MARSHALL FUNDS, INC.
- --------------------------------------------------------------------------------
SUPPLEMENT TO COMBINED PROSPECTUS DATED DECEMBER 31, 1995
The following information is a supplement to your combined prospectus.
We're providing it to advise you of a change in the shareholder servicing
agent and the shareholder servicing fee for all of the Marshall Funds
(except for the MONEY MARKET FUND, for which there are no changes). These
changes will be implemented on or about September 3, 1996.
I. Please replace the Summary of Fund Expenses table on page 5 with the
following Summary of Fund Expenses table:
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY VALUE
INCOME EQUITY STOCK
FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES.None.. None None None
Annual Fund Operating Expenses
(As a percentage of average net
assets)
Management Fee (after waiver)
(1)............................... 0.66% 0.75% 0.74%
12b-1 Fees (2)..................... None None None
Total Other Expenses............... 0.58% 0.44% 0.47%
Shareholder Servicing Fee (after
waiver) (4)..................... 0.25% 0.25% 0.25% 0.25%
----- ----- -----
Total Annual Fund Operating
Expenses (5).............. 1.24% 1.19% 1.21%
<CAPTION>
INTERMEDIATE GOVERNMENT SHORT-TERM
BOND INCOME TAX-FREE
FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES... None None None None
Annual Fund Operating Expenses
(As a percentage of average net
assets)
Management Fee (after waiver)
(1)............................... 0.52% 0.49% 0.03%
12b-1 Fees......................... None None None
Total Other Expenses (after waiver
and expense reimbursement) (3).... 0.19% 0.37% 0.48%
Shareholder Servicing Fee (after
waiver) (4)..................... 0.02% 0.02% 0.02% 0.02%
----- ----- -----
Total Annual Fund Operating
Expenses (5).............. 0.71% 0.86% 0.51%
<CAPTION>
MID-CAP INTERNATIONAL SHORT-TERM
STOCK STOCK INCOME
FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES... None None None
Annual Fund Operating Expenses
(As a percentage of average net
assets)
Management Fee (after waiver)
(1)............................... 0.67% 0.96% 0.20%
12b-1 Fees (2)..................... None 0.00% None
Total Other Expenses............... 0.57% 0.81% 0.31%
Shareholder Servicing Fee (after
waiver) (4)..................... 0.25% 0.02%
----- ----- -----
Total Annual Fund Operating
Expenses (5).............. 1.24% 1.77% 0.51%
<CAPTION>
INTERMEDIATE MONEY MARKET FUND
TAX-FREE CLASS A CLASS B
FUND SHARES SHARES
<S> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES... None None None
Annual Fund Operating Expenses
(As a percentage of average net
assets)
Management Fee (after waiver)
(1)............................... 0.17% 0.24% 0.24%
12b-1 Fees......................... None None 0.30%
Total Other Expenses (after waiver
and expense reimbursement) (3).... 0.44% 0.17% 0.17%
Shareholder Servicing Fee (after
waiver) (4)..................... 0.02% 0.02%
----- ----- -----
Total Annual Fund Operating
Expenses (5).............. 0.61% 0.41% 0.71%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver by the
investment adviser for all of the Funds except the Value Equity Fund. The
adviser may terminate this voluntary waiver at any time at its sole
discretion. The maximum management fee is 0.75% for the Stock Fund, Equity
Income Fund, Mid-Cap Stock Fund and Government Income Fund; 1.00% for the
International Stock Fund; 0.60% for the Short-Term Income Fund, Intermediate
Bond Fund and Intermediate Tax-Free Fund; and 0.50% for the Short-Term
Tax-Free Fund and Money Market Fund--Class A and Class B Shares.
(2) The International Stock Fund has no present intention of paying or accruing
12b-1 fees during the fiscal year ending August 31, 1996. If the
International Stock Fund were paying or accruing 12b-1 fees, the
International Stock Fund would be able to pay up to 0.25% of its average
daily net assets for 12b-1 fees. See "Marshall Funds, Inc. Information."
(3) Total Other Expenses were 0.79% for the Short-Term Tax-Free Fund absent the
voluntary expense reimbursement by the adviser and the voluntary waiver by
the administrator and 0.47% for the Intermediate Tax-Free Fund absent the
voluntary waiver by the administrator. The administrator and adviser may
terminate this waiver and reimbursement at any time at their sole
discretion.
(4) The Shareholder Servicing Fee for Short-Term Income Fund, Intermediate Bond
Fund, Government Income Fund, Short-Term Tax-Free Fund and Intermediate Bond
Fund has been reduced to reflect a voluntary waiver by the shareholder
servicing agent. The shareholder servicing agent may terminate this waiver
at any time at its sole discretion. The maximum Shareholder Servicing Fee is
0.25% for all funds except Money Market Fund--Class A and Class B, which has
a 0.02% maximum for each class.
(5) Total Fund Operating Expenses are expected to be 0.98% for the Equity Income
Fund, 0.97% for the Stock Fund, 1.01% for the Mid-Cap Stock Fund, 1.34% for
the International Stock Fund, 0.51% for the Short-Term Income Fund, 0.72%
for the Intermediate Bond Fund, 0.86% for the Government Income Fund, 0.51%
for the Short-Term Tax-Free Fund, 0.61% for the Intermediate Tax-Free Fund,
0.41% for the Money Market Fund--Class A Shares and 0.71% for the Money
Market Fund--Class B Shares for the fiscal year ending August 31, 1996. The
expenses in the table above reflect a change in the shareholder servicing
fee effective on or about September 3, 1996. Total Fund
Operating expenses are expected to be 1.33% for the Equity Income Fund,
1.22% for the Stock Fund, 1.32% for the Mid-Cap Stock Fund, 1.81% for the
International Stock Fund, 1.14% for the Short-Term Income Fund, 1.02% for
the Intermediate Bond Fund, 1.35% for the Government Income Fund, 1.52% for
the Short-Term Tax-Free Fund, 1.30% for the Intermediate Tax-Free Fund,
0.67% for the Money Market Fund--Class A Shares, and 0.97% for the Money
Market Fund--Class B Shares for the fiscal year ending August 31, 1997,
absent the voluntary waivers described in Notes 1, 3 and 4.
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of the Funds 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.
Long-term shareholders invested in the Money Market Fund--Class B Shares may
pay more than the economic equivalent of the maximum front-end sales charges
permitted under the rules of the National Association of Securities Dealers,
Inc. ("NASD"). However, in order for a Class B Shareholder to exceed the
NASD's maximum front-end sales charge of 6.25%, a continuous investment in
the Class B Shares for 89.3 years would be required.
EXAMPLE
You would pay the following expenses on a $1,000 Investment assuming (1) 5%
annual return and (2) redemption at the end of each time period. The Funds
charge no redemption fees.
<TABLE>
<CAPTION>
INTER- SHORT-
EQUITY VALUE MID-CAP NATIONAL TERM
INCOME EQUITY STOCK STOCK STOCK INCOME
FUND FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C>
1 Year................................... $ 13 $ 12 $ 12 $ 13 $ 18 $ 5
3 Years.................................. $ 40 $ 38 $ 39 $ 40 $ 56 $ 16
5 Years.................................. $ 68 $ 66 $ 67 $ 68 $ 97 $ 29
10 Years................................. $ 151 $ 145 $ 147 $ 151 $ 210 $ 64
<CAPTION>
SHORT-
INTERMEDIATE GOVERNMENT TERM INTERMEDIATE MONEY MARKET FUND
BOND INCOME TAX-FREE TAX-FREE CLASS A CLASS B
FUND FUND FUND FUND SHARES SHARES
<S> <C> <C> <C> <C> <C> <C>
1 Year................................... $ 7 $ 9 $ 5 $ 6 $ 4 $ 7
3 Years.................................. $ 23 $ 28 $ 16 $ 20 $ 13 $ 23
5 Years.................................. $ 40 $ 48 $ 29 $ 34 $ 23 $ 40
10 Years................................. $ 88 $ 106 $ 64 $ 76 $ 52 $ 88
</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.
II. On or about September 3, 1996, Federated Shareholder Services Company will
replace Marshall Funds Investor Services as shareholder servicing agent to
all of the Marshall Funds, except for the MONEY MARKET FUND. In connection
with this change, please replace the paragraph entitled "Shareholder
Servicing Arrangements" under the section "Administration of the Funds" on
page 19 with the following:
"SHAREHOLDER SERVICING ARRANGEMENTS. Federated Shareholder Services Company
("FSSC") has been appointed shareholder servicing agent for the EQUITY
FUNDS and the INCOME FUNDS. As such, FSSC provides shareholder services
which include, but are not limited to, distributing prospectuses and other
information, providing shareholder assistance, and communicating or
facilitating purchases and redemptions of shares. The EQUITY FUNDS and the
INCOME FUNDS may pay FSSC a fee equal to approximately 0.25 of 1% of the
average daily net asset value of Fund shares for which FSSC provides
shareholder services. FSSC may hire third parties, including Marshall Funds
Investor Services, Milwaukee, Wisconsin, a division of M&I Trust Company
("MFIS"), to provide shareholder services to the EQUITY FUNDS and the
INCOME FUNDS.
MFIS is the shareholder servicing agent for the MONEY MARKET FUND. As such,
MFIS provides shareholder services which include, but are not limited to,
distributing prospectuses and other information, providing shareholder
assistance, and communicating or facilitating purchases and redemptions of
shares. The MONEY MARKET FUND may pay MFIS a fee equal to approximately
0.02 of 1% of the average daily net asset value of Fund shares for which
MFIS provides shareholder services. MFIS may voluntarily choose to waive
all or a portion of its fee at any time."
August 2, 1996
G01010-06 (8/96)
