N-CSR 1 ncsrd.txt NCSR N-CSR Item 1. Report to Shareholders The Florida TaxFree Funds The Florida TaxFree Money Market Fund The Florida TaxFree ShortTerm Fund Distributor: William R. Hough & Co. 100 Second Avenue South, Suite 800 St. Petersburg, Florida 33701-4386 (800) 557-7555 Annual Report April 30, 2003 This report must be preceded or accompanied by a current prospectus of The Florida TaxFree Funds. CONTENTS President's Message 1 The Florida TaxFree Money Market Fund Statement of Investments Variable Rate Demand Notes 3 Municipal Bonds 5 The Florida TaxFree ShortTerm Fund Statement of Investments Variable Rate Demand Notes 10 Municipal Bonds 11 Statements of Assets and Liabilities 16 Statements of Operations 17 Statements of Changes in Net Assets 18 Notes to Financial Statements 19 Report of Independent Accountants 25 Dear Shareholder: 125: We are pleased to present the Annual Report on The Florida TaxFree Funds. We at The Hough Group of Funds continue to believe that either or both of The Florida TaxFree Funds represent prudent investments for investors who seek to reduce their federal income and Florida Intangible Tax liabilities. The Florida TaxFree Money Market Fund Total net assets of the Fund were $160.8 million as of April 30, 2003. This compares with $166.8 million on April 30, 2002. We are pleased to report that based on total return for the year ending April 30, 2003, The Florida TaxFree Money Market Fund was ranked in the top 13% out of a total of approximately 338 tax-free state-specific funds tracked by iMoneyNet Inc., a respected mutual fund performance and statistical reporting company. Rankings by iMoney Net for periods ending April 30, 2003 are as follows: 133: 1-year total return.... 43rd out of 338, 3-year total return...24th out of 338, 5-year total return...16th out of 338 The 7-day average yield of the Fund was 0.82% as of April 30, 2003. For investors in the 35% federal tax bracket who have Florida intangible assets of $200,000 or more, the tax equivalent yield was 1.36%. Had the adviser not reimbursed certain fees and expenses, the yield and ranking would have been lower. Past performance, however, is no guarantee of future results. The Florida TaxFree ShortTerm Fund As of April 30, 2003, total net assets for the Fund were $24.0 million. The portfolio had a dollar-weighted average maturity of 2.16 years and a 30-day SEC yield of 1.45% on April 30, 2003. This yield equates to a tax equivalent yield of 2.33% for a Floridian in the 35% federal tax bracket with Florida intangible assets of $200,000 or more. 142:The Florida TaxFree ShortTerm Fund is a variable net asset value mutual fund, and therefore the value of shares fluctuates with the movements of the short-term municipal bond market. Over the past year, the bond market has continued to be strong. The lower interest rate environment has been beneficial to The Florida TaxFree ShortTerm Fund and has contributed to a 4.38% cumulative total return for the 12-month period ended April 30, 2003. The main reason for this is the inverse relationship between interest rates and bond prices. As interest rates fall, there is generally a rise in bond prices. This relationship also usually holds true for tax-free municipal bond funds; as interest rates decrease, the net asset value (NAV) rises and a fund's total return increases. While the equity markets have been volatile over the past 12 months, the municipal bond market has shown strength and has provided solid returns for investors. The net asset value per share was $10.21 on April 30, 2003, compared with $10.14 on April 30, 2002. The cumulative total return on the Fund since its inception November 22, 1993 through April 30, 2003 was 50.08%. This represents a return of 4.39% on an annualized basis. As shown on the accompanying chart, another way of illustrating this return since inception would be that $10,000 invested on November 22, 1993 would have grown to $15,008 on April 30, 2003, including reinvestment of all distributions. The Florida Intangible Tax The Florida intangible tax is assessed against intangible assets such as stocks, bonds, and mutual funds as of January 1 each year. Each of The Florida TaxFree Funds will ordinarily invest at least 80% of its assets in Florida obligations. While state-specific tax-free funds can invest up to 20% in out-of-state issues, your Funds' portfolio management committee intends to keep the Funds completely exempt from the Florida Intangible Tax by investing in only Florida or other exempt issues at the appropriate time. We appreciate your investment in The Florida TaxFree Funds and urge you to contact us at 1-800-557-7555 whenever we can be of assistance. Sincerely, W. Robb Hough, Jr. President The Hough Group of Funds 11. As of the date of this report, the exemption for assets subject to the Florida intangible tax is scheduled to increase to $500,000 per couple ($250,000 for individuals) effective July 1st. Florida (42%)(a) Alachua, FL, IDB, (Sabine Inc., Project), 1.45%, 09/01/15,SunTrust Bank, N.A., LOC 1,300,000 1,300,000 Broward County, FL HFA, Housing RB, (P-Floats PT-703), 1.40%, 09/01/32, FHLMC Insured 3,000,000 3,000,000 Capital Trust Agency, FL, IDB, (Seminole Tribe of Florida Convention and Resort Hotel Facilities), 1.35%, 10/01/33, JP Morgan Chase Bank, LOC 3,000,000 3,000,000 Collier County, FL Health Facilities Auth, Hospital RB, (Cleveland Clinic Health System Obligated Group Guaranteed), Series 2003C-1, 1.35%, 01/01/35, J.P. Morgan Chase, LOC 1,000,000 1,000,000 Collier County, FL IDA, IDB, (Redlands Christian Migrant Association, Inc., Project), 1.40%, 12/01/26, Bank of America, N.A., LOC 3,900,000 3,900,000 Dade County, FL IDA, Pollution Ctrl RB, (Florida Power & Light), 1.37%, 06/01/21 3,600,000 3,600,000 Dade County, FL IDA, IDB, (Dolphins Stadium), Series A, 1.35%, 01/01/16, Societe Generale, LOC 600,000 600,000 Florida Development Finance Corp, IDB, DSLA Realty LC Project), Series A-1, 1.50%, 04/01/25, SunTrust Bank, N.A., LOC 1,680,000 1,680,000 Florida Development Finance Corp, IDB, RL Smith Investments LLC Project), Series A-2, 1.50%, 04/01/25, SunTrust Bank, N.A., LOC 1,565,000 1,565,000 Florida Development Finance Corp, IDB, (Charlotte Community Project), Series A-3, 1.40%, 02/01/21, SunTrust Bank, N.A., LOC 1,495,000 1,495,000 Florida Gulf Coast University Foundation, Inc., Certificates of Participation, Series A, 1.50%, 08/01/32, Wachovia Bank, N.A., LOC 1,000,000 1,000,000 Florida HFA, Housing RB, (Lakes of Northdale Project), Series D, 1.41%, 06/01/07, SouthTrust Bank of AL, LOC 2,065,000 2,065,000 Florida HFA, Housing RB, (Town Colony Development), 1983 Series E, 1.40%, 12/01/05, Credit Suisse First Boston, LOC 1,885,000 1,885,000 Gulf Breeze, FL, Hospital RB, (Heritage Healthcare Project), 1.45%, 01/01/24, Anchor National Life Insurance Co., SBPA 480,000 480,000 Highlands County, FL Health Facilities Auth, Hospital RB, (Adventist Health System / Sunbelt), Series 2003A, 1.35%, 11/15/32, SunTrust Bank, N.A., LOC 1,000,000 1,000,000 Jackson County, FL, Pollution Control RB, (Gulf Power Company Project), 1.40%, 07/01/22 500,000 500,000 Jacksonville, FL Electric Auth, Electric Util RB, Series C, 1.35%, 10/01/30, Dexia Credit Local de France, SPBA 1,000,000 1,000,000 Lee County, FL Hospital Board of Directors, Hospital RB, (Lee Memorial Hospital), Series D, 1.40%, 04/01/20, SunTrust Bank, N.A., Liquidity 1,800,000 1,800,000 Lee County, FL Hospital Board of Directors, Hospital RB, (Lee Memorial Hospital), Series 1995A, 1.36%, 04/01/25, SunTrust Bank, N.A., Liquidity 2,500,000 2,500,000 Lee County, FL HFA, Housing RB, (University Club Apartments), 1.45%, 05/15/35, SouthTrust Bank, N.A., LOC 800,000 800,000 Martin County, FL, Solid Waste RB, (Florida Power & Light), 1.42%, 01/01/27 2,450,000 2,450,000 Ocean Highway & Port Auth, FL, Transportation RB, Series 1990, 1.45%, 12/01/20, Wachovia Bank, N.A., LOC 1,500,000 1,500,000 Ocean Highway & Port Auth, FL, Transportation RB, Series 1990, 1.45%, 12/01/20, Wachovia Bank, N.A., LOC 700,000 700,000 Orange County, FL Health Facilities Auth, Hospital RB, (Adventist Health Systems/Sunbelt Obligated Group), Floater Certificates - Series 171, Series A, 1.51%, 11/15/14, FSA Insured, Morgan Stanley Dean Witter, Liquidity Facility 6,035,000 6,035,000 Orange County, FL IDA, IDB, (Central Florida YMCA Project), Series 2002A, 1.40%, 05/01/27, Bank of America, N.A., LOC $1,000,000 $1,000,000 Palm Beach County, FL Health Facilities Auth, Hospital RB, (Bethesda Healthcare System Project), 1.35%, 03/01/27, SunTrust Bank, LOC 1,000,000 1,000,000 Palm Beach County, FL, Public Improv RB, (Jewish Community Campus Project), 1.35%, 03/01/30, AMBAC Insured, The Northern Trust Company, SBPA 5,000,000 5,000,000 Palm Beach County, FL, Public Improv RB, (Jewish Community Campus Project), 1.35%, 03/01/30, The Northern Trust Company, LOC 1,200,000 1,200,000 Palm Beach County, FL, Hospital RB, (Hospice of Palm Beach County, Inc. Project), Series 2001, 1.40%, 03/01/28, The Northern Trust Company, LOC 1,700,000 1,700,000 Palm Beach County, FL, IDB, (Henry Morrison Flagler), 1.40%, 11/01/36, The Northern Trust Bank, LOC 3,000,000 3,000,000 St. Lucie County, FL, Pollution Control, (Florida Power & Light), 1.37%, 09/01/28 2,000,000 2,000,000 St. Lucie County, FL, IDB, (Freedom Plastics FL Project), 1.46%, 11/01/20, LaSalle Bank, N.A., LOC 2,300,000 2,300,000 St. Petersburg, FL, Public Improv RB, (Florida International Museum Project), Series 1997A, 1.35%, 10/01/17, SunTrust Bank, Tampa Bay, LOC 2,975,000 2,975,000 St. Petersburg, FL Health Facilities Auth, Hospital RB, (Menorah Manor Project), Series 1997, 1.40%, 07/01/27, SunTrust Bank, Tampa Bay, LOC 700,000 700,000 Southeast Volusia, FL Hospital District, Hospital RB, (Bert Fish Medical Center), 1.40%, 05/01/22, SouthTrust Bank of Alabama, N.A., LOC 600,000 600,000 Sumter County, FL IDA, IDB, (Great Southern Wood, FL, Inc.), 1.50%, 04/01/05, SouthTrust Bank, LOC 200,000 200,000 Non-Florida (<1%) (a) Providence, RI Housing Auth, Housing RB, (Cathedral Square), Series B, 1.45%, 09/01/17, Fleet Bank, LOC $570,000 $570,000 Total Variable Rate Demand Notes (Cost $67,100,000) $67,100,000 Florida (55%)(a) Arcadia, FL, Sales Tax RB, (Dedicated Pool Local Government),4.80%, 12/01/03, FGIC Insured $100,000 $102,142 Bay County, FL School District, Sales Tax RB, 4.30%, 06/01/03, FSA Insured 100,000 100,258 Brevard County, FL, Public Improvement RB, (Fourth Cent Tourist Development Tax - Florida Marlins Training), 3.30%, 03/01/04, FGIC Insured 145,000 147,609 Brevard County, FL School District, Revenue Anticipation Notes, 2.50%, 05/02/03 2,500,000 2,500,067 Brevard County, FL School Board, Certificates of Participation, 2.00%, 07/01/03, AMBAC Insured 1,010,000 1,010,940 Brevard County, FL School District, Tax Anticipation Notes, 2.25%, 06/30/03 1,000,000 1,001,318 Broward County, FL, Sales Tax RB, Commercial Paper, 1.20%, 05/06/03, Dexia Credit Local de France, LOC 2,500,000 2,500,000 Charlotte County, FL School District, Tax Anticipation Notes, 2.25%, 06/30/03 2,000,000 2,002,949 Charlotte County, FL, Water & Sewer RB, 6.875%, 10/01/03, Pre-refunded @ 102 325,000 338,541 Collier County, FL, Gax Tax RB, 2.00%, 06/01/03, AMBAC Insured 1,495,000 1,496,188 Duval County, FL School District, Certificates of Participation, 4.40%, 07/01/03, FSA Insured 450,000 452,409 Escambia County, FL HFA, Housing RB, (Single Family Mortgage), Series B, 1.15%, 09/04/03, GNMA/FNMA Collateralized, Mandatory Tender @ 100, Bank of America, N.A., SBPA 825,000 825,000 Florida Rural Utility Financing Commission, Public Improv Revenue Notes, (Public Projects Construction), Series 2002A, 3.00%, 07/15/03 3,730,000 3,739,834 Florida State Board of Education, GO Bonds, Series D, 6.75%, 06/01/03 485,000 487,117 Florida State Board of Education, GO Bonds, (Capital Outlay), Series F, 5.40%, 06/01/03 100,000 100,330 Florida State Board of Education, GO Bonds, (Capital Outlay), Series A, 5.00%, 06/01/03 200,000 200,652 Florida State Board of Education, GO Bonds, (Capital Outlay), Series C, 5.125%, 06/01/03 100,000 100,328 Florida State Board of Education, GO Bonds, (Capital Outlay), Series A, 5.00%, 01/01/04 50,000 51,248 Florida State Board of Education, Public Improvement RB, (Lottery Revenues), Series C, 4.00%, 07/01/03, FGIC Insured 225,000 225,941 Florida State Board of Education, Public Improvement RB, (Lottery Revenues), Series A, 4.50%, 07/01/03, FGIC Insured 100,000 100,542 Florida Local Government Commission, Commercial Paper, (Florida Association of Counties Pooled Program), 1.05%, 06/13/03, Wachovia Bank, N.A., LOC 1,964,000 1,964,000 Florida Local Government Commission, Commercial Paper, (Florida Association of Counties Pooled Program), 1.05%, 07/10/03, Wachovia Bank, N.A., LOC 4,000,000 4,000,000 Florida Local Government Commission, Commercial Paper, (Florida Pooled Program), Series B, 1.05%, 06/09/03, Wachovia Bank, N.A., LOC 1,783,000 1,783,000 Florida State Department of Management Services, Public Improvement RB, (FL Facilities Pool), Series 2002A, 3.00%, 09/01/03, FSA Insured 1,200,000 1,207,622 Florida State Department of Environmental Protection, Public Improvement RB, (Save Our Coast), Series 2003, 3.00%, 07/01/03, FGIC Insured 930,000 932,951 Florida State Division of Bond Finance, Department of General Services, Public Improvement RB, Environmental Protection, (Preservation 2000), Series B, 5.00%, 07/01/03, FSA Insured 280,000 281,793 Florida Municipal Loan Council, Public Improvement RB, Series C, 3.00%, 11/01/03, MBIA Insured 950,000 957,241 Florida Municipal Loan Council, Public Improvement RB, Series A, 4.375%, 04/01/04, MBIA Insured 100,000 103,161 Florida State Municipal Power Agency, Electric Util RB, (Stanton II Project), 4.45%, 10/01/03, AMBAC Insured 100,000 101,275 Florida State Turnpike Auth, Transportation RB, (Department of Transportation), Series A, 5.50%, 07/01/03, AMBAC Insured $100,000 $100,679 Fort Lauderdale, FL, GO Bonds, 4.50%, 07/01/03 100,000 100,476 Fort Lauderdale, FL, GO Bonds, 2.00%, 07/01/03 380,000 380,317 Fort Myers, FL, Water & Sewer RB, Series A, 5.00%, 04/01/04, FGIC Insured 100,000 103,516 Gainesville, FL Utility System, Water & Sewer RB, Series A, 4.30%, 10/01/03 50,000 50,611 Gainesville, FL Utility System, Electric Util RB, CP Notes, Series C, 1.10%, 05/22/03, Bayerische Landesbank, LOC 1,883,000 1,883,000 Greater Orlando, FL Aviation Auth, Transportation RB, Series B, 3.00%, 10/01/03, FSA Insured 200,000 200,758 Jacksonville, FL Electric Auth, Water & Sewer RB, CP Notes, Series D, 1.05%, 05/06/03, Dexia Credit Local, SBPA 5,000,000 5,000,000 Jacksonville, FL Electric Auth, Electric Util RB, (St. Johns River), Issue 2, Series 10, 6.50%, 10/01/03 2,025,000 2,042,044 Jacksonville, FL Electric Auth, Electric Util RB, (St. Johns River), Issue 2, Series 16, 5.00%, 10/01/03 710,000 720,827 Jacksonville, FL Electric Auth, Electric Util RB, Subseries D, 5.30%, 10/01/03, Pre-refunded @ 100 250,000 253,996 Jacksonville, FL Electric Auth, Electric Util RB, Subseries D, 5.375%, 10/01/03, Pre-refunded @ 100 200,000 203,427 Jacksonville, FL, Public Improvement RB, (Excise Tax), Series A, 4.90%, 10/01/03, FGIC Insured 200,000 202,949 Jacksonville, FL, Commercial Paper, (Florida Power & Light), Series 1992, 1.15%, 05/22/03 5,300,000 5,300,000 Jacksonville, FL Port Auth, Transportation RB, 4.20%, 10/01/03, FGIC insured 200,000 202,027 Jacksonville, FL Port Auth, Transportation RB, 7.625%, 11/01/03, Pre-refunded @ 102 585,000 614,447 Jacksonville, FL, Public Improvement RB, (River (City Renaissance Project), 4.50%, 10/01/03, FGIC Insured 100,000 101,304 Kissimmee, FL Utility Auth, Electric Util RB, 5.50%, 10/01/03, Pre-refunded @ 103 280,000 290,637 Kissimmee, FL Utility Auth, Electric Util RB, Commercial Paper, Series 2000B, 1.05%, 06/06/03, Bank of Nova Scotia, Liquidity 6,000,000 6,000,000 Lee County, FL HFA, Housing RB, (Floater - PT- 611), 1.20%, 09/04/03, Mandatory Tender @ 100, Merrill Lynch, Liquidity 2,805,000 2,805,000 Manatee County, FL Port Auth, Transportation RB, Series A, 5.00%, 10/01/03, Pre-refunded @ 102 100,000 103,579 Miami-Dade County, FL, Transportation RB, (Miami International Airport), Commercial Paper, Series A, 1.00%, 05/13/03, J.P. Morgan Chase, Bayerische Landesbank Girozentrale, State StreetBank, LOC 2,514,000 2,514,000 Ocala, FL, Public Improvement RB, (Capital Improvement), 2.00%, 10/01/03, AMBAC Insured 430,000 430,890 Ocala, FL, Public Improvement RB, (Optional Gas Tax Rev), 2.50%, 10/01/03, AMBAC Insured 1,315,000 1,320,449 Orange County, FL School Board, Certificates of Participation, Series A, 3.60%, 08/01/03, MBIA Insured 100,000 100,557 Orlando & Orange County, FL Expressway Auth, Transportation RB, (Senior Lien), 5.375%, 07/01/03, Pre-refunded @ 102 200,000 205,389 Orlando & Orange County, FL Expressway Auth, Transportation RB, (Senior Lien), 5.25%, 07/01/03, Pre-refunded @ 102 300,000 308,065 Orlando & Orange County, FL Expressway Auth, Transportation RB, (Senior Lien), 5.50%, 07/01/03, Pre-refunded @ 102 490,000 503,377 Orlando & Orange County, FL Expressway Auth, Transportation RB, (Junior Lien), 5.95%, 07/01/03, Pre-refunded @ 100 300,000 302,067 Orlando, FL Utilities Commission, Water & Electric RB, (Commercial Paper), Series 1999A, 1.10%, 05/19/03, J. P. Morgan Chase, LOC $6,500,000 $6,500,000 Osceola County, FL School District, GO Bonds, 2.00%, 08/01/03, FSA Insured 370,000 370,554 Palm Beach County, FL, GO Bonds, (Land Acquisition Program), Series A, 3.50%, 06/01/03 100,000 100,158 Palm Beach County, FL, Public Improvement RB, (Criminal Justice Facilities), 2.00%, 06/01/03 370,000 370,203 Palm Beach County, FL Health Facilities Auth, Hospital RB, (Pooled Hospital Loan Project), Commercial Paper, 1.00%, 05/15/03, SunTrust Bank, LOC 2,500,000 2,500,000 Pasco County, FL, Public Improvement RB, (Guaranteed Entitlement), 2.00%, 12/01/03, FSA Insured 440,000 442,290 Port St. Lucie, FL, Water & Sewer RB, (Stormwater Utility Revenues), 2.50%, 05/01/03, MBIA Insured 495,000 495,000 Putnam County, FL Development Auth, Pollution Ctrl RB, (Seminole Electric Cooperative, Inc.), Series D, 1.45%, 06/15/03, National Rural Utilities Cooperative Finance Corporation, GTY, Mandatory Tender @ 100 1,500,000 1,500,000 Putnam County, FL Development Auth, Pollution Ctrl RB, (Seminole Electric Cooperative, Inc.), Series H-4, 1.25%, 09/15/03, National Rural Utilities Cooperative Finance Corporation, GTY, Mandatory Tender @ 100 1,500,000 1,500,000 St. Lucie County, FL, GO Bonds, 4.00%, 10/01/03, AMBAC Insured 50,000 50,575 St. Lucie County, FL, Water & Sewer RB, 5.00%, 10/01/03, Escrowed to Maturity 50,000 50,776 St. Lucie County, FL, Solid Waste RB, 2.00%, 09/01/03, AMBAC Insured 550,000 551,466 Sarasota County, FL Public Hospital Board, Hospital RB, (Sarasota Memorial Hospital Project), Series B, 4.60%, 10/01/03, MBIA Insured 100,000 101,401 Sarasota-Manatee, FL Airport Auth, Transportation RB, 4.80%, 08/01/03, MBIA Insured 100,000 100,871 Seminole County, FL School District, Tax Anticipation Notes, 2.125%, 08/19/03 1,500,000 1,503,232 South Florida Water Management District, Special Assessment RB, (Special Obligation Acquisition Bonds), 4.70%, 10/01/03, MBIA Insured 100,000 101,387 Sunshine State Governmental Financing Comm, Commercial Paper, Series A, 1.10%, 07/02/03, FGIC Insured, SBPA: Bank of Nova Scotia 4,539,000 4,539,000 Sunshine State Governmental Financing Comm, Commercial Paper, Series C, 1.00%, 05/14/03, FGIC Insured, SBPA: Toronto-Dominion Bank 1,330,000 1,330,000 Sunshine State Governmental Financing Comm, Commercial Paper, Series G, 1.00%, 05/12/03, MBIA Insured, SBPA: Landesbank Hessen-Thuringen Girozentrale 2,500,000 2,500,000 Sunshine State Governmental Financing Comm, Commercial Paper, Series F, 1.10%, 06/03/03, AMBAC Insured, SBPA: Landesbank Hessen-Thuringen Girozentrale 1,500,000 1,500,000 Tampa Bay, FL Water Utility System, Water & Sewer RB, Series B, 3.90%, 10/01/03, FGIC Insured 50,000 50,554 Tampa, FL, Public Improvement RB, (Guaranteed Entitlement), 6.00%, 10/01/03, AMBAC Insured 250,000 255,001 Tampa, FL, Solid Waste RB, 5.00%, 10/01/03, Pre-refunded @ 102 95,000 98,384 Tampa, FL, Solid Waste RB, 5.25%, 10/01/03, Pre-refunded @ 102 100,000 103,683 Venice, FL, Public Improv RB, 3.25%, 07/01/03, FGIC Insured 100,000 100,334 Non-Florida (3%) (a) Adams County, CO School District No. 012, GO Bonds, 6.50%, 12/15/03 $135,000 $139,518 Alabama Water Pollution Control Auth, Pollution Control RB, (Revolving Fund Loan), Series B, 4.25%, 08/15/03, AMBAC Insured 150,000 151,302 Channelview, TX Independent School District, GO Bonds, 2.00%, 08/15/03, PSF Guaranty 50,000 50,072 Chelan County, WA Public Utility District No. 001, Electric Utility RB, (Chelan Hydro), Series D, 4.50%, 07/01/03 125,000 125,671 Clarksdale, MS Sewer & Wastewater Treatment System, Water & Sewer RB, 2.00%, 10/01/03, Radian Insured 85,000 85,263 Dallas, TX Independent School District, GO Bonds, 5.70%, 08/15/03, Pre-refunded @ 100 430,000 435,621 Howard County, MD, GO Bonds (Public Improvement), Series A, 5.875%, 05/15/03, Pre-refunded @ 100 215,000 215,400 Johnson County, IN Hospital Association, Hospital RB, (Hospital Building), 6.50%, 07/01/03, AMBAC Insured 515,000 519,603 Maricopa County, AZ School District, GO Bonds, (No. 006 Washington Elementary), Series A, 3.25%, 07/01/03, FSA Insured 550,000 551,989 Michigan State Building Auth, Public Improvement RB, Series I, 6.25% 10/01/03, AMBAC Insured 200,000 204,266 Michigan State South Central Power Agency, Electric Utility RB, (Power Supply System), 5.60%, 11/01/03, MBIA Insured 250,000 255,591 New Jersey Health Care Facilities Financing Auth, Hospital RB, (Kennedy Health System), Series B, 5.75%, 07/01/03, MBIA Insured 520,000 524,055 Puerto Rico, Commonwealth of, Tax and Revenue Anticipation Notes, 2.50%, 07/30/03 1,000,000 1,002,492 Riverton, UT, Water & Sewer RB, 2.50%, 09/01/03, FGIC Insured 235,000 235,981 San Antonio, TX Airport System, Transportation RB, (Sub Lien - Passenger Facility), 4.00%, 07/01/03, FGIC Insured 775,000 778,410 Santa Fe, NM, Public Improvement RB, (Gross Receipts Tax), Series A, 4.95%, 06/01/03, AMBAC Insured 25,000 25,065 Tennessee, State of, GO Bonds, Series A, 5.00%, 05/01/03 200,000 200,000 Total Municipal Bonds (Cost $93,374,012) $93,374,012 Total Investments (100%) (Cost $160,474,012) (a) $160,474,012 (a) Percentages indicated are based on investments. Summary of Ratings (Unaudited): AAA/Equivalent 98%, AA/Equivalent 2% Average Portfolio Maturity: 37.40 Days AMBAC Ambac Assurance Corporation CP Commercial Paper FGIC Financial Guaranty Insurance Corporation FHLMC Florida Home Loan Mortgage Corporation FNMA Federal National Mortgage Association FSA Financial Securities Assurance GO General Obligation GNMA Government National Mortgage Association GTY Guarantee HFA Housing Finance Authority IDA Industrial Development Authority IDB Industrial Development Bond LOC Letter of Credit MBIA Municipal Bond Insurance Association PSF Permanent School Fund RB Revenue Bond SBPA Standby Bond Purchase Agreement Variable Rate Demand Notes Florida (6%) (a) Collier County, FL Health Facilities Auth, Hospital RB, (Cleveland Clinic Health System Obligated Group Guaranteed), Series 2003C-1, 1.35%, 01/01/35, J.P. Morgan Chase, LOC $500,000 $500,000 Lee County, FL Hospital Board of Directors, Hospital RB, (Lee Memorial Hospital), Series 1995A, 1.36%, 04/01/25, SunTrust Bank, N.A., Liquidity 200,000 200,000 Martin County, FL, Solid Waste RB, (Florida Power & Light), 1.42%, 01/01/27 200,000 200,000 St. Lucie County, FL, Pollution Control, (Florida Power & Light), 1.37%, 03/01/28 400,000 400,000 Variable Rate Demand Notes Non-Florida (<1%) (a) Colorado Health Facilities Auth, Hospital RB, (The Visiting Nurses Corp. Project), 1.40%, 07/01/22, Wells Fargo Bank, LOC $100,000 $100,000 Total Variable Rate Demand Notes (Cost $1,400,000) $1,400,000 Municipal Bonds Florida (91%) (a) Anastasia Sanitation District, St. Johns County, FL, Water & Sewer RB, 6.80%, 06/01/04, FGIC Insured $100,000 $106,091 Baker County, FL Hospital Auth, Hospital RB, 4.60%, 12/01/06, ACA Insured 175,000 187,667 Baker County, FL Hospital Auth, Hospital RB, 4.65%, 12/01/07, ACA Insured 120,000 129,904 Brevard County, FL, Water & Sewer RB, 5.85%, 03/01/04, Escrowed to Maturity 100,000 103,901 Broward County, FL Airport System, Transportation RB, Series C, 5.00%, 10/01/05, AMBAC Insured 125,000 129,219 Broward County, FL Airport System, Transportation RB, Series C, 5.20%, 10/01/07, AMBAC Insured 295,000 304,773 Capital Projects Finance Auth, FL, Housing RB, (Capital Projects Loan Program Florida Universities), Senior Series F-1, 4.50%, 10/01/06, MBIA Insured 250,000 264,560 Clearwater, FL Housing Auth, Housing RB, (Hamptons Apartments), 8.25%, 05/01/04, Pre-refunded @ 103 590,000 643,442 Collier County, FL School Board, Certificates of Participation, 4.50%, 02/15/06, FSA Insured 205,000 220,273 Crossings at Fleming Island Community Development District, FL, Special Assessment Bonds, Series B, 5.15%, 05/01/03, MBIA Insured 200,000 200,000 Dade County, FL, GO Bonds, 5.25%, 11/01/04, FGIC Insured 50,000 52,895 Dade County, FL, Transportation RB, (Seaport Rev), 6.25%, 10/01/05, MBIA Insured 400,000 445,020 Dade County, FL, Transportation RB, (Aviation Rev), Series Y, 5.25%, 10/01/04 100,000 103,614 Dade County, FL School Board, Certificates of Participation, Series B, 5.60%, 08/01/06, Pre-refunded @ 101 115,000 130,434 Dade County, FL School District, GO Bonds, 5.00%, 08/01/05, MBIA Insured 100,000 105,336 Dade County, FL, Water & Sewer RB, 4.70%, 10/01/04, FGIC Insured 50,000 51,688 Duval County, FL School District, GO Bonds, 6.30%, 08/01/07, AMBAC Insured 250,000 291,165 Escambia County, FL Health Facilities Auth, Hospital RB, (Baptist Hospital & Baptist Manor Project), 4.40%, 10/01/03 210,000 211,909 Escambia County, FL HFA, Single Family Mortgage RB, (Multi-County Program), 4.10%, 04/01/04, GNMA Collateralized 120,000 122,042 Escambia County, FL Utility Auth, Water & Sewer RB, Series B, 4.10%, 01/01/06, FGIC Insured 150,000 159,266 First Florida Governmental Financing Commission, Public Improv RB, 4.20%, 07/01/04, AMBAC Insured 100,000 103,466 Florida Development Finance Corporation, IRB, (FDFC Guaranty Program), 1997 Series B, 4.90%, 05/01/03, AMBAC Insured 40,000 40,000 Florida Housing Finance Corp, Housing RB, (Homeowner Mortgage), Series 2, 3.25%, 01/01/06 450,000 454,446 Florida Gas Utility, Gas Tax RB, (Gas Project No. 1), 4.20%, 12/01/07, FSA Insured 100,000 107,541 Florida State Department of Transportation, GO Bonds, (Right of Way), 5.80%, 07/01/05, Pre-refunded @ 101 125,000 137,990 Florida State Board of Education, GO Bonds, Capital Outlay, 8.40%, 06/01/07 55,000 64,716 Florida State Board of Education, GO Bonds, Series C, 5.40%, 06/01/03 60,000 60,185 Florida State Board of Education, GO Bonds, Series A, 5.00%, 06/01/07 200,000 222,022 Florida State Board of Education, GO Bonds, Capital Outlay, Series C, 4.90%, 06/01/05 100,000 101,275 Florida State Board of Education, GO Bonds, Capital Outlay, Series E, 5.80%, 06/01/04, Pre-refunded @ 101 150,000 159,026 Florida State Board of Education, GO Bonds, Capital Outlay, Series A, 5.25%, 06/01/04 100,000 104,345 Florida State Board of Education, GO Bonds, Capital Outlay, Series A, 6.00%, 01/01/05 100,000 107,551 Florida State Board of Education, GO Bonds, Series A, 5.00%, 06/01/04 200,000 208,158 Florida State Board of Regents, Certificates of Participation, State University System, (FL Atlantic University Foundation, Inc.), 4.00%, 05/01/04, Asset Guaranty Insured $125,000 $128,380 Florida State Department of Transportation, Transportation RB, (Alligator Alley), 6.25%, 07/01/06, FGIC Insured 100,000 113,721 Florida State Department of Environmental Protection, Public Improv RB, (Preservation 2000), Series 2001A, 5.00%, 07/01/07, FSA Insured 250,000 277,545 Florida State Division of Bond Finance, Department of General Services, Public Improv RB, (Department of Environmental Protection - Preservation 2000), Series B, 5.75%, 07/01/06, FGIC Insured 450,000 504,869 Florida State Division of Bond Finance, Department of General Services, Public Improv RB, (Department of Environmental Protection - Preservation 2000), Series A, 5.00%, 07/01/05, FGIC Insured 350,000 376,502 Florida State Division of Bond Finance, Department of General Services, Public Improv RB, (Department of Environmental Protection - Perservation 2000), Series A, 5.75%, 07/01/05, Pre-refunded @ 101 120,000 132,343 Florida State Division of Bond Finance, Department of General Services, Public Improv RB, (Department of Environmental Protection - Preservation 2000), Series A, 5.25%, 07/01/07, MBIA Insured 50,000 55,252 Florida State Turnpike Auth, Transportation RB, Series B, 4.40%, 07/01/07, MBIA Insured 100,000 108,647 Gainesville, FL Utility System, Water & Sewer RB, Series A, 5.30%, 10/01/06 125,000 129,249 Greater Orlando, FL Aviation Auth, Transportation RB, (Orlando, FL Airport), Series B, 3.25%, 10/01/06, FSA Insured 250,000 257,733 Gulf Breeze, FL, Public Improvement RB, (Local Government Loan), Series C, 4.50%, 12/01/04, FGIC Insured, Mandatory Tender @ 100 260,000 272,862 Gulf Breeze, FL, Public Improvement RB, (Venice Local Government Loan), 4.00%, 12/01/06, FGIC Insured, Mandatory Tender @ 100 35,000 37,577 Halifax, FL Hospital Medical Center, Hospital RB, Series A, 5.00%, 10/01/07, MBIA Insured 440,000 476,511 Highlands County, FL Health Facilities Auth, Hospital RB, (Adventist Health/Sunbelt), 3.35%, 09/01/05, Mandatory Tender @ 100 500,000 513,015 Hillsborough County, FL, Water & Sewer RB, (Capacity Special Assessment), 4.50%, 03/01/06, FSA Insured 190,000 204,541 Hillsborough County, FL Educational Facilities Auth, Higher Education RB, (University of Tampa Project), 4.15%, 12/01/06, Radian Asset Assurance Insured 225,000 241,918 Hillsborough County, FL IDA, Hospital RB, (University Community Hospital), 5.60%, 08/15/07, MBIA Insured 50,000 53,385 Hillsborough County, FL HFA, Housing RB, Single Family Mortgage, Series A-1, 4.25%, 04/01/07, GNMA/FNMA Collateralized 100,000 103,786 Hillsborough County, FL IDA, Hospital RB, (H. Lee Moffitt Cancer Center Project), Series C, 3.00%, 07/01/04 170,000 171,579 Hillsborough County, FL, Water & Sewer RB, (Junior Lien), 5.00%, 08/01/06, AMBAC Insured 250,000 275,385 Jacksonville, FL Electric Auth, Electric Util RB, (St. Johns River Power Park), Issue 2, Series 18, 4.00%, 10/01/04 250,000 259,333 Jacksonville, FL, Capital Improv RB, (Gator Bowl Project), 6.00%, 10/01/04, Pre-refunded @ 101 165,000 177,821 Jacksonville, FL Electric Auth, Electric Util RB, (St. Johns River), Issue 2, Series 14, 4.90%, 10/01/08 30,000 32,258 Jacksonville, FL Electric Auth, Electric Util RB, (St. Johns River), Issue 2, Series 16, 4.50%, 10/01/07 100,000 101,945 Jacksonville, FL, Higher Education RB, (Edward Waters College Project), 3.60%, 10/01/06, Mandatory Tender @ 100, First Union National Bank, LOC 655,000 655,000 Jacksonville, FL, Public Improvement RB, (Excise Taxes), Series A, 5.25%, 10/01/06, FGIC Insured 160,000 163,832 Jacksonville, FL Health Facilities Auth, Hospital RB, (Charity Obligated Group), Series A, 5.50%, 08/15/06, MBIA Insured 250,000 278,800 Jacksonville, FL Port Auth, Seaport RB, Series 2000, 4.70%, 11/01/06, Escrowed to Maturity 165,000 180,413 Jacksonville, FL Port Auth, Seaport RB, Series 2000, 4.70% 11/01/06, MBIA Insured 245,000 267,099 Lafayette County, FL, Public Improv RB, Series 2000, 4.90%, 09/01/04 $155,000 $161,205 Lauderhill, FL, Sales Tax RB, (Half Cent), 4.25%, 10/01/05, FGIC Insured 150,000 160,097 Lee County, FL School Board, Certificates of Participation, Series A, 4.85%, 08/01/03, FSA Insured 50,000 50,447 Lee County, FL IDA, Water & Sewer RB, (Bonita Springs Utilities Project), 4.75%, 11/01/04, FSA Insured 185,000 193,791 Lee County, FL IDA, Water & Sewer RB, (Bonita Springs Utilities Project), 4.75%, 11/01/05, FSA Insured 210,000 225,971 Lee County, FL IDA, Water & Sewer RB, (Bonita Springs Utilities Project), 3.90%, 11/01/05, AMBAC Insured 295,000 312,827 Lee County, FL Solid Waste System, Solid Waste RB, 5.25%, 10/01/07, MBIA Insured 500,000 551,550 Lee, FL Memorial Health System, Hospital RB, Series A, 4.00%, 04/01/07, FSA Insured 250,000 266,265 Leesburg, FL, Hospital RB, (Leesburg Regional Medical Center), Series B, 5.30%, 07/01/03 85,000 85,446 Lee County, FL School District, GO Bonds, 5.20%, 07/01/07 100,000 102,630 Martin County, FL Health Facilities Auth, Hospital RB, (Martin Memorial Medical Center), Series B, 5.25%, 11/15/07, MBIA Insured 250,000 281,225 Miami Beach, FL Health Facilities Auth, Hospital RB, (South Shore Hospital), Series A, 4.30%, 08/01/03, ACA Insured 130,000 130,871 Miami Beach, FL, Water & Sewer RB, 5.375%, 09/01/08, FSA Insured 250,000 274,785 Miami-Dade County, FL School Board, Certificates of Participation, Series C, 5.25%, 08/01/06, FSA Insured 100,000 110,705 Miami-Dade County, FL Solid Waste System, Solid Waste RB, 4.20%, 10/01/05, AMBAC Insured 75,000 79,913 Naples, FL, Hospital RB, (Naples Community Hospital, Inc. Project), 4.90%, 10/01/04, MBIA Insured 200,000 206,820 North Miami, FL Health Facilities Auth, Hospital RB, (Catholic Health Services Obligation Group), 5.10%, 08/15/04, SunTrust Bank, Central Florida, LOC 190,000 196,483 Northern Palm Beach County, FL Improvement District, Public Improv RB, (Water Control & Improvement - Unit Development 18), 4.30%, 08/01/05, MBIA Insured 50,000 53,162 Orange County, FL Health Facilities Auth, Hospital RB, (Orlando Regional Healthcare), Series A, 6.25%, 10/01/07, Escrowed to Maturity 235,000 276,045 Orange County, FL Health Facilities Auth, Hospital RB, (Adventist Health System), 5.50%, 11/15/03 250,000 254,663 Orange County, FL, Public Improvement RB, (Tourist Development Tax), 5.00%, 10/01/06, AMBAC Insured 25,000 27,622 Orange County, FL HFA, Housing RB, (Homeowner Rev), Series A-1, 4.95%, 09/01/05 35,000 35,929 Orange County, FL HFA, Housing RB, (Homeowner Rev), Series B, 2.80%, 09/01/05, GNMA/FNMA Collateralized 150,000 151,074 Orange County, FL HFA, Housing RB, (Homeowner Rev), Series B, 3.15%, 09/01/06, GNMA/FNMA Collateralized 155,000 156,411 Orlando, FL, Water & Sewer RB, (Wastewater System), Series A, 3.25%, 10/01/08, AMBAC Insured 170,000 176,282 Orlando & Orange County, FL Expressway Auth, Transportation RB, Senior Lien, 5.375%, 07/01/08, AMBAC Insured 25,000 25,681 Osceola County, FL HFA, Multifamily Housing RB, (Tierra Vista Apartments Project), Series A, 4.85%, 06/01/03, FSA Insured 55,000 55,102 Osceola County, FL, Sales Tax RB, 3.95%, 04/01/04, FSA Insured 150,000 153,854 Osceola County, FL School Board, Certificates of Participation, Series A, (Four Corners Charter School), 5.00%, 08/01/05, MBIA Insured 215,000 231,749 Palm Beach County, FL, Public Improv RB, (Criminal Justice Facilities), 5.375%, 06/01/07, FGIC Insured 250,000 281,168 Palm Beach County, FL Health Facilities Auth, Hospital RB, (The Waterford Project), Series 1997, 5.00%, 10/01/03 150,000 149,933 Palm Beach County, FL, Hospital RB, (Lourdes -Noreen Mckeen Residence for Geriatric Care, Inc.), 3.50%, 12/01/07, Radian Asset Assurance Insured 250,000 261,635 Palm Beach, FL HFA, Housing RB, (Lake Crystal Apts Project), 4.20%, 12/01/04, FHLMC Collateralized $130,000 $133,852 Pinellas County, FL HFA, Single Family Mortgage RB, Series 1997C, 5.05%, 09/01/07, GNMA Collateralized 40,000 41,378 Pinellas County, FL HFA, Single Family Mortgage RB, (Multi-County Program), Series A, 3.70%, 09/01/06, GNMA/FNMA Collateralized 90,000 92,090 Pinellas County, FL HFA, Single Family Mortgage RB, (Multi-County Program), Series A, 2.05%, 09/01/06, GNMA/FNMA Collateralized 155,000 154,899 Plantation, FL Health Facilities Auth, Hospital RB, (Covenant Village of FL, Inc.), 4.35%, 12/01/03 100,000 100,914 Reedy Creek, FL Improvement District, Public Improv RB, Series A, 5.00%, 06/01/07, AMBAC Insured 135,000 149,865 St. Lucie County, FL, Sales Tax RB, 4.50%, 10/01/04, FGIC Insured 50,000 51,627 St. Lucie County, FL School Board, Certificates of Participation, 5.00%, 07/01/03, Escrowed to Maturity 25,000 25,153 St. Lucie County, FL School Board, Certificates of Participation, 5.00%, 07/01/03, FSA Insured 30,000 30,181 St. Petersburg, FL, Water & Sewer RB, (Utility Tax Revenue), 5.00%, 06/01/07, AMBAC Insured 250,000 277,528 Sarasota County, FL, Public Improv RB, (Infrastructure Sales Surtax Rev), 3.80%, 09/01/04, FSA Insured 125,000 129,199 Seminole County, FL School Board, Certificates of Participation, Series A, 6.125%, 07/01/04, Pre-refunded @ 102 285,000 306,954 South Broward Hospital District, FL, Hospital RB, 4.95%, 05/01/03, AMBAC Insured 50,000 50,000 South Broward Hospital District, FL, Hospital RB, 5.05%, 05/01/04, AMBAC Insured 100,000 102,000 South Lake County, FL Hospital District, Hospital RB, (South Lake Hospital, Inc.), 4.625%, 10/01/04 65,000 67,472 Sunrise, FL, Water & Sewer RB, Series A, 5.75%, 10/01/06, Pre-refunded @ 101 100,000 114,539 Sunrise Lakes, FL, GO Bonds, (Phase 4 Recreation Dist), 4.125%, 08/01/04, AMBAC Insured 100,000 103,572 Tallahassee, FL, Electric Util RB, Series A, 4.00%, 10/01/04, FSA Insured 100,000 103,833 Tampa, FL Health System, Hospital RB, (Catholic Health East), Series A-3, 4.25%, 11/15/08, MBIA Insured 150,000 162,560 Tampa, FL Sports Auth, Public Improvement RB, (Interlocal Agreement - Tampa Bay), 5.10%, 04/01/05, Escrowed to Maturity 50,000 53,515 Tampa, FL, Water & Sewer RB, 5.00%, 10/01/08, FGIC Insured 50,000 54,137 Turtle Run, FL Community Development District, Special Assessment RB, (Water Management Benefit), 5.00%, 05/01/05, MBIA Insured 210,000 224,906 Venice, FL, Hospital RB, (Bon Secours Health System Project), 5.10%, 08/15/05, MBIA Insured 100,000 107,983 Venice, FL, Hospital RB, (Bon Secours Health System Project), 5.30%, 08/15/07, MBIA Insured 215,000 239,598 Volusia County, FL Health Facilities Auth, Hospital RB, (John Knox Project), Series A, 5.50%, 06/01/05, Asset Guaranty Insured 300,000 322,793 West Orange, FL Healthcare District, Hospital RB, Series 1999A, 5.00%, 02/01/04 500,000 510,114 Municipal Bonds Non-Florida (3%) (a) Puerto Rico Commonwealth Medical Services Administration, Certificates of Participation, Series 2002, 2.75%, 12/01/03 $235,000 $235,126 Virgin Islands Port Auth, Transportation RB, (Rohlsen Terminal), Series 1998A, 4.35%, 09/01/03 455,000 458,457 Total Municipal Bonds (Cost $21,891,574) $22,470,797 Total Investments (100%) (Cost $23,291,574) (a) $23,870,797 (a) Percentages indicated are based on investments. Summary of Ratings (Unaudited): AAA/Equivalent 78%, AA/Equivalent 12% A/Equivalent 4%, BBB/Equivalent 3%, Other 3% Average Portfolio Maturity: 2.16 Years ACA ACA Financial Guaranty AMBAC Ambac Assurance Corporation CP Commercial Paper FDFC Florida Development Financial Corporation FGIC Financial Guaranty Insurance Corporation FHLMC Florida Home Loan Mortgage Corporation FNMA Federal National Mortgage Association FSA Financial Securities Assurance GO General Obligation GNMA Government National Mortgage Association HFA Housing Finance Authority IDA Industrial Development Authority IRB Industrial Revenue Bond LOC Letter of Credit MBIA Municipal Bond Insurance Association RB Revenue Bond Statements of Assets and Liabilities Money Fund ShortTerm Fund ASSETS Investments in securities, at value (cost $160,474,012 and $23,291,574 respectively) $160,474,012 $23,870,797 Cash 93,777 6,848 Receivables: Interest 597,871 288,994 Fund shares sold 108,269 -- Total assets 161,273,929 24,166,639 LIABILITIES Payable for investment securities purchased 308,066 109,291 Dividend payable 106,446 82,522 Funds advanced by manager 68,781 10,038 Total liabilities 483,293 201,851 NET ASSETS Paid in capital 160,791,670 23,318,329 Net unrealized appreciation of investments -- 579,223 Accumulated net investment income 2,519 10,611 Accumulated net realized gain/(loss) (3,553) 56,625 Net assets $160,790,636 $23,964,788 Number of shares outstanding 160,942,869 2,346,274 Net asset value, offering price and redemption price per share $ 1.00 10.21 Statements of Operations Money Fund ShortTerm Fund INVESTMENT INCOME Income: Interest $2,424,057 $802,951 Expenses: Distribution and service fees (Note 2) 89,721 15,645 Investment advisory fee (Note 2)847,544 140,819 Custodian fees (Note 3) 28,253 11,758 Transfer agency fees and expenses (Note 2) 104,353 19,006 Printing costs 7,263 521 Professional fees 22,426 19,738 Insurance 3,629 495 Registration and filing fees 26,581 15,997 Trustees' fees and expenses 14,945 3,955 Securities valuation fees 17,260 30,305 Total expenses 1,161,975 258,239 Expense reimbursements and fee reductions (Note 2) (368,675) (148,206) Custodian fees paid indirectly (Note 3) (713) (430) Net expenses 792,587 109,603 Net investment income $ 1,631,470 $ 693,348 REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS Net realized gain/(loss) on investments $ (3,553) $ 144,664 Unrealized appreciation on investments -- 195,518 Net realized and unrealized gain/(loss) on investments (3,553) 340,182 Increase in net assets from operations $ 1,627,917 $ 1,033,530 Money Fund Short Term Fund Year Ended Year Ended Year Ended Year Ended 4/30/03 4/30/02 4/30/03 4/30/02 INCREASE (DECREASE) IN NET ASSETS Operations: Net investment income ... $1,631,470 $ 3,084,050 $ 693,348 $ 949,008 Net realized gain/(loss) on investments (3,553) 49,175 144,664 173,217 Unrealized appreciation Of investments -- -- 195,518 104,757 Increase in net assets from operations 1,627,917 3,133,225 1,033,530 1,226,982 Distributions to shareholders from: Net investment income... (1,631,470) (3,084,050) (693,348) (949,008) Net realized gains ... (41,247) -- (151,534) (105,789) Fund share Transactions (Note 4) (6,012,535) 14,457,025 1,410,951 (6,291,399) Net increase (decrease) in net assets (6,057,335) 14,506,200 1,599,599 (6,119,214) Net Assets: Beginning of year 166,847,971 152,341,771 22,365,189 28,484,403 End of year $160,790,636 $166,847,971 $23,964,788 $22,365,189 Notes to Financial Statements 1. Summary of Accounting Policies The Florida TaxFree Money Market Fund (the "Money Fund") and The Florida TaxFree ShortTerm Fund (the "ShortTerm Fund") are series of The Hough Group of Funds (the "Trust"), which was organized as a Massachusetts Business Trust on July 22, 1993. The Trust is registered as an open-end non-diversified management investment company and commenced operations on November 22, 1993. Both Funds seek a high level of current interest income, exempt from federal income tax, as is consistent with the preservation of capital and liquidity, and both are intended to be exempt from Florida intangible property tax. Each Fund is considered to be a separate entity for financial reporting and tax purposes. Their financial statements are prepared in accordance with accounting principles generally accepted in the United States of America for investment companies as follows: Valuation of Securities For the Money Fund, investments are stated at amortized cost. Under this valuation method, a portfolio instrument is valued at cost and any discount or premium is amortized to the maturity of the instrument. For the ShortTerm Fund, municipal obligations are stated on the basis of valuations provided by an independent pricing service approved by the Board of Trustees, which considers information with respect to transactions in bonds, quotations from bond dealers, market transactions in comparable securities and various relationships between securities in determining value. Variable Rate Demand Notes The Funds have invested in certain variable interest demand notes, which are redeemable at specified intervals upon demand. The securities are secured as to principal and interest by bank letters of credit or corporate or insurance company guarantees. The maturity of these instruments for the purpose of calculating the portfolio's weighted average maturity is considered to be the greater of the period until the interest rate is adjusted or until the principal can be recovered by demand. Securities Traded on a When-Issued Basis or Delayed Delivery Bonds The Funds may trade on a when-issued or delayed delivery basis, with payment and delivery scheduled for a future date. These transactions are subject to market fluctuations and are subject to the risk that the value at delivery may be more or less than the trade date purchase price. Although the Funds will generally purchase these securities with the intention of acquiring such securities, they may sell such securities before the settlement date. Federal Income Taxes It is the policy of each Fund to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its income to its shareholders. Therefore, no provision for federal income tax is required. Dividends and Distributions Dividends from investment income (excluding realized gains and losses if any) are declared daily and paid monthly. Distributions of net realized gains, if any, on the sales of investments are recorded on the ex-dividend date, and are made after the close of the Fund's fiscal year and in November, December and/or January, as declared by the Board of Trustees. Dividends paid from net investment income for the year ended April 30, 2003 are exempt from federal income taxes. However, certain shareholders may be subject to the Alternative Minimum Tax (AMT). General Securities transactions are accounted for on the trade date (the date an order to buy or sell is executed). Interest income, including amortization of premium and accretion of discount, is recorded on the accrual basis. Realized gains or losses from securities transactions are recorded on the identified cost basis. In the normal course of business each Fund enters into contracts that contain a variety of representations and warranties and which provide general indemnifications. The Funds' maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Funds and/or its affiliates that have not yet occurred. However, based on experience, the Funds expect the risk of loss to be remote. Expenses Expenses arising in connection with each Fund are allocated directly to the respective Fund, if specifically identifiable. Other expenses are allocated between the Funds in proportion to the relative net assets of each Fund. Accounting Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. 2. Investment Management Fees and Other Transactions with Affiliate Under its investment advisory agreements, William R. Hough & Co. (WRH) provides the Funds with investment research, advice, and supervision, and manages the business affairs of each Fund. For these services, the Money Fund and ShortTerm Fund have agreed to pay WRH a monthly fee at an annual rate of .50% and .60%, respectively, of their average net assets. For the year ended April 30, 2003, management fees totaled $847,544 and $140,819 for the Money Fund and ShortTerm Fund, respectively. The Funds also compensate WRH for services provided under a Transfer Agency and Fund Accounting Agreement at the rate of $18 per account per year. During the year ended April 30, 2003, fees under this agreement amounted to $64,403 and $4,870 for the Money Fund and the ShortTerm Fund, respectively. However, these and all other expenses of the Funds were paid by WRH to the extent that they exceeded .40% (.50% effective September 1, 2002) of each Fund's average daily net assets. Expenses in excess of .50% of each Fund's average daily net assets, exclusive of interest, taxes, expenses of withholding taxes, brokerage commissions, extraordinary expenses and distribution fees payable by a fund under its distribution and service plan, will continue to be paid by WRH until notice is otherwise provided to shareholders. To the extent that actual expenses in future years are less than the maximum .50% expense limitation, the Funds may be required to reimburse WRH for expenses paid in excess of the limitation during the prior three years, subject to the .50% expense limitation. At April 30, 2003, $1,336,149 and $468,710 in reimbursed expenses were subject to recapture by WRH through April 30, 2006, for the Money Fund and ShortTerm Fund, respectively. Amounts subject to recapture expire as follows: 4/30/2004 4/30/2005 4/30/2006 Money Fund $464,465 $503,009 $368,675 ShortTerm Fund $150,561 $169,943 $148,206 The Funds have adopted Distribution and Service Plans (the "Plans") under Securities and Exchange Commission Rule 12b-1, which authorize each Fund to pay WRH up to .25% of its annual average net assets for shareholder support services or sales activities. The amounts reported as distribution and service fees in the Statements of Operations represent Fund distribution costs, such as advertising, printing, and dealer commissions, all of which were paid by WRH, and are included in expense reimbursements and fee reductions. During the year ended April 30, 2003, the Money Fund and the ShortTerm Fund paid $598 and $147, respectively, to WRH for brokerage fees on executions of portfolio investment transactions. Fees are paid to Trustees of the Trust at the rate of $1,000 per year plus $500 per quarterly meeting and $400 per audit meeting per trustee. 3. Custodian Fees Paid Indirectly For the year ended April 30, 2003, custodian fees were reduced by earnings credits of $713 and $430 on average daily cash balances for the Money Market Fund and the ShortTerm Fund, respectively. 4. Fund Shares The Funds have authorized an unlimited number of shares at no par value. Transactions in Fund shares for the year's ended April 30, 2003 and 2002 are as follows: Money Fund* ShortTerm Fund Shares Amount Year Year Year Year Year Year Ended Ended Ended Ended Ended Ended 4/30/03 4/30/02 4/30/03 4/30/02 4/30/03 4/30/02 Sold 432,376,137 428,171,372 2,149,066 1,698,475 21,951,567 17,238,730 Issued on reinvested dividends 1,599,401 3,069,993 73,320 97,914 750,482 993,670 Redeemed(439,988,073)416,784,340)(2,082,121)(2,414,685)(21,291,098)(24,523,799) Net Increase (decrease)(6,012,535) 14,457,025 140,265 (618,296) 1,410,951 (6,291,399) * All at $1.00 per share 5. Investment Transactions Purchases and sales/maturities of investment securities (excluding short-term securities) for the ShortTerm Fund for the year ended April 30, 2003 were $9,414,652 and $8,618,652, respectively. 6. Federal Income Taxes and Distributions to Shareholders At April 30, 2003, the cost of securities for federal income tax purposes was approximately the same as that for financial reporting purposes. Market value includes net unrealized appreciation over tax cost of $579,223 for the Short Term Fund, which consists of aggregate gross unrealized appreciation and (depreciation) of $583,863 and ($4,640), respectively. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. Accordingly, the character of distributions and composition of net assets for tax purposes may differ from that reflected in the accompanying financial statements. The differences between book-basis and tax-basis distributions and undistributed gains are attributed primarily to market discount accretion. As of April 30, 2003, the fund had net tax basis capital loss carryforwards in the aggregate of $3,553. These capital loss carryforwards may be applied to any net taxable capital gain until their expiration date of April 30, 2011. For income tax purposes, distributions paid during the fiscal years ended April 30, 2003 and 2002 were as follows: Distributions paid from: 2003 2002 Money Fund ShortTerm Fund Money Fund ShortTerm Fund Ordinary Income $43,766 $43,138 --- $6,753 Tax Exempt Income $1,628,951 $693,348 $3,084,050 $949,008 Long-Term Capital Gains -- $108,396 --- $99,036 As of April 30, 2003, the components of distributable earnings on a tax basis were as follows: Money Fund ShortTerm Fund Undistributed Ordinary Income -- $14,106 Undistributed Tax-Exempt Income $108,965 $76,454 Undistributed Long Term Capital Gains -- $56,625 Capital Loss Carryforwards ($3,553) -- Net Unrealized Appreciation -- $579,223 7. Financial Highlights Money Fund* Per share operating Year Year Year Year Year performance(For a share Ended Ended Ended Ended Ended outstanding throughout 4/30/03 4/30/02 4/30/01 4/30/00 4/30/99 the year) Net asset value, beginning of year.... $1.00 $1.00 $1.00 $1.00 $1.00 Income from investment operations: Net investment income.. 0.010 0.019 0.036 0.032 0.030 Less distributions from: Net investment income.. (0.010) (0.019) (0.036)(0.031) (0.030) Return of capital.. -- -- -- (0.001) -- Total distributions (0.010) (0.019) (0.030) (0.032) (0.030) Net asset value, end of year.... $1.00 $1.00 $1.00 $1.00 $1.00 Total return .... .99% 1.89% 3.70% 3.26% 3.02% Ratios/supplemental data Net assets at end of year (000's)... $160,791 $166,848 $152,342 $137,051 $160,410 Ratios to average daily net assets Expenses.... .47% .40% .40% .40% .39% Expenses (before reimbursement) .. .69% .70% .74% .70% .73% Net investment income............ .96% 1.84% 3.63% 3.11% 2.96% * Per share amounts have been calculated using the monthly average share method. 7. Financial Highlights (continued) ShortTerm Fund* Per share operating performance (for a share outstanding throughout the year) Year Year Year Year Year Ended Ended Ended Ended Ended 4/30/03 4/30/02 4/30/01 4/30/00 4/30/99 Net asset value, beginning of year $10.14 $10.09 $9.84 $10.11 $10.05 Income from investment operations: Net Investment income 0.30 0.38 0.41 0.41 0.40 Net realized and unrealized gain (loss) on investments 0.13 0.10 0.25 (0.27) 0.06 Total from investment Operations 0.43 0.48 0.66 0.14 0.46 Less distributions from: Net investment income (0.30) (0.38) (0.41) (0.40) (0.40) Net realized gains (0.06) (0.05) -- -- -- Return of capital -- -- -- (0.01) -- Total distributions (0.36) (0.43) (0.41) (0.41) (0.40) Net asset value, end of year $10.21 $10.14 $10.09 $9.84 $10.11 Total return 4.38% 4.77% 6.79% 1.39% 4.71% Ratios/supplemental data Net assets at end of year (000's) $23,965 $22,365 $28,484 $32,779 $29,356 Ratios to average daily net assets Expenses .47% .40% .40% .40% .39% Expenses before reimbursement 1.10% 1.07% .92% .91% .93% Net investment income 2.95% 3.73% 4.07% 3.97% 4.00% Portfolio turnover Rate 41.6% 62.1% 26.0% 32.2% 25.6% * Per share amounts have been calculated using the monthly average share method. The Board of Trustees and Shareholders of The Florida TaxFree Funds In our opinion, the accompanying statements of assets and liabilities, including the statements of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of The Florida TaxFree Money Market Fund and The Florida TaxFree ShortTerm Fund (constituting The Hough Group of Funds, hereafter referred to as the "Fund") at April 30, 2003, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years then ended and the financial highlights for each of the four years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at April 30, 2003 by correspondence with the custodian and broker, provide a reasonable basis for our opinion. The financial highlights for the year ended April 30, 1999 were audited by other independent accountants whose report dated May 27, 1999 expressed an unqualified opinion on those financial statements. PricewaterhouseCoopers LLP New York, New York June 4, 2003 Interested Trustee W. Robb Hough, Jr., age 50 Current Positions Held with the Funds: President and Chairman Term of Office and Length of Time Served: Indefinitely until successor is elected. Chairman since November 1993; President since May 1996. Principal Occupations During the Past Five Years: President, William R. Hough & Co. Number of Portfolios Overseen Within the Fund Complex: 2 Other Directorships Held Outside the Fund Complex: Director and President, William R. Hough & Co. Independent Trustees Daniel Calabria, age 67 Current Positions Held with the Funds: Trustee Term of Office and Length of Time Served: Indefinitely until successor is elected. Trustee since November 1993. Principal Occupations During the Past Five Years: Retired; Trustee for various mutual funds Number of Portfolios Overseen Within the Fund Complex: 2 Other Directorships Held Outside the Fund Complex: Trustee, IDEX Mutual Funds; Trustee, Aegon/Transamerica Series Funds. William C. James, age 76 Current Positions Held with the Funds: Trustee Term of Office and Length of Time Served: Indefinitely until successor is elected. Trustee since November 1993. Principal Occupations During the Past Five Years: Retired, Private Investor Number of Portfolios Overseen Within the Fund Complex: 2 Other Directorships Held Outside the Fund Complex: None James T. Lang, age 81 Current Positions Held with the Funds: Trustee Term of Office and Length of Time Served: Indefinitely until successor is elected. Trustee since November 1993. Principal Occupations During the Past Five Years: Financial Manager of U.S. Department of Commerce Grants to World Trade Association of Florida, Financial Consultant, Trustee of various individual trusts. Number of Portfolios Overseen Within the Fund Complex: 2 Other Directorships Held Outside the Fund Complex: Vice Chairman of the Pinellas County Educational Facilities Authority Peter B. Wells, age 48 Current Positions Held with the Funds: Trustee Term of Office and Length of Time Served: Indefinitely until successor is elected. Trustee since May 2000. Principal Occupations During the Past Five Years: Certified Public Accountant, Wells, Houser, Schatzel & Thomas, P.A., formerly named Peel, Schatzel & Wells, P.A. Number of Portfolios Overseen Within the Fund Complex: 2 Other Directorships Held Outside the Fund Complex: None N-CSR Item 9. Controls and Procedures (a)Based on an evaluation of the disclosure controls and procedures (as defined in rule 30a-2(c) under the Act), the Principal Executive Officer and Treasurer of the Trust have concluded that such disclosure controls and procedures are effectively designed to ensure that information required to be disclosed by the Trust is accumulated and communicated to the Trust's management to allow timely decisions regarding required disclosure. (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 evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.