<PAGE>
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 08/31/97
______________________________________________________________________________
2. State Identification Number:
WI Not Applicable
_____________________________________________________________________________
3. Exact name of investment company as specified in registration statement:
Marshall Funds, Inc.
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4. Address of principal executive office:
(number, street, city, state, zip, code)
Federated Investors Towers
Pittsburgh, PA 15222-3799
_____________________________________________________________________________
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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, 1997 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 Fund, 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, 1997, and with respect to agreement
of security purchases and sales, for the period from June 6, 1997 (the date of
our last examination) through August 31, 1997:
* Count and inspection of all securities located in the vault of M&I Trust;
* Confirmation of all securities held by the institutions in book entry
form (Chase Manhattan Bank and the Depository Trust Company);
* 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;
* 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 M&I Trust;
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ARTHUR ANDERSEN LLP
We noted a single security (CUSIP #126691-4E-1) was incorrectly recorded
on the records of M&I Trust. This resulted in the par value of the
security being overstated by 418,578 units in the Marshall Intermediate
Bond Fund and 154,057 units in the Marshall Short-Term Income Fund. The
amount has since been corrected on the records of M&I Trust. The market
values of the Marshall Intermediate Bond Fund and the Marshall Short-Term
Income Fund were not affected as the administrator had the correct amount
of units recorded.
Marshall Funds, Inc.'s Response
-------------------------------
Depository reconciliation procedures are performed by M&I Trust on a
monthly basis. These procedures are designed to detect differences in
par value. We believe the procedures are adequate in identifying
differences between the records of M&I Trust and Marshall Funds, Inc.
* Confirmation of collateral for futures contracts with banks;
* Confirmation of all repurchase agreements with brokers;
* Agreement of (5) security purchases and (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, 1997 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 24, 1997.
fed149/a/O092597
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Marshall Funds
Marshall Your Resources
Management Statement Regarding Compliance with
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Certain Provisions of the Investment Company Act of 1940
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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 August 31, 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
August 31, 1997 with respect to securities reflected in the investment account
of the Company.
Marshall Funds, Inc.
By: /s/ Brooke J. Billick
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Brooke J. Billick 09/24/97
Assistant Secretary of Marshall Funds, Inc.
Marshall Funds Investor Services
1000 North Water Street
PO Box 1348
Milwaukee, Wisconsin 53201-1348
1-800-236-FUND (3863)
414-287-8555
http://www.marshallfunds.com
