1933 Act File No. 33-48907
1940 Act File No. 811-7047
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No.
Post-Effective Amendment No. 10 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 11 X
MARSHALL FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779
(Address of Principal Executive Offices)
(412) 288-1900
(Registrant's Telephone Number)
John W. McGonigle, Esquire,
Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
on _________________ pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)
X on September 1, 1994 pursuant to paragraph (a) of Rule
485.
Registrant has filed with the Securities and Exchange
Commission a declaration pursuant to Rule 24f-2 under the
Investment Company Act of 1940, and:
filed the Notice required by that Rule on
_________________; or
X intends to file the Notice required by that Rule on or
about
October 14, 1994; or
during the most recent fiscal year did not sell any
securities pursuant to Rule 24f-2 under the Investment
Company Act of 1940, and, pursuant to Rule 24f-2(b)(2), need
not file the Notice.
Copies to:
Thomas J. Donnelly, Esquire Charles H. Morin, Esquire
Houston, Houston & Donnelly Dickstein, Shapiro & Morin,
L.L.P
2510 Centre City Tower 2101 L Street, N.W.
650 Smithfield Street Washington, D.C. 20037
Pittsburgh, Pennsylvania 15222
CROSS-REFERENCE SHEET
This Amendment to the Registration Statement of Marshall
Funds, Inc., which consists of thirteen portfolios including:
(1) Marshall Balanced Fund; (2) Marshall Equity Income Fund;
(3) Marshall Government Income Fund; (4) Marshall Intermediate
Bond Fund; (5) Marshall Intermediate Tax-Free Fund; (6)
Marshall Mid-Cap Stock Fund; (7) Marshall Money Market Fund,
(a) Trust Shares and (b) Investment Shares; (8) Marshall Short-
Term Income Fund; (9) Marshall Short-Term Tax-Free Fund; (10)
Marshall Stock Fund; (11) Marshall Tax-Free Money Market Fund;
(12) Marshall Value Equity Fund; and (13) Marshall
International Stock Fund, relates only to the Marshall
International Stock Fund, and is comprised of the following:
PART A. INFORMATION REQUIRED IN A PROSPECTUS.
Prospectus Heading
(Rule 404(c) Cross Reference)
Item 1. Cover Page (1-13) Cover Page.
Item 2. Synopsis (1-13) Summary of Fund
Expenses; (13) Synopsis.
Item 3. Condensed Financial
Information (1-12) Financial Highlights; (1-
13) Performance Information.
Item 4. General Description of
Registrant (1-12) General Information;
(13) Synopsis; (1-13)
Investment Information; (1-12)
Investment Objectives; (1-13)
Investment Policies; (1-13)
Investment Limitations.
Item 5. Management of the Fund (1-13) Marshall Funds, Inc.
Information; (1-13) Management
of Marshall Funds, Inc.; (1-13)
Distribution of Fund Shares; (1-
13) Administrative
Arrangements; (1-13)
Administration of the Fund; (1-
13) Expenses of the Fund.
Item 6. Capital Stock and Other
Securities (1-13) Dividends; (1-13)
Capital Gains; (1-13)
Shareholder Information; (1-13)
Voting Rights and Capital
Stock; (1-13) Effect of Banking
Laws; (1-13) Tax Information;
(1-13) Federal Income Tax.
Item 7. Purchase of Securities Being
Offered (1-13) Net Asset Value; (1-13)
Investing in the Fund; (1-13)
Share Purchases; (1-13) Minimum
Investment Required; (1-13)
What Shares Cost; (1-13)
Certificates and Confirmations;
(1-13) Exchange Privilege.
Item 8. Redemption or Repurchase (1-13) Redeeming Shares; (1-13)
Redemption Before Purchase
Instruments Clear; (1-13)
Accounts with Low Balances.
Item 9. Pending Legal Proceedings None.
PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL
INFORMATION.
Item 10. Cover Page (1-13) Cover Page.
Item 11. Table of Contents (1-13) Table of Contents.
Item 12. General Information and
History (1-13) General Information
About the Fund.
Item 13. Investment Objectives and
Policies (1-13) Investment Objectives
and Policies.
Item 14. Management of the Fund (1-13) Marshall Funds, Inc.
Management.
Item 15. Control Persons and
Principal Holders of
Securities Not Applicable.
Item 16. Investment Advisory and
Other Services (1-13) Investment Advisory
Services; Administrative
Arrangements.
Item 17. Brokerage Allocation (1-13) Brokerage Transactions.
Item 18. Capital Stock and Other
Securities Not applicable.
Item 19. Purchase, Redemption and Pricing
of Securities Being Offered (1-13) Purchasing Shares;
(1-13) Determining Net Asset
Value; (1-13) Redeeming Shares.
Item 20. Tax Status (1-13) Tax Status.
Item 21. Underwriters Not applicable.
Item 22. Calculation of Performance
Data (1-13) Yield; (1-13)
Performance Comparisons; (1-6,
8-13) Total Return; (7)
Effective Yield; (5,9,11) Tax-
Equivalent Yield.
Item 23. Financial Statements (1,2,5,6,9,12) Filed in Part A
of the respective prospectuses;
(3,4,7,8,10) Incorporated by
reference; (11,13) To be filed
by amendment.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS
DATED JULY 1, 1994
MARSHALL INTERNATIONAL STOCK FUND
(A PORTFOLIO OF MARSHALL FUNDS, INC.)
PROSPECTUS
The shares offered in this prospectus represent interests in the
Marshall International Stock Fund (the "Fund"), a diversified
investment portfolio of the Marshall Funds, Inc. (the
"Corporation"), an open-end management investment company (a
mutual fund). The Fund's investment objective is long-term
capital growth which it seeks to achieve through a flexible policy
of investing primarily in equity securities of companies and
governments outside the United States, although the Fund may also
purchase debt obligations and invest in domestic issuers when
appropriate to achieve its investment objective. This prospectus
contains the information you should read and know before you
invest in the Fund. Keep this prospectus for future reference.
The Corporation consists of the following thirteen separate
investment portfolios, each having a distinct investment objective
and policies.
EQUITY FUNDS
- Marshall Balanced Fund
- Marshall Equity Income Fund
- Marshall International Stock Fund
- Marshall Mid-Cap Stock Fund
- Marshall Stock Fund
- Marshall Value Equity Fund
INCOME FUNDS
- Marshall Short-Term Income Fund
- Marshall Government Income Fund
- Marshall Intermediate Bond Fund
MONEY MARKET FUNDS
- Marshall Money Market Fund
- Investment Shares
- Trust Shares
- Marshall Tax-Free Money Market Fund
TAX-FREE FUNDS
- Marshall Short-Term Tax-Free Fund
- Marshall Intermediate Tax-Free Fund
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR ENDORSED OR GUARANTEED BY, MARSHALL &
ILSLEY CORP. OR ANY OF ITS BANKING SUBSIDIARIES ("M&I CORP."),
AND THE SHARES ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THESE SHARES INVOLVES
INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
The Fund has also filed a separate Statement of Additional
Information dated September __, 1994, with the Securities and
Exchange Commission. The information contained in the
Statement of Additional Information is incorporated by
reference into this prospectus. You may request a copy of the
Statement of Additional Information free of charge, obtain
other information, or make inquiries about the Fund by writing
to or calling Marshall Funds Investor Services at 414-287-8500
or 1-800-236-8560, M&I Brokerage Services, Inc. or any M&I
Bank.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Prospectus dated September __, 1994
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR
AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE
SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS
TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION
STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO
BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY
STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE
SECURITIES LAWS OF ANY SUCH STATE.
TABLE OF CONTENTS
SYNOPSIS
SUMMARY OF FUND EXPENSES
INVESTMENT INFORMATION
INVESTMENT OBJECTIVE
INVESTMENT POLICIES
Acceptable Investments
Temporary Investments
PORTFOLIO INVESTMENTS AND STRATEGIES
Equity and Fixed Income Securities
Depositary Receipts
Convertible Securities
Debt Obligations
Fixed Rate Obligations
Floating Rate Obligations
Forward Commitments
Options on Securities or Indices and Futures Contracts
Foreign Currency Transactions
Forward Foreign Currency Exchange Contracts and Options
on Foreign Currencies
U.S. Government Obligations
Money Market Instruments
Repurchase Agreements
Investing in Securities of Other Investment Companies
When-Issued and Delayed Delivery Transactions
Lending of Portfolio Securities
Borrowings
Investment Grade Ratings
Investment Risks
Exchange Rates
Foreign Companies
U.S. Government Policies
Futures and Options
INVESTMENT LIMITATIONS
MARSHALL FUNDS, INC. INFORMATION
Management of Marshall Funds, Inc.
Board of Directors
Investment Adviser and Subadviser
Advisory and Subadvisory Fees
Adviser's Background
Subadviser's Background
Distribution of Fund Shares
Distribution Plan
Administrative Arrangements
ADMINISTRATION OF THE FUND
Administrative Services
Custodian
Transfer Agent, Dividend Disbursing Agent, and Portfolio
Accounting Services
Shareholder Servicing Arrangements
Legal Counsel
Independent Public Accountants
Brokerage Transactions
Expenses of the Fund
NET ASSET VALUE
INVESTING IN THE FUND
Share Purchases
Through M&I Trust Companies
Through MFIS
Through M&I Brokerage Services, Inc.
Through Authorized Broker/Dealers
By Mail
By Wire
Minimum Investment Required
What Shares Cost
Systematic Investment Program
Certificates and Confirmations
Dividends and Capital Gains
EXCHANGE PRIVILEGE
Exchanging Shares
Exchange-by-Telephone
REDEEMING SHARES
By Mail
By Telephone
Signatures
Systematic Withdrawal Program
Redemption Before Purchase Instruments Clear
Accounts with Low Balances
SHAREHOLDER INFORMATION
Voting Rights and Common Stock
EFFECT OF BANKING LAWS
TAX INFORMATION
Federal Income Tax
PERFORMANCE INFORMATION
ADDRESSES Inside Back Cover
SYNOPSIS
The Corporation was incorporated under the laws of the State of
Wisconsin on July 31, 1992. The Articles of Incorporation permit
the Corporation to offer separate series of shares representing
interests in separate portfolios of securities. The shares in any
one portfolio may be offered in separate classes.
This prospectus relates only to the shares of the portfolio
known as Marshall International Stock Fund ("Fund") of the
Corporation. The Fund is designed as a convenient means of
accumulating an interest in a professionally managed,
diversified portfolio consisting primarily of foreign equity
securities.
Shares of the Fund are designed for investors who wish to
spread their investments beyond the United States and who are
prepared to accept the particular risks associated with these
investments. It is not intended to provide a complete
investment program for an investor. In addition to investing
in foreign securities, the Fund may make certain other
investments and employ certain other investment techniques
that involve risks, including entering into repurchase
agreements, lending portfolio securities, and entering into
futures contracts and related options as hedges. These risks
are described under "Investment Policies" and "Portfolio
Investments and Strategies."
A minimum initial investment of $1,000 is required for the
Fund. Subsequent investments must be in amounts of at least
$50. Shares of the Fund are sold and redeemed at net asset
value without a sales charge. Information on purchasing and
redeeming shares may be found under "Investing in the Fund"
and "Redeeming Shares." Additionally, information regarding
the exchange privilege offered with respect to the Corporation
may be found under "Exchange Privilege." M&I Investment
Management Corp. is the investment adviser to the Fund, and
Templeton Investment Counsel, Inc. is the Fund's subadviser.
See "Marshall Funds, Inc. Information."
MARSHALL INTERNATIONAL STOCK FUND
SUMMARY OF FUND EXPENSES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price).........
None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price).........
None
Contingent Deferred Sales Charge
(as a percentage of original purchase price or
redemption proceeds, as applicable).....
None
Redemption Fees (as a percentage of amount redeemed,
if applicable) ......................................
None
Exchange
Fee....................................................
None
ANNUAL FUND OPERATING EXPENSES*
(As a percentage of projected average net assets)
Management Fee (after waiver)(1)
........................................ 0.95%
12b-1
Fees(2)...................................................
........................ None
Total Other Expenses
..........................................................
.... 0.65%
Shareholder Servicing Fees
............................... 0.02%
Total Annual Fund Operating Expenses (3) ........
1.60%
(1) The estimated management fee has
been reduced to reflect the anticipated voluntary waiver by
the investment adviser. The adviser may terminate this
voluntary waiver at any time at its sole discretion. The
maximum management fee is 1.00%.
(2) The Fund has no present intention
of paying or accruing 12b-1 fees during the fiscal year
ending August 31, 1995. If the Fund were paying or
accruing 12b-1 fees, the Fund would be able to pay up to
0.25% of its average daily net assets for 12b-1 fees. See
"Marshall Funds, Inc. Information."
(3) Total Annual Fund Operating
Expenses are estimated to be 1.65% absent the anticipated
voluntary waiver described above in note 1.
* Annual Fund Operating Expenses are estimated based on
average expenses expected to be incurred during the fiscal
year ending August 31, 1995. During the course of this
period, expenses may be more or less than the average
amounts shown.
The purpose of this table is to assist an investor in
understanding the various costs and expenses that a
shareholder of the Fund will bear, either directly or
indirectly. For more complete descriptions of the various
costs and expenses, see "Marshall Funds, Inc. Information."
Wire-transferred redemptions may be subject to an additional
fee.
EXAMPLE 1 year 3
years
You would pay the following expenses on
a $1,000 investment assuming (1) a 5% annual
return and (2) redemption at the end of each time
period....................................................
........... $16 $51
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF
PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE SHOWN. THE EXAMPLE IS BASED ON ESTIMATED DATA
FOR THE FISCAL YEAR ENDING AUGUST 31, 1995.
INVESTMENT INFORMATION
INVESTMENT OBJECTIVE
The investment objective of the Fund is long-term capital
growth. While there is no assurance that the Fund will
achieve its investment objective, it endeavors to do so by
following the investment policies described in this
prospectus. The investment objective of the Fund cannot be
changed by the Board of Directors ("Directors") without
shareholder approval.
INVESTMENT POLICIES
The Fund pursues its investment objective through a flexible
policy of investing in stocks and debt obligations of
companies and governments outside the United States. Under
normal market conditions, at least 65% of the Fund's total
assets will be invested in securities of issuers domiciled in
at least three different nations outside the United States,
and at least 65% of the Fund's total assets will be invested
in equity securities. "Equity securities," as used herein,
refers to common stock, preferred stock, securities
convertible into common or preferred stock, and warrants or
rights to subscribe to or purchase such securities. The Fund
may also invest up to 35% of its total assets in debt
securities when, in the judgment of the Fund's subadviser, the
capital appreciation available through such investment
outweighs the potential for capital growth through investment
in equity securities. Any income realized by the Fund will be
incidental to its investment objective of long-term capital
growth. In selecting securities, the Fund's subadviser
attempts to identify those companies in various countries and
industries where economic and political factors, including
currency movements, are likely to produce above-average
opportunities for capital appreciation.
Unless indicated otherwise, the investment policies of the
Fund may be changed by the Directors without approval of
shareholders. Shareholders will be notified before any
material change in these policies becomes effective.
ACCEPTABLE INVESTMENTS. The Fund invests in securities of
issuers in any foreign country, developed or undeveloped, as
well as the United States. These securities may be
denominated in currencies other than U.S. dollars. Acceptable
investments include the following:
- - common stocks;
- - preferred stocks;
- - convertible securities;
- - sponsored or unsponsored American Depositary Receipts
("ADRs"), Global Depositary Receipts ("GDRs"), and European
Depositary Receipts ("EDRs");
- - debt obligations (including bonds, notes, debentures and
commercial paper) of corporations and governments rated, at
the time or purchase, in the investment grade category by a
nationally recognized statistical rating organization
("NRSRO") (i.e., Baa or better by Moody's Investors Services,
Inc. ("Moody's") or BBB or better by Standard & Poor's
Corporation ("S&P") or Fitch Investors Service, Inc.
("Fitch")) or, if unrated, determined by the Fund's
subadviser to be of comparable quality. See "Investment
Grade Ratings" below;
- - put and call options on securities and indices and
futures contracts;
- - instruments of domestic and foreign banks and savings and
loans if they have capital, surplus, and undivided profits of
over $100,000,000, or if the principal amount of the
instrument is insured in full by the Bank Insurance Fund
("BIF"), which is administered by the Federal Deposit
Insurance Corporation ("FDIC"), or the Savings Association
Insurance Fund ("SAIF"), which is administered by the FDIC.
Bank instruments may include interest-bearing call deposits,
time deposits, bankers' acceptances, Eurodollar Certificates
of Deposit ("ECDs"), Yankee Certificates of Deposit ("Yankee
CDs") and Eurodollar Time Deposits ("ETDs"); and
- - U.S. and foreign short-term money market instruments,
including repurchase agreements.
In addition, the Fund may purchase certain other investments
and engage in certain other investment strategies (such as
entering into forward commitments and foreign currency
transactions), as described below under "Portfolio Investments
and Strategies." The risks associated with the Fund's
investments and strategies are described below under
"Portfolio Investments and Strategies" and "Investment Risks."
TEMPORARY INVESTMENTS. For temporary defensive purposes (up
to 100% of its total assets) and to maintain liquidity (up to
35% of its total assets), the Fund may invest in cash and cash
items, denominated in U.S. dollars or the currency of any
foreign country, issued by entities organized in the United
States or any foreign country. Temporary investments may
include the following:
- - short-term (less than one year to maturity) and medium-
term (not greater than five years to maturity) obligations
issued or guaranteed by the U.S. government or the
governments of foreign countries, their agencies or
instrumentalities;
- - finance company and corporate commercial paper and other
short-term corporate obligations rated in the top two
categories by an NRSRO (i.e., A-1 or A-2 by S & P, Prime-1 or
Prime-2 by Moody's or F-1 or F-2 by Fitch) or, if unrated, of
comparable quality as determined by the Fund's subadviser;
- - obligations (including certificates of deposit, time
deposits and bankers' acceptances) of U.S. and foreign banks
having total assets in excess of $100,000,000; and
- - repurchase agreements.
PORTFOLIO INVESTMENTS AND STRATEGIES
EQUITY AND FIXED INCOME SECURITIES. The Fund will invest
its assets primarily in equity securities of companies
that appear to have growth potential. However, the Fund
may shift its emphasis to fixed income securities,
warrants, or other obligations of companies or
governments, if they appear to offer potential for higher
return and capital appreciation. Certain debt securities
can provide the potential for capital appreciation based
on various factors such as changes in interest rates,
economic and market conditions, improvement in an issuer's
ability to repay principal and pay interest, and ratings
upgrades. The Fund may invest in debt or preferred
securities which have equity features, such as conversion
of exchange rights, or which carry warrants to purchase
common stock or other equity interests. Such equity
features enable the holder of the bond or preferred
security to benefit from increases in the market price of
the underlying equity.
DEPOSITARY RECEIPTS. The Fund may invest in foreign issuers
by purchasing sponsored or unsponsored ADRs, GDRs and EDRs
(collectively, "Depositary Receipts"). ADRs are Depositary
Receipts typically issued by a U.S. bank or trust company
which evidence ownership of underlying securities issued by a
foreign corporation. EDRs and GDRs are typically issued by
foreign banks or trust companies, although they also may be
issued by U.S. banks or trust companies, and evidence
ownership of underlying securities issued by either a foreign
or a United States corporation. Generally, Depositary
Receipts in registered form are designed for use in the U.S.
securities market and Depositary Receipts in bearer form are
designed for use in securities markets outside the United
States. Depositary Receipts may not necessarily be
denominated in the same currency as the underlying securities
into which they may be converted. Ownership of unsponsored
Depositary Receipts may not entitle the Fund to financial or
other reports from the issuer of the underlying security, to
which it would be entitled as the owner of sponsored
Depositary Receipts. Depositary Receipts also involve the
risks of other investments in foreign securities, as discussed
below.
CONVERTIBLE SECURITIES. The Fund may invest in convertible
securities that are rated, at the time of purchase, investment
grade by an NRSRO or, if unrated, of comparable quality as
determined by the Fund's subadviser. Convertible securities
are fixed income securities which may be exchanged or
converted into a predetermined number of the issuer's
underlying common stock at the option of the holder during a
specified time period. Convertible securities may take the
form of convertible bonds, convertible preferred stock or
debentures, units consisting of "usable" bonds and warrants or
a combination of the features of several of these securities.
The investment characteristics of each convertible security
vary widely, which allows convertible securities to be
employed for different investment objectives.
Convertible bonds and convertible preferred stocks are fixed
income securities that generally retain the investment
characteristics of fixed income securities until they have
been converted but also react to movements in the underlying
equity securities. The holder is entitled to receive the
fixed income of a bond or the dividend preference of a
preferred stock until the holder elects to exercise the
conversion privilege. Usable bonds are corporate bonds that
can be used in whole or in part, customarily at full face
value, in lieu of cash to purchase the issuer's common stock.
When owned as part of a unit along with warrants, which
entitle the holder to buy the common stock, they function as
convertible bonds, except that the warrants generally will
expire before the bonds' maturity. Convertible securities are
senior to equity securities and, therefore, have a claim to
assets of the corporation prior to the holders of common stock
in the case of liquidation. However, convertible securities
are generally subordinated to similar nonconvertible
securities of the same company. The interest income and
dividends from convertible bonds and preferred stocks provide
a stable stream of income with generally higher yields than
common stocks, but lower than nonconvertible securities of
similar quality. A Fund will exchange or convert the
convertible securities held in its portfolio into shares of
the underlying common stocks when, in the subadviser's
opinion, the investment characteristics of the underlying
common shares will assist the Fund in achieving its investment
objective. Otherwise, the Fund will hold or trade the
convertible securities. In selecting convertible securities
for the Fund, the Fund's subadviser evaluates the investment
characteristics of the convertible security as a fixed income
instrument, and the investment potential of the underlying
equity security for capital appreciation. In evaluating these
matters with respect to a particular convertible security, the
Fund's subadviser considers numerous factors, including the
economic and political outlook, the value of the security
relative to other investment alternatives, trends in the
determinants of the issuer's profits, and the issuer's
management capability and practices.
DEBT OBLIGATIONS. The Fund may invest in debt obligations,
including corporate bonds, notes, and debentures, which may
have fixed or floating rates of interest and which are rated,
at the time or purchase, investment grade by an NRSRO or, if
unrated, of comparable quality as determined by the Fund's
subadviser.
FIXED RATE OBLIGATIONS. The Fund may invest in fixed
rate securities, including fixed rate securities with
short-term characteristics. Fixed rate securities with
short-term characteristics are long-term debt obligations
but are treated in the market as having short maturities
because call features of the securities may make them
callable within a short period of time. A fixed rate
security with short-term characteristics would include a
fixed income security priced close to call or redemption
price or fixed income security approaching maturity,
where the expectation of call or redemption is high.
Fixed rate securities exhibit more price volatility
during times of rising or falling interest rates than
securities with floating rates of interest. This is
because floating rate securities, as described below,
behave like short-term instruments in that the rate of
interest they pay is subject to periodic adjustments
based on a designated interest rate index. Fixed rate
securities pay a fixed rate of interest and are more
sensitive to fluctuating interest rates. In periods of
rising interest rates the value of a fixed rate security
is likely to fall. Fixed rate securities with short-term
characteristics are not subject to the same price
volatility as fixed rate securities without such
characteristics. Therefore, they behave more like
floating rate securities with respect to price
volatility.
FLOATING RATE OBLIGATIONS. The Fund may invest in
floating rate debt obligations, including increasing rate
securities. Floating rate securities are generally
offered at an initial interest rate which is at or above
prevailing market rates. The interest rate paid on these
securities is then reset periodically (commonly every 90
days to an increment over some predetermined interest
rate index). Commonly utilized indices include the three-
month Treasury bill rate, the 180-day Treasury bill rate,
the one-month or three-month London Interbank Offered
Rate (LIBOR), the prime rate of a bank, the commercial
paper rates, or the longer-term rates on U.S. Treasury
securities.
FORWARD COMMITMENTS. Forward commitments are contracts to
purchase securities for a fixed price at a date beyond
customary settlement time. The Fund may enter into these
contracts if liquid securities in amounts sufficient to meet
the purchase price are segregated on the Fund's records at the
trade date and maintained until the transaction has been
settled. Risk is involved if the value of the security
declines before settlement. Although the Fund enters into
forward commitments with the intention of acquiring the
security, it may dispose of the commitment prior to settlement
and realize a short-term profit or loss.
OPTIONS ON SECURITIES OR INDICES AND FUTURES CONTRACTS.
In order to hedge against market shifts, the Fund may
purchase put and call options on securities or securities
indices. In addition, the Fund may seek to generate
income to offset operating expenses and/or may hedge a
portion of its portfolio investments through writing
(i.e., selling) covered put and call options. An option
on a security is a contract that permits the purchaser of
the option, in return for the premium paid, the right to
buy a specified security (in the case of a call option) or
to sell a specified security (in the case of a put option)
from or to the writer of the option at a designated price
during the term of the option. An option on a securities
index permits the purchaser of the option, in return for
the premium paid, the right to receive from the seller
cash equal to the difference between the closing price of
the index and the exercise price of the option. The Fund
may write a call or put option only if the option is
"covered." This means that so long as the Fund is
obligated as the writer of a call option, it will own the
underlying securities subject to the call, or hold a call
at the same exercise price, for the same exercise period,
and on the same securities as the written call. A put is
covered if the Fund maintains liquid assets with a value
equal to the exercise price in a segregated account, or
holds a put on the underlying securities at an equal or
greater exercise price. The value of the underlying
securities on which options may be written at any one time
will not exceed 25% of the total assets of the Fund. The
Fund will not purchase put or call options if the
aggregate premium paid for such options would exceed 5% of
its total assets at the time of the purchase.
Options purchased or written by the Fund will be traded on United
States and foreign exchanges or in the over-the-counter markets.
Over-the-counter options are two-party contracts with price and
terms negotiated between buyer and seller. In contrast, exchange-
traded options are third-party contracts with standardized strike
prices and expirations dates and are purchased from a clearing
corporation. Exchange-traded options generally have a continuous
liquid market while over-the-counter options may not. The Fund
purchases and writes options only with investment dealers and other
financial institutions (such as commercial banks or savings and
loan associations) deemed creditworthy by the Fund's subadviser.
For hedging purposes only, the Fund may buy and sell
covered financial futures contracts, stock index futures
contracts, foreign currency futures contracts and options
on any of the foregoing. A financial futures contract is
an agreement between two parties to buy or sell a
specified debt security at a set price on a future date.
An index futures contract is an agreement to take or make
delivery of an amount of cash based on the difference
between the value of the index at the beginning and at the
end of the contract period. A futures contract on a
foreign currency is an agreement to buy or sell a
specified amount of a currency for a set price on a future
date. When the Fund enters into a futures contract, it
must make an initial deposit, known as "initial margin,"
as a partial guarantee of its performance under the
contract. As the value of the security, index, or
currency fluctuates, either party to the contract is
required to make additional margin payments, known as
"variation margin," to cover any additional obligation it
may have under the contract. In addition, when the Fund
enters into a futures contract, it will segregate assets
to "cover" its position in accordance with the Investment
Company Act of 1940 ("Act"). See "Investment Objectives
and Policies - Futures and Options Transactions" in the
Statement of Additional Information.
FOREIGN CURRENCY TRANSACTIONS. The Fund will enter into
foreign currency transactions to obtain the necessary
currencies to settle securities transactions. Currency
transactions may be conducted either on a spot or cash
basis at prevailing rates or through forward foreign
currency exchange contracts.
The Fund may also enter into foreign currency transactions
to protect Fund assets against adverse changes in foreign
currency exchange rates or exchange control regulations.
Such changes could unfavorably affect the value of Fund
assets which are denominated in foreign currencies, such
as foreign securities or funds deposited in foreign banks,
as measured in U.S. dollars. Although foreign currency
exchanges may be used by the Fund to protect against a
decline in the value of one or more currencies, such
efforts may also limit any potential gain that might
result from a relative increase in the value of such
currencies and might, in certain cases, result in losses
to the Fund. Further, the Fund may be affected either
unfavorably or favorably by fluctuations in the relative
rates of exchange between the currencies of different
nations. Cross-hedging transactions by the Fund involve
the risk of imperfect correlation between changes in the
values of the currencies to which such transactions relate
and changes in the value of the currency or other asset or
liability that is the subject of the hedge.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS AND
OPTIONS ON FOREIGN CURRENCIES. A forward foreign
currency exchange contract ("forward contract") is an
obligation to purchase or sell an amount of a
particular currency at a specific price and on a
future date agreed upon by the parties.
Generally, no commission charges or deposits are
involved. At the time the Fund enters into a forward
contract, Fund assets with a value equal to the
Fund's obligation under the forward contract are
segregated on the Fund's records and are maintained
until the contract has been settled. The Fund
generally will not enter into a forward contract with
a term of more than one year. The Fund will
generally enter into a forward contract to provide
the proper currency to settle a securities
transaction at the time the transaction occurs
("trade date"). The period between trade date and
settlement date will vary between twenty-four hours
and thirty days, depending upon local custom.
The Fund may also protect against the decline of a
particular foreign currency by entering into a
forward contract to sell an amount of that currency
approximating the value of all or a portion of the
Fund's assets denominated in that currency
("hedging"). The success of this type of short-term
hedging strategy is highly uncertain due to the
difficulties of predicting short-term currency market
movements and of precisely matching forward contract
amounts and the constantly changing value of the
securities involved. Although the subadviser will
consider the likelihood of changes in currency values
when making investment decisions, the subadviser
believes that it is important to be able to enter
into forward contracts when it believes the interests
of the Fund will be served. The Fund will not enter
into forward contracts for hedging purposes in a
particular currency in an amount in excess of the
Fund's assets denominated in that currency. No more
than 30% of the Fund's assets will be committed to
forward contracts for hedging purposes at any time.
(This restriction does not include forward contracts
entered into to settle securities transactions.)
The Fund may purchase and write put and call options on
foreign currencies for the purpose of protecting against
declines in the U.S. dollar value of foreign currency-
denominated portfolio securities and against increases in
the U.S. dollar cost of such securities to be acquired.
As in the case of other kinds of options, however, the
writing of an option on a foreign currency constitutes
only a partial hedge, up to the amount of the premium
received, and the Fund could be required to purchase or
sell foreign currencies at disadvantageous exchange
rates, thereby incurring losses. The purchase of an
option on a foreign currency may constitute an effective
hedge against fluctuations in exchange rates although, in
the event of rate movements adverse to the Fund's
position, it may forfeit the entire amount of the premium
plus related transaction costs. Options on foreign
currencies to be written or purchased by the Fund are
traded on U.S. and foreign exchanges or over-the-counter.
U.S. GOVERNMENT OBLIGATIONS. The Fund may invest in U.S.
government obligations, which generally include direct
obligations of the U.S. Treasury (such as U.S. Treasury bills,
notes, and bonds) and obligations issued or guaranteed by U.S.
government agencies or instrumentalities. These securities
are backed by: the full faith and credit of the U.S.
Treasury; the issuer's right to borrow an amount limited to a
specific line of credit from the U.S. Treasury; the
discretionary authority of the U.S. government to purchase
certain obligations of agencies or instrumentalities; or the
credit of the agency or instrumentality issuing the
obligations. Examples of agencies and instrumentalities which
are permissible investments which may not always receive
financial support from the U.S. government are: Federal Farm
Credit Banks; Federal Home Loan Banks; Federal National
Mortgage Association; The Student Loan Marketing Association;
and Federal Home Loan Mortgage Corporation.
MONEY MARKET INSTRUMENTS. The Fund may invest in domestic and
foreign short-term money market instruments, including
interest-bearing call deposits with banks, government
obligations, ECDs, ETDs, Yankee CDs, bankers' acceptances,
commercial paper, short-term corporate debt securities, and
repurchase agreements. These investments may be used to
temporarily invest cash received from the sale of Fund shares,
to establish and maintain reserves for temporary defensive
purposes, or to take advantage of market opportunities.
REPURCHASE AGREEMENTS. The securities in which the Fund
invests may be purchased pursuant to repurchase agreements.
Repurchase agreements are arrangements in which banks,
broker/dealers, and other recognized financial institutions
sell U.S. government securities or other securities to the
Fund and agree at the time of sale to repurchase them at a
mutually agreed upon time and price. To the extent that the
original seller does not repurchase the securities from the
Fund, the Fund could receive less than the repurchase price on
any sale of such securities.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. The
Fund may invest in the securities of open-end and closed-end
investment companies. However, the Fund will not own more
than 3% of the total outstanding voting stock of any
investment company, invest more than 5% of its total assets in
any one investment company, or invest more than 10% of its
total assets in investment companies in general.
In order to comply with certain state restrictions, the Fund
will limit its investments in other open-end investment
companies to those with sales loads of less than 1.00% of the
offering price. Although the adviser will waive its
investment advisory fee on that portion of the Fund's assets
that are invested in securities of open-end investment
companies, investment companies incur certain expenses, such
as custodian and transfer agency fees. Therefore, the Fund's
investment in other investment companies would be subject to
such duplicate expenses.
Some countries have authorized the formation of closed-end
investment companies to facilitate indirect foreign investment
in their capital markets. In order to comply with certain
state restrictions, the Fund will purchase securities of
closed-end investment companies only in open-market
transactions involving only customary brokerage commissions.
These restrictions do not apply if the shares of the
investment company are acquired in a merger, consolidation,
reorganization or acquisition. Shares of certain closed-end
investment companies may at times be acquired only at market
prices representing premiums to their net asset values,
although they may also be acquired at discounts to their net
asset values. As with open-end investment companies, the
Fund's investment in closed-end investment companies would
involve duplication of certain fees, including advisory fees.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may
purchase securities on a when-issued or delayed delivery
basis. These transactions are arrangements in which the Fund
purchases securities with payment and delivery scheduled for a
future time, thereby involving a risk that the yield obtained
from the investment will be less than that available in the
market when delivery takes place. The Fund may engage in when-
issued and delayed delivery transactions for the purpose of
acquiring portfolio securities consistent with the Fund's
investment objective and policies. Settlement days may be a
month or more after entering into these transactions, and the
market values of the securities purchased may vary from the
purchase prices. Accordingly, the Fund may pay more or less
than the market value of the securities on the settlement
date. In when-issued and delayed delivery transactions, the
Fund relies on the seller to complete the transaction. The
seller's failure to complete the transaction may cause the
Fund to miss a price or yield considered to be advantageous.
No fees or other expenses, other than normal transaction
costs, are incurred. However, liquid assets of the Fund
sufficient to make payment for the securities to be purchased
are segregated at the trade date. These securities are marked
to market daily and maintained until the transaction is
settled.
LENDING OF PORTFOLIO SECURITIES. In order to generate
additional income, the Fund may lend portfolio securities on a
short-term or long-term basis, or both, up to one-third of the
value of its total assets to broker/dealers, banks, or other
institutional borrowers of securities. The Fund will only
enter into loan arrangements with broker/dealers, banks, or
other institutions which the subadviser has determined are
creditworthy under guidelines established by the Directors and
will receive collateral in the form of cash or U.S. government
securities equal to at least 100% of the value of the
securities loaned.
BORROWING. The Fund may borrow up to one-third of the value
of its total assets from banks to increase its holdings of
portfolio securities. The Fund is required to maintain
continuous asset coverage of 300% with respect to such
borrowings and to sell (within three days) sufficient
portfolio holdings to restore such coverage if it should
decline to less than 300% due to market fluctuations or
otherwise, even if such liquidations of the Fund's holdings
may be disadvantageous from an investment standpoint.
Leveraging by means of borrowing may exaggerate the effect of
any increase or decrease in the value of the portfolio
securities on the Fund's net asset value, and money borrowed
will be subject to interest and other costs (which may include
commitment fees and/or the cost of maintaining minimum average
balances) which may or may not exceed the income received or
capital appreciation realized from the securities purchased
with borrowed funds.
INVESTMENT GRADE RATINGS. Except where a higher rating is
specified, the Fund may invest in securities rated investment
grade, which is the top four rating categories, by an NRSRO
(i.e., Aaa, Aa, A or Baa by Moody's or AAA, AA, A or BBB by
S&P and Fitch). Securities rated "Baa" by Moody's or "BBB" by
S&P or Fitch have speculative characteristics and changes in
economic conditions or other circumstances are more likely to
lead to a weakened capacity to make principal and interest
payments than higher rated securities. If any security
purchased by the Fund is subsequently downgraded, securities
will be evaluated on a case-by-case basis by the Fund's
subadviser, who will determine whether or not the security
continues to be an acceptable investment. If not, the
security will be sold. A description of the rating categories
is contained in the Appendix to the Statement of Additional
Information.
INVESTMENT RISKS. As with other mutual funds that invest
primarily in equity securities, the Fund is subject to market
risks. That is, the possibility exists that common stocks
will decline over short or even extended periods of time, and
all equity markets tend to be cyclical, experiencing both
periods when stock prices generally increase and periods when
stock prices generally decrease.
With respect to debt obligations which the Fund may
purchase, their prices move inversely to interest rates,
and the amount of changes in market prices of debt
obligations in response to changes in market interest
rates generally depends on the maturity of the debt
obligations: the debt obligations with the longest
maturities will experience the greatest market price
changes.
Investing in non-U.S. securities carries substantial risks
in addition to those associated with domestic investments.
In an attempt to reduce some of these risks, the Fund
diversifies its investments broadly among foreign
countries, including both developed and developing
countries. At least three different countries will always
be represented in the Fund's portfolio.
The Fund occasionally takes advantage of the unusual
opportunities for higher returns available from investing
in developing countries. These investments, however,
carry considerably more volatility and risk because they
are associated with less mature economies and less stable
political systems.
EXCHANGE RATES. Foreign securities may be denominated
in foreign currencies. Therefore, the value in U.S.
dollars of the Fund's assets and income may be affected
by changes in exchange rates and regulations. Although
the Fund values its assets daily in U.S. dollars, it
will not convert its holding of foreign currencies to
U.S. dollars daily. When the Fund converts its holdings
to another currency, it may incur conversion costs.
Foreign exchange dealers realize a profit on the
difference between the prices at which they buy and sell
currencies.
FOREIGN COMPANIES. The risks associated with investing
in foreign companies include: risks of adverse
political and economic developments (including possible
governmental seizure or nationalization of assets); the
possible imposition of exchange controls or other
governmental restrictions; default in foreign government
securities; foreign companies are not generally subject
to uniform financial reporting, auditing and accounting
standards, and auditing practices and requirements may
not be comparable to those applicable to U.S. companies;
less readily available market quotations on foreign
companies; the possibility of less publicly available
information on foreign securities and their issuers;
differences in government regulation and supervision of
foreign stock exchanges, brokers, listed companies, and
banks; generally lower foreign stock market volume; the
likelihood that foreign securities may be less liquid or
more volatile; foreign brokerage commissions and other
transaction costs (such as custodial services) may be
higher; unreliable mail service between countries;
restrictions on foreign investments in other
jurisdictions; difficulties which may be encountered in
obtaining or enforcing a court judgment abroad and
affecting repatriation of capital invested abroad; and
delays or problems in settlement of foreign
transactions, which could adversely affect shareholder
equity or cause the Fund to miss attractive investment
opportunities. In addition, foreign securities may be
subject to foreign taxes, which reduce yield and total
return. The Fund occasionally takes advantages of the
unusual opportunities for higher returns available from
investing in developing countries. These investments,
however, carry considerably more volatility and risk
because they are associated with less mature economies
and less stable political systems. Different risks may
also exist for obligations of foreign banks, domestic
branches of foreign banks or foreign branches of
domestic banks since they may not be subject to the same
regulatory requirements, loan limitations, examinations,
or accounting, auditing and recordkeeping requirements
as United States banks. As a matter of practice, the
Fund will not invest in the securities of a foreign
issuer if any risk identified above appears to the
Fund's subadviser to be substantial.
U.S. GOVERNMENT POLICIES. In the past, U.S. government
policies have discouraged or restricted certain
investments abroad by investors such as the Fund.
Investors are advised that when such policies are
instituted, the Fund will abide by them.
FUTURES AND OPTIONS. When the Fund uses futures and options
on futures as hedging devices, there is a risk that the
prices of the securities subject to the futures contracts
may not correlate with the prices of the securities in the
Fund's portfolio. This may cause the futures contract and
any related options to react differently than the portfolio
securities to market changes. In addition, the Fund's
subadviser could be incorrect in its expectations about the
direction or extent of market factors such as interest or
currency exchange rate movements. In these events, the Fund
may lose money on the futures contract or option. Also, it
is not certain that a secondary market for positions in
futures contracts or for options will exist at all times.
Although the Fund's subadviser will consider liquidity
before entering into such transactions, there is no
assurance that a liquid secondary market on an exchange or
otherwise will exist for any particular futures contract or
option at any particular time. The Fund's ability to
establish and close out futures and options positions
depends on this secondary market.
INVESTMENT LIMITATIONS
The Fund will not:
- - borrow money directly or through reverse repurchase
agreements (arrangements in which the Fund sells a portfolio
instrument for a percentage of its cash value with an
agreement to buy it back on a set date) or pledge securities
except, under certain circumstances, the Fund may borrow up
to one-third of the value of its total assets and pledge up
to 15% of the value of its total assets to secure such
borrowings; or
- - with respect to 75% of the value of its total assets,
invest more than 5% of its total assets in securities of one
issuer other than cash, cash items or securities issued or
guaranteed by the government of the United States or its
agencies or instrumentalities and repurchase agreements
collateralized by such securities, or acquire more than 10%
of the voting securities of any one issuer.
The above investment limitations cannot be changed without
shareholder approval. The following limitations, however, may
be changed by the Directors without shareholder approval.
Shareholders will be notified before any material change in
these limitations becomes effective.
The Fund will not
- - invest more than 15% of the value of its net assets in
illiquid securities, including repurchase agreements
providing for settlement more than seven days after notice,
over-the-counter options, and certain securities not
determined by the Directors to be liquid; or
- - invest more than 5% of its net assets in warrants.
MARSHALL FUNDS, INC. INFORMATION
MANAGEMENT OF MARSHALL FUNDS, INC.
BOARD OF DIRECTORS. The Board of Directors is responsible for
managing the business affairs of the Corporation and for
exercising all of the powers of the Corporation except those
reserved for the shareholders.
INVESTMENT ADVISER AND SUBADVISER. Pursuant to an investment
advisory contract with the Corporation, the Fund is managed by
M&I Investment Management Corp., the Fund's investment adviser
(the "Adviser"), subject to direction by the Directors. The
Adviser, in turn, has entered into a Subadvisory Contract with
Templeton Investment Counsel, Inc. ("TICI"), as described
below.
It is the Adviser's responsibility to select, subject to
review and approval by the Corporation's Directors, a
subadviser for the Fund that has distinguished itself in its
area of expertise in asset management and to review the
subadviser's continued performance. Subject to the
supervision and direction of the Corporation's Directors, the
Adviser provides investment management evaluation services
principally by performing initial due diligence on TICI and
thereafter monitoring TICI's performance through quantitative
and qualitative analysis, as well as periodic in-person,
telephonic and written consultations with TICI. In evaluating
TICI, the Adviser considers, among other factors, TICI's level
of expertise; relative performance and consistency of
performance over a minimum period of time; level of adherence
to investment discipline or philosophy; personnel, facilities
and financial strength; and quality of service and client
communications. The Adviser has responsibility for
communicating performance expectations and evaluations to TICI
and ultimately recommending to the Corporation's Directors
whether TICI's contract should be renewed, modified or
terminated. The Adviser provides written reports to the
Directors regarding the results of its evaluation and
monitoring functions. The Adviser is also responsible for
conducting all operations of the Fund, except those operations
contracted to TICI, the custodian, the transfer agent, and the
administrator. Although TICI's activities are subject to
oversight by the Directors and officers of the Corporation,
neither the Directors, the officers, nor the Adviser evaluates
the investment merits of TICI's individual security
selections. TICI has complete discretion to purchase, manage
and sell portfolio securities for the Fund, subject to the
Fund's investment objective, policies and limitations.
ADVISORY AND SUBADVISORY FEES. The Adviser is entitled to
receive an annual investment advisory fee equal to 1.00% of
the Fund's average daily net assets. The advisory fee paid by
the Fund, while higher than advisory fees paid by other mutual
funds in general, is comparable to fees paid by many mutual
funds with similar objectives and policies. The investment
advisory contract allows the voluntary waiver in whole or in
part of the investment advisory fees or the reimbursement of
expenses by the Adviser from time to time. The Adviser can
terminate any voluntary waiver of its fees or reimbursement of
expenses at any time in its sole discretion.
Under the terms of a Subadvisory Contract between the Adviser
and TICI, TICI will furnish to the Adviser such investment
advice, statistical and other factual information as may from
time to time be reasonably requested by the Adviser. For its
services under the Subadvisory Contract, TICI is entitled to
receive an annual fee from the Adviser equal to 0.50% of the
Fund's average daily net assets up to $70 million and 0.40% of
such assets in excess thereof ("Subadvisory Fee"). Such
Subadvisory Fee shall be computed daily and paid monthly.
ADVISER'S BACKGROUND. The Adviser is a wholly-owned
subsidiary of Marshall & Ilsley Corp., a registered bank
holding company headquartered in Milwaukee, Wisconsin. As of
December 31, 1993, the Adviser had approximately $5.7 billion
in assets under management and has managed investments for
individuals and institutions since its inception in 1973. As
part of its regular banking operations, affiliates of the
Adviser may make loans to public companies. Thus, it may be
possible, from time to time, for the Fund to hold or acquire
securities of issuers which are also lending clients of the
Adviser's affiliates. The lending relationship will not be a
factor in the selection of securities.
SUBADVISER'S BACKGROUND. TICI is a professional investment
counseling firm which has been providing investment services
since 1979. As of October 31, 1993, TICI had discretionary
investment management of $9.3 billion of assets. TICI is
indirectly owned by Franklin Resources, Inc., which engages in
various aspects of the financial services industry through its
subsidiaries.
TICI and its affiliates serve as advisers for a wide variety
of public investment mutual funds and private clients in many
nations. TICI, its affiliates and their predecessors have
been investing globally over the past 51 years and provide
investment management and advisory services to a worldwide
client base, including over 2.9 million mutual fund
shareholders, foundations and endowments, employee benefit
plans and individuals. TICI and its affiliates have
approximately 3,200 employees in ten different countries and a
global network of over 50 investment research sources. TICI
is supported by the Templeton organization's large staff of
research analysts, traders and other investment specialists
based in Fort Lauderdale, Nassau, New York, Edinburgh,
Toronto, Hong Kong, Melbourne, and Singapore. Templeton's
research analysts use a disciplined, long-term approach to
value-oriented global and international investing. Securities
are selected for the Fund's portfolio from a list of eligible
securities maintained and constantly updated by Templeton's
analysts on the basis of fundamental analysis, which utilizes
a global database of information on issuers. TICI believes
that the Templeton organization's team approach benefits Fund
investors by bringing together many disciplines and leveraging
the organization's extensive resources.
It is understood that TICI may have advisory, management,
service or other contracts with other individuals or entities,
and may have other interests and businesses. When a security
proposed to be purchased or sold for the Fund is also to be
purchased or sold for other accounts managed by TICI at the
same time, TICI shall make such purchases or sales on a pro-
rata, rotating or other equitable basis so as to avoid any one
account being preferred over any other account. Although this
may adversely affect the price the Fund pays or receives, or
the size of the position it obtains, it may also enable TICI
to negotiate lower transaction costs.
PORTFOLIO MANAGEMENT TEAM. The lead portfolio manager of the
Fund is James E. Chaney, Vice President of TICI. Prior to
joining the Templeton organization in 1991, Mr. Chaney spent
six years with GE Investments, where he was vice president of
international equities. In that capacity, he had numerous
research responsibilities and also managed several accounts,
including a mutual fund. He also has another seven years'
experience as an international consulting engineer and project
manager for Camp, Dresser & McKee, Inc. and American British
Consultants. Mr. Chaney received a M.B.A. with Honors from
Columbia University, where he was a member of the Beta Gamma
Sigma Honor Society. He received his M.S. in Engineering from
Northeastern University and his B.S. in Engineering from the
University of Massachusetts-Amherst.
DISTRIBUTION OF FUND SHARES
Federated Securities Corp. ("FSC") is the principal
distributor for shares of the Fund. It is a Pennsylvania
corporation organized on November 14, 1969, and is the
principal distributor for a number of investment companies.
FSC is a subsidiary of Federated Investors.
DISTRIBUTION PLAN. Under a distribution plan (the "Plan")
adopted in accordance with Rule 12b-1 under the Act, the Fund
may pay to FSC an amount computed at an annual rate of 0.25%
of the Fund's average daily net assets to finance any activity
which is principally intended to result in the sale of shares
subject to the Plan. FSC may, from time to time and for such
periods as it deems appropriate, voluntarily reduce its 12b-1
compensation under the Plan to the extent the expenses
attributable to shares of the Fund exceed such lower expense
limitation as FSC may, by notice to the Corporation,
voluntarily declare to be effective. The Fund has no present
intention of paying or accruing 12b-1 fees during the fiscal
year ending August 31, 1995.
FSC may select certain entities to provide sales and/or
administrative services as agents for the Fund.
Administrative services may include, but are not limited to,
the following functions: providing office space, equipment,
telephone facilities, and various clerical, supervisory,
computer and other personnel as necessary or beneficial to
establish and maintain shareholder accounts and records;
processing purchase and redemption transactions and automatic
investments of client account cash balances; answering routine
client inquiries regarding the Fund; assisting clients in
changing dividend options, account designations, and
addresses; and providing such other services as the Fund
reasonably requests.
Such entities will receive a fee from FSC based upon shares
owned by their clients or customers. The schedules of such
fees and the basis upon which such fees will be paid will be
determined from time to time by FSC.
The Fund's Plan is a compensation type plan. As such, the
Fund makes no payments to FSC except as described above.
Therefore, the Fund does not pay for unreimbursed expenses of
FSC, including amounts expended by FSC in excess of amounts
received by it from the Fund, interest, carrying or other
financing charges in connection with excess amounts expanded,
or FSC's overhead expenses. However, FSC may be able to
recover such amounts or may earn a profit from future payments
made by the Fund under the Plan.
The Glass-Steagall Act prohibits a depository institution
(such as a commercial bank or a savings and loan association)
from being an underwriter or distributor of most securities.
In the event the Glass-Steagall Act is deemed to prohibit
depository institutions from acting in the administrative
capacities described above or should Congress relax current
restrictions on depository institutions, the Directors will
consider appropriate changes in the services.
State securities laws governing the ability of depository
institutions to act as underwriters or distributors of
securities may differ from interpretations given to the Glass-
Steagall Act and, therefore, banks and financial institutions
may be required to register as dealers pursuant to state law.
Although state securities laws differ, administrators in some
states may be required to register as brokers and dealers
pursuant to state law.
ADMINISTRATIVE ARRANGEMENTS. FSC may select brokers and
dealers to provide distribution and administrative services.
FSC may also select administrators (including depository
institutions such as commercial banks and savings and loan
associations) to provide administrative services. These
administrative services include distributing prospectuses and
other information, providing account assistance, and
communicating or facilitating purchases and redemptions of the
Fund's shares.
Brokers, dealers, and administrators will receive fees from
FSC based upon shares owned by their clients or customers.
The fees are calculated as a percentage of the average
aggregate net asset value of shareholder accounts held during
the period for which the brokers, dealers, and administrators
provide services. This fee is in addition to the amounts paid
under the Plan for administrative services and, if paid, will
be reimbursed by the Adviser and not the Fund.
OTHER PAYMENTS TO FINANCIAL INSTITUTIONS. FSC, the Adviser or
their affiliates, at their own expense and out of their own
assets, may also provide other compensation to financial
institutions in connection with sales of Fund shares or as
financial assistance for providing substantial marketing,
sales and operational support. The support may include
initiating customer accounts, providing sales literature, or
participating in sales, educational and training seminars
(including those held at recreational facilities). Such
assistance will be predicated upon the amount of shares of the
Fund or the Corporation the financial institution sells or may
sell and/or upon the type and nature of sales, operational or
marketing support furnished by the financial institution. Any
payments made by FSC may be reimbursed by the Adviser or its
affiliates.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Administrative Services, a
subsidiary of Federated Investors, provides the Fund with
certain administrative personnel and services necessary to
operate the Fund. Such services include certain shareholder
servicing, legal and accounting services. Federated
Administrative Services provides these services at an annual
rate as specified below:
ADMINISTRATIVE AVERAGE AGGREGATE DAILY NET
FEE ASSETS OF THE CORPORATION
..150 of 1% on the first $250 million
..125 of 1% on the next $250 million
..100 of 1% on the next $250 million
..075 of 1% on assets in excess of $750
million
The administrative fee received during any fiscal year shall
be at least $50,000 for the Fund. Federated Administrative
Services may choose voluntarily to waive a portion of its fee
at any time.
CUSTODIAN. Marshall & Ilsley Trust Company ("M&I Trust
Company"), Milwaukee, Wisconsin, a subsidiary of Marshall &
Ilsley Corp., is custodian for the securities and cash of the
Fund. Under the Custodian Agreement, M&I Trust Company holds
the Fund's portfolio securities in safekeeping and keeps all
necessary records and documents relating to its duties. M&I
Trust Company may voluntarily choose to waive all or a portion
of its fee at any time. Any fee that is charged is reflected
in the "Summary of Fund Expenses."
TRANSFER AGENT, DIVIDEND DISBURSING AGENT, AND PORTFOLIO
ACCOUNTING SERVICES. Federated Services Company, Pittsburgh,
Pennsylvania, a subsidiary of Federated Investors, is transfer
agent for the shares of the Fund and dividend disbursing agent
for the Fund. It also provides certain accounting and
recordkeeping services with respect to the Fund's portfolio of
investments.
SHAREHOLDER SERVICING ARRANGEMENTS. Marshall Funds Investor
Services ("MFIS"), Milwaukee, Wisconsin, is the shareholder
servicing agent for the Fund. As such, MFIS provides
shareholder services which include, but are not limited to,
distributing prospectuses and other information, providing
shareholder assistance, and communicating or facilitating
purchases and redemptions of shares. The Fund may pay MFIS a
fee equal to 0.015 of 1% of the average daily net asset value
of Fund shares for which MFIS provides shareholder services.
MFIS may voluntarily choose to waive all or a portion of its
fee at any time.
LEGAL COUNSEL. Legal counsel is provided by Houston, Houston
& Donnelly, Pittsburgh, Pennsylvania and Dickstein, Shapiro &
Morin, L.L.P., Washington, D.C.
INDEPENDENT PUBLIC ACCOUNTANTS. The independent public
accountants for the Fund are Arthur Andersen & Co.,
Pittsburgh, Pennsylvania.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and
sale of portfolio instruments, the Adviser and TICI look for
prompt execution of the order at a favorable price. In
working with dealers, the Adviser and TICI will generally
utilize those who are recognized dealers in specific portfolio
instruments, except when a better price and execution of the
order can be obtained elsewhere. In selecting among firms
believed to meet this criteria, the Adviser and TICI may give
consideration to those firms which have sold or are selling
shares of the Fund and other funds distributed by FSC or
Franklin/Templeton Distributors, Inc. The Adviser and TICI
make decisions on portfolio transactions and select brokers
and dealers subject to review by the Directors.
EXPENSES OF THE FUND
The Fund pays all of its own expenses and its allocable share
of the Corporation's expenses. The expenses include, but are
not limited to, the cost of: organizing the Corporation and
continuing its existence; Directors' fees; investment advisory
and administrative services; printing prospectuses and other
Fund documents for shareholders; registering the Corporation,
the Fund, and shares of the Fund with federal and state
securities authorities; taxes and commissions; issuing,
purchasing, repurchasing, and redeeming shares; fees for
custodians, transfer agents, dividend disbursing agents,
shareholder servicing agents, and registrars; printing,
mailing, auditing, and certain accounting and legal expenses;
reports to shareholders; meetings of Directors and
shareholders and proxy solicitations therefor; insurance
premiums; association membership dues; and such non-recurring
and extraordinary items as may arise. However, the Adviser
may voluntarily reimburse some expenses and, in addition, has
undertaken to reimburse each Fund up to the amount of its
advisory fee, the amount by which operating expenses exceed
limitations imposed by certain states.
NET ASSET VALUE
The Fund's net asset value per share fluctuates. It is
determined by dividing the sum of the market value of all
securities and other assets, less liabilities, by the number
of shares outstanding.
INVESTING IN THE FUND
SHARE PURCHASES
Shares of the Fund are sold on days on which the New York
Stock Exchange is open for business. Shares of the Fund may
be purchased through M&I Trust Company, M&I Marshall & Ilsley
Trust Company of Arizona, Marshall & Ilsley Trust Company of
Florida (the above-mentioned companies will be referred to as
"M&I Trust Companies"), MFIS, M&I Brokerage Services, Inc. and
authorized broker/dealers. Purchase orders must be received
by the Fund by 3:00 p.m. (Central time) in order for shares to
be purchased at that day's net asset value. In connection
with the sale of shares of the Fund, FSC may from time to time
offer certain items of nominal value to any shareholder or
investor.
The Fund reserves the right to reject any purchase request.
Texas residents must purchase shares through FSC at 800-618-
8573.
THROUGH M&I TRUST COMPANIES. Trust customers should contact
their account officer in order to make purchase requests.
THROUGH MFIS. An investor may contact MFIS at 1-800-236-8554
by 3:00 p.m. (Central time) in order to purchase shares of the
Fund.
THROUGH M&I BROKERAGE SERVICES, INC. An investor may purchase
shares of the Fund through any M&I Bank employing a
representative of M&I Brokerage Services, Inc. ("M&I Brokerage
Services").
THROUGH AUTHORIZED BROKER/DEALERS. An investor may place an
order through authorized brokers and dealers to purchase
shares of the Fund.
Payment for orders may be made:
BY MAIL. To purchase shares of the Fund by mail, send a check
made payable to the Fund to Marshall Funds Investor Services,
P.O. Box 1348, Milwaukee, Wisconsin 53201-1348. Orders
received by mail should be accompanied by an account
application. If a check for the purchase of shares does not
clear, the purchase will be canceled and the investor will be
charged a $15 fee.
Orders by mail are considered received after payment by check
is converted by MFIS into federal funds. This is generally
the next business day after MFIS receives the check.
BY WIRE. To purchase shares by wire, wire the funds as
follows:
M&I Marshall & Ilsley Bank
ABA Number 075000051
Credit: Boston Financial Data Services Deposit Account Number
27480
Further credit to: Marshall International Stock Fund
Re: (Shareholder name and account number)
Following the wire transfer, you must complete an account
application and mail it to the Fund. Your bank may charge a
fee for wiring funds.
Wire orders will only be accepted on days on which the Fund,
M&I Bank and the Federal Reserve wire system are open for
business.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in the Fund by an investor is
$1,000. Additional purchases of $50 or more may be made at
anytime. The Fund may waive or lower the minimum initial
investment from time to time, such as for employees of M&I
Corp.
WHAT SHARES COST
Shares of the Fund are sold at their net asset value next
determined after an order is received. There is no sales
charge imposed by the Fund.
The net asset value is determined at or after the close of the
New York Stock Exchange, Monday through Friday, except on: (i)
days on which there are not sufficient changes in the value of
the Fund's portfolio securities that its net asset value might
be materially affected; (ii) days during which no shares are
tendered for redemption and no orders to purchase shares are
received; and (iii) the following holidays: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day.
SYSTEMATIC INVESTMENT PROGRAM
Once a Fund account has been opened, shareholders may add to
their investment on a regular basis in a minimum amount of
$50. This amount may be lowered from time to time, such as
for employees of M&I Corp. Under this program, funds may be
automatically withdrawn periodically from the shareholder's
checking account and invested in Fund shares at the net asset
value next determined after an order is received by MFIS. A
shareholder may apply for participation in this program
through MFIS.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Services Company
maintains a share account for each shareholder of record. The
Corporation will not issue certificates evidencing shares of
common stock purchased unless so requested in writing. Where
certificates are not issued, the shareholder's account will be
credited with the number of shares purchased, relieving
shareholders of responsibility for safekeeping of certificates
and the need to deliver them upon redemption. Written
confirmations are issued for all purchases of shares of common
stock. Any shareholder may deliver certificates to the
transfer agent and direct that the shareholder's account be
credited with the shares. A shareholder may direct the
transfer agent at any time to issue a certificate for the
shareholder's shares of common stock without charge.
Detailed confirmations of each purchase or redemption or
dividend payment are sent to each shareholder. Shareholders
will receive monthly statements.
In addition, the Fund will provide, upon request, photocopies
of confirmations for transactions affecting your account in
prior years. A fee of $5 per year requested will be charged
to cover the cost of obtaining this information.
DIVIDENDS AND CAPITAL GAINS
Dividends are declared and paid annually to all shareholders
invested in the Fund on the record date. Capital gains, when
realized by the Fund, will be distributed at least once every
12 months. Unless shareholders request cash payments by
writing to the Fund, dividends and capital gains are
automatically reinvested in additional shares of the Fund on
payment dates at the ex-dividend date net asset value.
EXCHANGE PRIVILEGE
All shareholders of the Fund are shareholders of the
Corporation. The Corporation currently consists of Marshall
Balanced Fund, Marshall Equity Income Fund, Marshall
Government Income Fund, Marshall Intermediate Bond Fund,
Marshall Intermediate Tax-Free Fund, Marshall International
Stock Fund, Marshall Mid-Cap Stock Fund, Marshall Money Market
Fund (Investment Shares and Trust Shares), Marshall Short-Term
Income Fund, Marshall Short-Term Tax-Free Fund, Marshall Stock
Fund, Marshall Tax-Free Money Market Fund, and Marshall Value
Equity Fund. Shareholders have easy access to each of the
Corporation's portfolios, as well as to the Institutional
Service Shares of Max-Cap Fund (a portfolio of Federated Index
Trust), through a telephone exchange program. The portfolios
of the Corporation are advised by M&I Investment Management
Corp. and distributed by FSC.
EXCHANGING SHARES. Shareholders of the Fund may exchange
their Fund shares for shares of other mutual funds advised by
the Adviser at net asset value without a sales charge. In
addition, shareholders may exchange shares of the Fund for
Institutional Service Shares of Max-Cap Fund at net asset
value without a sales charge.
Shareholders who exercise this exchange privilege must
exchange shares having a net asset value of at least $1,000,
except for exchanges into Institutional Service Shares of Max-
Cap Fund, which requires a $25,000 minimum investment. Prior
to any exchange, the shareholder must receive a copy of the
current prospectus of the fund into which an exchange is to be
effected. Subsequent exchanges may be made for $50 or more.
The exchange privilege is available to shareholders residing
in any state in which the fund shares being acquired may
legally be sold. Upon receipt of proper instructions and all
necessary supporting documents, shares submitted for exchange
will be redeemed at the next-determined net asset value.
Written exchange instructions may require a signature
guarantee. Exercise of this privilege is treated as a sale
for federal income tax purposes and, depending on the
circumstances, a short- or long-term capital gain or loss may
be realized. The exchange privilege may be terminated at any
time. Shareholders will be notified of the termination of the
exchange privilege. A shareholder may obtain further
information on the exchange privilege by calling MFIS.
EXCHANGE-BY-TELEPHONE. Instructions for exchanges between
funds which are part of the Corporation may be given by
telephone to MFIS. Trust customers should contact their
account officer. Shares may be exchanged by telephone only
between fund accounts having identical shareholder
registrations.
Shareholders requesting the telephone exchange service
authorize the Fund and its agents to act upon their telephonic
instructions to exchange shares from any account for which
they have authorized such services. Telephone exchange
instructions may be recorded. If reasonable procedures are
not followed by the Fund, it may be liable for losses due to
unauthorized or fraudulent telephone instructions.
Any shares held in certificate form cannot be exchanged by
telephone but must be forwarded to the transfer agent by MFIS
and deposited to the shareholder's mutual fund account before
being exchanged.
Telephone exchange instructions must be received before 3:00
p.m. (Central time) for shares to be exchanged the same day.
The telephone exchange privilege may be modified or terminated
at any time. Shareholders will be notified of such
modification or termination. Shareholders may have difficulty
in making exchanges by telephone through banks, brokers, and
other financial institutions during times of drastic economic
or market changes. If a shareholder cannot contact his or her
bank, broker, or financial institution by telephone, it is
recommended that an exchange request be made in writing and
sent by overnight mail.
REDEEMING SHARES
The Fund redeems shares at its net asset value next determined
after the Fund receives the redemption request. Redemptions
will be made on days on which the Fund computes its net asset
value. Telephone or written requests for redemptions must be
received in proper form as described below and can be made
through MFIS or M&I Brokerage Services. Trust customers
should contact their account officer in order to make
redemption requests. Redemption proceeds will normally be
mailed, or wired if by written request, the following business
day, but in no event more than seven days, after the request
is received.
BY MAIL. Shareholders may redeem shares of the Fund by
sending a written request to the Marshall Funds Investor
Services, P.O. Box 1348, Milwaukee, Wisconsin 53201-1348. The
written request should include the shareholder's name, the
Fund name, the account number, and the number of shares or
dollar amount requested. If share certificates have been
issued, they must be properly endorsed and should be sent by
registered or certified mail. Additional documentation may be
required from corporations, executors, administrators,
trustees, or guardians. Shareholders should call 1-800-236-
8554 for assistance in redeeming by mail.
BY TELEPHONE. A shareholder may redeem shares of the Fund by
calling MFIS (1-800-236-8554) to request the redemption.
Customers of M&I Brokerage Services may call their account
representative or MFIS for information regarding redemption
requests. Telephone redemptions, however, are not available
for retirement accounts. Shares will be redeemed at the net
asset value next determined after the Fund receives the
redemption request. It is the responsibility of MFIS to
promptly submit redemption requests to the Fund. Redemption
requests must be received by 3:00 p.m. (Central time) in order
for shares to be redeemed at that day's net asset value.
An authorization form permitting the Fund to accept telephone
redemption requests must first be completed. It is
recommended that investors request this privilege at the time
of their initial application. If not completed at the time of
the initial application, authorization forms and information
on this service can be obtained through MFIS or M&I Brokerage
Services.
A shareholder may have the redemption proceeds directly
deposited by Electronic Funds Transfer or wired directly to a
domestic commercial bank previously designated by the
shareholder. Wire redemption orders will only be accepted on
days on which the Fund, M&I Bank, and the Federal Reserve wire
system are open for business. Wire-transferred redemptions
may be subject to an additional fee.
Shareholders requesting the telephone redemption service
authorize the Fund and its agents to act upon their telephonic
instruction to redeem shares from any account for which they
have authorized such services. Telephone redemption
instructions may be recorded. If reasonable procedures are
not followed by the Fund, it may be liable for losses due to
unauthorized or fraudulent telephone instructions.
SIGNATURES. Shareholders requesting a redemption of $50,000
or more, a redemption of any amount to be sent to an address
other than that on record with the Fund, or a redemption
payable other than to the shareholder of record must have
signatures on written redemption requests guaranteed by:
- - a trust company or commercial bank whose deposits are
insured by BIF, which is administered by the FDIC;
- - a member of the New York, American, Boston, Midwest, or
Pacific Stock Exchange;
- - a savings bank or savings and loan association whose
deposits are insured by SAIF which is administered by the
FDIC; or
- - any other "eligible guarantor institution," as defined in
the Securities Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary
public.
The Corporation and its transfer agent have adopted standards
for accepting signature guarantees from the above
institutions. The Corporation may elect in the future to
limit eligible signature guarantors to institutions that are
members of a signature guarantee program. The Corporation and
its transfer agent reserve the right to amend these standards
at any time without notice.
SYSTEMATIC WITHDRAWAL PROGRAM
Shareholders who desire to receive payments of a predetermined
amount may take advantage of the Systematic Withdrawal
Program. Under this program, shares are redeemed to provide
for monthly or quarterly withdrawal payments in an amount
directed by the shareholder. Shareholders may redeem by
periodic withdrawal payments in a minimum amount of $100.
Depending upon the amount of the withdrawal payments, the
amount of dividends paid and capital gains distributions with
respect to shares, and the fluctuation of net asset value of
shares redeemed under this program, redemptions may reduce,
and eventually deplete, the shareholder's investment in the
Fund. For this reason, payments under this program should not
be considered as yield or income on the shareholder's
investment in the Fund. To be eligible to participate in this
program, a shareholder must have an account value of at least
$10,000. A shareholder may apply for participation in this
program through MFIS or M&I Brokerage Services.
REDEMPTION BEFORE PURCHASE INSTRUMENTS CLEAR
When shares of the Fund are purchased by check or through the
Automated Clearing House system, the proceeds from the
redemption of those shares (whether redeemed by mail or by
telephone) are not available, and the shares may not be
exchanged, until MFIS is reasonably certain that the purchase
check has cleared, which could take up to seven calendar days.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low
balances, the Fund may redeem shares in any account and pay
the proceeds to the shareholder if the account balance falls
below the required minimum value of $1,000. This requirement
does not apply, however, if the balance falls below $1,000
because of changes in the Fund's net asset value.
Before shares are redeemed to close an account, the
shareholder is notified in writing and allowed 30 days to
purchase additional shares to meet the minimum requirement.
SHAREHOLDER INFORMATION
VOTING RIGHTS AND COMMON STOCK
The Corporation's authorized capital consists of
50,000,000,000 shares of common stock with a par value of
$.0001 per share, of which the Fund's authorized capital
consists of 1,000,000,000 shares of common stock.
Shareholders are entitled: (i) to one vote per full share of
Common Stock; (ii) to such distributions as may be declared by
the Corporation's Directors out of funds legally available;
and (iii) upon liquidation of the Corporation, to participate
ratably in the assets of the Fund available for distribution.
Each share of the Fund gives the shareholder one vote in the
election of Directors and other matters submitted to
shareholders for vote. All shares of each portfolio or class
in the Corporation have equal voting rights, except that only
shares of a particular portfolio or class are entitled to vote
on matters affecting that portfolio or class. There are no
conversion or sinking fund provisions applicable to the
shares, and the holders have no preemptive rights and may not
cumulate their votes in the election of Directors.
Consequently, the holders of more than 50% of the
Corporation's shares of common stock voting for the election
of Directors can elect the entire Board of Directors, and, in
such event, the holders of the Corporation's remaining shares
voting for the election of Directors will not be able to elect
any person or persons to the Board of Directors.
The Wisconsin Business Corporation Law (the "WBCL") permits
registered investment companies, such as the Corporation, to
operate without an annual meeting of shareholders under
specified circumstances if an annual meeting is not required
by the Act. The Corporation has adopted the appropriate
provisions in its By-laws and does not anticipate holding an
annual meeting of shareholders to elect Directors unless
otherwise required by the Act. Directors may be removed by
the shareholders at a special meeting. A special meeting of
the shareholders may be called by the Directors upon written
request of shareholders owning at least 10% of the
Corporation's outstanding voting shares.
The shares are redeemable and are transferable. All shares
issued and sold by the Corporation will be fully paid and
nonassessable except as provided in WBCL Section
180.0622(2)(b). Fractional shares of common stock entitle the
holder to the same rights as whole shares of common stock
except the right to receive a certificate evidencing such
fractional shares.
The definitions of the terms "series" and "class" in the WBCL
differ from the meanings assigned to those terms in this
prospectus and the Fund's Statement of Additional Information.
The Articles of Incorporation of the Corporation reconcile
this inconsistency in terminology, and provide that the Fund's
prospectus and Statement of Additional Information may define
these terms consistently with the use of those terms under the
Act and the Internal Revenue Code.
EFFECT OF BANKING LAWS
Banking laws and regulations presently prohibit a bank holding
company registered under the federal Bank Holding Company Act
of 1956 or any bank or non-bank affiliate thereof from
sponsoring, organizing, controlling or distributing the shares
of a registered, open-end management investment company
continuously engaged in the issuance of its shares, and
prohibit banks generally from issuing, underwriting, or
distributing securities. However, such banking laws and
regulations do not prohibit such a holding company, affiliate,
or banks generally from acting as investment adviser, transfer
agent or custodian to such an investment company or from
purchasing shares of such a company as agent for and upon the
order of such a customer. M&I Corp. is subject to such
banking laws and regulations.
M&I Corp. believes, based on the advice of its counsel, that
M&I Investment Management Corp. may perform the services
contemplated by the investment advisory agreement with the
Corporation without violation of the Glass-Steagall Act or
other applicable banking laws or regulations. Changes in
either federal or state statutes and regulations relating to
the permissible activities of banks and their subsidiaries or
affiliates, as well as further judicial or administrative
decisions or interpretations of such present or future
statutes and regulations, could prevent M&I Investment
Management Corp. or M&I Corp. from continuing to perform all
or a part of the above services for its customers and/or the
Fund. If M&I Investment Management Corp. and M&I Corp. were
prohibited from engaging in these activities, the Directors
would consider alternative advisers and means of continuing
available investment services. In such event, changes in the
operation of the Fund may occur, including possible
termination of any automatic or other Fund share investment
and redemption services then being provided by M&I Investment
Management Corp. and M&I Brokerage Services or MFIS. It is
not expected that existing shareholders would suffer any
adverse financial consequences if another adviser with
equivalent abilities to M&I Investment Management Corp. is
found as a result of any of these occurrences.
State securities laws governing the ability of depository
institutions to act as underwriters or distributors of
securities may differ from interpretations given to the Glass-
Steagall Act and, therefore, banks and financial institutions
may be required to register as dealers pursuant to state law.
TAX INFORMATION
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to
meet requirements of the Internal Revenue Code applicable to
regulated investment companies and to receive the special tax
treatment afforded to such companies.
The Fund will be treated as a single, separate entity for
federal income tax purposes so that income (including capital
gains) and losses realized by the other portfolios of the
Corporation, if any, will not be combined for tax purposes
with those realized by the Fund.
Investment income received by the Fund from sources within
foreign countries may be subject to foreign taxes withheld at
the source. The United States has entered into tax treaties
with many foreign countries that entitle the Fund to reduced
tax rates or exemptions on this income. The effective rate of
foreign tax cannot be predicted since the amount of Fund
assets to be invested within various countries is unknown.
However, the Fund intends to operate so as to qualify for
treaty-reduced tax rates where applicable.
Unless otherwise exempt, shareholders are required to pay
federal income tax on any dividends and other distributions
received. This applies whether dividends and distributions
are received in cash or as additional shares. Information on
the tax status of dividends and distribution is provided
annually.
If more than 50% of the value of the Fund's assets at the end
of the tax year is represented by stock or securities of
foreign corporations, the Fund intends to qualify for certain
Internal Revenue Code stipulations that would allow
shareholders to claim a foreign tax credit or deduction on
their U.S. income tax returns. The Internal Revenue Code may
limit a shareholder's ability to claim a foreign tax credit.
Furthermore, shareholders who elect to deduct their portion of
the Fund's foreign taxes rather than take the foreign tax
credit must itemize deductions on their income tax returns.
Shareholders are urged to consult their own tax advisers
regarding the status of their accounts under state and local
tax laws.
PERFORMANCE INFORMATION
From time to time, the Fund may advertise total return and
yield. Total return represents the change, over a specified
period of time, in the value of an investment in the Fund
after reinvesting all income and capital gains distributions.
It is calculated by dividing that change by the initial
investment and is expressed as a percentage.
The yield of the Fund is calculated by dividing the net
investment income per share (as defined by the Securities and
Exchange Commission) earned by the Fund over a thirty-day
period by the offering price per share of the Fund on the last
day of the period. This number is then annualized using semi-
annual compounding. The yield does not necessarily reflect
income actually earned by the Fund and, therefore, may not
correlate to the dividends or other distributions paid to
shareholders.
The Fund is sold without any sales load or other similar non-
recurring charges.
From time to time, the Fund may advertise its performance
using certain financial publications and/or compare its
performance to certain indices.
ADDRESSES
Marshall International Stock Fund Federated Investors Tower
Pittsburgh, Pennsylvania
15222-3779
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania
15222-3779
Adviser
M&I Investment Management Corp. 1000 North Water
Street
Milwaukee, Wisconsin 53202
Subadviser
Templeton Investment Counsel, Inc. 500 East Broward Blvd.
Suite 2100
Ft. Lauderdale, Florida
33394-3091
Custodian
Marshall & Ilsley Trust Company 1000 North Water
Street
Milwaukee, Wisconsin 53202
Transfer Agent, Dividend Disbursing Agent, and
Portfolio Accounting Services
Federated Services Company Federated Investors Tower
Pittsburgh, Pennsylvania
15222-3779
Shareholder Servicing Agent
Marshall Funds Investor Services P.O. Box 1348
Milwaukee, Wisconsin
53201-1348
or
1000 North Water Street
Milwaukee, Wisconsin
53202
Legal Counsel
Houston, Houston & Donnelly 2510 Centre City Tower
Pittsburgh, Pennsylvania
15222
Legal Counsel
Dickstein, Shapiro & Morin, L.L.P. 2101 L Street, N.W.
Washington, D.C. 20037
Independent Public Accountants
Arthur Andersen & Co. 2100 One PPG Place
Pittsburgh, Pennsylvania
15222
SUBJECT TO COMPLETION
PRELIMINARY STATEMENT OF ADDITIONAL INFORMATION
DATED JULY 1, 1994
MARSHALL INTERNATIONAL STOCK FUND
(A PORTFOLIO OF MARSHALL FUNDS, INC.)
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the
Marshall International Stock Fund ("Fund") prospectus dated
September __, 1994. This Statement is not a prospectus itself. To
receive a copy of the Fund's prospectus, write or call Marshall
Funds Investor Services a 414-287-8500 or 1-800-326-8560, M&I
Brokerage Services, Inc. or any M&I Bank.
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
Statement dated September __, 1994
FEDERATED SECURITIES CORP.
(LOGO)
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR
AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE
SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS
TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION
STATEMENT BECOMES EFFECTIVE. THIS STATEMENT OF ADDITIONAL
INFORMATION DOES NOT CONSTITUTE A PROSPECTUS.
TABLE OF CONTENTS
GENERAL INFORMATION ABOUT THE FUND
INVESTMENT OBJECTIVE AND POLICIES
Types of Investments
Securities of Foreign Issuers
Repurchase Agreements
Demand Features
Debt Obligations
Futures and Options Transactions
Foreign Currency Hedging Transactions
Risks
Warrants
Reverse Repurchase Agreements
Lending of Portfolio Securities
Portfolio Turnover
Investment Limitations
MARSHALL FUNDS, INC. MANAGEMENT
Officers and Directors
Fund Ownership
INVESTMENT ADVISORY SERVICES
Adviser to the Fund
Advisory Fees
Subadviser to the Fund
Subadvisory Fees
State Expense Limitations
ADMINISTRATIVE SERVICES
CUSTODIAN
BROKERAGE TRANSACTIONS
PURCHASING SHARES
Exchanging Securities for Fund Shares
DETERMINING NET ASSET VALUE
Determining Market Value of Securities
Trading in Foreign Securities
EXCHANGE PRIVILEGE
Requirements for Exchange
Making an Exchange
REDEEMING SHARES
Redemption in Kind
TAX STATUS
The Fund's Tax Status
Foreign Taxes
Shareholders' Tax Status
TOTAL RETURN
YIELD
PERFORMANCE COMPARISONS
APPENDIX
GENERAL INFORMATION ABOUT THE FUND
Marshall International Stock Fund (the "Fund") is a portfolio of
Marshall Funds, Inc. (the "Corporation"), which was established as
a Wisconsin corporation under the laws of the State of Wisconsin on
July 31, 1992.
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund is long-term capital
growth. While there is no assurance that the Fund will
achieve its investment objective, it endeavors to do so by
following the investment policies described in the prospectus
and this Statement of Additional Information. The investment
objective of the Fund cannot be changed by the Board of
Directors (the "Directors") without shareholder approval.
The Fund invests in a diversified portfolio composed primarily
of non-U.S. equity securities. Under normal market
conditions, the Fund will invest at least 65% of its total
assets in securities of issuers located in at least three
countries outside of the United States, and at least 65% of
its total assets in equity securities. However, when
appropriate to achieve its investment objective, the Fund may
purchase debt obligations, invest in domestic issuers, and
engage in the investment practices and strategies described in
the prospectus and below. Unless indicated otherwise, the
investment policies of the Fund may be changed by the
Directors without approval of shareholders. Shareholders
will be notified before any material change in these policies
becomes effective.
TYPES OF INVESTMENTS
SECURITIES OF FOREIGN ISSUERS
Investments in companies domiciled in developing countries may be
subject to potentially higher risks than investments in developed
countries. These risks include (i) less social, political and
economic stability; (ii) the small current size of the markets for
such securities and the currently low or nonexistent volume of
trading, which result in a lack of liquidity and in greater price
volatility; (iii) certain national policies which may restrict the
Fund's investment opportunities, including restrictions on
investment in issuers or industries deemed sensitive to national
interests; (iv) the absence of developed legal structures governing
private or foreign investment or allowing for judicial redress for
injury to private property; (v) the absence, until recently in
certain Eastern European countries, or a capital market structure
or market-oriented economy; and (vi) the possibility that recent
favorable economic developments in Eastern Europe may be slowed or
reversed by unanticipated political or social events in such
countries.
REPURCHASE AGREEMENTS
The Fund requires its custodian to take possession of the
securities subject to repurchase agreements and these securities
are marked to market daily. To the extent that the original seller
does not repurchase the securities from the Fund, the Fund could
receive less than the repurchase price on any sale of such
securities. In the event that such a defaulting seller filed for
bankruptcy or became insolvent, disposition of such securities by
the Fund might be delayed pending court action. The Fund believes
that, under the regular procedures normally in effect for custody
of the Fund's portfolio securities subject to repurchase
agreements, a court of competent jurisdiction would rule in favor
of the Fund and allow retention or disposition of such securities.
The Fund will only enter into repurchase agreements with banks and
other recognized financial institutions, such as broker/dealers,
which are deemed by the Fund's subadviser to be creditworthy
pursuant to guidelines established by the Directors.
DEMAND FEATURES
The Fund may acquire securities that are subject to puts and
standby commitments ("demand features") to purchase the
securities at their principal amount (usually with accrued
interest) within a fixed period (usually seven days following
a demand by the Fund). The demand feature may be issued by
the issuer of the underlying securities, a dealer in the
securities or by another third party, and may not be
transferred separately from the underlying security. A Fund
uses these arrangements to provide it with liquidity and not
to protect against changes in the market value of the
underlying securities. The bankruptcy, receivership or
default by the issuer of the demand feature, or a default on
the underlying security or other event that terminates the
demand feature before its exercise, will adversely affect the
liquidity of the underlying security. Demand features that
are exercisable even after a payment default on the underlying
security may be treated as a form of credit enhancement.
DEBT OBLIGATIONS
The Fund may purchase certain debt obligations known as
increasing rate securities. These securities are generally
offered at an initial interest rate which is at or above
prevailing market rates. Interest rates are reset
periodically (most commonly every 90 days) at different levels
on a predetermined scale. These levels of interest are
ordinarily set at progressively higher increments over time.
Some increasing rate securities may, by agreement, revert to a
fixed rate status. These securities may also contain features
which allow the issuer the option to convert the increasing
rate of interest to a fixed rate under such terms, conditions,
and limitations as are described in each issuer's prospectus.
FUTURES AND OPTIONS TRANSACTIONS
As a means of reducing fluctuations in the net asset value of
shares of the Fund, the Fund may attempt to hedge all or a portion
of its portfolio by buying and selling futures contracts and
options on futures contract, and buying put and call options on
portfolio securities and securities indices. The Fund may also
write covered put and call options on portfolio securities to
attempt to increase its current income or to hedge a portion of its
portfolio investments. The Fund will maintain its positions in
securities, option rights, and segregated cash subject to puts and
calls until the options are exercised, closed, or have expired. An
option position on futures contracts may be closed out over-the-
counter or on a nationally recognized exchange which provides a
secondary market for options of the same series. The Fund will not
engage in futures transactions for speculative purposes.
FUTURES CONTRACTS
The Fund may purchase and sell financial futures contracts to hedge
against the effects of changes in the value of portfolio securities
due to anticipated changes in interest rates and market conditions
without necessarily buying or selling the securities. Although
some financial futures contracts call for making or taking delivery
of the underlying securities, in most cases these obligations are
closed out before the settlement date. The closing of a
contractual obligation is accomplished by purchasing or selling an
identical offsetting futures contract. Other financial futures
contract by their terms call for cash settlements.
The Fund also may purchase and sell stock index futures contracts
with respect to any stock index traded on a recognized stock
exchange or board of trade to hedge against changes in prices.
Stock index futures contracts are based on indices that reflect the
market value of common stock of the firms included in the indices.
An index futures contract is an agreement pursuant to which two
parties agree to take or make delivery of an amount of cash equal
to the differences between the value of the index at the close of
the last trading day of the contract and the price at which the
index contract was originally written. No physical delivery of the
underlying securities in the index is made. Instead, settlement in
cash must occur upon the termination of the contract, with the
settlement being the difference between the contract price and the
actual level of the stock index at the expiration of the contract.
A futures contract is a firm commitment by two parties: the seller
who agrees to make delivery of the specific type of security called
for in the contract ("going short") and the buyer who agrees to
take delivery of the security ("going long") at a certain time in
the future. For example, in the fixed income securities market,
prices move inversely to interest rates. A rise in rates means a
drop in price. Conversely, a drop in rates means a rise in price.
In order to hedge its holdings of fixed income securities against a
rise in market interest rates, the Fund could enter into contracts
to deliver securities at a predetermined price (i.e., "go short")
to protect itself against the possibility that the prices of its
fixed income securities may decline during the Fund's anticipated
holding period. The Fund would "go long" (agree to purchase
securities in the future at a predetermined price) to hedge against
a decline in market interest rates.
"MARGIN" IN FUTURES TRANSACTIONS
Unlike the purchase or sale of a security, the Fund does not pay or
receive money upon the purchase or sale of a futures contract.
Rather, the Fund is required to deposit an amount of "initial
margin" in cash, U.S. Government securities or highly-liquid debt
securities with its custodian (or the broker, if legally
permitted). The nature of initial margin in futures transactions
is different from that of margin in securities transactions in that
initial margin in futures transactions does not involve the
borrowing of funds by the Fund to finance the transactions.
Initial margin is in the nature of a performance bond or good faith
deposit on the contract which is returned to the Fund upon
termination of the futures contract, assuming all contractual
obligations have been satisfied.
A futures contract held by the Fund is valued daily at the official
settlement price of the exchange on which it is traded. Each day
the Fund pays or receives cash, called "variation margin," equal to
the daily change in value of the futures contract. This process is
known as "marking to market." Variation margin does not represent a
borrowing or loan by the Fund but is instead settlement between the
Fund and the broker of the amount one would owe the other if the
futures contract expired. In computing its daily net asset value,
the Fund will mark to market its open futures positions. The Fund
is also required to deposit and maintain margin when it writes call
options on futures contracts.
To the extent required to comply with Commodity Futures Trading
Commission ("CFTC") Regulation 4.5 and thereby avoid status as a
"commodity pool operator, " the Fund will not enter into a futures
contract, or purchase an option thereon, if immediately thereafter
the initial margin deposits for futures contracts held by it, plus
premiums paid by it for open options on futures contracts, would
exceed 5% of the market value of the Fund's total assets, after
taking into account the unrealized profits and losses on those
contracts it has entered into; and, provided further, that in the
case of an option that is in-the-money at the time of purchase, the
in-the-money amount may be excluded in computing such 5%. Second,
the Fund will not enter into these contracts for speculative
purposes; rather, these transactions are entered into only for bona
fide hedging purposes, or other permissible purposes pursuant to
regulations promulgated by the CFTC. Third, since the Fund does
not constitute a commodity pool, it will not market itself as such,
nor serve as a vehicle for trading in the commodities futures or
commodity options markets. Finally, because the Fund will submit
to the CFTC special calls for information, the Fund will not
register as a commodities pool operator.
PUT OPTIONS ON FINANCIAL AND STOCK INDEX FUTURES CONTRACTS
The Fund may purchase listed put options on financial and stock
index futures contracts to protect portfolio securities against
decreases in value resulting from market factors, such as an
anticipated increase in interest rates or stock prices. Unlike
entering directly into a futures contract, which requires the
purchaser to buy a financial instrument on a set date at a
specified price, the purchase of a put option on a futures contract
entitles (but does not obligate) its purchaser to decide on or
before a future date whether to assume a short position at the
specified price.
Generally, if the hedged portfolio securities decrease in value
during the term of an option, the related futures contracts will
also decrease in value and the option will increase in value. In
such an event, the Fund will normally close out its option by
selling an identical option. If the hedge is successful, the
proceeds received by the Fund upon the sale of the second option
will be large enough to offset both the premium paid by the Fund
for the original option plus the decrease in value of the hedged
securities.
Alternatively, the Fund may exercise its put option to close out
the position. To do so, it would simultaneously enter into a
futures contract of the type underlying the option (for a price
less than the strike price of the option) and exercise the option.
The Fund would then deliver the futures contract in return for
payment of the strike price. If the Fund neither closes out nor
exercises an option, the option will expire on the date provided in
the option contract, and only the premium paid for the contract
will be lost.
When the Fund sells a put on a futures contract, it receive a cash
premium in exchange for granting to the purchaser of the put the
right to receive from the Fund, at the strike price, a short
position in such futures contract, even though the strike price
upon exercise of the option is greater than the value of the
futures position received by such holder. If the value of the
underlying futures position is not such that exercise of the option
would be profitable to the option holder, the option will generally
expire without being exercised. It will generally be the policy of
the Fund, in order to avoid the exercise of an option sold by it,
to cancel its obligation under the option by entering into a
closing purchase transaction, if available, unless it is determined
to be in the Fund's interest to deliver the underlying futures
position. A closing purchase transaction consists of the purchase
by the Fund of an option having the same term as the option sold by
the Fund, and has the effect of canceling the Fund's position as a
seller. The premium which the Fund will pay in executing a closing
purchase transaction may be higher than the premium received when
the option was sold, depending in large part upon the relative
price of the underlying futures position at the time of each
transaction.
CALL OPTIONS ON FINANCIAL AND STOCK INDEX FUTURES CONTRACTS
In addition to purchasing put options on futures, the Fund may
write listed and over-the-counter call options on financial and
stock index futures contracts to hedge its portfolio. When the
Fund writes a call option on a futures contract, it is undertaking
the obligation of assuming a short futures position (selling a
futures contract) at the fixed strike price at any time during the
life of the option if the option is exercised. As stock prices
fall or market interest rates rise, causing the prices of futures
to go down, the Fund's obligation under a call option on a future
(to sell a futures contract) costs less to fulfill, causing the
value of the Fund's call option position to increase.
In other words, as the underlying futures price goes down below the
strike price, the buyer of the option has no reason to exercise the
call, so that the Fund keeps the premium received for the option.
This premium can substantially offset the drop in value of the
Fund's portfolio securities.
Prior to the expiration of a call written by the Fund, or exercise
of it by the buyer, the Fund may close out the option by buying an
identical option. If the hedge is successful, the cost of the
second option will be less than the premium received by the Fund
for the initial option. The net premium income of the Fund will
then substantially offset the decrease in value of the hedged
securities.
When the Fund purchases a call on a financial futures contract, it
receives in exchange for the payment of a cash premium the right,
but not the obligation, to enter into the underlying futures
contract at a strike price determined at the time the call was
purchased, regardless of the comparative market value of such
futures position at the time the option is exercised. The holder
of a call option has the right to receive a long (or buyer's)
position in the underlying futures contract.
The Fund will not maintain open positions in futures contracts it
has sold or call options it has written on futures contracts if, in
the aggregate, the value of the open positions (marked to market)
exceeds the current market value of its securities portfolio plus
or minus the unrealized gain or loss on those open positions,
adjusted for the correlation of volatility between the hedged
securities and the futures contracts. If this limitation is
exceeded at any time, the Fund will take prompt action to close out
a sufficient number of open contracts to bring its open futures and
options positions within this limitation.
PURCHASING PUT OPTIONS ON PORTFOLIO SECURITIES AND STOCK INDICES
The Fund may purchase put options on portfolio securities and stock
indices to protect against price movements in the Fund's portfolio
securities. A put option gives the Fund, in return for a premium,
the right to sell the underlying security to the writer (seller) at
a specified price during the term of the option.
WRITING COVERED CALL OPTIONS ON PORTFOLIO SECURITIES AND STOCK
INDICES
The Fund may also write covered call options to generate income and
thereby protect against price movements in the Fund's portfolio
securities. As writer of a call option, the Fund has the
obligation upon exercise of the option during the option period to
deliver the underlying security upon payment of the exercise price
or, in the case of a securities index, a cash payment equal to the
difference between the closing price of the index and the exercise
price of the option. The Fund may only sell call options either on
securities held in its portfolio or on securities which it has the
right to obtain without payment of further consideration (or has
segregated cash in the amount of any additional consideration).
FOREIGN CURRENCY HEDGING TRANSACTIONS
In order to hedge against foreign currency exchange rate risks, the
Fund may enter into forward foreign currency exchange contracts and
foreign currency futures contracts, as well as purchase put or call
options on foreign currencies, as described below. The Fund may
also conduct its foreign currency exchange transactions on a spot
(i.e., cash) basis at the spot rate prevailing in the foreign
currency exchange market.
The Fund may enter into forward foreign currency exchange contracts
("forward contracts") to attempt to minimize the risk to the Fund
from adverse changes in the relationship between the U.S. dollar
and foreign currencies. A forward contract is an obligation to
purchase or sell a specific currency for an agreed price at a
future date which is individually negotiated and privately traded
by currency traders and their customers. The Fund may enter into a
forward contract, for example, when it enters into a contract for
the purchase or sale of a security denominated in a foreign
currency in order to "lock in" the U.S. dollar price of the
security. In addition, for example, when the Fund believes that a
foreign currency may suffer a substantial decline against the U.S.
dollar, it may enter into a forward contract to sell an amount of
that foreign currency approximating the value of some or all of the
Fund's portfolio securities denominated in such foreign currency,
or when the Fund believes that the U.S. dollar may suffer a
substantial decline against a foreign currency, it may enter into a
forward contract to buy that foreign currency for a fixed dollar
amount. This second investment practice is generally referred to
as "cross-hedging." Because in connection with the Fund's forward
foreign currency transactions an amount of the Fund's assets equal
to the amount of the purchase will be held aside or segregated to
be used to pay for the commitment, the Fund will always have cash,
cash equivalents or high quality debt securities available
sufficient to cover any commitments under these contracts or to
limit any potential risk. The segregated account will be marked-to-
market on a daily basis. While these contracts are not presently
regulated by the CFTC, the CFTC may in the future assert authority
to regulate forward contracts. In such event, the Fund's ability
to utilize forward contracts in the manner set forth above may be
restricted. Forward contracts may limit potential gain from a
positive change in the relationship between the U.S. dollar and
foreign currencies. Unanticipated changes in currency prices may
result in poorer overall performance for the Fund that if it had
not engaged in such contracts.
The Fund may purchase and write put and call options on foreign
currencies for the purpose of protecting against declines in the
dollar value of foreign portfolio securities and against increases
in the dollar cost of foreign securities to be acquired. As is the
case with other kinds of options, however, the writing of an option
on foreign currency will constitute only a partial hedge, up to the
amount of the premium received, and the Fund could be required to
purchase or sell foreign currencies at disadvantageous exchange
rates, thereby incurring losses. The purchase of an option on
foreign currency may constitute an effective hedge against
fluctuation in exchange rates, although, in the event of rate
movements adverse to the Fund's position, the Fund may forfeit the
entire amount of the premium plus related transaction costs.
Options on foreign currencies to be written or purchased by the
Fund will be traded on U.S. and foreign exchanges or over-the-
counter.
The Fund may enter into exchange-traded contracts for the purchase
or sale for future delivery of foreign currencies ("foreign
currency futures"). This investment technique will be used only to
hedge against anticipated future changes in exchange rates which
otherwise might adversely affect the value of the Fund's portfolio
securities or adversely affect the prices of securities that the
Fund intends to purchase at a later date. The successful use of
foreign currency futures will usually depend on the ability of the
Fund's subadviser to forecast currency exchange rate movements
correctly. Should exchange rates move in an unexpected manner, the
Fund may not achieve the anticipated benefits of foreign currency
futures or may realize losses.
RISKS
When the Fund uses futures and options on futures as hedging
devices, there is a risk that the prices of the securities or
foreign currency subject to the futures contracts may not correlate
perfectly with the prices of the securities or currency in the
Fund's portfolio. This may cause the futures contract and any
related options to react differently to market changes than the
portfolio securities or foreign currency. In addition, the Fund's
adviser could be incorrect in its expectations about the direction
or extent of market factors such as stock price movements or
foreign currency exchange rate fluctuations. In these events, the
Fund may lose money on the futures contract or option.
It is not certain that a secondary market for positions in futures
contracts or for options will exist at all times. Although the
Fund's adviser will consider liquidity before entering into these
transactions, there is no assurance that a liquid secondary market
on an exchange or otherwise will exist for any particular futures
contract or option at any particular time. The Fund's ability to
establish and close out futures and options positions depends on
this secondary market. The inability to close out these positions
could have an adverse effect on the Fund's ability to effectively
hedge its portfolio.
To minimize risks, the Fund may not purchase or sell futures
contracts or related options if immediately thereafter the sum of
the amount of margin deposits on the Fund's existing futures
positions and premiums paid for related options would exceed 5% of
the market value of the Fund's total assets after taking into
account the unrealized profits and losses on those contracts it has
entered into; and, provided further, that in the case of an option
that is in-the-money at the time of purchase, the in-the-money
amount may be excluded in computing such 5%. When the Fund
purchases futures contracts, an amount of cash and cash
equivalents, equal to the underlying commodity value of the futures
contracts (less any related margin deposits), will be deposited in
a segregated account with the Fund's custodian (or the broker, if
legally permitted) to collateralize the position and thereby insure
that the use of such futures contract is unleveraged. When the
Fund sells futures contracts, it will either own or have the right
to receive the underlying future or security, or will make deposits
to collateralize the position as discussed above.
WARRANTS
The Fund may purchase warrants. Warrants are basically options to
purchase common stock at a specific price (usually at a premium
above the market value of the optioned common stock at issuance)
valid for a specific period of time. Warrants may have a life
ranging from less than a year to twenty years or may be perpetual.
However, most warrants have expiration dates after which they are
worthless. In addition, if the market price of the common stock
does not exceed the warrant's exercise price during the life of the
warrant, the warrant will expire as worthless. Warrants have no
voting rights, pay no dividends, and have no rights with respect to
the assets of the corporation issuing them. The percentage
increase or decrease in the market price of the warrant may tend to
be greater than the percentage increase or decrease in the market
price of the optioned common stock.
REVERSE REPURCHASE AGREEMENTS
The Fund may enter into reverse repurchase agreements. This
transaction is similar to borrowing cash. In a reverse repurchase
agreement, the Fund transfers possession of a portfolio instrument
to another person, such as a financial institution, broker, or
dealer, in return for a percentage of the instrument's market value
in cash, and agrees that on a stipulated date in the future the
Fund will repurchase the portfolio instrument by remitting the
original consideration plus interest at an agreed upon rate. The
use of reverse repurchase agreements may enable the Fund to avoid
selling portfolio instruments at a time when a sale may be deemed
to be disadvantageous, but the ability to enter into reverse
repurchase agreements does not ensure that the Fund will be able to
avoid selling portfolio instruments at a disadvantageous time.
When effecting reverse repurchase agreements, liquid assets of the
Fund, in a dollar amount sufficient to make payment for the
obligations to be purchased, are segregated at the trade date.
These securities are marked to market daily and maintained until
the transaction is settled.
LENDING OF PORTFOLIO SECURITIES
The collateral received when the Fund lends portfolio securities
must be valued daily and, should the market value of the loaned
securities increase, the borrower must furnish additional
collateral to the Fund. During the time portfolio securities are
on loan, the borrower pays the Fund any dividends or interest paid
on such securities. Loans are subject to termination at the option
of the Fund or the borrower. The Fund may pay reasonable
administrative and custodial fees in connection with a loan and may
pay a negotiated portion of the interest earned on the cash or
equivalent collateral to the borrower or placing broker. If the
Fund does not have the right to vote securities on loan, it would
terminate the loan and regain the right to vote if that were
considered important with respect to the investment.
PORTFOLIO TURNOVER
Although the Fund does not intend to invest for the purpose of
seeking short-term profits, securities in the portfolio will be
sold whenever the Fund's subadviser believes it is appropriate to
do so in light of the Fund's investment objective without regard to
the length of time a particular security may have been held. The
investment adviser does not anticipate that the Fund's portfolio
turnover will generally exceed 50%.
INVESTMENT LIMITATIONS
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any
securities on margin, but may obtain such short-term credits as may
be necessary for clearance of purchases and sales of portfolio
securities. A deposit or payment by the Fund of initial or
variation margin in connection with futures contracts, forward
contracts or related options transactions is not considered the
purchase of a security on margin.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities except that the Fund may
borrow money directly or through reverse repurchase agreements in
amounts up to one-third of the value of its total assets including
the amounts borrowed, and except to the extent that the Fund will
enter into futures contracts or forward contracts.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets
except to secure permitted borrowings. In those cases, it may
pledge assets having a market value not exceeding the lesser of the
dollar amounts borrowed or 15% of the value of total assets at the
time of the pledge. For purposes of this limitation, the following
are not deemed to be pledges: margin deposits for the purchase and
sale of futures contracts and related options; and segregation of
collateral arrangements made in connection with options activities,
forward contracts or the purchase of securities on a when-issued
basis.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets except portfolio
securities. This shall not prevent the Fund from purchasing or
holding U.S. government obligations, money market instruments,
variable rate demand notes, bonds, debentures, notes, certificates
of indebtedness, or other debt securities, entering into repurchase
agreements, or engaging in other transactions where permitted by
the Fund's investment objective, policies, and limitations.
INVESTING IN COMMODITIES
The Fund will not purchase or sell commodities, commodity
contracts, or commodity futures contracts except that the Fund may
purchase and sell futures contracts and related options, and enter
into forward contracts and related options.
INVESTING IN REAL ESTATE
The Fund will not purchase or sell real estate, including limited
partnership interests, although it may invest in the securities of
companies whose business involves the purchase or sale of real
estate or in securities which are secured by real estate or which
represent interests in real estate.
DIVERSIFICATION OF INVESTMENTS
With respect to securities comprising 75% of the value of its total
assets, the Fund will not purchase securities issued by any one
issuer (other than cash, cash items or securities issued or
guaranteed by the government of the United States or its agencies
or instrumentalities and repurchase agreements collateralized by
such securities) if as a result more than 5% of the value of its
total assets would be invested in the securities of that issuer or
if it would own more than 10% of the outstanding voting securities
of such issuer.
CONCENTRATION OF INVESTMENTS
The Fund will not invest 25% or more of its total assets in any one
industry. However, investing in U.S. government securities shall
not be considered investments in any one industry.
UNDERWRITING
The Fund will not underwrite any issue of securities, except as it
may be deemed to be an underwriter under the Securities Act of 1933
in connection with the sale of restricted securities which the Fund
may purchase pursuant to its investment objective, policies and
limitations.
The above investment limitations cannot be changed without
shareholder approval. The following limitations, however, may be
changed by the Directors without shareholder approval.
Shareholders will be notified before any material change in these
limitations becomes effective.
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 15% of the value of its net
assets in illiquid securities, including repurchase agreements
providing for settlement in more than seven days after notice, over-
the-counter options, and certain restricted securities not
determined by the Directors to be liquid.
INVESTING IN NEW ISSUERS
The Fund will not invest more than 5% of the value of its total
assets in securities of issuers which have records of less than
three years of continuous operations, including the operation of
any predecessor.
INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS AND
DIRECTORS OF THE CORPORATION
The Fund will not purchase or retain the securities of any issuer
if the Officers and Directors of the Corporation or the Fund's
advisers, owning individually more than 1/2 of 1% of the issuer's
securities, together own more than 5% of the issuer's securities.
INVESTING IN MINERALS
The Fund will not purchase interests in oil, gas, or other mineral
exploration or development programs or leases, except it may
purchase the securities of issuers which invest in or sponsor such
programs.
PURCHASING SECURITIES TO EXERCISE CONTROL
The Fund will not purchase securities of a company for the purpose
of exercising control or management.
INVESTING IN WARRANTS
The Fund will not invest more than 5% of its net assets in
warrants, including those acquired in units or attached to other
securities. To comply with certain state restrictions, the Fund
will limit its investment in such warrants not listed on the New
York or American Stock Exchanges to 2% of its net assets. (If
state restrictions change, this latter restriction may be revised
without notice to shareholders.) For purposes of this investment
restriction, warrants will be valued at the lower of cost or
market, except that warrants acquired by the Fund in units with or
attached to securities may be deemed to be without value.
INVESTING IN PUT OPTIONS
The Fund will not purchase put options on securities, unless the
securities are held in the Fund's portfolio and not more than 5% of
the value of the Fund's total assets would be invested in premiums
on open put option positions.
WRITING COVERED CALL OPTIONS
The Fund will not write call options on securities unless the
securities are held in the Fund's portfolio or unless the Fund is
entitled to them in deliverable form without further payment or
after segregating cash in the amount of any further payment. The
Fund will not write call options in excess of 25% of the value of
its total assets.
Except with respect to borrowing money, if a percentage limitation
is adhered to at the time of investment, a later increase or
decrease in percentage resulting from any change in value or net
assets will not result in a violation of such restriction. For
purposes of its policies and limitations, the Fund considers
certificates of deposit and demand and time deposits issued by a
U.S. branch of a domestic bank or savings and loan having capital,
surplus, and undivided profits in excess of $100,000,000 at the
time of investment to be "cash items."
In order to permit the sale of the Fund's shares in certain states,
the Fund may make commitments more restrictive than the investment
limitations described above. In this regard, to comply with
certain state restrictions, the Fund will not invest more than 5%
of its total assets in securities subject to restrictions on resale
under the Securities Act of 1933, except for commercial paper
issued under Section 4(2) of the Securities Act of 1933 and certain
other restricted securities which meet the criteria for liquidity
as established by the Directors. If state requirements change,
these restrictions may be changed without notice to shareholders.
MARSHALL FUNDS, INC. MANAGEMENT
OFFICERS AND DIRECTORS
Officers and Directors are listed with their addresses, principal
occupations, and present positions, including any affiliation with
Marshall & Ilsley Corp., Federated Investors, Federated Securities
Corp., Federated Services Company, and Federated Administrative
Services.
Position with Principal Occupation
Name and Address the Corporation During Past Five Years
Edward C. Gonzales* Chairman, Director Director, Vice
Federated Investors Tower and Treasurer
Pittsburgh, PA President, Treasurer,
and Trustee,
Federated Investors;
Vice President and
Treasurer, Federated
Advisers, Federated
Management, and
Federated Research;
Executive Vice
President, Treasurer,
and Director,
Federated Securities
Corp.; Chairman,
Treasurer, and
Trustee, Federated
Administrative
Services; Trustee,
Director, Vice
President and/or
Treasurer of certain
investment companies
advised or
distributed by
affiliates of
Federated Investors.
John DeVincentis Director Independent Financial
4700 21st Street Consultant; retired,
Racine, WI 53406 Senior Vice President
of Finance, In-Sink-
Erator Division of
Emerson Motors.
Ody J. Fish Director Formerly, Director,
247 Progress Drive Newton Income Fund,
Hartland, WI Inc. and Newton Growth
Fund, Inc.; Private
Investor; formerly
President Pal-O-Pak
Insulation Company.
Paul E. Hassett Director Formerly, Director,
1630 Capital Avenue Newton Income Fund,
Madison, WI Inc. and Newton Growth
Fund, Inc.; Retired;
formerly President,
Wisconsin
Manufacturers and
Commerce.
James F. Duca, II President Vice President,
1000 N. Water Street Marshall & Ilsley
Milwaukee, WI Trust Company;
Vice President,
Marshall & Ilsley
Trust Company of
Florida, formerly
Secretary, Marshall &
Ilsley Trust Company
and Marshall & Ilsley
Trust Company of
Florida.
Joseph S. Machi Vice President and Vice President,
Federated Investors Tower Assistant Treasurer
Pittsburgh, PA Federated
Administrative
Services; Director,
Private Label
Management, Federated
Investors; Vice
President and
Assistant Treasurer
of certain funds for
which Federated
Securities Corp. is
the principal
distributor.
Peter J. Germain Secretary Corporate Counsel,
Federated Investors Tower Federated Investors.
Pittsburgh, PA
* This Director is deemed to be an "interested person" of the
Fund or the Corporation as defined in the Investment Company
Act of 1940.
FUND OWNERSHIP
Officers and Directors of the Corporation own less than 1% of the
Fund's outstanding shares.
INVESTMENT ADVISORY SERVICES
ADVISER TO THE FUND
The Fund's investment adviser is M&I Investment Management Corp.
("Adviser"). The Adviser shall not be liable to the Corporation,
the Fund or any shareholder of the Fund for any losses that may be
sustained in the purchase, holding, or sale of any security, or for
anything done or omitted by it, except acts or omissions involving
willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties imposed upon it by its contract with the
Corporation. Because of the internal controls maintained by the
Adviser's affiliates to restrict the flow of non-public
information, Fund investments are typically made without any
knowledge of the Adviser or its affiliates' lending relationships
with an issuer.
The Adviser has previously served as investment adviser to Newton
Money Fund, Newton Income Fund, and Newton Growth Fund.
ADVISORY FEES
For its advisory services, the Adviser receives an annual
investment advisory fee as described in the combined prospectus.
SUBADVISER TO THE FUND
Templeton Investment Counsel, Inc. ("TICI") is the subadviser
to the Fund under the terms of a Subadvisory Contract between
the Adviser and TICI. TICI is a Florida corporation and an
indirect wholly-owned subsidiary of Franklin Resources, Inc.
("Franklin"), a publicly traded company whose shares are
listed on the New York Stock Exchange. Charles B. Johnson,
Rupert H. Johnson, Jr. and R. Martin Wiskemann are principal
shareholders of Franklin and own, respectively, approximately
20%, 16% and 9.2% of its outstanding shares. Messrs. Charles
B. Johnson and Rupert H. Johnson, Jr. are brothers.
Research services may be provided to TICI by various
affiliates, including Templeton, Galbraith & Hansberger Ltd.
and Templeton Quantitative Advisors, Inc., corporations
registered under the Investment Advisers Act of 1940, and
Templeton Management Limited, a Canadian company. The
research services include information, analytical reports,
computer screening studies, statistical data, and factual
resumes pertaining to securities in the United States and in
various foreign nations. Such supplemental research, when
utilized, is subject to analysis by TICI before being
incorporated into the investment advisory process. TICI pays
these affiliates compensation and reimbursement of expenses as
mutually agreed upon, without cost to the Fund. These
affiliates and TICI are independent contractors and in no
sense is any of them an agent for the other. Any of them is
free to discontinue such research services at any time on 30
days' notice without cost or penalty.
SUBADVISORY FEES
For its services under the Subadvisory Contract, TICI receives
a subadvisory fee, as described in the prospectus.
STATE EXPENSE LIMITATIONS
The Adviser has undertaken to comply with the expense limitations
established by certain states for investment companies whose shares
are registered for sale in those states. If the Fund's normal
operating expenses (including the investment advisory fee, but not
including brokerage commissions, interest, taxes, and extraordinary
expenses) exceed 2 1/2% per year of the first $30 million of
average net assets, 2% per year of the next $70 million of average
net assets, and 1 1/2% per year of the remaining average net
assets, the Adviser will reimburse the Fund for its expenses over
the limitation. If the Fund's monthly projected operating expenses
exceed this limitation, the advisory fees paid will be reduced by
the amount of the excess, subject to an annual adjustment. If the
expense limitation is exceeded, the amount to be reimbursed by the
Adviser will be limited, in any single fiscal year, by the amount
of its advisory fees.
This arrangement is not part of the advisory contract and may be
amended or rescinded in the future.
ADMINISTRATIVE SERVICES
Federated Administrative Services, a subsidiary of Federated
Investors, provides administrative personnel and services to the
Fund for the fee set forth in the combined prospectus.
CUSTODIAN
For its services as custodian, Marshall & Ilsley Trust Company
("M&I Trust Company") receives an annual fee, payable monthly, of
0.02% of the first $250 million of the Fund's average aggregate
daily net assets and 0.01% on such assets over $250 million. In
addition, M&I Trust Company is reimbursed for its out-of-pocket
expenses, which include postage, telephone supplies, and wire
charges. M&I Trust Company has entered into agreements with
foreign subcustodians approved by the Directors pursuant to Rule
17f-5 under the Act. The foreign subcustodians may not hold
certificates for the securities in their custody, but instead have
book records with domestic and foreign securities depositories,
which in turn have book records with the transfer agents of the
issuers of the securities. Compensation for the services of the
foreign subcustodians is based on a schedule of charges agreed on
from time to time.
BROKERAGE TRANSACTIONS
The Adviser and/or TICI may select brokers and dealers who offer
brokerage and research services. These services may be furnished
directly to the Fund, the Adviser, or TICI and may include:
- - advice as to the advisability of investing in securities;
- - security analysis and reports;
- - economic studies;
- - industry studies;
- - receipt of quotations for portfolio evaluations; and
- - similar services.
The Adviser, TICI, and their affiliates exercise reasonable
business judgment in selecting brokers who offer brokerage and
research services to execute securities transactions. They
determine in good faith that commissions charged by such persons
are reasonable in relationship to the value of the brokerage and
research services provided.
Research services provided by brokers and dealers may be used by
the Adviser and TICI in advising the Fund and other accounts. To
the extent that receipt of these services may supplant services for
which the Adviser, TICI, or their affiliates might otherwise have
paid, it would tend to reduce their expenses.
PURCHASING SHARES
Shares are sold at their net asset value on days on which the New
York Stock Exchange is open for business. The procedure for
purchasing shares of the Fund is explained in the prospectus under
"Investing in the Fund."
EXCHANGING SECURITIES FOR FUND SHARES
The Fund may accept securities in exchange for Fund shares. The
Fund will allow such exchanges only upon the prior approval of the
Fund and a determination by the Fund and its advisers that the
securities to be exchanged are acceptable.
Any securities exchanged must meet the investment objective and
policies of the Fund, must have a readily ascertainable market
value, and must be liquid. The market value of any securities
exchanged in an initial investment, plus any cash, must be at least
equal to the minimum investment in the Fund. The Fund acquires the
exchanged securities for investment and not for resale.
Securities accepted by the Fund will be valued in the same manner
as the Fund values its assets. The basis of the exchange will
depend on the net asset value of Fund shares on the day the
securities are valued. One share of the Fund will be issued for
the equivalent amount of securities accepted.
Any interest earned on the securities prior to the exchange will be
considered in valuing the securities. All interest, dividends,
subscription or other rights attached to the securities become the
property of the Fund, along with the securities.
If an exchange is permitted, it will be treated as a sale for
federal income tax purposes. Depending upon the cost basis of the
securities exchanged for Fund shares, a gain or loss may be
realized by the investor.
DETERMINING NET ASSET VALUE
The net asset value generally changes each day. The days on which
net asset value is calculated by the Fund are described in the
combined prospectus.
DETERMINING MARKET VALUE OF SECURITIES
Market values of the Fund's portfolio securities are determined as
follows:
- -according to the last reported sales price on a recognized
securities exchange, if available. (If a security is traded on
more than one exchange, the price on the primary market for that
security, as determined by the Fund's adviser or subadviser, is
used. );
- -according to the last reported bid price, if no sale on the
recognized exchange is reported or if the security is traded over-
the-counter;
- -for short-term obligations with remaining maturities of less than
60 days at the time of purchase, at amortized cost, which
approximates fair value; or
- -at fair value as determined in good faith by the Directors.
Prices provided by independent pricing services may be determined
without relying exclusively on quoted prices and may reflect:
institutional trading in similar groups of securities, yield,
quality, coupon rate, maturity, type of issue, trading
characteristics, and other market data.
The Fund will value futures contracts, and options on stocks, stock
indices and futures contracts at their market values established by
the exchanges at the close of option trading on such exchanges
unless the Directors determine in good faith that another method of
valuing these positions is necessary.
TRADING IN FOREIGN SECURITIES. Trading in foreign securities may
be completed at times which vary from the closing of the New York
Stock Exchange. In computing the net asset value, the Fund values
foreign securities at the latest closing price on the exchange on
which they are traded immediately prior to the closing of the New
York Stock Exchange. Certain foreign currency exchange rates may
also be determined at the latest rate prior to the closing of the
New York Stock Exchange. Foreign securities quote din foreign
currencies are translated into U.S. dollars at current rates.
Occasionally, events that affect these values and exchange rates
may occur between the times at which they are determined and the
closing of the New York Stock Exchange. If such events materially
affect the value of portfolio securities, these securities may be
valued at their fair value as determined in good faith by the
Directors, although the actual calculation may be done by others.
EXCHANGE PRIVILEGE
REQUIREMENTS FOR EXCHANGE
Shareholders using the exchange privilege must exchange shares
having a net asset value of at least $1,000, except for exchanges
into Institutional Service Shares of Max-Cap Fund, which requires a
$25,000 minimum investment. Before the exchange, the shareholder
must receive a prospectus of the fund for which the exchange is
being made.
Further information on the exchange privilege and prospectuses may
be obtained by calling Marshall Funds Investor Services, M&I
Brokerage Services, Inc. or any M&I Bank.
MAKING AN EXCHANGE
Instructions for exchanges may be given in writing or by telephone.
Written instructions may require a signature guarantee.
REDEEMING SHARES
The Fund redeems shares at the next computed net asset value after
the redemption requests are received. Redemption procedures are
explained in the prospectus under "Redeeming Shares."
REDEMPTION IN KIND
Although the Corporation intends to redeem shares in cash, it
reserves the right under certain circumstances to pay the
redemption price in whole or in part by a distribution of
securities from the Fund's portfolio. To the extent available,
such securities will be readily marketable.
Redemption in kind will be made in conformity with applicable
Securities and Exchange Commission rules, taking such securities at
the same value employed in determining net asset value and
selecting the securities in a manner the Directors determine to be
fair and equitable.
The Corporation has elected to be governed by Rule 18f-1 under the
Investment Company Act of 1940, which obligates the Corporation to
redeem shares for any one shareholder in cash only up to the lesser
of $250,000 or 1% of the Fund's net asset value during any 90-day
period.
Redemption in kind is not as liquid as a cash redemption. If
redemption is made in kind, shareholders receiving their securities
and selling them before their maturity could receive less than the
redemption value of their securities and could incur transaction
costs.
TAX STATUS
THE FUND'S TAX STATUS
The Fund will pay no federal income tax because the Fund expects to
meet the requirements of Subchapter M of the Internal Revenue Code
applicable to regulated investment companies and to receive the
special tax treatment afforded to such companies. To qualify for
this treatment, the Fund must, among other requirements:
- -derive at least 90% of its gross income from dividends, interest,
and gains from the sale of securities;
- -derive less than 30% of its gross income from the sale of
securities held less than three months;
- -invest in securities within certain statutory limits; and
- -distribute to its shareholders at least 90% of its net income
earned during the year.
However, the Fund may invest in the stock of certain foreign
corporations which would constitute a Passive Foreign Investment
Company (PFIC). Federal income taxes may be imposed on the Fund
upon disposition of PFIC investments.
FOREIGN TAXES
Investment income on certain foreign securities in which the Fund
may invest may be subject to foreign withholding or other taxes
that could reduce the return on these securities. Tax treaties
between the United States and foreign countries, however, may
reduce or eliminate the amount of foreign taxes to which the Fund
would be subject.
SHAREHOLDERS' TAX STATUS
Shareholders are subject to federal income tax on dividends
received as cash or additional shares. The dividends received
deduction for corporations will apply to ordinary income
distributions to the extent the distribution represents amounts
that would qualify for the dividends received deduction to the Fund
if the Fund were a regular corporation, and to the extent
designated by the Fund as so qualifying. These dividends and any
short-term capital gains are taxable as ordinary income.
CAPITAL GAINS
Capital gains, when experienced by the Fund, could result in an
increase in dividends. Capital losses could result in a decrease
in dividends. When the Fund realizes net long-term capital gains,
it will distribute them at least once every 12 months.
TOTAL RETURN
The average annual total return for the Fund is the average
compounded rate of return for a given period that would equate a
$1,000 initial investment to the ending redeemable value of that
investment. The ending redeemable value is computed by multiplying
the number of shares owned at the end of the period by the offering
price per share at the end of the period. The number of shares
owned at the end of the period is based on the number of shares
purchased at the beginning of the period with $1,000, adjusted over
the period by any additional shares, assuming the quarterly
reinvestment of any dividends and distributions.
YIELD
The yield for the Fund is determined by dividing the net investment
income per share (as defined by the Securities and Exchange
Commission) earned by the Fund over a thirty-day period by the
offering price per share of the Fund on the last day of the period.
This value is annualized using semi-annual compounding. This means
that the amount of income generated during the thirty-day period is
assumed to be generated each month over a twelve-month period and
is reinvested every six months. The yield does not necessarily
reflect income actually earned by the Fund because of certain
adjustments required by the Securities and Exchange Commission and,
therefore, may not correlate to the dividends or other
distributions paid to shareholders.
To the extent that financial institutions and broker/dealers charge
fees in connection with services provided in conjunction with an
investment in the Fund, performance will be reduced for those
shareholders paying those fees.
PERFORMANCE COMPARISONS
The Fund's performance depends upon such variables as:
- - portfolio quality;
- - average portfolio maturity;
- - type of instruments in which the portfolio is invested;
- - changes in interest rates and market value of portfolios
securities;
- - changes in Fund expenses;
- - the relative amount of Fund cash flow; and
- - various other factors.
The Fund's performance fluctuates on a daily basis largely because
net earnings and offering price per share fluctuate daily. Both
net earnings and offering price per share are factors in the
computation of yield and total return. Investors may use financial
publications and/or indices to obtain a more complete view of the
Fund's performance. When comparing performance, investors should
consider all relevant factors such as the composition of any index
used, prevailing market conditions, portfolio compositions of other
funds, and methods used to value portfolio securities and compute
offering price. The financial publications and/or indices which
the Fund uses in advertising may include:
- -MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALIA AND FAR
EAST INDEX (EAFE) is a market capitalization weighted foreign
securities index, which is widely used to measure the performance
of European, Australian and New Zealand and Far Eastern stock
markets. The index covers approximately 1,020 companies drawn
from 18 countries in the above regions. The index values its
securities daily in both U.S. dollars and local currency and
calculates total returns monthly. EAFE U.S. dollar total return
is a net dividend figure less Luxembourg withholding tax. The
EAFE is monitored by Capital International, S.A., Geneva,
Switzerland.
- -LIPPER ANALYTICAL SERVICES, INC. ranks funds in various fund
categories by making comparative calculations using total return.
Total return assumes the reinvestment of all capital gains
distributions and income dividends and takes into account any
change in net asset value over a specific period of time. From
time to time, the Fund will quote its Lipper ranking in the
"international funds" or "global funds" category in advertising
and sales literature.
- -CONSUMER PRICE INDEX is generally considered to be a measure of
inflation.
- -DOW JONES INDUSTRIAL AVERAGE ("DJIA") is an unmanaged index
representing share prices of major industrial corporations, public
utilities, and transportation companies. Produced by the Dow
Jones & Company, it is cited as a principal indicator of market
conditions.
- -STANDARD & POOR'S DAILY STOCK PRICE INDEX OF 500 COMMON STOCKS, a
composite index of common stocks in industry, transportation,
financial, and public utility companies. The Standard & Poor's
index assumes reinvestment of all dividends paid by stocks listed
on the index. Taxes due on any of these distributions are not
included, nor are brokerage or other fees calculated in the
Standard & Poor's figures.
- -MORNINGSTAR, INC., an independent rating service, is the publisher
of the bi-weekly Mutual Fund Values. Mutual Fund Values rates
more than 1,000 NASDAQ-listed mutual funds of all types, according
to their risk-adjusted returns. The maximum rating is five stars,
and ratings are effective for two weeks.
Investors may also consult the fund evaluation consulting universes
listed below. Consulting universes may be composed of pension,
profit sharing, commingled, endowment/foundation, and mutual funds.
- -FIDUCIARY CONSULTING GRID UNIVERSE, for example, is composed of
over 1,000 funds, representing 350 different investment managers,
divided into subcategories based on asset mix. The funds are
ranked quarterly based on performance and risk characteristics.
- -SEI DATA BASE for equity funds includes approximately 900 funds,
representing 361 money managers, divided into fund types based on
investor groups and asset mix. The funds are ranked every three,
six, and twelve months.
- -MERCER MEIDINGER, INC. compiles a universe of approximately 600
equity funds, representing about 500 investment managers, and
updates their rankings each calendar quarter as well as on a one,
three, and five year basis.
Advertisements and other sales literature for the Fund may quote
total returns which are calculated on non-standardized base
periods. These total returns also represent the historic change in
the value of an investment in the Fund based on quarterly
reinvestment of dividends over a specified period of time.
APPENDIX
STANDARD AND POOR'S CORPORATION CORPORATE BOND RATINGS
AAA--Debt rated AAA has the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely
strong.
AA--Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from the higher rated issues only in
small degree.
A--Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
debt in higher rated categories.
BBB--Debt rated BBB is regarded as having an adequate capacity to
pay interest and repay principal. Whereas it normally exhibits
adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened
capacity to pay interest and repay principal for debt in this
category than in higher rated categories.
NR--Indicates that no public rating has been requested, that there
is insufficient information on which to base a rating, or that
Standard & Poor's does not rate a particular type of obligation as
a matter of policy.
PLUS (+) OR MINUS (-):--The ratings from AA to BBB may be modified
by the addition of a plus or minus sign to show relative standing
within the major rating categories.
MOODY'S INVESTORS SERVICE, INC., CORPORATE BOND RATINGS
Aaa--Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt edge." Interest payments are
protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such
issues.
Aa--Bonds which are rated Aa are judged to be of high quality by
all standards. Together with the Aaa group, they comprise what are
generally known as high-grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in
Aaa securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make
the long term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium-grade
obligations. Factors giving security to principal and interest are
considered adequate but elements may be present which suggest a
susceptibility to impairment sometime in the future.
Baa--Bonds which are rated Baa are considered as medium-grade
obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate
for the present but certain protective elements may be lacking or
may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well.
NR--Not rated by Moody's.
FITCH INVESTORS SERVICE, INC., LONG-TERM DEBT RATINGS
AAA--Bonds considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability to
pay interest and repay principal, which is unlikely to be affected
by reasonably foreseeable events.
AA--Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal
is very strong, although not quite as strong as bonds rated AAA.
Because bonds rated in the AAA and AA categories are not
significantly vulnerable to foreseeable future developments, short-
term debt of these issuers is generally rated F-1+.
A--Bonds considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal
is considered to be strong, but may be more vulnerable to adverse
changes in economic conditions and circumstances than bonds with
higher ratings.
BBB--Bonds considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and repay
principal is considered to be adequate. Adverse changes in
economic conditions and circumstances, however, are more likely to
have adverse impact on these bonds, and therefore, impair timely
payment.
NR--NR indicates that Fitch does not rate the specific issue.
STANDARD AND POOR'S CORPORATION COMMERCIAL PAPER RATINGS
A-1--This designation indicates that the degree of safety regarding
timely payment is either overwhelming or very strong. The issues
determined to possess overwhelming safety characteristics are
denoted with a plus (+) sign designation.
A-2--Capacity for timely payment on issues with this designation is
strong. However, the relative degree of safety is not as high as
for issues designated A-1.
MOODY'S INVESTORS SERVICES, INC., COMMERCIAL PAPER RATINGS
P-1--Issuers rated PRIME-1 (for related supporting institutions)
have a superior capacity for repayment of short-term promissory
obligations. PRIME-1 repayment capacity will normally be evidenced
by the following characteristics: conservative capitalization
structures with moderate reliance on debt and ample asset
protection; broad margins in earning coverage of fixed financial
charges and high internal cash generation; and well-established
access to a range of financial markets and assured sources of
alternate liquidity.
P-2--Issuers rated PRIME-2 (for related supporting institutions)
have a strong capacity for repayment of short-term promissory
obligations. This will normally be evidenced by many of the
characteristics cited above but to a lesser degree. Earnings
trends and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample
alternate liquidity is maintained.
FITCH INVESTORS SERVICE, INC., SHORT-TERM RATINGS
F-1+--(Exceptionally Strong Credit Quality). Issues assigned this
rating are regarded as having the strongest degree of assurance for
timely payment.
F-1--(Very Strong Credit Quality). Issues assigned to this rating
reflect an assurance of timely payment only slightly less in degree
than issues rated F-1+.
F-2--(Good Credit Quality). Issues carrying this rating have a
satisfactory degree of assurance for timely payment but the margin
of safety is not as great as the F-1+ and F-1 categories.
PART C. OTHER INFORMATION.
Item 24. Financial Statements and Exhibits:
(a) Financial Statements [(1,2,5,6,9,12) Filed in Part
A of the respective prospectuses; (3,4,7,8,10)
Incorporated by reference; (11,13) To be filed by
amendment.]
(b) Exhibits:
(1) Paper copy of Articles of Incorporation of the
Registrant (6.);
(i) Paper copy of Amendment No. 1
to the Articles of Incorporation (2.);
(ii) Paper copy of Amendment No. 2
to the Articles of Incorporation (2.);
(iii) Paper copy of Amendment No. 3
to the Articles of Incorporation (2.);
(iv) Conformed copy of Amendment
No. 4 to the Articles of Incorporation
(6.);
(v) Form of Amendment No. 5 to the
Articles of Incorporation;+
(2) Paper copy of By-Laws of the Registrant (1.);
(3) Not applicable;
(4) Paper copy of Specimen Certificate for Shares
of Capital Stock of the Registrant (2.);
(5) Conformed copy of Investment Advisory Contract
of the Registrant (4.);
(i) Conformed copy of Exhibit G of
the Investment Advisory Contract (5.);
(ii) Conformed copy of Exhibit H of
the Investment Advisory Contract (5.);
(iii) Conformed copy of Exhibit I of
the Investment Advisory Contract (5.);
(iv) Conformed copy of Exhibit J of
the Investment Advisory Contract (5.);
+ All exhibits have been filed electronically.
1. Response is incorporated by reference to Registrant's Initial
Registration Statement on Form N-1A filed August 6, 1992
(File Nos. 33-48907 and 811-7047).
2. Response is incorporated by reference to Registrant's Pre-
Effective Amendment No. 1 on Form N-1A filed September 28,
1992 (File Nos. 33-48907 and 811-7047).
3. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 1 on Form N-1A filed October 19, 1992
(File Nos. 33-48907 and 811-7047).
4. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 5 on Form N-1A filed April 23, 1993
(File Nos. 33-48907 and 811-7047).
5. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 7 on Form N-1A filed October 29, 1993
(File Nos. 33-48907 and 811-7047).
6. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 8 on Form N-1A filed December 28,
1993 (File Nos. 33-48907 and 811-7047).
(v) Conformed copy of Exhibit K of
the Investment Advisory Contract;+
(vi) Conformed copy of Exhibit L of
the Investment Advisory Contract;+
(vii) Form of Exhibit M of the Investment
Advisory Contract;+
(viii) Conformed copy of Federated Management
Sub-Advisory Agreement with the
Registrant;+
(ix) Form of Templeton Investment
Counsel, Inc., Sub-Advisory Agreement
with the M&I Investment Management,
Inc.;+
(6) Conformed copy of Distributor's Contract of
the Registrant (4.);
(i) Conformed copy of Exhibit H of
the Distributor's Contract (5.);
(ii) Conformed copy of Exhibit I of
the Distributor's Contract (6.);
(iii) Form of Exhibit J of the
Distributor's Contract;+
(7) Not applicable;
(8) Conformed copy of Custodian Contract of the
Registrant;+
(9) (i)Conformed copy of Fund Accounting
and Shareholder Recordkeeping
Agreement of the Registrant;+
(ii) Conformed copy of
Administrative Services Agreement of the
Registrant;+
(iii) Conformed copy of Shareholder
Services Agreement (4.);
(iv)Conformed copy of Amendment No. 1 of the
Shareholder Services Agreement (6.);
(v)Conformed copy of Amendment No. 2 of the
Shareholder Services Agreement;+
(vi)Form of Amendment No. 3 of the
Shareholder Services Agreement;+
+ All exhibits have been filed electronically.
1. Response is incorporated by reference to Registrant's Initial
Registration Statement on Form N-1A filed August 6, 1992
(File Nos. 33-48907 and 811-7047).
2. Response is incorporated by reference to Registrant's Pre-
Effective Amendment No. 1 on Form N-1A filed September 28,
1992 (File Nos. 33-48907 and 811-7047).
3. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 1 on Form N-1A filed October 19, 1992
(File Nos. 33-48907 and 811-7047).
4. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 5 on Form N-1A filed April 23, 1993
(File Nos. 33-48907 and 811-7047).
5. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 7 on Form N-1A filed October 29, 1993
(File Nos. 33-48907 and 811-7047).
6. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 8 on Form N-1A filed December 28,
1993 (File Nos. 33-48907 and 811-7047).
(10) Conformed copy of Opinion and Consent of
Counsel as to legality of shares being
registered (4.);
(11) Not applicable;
(12) Not applicable;
(13) Paper copy of copy of Initial Capital
Understanding (2.);
(14) Not applicable;
(15) (i)Conformed copy of Distribution Plan
(4.);
(ii) Form of Exhibit B of
Distribution Plan;+
(iii) Copy of 12b-1 Agreement,
through and including Exhibit B;+
(16) Copy of Schedule for Computation of Fund
Performance Data (6.);
(17) (i) Conformed copy of Power of Attorney
(5.);
(ii) Conformed copy of Power of Attorney dated
December 27, 1993 with respect to James
F. Duca, II, President of the Corporation
(6.);
(18) Not applicable.
Item 25. Persons Controlled by or Under Common Control with
Registrant:
None
Item 26. Number of Holders of Securities:
Number of Record Holders
Title of Class as of June 1, 1994_____
Shares of capital stock
Marshall Intermediate Bond Fund 219
Marshall Government Income Fund 2,022
Marshall Money Market Fund
Investment Shares 54
Trust Shares 1,930
Marshall Tax-Free Money Market Fund 4
Marshall Short-Term Income Fund 153
Marshall Stock Fund 2,993
Marshall Balanced Fund 35
Marshall Equity Income Fund 57
Marshall Mid-Cap Stock Fund 103
Marshall Value Equity Fund 66
Marshall Intermediate Tax-Free Fund 16
Marshall Short-Term Tax-Free Fund 15
Marshall International Stock Fund 0
Item 27. Indemnification: (5.)
+ All exhibits have been filed electronically.
2. Response is incorporated by reference to Registrant's Pre-
Effective Amendment No. 1 on Form N-1A filed September 28,
1992 (File Nos. 33-48907 and 811-7047).
4. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 5 on Form N-1A filed April 23, 1993
(File Nos. 33-48907 and 811-7047).
5. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 7 on Form N-1A filed October 29, 1993
(File Nos. 33-48907 and 811-7047).
6. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 8 on Form N-1A filed December 28,
1993 (File Nos. 33-48907 and 811-7047).
Item 28. Business and Other Connections of Investment Adviser:
(a) M&I INVESTMENT MANAGEMENT CORP.
M&I Investment Management Corp. is a registered
investment adviser and wholly-owned subsidiary of
Marshall & Ilsley Corporation, a registered bank
holding company headquartered in Milwaukee,
Wisconsin. As of December 31, 1992, M&I Investment
Management Corp. had approximately $5.4 billion in
assets under management and has managed investments
for individuals and institutions since its inception
in 1973. M&I Investment Management Corp. served as
investment adviser to Newton Money Fund, Newton
Income Fund and Newton Growth Fund.
For further information about M & I Investment
Management Corp., its officers and directors,
response in incorporated by reference to M & I
Investment Management Corp.'s Form ADV, File No. 801-
9118, dated February 25, 1994, as amended.
(b) FEDERATED MANAGEMENT
Federated Management is a registered investment
adviser under the Investment Advisers Act of 1940 and
is a subsidiary of Federated Investors ("Federated").
Federated Management and other subsidiaries of
Federated serve as investment advisers to a number of
investment companies and private accounts. Total
assets under management or administration by
subdidiaries of Federated are approximately $70
billion. Federated, which was founded in 1956 as
Federated Investors, Inc., develops and manages
mutual funds primarily for the financial industry.
Federated's track record of competitive performance
and its disciplined, risk-averse investment
philosophy serve approximately 3,500 client
institutions nationwide.
For further information about Federated Management,
its officers and trustees, response in incorporated
by reference to Federated Management's Form ADV, File
No. 801-34610, dated March 31, 1994, as amended.
(c) TEMPLETON INVESTMENT COUNSEL, INC.
Templeton Investment Counsel, Inc. ("TICI"), 500 East
Broward Blvd, Suite 2100, Ft. Lauderdale, FL 33394-
3091, is a professional investment counseling firm
which has been providing investment services since
1979. As of October 1, 1993, TICI had discretionary
investment management of $9.3 billion of assets,
including approximately $165 million of assets of AMR
and its subsidiaries and affiliated entities. TICI
serves as investment adviser to the American
AAdvantage International Equity Fund.
For a list of the officers and directors of TICI and
for further information about TICI, any other
business, vocation or employment of a substantial
nature in which a director or officer of TICI is, or
at any time in the past two fiscal years has been,
engaged for his or her own account or in the capacity
of director, officer, employee, partner or trustee,
response is incorporated by reference to TICI's Form
ADV, File No. 801-15125, dated December 29, 1993, as
amended.
Item 29. Principal Underwriters:
(a) Federated Securities Corp., the Distributor
for shares of the Registrant, also acts as principal
underwriter for the following open-end investment companies:
Alexander Hamilton Funds; American Leaders Fund, Inc.;
Annuity Management Series; Automated Cash Management Trust;
Automated Government Money Trust; BayFunds; The Biltmore
Funds; The Biltmore Municipal Funds; The Boulevard Funds;
California Municipal Cash Trust; Cambridge Series Trust; Cash
Trust Series, Inc.; Cash Trust Series II; DG Investor Series;
Edward D. Jones & Co. Daily Passport Cash Trust; Federated
ARMs Fund; Federated Exchange Fund, Ltd.; Federated GNMA
Trust; Federated Government Trust; Federated Growth Trust;
Federated High Yield Trust; Federated Income Securities
Trust; Federated Income Trust; Federated Index Trust;
Federated Intermediate Government Trust; Federated Master
Trust; Federated Municipal Trust; Federated Short-
Intermediate Government Trust; Federated Short-Term U.S.
Government Trust; Federated Stock Trust; Federated Tax-Free
Trust; Federated U.S. Government Bond Fund; First Priority
Funds; First Union Funds; Fixed Income Securities, Inc.;
Fortress Adjustable Rate U.S. Government Fund, Inc.; Fortress
Municipal Income Fund, Inc.; Fortress Utility Fund, Inc.;
Fountain Square Funds; Fund for U.S. Government Securities,
Inc.; Government Income Securities, Inc.; High Yield Cash
Trust; Independence One Mutual Funds; Insight Institutional
Series, Inc.; Insurance Management Series; Intermediate
Municipal Trust; International Series Inc.; Investment Series
Funds, Inc.; Investment Series Trust; Liberty Equity Income
Fund, Inc.; Liberty High Income Bond Fund, Inc.; Liberty
Municipal Securities Fund, Inc.; Liberty U.S. Government
Money Market Trust; Liberty Utility Fund, Inc.; Liquid Cash
Trust; Managed Series Trust; Mark Twain Funds; Money Market
Management, Inc.; Money Market Obligations Trust; Money
Market Trust; The Monitor Funds; Municipal Securities Income
Trust; New York Municipal Cash Trust; 111 Corcoran Funds;
Peachtree Funds; The Planters Funds; Portage Funds; RIMCO
Monument Funds; The Shawmut Funds; Short-Term Municipal
Trust; Signet Select Funds; SouthTrust Vulcan Funds; Star
Funds; The Starburst Funds; The Starburst Funds II; Stock and
Bond Fund, Inc.; Sunburst Funds; Targeted Duration Trust; Tax-
Free Instruments Trust; Tower Mutual Funds; Trademark Funds;
Trust for Financial Institutions; Trust for Government Cash
Reserves; Trust for Short-Term U.S. Government Securities;
Trust for U.S. Treasury Obligations; Vision Fiduciary Funds,
Inc.; Vision Group of Funds, Inc.; and World Investment
Series, Inc.
Federated Securities Corp. also acts as
principal underwriter for the following closed-end investment
company: Liberty Term Trust, Inc.- 1999.
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and
Offices
Business Address With Underwriter With Registrant
Richard B. Fisher Director, Chairman, Chief
Federated Investors Tower Executive Officer, Chief --
Pittsburgh, PA 15222-3779 Operating Officer, and
Asst. Treasurer, Federated
Securities Corp.
Edward C. Gonzales Director, Executive Vice Chairman,
Federated Investors Tower President, and Treasurer, Director, and
Pittsburgh, PA 15222-3779 Federated Securities Treasurer
Corp.
(1) (2) (3)
Name and Principal Positions and Offices Positions and
Offices
Business Address With Underwriter With Registrant
John W. McGonigle Director, Executive Vice
Federated Investors Tower President, and Assistant --
Pittsburgh, PA 15222-3779 Secretary, Federated
Securities Corp.
John A. Staley, IV Executive Vice President
Federated Investors Tower and Assistant Secretary, --
Pittsburgh, PA 15222-3779 Federated Securities Corp.
John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark R. Gensheimer Executive Vice President --
Federated Investors Tower of Bank/Trust, Federated
Pittsburgh, PA 15222-3779 Securities Corp.
Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
H. Joseph Kennedy Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and
Offices
Business Address With Underwriter With Registrant
James R. Ball Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard W. Boyd Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mary J. Combs Vice President, --
Federated Investors Tower Federated
Securities Corp.
Pittsburgh, PA 15222-3779
R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Laura M. Deger Vice President, --
Federated Investors Tower Federated
Securities Corp.
Pittsburgh, PA 15222-3779
Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David C. Glabicki Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Scott A. Hutton Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William J. Kerns Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William E. Kugler Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and
Offices
Business Address With Underwriter With Registrant
Dennis M. Laffey Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Francis J. Matten, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
J. Michael Miller Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Jeffrey Niss Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael P. O'Brien Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Solon A. Person, IV Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert F. Phillips Vice President, --
Federated Investors Tower Federated
Securities Corp.
Pittsburgh, PA 15222-3779
Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Charles A. Robison Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas E. Territ Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and
Offices
Business Address With Underwriter With Registrant
William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Philip C. Hetzel Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Ernest L. Linane Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
S. Elliott Cohan Secretary, Federated --
Federated Investors Tower Securities Corp.
Pittsburgh, PA 15222-3779
(c) Not applicable.
Item 30. Location of Accounts and Records:
Marshall Funds, Inc. Federated Investors Tower
Pittsburgh,PA 15222-3779
Federated Services Company Federated Investors Tower
("Transfer Agent, Dividend Pittsburgh, PA 15222-3779
Disbursing Agent, and Portfolio
Accounting Services")
Federated Administrative Services Federated Investors
Tower
("Administrator") Pittsburgh, PA 15222-3779
M & I Investment Management Corp. 1000 North Water
Street
("Adviser") Milwaukee, WI 53202
Marshall & Ilsley Trust Company 1000 North Water
Street
("Custodian") Milwaukee, WI 53202
Templeton Investment Counsel, Inc. 500 East Broward
Blvd.
("Sub-adviser") Suite 2100
Ft. Lauderdale, FL 33394-
3091
tem 31. Management Services: Not applicable.
Item 32. Undertakings:
Registrant hereby undertakes to comply with the
provisions of Section 16(c) of the 1940 Act with respect
to the removal of Trustees and the calling of special
shareholders meetings by shareholders.
Registrant hereby undertakes to furnish each person to
whom a prospectus is delivered, a copy of the
Registrant's latest annual report to shareholders, upon
request and without charge.
Registrant hereby undertakes to file a post-effective
amendment on behalf of Marshall Tax-Free Money Market
Fund, using financial statements for Marshall Tax-Free
Money Market Fund, which need not be certified, within
four to six months from the date the shares of the
Marshall Tax-Free Money Market Fund are sold to the
public or operations otherwise begin.
Registrant hereby undertakes to file a post-effective
amendment on behalf of Marshall International Stock
Fund, using financial statements for Marshall
International Stock Fund, which need not be certified,
within four to six months from the effective date of
this Post-Effective Amendment No. 10.
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933 and the Investment Company Act of 1940, the Registrant,
MARSHALL FUNDS, INC., has duly caused this Amendment to its
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of
Pittsburgh and Commonwealth of Pennsylvania, on the 1st day of
July, 1994.
MARSHALL FUNDS, INC.
BY: /s/ Victor R. Siclari
Victor R. Siclari, Assistant Secretary
Attorney in Fact for James F. Duca, II
July 1, 1994
Pursuant to the requirements of the Securities Act of
1933, this Amendment to its Registration Statement has been
signed below by the following person in the capacity and on
the date indicated:
NAME TITLE
DATE
By: /s/ Victor R. Siclari
Victor R. Siclari Attorney In Fact July 1, 1994
ASSISTANT SECRETARY For the Persons
Listed Below
NAME TITLE
Edward C. Gonzales* Chairman, Director, and
Treasurer (Principal Financial
and Accounting Officer)
James F. Duca, II* President
John DeVincentis* Director
Ody J. Fish* Director
Paul E. Hassett* Director
* By Power of Attorney
Exhibit 1(v) under Form N-1A
Exhibit 3(a) under Item 601/Reg. S-K
MARSHALL FUNDS, INC.
Amendment No. 5
to
ARTICLES OF INCORPORATION
Dated July 30, 1992
THESE Articles of Incorporation are amended as follows:
Delete Section (a) of Article IV and substitute in its
place the following:
" (a) The Corporation is authorized to issue fifty billion
(50,000,000,000) shares of common stock, par value $.0001 per
share. Subject to the following paragraph, the authorized shares
are classified as follows:
Authorized Number
Class Series
of Shares
Marshall Balanced Fund 1,000,000,000
Marshall Equity Income Fund 1,000,000,000
Marshall Government Income Fund
1,000,000,000
Marshall Intermediate Bond Fund
1,000,000,000
Marshall Mid-Cap Stock Fund 1,000,000,000
Marshall Money Market Fund Investment
5,000,000,000
Shares
Marshall Money Market Fund Trust Shares
5,000,000,000
Marshall Short-Term Income Fund 1,000,000,000
Marshall Stock Fund
1,000,000,000
Marshall Tax-Free Money
2,500,000,000
Market Fund
Marshall Value Equity Fund 1,000,000,000
Marshall Short-Term Tax-Free Fund 1,000,000,000
Marshall Intermediate Tax-Free Fund 1,000,000,000
Marshall International Stock Fund 1,000,000,000
The remaining 26,500,000,000 shares shall remain unclassified
until action is taken by the Board of Directors pursuant to the
following paragraph."
The undersigned Secretary of Marshall Funds, Inc. certifies
that the above stated amendment is a true and correct Amendment
to the Articles of Incorporation, as adopted by the Directors of
the Corporation as of the 25th day of July, 1994, in accordance
with Section 180.1002 of the Wisconsin Business Corporation Law.
WITNESS the due execution hereof this 25th day of July,
1994.
Peter J. Germain
Secretary
Exhibit 5(v) under Form N-1A
Exhibit 10 under Item 601/Reg.
S-K
EXHIBIT K
to the
Investment Advisory Contract
Marshall Short-Term Tax-Free Fund
For all services rendered by Adviser hereunder, the above-
named Portfolio of the Fund shall pay to Adviser and Adviser
agrees to accept as full compensation for all services rendered
hereunder, an annual investment advisory fee equal to .50 of 1%
of the average daily net assets of the Portfolio.
The portion of the fee based upon the average daily net
assets of the Portfolio shall be accrued daily at the rate of
1/365th of .50 of 1% applied to the daily net assets of the
Portfolio.
The advisory fee so accrued shall be paid to Adviser daily.
Witness the due execution hereof this 1st day of November,
1993.
Attest: M&I Investment
Management Corp.
/s/ M. A. Hatfield By:/s/ John D. Boritzke
Assistant Secretary
Vice President
Attest: Marshall Funds, Inc.
/s/ Victor R. Siclari By:/s/ Joseph S. Machi
Assistant Secretary
Vice President
Exhibit 5(vi) under Form N-1A
Exhibit 10 under Item 601/Reg.
S-K
EXHIBIT L
to the
Investment Advisory Contract
Marshall Intermediate Tax-Free Fund
For all services rendered by Adviser hereunder, the above-
named Portfolio of the Fund shall pay to Adviser and Adviser
agrees to accept as full compensation for all services rendered
hereunder, an annual investment advisory fee equal to .60 of 1%
of the average daily net assets of the Portfolio.
The portion of the fee based upon the average daily net
assets of the Portfolio shall be accrued daily at the rate of
1/365th of .60 of 1% applied to the daily net assets of the
Portfolio.
The advisory fee so accrued shall be paid to Adviser daily.
Witness the due execution hereof this 1st day of November,
1993.
Attest: M&I Investment
Management Corp.
/s/ M. A. Hatfield By: /s/ John D. Boritzke
Assistant Secretary
Vice President
Attest: Marshall Funds, Inc.
/s/ Victor R. Siclari By:/s/ Jospeh S. Machi
Assistant Secretary
Vice President
Exhibit 5(vii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
EXHIBIT M
to the
Investment Advisory Contract
Marshall International Stock Fund
1. Fees. For all services rendered by Adviser hereunder, the
above-named Portfolio to the Fund (hereinafter, the "Portfolio")
shall pay to Adviser and Adviser agrees to accept as full
compensation for all services rendered hereunder, an annual
investment advisory fee equal to 1% of the average daily net assets
of the Portfolio. The portion of the fee based upon the average
daily net assets of the Portfolio shall be accrued daily at the rate
of 1/365 of 1% applied to the daily net assets of the Portfolio. The
advisory fee so accrued shall be paid to the Adviser daily.
2. Indemnification. Reference is hereby made to the
Subadvisory Contract dated August 1, 1994 between the Adviser and
Templeton Investment Counsel, Inc. (the "Subadvisory Contract"). All
capitalized terms used herein shall have the same meaning as used in
the Subadvisory Contract. The Adviser shall indemnify and hold the
Portfolio harmless for acts or omissions of Subadviser as a result of
Subadviser's willful misfeasance, bad faith, gross negligence, or
reckless disregard of Subadviser's obligations or duties under the
Subadvisory Contract. In the absence of Subadviser's willful
misfeasance, bad faith, or gross negligence or reckless disregard of
Subadviser's duties, Adviser shall not be liable to the Fund or to
the Portfolio or to any shareholder of the Fund, or to any person,
firm or organization, for any act or omission in the course of or
connected in any way with rendering services or for any losses that
may be sustained in the purchase, holding, or sale of any security or
other investment of the Portfolio.
3. Sales Literature. The Adviser acknowledges that all sales
literature for investment companies (such as the Portfolio) are
subject to strict oversight. The Adviser agrees to submit any
proposed sales literature for the Portfolio (including any sales
literature that Adviser is aware that is proposed to be used by the
Subadviser), or for itself and its affiliates that mentions the
Portfolio to the Fund's distributor for review and filing with the
appropriate regulatory authorities prior to the public release of any
such sales literature; provided, however, that nothing herein shall
be construed so as to create any obligation or duty on the part of
the Adviser to produce sales literature for the Portfolio or Fund.
The Fund agrees to cause its distributor to promptly review all such
sales literature to ensure compliance with relevant requirements, to
promptly notify Adviser of any deficiencies contained in such sales
literature, to promptly file complying sales literature with the
relevant authorities, and to cause such sales literature to be
distributed to prospective investors in the Portfolio.
Witness the due execution hereof this 1st day of August, 1994.
Attest: M & I Investment Management Corp.
By:
Secretary President
Attest: Marshall Funds, Inc.
By:
Secretary President
1
Exhibit 5(viii) under Form N-
1A
Exhibit 10 under Item 601/Re
g. S-K
Marshall Funds, Inc.
SUB-ADVISORY AGREEMENT
THIS AGREEMENT is made between M&I Investment Management
Corp., a registered investment adviser organized under the
laws of Wisconsin and having its principal place of business
in Milwaukee, Wisconsin (hereinafter referred to as "Adviser")
and Federated Management, a registered investment adviser
organized under the laws of Delaware and having its principal
place of business in Pittsburgh, Pennsylvania (hereinafter
referred to as the "Sub-Adviser").
WITNESSETH:
That the parties hereto, intending to be legally bound
hereby agree as follows:
1. Sub-Adviser hereby agrees to furnish to Adviser in
its capacity as investment adviser to Marshall Funds, Inc.
(the "Corporation") such investment advice, statistical and
other factual information as may from time to time be
reasonably requested by Adviser for one or more of the
portfolios ("Funds") of the Corporation, which may be offered
in one or more classes of shares ("Classes").
2. For its services under this Agreement, Sub-Adviser
shall receive from Adviser an annual fee ("the Sub-Advisory
Fee"), as set forth in the exhibits hereto. In the event that
the fee due from the Corporation to the Adviser on behalf of
the Fund is reduced in order to meet expense limitations
imposed on the Fund by state securities laws or regulations,
the Sub-Advisory Fee shall be reduced by one-half of said
reduction in the fee due from the Corporation to the Adviser
on behalf of the Fund.
Notwithstanding any other provision of this Agreement,
the Sub-Adviser may from time to time and for such periods as
it deems appropriate, reduce its compensation (and, if
appropriate, assume expenses of the Fund or Class of the Fund)
to the extent that the Fund's expenses exceed such lower
expense limitation as the Sub-Adviser may, by notice to the
Corporation on behalf of the Fund, voluntarily declare to be
effective.
3. This Agreement shall begin for the Fund on the date
that the parties execute an exhibit to this Agreement relating
to such Fund. This Agreement shall remain in effect for the
Fund until the first meeting of Shareholders held after the
execution date of an exhibit relating to the Fund, and if
approved at such meeting by the shareholders of the Fund,
shall continue in effect for the Fund for the period specified
in the attached exhibits, subject to the provisions for
termination and all of the other terms and conditions hereof
if: (a) such continuation shall be specifically approved at
least annually by the vote of a majority of the Directors of
the Corporation, including a majority of the Directors who are
not parties to this Agreement or interested persons of any
such party (other than as Directors of the Corporation) cast
in person at a meeting called for that purpose; and (b)
Adviser shall not have notified the Corporation in writing at
least sixty (60) days prior to the anniversary date of this
Agreement in any year thereafter that it does not desire such
continuation with respect to the Fund.
4. Notwithstanding any provision in this Agreement, it
may be terminated at any time without the payment of any
penalty: (a) by the Directors of the Corporation or by a vote
of a majority of the outstanding voting securities (as defined
in Section 2(a)(42) of the Act) of the Fund on sixty (60)
days' written notice to Adviser; (b) by Sub-Adviser or Adviser
upon 120 days' written notice to the other party to the
Agreement.
5. This Agreement shall automatically terminate: (a) in
the event of its assignment (as defined in the Investment
Company Act of 1940); or (b) in the event of termination of
the Investment Advisory Contract for any reason whatsoever.
6. So long as both Adviser and Sub-Adviser shall be
legally qualified to act as an investment adviser to the Fund,
neither Adviser nor Sub-Adviser shall act as an investment
adviser (as such term is defined in the Investment Company Act
of 1940) to the Fund except as provided herein and in the
Investment Advisory Contract or in such other manner as may be
expressly agreed between Adviser and Sub-Adviser.
Provided, however, that if the Adviser or Sub-Adviser
shall resign prior to the end of any term of this Agreement or
for any reason be unable or unwilling to serve for a
successive term which has been approved by the Directors of
the Corporation pursuant to the provisions of Paragraph 3 of
this Agreement or Paragraph 6 of the Investment Advisory
Contract, the remaining party, Sub-Adviser or Adviser as the
case may be, shall not be Aprohibited from serving as an
investment adviser to such Fund by reason of the provisions of
this Paragraph 6.
7. This Agreement may be amended from time to time by
agreement of the parties hereto provided that such amendment
shall be approved both by the vote of a majority of Directors
of the Corporation, including a majority of Directors who are
not parties to this Agreement or interested persons, as
defined in Section 2(a)(19) of the Investment Company Act of
1940, of any such party at a meeting called for that purpose,
and by the holders of a majority of the outstanding voting
securities (as defined in Section 2(a)(42) of the Investment
Company Act of 1940) of the Fund.
Exhibit A
Marshall Funds, Inc.
Marshall Tax-Free Money Market Fund
Sub-Advisory Agreement
For all services rendered by Sub-Adviser hereunder,
Adviser shall pay Sub-Adviser a Sub-Advisory Fee equal to .25
of 1% of the average daily net assets of the above-mentioned
portfolio. The Sub-Advisory Fee shall be accrued daily and
paid monthly as set forth in the Investment Advisory Contract
dated October 1, 1992.
The effective date hereof shall be the 1st day of
October, 1992 to be renewed on October 1, 1994 and annually
thereafter.
This Exhibit duly incorporates by reference the Sub-
Advisory Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on their behalf by their duly
authorized officers, and their corporate seals to be affixed
hereto this 1st day of October, 1992.
ATTEST: M&I Investment
Management Corp.
/s/ Michael A. Hatfield By: /s/ William J. Gumerman
Secretary
President
Federated Management
/s/ John W. McGonigle By: /s/ Mark L. Mallon
Secretary Vice
President
1
Exhibit 5(ix) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
SUBADVISORY CONTRACT
AGREEMENT made of the 1st day of August, 1994,
between M&I Investment Management Corp., an investment
adviser registered under the Investment Advisers Act of
1940, organized under the laws of Wisconsin and having its
principal place of business in Milwaukee, Wisconsin (the
"Adviser"), and Templeton Investment Counsel, Inc., a
Florida corporation (the "Subadviser").
W I T N E S S T H
WHEREAS, Marshall Funds, Inc. (the "Corporation")
is an open-and, management investment company, registered
under the Investment Company Act of 1940, as amended (the
"1940 Act"), the Corporation has thirteen portfolios
including the Marshall International Stock Fund (the "Fund")
and the Subadviser is an investment adviser registered under
the Investment Advisers Act of 1940 (the "Advisers Act"),
and
WHEREAS, pursuant to authority granted the Adviser
by the Corporation's Directors and pursuant to the
provisions of the Investment Advisory Contract dated October
1, 1992 between the Adviser and the Corporation with respect
to the Fund (the "Advisory Contract"), the Adviser has
selected the Subadviser to act as a sub-investment adviser
of the Fund and to provide certain other services, as more
fully set forth below, and to perform such services under
the terms and conditions hereinafter set forth,
NOW, THEREFORE, in consideration of the mutual
agreements
herein contained, it is agreed as follows:
1. The Subadviser's Services.
(a) Within the framework of the fundamental policies,
investment objectives, and investment restrictions
of the Fund, and subject to the supervision and
review of the Adviser and of the Directors of the
Corporation, the Subadviser shall have the sole
and exclusive responsibility for the making and
execution of all investment decisions for that
portion or all of the Fund's portfolio as
designated by the Adviser (the "Portfolio"),
including the purchase, retention and disposition
of securities, in accordance with the Fund's
investment objectives, policies and restrictions
as stated in the Corporation's Registration
Statement, including the Prospectus and Statement
of Additional Information (such Registration
Statement, as currently in effect and as amended
or supplemented from time to time, collectively
called the "Prospectus") and subject to the
following understandings:
(i) The Subadviser shall supervise the
Portfolio's investments and determine from
time to time what securities will be
purchased, retained, sold or loaned by the
Portfolio, and what portion of the assets
will be invested or held uninvested as cash.
(ii) In the performance of its duties and
obligations under this Agreement, the
Subadviser shall act in conformity with the
Corporation's Articles of Incorporation and
By-Laws and the Fund's Prospectus and with
the instructions and directions received in
writing from the Adviser or the Directors of
the Corporation and will conform to and
comply with the requirements of the 1940
Act, the Internal Revenue Code of 1986, as
amended (including the requirements for
qualification as a regulated investment
company) and all other applicable federal
and state laws and regulations.
(b) The Subadviser shall not be responsible for the
provision of administrative, bookeeping or
accounting services to the Fund, except as
otherwise provided herein or as may be necessary
for the Subadviser to supply to the Adviser, the
Corporation or its Directors the information
required to be supplied under this Contract.
The Subadviser shall maintain separate books and
detailed records of all matters pertaining to the
Fund and the Portfolio (the "Fund's Books and
Records"), including without limitation a daily
ledger of such assets and liabilities relating
thereto and brokerage and other records of all
securities transactions. The Subadviser shall also
require that its Access Persons (as defined in the
Corporation's Code of Ethics) provide the
Subadviser with monthly reports of their personal
securities transactions. The Fund's Books and
Records shall be available to the Adviser at any
reasonable time upon request and shall be available
by overnight delivery of copies or for telecopying
without delay to the Adviser during any day that
the Fund is open for business.
(c) The Subadviser shall determine the securities
to be purchased or sold by the Fund in respect of
the Portfolio and will place orders with or
through such persons, brokers or dealers to carry
out the policy with respect to brokerage as set
forth in the Fund's Prospectus or as the Directors
may direct from time to time. Subject to the
provisions of the following paragraph, the
Subadviser will take reasonable steps to assure
that Portfolio transactions are effected at the
best price and execution available, as such phrase
is used in the Fund's Prospectus, as in effect
from time to time.
In using its best efforts to obtain for the Fund
the most favorable price and execution available,
the Subadviser, bearing in mind the Fund's best
interests at all times, shall consider all factors
it deems relevant, including by way of
illustration, price, the size of the transaction,
the nature of the market for the security, the
amount of the commission, the timing of the
transaction taking into account market prices and
trends, the reputation, experience and financial
stability of the broker or dealer involved and the
quality of service rendered by the broker or
dealer in other transactions. Subject to such
policies as the Directors of the Corporation may
determine, the Subadviser is specifically
authorized to allocate brokerage business to firms
that provide such services or facilities and to
cause the Fund to pay a member of a securities
exchange or any other securiites broker or dealer
an amount of commission for effecting a securities
transaction in excess of the amount of commission
another member of an exchange, broker, or dealer
would have charged for effecting that transaction,
if the Subadviser determines in good faith that
such amount of commission is reasonable in
relation to the value of the brokerage and
research services (as such services are defined in
Section 28(e) of the Securities Exchange Act of
1934) provided by such member, broker, or dealer,
viewed in terms either of that particular
transaction or the Subadviser's overall
responsibilities with respect to the accounts as
to which it exercises investment discretion.
It is understood that the Subadviser may have
advisory, management, service or other contracts
with other individuals or entities, and may have
other interests and businesses. When a security
proposed to be purchased or sold for the Fund is
also to be purchased or sold for other accounts
managed by the Subadviser at the same time, the
Subadviser shall make such purchases or sales on a
pro-rata, rotating or other equitable basis so as
to avoid any one account being preferred over any
other account.
The Subadviser will advise the Adviser and, if
instructed by the Adviser, the Fund's custodian or
sub-custodians on a prompt basis each day by
electronic telecommunication of each confirmed
purchase and sale of a Portfolio security
specifying the name of the issuer, the full
description of the security including its class,
and amount or number of shares of the security
purchased or sold, the market price, commission,
government charges and gross or net price, trade
date, settlement date and identity of the
effecting broker or dealer and, if different, the
identity of the clearing broker. Under no
circumstances may the Subadviser or any affiliates
of the Subadviser act as a principal in a
securities transaction with the Fund or any other
investment company managed by the Adviser unless
(i) permitted by an exemptive provision, rule or
order under the 1940 Act and (ii) upon obtaining
prior approval of the securities transaction from
the Adviser. Any such transactions shall be
reported quarterly to the Corporation's Directors.
(d) From time to time as the Adviser or the
Directors of the Corporation may reasonably
request, the Subadviser shall furnish the Adviser
and to each of the Corporation's Directors reports
of Portfolio transactions and reports on
securities held in the Portfolio, all in such
detail as the Adviser or the Directors may
reasonably request. The Subadviser will also
inform the Adviser and the Corporation's Directors
on a current basis of changes in investment
strategy or tactics or in key personnel.
It shall be the duty of the Subadviser to furnish
to the Corporation's Directors such information as
may reasonably be necessary in order for such
Directors to evaluate this Contract or any
proposed amendments thereto for the purpose of
casting a vote pursuant to Section 8 or 9 hereof.
2. Allocation of Charges and Expenses. The
Subadviser will bear its own costs of providing services
hereunder. Other than as specifically indicated herein the
Subadviser shall not be responsible for the Corporation's or
the Adviser's expenses, including, without limitation the
expenses of organizing the Corporation and continuing its
existence; fees and expenses of Directors and officers of
the Corporation; fees for investment advisory services and
administrative personnel and services, expenses incurred in
the distribution of its shares ("Shares"), including
expenses of administrative support services, fees and
expenses of preparing and printing its Registration
Statements under the Securities Act of 1933 and the 1940
Act, and any amendments thereto, expenses of registering
and qualifying the Corporation, the Fund and Shares of the
Fund under federal and state laws and regulation; expenses
of preparing, printing and distributing prospectus (and any
amendments thereto) to shareholders, interest expense,
taxes, fees and commissions of every kind, expenses of issue
(including cost of Share certificate), purchase, repurchase
and redemption of Shares including expenses attributable to
a program of periodic issue, charges and expenses of
custodians, transfer agents, dividend disbursing agents,
shareholder servicing agents and registrars, printing and
mailing costs, auditing, accounting and legal expenses;
reports to shareholders and governmental officers and
commissions; expenses of meetings of Directors and
shareholders and proxy solicitations therefor; insurance
expenses; association membership dues and such nonrecurring
items as may arise, including all losses and liabilities
incurred in administrating the Corporation and the Fund.
The Corporation or the Adviser, as the case may be, shall
reimburse the Subadviser for any such expenses or other
expenses of the Fund or the Adviser, as may be reasonably
incurred by such Subadviser on behalf of the Fund or the
Adviser. The Subadviser shall keep and supply to the
Corporation and the Adviser adequate records of all such
expenses.
3. Information Supplied by the Adviser. The Adviser
shall provide the Subadviser with the Corporation's Articles
of Incorporation and By-Laws, the Fund's most current
Prospectus and Statement of Additional Information, and Code
of Ethics and instructions as in effect from time to time;
and the Subadviser shall have no responsibility for actions
taken in reliance on any such documents. The Adviser shall
promptly furnish to the Subadviser copies of all material
amendments or supplements to the foregoing documents.
4. Registration as an Adviser. The Adviser and the
Subadviser represent and warrant to each of the Corporation
and each other that they are registered as an "investment
adviser" under the Advisers Act and covenants that they will
remain so registered for the duration of this Contract.
5. Subadviser's Compensation. The Adviser shall pay
to the Subadviser, as compensation for the Subadviser's
services hereunder 0.50% per annum of the Fund's average
daily net assets up to $70 million and 0.40% of such assets
in excess thereof ("Sub-Advisory Fee"). Such fee shall be
computed daily and paid monthly. The method of determining
net assets of the Fund for purposes hereof shall be the same
as the method of determining net assets for purposes of
establishing the offering and redemption price of Fund
shares as described in the Fund's Prospectus. If this
Contract shall be effective for only a portion of a month,
the aforesaid fee shall be prorated for the portion of such
month during which this contract is in effect.
Notwithstanding any other provision of the
Contract, the Subadviser may from time to time agree not to
impose all or a portion of its fee otherwise payable
hereunder (in advance of the time such fee or portion
thereof would otherwise accrue). Any such fee reduction may
be discontinued or modified by the Subadviser at any time.
6. Independent Contractor. In the performance of its
duties hereunder, the Subadviser is and shall be an
independent contractor and unless otherwise expressly
provided herein or otherwise authorized in writing, shall
have no authority to act for or represent the Corporation in
any way or otherwise be deemed to be an agent of the
Corporation or of the Adviser.
7. Sales Literature. The Adviser and Subadviser
acknowledge that all sales literature for investment
companies (such as the Corporation) are subject to strict
regulatory oversight. The Subadviser agrees to submit any
proposed sales literature for the Corporation (or any Fund)
or for itself or its affiliates which mentions the
Corporation (or any Fund) to the Corporation's distributor
for review and filing with the appropriate regulatory
authorities prior to the public release of any such sales
literature, provided, however, that nothing herein shall be
construed so as to create any obligation or duty on the part
of the Subadviser to produce sales literature for the
Corporation (or any Fund). Further, the Adviser agrees to
submit to the Subadviser any and all sales literature
referencing "Templeton," "Templeton Investment Counsel,
Inc.," or any affiliate thereof, for review and approval
prior to filing or public release.
8. Assignment and Amendments. This Contract may not
be assigned by the Subadviser and shall automatically
terminate, without the payment of any penalty, in the event
of (i) its assignment, including any change of control of
the Adviser or the Subadviser, or (ii) in the event of the
termination of the Advisory Contract, provided that such
termination shall not relieve the Adviser or the Subadviser
of any liability incurred hereunder.
The terms of this Contract shall not be changed
unless such change is approved at a meeting by the
affirmative vote of a majority of the outstanding voting
securities of the Fund and unless also approved by the
affirmative vote of a majority of Directors of the
Corporation voting in person, including a majority of the
Directors who are not interested persons of the Corporation,
the Adviser or the Subadviser, at a meeting called for the
purpose of voting at such change.
9. Duration and Termination. This Contract shall
become effective as of the date first above written and
shall remain in full force and effect continually thereafter
unless terminated automatically as set forth in Section 8
hereof or until terminated as follows:
(a) The Corporation or the Adviser may at any time
terminate this Contract, without payment of any
penalty, by not more than sixty (60) days' nor
less than thirty (30) days' written notice
delivered or mailed by registered mail, postage
prepaid, to the Subadviser. Action of the
Corporation under this Subsection may be taken
either (i) by vote of its Directors or (ii) by the
affirmative vote of a majority of the outstanding
voting securities of the Fund.
(b) The Subadviser may at any time terminate this
Contract by not less than sixty (60) days' written
notice delivered or mailed by registered mail,
postage prepaid, to the Adviser; or
(c) This contract shall automatically terminate on
August 1, of any year beginning in 1996, in which
its terms and renewal shall not have been approved
by (i) a majority vote of the Directors of the
Corporation voting in person, including a majority
of the Directors who are not interested persons of
the Corporation, the Adviser or the Subadviser, at
a meeting called for the purpose of voting on such
approval or (ii) the affirmative vote of a
majority of the outstanding voting securities of
the Fund; provided, however, that if the
continuance of this Contract is submitted to the
shareholders of the Fund for their approval and
such shareholders fail to approve such continuance
of this contract as provided herein, the
Subadviser may continue to serve hereunder as to
the Fund in a manner consistent with the 1940 Act
and the rules and regulations thereunder.
Termination of this Contract pursuant to this
Section shall be without payment of any penalty.
In the event of termination of this Contract for
any reason, the Subadviser shall, immediately upon
notice of termination or on such later date as may
be specified in such notice, cease all activity on
behalf of the Portfolio and with respect to any of
its assets, except as expressly directed by the
Adviser. In addition, the Subadviser shall
deliver the Fund's Books and Records to the
Adviser by such means and in accordance with such
schedule as the Adviser shall direct and shall
otherwise cooperate, as reasonably directed by the
Adviser, in the transition of portfolio assets
management to any successors of the Subadviser,
including the Adviser.
10. Certain Definitions. For the purposes of this
Contract:
(a) "Affirmative vote of a majority of the outstanding
voting securities of the Fund" means the
affirmative vote, at an annual or special meeting
of shareholders of the Fund, duly called and held,
(a) of 67% or more of the shares of the Fund
present (in person or by proxy) and entitled to
vote at such meeting, if the holder or more than
50% of the outstanding shares of the Fund entitled
to vote at such meeting are present (in person or
by proxy), or (b) of more than 50% of the
outstanding shares of the Fund entitled to vote at
such meeting, whichever is less.
(b) "Interested persons" and "Assignment" shall have
their respective meetings as set forth in the 1940
Act, subject, however, to such exemptions as may
be granted by the Securities and Exchange
Commission under said Act.
11. Liability and Indemnification. In the absence of
willful misfeasance, bad faith or gross negligence on the
part of the Subadviser, or of reckless disregard of its
obligations and duties hereunder, the Subadviser shall not
be subject to any liability to the Adviser or the
Corporation, to any shareholder of the Fund, or to any
person, firm or organization, for any act or omission in the
course of, or connected with the rendering of services by
Subadviser. Nothing herein, however, shall derogate from
the Subadviser's obligations under federal and state
securities laws.
The Subadviser shall indemnify and hold the Adviser
harmless from and against any and all losses, damages,
costs, charges, counsel fees, payments, expenses and
liabilities arising out of or attributable to any action or
failure or omission to act by the Subadviser as a result of
the Subadviser's willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations and
duties hereunder.
12. Jurisdiction. This Contract shall be governed by
and construed to be consistent with the Advisory Contract
and in accordance with substantive laws of the State of
Wisconsin without giving regard to the conflicts of law
principles thereof and in accordance with the 1940 Act. In
the case of any conflict between state law and the 1940 Act,
the 1940 Act shall control.
13. Counterparts. This Contract may be executed
simultaneously in two or more counterparts, each of which
shall be deemed an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused
this instrument to be signed on their behalf by their duly
authorized officers as the date first above written.
M&I INVESTMENT MANAGEMENT
INC.
By
ATTEST: Secretary President
TEMPLETON INVESTMENT COUNSEL, INC.
By
ATTEST: Secretary President
Exhibit 6(iii) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K
Exhibit J
to the
Distributor's Contract
MARSHALL FUNDS, INC.
Marshall International Stock Fund
The following provisions are hereby incorporated and made
part of the Distributor's Contract dated the 1st day of October,
1992 between Marshall Funds, Inc. and Federated Securities Corp.
with respect to the Fund set forth above.
1. The Fund hereby appoints FSC to engage in activities
principally intended to result in the sale of Shares. Pursuant
to this appointment FSC is authorized to select a group of
brokers ("Brokers") to sell shares of the above-listed Fund
("Shares"), at the current offering price thereof as described
and set forth in the prospectus of the Fund, and to render
administrative support services to the Fund and its
shareholders. In addition, FSC is authorized to select a group
of Administrators ("Administrators") to render administrative
support services to the Fund and its shareholders.
2. Administrative support services may include, but are
not limited to, the following eleven functions: (1) account
openings: the Broker or Administrator communicates account
openings via computer terminals located on the Broker or
Administrator's premises; 2) account closings: the Broker or
Administrator communicates account closings via computer
terminals; 3) enter purchase transactions: purchase
transactions are entered through the Broker or Administrator's
own personal computer or through the use of a toll-free
telephone number; 4) enter redemption transactions: Broker or
Administrator enters redemption transactions in the same manner
as purchases; 5) account maintenance: Broker or Administrator
provides or arranges to provide accounting support for all
transactions. Broker or Administrator also wires funds and
receives funds for Fund share purchases and redemptions,
confirms and reconciles all transactions, reviews the activity
in the Fund's accounts, and provides training and supervision of
its personnel; 6) interest posting: Broker or Administrator
posts and reinvests dividends to the Fund's accounts; 7)
prospectus and shareholder reports: Broker or Administrator
maintains and distributes current copies of prospectuses and
shareholder reports; 8) advertisements: the Broker or
Administrator continuously advertises the availability of its
services and products; 9) customer lists: the Broker or
Administrator continuously provides names of potential
customers; 10) design services: the Broker or Administrator
continuously designs material to send to customers and develops
methods of making such materials accessible to customers; and
11) consultation services: the Broker or Administrator
continuously provides information about the product needs of
customers.
3. During the term of this Agreement, the Fund will pay
FSC for services pursuant to this Agreement, a monthly fee
computed at the annual rate of .25% of the average aggregate net
asset value of the Shares of the Marshall International Stock
Fund held during the month. For the month in which this
Agreement becomes effective or terminates, there shall be an
appropriate proration of any fee payable on the basis of the
number of days that the Agreement is in effect during the month.
4. FSC may from time-to-time and for such periods as it
deems appropriate reduce its compensation to the extent any
Shares' expenses exceed such lower expense limitation as FSC
may, by notice to the Fund, voluntarily declare to be effective.
5. FSC will enter into separate written agreements, as set
forth in the Rule 12b-1 Plan adopted on behalf of the Fund
listed above, with various firms to provide certain of the
services set forth in Paragraph 1 herein. FSC, in its sole
discretion, may pay Brokers and Administrators a periodic fee in
respect of Shares owned from time to time by their clients or
customers. The schedules of such fees and the basis upon which
such fees will be paid shall be determined from time to time by
FSC in its sole discretion.
6. FSC will prepare reports to the Board of Directors of
the Fund on a quarterly basis showing amounts expended hereunder
including amounts paid to Brokers and Administrators and the
purpose for such payments.
7. In the event any amendment to this Agreement materially
increases the fees set forth in Paragraph 3, such amendment must
be approved by a vote of a majority of the outstanding voting
securities of the Fund.
In consideration of the mutual covenants set forth in the
Distributor's Contract dated October 1, 1992 between Marshall
Funds, Inc. and Federated Securities Corp., Marshall Funds, Inc.
executes and delivers this Exhibit on behalf of the Fund set
forth in this Exhibit.
Witness the due execution hereof this 1st day of August,
1994.
ATTEST: MARSHALL FUNDS,
INC.
By:
Secretary
President
(SEAL)
ATTEST: FEDERATED
SECURITIES CORP.
By:
Secretary
President
(SEAL)
1
Exhibit 8 under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
CUSTODIAN CONTRACT*
Between
MARSHALL FUNDS, INC.
and
MARSHALL & ILSLEY TRUST COMPANY
* Safekeeping only
TABLE OF CONTENTS
Page
1. Employment of Custodian and Property to be Held by
It............ 1
2. Duties of the Custodian With Respect to Property
of the Funds Held by the
Custodian............................... 1
2.1 Holding
Securities........................................ 1
2.2 Delivery of
Securities.................................... 2
2.3 Registration of
Securities................................ 4
2.4 Bank
Accounts............................................. 4
2.5 Payments for
Shares....................................... 4
2.6 Availability of Federal
Funds............................. 4
2.7 Collection of
Income...................................... 5
2.8 Payment of Fund
Moneys.................................... 5
2.9 Liability for Payment in Advance of
Receipt of Securities
Purchased........................... 6
2.10 Payments for Repurchases or Redemptions
of Shares of a
Fund....................................... 6
2.11 Appointment of
Agents..................................... 6
2.12 Deposit of Fund Assets in Securities
System............... 7
2.13 Segregated
Account........................................ 8
2.14 Joint Repurchase
Agreements............................... 8
2.15 Ownership Certificates for Tax
Purposes................... 8
2.16
Proxies................................................... 9
2.17 Communications Relating to Fund Portfolio
Securities...... 9
2.18 Proper
Instructions....................................... 9
2.19 Actions Permitted Without Express
Authority............... 9
2.20 Evidence of
Authority.....................................10
3.
Reserved......................................................
...10
4.
Records.......................................................
...10
5. Opinion of Funds' Independent Public
Accountants.................11
6. Reports to Trust by Independent Public
Accountants...............11
7. Compensation of
Custodian........................................11
8. Responsibility of
Custodian......................................11
9. Effective Period, Termination and
Amendment......................13
10. Successor
Custodian..............................................13
11. Interpretive and Additional
Provisions...........................14
12. Wisconsin Law to
Apply...........................................14
13.
Notices.......................................................
...14
14.
Counterparts..................................................
...14
CUSTODIAN CONTRACT
This Contract between MARSHALL FUNDS, INC., (the
"Corporation"), a Wisconsin corporation, on behalf of the
portfolios (hereinafter collectively called the "Funds" and
individually referred to as a "Fund") of the Corporation,
organized and existing under the laws of the State of
Wisconsin, having its principal place of business at Federated
Investors Tower, Pittsburgh, Pennsylvania, 15222-3779, and
MARSHALL & ILSLEY TRUST COMPANY, a Wisconsin corporation,
having its principal place of business at 1000 North Water
Street, Milwaukee, Wisconsin, 53202, hereinafter called the
"Custodian",
WITNESSETH: That in consideration of the mutual
covenants and agreements hereinafter contained, the parties
hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Corporation hereby employs the Custodian as the
custodian of the assets of each of the Funds of the
Corporation. Except as otherwise expressly provided herein,
the securities and other assets of each of the Funds shall be
segregated from the assets of each of the other Funds and from
all other persons and entities. The Corporation will deliver
to the Custodian all securities and cash owned by the Funds
and all payments of income, payments of principal or capital
distributions received by them with respect to all securities
owned by the Funds from time to time, and the cash
consideration received by them for shares ("Shares") of
capital stock of the Funds as may be issued or sold from time
to time. The Custodian shall not be responsible for any
property of the Funds held or received by the Funds and not
delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the
meaning of Section 2.18), the Custodian shall from time to
time employ one or more sub-custodians upon the terms
specified in the Proper Instructions, provided that the
Custodian shall have no more or less responsibility or
liability to the Corporation or any of the Funds on account of
any actions or omissions of any sub-custodian so employed than
any such sub-custodian has to the Custodian.
2. Duties of the Custodian With Respect to Property of the
Funds Held by the Custodian
2.1 Holding Securities. The Custodian shall hold and
physically segregate for the account of each Fund all non-
cash property, including all securities owned by each
Fund, other than securities which are maintained pursuant
to Section 2.12 in a clearing agency which acts as a
securities depository or in a book-entry system
authorized by the U.S. Department of the Treasury,
collectively referred to herein as "Securities System",
or securities which are subject to a joint repurchase
agreement with affiliated funds pursuant to Section 2.14.
The Custodian shall maintain records of all receipts,
deliveries and locations of such securities, together
with a current inventory thereof, and shall conduct
periodic physical inspections of certificates
representing stocks, bonds and other securities held by
it under this Contract in such manner as the Custodian
shall determine from time to time to be advisable in
order to verify the accuracy of such inventory. With
respect to securities held by any agent appointed
pursuant to Section 2.11 hereof, and with respect to
securities held by any sub-custodian appointed pursuant
to Section 1 hereof, the Custodian may rely upon
certificates from such agent as to the holdings of such
agent and from such sub-custodian as to the holdings of
such sub-custodian, it being understood that such
reliance in no way relieves the Custodian of its
responsibilities under this Contract. The Custodian will
promptly report to the Corporation the results of such
inspections, indicating any shortages or discrepancies
uncovered thereby, and take appropriate action to remedy
any such shortages or discrepancies.
2.2 Delivery of Securities. The Custodian shall release and
deliver securities owned by a Fund held by the Custodian
or in a Securities System account of the Custodian only
upon receipt of Proper Instructions, which may be
continuing instructions when deemed appropriate by the
parties, and only in the following cases:
(1) Upon sale of such securities for the account of a
Fund and receipt of payment therefor;
(2) Upon the receipt of payment in connection with any
repurchase agreement related to such securities
entered into by the Corporation;
(3) In the case of a sale effected through a Securities
System, in accordance with the provisions of Section
2.12 hereof;
(4) To the depository agent in connection with tender
or other similar offers for portfolio securities of a
Fund, in accordance with the provisions of Section
2.17 hereof;
(5) To the issuer thereof or its agent when such
securities are called, redeemed, retired or otherwise
become payable; provided that, in any such case, the
cash or other consideration is to be delivered to the
Custodian;
(6) To the issuer thereof, or its agent, for transfer
into the name of a Fund or into the name of any
nominee or nominees of the Custodian or into the name
or nominee name of any agent appointed pursuant to
Section 2.11 or into the name or nominee name of any
sub-custodian appointed pursuant to Section 1; or for
exchange for a different number of bonds,
certificates or other evidence representing the same
aggregate face amount or number of units; provided
that, in any such case, the new securities are to be
delivered to the Custodian;
(7) Upon the sale of such securities for the account of
a Fund, to the broker or its clearing agent, against
a receipt, for examination in accordance with "street
delivery custom"; provided that in any such case, the
Custodian shall have no responsibility or liability
for any loss arising from the delivery of such
securities prior to receiving payment for such
securities except as may arise from the Custodian's
own failure to act in accordance with the standard of
reasonable care or any higher standard of care
imposed upon the Custodian by any applicable law or
regulation if such above-stated standard of
reasonable care were not part of this Contract;
(8) For exchange or conversion pursuant to any plan of
merger, consolidation, recapitalization,
reorganization or readjustment
of the securities of the issuer of such securities,
or pursuant to provisions for conversion contained in
such securities, or pursuant to any deposit
agreement; provided that, in any such case, the new
securities and cash, if any, are to be delivered to
the Custodian;
(9) In the case of warrants, rights or similar
securities, the surrender thereof in the exercise of
such warrants, rights or similar securities or the
surrender of interim receipts or temporary securities
for definitive securities; provided that, in any such
case, the new securities and cash, if any, are to be
delivered to the Custodian;
(10) For delivery in connection with any loans of
portfolio securities of a Fund, but only against
receipt of adequate collateral in the form of (a)
cash, in an amount specified by the Corporation, (b)
certificated securities of a description specified by
the Corporation, registered in the name of the Fund
or in the name of a nominee of the Custodian referred
to in Section 2.3 hereof or in proper form for
transfer, or (c) securities of a description
specified by the Corporation, transferred through a
Securities System in accordance with Section 2.12
hereof;
(11) For delivery as security in connection with any
borrowings requiring a pledge of assets by a Fund,
but only against receipt of amounts borrowed, except
that in cases where additional collateral is required
to secure a borrowing already made, further
securities may be released for the purpose;
(12) For delivery in accordance with the provisions of
any agreement among the Corporation, the Custodian
and a broker-dealer registered under the Securities
Exchange Act of 1934 (the "Exchange Act"), as
amended, and a member of The National Association of
Securities Dealers, Inc. ("NASD"), relating to
compliance with the rules of The Options Clearing
Corporation and of any registered national securities
exchange, or of any similar organization or
organizations, regarding escrow or other arrangements
in connection with transactions for a Fund;
(13) For delivery in accordance with the provisions of
any agreement among the Corporation, the Custodian,
and a Futures Commission Merchant registered under
the Commodity Exchange Act, relating to compliance
with the rules of the Commodity Futures Trading
Commission and/or any Contract Market, or any similar
organization or organizations, regarding account
deposits in connection with transactions for a Fund;
(14) Upon receipt of instructions from the transfer
agent ("Transfer Agent") for a Fund, for delivery to
such Transfer Agent or to the holders of shares in
connection with distributions in kind, in
satisfaction of requests by holders of Shares for
repurchase or redemption; and
(15) For any other proper corporate purpose, but only
upon receipt of, in addition to Proper Instructions,
a certified copy of a resolution of the Board of
Directors (the "Board") of the Corporation on behalf
of a Fund signed by an officer of the Corporation and
certified by its Secretary or an Assistant Secretary,
specifying the securities to be delivered, setting
forth the purpose for which such delivery is to be
made, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom
delivery of such securities shall be made.
2.3 Registration of Securities. Securities held by the
Custodian (other than bearer securities) shall be
registered in the name of a particular Fund or in the
name of any nominee of the Fund or of any nominee of the
Custodian which nominee shall be assigned exclusively to
the Fund, unless the Corporation has authorized in
writing the appointment of a nominee to be used in common
with other registered investment companies affiliated
with the Fund, or in the name or nominee name of any
agent appointed pursuant to Section 2.11 or in the name
or nominee name of any sub-custodian appointed pursuant
to Section 1. All securities accepted by the Custodian
on behalf of a Fund under the terms of this Contract
shall be in "street name" or other good delivery form.
2.4 Bank Accounts. The Custodian shall open and maintain a
separate bank account or accounts in the name of each
Fund, subject only to draft or order by the Custodian
acting pursuant to the terms of this Contract, and shall
hold in such account or accounts, subject to the
provisions hereof, all cash received by it from or for
the account of each Fund, other than cash maintained in a
joint repurchase account with other affiliated funds
pursuant to Section 2.14 of this Contract or by a
particular Fund in a bank account established and used in
accordance with Rule 17f-3 under the Investment Company
Act of 1940, as amended. Funds held by the Custodian for
a Fund may be deposited by it to its credit as Custodian
in the Banking Department of the Custodian or in such
other banks or trust companies as it may in its
discretion deem necessary or desirable; provided,
however, that every such bank or trust company shall be
qualified to act as a custodian under the Investment
Company Act of 1940, as amended, and that each such bank
or trust company and the funds to be deposited with each
such bank or trust company shall be approved by vote of a
majority of the Board of Directors ("Board") of the
Corporation. Such funds shall be deposited by the
Custodian in its capacity as Custodian for the Fund and
shall be withdrawable by the Custodian only in that
capacity. If requested by the Corporation, the Custodian
shall furnish the Corporation, not later than twenty (20)
days after the last business day of each month, an
internal reconciliation of the closing balance as of that
day in all accounts described in this section to the
balance shown on the daily cash report for that day
rendered to the Corporation.
2.5 Payments for Shares. The Custodian shall make such
arrangements with the Transfer Agent of each Fund, as
will enable the Custodian to receive the cash
consideration due to each Fund and will deposit into each
Fund's account such payments as are received from the
Transfer Agent. The Custodian will provide timely
notification to the Corporation and the Transfer Agent of
any receipt by it of payments for Shares of the
respective Fund.
2.6 Availability of Federal Funds. Upon mutual agreement
between the Corporation and the Custodian, the Custodian
shall make federal funds available to the Funds as of
specified times agreed upon from time to time by the
Corporation and the Custodian in the amount of checks,
clearing house funds, and other non-federal funds
received in payment for Shares of the Funds which are
deposited into the Funds' accounts.
2.7 Collection of Income.
(1) The Custodian shall collect on a timely basis all
income and other payments with respect to registered
securities held hereunder to which each Fund shall be
entitled either by law or pursuant to custom in the
securities business, and shall collect on a timely
basis all income and other payments with respect to
bearer securities if, on the date of payment by the
issuer, such securities are held by the Custodian or
its agent thereof and shall credit such income, as
collected, to each Fund's custodian account. Without
limiting the generality of the foregoing, the
Custodian shall detach and present for payment all
coupons and other income items requiring presentation
as and when they become due and shall collect
interest when due on securities held hereunder. The
collection of income due the Funds on securities
loaned pursuant to the provisions of Section 2.2 (10)
shall be the responsibility of the Corporation. The
Custodian will have no duty or responsibility in
connection therewith, other than to provide the
Corporation with such information or data as may be
necessary to assist the Corporation in arranging for
the timely delivery to the Custodian of the income to
which each Fund is properly entitled.
(2) The Corporation shall promptly notify the Custodian
whenever income due on securities is not collected in
due course and will provide the Custodian with weekly
reports of the status of past due income. The
Corporation will furnish the Custodian with a weekly
report of accrued/past due income for the fund. Once
an item is identified as past due and the Corporation
has furnished the necessary claim documentation to
the Custodian, the Custodian will then initiate a
claim on behalf of the Corporation. The Custodian
will furnish the Corporation with a status report bi-
weekly.
2.8 Payment of Fund Moneys. Upon receipt of Proper
Instructions, which may be continuing instructions when
deemed appropriate by the parties, the Custodian shall
pay out moneys of each Fund in the following cases only:
(1) Upon the purchase of securities, futures contracts
or options on futures contracts for the account of a
Fund but only (a) against the delivery of such
securities, or evidence of title to futures
contracts, to the Custodian (or any bank, banking
firm or trust company doing business in the United
States or abroad which is qualified under the
Investment Company Act of 1940, as amended, to act as
a custodian and has been designated by the Custodian
as its agent for this purpose) registered in the name
of the Fund or in the name of a nominee of the
Custodian referred to in Section 2.3 hereof or in
proper form for transfer, (b) in the case of a
purchase effected through a Securities System, in
accordance with the conditions set forth in Section
2.12 hereof or (c) in the case of repurchase
agreements entered into between the Corporation and
any other party, (i) against delivery of the
securities either in certificate form or through an
entry crediting the Custodian's account at the
Federal Reserve Bank with such securities or (ii)
against delivery of the receipt evidencing purchase
for the account of the Fund of securities owned by
the Custodian along with written evidence of the
agreement by the Custodian to repurchase such
securities from the Fund;
(2) In connection with conversion, exchange or
surrender of securities owned by a Fund as set forth
in Section 2.2 hereof;
(3) For the redemption or repurchase of Shares of a
Fund issued by the Corporation as set forth in
Section 2.10 hereof;
(4) For the payment of any expense or liability
incurred by a Fund, including but not limited to the
following payments for the account of the Fund:
interest; taxes; management, accounting, transfer
agent and legal fees; and operating expenses of the
Fund, whether or not such expenses are to be in whole
or part capitalized or treated as deferred expenses;
(5) For the payment of any dividends on Shares of a
Fund declared pursuant to the governing documents of
the Corporation;
(6) For payment of the amount of dividends received in
respect of securities sold short;
(7) For any other proper purpose, but only upon receipt
of, in addition to Proper Instructions, a certified
copy of a resolution of the Board of the Corporation
on behalf of a Fund signed by an officer of the
Corporation and certified by its Secretary or an
Assistant Secretary, specifying the amount of such
payment, setting forth the purpose for which such
payment is to be made, declaring such purpose to be a
proper purpose, and naming the person or persons to
whom such payment is to be made.
2.9 Liability for Payment in Advance of Receipt of
Securities Purchased. In any and every case where
payment for purchase of securities for the account of a
Fund is made by the Custodian in advance of receipt of
the securities purchased, in the absence of specific
written instructions from the Corporation to so pay in
advance, the Custodian shall be absolutely liable to the
Fund for such securities to the same extent as if the
securities had been received by the Custodian.
2.10 Payments for Repurchases or Redemptions of Shares of a
Fund. From such funds as may be available for the
purpose of repurchasing or redeeming Shares of a Fund,
but subject to the limitations of the Articles of
Incorporation and any applicable votes of the Board of
the Corporation pursuant thereto, the Custodian shall,
upon receipt of instructions from the Transfer Agent,
make funds available for payment to holders of shares of
such Fund who have delivered to the Transfer Agent a
request for redemption or repurchase of their shares
including without limitation through bank drafts,
automated clearinghouse facilities, or by other means.
In connection with the redemption or repurchase of Shares
of the Funds, the Custodian is authorized upon receipt of
instructions from the Transfer Agent to wire funds to or
through a commercial bank designated by the redeeming
shareholders.
2.11 Appointment of Agents. The Custodian may at any time or
times in its discretion appoint (and may at any time
remove) any other bank or trust company which is itself
qualified under the Investment Company
Act of 1940, as amended, and any applicable state law or
regulation, to act as a custodian, as its agent to carry
out such of the provisions of this Section 2 as the
Custodian may from time to time direct; provided,
however, that the appointment of any agent shall not
relieve the Custodian of its responsibilities or
liabilities hereunder.
2.12 Deposit of Fund Assets in Securities System. The
Custodian may deposit and/or maintain securities owned by
the Funds in a clearing agency registered with the
Securities and Exchange Commission under Section 17A of
the Exchange Act, which acts as a securities depository,
or in the book-entry system authorized by the U.S.
Department of the Treasury and certain federal agencies,
collectively referred to herein as "Securities System" in
accordance with applicable Federal Reserve Board and
Securities and Exchange Commission rules and regulations,
if any, and subject to the following provisions:
(1) The Custodian may keep securities of each Fund in a
Securities System provided that such securities are
represented in an account ("Account") of the
Custodian in the Securities System which shall not
include any assets of the Custodian other than assets
held as a fiduciary, custodian or otherwise for
customers;
(2) The records of the Custodian with respect to
securities of the Funds which are maintained in a
Securities System shall identify by book-entry those
securities belonging to each Fund;
(3) The Custodian shall pay for securities purchased
for the account of each Fund upon (i) receipt of
advice from the Securities System that such
securities have been transferred to the Account, and
(ii) the making of an entry on the records of the
Custodian to reflect such payment and transfer for
the account of the Fund. The Custodian shall
transfer securities sold for the account of a Fund
upon (i) receipt of advice from the Securities System
that payment for such securities has been transferred
to the Account, and (ii) the making of an entry on
the records of the Custodian to reflect such transfer
and payment for the account of the Fund. Copies of
all advices from the Securities System of transfers
of securities for the account of a Fund shall
identify the Fund, be maintained for the Fund by the
Custodian and be provided to the Corporation at its
request. Upon request, the Custodian shall furnish
the Corporation confirmation of each transfer to or
from the account of a Fund in the form of a written
advice or notice and shall furnish to the Corporation
copies of daily transaction sheets reflecting each
day's transactions in the Securities System for the
account of a Fund.
(4) The Custodian shall provide the Corporation with
any report obtained by the Custodian on the
Securities System's accounting system, internal
accounting control and procedures for safeguarding
securities deposited in the Securities System;
(5) The Custodian shall have received the initial
certificate, required by Section 9 hereof;
(6) Anything to the contrary in this Contract
notwithstanding, the Custodian shall be liable to the
Corporation for any loss or
damage to a Fund resulting from use of the Securities
System by reason of any negligence, misfeasance or
misconduct of the Custodian or any of its agents or
of any of its or their employees or from failure of
the Custodian or any such agent to enforce
effectively such rights as it may have against the
Securities System; at the election of the Corporation,
it shall be entitled to be subrogated to the rights
of the Custodian with respect to any claim against
the Securities System or any other person which the
Custodian may have as a consequence of any such loss
or damage if and to the extent that a Fund has not
been made whole for any such loss or damage.
(7) The authorization contained in this Section 2.12
shall not relieve the Custodian from using reasonable
care and diligence in making use of any Securities
System.
2.13 Segregated Account. The Custodian shall upon receipt of
Proper Instructions establish and maintain a segregated
account or accounts for and on behalf of each Fund, into
which account or accounts may be transferred cash and/or
securities, including securities maintained in an account
by the Custodian pursuant to Section 2.12 hereof, (i) in
accordance with the provisions of any agreement among the
Corporation, the Custodian and a broker-dealer registered
under the Exchange Act and a member of the NASD (or any
futures commission merchant registered under the
Commodity Exchange Act), relating to compliance with the
rules of The Options Clearing Corporation and of any
registered national securities exchange (or the Commodity
Futures Trading Commission or any registered contract
market), or of any similar organization or organizations,
regarding escrow or other arrangements in connection with
transactions for a Fund, (ii) for the purpose of
segregating cash or government securities in connection
with options purchased, sold or written for a Fund or
commodity futures contracts or options thereon purchased
or sold for a Fund, (iii) for the purpose of compliance
by the Corporation or a Fund with the procedures required
by any release or releases of the Securities and Exchange
Commission relating to the maintenance of segregated
accounts by registered investment companies and (iv) for
other proper corporate purposes, but only, in the case of
clause (iv), upon receipt of, in addition to Proper
Instructions, a certified copy of a resolution of the
Board signed by an officer of the Corporation and
certified by the Secretary or an Assistant Secretary,
setting forth the purpose or purposes of such segregated
account and declaring such purposes to be proper
corporate purposes.
2.14 Joint Repurchase Agreements. Upon the receipt of Proper
Instructions, and in compliance with applicable exemptive
orders, the Custodian shall deposit and/or maintain any
assets of a Fund and any affiliated funds which are
subject to joint repurchase transactions in an account
established solely for such transactions for the Fund and
its affiliated funds. For purposes of this Section 2.14,
"affiliated funds" shall include all investment companies
and their portfolios for which subsidiaries or affiliates
of Marshall & Ilsley Corporation serve as investment
advisers. The requirements of segregation set forth in
Section 2.1 shall be deemed to be waived with respect to
such assets.
2.15 Ownership Certificates for Tax Purposes. The Custodian
shall execute ownership and other certificates and
affidavits for all federal and state tax purposes in
connection with receipt of income or other payments with
respect to securities of a Fund held by it and in
connection with transfers of securities.
2.16 Proxies. The Custodian shall, with respect to the
securities held hereunder, cause to be promptly executed
by the registered holder of such securities, if the
securities are registered otherwise than in the name of a
Fund or a nominee of a Fund, all proxies, without
indication of the manner in which such proxies are to be
voted, and shall promptly deliver to the Corporation such
proxies, all proxy soliciting materials and all notices
relating to such securities.
2.17 Communications Relating to Fund Portfolio Securities.
The Custodian shall transmit promptly to the Corporation
all written information (including, without limitation,
pendency of calls and maturities of securities and
expirations of rights in connection therewith and notices
of exercise of call and put options written by the Fund
and the maturity of futures contracts purchased or sold
by the Fund) received by the Custodian from issuers of
the securities being held for the Fund. With respect to
tender or exchange offers, the Custodian shall transmit
promptly to the Corporation all written information
received by the Custodian from issuers of the securities
whose tender or exchange is sought and from the party (or
his agents) making the tender or exchange offer. If the
Corporation desires to take action with respect to any
tender offer, exchange offer or any other similar
transaction, the Corporation shall notify the Custodian
in writing at least three business days prior to the date
on which the Custodian is to take such action. However,
the Custodian shall nevertheless exercise its best
efforts to take such action in the event that
notification is received three business days or less
prior to the date on which action is required. Except
for securities held in a nominee name, the Custodian will
act as a secondary source of information and will not be
responsible for providing corporate action notification
to the Corporation.
2.18 Proper Instructions. Proper Instructions as used
throughout this Section 2 means a writing signed or
initialed by at least two persons as the Board shall have
from time to time authorized. Each such writing shall
set forth the specific transaction or type of transaction
involved. Oral instructions will be considered Proper
Instructions if the Custodian reasonably believes them to
have been given by a person previously authorized in
Proper Instructions to give such instructions with
respect to the transaction involved. The Corporation
shall cause all oral instructions to be confirmed in
writing. Upon receipt of a certificate of the Secretary
or an Assistant Secretary as to the authorization by the
Board of the Corporation accompanied by a detailed
description of procedures approved by the Board, Proper
Instructions may include communications effected directly
between electro-mechanical or electronic devices provided
that the Board and the Custodian are satisfied that such
procedures afford adequate safeguards for a Fund's
assets.
2.19 Actions Permitted Without Express Authority. The
Custodian may in its discretion, without express
authority from the Corporation:
(1) make payments to itself or others for minor
expenses of handling securities or other similar
items relating to its duties under this Contract,
provided that all such payments shall be accounted
for to the Corporation in such form that it may be
allocated to the affected Fund;
(2) surrender securities in temporary form for
securities in definitive form;
(3) endorse for collection, in the name of a Fund,
checks, drafts and other negotiable instruments; and
(4) in general, attend to all non-discretionary details
in connection with the sale, exchange, substitution,
purchase, transfer and other dealings with the
securities and property of each Fund except as
otherwise directed by the Corporation.
2.20 Evidence of Authority. The Custodian shall be protected
in acting upon any instructions, notice, request,
consent, certificate or other instrument or paper
reasonably believed by it to be genuine and to have been
properly executed on behalf of a Fund. The Custodian may
receive and accept a certified copy of a vote of the
Board of the Corporation as conclusive evidence (a) of
the authority of any person to act in accordance with
such vote or (b) of any determination of or any action by
the Board pursuant to the Articles of Incorporation as
described in such vote, and such vote may be considered
as in full force and effect until receipt by the
Custodian of written notice to the contrary.
3. Reserved.
4. Records
The Custodian shall create and maintain all records
relating to its activities and obligations under this Contract
in such manner as will meet the obligations of the Corporation
and the Funds under the Investment Company Act of 1940, as
amended, with particular attention to Section 31 thereof and
Rules 31a-1 and 31a-2 thereunder. All such records shall be
the property of the Corporation and shall at all times during
the regular business hours of the Custodian be open for
inspection by duly authorized officers, employees or agents of
the Corportion and employees and agents of the Securities and
Exchange Commission. In the event of termination of this
Contract, the Custodian will deliver all such records to the
Corporation, to a successor Custodian, or to such other person
as the Corporation may direct. The Custodian will
electronically transmit daily to the Corporation, information
pertaining to the securities transactions of the fund as a
"custody only" custodian. The Custodian shall, at the
Corporation's request, supply the Corporation with a
tabulation of securities owned by a Fund and held by the
Custodian and shall, when requested to do so by the
Corporation and for such compensation as shall be agreed upon
between the Corporation and the Custodian, include certificate
numbers in such tabulations.
5. Opinion of Funds' Independent Public Accountants
The Custodian shall take all reasonable action, as the
Corporation may from time to time request, to obtain from year
to year favorable opinions from each Fund's independent public
accountants with respect to its activities hereunder in
connection with the preparation of the Fund's registration
statement, periodic reports, or any other reports to the
Securities and Exchange Commission and with respect to any
other requirements of such Commission.
6. Reports to Corporation by Independent Public Accountants
The Custodian shall provide the Corporation, at such
times as the Corporation may reasonably require, with reports
by independent public accountants for each Fund on the
accounting system, internal accounting control and procedures
for safeguarding securities, futures contracts and options on
futures contracts, including securities deposited and/or
maintained in a Securities System, relating to the services
provided by the Custodian for the Fund under this Contract;
such reports, shall be of sufficient scope and in sufficient
detail, as may reasonably be required by the Corporation, to
provide reasonable assurance that any material inadequacies
would be disclosed by such examination, and, if there are no
such inadequacies, the reports shall so state.
7. Compensation of Custodian
The Custodian shall be entitled to reasonable
compensation for its services and expenses as Custodian, as
agreed upon from time to time between the Corporation and the
Custodian.
8. Responsibility of Custodian
The Custodian shall be held to a standard of reasonable
care in carrying out the provisions of this Contract;
provided, however, that the Custodian shall be held to any
higher standard of care which would be imposed upon the
Custodian by any applicable law or regulation if such above
stated standard of reasonable care was not part of this
Contract. The Custodian shall be entitled to rely on and may
act upon advice of counsel (who may be counsel for the
Corporation) on all matters, and shall be without liability
for any action reasonably taken or omitted pursuant to such
advice, provided that such action is not in violation of
applicable federal or state laws or regulations, and is in
good faith and without negligence. The Custodian shall be
kept indemnified by the Corporation but only from the assets
of the Fund involved in the issue at hand and be without
liability for any action taken or thing done by it in carrying
out the terms and provisions of this Contract in accordance
with the above standards.
In order that the indemnification provisions contained
in this Section 8 shall apply, however, it is understood that
if in any case the Corporation may be asked to indemnify or
save the Custodian harmless, the Corporation shall be fully
and promptly advised of all pertinent facts concerning the
situation in question, and it is further understood that the
Custodian will use all reasonable care to identify and notify
the Corporation promptly concerning any situation which
presents or appears likely to present the probability of such
a claim for indemnification. The Corporation shall have the
option to defend the Custodian against any claim which may be
the subject of this indemnification, and in the event that the
Corporation so elects it will so notify the Custodian and
thereupon the Corporation shall take over complete defense of
the claim, and the Custodian shall in such situation initiate
no further legal or other expenses for which it shall seek
indemnification under this Section. The Custodian shall in no
case confess any claim or make any compromise in any case in
which the Corporation will be asked to indemnify the Custodian
except with the Corporation's prior written consent.
Notwithstanding the foregoing, the responsibility of the
Custodian with respect to redemptions effected by check shall
be in accordance with a separate Agreement entered into
between the Custodian and the Corporation.
If the Corporation requires the Custodian to take any
action with respect to securities, which action involves the
payment of money or which action may, in the reasonable
opinion of the Custodian, result in the Custodian or its
nominee assigned to a Fund being liable for the payment of
money or incurring liability of some other form, the Custodian
may request the Corporation, as a prerequisite to requiring
the Custodian to take such action, to provide indemnity to the
Custodian in an amount and form satisfactory to the Custodian.
The Corporation agrees to indemnify and hold harmless
the Custodian and its nominee from and against all taxes,
charges, expenses, assessments, claims and liabilities
(including counsel fees) (referred to herein as authorized
charges) incurred or assessed against it or its nominee in
connection with the performance of this Contract, except such
as may arise from it or its nominee's own failure to act in
accordance with the standard of reasonable care or any higher
standard of care which would be imposed upon the Custodian by
any applicable law or regulation if such above-stated standard
of reasonable care were not part of this Contract. To secure
any authorized charges and any advances of cash or securities
made by the Custodian to or for the benefit of a Fund for any
purpose which results in the Fund incurring an overdraft at
the end of any business day or for extraordinary or emergency
purposes during any business day, the Corporation hereby
grants to the Custodian a security interest in and pledges to
the Custodian securities held for the Fund by the Custodian,
in an amount not to exceed 10 percent of the Fund's gross
assets, the specific securities to be designated in writing
from time to time by the Corporation or the Fund's investment
adviser. Should the Corporation fail to make such
designation, or should it instruct the Custodian to make
advances exceeding the percentage amount set forth above and
should the Custodian do so, the Corporation hereby agrees that
the Custodian shall have a security interest in all securities
or other property purchased for a Fund with the advances by
the Custodian, which securities or property shall be deemed to
be pledged to the Custodian, and the written instructions of
the Corporation instructing their purchase shall be considered
the requisite description and designation of the property so
pledged for purposes of the requirements of the Uniform
Commercial Code. Should the Corporation fail to cause a Fund
to repay promptly any authorized charges or advances of cash
or securities, subject to the provision of the second
paragraph of this Section 8 regarding indemnification, the
Custodian shall be entitled to use available cash and to
dispose of pledged securities and property as is necessary to
repay any such advances. In addition, in connection with the
discharge and satisfaction of any claim made by the Custodian
against the Corporation, for whatever reasons, involving more
than one Fund, the Corporation shall have the exclusive right
to determine the appropriate allocations of liability for any
claim between or among the Funds.
9. Effective Period, Termination and Amendment
This Contract shall become effective as of its
execution, shall continue in full force and effect until
terminated as hereinafter provided, may be amended at any time
by written agreement of the parties hereto and may be
terminated by either party by an instrument in writing
delivered or mailed, postage prepaid to the other party, such
termination to take effect not sooner than sixty (60) days
after the date of such delivery or mailing; provided, however
that the Custodian shall not act under Section 2.12 hereof in
the absence of receipt of an initial certificate of the
Secretary or an Assistant Secretary that the Board of the
Corporation has approved the initial use of a particular
Securities System as required in each case by Rule 17f-4 under
the Investment Company Act of 1940, as amended; provided
further, however, that the Corporation shall not amend or
terminate this Contract in contravention of any applicable
federal or state regulations, or any provision of the Articles
of Incorporation, and further provided, that the Corporation
may at any time by action of its Board of Directors (i)
substitute another bank or trust company for the Custodian by
giving notice as described above to the Custodian, or (ii)
immediately terminate this Contract in the event of the
appointment of a conservator or receiver for the Custodian by
the Comptroller of the Currency or upon the happening of a
like event at the direction of an appropriate regulatory
agency or court of competent jurisdiction. This Contract may
not be assigned by one party without the written consent of
the other party; such assignment to take effect not sooner
than sixty (60) days after the date of the written consent.
Upon termination of the Contract, the Corporation shall
pay to the Custodian such compensation as may be due as of the
date of such termination and shall likewise reimburse the
Custodian for its costs, expenses and disbursements.
10. Successor Custodian
If a successor custodian shall be appointed by the Board
of the Corporation, or if the Custodian shall terminate this
Contract, the Custodian shall, upon termination, deliver to
such successor custodian at the office of the Custodian, duly
endorsed and in the form for transfer, all securities then
held by it hereunder for each Fund and shall transfer to
separate accounts of the successor custodian all of each
Fund's securities held in a Securities System.
If the Corporation terminates this Contract and no such
successor custodian shall be appointed, the Custodian shall,
in like manner, upon receipt of a certified copy of a vote of
the Board of the Corporation, deliver at the office of the
Custodian and transfer such securities, funds and other
properties in accordance with such vote.
If the Custodian terminates this Contract and no
successor custodian is appointed or in the event that no
written order designating a successor custodian or certified
copy of a vote of the Board shall have been delivered to the
Custodian on or before the date when such termination shall
become effective, then the Custodian shall have the right to
deliver to a bank or trust company, which is a "bank" as
defined in the Investment Company Act of 1940, as amended, of
its own selection, having an aggregate capital, surplus, and
undivided profits, as shown by its last published report, of
not less than $100,000,000, all securities, funds and other
properties held by the Custodian and all instruments held by
the Custodian relative thereto and all other property held by
it under this Contract for each Fund and to transfer to
separate accounts of such successor custodian all of each
Fund's securities held in any Securities System. Thereafter,
such bank or trust company shall be the successor of the
Custodian under this Contract.
In the event that securities, funds and other properties
remain in the possession of the Custodian after the date of
termination hereof owing to
failure of the Corporation to procure the certified copy of
the vote referred to or of the Board to appoint a successor
custodian, the Custodian shall be entitled to fair
compensation for its services during such period as the
Custodian retains possession of such securities, funds and
other properties and the provisions of this Contract relating
to the duties and obligations of the Custodian shall remain in
full force and effect.
11. Interpretive and Additional Provisions
In connection with the operation of this Contract, the
Custodian and the Corporation may from time to time agree on
such provisions interpretive of or in addition to the
provisions of this Contract as may in their joint opinion be
consistent with the general tenor of this Contract. Any such
interpretive or additional provisions shall be in a writing
signed by both parties and shall be annexed hereto, provided
that no such interpretive or additional provisions shall
contravene any applicable federal or state regulations or any
provision of the Articles of Incorporation. No interpretive
or additional provisions made as provided in the preceding
sentence shall be deemed to be an amendment of this Contract.
12. Wisconsin Law to Apply
This Contract shall be construed and the provisions
thereof interpreted under and in accordance with the internal
laws of the State of Wisconsin.
13. Notices
Except as otherwise specifically provided herein,
Notices and other writings delivered or mailed postage prepaid
to the Corporation at Federated Investors Tower, Pittsburgh,
Pennsylvania, 15222-3779, or to the Custodian at 1000 North
Water Street, Milwaukee, Wisconsin, 53202, or to such other
address as the Corporation or Custodian may hereafter specify,
shall be deemed to have been properly delivered or given
hereunder to the respective address.
14. Counterparts
This Contract may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original.
IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and behalf by its duly
authorized representative and its seal to be hereunder affixed
as of the 26th day of April, 1993.
ATTEST: MARSHALL FUNDS, INC.
/s/Victor R. Siclari By /s/Joseph A. Machi
Assistant Secretary Vice President
ATTEST MARSHALL & ILSLEY TRUST COMPANY
/s/M. A. Hatfield By /s/William J. Gumerman
Secretary Vice President
1
Exhibit 9(i) under Form N-1A
Exhibit 10 under Item 601/Reg.
S-K
FUND ACCOUNTING
AND
SHAREHOLDER RECORDKEEPING AGREEMENT
AGREEMENT made as of the 14th day of September, 1992, by
and between MARSHALL FUNDS, INC. a Wisconsin corporation,
having its principal office and place of business at Federated
Investors Tower, Pittsburgh, PA 15222-3779 (the
"Corporation"), on behalf of the portfolios (individually
referred to herein as a "Fund" and collectively as "Funds") of
the Corporation, and FEDERATED SERVICES COMPANY, a Delaware
business trust having its principal office and place of
business at Federated Investors Tower, Pittsburgh, Pennsylvania
15222-3779 ("Services").
WHEREAS, the Corporation is registered as an open-end
management investment company under the Investment Company Act
of 1940, as amended (the "1940 Act") with authorized and issued
shares of common stock ("Shares"); and
WHEREAS, the Corporation wishes to retain Services to
provide certain pricing, accounting and recordkeeping services
for each of the Funds, including any classes of shares issued
by any Fund ("Classes"), and Services is willing to furnish
such services; and
WHEREAS, the Corporation desires to appoint Services as
its transfer agent, dividend disbursing agent, and agent in
connection with certain other activities, and Services desires
to accept such appointment;
NOW THEREFORE, in consideration of the promises and mutual
covenants herein contained, the parties hereto agree as
follows:
SECTION ONE: Fund Accounting.
Article 1. Appointment.
The Corporation hereby appoints Services to provide
certain pricing and accounting services to the Funds for the
period and on the terms set forth in this Agreement. Services
accepts such appointment and agrees to furnish the services
herein set forth in return for the compensation as provided in
Article 3 of this Section.
Article 2. Services and Duties.
Subject to the supervision and control of the
Corporation's Board of Directors ("Board"), Services will
assist the Corporation with regard to portfolio accounting for
the Corporation and the Funds, and/or the Classes, and in
connection therewith undertakes to do the following specific
services;
A. Valuing the assets of the Funds and determining the
net asset value per share of the outstanding Shares of the
Funds and the Classes, at the time and in the manner from time
to time determined by the Board of the Corporation and as set
forth in the prospectus;
B. Calculating the net income of the Funds, if any;
C. Calculating capital gains or losses for the Funds from
sale or disposition of assets, if any;
D. Maintaining the general ledger and other accounts,
books and financial records of the Corporation, including for
each Fund and Class, as required under Section 31(a) of the
1940 Act and the Rules thereunder in connection with the
services provided by Services;
E. Preserving for the periods prescribed by Rule 31a-2
under the 1940 Act the records to be maintained by Rule 31a-1
under said Act in connection with the services provided by
Services. Services further agrees that all such records which
it maintains for the Corporation are the property of the
Corporation and further agrees to surrender promptly to the
Corporation such records upon the Corporation's request.
F. At the request of the Corporation, drafting various
reports or other financial documents required by federal, state
and other applicable laws and regulations; and
G. Such other similar services as may be reasonably
requested by the Corporation.
Article 3. Compensation and Allocation of Expenses.
A. The Funds will compensate Services for its services
rendered pursuant to Section One of this Agreement in
accordance with the fees set forth on Fee Schedule A, annexed
hereto and incorporated herein. Such fees do not include out-
of-pocket disbursements of Services for which Services shall be
entitled to bill separately. Out-of-pocket disbursements shall
include, but shall not be limited to, the items specified in
Schedule B, annexed hereto and incorporated herein, which
Schedule may be modified by Services upon not less than thirty
days' prior written notice to the Corporation.
B. Services shall not be required to pay any of the
following expenses incurred by the Corporation, the Funds, or
the Classes: custodial expenses; membership dues in the
Investment Company Institute or any similar organization;
transfer agency expenses; investment advisory expenses; costs
of printing and mailing stock certificates, prospectuses,
reports and notices; administrative expenses; interest on
borrowed money; brokerage commissions; taxes and fees payable
to federal, state and other governmental agencies; fees of
Directors of the Corporation; outside auditing expenses;
outside legal expenses; or other expenses not specified in this
Article 3 which may be properly payable by the Corporation.
C. Services will invoice the Funds as soon as practicable
after the end of each calendar month, and said invoices will be
detailed in accordance with Schedule A and Schedule B. The
Corporation will promptly pay to Services the amount of such
invoice.
D. Any compensation agreed to hereunder may be adjusted
from time to time by attaching to Schedule A a revised Schedule
A dated and signed by a duly authorized officer of the
Corporation and a duly authorized officer of Services.
E. The fee for the period from the effective date of
application of this Agreement with respect to a Fund or a Class
to the end of the initial month shall be prorated according to
the proportion that such period bears to the full month period.
Upon any termination of this Agreement before the end of any
month, the fee for such period shall be prorated according to
the proportion which such period bears to the full month
period. For purposes of determining fees payable to Services,
the value of the Fund's net assets shall be computed at the
time and in the manner specified in the Fund's prospectus.
F. Services in its sole discretion may from time to time
employ or associate with itself such person or persons as
Services may reasonably believe to be particularly suited to
assist it in performing services under this Agreement. Such
person or persons may be officers and employees who are
employed by both Services and the Corporation. The
compensation of such person or persons shall be paid by
Services and no obligation shall be incurred on behalf of the
Corporation, the Funds, or the Classes in such respect.
Services and such person or persons employed by Services, agree
to keep confidential all proprietary information, including
without limitation information concerning the Corporation's
shareholders, relating in any manner to the Corporation.
SECTION TWO: Shareholder Recordkeeping.
Article 4. Terms of Appointment.
Subject to the terms and conditions set forth in this
Agreement, the Corporation hereby employs and appoints Services
to act as, and Services agrees to act as, transfer agent for
each Fund's Shares, dividend disbursing agent, and agent in
connection with any accumulation, open-account or similar plans
provided to the shareholders of any Fund ("Shareholders"),
including without limitation any periodic investment plan or
periodic withdrawal program.
Proper Instructions as used throughout Section Two of this
Agreement means a writing signed or initialed by one or more
person or persons as the Board shall have from time to time
authorized. Each such writing shall set forth the specific
transaction or type of transaction involved. Oral instructions
will be considered Proper Instructions if Services reasonably
believes them to have been given by a person previously
authorized in Proper Instructions to give such instructions
with respect to the transaction involved. The Corporation and
Services shall cause all oral instructions to be confirmed in
writing. Proper Instructions may include communications
effected directly between electro-mechanical or electronic
devices provided that the Corporation and Services are
satisfied that such procedures afford adequate safeguards for a
Fund's assets. Proper Instructions may only be amended in
writing.
Article 5. Duties of Services.
Services agrees that it will perform the following
services in accordance with Proper Instructions as may be
provided from time to time by the Corporation as to any Fund:
A. Purchases
(1) Services shall receive orders and payment for the
purchase of shares and promptly deliver payment and
appropriate documentation therefore to the
safekeeping custodian of the relevant Fund (the
"Custodian"). Services shall promptly notify the
Corporation and the Custodian on a daily basis of
the total amount of orders and payments so
delivered.
(2) Pursuant to purchase orders and in accordance
with the Fund's current prospectus, Services shall
compute and issue the appropriate number of shares
and hold such shares in the appropriate Shareholder
accounts.
(3) If a Shareholder or its agent requests a
certificate, Services, as Transfer Agent, shall
countersign and mail by first class mail, a
certificate to the Shareholder at his address as
set forth on the transfer books of the Fund,
subject to any Proper Instructions regarding the
delivery of certificates.
(4) In the event that any check or other order for
the purchase of Shares of the Fund is returned
unpaid for any reason, Services shall debit the
Share account of the Shareholder by the number of
Shares that had been credited to his account upon
receipt of the check or other order, promptly mail
a debit advice to the Shareholder, and notify the
Corporation of its action. In the event that the
amount paid for such Shares exceeds proceeds of the
redemption of such Shares plus the amount of any
dividends paid with respect to such Shares,
Services will receive reimbursement of such excess
from the Fund or its distributor.
B. Distribution
(1) Upon notification by the Corporation of the
declaration of any distribution to shareholders,
Services shall act as Dividend Disbursing Agent for
the Fund in accordance with the provisions of its
governing document and the then current prospectus
of the Fund and as such shall prepare and mail or
credit income, capital gain, or any other payments
to Shareholders. As the Dividend Disbursing Agent,
Services shall, on or before the payment date of
any such distribution, notify the Custodian of the
estimated amount required to pay any portion of
said distribution which is payable in cash and
request the Custodian to make available sufficient
funds for the cash amount to be paid out. Services
shall reconcile the amounts so requested and the
amounts actually received with the Custodian on a
daily basis. If a Shareholder is entitled to
receive additional Shares by virtue of any such
distribution or dividend, appropriate credits shall
be made to the Shareholder's account and
certificates delivered where requested; and
(2) Services shall maintain records of account for
each Fund and advise the Corporation and its
Shareholders as to the
foregoing.
C. Redemptions and Transfers
(1) Services shall receive redemption requests and
redemption directions and, if such redemption
requests comply with the procedures as may be
described in the Fund prospectus or set forth in
Proper Instructions, deliver the appropriate
instructions therefore to the Custodian.
(2) At the appropriate time as and when it receives
monies paid to it by the Custodian with respect to
any redemption, Services shall pay over or cause to
be paid over in the appropriate manner such monies
as instructed by the redeeming Shareholders,
pursuant to procedures described in the then
current prospectus of the Fund.
(3) If any such certificate or request for redemption
does not comply with the procedures for redemption
approved by the Corporation, Services shall
promptly notify the Shareholder and the Corporation
of such fact, together with the reason therefor,
and shall effect such redemption at the price
applicable to the date and time of receipt of
documents complying with said procedures.
(4) Services shall effect transfers of Shares by the
registered owners thereof.
(5) Services shall identify and process abandoned
accounts and uncashed checks for state escheat
requirements on an annual basis and report such
actions to the Corporation.
D. Recordkeeping
(1) Services shall record the issuance of shares of
the Fund and maintain pursuant to applicable rules
of the Securities and Exchange Commission ("SEC") a
record of the total number of shares of the Fund
which are authorized, based upon data provided to
it by the Corporation, and issued and outstanding.
Services shall also provide the Corporation on a
regular basis or upon reasonable request with the
total number of Shares which are authorized and
issued and outstanding, but shall have no
obligation when recording the issuance of Shares,
except as otherwise set forth herein, to monitor
the issuance of such shares or to take cognizance
of any laws relating to the issue or sale of such
Shares, which functions shall be the sole
responsibility of the Corporation or its duly
authorized agents.
(2) Services shall establish and maintain records
pursuant to applicable rules of the SEC relating to
the services to be performed hereunder in the form
and manner as agreed to by the Corporation to
include a record for each Shareholder's account of
the following:
(a) Name, address and tax identifying number
(and whether such number has been certified);
(b) Number of Shares held;
(c) Historical information regarding the
account, including dividends paid and date and
price for all transactions;
(d) Any stop or restraining order placed against
the account;
(e) Information with respect to withholdings in
the case of a foreign account or an account for
which withholding is required by the Internal
Revenue Code;
(f) Any dividend reinvestment order, plan
application, dividend address and
correspondence relating to the current
maintenance of the account;
(g) Certificate numbers and denominations for
any Shareholder holding certificates;
(h) Any information required in order for
Services to perform the calculations
contemplated or required by this Agreement.
(3) Services shall preserve any such records required
to be maintained pursuant to the rules of the SEC
for the periods prescribed in said Rules as
specifically noted below. Such record retention
shall be at the expense of the Fund, and such
records may be inspected by the Corporation at
reasonable times. Services may, at its option at
any time, and shall forthwith upon the
Corporation's demand, turn over to the Corporation
and cease to retain in Services's files, records
and documents created and maintained by Services
pursuant to this Agreement, which are no longer
needed by Services in performance of its services
or for its protection. If not so turned over to
the Corporation, such records and documents will be
retained by Services for six years from the year of
creation, during the first two of which such
documents will be in readily accessible form. At
the end of the six year period, such records and
documents will either be turned over to the
Corporation or destroyed in accordance with written
instructions from the Corporation.
E. Confirmations/Reports
(1) Services shall furnish to the Corporation
periodically the following information:
(a) A copy of the transaction register;
(b) Dividend and reinvestment blotters;
(c) The total number of Shares issued and
outstanding in each state for "blue sky"
purposes as determined according to Proper
Instructions delivered from time to time by the
Corporation to Services;
(d) Shareholder lists and statistical
information;
(e) Payments to third parties relating to
distribution agreements, allocations of sales
loads, redemption fees, or other transaction or
sales-related payments;
(f) Such other information as may be agreed upon
from time to time.
(2) Services shall prepare in the appropriate form,
file with the Internal Revenue Service and
appropriate state agencies, and, if required, mail
to Shareholders, such notices for reporting
dividends and distributions paid as are required to
be so filed and mailed and shall withhold such sums
as are required to be withheld under applicable
federal and state income tax laws, rules and
regulations.
(3) In addition to and not in lieu of the services
set forth above, Services shall:
(a) Perform all of the customary services of a
transfer agent, dividend disbursing agent and,
as relevant, agent in connection with
accumulation, open-account or similar plans
(including without limitation any periodic
investment plan or periodic withdrawal
program), including but not limited to:
maintaining all Shareholder accounts, preparing
Shareholder meeting lists, mailing proxies,
receiving and tabulating proxies, mailing
Shareholder reports and prospectuses to current
Shareholders, withholding taxes on accounts
subject to back-up or other withholding
(including non-resident alien accounts),
preparing and filing reports on U.S. Treasury
Department Form 1099 and other appropriate
forms required with respect to dividends and
distributions by federal authorities for all
Shareholders, preparing and mailing
confirmation forms and statements of account to
Shareholders for all purchases and redemptions
of Shares and other confirmable transactions in
Shareholder accounts, preparing and mailing
activity statements for Shareholders, and
providing Shareholder account information; and
(b) provide a system which will enable the
Corporation to monitor the total number of
Shares of each Fund sold in each state ("blue
sky reporting"). The Corporation or its
distributor shall by Proper Instructions
(i) identify to Services those transactions and
assets to be treated as exempt from the blue
sky reporting for each state and (ii) verify
the classification of transactions for each
state on the system prior to activation and
thereafter monitor the daily activity for each
state. The responsibility of Services for each
Fund's state blue sky registration status is
limited solely to the recording of the initial
classification of transactions or accounts with
regard to blue sky compliance and the reporting
of such transactions and accounts to the
Corporation as provided above.
F. Other Duties
(1) Services shall answer correspondence from
Shareholders relating
to their Share accounts and such other
correspondence as may from time to time be
addressed to Services;
(2) Services shall mail proxy cards and other
material supplied to it by the Corporation in
connection with Shareholder Meetings
of each Fund; receive, examine and tabulate
returned proxies; and certify the vote of the
Shareholders;
(3) Services shall establish and maintain facilities
and procedures for safekeeping of stock
certificates, check forms and facsimile signature
imprinting devices, if any; and for the preparation
or use, and for keeping account of, such
certificates, forms and devices.
Article 6. Duties of the Corporation.
A. Compliance
Under this Agreement and vis-a-vis Services, the
Corporation assumes full responsibility for the
preparation, contents and distribution of each
prospectus of the Fund and for complying with all
applicable requirements of the Securities Act of 1933,
as amended, the 1940 Act and any laws, rules and
regulations of government authorities having
jurisdiction.
B. Share Certificates
The Corporation shall supply Services with a
sufficient supply of blank Share certificates and from
time to time shall renew such supply upon request of
Services. Such blank Share certificates shall be
properly signed, manually or by facsimile, if
authorized by the Corporation and shall bear the seal
of the Corporation or facsimile thereof; and
notwithstanding the death, resignation or removal of
any officer of the Corporation authorized to sign
certificates, Services may continue to countersign
certificates which bear the manual or facsimile
signature of such officer until otherwise directed by
the Corporation.
C. Distributions
The Corporation shall promptly inform Services of the
declaration of any dividend or distribution on account
of any Fund's shares.
Article 7. Fees and Expenses.
A. Annual Fee
For performance by Services pursuant to Section Two of
this Agreement, the Corporation agrees to pay Services
an annual maintenance fee for each Shareholder account
as set out in the fee schedule, Schedule C attached
hereto. Such fees may be changed from time to time
subject to mutual written agreement between the
Corporation and Services. Pursuant to information in
the Corporation prospectus or other information or
instructions from the Corporation, Services may sub-
divide any Fund into Classes or other sub-components
for recordkeeping purposes. Services will charge the
Fund the fees set forth on Schedule C for each such
Class or sub-component the same as if each were a Fund.
B. Reimbursements
In addition to the fee paid under Article 7A above,
the Corporation agrees to reimburse Services for out-of-
pocket expenses or advances incurred by Services for
the items set out in Schedule D, attached hereto. In
addition, any other expenses incurred by Services at
the request or with the consent of the Corporation,
will be reimbursed by the appropriate Fund.
C. Payment
Services shall issue billing notices with respect to
fees and reimbursable expenses on a timely basis,
generally within 15 days following the end of the month
in which the fees and expenses have been incurred. The
Corporation agrees to pay all fees and reimbursable
expenses within 30 days following the receipt of the
respective billing notices.
Article 8. Assignment of Shareholder Recordkeeping.
Except as provided below, neither this Agreement nor
any rights or obligations hereunder may be assigned by
either party without the written consent of the other
party.
(1) This Agreement shall inure to the benefit of and
be binding upon the parties and their respective
permitted successors and assigns.
(2) Services may without further consent on the part
of the Corporation subcontract for the performance
hereof with (A) Boston Financial Data Services,
Inc., a Massachusetts Trust ("BFDS"), which is duly
registered as a transfer agent pursuant to
Section 17A(c)(1) of the Securities Exchange Act of
1934, or any succeeding statute ("Section
17A(c)(1)"), or (B) a BFDS subsidiary duly
registered as a transfer agent pursuant to
Section 17A(c)(1), or (C) a BFDS affiliate;
provided, however, that Services shall be as fully
responsible to the Corporation for the acts and
omissions of any subcontractor as it is for its own
acts and omissions.
SECTION THREE: General Provisions.
Article 9. Documents.
A. In connection with the appointment of Services under
this Agreement, the Corporation shall file with Services the
following documents:
(1) A copy of the Articles of Incorporation and By-
Laws of the Corporation and all amendments thereto;
(2) A copy of the resolution of the Board of the
Corporation authorizing this Agreement;
(3) Specimens of all forms of outstanding Share
certificates of the Funds in the forms approved by
the Board of the Corporation with a certificate of
the Secretary of the Corporation as to such
approval;
(4) All account application forms and other documents
relating to Shareholders accounts; and
(5) A copy of the current prospectus for each Fund.
B. The Corporation will also furnish from time to time
the following documents:
(1) Each resolution of the Board of the Corporation
authorizing the original issuance of each Fund's
Shares;
(2) Each Registration Statement filed with the SEC
and amendments thereof and orders relating thereto
in effect with respect to the sale of Shares of any
Fund;
(3) A certified copy of each amendment to the
governing document and the By-Laws of the
Corporation;
(4) Certified copies of each vote of the Board
authorizing officers to give Proper Instructions to
the Transfer Agent;
(5) Specimens of all new Share certificates
representing Shares of any Fund, accompanied by
Board resolutions approving such forms;
(6) Such other certificates, documents or opinions
which Services may, in its discretion, deem
necessary or appropriate in the proper performance
of its duties; and
(7) Revisions to the prospectus of any Fund.
Article 10. Representations and Warranties.
A. Representations and Warranties of Services
Services represents and warrants to the Corporation
that:
(1) It is a business trust duly organized and
existing and in good standing under the laws of the
State of Delaware.
(2) It is duly qualified to carry on its business in
the State of Delaware.
(3) It is empowered under applicable laws and by its
charter and by-laws to enter into and perform this
Agreement.
(4) All requisite corporate proceedings have been
taken to authorize it to enter into and perform
this Agreement.
(5) It has and will continue to have access to the
necessary facilities, equipment and personnel to
perform its duties and obligations under this
Agreement.
(6) It is in compliance with federal securities law
requirements and in good standing as a transfer
agent.
B. Representations and Warranties of the Corporation
The Corporation represents and warrants to Services
that:
(1) It is a corporation duly organized and existing
and in good standing under the laws of the State of
Wisconsin.
(2) It is empowered under applicable laws and by its
Articles of Incorporation and By-Laws to enter into
and perform this Agreement.
(3) All corporate proceedings required by said
Articles of Incorporation and By-Laws have been
taken to authorize it to enter into and perform
this Agreement.
(4) The Corporation is an open-end investment company
registered under the 1940 Act.
(5) A registration statement under the Securities Act
of 1933 will be effective, and appropriate state
securities law filings have been made and will
continue to be made, with respect to all Shares of
each Fund being offered for sale.
Article 11. Standard of Care/Indemnification.
A. Standard of Care
Services shall be held to a standard of reasonable
care in carrying out the provisions of this Agreement;
provided, however that Services shall be held to any
higher standard of care which would be imposed upon
Services by any applicable law or regulation even
though such stated standard of care was not part of
this Agreement.
B. Indemnification by Corporation
Services shall not be responsible for and the
Corporation shall indemnify and hold Services harmless
against any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liabilities
arising out of or attributable to:
(1) The Corporation's refusal or failure to comply
with the terms of this Agreement, or which arise
out of the Corporation's lack of good faith,
negligence or willful misconduct or which arise out
of the breach of any representation or warranty of
the Corporation hereunder.
(2) The reliance on or use by Services or its agents
or subcontractors of information, records and
documents in proper form which
(a) are received by Services or its agents or
subcontractors and furnished to it by or on
behalf of the Corporation, its shareholders or
investors regarding the purchase, redemption or
transfer of shares and shareholder account
information, or
(b) have been prepared and/or maintained by the
Corporation or its affiliates or any other
person or firm on behalf of the Corporation.
(3) The reliance on, or the carrying out by Services
or its agents or subcontractors of, Proper
Instructions of the Corporation.
(4) The offer or sale of Shares in violation of any
requirement under the federal securities laws or
regulations or the securities laws or regulations
of any state that such Shares be registered in such
state or in violation of any stop order or other
determination or ruling by any federal agency or
any state with respect to the offer or sale of such
Shares in such state.
Provided, however, that Services shall not be
protected by this Article 11.B. from liability for any
act or omission resulting from Services's lack of good
faith, negligence, willful misconduct, or failure to
meet the standard of care set forth in Article 11.A.,
above.
C. Indemnification by Services
Services shall indemnify and hold each Fund harmless
from and against any and all losses, damages, costs,
charges, counsel fees, payments, expenses and
liabilities arising out of or attributable to any
action or failure or omission to act by Services as a
result of Services's lack of good faith, negligence,
willful misconduct, or failure to meet the standard of
care set forth in Article 11.A above.
D. Reliance
At any time Services may apply to any officer of the
Corporation for written instructions, and may consult
with legal counsel acceptable to the Board of Directors
of the Corporation with respect to any matter arising
in connection with the services to be performed by
Services under this Agreement, and Services and its
agents or subcontractors shall not be liable and shall
be indemnified by the appropriate Fund for any action
reasonably taken or omitted by it in reliance upon such
written instructions or upon the opinion of such
counsel provided such action is not in violation of
applicable Federal or state laws or regulations.
Services, its agents and subcontractors shall be
protected and indemnified in recognizing stock
certificates which are reasonably believed to bear the
proper manual or facsimile signatures of the officer of
the Corporation, and the proper countersignature of any
former transfer agent or registrar, or of a co-transfer
agent or co-registrar.
E. Notification
In order that the indemnification provisions contained
in this Article 11 shall apply, upon the assertion of a
claim for which either party may be required to
indemnify the other, the party seeking indemnification
shall promptly notify the other party of such
assertion, and shall keep the other party advised with
respect to all developments concerning such claim. The
party who may be required to indemnify shall have the
option to participate with the party seeking
indemnification in the defense of such claim. The
party seeking indemnification shall in no case confess
any claim or make any compromise in any case in which
the other party may be required to indemnify it except
with the other party's prior written consent.
Article 12. Termination of Agreement.
This Agreement may be terminated at any time without
payment of any penalty by either party upon one hundred twenty
(120) days written notice to the other. Should the Corporation
exercise its rights to terminate, all out-of-pocket expenses
associated with the movement of records and materials will be
borne by the appropriate Fund. Additionally, Services reserves
the right to charge for any other reasonable expenses
associated with termination by the Corporation.
Article 13. Amendment.
This Agreement may be amended or modified by a written
agreement executed by both parties.
Article 14. Interpretive and Additional Provisions.
In connection with the operation of this Agreement,
Services and the Corporation may from time to time agree on
such provisions interpretive of or in addition to the
provisions of this Agreement as may in their joint opinion be
consistent with the general tenor of this Agreement. Any such
interpretive or additional provisions shall be in a writing
signed by both parties and shall be annexed hereto, provided
that no such interpretive or additional provisions shall
contravene any applicable Federal or state regulations or any
provision of the Articles of Incorporation or By-Laws of the
Corporation. No interpretive or additional provisions made as
provided in the preceding sentence shall be deemed to be an
amendment of this Agreement.
Article 15. Governing Law. Wisconsin Law to Apply
This Agreement shall be construed and the provisions
hereof interpreted under and in accordance with the laws of the
State of Wisconsin.
Article 16. Notices.
Except as otherwise specifically provided herein, Notices
and other writings delivered or mailed postage prepaid to the
Corporation at Federated Investors Tower, Pittsburgh,
Pennsylvania, 15222-3779, or to Services at Federated Investors
Tower, Pittsburgh, Pennsylvania, 15222-3779, or to such other
address as the Corporation or Services may hereafter specify,
shall be deemed to have been properly delivered or given
hereunder to the respective address.
Article 17. Counterparts.
This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original.
Article 18. Proprietary and Confidential Information.
Services agrees on behalf of itself and its directors,
officers, employees and agents to treat confidentially and as
proprietary information of the Corporation all records and
other information relative to the Corporation and prior,
present, or potential Shareholders, and not to use such records
and information for any purpose other than performance of its
responsibilities and duties hereunder, except after prior
notification to and approval in writing by the Corporation
which approval may not be withheld where Services may be
exposed to civil or criminal contempt proceedings for failure
to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the
Corporation.
Article 19. Limitations of Liability of Trustees and
Shareholders of Services.
The execution and delivery of this Agreement have been
authorized by the Trustees of Services and signed by an
authorized officer of Services, acting as such, and neither
such authorization by such Trustees nor such execution and
delivery by such officer shall be deemed to have been made by
any of them individually or to impose any liability on any of
them personally, and the obligations of this Agreement are not
binding upon any of the Trustees or shareholders of Services,
but bind only the property of the Corporation as provided in
the Articles of Incorporation.
Article 20. Assignment.
This Agreement and the rights and duties hereunder shall
not be assignable with respect to a Fund by either of the
parties hereto except by the specific written consent of the
other party.
Article 21. Merger of Agreement.
This Agreement constitutes the entire agreement between
the parties hereto and supersedes any prior agreement with
respect to the subject hereof whether oral or written.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in their names and on their behalf
under their seals by and through their duly authorized
officers, as of the day and year first above written.
ATTEST: MARSHALL FUNDS, INC.
/s/ James Edward Banks By:/s/ Joseph S. Machi
Assistant Secretary Vice President
ATTEST: FEDERATED SERVICES COMPANY
/s/ Joseph M. Huber By:/s/ Ronald L. Cavanagh
Assistant Secretary Vice President
Exhibit 9(ii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
Marshall Funds, Inc.
ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement is made as of this
1st day of October, 1992, between Marshall Funds, Inc., a
Wisconsin Corporation (herein called the "Fund"), and
Federated Administrative Services, a Delaware business trust
(herein called "FAS").
WHEREAS, the Fund is a Wisconsin corporation, consisting
of one or more portfolios, which operates as an open-end
management investment company and will so register under the
Investment Company Act of 1940 (the "Investment Company Act");
and
WHEREAS, the Fund desires to retain FAS as its
Administrator to provide it with administrative services, and
FAS is willing to render such services;
NOW, THEREFORE, in consideration of the premises and
mutual convenants set forth herein, the parties hereto agree
as follows:
1. Appointment of Administrator. The Fund hereby
appoints FAS as Administrator of the Fund on the terms and
conditions set forth in this agreement; and FAS hereby accepts
such appointment and agrees to perform the services and duties
set forth in Section 2 of this Agreement in consideration of
the compensation provided for in Section 4 hereof.
2. Services and Duties. As Administrator, and subject
to the supervison and control of the Fund's Board of Directors
("Directors"), FAS will provide facilities, equipment, and
personnel to carry out the following administrative services
for operation of the business and affairs of the Fund and each
of its portfolios:
(a) prepare, file, and maintain the Fund's governing
documents, including the Articles of Incorporation
(which has already been prepared and filed), the By-
laws, minutes of meetings of Directors and
shareholders, and proxy statements for meetings of
shareholders;
(b) prepare and file with the Securities and Exchange
Commission and the appropriate state securities
authorities the registration statements for the Fund
and the Fund's shares and all amendments thereto,
reports to regulatory authorities and shareholders,
prospectuses, proxy statements, and such other
documents as may be necessary or convenient to enable
the Fund to make a continuous offering of its shares;
(c) prepare, negotiate, and administer contracts on
behalf of the Fund with, among others, the
distributor, custodian, and transfer agent;
(d) supervise the Fund's custodian and fund accountant
in the maintenance of the Fund's general ledger and in
the preparation of the Fund's financial statements,
including oversight of expense accruals and payments,
of the determination of the net asset value of the
Fund's assets and of the Fund's shares, and of the
declaration and payment of dividends and other
distributions to shareholders;
(e) calculate performance data of the Fund for
dissemination to information services covering the
investment company industry;
(f) prepare and file on a timely basis the Fund's
Federal and State income tax returns (if applicable)
and other tax returns;
(g) examine and review the operations of the Fund's
custodian and transfer agent;
(h) coordinate the layout and printing of publicly
disseminated prospectuses and reports;
(i) perform internal audit examinations in accordance
with a charter to be adopted by FAS and the Fund;
(j) assist with the design, development, and operation
of the Fund;
(k) provide individuals reasonably acceptable to the
Fund's Directors for nomination, appointment, or
election as officers of the Fund, who will be
responsible for the management of certain of the
Fund's affairs as determined by the Fund's Directors;
(l) monitor the Fund's compliance with Section 851
through 855 of the Internal Revenue Code so as to
enable the Fund to maintain its status as a "regulated
investment company;" and
(m) advise the Fund and its Board of Directors on
matters concerning the Fund and its affairs.
FAS acknowledges the importance of efficient and prompt
transmission of information to the Fund's transfer agent. FAS
agrees to use its best efforts to meet the deadline for
transmission of pricing information presently set by the
Fund's transfer agent and such future deadlines as may be
reasonably established by the Fund's Transfer Agent.
The foregoing, along with any additional services that
FAS shall agree in writing to perform for the Fund hereunder,
shall hereafter be referred to as "Administrative Services."
In compliance with Rule 31a-3 under the Investment Company
Act, FAS hereby agrees that all records that it maintains for
the Fund are the property of the Fund and further agrees to
surrender promptly to the Fund any such records upon the
Fund's request. FAS further agrees to preserve any records it
maintains for the period prescribed by the Investment Company
Act and rules promulgated thereunder. Administrative Services
shall not include any duties, functions, or services to be
performed for the Fund by the Fund's investment adviser,
distributor, custodian, or transfer agent pursuant to their
agreements with the Fund.
3. Expenses. FAS shall be responsible for expenses
incurred in providing all the Administrative Services, as
described in paragraph 2, to the Fund, including the
compensation of FAS employees who serve as Directors or
Officers of the Fund. The Fund shall be responsible for all
other expenses incurred by FAS on behalf of the Fund,
including without limitation postage and courier expenses,
printing expenses, travel expenses, registration fees, filing
fees, fees of outside counsel and independent auditors,
insurance premiums, fees payable to directors who are not FAS
employees, taxes, and trade association dues.
4. Compensation. For the Administrative Services
provided, the Fund hereby agrees to pay and FAS hereby agrees
to accept as full compensation for its services rendered
hereunder an administrative fee at an annual rate per
portfolio of the Fund's shares, payable daily, as specified
below:
Maximum Administrative Average Daily Net Assets
Fee of the Portfolios
.15% on the first $250 million
.125% on the next $250 million
.100% on the next $250 million
.075% on assets in excess of
$750 million
However, in no event shall the administrative fee
received during any year of this contract be less than, or be
paid at a rate less than would aggregate, $50,000, per
portfolio.
5. Responsibility of Administrator.
(a) FAS shall not be liable for any error of
judgment or mistake of law or for any loss
suffered by the Fund in connection with the
matters to which this Agreement relates, except a
loss resulting from willful misfeasance, bad faith
or gross negligence on its part in the performance
of its duties or from reckless disregard by it of
its obligations and duties under this Agreement.
FAS shall be entitled to rely on and may act upon
advice of counsel, approved in each case by the
Directors and acceptable to FAS, on all matters
relating to the Fund, and shall be without
liability for any action reasonably taken or
omitted pursuant to such advice. Any person, even
though also an officer, director, partner,
employee or agent of FAS, who may be or become an
officer, director, employee or agent of the Fund,
shall be deemed, when rendering services to the
Fund or acting on any business of the Fund (other
than services or business in connection with the
duties of FAS hereunder) in accordance with his
responsibilities to the Fund as such officer,
director, employee, or agent to be rendering such
services to or acting solely for the Fund and not
as an officer, director, partner, employee or
agent or one under the control or direction of FAS
even though paid by FAS.
(b) FAS shall be kept indemnified by the Fund and
be without liability for any action taken or thing
done by it in performing the Administrative
Services in accordance with the above standards;
provided, however, that the Fund will not
indemnify FAS for the portion of any loss or claim
caused, directly or indirectly, by the negligence
of FAS. In order that the indemnification
provisions contained in this Section 5 shall
apply, however, it is understood that if in any
case the Fund may be asked to indemnify or save
FAS harmless, the Fund shall be fully and promptly
advised of all pertinent facts concerning the
situation in questions, and it is further
understood that FAS will use all reasonable care
to indentify and notify the Fund promptly
concerning any situation which presents or appears
likely to present the probability of such a claim
for indemnification against the Fund. The Fund
shall have the option to defend FAS against any
claim which may be the subject of this
indemnification. In the event that the Fund so
elects it will so notify FAS and thereupon the
Fund shall take over complete defense of the
claim, and FAS shall in such situation initiate no
further legal or other expenses for which it shall
seek indemnification under this Section. FAS
shall in no case confess any claim or make any
compromise in any case in which the Fund will be
asked to indemnify FAS except with the Fund's
written consent.
6. Duration and Termination.
(a) The initial term of this Agreement shall
commence on the date hereof, and extend for a
period of five years from the effective date of
the Fund's original portfolios.
(b) Thereafter, this Agreement shall be
automatically renewed each year for an additional
term of one year, unless notice of termination has
been delivered by either party to the other no
less than one year before the beginning of any
such additional term.
(c) Notwithstanding the foregoing, this Agreement
may be terminated at any time by mutual agreement
of the parties hereto or for "cause" (as defined
below) in either case on not less than 60 days
notice given by the Fund's Directors or given by
FAS. For purposes of this agreement "cause" shall
mean (i) a determination that FAS has acted in a
manner that constitutes willful misfeasance, bad
faith, gross negligence or a reckless disregard
for its duties and obligations described herein;
(ii) a final judicial, regulatory or
administrative ruling or order in which FAS has
been found guilty of criminal misconduct or of
unethical behavior in the operation of its
business; (iii) the dissolution or liquidation of
either party or other cessation of business other
than reorganization or recapitalization as an
ongoing business; (iv) financial difficulties on
the part of either party which is evidenced by the
authorization or commencement of, or acquiescence
in, a voluntary or involuntary case under Title 11
of the United States Code, as may be in effect
from time to time, or any applicable law, or any
applicable law of any jurisdiction relating to the
liquidation or reorganization of debtors or to the
modification or attention of the rights of
creditors; or (v) any other circumstances which
substantially impairs the performance of either
party's obligations hereunder. For purposes of
subsection (c)(i) and (v) hereof, "cause" shall be
determined by an arbitrator selected and acting
pursuant to the rules of the American Arbitration
Association. Both parties agree to use their best
efforts to expedite the holding of the arbitration
and to request that the arbitrator issue his
finding at the earliest possible date.
(d) Upon the termination of this Agreement, the
Fund shall pay to FAS such compensation as may be
payable prior to the effective date of such
termination. In the event that the Fund
designates a successor to any of FAS's obligations
hereunder, FAS shall, at the direction of the
Fund, transfer to such successor all relevant
books, records and other data established or
maintained by FAS under the foregoing provisions.
7. Amendment. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which an
enforcement of the change, waiver, discharge or termination is
sought.
8. Proprietary and Confidential Information. FAS agrees
on behalf of itself and its directors, officers, and employees
to treat confidentially and as proprietary information of the
Fund all records and other information relative to the Fund
and prior, present, or potential Shareholders, and not to use
such records and information for any purpose other than
performance of its responsibilities and duties hereunder,
except after prior notification to and approval in writing by
the Fund, which approval may not be withheld where FAS may be
exposed to civil or criminal contempt proceedings for failure
to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Fund.
The intentional failure of FAS to comply with its obligations
under this paragraph, as determined by an arbitrator selected
and acting in a manner described in Paragraph 6(c), shall
constitute "cause" as described in that section.
9. Limitations of Liability of Trustees and Shareholders
of FAS. The execution and delivery of this Agreement have
been authorized by the Trustees of FAS and signed by an
authorized officer of FAS, acting as such, and neither such
authorization by such Trustees nor such execution and delivery
by such officer shall be deemed to have been made by any of
them individually or to impose any liability on any of them
personally, and the obligations of this Agreement are not
binding upon any of the Trustees or shareholders of FAS, but
bind only the trust property of the Trust as provided in the
Declaration of Trust.
10. Notices. Notices of any kind to be given to the Fund
hereunder by FAS shall be in writing and shall be duly given
if delivered to the Fund and to its investment adviser
respectively at the following addresses: Marshall Funds,
Inc., Federated Investors Tower, Pittsburgh, Pennsylvania,
15222-3779, Attention: Edward C. Gonzales, President; M&I
Investment Management Corp., 770 North Water Street,
Milwaukee, Wisconsin 53202, Attention: William J. Gumerman,
President. Notices of any kind to be given to FAS hereunder
by the Fund shall be in writing and shall be duly given if
delivered to FAS at Federated Investors Tower, Pittsburgh, PA
15222-3779, Attention: Edward C. Gonzales
11. Miscellaneous. The captions in this Agreement are
included for convenience of reference only and in no way
define or delimit any of the provisions hereof or otherwise
affect their construction or effect. If any provision of this
Agreement shall be held or made invalid by a court or
regulatory agency decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
Subject to the provisions of Section 5, hereof, this Agreement
shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and shall be
governed by Pennsylvania law; provided, however, that nothing
herein shall be construed in a manner inconsistent with the
Investment Company Act or any rule or regulation promulgated
by the Securities and Exchange Commission thereunder, or the
Wisconsin Business Corporation Law.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below
as of the day and year first above written.
Marshall Funds, Inc.
Attest:/s/ Peter J. Germain By/s/ Edward C. Gonzales
Secretary President
Federated Administrative Services
Attest:/s/ John W. McGonigle By/s/ J. Christopher Donahue
Secretary President
REV: 9/10/92
1
Exhibit 9(v) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
Amendment #2
Dated November 1, 1993
to
Schedule A
Shareholder Services Agreement
between
Marshall Funds, Inc.
and
Marshall & Ilsley Trust Company
Marshall Funds, Inc. (the "Corporation") consists of the
following portfolios and classes:
Name
Marshall Balanced Fund
Marshall Equity Income Fund
Marshall Government Income Fund
Marshall Intermediate Bond Fund
Marshall Mid-Cap Stock Fund
Marshall Money Market Fund - Trust and Investment Shares
Marshall Short-Term Income Fund
Marshall Stock Fund
Marshall Tax-Free Money Market Fund
Marshall Value Equity Fund
Marshall Short-Term Tax-Free Fund
Marshall Intermediate Tax-Free Fund
ATTEST: Marshall Funds, Inc.
/s/ Victor R. Siclari By:/s/ Joseph S. Machi
Assistant Secretary Vice President
ATTEST: Marshall & Ilsley Trust
Company
/s/ M. A. Hatfield By:/s/ James F. Duca, II
Secretary Vice President
Exhibit 9(vi) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
Amendment #3
Dated August 1, 1994
to
Schedule A
Shareholder Services Agreement
between
Marshall Funds, Inc.
and
Marshall & Ilsley Trust Company
Marshall Funds, Inc. (the "Corporation") consists of the
following portfolios and classes:
Name
Marshall Balanced Fund
Marshall Equity Income Fund
Marshall Government Income Fund
Marshall Intermediate Bond Fund
Marshall Mid-Cap Stock Fund
Marshall Money Market Fund - Trust and Investment Shares
Marshall Short-Term Income Fund
Marshall Stock Fund
Marshall Tax-Free Money Market Fund
Marshall Value Equity Fund
Marshall Short-Term Tax-Free Fund
Marshall Intermediate Tax-Free Fund
Marshall International Stock Fund
ATTEST: Marshall Funds, Inc.
By:
Assistant Secretary Vice
President
ATTEST: Marshall & Ilsley Trust Company
By:
Secretary Vice President
Exhibit 15(ii) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K
EXHIBIT B
to the
Plan
MARSHALL FUNDS, INC.
Marshall International Stock Fund
This Plan is adopted by Marshall Funds, Inc. with respect
to the portfolio of the Corporation set forth above.
In compensation for the services provided pursuant to this
Plan, FSC will be paid a monthly fee computed at the annual rate
of .25 of 1% of the average aggregate net asset value of the
shares of Marshall International Stock Fund, a portfolio of
Marshall Funds, Inc. held during the month.
Witness the due execution hereof this 1st day of August,
1994.
Marshall Funds, Inc.
By:
President
Exhibit 15(iii) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K
RULE 12b-1 AGREEMENT
This Agreement is made between the Institution executing this
Agreement ("Administrator") and Federated Securities Corp.
("FSC") for the mutual funds (referred to individually as the
"Fund" and collectively as the "Funds") for which FSC serves as
Distributor of shares of beneficial interest or capital stock
("Shares") and which have adopted a Rule 12b-1 Plan ("Plan") and
approved this form of agreement pursuant to Rule 12b-1 under the
Investment Company Act of 1940. In consideration of the mutual
covenants hereinafter contained, it is hereby agreed by and
between the parties hereto as follows:
1. FSC hereby appoints Administrator to render or cause to
be rendered sales and/or administrative support services to the
Funds and their shareholders.
2. The services to be provided under Paragraph 1 may
include, but are not limited to, the following:
(a) communicating account openings through computer
terminals located on the Administrator's premises
("computer terminals"), through a toll-free telephone
number or otherwise;
(b) communicating account closings via the computer
terminals, through a toll-free telephone number or
otherwise;
(c) entering purchase transactions through the computer
terminals, through a toll-free telephone number or
otherwise;
(d) entering redemption transactions through the
computer terminals, through a toll-free telephone number
or otherwise;
(e) electronically transferring and receiving funds for
Fund Share purchases and redemptions, and confirming and
reconciling all such transactions;
(f) reviewing the activity in Fund accounts;
(g) providing training and supervision of its personnel;
(h) maintaining and distributing current copies of
prospectuses and shareholder reports;
(i) advertising the availability of its services and
products;
(j) providing assistance and review in designing
materials to send to customers and potential customers
and developing methods of making such materials
accessible to customers and potential customers; and
(k) responding to customers' and potential customers'
questions about the Funds.
The services listed above are illustrative. The Administrator
is not required to perform each service and may at any time
perform either more or fewer services than described above.
3. During the term of this Agreement, FSC will pay the
Administrator fees for each Fund as set forth in a written
schedule delivered to the Administrator pursuant to this
Agreement. FSC's fee schedule for Administrator may be changed
by FSC sending a new fee schedule to Administrator pursuant to
Paragraph 12 of this Agreement. For the payment period in which
this Agreement becomes effective or terminates, there shall be
an appropriate proration of the fee on the basis of the number
of days that the Rule 12b-1 Agreement is in effect during the
quarter.
4. The Administrator will not perform or provide any duties
which would cause it to be a fiduciary under Section 4975 of the
Internal Revenue Code, as amended. For purposes of that
Section, the Administrator understands that any person who
exercises any discretionary authority or discretionary control
with respect to any individual retirement account or its assets,
or who renders investment advice for a fee, or has any authority
or responsibility to do so, or has any discretionary authority
or discretionary responsibility in the administration of such an
account, is a fiduciary.
5. The Administrator understands that the Department of
Labor views ERISA as prohibiting fiduciaries of discretionary
ERISA assets from receiving administrative service fees or other
compensation from funds in which the fiduciary's discretionary
ERISA assets are invested. To date, the Department of Labor has
not issued any exemptive order or advisory opinion that would
exempt fiduciaries from this interpretation. Without specific
authorization from the Department of Labor, fiduciaries should
carefully avoid investing discretionary assets in any fund
pursuant to an arrangement where the fiduciary is to be
compensated by the fund for such investment. Receipt of such
compensation could violate ERISA provisions against fiduciary
self-dealing and conflict of interest and could subject the
fiduciary to substantial penalties.
6. The Administrator agrees not to solicit or cause to be
solicited directly, or indirectly at any time in the future, any
proxies from the shareholders of any or all of the Funds in
opposition to proxies solicited by management of the Fund or
Funds, unless a court of competent jurisdiction shall have
determined that the conduct of a majority of the Board of
Directors of the Fund or Funds constitutes willful misfeasance,
bad faith, gross negligence or reckless disregard of their
duties. This paragraph 6 will survive the term of this
Agreement.
7. With respect to each Fund, this Agreement shall continue
in effect for one year from the date of its execution, and
thereafter for successive periods of one year if the form of
this Agreement is approved at least annually by the Directors of
the Fund, including a majority of the members of the Board of
Directors of the Fund who are not interested persons of the Fund
and have no direct or indirect financial interest in the
operation of the Fund's Plan or in any related documents to the
Plan ("Disinterested Directors ") cast in person at a meeting
called for that purpose.
8. Notwithstanding paragraph 7, this Agreement may be
terminated as follows:
(a) at any time, without the payment of any penalty, by
the vote of a majority of the Disinterested Directors of
the Fund or by a vote of a majority of the outstanding
voting securities of the Fund as defined in the
Investment Company Act of 1940 on not more than sixty
(60) days' written notice to the parties to this
Agreement;
(b) automatically in the event of the Agreement's
assignment as defined in the Investment Company Act of
1940 or upon the termination of the "Administrative
Support and Distributor's Contract" or "Distributor's
Contract" between the Fund and FSC; and
(c) by either party to the Agreement without cause by
giving the other party at least sixty (60) days' written
notice of its intention to terminate.
9. The termination of this Agreement with respect to any one
Fund will not cause the Agreement's termination with respect to
any other Fund.
10. The Administrator agrees to obtain any taxpayer
identification number certification from its customers required
under Section 3406 of the Internal Revenue Code, and any
applicable Treasury regulations, and to provide FSC or its
designee with timely written notice of any failure to obtain
such taxpayer identification number certification in order to
enable the implementation of any required backup withholding.
11. This Agreement supersedes any prior service agreements
between the parties for the Funds.
12. This Agreement may be amended by FSC from time to time
by the following procedure. FSC will mail a copy of the
amendment to the Administrator's address, as shown below. If
the Administrator does not object to the amendment within thirty
(30) days after its receipt, the amendment will become part of
the Agreement. The Administrator's objection must be in writing
and be received by FSC within such thirty days.
13. This Agreement shall be construed in accordance with the
Laws of the Commonwealth of Pennsylvania.
__________________________________
[Administrator]
_________________________________
Address
_________________________________
City State Zip
Code
Dated:_______________________
By:______________________________
Authorized Signature
__________________________________
Title
__________________________________
Print Name of Authorized
Signature
FEDERATED SECURITIES
CORP.
Federated Investors Tower
Pittsburgh, Pennsylvania
15222-3779
By:_________________________________
Richard B. Fisher,
President
Marshall Funds, Inc.
EXHIBIT A to 12b-1 Agreement with
Federated Securities Corp. ("FSC")
Portfolios
FSC will pay Administrator fees for the following
portfolios (the "Funds") effective as of the dates set forth
below:
Name Date
Marshall Money Market Fund October 1, 1992
Investment Shares
Administrative Fees
1. During the term of this Agreement, FSC will pay
Administrator a quarterly fee in respect of each Fund. This fee
will be computed at the annual rate of .30% of the average net
asset value of Shares held during the quarter in accounts for
which the Administrator provides services under this Agreement,
so long as the average net asset value of Shares in each Fund
during the quarter equals or exceeds such minimum amount as FSC
shall from time to time determine and communicate in writing to
the Administrator.
2. For the quarterly period in which the Agreement becomes
effective or terminates, there shall be an appropriate proration
of any fee payable on the basis of the number of days that the
Agreement is in effect during the quarter.
Marshall Funds, Inc.
EXHIBIT B to 12b-1 Agreement with
Federated Securities Corp. ("FSC")
Portfolios
FSC will pay Administrator fees for the following portfolio
(the "Fund") effective as of the dates set forth below:
Name Date
Marshall International Stock Fund August 1, 1994
Administrative Fees
1. During the term of this Agreement, FSC will pay
Administrator a quarterly fee in respect of the Fund. This fee
will be computed at the annual rate of .25% of the average net
asset value of Shares held during the quarter in accounts for
which the Administrator provides services under this Agreement,
so long as the average net asset value of Shares in the Fund
during the quarter equals or exceeds such minimum amount as FSC
shall from time to time determine and communicate in writing to
the Administrator.
2. For the quarterly period in which the Agreement becomes
effective or terminates, there shall be an appropriate proration
of any fee payable on the basis of the number of days that the
Agreement is in effect during the quarter.
