REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of Mercantile Mutual Funds, Inc.
We have examined management's assertion, included in the accompanying Management
Statement Regarding Compliance with Certain Provisions of the Investment Company
Act of 1940, about Mercantile Mutual Funds, Inc.'s (the "Company's") compliance
with the requirements of subsections (b) and (c) of Rule 17f-2 under the
Investment Company Act of 1940 ("the Act") as of October 31, 2000. Management is
responsible for the Company's compliance with those requirements. Our
responsibility is to express an opinion on management's assertion about the
Company's compliance based on our examination.
Our examination was conducted in accordance with attestation standards
established by the American Institute of Certified Public Accountants and,
accordingly, included examining, on a test basis, evidence about the Company'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 October 31, 2000, and with respect to
agreement of security purchases and sales, for the period from September 30,
2000 (the date of the last examination performed by other independent
accountants) through October 31, 2000:
o Count and inspection of securities located in the vault of Firstar Bank
Milwaukee, N.A. in Milwaukee, Wisconsin without prior notice to management;
o Confirmation of all securities held by the following institutions in book
entry form: the Federal Reserve Bank of Chicago and the Depository Trust
Company;
o Confirmation of all securities and similar investments held by the
following sub-custodian: Bank of New York;
o Confirmation of all securities and similar investments held by outside
brokers and other third parties;
o Confirmation of all repurchase agreements with brokers;
o Reconciliation of all such securities to the books and records of the
Company and the Custodian; and
o Agreement of 5 security purchases and 5 security sales or maturities since
the last report from the books and records of the Company to broker
confirmations.
We believe that our examination provides a reasonable basis for our opinion. Our
examination does not provide a legal determination on the Company's compliance
with specified requirements.
In our opinion, management's assertion that Mercantile Mutual 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 October 31, 2000 with respect to securities
reflected in the investment account of the Company, except for the exceptions
noted, is fairly stated in all material respects.
This report is intended solely for the information and use of the Board of
Directors, management, and the Securities and Exchange Commission and is not
intended to be and should not be used by anyone other than these specified
parties.
December 18, 2000
