[MARSHALL FUNDS LOGO]
Class Y Shares
Supplement to Prospectus dated December 31, 1998
- ------------------------------------------------------------------------------
1. Effective January 25, 1999, the GOVERNMENT INCOME FUND is managed by Joseph
M. Cullen. Mr. Cullen joined the Adviser in January 1999 and has managed the
Fund since that time. He was formerly a portfolio manager at Lincoln Investment
Management, Inc. from 1997 to 1998, and was a portfolio analyst from 1991 to
1994. From 1994 to 1997 he was a fixed income portfolio manager at The Boston
Company Asset Management, Inc. Mr. Cullen, who is a Chartered Financial Analyst,
received B.A. in Economics with a Minor in Mathematics from Ripon College, and a
M.B.A. in Finance from Carnegie Mellon University.
2. The Bar Charts and Average Annual Total Return tables below, update the
charts and tables on pages 3 through 8 in the Prospectus by including the
performance results of each Fund through December 31, 1998:
Marshall Equity Income Fund
Annual Total Return (calendar years 1994-1998)
[Annual Total Return Graphic]
Total Return
<TABLE>
<S> <C> <C>
Best quarter (4Q98) 11.67%
Worst quarter (3Q98) (7.75%)
</TABLE>
Average Annual Total Return through 12/31/98*
<TABLE>
<CAPTION>
Since 9/30/93
inception 1 Year 5 Year
<S> <C> <C> <C>
Fund 16.93% 10.48% 17.65%
S&P500 23.32% 28.58% 24.06%
LEIFI 16.03% 11.78% 16.62%
- ---------------------------------------------------------------------
</TABLE>
Marshall Large-Cap Growth & Income Fund
Annual Total Return (calendar years 1993-1998)
[Annual Total Return Graphic]
Total Return
<TABLE>
<S> <C> <C>
Best quarter (4Q98) 22.67%
Worst quarter (3Q98) (10.08%)
</TABLE>
Average Annual Total Return through 12/31/98*
<TABLE>
<CAPTION>
Since 11/20/92
inception 1 Year 5 Year
<S> <C> <C> <C>
Fund 15.43% 26.18% 18.04%
S&P500 21.65% 28.58% 24.06%
LGIFI 17.33% 13.58% 17.83%
- ---------------------------------------------------------------------
</TABLE>
*The table shows each Fund's average annual total returns compared to a broad-
based market index over a period of time. In addition, the performance of Equity
Income Fund is compared to the Lipper Equity Income Funds Index (LEIFI), and the
performance of Large-Cap Growth & Income Fund is compared to the Lipper Growth
&Income Funds Index (LGIFI), which are indices of funds with similar investment
objectives.
As with all mutual funds, past performance does not necessarily predict future
performance.
Marshall Mid-Cap Value Fund
Annual Total Return (calendar years 1994-1998)
[Annual Total Return Graphic]
Total Return
<TABLE>
<S> <C> <C>
Best quarter (4Q98) 12.36%
Worst quarter (3Q98) (13.20%)
</TABLE>
Average Annual Total Return through 12/31/98*
<TABLE>
<CAPTION>
Since 9/30/93
inception 1 Year 5 Year
<S> <C> <C> <C>
Fund 13.37% 5.15% 13.59%
SPMC 18.45% 19.09% 18.84%
LMCFI 14.89% 13.92% 15.20%
- ---------------------------------------------------------------------
</TABLE>
Marshall Mid-Cap Growth Fund
Annual Total Return (calendar years 1994-1998)
[Annual Total Return Graphic]
Total Return
<TABLE>
<S> <C> <C>
Best quarter (4Q98) 30.61%
Worst quarter (3Q98) (22.90%)
</TABLE>
Average Annual Total Return through 12/31/98*
<TABLE>
<CAPTION>
Since 9/30/93
inception 1 Year 5 Year
<S> <C> <C> <C>
Fund 16.17% 15.72% 16.67%
SPMC 18.45% 19.09% 18.84%
LMCFI 14.89% 13.92% 15.20%
- ---------------------------------------------------------------------
</TABLE>
Marshall Small-Cap Growth Fund/1/
Annual Total Return (calendar years 1996-1998)
[Annual Total Return Graphic]
Total Return
<TABLE>
<S> <C> <C>
Best quarter (4Q98) 30.28%
Worst quarter (3Q98) (27.56%)
</TABLE>
Average Annual Total Return through 12/31/98**
<TABLE>
<CAPTION>
Since 11/1/95
inception 1 Year
<S> <C> <C>
Fund 29.65% 3.41%
Russell 2000 11.65% (2.78%)
LSCFI 10.30% (0.85%)
- ---------------------------------------------------------------------
</TABLE>
Marshall International Stock Fund
Annual Total Return (calendar years 1995-1998)
[Annual Total Return Graphic]
Total Return
<TABLE>
<S> <C> <C>
Best quarter (4Q98) 16.30%
Worst quarter (3Q98) (19.06%)
</TABLE>
Average Annual Total Return through 12/31/98***
<TABLE>
<CAPTION>
Since 9/1/94
inception 1 Year
<S> <C> <C>
Fund 8.65% 3.26%
EAFE Index 6.09% 18.23%
LIFI 8.41% 12.66%
- ---------------------------------------------------------------------
</TABLE>
*The table shows the Mid-Cap Value Fund and Mid-Cap Growth Fund's average annual
total returns over a period of time. In addition, the performance of the Funds
are compared to the Lipper Mid-Cap Funds Index (LMCFI), which is an index of
funds with similar investment objectives.
**The table shows Small-Cap Growth Fund's average annual total returns over a
period of time relative to the Russell 2000, a broad-based market index and the
Lipper Small Cap Funds Index (LSCFI), which are indices of funds with similar
investment objectives.
***The table shows the Fund's average annual total returns over a period of
time. In addition, the performance of International Stock Fund relative to the
Morgan Stanley Capital Europe, Australia, Far East Index (EAFE Index), and the
Lipper International Funds Index (LIFI), which are indices of funds with similar
investment objectives.
As with all mutual funds, past performance does not necessarily predict
future performance.
/1/ The SMALL-CAP GROWTH FUND is the successor to the portfolio of a collective
trust fund managed by the Adviser. At the Fund's commencement of operations, the
assets from the collective trust fund were transferred to the Fund in exchange
for Fund shares. The Fund's average annual total return since inception
(11/1/95) is 29.65% through 12/31/98. The quoted performance data includes the
performance of the collective trust fund for periods before the SMALL-CAP GROWTH
FUND'S registration statement became effective on August 30, 1996, as adjusted
to reflect the SMALL-CAP GROWTH FUND'S expenses. The collective trust fund was
not registered under the Investment Company Act of 1940 ("1940 Act") and
therefore was not subject to certain investment restrictions that are imposed by
the 1940 Act. If the collective trust fund had been registered under the 1940
Act, the performance may have been adversely affected.
Marshall Short-Term Income Fund
Annual Total Return (calendar years 1993-1998)
[Annual Total Return Graphic]
Total Return
<TABLE>
<S> <C> <C>
Best quarter (2Q95) 2.48%
Worst quarter (1Q94) 0.17%
</TABLE>
Average Annual Total Return through 12/31/98/1/
<TABLE>
<CAPTION>
Since 11/1/92
inception 1 Year 5 Year
<S> <C> <C> <C>
Fund 5.05% 4.91% 5.39%
LSTIBI 5.43% 5.73% 5.43%
DMFA 4.45% 5.04% 4.86%
- ---------------------------------------------------------------------
</TABLE>
Marshall Intermediate Bond Fund
Annual Total Return (calendar years 1993-1998)
[Annual Total Return Graphic]
Total Return
<TABLE>
<S> <C> <C>
Best quarter (2Q95) 4.68%
Worst quarter (1Q96) (2.03%)
</TABLE>
Average Annual Total Return through 12/31/98/2/
<TABLE>
<CAPTION>
Since 11/23/92
inception 1 Year 5 Year
<S> <C> <C> <C>
Fund 5.78% 6.33% 5.49%
LGCI 7.10% 8.44% 6.66%
LSIBF 6.23% 6.99% 5.96%
- ---------------------------------------------------------------------
</TABLE>
Marshall Intermediate Tax-Free Fund
Annual Total Return (calendar years 1995-1998)
[Annual Total Return Graphic]
Total Return
<TABLE>
<S> <C> <C>
Best quarter (1Q95) 4.31%
Worst quarter (1Q96) (0.63%)
</TABLE>
Average Annual Total Return through 12/31/98/3/
<TABLE>
<CAPTION>
Since 2/2/94
inception 1 Year
<S> <C> <C>
Fund 5.04% 5.65%
LB7GOBI 5.69% 6.36%
LIMI 5.00% 5.59%
- ---------------------------------------------------------------------
</TABLE>
Marshall Government Income Fund
Annual Total Return (calendar years 1993-1998)
[Annual Total Return Graphic]
Total Return
<TABLE>
<S> <C> <C>
Best quarter (2Q95) 4.92%
Worst quarter (1Q94) (2.13%)
</TABLE>
Average Annual Total Return through 12/31/98/4/
<TABLE>
<CAPTION>
Since 12/13/92
inception 1 Year 5 Year
<S> <C> <C> <C>
Fund 6.24% 6.51% 6.24%
LMI 7.29% 6.95% 7.23%
LUSMI 6.17% 6.13% 5.70%
- ---------------------------------------------------------------------
</TABLE>
/1/ The table shows the Short-Term Income Fund's average annual total returns
over a period of time relative to the Lipper S-T Investment Grade Bond Index
(LSTIBI), a broad-based market index, and IBC/Donoghue's Taxable Money Fund
Average (DMFA), an average of money funds.
/2/ The table shows the Intermediate Bond Fund's total returns averaged over a
period of time relative to the Lehman Brothers Government/Corporate
Intermediate Index (LGCI), a broad-based market index and the Lipper
Short/Intermediate Investment Grade Bond Funds Index (LSIBF), an average of
funds with similar investment objectives.
/3/ The table shows the Intermediate Tax-Free Fund's average annual total
returns over a period of years relative to the Lehman Brothers 7-Year G.O. Bond
Index (LB7GOBI), a broad-based market index and the Lipper Intermediate
Municipal Funds Index (LIMI), an average of funds with similar investment
objectives.
/4/ The table shows the Government Income Fund's average annual total returns
over a period of years relative to the Lehman Brothers Mortgage-Backed
Securities Index (LMI), a broad-based market index and the Lipper U.S. Mortgage
Funds Index (LUSMI), an average of funds with similar investment objectives.
As with all mutual funds, past performance does not necessarily predict future
performance.
Marshall Money Market Fund
Annual Total Return (calendar years 1993-1998)
[Annual Total Return Graphic]
Total Return
<TABLE>
<S> <C> <C> <C>
Best quarter (2Q95) 1.45%
Worst quarter (2Q93) 0.72%
7-Day Net Yield
7-Day Net Yield (as of 12/31/98)* 5.03%
</TABLE>
Average Annual Total Return through 12/31/98**
<TABLE>
<CAPTION>
Since 11/23/92
inception 1 Year 5 Year
<S> <C> <C> <C>
Fund 4.80% 5.42% 5.19%
DMFA 4.48% 5.04% 4.86%
- ---------------------------------------------------------------------
</TABLE>
*Investors may call the Fund to acquire the current 7-Day Net Yield at
1-800-236-FUND(3863).
**The table shows the Fund's average total returns over a period of years
relative to the IBC/Donoghue's Money Fund Average (DMFA), an average of money
funds.
January 31, 1999
Marshall Funds Investor Services
1000 North Water Street
P.O. Box 1348
Milwaukee, WI 53201-1348
412-287-8555 or 800-236-FUND (3863)
http://www.marshallfunds.com
G01010-15 (1/99)
Federated Securities Corp., Distributor
Sec File No. 811-7047 SRI 505178
APPENDIX A
1. The graphic presentation displayed here consists of a bar chart
representing the annual total returns of Marshall Equity Income Fund (Fund) as
of the calendar year-end for each of five years.
The `y' axis reflects the "% Total Return" beginning with "-5.00%" and
increasing in increments of 5.00% up to 35.00%.
The `x' axis represents calculation periods from the earliest calendar year
end of the Fund's start of business through the calendar year ended December 31,
1998. The light gray shaded chart features five distinct vertical bars, each
shaded in charcoal, and each visually representing by height the total return
percentages for the calendar year stated directly at its base. The calculated
total return percentage for the Fund which appear directly above each respective
bar, for the calendar years 1994 through 1998, are -1.63%, 34.22%, 21.18%,
27.53% and 10.48%.
The total returns displayed for the Fund do not reflect the payment of any
sales charges or recurring shareholder account fees. If these charges or fees
had been included, the returns shown would have been lower.
Within the period shown in the Chart, the Fund's highest quarterly return
for the quarter ended 4Q98, was 11.67%. Its lowest quarterly return for the
quarter ended 3Q98, was (7.75%).
Average Annual Total Return for the Fund compared to Standard & Poor's 500
Index (S&P 500) and Lipper Equity Income Funds Index
(LEIFI) through December 31, 1998.
Calendar Period Fund S&P 500 LEIFI
- --------------- ---- ------- -----
Life of the Fund* 16.93% 23.25% 16.03%
1 Year 10.48% 28.15% 11.78%
5 year 17.65% 23.98% 16.62%
* Since inception date of September 30, 1993.
The bar chart shows the variability of the Fund's actual total return on a
yearly basis. The table shows the Fund's total returns averaged over a period of
years relative to S&P 500, a broad-based market index and LEIFI, an average of
funds with similar investment objectives . While past performance does not
necessarily predict future performance, this information provides you with
historical performance information so that you can analyze whether the Fund's
investment risks are balanced by its potential rewards.
<PAGE>
2. The graphic presentation displayed here consists of a bar chart
representing the annual total returns of Marshall Large-Cap Growth & Income Fund
(Fund) as of the calendar year-end for each of six years.
The `y' axis reflects the "% Total Return" beginning with "-10.00%" and
increasing in increments of 5.00% up to 35.00%.
The `x' axis represents calculation periods from the earliest calendar year
end of the Fund's start of business through the calendar year ended December 31,
1998. The light gray shaded chart features six distinct vertical bars, each
shaded in charcoal, and each visually representing by height the total return
percentages for the calendar year stated directly at its base. The calculated
total return percentage for the Fund which appear directly above each respective
bar, for the calendar years 1993 through 1998, are 3.35%, -5.79%, 33.20%,
14.66%, 26.24% and 26.18%.
The total returns displayed for the Fund do not reflect the payment of any
sales charges or recurring shareholder account fees. If these charges or fees
had been included, the returns shown would have been lower.
Within the period shown in the Chart, the Fund's highest quarterly return
for the quarter ended 4Q98, was 22.67%. Its lowest quarterly return for the
quarter ended 3Q98, was (10.08%).
Average Annual Total Return for the Fund compared to Standard & Poor's 500
Index (S&P 500) and Lipper Growth & Income Funds Index (LGIFI) through December
31, 1998.
Calendar Period Fund S&P 500 LGIFI
- --------------- ---- ------- -----
Life of the Fund* 15.43% 23.25% 17.33%
5 Year 18.04% 23.98% 17.83%
1 Year 26.18% 28.15% 13.58%
* Since inception date of November 20, 1992.
The bar chart shows the variability of the Fund's actual total return on a
yearly basis. The table shows the Fund's total returns averaged over a period of
years relative to S&P 500, a broad-based market index and LGIFI, an average of
funds with similar investment objectives. While past performance does not
necessarily predict future performance, this information provides you with
historical performance information so that you can analyze whether the Fund's
investment risks are balanced by its potential rewards.
<PAGE>
3. The graphic presentation displayed here consists of a bar chart
representing the annual total returns of Marshall Mid-Cap Value Fund (Fund) as
of the calendar year-end for each of five years.
The `y' axis reflects the "% Total Return" beginning with "0.00%" and
increasing in increments of 5.00% up to 30.00%.
The `x' axis represents calculation periods from the earliest calendar year
end of the Fund's start of business through the calendar year ended December 31,
1998. The light gray shaded chart features five distinct vertical bars, each
shaded in charcoal, and each visually representing by height the total return
percentages for the calendar year stated directly at its base. The calculated
total return percentage for the Fund which appear directly above each respective
bar, for the calendar years 1994 through 1998, are 2.08%, 25.39%, 13.91%, 23.38%
and 5.15%.
The total returns displayed for the Fund do not reflect the payment of any
sales charges or recurring shareholder account fees. If these charges or fees
had been included, the returns shown would have been lower.
Within the period shown in the Chart, the Fund's highest quarterly return
for the quarter ended 4Q98, was 12.36%. Its lowest quarterly return for the
quarter ended 3Q98, was (13.20%).
Average Annual Total Return for the Fund compared to Standard & Poor's
Mid-Cap 400 Index (SPMC) and Lipper Mid-Cap Funds Index (LMCFI) through December
31, 1998.
Calendar Period Fund SPMC LMCFI
- --------------- ---- --------- -----
Life of the Fund* 13.37% 18.38% 14.89%
1 Year 5.15% 18.72% 13.92%
5 Year 13.59% 18.76% 15.20%
* Since inception date of September 30, 1993.
The bar chart shows the variability of the Fund's actual total return on a
yearly basis. The table shows the Fund's total returns averaged over a period of
years relative to SPMC, a broad-based market index and LMCFI, an average of
funds with similar investment objectives. While past performance does not
necessarily predict future performance, this information provides you with
historical performance information so that you can analyze whether the Fund's
investment risks are balanced by its potential rewards.
<PAGE>
4. The graphic presentation displayed here consists of a bar chart
representing the annual total returns of Marshall Mid-Cap Growth Fund (Fund) as
of the calendar year-end for each of five years.
The `y' axis reflects the "% Total Return" beginning with "-10.00%" and
increasing in increments of 5.00% up to 35.00%.
The `x' axis represents calculation periods from the earliest calendar year
end of the Fund's start of business through the calendar year ended December 31,
1998. The light gray shaded chart features five distinct vertical bars, each
shaded in charcoal, and each visually representing by height the total return
percentages for the calendar year stated directly at its base. The calculated
total return percentage for the Fund which appear directly above each respective
bar, for the calendar years 1994 through 1998, are -5.64%, 33.74%, 20.61%,
22.73% and 15.72%.
The total returns displayed for the Fund do not reflect the payment of any
sales charges or recurring shareholder account fees. If these charges or fees
had been included, the returns shown would have been lower.
Within the period shown in the Chart, the Fund's highest quarterly return
for the quarter ended 4Q98 was 30.61%. Its lowest quarterly return for the
quarter ended 3Q98, was (22.90%).
Average Annual Total Return for the Fund compared to Standard & Poor's
Mid-Cap 400 Index (SPMC) and Lipper Mid-Cap Funds Index (LMCFI) through December
31, 1998.
Calendar Period Fund SPMC LMCFI
- --------------- ---- --------- -----
Life of the Fund* 16.17% 18.38% 14.89%
1 Year 15.72% 18.72% 13.92%
5 Year 16.67% 18.76% 15.20%
* Since inception date of September 30, 1993.
The bar chart shows the variability of the Fund's actual total return on a
yearly basis. The table shows the Fund's total returns averaged over a period of
years relative to SPMC, a broad-based market index and LMCFI, an average of
funds with similar investment objectives. While past performance does not
necessarily predict future performance, this information provides you with
historical performance information so that you can analyze whether the Fund's
investment risks are balanced by its potential rewards.
<PAGE>
5. The graphic presentation displayed here consists of a bar chart
representing the annual total returns of Marshall Small-Cap Growth Fund (Fund)
as of the calendar year-end for each of three years.
The `y' axis reflects the "% Total Return" beginning with "0.00%" and
increasing in increments of 10.00% up to 60.00%.
The `x' axis represents calculation periods from the earliest calendar year
end of the Fund's start of business through the calendar year ended December 31,
1998. The light gray shaded chart features three distinct vertical bars, each
shaded in charcoal, and each visually representing by height the total return
percentages for the calendar year stated directly at its base. The calculated
total return percentage for the Fund which appear directly above each respective
bar, for the calendar years 1996 through 1998, are 50.39%, 23.18% and 3.41%.
The total returns displayed for the Fund do not reflect the payment of any
sales charges or recurring shareholder account fees. If these charges or fees
had been included, the returns shown would have been lower.
Within the period shown in the Chart, the Fund's highest quarterly return
for the quarter ended 4Q98 was 30.28%. Its lowest quarterly return for the
quarter ended 3Q98 was (27.56%).
Average Annual Total Return for the Fund compared to Russell 2000 Index
(Russell 2000) and Lipper Small Cap Funds Index (LSCFI) through December 31,
1998.
Calendar Period Fund Russell 2000 LSCFI
- --------------- ---- ------------ -----
Life of the Fund* 14.53% 11.65% 10.30%
1 Year 3.41% (2.78%) (0.85%)
* Since inception date of November 1, 1995.
The bar chart shows the variability of the Fund's actual total return on a
yearly basis. The table shows the Fund's total returns averaged over a period of
years relative to Russell 2000, a broad-based market index and LSCFI, an average
of funds with similar investment objectives. While past performance does not
necessarily predict future performance, this information provides you with
historical performance information so that you can analyze whether the Fund's
investment risks are balanced by its potential rewards.
<PAGE>
6. The graphic presentation displayed here consists of a bar chart
representing the annual total returns of Marshall International Stock Fund
(Fund) as of the calendar year-end for each of four years.
The `y' axis reflects the "% Total Return" beginning with "0.00%" and
increasing in increments of 5.00% up to 20.00%.
The `x' axis represents calculation periods from the earliest calendar year
end of the Fund's start of business through the calendar year ended December 31,
1998. The light gray shaded chart features four distinct vertical bars, each
shaded in charcoal, and each visually representing by height the total return
percentages for the calendar year stated directly at its base. The calculated
total return percentage for the Fund which appear directly above each respective
bar, for the calendar years 1995 through 1998, are 11.55%, 19.65%, 10.86% and
3.26%.
The total returns displayed for the Fund do not reflect the payment of any
sales charges or recurring shareholder account fees. If these charges or fees
had been included, the returns shown would have been lower.
Within the period shown in the Chart, the Fund's highest quarterly return
for the quarter ended 4Q98, was 16.30%. Its lowest quarterly return for the
quarter ended 3Q98 was (19.06%).
Average Annual Total Return for the Fund compared to Morgan Stanley Capital
Europe, Australia, Far East Index (EAFE Index) and Lipper International Funds
Index (LIFI) through December 31, 1998.
Calendar Period Fund EAFE Index LIFI
- --------------- ---- ---------- ----
Life of the Fund* 8.65% 6.09% 8.41%
1 Year 3.26% 18.23% 12.66%
* Since inception date of September 1, 1994.
The bar chart shows the variability of the Fund's actual total return on a
yearly basis. The table shows the Fund's total returns averaged over a period of
years relative to EAFE Index, a broad-based market index and LIFI, an average of
funds with similar investment objectives. While past performance does not
necessarily predict future performance, this information provides you with
historical performance information so that you can analyze whether the Fund's
investment risks are balanced by its potential rewards.
<PAGE>
7. The graphic presentation displayed here consists of a bar chart
representing the annual total returns of Marshall Short-Term Income Fund (Fund)
as of the calendar year-end for each of six years.
The `y' axis reflects the "% Total Return" beginning with "0.00%" and
increasing in increments of 2.00% up to 10.00%.
The `x' axis represents calculation periods from the earliest calendar year
end of the Fund's start of business through the calendar year ended December 31,
1998. The light gray shaded chart features six distinct vertical bars, each
shaded in charcoal, and each visually representing by height the total return
percentages for the calendar year stated directly at its base. The calculated
total return percentage for the Fund which appear directly above each respective
bar, for the calendar years 1993 through 1998, are 3.70%, 1.83%, 8.97%, 4.97%,
6.40% and 4.91%.
The total returns displayed for the Fund do not reflect the payment of any
sales charges or recurring shareholder account fees. If these charges or fees
had been included, the returns shown would have been lower.
Within the period shown in the Chart, the Fund's highest quarterly return
for the quarter ended 2Q95, was 2.48%. Its lowest quarterly return for the
quarter ended 2Q94 was 0.17%.
Average Annual Total Return for the Fund compared to Lipper S-T Investment
Grade Bond Index (LSTIBI) and IBC/Donoghue's Taxable Money Fund Average (DMFA)
through December 31, 1998.
Calendar Period Fund LSTIBI DMFA
- --------------- ---- --------- ----
Life of the Fund* 5.05% 5.43% 4.45%
5 Year 5.39% 5.43% 4.86%
1 Year 4.91% 5.73% 5.04%
* Since inception date of November 1, 1992.
The bar chart shows the variability of the Fund's actual total return on a
yearly basis. The table shows the Fund's total returns averaged over a period of
years relative to LSTIBI, a broad-based market index and DMFA, an average of
funds with similar investment objectives. While past performance does not
necessarily predict future performance, this information provides you with
historical performance information so that you can analyze whether the Fund's
investment risks are balanced by its potential rewards.
<PAGE>
8. The graphic presentation displayed here consists of a bar chart
representing the annual total returns of Marshall Intermediate Bond Fund (Fund)
as of the calendar year-end for each of six years.
The `y' axis reflects the "% Total Return" beginning with "-5.00%" and
increasing in increments of 5.00% up to 20.00%.
The `x' axis represents calculation periods from the earliest calendar year
end of the Fund's start of business through the calendar year ended December 31,
1998. The light gray shaded chart features six distinct vertical bars, each
shaded in charcoal, and each visually representing by height the total return
percentages for the calendar year stated directly at its base. The calculated
total return percentage for the Fund which appear directly above each respective
bar, for the calendar years 1993 through 1998, are 6.88%, -3.06%, 15.46%, 2.41%,
7.18% and 6.33%.
The total returns displayed for the Fund do not reflect the payment of any
sales charges or recurring shareholder account fees. If these charges or fees
had been included, the returns shown would have been lower.
Within the period shown in the Chart, the Fund's highest quarterly return
for the quarter ended 2Q95 was 4.68%. Its lowest quarterly return for the
quarter ended 1Q96 was (2.03%).
Average Annual Total Return for the Fund compared to Lehman Brothers
Government/Corporate Intermediate Index (LGCI) and Lipper Short/Intermediate
Investment Grade Bond Funds Index (LSIBF) through December 31, 1998.
Calendar Period Fund LGCI LSIBF
- --------------- ---- --------- -----
Life of the Fund* 5.78% 7.10% 6.23%
5 Year 5.49% 6.66% 5.96%
1 Year 6.33% 8.44% 6.99%
* Since inception date of November 23, 1992.
The bar chart shows the variability of the Fund's actual total return on a
yearly basis. The table shows the Fund's total returns averaged over a period of
years relative to LGCI, a broad-based market index and LSIBF, an average of
funds with similar investment objectives. While past performance does not
necessarily predict future performance, this information provides you with
historical performance information so that you can analyze whether the Fund's
investment risks are balanced by its potential rewards.
<PAGE>
9. The graphic presentation displayed here consists of a bar chart
representing the annual total returns of Marshall Government Income Fund
(Fund) as of the calendar year-end for each of six years.
The `y' axis reflects the "% Total Return" beginning with "-5.00%" and
increasing in increments of 5.00% up to 20.00%.
The `x' axis represents calculation periods from the earliest calendar year
end of the Fund's start of business through the calendar year ended December 31,
1998. The light gray shaded chart features six distinct vertical bars, each
shaded in charcoal, and each visually representing by height the total return
percentages for the calendar year stated directly at its base. The calculated
total return percentage for the Fund which appear directly above each respective
bar, for the calendar years 1993 through 1998, are 5.99%, -2.74%, 16.97%, 3.04%,
8.43% and 6.51%.
The total returns displayed for the Fund do not reflect the payment of any
sales charges or recurring shareholder account fees. If these charges or fees
had been included, the returns shown would have been lower.
Within the period shown in the Chart, the Fund's highest quarterly return
for the quarter ended 2Q95 was 4.92%. Its lowest quarterly return for the
quarter ended 1Q94 was (2.13%).
Average Annual Total Return for the Fund compared to Lehman Brothers
Mortgage-Backed Securities Index (LMI) and Lipper U.S. Mortgage Funds Index
(LUSMI) through December 31, 1998.
Calendar Period Fund LMI LUSMI
- --------------- ---- --- -----
Life of the Fund* 6.24% 7.29% 6.17%
5 Year 6.24% 7.23% 5.70%
1 Year 6.51% 6.95% 6.13%
* Since inception date of December 13, 1992.
The bar chart shows the variability of the Fund's actual total return on a
yearly basis. The table shows the Fund's total returns averaged over a period of
years relative to LMI, a broad-based market index and LUSMI, an average of funds
with similar investment objectives. While past performance does not necessarily
predict future performance, this information provides you with historical
performance information so that you can analyze whether the Fund's investment
risks are balanced by its potential rewards.
<PAGE>
10. The graphic presentation displayed here consists of a bar chart
representing the annual total returns of Marshall Intermediate Tax-Free Fund
(Fund) as of the calendar year-end for each of four years.
The `y' axis reflects the "% Total Return" beginning with "0.00%" and
increasing in increments of 2.00% up to 12.00%.
The `x' axis represents calculation periods from the earliest calendar year
end of the Fund's start of business through the calendar year ended December 31,
1998. The light gray shaded chart features four distinct vertical bars, each
shaded in charcoal, and each visually representing by height the total return
percentages for the calendar year stated directly at its base. The calculated
total return percentage for the Fund which appear directly above each respective
bar, for the calendar years 1995 through 1998, are 11.54%, 3.84%, 6.79% and
5.65%.
The total returns displayed for the Fund do not reflect the payment of any
sales charges or recurring shareholder account fees. If these charges or fees
had been included, the returns shown would have been lower.
Within the period shown in the Chart, the Fund's highest quarterly return
for the quarter ended 1Q95 was 4.31%. Its lowest quarterly return for the
quarter ended 1Q96 was (0.63%).
Average Annual Total Return for the Fund compared to Lehman Brothers 7-Year
G.O. Bond Index (LB7GOBI) and Lipper Intermediate
Municipal Funds Index (LIMI) through December 31, 1998.
Calendar Period Fund LB7GOBI LIMI
- --------------- ---- ------- ----
Life of the Fund* 5.04% 5.69% 5.00%
1 Year 5.65% 6.36% 5.59%
* Since inception date of February 2, 1994.
The bar chart shows the variability of the Fund's actual total return on a
yearly basis. The table shows the Fund's total returns averaged over a period of
years relative to LB7GOBI, a broad-based market index and LIMI, an average of
funds with similar investment objectives. While past performance does not
necessarily predict future performance, this information provides you with
historical performance information so that you can analyze whether the Fund's
investment risks are balanced by its potential rewards.
<PAGE>
11. The graphic presentation displayed here consists of a bar chart
representing the annual total returns of Class Y Shares of the Marshall Money
Market Fund (Fund) as of the calendar year-end for each of six years.
The `y' axis reflects the "% Total Return" beginning with "0.00%" and
increasing in increments of 1.00% up to 6.00%.
The `x' axis represents calculation periods from the earliest calendar year
end of the Fund's start of business through the calendar year ended December 31,
1998. The light gray shaded chart features six distinct vertical bars, each
shaded in charcoal, and each visually representing by height the total return
percentages for the calendar year stated directly at its base. The calculated
total return percentage for Class Y Shares of the Fund which appear directly
above each respective bar, for the calendar years 1993 through 1998, are 2.99%,
4.06%, 5.78%, 5.27%, 5.44% and 5.42%. The calculated total return percentage for
Class A Shares of the Fund which appear directly above each respective bar, for
the calendar years 1993 through 1998, are 2.68%, 3.75%, 5.47%, 4.95%, 5.13% and
5.11%.
The total returns displayed for Class A Shares of the Fund do not reflect
the payment of any sales charges or recurring shareholder account fees. If these
charges or fees had been included, the returns shown would have been lower.
Within the period shown in the Chart, the Class Y Shares highest quarterly
return for the quarter ended 2Q95 was 1.45%, and its lowest quarterly return for
the quarter ended 2Q93 was 0.72%. Within the period shown in the Chart, the
Class A Shares highest quarterly return for the quarter ended 2Q95 was 1.38%,
and its lowest quarterly return for the quarter ended 2Q93 was 0.64%.
The Fund's 7-day net yield for Class A Shares was 4.73% and 5.03% for Class
Y Shares.
Average Annual Total Return for the Fund compared to IBC/Donaghue's Money
Fund Average (DMFA) through December 31, 1998.
Calendar Period Class Y Shares* Class A Shares** DMFA
- --------------- --------------- ------------------ ----
Life of the Fund 4.80% 4.50% 4.48%
5 Year 5.19% 4.88% 4.86%
1 Year 5.42% 5.11% 5.04%
*Since inception date of November 23, 1992.
**Since inception date of December 17, 1992.
The bar chart shows the variability of the Fund's Class Y Shares and Class
A Shares actual total return on a yearly basis. The table shows the Fund's Class
Y Shares and Class A Shares total returns averaged over a period of years
relative to DMFA, , an average of funds with similar investment objectives.
While past performance does not necessarily predict future performance, this
information provides you with historical performance information so that you can
analyze whether the Fund's investment risks are balanced by its potential
rewards.
