-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NcqpVecxddRad1RJvyJH3LqklM6z/NpdLxBEb5zOjLj1IP4fG3xXew592IyWjhqp Y1TqimUvUKyl+kLWwagPbw== 0001004402-03-000422.txt : 20030702 0001004402-03-000422.hdr.sgml : 20030702 20030702150058 ACCESSION NUMBER: 0001004402-03-000422 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20030430 FILED AS OF DATE: 20030702 EFFECTIVENESS DATE: 20030702 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORTH AMERICAN GOVERNMENT BOND FUND INC CENTRAL INDEX KEY: 0000893566 STATE OF INCORPORATION: MD FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-07292 FILM NUMBER: 03771463 BUSINESS ADDRESS: STREET 1: NORTH AMERICAN GOVERNMENT BOND FUND INC STREET 2: 535 MADISON AVE, 30TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 18009557175 MAIL ADDRESS: STREET 1: C/O FORUM FINANCIAL GROUP, LLC STREET 2: TWO PORTLAND SQUARE CITY: PORTLAND STATE: ME ZIP: 04101-4049 N-CSR 1 nf03-135.txt NORTH AMERICAN GOV'T BOND FUND SEMI-ANNUAL REPORT As filed with the Securities and Exchange Commission on July 2, 2003 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-07292 NORTH AMERICAN GOVERNMENT BOND FUND, INC. 535 Madison Avenue, 30th Floor New York, New York 10022 (212) 446-5600 R. Alan Medaugh, President 535 Madison Avenue, 30th Floor New York, NY 10022 (212) 446-5600 Date of fiscal year end: OCTOBER 31, 2003 Date of reporting period: APRIL 30, 2003 Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles. A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. ss. 3507. ITEM 1. REPORTS TO STOCKHOLDERS. - -------------------------------------------------------------------------------- ISI INTERNATIONAL STRATEGY & INVESTMENT - -------------------------------------------------------------------------------- SEMI - ANNUAL REPORT APRIL 30, 2003 TOTAL RETURN US TREASURY FUND MANAGED MUNICIPAL FUND NORTH AMERICAN GOVERNMENT BOND FUND ISI STRATEGY FUND - -------------------------------------------------------------------------------- ISI FUNDS SEMI-ANNUAL REPORT - TABLE OF CONTENTS - -------------------------------------------------------------------------------- Investment Advisor's Report............................................... 1 Performance Comparisons................................................... 2 Schedule of Investments................................................... 6 Statements of Assets and Liabilities...................................... 25 Statements of Operations.................................................. 27 Statements of Changes in Net Assets....................................... 29 Financial Highlights...................................................... 35 Notes to Financial Statements............................................. 39 - -------------------------------------------------------------------------------- INVESTMENT ADVISOR'S REPORT: - -------------------------------------------------------------------------------- Dear Shareholder: I am pleased to present the Semi-Annual report to shareholders for the ISI Funds. This report consolidates the four funds into one report. This report covers the six month reporting period ended April 30, 2003. For this period, the Total Return US Treasury Fund, Inc. (`Total Return') produced a +2.80% return; Managed Municipal Fund, Inc. (`Managed Municipal') produced a +3.50% return; North American Government Bond Fund, Inc. (`North American') produced a +3.79% return; and Strategy Fund (`Strategy') produced a +3.96% return. These figures assume the reinvestment of dividend and capital gain distributions, and exclude the impact of any sales charges. DESCRIPTION OF FUND OBJECTIVES Total Return, Managed Municipal, North American and Strategy, (each a 'Fund' and collectively, the 'Funds') are registered under the Investment Company Act of 1940 (the 'Act'), as amended, as open-end management investment companies. The Funds are organized as corporations under the laws of the state of Maryland. ISI manages all four Funds for total return through active management. Total Return's investment objective is to achieve a high level of total return with relative stability of principal, and secondarily, high current income consistent with an investment in securities issued by the United States Treasury. Managed Municipal's investment objective is designed to provide a high level of total return with relative stability of principal and, secondarily, high current income exempt from federal income tax through investment in a portfolio consisting primarily of tax-free municipal obligations. North American's investment objective is designed to provide a high level of current income, consistent with prudent investment risk. Strategy's investment objective is designed to maximize total return through a combination of long-term growth of capital and current income. RECENT FUND EVENTS Effective October 31, 2002, North American changed its fiscal year end from March 31 to October 31 and Strategy changed its fiscal year end from May 31 to October 31. Total Return and Managed Municipal already had an October 31 fiscal year end. These changes to North American and Strategy gave us the ability to produce a combined annual and semi-annual report. For the six month reporting period ended April 30, 2003, The Funds offered only one class of shares to investors: ISI Shares. On May 16, 2003 the North American Fund started offering C Shares, and the existing ISI Shares were redesignated as A Shares. We would like to welcome new investors to the ISI Funds and thank those who have been with us for some time. We appreciate your confidence. Sincerely, /s/ R. Alan Medaugh R. Alan Medaugh President May 19, 2003 1 - -------------------------------------------------------------------------------- TOTAL RETURN US TREASURY FUND - ISI SHARES PERFORMANCE COMPARISON 1 - -------------------------------------------------------------------------------- [EDGAR REPRESENTATION OF BAR CHART: TOTAL RETURN LEHMAN BROTHERS LEHMAN BROTHERS US TREASURY LEHMAN BROTHERS INTERMEDIATE LONG-TERM FUND TREASURY INDEX TREASURY INDEX TREASURY INDEX ------------ --------------- --------------- --------------- Date Load ---- ----- 4/30/1993 9,704 10,000 10,000 10,000 5/31/1993 9,704 9,988 9,971 10,033 6/30/1993 10,020 10,211 10,118 10,457 7/31/1993 10,110 10,271 10,137 10,625 8/31/1993 10,411 10,500 10,290 11,052 9/30/1993 10,466 10,541 10,332 11,091 10/31/1993 10,503 10,581 10,356 11,171 11/30/1993 10,308 10,465 10,305 10,885 12/31/1993 10,347 10,505 10,347 10,920 1/31/1994 10,509 10,650 10,450 11,181 2/28/1994 10,258 10,421 10,303 10,723 3/31/1994 10,005 10,187 10,154 10,252 4/30/1994 9,916 10,108 10,090 10,131 5/31/1994 9,888 10,095 10,097 10,064 6/30/1994 9,839 10,073 10,099 9,968 7/31/1994 10,051 10,256 10,230 10,306 8/31/1994 10,034 10,259 10,260 10,230 9/30/1994 9,857 10,114 10,176 9,908 10/31/1994 9,850 10,108 10,179 9,874 11/30/1994 9,842 10,088 10,132 9,932 12/31/1994 9,931 10,150 10,165 10,085 1/31/1995 10,118 10,338 10,330 10,344 2/28/1995 10,339 10,558 10,527 10,637 3/31/1995 10,386 10,625 10,585 10,729 4/30/1995 10,521 10,764 10,707 10,920 5/31/1995 11,099 11,199 11,009 11,758 6/30/1995 11,191 11,287 11,082 11,895 7/31/1995 11,083 11,245 11,087 11,705 8/31/1995 11,244 11,376 11,176 11,964 9/30/1995 11,383 11,485 11,250 12,184 10/31/1995 11,624 11,662 11,376 12,525 11/30/1995 11,844 11,843 11,515 12,839 12/31/1995 12,077 12,012 11,630 13,180 1/31/1996 12,092 12,088 11,730 13,180 2/29/1996 11,694 11,841 11,605 12,543 3/31/1996 11,510 11,738 11,548 12,294 4/30/1996 11,372 11,667 11,514 12,088 5/31/1996 11,340 11,644 11,509 12,025 6/30/1996 11,510 11,792 11,623 12,281 7/31/1996 11,526 11,820 11,658 12,286 8/31/1996 11,433 11,795 11,673 12,133 9/30/1996 11,667 11,989 11,822 12,467 10/31/1996 12,023 12,252 12,015 12,958 11/30/1996 12,345 12,465 12,160 13,390 12/31/1996 12,103 12,336 12,094 13,065 1/31/1997 12,057 12,348 12,138 12,972 2/28/1997 12,048 12,364 12,156 12,978 3/31/1997 11,865 12,230 12,085 12,646 4/30/1997 12,044 12,405 12,220 12,951 5/31/1997 12,162 12,513 12,315 13,096 6/30/1997 12,344 12,652 12,420 13,349 7/31/1997 12,859 13,015 12,652 14,133 8/31/1997 12,618 12,884 12,602 13,740 9/30/1997 12,842 13,079 12,739 14,118 10/31/1997 13,105 13,307 12,888 14,594 11/30/1997 13,201 13,376 12,918 14,787 12/31/1997 13,388 13,517 13,024 15,035 1/31/1998 13,590 13,724 13,199 15,341 2/28/1998 13,528 13,683 13,181 15,231 3/31/1998 13,558 13,721 13,220 15,263 4/30/1998 13,589 13,782 13,283 15,320 5/31/1998 13,782 13,925 13,375 15,612 6/30/1998 14,003 14,085 13,465 15,975 7/31/1998 13,979 14,107 13,518 15,908 8/31/1998 14,531 14,491 13,785 16,626 9/30/1998 14,947 14,895 14,118 17,235 10/31/1998 14,744 14,847 14,146 16,974 11/30/1998 14,845 14,844 14,093 17,104 12/31/1998 14,834 14,873 14,147 17,069 1/31/1999 14,925 14,959 14,208 17,222 2/28/1999 14,410 14,577 14,001 16,376 3/31/1999 14,414 14,633 14,094 16,338 4/30/1999 14,462 14,668 14,134 16,361 5/31/1999 14,291 14,531 14,044 16,103 6/30/1999 14,192 14,501 14,069 15,933 7/31/1999 14,137 14,488 14,083 15,857 8/31/1999 14,082 14,491 14,111 15,794 9/30/1999 14,192 14,602 14,221 15,911 10/31/1999 14,181 14,617 14,239 15,922 11/30/1999 14,110 14,590 14,245 15,813 12/31/1999 13,992 14,493 14,205 15,577 1/31/2000 14,150 14,530 14,166 15,799 2/29/2000 14,448 14,749 14,277 16,276 3/31/2000 14,825 15,042 14,459 16,832 4/30/2000 14,782 14,994 14,449 16,698 5/31/2000 14,740 15,017 14,509 16,637 6/30/2000 14,981 15,270 14,719 16,997 7/31/2000 15,176 15,428 14,818 17,290 8/31/2000 15,452 15,654 14,973 17,684 9/30/2000 15,329 15,667 15,088 17,470 10/31/2000 15,527 15,819 15,187 17,743 11/30/2000 15,872 16,144 15,407 18,303 12/31/2000 16,203 16,452 15,663 18,734 1/31/2001 16,241 16,585 15,848 18,766 2/28/2001 16,476 16,786 15,995 19,087 3/31/2001 16,431 16,840 16,121 18,991 4/30/2001 16,103 16,630 16,057 18,474 5/31/2001 16,142 16,682 16,123 18,498 6/30/2001 16,198 16,772 16,182 18,657 7/31/2001 16,677 17,190 16,475 19,351 8/31/2001 16,954 17,418 16,618 19,765 9/30/2001 17,079 17,694 16,962 19,912 10/31/2001 17,634 18,185 17,219 20,891 11/30/2001 17,052 17,734 17,024 19,898 12/31/2001 16,883 17,562 16,942 19,523 1/31/2002 16,993 17,658 16,989 19,711 2/28/2002 17,104 17,839 17,129 20,005 3/31/2002 16,703 17,410 16,867 19,197 4/30/2002 17,135 17,843 17,168 19,926 5/31/2002 17,210 17,943 17,287 19,988 6/30/2002 17,500 18,196 17,497 20,347 7/31/2002 17,936 18,628 17,847 20,975 8/31/2002 18,465 19,030 18,034 21,890 9/30/2002 18,959 19,543 18,380 22,803 10/31/2002 18,653 19,327 18,346 22,148 11/30/2002 18,473 19,136 18,175 21,903 12/31/2002 18,918 19,633 18,514 22,800 1/31/2003 18,848 19,573 18,460 22,723 2/28/2003 19,186 19,910 18,660 23,411 3/31/2003 19,078 19,827 18,659 23,116 4/30/2003 19,175 19,919 18,696 23,351 ] - --------------------------------------------------------------------------------------------------------------------- CUMULATIVE TOTAL RETURNS WITH LOAD ANNUALIZED TOTAL RETURNS WITH LOAD PERIODS ENDED SINCE SINCE APRIL 30, 2003 6 MONTHS 1 YEAR 5 YEARS 10 YEARS INCEPTION2 1 YEAR 5 YEARS 10 YEARS INCEPTION2 - --------------------------------------------------------------------------------------------------------------------- Total Return US Treasury Fund - ISI Shares -0.24% 8.51% 36.90% 91.75% 206.51% 8.51% 6.48% 6.73% 7.91% - --------------------------------------------------------------------------------------------------------------------- Lehman Brothers Treasury Index3 3.06% 11.64% 44.53% 99.19% 232.41% 11.64% 7.64% 7.13% 8.54% - --------------------------------------------------------------------------------------------------------------------- Lehman Brothers Intermediate Treasury Index3 1.91% 8.90% 40.75% 86.96% 201.19% 8.90% 7.08% 6.46% 7.81% - --------------------------------------------------------------------------------------------------------------------- Lehman Brothers Long-Term Treasury Index4 5.43% 17.19% 52.43% 133.51% 329.03% 17.19% 8.80% 8.85% 10.44% - ---------------------------------------------------------------------------------------------------------------------
1 PAST PERFORMANCE 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 performance information presented in the graph and table above does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. All performance assumes the reinvestment of dividend and capital gain distributions and includes the Fund s maximum 3.00% sales charge. Distribution of the Fund s capital gains and non-US Treasury income may be subject to state and local taxes. Management is not aware of any single index that is truly representative of the Fund since its active maturity management policy allows the manager to adjust the weighted average maturity throughout each US Treasury sector. Currently the Fund s weighted average maturity is approximately 10.7 years. 2 The Fund s inception date is August 10, 1988. Benchmark returns are for the periods beginning August 31, 1988. 3 The Lehman Brothers Treasury Index is an unmanaged index reflecting the performance of all public obligations and does not focus on one particular segment of the Treasury market. The Lehman Brothers Long-Term Treasury Index is an unmanaged index reflecting the performance of US Treasury securities in the long-term Treasury sector. The Lehman Brothers Intermediate Treasury Index is an unmanaged index reflecting the performance of US Treasury securities in the intermediate-term Treasury sector. Benchmark returns do not reflect expenses or sales charges that have been deducted from the Fund's returns. 2 - -------------------------------------------------------------------------------- MANAGED MUNICIPAL FUND - ISI SHARES PERFORMANCE COMPARISON 1 - -------------------------------------------------------------------------------- [EDGAR REPRESENTATION OF BAR CHART: LEHMAN BROTHERS LEHMAN BROTHERS MANAGED GENERAL PREREFUNDED MUNICIPAL CONSUMER MUNICIPAL FUND OBLIGATION INDEX BOND INDEX PRICE INDEX -------------- ---------------- -------------------- ----------- Date Load ---- ---- 4/30/1993 9,703 10,000 10,000 10,000 5/31/1993 9,739 10,052 10,020 10,010 6/30/1993 9,939 10,209 10,204 10,020 7/31/1993 9,884 10,226 10,180 10,020 8/31/1993 10,139 10,430 10,371 10,050 9/30/1993 10,286 10,541 10,487 10,070 10/31/1993 10,267 10,553 10,531 10,110 11/30/1993 10,147 10,482 10,403 10,121 12/31/1993 10,341 10,699 10,599 10,121 1/31/1994 10,482 10,823 10,708 10,151 2/28/1994 10,128 10,532 10,490 10,181 3/31/1994 9,754 10,145 10,267 10,212 4/30/1994 9,788 10,254 10,295 10,222 5/31/1994 9,898 10,334 10,331 10,232 6/30/1994 9,816 10,271 10,329 10,263 7/31/1994 9,975 10,433 10,466 10,294 8/31/1994 10,000 10,477 10,535 10,335 9/30/1994 9,801 10,331 10,457 10,366 10/31/1994 9,600 10,182 10,373 10,376 11/30/1994 9,420 10,022 10,225 10,387 12/31/1994 9,692 10,199 10,382 10,387 1/31/1995 9,987 10,441 10,535 10,428 2/28/1995 10,323 10,717 10,788 10,470 3/31/1995 10,399 10,861 10,864 10,501 4/30/1995 10,363 10,869 10,922 10,533 5/31/1995 10,764 11,193 11,172 10,554 6/30/1995 10,616 11,117 11,200 10,575 7/31/1995 10,723 11,246 11,320 10,575 8/31/1995 10,821 11,389 11,395 10,607 9/30/1995 10,868 11,462 11,395 10,628 10/31/1995 11,080 11,592 11,467 10,660 11/30/1995 11,274 11,755 11,593 10,649 12/31/1995 11,415 11,848 11,663 10,639 1/31/1996 11,494 11,963 11,795 10,702 2/29/1996 11,372 11,908 11,752 10,735 3/31/1996 11,155 11,776 11,636 10,788 4/30/1996 11,108 11,735 11,642 10,831 5/31/1996 11,071 11,716 11,640 10,853 6/30/1996 11,206 11,834 11,688 10,864 7/31/1996 11,341 11,947 11,796 10,886 8/31/1996 11,292 11,946 11,792 10,907 9/30/1996 11,450 12,093 11,901 10,940 10/31/1996 11,598 12,234 11,994 10,973 11/30/1996 11,801 12,462 12,141 10,995 12/31/1996 11,725 12,412 12,113 10,995 1/31/1997 11,725 12,445 12,157 11,028 2/28/1997 11,808 12,559 12,253 11,061 3/31/1997 11,646 12,397 12,119 11,094 4/30/1997 11,742 12,493 12,159 11,105 5/31/1997 11,917 12,680 12,332 11,094 6/30/1997 12,047 12,816 12,414 11,105 7/31/1997 12,406 13,148 12,624 11,116 8/31/1997 12,229 13,031 12,564 11,139 9/30/1997 12,396 13,180 12,672 11,161 10/31/1997 12,459 13,252 12,722 11,183 11/30/1997 12,512 13,315 12,750 11,172 12/31/1997 12,710 13,504 12,860 11,161 1/31/1998 12,839 13,643 12,973 11,183 2/28/1998 12,809 13,654 13,008 11,205 3/31/1998 12,815 13,666 13,005 11,228 4/30/1998 12,738 13,594 12,965 11,250 5/31/1998 12,970 13,818 13,127 11,273 6/30/1998 13,000 13,868 13,173 11,284 7/31/1998 13,018 13,901 13,222 11,295 8/31/1998 13,254 14,120 13,365 11,307 9/30/1998 13,417 14,310 13,475 11,318 10/31/1998 13,399 14,313 13,525 11,341 11/30/1998 13,430 14,360 13,567 11,341 12/31/1998 13,479 14,406 13,590 11,329 1/31/1999 13,639 14,595 13,737 11,352 2/28/1999 13,546 14,520 13,737 11,363 3/31/1999 13,528 14,526 13,735 11,397 4/30/1999 13,571 14,567 13,775 11,477 5/31/1999 13,434 14,485 13,725 11,477 6/30/1999 13,220 14,272 13,605 11,477 7/31/1999 13,271 14,329 13,687 11,512 8/31/1999 13,132 14,245 13,687 11,535 9/30/1999 13,068 14,257 13,731 11,592 10/31/1999 12,915 14,133 13,717 11,616 11/30/1999 13,082 14,277 13,785 11,627 12/31/1999 12,966 14,188 13,747 11,627 1/31/2000 12,876 14,135 13,765 11,650 2/29/2000 13,083 14,276 13,820 11,720 3/31/2000 13,408 14,563 13,938 11,814 4/30/2000 13,278 14,489 13,930 11,826 5/31/2000 13,186 14,412 13,930 11,838 6/30/2000 13,567 14,783 14,131 11,909 7/31/2000 13,766 14,978 14,257 11,933 8/31/2000 13,951 15,192 14,383 11,944 9/30/2000 13,831 15,114 14,371 12,004 10/31/2000 14,005 15,273 14,460 12,028 11/30/2000 14,140 15,380 14,533 12,040 12/31/2000 14,557 15,743 14,737 12,028 1/31/2001 14,625 15,915 14,945 12,100 2/28/2001 14,679 15,963 15,000 12,149 3/31/2001 14,788 16,103 15,107 12,173 4/30/2001 14,569 15,936 15,038 12,222 5/31/2001 14,720 16,097 15,182 12,283 6/30/2001 14,830 16,197 15,263 12,307 7/31/2001 15,038 16,427 15,411 12,270 8/31/2001 15,274 16,693 15,599 12,270 9/30/2001 15,177 16,656 15,658 12,332 10/31/2001 15,372 16,826 15,797 12,295 11/30/2001 15,232 16,678 15,690 12,270 12/31/2001 15,133 16,545 15,622 12,221 1/31/2002 15,332 16,816 15,850 12,246 2/28/2002 15,518 17,021 16,021 12,295 3/31/2002 15,203 16,696 15,696 12,368 4/30/2002 15,462 17,040 15,996 12,443 5/31/2002 15,577 17,134 16,097 12,443 6/30/2002 15,693 17,326 16,259 12,455 7/31/2002 15,882 17,540 16,435 12,467 8/31/2002 16,100 17,740 16,577 12,505 9/30/2002 16,436 18,099 16,816 12,530 10/31/2002 16,158 17,806 16,619 12,555 11/30/2002 16,084 17,718 16,565 12,555 12/31/2002 16,454 18,066 16,908 12,530 1/31/2003 16,365 18,035 16,887 12,580 2/28/2003 16,588 18,284 17,077 12,681 3/31/2003 16,603 18,319 17,050 12,757 4/30/2003 16,723 18,437 17,137 12,731 ] - --------------------------------------------------------------------------------------------------------------------- CUMULATIVE TOTAL RETURNS WITH LOAD ANNUALIZED TOTAL RETURNS WITH LOAD PERIODS ENDED SINCE SINCE APRIL 30, 2003 6 MONTHS 1 YEAR 5 YEARS 10 YEARS INCEPTION2 1 YEAR 5 YEARS 10 YEARS INCEPTION2 - --------------------------------------------------------------------------------------------------------------------- Managed Municipal Fund - ISI Shares 0.40% 4.94% 27.37% 67.23% 120.44% 4.94% 4.96% 5.28% 6.18% - --------------------------------------------------------------------------------------------------------------------- Lehman Brothers General Obligation Index3 3.55% 8.20% 35.63% 84.37% 148.21% 8.20% 6.29% 6.31% 7.15% - --------------------------------------------------------------------------------------------------------------------- Lehman Brothers Prerefunded Municipal Bond Index3 3.11% 7.13% 32.18% 71.37% 124.62% 7.13% 5.74% 5.53% 6.34% - --------------------------------------------------------------------------------------------------------------------- Consumer Price Index 4 1.40% 2.32% 13.16% 27.31% 43.08% 2.32% 2.50% 2.44% 2.76% - ---------------------------------------------------------------------------------------------------------------------
1 PAST PERFORMANCE 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 performance information presented in the graph and table above does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. All performance assumes the reinvestment of dividend and capital gain distributions and includes the Fund's maximum 3.00% sales charge. Performance would have been lower during the specified period if certain of the Fund's fees and expenses had not been waived. For certain investors, a portion of the Fund's income may be subject to the federal alternative minimum tax. Distribution of the Fund's income and capital gains may be subject to state and local taxes. 2 The Fund's inception date is February 26, 1990. Benchmark returns are for the periods beginning February 28, 1990. 3 The Lehman Brothers Prerefunded Municipal Bond Index, an unmanaged index, is a subcomponent of the main Lehman Brothers Municipal Bond Index, and contains only bonds from the main index that have been prerefunded or escrowed to maturity. The Lehman Brothers General Obligation Index is an unmanaged index reflecting general municipal market performance. Benchmark returns do not reflect expenses or sales charges that have been deducted from the Fund's returns. 4 The Consumer Price Index is a widely used measure of inflation. 3 - -------------------------------------------------------------------------------- NORTH AMERICAN GOVERNMENT BOND FUND - A SHARES PERFORMANCE COMPARISON 1 - -------------------------------------------------------------------------------- [EDGAR REPRESENTATION OF BAR CHART: LEHMAN BROTHERS LEHMAN BROTHERS NA GOVERNMENT INTERMEDIATE CONSUMER EMERGING AMERICAS BOND FUND TREASURY INDEX PRICE INDEX INDEX -------------- ---------------- ------------- ---------------- Date Load - ---- ----- 4/30/1993 9,703 10,000 10,000 10,000 5/31/1993 9,758 9,971 10,010 10,183 6/30/1993 9,950 10,118 10,020 10,339 7/31/1993 10,123 10,137 10,020 10,519 8/31/1993 10,327 10,290 10,050 10,786 9/30/1993 10,319 10,332 10,070 10,733 10/31/1993 10,450 10,356 10,110 11,351 11/30/1993 10,353 10,305 10,121 11,476 12/31/1993 10,459 10,347 10,121 12,011 1/31/1994 10,635 10,450 10,151 11,943 2/28/1994 10,344 10,303 10,181 11,211 3/31/1994 9,916 10,154 10,212 10,742 4/30/1994 9,927 10,090 10,222 10,493 5/31/1994 9,854 10,097 10,232 10,902 6/30/1994 9,769 10,099 10,263 10,552 7/31/1994 9,865 10,230 10,294 10,843 8/31/1994 10,037 10,260 10,335 11,128 9/30/1994 9,994 10,176 10,366 11,018 10/31/1994 9,929 10,179 10,376 10,960 11/30/1994 9,951 10,132 10,387 11,059 12/31/1994 9,135 10,165 10,387 9,750 1/31/1995 9,025 10,330 10,428 9,308 2/28/1995 9,237 10,527 10,470 8,613 3/31/1995 9,091 10,585 10,501 8,340 4/30/1995 9,397 10,707 10,533 9,439 5/31/1995 9,796 11,009 10,554 9,908 6/30/1995 9,923 11,082 10,575 10,522 7/31/1995 9,910 11,087 10,575 10,868 8/31/1995 10,062 11,176 10,607 10,989 9/30/1995 10,203 11,250 10,628 11,099 10/31/1995 10,251 11,376 10,660 10,808 11/30/1995 10,371 11,515 10,649 11,127 12/31/1995 10,563 11,630 10,639 11,731 1/31/1996 10,647 11,730 10,702 12,343 2/29/1996 10,307 11,605 10,735 11,852 3/31/1996 10,271 11,548 10,788 12,186 4/30/1996 10,247 11,514 10,831 12,629 5/31/1996 10,297 11,509 10,853 12,520 6/30/1996 10,423 11,623 10,864 12,715 7/31/1996 10,486 11,658 10,886 12,746 8/31/1996 10,510 11,673 10,907 13,193 9/30/1996 10,779 11,822 10,940 13,639 10/31/1996 11,101 12,015 10,973 13,688 11/30/1996 11,425 12,160 10,995 14,180 12/31/1996 11,217 12,094 10,995 14,309 1/31/1997 11,217 12,138 11,028 14,807 2/28/1997 11,229 12,156 11,061 15,062 3/31/1997 11,083 12,085 11,094 14,469 4/30/1997 11,231 12,220 11,105 14,833 5/31/1997 11,380 12,315 11,094 15,368 6/30/1997 11,543 12,420 11,105 15,697 7/31/1997 12,065 12,652 11,116 16,401 8/31/1997 11,872 12,602 11,139 16,260 9/30/1997 12,123 12,739 11,161 16,715 10/31/1997 12,235 12,888 11,183 15,949 11/30/1997 12,348 12,918 11,172 16,352 12/31/1997 12,562 13,024 11,161 16,693 1/31/1998 12,676 13,199 11,183 17,047 2/28/1998 12,648 13,181 11,205 17,199 3/31/1998 12,706 13,220 11,228 17,335 4/30/1998 12,764 13,283 11,250 17,384 5/31/1998 12,838 13,375 11,273 17,231 6/30/1998 12,986 13,465 11,284 17,149 7/31/1998 13,001 13,518 11,295 17,314 8/31/1998 13,226 13,785 11,307 14,591 9/30/1998 13,545 14,118 11,318 15,085 10/31/1998 13,453 14,146 11,341 15,600 11/30/1998 13,576 14,093 11,341 16,622 12/31/1998 13,622 14,147 11,329 16,574 1/31/1999 13,669 14,208 11,352 16,396 2/28/1999 13,352 14,001 11,363 16,479 3/31/1999 13,464 14,094 11,397 17,247 4/30/1999 13,576 14,134 11,477 17,787 5/31/1999 13,350 14,044 11,477 17,013 6/30/1999 13,367 14,069 11,477 17,245 7/31/1999 13,350 14,083 11,512 17,061 8/31/1999 13,334 14,111 11,535 17,238 9/30/1999 13,434 14,221 11,592 17,647 10/31/1999 13,418 14,239 11,616 17,974 11/30/1999 13,452 14,245 11,627 18,490 12/31/1999 13,401 14,205 11,627 18,973 1/31/2000 13,504 14,166 11,650 18,832 2/29/2000 13,781 14,277 11,720 19,718 3/31/2000 14,113 14,459 11,814 20,240 4/30/2000 14,042 14,449 11,826 19,962 5/31/2000 14,025 14,509 11,838 19,573 6/30/2000 14,185 14,719 11,909 20,343 7/31/2000 14,418 14,818 11,933 20,836 8/31/2000 14,654 14,973 11,944 21,359 9/30/2000 14,599 15,088 12,004 21,409 10/31/2000 14,710 15,187 12,028 21,198 11/30/2000 15,025 15,407 12,040 21,520 12/31/2000 15,287 15,663 12,028 21,838 1/31/2001 15,363 15,848 12,100 22,246 2/28/2001 15,553 15,995 12,149 22,088 3/31/2001 15,629 16,121 12,173 22,179 4/30/2001 15,513 16,057 12,222 22,310 5/31/2001 15,610 16,123 12,283 22,823 6/30/2001 15,707 16,182 12,307 23,277 7/31/2001 16,042 16,475 12,270 23,327 8/31/2001 16,281 16,618 12,270 23,802 9/30/2001 16,302 16,962 12,332 23,206 10/31/2001 16,865 17,219 12,295 24,125 11/30/2001 16,440 17,024 12,270 24,237 12/31/2001 16,337 16,942 12,221 24,566 1/31/2002 16,440 16,989 12,246 24,958 2/28/2002 16,564 17,129 12,295 25,727 3/31/2002 16,313 16,867 12,368 25,340 4/30/2002 16,545 17,168 12,443 25,920 5/31/2002 16,566 17,287 12,443 25,934 6/30/2002 16,690 17,497 12,455 25,518 7/31/2002 17,007 17,847 12,467 25,233 8/31/2002 17,457 18,034 12,505 26,295 9/30/2002 17,756 18,380 12,530 26,246 10/31/2002 17,577 18,346 12,555 26,784 11/30/2002 17,507 18,175 12,555 27,357 12/31/2002 17,786 18,514 12,530 28,093 1/31/2003 17,670 18,460 12,580 27,961 2/28/2003 17,935 18,660 12,681 28,512 3/31/2003 17,930 18,659 12,757 29,059 4/30/2003 18,243 18,696 12,731 30,076 - --------------------------------------------------------------------------------------------------------------------- CUMULATIVE TOTAL RETURNS WITH LOAD ANNUALIZED TOTAL RETURNS WITH LOAD PERIODS ENDED SINCE SINCE APRIL 30, 2003 6 MONTHS 1 YEAR 5 YEARS 10 YEARS INCEPTION2 1 YEAR 5 YEARS 10 YEARS INCEPTION2 - --------------------------------------------------------------------------------------------------------------------- ISI North American Government Bond Fund - A Shares 0.66% 7.00% 38.63% 82.43% 87.38% 7.00% 6.75% 6.20% 6.29% - --------------------------------------------------------------------------------------------------------------------- Lehman Brothers Intermediate Treasury Index3 1.91% 8.90% 40.75% 86.96% 91.94% 8.90% 7.08% 6.46% 6.57% - --------------------------------------------------------------------------------------------------------------------- Lehman Brothers Emerging Americas Index: Mexico Section4 12.29% 16.04% 73.02% 200.76% 210.64% 16.04% 11.59% 11.64% 11.69% - --------------------------------------------------------------------------------------------------------------------- Consumer Price Index5 1.40% 2.32% 13.16% 27.31% 28.59% 2.32% 2.50% 2.44% 2.48% - ---------------------------------------------------------------------------------------------------------------------
1 Past Performance is not indicative of future results. Investment return and principal will fluctuate so that an investor's shares when redeemed, may be worth more or less than their original cost. The performance information presented in the graph and table above does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. All performance assumes the reinvestment of dividend and capital gain distributions and includes the Fund's maximum 3.00% sales charge. Performance does not reflect the deduction of taxes that a shareholder would pay on a fund distribution or the redemption of fund shares. Performance would have been lower during the specified periods if certain of the Fund's fees and expenses had not been waived. 2 The Fund's inception date is January 15, 1993. Benchmark returns are for the periods beginning January 31, 1993. 3 The Lehman Brothers Intermediate Treasury Index is an unmanaged index reflecting the performance of US Treasury securities in the intermediate-term Treasury sector. 4 Lehman Brothers Emerging Americas Index: Mexico Section is an unmanaged sub-index of the Lehman Brothers Emerging Markets Index reflecting the performance of selected Mexican debt instruments with maturities of one year or more. The performance information in the graph and table above is quoted in US dollars. Benchmark returns do not reflect expenses or sales charges that have been deducted from the Fund's returns. 5 The Consumer Price Index is a widely used measure of inflation. 4 - -------------------------------------------------------------------------------- ISI STRATEGY FUND - ISI SHARES PERFORMANCE COMPARISON 1 - -------------------------------------------------------------------------------- [EDGAR REPRESENTATION OF BAR CHART: LIPPER FLEXIBLE ISI STRATEGY WILSHIRE 500 CONSUMER FUNDS PORTFOLIO FUND STOCK INDEX PRICE INDEX AVERAGE -------------- ---------------- ------------- ---------------- Date Load - ---- ----- 9/16/1997 9,699 10,000 10,000 10,000 9/30/1997 9,719 10,000 10,000 10,000 10/31/1997 9,554 9,667 10,020 9,776 11/30/1997 9,767 9,983 10,010 9,925 12/31/1997 9,933 10,168 10,000 10,053 1/31/1998 10,020 10,223 10,020 10,123 2/28/1998 10,459 10,967 10,040 10,582 3/31/1998 10,810 11,516 10,060 10,934 4/30/1998 10,878 11,653 10,080 11,022 5/31/1998 10,761 11,343 10,100 10,895 6/30/1998 11,044 11,741 10,110 11,110 7/31/1998 10,887 11,483 10,121 10,971 8/31/1998 9,992 9,695 10,131 9,871 9/30/1998 10,483 10,328 10,141 10,261 10/31/1998 10,888 11,097 10,161 10,720 11/30/1998 11,337 11,796 10,161 11,125 12/31/1998 11,776 12,550 10,151 11,542 1/31/1999 12,079 13,012 10,171 11,752 2/28/1999 11,634 12,540 10,181 11,423 3/31/1999 11,937 13,024 10,212 11,729 4/30/1999 12,301 13,648 10,283 12,077 5/31/1999 12,068 13,350 10,283 11,872 6/30/1999 12,443 14,041 10,283 12,259 7/31/1999 12,148 13,590 10,314 12,070 8/31/1999 12,046 13,464 10,335 11,993 9/30/1999 11,863 13,112 10,387 11,867 10/31/1999 12,282 13,946 10,407 12,233 11/30/1999 12,496 14,413 10,418 12,487 12/31/1999 12,953 15,507 10,418 13,091 1/31/2000 12,649 14,864 10,439 12,749 2/29/2000 12,869 15,196 10,501 12,993 3/31/2000 13,498 16,099 10,585 13,574 4/30/2000 13,056 15,260 10,596 13,267 5/31/2000 12,804 14,727 10,606 13,065 6/30/2000 13,183 15,377 10,670 13,390 7/31/2000 13,098 15,063 10,691 13,278 8/31/2000 13,734 16,157 10,702 13,873 9/30/2000 13,289 15,403 10,756 13,516 10/31/2000 13,205 15,076 10,777 13,420 11/30/2000 12,491 13,576 10,788 12,857 12/31/2000 12,735 13,818 10,777 13,153 1/31/2001 13,063 14,347 10,842 13,401 2/28/2001 12,340 12,986 10,885 12,728 3/31/2001 11,865 12,112 10,907 12,204 4/30/2001 12,299 13,109 10,951 12,775 5/31/2001 12,379 13,239 11,005 12,840 6/30/2001 12,254 13,018 11,027 12,620 7/31/2001 12,259 12,803 10,994 12,569 8/31/2001 11,814 12,028 10,994 12,134 9/30/2001 11,107 10,947 11,049 11,437 10/31/2001 11,416 11,226 11,016 11,657 11/30/2001 11,874 12,084 10,994 12,138 12/31/2001 12,006 12,301 10,950 12,235 1/31/2002 11,903 12,149 10,972 12,083 2/28/2002 11,765 11,899 11,016 11,955 3/31/2002 12,087 12,420 11,082 12,255 4/30/2002 11,814 11,813 11,148 11,953 5/31/2002 11,768 11,674 11,148 11,898 6/30/2002 11,193 10,854 11,160 11,308 7/31/2002 10,618 9,978 11,171 10,705 8/31/2002 10,745 10,036 11,204 10,803 9/30/2002 10,041 9,029 11,227 10,113 10/31/2002 10,515 9,720 11,249 10,551 11/30/2002 10,885 10,306 11,249 10,930 12/31/2002 10,500 9,735 11,227 10,618 1/31/2003 10,291 9,490 11,272 10,459 2/28/2003 10,221 9,329 11,362 10,374 3/31/2003 10,326 9,435 11,430 10,409 4/30/2003 10,932 10,208 11,407 10,963 - -------------------------------------------------------------------------------------------------------------------- CUMULATIVE TOTAL RETURNS WITH LOAD ANNUALIZED TOTAL RETURNS WITH LOAD PERIODS ENDED SINCE SINCE APRIL 30, 2003 6 MONTHS 1 YEAR 5 YEARS INCEPTION2 1 YEAR 5 YEARS INCEPTION2 - -------------------------------------------------------------------------------------------------------------------- ISI Strategy Fund Shares 0.85% -10.27% -2.49% 9.32% -10.27% -0.50% 1.60% - -------------------------------------------------------------------------------------------------------------------- Wilshire 5000 Index3 5.02% -13.59% -12.40% 2.08% -13.59% -2.61% 0.37% - -------------------------------------------------------------------------------------------------------------------- Consumer Price Index4 1.40% 2.32% 13.16% 14.07% 2.32% 2.50% 2.39% - -------------------------------------------------------------------------------------------------------------------- Lipper Flexible Portfolio Funds Average5 3.88% -8.11% -0.83% 9.63% -8.11% -0.33% 1.51% - --------------------------------------------------------------------------------------------------------------------
1 PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. Investment return and principal will fluctuate so that an investor's shares when redeemed, may be worth more or less than their original cost. The performance information presented in the graph and table above does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of Fund shares. All performance assumes the reinvestment of dividend and capital gain distributions and includes the Fund's maximum 3.00% sales charge. Performance would have been lower during the specified period if certain of the Fund's fees and expenses had not been waived. 2 The Fund's inception date is September 16, 1997. Benchmark returns are for the periods beginning September 30, 1997. 3 The Wilshire 5000 Index is an unmanaged index that represents the broadest measure of the US equity market. Benchmark returns do not reflect expenses or sales charges that have been deducted from the Fund's returns. 4 The Consumer Price Index is a widely used measure of inflation. 5 Lipper figures represent the average total returns reported by all the mutual funds designated by Lipper, Inc. as falling into the category indicated. 5 - -------------------------------------------------------------------------------- TOTAL RETURN US TREASURY FUND - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS (UNAUDITED) APRIL 30, 2003 INTEREST MATURITY PAR MARKET SECURITY RATE DATE VALUE VALUE - -------------------------------------------------------------------------------- US TREASURY OBLIGATIONS - 87.32% US Treasury Bond 10.375% 11/15/12 $ 14,250,000 $ 18,889,600 US Treasury Bond 8.875% 2/15/19 10,800,000 16,068,796 US Treasury Bond 7.500% 11/15/24 61,000,000 82,969,531 US Treasury Bond 5.250% 11/15/28 2,000,000 2,106,563 US Treasury Note 3.250% 12/31/03 56,000,000 56,787,500 US Treasury Note 3.000% 2/15/08 15,000,000 15,162,891 US Treasury Note 5.500% 5/15/09 25,000,000 28,281,250 ---------- TOTAL US TREASURY OBLIGATIONS (COST $216,139,167) 220,266,131 ----------- ZERO COUPON US TREASURY BONDS (STRIPs) - 2.87% US Treasury STRIPs1 5.410%2 8/15/15 5,000,000 2,871,114 US Treasury STRIPs1 5.640%2 5/15/17 8,500,000 4,362,024 --------- TOTAL ZERO COUPON US TREASURY BONDS (STRIPs) (Cost $6,486,560) 7,233,138 --------- REPURCHASE AGREEMENT - 8.51% GOLDMAN SACHS & Co. Dated 4/30/03, 1.220%, principal and interest in the amount of $21,464,727 due 5/1/03, collateralized by US Treasury Obligations, par value of $21,963,000, due 9/18/03 to 9/30/03 with a value of $21,894,028. 21,464,000 ---------- TOTAL REPURCHASE AGREEMENT (Cost $21,464,000) 21,464,000 ---------- TOTAL INVESTMENTS - 98.70% 248,963,269 (Cost $244,089,727) OTHER ASSETS IN EXCESS OF LIABILITIES - 1.30% 3,285,499 ------------- NET ASSETS - 100% $ 252,248,768 ============= - -------------------------------------------------------------------------------- 1 Includes principal of underlying security only. 2 Yield as of April 30, 2003. 6 See Notes to Financial Statements. - -------------------------------------------------------------------------------- MANAGED MUNICIPAL FUND - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS (UNAUDITED) APRIL 30, 2003 RATING* ISSUER (MOODY'S/S&P) PAR VALUE MARKET VALUE - ---------------------------------------------------------------------------------------------------------- MUNICIPAL BONDS - 86.14% General Obligations - 56.55% Arlington County, VA 5.000% 10/1/14 Aaa / AAA $ 2,000,00 2,183,760 Cary, NC 5.000% 3/1/18 Aaa / AAA 2,000,000 2,161,220 Charlotte, NC 5.000% 2/1/19 Aaa / AAA 2,300,000 2,436,643 Chesterfield County, VA 5.625% 1/15/14 Aaa / AAA 1,350,000 1,532,210 Chesterfield County, VA 5.000% 1/15/20 Aaa / NR 1,000,000 1,054,850 Du page County, IL, Jail Project 5.600% 1/1/21 Aaa / AAA 1,600,000 1,840,432 Florida State, Board of Education, Public Education 5.125% O6/1/21 Aa2 / AA+ 1,000,000 1,054,410 Franklin County, OH 5.450% 12/1/09 Aaa / AAA 1,500,000 1,567,170 Georgia State, Series B 5.000% 7/1/19 Aaa / AAA 5,000,000 5,316,600 Georgia State, Series D 5.000% 10/1/17 Aaa / AAA 1,850,000 1,990,082 Guilford County, NC, Series B 5.250% 10/1/16 Aa1 / AAA 3,000,000 3,323,790 King County, WA, Series G 5.000% 12/1/17 Aa1 / AA+ 2,565,000 2,732,135 Mecklenburg County, NC, Series D 4.250% 2/1/19 Aaa / AAA 2,000,000 2,006,240 Minneapolis, MN, Ref- Series B 5.200% 3/1/13 Aa1 / AAA 3,200,000 3,441,632 Minnesota State 5.000% 11/1/14 Aaa / AAA 2,500,000 2,731,100 Minnesota State 5.500% 6/1/18 Aaa / AAA 2,000,000 2,247,680 Missouri State, Fourth Street Building, Series A 4.125% 10/1/19 Aaa / AAA 2,000,000 1,994,040 Missouri State, Fourth State Building, Series A 5.000% 6/1/23 Aaa / AAA 2,000,000 2,056,840 Montgomery County, MD, Series A 5.000% 2/1/22 Aaa / AAA 2,750,000 2,907,960 North Carolina, Public School Building 4.600% 4/1/17 Aa1 / AAA 5,000,000 5,249,250 See Notes to Financial Statements. 7 - -------------------------------------------------------------------------------- MANAGED MUNICIPAL FUND (CONTINUED) - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS (UNAUDITED) APRIL 30, 2003 RATING* ISSUER (MOODY'S/S&P) PAR VALUE MARKET VALUE - ------------------------------------------------------------------------------------------------------- Salt Lake City, UT, Series A 4.500% 3/1/20 Aaa / NR 2,240,000 2,268,336 South Carolina State, Highway, Series B 5.000% 4/1/19 Aaa / AAA 1,000,000 1,068,950 South Carolina State, Highway, Series B 5.650% 7/1/21 Aaa / AAA 1,260,000 1,406,727 South Carolina State, State Institutional Series A 5.300% 3/1/17 Aaa / AAA 1,700,000 1,877,667 Spring Branch, TX, Independent School District 5.125% 2/1/26 Aaa / AAA 2,000,000 2,057,420 Virginia State 5.250% 6/1/16 Aaa / AAA 1,320,000 1,459,801 Washington State, Series E 5.000% 7/1/22 Aa1 / AA+ 2,000,000 2,035,980 --------- 62,002,925 ---------- OTHER REVENUE - 8.76% Fairfax County, VA, Water Authority Water Revenue 5.000% 4/1/27 Aa1 / AAA 3,500,000 3,615,570 Gwinett County, GA, Water & Sewer Authority 5.300% 8/1/20 Aaa / AAA 1,250,000 1,348,675 Gwinett County, GA, Water & Sewer Authority 5.250% 8/1/24 Aaa / AAA 1,500,000 1,592,430 Texas, Water Development Board Revenue 4.750% 7/15/20 Aaa / AAA 3,000,000 3,053,790 --------- 9,610,465 --------- PREREFUNDED ISSUES - 20.83% Arlington, TX, School District 5.750% 2/15/21 Aaa / NR 3,535,000 3,809,351 Charlotte, NC, Water & Sewer System Revenue 5.250% 6/1/24 Aa1 / AAA 1,600,000 1,835,984 Chicago, IL, Metropolitan Water Reclamation District- 6.300% 12/1/09 Aaa / AA+ 1,000,000 1,121,190 Dallas, TX 5.000% 2/15/10 Aaa / AAA 1,750,000 1,862,665 Delaware State, Series A 5.125% 4/1/16 Aaa / AAA 2,150,000 2,362,721 Delaware State, Series A 5.500% 4/1/19 Aaa / AAA 2,500,000 2,878,575 Florida State, Transportaton, Series A 5.800% 7/1/18 Aa2 / AAA 2,000,000 2,205,840 Indianapolis, IN, Public Improvement Board Revenue, Series A 6.000% 1/10/18 Aaa / AAA 300,000 307,101 8 See Notes to Financial Statements. - -------------------------------------------------------------------------------- MANAGED MUNICIPAL FUND (CONTINUED) - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS (UNAUDITED) APRIL 30, 2003 RATING* ISSUER (MOODY'S/S&P) PAR VALUE MARKET VALUE - ---------------------------------------------------------------------------------------------------------- Portland, OR, Metro Open Spaces Progressive, Series A 5.250% 9/1/07 Aa1 / AA+ 1,500,000 1,550,745 Tennessee State, Series A 5.500% 3/1/09 Aa2 / AA 1,535,000 1,650,018 Tennessee State, Series A 5.550% 3/1/10 Aa2 / AA 1,000,000 1,075,840 Texas State, Series A 6.000% 10/1/14 Aaa / AA 2,000,000 2,174,800 --------- 22,834,830 ---------- TOTAL MUNICIPAL BONDS (COST $87,054,010) 94,448,220 ---------- REPURCHASE AGREEMENT - 10.03% GOLDMAN SACHS & Co. 10,994,000 ---------- Dated 4/30/03, 1.22%, principal and interest in the amount of $10,994,373 due 5/1/03, collateralized by US Treasury Bond, par value of $9,392,000, due 11/15/27 with a market value of $11,214,283. TOTAL REPURCHASE AGREEMENT (COST $10,994,000) 10,994,000 ---------- TOTAL INVESTMENTS - 96.17% 105,442,220 (COST $98,048,010) OTHER ASSETS IN EXCESS OF LIABILITIES - 3.83% 4,200,993 ---------- NET ASSETS - 100% $ 109,643,213 ===========
- -------------------------------------------------------------------------------- * The Moody's and Standard & Poor's ratings indicated are believed to be the most recent ratings available as of April 30, 2003. The ratings shown are not audited. Moody's Municipal Bond Ratings : Aaa Judged to be of the best quality. Aa Judged to be of high quality by all standards. Issues are sometimes denoted with a 1, 2 or 3, which denote a high, medium or low ranking within the rating. NR Not Rated. S&P Municipal Bond Ratings: AAA Of the highest quality. AA The second strongest capicity for payment of debt services. Those issues determined to possess very strong safety characteristics are denoted with a plus (+) sign. NR Not Rated. See Notes to Financial Statements. 9 - -------------------------------------------------------------------------------- NORTH AMERICAN GOVERNMENT BOND FUND - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS (UNAUDITED) APRIL 30, 2003 INTEREST MATURITY PAR/NOMINAL MARKET SECURITY RATE DATE VALUE1 VALUE - ---------------------------------------------------------------------------------------------------------- CANADIAN SECURITIES - 10.81% Canadian Government Bond 4.500% 9/1/07 C22,300,000 $ 15,744,562 Canadian Government Bond 6.000% 6/1/11 8,500,000 6,395,724 Canadian Government Bond 5.250% 6/1/12 11,000,000 7,865,364 --------- TOTAL CANADIAN SECURITIES (COST $28,144,265) 30,005,650 ---------- MEXICAN SECURITIES - 15.80% Mexican Bono2 14.000% 9/2/04 P189,596,100 20,034,310 Mexican Bono2 14.500% 5/12/05 71,387,700 7,851,574 Mexican Bono2 10.500% 7/14/11 96,938,900 10,273,932 Mexican Cetes3 8.360%4 6/12/03 59,108,280 5,715,928 --------- TOTAL MEXICAN SECURITIES (COST $42,792,849) 43,875,744 ---------- US SECURITIES - 65.75% General Electric Co. 5.000% 2/1/13 $ 1,000,000 1,037,683 US Treasury Bond 8.750% 8/15/20 14,100,000 20,982,563 US Treasury Bond 7.875% 2/15/21 2,750,000 3,807,300 US Treasury Bond 7.500% 11/15/24 44,000,000 59,846,875 US Treasury Bond 6.875% 8/15/25 8,750,000 11,165,820 US Treasury Note 3.250% 12/31/03 47,000,000 47,660,936 US Treasury Note 3.000% 2/15/08 16,100,000 16,274,836 US Treasury Note 5.500% 5/15/09 19,250,000 21,776,563 ---------- TOTAL US SECURITIES 182,552,576 (Cost $180,946,747) -----------
10 See Notes to Financial Statements. - -------------------------------------------------------------------------------- NORTH AMERICAN GOVERNMENT BOND FUND (CONCLUDED) - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS (UNAUDITED) APRIL 30, 2003 MARKET SECURITY VALUE - ---------------------------------------------------------------------------------------------------------- REPURCHASE AGREEMENT - 6.49% GOLDMAN SACHS & Co. 18,019,000 ---------- Dated 4/30/03, 1.220%, principal and interest in the amount of $18,019,611 due 5/1/03, collateralized by US Treasury Bills, par value of $18,484,000, due 10/23/03 with a value of $18,379,491. TOTAL REPURCHASE AGREEMENT (COST $18,019,000) 18,019,000 ---------- TOTAL INVESTMENTS - 98.85% 274,452,970 (COST $269,902,861) ASSETS IN EXCESSS OF LIABILITIES - 1.15% 3,203,478 --------------- NET ASSETS - 100% $ 277,656,448 =============== - ------------------------------------------------------------------------------------------------------------------------
1 Par Value is shown in local currency: Canadian dollars (C), Mexican Pesos (P) and US dollars ($). 2 Bonos are fixed-rate, local currency-denominated coupon bonds issued by the Mexican government. 3 Cetes are short-term Mexican government debt securities. 4 Yield as of April 30, 2003. See Notes to Financial Statements. 11 - -------------------------------------------------------------------------------- ISI STRATEGY FUND - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS (UNAUDITED) APRIL 30, 2003 MARKET MARKET SECURITY SHARES VALUE SECURITY SHARES VALUE - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCK - 78.80% BIOTECHNOLOGY - 1.53% Basic Materials - 1.73% Allos Therapeutics + 201 378 Air Products & Chemicals, Inc. 250 10,767 Amgen, Inc.+ 1,500 91,965 Alcoa, Inc. 662 15,180 Andrx Group + 100 1,614 Arch Chemicals, Inc. 325 6,932 Biogen, Inc.+ 200 7,598 Bowater, Inc. 100 3,893 Bio-Technology General Corp.+ 100 346 Brady Corp. - Class A 100 3,351 Charles River Laboratories International, Inc.+ 100 2,715 Cabot Corp. 100 2,787 Chiron Corp.+ 100 4,083 Crompton Corp. 92 591 Ciphergen Biosystems, Inc.+ 1,045 5,110 Cytec Industries, Inc.+ 57 1,825 Covance, Inc.+ 100 1,773 Dow Chemical Co. 542 17,691 Cubist Pharmaceuticals, Inc.+ 88 812 Du Pont (E.I.) de Nemours & Co. 2,556 108,707 Diagnostic Products Corp. 100 3,950 Eastman Chemical Co. 100 3,053 Discovery Partners International + 1,367 4,429 Ecolab, Inc. 100 5,109 Exelixis, Inc.+ 900 7,667 Engelhard Corp. 100 2,455 Genencor International, Inc.+ 96 1,061 Georgia-Pacific Corp. 79 1,220 Genentech, Inc.+ 100 3,799 Glatfelter 100 1,145 Genzyme Corp. - General Division + 100 4,028 Goodrich Corp. 22 310 Gilead Sciences, Inc.+ 2,031 93,710 International Paper Co. 43 1,537 Human Genome Sciences, Inc.+ 84 982 Lafarge North America, Inc. 200 6,370 Idexx Laboratories, Inc.+ 100 3,900 Lubrizol Corp. 100 3,161 Invitrogen, Corp.+ 100 3,270 Martin Marietta Materials, Inc. 62 1,833 Kendle International, Inc.+ 100 489 MeadWestvaco Corp. 94 2,217 Kosan Biosciences, Inc.+ 76 497 Monsanto Co. 282 4,907 Lexicon Genetics, Inc.+ 92 460 Newmont Mining Corp. 205 5,539 Medimmune, Inc.+ 1,205 42,500 Ns Group, Inc.+ 2,344 17,697 Millennium Pharmaceuticals, Inc.+ 49 539 Nucor Corp. 100 4,085 Quest Diagnostics, Inc.+ 410 24,498 PPG Industries, Inc. 200 9,702 Rigel Pharmaceuticals, Inc.+ 1,865 1,623 Praxair, Inc. 200 11,616 Sangamo Biosciences, Inc.+ 100 283 Quanex Corp. 821 23,612 Seattle Genetics, Inc.+ 100 261 Rohm & Haas Co. 273 9,039 Sequenom, Inc.+ 93 188 Sigma - Aldrich Corp. 100 4,982 Serologicals Corp.+ 58 535 Smurfit - Stone Container Corp.+ 97 1,365 Universal Display Corp.+ 22 215 Southern Peru Copper Corp. 1,440 22,522 ------- Temple-Inland, Inc. 100 4,530 315,278 Texas Industries, Inc. 55 1,086 ------- United States Steel Corp. 66 945 Valspar Corp. 100 4,319 BUSINESS SERVICES - 1.41% Vulcan Materials Co. 100 3,497 Advent Software, Inc.+ 100 1,259 Wausau-Mosinee Paper Corp. 123 1,309 Agile Software Corp.+ 981 6,808 Weyerhaeuser Co. 300 14,877 Allied Waste Industries, Inc.+ 100 830 Wolverine Tube Co.+ 1,896 10,238 Answerthink, Inc.+ 100 195 ------- Apollo Group, Inc. - Class A + 25 1,355 356,001 Automatic Data Processing, Inc. 488 16,411 ------- BearingPoint, Inc.+ 100 817 CDW Computer Centers, Inc.+ 283 12,067 Cendant Corp.+ 1,540 21,991 12 See Notes to Financial Statements. - -------------------------------------------------------------------------------- ISI STRATEGY FUND (CONTINUED) - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS (UNAUDITED) APRIL 30, 2003 MARKET MARKET SECURITY SHARES VALUE SECURITY SHARES VALUE - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCK (CONTINUED) Onyx Software Corp.+ 578 347 BASIC MATERIAL (CONTINUED) Opnet Technologies, Inc.+ 1,701 11,958 Ceridian Corp.+ 100 1,395 Paychex, Inc. 62 1,931 Certegy, Inc.+ 48 1,200 Pec Solutions, Inc.+ 100 1,477 ChoicePoint, Inc.+ 410 14,465 Pegasus Solutions, Inc.+ 100 1,190 Ciber, Inc.+ 100 543 Pegasystems, Inc.+ 220 1,503 Cintas Corp. 154 5,529 Perot Systems Corp. - Class A + 100 1,062 Convergys Corp.+ 17 276 Per-Se Technologies, Inc.+ 100 873 CoStar Group, Inc.+ 100 2,226 Polycom, Inc.+ 79 776 CSG Systems International, Inc.+ 100 1,053 Pomeroy Computer + 1,153 8,359 Datastream Systems, Inc.+ 359 3,138 Pre-paid Legal Services, Inc.+ 100 2,306 Deluxe Corp. 100 4,401 QRS Corp.+ 100 520 DeVry, Inc.+ 100 2,314 Republic Services, Inc.+ 113 2,425 Digital River, Inc.+ 347 5,802 R.H. Donnelley Corp.+ 120 3,583 Dun & Bradstreet Corp.+ 410 15,498 Serena Software Co.+ 412 6,493 Equifax, Inc. 100 2,319 ServiceMaster Co. 168 1,520 Fidelity National Information Systems, Inc.+ 520 9,126 Sycamore Networks, Inc.+ 100 323 Fiserv, Inc.+ 190 5,594 Sylvan Learning Systems, Inc.+ 100 1,754 Forrester Research, Inc.+ 648 10,031 TeleTech Holdings, Inc.+ 100 408 Gartner, Inc. - Class B + 77 604 Tetra Technologies, Inc.+ 100 2,660 Global Payments, Inc. 80 2,481 Transaction Systems Architects, Inc.+ 83 577 Heidrick & Struggles International, Inc.+ 96 1,344 Universal Electronics, Inc.+ 100 1,046 H&R Block, Inc. 140 5,407 URS Corp.+ 630 8,946 IDX Systems Corp.+ 100 1,467 Verisity Ltd.+ 85 997 IMS Health, Inc. 100 1,540 Viad Corp. 9 181 InFocus Corp.+ 310 1,392 Wallace Computer Services, Inc. 222 5,801 infoUSA, Inc.+ 285 1,505 WebMD Corp.+ 52 501 Inrange Technologies Corp, - Class B + 100 228 --- Interpublic Group of Companies, Inc.+ 220 2,508 290,613 Iron Mountain, Inc.+ 229 9,126 ------- Kelly Services, Inc. - Class A 100 2,315 CAPITAL GOODS - 5.18% Lamar Advertising Co.+ 100 3,592 3M Co. 806 101,588 Landamerica Financial Group, Inc. 100 4,107 American Power Conversion Corp.+ 310 4,830 Macrovision Corp.+ 408 7,209 American Standard Companies, Inc.+ 200 14,238 Manpower, Inc. 93 3,058 Avery Dennison Corp. 100 5,301 Mapinfo Corp.+ 100 505 Baldor Electric Co. 100 2,224 Memberworks, Inc.+ 100 2,193 Ball Corp. 100 5,616 Mentor Corp. 100 1,851 Belden, Inc. 43 511 Metro One Telecommunications, Inc.+ 50 324 Boeing Co. 805 21,960 MPS Group, Inc.+ 100 675 Caterpillar, Inc. 410 21,566 NETIQ Corp.+ 75 1,033 Clarcor, Inc. 100 3,741 Nautilus Group, Inc. 720 9,144 Cooper Industries Ltd. - Class A 1,150 42,665 Navigant Consulting, Inc.+ 100 751 Cummins, Inc. 100 2,711 NCO Group, Inc.+ 96 1,608 Deere & Co. 200 8,806 NDCHealth Corp. 100 1,925 Diebold, Inc. 200 7,996 Omnicom Group 106 6,561 Digi International, Inc.+ 93 394 Dover Corp. 100 2,874 See Notes to Financial Statements. 13 - -------------------------------------------------------------------------------- ISI STRATEGY FUND (CONTINUED) - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS (UNAUDITED) APRIL 30, 2003 MARKET MARKET SECURITY SHARES VALUE SECURITY SHARES VALUE - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCK (CONTINUED) CONSUMER CYCLICALS - 2.70% CAPITAL GOODS (CONTINUED) Applebee's International, Inc. 8 219 Eaton Corp. 300 24,621 A O Smith Corp. 34 1,014 Emerson Electric Co. 410 20,787 A.T. Cross Co. - Class A + 100 512 Energizer Holdings, Inc.+ 376 10,836 Belo Corp. - Class A 25 563 Fastenal Co. 1,035 35,801 Black & Decker Corp. 100 4,125 Fisher Scientific International, Inc.+ 100 2,881 Brinker International, Inc.+ 250 7,938 Fluor Corp. 100 3,457 Brunswick Corp. 271 5,916 FMC Technologies, Inc.+ 60 1,129 Carnival Corp. 196 5,408 General Dynamics Corp. 610 37,863 Centex Corp. 100 6,602 General Electric Co. 13,914 409,767 Choice Hotels International, Inc.+ 100 2,440 Harsco Corp. 97 3,344 Coach, Inc.+ 1,560 67,876 Illinois Tool Works, Inc. 490 31,350 CSK Auto Corp.+ 100 1,025 Ingersoll-Rand Co. - Class A 200 8,816 Danaher Corp. 29 2,000 Johnson Controls, Inc. 410 33,718 Darden Restaurants, Inc. 100 1,751 Kaydon Corp. 100 2,230 Delphi Corp. 33 277 Lawson Products, Inc. 100 2,700 Donaldson Co., Inc. 72 2,874 Littelfuse, Inc.+ 19 372 Dow Jones & Co., Inc. 100 3,960 Lockheed Martin Corp. 200 10,010 DR Horton, Inc. 20 474 Millipore Corp.+ 25 854 Dura Automotive Systems Co.+ 100 805 Molex, Inc. 50 1,167 Ethan Allen Interiors, Inc. 72 2,425 Moog, Inc. - Class A + 31 986 Ford Motor Co. 24 247 Navistar International Corp.+ 96 2,678 Fortune Brands, Inc. 138 6,679 Northrop Grumman Corp. 463 40,721 Furniture Brands International, Inc.+ 100 2,375 Owens-Illinois, Inc.+ 100 889 Gannett Company, Inc. 21 1,590 Paccar, Inc. 150 8,761 General Motors Corp. 95 3,425 Pactiv Corp.+ 100 2,052 General Motors Corp. - Class H + 150 1,770 Pall Corp. 100 2,112 Genesis Intermedia, Inc.+ 600 12 Parker Hannifin Corp. 100 4,068 Genuine Parts Co. 1,175 37,565 Power-One, Inc.+ 231 1,351 Haggar Corp. 2,137 22,225 Precision Castparts Corp. 100 2,769 Harley-Davidson, Inc. 300 13,332 Raytheon Co. 200 5,986 Harrah's Entertainment, Inc.+ 200 7,878 Rockwell Automation, Inc. 1,535 34,998 Hasbro, Inc. 100 1,600 Rockwell Collins, Inc. 100 2,138 Hillenbrand Industries, Inc. 100 4,990 Roper Industries, Inc. 69 2,111 Hudson Highland Group, Inc.+ 5 74 Shaw Group, Inc.+ 100 1,165 International Game Technology + 200 17,260 Snap-On, Inc. 100 2,935 Jones Apparel Group, Inc.+ 100 2,852 Sonoco Products Co. 720 15,732 KB Home 100 4,927 Stewart Enterprises, Inc.+ 100 293 Knight-Ridder, Inc. 69 4,454 Teleflex, Inc. 100 3,839 Lancaster Colony Corp. 32 1,367 Textron, Inc. 200 5,898 La-Z-Boy, Inc. 58 1,133 United Technologies Corp. 465 28,742 Lear Corp.+ 300 11,922 White Electronic Designs Co.+ 96 752 Lee Enterprises, Inc. 100 3,587 W.W. Grainger, Inc. 100 4,615 Leggett & Platt, Inc. 100 2,065 York International Corp. 100 2,390 Lennar Corp. - Class A 100 5,424 ----- Lennar Corp. - Class B 10 536 1,066,705 Liz Claiborne, Inc. 72 2,342 --------- 14 See Notes to Financial Statements. - -------------------------------------------------------------------------------- ISI STRATEGY FUND (CONTINUED) - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS (UNAUDITED) APRIL 30, 2003 MARKET MARKET SECURITY SHARES VALUE SECURITY SHARES VALUE - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCK (CONTINUED) CONSUMER STAPLES - 10.12% CONSUMER CYCLICALS (CONTINUED) 7-Eleven, Inc.+ 100 899 Marriott International, Inc. - Class A 300 0,773 AMC Entertainment, Inc.+ 100 958 Masco Corp. 210 4,425 Alberto-Culver Co. - Class B 100 4,928 Mattel, Inc. 20 435 Albertson's, Inc. 3,176 63,075 Maytag Corp. 100 2,084 Altria Group, Inc. 3,021 92,926 McClatchy Co. - Class A 100 5,860 Anheuser-Busch Cos., Inc. 3,452 172,186 McGraw-Hill Cos., Inc. 200 1,678 Archer-Daniels-Midland Co. 44 488 MGM MIRAGE + 66 1,876 Avon Products, Inc. 300 17,451 Mohawk Industries, Inc.+ 100 5,547 Brown-Forman Corp. - Class B 200 15,308 New York Times Co. - Class A 200 9,276 Cablevision Systems Corp.+ 14,125 316,683 Newell Rubbermaid, Inc. 1,702 1,877 Campbell Soup Co. 100 2,203 Nike, Inc. - Class B 300 6,059 Clear Channel Communications, Inc.+ 85 3,324 Outback Steakhouse, Inc. 129 4,610 Clorox Co. 268 12,119 Photronics, Inc.+ 28 352 Coca Cola Enterprises, Inc. 100 1,949 Polaris Industries, Inc. 68 3,595 Coca-Cola Co. 4,462 180,265 PracticeWorks, Inc.+ 22 259 Colgate Palmolive Co. 620 35,445 Pulitzer, Inc. 78 3,637 Comcast Corp. - Class A + 1,305 41,643 Pulte Homes, Inc. 97 5,625 Comerica, Inc. 250 10,877 Reebok International Ltd.+ 100 3,106 Conagra Foods, Inc. 419 8,799 Scripps (E.W.) Co. - Class A 200 5,850 Constellation Brands, Inc. - Class A + 310 8,311 Sherwin-Williams Co. 64 1,784 Coors (Adolph) Co. 100 5,353 Speedway Motorsports, Inc. 100 2,431 Corn Products International, Inc. 24 717 SPX Corp.+ 73 2,467 COX Communications, Inc. - Class A + 876 28,996 Stanley Works 100 2,403 Dean Foods Co.+ 284 12,363 Starbucks Corp.+ 100 2,349 Del Monte Foods, Inc.+ 33 262 Starwood Hotels & Resorts Worldwide, Inc. 91 2,442 Delta & Pine Land Co. 100 2,326 Timberland Co. - Class A + 29 1,450 Dreyer's Grand Ice Cream, Inc. 1,212 77,423 Toro Co. 16 597 Eastman Kodak Co. 620 18,544 Tribune Co. 265 2,980 Echostar Communications Corp. - Class A + 100 2,996 Tweeter Home Entertainment Group, Inc.+ 574 3,306 Entercom Communications Corp. + 410 19,922 United Auto Group, Inc.+ 49 835 Estee Lauder Cos., Inc. 100 3,250 United Rentals, Inc.+ 1,175 2,102 Flowers Foods, Inc. 60 1,698 V.F. Corp. 200 7,868 Fox Entertainment Group, Inc. - Class A + 95 2,413 Washington Post Co. - Class B 36 6,244 Gaylord Entertainment Co.+ 100 2,081 Weight Watchers International, Inc.+ 510 3,960 General Mills, Inc. 300 13,533 Wendy's International, Inc. 100 2,904 Harte-Hanks, Inc. 50 900 Whirlpool Corp. 100 5,349 Heinz (H.J.) Co. 300 8,964 Wolverine World Wide, Inc. 100 1,844 Hershey Foods Corp. 200 13,050 Yum! Brands, Inc.+ 180 4,446 Hispanic Broadcasting Corp.+ 2,375 60,919 Zygo Corp.+ 96 717 Hormel Foods Corp. 100 2,301 --- Ingram Micro, Inc.+ 72 720 555,237 International Flavors & Fragrances, Inc. 300 9,534 ------- J.M Smucker Co. 52 1,887 Kellogg Co. 400 13,096 See Notes to Financial Statements. 15 - -------------------------------------------------------------------------------- ISI STRATEGY FUND (CONTINUED) - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS (UNAUDITED) APRIL 30, 2003 MARKET MARKET SECURITY SHARES VALUE SECURITY SHARES VALUE - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCK (CONTINUED) Cimarex Energy Co.+ 32 630 CONSUMER STAPLES (CONTINUED) ConocoPhillips 425 21,378 Kimberly-Clark Corp. 564 28,070 Consol Energy, Inc. 300 11,661 Kraft Foods, Inc. 665 20,549 Cooper Cameron Corp.+ 300 14,358 Kroger Co.+ 210 3,003 Devon Energy Corp. 1,086 51,332 Lexar Media, Inc.+ 462 2,241 Diamond Offshore Drilling, Inc. 100 1,864 McCormick & Co., Inc. 100 2,479 Dril-Quip, Inc.+ 96 1,476 Meredith Corp. 100 4,322 Encore Acquisition Co.+ 61 1,052 Metro-Goldwyn-Mayer, Inc.+ 100 1,115 EOG Resources, Inc. 80 2,990 Mondavi (Robert) Corp. - Class A + 66 1,620 Exxon Mobil Corp. 2,863 452,778 Nash Finch Co. 88 1,100 FMC Corp.+ 100 1,812 Pathmark Stores, Inc.+ 100 699 Frontier Oil Corp. 32 541 PepsiAmericas, Inc. 100 1,249 Global Industries Ltd.+ 93 413 Pepsi Bottling Group, Inc. 100 2,054 GlobalSantaFe Corp. 696 14,727 PepsiCo, Inc. 2,411 104,348 Halliburton Co. 1,393 29,824 Playtex Products, Inc.+ 50 367 Hanover Compressor Co.+ 1,574 13,237 Price Communications Corp.+ 21 256 Headwaters, Inc.+ 660 10,824 Procter & Gamble Co. 2,922 262,542 Helmerich & Payne, Inc. 100 2,573 R.J. Reynolds Tobacco Holdings, Inc. 100 2,817 Holly Corp. 411 11,709 R.R. Donnelley & Sons Co. 100 2,016 Hydril Co.+ 100 2,381 Safety Components International, Inc.* 12 0 Kerr-McGee Corp. 73 3,074 Safeway, Inc.+ 310 5,152 Marathon Oil Corp. 100 2,277 Sara Lee Corp. 300 5,034 Murphy Oil Corp. 820 34,153 Smithfield Foods, Inc.+ 1,502 29,439 Nabors Industries Ltd.+ 200 7,840 Supervalu, Inc. 100 1,647 National-Oilwell, Inc.+ 100 2,099 Sysco Corp. 620 17,813 Noble Corp.+ 100 3,095 Univision Communications, Inc. - Class A + 100 3,028 NL Industries 100 1,740 USA Interactive + 465 13,927 Noble Energy, Inc. 100 3,320 UST, Inc. 100 3,133 Occidental Petroleum Corp. 322 9,612 Viacom, Inc. - Class B + 3,066 133,095 Patterson - UTI Energy, Inc.+ 1,730 57,246 Walt Disney Co. 1,985 37,040 Pioneer Natural + 2,820 67,454 Weis Markets, Inc. 100 3,196 Pride International, Inc.+ 1,445 22,426 Westwood One, Inc.+ 100 3,490 Schlumberger Ltd. 100 4,193 Whole Foods Market, Inc.+ 540 32,054 Seacor Smit, Inc.+ 100 3,582 Winn-Dixie Stores, Inc. 965 12,091 Smith International, Inc.+ 200 7,112 W.M. Wrigley Jr. Co. 300 17,013 Stone Energy Corp.+ 673 23,642 Xm Satellite Radio + 3,311 32,017 Sunoco, Inc. 1,863 69,322 ------ Tidewater, Inc. 100 2,690 2,083,101 Universal Compression Holdings, Inc.+ 91 1,651 --------- Unocal Corp. 100 2,770 ENERGY - 5.78% Valero Energy Corp. 284 10,437 Anadarko Petroleum Corp. 82 3,641 Weatherford International Ltd.+ 100 4,023 Apache Corp. 885 50,666 W-H Energy Services, Inc.+ 85 1,530 Ashland, Inc. 330 9,785 ----- B.J. Services Co.+ 100 3,651 1,190,071 Burlington Resources, Inc. 200 9,262 --------- ChevronTexaco Corp. 1,914 120,218 16 See Notes to Financial Statements. - -------------------------------------------------------------------------------- ISI STRATEGY FUND (CONTINUED) - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS (UNAUDITED) APRIL 30, 2003 MARKET MARKET SECURITY SHARES VALUE SECURITY SHARES VALUE - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCK (CONTINUED) Commerce Bancorp, Inc./NJ 720 29,282 FINANCE - 17.37% Commerce Bancshares, Inc. 126 4,769 21st Century Insurance Group 100 1,353 Community First Bankshares, Inc. 50 1,346 Aflac, Inc. 510 16,682 Compass Bancshares, Inc. 50 1,686 Alliance Capital Management Holding LP 100 3,188 Compucredit Corp.+ 1,561 11,817 Allmerica Financial Corp.+ 98 1,499 Countrywide Credit Industries, Inc. 100 6,760 Allstate Corp. 50 1,889 Crescent Real Estate Equities Co. 100 1,418 AMB Property Corp. 100 2,730 Cullen/Frost Bankers, Inc. 100 3,279 AMBAC Financial Group, Inc. 150 8,753 Duke Realty Corp. 100 2,740 Amcore Financial, Inc. 100 2,342 Eaton Vance Corp. 100 2,980 American Capital Strategies Ltd. 2,789 67,661 Edwards (A.G.), Inc. 100 2,983 American Express Co. 1,525 57,737 Electro Rent Co.+ 1,930 19,261 American Financial Group, Inc. 644 14,284 Equity Office Properties Trust 344 8,934 American International Group, Inc. 3,139 81,905 Equity Residential 200 5,182 American National Insurance Co. 300 24,000 Fannie Mae 4,502 25,900 AmSouth Bancorp 49 1,031 Federated Department Stores + 22 674 AON Corp. 50 1,108 Fidelity National Financial, Inc. 11 378 Apartment Investment & Management Co. 52 1,964 Fifth Third Bancorp 19 937 Archstone-Smith Trust 100 2,280 Financial Federal Corp.+ 2,312 51,789 Arden Realty, Inc. 100 2,383 First American Corp. 100 2,650 Argonaut Group, Inc. 100 1,008 First Financial Corp./Indiana 100 5,100 Associated Banc Corp. 121 4,228 First Niagara Financial Corp. 58 705 Astoria Financial Corp. 100 2,502 First Place Financial Corp. 100 1,601 AvalonBay Communities, Inc. 100 3,989 First Tennessee National Corp. 100 4,380 Bancorpsouth, Inc. 100 2,010 First Virginia Banks, Inc. 620 25,327 Bank of America Corp. 4,887 61,882 FirstMerit Corp. 100 2,050 Bank of Hawaii Corp. 1,555 51,253 Flagstar Bancorp, Inc. 75 2,483 Bank of New York Co., Inc. 620 16,399 FleetBoston Financial Co. 1,071 28,403 Banknorth Group, Inc. 100 2,388 Flushing Financial Corp. 25 478 BB&T Corp. 460 14,996 Franklin Resources, Inc. 300 10,464 Bear Stearns Companies, Inc. 120 8,021 Freddie Mac 810 46,899 Berkshire Hathaway Inc. - Class A + 2 39,630 GBC Bancorp 100 2,747 Boston Properties, Inc. 100 3,920 Glenborough Realty Trust, Inc. 100 1,658 Capital One Financial Corp. 100 4,187 Glimcher Realty Trust 100 2,066 CarrAmerica Realty Corp. 100 2,608 Golden West Financial Corp. 200 15,084 Catellus Development Corp.+ 100 2,118 Greenpoint Financial Corp. 100 4,776 Charles Schwab Corp. 150 1,294 Hartford Financial Services Group 300 12,228 Charter One Financial, Inc. 160 4,648 Health Care Property Investors, Inc. 100 3,722 Chubb Corp. 300 15,867 Hibernia Corp. - Class A 100 1,812 Cincinnati Financial Corp. 200 7,370 HSBC Holdings - ADR 57 3,101 Citigroup, Inc. 6,252 45,391 Hudson United Bancorp 13 433 Citizens Banking Corp./MI 100 2,297 Hugoton Royalty Trust 100 1,456 City Bank Lynnwood WA 798 19,024 Huntington Bancshares, Inc. 86 1,674 City National Corp. 100 4,117 Independent Bank Corp. 26 620 CNA Financial Corp.+ 1,985 47,541 IndyMac Bancorp 100 2,228 Colonial BancGroup, Inc. 100 1,273 Insignia Financial Group + 2,148 23,843 See Notes to Financial Statements. 17 - -------------------------------------------------------------------------------- ISI STRATEGY FUND (CONTINUED) - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS (UNAUDITED) APRIL 30, 2003 MARKET MARKET SECURITY SHARES VALUE SECURITY SHARES VALUE - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCK (CONTINUED) Penford Corp. 100 1,349 FINANCE (CONTINUED) Pennsylvania Real Estate Investment Trust 100 2,855 Integra Bank Corp. 26 443 People's Bank/Bridgeport 100 2,635 Interpool, Inc. 100 1,524 PMI Group, Inc. 100 3,082 iStar Financial, Inc. 100 2,993 PNC Financial Services Group, Inc. 410 17,999 Janus Capital Group, Inc. 89 1,237 Popular, Inc. 100 3,654 Jefferson-Pilot Corp. 225 9,020 Progressive Corp. 610 41,480 John Hancock Financial Services, Inc. 260 7,545 Prologis 100 2,574 J.P. Morgan Chase & Co. 2,180 63,983 Provident Bankshares Corp. 20 508 KeyCorp 310 7,474 Provident Financial Group, Inc. 100 2,365 Kilroy Realty Corp. 100 2,482 Providian Financial Corp.+ 100 737 Kimco Realty Corp. 150 5,430 Prudential Financial, Inc. 1,175 37,565 Knight Trading Group, Inc.+ 720 3,643 Public Storage, Inc. 186 5,980 LaBranche & Co., Inc. 100 1,658 Radian Group, Inc. 200 7,940 La Quinta Corp.+ 55 186 Regions Financial Corp. 200 6,742 Legg Mason, Inc. 100 5,430 Reinsurance Group of America, Inc. 100 2,865 Lehman Brothers Holdings, Inc. 300 18,891 R & G Financial Corp. - Class B 100 2,708 Leucadia National Corp. 100 3,810 RLI Corp. 100 2,955 Liberty Property Trust 100 3,129 Rouse Co. 100 3,475 Lincoln National Corp. 200 6,392 Silicon Valley Bancshares + 100 2,338 Loews Corp. 40 1,651 Simon Property Group, Inc. 100 3,672 M & T Bank Corp. 312 26,355 SLM Corp. 350 39,200 Marsh & Mclennan Cos., Inc. 1,250 59,600 SouthTrust Corp. 100 2,686 Marshall & Ilsley Corp. 100 2,942 Southwest Bancorp of Texas, Inc.+ 100 3,398 MBIA, Inc. 150 6,705 Sovereign Bancorp, Inc. 60 927 MBNA, Inc. 1,225 23,153 St. Paul Cos., Inc. 100 3,434 Mellon Financial Corp. 210 5,555 State Street Corp. 300 10,509 Mercantile Bankshares Corp. 100 3,834 Stewart Information Services Corp.+ 100 2,668 Mercury General Corp. 100 4,400 Student Loan Corp. 410 43,956 Merrill Lynch & Co., Inc. 920 37,766 SunTrust Banks, Inc. 402 23,002 Metlife, Inc. 598 17,181 Synovus Financial Corp. 25 487 Metris Cos., Inc. 2,260 8,159 TCF Financial 100 3,960 MGIC Investment Corp. 153 6,955 Torchmark Corp. 200 7,750 Mony Group, Inc. 100 2,323 T. Rowe Price Group, Inc. 100 3,052 Moody's Corp. 3,207 54,866 Transatlantic Holdings, Inc. 620 42,160 Morgan Stanley 2,131 95,362 Travelers Property Casualty Corp. - Class B 662 10,757 National City Corp. 660 19,774 Trustmark Corp. 100 2,458 National Health Investors, Inc. 100 1,625 Union Planters Corp. 300 8,562 Nationwide Financial Services, Inc. 891 25,082 UnionbanCal Corp. 200 8,080 Neuberger Berman, Inc. 50 1,535 Unitrin, Inc. 100 2,471 New Century Financial 2,012 74,102 UnumProvident Corp. 1,263 14,524 North Fork Bancorp, Inc. 150 4,854 US Bancorp 2,123 47,024 Northern Trust Corp. 300 10,530 Valley National Bancorp 384 10,169 Northwest Bancorp, Inc. 100 1,630 Vornado Realty Trust 43 1,634 Old National Bancorp 84 1,833 Wachovia Corp. 1,567 59,875 Old Republic International Corp. 100 3,060 Waddell & Reed Financial, Inc. - Class A 100 2,000 18 See Notes to Financial Statements. - -------------------------------------------------------------------------------- ISI STRATEGY FUND (CONTINUED) - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS (UNAUDITED) APRIL 30, 2003 MARKET MARKET SECURITY SHARES VALUE SECURITY SHARES VALUE - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCK (CONTINUED) Haemonetics Corp.+ 98 1,738 FINANCE (CONTINUED) HCA, Inc. 610 19,581 Washington Mutual, Inc. 859 33,930 Health Management Associate, Inc. - Class A 50 853 Webster Financial Corp. 152 5,706 Health Net, Inc.+ 120 3,131 Wells Fargo & Co. 2,636 27,213 Henry Schein, Inc.+ 100 4,315 Westamerica Bancorp. 100 4,310 Humana, Inc.+ 100 1,105 White Mountains Insurance Group Ltd. 25 9,412 Invacare Corp. 78 2,492 Whitney Holding Corp. 150 5,067 IVAX Corp.+ 50 804 Wilmington Trust Corp. 200 5,382 Johnson & Johnson 4,806 270,866 WP Carey & Co. LLC 2,720 72,080 King Pharmaceuticals, Inc.+ 49 618 Zions Bancorp. 100 4,927 LifePoint Hospitals, Inc.+ 56 1,093 ----- Lincare Holdings, Inc.+ 100 3,037 3,577,203 Manor Care, Inc.+ 410 7,975 --------- McKesson Corp. 59 1,637 MedQuist, Inc.+ 100 HEALTH CARE - 10.53% Medtronic, Inc. 1,520 72,565 Abbott Laboratories 1,985 80,651 Merck & Co., Inc. 5,643 328,310 Accredo Health, Inc.+ 37 546 Mid Atlantic Medical Services + 84 3,658 Allergan, Inc. 510 35,828 Molecular Devices Corp.+ 86 1,079 AmerisourceBergen Corp. 218 12,611 Mylan Laboratories, Inc. 775 21,909 Anthem, Inc.+ 300 20,592 Nabi Biopharmaceuticals + 666 4,169 Apogent Technologies, Inc.+ 100 1,718 Oakley, Inc.+ 58 609 Applerra Corp.- Applied Biosystems Group 100 1,753 Omnicare, Inc. 100 2,652 Apria Healthcare Group, Inc.+ 100 2,345 Orthodontic Centers of America, Inc.+ 100 580 Arrow International, Inc. 100 4,266 Oxford Health Plans, Inc.+ 730 21,367 Bausch & Lomb, Inc. 100 3,516 Pacificare Health Systems + 25 796 Baxter International, Inc. 450 10,350 Patterson Dental Co.+ 100 4,017 Beckman Coulter, Inc. 100 3,887 Perrigo 100 1,536 Becton Dickinson & Co. 200 7,080 Pfizer, Inc. 11,213 344,800 Beverly Enterprises, Inc.+ 100 191 PolyMedica Corp. 100 3,725 Biomet, Inc. 275 8,377 Province Healthcare Co.+ 25 250 Boston Scientific Corp.+ 720 30,996 RehabCare Group, Inc.+ 51 891 Bristol-Myers Squibb Co. 3,105 79,302 Renal Care Group, Inc.+ 100 3,240 Cardinal Health, Inc. 616 34,052 Respironics, Inc.+ 100 3,842 Caremark Rx, Inc.+ 6,529 129,992 Salix Pharmaceuticals Ltd.+ 24 270 Community Health Systems, Inc.+ 100 1,900 Schering-Plough Corp. 1,325 23,982 Coventry Health Care, Inc.+ 66 2,694 Sola International, Inc.+ 100 1,401 C.R. Bard, Inc. 510 32,324 St. Jude Medical, Inc.+ 620 32,525 Cymer, Inc.+ 100 2,855 Steris Corp.+ 100 2,270 Cytyc Corp.+ 86 1,135 Stryker Corp. 200 13,402 DaVita, Inc.+ 20 412 Sunrise Assisted Living, Inc.+ 66 1,782 Dentsply International, Inc. 150 5,618 Sybron Dental Specialties, Inc.+ 33 672 Edwards Lifesciences Corp.+ 80 2,310 Triad Hospitals, Inc.+ 82 1,805 Eli Lilly & Co. 1,846 117,812 UnitedHealth Group, Inc. 620 57,121 Express Scripts, Inc.+ 100 5,896 US Oncology, Inc.+ 88 632 First Health Group Corp.+ 100 2,505 Ventas, Inc. 19 247 Forest Laboratories, Inc.+ 1,896 98,061 Guidant Corp. 1,030 40,160 See Notes to Financial Statements. 19 - -------------------------------------------------------------------------------- ISI STRATEGY FUND (CONTINUED) - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS (UNAUDITED) APRIL 30, 2003 MARKET MARKET SECURITY SHARES VALUE SECURITY SHARES VALUE - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCK (CONTINUED) IDT Corp.+ 210 2,999 HEALTH CARE (CONTINUED) Inet Technologies, Inc.+ 100 802 Viasys Healthcare, Inc.+ 23 373 Intercept, Inc.+ 1,826 13,129 Watson Pharmaceuticals, Inc.+ 100 2,907 Intuit, Inc.+ 917 35,561 Wellpoint Health Systems + 720 54,677 Juniper Networks, Inc.+ 100 1,022 Wyeth 930 40,483 Level 3 Communications, Inc.+ 100 572 Zimmer Holdings, Inc.+ 211 9,896 Netbank, Inc. 934 9,321 ----- Network Associates, Inc.+ 50 571 2,167,319 NIC, Inc.+ 1,000 2, --------- Overture Services, Inc.+ 75 802 Packeteer, Inc.+ 68 889 INFORMATION SERVICES - 2.42% PC-Tel, Inc.+ 55 505 Adtran, Inc.+ 817 33,072 Portal Software, Inc.+ 2,075 2,594 Alltel Corp. 377 17,666 Quest Software, Inc.+ 96 1,027 AT&T Corp. 74 1,262 Qwest Communications International + 4,899 18,469 AT&T Wireless Services, Inc.+ 5,476 35,375 Sun Microsystems, Inc.+ 3,165 10,444 BellSouth Corp. 730 18,608 Synplicity, Inc.+ 81 285 Boston Communications Group, Inc.+ 452 8,177 TIBCO Software, Inc.+ 100 493 CenturyTel, Inc. 25 736 Ulticom, Inc.+ 960 6,960 CT Communications, Inc. 60 595 WatchGuard Technolgies, Inc.+ 96 422 InfoSpace, Inc.+ 80 997 Yahoo! Inc.+ 3,168 78,503 Liberty Media Corp. - Class A + 4,330 47,630 ------ Nextel Communications, Inc. - Class A + 380 5,620 604,651 Nextel Partners, Inc. - Class A + 78 453 ------- SBC Communications, Inc. 3,697 86,362 Sprint Corp. - FON Group 53 610 Surewest Communications 593 15,720 Talk America Holdings, Inc.+ 1,617 14,213 RETAIL - 4.17% Telephone & Data Systems, Inc. 100 4,309 Abercrombie & Fitch Co.+ 54 1,776 Time Warner Telecom, Inc. - Class A + 1,503 5,411 American Eagle Outfitters + 16 280 Triton PCS Holdings, Inc. - Class A + 265 755 Automation, Inc.+ 234 3,241 Turnstone Systems, Inc.+ 2,515 6,287 Autozone, Inc.+ 300 24,243 U.S. Cellular Corp.+ 476 11,448 Barnes & Noble, Inc.+ 100 1,970 Verizon Communications, Inc. 4,888 182,713 Bed Bath & Beyond, Inc.+ 300 11,853 ------- Best Buy Co., Inc.+ 304 10,512 498,019 Big Lots, Inc. 681 8,526 ------- BJ's Wholesale Club, Inc.+ 100 1,412 Carmax, Inc.+ 31 656 INTERNET - 2.94% Circuit City Stores, Inc. 34 195 Amazon.Com, Inc.+ 3,242 92,948 Costco Wholesale Corp.+ 410 14,198 Ameritrade Holding Corp.+ 100 502 CVS Corp. 272 6,585 AOL Time Warner, Inc.+ 5,950 81,396 Dillards, Inc. - Class A 213 2,978 At Road, Inc.+ 525 3,365 Dollar General Corp. 38 553 Cisco Systems, Inc.+ 10,757 161,785 Dollar Tree Stores, Inc.+ 50 1,273 Covad Communications Group, Inc.+ 5,670 4,082 Family Dollar Stores, Inc. 100 3,419 DoubleClick, Inc.+ 899 7,731 Federated Investors, Inc. - Class B 50 1,365 E*TRADE Group, Inc.+ 100 550 Foot Locker, Inc. 100 1,100 eFunds Corp.+ 80 732 Gap, Inc. 2,162 35,954 ebay, Inc.+ 410 38,036 Home Depot, Inc. 1,245 35,022 Embarcadero Technologies + 674 4,624 Kohl's Corp.+ 410 23,288 Hotels.com + 300 21,480 20 See Notes to Financial Statements. - -------------------------------------------------------------------------------- ISI STRATEGY FUND (CONTINUED) - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS (UNAUDITED) APRIL 30, 2003 MARKET MARKET SECURITY SHARES VALUE SECURITY SHARES VALUE - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCK (CONTINUED) Apple Computer, Inc.+ 100 1,420 RETAIL (CONTINUED) Applied Materials, Inc.+ 2,930 42,778 Limited Brands 624 9,073 Applied Micro Circuits Corp.+ 100 448 Longs Drug Stores Corp. 83 1,286 Arbitron, Inc.+ 610 20,777 Lowe's Companies, Inc. 909 39,896 Arrow Electronics, Inc.+ 93 1,570 May Department Stores Co. 255 5,513 Ascential Software Corp.+ 96 369 Men's Warehouse, Inc.+ 30 500 Asyst Technologies, Inc.+ 96 458 Michaels Stores, Inc.+ 353 11,028 Audiovox Corp.+ 100 720 Nordstrom, Inc. 90 1,560 Avnet, Inc.+ 98 1,250 Office Depot, Inc.+ 100 1,266 Avocent Corp.+ 228 6,753 PC Connection, Inc.+ 100 704 AVX Corp. 620 6,591 Petsmart, Inc.+ 1,385 20,955 BEA Systems, Inc.+ 50 536 Pier 1 Imports, Inc. 100 1,856 BMC Software, Inc.+ 100 1,492 RadioShack Corp. 100 2,371 Broadcom Corp. - Class A + 896 16,029 Ross Stores, Inc. 391 14,819 Cabot Microelectronics Corp.+ 97 4,192 Saks, Inc.+ 530 4,743 CACI International, Inc.+ 100 3,493 Sears Roebuck & Co. 210 5,951 Cadence Design Systems, Inc.+ 100 1,143 ShopKo Stores, Inc.+ 100 1,203 Catapult Communication + 597 5,283 Staples, Inc.+ 50 952 CCC Information Services + 848 14,119 Talbots, Inc. 72 2,063 Celera Genomics Group + 1,365 14,333 Target Corp. 998 33,373 Checkfree Corp.+ 68 1,875 Tiffany & Co. 100 2,774 Checkpoint Systems, Inc.+ 100 1,335 TJX Cos., Inc. 200 3,850 CIENA Corp.+ 71 346 Toys R US, Inc.+ 32 328 Computer Network Technology Corp.+ 96 543 Walgreen Co. 1,275 39,346 Computer Sciences Corp.+ 210 6,920 Wal-Mart Stores, Inc. 7,716 434,565 Concerto Software, Inc.+ 100 455 Williams-Sonoma, Inc.+ 1,075 27,821 Corning, Inc.+ 1,495 8,103 ------ Dell Computer Corp.+ 3,891 112,489 858,195 DocuCorp International, Inc.+ 163 712 ------- DST Systems, Inc.+ 100 3,070 Electronic Art + 710 42,082 TECHNOLOGY - 10.16% Electronic Scientific Industries, Inc.+ 100 1,343 3D Systems Corp.+ 75 379 EMC Corp.+ 1,615 14,680 Acxiom Corp.+ 100 1,396 ESS Technology, Inc.+ 1,109 7,674 Adobe Systems, Inc. 100 3,456 Fair Isaac & Co., Inc. 51 2,656 Advanced Fiber Communications, Inc.+ 30 459 Fairchild Semiconductor - Class A + 1,621 19,241 Advanced Micro Devices, Inc.+ 100 744 First Data Corp. 1,055 41,388 Affiliated Computer Services, Inc. Flir Systems, Inc.+ 100 5,208 - - Class A + 279 24,327 FuelCell Energy, Inc.+ 1,130 6,961 Agere Systems, Inc. - Class A + 156 510 Gerber Scientific, Inc.+ 68 561 Agere Systems, Inc. - Class B + 1,310 2,240 Getty Images, Inc.+ 100 3,385 Agilent Technologies, Inc.+ 205 3,284 Harman International Industries, Inc. 80 5,327 Allen Telecom, Inc.+ 598 8,091 Harris Corp. 100 2,856 Alliance Data + 65 1,365 Hewlett-Packard Co. 4,222 68,819 Altera Corp.+ 100 1,581 Honeywell International, Inc. 920 21,712 American Management Systems + 100 1,230 Hutchinson Technology, Inc.+ 100 2,364 Amkor Technologies, Inc.+ 72 545 Analog Devices, Inc.+ 200 6,624 Anaren, Inc.+ 2,075 15,562 See Notes to Financial Statements. 21 - -------------------------------------------------------------------------------- ISI STRATEGY FUND (CONTINUED) - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS (UNAUDITED) APRIL 30, 2003 MARKET MARKET SECURITY SHARES VALUE SECURITY SHARES VALUE - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCK (CONTINUED) Pioneer Standard Electronics, Inc. 100 969 TECHNOLOGY (CONTINUED) Pitney Bowes, Inc. 379 13,307 IBM 3,072 260,813 Pixelworks, Inc.+ 1,263 9,409 IKON Office Solutions, Inc. 2,009 15,590 Powerwave Technologies, Inc.+ 75 301 Illumina, Inc.+ 330 657 QLogic Corp.+ 52 2,287 Integrated Device Technology, Inc.+ 100 1,033 Qualcomm, Inc. 3,044 97,073 Intel Corp. 8,874 163,282 Rayovac Corp.+ 96 998 Interactive Data Corp.+ 100 1,600 Read-Rite Corp.+ 830 672 Intergrated Circuit Systems, Inc.+ 210 4,561 Rudolph Technologies, Inc.+ 358 5,409 International Rectifier Corp.+ 100 2,262 Sandisk Corp.+ 75 1,815 Internet Security Systems + 167 2,191 Sanmina-SCI Corp.+ 72 346 Invision Technologies, Inc.+ 370 8,791 Scientific-Atlanta, Inc. 100 1,625 Iomega Corp.+ 40 372 SCM Microsystems, Inc.+ 100 382 ITT Industries, Inc. 100 5,830 Siebel Systems, Inc.+ 100 867 Jabil Circuit, Inc.+ 100 1,870 Silicon Image, Inc.+ 96 574 J.D. Edwards & Co.+ 100 1,198 Skyworks Solutions, Inc.+ 1,882 10,069 JDS Uniphase Corp.+ 720 2,326 SoftBrands, Inc.+ 44 59 Keane, Inc.+ 100 964 Standard Microsystems Corp.+ 100 1,266 Kemet Corp.+ 210 1,926 Storage Technology Corp.+ 100 2,472 KLA-Tencor Corp.+ 200 8,200 Stratex Networks, Inc.+ 219 539 Kulicke & Soffa Industries, Inc.+ 64 332 Stratos Lightwave, Inc.+ 100 378 Lam Research Corp.+ 75 1,090 Sungard Data Systems, Inc.+ 100 2,150 Lexmark International, Inc.+ 100 7,451 Symbol Technologies, Inc. 1,039 11,356 Linear Technology Corp. 1,961 67,596 Symmetricom, Inc.+ 64 264 LSI Logic Corp.+ 33 177 Synopsys, Inc.+ 37 1,800 Lucent Technologies, Inc.+ 5,208 9,374 Talx Corp. 1,655 21,052 Manufacturers' Services Ltd.+ 230 886 Tektronix, Inc.+ 200 3,754 Maxim Integrated Products, Inc. 65 2,554 Teledyne Technologies, Inc.+ 42 591 McData Corp. - Class A + 620 6,560 Tellabs, Inc.+ 100 618 Mercury Interactive Corp.+ 892 30,274 Teradyne, Inc.+ 100 1,160 MEMC Electronic Materials, Inc.+ 497 5,894 Texas Instruments, Inc. 1,865 34,484 Microchip Technology, Inc. 297 6,175 Thermo Electron Corp.+ 70 1,272 Micron Technology, Inc. 2,375 20,187 THQ, Inc.+ 50 706 Microsoft Corp. 16,846 430,752 Total System Services, Inc. 50 925 Motorola, Inc. 2,020 15,978 TTM Technologies, Inc.+ 96 452 Nanometrics, Inc.+ 100 484 Unisys Corp.+ 50 520 National Semiconductor Corp.+ 410 7,679 Veritas Software Corp.+ 768 16,904 NCR Corp.+ 75 1,644 Vishay Intertechnology, Inc.+ 61 762 Neoware Systems, Inc.+ 96 979 Western Digital Corp.+ 716 6,680 Netro Corp.+ 2,850 8,236 Western Wireless Corp.+ 96 588 Novellus Systems, Inc.+ 100 2,804 Wind River Systems + 100 331 Nvidia Corp.+ 94 1,341 Xerox Corp.+ 1,645 16,220 ON Semiconductor Corp.+ 459 624 Zomax, Inc.+ 96 321 Oracle Corp.+ 8,981 106,694 --- Peoplesoft, Inc.+ 25 376 2,090,755 --------- 22 See Notes to Financial Statements. - -------------------------------------------------------------------------------- ISI STRATEGY FUND (CONTINUED) - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS (UNAUDITED) APRIL 30, 2003 MARKET MARKET SECURITY SHARES VALUE SECURITY SHARES VALUE - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCK (CONTINUED) Northeast Utilities 100 1,492 TRANSPORTATION - 1.50% Northwest Natural Gas Co. 95 2,454 Burlington Northern Santa Fe Corp. 2,295 64,627 Northwestern Corp.+ 2,576 6,234 C. H. Robinson Worldwide 923 33,957 NUI Corp. 668 9,399 Continental Airlines, Inc. - Class B + 100 912 Oneok, Inc. 84 1,593 CSX Corp. 970 31,021 Pepco Holdings, Inc. 100 1,718 Delta Airlines, Inc. 100 1,279 PG&E Corp.+ 93 1,393 Expeditors International of Washington, Inc. 2,213 80,462 Piedmont Natural Gas Co. 95 3,549 FedEx Corp. 410 24,551 Pinnacle West Capital Corp. 100 3,322 GATX Corp. 100 1,884 PPL Corp. 93 3,367 Norfolk Southern Corp. 100 2,121 Progress Energy, Inc. 200 8,356 Ryder Systems, Inc. 100 2,484 Public Service Enterprise Group, Inc. 293 11,272 Sabre Holdings Corp. - Class A + 44 920 Puget Energy, Inc. 100 2,112 Shugard Storage Centers, Inc. 100 3,267 Questar Corp. 100 3,020 Southwest Airlines Co. 150 2,394 Sempra Energy 50 1,342 Swift Transport + 1,608 29,137 Southern Co. 720 20,945 Union Pacific Corp. 410 24,403 TECO Energy, Inc. 2,685 28,971 United Parcel Service, Inc. - Class B 100 6,212 TXU Corp. 100 1,992 --- ----- Veritas DGC, Inc.+ 581 3,980 309,631 Westar Energy, Inc. 387 5,441 ------- Wisconsin Energy Corp. 100 2,633 ------ UTILITIES - 1.26% 260,378 Allegheny Energy, Inc.+ 1,665 13,820 ------- Alliant Energy Corp. 100 1,756 TOTAL COMMON STOCK Ameren Corp. 200 8,196 (Cost $15,106,506) 16,223,157 American Electric Power Co., Inc. 36 950 ---------- Aquila, Inc.+ 210 584 RIGHTS - 0.01% Avista Corp. 1,000 11,830 Allied Capital Corp. 100 2,119 Calpine Corp.+ 100 537 Seagate* 300 - Cinergy Corp. 200 6,828 ------- CMS Energy Corp.+ 100 623 TOTAL RIGHTS Consolidated Edison, Inc. 310 5,332 (Cost $1,747) 2,119 Constellation Energy Group, Inc. 100 2,928 ----- DPL, Inc. 100 1,384 DTE Energy Co. 200 8,064 WARRANTS - 0.00% Duke Energy Corp. 78 1,372 Golden State Bancorp, Inc. 100 98 Edison International + 50 730 MasoTech* 200 - Energy East Corp. 100 1,822 Seabulk International, Inc. 1 - Entergy Corp. 300 13,983 Tokheim Corp. 500 - Exelon Corp. 372 19,731 ----- FirstEnergy Corp. 200 6,746 FPL Group, Inc. 200 12,174 TOTAL WARRANTS Great Plains Energy, Inc. 100 2,617 (Cost $8,690) 98 KeySpan Corp. 188 6,368 ----- MDU Resources Group, Inc. 100 2,976 Nicor, Inc. 100 3,006 NiSource, Inc. 76 1,436
See Notes to Financial Statements. 23 - -------------------------------------------------------------------------------- ISI STRATEGY FUND (CONCLUDED) - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS (UNAUDITED) APRIL 30, 2003 INTEREST MATURITY PAR MARKET RATE DATE VALUE VALUE - ---------------------------------------------------------------------------------------------------------- US TREASURY SECURITIES - 15.34% US Treasury Bond 9.250% 2/15/16 $ 1,000,000 1,491,055 US Treasury Bond 8.750% 5/15/17 500,000 727,812 US Treasury Bond 7.250% 8/15/22 500,000 656,641 US Treasury Note 5.500% 5/15/09 250,000 282,812 ------- TOTAL US TREASURY SECURITIES (COST $2,684,669) 3,158,320 --------- REPURCHASE AGREEMENT - 5.66% GOLDMAN SACHS & Co. Dated 4/30/03, 1.220%, principal and interest in the amount of $1,164,039 due 5/1/03, collateralized by US Treasury Note, par value of $1,177,000, due 9/30/03 with a value of $1,187,561. 1,164,000 --------- TOTAL REPURCHASE AGREEMENT (COST $1,164,000) 1,164,000 --------- TOTAL INVESTMENTS IN SECURITIES - 99.81% 20,547,694 (COST $18,965,612) OTHER ASSETS IN EXCESS OF LIABILITIES - 0.19% 39,554 -------------- NET ASSETS - 100.0% $ 20,587,248 ==============
- -------------------------------------------------------------------------------- + Non-income producing security. ADR American Depositary Receipt. * Security fair valued in good faith under procedures established by and under the general supervision of the Fund's Board of Directors. 24 See Notes to Financial Statements. - -------------------------------------------------------------------------------- ISI FUNDS - -------------------------------------------------------------------------------- STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED) APRIL 30, 2003 TOTAL RETURN US MANAGED TREASURY FUND MUNICIPAL FUND - --------------------------------------------------------------------------------------------------------------------------- ASSETS: Investments: In securities, at market value (cost $222,625,727 and $87,054,010, respectively) $ 227,499,269 $ 94,448,220 Repurchase agreement (cost $21,464,000 and $10,994,000, respectively) 21,464,000 10,994,000 Cash 793 3,457,093 Receivables: Capital shares sold 557,318 201,398 Interest 4,376,257 1,067,513 Prepaid expenses 22,177 19,691 ----------- ----------- Total assets 253,919,814 110,187,915 ----------- ----------- LIABILITIES: Payables: Capital shares redeemed 464,263 38,000 Dividends 1,032,688 396,965 Accrued Liabilities: Investment advisory fees 53,476 35,175 Distribution fees 51,682 21,984 Administration fees 10,309 4,394 Accrued expenses and other 58,628 48,184 ----------- ----------- Total liabilities 1,671,046 544,702 ----------- ----------- Net assets $ 252,248,768 $ 109,643,213 ----------- ----------- COMPONENTS OF NET ASSETS: Paid in capital $ 244,741,111 $ 102,840,063 Distributions in excess of net investment income (4,129,374) (760,433) Accumulated net realized gain from investment transactions 6,763,489 169,373 Net unrealized appreciation on investments 4,873,542 7,394,210 ----------- ----------- Net assets $ 252,248,768 $ 109,643,213 ============ ============ SHARES OF BENEFICIAL INTEREST OUTSTANDING 24,705,934 9,879,029 (115,000,000 and 55,000,000 shares authorized, respectively) ============ ============ NET ASSET VALUE AND REDEMPTION PRICE PER SHARE (net assets / shares of beneficial interest outstanding) $ 10.21 $ 11.10 ============ ============ MAXIMUM OFFERING PRICE PER SHARE ($10.21 / 0.97 and $11.10 / 0.97, respectively) $ 10.53 $ 11.44 ============ ============ See Notes to Financial Statements. 25 - -------------------------------------------------------------------------------- ISI FUNDS - -------------------------------------------------------------------------------- STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED) APRIL 30, 2003 NORTH AMERICAN GOVERNMENT BOND FUND ISI STRATEGY FUND - --------------------------------------------------------------------------------------------------------------------------- ASSETS: Investments: In securities, at market value (cost $251,883,861 and $17,801,612, respectively) $ 256,433,970 $ 19,383,694 Repurchase agreement (cost $18,019,000 and $1,164,000, respectively) 18,019,000 1,164,000 Cash 646 4,888 Receivables: Capital shares sold 503,861 12,138 Interest 4,633,640 66,621 Expense reimbursement by advisor - 9,201 Prepaid expenses 46,890 - ----------- ----------- Total assets 279,638,007 20,640,542 ----------- ----------- LIABILITIES: Payables: Capital shares redeemed 101,867 5,454 Dividends 1,667,680 - Accrued Liabilities: Investment advisory fees 90,110 - Distribution fees 90,110 4,044 Administration fees 11,240 2,482 Accrued expenses and other 20,552 41,314 ----------- ----------- Total liabilities 1,981,559 53,294 ----------- ----------- Net assets $ 277,656,448 $ 20,587,248 =========== =========== COMPONENTS OF NET ASSETS: Paid in capital $ 274,059,903 $ 23,745,090 Undistributed (Distributions in excess of) net investment income (7,419,676) 18,000 Accumulated net realized gain (loss) from investment transactions 6,412,331 (4,757,924) Net unrealized appreciation on investments and receivables/ payables denominated in foreign currency 4,603,890 1,582,082 ----------- ----------- Net assets $ 277,656,448 $ 20,587,248 =========== =========== SHARES OF BENEFICIAL INTEREST OUTSTANDING* 34,743,331 2,191,919 (60,000,000 and 25,000,000 shares authorized, respectively) =========== =========== NET ASSET VALUE AND REDEMPTION PRICE PER SHARE (net assets / shares of beneficial interest outstanding) $ 7.99 $ 9.39 =========== =========== MAXIMUM OFFERING PRICE PER SHARE ($7.99 / 0.97 and $9.39 / 0.97, respectively) $ 8.24 $ 9.68 =========== =========== 26 See Notes to Financial Statements. - -------------------------------------------------------------------------------- ISI FUNDS - -------------------------------------------------------------------------------- STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE SIX MONTHS ENDED APRIL 30, 2003 TOTAL RETURN US MANAGED TREASURY FUND MUNICIPAL FUND - -------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Interest $ 4,220,172 $ 2,348,059 ----------- ----------- EXPENSES: Investment advisory fees 302,768 206,147 Distribution fees 319,361 128,842 Administration fees 63,874 25,769 Transfer agent fees 48,976 19,909 Custody fees 5,020 4,465 Professional fees 43,711 22,642 Accounting fees 27,637 26,472 Printing and shareholder reports 9,395 6,131 Registration fees 11,486 8,985 Directors' fees 8,924 3,623 Miscellaneous 12,774 6,492 ----------- ----------- Total expenses 853,926 459,477 ----------- ----------- Net investment income 3,366,246 1,888,582 ----------- ----------- REALIZED AND UNREALIZED GAIN ON INVESTMENTS: Net realized gain from investment transactions 6,763,489 169,373 Net change in unrealized appreciation on investments (3,026,083) 1,523,926 ----------- ----------- Net realized and unrealized gain on investments 3,737,406 1,693,299 ----------- ----------- NET INCREASE IN NET ASSETS FROM OPERATIONS $ 7,103,652 $ 3,581,881 =========== =========== See Notes to Financial Statements. 27 - -------------------------------------------------------------------------------- ISI FUNDS - -------------------------------------------------------------------------------- STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE SIX MONTHS ENDED APRIL 30, 2003 NORTH AMERICAN GOVERNMENT BOND FUND ISI STRATEGY FUND - ------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Interest $ 5,234,505 $ 92,186 Dividend - 129,899 --------- ------- 5,234,505 222,085 --------- ------- EXPENSES: Investment advisory fees 527,514 39,462 Distribution fees 527,514 24,664 Administration fees 65,941 18,000 Transfer agent fees 76,362 12,497 Custody fees 38,542 18,572 Professional fees 61,213 10,655 Accounting fees 35,110 24,330 Printing and shareholder reports 15,548 1,897 Registration fees 25,024 5,529 Directors' fees 11,826 839 Miscellaneous 12,776 21,014 --------- -------- Total expenses 1,397,370 177,459 Less: fee waiver and/or expense reimbursements - (49,207) ---------- -------- Net expenses 1,397,370 128,252 ---------- -------- Net investment income 3,837,135 93,833 ---------- -------- REALIZED AND UNREALIZED GAIN ON INVESTMENTS: Net realized gain (loss) from: Investment transactions 6,491,179 (850,455) Foreign currency transactions (78,848) - Net change in unrealized appreciation/depreciation on investments and receivables/payables denominated in foreign currency foreign currencies 4,343 1,504,625 ---------- --------- Net realized and unrealized gain on investments and receivables/ payables denominated in foreign currency foreign currencies 6,416,674 654,170 ---------- --------- NET INCREASE IN NET ASSETS FROM OPERATIONS $ 10,253,809 $ 748,003 =========== ========= 28 See Notes to Financial Statements. - -------------------------------------------------------------------------------- TOTAL RETURN US TREASURY FUND - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS FOR THE SIX MONTHS FOR THE YEAR ENDED ENDED APRIL 30, OCTOBER 31, 2003 1 2002 - ------------------------------------------------------------------------------------------------------------ INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income $ 3,366,246 $ 9,005,811 Net realized gain on investment transactions 6,763,489 6,049,948 Net change in unrealized appreciation on investments (3,026,083) (1,512,881) ---------- ---------- Net increase in net assets from operations 7,103,652 13,542,878 ---------- ---------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income and net realized short-term gains: ISI Shares (6,386,729) (10,807,120) Class A Shares (a) - (2,230,399) Net realized long-term capital gains: ISI Shares - (854,348) Tax return of capital: ISI Shares - (504,515) Class A Shares (a) - (96,495) ---------- ---------- Total distributions (6,386,729) (14,492,877) ---------- ---------- CAPITAL SHARE TRANSACTIONS: (a) Proceeds from sale of shares ISI Shares 15,526,014 34,572,482 Class A Shares - 4,895,334 Contributions from share class merger ISI Shares - 102,172,420 Dividend reinvestments ISI Shares 3,316,649 7,591,702 Class A Shares - 1,060,736 Cost of shares redeemed ISI Shares (30,238,326) (35,772,474) Class A Shares - (12,474,587) Redemptions from share class merger Class A Shares - (102,172,420) ---------- ----------- Net decrease in net assets from capital share transactions (11,395,663) (126,807) ---------- ---------- Total decrease in net assets (10,678,740) (1,076,806) ---------- ---------- NET ASSETS: Beginning of period 262,927,508 264,004,314 ----------- ----------- End of year (including distributions in excess of net investment income of $4,129,374 and $1,108,891, respectively) $ 252,248,768 $ 262,927,508 ============ ============ See Notes to Financial Statements. 29 - -------------------------------------------------------------------------------- TOTAL RETURN US TREASURY FUND - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS (CONCLUDED) FOR THE SIX MONTHS FOR THE YEAR ENDED ENDED APRIL 30, OCTOBER 31, 2003 1 2002 - ------------------------------------------------------------------------------------------------------------ SHARE TRANSACTIONS: (a) Shares sold ISI Shares 1,527,726 3,496,625 Class A Shares - 500,532 Shares issued in connection with share class merger ISI Shares - 10,551,813 Shares issued to shareholders on reinvestment of dividends ISI Shares 325,645 774,546 Class A Shares - 109,242 Shares redeemed ISI Shares (2,978,514) (3,661,239) Class A Shares - (1,278,524) Shares redeemed in connection with share class merger Class A Shares - (10,551,813) ----------- ----------- Net decrease in shares from capital share transactions (1,125,143) (58,818) =========== =========== - -------------------------------------------------------------------------------- (1) Unaudited. (a) On February 28, 2002, Class A Shares merged into ISI Shares. 30 See Notes to Financial Statements. - -------------------------------------------------------------------------------- MANAGED MUNICIPAL FUND - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS FOR THE SIX MONTHS FOR THE YEAR ENDED ENDED APRIL 30, OCTOBER 31, 2003 1 2002 - ------------------------------------------------------------------------------------------------------------ INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income $ 1,888,582 $ 3,895,074 Net realized gain on investment transactions 169,373 257,404 Net change in unrealized appreciation on investments 1,523,926 853,535 ----------- ----------- Net increase in net assets from operations 3,581,881 5,006,013 ----------- ----------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income and net realized short-term gains: ISI Shares (2,647,211) (3,625,097) Class A Shares (a) - (478,023) Net realized long-term capital gains: ISI Shares - (575,789) Class A Shares (a) - (150,753) ----------- ----------- Total distributions (2,647,211) (4,829,662) CAPITAL SHARE TRANSACTIONS: (a) Proceeds from sale of shares ISI Shares 11,990,075 18,934,042 Class A Shares - 534,152 Contributions from share class merger ISI Shares - 31,732,581 Dividend reinvestments ISI Shares 1,183,077 1,895,264 Class A Shares - 296,034 Cost of shares redeemed ISI Shares (7,662,555) (15,996,773) Class A Shares - (2,191,497) Redemptions from share class merger Class A Shares - (31,732,581) ----------- ----------- Net increase in net assets from capital share transactions 5,510,597 3,471,222 ----------- ----------- Total increase in net assets 6,445,267 3,647,573 ----------- ----------- NET ASSETS: Beginning of year 103,197,946 99,550,373 End of year (including distributions in excess of net investment ----------- ----------- income of $760,433 and $1,804, respectively) $ 109,643,213 $ 103,197,946 =========== =========== See Notes to Financial Statements. 31 - -------------------------------------------------------------------------------- MANAGED MUNICIPAL FUND - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS (CONCLUDED) FOR THE SIX MONTHS FOR THE YEAR ENDED ENDED APRIL 30, OCTOBER 31, 2003 1 2002 - ------------------------------------------------------------------------------------------------------------ SHARE TRANSACTIONS: (a) Shares sold ISI Shares 1,087,670 1,738,501 Class A Shares - 49,939 Shares issued in connection with share class merger ISI Shares - 2,917,173 Shares issued to shareholders on reinvestment of dividends ISI Shares 107,530 174,818 Class A Shares - 27,402 Shares redeemed ISI Shares (696,731) (1,467,447) Class A Shares - (204,623) Shares redeemed in connection with share class merger Class A Shares - (2,917,173) ----------- ----------- Net increase in shares from capital share transactions 498,469 318,590 =========== ===========
- -------------------------------------------------------------------------------- (1) Unaudited. (a) On February 28, 2002, Class A Shares merged into ISI Shares. 32 See Notes to Financial Statements. - -------------------------------------------------------------------------------- NORTH AMERICAN GOVERNMENT BOND FUND - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS FOR THE SIX MONTHS APRIL 1, 2002 FOR THE YEAR ENDED ENDED APRIL 30, THROUGH MARCH 31, 2003 1 OCTOBER 31, 2002(A) 2002 - ------------------------------------------------------------------------------------------------------------------------------ INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income $ 3,837,135 $ 5,387,935 $ 7,637,648 Net realized gain on investment and foreign currency transactions 6,412,331 1,781,470 5,267,104 Net change in unrealized appreciation/depreciation on investments and receivables/payables denominated in foreign currencies 4,343 10,487,725 (7,138,087) ----------- ---------- --------- Net increase in net assets from operations 10,253,809 17,657,130 5,766,665 ----------- ---------- --------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment incomeand net realized short-term capital gains (11,231,939) (6,543,691) (11,728,591) Distribution in excess of net investment income - - (12,671) Net realized long-term capital gains - (632,453) (1,176,161) Tax return of capital - (3,573,142) (1,611,215) ----------- ---------- --------- Total distributions (11,231,939) (10,749,286) (14,528,638) ----------- ---------- ---------- CAPITAL SHARE TRANSACTIONS: Proceeds from sale of shares 37,798,022 49,986,841 121,835,448 Dividend reinvestments 5,123,294 5,738,371 7,703,881 Cost of shares redeemed (21,781,622) (25,767,420) (17,593,303) ----------- ---------- ---------- Net increase in net assets from capital share transactions 21,139,694 29,957,792 111,946,026 ----------- ---------- ----------- Total increase in net assets 20,161,564 36,865,636 103,184,053 NET ASSETS: Beginning of year 257,494,884 220,629,248 117,445,195 ----------- ---------- ----------- End of year (including distributions in excess of net investment income of $7,419,676, $24,872 and $18,133, respectively $ 277,656,448 $ 257,494,884 $ 220,629,248 =========== ============ ============ SHARE TRANSACTIONS: Shares sold 4,761,340 6,302,362 15,153,019 Shares issued to shareholders on reinvestment of dividends 646,362 728,793 959,827 Shares redeemed (2,746,569) (3,246,075) (2,189,379) ----------- ---------- ----------- Net increase in shares from capital share transactions 2,661,133 3,785,080 13,923,467 =========== ============ ============ - ------------------------------------------------------------------------------------------------------------------------------ (1) Unaudited. (a) The fund changed its fiscal year end from March 31 to October 31. See Notes to Financial Statements. 33 - -------------------------------------------------------------------------------- ISI STRATEGY FUND - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS FOR THE SIX MONTHS JUNE 1, 2002 FOR THE YEAR ENDED ENDED APRIL 30, THROUGH MAY 31, 2003 1 OCTOBER 31, 2002(A) 2002 - ------------------------------------------------------------------------------------------------------------------------------ INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income 93,833 103,547 296,642 Net realized loss on investment transactions (850,455) (814,078) (1,526,739) Net change in unrealized appreciation/depreciation on investments 1,504,625 (1,878,640) (105,118) Net increase (decrease) in net assets ---------- ---------- ----------- from operations 748,003 (2,589,171) (1,335,215) ---------- ---------- ----------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income (88,792) (136,525) (307,863) Net realized capital gains (15,803) - - ---------- ---------- ----------- Total distributions (104,595) (136,525) (307,863) ---------- ---------- ----------- CAPITAL SHARE TRANSACTIONS: Proceeds from sale of shares 3,459,466 647,734 4,461,904 Dividend reinvestments 93,827 122,740 276,748 Cost of shares redeemed (3,533,211) (2,518,850) (5,748,944) ---------- ---------- ----------- Net increase (decrease) in net assets from capital share transaction 20,082 (1,748,376) (1,010,292) ---------- ---------- ----------- Total increase (decrease) in net assets 663,490 (4,474,072) (2,653,370) NET ASSETS: Beginning of year 19,923,758 24,397,830 27,051,200 ---------- ---------- ----------- End of year (including undistributed net investment income of $18,000, $12,959 and $45,937, respectively) $ 20,587,248 $ 19,923,758 $ 24,397,830 =========== =========== =========== SHARE TRANSACTIONS: Shares sold 268,395 70,518 426,058 Shares issued to shareholders on reinvestment of dividends 10,433 13,501 26,909 Shares redeemed (281,281) (274,011) (553,271) ---------- ---------- ----------- Net decrease in shares from capital share transactions (2,453) (189,992) (100,304) =========== =========== ===========
- -------------------------------------------------------------------------------- (1) Unaudited. (a) The fund changed its fiscal year end from May 31 to October 31. 34 See Notes to Financial Statements. - -------------------------------------------------------------------------------- TOTAL RETURN US TREASURY FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD) SIX MONTHS ENDED APRIL 30, FOR THE YEARS ENDED OCTOBER 31, 2003 1 2002 2001 2000 1999 1998 - ---------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $ 10.18 $ 10.20 $ 9.57 $ 9.35 $ 10.62 $ 10.04 INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.13 0.35 0.45 0.50 0.64 0.51 Net realized and unrealized gain (loss) on investments 0.15 0.20 0.82 0.38 (1.03) 0.71 Total from investment operations 0.28 0.55 1.27 0.88 (0.39) 1.22 LESS DISTRIBUTIONS: Net investment income and short-term capital gains (0.25) (0.51) (0.45) (0.50) (0.71) (0.64) Net realized long-term capital gains - (0.04) (0.19) (0.16) - - Tax Return of Capital - (0.02) - - (0.17) - Total distributions (0.25) (0.57) (0.64) (0.66) (0.88) (0.64) Net asset value, end of period $ 10.21 $ 10.18 $ 10.20 $ 9.57 $ 9.35 $ 10.62 TOTAL RETURN2 2.80% 3 5.78% 13.57% 9.49% (3.82)% 12.50% SUPPLEMENTAL DATA AND RATIOS Net assets, end of period (000s) $252,249 $262,928 $149,588 $136,728 $151,532 $171,336 Ratios to average daily net assets: Net investment income 2.64%4 3.64% 4.51% 5.10% 4.68% 4.98% Expenses 0.67%4 0.74% 0.78% 0.82% 0.81% 0.85% Portfolio turnover rate 85%3 129% 61% 15% 77% 179% - ---------------------------------------------------------------------------------------------------------------------- 1 Unaudited. 2 Total return excludes the effect of sales charges. 3 Not Annualized. 4 Annualized. See Notes to Financial Statements. 35 - -------------------------------------------------------------------------------- MANAGED MUNICIPAL FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD) SIX MONTHS ENDED APRIL 30, FOR THE YEARS ENDED OCTOBER 31, 2003 1 2002 2001 2000 1999 1998 - ---------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $ 11.00 $ 10.99 $ 10.47 $ 10.12 $ 11.01 $ 10.79 ------- ------- ------- ------- ------- ------- INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.20 0.45 0.45 0.47 0.45 0.46 Net realized and unrealized gain (loss) on investments 0.18 0.09 0.55 0.36 (0.83) 0.33 ------- ------- ------- ------- ------- ------- Total from investment operations 0.38 0.54 1.00 0.83 (0.38) 0.79 ------- ------- ------- ------- ------- ------- LESS DISTRIBUTIONS: Net investment income and short-term capital gains (0.28) (0.45) (0.47) (0.48) (0.47) (0.54) Net realized long-term capital gains - (0.08) (0.01) - (0.04) (0.03) ------- ------- ------- ------- ------- ------- Total distributions (0.28) (0.53) (0.48) (0.48) (0.51) (0.57) ------- ------- ------- ------- ------- ------- Net asset value, end of period $ 11.10 $ 11.00 $ 10.99 $ 10.47 $ 10.12 $ 11.01 ======= ======= ======= ======= ======= ======== TOTAL RETURN2 3.50%3 5.11% 9.76% 8.44% (3.61)% 7.51% SUPPLEMENTAL DATA AND RATIOS Net assets, end of period (000s) $109,643 $103,198 $66,105 $65,233 $70,609 $80,749 Ratios to average daily net assets: Net investment income 3.66%4 3.92% 4.18% 4.60% 4.23% 4.24% Expenses after waivers and/or reimbursements 0.89%4 0.94% 0.93% 0.90% 0.90% 0.90% Expenses before waivers and/or reimbursements 0.89%4 0.96% 0.99% 1.01% 1.10% 1.13% Portfolio turnover rate 4%3 11% 21% 22% 8% 18% - ---------------------------------------------------------------------------------------------------------------------- 1 Unaudited. 2 Total return excludes the effect of sales charges. 3 Not Annualized. 4 Annualized. 36 See Notes to Financial Statements. - -------------------------------------------------------------------------------- NORTH AMERICAN GOVERNMENT BOND FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED) A SHARES 1 SIX MONTHS ENDED APRIL 1, 2002 APRIL 30, THROUGH FOR THE YEARS ENDED MARCH 31, 2003 2 10/31/2002 3 2002 2001 2000 1999 1998 - --------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $ 8.03 $ 7.80 $ 8.17 $ 8.07 $ 8.42 $ 8.74 $ 8.29 -------- -------- -------- -------- -------- -------- -------- INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.13 0.18 0.38 0.44 0.49 0.60 0.61 Net realized and unrealized gain (loss) on investments and foreign currency transactions 0.17 0.41 (0.03) 0.38 (0.12) (0.09) 0.56 -------- -------- -------- -------- -------- -------- -------- Total from investment operations 0.30 0.59 0.35 0.82 0.37 0.51 1.17 -------- -------- -------- -------- -------- -------- -------- LESS DISTRIBUTIONS: Net investment income and short-term capital gains (0.34) (0.22) (0.58) (0.53) (0.49) (0.60) (0.67) In excess of net investment income - - -7 (0.01) - - (0.05) Net realized long-term capital gains - (0.02) (0.06) (0.06) - (0.23) - Tax return of capital - (0.12) (0.08) (0.12) (0.23) - - -------- -------- -------- -------- -------- -------- -------- Total distributions (0.34) (0.36) (0.72) (0.72) (0.72) (0.83) (0.72) -------- -------- -------- -------- -------- -------- -------- Net asset value, end of period $ 7.99 $ 8.03 $ 7.80 $ 8.17 $ 8.07 $ 8.42 $ 8.74 ======== ======== ======== ======== ======== ======== ======== TOTAL RETURN4 3.79%5 7.75%5 4.38% 10.74% 4.82% 5.96% 14.65% SUPPLEMENTAL DATA AND RATIOS Net assets, end of period (000s) $277,656 $257,495 $220,629 $117,445 $61,697 $55,891 $ 52,018 Ratios to average daily net assets: Net investment income 2.91%6 3.84%6 4.60% 5.62% 5.59% 5.79% 7.17% Expenses after waivers and/or reimbursements 1.06%6 1.01%6 1.13% 1.24% 1.25% 1.25% 1.25% Expenses before waivers and/or reimbursements 1.06%6 1.01%6 1.13% 1.24% 1.41% 1.42% 1.28% Portfolio turnover rate 86%5 95%5 136% 89% 32% 173% 125% - -------------------------------------------------------------------------------------------------------------------------- 1 On May 16, 2003, ISI Shares were designated A Shares. 2 Unaudited. 3 The fund changed its fiscal year end from March 31 to October 31. 4 Total return excludes the effect of sales charges. 5 Not Annualized. 6 Annualized. 7 Less than $0.01 per share. See Notes to Financial Statements. 37 - -------------------------------------------------------------------------------- ISI STRATEGY FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED) Six Months June 1, 2002 Ended through September 16, 1997 3 April 30, October 31, For the years ended May 31, through 2003 1 20022 2002 2001 2000 1999 May 31, 1998 - ----------------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $ 9.08 $ 10.23 $ 10.89 $ 12.15 $ 11.91 $ 11.00 $ 10.00 ------ ------- ------- ------- ------- ------- -------- INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.04 0.05 0.12 0.25 0.26 0.21 0.13 Net realized and unrealized gain (loss) on investments 0.32 (1.14) (0.66) (0.62) 0.46 1.10 0.96 ------ ------- ------- ------- ------- ------- -------- Total from investment operations 0.36 (1.09) (0.54) (0.37) 0.72 1.31 1.09 ------ ------- ------- ------- ------- ------- -------- LESS DISTRIBUTIONS: Net investment income and short-term capital gains (0.04) (0.06) (0.12) (0.27) (0.24) (0.21) (0.09) Net realized long-term capital gains (0.01) - - (0.62) (0.24) (0.19) - ------ ------- ------- ------- ------- ------- -------- Total distributions (0.05) (0.06) (0.12) (0.89) (0.48) (0.40) (0.09) ------ ------- ------- ------- ------- ------- -------- Net asset value, end of period $ 9.39 $ 9.08 $ 10.23 $ 10.89 $ 12.15 $ 11.91 $ 11.00 ====== ======= ======= ======= ======= ======= ======== TOTAL RETURN4 3.96%5 (10.65)%5 (4.93)% (3.32)% 6.09% 12.15% 10.94%5 SUPPLEMENTAL DATA AND RATIOS Net assets, end of period (000s) $20,587 $19,924 $24,398 $27,051 $36,544 $35,734 $18,220 Ratios to average daily net assets: Net investment income 0.95%6 1.18%6 1.14% 2.09% 2.10% 1.81% 2.03%6 Expenses after waivers and/or reimbursements 1.30%6 1.30%6 1.19% 1.00% 1.00% 1.00% 1.00%6 Expenses before waivers and/or reimbursements 1.80%6 1.99%6 1.42% 1.38% 1.31% 1.68% 2.25%6 Portfolio turnover rate 24%5 12%5 72% 57% 59% 32% 20%5
- -------------------------------------------------------------------------------- 1 Unaudited. 2 The fund changed its fiscal year end from May 31 to October 31. 3 Commencement of Operations 4 Total Return figures exclude the impact of sales charges. 5 Not Annualized. 6 Annualized. 38 See Notes to Financial Statements. - -------------------------------------------------------------------------------- ISI FUNDS NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - -------------------------------------------------------------------------------- NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES A. ORGANIZATION Total Return US Treasury Fund, Inc. (`Total Return'), Managed Municipal Fund, Inc. (`Managed Municipal'), North American Government Bond Fund, Inc. (`North American') and Strategy Fund, Inc. (`Strategy'), (each a `Fund' and collectively, the `Funds') are registered under the Investment Company Act of 1940 (the `Act'), as amended, as open-end management investment companies. The Funds are organized as corporations under the laws of the state of Maryland. Total Return's investment objective is to achieve a high level of total return with relative stability of principal, and secondarily, high current income consistent with an investment in securities issued by the United States Treasury. Managed Municipal's investment objective is designed to provide a high level of total return with relative stability of principal and, secondarily, high current income exempt from federal income tax through investment in a portfolio consisting primarily of tax-free municipal obligations. North American's investment objective is designed to provide a high level of current income, consistent with prudent investment risk. Strategy's investment objective is designed to maximize total return through a combination of long-term growth of capital and current income. Effective October 31, 2002, North American changed its fiscal year end from March 31 to October 31 and Strategy changed its fiscal year end from May 31 to October 31. The Funds currently offer one class of shares to investors: ISI Shares. ISI Shares in Total Return, Managed Municipal, North American and Strategy are subject to a maximum front-end sales charge of 3.00%. Prior to February 28, 2002, Total Return and Managed Municipal offered Deutsche Asset Management Class A Shares (`Class A Shares') to investors. On February 28, 2002, the Class A Shares were merged into the ISI Shares. On May 16, 2003 North American Fund started offering C Shares and ISI Shares were redesigned as A Shares. B. VALUATION OF SECURITIES The Funds value their investments at market value. When valuing fixed income securities, the Funds use the last bid price prior to the calculation of the Funds' net asset value. If a current bid price is not available, the Funds use the mean between the latest quoted bid and asked prices. When valuing listed equity securities, Strategy uses the last sale price prior to the calculation of its net asset value. When valuing equity securities that are not listed or that are listed but have not traded, the Fund use the bid price in the over-the-counter market. When valuing securities for which market quotations are not readily available or for which the market quotations that are available are considered unreliable, the Funds determine a fair value in good faith under procedures established by and under the general supervision of the Funds' Board of Directors. The Funds may use these procedures to establish the fair value of securities when, for example, a significant event occurs between the time the market closes and the time the Funds value their investments. After consideration of various factors, the Funds may value the securities at their last reported price or at fair value. On April 30, 2003 Strategy had fair valued securities, which are footnoted accordingly in the Fund's schedule of investments. C. SECURITIES TRANSACTIONS AND INVESTMENT INCOME Securities transactions are recorded on trade date. Realized gains and losses are determined by comparing the proceeds of a sale or the cost of a purchase with a specific offsetting transaction. Dividend income is recorded on the ex-dividend date. Interest income, including amortization of premiums and accretion of discounts, is accrued daily. 39 - -------------------------------------------------------------------------------- ISI FUNDS NOTES TO FINANCIAL STATEMENTS (UNAUDITED-CONTINUED) - -------------------------------------------------------------------------------- Estimated expenses are also accrued daily. Income, gains (losses) and common expenses are allocated to each class based on its respective net assets. Class specific expenses are charged directly to each class. D. DISTRIBUTIONS Total Return pays a daily dividend and, Managed Municipal and North American pay monthly dividends at rates approved by the Funds' Board of Directors. To the extent that their net investment income and short-term capital gains are less than the approved rate, the Funds may pay some of their dividend from long-term capital gains or as a return of shareholder capital. Strategy pays dividends quarterly from its net investment income and annually from capital gains. An additional distribution of net realized short-term and long-term capital gains earned by the Funds, if any, may be made annually to the extent they exceed capital loss carryforwards. The Funds record dividends and distributions on the ex-dividend date E. FEDERAL INCOME TAXES The Funds each have a policy to qualify as a regulated investment companies under the Internal Revenue Code and to distribute substantially all of their taxable income to shareholders. Accordingly, no federal income taxes have been accrued. The Funds may periodically make reclassifications among certain capital accounts as a result of differences in the characterization and allocation of certain income and capital gain distributions determined annually in accordance with federal tax regulations, which may differ from accounting principals generally accepted in the United States. These book/tax differences are either temporary or permanent in nature. To the extent these differences are permanent, they are charged or credited to paid-in-capital or accumulated net realized gain as appropriate, in the period that the differences arise. F. FOREIGN CURRENCY TRANSLATION The Funds maintain their accounting records in US dollars. North American determines the US dollar value of foreign currency denominated assets, liabilities and transactions by using prevailing exchange rates. In valuing assets and liabilities, North American uses the prevailing exchange rate on valuation date. In valuing security transactions, the receipt of income and the payment of expenses, North American uses the prevailing exchange rate on the transaction date. Net realized gains and losses on foreign currency transactions shown on North American's financial statements result from the sale of foreign bonds, foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of interest recorded on its books and the US dollar equivalent of the amounts actually received or paid. G. FORWARD FOREIGN CURRENCY CONTRACTS North American may use forward foreign currency contracts to manage foreign exchange rate risk. The Fund may use these contracts to fix the US dollar value of a securities transaction for the period between the date of the transaction and the date of the security is received or delivered to hedge the US dollar value of securities that it already owns. The use of forward foreign currency contracts does not eliminate fluctuations in the prices of the underlying securities, but does establish a rate of exchange that can be achieved in the future. The Fund determines the net US dollar value of forward foreign currency contracts using prevailing exchange rates. On April 30, 2003 there were no open forward currency contracts. 40 - -------------------------------------------------------------------------------- ISI FUNDS NOTES TO FINANCIAL STATEMENTS (UNAUDITED-CONTINUED) - -------------------------------------------------------------------------------- H. REPURCHASE AGREEMENTS The Funds may make short-term investments in repurchase agreements that are fully collateralized by US government securities. Under the terms of a repurchase agreement, a financial institution sells fixed-income securities to the Funds and agrees to buy them back on a specified day in return for the principal amount of the original sale plus accrued interest. The custodial bank holds the collateral in a separate account until the agreement matures. If the value of the securities falls below the principal amount of the repurchase agreement plus accrued interest, the financial institution deposits additional collateral by the following business day. If the financial institution either fails to deposit the required additional collateral or fails to repurchase the securities as agreed, the Funds have the right to sell the securities and recover any resulting loss from the financial institution. If the financial institution enters into bankruptcy, the Funds' claims on the collateral may be subject to legal proceedings. I. ESTIMATES In preparing its financial statements in conformity with accounting principles generally accepted in the United States, management makes estimates and assumptions. Actual results may be different. Note 2 - FEES AND TRANSACTIONS WITH AFFILIATES International Strategy & Investment, Inc. ('ISI') is the Funds' Advisor. As compensation for its advisory services, Total Return pays ISI an annual fee based on the Fund's average daily net assets, which is calculated daily and paid monthly at the following annual rates: 0.20% of the first $100 million, 0.18% of the next $100 million, 0.16% of the next $100 million, 0.14% of the next $200 million and 0.12% of the amount over $500 million. In addition, Total Return pays ISI 1.50% of the Fund's gross income. Managed Municipal, North American and Strategy pay ISI an annual fee based on each Fund's average daily net assets, which is calculated daily and paid monthly at the annual rate of 0.40%. ISI has contractually agreed to waive its fees and/or reimburse expenses of Managed Municipal through February 29, 2004, to the extent necessary, to limit all expenses to 0.95% of the average daily net assets of the Fund. ISI has contractually agreed to waive its fees and/or reimburse expenses of North American through February 29, 2004, to the extent necessary, to limit all expenses to 1.25% of the average daily net assets of the Funds. ISI has contractually agreed to waive its fees and/or reimburse expenses of Strategy through February 29, 2004, to the extent necessary, to limit all expenses to 1.30% of the average daily net assets of the Fund. Los Angeles Capital Management and Equity Research, Inc. (`LA Capital') is Strategy's Sub-Advisor and is responsible for managing the common stocks in the Fund's portfolio. The Sub-Advisor is paid by ISI. Forum Administrative Services, LLC ("FAdS") is the Funds' Administrator. FAdS receives, for its services, a minimum monthly fee or an annual fee based on each Fund's average daily net assets which is calculated daily and paid monthly. 41 - -------------------------------------------------------------------------------- ISI FUNDS NOTES TO FINANCIAL STATEMENTS (UNAUDITED-CONTINUED) - -------------------------------------------------------------------------------- Forum Shareholder Services, LLC ("FSS") is the Funds' Transfer Agent. FSS receives for its services a monthly fee and a monthly per account fee, all of which are calculated daily and paid monthly. Forum Accounting Services, LLC ("FAcS") is the Funds' Accountant. FAcS receives for its services a monthly fee plus an annual fee based on the each Fund's average daily net assets, all of which are calculated daily and paid monthly. Certain officers and directors of the Fund are also officers or directors of ISI or FAcS. These persons are not paid by the Fund for serving in these capacities. The Northern Trust Company is the Fund's Custodian. ISI Group, Inc. (`ISI Group'), an affiliate of ISI, is the Distributor for the ISI Shares. Total Return, Managed Municipal and Strategy each pay ISI Group an annual fee, pursuant to Rule 12b-1, that is calculated daily and paid monthly at the annual rate of 0.25% of their average daily net assets. North American pays ISI Group an annual fee, pursuant to Rule 12b-1, that is calculated daily and paid monthly at the annual rate of 0.40% of its average daily net assets. Note 3 - INVESTMENT TRANSACTIONS The aggregate cost of purchases and proceeds from sales of investments, other than short-term obligations, for the six months ended April 30, 2003 were as follows: - ------------------------------------------------------------------------------- Non-US Government Obligations US Government Obligations - ------------------------------------------------------------------------------- Purchases Sales Purchases Sales Total Return $ - $ - $ 184,336,953 $ 187,428,598 Managed Municipal 4,148,060 5,814,000 - - North American 43,876,095 6,442,562 176,897,094 175,504,237 Strategy 4,753,532 3,804,081 - 710,938 - ------------------------------------------------------------------------------- The cost basis of investments, aggregate gross unrealized appreciation and depreciation for all investments held at April 30, 2003 were as follows: - -------------------------------------------------------------------------------- Cost Appreciation Depreciation Net Appreciation - -------------------------------------------------------------------------------- Total Return $ 244,089,727 $ 4,902,950 $ 29,408 $ 4,873,542 Managed Municipal 98,048,010 7,394,210 - 7,394,210 North American 269,902,861 3,282,969 27,257 3,255,712 Strategy 18,965,612 2,747,369 1,165,287 1,582,082 - -------------------------------------------------------------------------------- 42 - -------------------------------------------------------------------------------- ISI FUNDS NOTES TO FINANCIAL STATEMENTS (UNAUDITED-CONCLUDED) - -------------------------------------------------------------------------------- Note 4 - MARKET AND CREDIT RISK North American invests in Canadian and Mexican government securities. Investing in Canadian and Mexican government securities may have different risks than investing in US government securities. An investment in Canada or Mexico may be affected by developments unique to those countries. These developments may not affect the US economy or the prices of US government securities in the same manner. In addition, the value of bonds issued by international organizations may be affected by adverse international political and economic developments that may not impact the value of US government securities. 43 - -------------------------------------------------------------------------------- ISI INTERNATIONAL STRATEGY & INVESTMENT - -------------------------------------------------------------------------------- DIRECTORS AND OFFICERS EDWARD S. HYMAN THOMAS D. STEVENS* CHAIRMAN VICE PRESIDENT R. ALAN MEDAUGH STEVEN V. KILLORIN PRESIDENT VICE PRESIDENT JOSEPH R. HARDIMAN MARGARET M. BEELER DIRECTOR ASSISTANT VICE PRESIDENT W. MURRAY JACQUES KEITH C. REILLY DIRECTOR ASSISTANT VICE PRESIDENT LOUIS E. LEVY STACEY E. HONG DIRECTOR TREASURER CARL W. VOGT, ESQ. DAWN L. TAYLOR DIRECTOR ASSISTANT TREASURER NANCY R. LAZAR THOMAS G. SHEEHAN VICE PRESIDENT SECRETARY CARRIE L. BUTLER DANA A. LUKENS VICE PRESIDENT ASSISTANT SECRETARY EDWARD J. VEILLEUX *Thomas D. Stevens is only an VICE PRESIDENT officer for the ISI Strategy Fund. - -------------------------------------------------------------------------------- INVESTMENT ADVISOR - -------------------------------------------------------------------------------- ISI, INC. 535 MADISON AVENUE, 30TH FLOOR NEW YORK, NY 10022 (800) 955-7175 - -------------------------------------------------------------------------------- SHAREHOLDER SERVICING AGENT - -------------------------------------------------------------------------------- FORUM SHAREHOLDER SERVICES, LLC TWO PORTLAND SQUARE PORTLAND, ME 04101 (800) 822-8585 - -------------------------------------------------------------------------------- DISTRIBUTOR - -------------------------------------------------------------------------------- ISI GROUP, INC. 535 MADISON AVENUE, 30TH FLOOR NEW YORK, NY 10022 (800) 955-7175 - -------------------------------------------------------------------------------- ITEM 2. CODE OF ETHICS. Not applicable. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable. ITEM 5. [RESERVED] ITEM 6. [RESERVED] ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. [RESERVED] ITEM 9. CONTROLS AND PROCEDURES (a) - The certifying officers, whose certifications are included herewith, have evaluated the registrant's disclosure controls and procedures within 90 days of the filing date of this report. In their opinion, based on their evaluation, the registrant's disclosure controls and procedures are adequately designed, and are operating effectively to ensure, that material information relating to the registrant, including its consolidated subsidiaries, is made known to them by others within those entities, particularly during the period in which this report is being prepared. Further, in their opinion, the registrant's disclosure controls and procedures are adequately designed, and are operating effectively to ensure that information required to be disclosed by the registrant in the reports it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. (b) - There were no significant changes in the registrant's internal controls or in other factors that could significantly affect these controls subsequent to the date of their most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. ITEM 10. EXHIBITS. (a) Not applicable. (b) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Exhibit filed herewith). (c) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Exhibit filed herewith). EX-99.302 3 cert99906.txt CERTIFICATION OF SEC. 302 SARBANES-OXLEY ACT CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 (SUBSECTIONS (A) AND (B) OF SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE) In connection with the attached Report of the North American Government Bond Fund, Inc. (the "Trust") on Form N-CSR to be filed with the Securities and Exchange Commission (the "Report"), each of the undersigned officers of the Trust does hereby certify that, to the best of such officer's knowledge: 1. The Report fully complies with the requirements of 13(a) or 15(d) of the Securities and Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Trust as of, and for, the periods presented in the Report. Dated: June 24, 2003 /s/ R. Alan Medaugh - ---------------------- R. Alan Medaug President Dated: June 24, 2003 /s/ Stacey E. Hong - ---------------------- Stacey E. Hong Treasurer A signed original of this written statement required by Section 906 has been provided to the Trust and will be retained by the Trust and furnished to the Securities and Exchange Commission or its staff upon request. EX-99.906 4 cert99.txt CERTIFICATION OF SEC. 906 SARBANES-OXLEY ACT I, R. Alan Medaugh, certify that: 1. I have reviewed this report on Form N-CSR of the North American Government Bond Fund, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in rule 30a-2(c) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report (the "Evaluation Date"); and c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: June 24, 2003 /s/ R. Alan Medaugh - -------------------- R. Alan Medaugh President I, Stacey E. Hong, certify that: 1. I have reviewed this report on Form N-CSR of the North American Government Bond Fund, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in rule 30a-2(c) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report (the "Evaluation Date"); and c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize, and report financial 2 data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: June 24, 2003 /s/ Stacey E. Hong - ----------------------- Stacey E. Hong Treasurer 3 -----END PRIVACY-ENHANCED MESSAGE-----