<PAGE>
M.S.D.&T.
FUNDS, INC.
-----------------------
Semi-Annual Report
-----------------------
November 30, 1996
Investment Adviser and Administrator:
[MERCANTILE-SAFE DEPOSIT & TRUST COMPANY
LOGO APPEARS HERE]
Baltimore, MD
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NUMBER
-----------
<S> <C>
Chairman's Letter................................................... i
Fund Reviews........................................................ iv
Statements of Net Assets
Prime Money Market Fund............................................ 1
Government Money Market Fund....................................... 5
Tax-Exempt Money Market Fund....................................... 8
Tax-Exempt Money Market Fund (Trust)............................... 12
Value Equity Fund.................................................. 16
International Equity Fund.......................................... 20
Intermediate Fixed Income Fund..................................... 25
Maryland Tax-Exempt Bond Fund...................................... 29
Investment Abbreviations........................................... 32
Statements of Operations............................................ 33
Statements of Changes in Net Assets................................. 35
Financial Highlights................................................ 39
Notes to Financial Statements....................................... 47
Important Tax Information........................................... 54
</TABLE>
<PAGE>
Dear Shareholder:
It is a pleasure to send you the semi-annual report for the M.S.D.&T. Funds,
Inc. (the "Company") for the six months ended November 30, 1996. The report
includes financial information on the Value Equity, International Equity, In-
termediate Fixed Income and Maryland Tax-Exempt Bond Funds as well as the
Prime, Government, Tax-Exempt and Tax-Exempt (Trust) Money Market Funds.
During the past six months the stock and bond markets rewarded investors with
returns well above their long-term averages. The S&P 500 Index posted a total
return of 14.4%, while the Lehman Brothers Intermediate Government/Corporate
Index earned 6.1%. A favorable tailwind to the financial markets' performance
has been provided by large inflows of funds. The stock market has been the
beneficial recipient of unprecedented mutual fund inflows while foreign cen-
tral banks have purchased Treasury securities in record amounts. At the same
time, economic activity has expanded at a pace which has driven earnings
higher without inflationary consequences. Monetary policy makers have kept
short-term interest rates stable while fiscal policy has focused on balancing
the federal budget deficit.
The Institutional Shares of the M.S.D.&T. Value Equity Fund generated a 14.2%
total return for the six months ending November 30, 1996(1). Since its incep-
tion in early 1991 through November 30, 1996, the Fund's Institutional Shares
have earned an average annual total return of 13.5%(1). International equity
markets have lagged the domestic market during 1996. The M.S.D.&T. Interna-
tional Equity Fund(2) earned a 3.7% total return for the six month period end-
ing November 30, 1996(1), while the MSCI EAFE (Europe, Australia, Far East)
Index rose 3.4%.
On balance, interest rates on term securities have trended downward during the
past six months, resulting in small capital appreciation complementing income
returns. The Federal Reserve Bank correctly anticipated a slowing growth rate
in the economy and chose to leave short-term interest rates unchanged. The
status quo in Fed policy had beneficial consequences for the bond markets
where market participants had already discounted a slightly more restrictive
policy. For the six months ended November 30, 1996 the Institutional Shares of
the M.S.D.&T. Intermediate Fixed Income Fund had a total return of 6.2%(1)
while the Lehman Brothers Intermediate Government/Corporate Index showed a
6.1% gain. Also benefiting from the downward drift in interest rates, invest-
ors in the Maryland Tax-Exempt Bond Fund experienced a 5.7% total return for
the same six month period(1).
Money market rates remained essentially unchanged, in line with the no-action
mode pursued by the central bank. The M.S.D.&T. Money Market Funds continued
to generate competitive returns while providing stability of principal. The
seven day current yields for each fund as of November 30, 1996 are detailed
below:
<TABLE>
<CAPTION>
PRIME(3) GOVERNMENT(3) TAX-EXEMPT(3) TAX-EXEMPT (TRUST)(3)
-------- ------------- ------------- ---------------------
<S> <C> <C> <C>
4.96% 4.92% 3.15% 3.38%
5.22%(4) 5.60%(4)
</TABLE>
The investment adviser anticipates a benign economic environment where Real
GDP is not anticipated to drop to recessionary levels nor threaten to expand
above the Federal Reserve Bank's perceived target range of non-inflationary
growth. Indeed, the fundamentals of slow growth, subdued reported
i
<PAGE>
inflation, continued inflows of funds and fiscal and monetary policies favora-
ble toward the capital markets is widely apparent. The major concern of the
adviser is that much of the good news may already be imbedded at current price
levels. The adviser does not anticipate any significant changes in monetary or
fiscal policies which would drastically effect the current equilibrium.
The pages that follow discuss the performance, structure and strategy of each
of the M.S.D.&T. Funds, as well as providing a detailed list of assets
held(5). We appreciate your investment in the M.S.D.&T. Funds and welcome any
comments or questions regarding the Funds.
Sincerely,
/s/Leslie B. Disharoon
Leslie B. Disharoon
Chairman and President
ii
<PAGE>
SHARES OF THE M.S.D.&T. FUNDS, INC. ARE NOT BANK DEPOSITS OR OBLIGATIONS OF,
OR GUARANTEED, ENDORSED, OR OTHERWISE SUPPORTED BY MERCANTILE-SAFE DEPOSIT AND
TRUST COMPANY, ITS PARENT COMPANY OR ITS AFFILIATES, AND SUCH SHARES ARE NOT
FEDERALLY INSURED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPO-
RATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENTAL AGENCY. INVESTMENT
IN THE FUNDS INVOLVES RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
FOR MORE COMPLETE INFORMATION ON THE M.S.D.&T. FUNDS, INC., PLEASE CALL (800)
551-2145 TO RECEIVE A PROSPECTUS, WHICH SHOULD BE READ CAREFULLY BEFORE IN-
VESTING. BISYS FUNDS SERVICES SERVES AS THE FUNDS' DISTRIBUTOR.
(1) Total return and principal value of investments will fluctuate with market
changes and shares, when redeemed, may be worth more or less than their
original cost. Figures for the period indicated reflect fee waivers in effect,
reinvestment of dividends, distributions, and capital gains as well as changes
in share price. Fee waivers may result in higher total returns than would
occur if full fees were charged. Past performance is not a guarantee of future
results.
<TABLE>
<CAPTION>
VALUE INTERMEDIATE FIXED
EQUITY FUND INCOME FUND MARYLAND
(INSTITUTIONAL INTERNATIONAL (INSTITUTIONAL TAX-EXEMPT
SHARES) EQUITY FUND SHARES) BOND FUND
-------------- ------------- ------------------ ----------
<S> <C> <C> <C> <C>
Total Return for the one
year ended December 31,
1996................... 20.1% 10.2% 3.1% 3.1%
Annualized Total Return
for five years ended
December 31, 1996...... 12.7% N/A 5.6% N/A
Inception Date.......... 2/28/91 7/2/93 3/14/91 6/2/92
Average annual total re-
turn since inception to
December 31, 1996...... 13.1% 10.4% 6.4% 5.9%
</TABLE>
(2) International investing is subject to certain factors such as currency
exchange rate volatility, possible political, social or economic instability,
foreign taxation and/or differences in auditing and other financial standards.
(3) Investments in the money market portfolios are neither insured nor
guaranteed by the U.S. Government and there is no assurance that a money
market fund will be able to maintain a stable net asset value of $1.00 per
share. Yields will fluctuate as market conditions change. Past performance is
not a guarantee of future results.
Figures for the period indicated reflect fee waivers in effect. Fee waivers
may result in higher yields than would occur if full fees were charged. Absent
fee waivers, the seven-day yields for each Fund for the 7-day period ended No-
vember 30, 1996 would have been:
<TABLE>
<CAPTION>
PRIME GOVERNMENT TAX-EXEMPT TAX-EXEMPT (TRUST)
----- ---------- ---------- ------------------
<S> <C> <C> <C>
4.89% 4.85% 3.05% 3.31%
</TABLE>
(4) Taxable Equivalent Yield. Assumes 39.6% tax bracket. A portion of income
may be subject to some state and/or local taxes and for certain investors a
portion of income may be subject to the Federal alternative minimum tax.
(5) The composition of the Funds' holdings is subject to change.
- --------
iii
<PAGE>
THE M.S.D.&T. VALUE EQUITY FUND
The equity market continued to advance during the six months ended
November 30, 1996. The S&P 500 Index produced a total return of 14.4% for the
six months, a return well in excess of the long-run average return for equity
securities in the U.S. market.
The market benefited from the benign outlook for inflation and interest rates,
the continuation of the strong trend in corporate profits, and the ongoing
substantial inflow of funds for investment in the equity market. Although most
measures of valuation were at or near record highs, enthusiasm for common
stocks continued throughout the first half of the Fund's fiscal year.
The Institutional Shares of the M.S.D.&T. Value Equity Fund produced a total
return for the six-month period of 14.2%, nearly matching the return of the
general market. The Fund's holdings of larger consumer oriented companies,
whose earnings are not dependent on the business cycle, contributed to the re-
sult, as did well represented positions in the bank and insurance groups,
where falling interest rates aided earnings growth.
The recent focus on earnings growth and sustainability has resulted in a
slightly higher price/earnings ratio for the Fund and a slightly lower divi-
dend yield. Despite these changes, the Fund's yield and the portfolio rela-
tionship of price-to-earnings continues to be below the average of the general
market. During the past six months, the Fund's cash reserves have been kept at
minimal levels.
THE M.S.D.&T. INTERNATIONAL EQUITY FUND
Over the six months ended November 30, 1996, the International Equity Fund
produced a total return of 3.7%. Over the same period, the MSCI EAFE Index
gained 3.4%.
Despite strong performance in June, the Japanese market fell by more than 5%
in local currency terms during the period, with small cap stocks falling sig-
nificantly more than the large cap segment of the market. Returns to U.S. in-
vestors were further reduced by a strengthening U.S. dollar. Concerns about
the pace of the economic recovery were the catalysts for the decline, although
the most recent data suggests that a gradual recovery is in place. The Austra-
lian market posted modest gains over the six months, led by the industrial
sector. Hong Kong stocks enjoyed a strong run due to an improving economic
outlook in China, lower interest rates, rising property prices and accelerat-
ing corporate growth. Singapore stocks fell during the period but valuations
now look attractive on modest profit growth expectations.
The Continental European markets gained 8.9% in U.S. dollar terms during the
six months ended November 30, 1996. The Dutch market was the strongest, rising
19.4%. The economic environment continues to look positive for equities across
the Continent: interest rates have declined and further reductions are ex-
pected while inflation is likely to ease and remain subdued. The chemical, re-
tail, telecommunications and banking industries have been among the best-per-
forming. The U.K. market gained 17.3% in U.S. dollar terms over the period,
with over half of the returns coming from a stronger sterling. The currency
has strengthened due to economic growth and rising interest rates. The Inter-
national Equity Fund was able to participate in several successful new offer-
ings that contributed to overall return.
The exposure to emerging markets was boosted during the first half of the fis-
cal year and stands at just over 6% of the total portfolio. The largest hold-
ings are in Mexico, South Africa and Brazil.
iv
<PAGE>
THE M.S.D.&T. INTERMEDIATE FIXED INCOME FUND
After initially rising on fears of a tightening monetary policy, interest
rates reversed themselves and fell by 0.6% to 0.8% across the Treasury yield
curve by the end of the semi-annual period. Market participants were concerned
by rising commodity prices and a fear of rising wage pressure as the unemploy-
ment rate fell to new cyclical lows. However, when the Federal Reserve did not
act to raise short-term rates in late September, the market broke out of its
summer-long trading range, bringing down the yield on ten-year Treasuries to
about 6%.
During the past six months, investment quality within the Fund remained very
high. Combined Treasury, Government Agency and Government Mortgage exposure
totaled 82% of the Fund. During the first half of the semi-annual period, in-
vestments were made in the ten year area of the Treasury curve as yields ap-
proached 7%. Additionally, the corporate bond exposure was increased
incrementally in the five to ten year sector, as some yield spreads widened
near the end of the period. The average maturity of the Fund fell slightly by
0.1 years to 4.9 years.
As a result of the decline in interest rates, the Fund's Institutional Shares
enjoyed a strong rise in NAV over the period, increasing $0.33 to $10.52 per
share. Looking out over the next twelve to eighteen months, the investment ad-
viser is concerned by the increasing need for foreign investment to maintain
the current interest rate environment. Should yields around the world start to
rise due to increased economic activity, U.S. yields may be forced higher in a
sympathetic move. Outside of this need for foreign capital, the domestic indi-
cators continue to point to a benign interest rate environment.
THE M.S.D.&T. MARYLAND TAX-EXEMPT BOND FUND
For the six months ended November 30, 1996, the Maryland Tax-Exempt Bond Fund
earned a total return of 5.7%, reflecting declining interest rates as the
economy showed signs of slower growth and subdued inflation. Yields across
most fixed income markets finished the semi-annual period lower from where
they had started. Also occurring during the semi-annual period was a narrowing
of yield spreads between tax-exempt securities and taxable securities.
The investment adviser is expecting new issuance of municipal securities in
the State of Maryland for 1997 to remain somewhat constant as compared to
1996. However, current levels of issuance are roughly 70% of the volume issued
in 1992 and 1993. The decline in volume reflects the fact that most refunding
issues have already been completed and state and local governmental units are
being more careful in their spending and bonding programs.
Although Maryland's economy is experiencing growth, economies of neighboring
states are growing at somewhat faster rates. Despite this, Maryland continues
to be rated Aaa/AAA, as does a number of its counties, including Montgomery,
Howard, Baltimore and Anne Arundel.
While there is speculation of graduated tax reductions in Maryland over the
next several years, Maryland's state and local taxes remain relatively high.
Therefore, the management philosophy of the investment adviser is to maximize
the Fund's after-tax income while maintaining high credit standards. This has
resulted in a 13.3 year average maturity for the Fund as of November 30, 1996
and the investment adviser investing in securities rated A or better during
the semi-annual period.
v
<PAGE>
M.S.D.&T. FUNDS, INC.
PRIME MONEY MARKET FUND
STATEMENT OF NET ASSETS
NOVEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF PAR
NET ASSETS MATURITY (000) VALUE
------------- -------- ----- -----
<S> <C> <C> <C> <C>
AGENCY OBLIGATIONS................ 15.8%
FEDERAL FARM CREDIT BANK.......... 1.0%
Notes
5.60%............................ 06/03/97 $ 3,500 $ 3,497,530
------------
FEDERAL HOME LOAN BANK............ 2.8%
Floating Rate Notes**
5.27%............................ 12/03/96 10,000 9,996,931
------------
FEDERAL HOME LOAN MORTGAGE CORP... 4.3%
Discount Notes
5.22%............................ 01/17/97 15,000 14,897,775
------------
FEDERAL NATIONAL MORTGAGE ASSOCIA-
TION............................. 4.1%
Floating Rate Notes**
5.53%............................ 12/02/96 14,250 14,237,238
------------
STUDENT LOAN MARKETING ASSOCIA-
TION............................. 3.6%
Floating Rate Notes**
5.35%............................ 12/03/96 12,560 12,541,168
------------
TOTAL AGENCY OBLIGATIONS
(Cost $55,170,642)............ 55,170,642
------------
BANKERS' ACCEPTANCES.............. 4.3%
CoreStates Bank N.A.
5.26%............................ 12/10/96 5,000 4,993,425
5.29%............................ 01/28/97 10,000 9,914,772
------------
TOTAL BANKERS' ACCEPTANCES
(Cost $14,908,197)............. 14,908,197
------------
CERTIFICATES OF DEPOSIT........... 4.0%
EURODOLLAR........................ 4.0%
Morgan Guaranty Trust Co.
4.93%............................ 02/05/97 10,000 10,000,000
Union Bank of Switzerland -- New
York Branch
5.65%............................ 04/24/97 4,000 4,000,000
------------
TOTAL CERTIFICATES OF DEPOSIT
(Cost $14,000,000)............. 14,000,000
------------
</TABLE>
See Accompanying Notes to Financial Statements.
1
<PAGE>
M.S.D.&T. FUNDS, INC.
PRIME MONEY MARKET FUND
STATEMENT OF NET ASSETS -- CONTINUED
NOVEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF PAR
NET ASSETS MATURITY (000) VALUE
------------- -------- ----- -----
<S> <C> <C> <C> <C>
COMMERCIAL PAPER................. 41.4%
BEVERAGES........................ 2.9%
Coca-Cola Co., Inc.
5.20%........................... 12/20/96 $ 10,000 $ 9,972,556
------------
CHEMICALS........................ 4.6%
E.I. duPont de Nemours & Co.
5.26%........................... 01/14/97 4,000 3,974,284
5.25%........................... 02/07/97 12,000 11,881,000
------------
15,855,284
------------
CONSUMER GOODS................... 4.3%
Procter & Gamble Co.
5.28%........................... 01/23/97 7,000 6,945,587
5.25%........................... 02/10/97 8,000 7,917,167
------------
14,862,754
------------
ELECTRICAL EQUIPMENT............. 3.4%
Emerson Electric Co.
5.20%........................... 12/09/96 12,000 11,986,133
------------
FINANCE.......................... 8.8%
General Electric Capital Corp.
5.30%........................... 01/10/97 7,000 6,958,778
5.32%........................... 01/10/97 10,000 9,940,889
Norwest Financial, Inc.
5.28%........................... 01/21/97 14,000 13,895,280
------------
30,794,947
------------
MULTI-INDUSTRY................... 2.9%
Minnesota Mining & Manufacturing
Co.
5.21%........................... 12/20/96 10,000 9,972,503
------------
PETROLEUM........................ 5.4%
Amoco Corp.
5.22%........................... 01/24/97 12,000 11,906,040
Shell Oil Co.
5.22%........................... 12/20/96 7,000 6,980,715
------------
18,886,755
------------
PHARMACEUTICALS.................. 4.6%
Abbott Laboratories
5.23%........................... 12/27/96 10,000 9,962,228
5.25%........................... 02/04/97 6,000 5,943,125
------------
15,905,353
------------
</TABLE>
See Accompanying Notes to Financial Statements.
2
<PAGE>
M.S.D.&T. FUNDS, INC.
PRIME MONEY MARKET FUND
STATEMENT OF NET ASSETS -- CONTINUED
NOVEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF PAR
NET ASSETS MATURITY (000) VALUE
------------- -------- ----- -----
<S> <C> <C> <C> <C>
COMMERCIAL PAPER -- CONTINUED
UTILITIES -- TELEPHONE.............. 4.5%
BellSouth Capital Funding Corp.
5.28%.............................. 01/30/97 $ 6,000 $ 5,947,200
5.27%.............................. 02/06/97 10,000 9,901,919
-----------
15,849,119
-----------
TOTAL COMMERCIAL PAPER
(Cost $144,085,404)........... 144,085,404
-----------
CORPORATE BONDS..................... 4.2%
FINANCIAL SERVICES.................. 1.8%
Associates Corp. N.A.
8.70%.............................. 01/01/97 6,200 6,214,573
-----------
UTILITIES -- GAS.................... 2.4%
Wisconsin Natural Gas Co.
6.63%.............................. 01/15/97 8,440 8,449,894
-----------
TOTAL CORPORATE BONDS
(Cost $14,664,467)............ 14,664,467
-----------
REPURCHASE AGREEMENTS............... 28.2%
GOLDMAN, SACHS & CO.
(Agreement dated 11/29/96 to be
repurchased at $33,174,502
collateralized by $21,515,000
(Value $34,033,000) U.S. Treasury
Notes, 14.00%, due 11/15/11)
5.61%.............................. 12/02/96 33,159 33,159,000
J.P. MORGAN SECURITIES, INC.
(Agreement dated 11/29/96 to be
repurchased at $13,006,067
collateralized by $13,000,000
(Value $13,258,000) U.S. Treasury
Notes, 7.375%, due 11/15/97)
5.60%.............................. 12/02/96 13,000 13,000,000
MERRILL LYNCH GOVERNMENT SECURITIES,
INC.
(Agreement dated 11/29/96 to be
repurchased at $13,005,958
collateralized by $11,855,000
(Value $13,280,000) U.S. Treasury
Notes, 7.50%, due 11/15/16)
5.50%..............................
MORGAN STANLEY & CO., INC. 12/02/96 13,000 13,000,000
(Agreement dated 11/29/96 to be
repurchased at $13,006,034
collateralized by $11,870,000
(Value $13,284,000) U.S. Treasury
Notes, 7.875%, due 11/15/04)
5.57%.............................. 12/02/96 13,000 13,000,000
</TABLE>
See Accompanying Notes to Financial Statements.
3
<PAGE>
M.S.D.&T. FUNDS, INC.
PRIME MONEY MARKET FUND
STATEMENT OF NET ASSETS -- CONCLUDED
NOVEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF PAR
NET ASSETS MATURITY (000) VALUE
------------- -------- ----- -----
<S> <C> <C> <C> <C>
REPURCHASE AGREEMENTS -- CONTINUED
REPUBLIC NATIONAL BANK NEW YORK
(Agreement dated 11/29/96 to be
repurchased at $13,006,067
collateralized by $13,350,000 (Value
$13,275,000) U.S. Treasury Bills,
due 1/1/97)
5.60%............................... 12/02/96 $13,000 $ 13,000,000
WACHOVIA BANK OF NORTH CAROLINA, N.A.
(Agreement dated 11/29/96 to be
repurchased at $13,006,067
collateralized by $12,940,000 (Value
$13,277,000) U.S. Treasury Notes,
6.50%, due 8/15/97)
5.60%............................... 12/02/96 13,000 13,000,000
------------
TOTAL REPURCHASE AGREEMENTS
(Cost $98,159,000)............. 98,159,000
------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $340,987,710*)................ 97.9% 340,987,710
OTHER ASSETS IN EXCESS OF
LIABILITIES......................... 2.1% 7,176,215
------ ------------
NET ASSETS (equivalent to $1.00 per
share based on 348,246,496 shares
outstanding)........................ 100.0% $348,163,925
====== ============
NET ASSET VALUE, OFFERING AND REDEMP-
TION PRICE PER SHARE
($348,163,925 / 348,246,496)........ $1.00
=====
</TABLE>
- --------
* Aggregate cost for Federal income tax purposes.
** The rate shown is as of November 30, 1996 and the maturity date shown is
the longer of (i) the next interest readjustment date or (ii) the date on
which the principal amount can be recovered through demand.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
PRIME MONEY MARKET FUND
MATURITY SCHEDULE OF PORTFOLIO
NOVEMBER 30, 1996
(UNAUDITED)
MATURITY
PERIOD AMOUNT PAR PERCENTAGE OF PORTFOLIO
------------- ------------ ------------------------------
(CUM)
<S> <C> <C> <C>
1-- 7 days $120,719,000 35.29% 35.29%
8-- 14 days 17,000,000 4.97% 40.26%
15-- 30 days 37,000,000 10.82% 51.08%
31-- 60 days 93,640,000 27.37% 78.45%
61-- 90 days 52,000,000 15.20% 93.65%
91--120 days 14,250,000 4.17% 97.82%
Over 120 days 7,500,000 2.18% 100.00%
------------ -------
$342,109,000 100.00%
------------ -------
Average Weighted Maturity -- 35 days
- ----------------------------------------------------------------------------------
</TABLE>
See Accompanying Notes to Financial Statements.
4
<PAGE>
M.S.D.&T. FUNDS, INC.
GOVERNMENT MONEY MARKET FUND
STATEMENT OF NET ASSETS
NOVEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF PAR
NET ASSETS MATURITY (000) VALUE
------------- -------- ----- -----
<S> <C> <C> <C> <C>
AGENCY OBLIGATIONS................ 60.3%
FEDERAL FARM CREDIT BANK.......... 10.2%
Discount Notes
5.17%............................ 12/03/96 $10,000 $ 9,997,128
5.21%............................ 01/23/97 4,750 4,713,566
5.20%............................ 02/10/97 5,940 5,879,082
5.21%............................ 02/18/97 10,000 9,885,669
------------
30,475,445
------------
FEDERAL HOME LOAN BANK............ 13.3%
Discount Notes
5.28%............................ 01/06/97 3,000 2,984,160
5.22%............................ 01/09/97 10,000 9,943,450
5.20%............................ 01/16/97 13,000 12,913,622
5.20%............................ 02/06/97 10,000 9,903,222
Notes
5.40%............................ 03/20/97 4,000 3,999,062
------------
39,743,516
------------
FEDERAL HOME LOAN MORTGAGE CORP... 13.4%
Discount Notes
5.37%............................ 12/06/96 3,000 2,997,763
5.27%............................ 12/12/96 10,000 9,983,897
5.33%............................ 12/13/96 10,000 9,982,233
5.23%............................ 02/11/97 10,000 9,895,500
5.22%............................ 02/12/97 7,000 6,925,905
------------
39,785,298
------------
FEDERAL NATIONAL MORTGAGE ASSOCIA-
TION............................. 11.4%
Discount Notes
5.36%............................ 12/11/96 2,000 1,997,022
5.22%............................ 12/16/96 8,195 8,177,176
5.19%............................ 12/19/96 9,000 8,976,645
5.20%............................ 02/03/97 15,000 14,861,333
------------
34,012,176
------------
STUDENT LOAN MARKETING ASSOCIA-
TION............................. 4.7%
Floating Rate Notes**
5.35%............................ 12/02/96 4,000 3,994,006
5.53%............................ 12/02/96 10,000 10,000,000
------------
13,994,006
------------
</TABLE>
See Accompanying Notes to Financial Statements.
5
<PAGE>
M.S.D.&T. FUNDS, INC.
GOVERNMENT MONEY MARKET FUND
STATEMENT OF NET ASSETS -- CONTINUED
NOVEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF PAR
NET ASSETS MATURITY (000) VALUE
------------- -------- ----- -----
<S> <C> <C> <C> <C>
AGENCY OBLIGATIONS -- CONTINUED
TENNESSEE VALLEY AUTHORITY.......... 7.3%
Discount Notes
5.17%.............................. 01/21/97 $12,000 $ 11,912,110
5.20%.............................. 01/22/97 10,000 9,924,889
------------
21,836,999
------------
TOTAL AGENCY OBLIGATIONS
(Cost $179,847,440)........... 179,847,440
------------
U.S. TREASURY OBLIGATIONS........... 7.4%
U.S. TREASURY NOTES................. 7.4%
7.50%.............................. 12/31/96 1,000 1,001,661
6.25%.............................. 01/31/97 6,000 6,007,503
7.50%.............................. 01/31/97 5,000 5,018,925
4.75%.............................. 02/15/97 5,000 4,991,935
6.00%.............................. 08/31/97 5,000 5,010,076
------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $22,030,100)............ 22,030,100
------------
REPURCHASE AGREEMENTS............... 30.1%
GOLDMAN, SACHS & CO.
(Agreement dated 11/29/96 to be
repurchased at $5,018,345
collateralized by $3,695,000
(Value $5,143,000) U.S. Treasury
Notes, 11.75%, due 2/15/10)
5.61%.............................. 12/02/96 5,016 5,016,000
J.P. MORGAN SECURITIES, INC.
(Agreement dated 11/29/96 to be
repurchased at $17,007,933
collateralized by $15,891,000
(Value $17,387,000) U.S. Treasury
Notes, 7.75%, due 11/30/99)
5.60%.............................. 12/02/96 17,000 17,000,000
MERRILL LYNCH GOVERNMENT
SECURITIES, INC.
(Agreement dated 11/29/96 to be
repurchased at $17,007,792
collateralized by $14,590,000
(Value $17,378,000) U.S. Treasury
Notes, 7.875%, due 2/15/21)
5.50%.............................. 12/02/96 17,000 17,000,000
MORGAN STANLEY & CO., INC.
(Agreement dated 11/29/96 to be
repurchased at $17,007,891
collateralized by $15,525,000
(Value $17,375,000) U.S. Treasury
Notes, 7.875%, due 11/15/04)
5.57%.............................. 12/02/96 17,000 17,000,000
</TABLE>
See Accompanying Notes to Financial Statements.
6
<PAGE>
M.S.D.&T. FUNDS, INC.
GOVERNMENT MONEY MARKET FUND
STATEMENT OF NET ASSETS -- CONCLUDED
NOVEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF PAR
NET ASSETS MATURITY (000) VALUE
REPURCHASE AGREEMENTS -- CONTINUED ------------- -------- ----- -----
<S> <C> <C> <C> <C>
REPUBLIC NATIONAL BANK NEW YORK
(Agreement dated 11/29/96 to be
repurchased at $17,007,933
collateralized by $17,450,000 (Value
$17,352,000) U.S. Treasury Bills,
due 1/1/97)
5.60%............................... 12/02/96 $17,000 $ 17,000,000
WACHOVIA BANK OF NORTH CAROLINA, N.A.
(Agreement dated 11/29/96 to be
repurchased at $17,007,933
collateralized by $16,920,000 (Value
$17,361,000) U.S. Treasury Notes,
6.50%, due 8/15/97)
5.60%............................... 12/02/96 17,000 17,000,000
------------
TOTAL REPURCHASE AGREEMENTS
(Cost $90,016,000)............. 90,016,000
------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $291,893,540*)................ 97.8% 291,893,540
OTHER ASSETS IN EXCESS OF LIABILI-
TIES................................ 2.2% 6,482,218
------ ------------
NET ASSETS (equivalent to $1.00 per
share based on 298,530,961 shares
outstanding)........................ 100.0% $298,375,758
====== ============
NET ASSET VALUE, OFFERING AND REDEMP-
TION PRICE PER SHARE
($298,375,758 / 298,530,961)........ $1.00
=====
</TABLE>
- --------
* Aggregate cost for Federal income tax purposes.
** The rate shown is as of November 30, 1996 and the maturity date shown is
the longer of (i) the next interest readjustment date or (ii) the date on
which the principal amount can be recovered through demand.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
GOVERNMENT MONEY MARKET FUND
MATURITY SCHEDULE OF PORTFOLIO
NOVEMBER 30, 1996
(UNAUDITED)
MATURITY PERIOD AMOUNT PAR PERCENTAGE OF PORTFOLIO
--------------- ------------ ----------------------------
(CUM)
<S> <C> <C> <C>
1-- 7 days $117,016,000 39.95% 39.95%
8-- 14 days 22,000,000 7.51% 47.46%
15-- 30 days 17,195,000 5.87% 53.33%
31-- 60 days 53,750,000 18.35% 71.68%
61-- 90 days 73,940,000 25.24% 96.92%
91--120 days 4,000,000 1.37% 98.29%
Over 120 days 5,000,000 1.71% 100.00%
------------ -------
$292,901,000 100.00%
------------ -----------
Average Weighted Maturity -- 36 days
- -------------------------------------------------------------------------------------
</TABLE>
See Accompanying Notes to Financial Statements.
7
<PAGE>
M.S.D.&T. FUNDS, INC.
TAX-EXEMPT MONEY MARKET FUND
STATEMENT OF NET ASSETS
NOVEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF PAR
NET ASSETS MATURITY (000) VALUE
------------- -------- ------ -----
<S> <C> <C> <C> <C>
ARKANSAS.............................. 1.5%
Pulaski County, VRDN, (Minnesota
Mining & Manufacturing Co.)
3.30% (Aaa/NA, AAA/A-1+)**........... 12/06/96 $ 400 $ 400,000
3.30% (Aaa/NA, AAA/NA)**............. 12/06/96 400 400,000
---------
800,000
---------
ARIZONA............................... 2.3%
Arizona State, RB, Waste Water
Treatment
5.60% (Aa1/NA, AA+/NA)............... 07/01/97 1,000 1,010,188
Salt River, RB, (Arizona Agriculture
Project) Prerefunded @ 102
7.50% (Aaa/NA, AAA/NA)............... 01/01/97 250 255,769
---------
1,265,957
---------
CONNECTICUT........................... 3.7%
Connecticut Health & Educational
Facilities, TECP, (Yale University)
3.50% (Aaa/VMIG1, AAA/A-1+).......... 12/10/96 2,000 2,000,000
---------
FLORIDA............................... 4.6%
Jacksonville Electric Authority, TECP,
LA: Morgan Guaranty Trust Co.
3.60% (Aa1/P-1, AA/A-1+)............. 01/06/97 2,500 2,500,000
---------
ILLINOIS.............................. 4.9%
Illinois Educational Facilities, VRDN,
(Northwestern University), LIC:
Northern Trust Co.
3.60% (Aa1/VMIG1, AA/A-1+)**......... 12/06/96 2,626 2,626,000
---------
INDIANA............................... 3.5%
City of Mount Vernon, TECP, PCR,
(General Electric Co.)
3.45% (Aaa/P-1, AAA/A-1+)............ 01/23/97 1,860 1,860,000
---------
KANSAS................................ 4.4%
Kansas State, VRDN, Department of
Transportation Highway Revenue,
LA: Kansas State Pooled Money
Investment Board
3.40% (Aa/VMIG1, AA/A-1+)**.......... 12/06/96 1,300 1,300,000
Wyandotte County, COP, (Criminal
Justice Complex Project), Prerefunded
@ 102, INS: FGIC
7.875% (Aaa/NA, AAA/NA).............. 09/01/97 1,000 1,051,130
---------
2,351,130
---------
KENTUCKY.............................. 1.9%
Jefferson County, TECP, PCR, (LG&E)
3.40% (Aa2/VMIG1, AA/A-1+)........... 12/05/96 1,000 1,000,000
---------
</TABLE>
See Accompanying Notes to Financial Statements.
8
<PAGE>
M.S.D.&T. FUNDS, INC.
TAX-EXEMPT MONEY MARKET FUND
STATEMENT OF NET ASSETS -- CONTINUED
NOVEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF PAR
NET ASSETS MATURITY (000) VALUE
------------- -------- ----- -----
<S> <C> <C> <C> <C>
LOUISIANA..................... 4.5%
Plaquemine Parish Port &
Harbor
Terminal District, TECP,
(TECO Energy, Inc.)
3.40% (A1/P-1, AA-/A-1+)..... 01/08/97 $1,000 $1,000,000
3.50% (A1/P-1, AA-/A-1+)..... 01/16/97 1,400 1,400,000
----------
2,400,000
----------
MARYLAND...................... 3.8%
Montgomery County, TECP, SPA:
Union Bank of Switzerland
3.35% (Aaa/P-1, AAA/A-1+) ... 12/02/96 1,000 1,000,000
Washington Suburban Sanitation
District, GO, Prerefunded @
102
7.25% (Aaa/NA, AAA/NA)....... 01/01/97 500 511,437
7.375% (Aaa/NA, AA/NA)....... 01/01/97 500 511,510
----------
2,022,947
----------
MICHIGAN...................... 2.0%
University of Michigan, VRDN,
Hospital Revenue
4.15% (Aa2/VMIG1, AA/NA)**... 12/02/96 1,100 1,100,000
----------
MINNESOTA..................... 4.5%
City of Rochester, TECP, (Mayo
Foundation/Mayo Clinic)
3.50% (NA/NA, AA+/A-1+)...... 01/10/97 1,000 1,000,000
3.50% (NA/NA, AA+/A-1+)...... 02/04/97 1,400 1,400,000
----------
2,400,000
----------
MISSISSIPPI................... 3.0%
Jackson County, VRDN, Port
Facilities, (Chevron USA
Inc.)
4.15% (Aa2/P-1, NA/NA)**..... 12/02/96 1,600 1,600,000
----------
MISSOURI...................... 1.9%
Industrial Development
Authority of Boone County,
VRDN,
(Minnesota Mining &
Manufacturing Co.)
3.30% (Aaa/P-1, NA/NA)**..... 12/06/96 1,000 1,000,000
----------
NORTH CAROLINA................ 14.0%
City of Durham, VRDN, COP,
SPA: Wachovia Bank of North
Carolina
3.40% (Aa1/VMIG1, AAA/A-
1+)**....................... 12/06/96 2,000 2,000,000
City of Winston-Salem, VRDN,
COP, SPA: Credit Suisse
3.50% (Aa1/VMIG1, AAA/A-1+)**
............................ 12/06/96 2,500 2,500,000
North Carolina Educational
Facilities, VRDN, (Duke
University)
3.40% (Aa1/VMIG1, AA+/A-1+)**
............................ 12/06/96 3,000 3,000,000
----------
7,500,000
----------
</TABLE>
See Accompanying Notes to Financial Statements.
9
<PAGE>
M.S.D.&T. FUNDS, INC.
TAX-EXEMPT MONEY MARKET FUND
STATEMENT OF NET ASSETS -- CONTINUED
NOVEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF PAR
NET ASSETS MATURITY (000) VALUE
------------- -------- ------ -----
<S> <C> <C> <C> <C>
OREGON........................... 5.7%
Metropolitan Service District,
GO, (Convention Center Project)
ETM
6.40% (Aaa/NA, AAA/NA).......... 12/01/96 $ 650 $ 650,000
State of Oregon, GO, VRDN,
Veterans Welfare Board, LOC:
Morgan Guaranty Trust Co.
3.45% (Aa1/VMIG1, AAA/A-1+)**... 12/06/96 2,400 2,400,000
----------
3,050,000
----------
PENNSYLVANIA..................... 2.4%
Montgomery County, VRDN, SPA:
CoreStates Bank N.A.
3.45% (Aaa/VMIG1, NA/NA)**...... 12/06/96 250 250,000
Pennsylvania Turnpike, RB,
Prerefunded @102
7.875% (Aaa/NA, AAA/NA)............ 12/01/96 1,000 1,020,000
----------
1,270,000
----------
SOUTH CAROLINA................... 3.7%
York County, TECP, PCR, (Duke
Power)
3.50% (Aa2/VMIG1, AA-/A-1+)..... 01/08/97 1,000 1,000,000
3.625% (Aa2/VMIG1, AA-/A-1+).... 01/16/97 1,000 1,000,000
----------
2,000,000
----------
TENNESSEE........................ 5.7%
Shelby County, GO, School Board,
Prerefunded @ 102
6.50% (Aa/NA, AAA/NA)........... 08/01/97 1,000 1,036,327
Tennessee State, VRDN, BAN, SPA:
Tennessee State Retirement
System
3.50% (NA/SP-1+, NA/A-1+)**..... 12/06/96 2,000 2,000,000
----------
3,036,327
----------
TEXAS............................ 10.3%
Harris County, Health Facilities
Development, VRDN,
(Methodist Hospital) SPA:
Morgan Guaranty Trust Co. 50%
4.10% (NA/NA, AA/A-1+)**........ 12/02/96 1,000 1,000,000
Harris County, Health Facilities
Development, VRDN,
(St. Luke's Episcopal Hospital
Project), SPA:
Morgan Guaranty Trust Co.
4.10% (NA/NA, AA/A-1+)**........ 12/02/96 2,000 2,000,000
State of Texas, TRAN
4.75% (NA/MIG1, NA/SP-1+)....... 08/29/97 2,500 2,514,630
----------
5,514,630
----------
WEST VIRGINIA.................... 3.7%
Marshall County, VRDN, PCR,
Mountaineer Carbon Co. Project
4.10% (Aa3/P-1, AA-/A-1+)**..... 12/02/96 2,000 2,000,000
----------
</TABLE>
See Accompanying Notes to Financial Statements.
10
<PAGE>
M.S.D.&T. FUNDS, INC.
TAX-EXEMPT MONEY MARKET FUND
STATEMENT OF NET ASSETS -- CONCLUDED
NOVEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF PAR
NET ASSETS MATURITY (000) VALUE
------------- -------- ------ -----
<S> <C> <C> <C> <C>
WISCONSIN...................... 6.3%
Oak Creek, VRDN, PCR,
(Wisconsin Electric Power Co.)
3.65% (Aa3/P-1, AA/NA)**...... 12/06/96 $ 2,100 $ 2,100,000
State of Wisconsin, GO
4.50% (NA/MIG1, NA/SP-1+)..... 06/16/97 1,250 1,254,425
-----------
3,354,425
-----------
TOTAL MUNICIPAL BONDS (Cost
$52,651,416).............. 52,651,416
-----------
<CAPTION>
NUMBER
OF SHARES
---------
<S> <C> <C> <C> <C>
INVESTMENT COMPANIES........... 1.3%
Goldman Sachs Financial Square
Tax-Free Money Market Fund.... 566,949 566,949
Municipal Fund for Temporary
Investments -- MuniFund....... 138,034 138,034
-----------
TOTAL INVESTMENT COMPANIES
(Cost $704,983)........... 704,983
-----------
TOTAL INVESTMENTS IN SECURITIES
(Cost $53,356,399*)........... 99.6% 53,356,399
OTHER ASSETS IN EXCESS OF
LIABILITIES................... 0.4% 214,970
------ -----------
NET ASSETS (equivalent to $1.00
per share based on 53,577,935
shares outstanding)........... 100.0% $53,571,369
====== ===========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE
($53,571,369 / 53,577,935).... $1.00
=====
</TABLE>
- --------
* Aggregate cost for Federal income tax purposes.
** The rate shown is as of November 30, 1996 and the maturity date shown is
the longer of (i) the next interest readjustment date or (ii) the date on
which the principal amount can be recovered through demand.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
TAX-EXEMPT MONEY MARKET FUND
MATURITY SCHEDULE OF PORTFOLIO
NOVEMBER 30, 1996
(UNAUDITED)
MATURITY PERIOD AMOUNT PAR PERCENTAGE OF PORTFOLIO
--------------- ---------- -----------------------
(CUM)
<S> <C> <C> <C>
1-- 7 days $31,030,983 58.34% 58.34%
31-- 60 days 6,510,000 12.24% 70.58%
61-- 90 days 3,400,000 6.39% 76.97%
91--120 days 3,500,000 6.58% 83.55%
Over 120 days 8,750,000 16.45% 100.00%
----------- --------
$53,190,983 100.00%
=========== ========
Average Weighted Maturity -- 56 days
- -------------------------------------------------------------------------------------
</TABLE>
See Accompanying Notes to Financial Statements.
11
<PAGE>
M.S.D.&T. FUNDS, INC.
TAX-EXEMPT MONEY MARKET FUND (TRUST)
STATEMENT OF NET ASSETS
NOVEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF PAR
NET ASSETS MATURITY (000) VALUE
------------- -------- ----- -----
<S> <C> <C> <C> <C>
ALABAMA............................ 3.7%
City of Montgomery, TECP, PCR,
(General Electric Co.)
3.45% (Aaa/P-1, AAA/A-1+)......... 01/23/97 $ 2,000 $ 2,000,000
-----------
ARIZONA............................ 0.5%
Salt River, RB, (Arizona
Agriculture Project) Prerefunded @
102
7.50% (Aaa/NA, AAA/NA)............ 01/01/97 250 255,769
-----------
ARKANSAS........................... 1.9%
Pulaski County, VRDN, (Minnesota
Mining & Manufacturing Co.)
3.30% (Aaa/NA, AAA/A-1+)**........ 12/06/96 1,000 1,000,000
-----------
COLORADO........................... 3.7%
Colorado State TRAN
4.50% (NA/NA, NA/SP-1+)........... 06/27/97 2,000 2,008,913
-----------
CONNECTICUT........................ 5.7%
Connecticut Health & Educational
Facilities, TECP, (Yale
University)
3.50% (Aaa/VMIG1, AAA/A-1+)....... 12/10/96 2,000 2,000,000
Connecticut State, GO
4.40% (Aa/NA, AA-/NA)............. 12/01/96 1,100 1,100,000
-----------
3,100,000
-----------
FLORIDA............................ 3.3%
Jacksonville Electric Authority,
TECP, LA: Morgan Guaranty Trust
Co.
3.60% (Aa1/P-1, AA/A-1+).......... 01/06/97 1,800 1,800,000
-----------
ILLINOIS........................... 5.0%
Illinois Educational Facilities,
VRDN, (Northwestern University),
LIC:
Northern Trust Co.
3.60% (Aa1/VMIG1, AA/A-1+)**...... 12/06/96 2,093 2,093,000
Village of Bedford Park, VRDN,
(Minnesota Mining & Manufacturing
Co.)
3.30% (Aaa/NA, AAA/A-1+)**........ 12/06/96 600 600,000
-----------
2,693,000
-----------
KANSAS............................. 2.4%
Kansas State, VRDN, Department of
Transportation Highway Revenue,
LA:
Kansas State Pooled Money Invest-
ment Board
3.45% (Aa/VMIG1, AA/A-1+)**....... 12/06/96 1,300 1,300,000
-----------
KENTUCKY........................... 3.4%
Jefferson County, TECP, PCR, (LG&E)
3.40% (Aa2/VMIG1,AA/A-1+)......... 12/05/96 1,850 1,850,000
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
12
<PAGE>
M.S.D.&T. FUNDS, INC.
TAX-EXEMPT MONEY MARKET FUND (TRUST)
STATEMENT OF NET ASSETS -- CONTINUED
NOVEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF PAR
NET ASSETS MATURITY (000) VALUE
------------- -------- ----- -----
<S> <C> <C> <C> <C>
LOUISIANA............................... 3.3%
Lake Charles, Harbor & Terminal
District, VRDN,
(Conoco Inc. Project), (E.I. duPont)
4.20% (Aa3/P-1, AA-/A-1+)**............ 12/02/96 $ 800 $ 800,000
Plaquemine Parish Port & Harbor Terminal
District, TECP,
(TECO Energy, Inc.)
3.40% (A1/P-1, AA-/A-1+).................. 12/05/96 1,000 1,000,000
----------
1,800,000
----------
MARYLAND................................ 5.6%
Montgomery County, TECP, SPA: Union Bank
of Switzerland
3.45% (Aaa/P-1, AAA/A-1+).............. 01/06/97 2,000 2,000,000
Washington Suburban Sanitation District,
GO, Prerefunded @ 102
7.25% (Aaa/NA, AAA/NA)................. 01/01/97 500 511,510
7.375% (Aaa/NA, AA/NA)................. 01/01/97 500 511,437
----------
3,022,947
----------
MICHIGAN................................ 2.6%
University of Michigan, VRDN, Hospital
Revenue
4.15% (Aa2/VMIG1, AA/NA)**............. 12/02/96 1,400 1,400,000
----------
MINNESOTA............................... 4.3%
City of Rochester, TECP, (Mayo
Foundation/Mayo Clinic)
3.40% (NA/NA, AA+/A-1+)................ 01/10/97 1,500 1,500,000
3.50% (NA/NA, AA+/A-1+)................ 01/10/97 800 800,000
----------
2,300,000
----------
MISSISSIPPI............................. 3.7%
Jackson County, VRDN, Port Facilities,
(Chevron USA Inc.)
4.15% (Aa2/P-1, NA/NA)**............... 12/02/96 2,000 2,000,000
----------
NORTH CAROLINA.......................... 12.0%
City of Durham, VRDN, COP, SPA: Wachovia
Bank of North Carolina
3.40% (Aa1/VMIG1, AAA/A-1+)**.......... 12/06/96 2,000 2,000,000
City of Winston-Salem, VRDN, COP, SPA:
Credit Suisse
3.50% (Aa1/VMIG1, AAA/A-1+)**.......... 12/06/96 2,000 2,000,000
City of Winston-Salem, VRDN, GO, SPA:
Credit Suisse
3.45%(Aa1/VMIG1, AAA/A-1+)**........... 12/06/96 600 600,000
North Carolina Educational Facilities,
VRDN, (Duke University)
3.40% (Aa1/VMIG1, AAA/A-1+)**.......... 12/06/96 1,900 1,900,000
----------
6,500,000
----------
OREGON.................................. 4.5%
Oregon State, GO, VRDN, Veterans Welfare
Board, LOC:
Morgan Guaranty Trust Co.
3.45% (Aa1/VMIG1, AAA/A-1+)**.......... 12/06/96 2,400 2,400,000
----------
</TABLE>
See Accompanying Notes to Financial Statements.
13
<PAGE>
M.S.D.&T. FUNDS, INC.
TAX-EXEMPT MONEY MARKET FUND (TRUST)
STATEMENT OF NET ASSETS -- CONTINUED
NOVEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF PAR
NET ASSETS MATURITY (000) VALUE
------------- -------- ----- -----
<S> <C> <C> <C> <C>
PENNSYLVANIA........................ 1.4%
Delaware County, VRDN, IDA, Airport
Facility RB, (United Parcel
Service)
3.90% (Aaa/P-1, AAA/NA)**.......... 12/02/96 $ 500 $ 500,000
Montgomery County, VRDN, SPA:
CoreStates Bank N.A.
3.45% (Aaa/VMIG1, NA/NA)**......... 12/06/96 250 250,000
-----------
750,000
-----------
SOUTH CAROLINA...................... 3.7%
York County, TECP, PCR, (Duke Power)
3.625% (Aa2/VMIG1, AA-/A-1+)....... 01/16/97 1,000 1,000,000
3.55% (Aa2/VMIG1, AA-/A-1+)........ 02/05/97 1,000 1,000,000
-----------
2,000,000
-----------
TENNESSEE........................... 4.6%
Tennessee State, VRDN, BAN, SPA:
Tennessee State Retirement System
3.50% (NA/SP-1+, NA/A-1+)**........ 12/06/96 2,500 2,500,000
-----------
TEXAS............................... 12.1%
Harris County, Health Facilities
Development, VRDN,
(Methodist Hospital), SPA: Morgan
Guaranty Trust Co. 50%
4.10% (NA/NA, AA/A-1+)**........... 12/02/96 2,000 2,000,000
Harris County, Health Facilities
Development, VRDN, (St. Luke's
Episcopal Hospital Project), SPA:
Morgan Guaranty Trust Co.
4.10% (NA/NA, AA/A-1+)**........... 12/02/96 2,000 2,000,000
State of Texas, TRAN
4.75% (NA/MIG1, NA/SP-1+).......... 08/29/97 2,500 2,514,630
-----------
6,514,630
-----------
WEST VIRGINIA....................... 0.9%
Marshall County, VRDN, PCR,
Mountaineer Carbon Co. Project
4.10% (Aa3/P-1, AA-/A-1+)**........ 12/02/96 500 500,000
-----------
WISCONSIN........................... 7.1%
Oak Creek, VRDN, PCR, (Wisconsin
Electric Power Co.)
3.65% (Aa3/P-1, AA/NA)**........... 12/06/96 2,100 2,100,000
State of Wisconsin, GO
4.50% (NA/MIG1, NA/SP-1+).......... 06/16/97 1,750 1,756,195
-----------
3,856,195
-----------
WYOMING............................. 3.9%
Lincoln County, VRDN, PCR, (Exxon
Corp.)
4.15% (Aaa/NA, AAA/A-1+)**......... 12/02/96 500 500,000
Sublette County, VRDN, PCR, (Exxon
Corp.)
4.15% (Aaa/NA, AAA/A-1+)**......... 12/02/96 1,600 1,600,000
-----------
2,100,000
-----------
TOTAL MUNICIPAL BONDS (Cost
$53,651,454)....................... 53,651,454
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
14
<PAGE>
M.S.D.&T. FUNDS, INC.
TAX-EXEMPT MONEY MARKET FUND (TRUST)
STATEMENT OF NET ASSETS -- CONCLUDED
NOVEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF NUMBER OF
NET ASSETS SHARES VALUE
------------- --------- -----
<S> <C> <C> <C>
INVESTMENT COMPANIES....................... 0.4%
Goldman Sachs Financial Square Tax- Free
Money Market Fund......................... 218,320 $ 218,320
Municipal Fund for Temporary Intestments --
MuniFund................................. 3,667 3,667
-----------
TOTAL INVESTMENT COMPANIES
(Cost $221,987).......................... 221,987
-----------
TOTAL INVESTMENTS IN SECURITIES
(Cost $53,873,441*)....................... 99.7% 53,873,441
OTHER ASSETS IN EXCESS OF LIABILITIES...... 0.3% 156,301
------ -----------
NET ASSETS (equivalent to $1.00 per share
based on 54,027,919 shares outstanding)... 100.0% $54,029,742
====== ===========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE
($54,029,742 / 54,027,919)................ $1.00
===========
</TABLE>
- --------
* Aggregate cost for Federal income tax purposes.
** The rate shown is as of November 30, 1996 and the maturity date shown is
the longer of (i) the next interest readjustment date or (ii) the date on
which the principal amount can be recovered through demand.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
TAX-EXEMPT MONEY MARKET FUND (TRUST)
MATURITY SCHEDULE OF PORTFOLIO
NOVEMBER 30, 1996
(UNAUDITED)
MATURITY PERIOD AMOUNT PAR PERCENTAGE OF PORTFOLIO
--------------- ---------- ----------------------------
(CUM)
<S> <C> <C> <C>
1-- 7 days $31,364,987 58.28% 58.28%
31-- 60 days 9,600,000 17.84% 76.12%
61-- 90 days 4,000,000 7.43% 83.55%
91--120 days 1,800,000 3.34% 86.89%
Over 120 days 7,050,000 13.11% 100.00%
----------- -------
$53,814,987 100.00%
=========== =======
Average Weighted Maturity -- 48 days
- -------------------------------------------------------------------------------------
</TABLE>
See Accompanying Notes to Financial Statements.
15
<PAGE>
M.S.D.&T. FUNDS, INC.
VALUE EQUITY FUND
STATEMENT OF NET ASSETS
NOVEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF NUMBER OF
NET ASSETS SHARES VALUE
------------- --------- -----
<S> <C> <C> <C>
COMMON STOCK............................... 97.8%
AIRLINES................................... 1.6%
Southwest Airlines Co..................... 76,700 $ 1,898,325
------------
BANKS...................................... 7.9%
Barnett Banks, Inc........................ 32,000 1,408,000
CoreStates Financial Corp................. 54,000 2,909,250
J.P. Morgan & Co.......................... 27,000 2,548,125
Regions Financial Corp.................... 19,500 1,045,688
Sun Trust Banks Inc....................... 36,000 1,827,000
------------
9,738,063
------------
BEVERAGES.................................. 2.3%
Pepsico Inc............................... 93,000 2,778,375
------------
CHEMICALS.................................. 6.0%
Air Products & Chemicals Inc.............. 43,000 2,988,500
E.I. duPont deNemours & Co................ 46,300 4,363,775
------------
7,352,275
------------
COMPUTER EQUIPMENT......................... 5.0%
Hewlett-Packard Co........................ 54,400 2,930,800
International Business Machine Corp....... 20,000 3,187,500
------------
6,118,300
------------
COMPUTER SOFTWARE.......................... 1.7%
AutoDesk Inc.............................. 24,000 672,000
Electronic Data Services Corp............. 30,000 1,451,250
------------
2,123,250
------------
CONSUMER GOODS............................. 3.5%
Colgate Palmolive Co...................... 26,700 2,473,088
Proctor & Gamble Co....................... 17,000 1,848,750
------------
4,321,838
------------
ELECTRICAL EQUIPMENT....................... 4.8%
ABB AB ADR................................ 15,000 1,723,125
General Electric Co....................... 28,000 2,912,000
Hubbell, Inc. "B"......................... 28,800 1,209,600
------------
5,844,725
------------
ELECTRONICS................................ 2.5%
Intel Corp................................ 24,300 3,083,063
------------
</TABLE>
See Accompanying Notes to Financial Statements.
16
<PAGE>
M.S.D.&T. FUNDS, INC.
VALUE EQUITY FUND
STATEMENT OF NET ASSETS -- CONTINUED
NOVEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF NUMBER OF
NET ASSETS SHARES VALUE
------------- --------- -----
COMMON STOCK -- CONTINUED
<S> <C> <C> <C>
FOODS..................................... 5.6%
Giant Food, Inc. "A"..................... 73,500 $ 2,480,625
McCormick & Co., Inc..................... 80,000 1,970,000
Nestle Registered ADR.................... 43,900 2,384,903
------------
6,835,528
------------
HOME FURNISHINGS.......................... 0.3%
Maytag Corp.............................. 21,000 401,625
------------
INDUSTRIAL GOODS.......................... 4.0%
Corning Inc.............................. 68,400 2,770,200
PPG Industries Inc....................... 36,000 2,205,000
------------
4,975,200
------------
INSURANCE................................. 7.4%
Chubb Corp............................... 55,000 2,983,750
General RE Corp.......................... 4,700 793,125
Jefferson Pilot Corp..................... 10,000 582,500
Lincoln National Corp.................... 42,100 2,268,138
Unum Corp................................ 34,500 2,453,812
------------
9,081,325
------------
IRON/STEEL................................ 1.5%
Worthington Industries Inc............... 93,000 1,848,375
------------
MACHINERY & HEAVY EQUIPMENT............... 3.6%
Caterpillar, Inc......................... 16,000 1,266,000
Giddings & Lewis Inc..................... 68,000 799,000
Illinois Tool Works, Inc................. 27,600 2,366,700
------------
4,431,700
------------
MANUFACTURING............................. 1.3%
Eastman Kodak Co......................... 20,000 1,620,000
------------
MEDICAL INSTRUMENTS & SUPPLIES............ 2.4%
Johnson & Johnson........................ 55,000 2,921,875
------------
NATURAL GAS............................... 1.4%
Questar Corp............................. 45,400 1,776,275
------------
OIL EQUIPMENT & SERVICES.................. 4.2%
Halliburton Co........................... 22,922 1,381,050
Quaker State Corp........................ 80,000 1,370,000
Schlumberger Ltd. ADR.................... 23,300 2,423,200
------------
5,174,250
------------
PAPER & FOREST PRODUCTS................... 1.7%
Westvaco Corp............................ 72,300 2,042,475
------------
</TABLE>
See Accompanying Notes to Financial Statements.
17
<PAGE>
M.S.D.&T. FUNDS, INC.
VALUE EQUITY FUND
STATEMENT OF NET ASSETS -- CONTINUED
NOVEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF NUMBER OF
NET ASSETS SHARES VALUE
------------- --------- -----
<S> <C> <C> <C>
COMMON STOCK -- CONTINUED
PETROLEUM................................. 6.2%
Amoco Corp............................... 29,725 $ 2,307,403
Atlantic Richfield Co.................... 19,850 2,761,631
Exxon Corp............................... 27,500 2,602,187
------------
7,671,221
------------
PHARMACEUTICALS........................... 8.4%
Bristol-Myers Squibb Co.................. 31,500 3,583,125
Pfizer Inc............................... 39,400 3,531,225
Warner Lambert Co........................ 45,000 3,217,500
------------
10,331,850
------------
RETAIL DEPARTMENT STORES.................. 2.6%
May Department Stores Co................. 41,300 2,013,375
Wal-Mart Stores, Inc..................... 48,000 1,224,000
------------
3,237,375
------------
SHOES..................................... 1.3%
Stride Rite Corp......................... 165,500 1,655,000
------------
TECHNOLOGY................................ 2.2%
Motorola, Inc............................ 50,000 2,768,750
------------
TELECOMMUNICATIONS........................ 2.6%
Ericsson (LM) Tel--ADR................... 24,000 741,000
GTE Corp................................. 28,500 1,278,937
Lucent Technologies Inc.................. 24,059 1,233,024
------------
3,252,961
------------
TOBACCO................................... 2.5%
Philip Morris Inc........................ 30,000 3,093,750
------------
UTILITIES-TELEPHONE....................... 3.3%
A T & T Corp............................. 48,000 1,884,000
MCI Communications Corp.................. 72,300 2,205,150
------------
4,089,150
------------
TOTAL COMMON STOCK
(Cost $90,236,969)..................... 120,466,899
------------
</TABLE>
See Accompanying Notes to Financial Statements.
18
<PAGE>
M.S.D.&T. FUNDS, INC.
VALUE EQUITY FUND
STATEMENT OF NET ASSETS -- CONCLUDED
NOVEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF PAR
NET ASSETS MATURITY (000) VALUE
------------- -------- ----- -----
<S> <C> <C> <C> <C>
REPURCHASE AGREEMENT................. 0.8%
GOLDMAN SACHS & CO.
(Agreement dated 11/29/96 to be
repurchased at $1,015,475,
collateralized by $760,000 (Value
$1,049,000) U.S. Treasury Notes,
9.875%, due 11/15/15).............. 12/02/96 $1,015 $ 1,015,000
------------
TOTAL REPURCHASE AGREEMENT
(Cost $1,015,000)................ 1,015,000
------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $91,251,969*)................. 98.6% 121,481,899
OTHER ASSETS IN EXCESS OF
LIABILITIES......................... 1.4% 1,697,164
----- ------------
NET ASSETS........................... 100.0% $123,179,063
===== ============
NET ASSET VALUE,
OFFERING AND REDEMPTION
PRICE PER SHARE:
INSTITUTIONAL SHARES
($121,775,670 / 7,379,366).......... $16.50
======
AFBA FIVE STAR SHARES
($1,403,393 / 85,186)............... $16.47
======
</TABLE>
- --------
* Cost for Federal income tax purposes is $91,323,127. The aggregate gross
unrealized appreciation (depreciation) for all securities is as follows:
<TABLE>
<S> <C>
Excess of value over tax cost.................. $30,862,173
Excess of tax cost over value.................. $ (703,401)
</TABLE>
See Accompanying Notes to Financial Statements.
19
<PAGE>
M.S.D.&T. FUNDS, INC.
INTERNATIONAL EQUITY FUND
STATEMENT OF NET ASSETS
NOVEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF NUMBER OF
NET ASSETS SHARES VALUE
------------- --------- -----
<S> <C> <C> <C>
COMMON STOCK, PREFERRED STOCK & RIGHTS....... 95.9%
AUSTRALIA.................................... 4.0%
AAPC Ltd..................................... 800,000 $ 540,772
Australian National Industries............... 460,000 475,781
MIM Holdings................................. 340,000 484,577
National Mutual Holdings..................... 380,000 535,397
News Corp.................................... 74,000 394,144
QNI Ltd...................................... 370,000 720,187
---------
3,150,858
---------
BRAZIL....................................... 0.9%
Celesc GDR................................... 9,000 738,000
---------
CHINA........................................ 0.9%
Guangshen Railway............................ 1,850,000 735,740
---------
FINLAND...................................... 1.0%
Valmet....................................... 50,000 824,357
---------
FRANCE....................................... 6.2%
Bouygues..................................... 4,000 444,986
Christian Dior............................... 3,500 514,012
Cie de Suez.................................. 9,470 405,264
Compagne Generale Des Eaux................... 9,500 1,171,439
Pinault Printemps La Redoute................. 1,500 597,112
Scor......................................... 20,000 706,539
Societe Generale............................. 5,200 568,525
Total 'B'.................................... 6,000 488,087
---------
4,895,964
---------
GERMANY...................................... 6.9%
Berentzen-Gruppe Non-Voting
Preferred.................................... 18,000 644,068
Bilfinger & Berger........................... 10,000 373,429
Commerzbank.................................. 32,000 783,811
Deutsche Telekom............................. 6,500 141,662
Linde........................................ 700 424,889
Mannesman.................................... 2,020 841,061
Metro........................................ 4,860 407,554
RWE.......................................... 13,000 580,181
Veba......................................... 21,000 1,230,266
---------
5,426,921
---------
</TABLE>
See Accompanying Notes to Financial Statements.
20
<PAGE>
M.S.D.&T. FUNDS, INC.
INTERNATIONAL EQUITY FUND
STATEMENT OF NET ASSETS -- CONTINUED
NOVEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF NUMBER OF
NET ASSETS SHARES VALUE
------------- --------- -----
<S> <C> <C> <C>
COMMON STOCK, PREFERRED STOCK & RIGHTS --
CONTINUED
HONG KONG.................................. 4.2%
Cheung Kong................................ 60,000 $ 527,676
Hong Kong Electric......................... 260,000 833,936
HSBC Holdings.............................. 24,800 516,399
New World Development...................... 83,000 560,882
Oriental Press Group....................... 1,600,000 900,154
----------
3,339,047
----------
INDIA...................................... 0.7%
State Bank ID India GDR.................... 35,000 544,250
----------
ITALY...................................... 2.8%
Fiat Preferred............................. 170,000 263,710
Istituto Nazionale delle Assicurazioni
(INA)..................................... 380,000 529,269
Telecom Italia Mobile...................... 340,000 800,108
Unicem..................................... 90,000 607,755
----------
2,200,842
----------
JAPAN...................................... 29.9%
18th Bank.................................. 87,000 680,404
Amada...................................... 75,000 627,416
Amway Japan................................ 15,000 557,557
Bridgestone................................ 30,000 553,603
Canon...................................... 48,000 1,012,302
Dowa Fire & Marine......................... 68,000 339,402
Eisai...................................... 45,000 885,764
Fuji Photo Film............................ 25,000 784,270
Hitachi.................................... 100,000 931,458
Honda Motor................................ 25,000 738,137
Ichiyoshi Securities....................... 125,000 571,177
Ito Yokado................................. 15,000 757,908
Mabuchi Motors............................. 11,000 552,900
Matsushita Electric Industrial............. 47,000 813,620
Mitsubishi Electric........................ 90,000 518,014
Mitsubishi Heavy Industries................ 111,000 907,118
Mitsui Fudosan............................. 42,000 498,242
Nippon Comsys.............................. 65,000 811,072
NKK *...................................... 350,000 861,160
Sanwa Bank................................. 46,000 759,930
Sanyo Shinpan Finance...................... 7,500 471,880
Seino Transportation....................... 50,000 663,444
Sekisui Chemical........................... 55,000 608,963
Shikoku Electric Power..................... 26,500 533,260
Shimachu................................... 22,000 574,165
Shin-Etsu Chemical......................... 47,000 859,051
Shizuoka Bank.............................. 44,000 502,636
</TABLE>
See Accompanying Notes to Financial Statements.
21
<PAGE>
M.S.D.&T. FUNDS, INC.
INTERNATIONAL EQUITY FUND
STATEMENT OF NET ASSETS -- CONTINUED
NOVEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF NUMBER OF
NET ASSETS SHARES VALUE
------------- --------- -----
<S> <C> <C> <C>
COMMON STOCK, PREFERRED STOCK &
RIGHTS -- CONTINUED
JAPAN -- CONTINUED
Sony................................. 8,000 $ 512,478
Sumitomo Electric Industries......... 70,000 984,183
Sumitomo Trust & Banking............. 75,000 830,404
Suzuki Motor......................... 55,000 575,132
TDK.................................. 9,000 580,492
Tokyo Electron....................... 27,000 771,089
Toyota Motor......................... 28,000 765,202
Tsubaki Nakashima.................... 27,000 256,239
-----------
23,650,072
-----------
KOREA................................ 0.6%
Hana Bank GDR........................ 31,660 459,070
-----------
MEXICO............................... 1.6%
Altos Hornos de Mexico............... 280,000 622,810
Cemex CPO............................ 180,000 599,655
-----------
1,222,465
-----------
NETHERLANDS.......................... 4.3%
Hagemeyer............................ 13,000 1,031,966
ING.................................. 21,800 763,505
Vendex Intl.......................... 17,000 738,328
Ver Ned Uitgev Ver Bezit............. 43,500 887,872
-----------
3,421,671
-----------
PHILIPPINES.......................... 0.7%
Far East Bank & Trust Rights......... 2,820 5,622
Philippine National Bank............. 45,000 560,659
-----------
566,281
-----------
SINGAPORE............................ 3.1%
DBS Land............................. 140,000 499,134
Development Bank of Singapore
(Foreign)........................... 50,000 645,309
GP Batteries International........... 200,000 620,000
United Overseas Bank (Foreign)....... 64,244 682,556
-----------
2,446,999
-----------
SOUTH AFRICA......................... 1.7%
AECI................................. 140,000 759,463
Murray & Roberts..................... 220,000 596,721
-----------
1,356,184
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
22
<PAGE>
M.S.D.&T. FUNDS, INC.
INTERNATIONAL EQUITY FUND
STATEMENT OF NET ASSETS -- CONTINUED
NOVEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF NUMBER OF
NET ASSETS SHARES VALUE
------------- --------- -----
<S> <C> <C> <C>
COMMON STOCK, PREFERRED STOCK & RIGHTS --
CONTINUED
SPAIN...................................... 2.9%
Acerinox................................... 4,000 $ 509,652
Argentaria................................. 14,250 555,695
Iberdrola.................................. 68,000 785,019
Telefonica de Espana....................... 20,000 438,610
----------
2,288,976
----------
SWEDEN..................................... 4.0%
Dahl International......................... 40,000 852,135
Electrolux "B"............................. 10,000 586,215
Ericsson "B"............................... 30,200 931,300
Stora Kopparbergs.......................... 60,000 822,340
----------
3,191,990
----------
SWITZERLAND................................ 4.1%
Ciba Geigy Registered...................... 1,000 1,238,553
CS Holdings Registered..................... 6,000 639,241
Nestle Registered.......................... 500 543,259
Roche Holdings 1/10 PC Non-Voting.......... 110 846,332
----------
3,267,385
----------
UNITED KINGDOM............................. 15.4%
AEA Technology............................. 55,000 357,190
Allied Carpets............................. 75,000 359,165
Asda....................................... 200,000 398,232
Barclays................................... 30,000 515,937
BBA........................................ 75,000 438,559
British Petroleum.......................... 40,760 470,178
Burton..................................... 150,000 374,917
Courtaulds................................. 55,000 369,666
Dairy Crest................................ 100,000 325,979
Glaxo Wellcome............................. 30,000 493,253
Glynwed International...................... 65,000 381,723
Greenalls.................................. 40,000 403,609
Guardian Royal Exchange.................... 90,000 405,289
Jarvis Hotels.............................. 175,000 501,360
Lex Service................................ 55,666 314,748
Limelight.................................. 150,000 448,641
Medeva..................................... 95,000 409,448
Mirror Group............................... 120,000 465,780
National Westminster Bank.................. 35,000 404,911
NFC........................................ 115,000 362,315
P & P...................................... 100,000 236,082
Powergen................................... 38,000 370,658
RJB Mining................................. 45,000 396,971
Rubicon.................................... 125,000 420,075
Salvesen (Christian)....................... 70,000 364,626
</TABLE>
See Accompanying Notes to Financial Statements.
23
<PAGE>
M.S.D.&T. FUNDS, INC.
INTERNATIONAL EQUITY FUND
STATEMENT OF NET ASSETS -- CONCLUDED
NOVEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF NUMBER OF
NET ASSETS SHARES VALUE
------------- --------- -----
<S> <C> <C> <C> <C>
COMMON STOCK, PREFERRED STOCK &
RIGHTS -- CONTINUED
UNITED KINGDOM -- CONTINUED
Senior Engineering................ 150,000 $ 279,770
Shell Transport & Trading......... 30,000 498,546
Somerfield........................ 120,000 304,471
Sun Life & Provincial............. 85,000 359,207
United Utilities.................. 40,000 396,551
Wolseley.......................... 50,000 383,529
-----------
12,211,386
-----------
TOTAL COMMON STOCK, PREFERRED
STOCK & RIGHTS
(Cost $68,189,580).......... 75,938,458
-----------
<CAPTION>
PAR
MATURITY (000)
-------- -----
<S> <C> <C> <C> <C>
SHORT-TERM INVESTMENTS............ 6.7%
Eurodollar Time Deposit State
Street Bank & Trust Co. 4.875%... 12/02/96 $ 5,267 5,267,000
-----------
TOTAL SHORT-TERM INVESTMENTS
(Cost $5,267,000)........... 5,267,000
-----------
TOTAL INVESTMENTS IN SECURITIES
(Cost $73,456,580**)............. 102.6% 81,205,458
LIABILITIES IN EXCESS OF OTHER
ASSETS........................... (2.6)% (2,041,817)
----- -----------
NET ASSETS (equivalent to $12.78
per share based on 6,194,902
shares outstanding).............. 100.0% $79,163,641
===== ===========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE
($79,163,641 / 6,194,902)........ $12.78
===========
</TABLE>
- --------
* Non-income producing securities.
** Aggregate cost for Federal income tax purposes. The aggregate gross
unrealized appreciation (depreciation) for all securities is as follows:
<TABLE>
<S> <C>
Excess of value over tax cost........ $10,818,566
Excess of tax cost over value........ $(3,069,688)
</TABLE>
See Accompanying Notes to Financial Statements.
24
<PAGE>
M.S.D.&T. FUNDS, INC.
INTERMEDIATE FIXED INCOME FUND
STATEMENT OF NET ASSETS
NOVEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF PAR
NET ASSETS MATURITY (000) VALUE
------------- -------- ----- -----
<S> <C> <C> <C> <C>
AGENCY OBLIGATIONS.................. 19.7%
FEDERAL HOME LOAN BANK.............. 2.2%
Debentures
6.34%............................. 06/13/05 $ 1,000 $1,004,530
----------
FEDERAL HOME LOAN MORTGAGE CORP..... 2.6%
Debentures
8.14%............................. 05/20/04 1,000 1,008,490
Mortgage Backed Securities
6.50% (Pool #E00201).............. 03/01/08 163 162,058
----------
1,170,548
----------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION........................ 6.5%
Medium Term Notes
6.08%............................. 09/03/03 500 488,600
6.625%............................ 03/21/06 1,000 1,023,190
Mortgage Backed Securities
6.00% (Pool #227994).............. 07/01/08 724 705,374
7.50% (Pool #282608).............. 05/01/09 742 758,545
----------
2,975,709
----------
GOVERNMENT NATIONAL MORTGAGE ASSOCI-
ATION.............................. 8.4%
Mortgage Backed Securities
8.00% (Pool #308751).............. 11/15/06 256 265,178
8.00% (Pool #312726).............. 12/15/06 29 30,271
8.00% (Pool #319511).............. 12/15/06 79 82,089
6.50% (Pool #351994).............. 12/15/08 232 231,079
6.50% (Pool #359462).............. 01/15/09 244 242,914
6.00% (Pool #372668).............. 01/15/09 837 818,933
8.00% (Pool #389481).............. 04/15/09 263 273,084
8.00% (Pool #401484).............. 11/15/09 914 948,196
6.00% (Pool #410492).............. 01/15/11 166 162,160
6.00% (Pool #410497).............. 02/15/11 781 764,183
----------
3,818,087
----------
TOTAL AGENCY OBLIGATIONS
(Cost $8,910,483).............. 8,968,874
----------
</TABLE>
See Accompanying Notes to Financial Statements.
25
<PAGE>
M.S.D.&T. FUNDS, INC.
INTERMEDIATE FIXED INCOME FUND
STATEMENT OF NET ASSETS -- CONTINUED
NOVEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF PAR
NET ASSETS MATURITY (000) VALUE
------------- -------- ----- -----
<S> <C> <C> <C> <C>
CORPORATE BONDS........................ 13.8%
BEVERAGES.............................. 0.5%
Coca-Cola Co., Inc.
7.875% (Aa3, AA)...................... 09/15/98 $ 200 $ 207,000
---------
CHEMICALS.............................. 0.5%
E.I. duPont de Nemours & Co.
6.00% (Aa3, AA-)...................... 12/01/01 250 248,125
---------
FINANCE................................ 4.0%
General Electric Capital Corp.
Medium Term Notes
6.125% (Aaa, AAA)..................... 04/15/97 500 501,390
Norwest Financial, Inc.
6.125% (Aa3, AA-)..................... 08/01/03 300 296,250
6.375% (Aa3, AA-)..................... 11/15/03 1,000 1,003,750
---------
1,801,390
---------
FOODS.................................. 0.6%
Kellogg Co.
5.90% (Aaa, AAA)...................... 07/15/97 250 250,457
---------
PHARMACEUTICALS........................ 1.1%
SmithKline Beacham, PLC, Medium Term
Notes
6.625% (Aa3/A+)....................... 10/01/01 500 511,875
---------
RETAIL MERCHANDISING................... 0.6%
Wal-Mart Stores, Inc.
5.50% (Aa2, AA)....................... 09/15/97 250 249,935
---------
UTILITIES -- ELECTRIC.................. 2.2%
Wisconsin Electic Power Co.
6.625% (Aa3/AA)....................... 11/15/06 1,000 1,008,750
---------
UTILITIES -- GAS....................... 2.7%
Consolidated Natural Gas Co.
5.75% (A1, AA-)....................... 08/01/03 475 461,938
Northern Illinois Gas Co.
5.875% (Aa1, AA)...................... 05/01/00 500 493,750
Wisconsin Natural Gas Co.
6.125% (Aa3, AA)...................... 09/01/97 260 260,975
---------
1,216,663
---------
UTILITIES -- TELEPHONE................. 1.6%
New England Telephone &
Telegraph Co.
5.05% (Aa2, AA-)...................... 10/01/98 500 493,750
General Telephone Co. Il-
linois 1st Mortgage
7.50% (Aa3, AA)....................... 02/01/02 250 253,438
---------
747,188
---------
TOTAL CORPORATE BONDS**
(Cost $6,236,220)................... 6,241,383
---------
</TABLE>
See Accompanying Notes to Financial Statements.
26
<PAGE>
M.S.D.&T. FUNDS, INC.
INTERMEDIATE FIXED INCOME FUND
STATEMENT OF NET ASSETS -- CONTINUED
NOVEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF PAR
NET ASSETS MATURITY (000) VALUE
------------- -------- ----- -----
<S> <C> <C> <C> <C>
U.S. TREASURY OBLIGATIONS......... 62.7%
U.S. TREASURY NOTES
6.75%............................ 05/31/97 $ 300 $ 302,073
7.375%........................... 11/15/97 1,000 1,017,690
6.00%............................ 11/30/97 1,000 1,005,520
5.875%........................... 04/30/98 500 502,610
7.125%........................... 10/15/98 1,000 1,027,860
5.50%............................ 11/15/98 2,000 1,996,980
5.125%........................... 12/31/98 1,000 991,120
5.00%............................ 01/31/99 1,000 987,840
7.00%............................ 04/15/99 1,000 1,029,890
6.50%............................ 04/30/99 1,000 1,019,520
6.875%........................... 07/31/99 1,000 1,029,290
6.00%............................ 10/15/99 1,000 1,009,850
5.75%............................ 10/31/00 1,500 1,498,860
5.50%............................ 12/31/00 1,000 989,530
5.625%........................... 02/28/01 600 596,262
6.25%............................ 04/30/01 1,000 1,017,220
7.50%............................ 11/15/01 450 481,905
6.25%............................ 02/15/03 300 305,352
7.25%............................ 05/15/04 3,000 3,228,150
7.25%............................ 08/15/04 2,300 2,476,410
7.875%........................... 11/15/04 1,000 1,116,480
7.50%............................ 02/15/05 1,100 1,204,016
6.50%............................ 05/15/05 1,500 1,546,065
7.000%........................... 07/15/06 1,000 1,066,160
6.500%........................... 10/15/06 1,000 1,032,970
-----------
TOTAL U.S. TREASURY
OBLIGATIONS
(Cost $27,648,033)............. 28,479,623
-----------
REPURCHASE AGREEMENT 3.3%
GOLDMAN, SACHS & CO.
(Agreement dated 11/29/96 to be
repurchased at $1,516,709
collateralized by $1,170,000
(Value $1,563,000) U.S. Treasury
Notes, 9.25%, due 2/15/16)
5.61%............................ 12/02/96 1,516 1,516,000
-----------
TOTAL REPURCHASE AGREEMENT
(Cost $1,516,000).............. 1,516,000
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
27
<PAGE>
M.S.D.&T. FUNDS, INC.
INTERMEDIATE FIXED INCOME FUND
STATEMENT OF NET ASSETS -- CONCLUDED
NOVEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF
NET ASSETS VALUE
------------- -----
<S> <C> <C>
TOTAL INVESTMENTS IN SECURITIES
(Cost $44,310,736*)................................ 99.5% $45,205,880
OTHER ASSETS IN EXCESS OF LIABILITIES............... 0.5% 236,586
------ -----------
NET ASSETS.......................................... 100.0% $45,442,466
====== ===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER
SHARE:
INSTITUTIONAL SHARES
($44,640,804/4,245,229)....................... $10.52
======
AFBA FIVE STAR SHARES
($801,662/76,106)............................. $10.53
======
</TABLE>
- --------
* Cost for Federal income tax purposes is $44,342,709. The aggregate gross
unrealized appreciation (depreciation) for all securities is as follows:
<TABLE>
<S> <C>
Excess of value over tax cost............ $1,013,604
Excess of tax cost over value............ $ (150,433)
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
INTERMEDIATE FIXED INCOME FUND
MATURITY SCHEDULE OF PORTFOLIO
NOVEMBER 30, 1996
(UNAUDITED)
MATURITY PERIOD AMOUNT PAR PERCENTAGE OF PORTFOLIO
--------------- ---------- -----------------------
(CUM)
<S> <C> <C> <C>
1- 6 months $ 3,566,000 8.06% 8.06%
7-12 months 2,760,000 6.24% 14.30%
13-18 months 500,000 1.13% 15.43%
19-24 months 3,700,000 8.37% 23.80%
25-36 months 6,000,000 13.57% 37.37%
37-48 months 2,364,004 5.34% 42.71%
49-60 months 4,950,300 11.19% 53.90%
Over 60 months 20,390,450 46.10% 100.00%
----------- ------
$44,230,754 100.00%
----------- ------
</TABLE>
Average Weighted Maturity -- 4.9 years
- ---------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
28
<PAGE>
M.S.D.&T. FUNDS, INC.
MARYLAND TAX-EXEMPT BOND FUND
STATEMENT OF NET ASSETS
NOVEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF PAR
NET ASSETS MATURITY (000) VALUE
------------- -------- ------ -----
<S> <C> <C> <C> <C>
MARYLAND.............................. 94.1%
Anne Arundel County, GO, Consolidated
General Improvement
5.30% (Aa1,, AA+) ................... 07/15/12 $400 $ 399,000
Baltimore City, RB, (Waste Water Proj-
ect), INS: FGIC
5.50% (Aaa, AAA) .................... 07/01/26 300 302,250
Baltimore County, GO, Metropolitan
District
6.125% (Aaa, AAA) ................... 07/01/07 175 189,219
Baltimore County, GO, Refunding --
Consolidated Public Improvement
5.20% (Aaa, AAA) .................... 04/01/09 400 407,500
5.40% (Aaa, AAA) .................... 10/15/12 250 253,125
Baltimore, Port Facilities, RB, GTD:
E.I. duPont
6.50% (Aa3, AA-) .................... 10/01/11 300 327,000
Calvert County, PCRB, GTD: BGE
5.55% (A2, A)........................ 07/15/14 300 301,125
Charles County, GO, Consolidated Pub-
lic Improvement, Unlimited Tax,
INS: FGIC
5.50% (Aaa, AAA) .................... 01/01/06 230 241,212
Dorchester County, GO, Public Facili-
ties, INS: MBIA
5.875% (Aaa, AAA) ................... 02/01/10 215 226,825
Harford County, GO, Public Improve-
ment, Unlimited Tax
5.60% (Aa, AA-) ..................... 09/01/06 325 342,062
Howard County, GO, Consolidated Public
Improvement
5.25% (Aaa, AA+)..................... 08/15/09 400 407,500
5.25% (Aaa, AA+) .................... 08/15/12 250 250,937
Laurel, GO, INS: MBIA
6.40% (Aaa, AAA) .................... 07/01/01 200 217,750
Maryland Community Development
Administration,
RB, Multi Family Mortgage
6.60% (Aa, NA)....................... 05/15/12 145 152,431
Maryland Community Development
Administration,
RB, Single Family Mortgage
5.80% (Aa, NA)....................... 04/01/07 170 179,138
6.55% (Aa, NA)....................... 04/01/17 185 192,863
Maryland National Capital Park &
Planning
Commission--Montgomery County, GO
6.00% (Aaa, AAA)..................... 07/01/06 150 162,188
Maryland National Capital Park &
Planning
Commission--Prince George's County,
GO
5.15% (Aa, AA)....................... 07/01/11 300 300,000
Maryland State Health & Higher
Educational Facilities Authority, RB,
University of Maryland Medical
System, INS: FGIC
5.40% (Aaa, AAA)..................... 07/01/07 300 308,625
</TABLE>
See Accompanying Notes to Financial Statements.
29
<PAGE>
M.S.D.&T. FUNDS, INC.
MARYLAND TAX-EXEMPT BOND FUND
STATEMENT OF NET ASSETS -- CONTINUED
NOVEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF PAR
NET ASSETS MATURITY (000) VALUE
------------- -------- ------ -----
<S> <C> <C> <C> <C>
MARYLAND -- CONTINUED
Maryland State Stadium
Authority, RB, (Ocean City
Convention Center)
5.375% (Aa, AA)............... 12/15/15 $500 $ 492,500
Maryland State Transportation
Authority, RB
5.75% (A1, A+)................ 07/01/15 350 353,938
Maryland State, GO
6.60% (Aaa, AAA).............. 03/01/01 100 107,625
Maryland Water Quality Financ-
ing Administration,
RB, Revolving Loan Fund
5.50% (Aa, AA) ............... 09/01/11 200 203,250
5.40% (Aa, AA)................ 09/01/12 300 301,875
Montgomery County Revenue
Authority, RB, Olney Indoor
Swim Project
5.25% (NA, AA-)............... 10/01/12 250 250,313
Montgomery County, GO,
Refunding -- Consolidated
Public Improvement,
Unlimited Tax
5.80% (Aaa, AAA).............. 07/01/07 250 270,937
Montgomery County, RB, Housing
Opportunity Community Housing
Multi-Family (Avalon Knoll)
5.70% (NA, AAA)............... 07/01/10 150 152,625
Prince George's County, GO,
Consolidated Public
Improvement, Limited Tax,
INS: AMBAC
5.75% (Aaa, AAA).............. 03/15/10 175 182,000
Prince George's County, GO,
Refunding -- Consolidated
Public Improvement
Limited Tax
4.90% (A1, AA-)............... 10/01/02 300 307,875
Washington County, GO,
Refunding -- Consolidated
Public Improvement Unlimited
Tax, INS: FGIC
5.25% (Aaa, AAA).............. 01/01/06 200 208,250
Washington Suburban Sanitation
District, GO, Water Supply
5.50% (Aa1, AA)............... 06/01/12 280 284,900
----------
TOTAL MUNICIPAL BONDS
(Cost $7,972,016)........ 8,276,838
----------
</TABLE>
See Accompanying Notes to Financial Statements.
30
<PAGE>
M.S.D.&T. FUNDS, INC.
MARYLAND TAX -- EXEMPT BOND FUND
STATEMENT OF NET ASSETS -- CONCLUDED
NOVEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF NUMBER
NET ASSETS OF SHARES VALUE
------------- --------- -----
<S> <C> <C> <C>
INVESTMENT COMPANIES......................... 4.7%
Goldman Sachs Financial Square Tax -- Free
Money Market Fund........................... 353,491 $ 353,491
Municipal Fund for Temporary Investments --
MuniFund................................... 63,504 63,504
----------
TOTAL INVESTMENT COMPANIES
(Cost $416,995)....................... 416,995
----------
TOTAL INVESTMENTS IN SECURITIES
(Cost $8,389,011*).......................... 98.8% 8,693,833
OTHER ASSETS IN EXCESS OF LIABILITIES........ 1.2% 104,940
------ ----------
NET ASSETS (equivalent to $10.20 per share
based on 835,758 shares outstanding)........ 100.0% $8,798,773
====== ==========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE
($8,798,773 / 835,758)...................... $10.53
======
</TABLE>
- --------
* Aggregate Cost for Federal income tax purposes. The aggregate gross
unrealized appreciation (depreciation) for all securities is as follows:
<TABLE>
<S> <C>
Excess of value over tax cost........... $310,929
Excess of tax cost over value........... $ (6,107)
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARYLAND TAX-EXEMPT BOND FUND
MATURITY SCHEDULE OF PORTFOLIO
NOVEMBER 30, 1996
(UNAUDITED)
MATURITY PERIOD AMOUNT PAR PERCENTAGE OF PORTFOLIO
--------------- ---------- ---------------------------
(CUM)
<S> <C> <C> <C>
1 -- 6 months $ 416,995 4.92% 4.92%
37 -- 48 months 100,000 1.18% 6.10%
49 -- 60 months 200,000 2.36% 8.46%
Over 60 months 7,750,000 91.54% 100.00%
---------- -------
$8,466,995 100.00%
---------- -------
</TABLE>
Average Weighted Maturity -- 13.3 years
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
31
<PAGE>
M.S.D.&T. FUNDS, INC.
INVESTMENT ABBREVIATIONS
ADR American Depository Receipt
BAN Bond Anticipation Notes
COP Certificates of Participation
ETM Escrowed to Maturity in U.S. Government Obligations
FRN Floating Rate Notes
GO General Obligation
GTD Guaranteed
IDA Industrial Development Authority
INS Insured
LA Liquidity Agreement
LIC Line of Credit
LOC Letter of Credit
MB Municipal Bonds
MPB Municipal Put Bonds
PCR Pollution Control Revenue
PCRB Pollution Control Revenue Bonds
RAN Revenue Anticipation Notes
RB Revenue Bonds
SPA Standby Purchase Agreement
TAN Tax Anticipation Notes
TECP Tax-Exempt Commercial Paper
TRAN Tax and Revenue Anticipation Notes
VRDN Variable Rate Demand Notes
See Accompanying Notes to Financial Statements.
32
<PAGE>
M.S.D.&T. FUNDS, INC.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PRIME GOVERNMENT TAX-EXEMPT TAX-EXEMPT
MONEY MARKET MONEY MARKET MONEY MARKET MONEY MARKET
FUND FUND FUND FUND (TRUST)
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest.................. $9,327,738 $7,466,010 $922,962 $869,681
---------- ---------- -------- --------
EXPENSES:
Investment advisory fees.. 433,480 347,304 67,331 --
Administration fees....... 216,740 173,652 33,665 31,711
Accounting agent fees..... 52,018 41,677 10,773 10,148
Custodian fees............ 18,795 18,576 7,359 7,281
Directors' fees........... 10,766 8,625 1,673 1,575
Transfer agent fees....... 42,035 32,874 10,128 9,275
Legal..................... 35,888 28,751 5,576 5,250
Audit..................... 22,789 18,257 3,541 3,334
Other..................... 27,158 21,680 5,408 5,279
---------- ---------- -------- --------
859,669 691,396 145,454 73,853
Fees waived by Investment
Adviser.................. (17,339) (27,784) (5,386) --
Fees waived by
Administrator............ (96,744) (66,249) (24,260) (18,041)
---------- ---------- -------- --------
TOTAL EXPENSES........... 745,586 597,363 115,808 55,812
---------- ---------- -------- --------
NET INVESTMENT INCOME...... 8,582,152 6,868,647 807,154 813,869
---------- ---------- -------- --------
REALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss)
on investments sold...... (289) (5,335) -- --
---------- ---------- -------- --------
Net gain (loss) on
investments.............. (289) (5,335) -- --
---------- ---------- -------- --------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
OPERATIONS................ $8,581,863 $6,863,312 $807,154 $813,869
========== ========== ======== ========
</TABLE>
See Accompanying Notes to Financial Statements.
33
<PAGE>
M.S.D.&T. FUNDS, INC.
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
INTERMEDIATE MARYLAND
VALUE EQUITY INTERNATIONAL FIXED INCOME TAX-EXEMPT
FUND EQUITY FUND FUND BOND FUND
------------ ------------- ------------ ----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest.............. $ 94,303 $ 62,982 $1,407,146 $250,788
Dividends............. 1,226,870 746,511(1) -- --
----------- ---------- ---------- --------
TOTAL INVESTMENT
INCOME............ 1,321,173 809,493 1,407,146 250,788
----------- ---------- ---------- --------
EXPENSES:
Investment advisory
fees................. 330,469 303,232 77,690 23,291
Administration fees... 68,848 47,380 27,746 5,823
Accounting agent
fees................. 26,892 18,952 13,778 2,329
Custodian fees........ 9,206 28,353 5,118 2,254
Directors' fees....... 3,420 2,354 1,379 290
Transfer agent fees... 23,471 18,410 16,907 10,128
Legal................. 11,399 7,848 4,597 966
Audit................. 7,990 4,983 3,671 613
Registration fees..... 3,785 953 3,710 1,153
Amortization of
organizational
costs................ -- 2,435 -- 3,395
Pricing service fees.. 978 2,256 3,535 2,507
Other................. 21,360 4,471 16,416 685
----------- ---------- ---------- --------
507,818 441,627 174,547 53,434
Fees waived by
Investment Advisers.. (94,326) (24,682) (30,632) (20,349)
Fees waived by
Administrator........ (10,465) (18,952) (9,870) (5,823)
----------- ---------- ---------- --------
TOTAL EXPENSES..... 403,027 397,993 134,045 27,262
----------- ---------- ---------- --------
NET INVESTMENT INCOME... 918,146 411,500 1,273,101 223,526
----------- ---------- ---------- --------
REALIZED AND UNREALIZED
GAIN (LOSS) ON
INVESTMENTS AND FOREIGN
CURRENCY:
Net realized gain
(loss) from:
Investments........ 3,424,251 853,877 26,502 29,773
Foreign currency
transactions...... -- 112,018 -- --
Forward foreign
currency
contracts......... -- (199,347) -- --
----------- ---------- ---------- --------
3,424,251 766,548 26,502 29,773
----------- ---------- ---------- --------
Net unrealized
appreciation
(depreciation):
Investments........ 11,027,424 1,499,251 1,370,650 251,244
Translation of
assets and liabil-
ities in foreign
currencies........ -- 59,967 -- --
----------- ---------- ---------- --------
11,027,424 1,559,218 1,370,650 251,244
----------- ---------- ---------- --------
Net gain (loss) on
investments and
foreign currency
transactions......... 14,451,675 2,325,766 1,397,152 281,017
----------- ---------- ---------- --------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS........ $15,369,821 $2,737,266 $2,670,253 $504,543
=========== ========== ========== ========
</TABLE>
- --------
(1) Net of witholding taxes of $88,599
See Accompanying Notes to Financial Statements.
34
<PAGE>
M.S.D.&T. FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
PRIME PRIME GOVERNMENT
MONEY MARKET FUND MONEY MARKET MONEY MARKET FUND GOVERNMENT
FOR THE FUND FOR THE FOR THE MONEY MARKET FUND
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED FOR THE YEAR
NOVEMBER 30, 1996 MAY 31, 1996 NOVEMBER 30, 1996 ENDED MAY 31, 1996
----------------- ------------ ----------------- ------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS:
Operations:
Net investment income.. $ 8,582,152 $ 19,138,039 $ 6,868,647 $ 15,698,348
Net gain (loss) on
investments........... (289) (21,657) (5,335) (13,041)
------------ ------------ ------------ ------------
Net increase (decrease)
in net assets
resulting from
operations............ 8,581,863 19,116,382 6,863,312 15,685,307
------------ ------------ ------------ ------------
Distributions to
shareholders from:
Net investment income
($.02, $.05, $.02, and
$.05 per share,
respectively)......... (8,582,152) (19,138,039) (6,868,647) (15,698,348)
Net realized capital
gains................. -- -- -- --
------------ ------------ ------------ ------------
Total distributions
to shareholders.... (8,582,152) (19,138,039) (6,868,647) (15,698,348)
------------ ------------ ------------ ------------
Increase (decrease) in
net assets derived from
capital share
transactions........... 21,286,067 (55,159,078) 33,656,004 985,792
------------ ------------ ------------ ------------
TOTAL INCREASE
(DECREASE) IN NET
ASSETS................. 21,285,778 (55,180,735) 33,650,669 972,751
NET ASSETS:
Beginning of period.... 326,878,147 382,058,882 264,725,089 263,752,338
------------ ------------ ------------ ------------
End of period.......... $348,163,925 $326,878,147 $298,375,758 $264,725,089
============ ============ ============ ============
</TABLE>
See Accompanying Notes to Financial Statements.
35
<PAGE>
M.S.D.&T. FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
TAX-EXEMPT TAX-EXEMPT MONEY
MONEY MARKET FUND TAX-EXEMPT MARKET FUND (TRUST) TAX-EXEMPT MONEY
FOR THE MONEY MARKET FUND FOR THE MARKET FUND (TRUST)
SIX MONTHS ENDED FOR THE YEAR SIX MONTHS ENDED FOR THE YEAR
NOVEMBER 30, 1996 ENDED MAY 31, 1996 NOVEMBER 30, 1996 ENDED MAY 31, 1996
----------------- ------------------ ------------------- -------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS:
Operations:
Net investment income.. $ 807,154 $ 2,182,206 $ 813,869 $ 1,771,291
Net gain (loss) on
investments........... -- (3,901) -- 3,228
----------- ----------- ----------- -----------
Net increase (decrease)
in net assets
resulting from
operations............ 807,154 2,178,305 813,869 1,774,519
----------- ----------- ----------- -----------
Distributions to
shareholders from net
investment income
($.02, $.03, $.02, and
$.03 per share,
respectively)......... (807,154) (2,182,206) (813,869) (1,771,291)
Increase (decrease) in
net assets derived
from capital share
transactions.......... 3,434,607 (18,959,016) 7,488,461 (8,505,165)
----------- ----------- ----------- -----------
TOTAL INCREASE
(DECREASE) IN NET
ASSETS................. 3,434,607 (18,962,917) 7,488,461 (8,501,937)
----------- ----------- ----------- -----------
NET ASSETS:
Beginning of period.... 50,136,762 69,099,679 46,541,281 55,043,218
----------- ----------- ----------- -----------
End of period.......... $53,571,369 $50,136,762 $54,029,742 $46,541,281
=========== =========== =========== ===========
</TABLE>
See Accompanying Notes to Financial Statements.
36
<PAGE>
M.S.D.&T. FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
VALUE INTERNATIONAL
EQUITY FUND VALUE EQUITY FUND INTERNATIONAL
FOR THE EQUITY FUND FOR THE EQUITY FUND
SIX MONTHS ENDED FOR THE YEAR SIX MONTHS ENDED FOR THE YEAR
NOVEMBER 30, 1996 ENDED MAY 31, 1996 NOVEMBER 30, 1996 ENDED MAY 31, 1996
----------------- ------------------ ----------------- ------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS:
Operations:
Net investment income.. $ 918,146 $ 2,385,328 $ 411,500 $ 571,924
Net realized gain
(loss) on investments
and foreign currency.. 3,424,251 3,132,449 766,548 3,847,509
Net increase (decrease)
in unrealized
appreciation
(depreciation) on
investments and
translation of assets
and liabilites in
foreign............... 11,027,424 10,331,201 1,559,218 5,171,412
------------ ------------ ----------- -----------
Net increase (decrease)
in net assets
resulting from
operation............. 15,369,821 15,848,978 2,737,266 9,590,845
------------ ------------ ----------- -----------
Distributions to
shareholders from:
Net investment income
Institutional Class
($.14, $.35, $.15, and
$.07 per share,
respectively)......... (1,031,160) (2,496,063) (882,699) (430,777)
AFBA Five Star Class
($.13 and $.10 per
share, respectively).. (6,156) (375)
Net realized capital
gains Institutional
Class ($.00, $.71,
$.00, and $.66 per
share, respectively).. -- (4,969,957) -- (3,866,820)
------------ ------------ ----------- -----------
Total distributions to
shareholders.......... (1,037,316) (7,466,395) (882,699) (4,297,597)
------------ ------------ ----------- -----------
Capital Share
Transactions:
Proceeds of shares sold
Institutional Class... 7,860,835 23,438,948 3,381,856 12,630,589
AFBA Five Star Class.. 926,098 316,761
Cost of shares redeemed
Institutional Class... (8,133,302) (20,452,056) (1,887,336) (12,076,799)
AFBA Five Star Class.. (16,417) (100)
Value of shares issued
in reinvestment of
dividends
Institutional Class... 639,863 4,599,394 138,208 656,985
AFBA Five Star Class.. 6,193 369
------------ ------------ ----------- -----------
Increase (decrease) in
net assets derived from
capital share
transactions........... 1,283,270 7,903,316 1,632,728 1,210,775
------------ ------------ ----------- -----------
TOTAL INCREASE (DECREASE)
IN NET ASSETS.......... 15,615,775 16,285,899 3,487,295 6,504,023
------------ ------------ ----------- -----------
NET ASSETS:
Beginning of period.... 107,563,288 91,277,389 75,676,346 69,172,323
------------ ------------ ----------- -----------
End of period.......... $123,179,063 $107,563,288 $79,163,641 $75,676,346
============ ============ =========== ===========
</TABLE>
See Accompanying Notes to Financial Statements.
37
<PAGE>
M.S.D.&T. FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INTERMEDIATE MARYLAND
FIXED INTERMEDIATE TAX-EXEMPT MARYLAND
INCOME FUND FIXED BOND FUND TAX-EXEMPT
FOR THE INCOME FUND FOR THE BOND FUND
SIX MONTHS ENDED FOR THE YEAR SIX MONTHS ENDED FOR THE YEAR
NOVEMBER 30, 1996 ENDED MAY 31, 1996 NOVEMBER 30, 1996 ENDED MAY 31, 1996
----------------- ------------------ ----------------- ------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS:
Operations:
Net investment
income.............. $ 1,273,101 $ 2,448,392 $ 223,526 $ 544,193
Net realized gain
(loss) on
investments......... 1,397,152 (1,092,759) 281,017 (166,869)
----------- ----------- ---------- -----------
Net increase
(decrease) in net
assets resulting
from operations..... 2,670,253 1,355,633 504,543 377,324
----------- ----------- ---------- -----------
Distributions to
shareholders from:
Net investment income
Institutional Class
($.30, $.59, $.25,
and $.49 per share,
respectively)...... (1,257,406) (2,444,640) (223,526) (544,193)
AFBA Five Star Class
($.28 and $.28 per
share,
respectively)...... (15,695) (3,752)
----------- ----------- ---------- -----------
Total distribu-
tions to
shareholders.... (1,273,101) (2,448,392) (223,526) (544,193)
----------- ----------- ---------- -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds of shares
sold
Institutional Class 3,660,910 12,256,511 411,967 1,203,881
AFBA Five Star
Class............. 424,439 354,044
Cost of shares
redeemed
Institutional Class (5,118,976) (12,858,524) (2,146,877) (3,368,450)
AFBA Five Star
Class............. (3,107) (2,093)
Value of shares issued
in reinvestment of
dividends
Institutional Class 622,867 1,138,177 66,849 157,194
AFBA Five Star
Class............. 11,115 949
----------- ----------- ---------- -----------
Increase (decrease) in
net assets derived from
capital share
transactions.......... (402,752) 889,064 (1,668,061) (2,007,375)
----------- ----------- ---------- -----------
TOTAL INCREASE (DECREASE)
IN NET ASSETS.......... 994,400 (203,695) (1,387,044) (2,174,244)
NET ASSETS:
Beginning of period.. 44,448,066 44,651,761 10,185,817 12,360,061
----------- ----------- ---------- -----------
End of period........ $45,442,466 $44,448,066 $8,798,773 $10,185,817
=========== =========== ========== ===========
</TABLE>
See Accompanying Notes to Financial Statements.
38
<PAGE>
M.S.D.&T. FUNDS, INC.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PRIME MONEY MARKET FUND
---------------------------------------------------------------------------------------------
FOR THE SIX
MONTHS ENDED FOR THE YEARS ENDED
NOVEMBER 30, 1996 MAY 31, 1996 MAY 31, 1995 MAY 31, 1994 MAY 31, 1993 MAY 31, 1992
----------------- ------------ ------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- --------
Income From Investment
Operations:
Net Investment Income.... 0.0248 0.0532 0.0491 0.0296 0.0297 0.0467
-------- -------- -------- -------- -------- --------
Total From Investment
Operations........... 0.0248 0.0532 0.0491 0.0296 0.0297 0.0467
Less Distributions:
Dividends to
Shareholders from Net
Investment Income...... (0.0248) (0.0532) (0.0491) (0.0296) (0.0297) (0.0467)
-------- -------- -------- -------- -------- --------
Total Distributions.... (0.0248) (0.0532) (0.0491) (0.0296) (0.0297) (0.0467)
-------- -------- -------- -------- -------- --------
Net Asset Value, End of
Period.................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ========
- ---------------------------------------------------------------------------------------------------------------------------
Total Return............... 2.51% 5.45% 5.02% 3.00% 3.01% 4.77%
- ---------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of
Period (000)............ $348,163 $326,878 $382,059 $346,694 $432,415 $402,745
Ratio of Expenses to
Average Net Assets...... 0.43%(1)(2) 0.43%(1) 0.43%(1) 0.38%(1) 0.37%(1) 0.35%(1)
Ratio of Net Income to
Average Net Assets...... 4.95%(2) 5.33% 4.92% 2.95% 2.96% 4.55%
</TABLE>
- --------
(1) Without the waiver of advisory fees and administration fees, the ratio of
expenses to average net assets for the six months ended November 30, 1996
and the years ended May 31, 1996, May 31, 1995, May 31, 1994, May 31,
1993, and May 31, 1992, would have been .50%, .48%, .48%, .47%, .43%, and
.42%, respectively.
(2) Annualized.
See Accompanying Notes to Financial Statements.
39
<PAGE>
M.S.D.&T. FUNDS, INC.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
GOVERNMENT MONEY MARKET FUND
---------------------------------------------------------------------------------------------
FOR THE SIX
MONTHS ENDED FOR THE YEARS ENDED
NOVEMBER 30, 1996 MAY 31, 1996 MAY 31, 1995 MAY 31, 1994 MAY 31, 1993 MAY 31, 1992
----------------- ------------ ------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- --------
Income From Investment
Operations:
Net Investment Income..... 0.0248 0.0526 0.0485 0.0294 0.0293 0.0465
-------- -------- -------- -------- -------- --------
Total From
Investment
Operations......... 0.0248 0.0526 0.0485 0.0294 0.0293 0.0465
-------- -------- -------- -------- -------- --------
Less Distributions:
Dividends to
Shareholders from Net
Investment Income....... (0.0248) (0.0526) (0.0485) (0.0294) (0.0293) (0.0465)
-------- -------- -------- -------- -------- --------
Total Distributions... (0.0248) (0.0526) (0.0485) (0.0294) (0.0293) (0.0465)
-------- -------- -------- -------- -------- --------
Net Asset Value, End of
Period.................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ========
- ---------------------------------------------------------------------------------------------------------------------------
Total Return............... 2.50% 5.39% 4.95% 2.98% 2.97% 4.75%
- ---------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period
(000).................... $298,376 $264,725 $263,752 $273,790 $255,637 $293,450
Ratio of Expenses to
Average Net Assets....... 0.43%(1)(2) 0.43%(1) 0.43%(1) 0.38%(1) 0.37%(1) 0.34%(1)
Ratio of Net Income to
Average
Net Assets............... 4.94%(2) 5.27% 4.85% 2.94% 2.93% 4.64%
</TABLE>
- --------
(1) Without the waiver of advisory fees and administration fees, the ratio of
expenses to average net assets for the the six months ended November 30,
1996 and the years ended May 31, 1996, May 31, 1995, May 31, 1994, May 31,
1993, and May 31, 1992, would have been .50%, .48%, .48%, .47%, .44%, and
.41%, respectively.
(2) Annualized.
See Accompanying Notes to Financial Statements.
40
<PAGE>
M.S.D.&T. FUNDS, INC.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
TAX-EXEMPT MONEY MARKET FUND
--------------------------------------------------------------------------------------------
FOR THE SIX
MONTHS ENDED FOR THE YEARS ENDED
NOVEMBER 30, 1996 MAY 31, 1996 MAY 31, 1995 MAY 31, 1994 MAY 31, 1993 MAY 31, 1992
----------------- ------------ ------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Begin-
ning of Period......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- -------
Income From Investment
Operations:
Net Investment Income.. 0.0150 0.0321 0.0303 0.0202 0.0217 0.0346
Net Realized Gain on
Investments........... -- -- -- 0.0004 -- --
------- ------- ------- ------- ------- -------
Total From
Investment
Operations....... 0.0150 0.0321 0.0303 0.0206 0.0217 0.0346
------- ------- ------- ------- ------- -------
Less Distributions:
Dividends to
Shareholders from Net
Investment Income..... (0.0150) (0.0321) (0.0303) (0.0202) (0.0217) (0.0346)
Distributions to
Shareholders from Net
Capital Gains......... -- -- -- (0.0004) -- --
------- ------- ------- ------- ------- -------
Total
Distributions.... (0.0150) (0.0321) (0.0303) (0.0206) (0.0217) (0.0346)
------- ------- ------- ------- ------- -------
Net Asset Value, End of
Period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= ======= =======
- -----------------------------------------------------------------------------------------------------------------------
Total Return............ 1.51% 3.26% 3.08% 2.08% 2.19% 3.51%
- -----------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of
Period (000).......... $53,571 $50,137 $69,100 $82,222 $81,838 $72,687
Ratio of Expenses to
Average Net Assets.... 0.43%(1)(2) 0.43%(1) 0.43%(1) 0.38%(1) 0.37%(1) 0.38%(1)
Ratio of Net Income to
Average Net Assets.... 3.00%(2) 3.22% 3.01% 2.02% 2.16% 3.42%
</TABLE>
- --------
(1) Without the waiver of advisory fees and administration fees, the ratio of
expenses to average net assets for the the six months ended November 30,
1996 and the years ended May 31, 1996, May 31, 1995, May 31, 1994, May 31,
1993, and May 31, 1992, would have been .54%, .51%, .52%, .50%, .44%, and
.46%, respectively.
(2) Annualized.
See Accompanying Notes to Financial Statements.
41
<PAGE>
M.S.D.&T. FUNDS, INC.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
(UNAUDITED)
<TABLE>
<CAPTION>
TAX-EXEMPT MONEY MARKET FUND (TRUST)
--------------------------------------------------------------------------------------------
FOR THE SIX
MONTHS ENDED FOR THE YEARS ENDED
NOVEMBER 30, 1996 MAY 31, 1996 MAY 31, 1995 MAY 31, 1994 MAY 31, 1993 MAY 31, 1992
----------------- ------------ ------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period................ $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
------- ------- ------- ------- ------- -------
Income From Investment
Operations:
Net Investment Income.... 0.0161 0.0340 0.0320 0.0219 0.0238 0.0362
Net Realized Gain on
Investments............. -- -- -- 0.0003 -- --
------- ------- ------- ------- ------- -------
Total From Investment
Operations............ 0.0161 0.0340 0.0320 0.0222 0.0238 0.0362
------- ------- ------- ------- ------- -------
Less Distributions:
Dividends to Shareholders
from Net Investment
Income.................. (0.0161) (0.0340) (0.0320) (0.0219) (0.0238) (0.0362)
Distributions to
Shareholders from Net
Capital Gains........... -- -- -- (0.0003) -- --
------- ------- ------- ------- ------- -------
Total Distributions.... (0.0161) (0.0340) (0.0320) (0.0222) (0.0238) (0.0362)
------- ------- ------- ------- ------- -------
Net Asset Value, End of
Period................... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
======= ======= ======= ======= ======= =======
- -------------------------------------------------------------------------------------------------------------------------
Total Return.............. 1.62% 3.45% 3.25% 2.24% 2.40% 3.68%
- -------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period
(000)................... $54,030 $46,541 $55,043 $73,230 $55,975 $62,502
Ratio of Expenses to
Average Net Assets...... 0.22%(1)(2) 0.22%(1) 0.22%(1) 0.20%(1) 0.20%(1) 0.20%(1)
Ratio of Net Income to
Average Net Assets...... 3.21%(2) 3.40% 3.14% 2.19% 2.38% 3.63%
</TABLE>
- --------
(1) Without the waiver of administration fees, the ratio of expenses to average
net assets for the six months ended November 30, 1996 and the years ended
May 31, 1996, May 31, 1995, May 31, 1994, May 31, 1993, and May 31, 1992,
would have been .29%, .27%, .28%, .26%, .21%, and .21%, respectively.
(2) Annualized.
See Accompanying Notes to Financial Statements.
42
<PAGE>
M.S.D.&T. FUNDS, INC.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
VALUE EQUITY FUND
---------------------------------------------------------------------------------------
INSTITUTIONAL SHARES
---------------------------------------------------------------------------------------
FOR THE SIX
MONTHS ENDED
NOVEMBER 30, FOR THE YEARS ENDED
1996 MAY 31, 1996 MAY 31, 1995 MAY 31, 1994 MAY 31, 1993 MAY 31, 1992
------------ ------------ ------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Period........... $ 14.58 $ 13.42 $ 12.14 $ 12.39 $ 11.36 $ 10.69
-------- -------- ------- ------- ------- -------
Income From
Investment
Operations:
Net Investment
Income.......... 0.13 0.33 0.35 0.29 0.29 0.33
Net Realized and
Unrealized Gain
(Loss) on
Investments..... 1.93 1.89 1.55 (0.18) 1.13 0.66
-------- -------- ------- ------- ------- -------
Total From
Investment
Operations.. 2.06 2.22 1.90 0.11 1.42 0.99
-------- -------- ------- ------- ------- -------
Less Distributions:
Dividends to
Shareholders
from Net
Investment
Income.......... (0.14) (0.35) (0.34) (0.28) (0.30) (0.32)
Distributions to
Shareholders
from Net Capital
Gains........... 0.00 (0.71) (0.28) (0.08) (0.09) --
-------- -------- ------- ------- ------- -------
Total
Distributions (0.14) (1.06) (0.62) (0.36) (0.39) (0.32)
-------- -------- ------- ------- ------- -------
Net Asset Value,
End of Period.... $ 16.50 $ 14.58 $ 13.42 $ 12.14 $ 12.39 $ 11.36
======== ======== ======= ======= ======= =======
- -----------------------------------------------------------------------------------------------------------
Total Return...... 14.24% 17.24% 16.22% 0.87% 12.87% 9.51%
- -----------------------------------------------------------------------------------------------------------
Ratios/Supplemental
Data Net Assets,
End of Period
(000)........... $121,776 $107,233 $91,277 $53,240 $46,754 $17,463
Ratio of Expenses
to Average Net
Assets.......... 0.73%(1)(3) 0.73%(1) 0.73%(1) 0.68%(1) 0.68%(1) 0.68%(1)
Ratio of Net
Income to
Average Net
Assets.......... 1.67%(3) 2.38% 2.99% 2.41% 2.68% 3.05%
Portfolio turnover
rate............. 21.44% 45.15% 33.26% 61.16% 11.99% 9.57%
Average commission
rate(5).......... $ 0.0637 N/A N/A N/A N/A N/A
<CAPTION>
--------------------------------
AFBA FIVE
STAR SHARES
--------------------------------
FOR THE PERIOD
FOR THE SIX DECEMBER 1,
MONTHS ENDED 1995(4)
NOVEMBER 30, TO MAY 31,
1996 1996
------------- ---------------
(UNAUDITED)
<S> <C> <C>
Net Asset Value,
Beginning of
Period........... $ 14.56 $13.61
------- ------
Income From
Investment
Operations:
Net Investment
Income.......... 0.11 0.14
Net Realized and
Unrealized Gain
(Loss) on
Investments..... 1.93 0.91
------- ------
Total From
Investment
Operations.. 2.04 1.05
------- ------
Less Distributions
Dividends to
Shareholders
from Net
Investment
Income.......... (0.13) (0.10)
Distributions to
Shareholders
from Net Capital
Gains........... 0.00 0.00
------- ------
Total
Distribution (0.13) (0.10)
------- ------
Net Asset Value,
End of Period.... $ 16.47 $14.56
======= ======
- ----------------------------------------------------
Total Return...... 14.09% 7.72%
- ----------------------------------------------------
Ratios/Supplemental
Data Net Assets,
End of Period
(000)........... $ 1,403 $ 330
Ratio of Expenses
to Average Net
Assets.......... 0.98%(2)(3) 0.98%(2)(3)
Ratio of Net
Income to
Average Net
Assets.......... 1.34%(3) 2.36%(3)
Portfolio turnover
rate............. 21.44% 45.15%
Average commission
rate(5).......... $0.0637 N/A
</TABLE>
- -------
(1) Without the waiver of advisory fees and administration fees, the ratio of
expenses to average net assets for the six months ended November 30, 1996
and the years ended May 31, 1996, May 31, 1995, May 31, 1994, May 31,
1993, and May 31, 1992, would have been .92%, .89%, .89%, .87%, .88%, and
.96%, (annualized), respectively.
(2) Without the waiver of advisory fees and administration fees, the ratio of
expenses to average net assets for the six months ended November 30, 1996
and the period ended May 31, 1996 would have been 1.17% and 1.15%,
(annualized), respectively.
(3) Annualized.
(4) Commencement of Operations.
(5) Computed by dividing the total amount of commission paid by the total num-
ber of shares purchased and sold during the period for which there was a
commission. This disclosure is required by the S.E.C. beginning 1996.
See Accompanying Notes to Financial Statements.
43
<PAGE>
M.S.D.&T. FUNDS, INC.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND
------------------------------------------------------------------
FOR THE SIX FOR THE PERIOD
MONTHS ENDED FOR THE YEARS ENDED JULY 2, 1993 (3)
NOVEMBER 30, 1996 MAY 31, 1996 MAY 31, 1995 TO MAY 31, 1994
----------------- ------------ ------------ ----------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 12.47 $ 11.60 $ 11.81 $ 10.00
------- ------- ------- -------
Income From Investment
Operations:
Net Investment Income.. 0.07 0.09 0.03 0.08
Net Realized and
Unrealized Gain (Loss)
on Investments and
Foreign Currency...... 0.39 1.51 0.08 1.81
------- ------- ------- -------
Total From Investment
Operations........... 0.46 1.60 0.11 1.89
------- ------- ------- -------
Less Distributions:
Dividends to
Shareholders from Net
Investment Income..... (0.15) (0.07) (0.04) (0.07)
Distributions to
Shareholders from Net
Capital Gains......... 0.00 (0.66) (0.28) (0.01)
------- ------- ------- -------
Total Distributions... (0.15) (0.73) (0.32) (0.08)
------- ------- ------- -------
Net Asset Value, End of
Period................. $ 12.78 $ 12.47 $ 11.60 $ 11.81
======= ======= ======= =======
- ----------------------------------------------------------------------------------------------
Total Return............ 3.67% 14.27% 0.82% 18.98%
- ----------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of
Period (000).......... $79,164 $75,676 $69,172 $47,472
Ratio of Expenses to
Average Net Assets.... 1.05%(1)(2) 1.05%(1) 1.05%(1) 1.00%(1)(2)
Ratio of Net Income to
Average Net Assets.... 1.08%(2) 0.78% 0.06% 0.82%(2)
Portfolio turnover
rate................... 42.70% 53.58% 42.15% 39.49%
Average commission
rate(4)................ $0.0168 N/A N/A N/A
</TABLE>
- --------
(1) Without the waiver of advisory fees and administration fees, the
annualized ratio of expenses to average net assets for the six months
ended November 30, 1996 and the years ended May 31, 1996 and May 31, 1995
and the period ended May 31, 1994 would have been 1.17%, 1.17%, 1.16% and
1.20%, respectively.
(2) Annualized.
(3) Commencement of operations.
(4) Computed by dividing the total amount of commission paid by the total num-
ber of shares purchased and sold during the period for which there was a
commission. This disclosure is required by the S.E.C. beginning 1996.
See Accompanying Notes to Financial Statements.
44
<PAGE>
M.S.D.&T. FUNDS, INC.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
INTERMEDIATE FIXED INCOME FUND
-------------------------------------------------------------------------------
INSTITUTIONAL SHARES
-------------------------------------------------------------------------------
FOR THE SIX FOR THE YEARS ENDED
MONTHS ENDED MAY 31, MAY 31, MAY 31, MAY 31, MAY 31,
NOVEMBER 30, 1996 1996 1995 1994 1993 1992
----------------- ------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period................. $ 10.19 $ 10.43 $ 10.10 $ 10.55 $ 10.31 $ 9.97
------- ------- ------- ------- ------- -------
Income From Investment
Operations:
Net Investment Income..... 0.30 0.59 0.56 0.50 0.56 0.60
Net Realized and
Unrealized Gain (Loss) on
Investments.............. 0.33 (0.24) 0.33 (0.39) 0.24 0.34
------- ------- ------- ------- ------- -------
Total From Investment
Operations.............. 0.63 0.35 0.89 0.11 0.80 0.94
------- ------- ------- ------- ------- -------
Less Distributions:
Dividends to Shareholders
from Net Investment
Income................... (0.30) (0.59) (0.56) (0.50) (0.56) (0.60)
Distributions to
Shareholders from Net
Capital Gains............ -- -- -- (0.06) -- --
------- ------- ------- ------- ------- -------
Total Distributions..... (0.30) (0.59) (0.56) (0.56) (0.56) (0.60)
------- ------- ------- ------- ------- -------
Net Asset Value, End of
Period.................... $ 10.52 $ 10.19 $ 10.43 $ 10.10 $ 10.55 $ 10.31
======= ======= ======= ======= ======= =======
- -----------------------------------------------------------------------------------------------------------
Total Return............... 6.24% 3.38% 9.13% 0.94% 7.94% 9.68%
- -----------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period
(000).................... $44,641 $44,102 $44,652 $35,008 $28,078 $17,549
Ratio of Expenses to
Average Net Assets....... 0.60%(1)(3) 0.60%(1) 0.60%(1) 0.55%(1) 0.55%(1) 0.55%(1)
Ratio of Net Income to
Average.................. 5.74%(3) 5.66% 5.56% 4.75% 5.32% 5.76%
Portfolio turnover rate... 10.41% 52.79% 22.01% 48.58% 12.29% 13.76%
<CAPTION>
-------------------------------
AFBA FIVE
STAR SHARES
-------------------------------
FOR THE
FOR THE SIX PERIOD
MONTHS ENDED DECEMBER 1,
NOVEMBER 30, 1995(4)
1996 TO MAY 31, 1996
------------ ---------------
(UNAUDITED)
<S> <C> <C>
Net Asset Value, Beginning
of Period................. $10.20 $10.61
------ ------
Income From Investment
Operations:
Net Investment Income..... 0.28 0.28
Net Realized and
Unrealized Gain (Loss) on
Investments.............. 0.33 (0.41)
------ ------
Total From Investment
Operations.............. 0.61 (0.13)
------ ------
Less Distributions:
Dividends to Shareholders
from Net Investment
Income................... (0.28) (0.28)
Distributions to
Shareholders from Net
Capital Gains............ 0.00 --
------ ------
Total Distributions..... (0.28) (0.28)
------ ------
Net Asset Value, End of
Period.................... $10.53 $10.20
====== ======
- ------------------------------------------------------------
Total Return............... 6.04% (1.23)%
- ------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period
(000).................... $ 802 $ 346
Ratio of Expenses to
Average Net Assets....... 0.90%(2)(3) 0.90%(2)(3)
Ratio of Net Income to
Average.................. 5.46%(3) 5.50%(3)
Portfolio turnover rate... 10.41% 52.79%
</TABLE>
- --------
(1) Without the waiver of advisory fees and administration fees, the ratio of
expenses to average net assets for the six months ended November 30, 1996
and the years ended May 31, 1996, May 31, 1995, May 31, 1994, May 31,
1993, and May 31, 1992, would have been .78%, .72%, .70%, .66%, .64%, and
.72%, (annualized), respectively.
(2) Without the waiver of advisory fees and administration fees, the ratio of
expenses to average net assets for the the six months ended November 30,
1996 and the period ended May 31, 1996 would have been 1.08% and 1.06%,
(annualized), respectively.
(3) Annualized.
(4) Commencement of Operations.
See Accompanying Notes to Financial Statements
45
<PAGE>
M.S.D.&T. FUNDS, INC.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
MARYLAND TAX-EXEMPT BOND FUND
--------------------------------------------------------------------------------
FOR THE SIX FOR THE PERIOD
MONTHS ENDED FOR THE YEARS ENDED JUNE 2, 1992(1)
NOVEMBER 30, 1996 MAY 31, 1996 MAY 31, 1995 MAY 31, 1994 TO MAY 31, 1993
----------------- ------------ ------------ ------------ ---------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $10.20 $ 10.40 $ 10.25 $ 10.55 $ 10.00
------ ------- ------- ------- -------
Income From Investment
Operations:
Net Investment Income.. 0.25 0.49 0.49 0.50 0.48
Net Realized and
Unrealized Gain (Loss)
on Investments........ 0.33 (0.20) 0.15 (0.28) 0.55
------ ------- ------- ------- -------
Total From Investment
Operations........... 0.58 0.29 0.64 0.22 1.03
------ ------- ------- ------- -------
Less Distributions:
Dividends to
Shareholders from Net
Investment Income..... (0.25) (0.49) (0.49) (0.50) (0.48)
Distributions to
Shareholders from Net
Capital Gains......... -- -- -- (0.02) --
------ ------- ------- ------- -------
Total Distributions... (0.25) (0.49) (0.49) (0.52) (0.48)
------ ------- ------- ------- -------
Net Asset Value, End of
Period................ $10.53 $ 10.20 $ 10.40 $ 10.25 $ 10.55
====== ======= ======= ======= =======
- -------------------------------------------------------------------------------------------------------------
Total Return.......... 5.74% 2.84% 6.48% 1.99% 10.59%(3)
- -------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of
Period (000).......... $8,799 $10,186 $12,360 $20,008 $15,707
Ratio of Expenses to
Average Net Assets.... 0.59%(2)(3) 0.62%(2) 0.62%(2) 0.55%(2) 0.55%(2)(3)
Ratio of Net Income to
Average Net Assets.... 4.80%(3) 4.74% 4.83% 4.66% 4.78%(3)
Portfolio turnover
rate................... 7.94% 20.58% 36.80% 33.89% 17.59%
</TABLE>
- --------
(1) Commencement of operations.
(2) Without the waiver of advisory fees and administration fees, the ratio of
expenses to average net assets for the six months ended November 30, 1996
and the years ended May 31, 1996, May 31, 1995 and May 31, 1994 and the
period ended May 31, 1993 would have been 1.15%, 1.04%, .97%, .86%, and
.94% (annualized), respectively.
(3) Annualized.
See Accompanying Notes to Financial Statements
46
<PAGE>
M.S.D.&T. FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
M.S.D.&T. Funds, Inc. (the "Company") is registered under the Investment
Company Act of 1940, as amended, as an open-end management investment company.
The Company was incorporated in Maryland on March 7, 1989. The Articles of In-
corporation of the Company authorize the Board of Directors to issue up to ten
billion shares, having a par value of $.001 per share. The Company is a series
fund which is currently authorized to issue ten classes of common stock, which
represent interests in eight investment portfolios: the Prime Money Market
Fund (Class A), the Government Money Market Fund (Class B), the Tax-Exempt
Money Market Fund (Class C), the Tax-Exempt Money Market Fund (Trust) (Class
D), the Value Equity Fund (Class E and Class E -- Special Series 1), the In-
termediate Fixed Income Fund (Class F and Class F -- Special Series 1), the
Maryland Tax-Exempt Bond Fund (Class G) and the International Equity Fund
(Class H) -- (the "Funds"). Class E shares (Institutional Shares) and Class
E -- Special Series 1 shares (AFBA Five Star Shares) of the Value Equity Fund
and Class F shares (Institutional Shares) and Class F -- Special Series 1
shares (AFBA Five Star Shares) of the Intermediate Fixed Income Fund represent
equal pro rata interests in the respective Fund and bear the same fees and ex-
penses, except that AFBA Five Star Shares of a Fund bear the fees that are
payable under a Service Plan (the "Service Plan") adopted by the Board of Di-
rectors and each class bears certain class specific expenses.
The preparation of financial statements in conformity with generally ac-
cepted accounting principles requires management to make estimates and assump-
tions that affect the reported amounts of assets and liabilities and disclo-
sure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the re-
porting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by
the Funds in the preparation of their financial statements.
A) Security Valuation: Investment securities held by the Prime Money Market
Fund, Government Money Market Fund, Tax-Exempt Money Market Fund and Tax-
Exempt Money Market Fund (Trust) (the "Money Market Funds") are valued
under the amortized cost method, which approximates current market value.
Under this method, securities are valued at cost when purchased and,
thereafter, a constant proportionate amortization of any discount or
premium is recorded until maturity of the security. Regular review and
monitoring of the valuation is performed pursuant to procedures adopted
by the Company's Board of Directors in an attempt to avoid dilution or
other unfair results to shareholders. The Money Market Funds each seek to
maintain a stable net asset value of $1.00 per share, but there can be no
assurance that they will be able to do so. Investments held by the Value
Equity Fund, International Equity Fund, Intermediate Fixed Income Fund
and Maryland Tax-Exempt Bond Fund are valued at market value or, in the
absence of a market value with respect to any portfolio securities, at
fair value. A security that is primarily traded on a domestic security
exchange (including securities traded through the National Market System)
is valued at the last sale price on that exchange or, if there were no
sales during the day, at the current quoted bid price. Portfolio
securities that are primarily traded on foreign exchanges are generally
valued at the closing values of such securities on
47
<PAGE>
M.S.D.&T. FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
(UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED
their respective exchanges, provided that if such securities are not
traded on the valuation date, they will be valued at the preceding
closing values and provided further, that when an occurrence subsequent
to the time of valuation is likely to have changed the value, then the
fair value of those securities will be determined through consideration
of other factors by or under the direction of the Company's Board of
Directors. Over-the-counter securities and securities listed or traded on
foreign exchanges with operations similar to the U.S. over-the-counter
market are valued at the mean of the most recent available quoted bid and
asked prices in the over-the-counter market. Market or fair value may be
determined on the basis of valuations provided by one or more recognized
pricing services approved by the Board of Directors, which may rely on
matrix pricing systems, electronic data processing techniques and/or
quoted bid and asked prices provided by investment dealers. Short-term
investments with maturities of 60 days or less are valued at amortized
cost which approximates fair value. The net asset value per share of the
Value Equity Fund, International Equity Fund, Intermediate Fixed Income
Fund and Maryland Tax-Exempt Bond Fund will fluctuate as the values of
their respective investment portfolios change.
B) Security Transactions and Investment Income: Security transactions are
accounted for on the trade date. The cost of investments sold is deter-
mined by use of the specific identification method for both financial
reporting and income tax purposes. Interest income is recorded on the
accrual basis; dividend income is recorded on the ex-dividend date. The
Company accounts separately for the assets, liabilities and operations of
each Fund. Direct expenses of a Fund are charged to that Fund while
general expenses of the Company are allocated among the Funds based on
relative net assets. The investment income and expenses of the Value Eq-
uity Fund and Intermediate Fixed Income Fund (other than the expenses
incurred under the Service Plan and class specific expenses) and real-
ized and unrealized gains and losses on the investments of each such Fund
are allocated to the separate classes of shares of each such Fund based
upon their relative net asset value on the date income is earned or
expenses and realized and unrealized gains and losses are incurred.
C) Dividends and Distributions to Shareholders: Dividends from net invest-
ment income are declared daily and paid monthly to shareholders of the
Money Market Funds, Intermediate Fixed Income Fund and the Maryland Tax-
Exempt Bond Fund; are declared and paid quarterly to shareholders of the
Value Equity Fund; and are declared and paid semiannually to sharehold-
ers of the International Equity Fund. Any net realized capital gains are
distributed annually.
Income distributions and capital gains distributions are determined in
accordance with income tax regulations which may differ from generally
accepted accounting principals. These differences are primarily due to
differing treatments for foreign currency transactions.
D) Federal Income Taxes: Each of the Funds is a separate taxable entity and
intends to qualify for the tax treatment applicable to regulated invest-
ment companies under the Internal Revenue Code of 1986, as amended, and,
among other things, is required to make the requisite distributions to
its shareholders which will relieve it from Federal income or excise
taxes. Therefore, no provision has been recorded for Federal income or
excise taxes.
48
<PAGE>
M.S.D.&T. FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
(UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED
Under current tax law, capital losses and foreign currency losses real-
ized after October 31 may be deferred and treated as occurring on the
first day of the following fiscal year. The following losses will be
treated as arising on the first day of fiscal year ended May 31, 1997.
<TABLE>
<CAPTION>
CAPITAL LOSSES
DEFERRED
--------------
<S> <C>
Government Money Market Fund............................. 9,099
Intermediate Fixed Income Fund........................... 73,725
</TABLE>
E) Organizational Costs: Costs incurred in connection with the registration
and initial public offering of shares of the Funds have been deferred
and are being amortized on a straight-line basis for a five-year period.
F) Repurchase Agreements: The Prime Money Market Fund, Government Money
Market Fund, Value Equity Fund, International Equity Fund, Intermediate
Fixed Income Fund and Maryland Tax-Exempt Bond Fund may agree to pur-
chase portfolio securities from financial institutions, such as banks
and broker-dealers, subject to the seller's agreement to repurchase them
at an agreed upon date and price. In the case of the Prime Money Market
Fund and Government Money Market Fund, collateral for repurchase agree-
ments may have longer maturities than the maximum permissible remaining
maturity of portfolio investments. The seller will be required on a
daily basis to maintain the value of the securities subject to the re-
purchase agreement at not less than the repurchase price (including ac-
crued interest), plus the transaction costs the Funds could expect to
incur if the seller defaults, marked-to-market daily.
G) Foreign Currency Translation: Foreign currency amounts are translated
into U.S. dollars at prevailing exchange rates as follows: assets and
liabilities at the rate of exchange prevailing at the end of the respec-
tive period, purchases and sales of securities and income and expenses
at the rate of exchange prevailing on the dates of such transactions.
The International Equity Fund does not isolate that portion of the re-
sults of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices
of securities held. Such fluctuations are included with the net realized
and unrealized gain or loss from investments.
H) Forward Foreign Currency Contracts: The International Equity Fund enters
into forward foreign currency contracts in order to hedge its exposure
to changes in foreign currency exchange rates on its foreign portfolio
holdings. All commitments are marked-to-market daily at the applicable
foreign exchange rate and any resulting unrealized gains or losses are
recorded currently. The gain or loss arising from the difference between
the original contracts and the closing of such contracts is included in
income as a component of realized gain or loss on foreign currency. Such
contracts, which protect the value of a Fund's investment securities
against a decline in the value of currency, do not eliminate fluctua-
tions in the underlying prices of the securities, but merely establish
an exchange rate at a future date. Also, although such contracts tend to
minimize the risk of loss due to a decline in the value of a hedged cur-
rency, at the same time they tend to limit any potential gain that might
be realized should the value of such foreign currency increase.
49
<PAGE>
M.S.D.&T. FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
(UNAUDITED)
2. INVESTMENT ADVISER, DISTRIBUTOR AND OTHER RELATED PARTY TRANSACTIONS
Mercantile-Safe Deposit and Trust Company ("Mercantile") provides investment
advisory and administration services to each Fund pursuant to Investment Advi-
sory Agreements and an Administration Agreement. For its services as Adviser,
Mercantile receives an advisory fee computed daily and payable monthly at an
annual rate of .25% of the average daily net assets of each of the Prime Money
Market Fund, Government Money Market Fund, and Tax-Exempt Money Market Fund;
.60% of the average daily net assets of the Value Equity Fund; .80% of the av-
erage daily net assets of the International Equity Fund (.45% of which fee
Mercantile pays to CastleInternational Asset Management Limited as sub-advis-
er); .35% of the average daily net assets of the Intermediate Fixed Income
Fund; and .50% of the average daily net assets of the Maryland Tax-Exempt Bond
Fund. For its services as Administrator, Mercantile receives an administration
fee computed daily and payable monthly at an annual rate of .125% of the aver-
age daily net assets of each Fund. Mercantile may, at its discretion, volun-
tarily waive any portion of its advisory fee or its administration fee for any
Fund. Mercantile does not receive a fee for advisory services provided to the
Tax-Exempt Money Market Fund (Trust).
Under the Service Plan with respect to AFBA Five Star Shares, institutions
("Service Organizations") agree to provide support services to their clients
who are the beneficial owners of AFBA Five Star Shares of the Value Equity and
Intermediate Fixed Income Funds. For these services, the Funds agree to pay
the Service Organizations a fee at the annual rate of .25% of the average
daily net assets of each Fund's outstanding AFBA Five Star Shares.
Shares in each Fund are sold on a continuous basis without a sales load by
the Company's distributor, BISYS Fund Services ("the Distributor"). The Dis-
tributor receives no fee for these services.
Directors of the Company each receive from the Company an annual fee of
$3,500 and a fee of $1,625 for each Board meeting attended and are reimbursed
for all out-of-pocket expenses relating to attendance at meetings. Officers of
the Company do not receive compensation from the Company for serving as offi-
cers. No person who is a director, officer or employee of the Adviser serves
as a director, officer or employee of the Company. During the six months ended
November 30, 1996, the Funds paid legal fees to a law firm, a partner of which
serves as Secretary of the Company.
3. NET ASSETS
At November 30, 1996, net assets consisted of the following:
<TABLE>
<CAPTION>
PRIME GOVERNMENT TAX-EXEMPT TAX-EXEMPT
MONEY MARKET MONEY MARKET MONEY MARKET MONEY MARKET
FUND FUND FUND FUND (TRUST)
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Capital Paid-In......... $348,246,496 $298,530,961 $53,577,935 $54,027,919
Accumulated Realized
Gain (Loss) on
Investments............ (82,571) (155,203) (6,566) 1,823
------------ ------------ ----------- -----------
$348,163,925 $298,375,758 $53,571,369 $54,029,742
============ ============ =========== ===========
</TABLE>
50
<PAGE>
M.S.D.&T. FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
(UNAUDITED)
3. NET ASSETS -- CONTINUED
<TABLE>
<CAPTION>
VALUE INTERNATIONAL INTERMEDIATE MARYLAND
EQUITY EQUITY FIXED INCOME TAX-EXEMPT
FUND FUND FUND BOND FUND
------ ------------- ------------ ----------
<S> <C> <C> <C> <C>
Capital Paid-In
Institutional Class....... $ 87,228,704 $69,362,065 $43,903,593 $9,095,460
AFBA Five Star Class...... 1,232,904 -- 785,347 --
Accumulated Realized Gain
(Loss) on Investments..... 4,163,964 1,504,935 (134,922) (601,508)
Net Unrealized Appreciation
(Depreciation) on
Investments and Foreign
Currency.................. 30,229,930 7,752,822 895,144 304,821
Undistributed Net Invest-
ment Income (Distribution
in Excess of Net Invest-
ment Income).............. 323,561 543,819 (6,696) --
------------ ----------- ----------- ----------
$123,179,063 $79,163,641 $45,442,466 $8,798,773
============ =========== =========== ==========
</TABLE>
4. CAPITAL STOCK
Transactions in shares of the Company are summarized as follows:
<TABLE>
<CAPTION>
PRIME MONEY MARKET FUND GOVERNMENT MONEY MARKET FUND
------------------------------- -------------------------------
FOR THE SIX MONTHS FOR THE YEAR FOR THE SIX MONTHS FOR THE YEAR
ENDED ENDED ENDED ENDED
NOVEMBER 30, 1996 MAY 31, 1996 NOVEMBER 30, 1996 MAY 31, 1996
------------------ ------------ ------------------ ------------
<S> <C> <C> <C> <C>
Shares Sold............. 687,045,105 434,185,717 580,645,405 546,351,190
Shares Redeemed......... (666,209,889) (490,322,690) (547,189,930) (545,573,787)
Shares Reinvested....... 450,851 977,895 200,529 208,389
------------ ------------ ------------ ------------
Net Increase (Decrease)
in Shares.............. 21,286,067 (55,159,078) 33,656,004 985,792
Shares Outstanding:
Beginning of Period.... 326,960,429 382,119,507 264,874,957 263,889,165
------------ ------------ ------------ ------------
End of Period.......... 348,246,496 326,960,429 298,530,961 264,874,957
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
TAX-EXEMPT
TAX-EXEMPT MONEY MARKET FUND MONEY MARKET FUND (TRUST)
------------------------------ ------------------------------
FOR THE SIX FOR THE YEAR FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED MONTHS ENDED ENDED
NOVEMBER 30, 1996 MAY 31, 1996 NOVEMBER 30, 1996 MAY 31, 1996
----------------- ------------ ----------------- ------------
<S> <C> <C> <C> <C>
Shares Sold............. 124,882,575 98,464,935 97,789,217 43,529,526
Shares Redeemed......... (121,449,731) (117,428,168) (90,300,756) (52,034,691)
Shares Reinvested....... 1,763 4,217 0 0
------------ ------------ ----------- -----------
Net Increase (Decrease)
in Shares.............. 3,434,607 (18,959,016) 7,488,461 (8,505,165)
Shares Outstanding:
Beginning of Period.... 50,143,328 69,102,344 46,539,458 55,044,623
------------ ------------ ----------- -----------
End of Period.......... 53,577,935 50,143,328 54,027,919 46,539,458
============ ============ =========== ===========
</TABLE>
51
<PAGE>
M.S.D.&T. FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
(UNAUDITED)
4. CAPITAL STOCK -- CONTINUED
<TABLE>
<CAPTION>
VALUE EQUITY FUND
--------------------------------------------------
INSTITUTIONAL SHARES AFBA FIVE STAR SHARES INTERNATIONAL EQUITY FUND
----------------------- ------------------------- -----------------------------
FOR THE SIX FOR THE FOR THE SIX FOR THE FOR THE SIX FOR THE
MONTHS ENDED YEAR ENDED MONTHS ENDED PERIOD ENDED MONTHS ENDED YEAR ENDED
NOVEMBER 30, MAY 31, NOVEMBER 30, MAY 31, NOVEMBER 30, MAY 31,
1996 1996 1996 1996 1996 1996
------------ ---------- ------------ ------------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Shares Sold............. 531,809 1,678,924 63,086 22,663 271,363 1,059,437
Shares Redeemed......... (552,450) (1,459,804) (1,071) (7) (153,796) (1,009,713)
Shares Reinvested....... 43,369 335,598 490 25 11,053 55,904
--------- ---------- ------ ------ ------------ -------------
Net Increase (Decrease)
in Shares.............. 22,728 554,718 62,505 22,681 128,620 105,628
Shares Outstanding:
Beginning of Period.... 7,356,638 6,801,920 22,681 0 6,066,282 5,960,654
--------- ---------- ------ ------ ------------ -------------
End of Period.......... 7,379,366 7,356,638 85,186 22,681 6,194,902 6,066,282
========= ========== ====== ====== ============ =============
</TABLE>
<TABLE>
<CAPTION>
INTERMEDIATE FIXED INCOME FUND
--------------------------------------------------
INSTITUTIONAL SHARES AFBA FIVE STAR SHARES MARYLAND TAX-EXEMPT BOND FUND
----------------------- ------------------------- -----------------------------
FOR THE SIX FOR THE FOR THE SIX FOR THE FOR THE SIX FOR THE
MONTHS ENDED YEAR ENDED MONTHS ENDED PERIOD ENDED MONTHS ENDED YEAR ENDED
NOVEMBER 30, MAY 31, NOVEMBER 30, MAY 31, NOVEMBER 30, MAY 31,
1996 1996 1996 1996 1996 1996
------------ ---------- ------------ ------------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Shares Sold............. 355,707 1,170,604 41,383 34,055 40,211 115,810
Shares Redeemed......... (498,695) (1,232,150) (299) (204) (209,416) (321,232)
Shares Reinvested....... 60,756 108,696 1,079 92 6,509 15,078
--------- ---------- ------ ------ -------------- ---------------
Net Increase (Decrease)
in Shares.............. (82,232) 47,150 42,163 33,943 (162,696) (190,344)
Shares Outstanding:
Beginning of Period.... 4,327,461 4,280,311 33,943 0 998,454 1,188,798
--------- ---------- ------ ------ -------------- ---------------
End of Period.......... 4,245,229 4,327,461 76,106 33,943 835,758 998,454
========= ========== ====== ====== ============== ===============
</TABLE>
5. PURCHASES & SALES OF SECURITIES
For the six months ended November 30, 1996, total aggregate purchases and
proceeds from sales of investment securities were as follows:
<TABLE>
<CAPTION>
U.S. U.S.
GOVERNMENT GOVERNMENT
PURCHASES * SALES * PURCHASES SALES
----------- ------- ---------- ----------
<S> <C> <C> <C> <C>
Value Equity Fund................ $24,192,501 $20,489,091 $ 0 $2,761,484
International Equity Fund........ 31,389,672 32,184,538 0 0
Intermediate Fixed Income Fund... 2,493,860 0 1,994,688 5,737,306
Maryland Tax-Exempt Bond Fund.... 699,082 2,160,082 0 0
</TABLE>
- --------
* (excluding short-term and U.S. Government securities)
52
<PAGE>
M.S.D.&T. FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS -- CONCLUDED
(UNAUDITED)
6. CAPITAL LOSS CARRYOVERS
At May 31, 1996, the following Funds had capital loss carryovers:
<TABLE>
<CAPTION>
CAPITAL LOSS EXPIRATION
CARRYOVER YEAR
------------ ----------
<S> <C> <C>
Prime Money Market Fund.................... $ 73,906 2003 through 2004
Government Money Market Fund............... 140,768 2003 through 2004
Tax-Exempt Money Market Fund............... 5,946 2003 through 2004
Intermediate Fixed Income Fund............. 65,316 2003
Maryland Tax-Exempt Bond Fund.............. 631,281 2003 through 2004
</TABLE>
The capital loss carryovers are available to offset possible future capital
gains, if any, of the respective Funds.
53
<PAGE>
IMPORTANT TAX INFORMATION
During the calendar year ended December 31, 1996:
100.0% of the distributions paid by the Prime Money Market Fund, the
Government Money Market Fund and the Intermediate Fixed Income Fund were
derived from net investment income and short-term capital gains and are
taxable as ordinary income.
35.9% of the distributions paid by the Value Equity Fund were derived from
net investment income and short-term capital gains and are taxable as
ordinary income and 64.1% were derived from long term capital gains and
are taxable at the long term capital gain rate. Of such distributions
derived from net investment income and short-term capital gains, 100%
qualify for the dividends received deduction available to corporate
shareholders.
100.0% of the distributions paid by the Tax-Exempt Money Market Fund and
the Maryland Tax-Exempt Bond Fund were exempt-interest dividends,
excludable from gross income for Federal income tax purposes.
99.9% of the distributions paid by the Tax-Exempt Money Market Fund
(Trust) were exempt-interest dividends, excludable from gross income for
Federal income tax purposes and 0.1% were derived from short-term capital
gains and are taxable as ordinary income.
93.4% of the distributions paid by the International Equity Fund were
derived from net investment income and short-term capital gains and are
taxable as ordinary income and 6.6% were derived from long term capital
gains and are taxable at the long term capital gain rate.
CAPITAL GAIN DISTRIBUTIONS
During the calendar year of 1996, the M.S.D.&T. Funds distributed capital
gains to shareholders of the Value Equity Fund and the International Equity
Fund on 12/23/96. The Securities and Exchange Commission requires mutual funds
to disclose to shareholders the composition of the capital gain distribution.
Pursuant to this requirement, these percentages are listed below:
<TABLE>
<CAPTION>
SHORT- LONG-
TERM TERM
------ -----
<S> <C> <C>
Value Equity Fund................................................ 0% 100.0%
International Equity Fund........................................ 86.8% 13.2%
Tax-Exempt Trust Money Market Fund (Trust)....................... 100.0% 0%
</TABLE>
Short-term capital gain distributions are taxable to you as ordinary income.
Long-term capital gain distributions are taxable to you as long term capital
gains.
54
<PAGE>
CUSTODIAN (EXCEPT FOR THE INTERNATIONAL
EQUITY FUND)
Fifth Third Bank
Cincinnati, OH
DISTRIBUTOR
BISYS Fund Services
Columbus, Ohio
CUSTODIAN FOR THE INTERNATIONAL EQUITY
FUND AND TRANSFER AGENT:
State Street Bank and Trust Company
Boston, MA
This report is submitted for the general
information of the shareholders of
M.S.D.& T. Funds, Inc. It is not author-
ized for distribution to prospective
investors unless accompanied or preceded
by current Prospectuses for the Funds
which contain information concerning the
Funds' investment policies and expenses
as well as other pertinent information.
Shares of the Funds are not bank deposits
or obligations of, or guaranteed, endorsed
or otherwise supported by Mercantile Safe
Deposit and Trust Company, its parent
company or its affiliates and are not
federally insured or guaranteed by the
U.S. Government, the Federal Deposit
Insurance Corporation, the Federal Reserve
Board or any other governmental agency.
Investment in the Funds involves investment
risks, including possible loss of principal.
