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                                            08/31/98

_____________________________________________________________________________

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

_____________________________________________________________________________


                               ARTHUR ANDERSEN LLP


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
                    ----------------------------------------



To the Board of Directors of the Marshall Funds, Inc.
     and the Securities 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 & 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 the requirements of
subsections (b) and (c) of Rule 17f-2 under the Investment Company Act of 1940
(the "Act") as of August 31, 1998 included in the accompanying Management
Statement Regarding Compliance with Certain Provisions of the Investment Company
Act of 1940.  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 Marshall Funds, Inc.'s 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 August 31, 1998, and with respect to agreement
of security purchases and sales, for the period from June 12, 1998 (the date of
our last examination) through August 31, 1998:

  *  Count and inspection of all securities located in the vault of the
     Marshall & Ilsley Trust Company;

  *  Confirmation of all securities held by the institutions in book entry
     form (Chase Manhattan Bank, Depository Trust Company, and Union Bank of
     California);

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


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

  *  Reconciliation of all such securities to the books and records of
     Marshall Funds, Inc. and the Marshall & Ilsley Trust Company;

  *  Confirmation of all repurchase agreements with brokers and agreement of
     underlying collateral with banks; and

  *  Agreement of five (5) security purchases and five (5) 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 requirements of subsections (b) and (c) of Rule 17f-2 of the
Investment Company Act of 1940 as of August 31, 1998 with respect to securities
reflected in the investment account of the Marshall Funds, Inc. 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
September 25, 1998


                                                       MARSHALL FUNDS
                                                       Marshall Your Resources



                   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 subsections (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 effective internal controls over
compliance with those requirements.  We have performed an evaluation of the
Company's compliance with the requirements of subsections (b) and (c) of Rule
17f-2 as of August 31, 1998 and from June 12, 1998 through August 31, 1998.

     Based on this evaluation, we assert that the Company was in compliance
with the requirements of subsections (b) and (c) of Rule 17f-2 of the
Investment Company Act of 1940 as of August 31, 1998 and from June 12, 1998
through August 31, 1998 with respect to securities reflected in the
investment account of the Company.


Marshall Funds, Inc.                      Marshall & Ilsley Trust Company

By:  /s/ John M. Blase                    By:  /s/ Brooke J. Billick
    ---------------------------              -------------------------------
                                               Vice President





Marshall Funds Investor Services
P.O. Box 1348
1000 North Water Street
Milwaukee, Wisconsin  53201-1348

1-800-236-FUND (3863)
1-414-287-8555
http://www.marshallfunds.com