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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant x
Filed by a Party other than the Registrant ¨
Check the appropriate box:
| x | Preliminary Proxy Statement | |||
| ¨ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |||
| ¨ | Definitive Proxy Statement | |||
| ¨ | Definitive Additional Materials | |||
| ¨ | Soliciting Material Pursuant to §240.14a-12 | |||
MARSHALL FUNDS, INC. | ||||
| (Name of Registrant as Specified in its Charter) | ||||
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BMO FUNDS
111 East Kilbourn Avenue, Suite 200
Milwaukee, WI 53202
August , 2012
Dear Shareholder:
I am writing to inform you of the upcoming special meeting of shareholders of the BMO Large-Cap Focus Fund (the “Fund”) to be held at 8:30 a.m. (Central Time), Tuesday, August 28, 2012, at the offices of Marshall Funds, Inc. d/b/a BMO Funds (the “Corporation”) at 111 East Kilbourn Avenue, Suite 200, Milwaukee, Wisconsin 53202. At this meeting, you are being asked to approve the liquidation and dissolution of the Fund.
As discussed in more detail in the enclosed Proxy Statement, BMO Asset Management Corp. (the “Adviser”), the investment adviser to the Fund, recommended the liquidation of the Fund to the Board of Directors of the Corporation (the “Board”). Based on this recommendation, the Board voted to approve the liquidation and dissolution of the Fund pursuant to a plan of liquidation, subject to shareholder approval.
The question and answer section that follows discusses this proposal and the Proxy Statement itself provides greater detail about the proposal. Please review and consider the proposal carefully.
The Board has approved the liquidation and dissolution of the Fund and recommends that you vote in favor of the proposal.
Whether or not you plan to attend the special meeting, please sign and return the enclosed proxy card in the postage prepaid envelope provided. You also may vote by toll-free telephone or by Internet according to the instructions noted on the enclosed proxy card.
If we do not hear from you by August 21, 2012, we may contact you. Thank you for investing in the Fund and for your continuing support.
Sincerely,
John M. Blaser
President
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BMO FUNDS
BMO LARGE-CAP FOCUS FUND
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
A special meeting of shareholders of the BMO Large-Cap Focus Fund (the “Fund”), a series of Marshall Funds, Inc., d/b/a BMO Funds, a Wisconsin corporation (the “Corporation”), will be held on Tuesday, August 28, 2012 at 8:30 a.m. (Central Time) at the offices of the Corporation at 111 East Kilbourn Avenue, Suite 200, Milwaukee, Wisconsin 53202.
The meeting is being held to consider and vote on the following proposal as well as any other business that may properly come before the meeting or any adjournments thereof:
| 1. | To approve the liquidation and dissolution of the Fund, as described in a plan of liquidation, including an amendment to the Articles of Incorporation of the Corporation to terminate the Fund as a series of the Corporation. |
The Board of Directors recommends that shareholders vote FOR the proposal.
Only shareholders of record at the close of business on July 31, 2012, the record date for the special meeting, shall be entitled to notice of, and to vote at, the special meeting or any adjournments thereof.
Important Notice Regarding the Internet Availability of Proxy Materials for the
Shareholder Meeting to be held on August 28, 2012:
The Letter to Shareholders, Notice of Meeting and Proxy Statement are available at www.proxyvote.com.
YOUR VOTE IS IMPORTANT.
PLEASE RETURN YOUR PROXY CARD PROMPTLY OR PROXY VOTE BY
TOLL-FREE TELEPHONE OR INTERNET IN ACCORDANCE
WITH THE INSTRUCTIONS NOTED ON THE ENCLOSED PROXY CARD.
As a shareholder of the Corporation, you are asked to attend the special meeting either in person or by proxy. To obtain directions to attend the meeting, please call 1-800-236-FUND. If you are unable to attend the special meeting in person, we urge you to vote by proxy. You can do this in one of three ways by: (1) completing, signing, dating and promptly returning the enclosed proxy card in the enclosed postage prepaid envelope, (2) calling a toll-free telephone number or (3) using the Internet. Your prompt voting by proxy will help assure a quorum at the special meeting and avoid additional expenses associated with further solicitation. Voting by proxy will not prevent you from voting your shares in person at the special meeting. You may revoke your proxy before it is exercised at the special meeting by submitting to the Secretary of the Corporation a written notice of revocation or a subsequently signed proxy card. A prior proxy can also be revoked by proxy voting again through the website or toll-free number noted on the enclosed proxy card.
By Order of the Board of Directors,
Linda S. VanDenburgh
Secretary
Milwaukee, Wisconsin
August , 2012
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Questions and Answers
We encourage you to read the full text of the enclosed Proxy Statement, and, for your convenience, we have provided a brief overview of the proposal.
| Q. | Why am I receiving this Proxy Statement? |
| A. | Upon the recommendation of the Adviser, the Board has approved the liquidation and dissolution of the Fund. We are also asking shareholders to approve the liquidation and dissolution of the Fund. |
| Q. | How will the liquidation affect my investment? |
| A. | Pursuant to the plan of liquidation, any shareholder who has not exchanged or redeemed their shares of the Fund prior to August 29, 2012 will have their shares redeemed in cash and will receive a check representing the shareholder’s proportional interest in the Fund, subject to any required withholdings. |
| Q. | Will I have to pay any taxes as a result of the liquidation? |
| A. | The liquidation of the Fund is a taxable event for federal income tax purposes. A shareholder who receives redemption proceeds will be treated as having received the redemption proceeds in exchange for the shareholder’s shares of the Fund and will recognize gain or loss based on the difference between the amount received and the shareholder’s basis in the Fund shares, and any distributions received (including, but not limited to, any capital gain distributions) will be taxable in the normal manner. The federal income tax consequences of the liquidation are described generally in the Proxy Statement. You should consult your tax advisor with respect to your particular circumstances. |
| Q. | May I redeem or exchange my shares in advance of the special meeting? |
| A. | Yes. You may redeem your shares at any time prior to the liquidation date. Please see the Fund’s prospectus to review how to redeem shares. You also may exchange shares of the Fund for the same class of shares of any of the other BMO Funds free of charge, provided you meet the investment minimum of the new fund and you reside in a jurisdiction where the new fund shares may be lawfully offered for sale. However, the exchange of Fund shares for shares of any of the other BMO Funds is a taxable transaction for federal income tax purposes. Please see the Fund’s prospectus to review exchange privileges and potential federal income tax consequences. |
| Q. | What will happen if the shareholders do not approve the liquidation? |
| A. | If the shareholders of the Fund do not approve its liquidation, then you will remain a shareholder of the Fund and it will not liquidate. The Board would then consider other alternatives for the Fund, which may include another liquidation proposal. |
| Q. | Will the Fund pay for the proxy solicitation and related expenses of liquidating the Fund? |
| A. | No. The Adviser or an affiliate has agreed to bear these costs. Accordingly, shareholders of the Fund will not bear any of the costs associated with the liquidation. |
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| Q. | How does the Board recommend that I vote? |
| A. | After careful consideration, the Board, the majority of whom are not “interested persons” of the Corporation as defined in the Investment Company Act of 1940, recommends that you vote FOR the proposal. |
| Q. | How can I vote my shares? |
| A. | You may choose from one of the following options, as described in more detail on the proxy card: |
| • | By mail, using the enclosed proxy card and return envelope; |
| • | By telephone, using the toll-free number on your proxy card; |
| • | Through the Internet, using the website address on your proxy card; or |
| • | In person at the shareholder meeting. |
| Q. | Whom should I call for additional information about this Proxy Statement? |
| A. | Please call BMO Investor Services at 1-800-236-FUND. |
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BMO FUNDS
BMO LARGE-CAP FOCUS FUND
111 East Kilbourn Avenue, Suite 200
Milwaukee, WI 53202
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
August 28, 2012
General. This Proxy Statement is being furnished in connection with the solicitation of proxies by the Board of Directors of Marshall Funds, Inc., d/b/a BMO Funds, (the “Corporation”) with respect to the BMO Large-Cap Focus Fund (the “Fund”). The Fund consists of two classes of shares: Investor Class (“Class Y”) and Institutional Class (“Class I”).
The special meeting of shareholders will be held at the principal offices of the Corporation located at 111 East Kilbourn Avenue, Suite 200, Milwaukee, Wisconsin 53202, on Tuesday, August 28, 2012 at 8:30 a.m. (Central Time) and at any adjourned session thereof, for the purposes set forth in the enclosed notice of special meeting of shareholders (“Notice”). It is expected that the Notice, this Proxy Statement and Proxy Card will be mailed to shareholders on or about August 13, 2012.
Record Date/Shareholders Entitled to Vote. If you owned shares of the Fund as of the close of business on July 31, 2012 (the “Record Date”), then you are entitled to vote at the special meeting (or any adjournments thereof). You will be entitled to one vote per full share (and a fractional vote per fractional share) for each share you owned on the Record Date.
BMO Asset Management Corp. (the “Adviser”), the investment adviser to the Fund, recommended the liquidation of the Fund to the Board of Directors of the Corporation (the “Board”), based on a variety of factors, including, but not limited to, the Fund’s performance relative to its benchmark indices, the Fund’s current size and its impact on the Fund’s ability to achieve economies of scale, the impact of the performance issues on marketing efforts to grow the Fund and the profitability of the Fund to the Adviser and the willingness of the Adviser to continue to waive its management fees and/or reimburse expenses so as to maintain the Fund’s annual expense ratio at a competitive level. The Fund’s gross annualized expense ratio for the 2011 fiscal year was 1.22% for Class Y shares and 0.97% for Class I shares. Giving effect to the Adviser’s agreement to waive or reduce its investment advisory fee and reimburse certain Fund expenses through July 6, 2013, the Fund’s net annualized expense ratio for the 2011 fiscal year was 0.90% for Class Y shares and 0.65% for Class I shares. Based upon various factors as described below under “Proposal 1 – Board Approval and Recommendation,” the Adviser recommended the liquidation and dissolution of the Fund.
At a special telephonic meeting held on July 27, 2012, the Board, including a majority of the “disinterested” directors (the “Independent Directors”) as that term is defined in the Investment Company Act of 1940, as amended (the “1940 Act”), approved the liquidation and dissolution of the Fund pursuant to a plan of liquidation, subject to shareholder approval. The Board also approved an amendment to the Articles of Incorporation of the Corporation to terminate the Fund as a series of the Corporation under Wisconsin law, subject to shareholder approval.
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If shareholders of the Fund approve the proposal, the Fund will be liquidated and dissolved pursuant to a plan of liquidation. In addition, the Corporation’s Articles of Incorporation will be amended to terminate the Fund as a series of the Corporation.
If shareholders of the Fund do not approve the proposal, then the Fund will not liquidate. The Board would then consider other alternatives for the Fund, which may include another liquidation proposal.
PROPOSAL 1: APPROVAL OF THE LIQUIDATION AND DISSOLUTION OF THE FUND
Shareholders are being asked to approve the liquidation and dissolution of the Fund, including an amendment to the Corporation’s Articles of Incorporation to terminate the Fund as a series of the Corporation. If approved, the Fund will be liquidated and dissolved pursuant to the plan of liquidation described below. The Board, including a majority of the Independent Directors, has approved the liquidation and dissolution of the Fund, the plan of liquidation and submission of the proposal to shareholders of the Fund for approval.
The remainder of this section provides a summary of the plan of liquidation, a discussion of redemptions and exchanges prior to liquidation, an overview of the material federal income tax and other aspects of the liquidation, and information on the Board’s considerations and approval and concludes with the Board’s recommendation.
Summary of the Plan of Liquidation
The Plan of Liquidation (the “Plan”) is attached hereto asAnnex A, and this summary of the Plan is qualified in its entirety by the reference toAnnex A.
Effective Date of Plan; Liquidation Time. The Plan will become effective upon its approval by the shareholders of the Fund (the “Effective Date”). Assuming the Plan is approved at the special meeting on August 28, 2012, the Adviser anticipates that the Fund will commence making liquidating distributions on or about the close of trading on the New York Stock Exchange on August 29, 2012 (the “Liquidation Time”).
Cessation of Business. The Plan provides that, as of the Liquidation Time, the Fund will cease its business as a series fund of an investment company and will not engage in any business activities except for the purpose of winding up its business affairs, selling or disposing of its assets, discharging or making reasonable provision for the payment of all of the Fund’s liabilities and distributing its assets to shareholders in accordance with the provisions of the Plan.
Fixing of Interests and Closing of Books. The Plan also provides that the proportionate interests of shareholders in the assets of the Fund, and their rights to receive redemption payments and subsequent distributions, will be fixed on the basis of their respective holdings at the Liquidation Time. At the Liquidation Time, the books of the Fund will be closed.
Liquidation of Fund Assets and Payment of Debts. As soon as is reasonable and practicable after the Effective Date of the Plan, any remaining portfolio securities of the Fund will be converted to cash or cash equivalents. As soon as practicable after the Effective Date, the Corporation will pay, or make reasonable provision to pay, in full all known or reasonably ascertainable liabilities of the Fund incurred or expected to be incurred prior to the date of the final liquidating distribution.
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Liquidating Distributions. As soon as is reasonable and practicable after the Liquidation Time, the Corporation will mail to each shareholder of record at the Liquidation Time: (a) one or more liquidating distributions equal in the aggregate to the shareholder’s proportionate interest in the excess of the assets of the Fund over the liabilities of the Fund as of the Liquidation Time; and (b) information concerning the sources of each liquidating distribution. Any accrued income or gains will be distributed as part of the liquidating distribution. Upon the mailing of the final liquidating distribution, all outstanding shares of the Fund will be deemed redeemed and canceled.
In the event that the Fund receives assets following the date of its termination (e.g., through the payment of settlement proceeds), the Adviser will use commercially reasonable efforts to ensure that such assets are distributed to each shareholder of record as of the Liquidation Time in an amount equal to the shareholder’s proportionate interest in the Fund as of the Liquidation Time.
In the event that the Fund is unable to make liquidating distributions to any shareholders because of the inability to locate such shareholders, subject to applicable abandoned property laws, such liquidating distributions may be held in an account with a financial institution for the benefit of such shareholders that cannot be located. The expenses of such account will be charged against the assets in the account. The Fund does not anticipate being unable to locate shareholders.
Satisfaction of Federal Income and Excise Tax Distribution Requirements. If necessary, the Corporation shall have, by the Liquidation Time, declared and paid a distribution or distributions which, together with all previous such distributions, will have the effect of distributing to the Fund’s shareholders all of the Fund’s investment company taxable income for the taxable years ending at or prior to the Liquidation Time (computed without regard to any deduction for dividends paid), and all of the Fund’s net capital gain, if any, realized in the taxable years ending at or prior to the Liquidation Time (after reduction for any available capital loss carry-forward) and any additional amounts necessary to avoid any federal income or excise tax for such periods. Alternatively, the Fund may, if eligible, treat all or any portion of the amounts to be distributed as having been paid out as part of the liquidating distributions made to Fund shareholders.
Expenses. The Adviser or an affiliate will pay all costs incurred in carrying out the Plan. Accordingly, shareholders of the Fund will not bear any of the costs associated with the liquidation.
Articles Amendment. The officers of the Corporation will file an amendment to the Corporation’s Articles of Incorporation to terminate the Fund as a series of the Corporation under Wisconsin law.
Redemption and Exchanges Prior to Liquidation
Any time prior to the Liquidation Time, the shareholders of the Fund may redeem their shares of the Fund pursuant to the procedures set forth in the Fund’s prospectus. As disclosed in the Fund’s prospectus, although the Fund intends to pay share redemptions in cash, it reserves the right to pay the redemption price in whole or in part by a distribution of the Fund’s portfolio securities. Shareholders receiving portfolio securities in redemption of their shares will realize a gain or loss for federal income tax purposes in the same manner as when cash is received. Shareholders may also exchange their shares of the Fund for the same class of shares of any of the other BMO Funds free of charge, provided a shareholder meets the investment minimum of the new fund and resides in a jurisdiction where the new fund shares may be lawfully offered for sale. An exchange is treated as a redemption and a subsequent purchase, and is therefore a taxable transaction for federal income tax purposes.
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Material Federal Income Tax Considerations and Other Aspects of the Liquidation
The following is a general discussion of certain material U.S. federal income tax considerations for U.S. shareholders subject to federal income tax with respect to the liquidation and termination of the Fund. This discussion is based on current U.S. federal income tax laws in effect on the date of this Proxy Statement. Future legislative or administrative changes or court decisions might significantly alter these tax consequences, possibly retroactively. The statements below are not binding upon the Internal Revenue Service, and there can be no assurance that the Internal Revenue Service will concur with this summary or that the tax consequences to any shareholder will be as set forth below.
This discussion is for general information only and does not address all of the U.S. federal income tax considerations that may be relevant to specific shareholders in light of their particular circumstances or to shareholders subject to special treatment under U.S. federal income tax law (such as financial institutions, insurance companies, tax-exempt entities, broker-dealers, pension plans or persons that have a “functional currency” other than the U.S. dollar). This discussion does not address any U.S. state or local tax considerations. Nor does this discussion address any tax considerations for foreign shareholders or tax-exempt shareholders. Implementing the Plan may impose unanticipated tax consequences on shareholders and affect shareholders differently, depending on their particular tax situations independent of the Plan. Shareholders are encouraged to consult with their own tax advisor to determine the particular tax consequences to them of the Fund’s liquidation, including the application and effect of any state, local or foreign tax laws.
As used herein, a “U.S. shareholder” means a beneficial owner of the Fund’s common stock that is a U.S. citizen or U.S. resident alien, a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, that was created or organized under the laws of the United States, any state or the District of Columbia, an estate whose income is subject to U.S. federal income taxation regardless of its source, or a trust that either is subject to the supervision of a court within the United States and has one or more U.S. persons with authority to control all of its substantial decisions or has a valid election in effect under applicable Treasury Regulations to be treated as a United States person.
If the shareholders of the Fund approve the Plan, the Fund will sell its assets and distribute the proceeds to the shareholders as provided under the Plan (the “Liquidating Distribution”).
The Fund anticipates that it will retain its qualification for treatment as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), during the liquidation period and will make all required distributions so that the Fund will not be taxed on the Fund’s net gain, if any, realized from the liquidating sale of its assets. In the unlikely event that the Fund should lose its status as a regulated investment company during the liquidation process, the Fund would be treated as a regular corporation for federal income tax purposes during its last taxable year. In this event, the Fund would be subject to federal income taxes on the full amount of its taxable income and gains, which would reduce the Fund’s distributions (including, but not limited to the Liquidating Distribution). In addition, the Fund would be unable to pass through to its shareholders credits against foreign taxes paid.
To the extent necessary, the Fund shall, by the Liquidation Time, have declared a distribution or distributions which, together with all previous such distributions, shall have the effect of distributing to the Fund’s shareholders all of the Fund’s investment company taxable income for the taxable years ending at or prior to the Liquidation Time (computed without regard to any deduction for dividends paid), and all of the Fund’s net capital gain, if any, realized in the taxable years ending at or prior to the Liquidation Time (after reduction for any available capital loss carry-forward) and any additional amounts necessary to avoid any federal income or excise tax for such periods. The Fund’s shareholders
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will be taxed on any such distributions in the same manner as any other distribution of the Fund. Alternatively, the Fund may, if eligible, treat all or a portion of such amounts required to be distributed as a distribution of investment company taxable income or net capital gain on account of the Fund’s final taxable year as having been paid out as a part of the Liquidating Distributions made to the Fund’s shareholders in complete liquidation of the Fund. As described in the next paragraph, any such Liquidating Distributions will be treated for federal income tax purposes as having been received by Fund shareholders as consideration for a sale or exchange of their Fund shares.
A shareholder who receives a Liquidating Distribution will be treated as having received the Liquidating Distribution in exchange for the shareholder’s shares of the Fund and will recognize gain or loss based on the difference between the amount received and the shareholder’s basis in the Fund shares. If a shareholder holds shares as capital assets, the gain or loss will be characterized as a capital gain or loss. If the shares have been held for more than twelve months, any such gain will be treated as long-term capital gain, taxable to individual shareholders at a maximum federal income tax rate of 15%, and any such loss will be treated as long-term capital loss. Capital gain or loss on shares held for twelve months or less will be treated as short-term capital gain or loss, except that any loss realized with respect to shares of the Fund held for six months or less will be treated as long-term capital loss to the extent of any distributions of net capital gain that were previously received on the shares. Capital losses may be subject to limitations on their use by a shareholder.
If a shareholder redeems or exchanges the shareholder’s shares before the Liquidation Time, then such redemption or exchange (whether for cash or in-kind proceeds) will be taxed as described in the prior paragraph for Liquidating Distributions.
A Liquidating Distribution to a shareholder may be subject to backup withholding, unless the shareholder provides a correct taxpayer identification number and certifies that the shareholder is not subject to backup withholding and is a U.S. person. Certain stockholders specified in the Code may be exempt from backup withholding. The current backup withholding rate is 28%. Backup withholding is not an additional tax and is creditable against a taxpayer’s federal income tax liability, provided that the required information is timely furnished to the Internal Revenue Service.
An Individual Retirement Account (an “IRA”) is generally not taxable on investment income and gain from the Fund (assuming that the IRA did not incur debt to finance its investment in the Fund). Accordingly, the receipt by an IRA of a Liquidating Distribution should not be a taxable event for the IRA. However, if the IRA beneficiary receives the Liquidating Distribution (as opposed to the IRA reinvesting the Liquidating Distribution), then the Liquidating Distribution may be taxable to the IRA beneficiary.
Shareholders should consult their tax advisors to determine the federal, state and other income tax consequences of receiving the Liquidating Distribution with respect to their particular tax circumstances.
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Board Approval and Recommendation
At the Board meeting held on July 27, 2012, the Adviser reviewed the Fund’s returns for the year-to-date, one-year and since inception periods ended June 30, 2012 and provided comparative information regarding the Fund against its Lipper Inc. peer group of large cap core funds and a benchmark index for the same time periods as shown in the table below:
| Periods Ended June 30, 2012 | ||||||||||||||
| Total Return | Average Annual Total Return | |||||||||||||
| YTD | 1 Year | Commencement of Operations (9/1/10) | ||||||||||||
Fund (Class Y shares) | 5.21% | (3.25)% | 9.56% | |||||||||||
S&P 500® Index | 9.48% | 5.45% | 17.73% | |||||||||||
Lipper International Large Cap Core Fund Index | 7.95% | 1.89% | 14.74% | |||||||||||
The Adviser noted that the Fund had underperformed since inception. The Adviser noted that given performance issues, the Fund had low prospects for growth and commented on the profitability of the Fund and its willingness to continue to waive advisory fees and/or reimburse expenses so as to maintain the Fund’s expense ratio at a competitive level. Based on these factors, the Adviser recommended to the Board the liquidation and dissolution of the Fund.
The Board, including a majority of the Independent Directors, approved the liquidation and dissolution of the Fund pursuant to the Plan at a meeting held on July 27, 2012. In reaching its decision, the Board considered the Adviser’s recommendation and the variety of factors supporting the Adviser’s recommendation. The Board also considered that the Adviser or an affiliate had agreed to pay all the costs in carrying out the Plan and the expenses of the shareholders’ meeting. Based on all of the information considered, the Board concluded that the approval of the liquidation and dissolution of the Fund is in the best interests of the Fund and its shareholders.
Based on all of the foregoing, the Board recommends that shareholders of the Fund vote FOR the approval of the liquidation and dissolution of the Fund, as described in a plan of liquidation, including an amendment to the Articles of Incorporation of the Corporation to terminate the Fund as a series of the Corporation.
The Board knows of no other matters that may come before the special meeting, other than the proposal as set forth above. If any other matter properly comes before the special meeting, the persons named as proxies will vote on the same in their discretion.
Shares Outstanding. As of the Record Date, shares of the Fund were issued and outstanding and entitled to vote at the special meeting.
Share Ownership Information. As of July 31, 2012, the officers and directors of the Corporation, as a group,[owned less than 1%] of the Fund’s outstanding shares. Unless otherwise noted
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below, as of July 31, 2012, no persons owned of record or are known by the Corporation to own of record or beneficially more than 5% of any class of the Fund’s outstanding shares.
Name and Address | Class of Shares | Number of Shares | Percent of Class | |||
| [Mitra & Co* Marshall & Ilsley Trust Oper 11270 West Park Place Ste 400 Milwaukee WI 53224-3638 | Y | % | ||||
Mitra & Co* Marshall & Ilsley Trust Oper 11270 West Park Place Ste 400 Milwaukee WI 53224-3638] | I | % | ||||
*The Corporation believes that this entity, the holder of record of these shares, is not the beneficial owner of such shares.
The Corporation believes that Marshall & Ilsley Trust Company N.A. (“M&I Trust”), as fiduciary, owned a controlling interest in the Fund as of the Record Date. Shareholders with a controlling interest could affect the outcome at the special meeting.
Proxies. Whether you expect to be personally present at the special meeting or not, we encourage you to vote by proxy. You can do this in one of three ways. You may complete, date, sign and return the accompanying proxy card using the enclosed postage prepaid envelope; you may vote by calling 1-800-690-6903; or you may vote by Internet in accordance with the instructions noted on the enclosed proxy card. Your shares will be voted as you instruct. If no choice is indicated, your shares will be voted FOR the proposal and in the discretion of the persons named as proxies on such other matters that may properly come before the special meeting. Any shareholder giving a proxy may revoke it before it is exercised at the special meeting by submitting to the Secretary of the Corporation a written notice of revocation or a subsequently signed proxy card, or by attending the special meeting and voting in person. A prior proxy can also be revoked through the website or toll-free telephone number listed on the enclosed proxy card. If not so revoked, the shares represented by the proxy will be cast at the special meeting and any adjournments thereof. Attendance by a shareholder at the special meeting does not, in itself, revoke a proxy.
Quorum. A quorum must be present at the meeting for the transaction of business. A quorum occurs if one-third of the Fund’s shares outstanding on the Record Date are present at the meeting in person or by proxy. Abstentions and broker non-votes (i.e., proxies from brokers or nominees indicating that they have not received instructions from the beneficial owners to vote shares as to a matter with respect to which the brokers or nominees do not have discretionary power to vote), if any, will be treated as shares present for purposes of determining the quorum but do not represent votes cast for the proposal. In the event that a quorum is not present at the meeting, or in the event that a quorum is present but sufficient votes to approve the proposal are not received, the persons named as proxies may propose one or more adjournments of the meeting to a later date to permit further solicitation of votes. Any such adjournment will require the affirmative vote of a majority of shares voting on the adjournment. When voting on a proposed adjournment, the persons named as proxies will vote all proxies that they are entitled to vote FOR approval of the proposal in favor of adjournment and will vote all proxies required to be voted AGAINST the proposal against adjournment.
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Required Vote. In order for the proposal to be approved, the votes cast in favor of the proposal must exceed the votes cast against the proposal. Abstentions and broker non-votes will have no effect on the vote. Shares of both classes of the Fund will vote together as a single class. A vote in favor of the proposal is a vote in favor of the plan of liquidation and in favor of an amendment to the Corporation’s Articles of Incorporation to terminate the Fund as a series of the Corporation.
Method and Cost of Proxy Solicitation. Proxies will be solicited by the Corporation primarily by mail. The solicitation may also include telephone, facsimile, Internet or oral communication by certain officers or employees of the Corporation, the Adviser or Boston Financial Data Services, Inc. (the Fund’s transfer agent) who will not be paid for these services. Any telephonic solicitations will follow procedures designed to ensure accuracy and prevent fraud, including requiring identifying shareholder information and recording the shareholder’s instruction. The Adviser or an affiliate will bear the costs of the special meeting, including legal costs, printing and mailing costs and the costs of the solicitation of proxies. The Adviser or an affiliate will also reimburse brokers and other nominees for their reasonable expenses in communicating with persons for whom they hold shares of the Fund.
Householding. The SEC has adopted rules that permit investment companies, such as the Corporation, to satisfy delivery requirements for proxy statements with respect to two or more shareholders sharing the same address by delivering a single proxy statement addressed to those shareholders. This process, which is commonly referred to as “householding,” could result in extra convenience and cost savings for the Fund and its shareholders. If you participate in householding and unless the Fund has received contrary instructions, only one copy of this Proxy Statement will be mailed to two or more shareholders who share an address. If you need additional copies, do not want your mailings to be householded or would like your mailings householded in the future, please call 1-800-236-FUND or write to us at 111 East Kilbourn Avenue, Suite 200, Milwaukee, Wisconsin 53202. Copies of this Proxy Statement will be delivered to you promptly upon oral or written request.
Copies of the Fund’s most recent annual and semi-annual reports are available without charge upon request to the Fund at 111 East Kilbourn Avenue, Suite 200, Milwaukee, Wisconsin 53202, on the Fund’s website at www.bmofundsus.com, by email at or by calling BMO Investor Services, toll-free, at 1-800-236-FUND.
BMO Asset Management Corp., 115 South LaSalle Street, Chicago, Illinois 60603 serves as investment adviser and administrator to the Fund. Marshall & Ilsley Trust Company N.A., 111 East Kilbourn Avenue, Suite 200, Milwaukee, Wisconsin 53202, an affiliate of the Adviser, serves as custodian for the Fund. UMB Fund Services, Inc., 803 West Michigan Street, Milwaukee, Wisconsin 53233, serves as sub-administrator and portfolio accounting services agent for the Fund. M&I Distributors, LLC, 111 East Kilbourn Avenue, Suite 200, Milwaukee, Wisconsin 53202, an affiliate of the Adviser, serves as the distributor to the Fund. The Fund’s transfer agent and dividend disbursing agent is Boston Financial Data Services, Inc., 2000 Crown Colony Drive, Quincy, Massachusetts 02171. The Adviser also acts as the shareholder servicing agent to the Fund. Legal counsel to the Fund is Stradley Ronon Stevens & Young LLP, 2005 Market Street Philadelphia, Pennsylvania 19103. The independent registered public accounting firm to the Fund is KPMG LLP, 777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202.
FUTURE MEETINGS; SHAREHOLDER PROPOSALS
The Corporation is generally not required to hold annual meetings of shareholders and the Corporation generally does not hold a meeting of shareholders in any year unless certain specified
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shareholder actions such as election of directors or approval of a new advisory agreement are required to be taken under the 1940 Act or the Corporation’s Articles of Incorporation and By-Laws. By observing this policy, the Corporation seeks to avoid the expenses customarily incurred in the preparation of proxy material and the holding of shareholder meetings.
A shareholder desiring to submit a proposal intended to be presented at any meeting of shareholders of the Corporation hereafter called should send the proposal to the Secretary of the Corporation at the Corporation’s principal offices within a reasonable time before the solicitation of the proxies for such meeting. Shareholders who wish to recommend a nominee for election to the Board may do so by submitting the appropriate information about the candidate to the Corporation’s Secretary. The mere submission of a proposal by a shareholder does not guarantee that such proposal will be included in the Proxy Statement because certain rules under the federal securities laws must be complied with before inclusion of the proposal is required. Also, the submission does not mean that the proposal will be presented at the meeting. For a shareholder proposal to be considered at a shareholder meeting, it must be a proper matter for consideration under Wisconsin law.
By Order of the Board of Directors,
Linda S. VanDenburgh
Secretary
Milwaukee, Wisconsin
August , 2012
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PLAN OF LIQUIDATION
MARSHALL FUNDS, INC.
d/b/a BMO FUNDS
PLAN OF LIQUIDATION OF BMO LARGE-CAP FOCUS FUND
This Plan of Liquidation (the “Plan”) of BMO Large-Cap Focus Fund (the “Fund”), a series of Marshall Funds, Inc. d/b/a BMO Funds (the “Corporation”), a corporation organized and existing under the laws of the State of Wisconsin and an open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”), is intended to accomplish the complete liquidation of the Fund in conformity with the laws of the State of Wisconsin.
WHEREAS, on July 27, 2012, the Corporation’s Board of Directors (the “Board”) determined that it is in the best interest of the Fund and its shareholders that the Fund be liquidated and terminated as a series of the Corporation, subject to approval by the shareholders of the Fund in accordance with the Wisconsin Business Corporation Law (“WBCL”);
WHEREAS, the adoption of this Plan is intended to constitute the adoption of a plan of liquidation within the meaning of Section 331 or Section 332, as applicable, of the Internal Revenue Code of 1986, as amended; and
WHEREAS, the Board has considered and approved this Plan as the method of liquidating the Fund.
NOW, THEREFORE, the liquidation of the Fund shall be carried out in the manner hereinafter set forth:
| 1. | Effective Date of Plan. The Plan shall become effective upon the approval of the Plan at a meeting of shareholders called for the purpose of voting upon the Plan. In accordance with Sections 180.1003(3)(b) and 180.0725(3) of the WBCL, the Plan shall be approved if the votes cast in favor of the Plan exceed the votes cast against the Plan. The day of such approval is hereinafter called the “Effective Date.” |
| 2. | Cessation of Business. As of the close of trading on the New York Stock Exchange on August 29, 2012 (the “Liquidation Time”), the Fund shall cease its business as a series fund of a registered investment company and shall not engage in any business activities except for the purposes of winding up its business affairs, selling or disposing of its assets, discharging or making reasonable provision for the payment of all of the Fund’s liabilities as provided for in Section 4 below, and distributing its remaining assets of each class ratably among the shareholders of the outstanding shares of that class, in accordance with this Plan. |
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| 3. | Fixing of Interests and Closing of Books. The proportionate interests of the shareholders in the assets of the Fund shall be fixed on the basis of their respective holdings at the Liquidation Time. At the Liquidation Time, the books of the Fund shall be closed. |
| 4. | Liquidation of Fund Assets and Payment of Debts. As soon as is reasonable and practicable after the Effective Date, any remaining portfolio securities of the Fund shall be converted to cash or cash equivalents. As soon as practicable after the Effective Date, the Corporation shall pay, or make reasonable provision to pay, in full all known or reasonably ascertainable liabilities of the Fund incurred or expected to be incurred prior to the date of the final liquidating distribution provided for in Section 5 below. |
| 5. | Liquidating Distributions. As soon as is reasonable and practicable after the Liquidation Time, the Corporation shall mail to each shareholder of record at the Liquidation Time: (a) one or more liquidating distributions equal in the aggregate to the shareholder’s proportionate interest in the excess of the assets of the Fund over the liabilities of the Fund as of the Liquidation Time; and (b) information concerning the sources of each liquidating distribution. Any accrued income or gains will be distributed as part of the liquidating distribution. Upon the mailing of the final liquidating distribution, all outstanding shares of the Fund will be deemed redeemed and canceled. In the event that the Fund receives assets following the date of its termination (e.g., through the payment of settlement proceeds), BMO Asset Management Corp. (“BMO AM”), the investment adviser to the Fund, agrees to use commercially reasonable efforts to ensure that such assets are distributed to each shareholder of record as of the Liquidation Time in an amount equal to the shareholder’s proportionate interest in the Fund as of the Liquidation Time. If the Corporation is unable to make distributions to all of the Fund’s shareholders because of an inability to locate shareholders to whom distributions are payable, the Board may create, in the name and on behalf of the Corporation, an account with a financial institution and, subject to applicable abandoned property laws, deposit any of the Fund’s remaining assets in the account for the benefit of the shareholders that cannot be located. The expenses of the account, if any, shall be charged against the assets therein. |
| 6. | Satisfaction of Federal Income and Excise Tax Distribution Requirements. If necessary, the Corporation shall have, by the Liquidation Time, declared and paid a distribution or distributions which, together with all previous such distributions, shall have the effect of distributing to the Fund’s shareholders all of the Fund’s investment company taxable income for the taxable years ending at or prior to the Liquidation Time (computed without regard to any deduction for dividends paid), and all of the Fund’s net capital gain, if any, realized in the taxable years ending at or prior to the Liquidation Time (after reduction for any available capital loss carry-forward) and any additional amounts necessary to avoid any federal income or excise tax for such periods. Alternatively, the Fund may, if eligible, treat all or any portion of the amounts to be distributed pursuant to this Section 6 as having been paid out as part of the liquidating distributions made to Fund shareholders pursuant to Section 5. |
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| 7. | Expenses of the Liquidation of the Fund. BMO AM, the investment adviser to the Fund, or an affiliate shall bear all of the costs incurred in carrying out this Plan. In addition, no reserve shall be established by the Fund to discharge any contingent or unforeseen liabilities or obligations of the Fund that might remain after the date of the final liquidating distribution, it being understood that any such liabilities or obligations shall be the responsibility of BMO AM. |
| 8. | Articles of Amendment. The officers of the Corporation shall file an amendment to the Corporation’s Articles of Incorporation to terminate the Fund as a series of the Corporation under Wisconsin law. |
| 9. | Power of Directors. In addition to the general power of the directors of the Corporation under Wisconsin law, the Board, and subject to the discretion of the Board, the officers of the Corporation, shall have authority to do or authorize any or all acts and things as they may consider necessary or desirable to carry out the purposes of the Plan, including, without limitation, the execution and filing of all certificates, documents, information returns, tax returns, forms and other papers which may be necessary or appropriate to implement the Plan or which may be required by the provisions of Wisconsin law, the 1940 Act or the Securities Act of 1933, as amended, or the Internal Revenue Code of 1986, as amended. The Board shall have the authority to authorize such variations from, or amendments of, the provisions of the Plan (other than the terms governing liquidating distributions) as may be necessary or appropriate to effect the liquidation of the Fund and the distribution of its net assets to shareholders in accordance with the purposes to be accomplished by the Plan. |
Accepted and agreed as to Sections 5 and 7:
| BMO Asset Management Corp. | ||
| By: | ||
Name: Barry McInerney Title: Chief Executive Officer | ||
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