Form N-17f-2

                (As adopted in Release No. IC-17085, July 26, 1989,
                    effective September 25, 1989, 54 F.R. 30248)

                       U.S. Securities and Exchange Commission
                               Washington, D.C. 20549

                                    FORM N-17f-2

      Certificate of Accounting of Securities and Similar Investments In
                 The Custody of Management Investment Companies

                     Pursuant to Rule 17-2 (17 CFR 270.17f-2)

_____________________________________________________________________________

 1.  Investment Company Act File Number:          Date examination completed:

     811-58433                                    6/06/97

______________________________________________________________________________

 2.  State Identification Number:

     WI       Not Applicable

_____________________________________________________________________________

 3.  Exact name of investment company as specified in registration statement:

     Marshall Funds, Inc.

_____________________________________________________________________________

 4.  Address of principal executive office:
     (number, street, city, state, zip, code)

     Federated Investors Towers
     Pittsburgh, PA 15222-3799

_____________________________________________________________________________


                  REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To the Board of Directors of the Marshall Funds, Inc. 
   and the Securities and Exchange Commission:

We have examined management's assertion about Marshall Funds, Inc.'s (a
Wisconsin Corporation which includes the Marshall Money Market Fund-
Investment Shares, the Marshall Money Market Fund-Trust Shares, the Marshall
Government Income Fund, the Marshall Intermediate Bond Fund, the Marshall
Short-Term Income Fund, the Marshall Large-Cap Growth and Income Fund, the
Marshall Mid-Cap Value Fund, the Marshall Mid-Cap Growth Fund, the Marshall
Small-Cap Growth Fund, the Marshall Equity Income Fund, the Marshall
Intermediate Tax-Free Fund, and the Marshall International Stock Fund)
compliance with certain rules under the Investment Company Act of 1940 (the
"Act") as of June 6, 1997, included in the accompanying Management Statement
Regarding Compliance with Certain Provisions of the Investment Company Act of
1940.  Our examination was made without prior notice to the management of
Marshall Funds, Inc.  Management is responsible for the Marshall Funds,
Inc.'s compliance with those requirements.  Our responsibility is to express
an opinion on management's assertion about the compliance based on our
examination.

Our examination was made in accordance with standards established by the
American Institute of Certified Public Accountants and, accordingly, included
examining, on a test basis, evidence about the Marshall Funds, Inc.'s
compliance with those requirements and performing such other procedures as we
considered necessary in the circumstances.  Included among our procedures
were the following tests performed as of June 6, 1997, and for the period
May 9, 1997 (the date of our last examination) through June 6, 1997, with
respect to agreement of security purchases and sales:


       Count and inspection of all securities located in the vault of M&I
       Trust;

       Confirmation of outstanding balances of corporate notes held in the
       vault with the issuer;

       Confirmation of Marshall Funds, Inc.'s securities held by institutions
       in book entry form (Chase Manhattan Bank and The Depository Trust
       Company) on a scope basis;

       Confirmation of all securities of the Marshall International Stock Fund
       with State Street Bank and Trust Company which operates as subcustodian
       of the fund and with Templeton Investment Counsel, Inc., the investment
       subadvisor;


                                         2



       Confirmation of tax-exempt mutual funds owned by Marshall Funds, Inc.
       with transfer agents;

       Confirmation of collateral for futures contracts with banks;

       Confirmation of all repurchase agreements with brokers;

       Reconciliation of all such securities to the books and records of
       Marshall Funds, Inc. and M&I Trust;

       We were unable to perform this procedure for the Marshall International
       Stock Fund as the investments are not recorded on the M&I Trust
       safekeeping system.

       Agreement of five security purchases and five security sales or
       maturities since our last report from the books and records of Marshall
       Funds, Inc. to broker confirmations.


We believe that our examination provides a reasonable basis for our opinion. 
Our examination does not provide a legal determination on Marshall Funds
Inc.'s compliance with specified requirements.

In our opinion, management's assertion that Marshall Funds, Inc. was in
compliance with the above mentioned provisions of Rule 17f-2 of the
Investment Company Act of 1940 as of June 6, 1997, is fairly stated, in all
material respects.

This report is intended solely for the information and use of management of
Marshall Funds, Inc. and the Securities and Exchange Commission and should
not be used for any other purpose.



                                            /s/ Arthur Andersen LLP
                                            ARTHUR ANDERSEN LLP


Milwaukee, Wisconsin
June 27, 1997


                Management Statement Regarding Compliance with
                ----------------------------------------------
            Certain Provisions of the Investment Company Act of 1940
            --------------------------------------------------------

       We, as members of management of Marshall Funds, Inc. (the "Company"),
are responsible for complying with the requirements of subsection (b) and (c)
of Rule 17F-2, "Custody of Investments by Registered Management Investment
Companies", of the Investment Company Act of 1940.  We are also responsible
for establishing and maintaining an effective internal control structure over
compliance with those requirements.  We have performed an evaluation of the
Company's compliance with the requirements of subsection (b) and (c) of Rule
17F-2 as of June 6, 1997.

       Based on this evaluation, we assert that the Company was in compliance
with those provisions of Rule 17F-2 of the Investment Company Act of 1940 as
of June 6, 1997 with respect to securities reflected in the investment
account of the Company.

Marshall Funds, Inc.


By: /s/ Brooke J. Billick
    -------------------------------------------
    Brooke J. Billick
    Assistant Secretary of Marshall Funds, Inc.