------------------------------------------------
<C> <S> <C>
Common Stocks -- 88.5%
Capital Goods -- 15.3%
Computer Services
60,000 (4)Apex PC Solutions, Inc. $1,470,000
15,000 Digital River, Inc. 577,500
12,000 DoubleClick, Inc. 1,078,500
25,000 Maxtor Corp. 206,250
20,000 Smith-Gardner & Associates, Inc. 255,000
75,000 (4)Transaction Systems Architects, Inc., Class A 2,948,437
----------
Total 6,535,687
----------
Electronics
50,000 Cymer, Inc. 1,143,750
18,500 Power Integrations, Inc. 446,313
30,000 SDL, Inc. 1,635,000
60,000 Semtech Corp. 1,822,500
10,000 Uniphase Corp. 881,250
----------
Total 5,928,813
----------
Other Capital Goods
80,000 (4)Kellstrom Industries, Inc. 1,295,000
105,000 Watsco, Inc. 1,227,188
----------
Total 2,522,188
----------
Total Capital Goods 14,986,688
----------
Consumer Non-Durables -- 68.1%
Beverages & Foods
95,000 Golden State Vintners, Inc., Class B 1,151,875
----------
Broadcasting
105,000 (4)American Tower Systems Corp. 2,815,312
60,000 (4)Heftel Broadcasting Corp., Class A 2,475,000
50,000 Jacor Communications, Inc., Class A 3,487,500
60,000 Pinnacle Holdings, Inc. 851,250
65,000 Westwood One, Inc. 1,584,375
----------
Total 11,213,437
----------
Commercial Services
55,000 Lason Holdings, Inc. 2,980,313
20,000 Metzler Group, Inc. 850,000
65,000 MSC Industrial Direct Co. 1,161,875
70,000 (4)NOVA Corp. 1,750,000
70,000 Quanta Services, Inc. 1,890,000
90,000 SteriGenics International, Inc. 1,608,750
60,000 Superior Services, Inc. 1,205,625
90,000 United Road Services, Inc. 1,485,000
----------
Total 12,931,563
----------
Drugs
75,000 (4)North American Vaccine, Inc. 571,875
----------
Health Care
130,000 (4)Province Heathcare Co. 1,974,375
35,000 Renal Care Group, Inc. 693,438
61,000 (4)Sunrise Assisted Living, Inc. 2,356,125
----------
Total 5,023,938
----------
Leisure & Recreation
30,000 (4)American Classic Voyages 697,500
50,000 Dover Downs Entertainment 706,250
20,000 Speedway Motorsports, Inc. 713,750
130,000 Steiner Leisure Ltd. 3,835,000
----------
Total 5,952,500
----------
</TABLE>
(See Notes to Portfolios of Investments)
February 28, 1999 (unaudited)
Portfolio of Investments
- --------------------------------------------------------------------------------
Small-Cap Growth Fund
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
Shares or
Principal
Amount Description Value
---------------------------------------------------------------------------
<C> <S> <C>
Common Stocks (continued)
Consumer Non-Durables (continued)
Manufacturing
65,000 Eclipse Surgical Technologies, Inc. $731,250
99,300 (4)Novel Denim Holdings Ltd. 1,328,137
50,000 Packaged Ice, Inc. 425,000
115,000 (4)Rayovac Corp. 3,184,063
-----------
Total 5,668,450
-----------
Medical Supplies
80,000 (4)Henry Schein, Inc. 2,050,000
80,000 Sybron International Corp. 1,965,000
60,000 Xomed Surgical Products, Inc. 2,182,500
-----------
Total 6,197,500
-----------
Retail
55,000 (4)99 Cents Only Stores 2,602,188
60,000 Casey's General Stores, Inc. 772,500
-----------
Total 3,374,688
-----------
Services
30,000 (4)Brightpoint, Inc. 446,250
20,000 (4)CSG Systems International, Inc. 1,425,000
90,000 (4)Carey International, Inc. 1,580,625
84,500 (4)Carriage Services, Inc. 1,547,406
92,500 (4)Casella Waste Systems, Inc. 1,942,500
60,000 (4)Coach USA, Inc. 1,410,000
20,000 Navarre Corp. 320,000
100,000 Quest Education Corp. 900,000
150,000 Stewart Enterprises, Inc., Class A 2,250,000
-----------
Total 11,821,781
-----------
Transportation
60,000 Eagle USA Airfreight, Inc. 1,732,500
25,000 SkyWest, Inc. 785,937
-----------
Total 2,518,437
-----------
Total Consumer Non-Durables 66,426,044
-----------
Energy -- 0.6%
Oil & Gas Equipment & Services --
35,000 Evergreen Resources, Inc. 549,062
-----------
Telecommunications -- 4.5%
40,000 Com21, Inc. 942,500
30,000 Plantronics, Inc. 1,815,000
40,000 Polycom, Inc. 810,000
25,000 Terayon Communication Systems, Inc. 776,562
-----------
Total 4,344,062
-----------
Total Common Stocks (identified cost $85,748,426) 86,305,856
-----------
(5)U.S. Treasury -- 0.5%
$475,000 United States Treasury Bill, 7/8/1999 (identified
cost $467,604) 467,490
-----------
Total Investments in Securities (identified cost
$86,216,030) 86,773,346
-----------
(3)Repurchase Agreement -- 10.1%
9,858,232 Lehman Brothers, Inc., 4.78%, dated 2/26/1999, due
3/1/1999 (at amortized cost) 9,858,232
-----------
Total Investments (identified cost $96,074,262) $96,631,578
===========
</TABLE>
- --------------------------------------------------------------------------------
International Stock Fund
<TABLE>
<CAPTION>
------------------------------------------------------------------------
Shares Description Value
------------------------------------------------------------------------
<C> <S> <C>
Common Stocks -- 94.9%
Argentina -- 3.3%
113,910 (1)Telefonica de Argentina SA, ADR $3,331,868
145,500 YPF Sociedad Anonima, ADR 4,219,500
----------
Total 7,551,368
----------
Australia -- 2.7%
737,120 Cable & Wireless Optus Ltd. 1,620,440
489,500 David Jones Ltd. 462,048
460,700 Mayne Nickless Ltd. 1,501,997
862,501 Pacific Dunlop Ltd. 1,505,072
481,200 Pioneer International Ltd. 969,687
----------
Total 6,059,244
----------
Austria -- 0.9%
9,900 EVN AG 1,306,087
11,000 VA Technologie AG 852,585
----------
Total 2,158,672
----------
Belgium -- 0.2%
15,900 NV Union Miniere SA 518,820
----------
Bermuda -- 3.1%
170,000 Jardine Matheson Holdings Ltd. 445,400
83,000 PartnerRe Ltd. 3,589,750
48,100 (1)XL Capital Ltd. 2,946,125
----------
Total 6,981,275
----------
Brazil -- 1.3%
111,200 (1)Petroleo Brasileiro SA, ADR 857,430
34,150 (1)Telecomunicacoes Brasileiras SA, ADR 2,204,810
----------
Total 3,062,240
----------
Canada -- 2.5%
170,400 Agrium, Inc. 1,363,200
40,000 Canadian Imperial Bank of Commerce 942,908
184,760 (1)Laidlaw, Inc. 1,420,343
37,000 Newbridge Networks Corp. 899,178
380,700 Ranger Oil Ltd. 1,070,719
----------
Total 5,696,348
----------
Chile -- 0.6%
88,850 Gener SA, ADR 1,332,750
----------
Finland -- 3.3%
47,500 Amer Group, Ltd., Class A 704,990
850,000 (1)MeritaNordbanken OYJ. 4,980,832
73,500 (1)Metsa-Serla OYJ, Class B 509,885
142,239 (1)Stora Enso Oyj 1,259,444
----------
Total 7,455,151
----------
France -- 8.6%
30,119 Axa 3,933,804
18,842 Alcatel 2,030,060
49,700 (1)Alcatel, ADR 1,077,869
65,881 Banque Nationale de Paris 5,265,630
15,000 Compagnie Generale d'Industrie et de Participation 815,480
25,592 Elf Aquitaine SA 2,672,905
82,332 Rhone-Poulenc SA 3,779,035
----------
Total 19,574,783
----------
Germany -- 1.7%
53,500 Bayer AG 1,896,877
</TABLE>
(See Notes to Portfolios of Investments)
[_] Marshall Funds
- --------------------------------------------------------------------------------
International Stock Fund (continued)
<TABLE>
<CAPTION>
------------------------------------------------------------------
Shares Description Value
------------------------------------------------------------------
<C> <S> <C>
Common Stocks (continued)
Germany (continued)
37,650 Deutsche Bank, AG $1,968,209
----------
Total 3,865,086
----------
Great Britain -- 16.4%
1,960,406 Albert Fisher Group PLC 172,833
248,576 BG PLC 1,454,360
870,624 BTR Siebe PLC 3,642,993
211,400 British Airways PLC 1,951,336
189,800 (1)British Steel PLC, ADR 3,736,688
925,000 Caradon PLC 2,268,574
880,800 (4)Centrica PLC 1,648,367
146,466 Fairview Holdings PLC 220,691
292,932 Hillsdown Holdings PLC 319,297
125,166 Hyder PLC 1,596,050
322,000 Marks & Spencer PLC 2,172,990
1,500,000 Medeva PLC 2,528,732
264,434 National Power Co. PLC 2,106,655
347,200 Next PLC 4,062,771
300,000 Peninsular & Oriental Steam Navigation Co. 3,517,673
219,000 Rolls-Royce PLC 957,478
170,450 Somerfield PLC 1,021,853
516,900 Tate & Lyle PLC 3,769,968
146,466 Terranova Foods PLC 190,170
----------
Total 37,339,479
----------
Hong Kong -- 7.7%
382,000 Cathay Pacific Airways 426,499
116,107 HSBC Holdings PLC 3,267,032
628,000 Hong Kong Electric Holdings Ltd. 1,787,338
455,000 Hong Kong Ferry Holdings 469,829
2,238,400 Hong Kong Telecommunications Ltd. 3,755,946
210,000 Hutchison Whampoa 1,456,922
485,500 Jardine Strategic Holdings Ltd. 703,975
894,000 South China Morning Post Holdings Ltd. 383,678
752,500 Swire Pacific Ltd., Class A 3,078,961
1,246,000 Varitronix International Ltd. 2,203,317
----------
Total 17,533,497
----------
Hungary -- 1.0%
88,814 (1)(2)(4)MOL Magyar Olay, GDR 2,186,130
----------
Israel -- 1.1%
63,300 Teva Pharmaceutical Industries Ltd., ADR 2,559,694
----------
Italy -- 3.5%
170,000 (1)Burgo (Cartiere) SpA 971,870
1,120,900 (1)Fiat SpA 3,376,550
535,600 Telecom Italia SpA 3,621,358
----------
Total 7,969,778
----------
Japan -- 4.9%
55,000 Daito Trust Construction Co. 475,781
300 Nippon Telegraph & Telephone Corp. 2,473,758
258,000 Nomura Securities Co. Ltd. 2,482,833
85,000 (1)Ono Pharmaceutical Co. Ltd. 3,117,491
33,300 Sony Corp. 2,521,260
----------
Total 11,071,123
----------
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------
Shares Description Value
--------------------------------------------------------------------
<C> <S> <C>
Common Stocks (continued)
Korea -- 3.1%
243,500 (1)Pohang Iron and Steel Co. Ltd., ADR $3,804,688
315,765 (1)SK Telecom Co. Ltd., ADR 3,197,117
----------
Total 7,001,805
----------
Mexico -- 2.6%
346,000 Alfa, SA de CV, Class A 853,418
854,200 Industrias Penoles SA 2,562,686
42,978 (1)Telefonos de Mexico, Class L, ADR 2,457,804
----------
Total 5,873,908
----------
Netherlands -- 5.3%
46,800 Akzo Nobel NV 1,777,664
18,135 Ballast Nedam NV 514,391
19,400 European Vinyls Corp., International NV 114,107
76,950 ING Groep, NV 4,314,541
74,000 (1)Philips Electronics NV 5,166,081
8,676 Vendex NV 232,737
----------
Total 12,119,521
----------
New Zealand -- 0.6%
802,000 (1)Air New Zealand Ltd., Class B 1,332,291
----------
Norway -- 1.7%
56,000 (1)Elkem A.S., Class A 760,823
61,800 Kvaerner A.S., Class B 976,303
178,665 (1)Nycomed Amersham PLC 1,174,164
60,500 Saga Petroleum AS, Class A 508,468
39,500 Unitor Ships Service 349,447
----------
Total 3,769,205
----------
Peru -- 0.2%
43,700 CPT Telefonica del Peru SA, Class B, ADR 516,206
----------
Philippines -- 0.5%
48,205 (1)Philippine Long Distance Telephone Co., ADR 1,144,869
----------
Portugal -- 1.0%
34,500 BPI-SGPS SA 1,199,325
52,320 Banco Pinto & Sotto Mayor 1,050,902
----------
Total 2,250,227
----------
Singapore -- 0.3%
588,229 Dairy Farm International Holdings Ltd. 629,405
----------
Spain -- 6.7%
91,500 (1)Corporacion Bancaria de Espana SA, ADR 4,346,250
98,000 Endesa SA 2,600,873
191,500 Iberdrola SA 3,000,125
53,500 (1)Repsol SA 2,817,378
54,648 Telefonica SA 2,499,329
----------
Total 15,263,955
----------
Sweden -- 5.2%
89,600 (1)Autoliv, Inc. 3,404,800
28,600 Autoliv, Inc., ADR 1,079,311
47,000 (1)Esselte AB, Class A 726,124
59,100 (1)Granges AB 815,620
139,650 (4)Saab AB, Class B 1,227,992
75,000 (1)Svenska Handelsbanken, Stockholm 2,656,326
</TABLE>
(See Notes to Portfolios of Investments)
February 28, 1999 (unaudited)
Portfolio of Investments
- --------------------------------------------------------------------------------
International Stock Fund (continued)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Shares or
Principal
Amount Description Value
------------------------------------------------------------------------------
<C> <S> <C>
Common Stocks (continued)
Sweden (continued)
76,500 (1)Volvo AB, Class B $1,985,375
------------
Total 11,895,548
------------
Switzerland -- 3.3%
13,800 Credit Suisse Group 2,143,301
3,935 Swisscom AG 1,556,399
5,700 Zurich Allied AG 3,785,049
------------
Total 7,484,749
------------
Thailand -- 0.9%
1,145,200 (1)Bangkok Bank Public Co., Ltd. 1,932,697
------------
Venezuela -- 0.7%
107,900 (1)Compania Anonima Nacional Telefonos de
Venezuela, Class D, ADR 1,679,194
------------
Total Common Stocks (identified cost $197,574,636) 215,809,018
------------
Preferred Stocks -- 3.5%
Australia -- 2.3%
66,614 National Australia Bank, Ltd., Melbourne,
Exchangeable Capital Unit, $1.97 2,019,237
491,572 News Corp. Ltd., Pfd. 3,217,505
------------
Total 5,236,742
------------
Germany -- 0.4%
37,363 Moebel Walther AG, Pfd. 842,076
------------
Great Britain -- 0.1%
107,100 Hyder PLC, Pfd. 213,093
------------
United States -- 0.7%
33,700 SBC Communications, Inc., Conv. Pfd., $3.07 1,685,000
------------
Total Preferred Stocks (identified cost $7,091,698) 7,976,911
------------
Government Agencies -- 1.5%
$1,965,000 (6)Federal Home Loan Mortgage Corp., Discount Note,
4.71% 3/15/1999 1,961,401
1,408,000 (6)Federal Home Loan Mortgage Corp., Discount Note,
4.75% 4/22/1999 1,398,340
------------
Total Government Agencies (identified cost
$3,359,740) 3,359,741
------------
U.S. Treasury Issues -- 0.9%
1,177,000 United States Treasury Bill, 4/22/1999 1,169,220
336,000 United States Treasury Bill, 4/29/1999 333,591
367,000 United States Treasury Bill, 5/13/1999 363,734
239,000 United States Treasury Bill, 5/27/1999 236,448
------------
Total U.S. Treasury Issues (identified cost
$2,103,146) 2,102,993
------------
Total Investments (identified cost $210,129,220) $229,248,663
============
</TABLE>
INDUSTRY DIVERSIFICATION
<TABLE>
<CAPTION>
Percentage of
Net Assets
-------------------------------------------------
<S> <C>
Telecommunications 14.4%
Banking 11.3%
Financial Services 7.7%
Electric 4.7%
Insurance 4.6%
Services 4.1%
Diversified Manufacturing 3.8%
Retail Trade 3.7%
Automotive & Related 3.5%
Chemicals 3.3%
Steel 3.3%
Medical/Drugs 3.0%
Oil & Gas Products 3.0%
Electronic Technology 2.7%
Gas Distribution 2.5%
Consumer Basics 2.3%
Aerospace & Defense 2.1%
Oil 1.9%
Broadcasting 1.6%
Other 1.6%
Construction Equipment 1.5%
Other Financial 1.4%
Paper 1.2%
Household Products 1.1%
Non-Ferrous Metals 1.1%
Pharmaceuticals & Healthcare 1.1%
Air Travel 1.0%
Automobile 0.9%
Electrical Equipment 0.9%
Energy 0.9%
U.S. Treasury Securities 0.9%
Food & Beverages 0.8%
Utilities 0.8%
Non-Energy Minerals 0.6%
Industrial Services 0.4%
Metals 0.4%
Office Equipment 0.3%
Commercial Services 0.2%
Process Industries 0.2%
Other Assets and Liabilities, Net (0.8)%
-------
Total 100.00%
=======
</TABLE>
(See Notes to Portfolios of Investments)
[_] Marshall Funds
- --------------------------------------------------------------------------------
Intermediate Bond Fund
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Principal
Amount Description Value
------------------------------------------------------------------------------
<C> <S> <C>
Asset-Backed Securities -- 12.4%
$5,500,000 ARG Funding Corp., Class A2, 5.88%, 5/20/2002 $5,487,955
10,000,000 Bridgestone/Firestone Master Trust 1996-1, Class A,
6.17%, 7/1/2003 10,099,200
513,742 ContiMortgage Home Equity Loan Trust 1995-4, Class
A5, 6.56%, 12/15/2010 512,969
5,000,000 DLJ Commercial Mortgage Corp. 1998-STF2, Class A1,
5.588%, 11/5/2000 5,003,150
6,000,000 (2)DLJ Leverage Loan Funding, Class B1, 6.77%,
9/15/2005 5,850,000
7,750,000 First USA Credit Card Master Trust 1998-9, Class A, 5.28%,
9/18/2006 7,566,403
2,646,660 Green Tree Financial Corp. 1996-6, Class A3, 6.75%,
9/15/2027 2,650,723
12,000,000 J.P. Morgan Commercial Mortgage Finance Corp.
1997-C5, Class A2, 7.069%, 9/15/2029 12,491,580
10,000,000 Metris Master Trust 1997-1, Class A, 6.87%,
11/20/2005 10,300,100
990,332 Olympic Automobile Receivables Trust 1995-D, Class
A4, 6.05%, 11/15/2000 991,570
12,000,000 TMS Home Equity Trust 1996-B, Class A7, 7.55%,
2/15/2020 12,222,840
----------
Total Asset-Backed Securities
(identified cost $72,564,707) 73,176,490
----------
Collateralized Mortgage Obligations -- 13.2% 5,000,000 (2)Criimi
Mae CMBS Corp., Series 1998-1, Class A2,
6.009%, 2/20/2005 4,735,750
6,000,000 (2)Criimi Mae CMBS Corp., Series 1998-1, Class A3,
6.306%, 12/20/2007 5,527,020
9,000,000 DLJ Commercial Mortgage Corp., Series 1998-CG1, Class
A1B, 6.410%, 5/10/2008 9,010,845
7,185,000 Delta Funding Home Equity Loan Trust, Series 1997-3,
Class A2F, 6.59%, 9/25/2012 7,179,719
8,230,242 Federal Home Loan Mortgage Corp., Series 1829, Class
H, 6.50%, 10/15/2021 8,269,623
4,243,419 Federal Home Loan Mortgage Corp., Series 1834, Class
A, 7.00%, 1/15/2020 4,263,618
15,000,000 Federal National Mortgage Association, Series 1997- 17, Class PD,
7.00%, 4/18/2021 15,103,950
1,409,156 GE Capital Mortgage Services, Inc., Series 1997-6, Class A18,
9.00%, 7/25/2027 1,434,859
10,540,000 GMAC Commercial Mortgage Securities, Inc. 1998-C2,
Series 1998-C2, Class A2, 6.42%, 8/15/2008 10,556,179
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
Principal
Amount Description Value
----------------------------------------------------------------------------
<C> <S> <C>
Collateralized Mortgage Obligations (continued)
$4,607,593 Green Tree Financial Corp., Series 1994-7, Class
A4, 8.35%, 3/15/2020 $4,684,678
7,000,000 Green Tree Home Equity Loan Trust, Series 98-B,
Class B1, 7.81%, 11/15/2029 6,928,460
----------
Total Collateralized Mortgage Obligations
(identified cost $78,016,709) 77,694,701
----------
Corporate Bonds -- 49.6%
Banking -- 11.7%
12,550,000 Firstar Capital Trust I, Company Guarantee, 8.32%,
12/15/2026 13,277,022
7,000,000 Fleet Capital Trust V, 6.226%, 12/18/2028 6,969,900
5,000,000 Mercantile Capital Trust I, Company Guarantee,
5.820%, 2/1/2027 4,954,025
12,000,000 Old Kent Capital Trust I, 5.769%, 2/1/2027 11,889,348
10,000,000 (2)Skandinaviska Enskilda, Sub. Note, Series 144A,
6.50%, 12/29/2049 9,480,630 12,500,000 Starbank Capital Trust,
5.986%, 6/15/2027 12,424,488 10,000,000 Toronto-Dominion Bank, Sub. Note,
7.875%, 8/15/2004 10,126,900
----------
Total 69,122,313
----------
Broker/Dealers -- 6.2%
8,000,000 Bear Stearns Cos., Inc., Sr. Note, 7.00%, 1/15/2027 7,916,480
9,000,000 Lehman Brothers Holdings, Inc., Note, 6.90%,
1/29/2001 9,020,430
5,000,000 Lehman Brothers, Inc., Sr. Sub. Note, 7.50%,
8/1/2026 5,125,500
10,000,000 (1)Merrill Lynch & Co., Inc., Sr. Unsub. Note,
6.00%, 2/17/2009 9,648,300
5,000,000 PaineWebber Group, Inc., Note, 6.45%, 12/1/2003 4,941,100
----------
Total 36,651,810
----------
Finance -- 15.8%
10,000,000 Aristar, Inc., Note, 6.30%, 10/1/2002 10,022,100
15,000,000 (1)Conseco, Inc., Note, 6.80%, 6/15/2005 14,011,950
12,000,000 (2)Credit Suisse, London, Sub. Note, 7.90%,
4/29/2049 11,786,136
10,000,000 (2)Edison Funding Co., Sr. Note, 6.75%, 12/17/1999 10,061,010
4,000,000 FINOVA Capital Corp., Note, 6.25%, 11/1/2002 3,988,800
10,000,000 (2)Florida Windstorm Under, Bond, 6.50%, 8/25/2002 9,960,500
8,165,000 General Motors Acceptance Corp., Unsecd. Note,
7.00%, 6/6/2003 8,456,980
4,000,000 HSB Group, Inc., Company Guarantee, 5.94%,
7/15/2027 3,856,200
4,000,000 Household Netherlands BV, Company Guarantee, 6.20%,
12/1/2003 3,958,120
</TABLE>
(See Notes to Portfolios of Investments)
February 28, 1999 (unaudited)
Portfolio of Investments
- --------------------------------------------------------------------------------
Intermediate Bond Fund (continued)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Principal
Amount Description Value
------------------------------------------------------------------------------
<C> <S> <C>
Corporate Bonds (continued)
Finance (continued)
$5,000,000 MBNA Global Capital Securities, Jr. Sub. Deb.,
5.769%, 2/1/2027 $4,632,000
12,000,000 Sears Roebuck Acceptance Corp., Note, Series III,
7.01%, 9/19/2002 12,317,640
-----------
Total 93,051,436
-----------
Industrial Services -- 11.4%
5,000,000 Dayton-Hudson Corp., Unsecd. Note, 6.40%, 2/15/2003 5,079,750
10,000,000 Dayton-Hudson Corp., Unsecd. Note, 9.75%, 7/1/2002 11,154,600
7,000,000 Enserch Corp., 6.426%, 7/1/2028 6,934,270
10,000,000 IMC Global, Inc., Deb., 6.875%, 7/15/2007 9,681,200
12,000,000 (2)Marlin Water Trust, Sr. Note, 7.09%, 12/15/2001 11,963,604
10,000,000 (1)Tyco International Group, Note, 5.875%, 11/1/2004 9,820,640
7,000,000 Waste Management, Inc., Unsecd. Note 7.70%,
10/1/2002 7,332,430
5,000,000 Waste Management, Inc., Note, 6.625%, 7/15/2002 5,065,800
-----------
Total 67,032,294
-----------
Transportation -- 1.6%
4,604,239 Continental Airlines, Inc., Pass Thru Cert., 6.541%,
9/15/2008 4,442,952
4,000,000 Delta Air Lines, Inc., Equip. Trust, Series 1993-A2,
10.50%, 4/30/2016 5,139,520
-----------
Total 9,582,472
-----------
Utilities -- Telephone -- 2.9%
10,000,000 Telephone and Data System, Inc., Bond, 7.00%,
8/1/2006 10,141,100
7,000,000 (1)WorldCom, Inc., Sr. Note, 6.125%, 8/15/2001 7,051,450
-----------
Total 17,192,550
-----------
Total Corporate Bonds
(identified cost $295,148,696) 292,632,875
-----------
Corporate Notes -- 3.8%
Broker/Dealers -- 2.1%
12,000,000 Bear Stearns Cos., Inc., Sr. Note, 6.75%, 5/1/2001 12,164,280
-----------
Tobacco -- 1.7%
10,000,000 Philip Morris Cos., Inc., Note, 7.25%, 9/15/2001 10,257,800
-----------
Total Corporate Notes
(identified cost $21,921,780) 22,422,080
-----------
U.S. Agency Notes -- 1.9%
Federal Home Loan Bank -- 1.9%
5,000,000 5.43%, 11/17/2008 4,814,950
6,500,000 5.58%, 8/17/2001 6,526,065
-----------
Total U.S. Agency Notes
(identified cost $11,565,695) 11,341,015
-----------
</TABLE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
Principal
Amount Description Value
-----------------------------------------------------------------------------
<C> <S> <C>
Mortgage Backed Securities -- 0.9%
Federal Home Loan Mortgage Corporation -- 0.0%
$109,598 8.75%, 4/1/2001 $111,534
------------
Federal National Mortgage Association -- 0.9%
4,894,883 7.635%, 8/1/2011 5,240,559
------------
Total Mortgage Backed Securities (identified cost
$5,380,359) 5,352,093
------------
U.S. Treasury Notes -- 15.9%
5,000,000 (1)4.25%, 11/15/2003 4,797,250
5,000,000 (1)4.75%, 11/15/2008 4,801,150
10,000,000 (1)5.75%, 11/15/2000 10,096,100
6,000,000 (1)5.75%, 8/15/2003 6,103,560
5,000,000 (1)6.25%, 2/15/2007 5,264,150
10,000,000 (1)6.25%, 8/31/2000 10,159,700
12,000,000 (1)6.50%, 10/15/2006 12,792,480
17,000,000 (1)6.625%, 5/15/2007 18,331,780
5,000,000 (1)7.25%, 8/15/2004 5,444,900
15,000,000 (1)7.875%, 8/15/2001 15,915,750
------------
Total U.S. Treasury Notes
(identified cost $95,630,898) 93,706,820
------------
Total Investments in Securities
(identified cost $580,228,844) 576,326,074
------------
(3)Repurchase Agreement -- 0.8%
4,711,129 Lehman Brothers, Inc., 4.78%, dated 2/26/1999, due
3/1/1999 (at amortized cost) 4,711,129
------------
Total Investments (identified cost $584,939,973) $581,037,203
============
- ------------------------------------------------------------------------------
</TABLE>
Government Income Fund
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Principal
Amount Description Value
------------------------------------------------------------------------------
<C> <S> <C>
Asset-Backed Securities -- 9.5%
$750,929 Contitrade Services Home Equity Loan Trust, 7.700%,
9/15/2006, (Series 1991-2) $749,919
3,000,000 (2)DLJ Leverage Loan Funding, 6.770%, 9/15/2005 2,925,000 182,082
Green Tree Financial Corp., 6.750%, 9/15/2027 (Series
1996-6) 182,361
6,000,000 Green Tree Home Equity Loan Trust, 7.810%, 11/15/2029
(Series 1998-B) 5,938,680
10,643,000 Greenwich Capital Acceptance, 7.150%, 8/10/2020 10,758,583
4,955,714 (2)MLMI, 5.188%, 4/1/2011 (Series 1998-HI) 4,952,641 2,485,754
(2)Nationscredit Home Equity Loan Trust, 6.500%,
10/15/2028 2,495,076
328,720 Residential Asset Securitization Trust, 8.000%,
12/25/2026, (Series 1996-A8) 329,425
----------
Total Asset-Backed Securities (identified cost
$28,379,664) 28,331,685
----------
</TABLE>
(See Notes to Portfolios of Investments)
[_] Marshall Funds
- --------------------------------------------------------------------------------
Government Income Fund (continued)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
Principal
Amount Description Value
----------------------------------------------------------------------------
<C> <S> <C>
Collateralized Mortgage Obligations -- 18.0%
$2,739,847 Chase Mortgage Finance Corp., 6.250%, 11/25/2009,
(Series 1993-M) $2,735,422
5,000,000 Federal Home Loan Mortgage Corp., 6.500%,
4/15/2021, REMIC (Series 1574-G) 5,013,850
13,400,000 Federal Home Loan Mortgage Corp., 8.000%,
6/15/2023, REMIC (Series 1748-B) 13,770,778
1,475,095 Federal National Mortgage Association, 6.100%,
9/25/2004, REMIC (Series 1992-179-E) 1,472,042
605,467 GE Capital Mortgage Services, Inc. 1997-6, 9.000%,
7/25/2027 616,510
5,150,784 IMC Excess Cashflow Securities Trust 1997-A,
7.410%, 11/26/2028 4,853,017
1,226,622 Independent National Mortgage Corp., 7.250%,
11/25/2010 1,235,705
6,450,000 Independent National Mortgage Corp., 7.500%,
9/25/2025 6,533,915
4,177,400 (2)Prudential Home Mortgage Securities 1992-B,
7.400%, 5/25/2007 4,220,005
9,991,638 Residential Funding Mortgage Securities I 1996-S25,
7.500%, 5/25/2027 10,103,644
2,931,379 Saxon Mortgage Securities Corp. 1993-10, 5.680%,
11/25/2023 2,894,136
----------
Total Collateralized Mortgage Obligations
(identified cost $53,661,917) 53,449,024
----------
Commercial Mortgage Backed Securities -- 6.6%
1,658,000 Chase Commercial Mortgage Securities Corp. 1997-2,
6.600%, 11/19/2007 1,673,892
3,300,000 (2)DLJ Commercial Mortgage Corp. 1998-STFA, 6.770%,
9/15/2005 3,206,462
1,150,000 GMAC Commercial Mortgage Securities, Inc.,
6.853%,9/15/2006, (Series 1997-C1) 1,174,397
5,500,000 GMAC Commercial Mortgage Securities, Inc., 6.566%,
11/15/2007, (Series 1997-C2) 5,568,283
8,000,000 (2)Nomura Depositor Trust Commercial Mortgage Pass-
Thru 1998-ST I Floating Rate Note, 5.356%,
1/15/2003 7,995,040
----------
Total Commercial Mortgage Backed Securities
(identified cost $19,707,677) 19,618,074
----------
Mortgage Backed Securities -- 45.1%
Federal Home Loan Mortgage Corporation -- 12.5%
6,392,221 7.000%, 11/1/2009 6,522,047
4,390,392 7.000%, 5/1/2027 4,446,633
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
Principal
Amount Description Value
---------------------------------------------------------------------------
<C> <S> <C>
Mortgage Backed Securities (continued)
Federal Home Loan Mortgage Corporation (continued)
$4,191,642 7.500%, 5/1/2024 $4,325,272
4,576,334 8.000%, 2/1/2010 4,725,065
4,226,869 8.000%, 4/1/2008 4,364,242
4,066,880 8.000%, 4/1/2026 4,233,378
596,179 8.000%, 8/1/2025 620,587
651,951 8.500%, 2/1/2009 684,346
2,776,200 8.500%, 9/1/2024 2,924,560
15,916 8.750%, 4/1/2001 16,197
327,012 9.000%, 5/1/2017 348,575
3,700,655 9.000%, 6/1/2019 3,942,344
3,879 9.500%, 2/1/2001 3,952
6,071 10.500%, 10/1/2000 6,159
-----------
Total 37,163,357
-----------
Federal National Mortgage Association -- 10.4%
10,000,000 5.500%, TBA 9,715,600
10,000,000 7.500%, TBA 10,300,000
5,246,058 6.340%, 2/1/2008 5,311,560
1,877,372 8.000%, 5/1/2025 1,962,435
734,403 8.000%, 8/1/2007 754,371
752,998 8.500%, 3/1/2023 797,674
368,596 11.000%, 6/1/2020 411,099
168,816 11.500%, 10/1/2015 190,445
867,011 11.500%, 5/20/2021 1,000,860
643,071 11.500%, 7/1/2006 688,086
-----------
Total 31,132,130
-----------
Government National
Mortgage Association -- 22.2%
20,000,000 (7)6.000%, TBA, 30 Year 19,406,200
24,976,437 6.500%, 1/15/2029 24,843,812
2,225,124 7.000%, 6/15/2023 2,257,121
646,328 8.000%, 6/15/2022 670,364
539,441 8.000%, 7/15/2022 559,503
601,154 8.000%, 8/15/2022 623,511
4,094,005 8.000%, 8/15/2024 4,269,270
9,727,240 8.500%, 9/15/2028 10,326,049
680,767 9.000%, 2/15/2020 729,701
1,668,051 9.500%, 10/15/2024 1,803,062
271,267 9.500%, 7/15/2019 293,224
229,801 10.000%, 11/15/2020 251,489
4,908 10.500%, 10/15/2000 5,018
3,881 10.500%, 10/15/2000 3,968
9,571 11.000%, 11/15/2000 9,847
-----------
Total 66,052,139
-----------
Total Mortgage Backed Securities (identified cost
$134,766,391) 134,347,626
-----------
Government Agencies -- 9.5%
13,000,000 Federal Home Loan Bank System, 5.125%, 9/15/2003 12,721,280
11,000,000 Federal National Mortgage Association, 5.750%,
4/15/2003 11,068,860
3,858,100 National Archive Facility Trust, 8.500%, 9/1/2019 4,610,237
-----------
Total Government Agencies (identified cost
$29,120,171) 28,400,377
-----------
</TABLE>
(See Notes to Portfolios of Investments)
February 28, 1999 (unaudited)
Portfolio of Investments
- --------------------------------------------------------------------------------
Government Income Fund (continued)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Principal
Amount Description Value
------------------------------------------------------------------------------
<C> <S> <C>
(8)Variable Rate Notes -- 4.2%
$5,000,000 Enserch Corp. Floating Rate Note, 6.426%, 4/1/1999 $4,953,050
4,000,000 HSB Group, Inc. Floating Rate Note, 5.940%,
4/15/1999 3,856,200
4,000,000 MBNA Global Capital Securities, 5.770%, 5/4/1999 3,705,600
------------
Total Variable Rate Notes (identified cost
$12,659,735) 12,514,850
------------
U.S. Treasury Note -- 1.7%
5,000,000 (1)United States Treasury Note, 5.250%, 8/15/2003
(identified cost $5,236,719) 4,994,200
------------
Total Investments in Securities (identified cost
$283,532,274) 281,655,836
------------
(3)Repurchase Agreement -- 20.0%
59,410,063 Lehman Brothers, Inc., 4.780%, dated 2/26/1999, due
3/1/1999 (at amortized cost) 59,410,063
------------
Total Investments (identified cost $342,942,337) $341,065,899
============
- -------------------------------------------------------------------------------
</TABLE>
Money Market Fund
<TABLE>
<CAPTION>
--------------------------------------------------
Principal
Amount Description Value
--------------------------------------------------
<C> <S> <C>
Certificate of
Deposit -- 0.5%
Banking -- 0.5%
$10,000,000 Deutsche Bank, AG,
5.770%, 3/30/1999 $9,999,429
----------
(6)Commercial Paper --
2.7%
Beverages & Foods --
2.7%
50,000,000 Coca-Cola Co., 4.896%,
4/23/1999 49,642,986
----------
Corporate Bonds -- 5.5%
Asset-Backed -- 1.4%
25,000,000 Beta Finance, Inc.,
5.140%, 1/13/2000 24,998,693
----------
Beverages & Foods --
0.1%
2,500,000 PepsiCo, Inc., 6.250%,
9/1/1999 2,505,838
----------
Broker/Dealers -- 2.5%
35,000,000 Merrill Lynch & Co.,
Inc., 5.200%, 3/22/1999 35,063,545
11,100,000 Morgan Stanley Group,
Inc., 5.625%, 3/1/1999 11,100,000
----------
Total 46,163,545
----------
Personal Credit -- 1.5%
1,595,000 Associates Corp. of
North America, 6.750%,
10/15/1999 1,607,995
10,000,000 General Motors
Acceptance Corp.,
4.625%, 10/1/1999 10,146,339
</TABLE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
Principal
Amount Description Value
-----------------------------------------------------------------------------
<C> <S> <C>
Corporate Notes -- 13.0%
Asset-Backed -- 2.2%
$15,000,000 General Motors Acceptance Corp., 4.949%, 5/3/1999 $15,000,783
-----------
Total 26,755,117
-----------
Total Corporate Bonds 100,423,193
-----------
25,000,000 Centauri Communications, Inc., 5.330%, 3/6/2000 25,000,000
15,000,000 Sigma Finance, 5.890%, 5/5/1999 15,000,000
-----------
Total 40,000,000
-----------
Banking -- 2.6%
25,000,000 Bankers Trust Co., New York, 5.190%, 2/22/2000 24,995,268
23,000,000 CCC Putable Asset Trust, 6.450%, 10/18/1999 23,188,795
-----------
Total 48,184,063
-----------
Broker/Dealers -- 2.8%
25,000,000 Bear, Stearns and Co., 5.004%, 5/26/1999 25,000,000
6,000,000 Lehman Brothers Holdings, Inc., 7.120%, 7/30/1999 6,032,595
5,000,000 Merrill Lynch & Co., Inc., 5.250%, 5/25/1999 5,003,150
15,000,000 Republic National Bank of New York, 5.038%,
3/1/1999 15,000,000
-----------
Total 51,035,745
-----------
Financial -- 0.3%
5,000,000 Paccar Financial Corp., 6.060%, 3/15/1999 5,001,387
-----------
Foreign Banks -- 1.2%
22,000,000 AB Spintab, 4.919%, 5/3/1999 21,994,078
-----------
Forest Products -- 3.8%
70,000,000 Willamette Industries, Inc., 4.810%, 3/1/1999 70,000,000
-----------
Short-Term Business Credit -- 0.1%
2,000,000 McDonnell Douglas Finance Corp., 6.750%, 9/17/1999 2,010,572
-----------
Total Corporate Notes 238,225,845
-----------
Governments/Agencies -- 0.5%
Foreign Banks -- 0.5%
8,700,000 African Development Bank, 6.750%, 7/30/1999 8,732,619
-----------
(8)Variable Rate Notes -- 68.8%
Asset-Backed -- 8.1%
25,000,000 Bishop's Gate Residential Mortgage Trust 1998-2,
Class A-1, 5.139%, 3/10/1999 25,000,000
62,000,000 Liberty Lighthouse US Capital Co., 4.990%,
7/15/1999 62,000,000
60,000,000 Sigma Finance, 4.910%, 3/1/1999 60,000,000
-----------
Total 147,000,000
-----------
</TABLE>
(See Notes to Portfolios of Investments)
[_] Marshall Funds
- --------------------------------------------------------------------------------
Money Market Fund (continued)
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
Principal
Amount Description Value
---------------------------------------------------------------------------
<C> <S> <C>
(8)Variable Rate Notes (continued)
Banking -- 8.3%
$12,000,000 Banc One Corp., 5.201%, 3/15/1999 $11,994,616
25,000,000 Bankers Trust Co., New York, 4.970%, 3/1/1999 24,994,046
40,000,000 Citicorp, 5.199%, 3/1/1999 40,000,000
75,000,000 SMM Trust, 5.320%, 3/15/1999 75,000,000
-----------
Total 151,988,662
-----------
Broker/Dealers -- 10.1%
40,000,000 Bear, Stearns and Co., (Series B), 5.444%,
3/10/1999 40,000,000
71,200,000 (2)Goldman Sachs & Co., 5.066%, 3/1/1999 71,200,000
74,000,000 J.P. Morgan & Co., Inc., 4.800%, 3/1/1999 74,000,000
-----------
Total 185,200,000
-----------
Construction Equipment -- 3.3%
50,000,000 Caterpillar Financial Services Corp., 5.011%,
5/7/1999 50,017,242
10,000,000 Caterpillar Financial Services Corp., 5.038%,
3/15/1999 9,996,335
-----------
Total 60,013,577
-----------
Diversified Manufacturing -- 0.2%
3,000,000 Danaher Corp., 4.938%, 3/5/1999 3,000,000
-----------
Insurance -- 21.3%
25,000,000 (2)Combined Insurance Corp. of America, 5.251%,
3/5/1999 25,000,000
20,000,000 (2)Combined Insurance Corp. of America, 5.147%,
5/3/1999 20,000,000
40,000,000 (2)Commonwealth Life Insurance, 5.110%, 3/1/1999 40,000,000
10,000,000 (2)Commonwealth Life Insurance, 5.410%, 4/1/1999 10,000,000
35,000,000 First Allmerica Financial Life Insurance Co.,
5.110%, 5/4/1999 35,000,000
60,000,000 (2)General American Life Insurance Co., 4.990%,
3/1/1999 60,000,000
50,000,000 (2)Jackson National Life Insurance Co., 4.980%,
5/1/1999 50,000,000
60,000,000 (2)Transamerica Life Insurance and Annuity Co.,
5.076%, 3/5/1999 60,000,000
50,000,000 (2)Travelers Insurance Co., 5.011%, 4/1/1999 50,000,000
40,000,000 (2)Western National Life Insurance Co., 5.000%,
3/5/1999 40,000,000
-----------
Total 390,000,000
-----------
</TABLE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
Principal
Amount Description Value
-----------------------------------------------------------------------------
<C> <S> <C>
(8)Variable Rate Notes (continued)
Leasing -- 3.3%
$50,000,000 General Electric Capital Corp., (Series A),
5.189%, 3/9/1999 $50,000,000
10,000,000 U.S. Leasing Capital Corp., 5.140%, 4/19/1999 10,001,815
--------------
Total 60,001,815
--------------
Personal Credit -- 6.0%
50,000,000 American Honda Finance Corp., 4.970%, 4/21/1999 49,977,671
34,000,000 American Honda Finance Corp., 4.972%, 4/20/1999 33,984,863
25,000,000 Household Finance Corp., 5.375%, 3/4/1999 25,009,438
--------------
Total 108,971,972
--------------
Short-Term Business Credit -- 6.9%
30,000,000 CIT Group, Inc., 4.940%, 3/1/1999 29,979,888
25,000,000 CIT Group, Inc., 5.035%, 4/14/1999 24,987,901
72,000,000 (2)Heller Financial, Inc., 5.327%, 3/1/1999 72,000,000
--------------
Total 126,967,789
--------------
Utilities -- 1.3%
13,822,000 Consolidated Edison Co., 5.264%, 4/1/1999 13,826,348
10,000,000 (2)Wisconsin Public Service, 4.888%, 3/1/1999 10,000,000
--------------
Total 23,826,348
--------------
Total Variable Rate Notes 1,256,970,163
--------------
Total Investments in Securities 1,663,994,235
--------------
(3)Repurchase Agreement -- 10.0%
182,918,334 Lehman Brothers, Inc., 4.780%, dated 2/26/1999,
due 3/1/1999 182,918,334
--------------
Total Investments (at amortized cost) $1,846,912,569
==============
</TABLE>
(See Notes to Portfolios of Investments)
Notes to Portfolios of Investments
(1) Certain shares or principal amounts on loan to broker. (2) Securities
exempt from registration under the Securities Act of 1933, as
amended and may only be sold to dealers and other exempt investors. These
securities have been determined to be liquid according to guidelines
established by the board of directors.
(3) The repurchase agreements are fully collateralized by U.S. Government
and/or agency obligations based on market prices at date of the portfolio.
(4) Non-income producing.
(5) Represents the initial deposit within a margin account used to ensure the
Fund is able to satisfy the obligations of its outstanding long futures
contracts.
(6) Each issue shows the rate of discount at the time of purchase. (7) Includes
securities subject to dollar roll transactions.
(8) Current rate and next reset date shown. The following acronyms are used
throughout this portfolio:
- --------------------------------------------------------------------------------
ADR--American Depositary Receipt REMIC--Real Estate Mortgage Investment
GDR--Global Depositary Receipt Conduit
GNMA--Government National TBA--To Be Announced
Mortgage Association
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Unrealized Gross Gross
Cost of Appreciation Unrealized Unrealized
Investments for (Depreciation) Appreciation Depreciation
Federal Tax for Federal for Federal for Federal Total Net
Marshall Purposes Tax Purposes Tax Purposes Tax Purposes Assets**
- -------- --------------- -------------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
Equity Income Fund $420,395,340 $93,634,678 $108,683,938 $15,049,260 $515,139,339
Large-Cap Growth &
Income Fund 236,472,269 131,874,023 136,570,754 4,696,731 365,859,362
Mid-Cap Value Fund 120,706,383 6,104,755 14,671,532 8,566,777 127,729,268
Mid-Cap Growth Fund 198,993,376 48,387,219 56,555,373 8,168,154 249,904,616
Small-Cap Growth Fund 96,074,262 557,316 10,519,635 9,962,319 97,535,255
International Stock Fund 210,129,220 19,119,443 50,652,214 31,532,771 227,510,722
Intermediate Bond Fund 584,939,973 (3,902,770) 4,357,212 8,259,982 589,550,401
Government Income Fund 342,942,337 (1,876,438) 1,277,337 3,153,775 297,731,231
Money Market Fund 1,846,912,569* -- -- -- 1,828,051,137
</TABLE>
*At amortized cost
**The categories of investments are shown as a percentage of net assets at
February 28, 1999.
(See Notes which are an integral part of the Financial Statements)
February 28, 1999 (unaudited)
Statements of Assets and Liabilities
<TABLE>
<CAPTION>
------- ------- ------- -------
Equity Large-Cap Mid-Cap Mid-Cap
Income Growth & Income Value Growth
Fund Fund Fund Fund
------- ------- ------- -------
<S> <C> <C> <C> <C>
Assets:
Investments in
securities, at value $494,802,178 $337,418,237 $122,065,122 $232,185,370
Investments in
repurchase agreements 19,227,840 30,928,055 4,746,016 15,195,225
Short-term investments
held as collateral
for securities
lending 145,802,813 91,093,270 12,651,889 51,024,010
Cash 1,076 -- 27,776 25,571
Cash denominated in
foreign currencies
(at cost, $139,301) -- -- -- --
Income receivable 1,520,834 400,717 266,377 43,915
Receivable for
investments sold 4,216,864 -- 1,235,207 6,947,904
Receivable for capital
stock sold -- -- -- --
Receivable for daily
variation margin -- -- -- --
Deferred
organizational costs -- -- -- --
Deferred expenses -- -- -- --
------------ ------------ ------------ ------------
Total assets 665,571,605 459,840,279 140,992,387 305,421,995
------------ ------------ ------------ ------------
Liabilities:
Payable to Bank -- 1,360 -- --
Income distribution
payable -- -- -- --
Net payable for
foreign currency
exchange contracts
purchased -- -- -- --
Payable for
investments purchased 3,880,274 2,230,914 400,563 3,978,475
Payable on collateral
due to broker 145,802,813 91,093,270 12,651,889 51,024,010
Payable for daily
variation margin -- 108,000 -- 132,189
Payable for dollar
roll transactions -- -- -- --
Accrued expenses 749,179 547,373 210,667 382,705
------------ ------------ ------------ ------------
Total liabilities 150,432,266 93,980,917 13,263,119 55,517,379
------------ ------------ ------------ ------------
Net Assets Consist of:
Paid-in-capital 406,568,388 225,225,933 111,498,326 192,608,634
Net unrealized
appreciation
(depreciation) on
investments,
collateral, futures
contracts and foreign
currency translation 93,634,678 133,287,018 6,104,755 48,244,529
Accumulated net
realized gain (loss)
on investments,
futures contracts and
foreign currency
transactions 14,346,948 7,165,023 10,047,452 9,810,274
Undistributed net
investment
income/(net operating
loss) 589,325 181,388 78,735 (758,821)
------------ ------------ ------------ ------------
Total Net Assets $515,139,339 $365,859,362 $127,729,268 $249,904,616
------------ ------------ ------------ ------------
Net Asset Value,
Offering Price, and
Redemption Proceeds Per
Share
Class Y Shares:
Net Asset Value and
Redemption Proceeds
Per Share $15.43 $16.27 $10.24 $15.07
Offering Price Per
Share $15.43 $16.27 $10.24 $15.07
Class A Shares:
Net Asset Value and
Redemption Proceeds
Per Share $15.43 $16.27 $10.24 $15.07
Offering Price Per
Share(a) $16.37* $17.26* $10.86* $15.99*
------------ ------------ ------------ ------------
Net Assets:
Class Y Shares $515,139,242 $365,859,262 $127,729,176 $249,904,511
Class A Shares 97 100 92 105
------------ ------------ ------------ ------------
Total Net Assets $515,139,339 $365,859,362 $127,729,268 $249,904,616
============ ============ ============ ============
Shares Outstanding:
Class Y Shares 33,394,353 22,482,878 12,479,629 16,587,524
Class A Shares 6 6 9 7
------------ ------------ ------------ ------------
Total shares
outstanding ($0.0001
par value) 33,394,359 22,482,884 12,479,638 16,587,531
============ ============ ============ ============
Investments, at
identified cost $420,395,340 $236,472,269 $120,706,383 $198,993,376
============ ============ ============ ============
Investments, at tax cost $420,395,340 $236,472,269 $120,706,383 $198,993,376
============ ============ ============ ============
</TABLE>
* Computation of offering price per share 100/94.25 of net asset value.
** Computation of offering price per share 100/95.25 of net asset value.
(a) See "What Do Shares Cost?" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
[_] Marshall Funds
<TABLE>
<CAPTION>
------- ------- ------- ------- -------
Small-Cap International Intermediate Government Money
Growth Stock Bond Income Market
Fund Fund Fund Fund Fund
------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
$ 86,773,346 $229,248,663 $576,326,074 $281,655,836 $1,663,994,235
9,858,232 -- 4,711,129 59,410,063 182,918,334
-- 59,517,900 130,461,334 5,150,000 --
26,234 -- -- -- --
-- 133,040 -- -- --
3,927 1,134,246 7,092,537 2,342,190 14,436,402
3,424,520 -- 4,860,455 6,103,631 --
-- 206,792 -- -- --
23,625 -- -- -- --
18,785 3,016 -- -- --
-- 3,517 -- -- 200,000
------------ ------------ ------------ ------------ --------------
100,128,669 290,247,174 723,451,529 354,661,720 1,861,548,971
------------ ------------ ------------ ------------ --------------
-- 255,372 330,314 72,296 1,090,209
-- -- 2,729,958 1,295,042 6,698,717
-- 2,108 -- -- --
2,390,280 2,569,680 -- 30,525,599 25,000,000
-- 59,517,900 130,461,334 5,150,000 --
-- -- -- -- --
-- -- -- 19,630,873 --
203,134 391,392 379,522 256,679 708,908
------------ ------------ ------------ ------------ --------------
2,593,414 62,736,452 133,901,128 56,930,489 33,497,834
------------ ------------ ------------ ------------ --------------
99,443,795 197,872,551 615,366,908 300,660,067 1,828,051,137
362,625 19,089,737 (3,902,770) (1,876,438) --
(1,906,244) 9,851,556 (21,913,737) (1,052,398) --
(364,921) 696,878 -- -- --
------------ ------------ ------------ ------------ --------------
$ 97,535,255 $227,510,722 $589,550,401 $297,731,231 $1,828,051,137
------------ ------------ ------------ ------------ --------------
$11.40 $12.42 $9.39 $9.52 $1.00
$11.40 $12.42 $9.39 $9.52 $1.00
$11.40 $12.42 $9.39 $9.52 $1.00
$12.10* $13.18* $9.86** $9.99** $1.00
------------ ------------ ------------ ------------ --------------
$ 97,535,164 $227,510,624 $589,549,361 $297,731,132 $1,714,358,895
91 98 1,040 99 113,692,242
------------ ------------ ------------ ------------ --------------
$ 97,535,255 $227,510,722 $589,550,401 $297,731,231 $1,828,051,137
============ ============ ============ ============ ==============
8,559,126 18,322,789 62,805,126 31,281,030 1,714,358,895
8 8 111 10 113,692,242
------------ ------------ ------------ ------------ --------------
8,559,134 18,322,797 62,805,237 31,281,040 1,828,051,137
============ ============ ============ ============ ==============
$ 96,074,262 $210,129,220 $584,939,973 $342,942,337 $1,846,912,569
============ ============ ============ ============ ==============
$ 96,074,262 $210,129,220 $584,939,973 $342,942,337 $1,846,912,569
============ ============ ============ ============ ==============
</TABLE>
Six Months Ended February 28, 1999 (unaudited)
Statements of Operations
<TABLE>
<CAPTION>
------- ------- ------- -------
Large-Cap
Equity Growth & Mid-Cap Mid-Cap
Income Fund Income Fund Value Fund Growth Fund
------- ------- ------- -------
<S> <C> <C> <C> <C>
Investment Income:
Interest income $ 1,132,967 $ 806,166 $ 378,285 $ 485,242
Dividend income 6,750,851 1,965,451 1,201,536 134,064
----------- ----------- ----------- -----------
Total income 7,883,818 2,771,617 1,579,821 619,306
----------- ----------- ----------- -----------
Expenses:
Investment advisory fee 1,913,740 1,234,226 518,290 838,760
Directors' fees 981 1,197 1,371 1,364
Administrative fees 215,527 142,153 57,241 97,230
Custodian fees 37,604 29,319 17,231 21,902
Portfolio accounting fees 43,603 38,322 22,675 30,179
Transfer and dividend
disbursing agent fees and
expenses 56,722 54,493 42,661 46,056
Shareholder services fees--
Class Y Shares 637,913 411,409 172,763 279,587
Class A Shares -- -- -- --
Registration fees 9,745 12,035 8,331 7,854
Auditing fees 5,000 7,064 6,615 6,691
Legal fees 2,564 2,360 2,489 2,576
Printing and postage 3,189 7,705 7,988 10,341
Insurance premiums 6,018 1,757 1,461 1,798
Distribution services fees--
Class A Shares -- -- -- --
Taxes 20,174 14,107 5,395 14,655
Miscellaneous 31,553 19,905 10,011 19,134
----------- ----------- ----------- -----------
Total expenses 2,984,333 1,976,052 874,522 1,378,127
----------- ----------- ----------- -----------
Deduct--
Waiver of investment
advisory fee -- -- -- --
Waiver of shareholder
services fees--
Class Y Shares -- -- -- --
----------- ----------- ----------- -----------
Total Waivers -- -- -- --
----------- ----------- ----------- -----------
Net expenses 2,984,333 1,976,052 874,522 1,378,127
----------- ----------- ----------- -----------
Net investment income (net
operating loss) 4,899,485 795,565 705,299 (758,821)
----------- ----------- ----------- -----------
Realized and Unrealized Gain
(Loss) on Investments,
Collateral, Foreign Currency
and Futures Contracts:
Net realized gain (loss) on
investment transactions
(identified cost basis) 14,353,644 8,095,607 10,236,211 8,054,854
Net realized gain on foreign
currency transactions -- -- -- --
Net realized gain on futures
contracts (identified cost
basis) -- 971,733 -- 2,166,386
Net change in unrealized
appreciation (depreciation)
on investments, collateral,
futures contracts and
foreign currency
translation 58,438,972 70,557,868 1,644,080 54,889,457
----------- ----------- ----------- -----------
Net realized and unrealized
gain (loss) on investments
collateral, foreign currency
and futures contracts 72,792,616 79,625,208 11,880,291 65,110,697
----------- ----------- ----------- -----------
Change in net assets
resulting from operations $77,692,101 $80,420,773 $12,585,590 $64,351,876
=========== =========== =========== ===========
</TABLE>
(a) Net of Foreign taxes withheld of $87,589.
(b) Net of dollar roll interest expense of $1,823,594.
(See Notes which are an integral part of the Financial Statements)
[_] Marshall Funds
<TABLE>
<CAPTION>
- ----------- ------------- ------- ------- -------
Money
Small-Cap International Intermediate Government Market
Growth Fund Stock Fund Bond Fund Income Fund Fund
- ----------- ------------- ------- ------- -------
<S> <C> <C> <C> <C>
$ 377,496 $ 364,113 $ 19,305,278 $ 9,636,440(b) $48,053,250
13,600 2,037,239(a) -- -- --
- ----------- ----------- ------------ ----------- -----------
391,096 2,401,352 19,305,278 9,636,440 48,053,250
- ----------- ----------- ------------ ----------- -----------
476,846 1,142,617 1,756,987 1,076,541 4,424,604
1,463 507 1,232 865 1,517
57,460 98,827 244,975 122,449 744,307
9,637 62,215 41,680 26,751 102,594
20,777 32,895 50,736 36,066 82,595
36,911 41,019 26,443 40,297 103,193
119,212 285,654 740,173 358,847 166,333
-- -- -- -- 10,651
7,182 1,401 24,977 7,673 86,325
6,235 7,741 7,296 7,340 7,951
2,144 2,436 2,396 1,883 3,827
5,721 5,312 5,466 12,600 7,640
1,278 1,736 2,114 1,212 5,231
-- -- -- -- 159,769
3,591 5,958 18,982 9,880 59,688
7,560 2,576 25,160 6,400 5,325
- ----------- ----------- ------------ ----------- -----------
756,017 1,690,894 2,948,617 1,708,804 5,971,550
- ----------- ----------- ------------ ----------- -----------
-- -- (175,699) (143,539) (2,211,838)
-- -- (681,606) (330,140) --
- ----------- ----------- ------------ ----------- -----------
-- -- (857,305) (473,679) (2,211,838)
- ----------- ----------- ------------ ----------- -----------
756,017 1,690,894 2,091,312 1,235,125 3,759,712
- ----------- ----------- ------------ ----------- -----------
(364,921) 710,458 17,213,966 8,401,315 44,293,538
- ----------- ----------- ------------ ----------- -----------
(3,025,929) 10,462,619 (172,672) 645,905 --
-- (245,392) -- -- --
1,029,633 -- -- -- --
16,116,338 10,134,985 (13,392,291) (6,292,830) --
- ----------- ----------- ------------ ----------- -----------
14,120,042 20,352,212 (13,564,963) (5,646,925) --
- ----------- ----------- ------------ ----------- -----------
$13,755,121 $21,062,670 $ 3,649,003 $ 2,754,390 $44,293,538
=========== =========== ============ =========== ===========
</TABLE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
--------------------------- --------------------------
Equity Large-Cap
Income Growth &
Fund Income Fund
--------------------------- --------------------------
Six Months Six Months
Ended Year Ended Year
February 28, Ended February 28, Ended
1999 August 31, 1999 August 31,
(unaudited) 1998 (unaudited) 1998
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
Increase (Decrease) in
Net Assets:
Operations--
Net investment income
(net operating loss) $ 4,899,485 $ 9,626,902 $795,565 $1,227,848
Net realized gain
(loss) on investment
transactions 14,353,644 40,283,486 8,095,607 18,456,573
Net realized gain
(loss) on foreign
currency transactions -- -- -- --
Net realized gain
(loss) on futures
contracts -- -- 971,733 (844,292)
Net change in
unrealized
appreciation
(depreciation) of
investments,
collateral, futures
contracts and foreign
currency translation 58,438,972 (23,760,894) 70,557,868 (9,032,687)
------------ ------------- ------------ ------------
Change in net assets
resulting from
operations 77,692,101 26,149,494 80,420,773 9,807,442
------------ ------------- ------------ ------------
Distributions to
Shareholders--
Dividends to
shareholders from net
investment income
Class Y Shares (4,957,695) (9,687,514) (858,873) (1,128,306)
Distributions to
shareholders from net
realized gain on
investments
Class Y Shares (33,129,352) (27,002,639) (16,057,392) (23,055,255)
------------ ------------- ------------ ------------
Change in net assets
from distributions to
shareholders (38,087,047) (36,690,153) (16,916,265) (24,183,561)
------------ ------------- ------------ ------------
Capital Stock
Transactions--
Proceeds from sale of
shares 34,595,642 212,523,763 33,657,720 59,962,072
Net asset value of
shares issued to
shareholders in
payment of
distributions declared 34,426,343 29,988,247 16,371,223 23,601,015
Cost of shares redeemed (52,352,486) (104,836,067) (22,495,493) (63,972,861)
------------ ------------- ------------ ------------
Change in net assets
from capital stock
transactions 16,669,499 137,675,943 27,533,450 19,590,226
------------ ------------- ------------ ------------
Change in net assets 56,274,553 127,135,284 91,037,958 5,214,107
Net Assets:
Beginning of period 458,864,786 331,729,502 274,821,404 269,607,297
------------ ------------- ------------ ------------
End of period $515,139,339 $ 458,864,786 $365,859,362 $274,821,404
============ ============= ============ ============
Undistributed net
investment income
included in net assets
at end of period $ 589,325 $ 647,535 $ 181,388 $ 244,696
============ ============= ============ ============
Net gain (loss) as
computed for federal tax
purposes $ 14,353,644 $ 40,283,486 $ 9,067,340 $ 15,866,698
============ ============= ============ ============
</TABLE>
(See Notes which are an integral part of the Financial Statements)
[_] Marshall Funds
<TABLE>
<CAPTION>
- -------------------------- -------------------------- -------------------------- ---------------------------
Small-Cap
Mid-Cap Mid-Cap Growth International
Value Fund Growth Fund Fund Stock Fund
- -------------------------- -------------------------- -------------------------- ---------------------------
Six Months Six Months Six Months Six Months
Ended Year Ended Year Ended Year Ended Year
February 28, Ended February 28, Ended February 28, Ended February 28, Ended
1999 August 31, 1999 August 31, 1999 August 31, 1999 August 31,
(unaudited) 1998 (unaudited) 1998 (unaudited) 1998 (unaudited) 1998
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 705,299 $ 1,595,862 $ (758,821) $ (1,775,264) $ (364,921) $ (1,015,186) $ 710,458 $ 5,028,964
10,236,211 11,719,164 8,054,854 17,091,286 (3,025,929) 3,744,474 10,462,619 309,389
-- -- 2,166,386 -- -- -- (245,392) (233,199)
-- -- -- 264,890 1,029,633 (200,587) -- --
1,644,080 (16,549,975) 54,889,457 (36,178,485) 16,116,338 (23,578,293) 10,134,985 (29,288,960)
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ -------------
12,585,590 (3,234,949) 64,351,876 (20,597,573) 13,755,121 (21,049,592) 21,062,670 (24,183,806)
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ -------------
(998,368) (1,713,554) -- -- -- -- (4,598,552) (3,675,610)
(11,607,868) (21,031,640) (12,958,800) (23,952,792) (187,364) (2,485,675) -- (4,959,734)
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ -------------
(12,606,236) (22,745,194) (12,958,800) (23,952,792) (187,364) (2,485,675) (4,598,552) (8,635,344)
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ -------------
7,208,782 57,448,236 41,638,675 99,091,260 24,938,182 76,581,765 60,179,495 163,353,256
11,879,368 21,339,106 12,799,676 23,567,478 185,274 2,464,966 2,562,588 6,828,038
(25,958,046) (63,330,825) (43,315,226) (87,703,412) (21,013,963) (32,078,052) (76,943,989) (138,963,126)
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ -------------
(6,869,896) 15,456,517 11,123,125 34,955,326 4,109,493 46,968,679 (14,201,906) 31,218,168
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ -------------
(6,890,542) (10,523,626) 62,516,201 (9,595,039) 17,677,250 23,433,412 2,262,212 (1,600,982)
134,619,810 145,143,436 187,388,415 196,983,454 79,858,005 56,424,593 225,248,510 226,849,492
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ -------------
$127,729,268 $134,619,810 $249,904,616 $187,388,415 $ 97,535,255 $ 79,858,005 $227,510,722 $ 225,248,510
============ ============ ============ ============ ============ ============ ============ =============
$ 78,735 $ 371,804 $ -- $ -- $ -- $ -- $ 696,878 $ 4,584,972
============ ============ ============ ============ ============ ============ ============ =============
$ 10,236,211 $ 11,887,632 $ 10,221,240 $ 17,342,069 $ (1,996,296) $ 2,972,697 $ 10,217,227 $ 673,502
============ ============ ============ ============ ============ ============ ============ =============
</TABLE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
--------------------------
Intermediate
Bond Fund
--------------------------
Six Months
Ended Year
February 28, Ended
1999 August 31,
(unaudited) 1998
------------ ------------
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations--
Net investment income $ 17,213,966 $ 31,179,790
Net realized gain (loss) on investment
transactions (172,672) 1,740,828
Net change in unrealized appreciation
(depreciation) of investments,
collateral, futures contracts, and foreign
currency translation (13,392,291) 7,755,997
------------ ------------
Change in net assets resulting from operations 3,649,003 40,676,615
------------ ------------
Distributions to Shareholders--
Dividends to shareholders from net investment
income:
Class Y Shares (17,213,963) (31,179,790)
Class A Shares (3) --
Distributions from shareholders from net realized
gain on investments
Class Y Shares -- --
------------ ------------
Change in net assets from distributions to
shareholders (17,213,966) (31,179,790)
------------ ------------
Capital Stock Transactions--
Proceeds from sale of shares 55,803,528 256,079,048
Net asset value of shares issued to shareholders
in payment of dividends declared 5,648,003 13,270,752
Cost of shares redeemed (48,005,194) (87,411,885)
------------ ------------
Change in net assets from capital stock
transactions 13,446,337 181,937,915
------------ ------------
Change in net assets (118,626) 191,434,740
Net Assets:
Beginning of period 589,669,027 398,234,287
------------ ------------
End of period $589,550,401 $589,669,027
============ ============
Undistributed net investment income included in
net assets at end of period -- --
============ ============
Net gain (loss) as computed for federal tax
purposes ($172,672) $ 760,870
============ ============
</TABLE>
(See Notes which are an integral part of the Financial Statements)
[_] Marshall Funds
<TABLE>
<CAPTION>
-------------------------- ------------------------------
Government Money
Income Market
Fund Fund
-------------------------- ------------------------------
Six Months Six Months
Ended Year Ended Year
February 28, Ended February 28, Ended
1999 August 31, 1999 August 31,
(unaudited) 1998 (unaudited) 1998
------------ ------------ -------------- --------------
<S> <C> <C> <C>
$ 8,401,315 $ 15,508,284 $ 44,293,538 $ 82,839,430
645,905 1,854,374 -- --
(6,292,830) 3,216,704 -- --
------------ ------------ -------------- --------------
2,754,390 20,579,362 44,293,538 82,839,430
------------ ------------ -------------- --------------
(8,401,314) (15,508,284) (41,771,208) (78,163,550)
(1) -- (2,522,330) (4,675,880)
(83,554) -- -- --
------------ ------------ -------------- --------------
(8,484,869) (15,508,284) (44,293,538) (82,839,430)
------------ ------------ -------------- --------------
40,830,789 98,456,886 3,344,512,622 5,479,189,898
4,196,291 8,809,411 10,740,166 18,085,713
(21,877,984) (35,667,208) (3,221,143,396) (5,183,477,454)
------------ ------------ -------------- --------------
23,149,096 71,599,089 134,109,392 313,798,157
------------ ------------ -------------- --------------
17,418,617 76,670,167 134,109,392 313,798,157
280,312,614 203,642,447 1,693,941,745 1,380,143,588
------------ ------------ -------------- --------------
$297,731,231 $280,312,614 $1,828,051,137 $1,693,941,745
============ ============ ============== ==============
-- -- -- --
============ ============ ============== ==============
$ 645,905 $ 1,948,002 -- --
============ ============ ============== ==============
</TABLE>
Financial Highlights--Class A Shares
<TABLE>
<CAPTION>
Net realized and
unrealized
Net gain/(loss) on Dividends to
Net asset investment investments, shareholders
Period value, income/ collateral, futures Total from from net Net asset
Ended beginning operating contracts and investment investment Total value, end Total
August 31, of period (loss) foreign currency operations income distributions of period return(a)
- ---------- --------- ---------- ------------------- ---------- ------------ ------------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Equity Income Fund
1999(d) $15.88 0.04 (0.49) (0.45) -- -- $15.43 (2.83%)
Large-Cap Growth & Income Fund
1999(d) $16.34 0.01 (0.08) (0.07) -- -- $16.27 (0.43%)
Mid-Cap Value Fund
1999(d) $10.77 0.01 (0.54) (0.53) -- -- $10.24 (4.92%)
Mid-Cap Growth Fund
1999(d) $15.13 (0.01) (0.05) (0.06) -- -- $15.07 (0.40%)
Small-Cap Growth Fund
1999(d) $12.73 (0.01) (1.32) (1.33) -- -- $11.40 (10.45%)
International Stock Fund
1999(d) $12.69 0.01 (0.28) (0.27) -- -- $12.42 (2.13%)
Intermediate Bond Fund
1999(d) $ 9.53 0.09 (0.14) (0.05) (0.09) (0.09) $ 9.39 (0.56%)
Government Income Fund
1999(d) $ 9.61 0.08 (0.09) (0.01) (0.08) (0.08) $ 9.52 (0.07%)
Money Market Fund(f)
1994 $ 1.00 0.03 -- 0.03 (0.03) (0.03) $ 1.00 3.11%
1995 $ 1.00 0.05 -- 0.05 (0.05) (0.05) $ 1.00 5.25%
1996 $ 1.00 0.05 -- 0.05 (0.05) (0.05) $ 1.00 5.07%
1997 $ 1.00 0.05 -- 0.05 (0.05) (0.05) $ 1.00 5.04%
1998 $ 1.00 0.05 -- 0.05 (0.05) (0.05) $ 1.00 5.19%
1999(g) $ 1.00 0.02 -- 0.02 (0.02) (0.02) $ 1.00 2.37%
<CAPTION>
Ratios to Average Net Assets
------------------------------------
Net assets,
Period Net end Portfolio
Ended investment Expense of period turnover
August 31, Expenses income waiver(c) (000 omitted) rate
- ---------- ---------- ------------- ----------- -------------- ---------
<S> <C> <C> <C> <C> <C>
Equity Income Fund
1999(d) 1.17%(b) 1.54%(b) 0.25%(b) $ --(e) 35%
Large-Cap Growth & Income Fund
1999(d) 1.20%(b) 0.19%(b) 0.25%(b) $ --(e) 14%
Mid-Cap Value Fund
1999(d) 1.27%(b) 0.27%(b) 0.25%(b) $ --(e) 64%
Mid-Cap Growth Fund
1999(d) 1.23%(b) (0.75%)(b) 0.25%(b) $ --(e) 105%
Small-Cap Growth Fund
1999(d) 1.59%(b) (0.96%)(b) 0.25%(b) $ --(e) 98%
International Stock Fund
1999(d) 1.48%(b) 1.53%(b) 0.25%(b) $ --(e) 14%
Intermediate Bond Fund
1999(d) 0.94%(b) 5.54%(b) 0.31%(b) $ 1 71%
Government Income Fund
1999(d) 1.09%(b) 5.42%(b) 0.35%(b) $ --(e) 65%
Money Market Fund(f)
1994 0.70% 3.39% 0.29% $ 11,929 --
1995 0.71% 5.21% 0.26% $ 30,331 --
1996 0.71% 4.92% 0.26% $ 84,711 --
1997 0.71% 4.93% 0.26% $ 89,485 --
1998 0.71% 5.12% 0.25% $105,125 --
1999(g) 0.71%(b) 4.72%(b) 0.25%(b) $113,692 --
</TABLE>
(a) Based on net asset value.
(b) Computed on an annualized basis.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(d) Reflects operations for the period from December 31, 1998 (start of
performance) to February 28, 1999 (unaudited).
(e) Amounts do not round to one thousand dollars.
(f) Effective December 1998, Class B Shares changed its share class name to
Class A Shares.
(g) Six months ended February 28, 1999 (unaudited).
(See Notes which are an integral part of the Financial Statements)
February 28, 1999 (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, nine of
which offer Class A Shares (individually referred to as the "Fund", or
collectively as the "Funds") which are presented herein:
<TABLE>
<CAPTION>
Portfolio Name Investment Objective
-------------- --------------------
<C> <S>
Marshall Equity Income
Fund ("Equity
Income Fund")
Above-average
dividend income
with
appreciation of
capital.
Marshall Large-Cap Growth & Income Fund Growth of capital and
("Large-Cap Growth & Income Fund") income.
Marshall Mid-Cap Value Fund ("Mid-Cap Value Fund") Long-term capital growth
and income.
Marshall Mid-Cap Growth Fund ("Mid-Cap Growth Fund") Appreciation of capital.
Marshall Small-Cap Growth Fund ("Small-Cap Growth Fund") Appreciation of capital.
Marshall International Stock Fund ("International Stock Fund") Long-term capital
growth.
Marshall Intermediate
Bond Fund
("Intermediate
Bond Fund")
Maximize total
return
consistent with
current income.
Marshall Government Income Fund ("Government Income Fund") Current income.
Marshall Money Market Fund ("Money Market Fund") Current income
consistent with
stability of principal.
</TABLE>
The Funds are offered in two classes of shares: Class Y Shares and Class A
Shares. The assets of each portfolio are segregated and a shareholder's interest
is limited to the portfolio in which shares are held.
On December 22, 1997, the Equity Income Fund, Mid-Cap Value Fund, and
Intermediate Bond Fund each acquired portfolios of a common trust fund managed
by the Adviser. The acquisition was accomplished by a tax-free exchange at fair
market value.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Fund Shares Value of Shares
- ---- ---------- ---------------
<S> <C> <C>
Equity Income Fund 10,643,152 $162,840,218
Mid-Cap Value Fund 3,632,596 $ 40,794,056
Intermediate Bond Fund 14,808,934 $140,979,572
</TABLE>
- --------------------------------------------------------------------------------
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--Municipal bonds are valued by an independent pricing
service, taking into consideration yield, liquidity, risk, credit quality,
coupon, maturity, type of issue, and any other factors or market data the
pricing service deems relevant. U.S. government securities, listed corporate
bonds, other fixed income and asset-backed securities, and unlisted securities
and private placement securities are generally valued at the mean of the latest
bid and asked price as furnished by an independent pricing service. Listed
equity securities and investments in closed end investment companies are valued
at the last sale price reported on a national securities exchange. Money Market
Fund's use of the amortized cost method to value portfolio securities is in
accordance with Rule 2a-7 under the Act. For fluctuating net asset value funds
within the Corporation, short-term securities are valued at the prices provided
by an independent pricing service. However, short-term securities purchased with
remaining maturities of sixty days or less may be valued at amortized cost,
which approximates fair market value. Investments in other open-end regulated
investment companies are valued at net asset value.
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' adviser (or sub-adviser with respect to International Stock Fund) to
be creditworthy pursuant to the guidelines and/or standards reviewed or
established by the 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.
[_] Marshall Funds
Investment Income, Expenses and Distributions--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"). Dividend income
and distributions to shareholders are recorded on the ex-dividend date.
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 International Stock Fund upon the
disposition of 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, 1998, the following Funds had capital loss carryforwards 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 Capital Loss Capital Loss Capital Loss
Carryforward Carryforward Carryforward Carryforward Carryforward Total
to Expire in to Expire in to Expire in to Expire in to Expire in Capital Loss
Fund 2002 2003 2004 2005 2006 Carryforward
- ---- ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Intermediate Bond Fund -- $15,641,683 $6,100,494 -- -- $21,742,177
Government Income Fund -- 13,905 -- $1,184,492 -- 1,198,397
</TABLE>
- -------------------------------------------------------------------------------
Net realized capital losses on Government Income Fund of $416,086,
attributable to security transactions incurred after October 31, 1997, were
treated as arising on the first day of the Government Income Fund's next taxable
year (September 1, 1998).
Net realized losses on International Stock Fund of $364,576, attributable to
foreign currency transactions incurred after October 31, 1997, were treated as
arising on the first day of International Stock Fund's next taxable year
(September 1, 1998).
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 their shares in their first fiscal year, excluding the initial
expense of registering their shares, have been deferred and are being amortized
over a period not to exceed five years from each Fund's commencement date.
Futures Contracts--Large-Cap Growth & Income Fund, Mid-Cap Value Fund, Mid-
Cap Growth Fund and Small-Cap Growth Fund purchase stock index futures contracts
to manage cashflows, enhance yield, and to potentially reduce transaction costs.
Upon entering into a stock index futures contract with a broker, the Fund is
required to deposit in a segregated account a specified amount of cash or U.S.
government securities. Futures contracts are valued daily and unrealized gains
or losses are recorded in a "variation margin" account. Daily, the Fund receives
from or pays to the broker a specified amount of cash based upon changes in the
variation margin account. When a contract is closed, the Fund recognizes a
realized gain or loss. Futures contracts have market risks, including the risk
that the change in the value of the contract may not correlate with changes in
the value of the underlying securities.
At February 28, 1999, the Mid-Cap Value Fund had no outstanding futures
contracts.
- -------------------------------------------------------------------------------
At February 28, 1999, the Large-Cap Growth & Income Fund had outstanding
futures contracts as set forth below:
<TABLE>
<CAPTION>
Contracts Unrealized
Expiration Date to Receive Position Appreciation
- --------------- ---------- -------- ------------
<S> <C> <C> <C>
March 1999 72 S&P 500 Long $1,412,995
</TABLE>
- -------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- -------------------------------------------------------------------------------
At February 28, 1999, the Mid-Cap Growth Fund had outstanding futures
contracts as set forth below:
<TABLE>
<CAPTION>
Contracts Unrealized
Expiration Date to Receive Position (Depreciation)
- --------------- ---------- -------- --------------
<S> <C> <C> <C>
March 1999 10 S&P 500 Long ($142,690)
</TABLE>
- -------------------------------------------------------------------------------
At February 28, 1999, the Small-Cap Growth Fund had outstanding futures
contracts as set forth below:
<TABLE>
<CAPTION>
Contracts to Unrealized
Expiration Date Receive Position (Depreciation)
- --------------- --------------- -------- --------------
<S> <C> <C> <C>
March 1999 35 Russell 2000 Long ($194,691)
</TABLE>
- -------------------------------------------------------------------------------
Foreign Exchange Contracts--International Stock Fund may enter into foreign
currency exchange contracts as a way of managing foreign exchange rate risk. The
Fund may enter into these contracts for the purchase or sale of a specific
foreign currency at a fixed price on a future date as a hedge or cross hedge
against either specific transactions or portfolio positions. The objective of
the Fund's foreign currency hedging transactions is to reduce the risk that the
U.S. dollar value of the Fund's foreign currency denominated securities will
decline in value due to changes in foreign currency exchange rates. All foreign
currency exchange contracts are "marked to market" daily at the applicable
translation rates resulting in unrealized gains or losses. Realized gains or
losses are recorded at the time the foreign currency exchange contract is offset
by entering into a closing transaction or by the delivery or receipt of the
currency. Risk may arise upon entering into these contracts from the potential
inability of counterparties to meet the terms of their contracts and from
unanticipated movements in the value of a foreign currency relative to the U.S.
dollar. As of February 28, 1999, International Stock Fund had outstanding
foreign exchange contracts as set forth below:
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Foreign Currency Units Contracts at Unrealized
Settlement Date to Receive In Exchange For Value (Depreciation)
- --------------- ---------------------- --------------- ------------ --------------
<S> <C> <C> <C> <C>
Contracts Purchased:
3/1/1999--3/3/1999 682,282 Pound Sterling $1,095,771 $1,093,663 ($2,108)
</TABLE>
- -------------------------------------------------------------------------------
Foreign Currency Translation--The accounting records of International Stock
Fund are maintained in U.S. dollars. All assets and liabilities denominated in
foreign currencies ("FCs") are translated into U.S. dollars based on the rate of
exchange of such currencies against U.S. dollars on the date of valuation.
Purchases and sales of securities, income and expenses are translated at the
rate of exchange quoted on the respective date that such transactions are
recorded. Differences between income and expense amounts recorded and collected
or paid are adjusted when reported by the custodian bank. The Funds do not
isolate that portion of the results of operations resulting from changes in
foreign exchange rates on investments from the fluctuations arising from changes
in market prices of securities held. Such fluctuations are included with the net
realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
FCs, currency gains or losses realized between the trade and settlement dates on
securities transactions, the difference between the amounts of dividends,
interest, and foreign withholding taxes recorded on the Funds' books, and the
U.S. dollar equivalent of the amounts actually received or paid. Net unrealized
foreign exchange gains and losses arise from changes in the value of assets and
liabilities other than investments in securities at fiscal year end, resulting
from changes in the exchange rate.
Dollar Roll Transactions--The Funds, except for Money Market Fund, may enter
into dollar roll transactions, with respect to mortgage securities issued by
Government National Mortgage Association, Federal National Mortgage Association
and Federal Home Loan Mortgage Corporation, in which the Funds loan mortgage
securities to financial institutions and simultaneously agree to accept
substantially similar (same type, coupon and maturity) securities at a later
date at an agreed upon price. Dollar roll transactions are short-term financing
arrangements which will not exceed twelve months. The Funds will use the
proceeds generated from the transactions to invest in short-term investments,
which may enhance the Funds' current yield and total return.
Securities Lending--The Funds participate in a securities lending program
providing for the lending of corporate bonds, equity and government securities
to qualified brokers. The Funds receive cash as collateral in return for the
securities and record a corresponding payable for collateral due to the
respective broker. The amount of cash collateral received is maintained at a
minimum level of 100% of the market value on securities loaned, plus interest.
Collateral is reinvested in short-term securities including overnight repurchase
agreements, commercial paper, master notes, floating rate corporate notes (with
at least quarterly reset rates) and money market funds. The Funds reimburse the
custodian for the costs directly associated with the Funds' participation in the
securities lending program.
[_] Marshall Funds
As of February 28, 1999, the value of securities loaned plus interest, the
payable on collateral due to broker and the value of reinvested cash collateral
securities were as follows:
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value of
Market Value of Payable on Collateral Reinvested Collateral
Fund Securities Loaned Due to Broker Securities
- ---- ----------------- --------------------- ---------------------
<S> <C> <C> <C>
Equity Income Fund $141,313,619 $145,802,813 $145,802,813
Large-Cap Growth &
Income Fund $ 87,958,949 $ 91,093,270 $ 91,093,270
Mid-Cap Value Fund $ 12,120,386 $ 12,651,889 $ 12,651,889
Mid-Cap Growth Fund $ 50,211,333 $ 51,024,010 $ 51,024,010
International Stock Fund $ 53,808,298 $ 59,517,900 $ 59,517,900
Intermediate Bond Fund $127,462,928 $130,461,334 $130,461,334
Government Income Fund $ 5,002,350 $ 5,150,000 $ 5,150,000
</TABLE>
- -------------------------------------------------------------------------------
Individual reinvested cash collateral securities in excess of 5% of fund net
assets at February 28, 1999 are as follows:
- -------------------------------------------------------------------------------
Repurchase Agreements:
<TABLE>
<S> <C> <C>
Bank of America, 4.975%, 3/1/99
(Secured by asset-backed
securities and corporate bonds
and notes) Large-Cap Growth & Income Fund $40,000,000
Mid-Cap Growth Fund $25,000,000
Morgan Stanley Co., Inc., 5.000%,
3/1/99 (Secured by asset-backed
securities and corporate bonds
and notes) Large-Cap Growth & Income Fund $30,000,000
International Stock Fund $20,000,000
Intermediate Bond Fund $45,000,000
Investment Companies:
Dreyfus Cash Management Plus International Stock Fund $12,754,932
Prudential Institutional Liquidity
Portfolio Equity Income Fund $45,000,000
Mid-Cap Value Fund $10,000,000
Prudential Securities Group Fund
Agreement International Stock Fund $15,000,000
Merrimac Cash Fund Equity Income Fund $43,000,000
</TABLE>
- -------------------------------------------------------------------------------
Restricted Securities--Restricted securities are securities that may only be
resold upon registration under federal securities laws or in transactions exempt
from such registration. In some cases, the issuer of restricted securities has
agreed to register such securities for resale, at the issuer's expense either
upon demand by the Fund or in connection with another registered offering of the
securities. Many restricted securities may be resold in the secondary market in
transactions exempt from registration. Such restricted securities may be
determined to be liquid under criteria established by the Directors. The Fund
will not incur any registration costs upon such resales. The Funds' restricted
securities are valued at the price provided by dealers in the secondary market
or, if no market prices are available, at the fair value as determined by the
Fund's pricing committee.
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.
Notes to Financial Statements (continued)
3. Capital Stock
The Articles of Incorporation permit the Directors to issue an indefinite
number of full and fractional shares of common stock, par value $0.0001 per
share. At February 28, 1999, the capital paid-in was as follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Capital Paid-
Fund In
- ---- --------------
<S> <C>
Equity Income Fund $ 406,568,388
Large-Cap Growth & Income Fund $ 225,225,933
Mid-Cap Value Fund $ 111,498,326
Mid-Cap Growth Fund $ 192,608,634
Small-Cap Growth Fund $ 99,443,795
International Stock Fund $ 197,872,551
Intermediate Bond Fund $ 615,366,908
Government Income Fund $ 300,660,067
Money Market Fund $1,828,051,137
</TABLE>
- --------------------------------------------------------------------------------
Transactions in capital stock were as follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Large-Cap Growth
Equity Income Fund & Income Fund Mid-Cap Value Fund
----------------------- ----------------------- -----------------------
Six-Months Six-Months Six-Months
Ended Year Ended Ended Year Ended Ended Year Ended
February 28, August 31, February 28, August 31, February 28, August 31,
1999 1998 1999 1998 1999 1998
Class Y Shares ------------ ---------- ------------ ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 2,201,642 15,738,873 2,157,916 4,089,991 666,139 5,453,000
Shares issued to
shareholders in payment
of
distributions declared 2,168,876 1,937,827 1,042,350 1,725,616 1,071,333 1,866,937
Shares redeemed (3,360,638) (6,501,126) (1,468,083) (4,377,201) (2,390,978) (5,229,996)
---------- ---------- ---------- ---------- ---------- ----------
Net change resulting
from Class Y Share
transactions 1,009,880 11,175,574 1,732,183 1,438,406 (653,506) 2,089,941
========== ========== ========== ========== ========== ==========
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Large-Cap Growth
Equity Income Fund & Income Fund Mid-Cap Value Fund
----------------------- ----------------------- -----------------------
Period Period Period
Ended Year Ended Ended Year Ended Ended Year Ended
February 28, August 31, February 28, August 31, February 28, August 31,
1999* 1998 1999* 1998 1999* 1998
Class A Shares ------------ ---------- ------------ ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 6 -- 6 -- 9 --
--------- ---------- --------- --------- -------- ---------
Net change resulting
from Class A Share
transactions 6 -- 6 -- 9 --
========= ========== ========= ========= ======== =========
Net change resulting
from Fund Share
transactions 1,009,886 11,175,574 1,732,189 1,438,406 (653,497) 2,089,941
========= ========== ========= ========= ======== =========
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Small-Cap International
Mid-Cap Growth Fund Growth Fund Stock Fund
----------------------- ----------------------- ------------------------
Six-Months Six-Months Six Months
Ended Year Ended Ended Year Ended Ended Year Ended
February 28, August 31, February 28, August 31, February 28, August 31,
1999 1998 1999 1998 1999 1998
Class Y Shares ------------ ---------- ------------ ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 3,035,407 6,547,612 2,244,753 5,767,967 4,906,327 11,989,024
Shares issued to
shareholders in payment
of
distributions declared 950,942 1,710,267 15,715 199,269 201,461 545,806
Shares redeemed (3,080,963) (5,865,009) (1,834,356) (2,462,788) (6,304,076) (10,197,589)
---------- ---------- ---------- ---------- ---------- -----------
Net change resulting
from Class Y Share
transactions 905,386 2,392,870 426,112 3,504,448 (1,196,288) 2,337,241
========== ========== ========== ========== ========== ===========
</TABLE>
- --------------------------------------------------------------------------------
*For the period from December 31, 1998 (start of performance) to February 28,
1999.
[_] Marshall Funds
<TABLE>
<CAPTION>
Small-Cap International
Mid-Cap Growth Fund Growth Fund Stock Fund
----------------------- ----------------------- -----------------------
Period Period Period
Ended Year Ended Ended Year Ended Ended Year Ended
February 28, August 31, February 28, August 31, February 28, August 31,
1999* 1998 1999* 1998 1999* 1998
Class A Shares ------------ ---------- ------------ ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 7 -- 8 -- 8 --
------- --------- ------- --------- ---------- ---------
Net change resulting
from Class A Share
transactions 7 -- 8 -- 8 --
======= ========= ======= ========= ========== =========
Net change resulting
from Fund Share
transactions 905,393 2,392,870 426,120 3,504,448 (1,196,280) 2,337,241
======= ========= ======= ========= ========== =========
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Intermediate Government
Bond Fund Income Fund
----------------------- -----------------------
Six-Months Six-Months
Ended Year Ended Ended Year Ended
February 28, August 31, February 28, August 31,
1999 1998 1999 1998
Class Y Shares ------------ ---------- ------------ ----------
<S> <C> <C> <C> <C>
Shares sold 5,830,401 26,987,634 4,228,425 10,236,771
Shares issued to
shareholders in payment of
distributions declared 590,356 1,392,283 434,748 916,492
Shares redeemed (5,025,355) (9,172,629) (2,272,311) (3,711,734)
---------- ---------- ---------- ----------
Net change resulting from
Class Y Share transactions 1,395,402 19,207,288 2,390,862 7,441,529
========== ========== ========== ==========
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Intermediate Government
Bond Fund Income Fund
----------------------- -----------------------
Period Period
Ended Year Ended Ended Year Ended
February 28, August 31, February 28, August 31,
1999* 1998 1999* 1998
Class A Shares ------------ ---------- ------------ ----------
<S> <C> <C> <C> <C>
Shares sold 111 -- 10 --
--------- ---------- --------- ---------
Net change resulting from
Class A Share transactions 111 -- 10 --
========= ========== ========= =========
Net change resulting from Fund
Share transactions 1,395,513 19,207,288 2,390,872 7,441,529
========= ========== ========= =========
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Money Market Fund
------------------------------
Six-Months
Ended Year Ended
February 28, August 31,
1999 1998
Class Y Shares -------------- --------------
<S> <C> <C>
Shares sold 3,094,058,012 4,913,792,441
Shares issued to shareholders in payment of
distributions declared 8,610,132 13,477,063
Shares redeemed (2,977,126,237) (4,629,111,222)
-------------- --------------
Net change resulting from Class Y Share
transactions 125,541,907 298,158,282
============== ==============
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Money Market Fund
--------------------------
Six-Months
Ended Year Ended
February 28, August 31,
1999 1998
Class A Shares ------------ ------------
<S> <C> <C>
Shares sold 250,454,610 565,397,457
Shares issued to shareholders in payment of
distributions declared 2,130,034 4,608,650
Shares redeemed (244,017,159) (554,366,232)
------------ ------------
Net change resulting from Class A Share
transactions 8,567,485 15,639,875
============ ============
Net change resulting from Fund Share transactions 134,109,392 313,798,157
============ ============
</TABLE>
- --------------------------------------------------------------------------------
*For the period from December 31, 1998 (start of performance) to February 28,
1999.
Notes to Financial Statements (continued)
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%
Large-Cap Growth & Income Fund 0.75%
Mid-Cap Value Fund 0.75%
Mid-Cap Growth Fund 0.75%
Small-Cap Growth Fund 1.00%
International Stock Fund 1.00%
Intermediate Bond Fund 0.60%
Government Income Fund 0.75%
Money Market Fund 0.50%
</TABLE>
- --------------------------------------------------------------------------------
Templeton Investment Counsel, Inc. was the sub-adviser (the "Sub-Adviser") for
International Stock Fund for the period ended February 28, 1999. Effective March
29, 1999, International Stock Fund changed its Sub-Adviser to BPI Global Asset
Management LLP. 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"), under the
Administrative Services Agreement, provides the Funds with administrative
personnel and services. The fee paid to FAS is based on the level of average
aggregate daily net assets of the Corporation for the period except for the
Small-Cap Growth Fund, which is based on the Fund's average daily net assets.
Distribution Services Fee--The Funds have adopted a Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the
Funds will compensate Federated Securities Corp. ("FSC"), the principal
distributor, from their net assets to finance activities intended to result in
the sale of shares of the Funds' Class A Shares. The Plan provides that the
Funds may incur distribution expenses up 0.25% of the average daily net assets
of the Funds' Class A Shares (except for Money Market Fund's Class A Shares
which may accrue up to 0.30%) annually, to compensate FSC.
Shareholder Services Fee--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services Company ("FSSC"), the Funds' Class A Shares
(except for Money Market Fund) will pay FSSC up to 0.25% of average daily net
assets of the Funds' Class A Shares for the period. The fee paid to FSSC is used
to finance certain services for shareholders and to maintain shareholder
accounts. FSSC may voluntarily choose to waive any portion of its fee. FSSC can
modify or terminate this voluntary waiver at any time at its sole discretion.
Marshall Funds Investor Services ("MFIS") is the shareholder servicing agent for
the Money Market Fund. The Money Market Fund may pay MFIS a fee equal to
approximately 0.02% of the average daily net assets of the Money Market Fund's
Class A Shares for which MFIS provides shareholder services. MFIS may
voluntarily choose to waive any portion of its fee. MFIS can modify or terminate
this voluntary waiver at any time at its sole discretion.
Transfer and Dividend Disbursing Agent Fees and Expenses--Federated Services
Company ("FServ") through its subsidiary, FSSC, serves as transfer and dividend
disbursing agent for the Funds. The fee paid to FSSC is based on the size, type,
and number of accounts and transactions made by shareholders.
Portfolio Accounting Fees--FServ maintains the Funds' accounting records for
which it receives a fee. The fee is based on the level of each Fund's average
daily net assets for the period, plus out-of-pocket expenses. FServ may
voluntarily choose to waive any portion of its fee.
Custodian Fees--Marshall & Ilsley Trust Co. is the Funds' custodian. Marshall
& Ilsley Trust Co. receives fees based on the level of each Fund's average
daily net assets for the period. The custodian also charges a fee in connection
with securities lending activities of the Funds.
Organizational Expenses--Organizational expenses were borne initially by FAS.
The Funds have reimbursed FAS for these expenses. These expenses have been
deferred and are being amortized over the five-year period following each Fund's
effective date. For the period ended February 28, 1999, the Fund's expensed the
following pursuant to this agreement:
[_] Marshall Funds
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Organizational Organizational
Fund Expenses Expenses Paid
- ---- -------------- --------------
<S> <C> <C>
Small-Cap Growth Fund $35,592 $3,716
International Stock Fund $18,401 $2,970
</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
period ended February 28, 1999, were as follows:
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Fund Purchases Sales
- ---- ------------ ------------
<S> <C> <C>
Equity Income Fund $176,080,140 $165,665,718
Large-Cap Growth & Income Fund $ 56,300,901 $ 42,617,771
Mid-Cap Value Fund $ 80,089,467 $ 83,339,391
Mid-Cap Growth Fund $224,517,162 $225,593,612
Small-Cap Growth Fund $ 83,639,128 $ 82,182,824
International Stock Fund $ 32,647,062 $ 47,442,066
Intermediate Bond Fund $434,918,414 $391,288,318
Government Income Fund $263,497,060 $208,152,885
</TABLE>
- -------------------------------------------------------------------------------
6. Risk of Foreign Investing
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.
7. Year 2000
Similar to other financial organizations, the Funds could be adversely
affected if the computer systems used by the Funds' service providers do not
properly process and calculate date-related information and data from and after
January 1, 2000. The Funds' Adviser and administrator are taking measures that
they believe are reasonably designed to address the Year 2000 issue with respect
to computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Funds' other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Funds.
Directors Officers
Ody J. Fish John M. Blaser
President
John DeVincentis
Jo A. Dales
Paul E. Hassett Vice President
Brooke J. Billick
Secretary
Ann K. Peirick
Treasurer
Janet D. Olsen
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.
Thisreport is authorized for distribution to prospective investors only when
preceded or accompanied by the Funds' prospectus, which contains facts
concerning each Fund's objective and policies, management
fees, expenses, and other information.
Marshall Funds
Marshall Funds Investor Services
1000 North Water Street
P.O. Box 1348
Milwaukee, Wisconsin 53201-1348
1-800-236-FUND (3863) or 414-287-8595
TDD: Speech and Hearing Impaired Services
800-209-3520
www.marshallfunds.com
Federated Securities Corp., Distributor G01126-02 (4/99)
953-276
1A. The graphic representation here displayed consists of two charts. One chart
outlines the top five industries that the Marshall Equity Income Fund
("Equity Income Fund") invests in as well as its percentage of net assets as of
February 28, 1999. The information is as follows: Domestic & International
Oil, 14.8%; Banks, 13.8%;
Telecommunications, 10.3%; Healthcare, 8.0%; Electric, 7.5%. The second
chart outlines the Equity Income Fund's five largest stock holdings and its
percentage of net assets as of February 28, 1999. The information is as follows:
Exxon Corp., 3.0%; AT&T Corp., 2.8%; SBC Communications, Inc., 2.4%; BankAmerica
Corp., 2.3%; Philip Morris Cos., Inc., 2.3%. 2A. The graphic representation here
displayed consists of two charts. The first chart outlines the average annual
total returns for the Equity Income Fund as of February 28, 1999 for the 1-year,
3-year, 5-year and since inception (9/30/93) periods.
The returns are as follows: 2.93%; 16.91%; 17.36%; and 15.95%, respectively. The
second chart outlines the six-month total return for the Equity Income Fund as
of February 28, 1999. The six-month return is 17.12%.
<PAGE>
3A. The graphic presentation here displayed consists of a line graph. The
corrresponding components of the line graph are listed beneath the graphic
presentation. The Equity Income Fund (Class Y Shares) is represented by a solid
line, whereas Standard & Poor's 500 Index ("S&P 500") is represented by a broken
dotted line and Lipper Equity Income Funds Index ("LEIFI") is represented by a
dotted line. The line graph is a visual representation of a comparison of change
in value of a hypothetical investment of $10,000 in the Equity Income Fund and
S&P 500 and LEIFI from its inception on September 30, 1993 to February 28, 1999.
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
Equity Income Fund as compared to S&P 500 and LEIFI; the ending values are
$22,083; $30,365; and $21,182, respectively.
<PAGE>
1B. The graphic representation here displayed consists of two charts. One
chart outlines the top five industries that the Marshall Large-Cap Growth &
Income Fund ("Large-Cap Growth & Income Fund") invests in as well as its
percentage of net assets as of February 28, 1999. The information is as follows:
Telecommunications, 11.1%; Computer Services, 8.7%; Retail, 7.8%; Banks, 7.4%;
Beverages & Foods, 5.7%. The second chart outlines the Large-Cap Growth & Income
Fund's five largest stock holdings and its percentage of net assets as of
February 28, 1999. The information is as follows: General Electric Co., 3.3%;
Microsoft Corp., 3.2%; MCI Worldcom, Inc., 2.5%; Walgreen Co., 2.4%; and
American International Group, Inc., 2.4%.
2B. The graphic representation here displayed consists of two charts. The
first chart outlines the average annual total returns for the Large-Cap Growth &
Income Fund as of February 28, 1999 for the 1-year, 3-year, 5-year and since
inception (11/20/92) periods. The returns are as follows: 17.38%, 22.16%;
17.81%; and 14.92%, respectively. The second chart outlines the six-month total
return for the Large-Cap Growth & Income Fund as of February 28, 1999. The
six-month return is 29.24%.
3B. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed beneath the graphic
presentation. The Large-Cap Growth & Income Fund (Class Y Shares) is represented
by a solid line, whereas Standard & Poor's 500 Index ("S&P 500") is represented
by a broken dotted line and Lipper Growth and Income Funds Index ("LGIFI") is
represented by a dotted line. The line graph is a visual representation of a
comparison of change in value of a hypothetical investment of $10,000 in the
Large-Cap Growth & Income Fund and S&P 500 and LGIFI from its inception on
November 20, 1992 to February 28, 1999. 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 Large-Cap Growth & Income Fund as compared to
S&P 500 and LGIFI; the ending values are $23,936; $33,075; and $25,534,
respectively.
<PAGE>
1C. The graphic representation here displayed consists of two charts. One
chart outlines the top five industries that the Marshall Mid-Cap Value Fund
("Mid-Cap Value Fund") invests in as well as its percentage of net assets as of
February 28, 1999. The information is as follows: Services, 12.1%; Oil & Gas
Products, 8.2%; Pharmaceuticals & Health Care, 8.1%; Beverages & Foods, 7.7%;
Insurance, 7.4%. The second chart outlines the Mid-Cap Value Fund's five largest
stock holdings and its percentage of net assets as of February 28, 1999. The
information is as follows: Hanson PLC, ADR, 3.2%; International Multifoods
Corp., 3.0%; Silicon Graphics, Inc., 2.8%; Telephone and Data System, Inc.,
2.4%; and Everett Re Holding, Inc., 2.3%.
2C. The graphic representation here displayed consists of two charts. The
first chart outlines the average annual total returns for the Mid-Cap Value Fund
as of February 28, 1999 for the 1-year, 3-year, 5-year and since inception
(9/30/93) periods.
The returns are as follows: (8.22%); 9.40%; 11.86%; and 11.31%, respectively.
The second chart outlines the six-month total return for the Mid-Cap Value Fund
as of February 28, 1999. The six-month return is 9.13%.
3C. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed beneath the graphic
presentation. The Mid-Cap Value Fund (Class Y Shares) is represented by a solid
line, whereas Standard & Poor's Mid-Cap 400 Index ("SPMC") is represented by a
broken dotted line and Lipper Mid-Cap Funds Index ("LMCFI") is represented by a
dotted line. The line graph is a visual representation of a comparison of change
in value of a hypothetical investment of $10,000 in the Mid-Cap Value Fund and
SPMC and LMCFI, from its inception on September 30, 1993 to February 28, 1999.
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
Mid-Cap Value Fund as compared to SPMC and LMCFI, the ending values are $17,864;
$22,161; and $19,789, respectively.
<PAGE>
1D. The graphic representation here displayed consists of two charts. One
chart outlines the top five industries that the Marshall Mid-Cap Growth Fund
("Mid-Cap Growth Fund") invests in as well as its percentage of net assets as of
February 28, 1999. The information is as follows: Retail, 11.3%;
Telecommunications, 10.9%; Broadcasting, 9.7%; Leisure & Recreation, 9.0%;
Computer Services, 7.9%. The second chart outlines the Mid-Cap Growth Fund's
five largest stock holdings and its percentage of net assets as of February 28,
1999. The information is as follows: Kohl's Corp., 4.1%; Tellabs, Inc., 3.5%;
Lexmark Intl. Group, Class A, 3.1%; FIserv, Inc., 2.8%; and Steiner Leisure
Ltd., 2.7%.
2D. The graphic representation here displayed consists of two charts. The
first chart outlines the average annual total returns for the Mid-Cap Growth
Fund as February 28, 1999 for the 1-year, 3-year, 5-year and since inception
(9/30/93) periods. The returns are as follows: 6.44%; 16.19%; 16.18%; and
15.05%, respectively. The second chart outlines the six-month total return for
the Mid-Cap Growth Fund as of February 28, 1999. The six-month return is 33.79%.
3D. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed beneath the graphic
presentation. The Mid-Cap Growth Fund (Class Y Shares) is represented by a solid
line, whereas Standard & Poor's Mid-Cap 400 Index ("SPMC") is represented by a
broken dotted line and the Lipper Mid-Cap Funds Index ("LMCFI") is represented
by a dotted line. The line graph is a visual representation of a comparison of
change in value of a hypothetical investment of $10,000 in the Mid-Cap Growth
Fund and SPMC and LMCFI from its inception on September 30, 1993 to February 28,
1999. 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
Mid-Cap Growth Fund as compared to SPMC and LMCFI; the ending values are
$21,371; $22,161; and $19,789, respectively.
1E. The graphic representation here displayed consists of two charts. One
chart outlines the top five industries that the Marshall Small-Cap Growth Fund
("Small-Cap Growth Fund") invests in as well as its percentage of net assets as
of February 28, 1999. The information is as follows: Commercial Services, 13.3%;
Broadcasting, 12.2%; Services,12.1%; Computer Services, 6.7%; Medical Supplies,
6.4%. The second chart outlines the Small-Cap Growth Fund's five largest stock
holdings and its percentage of net assets as of February 28, 1999. The
information is as follows: Steiner Leisure Ltd., 3.9%; Jacor Communications,
Inc., Class A, 3.6%; Rayovac Corp., 3.3%; Larson Holdings, Inc., 3.1%; and
Transactions Systems Architects, Inc., Class A, 3.0%.
2E. The graphic representation here displayed consists of two charts. The
first chart outlines the average annual total returns for the Small-Cap Growth
Fund as of February 28, 1999 for the 1-year, 3-year and since inception
(11/1/95) periods. The returns are as follows: (15.08%), 14.12% and 22.62%,
respectively. The second chart outlines the six-month total return for the
Small-Cap Growth Fund as of February 28, 1999. The six-month return is 16.31%.
<PAGE>
3E. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed beneath the graphic
presentation. The Small-Cap Growth Fund (Class Y Shares) is represented by a
solid line, whereas the Russell 2000 Index ("Russell 2000") is represented by a
broken dotted line and Lipper Small Cap Funds Index ("LSCFI") is represented by
a dotted line. The line graph is a visual representation of a comparison of
change in value of a hypothetical investment of $10,000 in the Small-Cap Growth
Fund and Russell 2000 and LSCFI from its inception on November 1, 1995 to
February 28, 1999. 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 Small-Cap Growth Fund as compared to Russell 2000 and LSCFI;
the ending values are $19,712; $13,834; and $12,502, respectively.
1F. The graphic presentation here displayed consists of four charts. One
chart outlines the top five industries that the Marshall International Stock
Fund ("International Stock Fund") invests in as well as its percentage of net
assets as of February 28, 1999. The information is as follows:
Telecommunications, 14.4%; Banking, 11.3%; Financial Services, 7.7%; Electric,
4.7%; and Insurance, 4.6%. The second chart outlines the International Stock
Fund's five largest stock holdings and its percentage of net assets as of
February 28, 1999. The information is as follows: Banque Nationale de Paris,
2.3%; Philips Electronics NV, 2.3%; Merita Nordbanken OYJ, 2.2%; Corporacion
Bancaria de Espana SA, ADR, 1.9%; and ING Groep, NV, 1.9%. The third chart
outlines the International Stock Fund's regional exposure and its percentage of
net assets as of February 28, 1999. The information is as follows: Europe,
59.3%; Pacific Rim/Asia, 17.4%; South America, 6.1%; North America, 5.8%; and
Australia/New Zealand, 5.6%. The fourth chart outlines the International Stock
Fund's country allocations and its percentage of net assets as of February 28,
1999. The information is as follows: Great Britain, 16.5%; France, 8.6%;Hong
Kong, 7.7%; Spain, 6.7%; and Netherlands, 5.3%.
2F. The graphic representation here displayed consists of two charts. The
first chart outlines the average annual total returns for the International
Stock Fund as of February 28, 1999 for the 1-year, 3-year and since inception
(9/1/94) periods.
The returns are as follows: (3.62%), 8.47% and 7.71%, respectively. The second
chart outlines the six-month total return for the International Stock fund as of
February 28, 1999. The six-month return is 9.74%.
3F. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed beneath the graphic
presentation. The International Stock Fund (Class Y Shares) is represented by a
solid line, whereas the Morgan Stanley Capital International Europe, Australia,
Far East Index ("EAFE") is represented by a broken line and the Lipper
International Funds Index ("LIFI") is represented by a dotted line. The line
graph is a visual representation of a comparison of change in value of a
hypothetical investment of $10,000 in the International Stock Fund and EAFE and
LIFI from its inception on September 1, 1994 to February 28, 1999. 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 International Stock
Fund as compared to EAFE and LIFI; the ending values are $13,970; $13,440; and
$13,740, respectively.
1G. The graphic representation here displayed consists of two charts. One chart
outlines the portfolio diversification of the Marshall Short-Term Income Fund
("Short-Term Income Fund") as well as its percentage of net assets as of
February 28, 1999. The information is as follows: BBB Rated Corporate Bonds,
23.0%; AAA Rated Corporate Bonds, 22.5%; A Rated Corporate Bonds, 21.3%;
Government Agency, 10.9%; U.S. Treasury, 3.9%; Cash & Cash Equivalents , 2.1%;
and AA Rated Corporate Bonds, 0.5%. The second chart outlines the Short-Term
Income Fund's fund statistics as of February 28, 1999. The information is as
follows:
SEC 30-day yield, 5.87%; Average Dollar-Weighted Maturity, 2.10 years; Duration,
1.31 years.
2G. The graphic representation here displayed consists of two chart. The first
chart
outlines the average annual total returns for the Short-Term Income Fund as of
February 28, 1999 for the 1-year, 3-year, 5-year and since inception (11/1/92)
periods. The returns are as follows: 4.54%; 5.45%; 5.41%; and 5.00%,
respectively. The second chart outlines the six-month total return for the
Short-Term Income Fund as of February 28, 1999. The six-month return is 1.31%.
3G. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed beneath the graphic
presentation. The Short-Term Income Fund is represented by a solid line, whereas
the Lipper Short-Term Investment Grade Bond Fund Index ("LSTIBI") is represented
by a broken line and IBC/Donoghue's Taxable Money Fund Average ("DMFA") is
represented by a dotted line. The line graph is a visual representation of a
comparison of change in value of a hypothetical investment of $10,000 in the
Short-Term Income Fund and LSTIBI and DMFA from its inception on November 1,
1992 to February 28, 1999. 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 Short-Term Income Fund as compared to LSTIBI and DMFA; the
ending values are $13,617; $13,885; and $13,219, respectively.
1H. The graphic representation here displayed consists of two charts. One chart
outlines the portfolio diversification of the Marshall Intermediate Bond Fund
("Intermediate Bond Fund") as well as its percentage of net assets as of
February 28, 1999. The information is as follows: AAA Rated Corporate
Bonds, 36.7%; A Rated Corporate Bonds, 31.0%; BBB Rated Corporate Bonds, 17.1%;
U.S. Treasury, 15.9%; AA Rated Corporate Bonds, 3.4%; Government Agency, 2.8%;
and Cash & Cash Equivalents, 0.8. The second chart outlines the Intermediate
Bond Fund's fund statistics as of February 28, 1999. The information is as
follows: SEC 30-day yield, 5.55%; Average Dollar-Weighted Maturity, 4.48 years;
Duration,
3.04 years.
2H. The graphic representation here displayed consists of two charts. The first
chart
outlines the average annual total returns for the Intermediate Bond Fund as
February 28, 1999 for the 1-year, 3-year, 5-year and since inception (11/23/92)
periods. The returns are as follows: 4.61%; 5.51%; 5.46%; and 5.53%,
respectively. The second chart outlines the six-month total return for the
Intermediate Bond Fund as of February 28, 1999. The six-month return is 0.69%.
3H. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed beneath the graphic
presentation. The Intermediate Bond Fund (Class Y Shares) is represented by a
solid line, whereas Lehman Brothers Government/Corporate Bond Index ("LGCI") is
represented by a broken dotted line and Lipper Intermediate Investment Grade
Bond Funds Index ("LIBF") is represented by a dotted line. The line graph is a
visual representation of a comparison of change in value of a hypothetical
investment of $10,000 in the Intermediate Bond Fund and LGCI and LIBF from its
inception on November 23, 1992 to February 28, 1999. 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 Intermediate Bond Fund as
compared to LGCI and LIBF; the ending values are $14,024; $15,031; and $15,027,
respectively.
<PAGE>
1I. The graphic representation here displayed consists of two charts. One
chart outlines the portfolio diversification of the Marshall Government Income
Fund ("Government Income Fund") as well as its percentage of net assets as of
February 28, 1999. The information is as follows: CMO/ABS, 27.5%; GNMA/MBS,
22.2%; FHLMC/MBS, 12.5%; FNMA/MBS, 10.4%; Government Agency, 9.5%; CMBS, 6.6%;
Corporate, 4.2%; and U.S. Treasury, 1.7%. The second chart outlines the
Government Income Fund's fund statistics as of February 28, 1999. The
information is as follows: SEC 30-day yield, 5.25%; Average Dollar-Weighted
Maturity, 4.35 years; Duration, 2.43 years.
2I. The graphic representation here displayed consists of two charts. The first
chart
outlines the average annual total returns for the Government Income Fund as of
February 28, 1999 for the 1-year, 3-year, 5-year and since inception (12/13/92)
periods. The returns are as follows: 5.16%; 6.45%; 6.24%; and 6.07%,
respectively. The second chart outlines the six-month total return for the
Government Income Fund as of February 28, 1999. The six-month return is 1.00%.
<PAGE>
3I. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed beneath the graphic
presentation. The Government Income Fund (Class Y Shares) is represented by a
solid line, whereas Lehman Brothers Mortgage-Backed Securities Index ("LMI") is
represented by a broken dotted line and Lipper U.S. Mortgage Funds Index
("LUSMI") is represented by a dotted line. The line graph is a visual
representation of a comparison of change in value of a hypothetical investment
of $10,000 in the Government Income Fund and LMI and LUSMI from its inception on
December 13, 1992 to February 28, 1999. 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 Government Income Fund as compared to LMI and
LUSMI; the ending values are $14,422; $15,393; and $14,383, respectively.
1J. The graphic representation here displayed consists of two charts. One chart
outlines the portfolio diversification of the Marshall Intermediate Tax-Free
Fund ("Intermediate Tax-Free Fund") as well as its percentage of net assets as
of February 28, 1999. The information is as follows: Texas, 12.3%; New York,
8.0%; Arizona, 7.4%; Wisconsin, 6.4%; Ohio, 6.2%. The second chart outlines
the Intermediate Tax-Free Fund's fund statistics as of February 28, 1999. The
information is as follows: SEC 30-day yield, 3.59%; Average Dollar-Weighted
Maturity, 8.02 years; Duration, 6.54 years.
2J. The graphic representation here displayed consists of two charts. The
first chart outlines the average annual total returns for the Intermediate
Tax-Free Fund as of February 28, 1999 for the 1-year, 3-year, 5-year and since
inception (2/2/94) periods. The returns are as follows: 5.32%; 5.51%; 5.31% and
5.00%, respectively. The second chart outlines the six-month total return for
the Intermediate Tax-Free Fund as of February 28, 1999. The six-month return is
2.32%.
3J. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed beneath the graphic
presentation. The Intermediate Tax-Free Fund is represented by a solid line,
whereas Lipper Intermediate Municipal Funds Index ("LIMI") is represented by a
broken line and Lehman Brothers 7-Year General Obligations Index ("L7GO") is
represented by a dotted line. The line graph is a visual representation of a
comparison of change in value of a hypothetical investment of $10,000 in the
Intermediate Tax-Free Fund and LIMI and L7GO from its inception on February 2,
1994 to February 28, 1999.
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
Intermediate Tax-Free Fund as compared to LIMI and L7GO; the ending values are
$12,808; $12,740; and $13,247, respectively.
K. The graphic representation here displayed consists of one chart which
outlines the Marshall Money Market Fund's fund statistics as of February 28,
1999. The information is as follows: 7-day Net Yield, Class Y Shares--4.71%;
7-day Effective Yield, Class Y Shares--4.82%; Average Dollar-Weighted Maturity,
44.27 days.
