To the Board of Directors of
Mercantile Mutual Funds, Inc.
and the
Securities and Exchange Commission:
We have examined management's assertion about the Mercantile Mutual Funds,
Inc.'s (the Funds) compliance with the requirements of subsection (b) and (c) of
Rule 17f-2 under the Investment Company Act of 1940 (the Act) as of July 31,
2000 included in the accompanying Management Statement Regarding Compliance with
Certain Provisions of the Investment Company Act of 1940. Management is
responsible for the Funds' compliance with those requirements. Our
responsibility is to express an opinion on management's assertion about the
Funds' 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 Funds' 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 July 31, 2000 and for the period from November 30, 1999 (the
date of our last examination) through July 31, 2000, with respect to security
transactions, without prior notice to management:
1. Confirmation of all securities held by Mercantile Bank in book entry
form;
2. Verification of all securities purchased/sold but not received/delivered
and securities in transit via examination of underlying trade ticket or
broker confirmation;
3. Reconciliation of all such securities to the books and records of the Funds
and Mercantile Bank;
4. Confirmation of all repurchase agreements with brokers/banks and agreement
of underlying collateral with Mercantile Bank records; and
5. Agreement of twelve selected security purchases, sales or maturities
since our last report from the books and records of the Funds to trade
tickets or broker confirmations.
We believe that our examination provides a reasonable basis for our opinion. Our
examination does not provide a legal determination on the Funds' compliance with
specified requirements.
In our opinion, management's assertion that the Funds were in compliance with
the requirements of subsections (b) and (c) of Rule 17f-2 of the Investment
Company Act of 1940 as of July 31, 2000, with respect to securities reflected in
the investment account of the Funds, is fairly stated, in all material respects.
This report is intended solely for the information and use of management of the
Mercantile Mutual Funds, Inc. and the Securities and Exchange Commission and is
not intended to be and should not be used by anyone other than these specified
parties.
KPMG LLP
Columbus, Ohio
October 20, 2000
