<PAGE> PAGE 1
000 B000000 05/31/96
000 C000000 0000847090
000 D000000 N
000 E000000 NF
000 F000000 Y
000 G000000 N
000 H000000 N
000 I000000 3.0
000 J000000 A
001 A000000 M.S.D.&T. FUNDS, INC.
001 B000000 811-5782
001 C000000 4102375226
002 A000000 2 HOPKINS PLAZA, PAV. 2
002 B000000 BALTIMORE
002 C000000 MD
002 D010000 21201
003 000000 N
004 000000 N
005 000000 N
006 000000 N
007 A000000 Y
007 B000000 8
007 C010100 1
007 C020100 PRIME MONEY MARKET FUND
007 C030100 N
007 C010200 2
007 C020200 GOVERNMENT MONEY MARKET FUND
007 C030200 N
007 C010300 3
007 C020300 TAX-EXEMPT MONEY MARKET FUND
007 C030300 N
007 C010400 4
007 C020400 TAX-EXEMPT MONEY MARKET FUND (TRUST)
007 C030400 N
007 C010500 5
007 C020500 VALUE EQUITY FUND
007 C030500 N
007 C010600 6
007 C020600 INTERMEDIATE FIXED INCOME FUND
007 C030600 N
007 C010700 7
007 C020700 MARYLAND TAX-EXEMPT BOND FUND
007 C030700 N
007 C010800 8
007 C020800 INTERNATIONAL EQUITY FUND
007 C030800 N
007 C010900 9
007 C011000 10
015 B00AA01 C
018 00AA00 Y
019 A00AA00 N
<PAGE> PAGE 2
019 B00AA00 0
020 A000001 WARBURG SECURITIES
020 B000001 13-3340045
020 C000001 47
020 A000002 MORGAN STANLEY
020 B000002 13-2655998
020 C000002 31
020 A000003 COUNTY NAT WEST
020 B000003 12-3312778
020 C000003 20
020 A000004 FIRST BOSTON
020 B000004 13-5659485
020 C000004 14
020 A000005 SALOMON BROTHERS
020 B000005 13-3082694
020 C000005 14
020 A000006 FIBA NORDIC
020 C000006 13
020 A000007 SMITH BARNEY
020 B000007 13-1912900
020 C000007 11
020 A000008 PEREGRINE BROKERAGE
020 C000008 10
020 A000009 ALEX BROWN & SONS
020 B000009 52-1319768
020 C000009 8
020 A000010 GOLDMAN SACHS & CO
020 B000010 13-5108880
020 C000010 8
021 000000 337
022 A000001 MORGAN (JP) SECURITIES INC
022 B000001 13-3224016
022 C000001 10217682
022 D000001 47506
022 A000002 WACHOVIA SECURITIES
022 B000002 56-0927594
022 C000002 9491091
022 D000002 2043
022 A000003 REPUBLIC BANK OF NY
022 B000003 13-2774276
022 C000003 9350976
022 D000003 0
022 A000004 GOLDMAN SACHS & CO.
022 B000004 13-5108880
022 C000004 6828557
022 D000004 104471
022 A000005 MERRILL LYNCH & CO
022 B000005 13-5674085
022 C000005 6348538
022 D000005 34946
022 A000006 STATE STREET
<PAGE> PAGE 3
022 B000006 04-1867445
022 C000006 833110
022 D000006 14
022 A000007 CARROLL MCCENTEE & MCGINLEY
022 B000007 13-2650272
022 C000007 249966
022 D000007 87934
022 A000008 FIRST BOSTON
022 B000008 13-5659485
022 C000008 207956
022 D000008 499
022 A000009 FIRST CHICAGO
022 B000009 36-3595942
022 C000009 167161
022 D000009 13526
022 A000010 LEHMAN BROTHERS
022 B000010 13-2518466
022 C000010 83097
022 D000010 3513
023 C000000 44700109
023 D000000 580124
026 A000000 N
026 B000000 N
026 C000000 N
026 D000000 N
026 E000000 N
026 F000000 N
026 G010000 N
026 G020000 N
026 H000000 N
027 000000 Y
029 00AA00 N
030 A00AA00 0
030 B00AA00 0.00
030 C00AA00 0.00
031 A00AA00 0
031 B00AA00 0
032 00AA00 0
033 00AA00 0
034 00AA00 N
035 00AA00 0
036 B00AA00 0
042 A00AA00 0
042 B00AA00 0
042 C00AA00 0
042 D00AA00 0
042 E00AA00 0
042 F00AA00 0
042 G00AA00 0
042 H00AA00 0
043 00AA00 0
<PAGE> PAGE 4
044 00AA00 0
077 A000000 Y
077 B000000 Y
077 C000000 Y
077 Q010000 Y
077 Q020000 N
077 Q030000 N
078 000000 N
080 A00AA00 RELIANCE INSURANCE COMPANY
080 C00AA00 1250
081 A00AA00 N
081 B00AA00 0
082 A00AA00 N
082 B00AA00 0
083 A00AA00 N
083 B00AA00 0
084 A00AA00 N
084 B00AA00 0
085 A00AA00 N
024 000100 Y
025 A000101 MORGAN (JP) SECURITIES
025 B000101 13-3224016
025 C000101 D
025 D000101 18000
025 A000102 DELETE
025 D000102 0
025 A000103 DELETE
025 D000103 0
025 D000104 0
025 D000105 0
025 D000106 0
025 D000107 0
025 D000108 0
028 A010100 32909
028 A020100 82
028 A030100 0
028 A040100 68032
028 B010100 43379
028 B020100 87
028 B030100 0
028 B040100 24977
028 C010100 25093
028 C020100 83
028 C030100 0
028 C040100 29000
028 D010100 7754
028 D020100 70
028 D030100 0
028 D040100 45146
028 E010100 44497
028 E020100 75
<PAGE> PAGE 5
028 E030100 0
028 E040100 47136
028 F010100 44981
028 F020100 76
028 F030100 0
028 F040100 40893
028 G010100 198613
028 G020100 473
028 G030100 0
028 G040100 255184
028 H000100 0
037 000100 N
038 000100 0
055 A000100 N
055 B000100 N
056 000100 Y
057 000100 N
062 A000100 Y
062 B000100 0.0
062 C000100 31.4
062 D000100 22.5
062 E000100 0.0
062 F000100 2.0
062 G000100 11.9
062 H000100 3.0
062 I000100 19.2
062 J000100 0.0
062 K000100 0.0
062 L000100 9.8
062 M000100 0.0
062 N000100 0.0
062 O000100 0.0
062 P000100 0.0
062 Q000100 0.0
062 R000100 0.0
063 A000100 50
063 B000100 0.0
066 A000100 N
067 000100 N
068 A000100 N
068 B000100 N
069 000100 N
070 A010100 Y
070 A020100 Y
070 B010100 N
070 B020100 N
070 C010100 N
070 C020100 N
070 D010100 N
070 D020100 N
070 E010100 N
<PAGE> PAGE 6
070 E020100 N
070 F010100 N
070 F020100 N
070 G010100 N
070 G020100 N
070 H010100 N
070 H020100 N
070 I010100 N
070 I020100 N
070 J010100 Y
070 J020100 Y
070 K010100 Y
070 K020100 Y
070 L010100 Y
070 L020100 N
070 M010100 N
070 M020100 N
070 N010100 Y
070 N020100 N
070 O010100 Y
070 O020100 N
070 P010100 Y
070 P020100 Y
070 Q010100 N
070 Q020100 N
070 R010100 N
070 R020100 N
071 A000100 0
071 B000100 0
071 C000100 0
071 D000100 0
072 A000100 12
072 B000100 20682
072 C000100 0
072 D000100 0
072 E000100 0
072 F000100 898
072 G000100 449
072 H000100 0
072 I000100 82
072 J000100 35
072 K000100 0
072 L000100 25
072 M000100 19
072 N000100 3
072 O000100 0
072 P000100 0
072 Q000100 108
072 R000100 43
072 S000100 59
072 T000100 0
<PAGE> PAGE 7
072 U000100 0
072 V000100 0
072 W000100 5
072 X000100 1726
072 Y000100 182
072 Z000100 19138
072AA000100 0
072BB000100 22
072CC010100 0
072CC020100 0
072DD010100 19138
072DD020100 0
072EE000100 0
073 A010100 0.0532
073 A020100 0.0000
073 B000100 0.0000
073 C000100 0.0000
074 A000100 0
074 B000100 73469
074 C000100 252848
074 D000100 0
074 E000100 0
074 F000100 0
074 G000100 0
074 H000100 0
074 I000100 0
074 J000100 0
074 K000100 0
074 L000100 2354
074 M000100 0
074 N000100 328671
074 O000100 0
074 P000100 106
074 Q000100 0
074 R010100 0
074 R020100 0
074 R030100 0
074 R040100 1687
074 S000100 0
074 T000100 326878
074 U010100 326960
074 U020100 0
074 V010100 1.00
074 V020100 0.00
074 W000100 0.9997
074 X000100 3157
074 Y000100 0
075 A000100 359125
075 B000100 0
076 000100 0.00
024 000200 N
<PAGE> PAGE 8
025 D000201 0
025 D000202 0
025 D000203 0
025 D000204 0
025 D000205 0
025 D000206 0
025 D000207 0
025 D000208 0
028 A010200 35468
028 A020200 19
028 A030200 0
028 A040200 41555
028 B010200 58875
028 B020200 19
028 B030200 0
028 B040200 52861
028 C010200 38584
028 C020200 20
028 C030200 0
028 C040200 50175
028 D010200 35788
028 D020200 20
028 D030200 0
028 D040200 25113
028 E010200 23164
028 E020200 28
028 E030200 0
028 E040200 44673
028 F010200 80816
028 F020200 28
028 F030200 0
028 F040200 76411
028 G010200 272695
028 G020200 134
028 G030200 0
028 G040200 290788
028 H000200 0
037 000200 N
038 000200 0
055 A000200 N
055 B000200 N
056 000200 Y
057 000200 N
062 A000200 Y
062 B000200 5.7
062 C000200 77.8
062 D000200 16.6
062 E000200 0.0
062 F000200 0.0
062 G000200 0.0
062 H000200 0.0
<PAGE> PAGE 9
062 I000200 0.0
062 J000200 0.0
062 K000200 0.0
062 L000200 0.0
062 M000200 0.0
062 N000200 0.0
062 O000200 0.0
062 P000200 0.0
062 Q000200 0.0
062 R000200 0.0
063 A000200 44
063 B000200 0.0
066 A000200 N
067 000200 N
068 A000200 N
068 B000200 N
069 000200 N
070 A010200 Y
070 A020200 Y
070 B010200 N
070 B020200 N
070 C010200 N
070 C020200 N
070 D010200 N
070 D020200 N
070 E010200 N
070 E020200 N
070 F010200 N
070 F020200 N
070 G010200 N
070 G020200 N
070 H010200 N
070 H020200 N
070 I010200 N
070 I020200 N
070 J010200 Y
070 J020200 N
070 K010200 Y
070 K020200 Y
070 L010200 N
070 L020200 N
070 M010200 N
070 M020200 N
070 N010200 Y
070 N020200 N
070 O010200 Y
070 O020200 N
070 P010200 Y
070 P020200 Y
070 Q010200 N
070 Q020200 N
<PAGE> PAGE 10
070 R010200 N
070 R020200 N
071 A000200 0
071 B000200 0
071 C000200 0
071 D000200 0
072 A000200 12
072 B000200 16980
072 C000200 0
072 D000200 0
072 E000200 0
072 F000200 745
072 G000200 373
072 H000200 0
072 I000200 71
072 J000200 36
072 K000200 0
072 L000200 21
072 M000200 17
072 N000200 2
072 O000200 0
072 P000200 0
072 Q000200 89
072 R000200 36
072 S000200 49
072 T000200 0
072 U000200 0
072 V000200 0
072 W000200 6
072 X000200 1445
072 Y000200 163
072 Z000200 15698
072AA000200 0
072BB000200 13
072CC010200 0
072CC020200 0
072DD010200 15698
072DD020200 0
072EE000200 0
073 A010200 0.0526
073 A020200 0.0000
073 B000200 0.0000
073 C000200 0.0000
074 A000200 0
074 B000200 43892
074 C000200 221010
074 D000200 0
074 E000200 0
074 F000200 0
074 G000200 0
074 H000200 0
<PAGE> PAGE 11
074 I000200 0
074 J000200 0
074 K000200 0
074 L000200 1389
074 M000200 0
074 N000200 266291
074 O000200 0
074 P000200 127
074 Q000200 0
074 R010200 0
074 R020200 0
074 R030200 0
074 R040200 1439
074 S000200 0
074 T000200 264725
074 U010200 264875
074 U020200 0
074 V010200 1.00
074 V020200 0.00
074 W000200 0.9994
074 X000200 3015
074 Y000200 0
075 A000200 298134
075 B000200 0
076 000200 0.00
024 000300 N
028 A010300 7486
028 A020300 1
028 A030300 0
028 A040300 8370
028 B010300 9129
028 B020300 0
028 B030300 0
028 B040300 5526
028 C010300 7620
028 C020300 1
028 C030300 0
028 C040300 8964
028 D010300 6880
028 D020300 0
028 D030300 0
028 D040300 5204
028 E010300 6243
028 E020300 0
028 E030300 0
028 E040300 21412
028 F010300 9119
028 F020300 0
028 F030300 0
028 F040300 8647
028 G010300 46477
<PAGE> PAGE 12
028 G020300 2
028 G030300 0
028 G040300 58123
028 H000300 0
037 000300 N
038 000300 0
055 A000300 N
055 B000300 N
056 000300 Y
057 000300 N
062 A000300 Y
062 B000300 0.0
062 C000300 0.0
062 D000300 0.0
062 E000300 95.3
062 F000300 0.0
062 G000300 0.0
062 H000300 0.0
062 I000300 0.0
062 J000300 0.0
062 K000300 0.0
062 L000300 4.2
062 M000300 0.0
062 N000300 0.0
062 O000300 0.0
062 P000300 0.0
062 Q000300 0.0
062 R000300 0.0
063 A000300 30
063 B000300 0.0
066 A000300 N
067 000300 N
068 A000300 N
068 B000300 N
069 000300 N
070 A010300 N
070 A020300 N
070 B010300 N
070 B020300 N
070 C010300 N
070 C020300 N
070 D010300 N
070 D020300 N
070 E010300 N
070 E020300 N
070 F010300 N
070 F020300 N
070 G010300 N
070 G020300 N
070 H010300 N
070 H020300 N
<PAGE> PAGE 13
070 I010300 N
070 I020300 N
070 J010300 Y
070 J020300 N
070 K010300 Y
070 K020300 Y
070 L010300 N
070 L020300 N
070 M010300 N
070 M020300 N
070 N010300 Y
070 N020300 N
070 O010300 Y
070 O020300 N
070 P010300 Y
070 P020300 Y
070 Q010300 N
070 Q020300 N
070 R010300 N
070 R020300 N
071 A000300 0
071 B000300 0
071 C000300 0
071 D000300 0
072 A000300 12
072 B000300 2474
072 C000300 0
072 D000300 0
072 E000300 0
072 F000300 169
072 G000300 85
072 H000300 0
072 I000300 19
072 J000300 15
072 K000300 0
072 L000300 5
072 M000300 4
072 N000300 2
072 O000300 0
072 P000300 0
072 Q000300 27
072 R000300 7
072 S000300 11
072 T000300 0
072 U000300 0
072 V000300 0
072 W000300 2
072 X000300 346
072 Y000300 55
072 Z000300 2182
072AA000300 0
<PAGE> PAGE 14
072BB000300 4
072CC010300 0
072CC020300 0
072DD010300 2182
072DD020300 0
072EE000300 0
073 A010300 0.0321
073 A020300 0.0000
073 B000300 0.0000
073 C000300 0.0000
074 A000300 0
074 B000300 0
074 C000300 47755
074 D000300 0
074 E000300 0
074 F000300 0
074 G000300 0
074 H000300 0
074 I000300 2116
074 J000300 0
074 K000300 0
074 L000300 507
074 M000300 0
074 N000300 50378
074 O000300 0
074 P000300 15
074 Q000300 0
074 R010300 0
074 R020300 0
074 R030300 0
074 R040300 226
074 S000300 0
074 T000300 50137
074 U010300 50143
074 U020300 0
074 V010300 1.00
074 V020300 0.00
074 W000300 0.9999
074 X000300 375
074 Y000300 0
075 A000300 67788
075 B000300 0
076 000300 0.00
024 000400 N
028 A010400 1301
028 A020400 0
028 A030400 0
028 A040400 9854
028 B010400 7771
028 B020400 0
028 B030400 0
<PAGE> PAGE 15
028 B040400 1690
028 C010400 1880
028 C020400 0
028 C030400 0
028 C040400 4325
028 D010400 5759
028 D020400 0
028 D030400 0
028 D040400 2325
028 E010400 3632
028 E020400 0
028 E030400 0
028 E040400 6915
028 F010400 4053
028 F020400 0
028 F030400 0
028 F040400 4556
028 G010400 24396
028 G020400 0
028 G030400 0
028 G040400 29665
028 H000400 0
037 000400 N
038 000400 0
055 A000400 N
055 B000400 N
056 000400 Y
057 000400 N
062 A000400 Y
062 B000400 0.0
062 C000400 0.0
062 D000400 0.0
062 E000400 95.1
062 F000400 0.0
062 G000400 0.0
062 H000400 0.0
062 I000400 0.0
062 J000400 0.0
062 K000400 0.0
062 L000400 4.3
062 M000400 0.0
062 N000400 0.0
062 O000400 0.0
062 P000400 0.0
062 Q000400 0.0
062 R000400 0.0
063 A000400 32
063 B000400 0.0
066 A000400 N
067 000400 N
068 A000400 N
<PAGE> PAGE 16
068 B000400 N
069 000400 N
070 A010400 N
070 A020400 N
070 B010400 N
070 B020400 N
070 C010400 N
070 C020400 N
070 D010400 N
070 D020400 N
070 E010400 N
070 E020400 N
070 F010400 N
070 F020400 N
070 G010400 N
070 G020400 N
070 H010400 N
070 H020400 N
070 I010400 N
070 I020400 N
070 J010400 Y
070 J020400 N
070 K010400 Y
070 K020400 Y
070 L010400 N
070 L020400 N
070 M010400 N
070 M020400 N
070 N010400 Y
070 N020400 N
070 O010400 Y
070 O020400 N
070 P010400 Y
070 P020400 Y
070 Q010400 N
070 Q020400 N
070 R010400 N
070 R020400 N
071 A000400 0
071 B000400 0
071 C000400 0
071 D000400 0
072 A000400 12
072 B000400 1886
072 C000400 0
072 D000400 0
072 E000400 0
072 F000400 0
072 G000400 65
072 H000400 0
072 I000400 18
<PAGE> PAGE 17
072 J000400 13
072 K000400 0
072 L000400 4
072 M000400 3
072 N000400 2
072 O000400 0
072 P000400 0
072 Q000400 21
072 R000400 6
072 S000400 9
072 T000400 0
072 U000400 0
072 V000400 0
072 W000400 1
072 X000400 142
072 Y000400 28
072 Z000400 1771
072AA000400 3
072BB000400 0
072CC010400 0
072CC020400 0
072DD010400 1771
072DD020400 0
072EE000400 0
073 A010400 0.0340
073 A020400 0.0000
073 B000400 0.0000
073 C000400 0.0000
074 A000400 0
074 B000400 0
074 C000400 44242
074 D000400 0
074 E000400 0
074 F000400 0
074 G000400 0
074 H000400 0
074 I000400 2037
074 J000400 0
074 K000400 0
074 L000400 458
074 M000400 0
074 N000400 46737
074 O000400 0
074 P000400 6
074 Q000400 0
074 R010400 0
074 R020400 0
074 R030400 0
074 R040400 190
074 S000400 0
074 T000400 46541
<PAGE> PAGE 18
074 U010400 46539
074 U020400 0
074 V010400 1.00
074 V020400 0.00
074 W000400 1.0000
074 X000400 373
074 Y000400 0
075 A000400 52064
075 B000400 0
076 000400 0.00
024 000500 Y
025 A000501 MORGAN (J.P.) SECURITIES
025 B000501 13-3224016
025 C000501 E
025 D000501 2346
025 D000502 0
025 D000503 0
025 D000504 0
025 D000505 0
025 D000506 0
025 D000507 0
025 D000508 0
028 A010500 2598
028 A020500 3363
028 A030500 0
028 A040500 801
028 B010500 3449
028 B020500 114
028 B030500 0
028 B040500 3346
028 C010500 2391
028 C020500 0
028 C030500 0
028 C040500 2617
028 D010500 1638
028 D020500 0
028 D030500 0
028 D040500 2114
028 E010500 1982
028 E020500 349
028 E030500 0
028 E040500 1037
028 F010500 2571
028 F020500 0
028 F030500 0
028 F040500 3113
028 G010500 14629
028 G020500 3826
028 G030500 0
028 G040500 13028
028 H000500 0
<PAGE> PAGE 19
037 000500 N
038 000500 0
055 A000500 N
055 B000500 N
056 000500 Y
057 000500 N
062 A000500 N
062 B000500 0.0
062 C000500 0.0
062 D000500 0.0
062 E000500 0.0
062 F000500 0.0
062 G000500 0.0
062 H000500 0.0
062 I000500 0.0
062 J000500 0.0
062 K000500 0.0
062 L000500 0.0
062 M000500 0.0
062 N000500 0.0
062 O000500 0.0
062 P000500 0.0
062 Q000500 0.0
062 R000500 0.0
066 A000500 Y
066 B000500 N
066 C000500 N
066 D000500 N
066 E000500 Y
066 F000500 N
066 G000500 N
067 000500 N
068 A000500 N
068 B000500 N
069 000500 N
070 A010500 Y
070 A020500 Y
070 B010500 Y
070 B020500 N
070 C010500 Y
070 C020500 N
070 D010500 Y
070 D020500 N
070 E010500 N
070 E020500 N
070 F010500 Y
070 F020500 N
070 G010500 Y
070 G020500 N
070 H010500 Y
070 H020500 N
<PAGE> PAGE 20
070 I010500 N
070 I020500 N
070 J010500 Y
070 J020500 N
070 K010500 Y
070 K020500 Y
070 L010500 Y
070 L020500 N
070 M010500 Y
070 M020500 N
070 N010500 Y
070 N020500 N
070 O010500 Y
070 O020500 N
070 P010500 Y
070 P020500 N
070 Q010500 N
070 Q020500 N
070 R010500 N
070 R020500 N
071 A000500 48513
071 B000500 42727
071 C000500 94640
071 D000500 45
072 A000500 12
072 B000500 563
072 C000500 2553
072 D000500 0
072 E000500 0
072 F000500 600
072 G000500 125
072 H000500 0
072 I000500 45
072 J000500 15
072 K000500 0
072 L000500 7
072 M000500 5
072 N000500 2
072 O000500 0
072 P000500 0
072 Q000500 45
072 R000500 12
072 S000500 16
072 T000500 0
072 U000500 7
072 V000500 0
072 W000500 11
072 X000500 890
072 Y000500 159
072 Z000500 2385
072AA000500 3132
<PAGE> PAGE 21
072BB000500 0
072CC010500 10331
072CC020500 0
072DD010500 2496
072DD020500 0
072EE000500 4970
073 A010500 0.3544
073 A020500 0.0994
073 B000500 0.7120
073 C000500 0.0000
074 A000500 0
074 B000500 2212
074 C000500 2773
074 D000500 0
074 E000500 1598
074 F000500 100702
074 G000500 0
074 H000500 0
074 I000500 0
074 J000500 0
074 K000500 0
074 L000500 401
074 M000500 0
074 N000500 107686
074 O000500 0
074 P000500 78
074 Q000500 0
074 R010500 0
074 R020500 0
074 R030500 0
074 R040500 45
074 S000500 0
074 T000500 107563
074 U010500 7380
074 U020500 0
074 V010500 14.58
074 V020500 14.56
074 W000500 0.0000
074 X000500 3816
074 Y000500 0
075 A000500 0
075 B000500 99323
076 000500 0.00
024 000600 N
028 A010600 712
028 A020600 96
028 A030600 0
028 A040600 359
028 B010600 1533
028 B020600 101
028 B030600 0
<PAGE> PAGE 22
028 B040600 1533
028 C010600 1826
028 C020600 101
028 C030600 0
028 C040600 711
028 D010600 1267
028 D020600 97
028 D030600 0
028 D040600 606
028 E010600 884
028 E020600 102
028 E030600 0
028 E040600 628
028 F010600 2330
028 F020600 100
028 F030600 0
028 F040600 1419
028 G010600 8552
028 G020600 597
028 G030600 0
028 G040600 5256
028 H000600 0
037 000600 N
038 000600 0
055 A000600 N
055 B000600 N
056 000600 Y
057 000600 N
062 A000600 Y
062 B000600 6.2
062 C000600 0.0
062 D000600 1.6
062 E000600 0.0
062 F000600 0.0
062 G000600 0.0
062 H000600 0.0
062 I000600 0.0
062 J000600 0.0
062 K000600 0.0
062 L000600 1.1
062 M000600 61.1
062 N000600 22.5
062 O000600 0.0
062 P000600 7.1
062 Q000600 0.0
062 R000600 0.0
063 A000600 0
063 B000600 5.0
066 A000600 N
067 000600 N
068 A000600 N
<PAGE> PAGE 23
068 B000600 N
069 000600 N
070 A010600 Y
070 A020600 Y
070 B010600 N
070 B020600 N
070 C010600 Y
070 C020600 N
070 D010600 N
070 D020600 N
070 E010600 Y
070 E020600 N
070 F010600 N
070 F020600 N
070 G010600 Y
070 G020600 N
070 H010600 N
070 H020600 N
070 I010600 N
070 I020600 N
070 J010600 Y
070 J020600 N
070 K010600 Y
070 K020600 Y
070 L010600 Y
070 L020600 N
070 M010600 Y
070 M020600 N
070 N010600 Y
070 N020600 N
070 O010600 Y
070 O020600 N
070 P010600 Y
070 P020600 N
070 Q010600 N
070 Q020600 N
070 R010600 N
070 R020600 N
071 A000600 22903
071 B000600 22192
071 C000600 42041
071 D000600 53
072 A000600 12
072 B000600 2708
072 C000600 0
072 D000600 0
072 E000600 0
072 F000600 151
072 G000600 54
072 H000600 0
072 I000600 32
<PAGE> PAGE 24
072 J000600 10
072 K000600 0
072 L000600 3
072 M000600 2
072 N000600 2
072 O000600 0
072 P000600 0
072 Q000600 22
072 R000600 5
072 S000600 7
072 T000600 0
072 U000600 7
072 V000600 0
072 W000600 16
072 X000600 311
072 Y000600 51
072 Z000600 2448
072AA000600 0
072BB000600 58
072CC010600 0
072CC020600 1035
072DD010600 2445
072DD020600 4
072EE000600 0
073 A010600 0.5925
073 A020600 0.2830
073 B000600 0.0000
073 C000600 0.0000
074 A000600 0
074 B000600 714
074 C000600 3247
074 D000600 40487
074 E000600 0
074 F000600 0
074 G000600 0
074 H000600 0
074 I000600 0
074 J000600 0
074 K000600 0
074 L000600 286
074 M000600 0
074 N000600 44734
074 O000600 0
074 P000600 36
074 Q000600 0
074 R010600 0
074 R020600 0
074 R030600 0
074 R040600 250
074 S000600 0
074 T000600 44448
<PAGE> PAGE 25
074 U010600 4361
074 U020600 0
074 V010600 10.19
074 V020600 10.20
074 W000600 0.0000
074 X000600 2745
074 Y000600 0
075 A000600 0
075 B000600 43275
076 000600 0.00
024 000700 N
028 A010700 52
028 A020700 15
028 A030700 0
028 A040700 478
028 B010700 116
028 B020700 13
028 B030700 0
028 B040700 1132
028 C010700 211
028 C020700 13
028 C030700 0
028 C040700 141
028 D010700 20
028 D020700 11
028 D030700 0
028 D040700 96
028 E010700 90
028 E020700 12
028 E030700 0
028 E040700 178
028 F010700 118
028 F020700 11
028 F030700 0
028 F040700 30
028 G010700 607
028 G020700 75
028 G030700 0
028 G040700 2055
028 H000700 0
037 000700 N
038 000700 0
055 A000700 Y
055 B000700 N
056 000700 Y
057 000700 N
062 A000700 Y
062 B000700 0.0
062 C000700 0.0
062 D000700 0.0
062 E000700 0.0
<PAGE> PAGE 26
062 F000700 0.0
062 G000700 0.0
062 H000700 0.0
062 I000700 0.0
062 J000700 0.0
062 K000700 0.0
062 L000700 5.9
062 M000700 0.0
062 N000700 0.0
062 O000700 92.8
062 P000700 0.0
062 Q000700 0.0
062 R000700 0.0
063 A000700 0
063 B000700 12.3
066 A000700 N
067 000700 N
068 A000700 N
068 B000700 N
069 000700 N
070 A010700 Y
070 A020700 Y
070 B010700 N
070 B020700 N
070 C010700 N
070 C020700 N
070 D010700 N
070 D020700 N
070 E010700 N
070 E020700 N
070 F010700 N
070 F020700 N
070 G010700 N
070 G020700 N
070 H010700 N
070 H020700 N
070 I010700 N
070 I020700 N
070 J010700 Y
070 J020700 N
070 K010700 Y
070 K020700 Y
070 L010700 N
070 L020700 N
070 M010700 N
070 M020700 N
070 N010700 Y
070 N020700 N
070 O010700 Y
070 O020700 N
070 P010700 Y
<PAGE> PAGE 27
070 P020700 Y
070 Q010700 N
070 Q020700 N
070 R010700 N
070 R020700 N
071 A000700 2251
071 B000700 4716
071 C000700 10938
071 D000700 21
072 A000700 12
072 B000700 615
072 C000700 0
072 D000700 0
072 E000700 0
072 F000700 57
072 G000700 14
072 H000700 0
072 I000700 19
072 J000700 4
072 K000700 0
072 L000700 1
072 M000700 1
072 N000700 2
072 O000700 0
072 P000700 0
072 Q000700 6
072 R000700 1
072 S000700 2
072 T000700 0
072 U000700 7
072 V000700 0
072 W000700 5
072 X000700 119
072 Y000700 48
072 Z000700 544
072AA000700 163
072BB000700 0
072CC010700 0
072CC020700 330
072DD010700 544
072DD020700 0
072EE000700 0
073 A010700 0.4942
073 A020700 0.0000
073 B000700 0.0000
073 C000700 0.0000
074 A000700 0
074 B000700 0
074 C000700 0
074 D000700 9459
074 E000700 0
<PAGE> PAGE 28
074 F000700 0
074 G000700 0
074 H000700 0
074 I000700 599
074 J000700 0
074 K000700 0
074 L000700 240
074 M000700 0
074 N000700 10298
074 O000700 0
074 P000700 3
074 Q000700 0
074 R010700 0
074 R020700 0
074 R030700 0
074 R040700 109
074 S000700 0
074 T000700 10186
074 U010700 998
074 U020700 0
074 V010700 10.20
074 V020700 0.00
074 W000700 0.0000
074 X000700 116
074 Y000700 0
075 A000700 0
075 B000700 11581
076 000700 0.00
024 000800 N
025 A000801 DELETE
025 D000801 0
025 D000802 0
025 D000803 0
025 D000804 0
025 D000805 0
025 D000806 0
025 D000807 0
025 D000808 0
028 A010800 3070
028 A020800 592
028 A030800 0
028 A040800 1450
028 B010800 2479
028 B020800 64
028 B030800 0
028 B040800 826
028 C010800 662
028 C020800 0
028 C030800 0
028 C040800 709
028 D010800 430
<PAGE> PAGE 29
028 D020800 0
028 D030800 0
028 D040800 3838
028 E010800 551
028 E020800 0
028 E030800 0
028 E040800 537
028 F010800 1474
028 F020800 1
028 F030800 0
028 F040800 1002
028 G010800 8666
028 G020800 657
028 G030800 0
028 G040800 8362
028 H000800 0
037 000800 N
038 000800 0
055 A000800 Y
055 B000800 N
056 000800 Y
057 000800 N
062 A000800 N
062 B000800 0.0
062 C000800 0.0
062 D000800 0.0
062 E000800 0.0
062 F000800 0.0
062 G000800 0.0
062 H000800 0.0
062 I000800 0.0
062 J000800 0.0
062 K000800 0.0
062 L000800 0.0
062 M000800 0.0
062 N000800 0.0
062 O000800 0.0
062 P000800 0.0
062 Q000800 0.0
062 R000800 0.0
066 A000800 Y
066 B000800 N
066 C000800 N
066 D000800 Y
066 E000800 N
066 F000800 N
066 G000800 N
067 000800 N
068 A000800 N
068 B000800 Y
069 000800 N
<PAGE> PAGE 30
070 A010800 Y
070 A020800 N
070 B010800 Y
070 B020800 N
070 C010800 Y
070 C020800 N
070 D010800 Y
070 D020800 N
070 E010800 Y
070 E020800 N
070 F010800 Y
070 F020800 N
070 G010800 Y
070 G020800 N
070 H010800 N
070 H020800 N
070 I010800 N
070 I020800 N
070 J010800 Y
070 J020800 N
070 K010800 Y
070 K020800 N
070 L010800 Y
070 L020800 Y
070 M010800 Y
070 M020800 Y
070 N010800 Y
070 N020800 N
070 O010800 Y
070 O020800 N
070 P010800 Y
070 P020800 N
070 Q010800 N
070 Q020800 N
070 R010800 N
070 R020800 N
071 A000800 41583
071 B000800 37387
071 C000800 69777
071 D000800 54
072 A000800 12
072 B000800 170
072 C000800 1170
072 D000800 0
072 E000800 0
072 F000800 585
072 G000800 91
072 H000800 0
072 I000800 36
072 J000800 55
072 K000800 0
<PAGE> PAGE 31
072 L000800 16
072 M000800 4
072 N000800 2
072 O000800 0
072 P000800 0
072 Q000800 37
072 R000800 9
072 S000800 12
072 T000800 0
072 U000800 5
072 V000800 0
072 W000800 1
072 X000800 853
072 Y000800 86
072 Z000800 572
072AA000800 3848
072BB000800 0
072CC010800 5171
072CC020800 0
072DD010800 431
072DD020800 0
072EE000800 3867
073 A010800 0.0696
073 A020800 0.0000
073 B000800 0.6559
073 C000800 0.0000
074 A000800 1
074 B000800 0
074 C000800 0
074 D000800 0
074 E000800 0
074 F000800 73865
074 G000800 0
074 H000800 0
074 I000800 0
074 J000800 0
074 K000800 0
074 L000800 2495
074 M000800 0
074 N000800 76361
074 O000800 173
074 P000800 44
074 Q000800 0
074 R010800 0
074 R020800 0
074 R030800 0
074 R040800 468
074 S000800 0
074 T000800 75676
074 U010800 6066
074 U020800 0
<PAGE> PAGE 32
074 V010800 12.47
074 V020800 0.00
074 W000800 0.0000
074 X000800 2696
074 Y000800 0
075 A000800 0
075 B000800 72760
076 000800 0.00
SIGNATURE LINDA A. DURKIN
TITLE FUNDS ADMINISTATOR
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
M.S.D.&T. Funds, Inc.
In planning and performing our audit of the financial statements
and financial highlights of the M.S.D.&T. Funds, Inc. (Prime
Money Market Fund, Government Money Market Fund, Tax-Exempt
Money Market Fund, Tax-Exempt Money Market Fund (Trust), Value
Equity Fund, International Equity Fund, Intermediate Fixed
Income Fund and Maryland Tax-Exempt Bond Fund) for the year
ended May 31, 1996, we considered its internal control
structure, including procedures for safeguarding securities, in
order to determine our auditing procedures for the purpose of
expressing our opinion on the financial statements and financial
highlights and to comply with the requirements of Form N-SAR,
not to provide assurance on the internal control structure.
The management of M.S.D.&T. Funds, Inc. is responsible for
establishing and maintaining an internal control structure. In
fulfilling this responsibility, estimates and judgments by
management are required to assess the expected benefits and
related costs of internal control structure policies and
procedures. Two of the objectives of an internal control
structure are to provide management with reasonable, but not
absolute, assurance that assets are safeguarded against loss
from unauthorized use or disposition and that transactions are
executed in accordance with management's authorization and
recorded properly to permit preparation of financial statements
in conformity with generally accepted accounting principles.
Because of inherent limitations in any internal control
structure, errors or irregularities may occur and not be
detected. Also, projection of any evaluation of the structure
to future periods is subject to the risk that it may become
inadequate because of changes in conditions or that the
effectiveness of the design and operation may deteriorate.
Our consideration of the internal control structure would not
necessarily disclose all matters in the internal control
structure that might be material weaknesses under standards
established by the American Institute of Certified Public
Accountants. A material weakness is a condition in which the
design or operation of the specific internal control structure
elements does not reduce to a relatively low level the risk that
errors or irregularities in amounts that would be material in
relation to the financial statements and financial highlights
being audited may occur and not be detected within a timely
period by employees in the normal course of performing their
assigned functions. However, we noted no matters involving the
internal control structure, including procedures for
safeguarding securities, that we consider to be material
weaknesses, as defined above, as of May 31, 1996.
This report is intended solely for the information and use of
management and the Board of Directors of M.S.D.&T. Funds, Inc.
and for the Securities and Exchange Commission.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
July 18, 1996
<PAGE>
M.S.D. & T. FUNDS, INC.
File Nos. 33-27491/811-5782
FORM N-SAR
Semi-Annual Report
for Registered Investment Companies
for the fiscal year ended May 31, 1996
--------------------------------------
ITEM 77C: Submission of matters to a vote of securityholders
At a Special Meeting of Shareholders (the "Meeting") of Registrant's
International Equity Fund (the "Fund") held on May 17, 1996, shareholders of the
Fund approved a new Sub-Advisory Agreement between Mercantile-Safe Deposit and
Trust Company, as adviser, and CastleInternational Asset Management Limited, as
sub-adviser, with respect to the Fund. Of the 6,025,063.053 shares of the Fund
outstanding on April 3, 1996, the record date for the Meeting, and the
5,121,544.62 shares of the Fund represented at the Meeting in person or by
proxy, 5,038,795.393 shares were voted in favor of the resolution approving the
new Sub-Advisory Agreement, 7,174.044 shares were voted against said resolution,
and 75,575.183 shares abstained.
<PAGE>
M.S.D. & T. FUNDS, INC.
File Nos. 33-27491/811-5782
FORM N-SAR
Semi-Annual Report
for Registered Investment Companies
for the fiscal year ended May 31, 1996
--------------------------------------
ITEM 77Q1: Exhibits
(a) Amendment to Registrant's Bylaws Adopted by the Board of Directors on
January 22, 1996.
(e) Sub-Advisory Agreement dated as of March 19, 1996 between Mercantile-
Safe Deposit and Trust Company and CastleInternational Asset
Management Limited with respect to Registrant's International Equity
Fund.
<PAGE>
Exhibit (a)
M.S.D. & T. FUNDS, INC.
Amendment to Bylaws
Adopted by the Board of Directors
On January 22, 1996
RESOLVED, that Article I, Section 1.2 of the Company's Bylaws be, and
it hereby is, amended and restated in its entirety to read as follows:
SECTION 1.2. Special Meetings. Special meetings of the stockholders
----------------
for any purpose or purposes, unless otherwise prescribed by statute or by
the charter, may be held at any place, within or without the State of
Maryland, and may be called at any time by the Board of Directors or by the
President, and shall be called at the request in writing of stockholders
entitled to cast at least ten (10) percent of all the votes entitled to be
cast at such meeting. Such request shall state the purpose or purposes of
the proposed meeting and the matters proposed to be acted on at it;
provided, however, that unless requested by stockholders entitled to cast a
majority of all the votes entitled to be cast at the meeting, a special
meeting need not be called to consider any matter which is substantially
the same as a matter voted on at any special meeting of the stockholders
held during the preceding twelve (12) months. The Secretary shall inform
such stockholders of the reasonably estimated costs of preparing and
mailing the notice of the meeting and on payment of these costs to the
Corporation shall notify each stockholder entitled to notice of the
meeting.
<PAGE>
Exhibit (e)
SUB-ADVISORY AGREEMENT
(International Equity Fund)
AGREEMENT made as of March 19, 1996 between MERCANTILE-SAFE DEPOSIT &
TRUST COMPANY, a Maryland trust company (the "Adviser"), and CASTLEINTERNATIONAL
ASSET MANAGEMENT LIMITED, a U.K. corporation registered under the U.S.
Investment Advisers Act of 1940, as amended, and a member of the Investment
Management Regulatory Organization ("IMRO") and regulated by IMRO in the conduct
of its affairs ("Sub-Adviser").
WHEREAS, M.S.D. & T. Funds, Inc. ("M.S.D. & T.") is registered as an
open-end, management investment company under the Investment Company Act of
1940, as amended (the "1940 Act"); and
WHEREAS, the Adviser has been appointed investment adviser to M.S.D. &
T.'s International Equity Fund (the "Fund"); and
WHEREAS, the Adviser desires to retain Sub-Adviser to assist it in the
provision of a continuous investment program for the Fund and Sub-Adviser is
willing to do so; and
WHEREAS, the Board of Directors of the Fund has approved this
Agreement, subject to approval by the shareholders of the Fund, and Sub-Adviser
is willing to furnish such services upon the terms and conditions herein set
forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. Effective March 19, 1996, the Adviser hereby
-----------
appoints Sub-Adviser to act as sub-adviser to the Fund as permitted by the
Adviser's Advisory Agreement with M.S.D. & T. pertaining to the Fund. Intending
to be legally bound, Sub-Adviser accepts such appointment and agrees to render
the services herein set forth for the compensation herein provided.
2. Sub-Advisory Services. Subject to the supervision of M.S.D. &
---------------------
T.'s Board of Directors, Sub-Adviser will assist the Adviser in providing a
continuous investment program for the Fund, including research and management
with respect to all securities and investments and cash equivalents in the Fund.
Sub-Adviser will provide services under this Agreement in accordance with the
Fund's investment objective, policies and restrictions as stated in the Fund's
prospectuses and resolutions of M.S.D. & T.'s Board of Directors applicable to
the Fund.
<PAGE>
Adviser hereby undertakes to provide Sub-Adviser with copies of such
prospectuses and resolutions as the same became available from time to time.
Without limiting the generality of the foregoing, Sub-Adviser further
agrees that it will:
(a) prepare, subject to the Adviser's approval, lists of foreign
countries for investment by the Fund and determine from time to time what
securities and other investments will be purchased, retained or sold for
the Fund, including, with the assistance of the Adviser, the Fund's
investments in futures and forward currency contracts; provided, however,
-------- -------
that Sub-Adviser shall not be responsible for taking action with respect to
any proxies, notices, reports or other communications relating to any of
the Fund's portfolio securities;
(b) manage in consultation with the Adviser the Fund's temporary
investments in securities;
(c) place orders for the Fund either directly with the issuer or
with any broker or dealer;
(d) provide, at Sub-Adviser's expense, using one or more pricing
services believed by Sub-Adviser to be reliable, the value of the portfolio
securities and other assets of the Fund in accordance with the 1940 Act,
the Fund's current prospectuses and applicable resolutions of the Board of
Directors of M.S.D. & T. on each day that the Fund's assets are required to
be valued, such information to be transmitted by telephone, telecopy or
other transmission as soon as possible and in any event within 24 hours of
the time of valuation to BISYS Fund Services Ohio, Inc., as fund
accountant, or to such other person(s) as the Adviser may direct for the
benefit of the Fund;
(e) manage the Fund's overall cash position, and determine from
time to time what portion of the Fund's assets will be held in different
currencies;
(f) provide the Adviser with foreign broker research, a quarterly
review of international economic and investment developments, and
occasional "White Papers" on international investment issues;
(g) attend regular business and investment-related meetings with
M.S.D. & T.'s Board of Directors and the Adviser if requested to do so by
M.S.D. & T. and/or the Adviser; and
-2-
<PAGE>
(h) maintain books and records with respect to the securities
transactions for the Fund, furnish to the Adviser and M.S.D. & T.'s Board
of Directors such periodic and special reports as they may request with
respect to the Fund, and provide in advance to the Adviser all reports to
the Board of Directors for examination and review within a reasonable time
prior to M.S.D. & T. Board meetings. Adviser hereby undertakes to provide
Sub-Adviser with at least fourteen days prior written notice of the date,
time and location of all M.S.D. & T. Board meetings pertaining to the Fund.
3. Subcontractors. It is understood that Sub-Adviser may from time
--------------
to time engage or associate itself with such person or persons as Sub-Adviser
may believe to be particularly fitted to assist Sub-Adviser in the performance
of certain ministerial or administrative services required by this Agreement;
provided, however, that such person or persons shall have been approved by the
- -------- -------
Board of Directors of M.S.D. & T., that the compensation of such person or
persons shall be paid by Sub-Adviser and that Sub-Adviser shall be as fully
responsible to the Adviser and M.S.D. & T. for the acts and omissions of any
subcontractor as it is for its own acts and omissions.
4. Covenants by Sub-Adviser. Sub-Adviser agrees with respect to the
------------------------
services provided to the Fund that it:
(a) will conform with all Rules and Regulations of the Securities
and Exchange Commission ("SEC") applicable to it and will also conform with
all Rules and Regulations of IMRO;
(b) will telecopy trade information to the Adviser on the first
business day following the day of the trade and cause broker confirmations
to be sent directly to the Adviser; and
(c) will treat confidentially and as proprietary information of
M.S.D. & T. all records and other information relative to the Fund and
prior, present or potential shareholders, and will not use such records and
information for any purpose other than performance of its responsibilities
and duties hereunder (except after prior notification to and approval in
writing by M.S.D. & T., which approval shall not be unreasonably withheld
and may not be withheld and will be deemed granted where Sub-Adviser may be
exposed to civil or criminal contempt proceedings for failure to comply,
when requested to divulge such information by duly constituted authorities,
or when so requested by M.S.D. & T.).
-3-
<PAGE>
5. Services Not Exclusive.
----------------------
(a) The services furnished by Sub-Adviser hereunder are deemed not
to be exclusive, and nothing in this Agreement shall (i) prevent Sub-Adviser or
any affiliated person (as defined in the 1940 Act) of Sub-Adviser from acting as
investment adviser or manager for any other person or persons, including other
management investment companies with investment objectives and policies the same
as or similar to those of the Fund or (ii) limit or restrict Sub-Adviser or any
such affiliated person from buying, selling or trading any securities or other
investments (including any securities or other investments which the Fund is
eligible to buy) for its or their own accounts or for the accounts of others for
whom it or they may be acting; provided, however, that Sub-Adviser agrees that
-------- -------
it will not undertake any activities which, in its reasonable judgment, will
adversely affect the performance of its obligations to the Fund under this
Agreement.
(b) Nothing contained herein, however, shall prohibit Sub-Adviser
from advertising or soliciting the public generally with respect to products or
services, regardless of whether such advertisement or solicitation may include
prior, present or potential shareholders of M.S.D. & T.
6. Portfolio Transactions. Investment decisions for the Fund shall
----------------------
be made by Sub-Adviser independently from those for any other investment
companies and accounts advised or managed by Sub-Adviser. The Fund and such
investment companies and accounts may, however, invest in the same securities.
When a purchase or sale of the same security is made at substantially the same
time on behalf of the Fund and/or another investment company or account, the
transaction will be averaged as to price, and available investments allocated as
to amount, in a manner which Sub-Adviser believes to be equitable to the Fund
and such other investment company or account. In some instances, this
investment procedure may adversely affect the price paid or received by the Fund
or the size of the position obtained or sold by the Fund. To the extent
permitted by law, Sub-Adviser may aggregate the securities to be sold or
purchased for the Fund with those to be sold or purchased for other investment
companies or accounts in order to obtain best execution.
Sub-Adviser shall place orders for the purchase and sale of portfolio
securities and will solicit broker-dealers to execute transactions in accordance
with the Fund's policies and restrictions regarding brokerage allocations. Sub-
Adviser shall place orders pursuant to its investment determination for the Fund
either directly with the issuer or with any broker or dealer selected by Sub-
Adviser. In executing portfolio transactions and selecting brokers or dealers,
Sub-Adviser shall use its reasonable best efforts to seek the most favorable
execution of
-4-
<PAGE>
orders, after taking into account all factors Sub-Adviser deems relevant,
including the breadth of the market in the security, the price of the security,
the financial condition and execution capability of the broker or dealer, and
the reasonableness of the commission, if any, both for the specific transaction
and on a continuing basis. Consistent with this obligation, Sub-Adviser may, to
the extent permitted by law, purchase and sell portfolio securities to and from
brokers and dealers who provide brokerage and research services (within the
meaning of Section 28(e) of the Securities Exchange Act of 1934) to or for the
benefit of the Fund and/or other accounts over which Sub-Adviser or any of its
affiliates exercises investment discretion. Sub-Adviser is authorized to pay to
a broker or dealer who provides such brokerage and research services a
commission for executing a portfolio transaction for the Fund which is in excess
of the amount of commission another broker or dealer would have charged for
effecting that transaction if Sub-Adviser determines in good faith that such
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of either that
particular transaction or Sub-Adviser's overall responsibilities to the Fund and
to M.S.D. & T. In no instance will portfolio securities be purchased from or
sold to Sub-Adviser, or the Fund's principal underwriter, or any affiliated
person thereof except as permitted by the Securities and Exchange Commission.
7. Books and Records. In compliance with the requirements of Rule
-----------------
31a-3 under the 1940 Act, Sub-Adviser hereby agrees that all records which it
maintains for M.S.D. & T. are the property of M.S.D. & T. and further agrees to
surrender promptly to M.S.D. & T. any of such records upon M.S.D. & T.'s
request; provided, however, that the Sub-Adviser may make and retain photocopies
-------- -------
of such records in order to comply with applicable regulatory requirements.
Sub-Adviser further agrees to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act the records required to be maintained by Rule 31a-1 under the
1940 Act.
8. Expenses. During the term of this Agreement, Sub-Adviser will
--------
pay all expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities, commodities and other investments
(including brokerage commissions and other transaction charges, if any)
purchased for the Fund.
-5-
<PAGE>
9. Compensation. For the services provided and the expenses assumed
------------
with respect to the Fund pursuant to this Agreement, Sub-Adviser will be
entitled to a fee, computed daily and payable quarterly, from the Adviser,
calculated at the annual rate of .45% of the Fund's average daily net assets.
Notwithstanding any other provision of the Agreement, all fees payable to Sub-
Adviser pursuant to this Agreement shall be withheld by Adviser until such time
as this Agreement shall have been approved by vote of the lesser (1) 67% of the
shares of the Fund represented at a meeting if holders of more than 50% of the
outstanding shares of the Fund are present in-person or by proxy or (b) more
than 50% of the outstanding shares of the Fund. Upon such approval, the Adviser
shall forthwith remit to the Sub-Adviser all withheld fees, with interest at a
rate to be agreed upon by the Adviser and Sub-Adviser. If such approval is not
obtained within 120 days after the effective date of this Agreement, this
Agreement shall terminate and all withheld fees shall be retained by the
Adviser, but all other provisions of this Agreement shall be effective in
accordance with their terms.
10. Standard of Care; Limitation of Liability. Sub-Adviser shall
-----------------------------------------
exercise due care and diligence and use the same skill and care in providing its
services hereunder as it uses in providing services to other investment
companies, but shall not be liable for any action taken or omitted by Sub-
Adviser in the absence of bad faith, willful misconduct, negligence or reckless
disregard of its duties. Notwithstanding the foregoing it is agreed that the
relative investment performance of the Fund shall not constitute a breach by the
Sub-Adviser of these obligations.
11. Reference to Sub-Adviser. Neither the Adviser nor any affiliate
------------------------
or agent of it shall make reference to or use the name of Sub-Adviser or any of
its affiliates, or any of their clients, except references concerning the
identity of and services provided by Sub-Adviser to the Fund, which references
shall not differ in substance from those included in the current registration
statement pertaining to the Fund, this Agreement and the Advisory Agreement
between the Adviser and M.S.D. & T. with respect to the Fund, in any advertising
or promotional materials without the prior approval of Sub-Adviser, which
approval shall not be unreasonably withheld or delayed. The Adviser hereby
agrees to make all reasonable efforts to cause M.S.D. & T. and any affiliate
thereof to satisfy the foregoing obligation.
12. Duration and Termination. Unless sooner terminated, this
------------------------
Agreement shall continue until July 20, 1997 and thereafter shall continue
automatically for successive annual periods, provided such continuance is
specifically approved at least annually by M.S.D. & T.'s Board of Directors or
vote of the lesser of (a) 67% of the shares of the Fund represented at a meeting
if holders of more than 50% of the outstanding shares of the Fund are present in
person or by proxy or (b) more than 50%
-6-
<PAGE>
of the outstanding shares of the Fund, provided that in either event its
continuance also is approved by a majority of M.S.D. & T.'s Directors who are
not "interested persons" (as defined in the 1940 Act) of any party to this
Agreement, by vote cast in person at a meeting called for the purpose of voting
on such approval. This Agreement is terminable at any time without penalty, on
60 days' notice, by Adviser, Sub-Adviser or by M.S.D. & T.'s Board of Directors
or by vote of the lesser of (a) 67% of the shares of the Fund represented at a
meeting if holders of more than 50% of the outstanding shares of the Fund are
present in person or by proxy or (b) more than 50% of the outstanding shares of
the Fund. This Agreement will terminate automatically in the event of its
assignment (as defined in the 1940 Act).
13. Amendment of this Agreement. No provision of this Agreement may
---------------------------
be changed, waived, discharged or terminated orally, but only by an instrument
in writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. No amendment of this Agreement shall be
effective with respect to the Fund until approved by the vote of a majority of
the outstanding voting securities of the Fund.
14. Notice. Any notice, advice or report to be given pursuant to
------
this Agreement shall be delivered or mailed:
To Sub-Adviser at:
-----------------
125 S. Wacker Drive
Suite 300
Chicago, IL 60606
To the Adviser at:
-----------------
Two Hopkins Plaza
Baltimore, MD 21201
To M.S.D. & T. at:
-----------------
Two Hopkins Plaza
Baltimore, MD 21201
15. Miscellaneous. The captions in this Agreement are included for
-------------
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby.
This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and shall be governed by
Maryland law.
-7-
<PAGE>
16. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
MERCANTILE-SAFE DEPOSIT &
TRUST COMPANY
By:/s/ David L. Donabedian
-----------------------
Attest:
/s/ Kevin J. Dachille
- ---------------------
CASTLEINTERNATIONAL ASSET
MANAGEMENT LIMITED
By:/s/ Douglas B. Waggoner
-----------------------
Douglas B. Waggoner
Managing Director
Attest:
- --------------------
