- --------------------------------------------------------------------------------
MARSHALL
- --------------------------------------------------------------------------------
INTERNATIONAL
- --------------------------------------------------------------------------------
STOCK FUND
- --------------------------------------------------------------------------------
- Marshall International Stock Fund
(Portfolios of Marshall Funds, Inc.)
COMBINED SEMI-ANNUAL REPORT
AND SUPPLEMENT
TO COMBINED PROSPECTUS
DATED JANUARY 1, 1995
March 31, 1995
---------------------------------------------------
FEDERATED SECURITIES CORP.
(LOGO)
- ---------------------------------------------
---------------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
---------------------------------------------------
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
4030403 (3/95)
---------------------------------------------------
MARSHALL INTERNATIONAL STOCK FUND
1995 SEMI-ANNUAL REPORT
INVESTMENT COMMENTARY
- --------------------------------------------------------------------------------
Your Fund has outperformed its benchmark index (MSCI EAFE). These results are
primarily due to the Fund's underweighting of Japanese shares. Furthermore, it
continues to benefit from a "no-frills" well-diversified portfolio. It has not,
for example, employed currency hedging strategies which have recently hurt many
other similar funds. The portfolio also does not typically include futures and
options for investment purposes and likewise remains unleveraged. The Fund's
investment strategy, with low portfolio turnover, focuses primarily on
fundamental "stock-picking."
As an asset class, however, international securities have yielded unsatisfactory
returns. Looking back to the beginning of 1994, investors' expectations were
high. Historical returns from equity markets were well above average, the
economic base worldwide was growing, people were being put back to work, and
money poured into stock mutual funds. Yet, 1994 and 1995 year-to-date has been a
humbling experience, because many financial markets have been adversely affected
by recent global developments, including inflationary fears, rising interest
rates, foreign exchange currency volatility, and the ongoing Mexican monetary
crisis. The impact of these events has been further exacerbated by distressed
selling from institutions that include, for example, highly-leveraged hedge
funds. Fortunately, many of these recent events are considered cyclical, not
secular.
What will 1995 hold for investors? We do not really know, because it has always
proven difficult to predict short-term events, hence our long-term investment
focus. However, our level of optimism continues to improve, because prices for
many securities with good long-term fundamentals have fallen to attractive
levels. Your Fund is well-positioned with holdings in many of these securities
in market sectors that include, 1) natural resources-oriented securities, 2)
selective industrial cyclicals that continue to offer value, 3) consumer
durables securities that include automobile manufacturers, 4) utilities in
strong growth economies, and 5) undervalued financials with strong fundamentals.
The Fund's geographic weightings are also considered favorable. It is our
anticipation that Europe will continue to be overweighted, with good exposure in
Scandinavia and Spain. Central Europe, particularly the former iron curtain
countries, is looking more interesting. We also remain committed to investments
in Australia, New Zealand, and the Fund's Canadian holdings which, in our
opinion, remain undervalued.
Your Fund also has investments in emerging markets despite poor near-term
performance. In Hong Kong, after a steep correction, valuations of some
companies appear more attractive. In Mexico, the market has also fallen
dramatically. Mexico has fundamental economic problems that no doubt will result
in economic suffering for many months, but at some future point, securities
prices for Mexican companies that endure will be fully discounted, undervalued,
and considered bargains.
Your natural resources investments include energy, forest products, and base
metals companies. Many commodities now have limited new supply, sell at prices
below replacement cost, and should continue to benefit from growing demand
despite a recent correction in prices.
Financial stocks that can be influenced by rising interest rates have not fared
well over the last 12 months. All stocks are influenced by levels of interest
rates, yet some are perceived to be more sensitive than others. Performance in
1994 was not helped by the portfolio's financial exposure. Nevertheless, share
prices for many of these securities may already reflect the likelihood of
further rate increases and may be undervalued, thus offering longer-term
investment opportunity.
With the "madness of crowds" guiding market behavior, 1995 may be much like
1994. Fortunately, market volatility can create opportunity, especially for
fundamental investors with long-term perspectives.
Finally, we realize your expectations are high. We respect the confidence you
have shown by placing your assets in our care, and we remain, as always,
dedicated to the tasks at hand. Our long-term outlook remains favorable. In the
1990's, international investing should continue to offer opportunity.
A. The following information replaces the corresponding information relating to
the MARSHALL INTERNATIONAL STOCK FUND in the "Summary of Fund Expenses" table
starting on page 5 of the prospectus.
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES..................................................... NONE
ANNUAL FUND OPERATING EXPENSES*
(As a percentage of estimated average net assets)
Management Fee....................................................................... 1.00%
12b-1 Fee(1)......................................................................... 0.00%
Total Other Expenses................................................................. 0.58%
Shareholder Servicing Fees.................................................. 0.02%
Total Annual Fund Operating Expenses............................................ 1.58%
</TABLE>
(1) 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."
* 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.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years
- --------------------------------------------------------------------------- ------ -------
<S> <C> <C>
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 $50
</TABLE>
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.
B. Please insert the following "Financial Highlights" table for MARSHALL
INTERNATIONAL STOCK FUND immediately following the "Financial Highlights"
table for Marshall Mid-Cap Stock Fund on page 8 of the prospectus.
MARSHALL INTERNATIONAL STOCK FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
FEBRUARY 28,
1995*
-----------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------
Net investment income 0.052
- ------------------------------------------------------------------------
Net realized and unrealized loss on investments and
foreign currency transactions (0.766)
-----
- ------------------------------------------------------------------------
Total from investment operations (0.714)
- ------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ------------------------------------------------------------------------
Dividends to shareholders from net investment income (0.045)
- ------------------------------------------------------------------------
Distributions to shareholders from net realized gain on investments
and foreign currency transactions (0.001)
-----
- ------------------------------------------------------------------------
Total distributions (0.046)
-----
- ------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.24
-----
- ------------------------------------------------------------------------
TOTAL RETURN** (7.14%)
- ------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------------------
Expenses 1.46%(a)
- ------------------------------------------------------------------------
Net investment income 1.39%(a)
- ------------------------------------------------------------------------
Expense waiver (b) 0.07%(a)
- ------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------------------
Net assets, end of period (000 omitted) $76,573
- ------------------------------------------------------------------------
Portfolio turnover rate 9%
- ------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from September 2, 1994 (date of initial
public investment) to February 28, 1995 (unaudited).
** Based on net asset value.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
C. Please revise the third paragraph of the sub-section entitled "Common Stock
and Voting Rights" on page 26 of the prospectus to reflect that Mitra & Co.,
Marshall & Ilsley Trust Operations, Milwaukee, Wisconsin owned 4,403,056
shares (52.92%) of INTERNATIONAL STOCK FUND, and Maril & Co., Marshall &
Ilsley Trust Co., Milwaukee, Wisconsin owned 3,175,077 shares (38.16%) of
INTERNATIONAL STOCK FUND.
D. Please insert the following financial statements at the end of the prospectus
before the section entitled "Addresses." In addition, please add the heading
"Financial Statements" to the Table of Contents immediately before
"Addresses."
MARSHALL INTERNATIONAL STOCK FUND
PORTFOLIO OF INVESTMENTS
FEBRUARY 28, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- -------------------------------------------------------------------- -----------
COMMON STOCKS--85.2%
- ----------------------------------------------------------------------------------
<C> <S> <C>
ARGENTINA--0.8%
--------------------------------------------------------------------
TELEPHONE--0.8%
--------------------------------------------------------------------
31,000 Telefonica De Argentina $ 577,375
-------------------------------------------------------------------- -----------
TOTAL ARGENTINA 577,375
-------------------------------------------------------------------- -----------
AUSTRALIA--3.5%
--------------------------------------------------------------------
BANKING--1.6%
--------------------------------------------------------------------
340,200 Westpac Bank Corp. 1,255,907
-------------------------------------------------------------------- -----------
BROADCASTING--0.5%
--------------------------------------------------------------------
92,000 News Corporation 409,598
-------------------------------------------------------------------- -----------
CONSTRUCTION MATERIALS--1.4%
--------------------------------------------------------------------
436,200 Pioneer International Ltd. 1,049,920
-------------------------------------------------------------------- -----------
TOTAL AUSTRALIA 2,715,425
-------------------------------------------------------------------- -----------
AUSTRIA--2.7%
--------------------------------------------------------------------
ELECTRIC UTILITIES--1.2%
--------------------------------------------------------------------
7,500 EVN Energ Versorg 904,501
-------------------------------------------------------------------- -----------
INDUSTRIAL MACHINERY--1.5%
--------------------------------------------------------------------
11,000 VA Technologie AG 1,182,405
-------------------------------------------------------------------- -----------
TOTAL AUSTRIA 2,086,906
-------------------------------------------------------------------- -----------
BELGIUM--2.7%
--------------------------------------------------------------------
CHEMICALS--1.5%
--------------------------------------------------------------------
2,200 Solvay 1,139,289
-------------------------------------------------------------------- -----------
NON-FERROUS METALS--1.2%
--------------------------------------------------------------------
14,000 Union Miniere 920,823
-------------------------------------------------------------------- -----------
TOTAL BELGIUM 2,060,112
-------------------------------------------------------------------- -----------
BERMUDA--1.3%
--------------------------------------------------------------------
FINANCIAL SERVICES--1.3%
--------------------------------------------------------------------
277,500 Jardine Strategic 1,032,300
-------------------------------------------------------------------- -----------
TOTAL BERMUDA 1,032,300
-------------------------------------------------------------------- -----------
</TABLE>
MARSHALL INTERNATIONAL STOCK FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- -------------------------------------------------------------------- -----------
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
<C> <S> <C>
BRAZIL--0.7%
--------------------------------------------------------------------
BROADCASTING--0.7%
--------------------------------------------------------------------
18,000 Telecomunicacoes Brasileras $ 531,234
-------------------------------------------------------------------- -----------
TOTAL BRAZIL 531,234
-------------------------------------------------------------------- -----------
CANADA--3.1%
--------------------------------------------------------------------
BANKING--1.4%
--------------------------------------------------------------------
46,000 Canadian Imperial Bank Toronto 1,122,272
-------------------------------------------------------------------- -----------
ELECTRONICS--1.1%
--------------------------------------------------------------------
24,000 Newbridge Networks Corp. 813,720
-------------------------------------------------------------------- -----------
MINING--0.6%
--------------------------------------------------------------------
58,000 Metall Mining Corp. 457,807
-------------------------------------------------------------------- -----------
TOTAL CANADA 2,393,799
-------------------------------------------------------------------- -----------
CHILE--1.0%
--------------------------------------------------------------------
TELEPHONE--1.0%
--------------------------------------------------------------------
12,500 Compania De Telefonos Chile SA 762,500
-------------------------------------------------------------------- -----------
TOTAL CHILE 762,500
-------------------------------------------------------------------- -----------
CHINA--0.7%
--------------------------------------------------------------------
ELECTRIC UTILITIES--0.7%
--------------------------------------------------------------------
60,300 Shandong Huaneng Power Dev. Ltd. 550,238
-------------------------------------------------------------------- -----------
TOTAL CHINA 550,238
-------------------------------------------------------------------- -----------
CZECHOSLOVAKIA--0.7%
--------------------------------------------------------------------
ELECTRIC UTILITIES--0.5%
--------------------------------------------------------------------
9,350 Cez (Cesk En Zavody) 424,289
-------------------------------------------------------------------- -----------
FINANCIAL SERVICES--0.2%
--------------------------------------------------------------------
4,500 Creditanstalt Inv. 117,166
-------------------------------------------------------------------- -----------
TOTAL CZECHOSLOVAKIA 541,455
-------------------------------------------------------------------- -----------
FINLAND--2.4%
--------------------------------------------------------------------
CONGLOMERATES--1.2%
--------------------------------------------------------------------
48,500 Amer Group 896,328
-------------------------------------------------------------------- -----------
PAPER--1.2%
--------------------------------------------------------------------
23,000 Metsa Serla Oy 932,066
-------------------------------------------------------------------- -----------
TOTAL FINLAND 1,828,394
-------------------------------------------------------------------- -----------
</TABLE>
MARSHALL INTERNATIONAL STOCK FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- -------------------------------------------------------------------- -----------
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
<C> <S> <C>
FRANCE--5.7%
--------------------------------------------------------------------
AUTOMOBILES--1.4%
--------------------------------------------------------------------
31,500 Renault (Regie Nationale) $ 1,047,850
-------------------------------------------------------------------- -----------
BANKING--1.4%
--------------------------------------------------------------------
24,000 Banque National Paris 1,064,639
-------------------------------------------------------------------- -----------
CHEMICALS--1.5%
--------------------------------------------------------------------
48,000 Rhone Poulenc SA 1,146,534
-------------------------------------------------------------------- -----------
GAS EXPLORATION--1.4%
--------------------------------------------------------------------
15,500 Soc Elf Aquitaine 1,113,123
-------------------------------------------------------------------- -----------
TOTAL FRANCE 4,372,146
-------------------------------------------------------------------- -----------
GERMANY--4.7%
--------------------------------------------------------------------
BANKING--1.6%
--------------------------------------------------------------------
2,510 Deutsche Bank AG 1,236,644
-------------------------------------------------------------------- -----------
CHEMICALS--1.6%
--------------------------------------------------------------------
5,000 Bayer AG 1,229,142
-------------------------------------------------------------------- -----------
ELECTRIC UTILITIES--1.5%
--------------------------------------------------------------------
3,250 Veba AG 1,169,402
-------------------------------------------------------------------- -----------
TOTAL GERMANY 3,635,188
-------------------------------------------------------------------- -----------
GREAT BRITAIN--9.4%
--------------------------------------------------------------------
BANKING--1.7%
--------------------------------------------------------------------
135,000 Barclays 1,296,556
-------------------------------------------------------------------- -----------
BUSINESS SERVICES--1.5%
--------------------------------------------------------------------
119,000 Welsh Water 1,117,451
-------------------------------------------------------------------- -----------
FOOD & BEVERAGES--2.6%
--------------------------------------------------------------------
1,158,900 Albert Fisher Group 761,589
--------------------------------------------------------------------
421,955 Hillsdown Holdings 1,199,381
-------------------------------------------------------------------- -----------
Total 1,960,970
-------------------------------------------------------------------- -----------
GAS & PIPELINE UTILITIES--1.4%
--------------------------------------------------------------------
231,800 British Gas 1,064,481
-------------------------------------------------------------------- -----------
RETAIL TRADE--2.3%
--------------------------------------------------------------------
776,200 Burton Group 823,522
--------------------------------------------------------------------
115,000 Kwik Save Group 952,415
-------------------------------------------------------------------- -----------
Total 1,775,937
-------------------------------------------------------------------- -----------
TOTAL GREAT BRITAIN 7,215,395
-------------------------------------------------------------------- -----------
</TABLE>
MARSHALL INTERNATIONAL STOCK FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- -------------------------------------------------------------------- -----------
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
<C> <S> <C>
HONG KONG--4.8%
--------------------------------------------------------------------
BANKING--1.2%
--------------------------------------------------------------------
89,800 HSBC Holdings $ 943,704
-------------------------------------------------------------------- -----------
CONGLOMERATES--2.7%
--------------------------------------------------------------------
210,000 Hutchinson Whampoa 890,901
--------------------------------------------------------------------
165,000 Swire Pacific 1,157,764
-------------------------------------------------------------------- -----------
Total 2,048,665
-------------------------------------------------------------------- -----------
RETAIL TRADE--0.9%
--------------------------------------------------------------------
550,000 Dairy Farm International 661,579
-------------------------------------------------------------------- -----------
TOTAL HONG KONG 3,653,948
-------------------------------------------------------------------- -----------
INDONESIA--1.0%
--------------------------------------------------------------------
FOREST PRODUCTS--1.0%
--------------------------------------------------------------------
562,500 Barito Pac Timber 799,402
-------------------------------------------------------------------- -----------
TOTAL INDONESIA 799,402
-------------------------------------------------------------------- -----------
ITALY--2.8%
--------------------------------------------------------------------
PAPER--1.3%
--------------------------------------------------------------------
150,000 Burgo (Cartiere) Spa 1,034,483
-------------------------------------------------------------------- -----------
TELPHONE--1.5%
--------------------------------------------------------------------
495,000 Stet-Societa Finanziaria Telefonica 1,138,426
-------------------------------------------------------------------- -----------
TOTAL ITALY 2,172,909
-------------------------------------------------------------------- -----------
JAPAN--2.2%
--------------------------------------------------------------------
ELECTRICAL EQUIPMENT--1.2%
--------------------------------------------------------------------
104,000 Hitachi 910,061
-------------------------------------------------------------------- -----------
HOUSEHOLD APPLIANCES & FURNISHINGS--1.0%
--------------------------------------------------------------------
19,000 Sony Corp. 826,386
-------------------------------------------------------------------- -----------
TOTAL JAPAN 1,736,447
-------------------------------------------------------------------- -----------
MEXICO--0.6%
--------------------------------------------------------------------
CONTAINERS & GLASS--0.6%
--------------------------------------------------------------------
152,000 Vitro SA 482,032
-------------------------------------------------------------------- -----------
TOTAL MEXICO 482,032
-------------------------------------------------------------------- -----------
NETHERLANDS--7.0%
--------------------------------------------------------------------
CHEMICALS--2.5%
--------------------------------------------------------------------
10,000 Akzo Nobel NV 1,172,473
--------------------------------------------------------------------
17,000 European Vinyls Corp. International NV 756,689
-------------------------------------------------------------------- -----------
Total 1,929,162
-------------------------------------------------------------------- -----------
</TABLE>
MARSHALL INTERNATIONAL STOCK FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- -------------------------------------------------------------------- -----------
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
<C> <S> <C>
NETHERLANDS--CONTINUED
--------------------------------------------------------------------
INSURANCE--3.3%
--------------------------------------------------------------------
18,086 Aegon NV $ 1,249,067
--------------------------------------------------------------------
25,500 International Nederlanden 1,250,566
-------------------------------------------------------------------- -----------
Total 2,499,633
-------------------------------------------------------------------- -----------
RETAIL TRADE--1.3%
--------------------------------------------------------------------
15,000 Kon Bijenkorf Beh 962,469
-------------------------------------------------------------------- -----------
TOTAL NETHERLANDS 5,391,264
-------------------------------------------------------------------- -----------
NEW ZEALAND--2.8%
--------------------------------------------------------------------
FOREST PRODUCTS--1.4%
--------------------------------------------------------------------
435,000 Fletcher Challenge 1,083,434
-------------------------------------------------------------------- -----------
INVESTMENT COMPANIES--1.4%
--------------------------------------------------------------------
1,432,600 Brierley Investment Ltd. 1,035,024
-------------------------------------------------------------------- -----------
TOTAL NEW ZEALAND 2,118,458
-------------------------------------------------------------------- -----------
NORWAY--3.2%
--------------------------------------------------------------------
DRUGS & HEALTH CARE--1.5%
--------------------------------------------------------------------
58,000 Hafslund Nycomed 1,146,672
-------------------------------------------------------------------- -----------
NON-FERROUS METALS--0.7%
--------------------------------------------------------------------
44,400 Elkem AS 557,659
-------------------------------------------------------------------- -----------
PETROLEUM SERVICES--1.0%
--------------------------------------------------------------------
60,500 Saga Petroleum 783,326
-------------------------------------------------------------------- -----------
TOTAL NORWAY 2,487,657
-------------------------------------------------------------------- -----------
SPAIN--8.0%
--------------------------------------------------------------------
BANKING--2.5%
--------------------------------------------------------------------
43,000 BCO Bilboa Vizcaya 1,147,115
--------------------------------------------------------------------
47,000 Corporacion Bancaria De Espana 752,000
-------------------------------------------------------------------- -----------
Total 1,899,115
-------------------------------------------------------------------- -----------
ELECTRIC UTILITIES--2.7%
--------------------------------------------------------------------
22,000 Emp Nac Electricid 958,654
--------------------------------------------------------------------
172,000 Iberdrola SA 1,076,472
-------------------------------------------------------------------- -----------
Total 2,035,126
-------------------------------------------------------------------- -----------
PETROLEUM SERVICES--1.4%
--------------------------------------------------------------------
38,500 Repsol SA 1,093,331
-------------------------------------------------------------------- -----------
TELEPHONE--1.4%
--------------------------------------------------------------------
88,000 Telfonica De Esp 1,098,064
-------------------------------------------------------------------- -----------
TOTAL SPAIN 6,125,636
-------------------------------------------------------------------- -----------
</TABLE>
MARSHALL INTERNATIONAL STOCK FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- -------------------------------------------------------------------- -----------
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
<C> <S> <C>
SWEDEN--7.5%
--------------------------------------------------------------------
AUTOMOBILES--1.7%
--------------------------------------------------------------------
65,000 Volvo AB $ 1,303,885
-------------------------------------------------------------------- -----------
BANKING--2.8%
--------------------------------------------------------------------
70,000 Stadshypotek AB 1,026,869
--------------------------------------------------------------------
90,000 Svenska Handelsbnk 1,142,179
-------------------------------------------------------------------- -----------
Total 2,169,048
-------------------------------------------------------------------- -----------
DRUGS & HEALTH CARE--1.4%
--------------------------------------------------------------------
43,000 Astra AB 1,065,010
-------------------------------------------------------------------- -----------
FOREST PRODUCTS--1.6%
--------------------------------------------------------------------
19,000 Stora Kopparbergs 1,226,375
-------------------------------------------------------------------- -----------
TOTAL SWEDEN 5,764,318
-------------------------------------------------------------------- -----------
SWITZERLAND--4.6%
--------------------------------------------------------------------
BUSINESS SERVICES--1.6%
--------------------------------------------------------------------
825 SGS Holding 1,205,049
--------------------------------------------------------------------
ELECTRICAL EQUIPMENT--1.5%
--------------------------------------------------------------------
1,350 BBC Brown Boveri 1,179,197
-------------------------------------------------------------------- -----------
INSURANCE--1.5%
--------------------------------------------------------------------
1,200 Zurich Versicherun 1,150,365
-------------------------------------------------------------------- -----------
TOTAL SWITZERLAND 3,534,611
-------------------------------------------------------------------- -----------
UNITED STATES--0.9%
--------------------------------------------------------------------
FINANCIAL SERVICES--0.9%
--------------------------------------------------------------------
23,000 Nacional Financiera SNC, ADR 678,500
-------------------------------------------------------------------- -----------
TOTAL UNITED STATES 678,500
-------------------------------------------------------------------- -----------
TOTAL COMMON STOCKS (IDENTIFIED COST, $68,078,520) 65,247,649
-------------------------------------------------------------------- -----------
PREFERRED STOCKS--0.4%
- ----------------------------------------------------------------------------------
AUSTRALIA--0.4%
--------------------------------------------------------------------
BROADCASTING--0.4%
--------------------------------------------------------------------
81,000 News Corporation Limited 321,153
-------------------------------------------------------------------- -----------
TOTAL PREFERRED STOCKS (IDENTIFIED COST, $313,754) 321,153
-------------------------------------------------------------------- -----------
CLOSED-END INVESTMENT COMPANIES--3.2%
- ----------------------------------------------------------------------------------
340,200 India Fund 724,575
--------------------------------------------------------------------
47,767 Thai Fund, Inc. 1,128,495
--------------------------------------------------------------------
59,000 Turkish Growth Fund 560,500
-------------------------------------------------------------------- -----------
TOTAL MUTUAL FUND SHARES (IDENTIFIED COST $2,996,350) 2,413,570
-------------------------------------------------------------------- -----------
</TABLE>
MARSHALL INTERNATIONAL STOCK FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ---------- -------------------------------------------------------------------- -----------
<C> <S> <C>
CONVERTIBLE BONDS--2.9%
- ----------------------------------------------------------------------------------
GREAT BRITAIN--1.5%
--------------------------------------------------------------------
650,000 National Power, 6.25%, 9/8/2023 $ 1,137,371
-------------------------------------------------------------------- -----------
TOTAL GREAT BRITAIN 1,137,371
-------------------------------------------------------------------- -----------
UNITED STATES--1.4%
--------------------------------------------------------------------
1,380,000 PIV Investment Finance, 4.50%, 12/1/2000 1,047,075
-------------------------------------------------------------------- -----------
TOTAL UNITED STATES 1,047,075
-------------------------------------------------------------------- -----------
TOTAL CONVERTIBLE BONDS (IDENTIFIED COST, $2,230,142) 2,184,446
-------------------------------------------------------------------- -----------
U.S. TREASURY ISSUES--5.1%
- ----------------------------------------------------------------------------------
$3,125,000 Treasury Bill, 6/01/1995 3,080,000
--------------------------------------------------------------------
800,000 Treasury Note, 8.875%, 2/15/1996 818,008
-------------------------------------------------------------------- -----------
TOTAL U.S. TREASURY ISSUES (IDENTIFIED COST, $3,892,530) 3,898,008
-------------------------------------------------------------------- -----------
SHORT-TERM INVESTMENTS--5.9%
- ----------------------------------------------------------------------------------
2,036,000 Treasury Bill, 3/02/1995 2,035,703
--------------------------------------------------------------------
2,480,000 Treasury Bill, 3/09/1995 2,476,988
-------------------------------------------------------------------- -----------
TOTAL SHORT-TERM INVESTMENTS (AT AMORTIZED COST) 4,512,691
-------------------------------------------------------------------- -----------
TOTAL INVESTMENTS (IDENTIFIED COST, $82,023,987) $78,577,517+
-------------------------------------------------------------------- -----------
</TABLE>
+ The cost of investments for federal tax purposes amounts to $82,023,987. The
net unrealized depreciation of investments on a federal tax basis amounts to
$3,446,470, which is comprised of $1,234,860 appreciation and $4,681,330
depreciation at February 28, 1995.
Note: The categories of investments are shown as a percentage of net assets
($76,572,666) at
February 28, 1995.
The following abbreviation is used throughout this portfolio:
ADR--American Depository Receipt
(See Notes which are an integral part of the Financial Statements)
MARSHALL INTERNATIONAL STOCK FUND
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------
Investments in securities, at value
(identified cost and tax cost $82,023,987) $78,577,517
- ---------------------------------------------------------------------------------
Cash 23,569
- ---------------------------------------------------------------------------------
Receivable for foreign currency sold 105,737
- ---------------------------------------------------------------------------------
Income receivable 108,795
- ---------------------------------------------------------------------------------
Receivable for capital stock sold 45,746
- --------------------------------------------------------------------------------- -----------
Total assets 78,861,364
- ---------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------
Payable for capital stock redeemed $1,181,267
- --------------------------------------------------------------------
Payable for investments purchased 895,508
- --------------------------------------------------------------------
Payable for foreign currency purchased 105,737
- --------------------------------------------------------------------
Accrued expenses 106,186
- -------------------------------------------------------------------- ----------
Total liabilities 2,288,698
- --------------------------------------------------------------------------------- -----------
NET ASSETS for 8,283,579 shares of capital stock outstanding $76,572,666
- --------------------------------------------------------------------------------- -----------
NET ASSETS CONSIST OF:
- ---------------------------------------------------------------------------------
Paid-in capital $80,738,891
- ---------------------------------------------------------------------------------
Net unrealized depreciation of investments and foreign currency transactions (3,446,104)
- ---------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign currency transactions (778,831)
- ---------------------------------------------------------------------------------
Undistributed net investment income 58,710
- --------------------------------------------------------------------------------- -----------
Total Net Assets $76,572,666
- --------------------------------------------------------------------------------- -----------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
($76,572,666 / 8,283,579 shares of capital stock outstanding) $ 9.24
- --------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
MARSHALL INTERNATIONAL STOCK FUND
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM SEPTEMBER 2, 1994 (DATE OF INITIAL PUBLIC INVESTMENT) TO
FEBRUARY 28, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------
Interest income $ 369,513
- ----------------------------------------------------------------------------------
Dividend income (net of foreign taxes withheld of $55,686) 481,382
- ---------------------------------------------------------------------------------- -----------
Total investment income 850,895
- ----------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------
Investment advisory fee $298,714
- -----------------------------------------------------------------------
Administrative personnel and services fees 27,306
- -----------------------------------------------------------------------
Custodian fee 83,449
- -----------------------------------------------------------------------
Portfolio accounting and transfer and dividend disbursing agent fees
and expenses 28,520
- -----------------------------------------------------------------------
Shareholders services fees 4,773
- -----------------------------------------------------------------------
Legal fees 3,705
- -----------------------------------------------------------------------
Directors' fees 141
- -----------------------------------------------------------------------
Printing and postage 6,292
- -----------------------------------------------------------------------
Taxes 2,062
- -----------------------------------------------------------------------
Miscellaneous 3,007
- ----------------------------------------------------------------------- --------
Total expenses 457,969
- -----------------------------------------------------------------------
Deduct--
- -----------------------------------------------------------------------
Waiver of investment advisory fee $20,567
- -------------------------------------------------------------- -------
Net expenses 437,402
- ---------------------------------------------------------------------------------- -----------
Net investment income 413,493
- ---------------------------------------------------------------------------------- -----------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS:
- ----------------------------------------------------------------------------------
Net realized loss on investments and foreign currency transactions
(identified cost basis) (770,159)
- ----------------------------------------------------------------------------------
Net change in unrealized depreciation of investments and foreign currency
transactions (3,446,104)
- ---------------------------------------------------------------------------------- -----------
Net realized and unrealized loss on investments and foreign currency
transactions (4,216,263)
- ---------------------------------------------------------------------------------- -----------
Change in net assets resulting from operations ($3,802,770)
- ---------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
MARSHALL INTERNATIONAL STOCK FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
FEBRUARY 28,
1995*
----------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ------------------------------------------------------------------------
OPERATIONS--
- ------------------------------------------------------------------------
Net investment income $ 413,493
- ------------------------------------------------------------------------
Net realized loss on investments and foreign currency transactions
($770,159 net loss as computed for federal tax purposes) (770,159)
- ------------------------------------------------------------------------
Net change in unrealized depreciation of investments and foreign
currency transactions (3,446,104)
- ------------------------------------------------------------------------ --------------
Change in net assets resulting from operations (3,802,770)
- ------------------------------------------------------------------------ --------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ------------------------------------------------------------------------
Dividends to shareholders from net investment income (354,783)
- ------------------------------------------------------------------------
Distributions to shareholders from net realized gain on investments
and foreign currency transactions (8,672)
- ------------------------------------------------------------------------ --------------
Change in net assets from distributions to shareholders (363,455)
- ------------------------------------------------------------------------ --------------
CAPITAL STOCK TRANSACTIONS--
- ------------------------------------------------------------------------
Proceeds from sale of shares 99,541,981
- ------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
dividends declared 216,668
- ------------------------------------------------------------------------
Cost of shares redeemed (19,019,758)
- ------------------------------------------------------------------------ --------------
Change in net assets from capital stock transactions 80,738,891
- ------------------------------------------------------------------------ --------------
Change in net assets 76,572,666
- ------------------------------------------------------------------------
NET ASSETS--
- ------------------------------------------------------------------------
Beginning of period --
- ------------------------------------------------------------------------ --------------
End of period (including undistributed net investment income of $58,710) $ 76,572,666
- ------------------------------------------------------------------------ --------------
</TABLE>
* Reflects operations for the period from September 2, 1994 (date of initial
public investment) to February 28, 1995 (unaudited).
(See Notes which are an integral part of the Financial Statements)
MARSHALL INTERNATIONAL STOCK FUND
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Marshall Funds, Inc. (the "Corporation"), is an open-end, management investment
company established as a Wisconsin corporation under the Articles of
Incorporation on July 31, 1992. The Corporation consists of eleven diversified
portfolios. The following Funds comprise the Corporation:
FUNDS
Marshall Stock Fund
Marshall Value Equity Fund
Marshall Equity Income Fund
Marshall Mid-Cap Stock Fund
Marshall International Stock Fund
Marshall Short-Term Income Fund
Marshall Intermediate Bond Fund
Marshall Government Income Fund
Marshall Short-Term Tax-Free Fund
Marshall Intermediate Tax-Free Fund
Marshall Money Market Fund
Marshall Money Market Fund is offered in two classes of shares: Class A Shares
and Class B Shares. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held. The
financial statements included herein are only those of Marshall International
Stock Fund (the "Fund"). The financial statements of the other Funds are
presented separately.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Listed equity securities and investments in closed-end
investment companies are valued at the last sale price reported on national
securities exchanges. Unlisted securities and short-term securities are
generally valued at the prices provided by an independent pricing service.
Short-term securities with remaining maturities of sixty days or less at the
time of purchase may be valued at amortized cost, which approximates fair market
value. Investments in other open-end investment companies are valued at net
asset value.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Dividend income and distributions
to shareholders are recorded on the ex-dividend date. Interest income and
expenses are accrued daily. Bond premium and discount, if applicable, are
amortized as required by the Internal Revenue Code, as amended (the "Code").
FOREIGN CURRENCY TRANSLATION--The accounting records of the Fund are maintained
in U.S. dollars. All assets and liabilities denominated in foreign currencies
("FC") are translated into U.S. dollars based on the rate of exchange of such
currencies against U.S. dollars on the date of valuation. Purchases and sales of
securities, income and expenses are translated at the rate of exchange quoted on
the respective date that such transactions are recorded. Differences between
income and expense amounts recorded and collected or paid are adjusted when
reported by the custodian bank. The Fund does not isolate that portion of the
results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of FCs, currency gains or losses
realized between the trade and settlement dates on securities transactions, the
difference between the amount of dividends, interest, and foreign withholding
taxes recorded on the Fund's books, and the U.S. dollar equivalent of the
amounts actually received
MARSHALL INTERNATIONAL STOCK FUND
- --------------------------------------------------------------------------------
or paid. Net unrealized foreign exchange gains and losses arise from changes in
the value of assets and liabilities other than investments in securities at
fiscal year end, resulting from changes in the exchange rate.
FOREIGN CURRENCY COMMITMENTS--The Fund may enter into foreign currency
commitments for the delayed delivery of foreign currency exchange transactions.
Risks may arise upon entering these transactions from the potential inability of
counterparties to meet the terms of their commitments and from unanticipated
movements in foreign exchange rates. The foreign currency transactions are
adjusted by the daily exchange rate of the underlying currency and any gains or
losses are recorded for financial statement purposes as unrealized until the
settlement date.
At February 28, 1995, the Fund had outstanding foreign currency commitments set
out below:
<TABLE>
<CAPTION>
UNREALIZED
COMMITMENTS TO IN EXCHANGE APPRECIATION/
SETTLEMENT DATE RECEIVE FOR DEPRECIATION
---------------------------------------------------- ----------- -------------
<S> <C> <C> <C>
March 6, 1995 73,400 Netherland Guilders $45,050 ($110)
March 2, 1995 391,797 Norwegian Krone 60,687 65
-------------
Total ($ 45)
=============
</TABLE>
FEDERAL TAXES--It is each Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary. However, federal taxes may be imposed
on the Fund upon the disposition of certain investments in passive foreign
investment companies. Withholding taxes on foreign dividends have been provided
for in accordance with the Fund's understanding of the applicable country's tax
rules and rates.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the securities
purchased. Securities purchased on a when-issued or delayed delivery basis are
marked to market daily and begin earning interest on the settlement date.
CONCENTRATION OF CREDIT RISK--The Fund invests in equity and fixed income
securities of non-U.S. issuers. Although the Fund maintains a diversified
investment portfolio, the political or economic developments within a particular
country or region may have an adverse effect on the ability of domiciled issuers
to meet their obligations. Additionally, political or economic developments may
have an effect on the liquidity and volatility of portfolio securities and
currency holdings.
MARSHALL INTERNATIONAL STOCK FUND
- --------------------------------------------------------------------------------
At February 28, 1995, the Fund was diversified across the following industries:
<TABLE>
<S> <C> <C> <C>
Automobiles 3.0 % Forest Products 4.0 %
Banking 14.0 Gas & Pipeline Utilities 1.4
Broadcasting 1.6 Gas Exploration 1.4
Business Services 3.0 Household Appliances & Furniture 1.1
Chemicals 6.9 Industrial Machinery 1.5
Conglomerates 3.7 Insurance 4.6
Construction Materials 1.3 Investment Companies 1.3
Containers & Glass 0.6 Mining 0.6
Drugs & Health Care 2.8 Non-Ferrous Metals 1.9
Electric Utilities 6.5 Paper 2.5
Electrical Equipment 2.7 Petroleum Services 2.4
Electronics 1.0 Retail Trade 4.3
Financial Services 2.3 Telephone 4.6
Food & Beverages 2.5
</TABLE>
OTHER--Investment transactions are accounted for on the trade date.
(3) CAPITAL STOCK
The Articles of Incorporation of the Corporation permit the Directors to issue
50 billion full and fractional shares of common stock, par value $0.0001 per
share. At February 28, 1995, the capital paid-in for the Fund was $80,738,891.
Transactions in Capital Stock were as follows:
<TABLE>
<CAPTION>
PERIOD ENDED
FEBRUARY 28,
1995*
-----------------
<S> <C>
- -----------------------------------------------------------------------
Shares sold 10,302,879
- -----------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 23,373
- -----------------------------------------------------------------------
Shares redeemed (2,042,673)
- ----------------------------------------------------------------------- --------------
Net change resulting from capital stock transactions 8,283,579
- ----------------------------------------------------------------------- --------------
</TABLE>
* Reflects operations for the period from September 2, 1994 (date of initial
public investment) to February 28, 1995.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--M&I Investment Management Corp., the Fund's investment
adviser (the "Adviser"), receives for its services an annual investment advisory
fee equal to 1.00% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive all or a portion of its fee. The Adviser can modify
or terminate this voluntary waiver at any time at its sole discretion.
Templeton Investment Counsel, Inc. ("TICI") is the Fund's sub-adviser (the
"Sub-Adviser"). The Adviser compensates the Sub-Adviser based on the level of
average aggregate daily net assets of the Fund.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with certain administrative personnel and services. The FAS fee is based on the
level of average aggregate net assets of the Corporation for the period. FAS may
voluntarily choose to waive a portion of its fee.
DISTRIBUTION SERVICES FEE--The Fund has adopted a Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the terms
of the Plan, the Fund will compensate Federated Securities Corp. ("FSC"), the
principal distributor, from the net assets of the
MARSHALL INTERNATIONAL STOCK FUND
- --------------------------------------------------------------------------------
Fund to finance activities intended to result in the sale of the Fund's shares.
The Plan provides that the Fund may incur distribution expenses up to 0.25 of 1%
of the average daily net assets of its shares, annually, to compensate FSC.
SHAREHOLDER SERVICES FEE--Marshall Funds Investors Services ("MFIS") is the
Fund's shareholder servicing agent. Under the terms of a shareholder service
agreement with MFIS, the Fund will pay MFIS a fee to obtain certain personal
services for shareholders and the maintenance of shareholder accounts. The fee
is based on the level of the Fund's average net assets for the period.
TRANSFER AND DIVIDEND DISBURSING AGENT, PORTFOLIO ACCOUNTING AND CUSTODY
FEES--Federated Services Company ("FServ") serves as transfer and dividend
disbursing agent for the Fund. The FServ fee is based on the size, type, and
number of accounts and transactions made by shareholders.
FServ also maintains the accounting records. The fee is based on the level of
the Fund's average net assets for the period.
Marshall and Ilsley Trust Company is the Fund's custodian. The fee is based on
the level of the Fund's average net assets for the period.
ORGANIZATIONAL EXPENSES--Organizational expenses incurred by the Fund will be
borne initially by FAS and are estimated to be $25,000. The Fund has agreed to
reimburse FAS for the organizational expenses during the five year period
following September 1, 1994 (date the Fund first became effective). For the
period ended February 28, 1995, the Fund paid $833 pursuant to this agreement.
Certain of the Officers and Directors of the Corporation are Officers and
Directors or Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended February 28, 1995, were as follows:
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------
PURCHASES-- $82,388,482
- ------------------------------------------------------------------------------- -----------
SALES-- $ 4,269,795
- ------------------------------------------------------------------------------- -----------
</TABLE>
MARSHALL INTERNATIONAL STOCK FUND
(A PORTFOLIO OF MARSHALL FUNDS, INC.)
SUPPLEMENT TO STATEMENT OF ADDITIONAL INFORMATION DATED JANUARY 1, 1995.
A. Please insert the following sentence after the fourth sentence in
the second paragraph of the sub-section entitled "Portfolio
Turnover" on page 8 of the Statement of Additional Information
("SAI"):
"For the period from September 2, 1994 (date of initial public
investment) to February 28, 1995, the portfolio turnover rate for
INTERNATIONAL STOCK FUND was 9%."
B. Please replace "247 Progress Drive" with "547 Progress Drive" as
the street address of Ody J. Fish, Director, in the section
entitled "Officers and Directors " which begins on page 13 of the
SAI.
C. Please insert the following paragraph as the last paragraph of the
sub-section entitled "Officers and Directors" which begins on page
13 of the SAI:
"The birthdates of the officers and directors of the Corporation
are as follows: Edward C. Gonzales, October 22, 1930; John
DeVincentis, March 27, 1934; Ody J. Fish, June 16, 1925; Paul E.
Hasset, September 4, 1917; James F. Duca, II, January 9, 1958;
Joseph S. Machi, May 22, 1962; and Peter J. Germain, September 3,
1959."
D. Please substitute the following information for the INTERNATIONAL
STOCK FUND under the section entitled "Fund Ownership" on page 15
of the SAI, which information is as of March 3, 1995:
"Maril & Co., Marshall & Ilsley Trust Co., Milwaukee, Wisconsin,
owned approximately 3,175,077 shares (38.16%); and Mitra & Co.,
Marshall & Ilsley Trust Operations, Milwaukee, Wisconsin, owned
approximately 4,403,056 shares (52.92%)."
E. Please add the heading "Directors' Compensation" to the Table of
Contents immediately following the heading "Fund Ownership" on the
Table of Contents page. In addition, please insert the following
as a new section on page 16 of the SAI immediately following the
end of the sub-section entitled "Fund Ownership":
"DIRECTORS' COMPENSATION
NAME , AGGREGATE
POSITION WITH COMPENSATION
CORPORATION FROM CORPORATION*
Edward C. Gonzales $ 0
Chairman, Director, and Treasurer
John DeVincentis $ 4,500
Director
Ody J. Fish $ 4,500
Director
Paul E. Hasset $ 4,500
Director
*The information is provided for the fiscal year ended August 31, 1994.
The Corporation is the only investment company in the Fund Complex. The
aggregate compensation is provided for the Corporation, which, at fiscal
year end, was comprised of eleven portfolios."
F. Please insert the following sentence after the fourth sentence in
the sub-section entitled "Advisory Fees" under the main section
entitled "Investment Advisory Services" on page 16 of the SAI:
"For the period from September 2, 1994 (date of initial public
investment) to February 28, 1995, the Adviser earned fees from
INTERNATIONAL STOCK FUND of $298,714, of which $20,567 was
voluntarily waived."
G. Please insert the following sub-section entitled "Subadvisory
Fees" immediately after the sub-section entitled "Subadviser to
INTERNATIONAL STOCK FUND" under the main section entitled
"Investment Advisory Services" on page 17 of the SAI:
"SUBADVISORY FEES
For its subadvisory services, TICI receives an annual subadvisory
fee, payable by the Adviser, as described in the prospectus. From
September 2, 1994 (date of initial public investment) to February
28, 1995, TICI earned fees from INTERNATIONAL STOCK FUND of
$148,508."
H. Please insert the following information after the fourth sentence
under the section entitled "Administrative Services" on page 18 of
the SAI:
"For the period from September 2, 1994 (date of initial public
investment) to February 28, 1995, FAS received fees from
INTERNATIONAL STOCK FUND of $27,306."
I. Please insert the following information as the last sentence of
the section entitled "Shareholder Servicing Arrangements" on page
18 of the SAI:
"For the period from September 2, 1994 (date of initial public
investment) to February 28, 1995, MFIS earned a shareholder
servicing fee of $4,773 for INTERNATIONAL STOCK FUND."
J. Please insert the following information at the end of the section
entitled "Brokerage Transactions" on page 19 of the SAI:
"For the period from September 2, 1994 (date of initial public
investment) to February 28, 1995, INTERNATIONAL STOCK FUND paid
$260,230 in brokerage commissions on brokerage transactions."
K. Please insert the following information after the fourth sentence
in the second paragraph under the section entitled "Total Return"
on page 23 of the SAI:
"INTERNATIONAL STOCK FUND'S cumulative total return for the period
from September 2, 1994 (date of initial public investment) to
February 28, 1995, was (7.14%)."
March 31, 1995
FEDERATED SECURITIES CORP.
Distributor
A subsidiary of Federated
Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
G01010-01 (3/95)
