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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 November 30,
1999 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 November 30, 1999, and with respect to agreement of security
purchases and sales, for the period from July 31, 1999 (the date of our last
examination) through November 30, 1999:
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 November 30, 1999, with respect to securities
reflected in the investment account of the Funds, is fairly stated, in all
material respects.
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2
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
January 14, 2000
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Mercantile Mutual Funds, Inc.
3435 Stelzer Road
Columbus, Ohio 43219
January 14, 2000
Management Statement Regarding Compliance with Certain Provisions of the
Investment Company Act of 1940
We, as members of management of the Mercantile Mutual Funds, Inc. (the Funds),
are responsible for complying with the requirements of subsections (b) and (c)
of Rule 17f-2, "Custody of Investments by Registered Investment Companies," of
the Investment Company Act of 1940. We are also responsible for establishing and
maintaining effective internal controls over compliance with Rule 17f-2
requirements. We have performed an evaluation of the Funds' compliance with the
requirements of subsections (b) and (c) of Rule 17f-2 as of November 30, 1999.
Based on this evaluation, we assert 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 November 30, 1999 and for the period from July 31, 1999
through November 30, 1999, with respect to securities reflected in the
investment accounts of the Funds.
Sincerely,
/s/ Walter B. Grimm
Walter B. Grimm
Vice President and Assistant Treasurer
Mercantile Mutual Funds, Inc.
