<PAGE>
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
(RULE 14a-101)
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
M.S.D. & T. FUNDS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
<PAGE>
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
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Notes:
<PAGE>
[PRELIMINARY COPY]
M.S.D.& T. FUNDS, INC.
____________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
____________
June __, 1998
To the Shareholders of
M.S.D.& T. Funds, Inc.
An Annual Meeting of Shareholders of M.S.D. & T. Funds, Inc. (the
"Company") will be held on July 24, 1998, at 1:30 P.M. Eastern Time, at the
offices of Mercantile-Safe Deposit & Trust Company, Second Floor Board Room, Two
Hopkins Plaza, Baltimore, Maryland 21201, for the following purposes:
(1) The election of a Board of five (5) Directors;
(2) The ratification or rejection of the selection of Coopers &
Lybrand L.L.P. as the Company's independent accountants for the fiscal year
ending May 31, 1999;
(3) The approval or disapproval of a new investment advisory agreement
between the Company and Mercantile-Safe Deposit & Trust Company
("Mercantile") with respect to the Prime Money Market Fund, Government
Money Market Fund, Tax-Exempt Money Market Fund, Growth & Income Fund,
International Equity Fund, Limited Maturity Bond Fund, Maryland Tax-Exempt
Bond Fund, Diversified Real Estate Fund, Equity Income Fund, Equity Growth
Fund, Total Return Bond Fund, National Tax-Exempt Bond Fund and
Intermediate Tax-Exempt Bond Fund; and
(4) The transaction of such other business as may properly come before
the meeting or any adjournment thereof.
The proposals referred to above are discussed in the Proxy Statement
attached to this Notice. Each shareholder is invited to attend the Annual
Meeting of Shareholders in person. Shareholders of record at the close of
business on May 21, 1998 have the right to vote at the meeting. If you cannot
be present at the meeting, we urge you to fill in, sign and promptly return the
enclosed proxy in order that the meeting can be held and a maximum number of
shares may be voted.
<PAGE>
THE COMPANY HAS BEEN ADVISED BY MERCANTILE THAT CERTAIN CUSTOMERS OF
MERCANTILE, WHO ARE BENEFICIAL OWNERS OF SHARES OF COMMON STOCK OF THE COMPANY'S
INVESTMENT PORTFOLIOS, HAVE ELECTED NOT TO RECEIVE PROXY MATERIALS WITH RESPECT
TO INVESTMENTS HELD OF RECORD, FOR THEIR BENEFIT, BY MERCANTILE. MERCANTILE HAS
ASKED THE COMPANY TO ADVISE SHAREHOLDERS IN THAT CATEGORY THAT THE ENCLOSED
PROXY MATERIALS ARE BEING PROVIDED TO THEM IN THIS CASE IN ORDER TO COMPLY WITH
LEGAL REQUIREMENTS APPLICABLE TO THE COMPANY AND MERCANTILE. SUCH CUSTOMERS WHO
RECEIVE THESE MATERIALS ARE REQUESTED TO COMPLETE THE ENCLOSED PROXY AND RETURN
IT IN THE POSTAGE-PAID ENVELOPE PROVIDED.
By Order of the Board of Directors
W. BRUCE McCONNEL, III
Secretary
WE NEED YOUR PROXY VOTE IMMEDIATELY
A SHAREHOLDER MAY THINK HIS OR HER VOTE IS NOT IMPORTANT, BUT IT IS VITAL. BY
-----
LAW, THE ANNUAL MEETING OF SHAREHOLDERS OF THE COMPANY SCHEDULED FOR JULY 24,
1998 WILL HAVE TO BE ADJOURNED WITHOUT CONDUCTING ANY BUSINESS IF LESS THAN A
MAJORITY OF THE SHARES ELIGIBLE TO VOTE ARE REPRESENTED. IN THAT EVENT, THE
COMPANY WOULD CONTINUE TO SOLICIT VOTES IN AN ATTEMPT TO ACHIEVE A QUORUM.
CLEARLY, YOUR VOTE COULD BE CRITICAL IN ALLOWING THE COMPANY TO HOLD THE MEETING
AS SCHEDULED, SO PLEASE RETURN YOUR PROXY CARD IMMEDIATELY.
-----------
-2-
<PAGE>
[PRELIMINARY COPY]
M.S.D. & T. FUNDS, INC.
TWO HOPKINS PLAZA
BALTIMORE, MARYLAND 21201
1-800-551-2145
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of M.S.D. & T. Funds, Inc. (the "Company")
for use at an Annual Meeting of Shareholders of the Company to be held at the
offices of Mercantile-Safe Deposit & Trust Company, Second Floor Board Room, Two
Hopkins Plaza, Baltimore, Maryland 21201 on July 24, 1998, at 1:30 P.M. Eastern
Time. As used in this Proxy Statement, the meeting and any adjournment thereof
is referred to as the "Meeting"; the Company's investment portfolios are
referred to as "Funds"; and the Funds' shares are referred to "Shares".
It is expected that the solicitation of proxies will be primarily by
mail. The Company's officers and service contractors may also solicit proxies
by telephone, telegraph, facsimile or personal interview. The Company will bear
all proxy solicitation costs. Any shareholder giving a proxy may revoke it at
any time before it is exercised by submitting to the Company a written notice of
revocation or a subsequently executed proxy or by attending the Meeting and
electing to vote in person. This Proxy Statement and the enclosed proxy are
expected to be distributed to shareholders on or about June __, 1998.
The following table summarizes the proposals to be voted on at the
Meeting and indicates those shareholders who are being solicited with respect to
each proposal:
PROPOSAL SHAREHOLDERS SOLICITED
- ---------------------------------------- ---------------------------------
1. Election of a Board of five (5) All Funds voting together in the
Directors. aggregate.
2. Ratification or rejection of the All Funds voting together in the
selection of Coopers & Lybrand L.L.P. aggregate.
as the Company's independent
accountants for the fiscal year
ending May 31, 1999.
3. Approval or disapproval of a new Shareholders of each Fund (other
Advisory Agreement with Mercantile- than the Tax-Exempt Money Market
Safe Deposit & Trust Company. Fund (Trust)) voting separately
on a Fund-by-Fund basis.
A proxy is enclosed with respect to the Shares you own in the Company. If
the proxy is executed properly and returned, the
1
<PAGE>
Shares represented by it will be voted at the Meeting in accordance with the
instructions thereon. Each full Share is entitled to one vote and each
fractional Share to a proportionate fractional vote. If you do not expect to be
present at the Meeting and wish your Shares to be voted, please complete the
enclosed proxy and mail it in the enclosed reply envelope.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF EACH PROPOSAL
DESCRIBED IN THIS PROXY STATEMENT.
2
<PAGE>
PROPOSAL 1
(ALL FUNDS)
At the Meeting, shareholders will be asked to consider the election of five
Directors, who will constitute the entire Board of Directors of the Company.
Each elected Director will hold office for an indefinite term until the earlier
of (1) the date the election of a Director's successor in office becomes
effective, or (2) the date a Director resigns or his term as a Director is
terminated in accordance with the Company's By-Laws. Normally, there will be no
meetings of shareholders for the purpose of electing Directors except as
required by the Investment Company Act of 1940, as amended (the "1940 Act").
See "Other Matters" below. The Directors may, as permitted by the 1940 Act,
appoint additional Directors without shareholder approval.
All Shares represented by valid proxies will be voted in the election of
Directors for each nominee named below, unless authority to vote for a
particular nominee is withheld. The five nominees who receive the highest
number of votes cast at the Meeting will be elected as Directors. Cumulative
voting is not permitted. Each nominee has consented to being named in this
Proxy Statement and to serve if elected. If a nominee withdraws from the
election or is otherwise unable to serve, the named proxies will vote for the
election of such substitute nominee as the Board of Directors may recommend,
unless the Board decides to reduce the number of Directors serving on the Board.
Messrs. Disharoon, Decatur H. Miller, Murphy and Packard are incumbent
Directors who are standing for re-election. Messrs. Disharoon, Decatur H.
Miller and Packard were last elected by shareholders at a meeting held on July
16, 1990. Mr. Murphy was appointed to the Board of Directors on April 29, 1994.
In addition, the incumbent Directors of the Company have nominated Dr. Edward D.
Miller as an additional Director to be voted on by the Company's shareholders.
The following table contains relevant information about the nominees:
3
<PAGE>
<TABLE>
<CAPTION>
Company Shares
Owned
Principal Occupations Beneficially
Position with During Past 5 Years as of
Name and Address the Company and Other Affiliations April 1, 1998
- ---------------------------- ------------------ --------------------------- --------------
<S> <C> <C> <C>
LESLIE B. DISHAROON* Chairman of the Retired; Director, **
11321 John Carroll Road Board, President; Baltimore Gas & Electric
Owings Mills, MD 21117 Director since Company; Director,
Age: 65 1989 Travelers Inc.
(diversified financial
services); Director, GRC
International, Inc.
(technology based services
and products); Director,
Aegon USA, Inc. (holding
company-insurance).
DECATUR H. MILLER* Director since Retired; Partner and **
26 Whitfield Road 1989; Treasurer former Chairman of the law
Baltimore, MD 21201 firm of Piper & Marbury
Age: 65 L.L.P., Baltimore,
Maryland until 1995.
EDWARD D. MILLER Nominee Dean/Chief Executive None
Johns Hopkins Medicine Officer, Johns Hopkins
720 Rutland Street Medicine, January 1997 to
Baltimore, MD 21205-2196 date; Interim Dean, Johns
Age: 55 Hopkins Medicine, March
1996 to January 1997;
Chairman, Department of
Anesthesiology and
Critical Care Medicine,
Johns Hopkins University,
July 1994 to date;
Chairman, Department of
Anesthesiology, Columbia
Presbyterian Hospital,
March 1993 to June 1994.
JOHN R. MURPHY Director since Vice Chairman, National None
3115 Blendon Road 1994 Geographic Society, March
Owings Mills, MD 21117 1998 to date; President
Age: 64 and Chief Executive
Officer, National
Geographic Society, May
1996 to March 1998;
Director, Provant, Inc.;
Director Omnicom Group;
Director, Monarch Avalon
Inc. (games, graphic arts,
envelope manufacturing)
until 1994.
</TABLE>
4
<PAGE>
<TABLE>
<S> <C> <C> <C>
GEORGE R. PACKARD, III Director since President, U.S.-Japan None
4425 Garfield Street, N.W. 1989 Foundation, beginning
Washington, DC 20007 July, 1998; Visiting
Age: 66 President, International
University of Japan, 1994
to date; Former Dean,
School of Advanced
International Studies at
The Johns Hopkins
University; Director,
Offitbank (private bank).
</TABLE>
__________________________
* Mr. Disharoon is an "interested person" of the Company as defined in the
1940 Act because he and his wife own stock in Mercantile Bankshares
Corporation, the parent corporation of the Company's investment adviser,
and because he serves as an officer of the Company. Mr. Decatur H. Miller
is an "interested person" of the Company because he is a co-trustee of a
trust for which Mercantile is also a co-trustee and because he serves as an
officer of the Company.
** As of April 1, 1998, Mr. Disharoon beneficially owned 1,432.235 Shares of
the Company's International Equity Fund. As of April 1, 1998, Mr. Decatur
H. Miller beneficially owned 656.520 Shares of the Company's Prime Money
Market Fund, 2,252.176 Shares of the Company's Growth & Income Fund and
2,470.464 Shares of the Company's International Equity Fund.
_________________________
Effective June 1, 1998, each Director of the Company receives an annual fee
of $9,500 plus $2,000 for each Board meeting attended and reimbursement of
expenses incurred as a Director. Additionally, the Chairman and President of
the Company receives an additional annual fee of $7,500 for his services in such
capacities. Prior to June 1, 1998, each Director received an annual fee of
$3,500 plus $1,625 for each Board meeting attended and reimbursement of expenses
incurred as a Director. Remuneration for services rendered during the Company's
fiscal year ended May 31, 1998 and distributed to all Directors and officers as
a group was $45,125. As of April 1, 1998, the Directors and officers of the
Company, as a group, owned less than 1% of the outstanding shares of each Fund.
The following chart provides certain information about the fees received by
the Company's Directors for their services as members of the Board of Directors
for the fiscal year ended May 31, 1998:
5
<PAGE>
<TABLE>
<CAPTION>
===========================================================================================
TOTAL
PENSION OR COMPENSATION
RETIREMENT FROM THE
AGGREGATE BENEFITS ESTIMATED COMPANY AND
COMPENSATION ACCRUED AS PART ANNUAL FUND COMPLEX/*/
FROM THE OF COMPANY BENEFITS UPON PAID TO
NAME OF PERSON/POSITION COMPANY EXPENSES RETIREMENT DIRECTORS
- ------------------------- ------------ ------------ ------------- ---------------
<S> <C> <C> <C> <C>
Leslie B. Disharoon $10,000 N/A N/A $10,000
Chairman of the Board
of Directors and
President
- ------------------------- ------------ ------------ ------------- ---------------
Decatur H. Miller $ 8,375 N/A N/A $ 8,375
Director and Treasurer
- ------------------------- ------------ ------------ ------------- ---------------
John R. Murphy $10,000 N/A N/A $10,000
Director
- ------------------------- ------------ ------------ ------------- ---------------
George R. Packard, III $ 8,375 N/A N/A $ 8,375
Director
- ------------------------- ------------ ------------ ------------- ---------------
J. Stevenson Peck** $ 8,375 N/A N/A $ 8,375
Director
===========================================================================================
</TABLE>
* The "Fund Complex" consists solely of the Company.
** Mr. Peck resigned as a Director of the Company on March 2, 1998.
The Board of Directors of the Company held four meetings during the last
fiscal year, which ended May 31, 1998. During that year, Messrs. Disharoon and
Murphy attended all meetings, Mr. Peck attended all meetings prior to his
resignation as a Director, and Messrs. Decatur H. Miller and Packard attended
all but one meeting. The Board does not have standing audit, compensation or
nominating committees. The Board of Directors is prepared to review nominations
from shareholders to fill any future vacancies on the Board in written
communications delivered to the Company at its address on page 1.
Mr. Disharoon has served as Chairman of the Board since May 17, 1989.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" EACH NOMINEE
FOR DIRECTOR OF THE COMPANY.
6
<PAGE>
PROPOSAL 2
(ALL FUNDS)
Shareholders are also being asked to vote upon the ratification or
rejection of the selection of Coopers & Lybrand L.L.P. ("Coopers & Lybrand") as
independent accountants for the Company's fiscal year ending May 31, 1999.
Approval of the proposal requires the affirmative vote of a majority of the
shares cast at the Meeting, either in person or by proxy, assuming that a quorum
is reached. Unless instructed otherwise, the persons named as proxies in the
accompanying Proxy will vote for Coopers & Lybrand.
The Board of Directors of the Company, including all of the Directors who
are not "interested persons" of the Company, selected Coopers & Lybrand as the
Company's independent accountants for the fiscal year ending May 31, 1999 at a
meeting held on April 24, 1998. Coopers & Lybrand has stated that it has no
material direct or indirect financial interest in the Company. Coopers &
Lybrand, with offices at 2400 Eleven Penn Center, Philadelphia, Pennsylvania
19103, has served as the Company's independent accountants since its
commencement of operations in 1989. Effective July 1, 1998, Coopers & Lybrand
will be known as PricewaterhouseCoopers L.L.P.
As part of its audit of the Company's financial statements for the fiscal
year ended May 31, 1997, Coopers & Lybrand reviewed the Company's annual report
to shareholders and its related filings with the Securities and Exchange
Commission (the "SEC"). In addition, Coopers & Lybrand performed additional
non-audit services for the Company which included a review of the Company's tax
returns. Coopers & Lybrand will provide these same services as part of the
audit of the Company's financial statements for the fiscal year ended May 31,
1998, which is currently in progress.
A representative of Coopers & Lybrand is expected to be available by
telephone at the Meeting should any matter arise requiring consultation with the
accountants, and Coopers & Lybrand will be given the opportunity to make a
statement if it chooses.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
RATIFICATION OF THE SELECTION OF COOPERS & LYBRAND AS INDEPENDENT ACCOUNTANTS OF
THE COMPANY.
7
<PAGE>
PROPOSAL 3
(EACH FUND OTHER THAN THE
TAX-EXEMPT MONEY MARKET
FUND (TRUST))
At the Meeting, shareholders of each Fund (other than the Tax-Exempt Money
Market Fund (Trust)) will be asked to approve a new investment advisory
agreement with Mercantile-Safe Deposit & Trust Company ("Mercantile").
Mercantile currently serves as investment adviser to the Company pursuant to
seven separate investment advisory agreements. Six of those investment advisory
agreements (the "Current Agreements") pertaining to the Prime Money Market,
Government Money Market and Tax-Exempt Money Market Funds, the Growth & Income
and Limited Maturity Bond Funds, the Maryland Tax-Exempt Bond Fund, the
International Equity Fund, the Diversified Real Estate Fund, and the Equity
Income, Equity Growth, Total Return Bond, National Tax-Exempt Bond and
Intermediate Tax-Exempt Bond Funds, respectively, will be consolidated into the
New Agreement. The terms and conditions of the New Agreement are the same as
those of the Current Agreements except for provisions relating to (1) the
effective date (which will be July 24, 1998 or such later date as the New
Agreement is approved by shareholders of the Funds), (2) the ability of
Mercantile to utilize a sub-adviser if desirable (currently, Mercantile is
authorized to do so only with respect to the International Equity Fund,
Diversified Real Estate Fund, Equity Income Fund, Equity Growth Fund, Total
Return Bond Fund, National Tax-Exempt Bond Fund and Intermediate Tax-Exempt Bond
Fund, (3) the implementation of advisory fee breakpoints as described below, (4)
the standard of care to which Mercantile is subject in providing advisory
services under the New Agreement (a negligence standard care has been
substituted for the gross negligence standard of care in the Current
Agreements), and (5) the termination date (July 31, 1999). Significant
provisions of the New Agreement are summarized below, however, this summary is
qualified in its entirety by reference to the New Agreement, a copy of which is
attached to this Proxy Statement as Exhibit A.
No changes are proposed to the current Advisory Agreement between the
Company and Mercantile with respect to the Tax-Exempt Money Market Fund (Trust).
TERMS AND CONDITIONS OF THE NEW AGREEMENT. In the New Agreement,
Mercantile agrees, subject to the general supervision and approval of the
Company's Board of Directors, to be responsible for the management of, and to
provide a continuous investment program for, each Fund's portfolio in accordance
with such Fund's investment objective, policies and limitations, and to make
decisions with respect to and place orders for all purchases and sales of
portfolio securities for the respective Funds. Mercantile's responsibilities as
investment adviser
8
<PAGE>
include providing investment research and management with respect to all
securities, investments, cash and cash equivalents in the Funds and maintaining
books and records with respect to each Fund's securities transactions.
The New Agreement authorizes Mercantile to employ or contract with other
persons to assist it in the performance of its responsibilities under the
Agreement, including one or more sub-advisers who may perform any or all of the
advisory services described above under Mercantile's supervision. Any sub-
adviser must be approved as required by the 1940 Act. Any fees or compensation
payable to such other persons or sub-advisers will be paid by Mercantile.
For the services provided and expenses assumed pursuant to the New
Agreement, Mercantile is entitled to advisory fees, computed daily and payable
monthly, at the following annual rates: (a) 0.25% of the first $1 billion of
the average daily net assets of each of the Prime Money Market Fund, Government
Money Market Fund and Tax-Exempt Money Market Fund, plus 0.20% of each such
Fund's average daily net assets in excess of $1 billion; (b) 0.60% of the first
$1 billion of the average daily net assets of each of the Growth & Income Fund,
Equity Income Fund and Equity Growth Fund, plus 0.40% of each such Fund's
average daily net assets in excess of $1 billion; (c) 0.35% of the first $1
billion of the average daily net assets of each of the Limited Maturity Bond
Fund and Total Return Bond Fund, plus 0.20% of each such Fund's average daily
net assets in excess of $1 billion; (d) 0.50% of the first $1 billion of the
average daily net assets of each of the Maryland Tax-Exempt Bond Fund, National
Tax-Exempt Bond Fund and Intermediate Tax-Exempt Bond Fund, plus 0.25% of each
such Fund's average daily net assets in excess of $1 billion; (e) 0.80% of the
first $1 billion of the average daily net assets of the International Equity
Fund, plus 0.70% of such Fund's average daily net assets in excess of $1
billion; and (f) 0.80% of the first $1 billion of the average daily net assets
of the Diversified Real Estate Fund, plus 0.60% of such Fund's average daily net
assets in excess of $1 billion. The advisory fees payable by each Fund under
the New Agreement are the separate obligation of that Fund (and not the joint
obligation of all Funds). Mercantile may from time to time voluntarily waive
all or a portion of its advisory fees in order to assist a Fund in maintaining a
competitive expense ratio.
The New Agreement provides that Mercantile will pay all expenses incurred
by it in connection with its activities under the New Agreement other than the
expenses to be borne by the Funds. Expenses to be borne by the Funds include,
without limitation, brokerage fees, commissions and other transaction costs,
outside auditing and legal expenses, SEC fees, costs of stockholders' reports
and meetings, costs of proxy statements and prospectuses, and extraordinary
expenses.
9
<PAGE>
The New Agreement also provides that Mercantile may place orders for
portfolio securities either directly with the issuer or with any broker or
dealer selected by Mercantile. In executing portfolio transactions and
selecting brokers or dealers, the New Agreement requires Mercantile to use its
reasonable best efforts to seek the most favorable execution of orders, after
taking into account all factors Mercantile deems relevant, including the breadth
of the market in the security, the price of the security, the financial
condition and execution capability of the broker or dealer, and the
reasonableness of the commission, if any, both for the specific transaction and
on a continuing basis.
Consistent with this obligation, Mercantile may, to the extent permitted by
law, purchase and sell portfolio securities from and to brokers and dealers who
provide brokerage and research services (within the meaning of Section 28(e) of
the Securities Exchange Act of 1934, as amended ) to or for the benefit of the
Funds and/or other accounts over which Mercantile or any of its affiliates
exercises investment discretion. Mercantile is authorized to pay to a broker or
dealer who provides such brokerage and research services a commission for
executing a portfolio transaction for any Fund which is in excess of the amount
of commission another broker or dealer would have charged for effecting that
transaction if Mercantile determines in good faith that such commission was
reasonable in relation to the value of brokerage and research services provided
by such broker or dealer, viewed in terms of either that particular transaction
or Mercantile's overall responsibilities to the particular Fund and to the
Company. Such brokerage and research services might consist of reports and
statistics relating to specific companies or industries, general summaries of
groups of stocks or bonds and their comparative earnings and yields, or broad
overviews of the stock, bond and government securities markets and the economy.
Such brokerage or research services may be useful to Mercantile in serving other
clients as well as the Company, and conversely brokerage or research services
obtained by the placement of business of other clients may be useful to
Mercantile in carrying out its obligations to the Company. In no instance will
portfolio securities be purchased from or sold to Mercantile or the Funds'
principal underwriter, BISYS Fund Services, or any affiliated person of either
of them, except as permitted by the SEC. Mercantile may not make loans for the
purpose of purchasing or carrying Fund Shares, or make interest-bearing loans to
the Company.
Further, the New Agreement provides that Mercantile and others who may
assist Mercantile in providing services to the Fund (but not including any sub-
adviser with whom Mercantile may contract pursuant to the terms of the New
Agreement) shall not be liable for any alleged or actual error of judgment or
mistake of law or for any alleged or actual loss suffered by a Fund or the
10
<PAGE>
Company, and each Fund and the Company have agreed to indemnify and hold
harmless Mercantile and such other persons against and from any claims,
liabilities, actions, suits, proceedings, judgments or damages (and expenses as
and when incurred in connection therewith, including the reasonable cost of
investigating or defending same, including but not limited to attorneys' fees)
arising out of any such alleged or actual error of judgment or mistake of law or
loss; however, nothing in the New Agreement will be deemed to protect or purport
to protect Mercantile or any such other person against any liability to the
Company or its shareholders resulting from willful misfeasance, bad faith or
negligence in the performance of its duties under the New Agreement or by reason
of reckless disregard of the obligations or duties thereunder.
If approved by a majority of the outstanding Shares of a Fund (as defined
below) and not sooner terminated, the New Agreement will continue in effect with
respect to such Fund until July 31, 1999 and thereafter from year to year,
provided that such continuance is approved at least annually (i) by the vote of
a majority of those members of the Board of Directors who are not parties to the
New Agreement or "interested persons" (as defined in the 1940 Act) of any such
party, and (ii) by the Board of Directors or by vote of a majority of the
outstanding Shares of such Fund.
The New Agreement provides that it will terminate automatically in the
event of its "assignment" (as defined in the 1940 Act), and that it is
terminable with respect to one or more Funds by Mercantile, by the Board of
Directors of the Company, or by vote of a majority of the outstanding Shares of
such Fund or Funds, without penalty, on 60 days' notice.
EVALUATION BY THE BOARD OF DIRECTORS. The New Agreement was approved by a
majority of the Company's Board of Directors and by a majority of those members
of the Board of Directors who are not "interested persons" (as defined in the
1940 Act) of any party to the New Agreement at a meeting held on April 24, 1998.
The New Agreement was proposed in order to consolidate the Current Agreements
into the New Agreement and to implement certain changes in the terms of the
Current Agreements. These changes include (1) the institution of advisory fee
breakpoints with respect to each Fund, which will allow the shareholders of each
Fund to share in any economies of scale realized by Mercantile as the assets of
the Funds increase, (2) a change from a gross negligence to a negligence
standard of care, which will result in Mercantile being held to a higher
standard of care in providing advisory services under the New Agreement, and (3)
allowing Mercantile to utilize a sub-adviser to assist it in providing advisory
services to each Fund. The Board of Directors considered that, except as noted
above, the New Agreement was the same as the Current Agreements and that there
would be no change
11
<PAGE>
in the personnel at Mercantile providing advisory services to the Funds as a
result of the New Agreement. The Board considered each of these factors to be
of material importance in connection with its recommendation of the New
Agreement. Based upon their consideration, analysis and evaluation of the above
factors and other information deemed by them to be relevant, the Board has
concluded that the approval of the New Agreement would be in the best interest
of the Funds and their respective shareholders.
At the time of their approval of the New Agreement, two of the members of
the Company's Board of Directors were considered to be "interested" Directors
within the meaning of the 1940 Act. Leslie B. Disharoon, Chairman of the Board,
Director and President of the Company, and his wife each own shares of
Mercantile Bankshares Corporation, the parent of the Fund's investment adviser.
Decatur H. Miller, Treasurer of the Trust and a member of the Board, serves as a
co-trustee of a trust for which Mercantile is also a co-trustee.
INFORMATION CONCERNING THE CURRENT AGREEMENTS. The Current Agreement with
respect to the Prime Money Market Fund, Government Money Market Fund and Tax-
Exempt Money Market Fund is dated July 21, 1989, was approved by the
shareholders of each such Fund on July 16, 1990 for the purpose of complying
with certain conditions imposed by the 1940 Act as well as by the SEC at that
time in connection with the registration of such Funds under the federal
securities laws, and was last approved by the Board of Directors of the Company
on April 24, 1998. Pursuant to such Agreement, Mercantile is entitled to
receive advisory fees at the annual rate of 0.25% of each Fund's average daily
net assets. For the fiscal year ended May 31, 1998, Mercantile received
advisory fees (after waivers) at the effective annual rates of 0.24%, 0.23% and
0.23% of the average daily net assets of the Prime Money Market Fund, Government
Money Market Fund and Tax-Exempt Money Market Fund, respectively, representing
$962,316 with respect to the Prime Money Market Fund, $825,312 with respect to
the Government Money Market Fund and $198,495 with respect to the Tax-Exempt
Money Market Fund.
The Current Agreement with respect to the Growth & Income Fund and Limited
Maturity Bond Fund is dated November 13, 1990, was approved by the shareholders
of each such Fund on October 28, 1991 for the purpose of complying with certain
conditions imposed by the 1940 Act as well as by the SEC at that time in
connection with the registration of such Funds under the federal securities
laws, and was last approved by the Board of Directors of the Company on April
24, 1998. Pursuant to such Agreement, Mercantile is entitled to receive
advisory fees at the annual rates of 0.60% of the average daily net assets of
the Growth & Income Fund and 0.35% of the average daily net assets of the
Limited Maturity Bond Fund. For the fiscal year ended May 31, 1998, Mercantile
received advisory fees (after waivers) at the
12
<PAGE>
effective annual rates of 0.43% and 0.15% of the average daily net assets of the
Growth & Income Fund and Limited Maturity Bond Fund, respectively, representing
$768,650 with respect to the Growth & Income Fund and $64,482 with respect to
the Limited Maturity Bond Fund.
The Current Agreement with respect to the Maryland Tax-Exempt Bond Fund is
dated February 3, 1992, was approved by the sole shareholder of such Fund on
June 2, 1992 prior to the Fund's initial public offering, and was last approved
by the Board of Directors of the Company on April 24, 1998. Pursuant to such
Agreement, Mercantile is entitled to receive advisory fees at the annual rate of
0.50% of such Fund's average daily net assets. For the fiscal year ended May
31, 1998, Mercantile received advisory fees (after waivers) at the effective
annual rate of 0.07% of the Fund's average daily net assets, representing
$6,788.
The Current Agreement with respect to the International Equity Fund is
dated June 29, 1993, was approved by the sole shareholder of such Fund on June
29, 1993 prior to the Fund's initial public offering, and was last approved by
the Company's Board of Directors on April 24, 1998. Pursuant to such Agreement,
Mercantile is entitled to receive advisory fees at the annual rate of 0.80% of
the Fund's average daily net assets. For the fiscal year ending May 31, 1998,
Mercantile received advisory fees (after waivers) at the effective annual rate
of 0.74% of the Fund's average daily net assets, representing $611,183. Of the
fees paid to Mercantile, $343,917 was paid to BlackRock, Inc., the sub-adviser
to the Fund, pursuant to the terms of a Sub-Advisory Agreement dated March 19,
1996.
The Current Agreement with respect to the Diversified Real Estate Fund is
dated July 31, 1997, was approved by the sole shareholder of such Fund on July
31, 1997 and was last approved by the Board of Directors of the Company on April
24, 1998. Pursuant to such Agreement, Mercantile is entitled to receive
advisory fees at the annual rate of 0.80% of the Fund's average daily net
assets. For the period August 1, 1997 (commencement of operations) through May
31, 1998, Mercantile waived all advisory fees payable to it.
The Current Agreement with respect to the Equity Growth Fund, Equity Income
Fund, Total Return Bond Fund, National Tax-Exempt Bond Fund and Intermediate
Tax-Exempt Bond Fund is dated February 27, 1998, was approved by the sole
shareholder of each such Fund on February 27, 1998 prior to each such Fund's
initial public offering, and was last approved by the Board of Directors of the
Company on October 24, 1997. Pursuant to such Agreement, Mercantile is entitled
to receive advisory fees at the annual rates of 0.60%, 0.60%, 0.35%, 0.50% and
0.50% of the average
13
<PAGE>
daily net assets of the Equity Income Fund, Equity Growth Fund, Total Return
Bond Fund, National Tax-Exempt Bond Fund and Intermediate Tax-Exempt Bond Fund,
respectively. For the period March 1, 1998 (commencement of operations) through
May 31, 1998, Mercantile received advisory fees (after waivers) at the effective
annual rates of 0.45%, 0.31%, 0.20%, 0.21% and 0.20% of the average daily net
assets of the Equity Income Fund, Equity Growth Fund, Total Return Bond Fund,
National Tax-Exempt Bond Fund and Intermediate Tax-Exempt Bond Fund,
respectively, representing $372,017 with respect to the Equity Income Fund,
$27,570 with respect to the Equity Growth Fund, $50,310 with respect to the
Total Return Bond Fund, $91,661 with respect to the National Tax-Exempt Bond
Fund and $47,954 with respect to the Intermediate Tax-Exempt Bond Fund.
REQUIRED VOTE. The approval of the New Agreement requires the affirmative
vote of the holders of a "majority of the outstanding shares" of each Fund (as
defined in the 1940 Act), which means the lesser of (a) the holders of 67% or
more of the Shares of the Fund present at the Meeting if the holders of more
than 50% of the outstanding Shares of such Fund are present in person or by
proxy, or (b) more than 50% of the outstanding Shares of the Fund.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE NEW
AGREEMENT.
VOTING INFORMATION
RECORD DATE. Only shareholders of record at the close of business on May
21, 1998 will be entitled to vote at the Meeting. On that date, the outstanding
Shares were as follows:
Number of
Fund Shares Outstanding
- -------------------------------------- ------------------
Prime Money Market Fund 446,266,892.040
Government Money Market Fund 387,227,832.550
Tax-Exempt Money Market Fund 90,575,490.920
Tax-Exempt Money Market Fund (Trust) 59,322,577.000
Growth & Income Fund 9,193,284.550
International Equity Bond 6,126,098.446
Limited Maturity Bond Fund 4,174,709.719
Maryland Tax-Exempt Bond Fund 1,375,439.909
14
<PAGE>
Number of
Fund Shares Outstanding
- -------------------------------------- ------------------
Diversified Real Estate Fund 650,966.960
Equity Income Fund 31,422,776.984
Equity Growth Fund 3,432,060.112
Total Return Bond Fund 10,251,154.948
National Tax-Exempt Bond Fund 17,617,967.533
Intermediate Tax-Exempt Bond Fund 9,473,575.118
QUORUM. A quorum is constituted with respect to the Company or a Fund, by
the presence in person or by proxy of the holders of at least a majority of all
of the votes entitled to be cast at the Meeting by shareholders of the Company
or such Fund. For purposes of determining the presence of a quorum,
abstentions, but not broker "non-votes" (that is, proxies from brokers or
nominees indicating that such persons have not received instructions from the
beneficial owners or other persons entitled to vote shares on a particular
matter with respect to which the brokers or nominees do not have discretionary
power), will be treated as shares that are present at the Meeting but which have
not been voted. Abstentions and broker "non-votes" will have the effect of a
"no" vote for purposes of obtaining the requisite approval of each proposal.
In the event that a quorum is not present at the Meeting or at any
adjournment thereof, or in the event that a quorum is present at the Meeting but
sufficient votes to approve any of the proposals are not received, the persons
named as proxies, or their substitutes, may propose and vote for one or more
adjournments of the Meeting to permit the further solicitation of proxies. Any
such adjournment will require the affirmative vote of a majority of those Shares
affected by the adjournment that are represented at the Meeting in person or by
proxy. If a quorum is present, the persons named as proxies will vote those
proxies which they are entitled to vote FOR any of the proposals in favor of
such adjournments, and will vote those proxies required to be voted AGAINST all
proposals against any such adjournments.
OTHER SHAREHOLDER INFORMATION. As of May 21, 1998, the record date for the
Meeting, Mercantile held of record, in a fiduciary or representative capacity
for its customers, substantially all of the outstanding Shares of each Fund. On
such date, Mercantile may be deemed to be the beneficial owner, for purposes of
the federal securities laws, of approximately ___%, ___%, ___%, ___%, ___%,
____%, ___%, ___%, ___%, ___%,
15
<PAGE>
___%, ___%, ___% and ___% of the Shares of the Prime Money Market Fund,
Government Money Market Fund, Tax-Exempt Money Market Fund, Tax-Exempt Money
Market Fund (Trust), Growth & Income Fund, International Equity Fund, Limited
Maturity Bond Fund, Maryland Tax-Exempt Bond Fund, Diversified Real Estate Fund,
Equity Growth Fund, Equity Income Fund, Total Return Bond Fund, National Tax-
Exempt Bond Fund and Intermediate Tax-Exempt Bond Fund, respectively, that were
outstanding on that date because Mercantile possessed sole or shared voting or
investment power with respect to such Shares. Mercantile does not, however,
have any economic interest in such Shares which are held solely for the benefit
of its customers.
The name, address and share ownership of each other person who may have
possessed sole or shared voting or investment power with respect to more than 5%
of the Company's outstanding shares at that date were:
<TABLE>
<CAPTION>
Percentage
Amount of Fund of Fund
Fund Name and Address Shares Owned Shares Owned
- ----------------- -------------------------------- -------------- ------------
<S> <C> <C> <C>
Prime Money The Johns Hopkins Hospital 24,437,926 5.48%
Market Fund 600 North Wolfe Street
Baltimore, MD 21287
Government Mr. James G. Robinson 28,928,015 7.47%
Money Market 10 East Lee Street
Fund Suite 2705
Baltimore, MD 21202
Tax-Exempt Fred Hittman 5,339,747 5.90%
Money market 3211 Keyser Road
Fund Baltimore, MD 21208
Reliable Liquors, Inc. 7,919,200 8.74%
2200 Winchester Street
Baltimore, MD 21216
Tax-Exempt Robert H. Levi Marital Trust 3,781,526 6.37%
Money Market c/o Mercantile-Safe Deposit and
Fund (Trust) Trust Company
Two Hopkins Plaza
Baltimore, MD 21201
Betty Washington Whiting Deed 3,913,731 6.60%
of Trust
c/o Mercantile-Safe Deposit and
Trust Company
Two Hopkins Plaza
Baltimore, MD 21201
</TABLE>
16
<PAGE>
<TABLE>
<S> <C> <C> <C>
Maryland Tax- Mr. Kenneth H. Roberts 150,215 11.00%
Exempt Bond 6287 Firethorn Drive
Fund Clarksville, MD 21029
Chelton Communications Systems, 100,926 7.39%
Inc.
58 Main Street, Route 117
Bolton, MA 01740
Growth & Income Mr. Willard Hackerman 550,964 5.99%
Fund 1 Slade Avenue
Baltimore, MD 21208-5240
</TABLE>
For purposes of the 1940 Act, any person who owns directly or through one
or more controlled companies more than 25% of the voting securities of a company
is presumed to "control" such company. Under this definition, Mercantile may be
deemed to be a controlling person of the Company. The Company has been advised
by Mercantile that subject to its fiduciary responsibilities, it intends to vote
the Shares over which it has voting power FOR and AGAINST each proposal
presented at the Meeting in the same proportions as the total votes that are
cast FOR and AGAINST the proposal by other shareholders of the Company.
ADDITIONAL INFORMATION
INFORMATION ABOUT MERCANTILE. Mercantile's principal offices are located
at Two Hopkins Plaza, Baltimore, Maryland 21201. Mercantile is a wholly-owned
subsidiary of Mercantile Bankshares Corporation, a publicly-held bank holding
company, whose principal offices are also located at Two Hopkins Plaza,
Baltimore, Maryland 21201. As of May 21, 1998, to the Company's knowledge, no
person owned beneficially or of record 10% or more of any class of issued and
outstanding voting securities of Mercantile Bankshares Corporation.
The New Advisory Agreement permits Mercantile to act as investment adviser
to one or more other investment companies and to fiduciary or other managed
accounts. While Mercantile does not provide investment advisory services to any
investment companies other than the Company, it does provide such services to
fiduciary and other managed accounts. Mercantile also serves as investment
adviser to the Company's Tax-Exempt Money Market Fund (Trust), with net assets
at May 21, 1998 of approximately $59,321,430. Pursuant to the terms of the
investment advisory agreement relating to that Fund, Mercantile receives no
advisory fees for providing services to the Fund.
17
<PAGE>
The name and principal occupation of the chief executive officer and each
director of Mercantile as of May 21, 1998 were as follows: [to be provided]
BANKING LAWS. Banking laws and regulations, including the Glass Steagall
Act as presently interpreted by the board of Governors of the Federal Reserve
System, prohibit a bank holding company registered under the Federal Bank
Holding Company Act of 1956 or any affiliate thereof from sponsoring, organizing
or controlling a registered open-end investment company continuously engaged in
the issuance of its shares, and prohibit banks generally from underwriting,
selling or distributing securities, but in general do not prohibit such a
holding company or affiliated banks generally from acting as adviser to such an
investment company or from purchasing shares of such a company as agent for and
upon the order of customers. Mercantile is subject to such laws and
regulations. Mercantile believes that it may perform the services contemplated
by the New Agreement. However, future changes in legal requirements relating to
the permissible activities of banks and their affiliates, as well as future
interpretations of current requirements, could prevent Mercantile from
continuing to perform investment advisory services for the Company.
If Mercantile were prohibited from performing investment advisory services
for the Company, it is expected that the Board of Directors of the Company would
select another qualified firm. Any new advisory agreement would be subject to
shareholder approval.
PAYMENTS TO AFFILIATES. Mercantile also serves as administrator to the
Company. For its services as administrator, Mercantile receives fees from the
Funds, computed daily and payable monthly, calculated at the annual rate of
.125% of the Company's aggregate average daily net assets. For the fiscal year
ended May 31, 1998, Mercantile received administrative fees (net of waivers)
from each Fund as follows:
<TABLE>
<CAPTION>
Fund Administration Fee
- -------------------------------------- ------------------
<S> <C>
Prime Money Market Fund $340,956
Government Money Market Fund $367,405
Tax-Exempt Money Market Fund $ 64,207
Tax-Exempt Money Market Fund (Trust) $ 42,758
Growth & Income Fund $221,769
International Equity Fund $ 62,449
</TABLE>
18
<PAGE>
<TABLE>
<S> <C>
Limited Maturity Bond Fund $ 22,388
Maryland Tax-Exempt Bond Fund $ 1,492
Diversified Real Estate Fund $ -0-
Equity Income Fund $ 40,943
Equity Growth Fund $ 8,650
Total Return Bond Fund $ -0-
National Tax-Exempt Bond Fund $ 4,414
Intermediate Tax-Exempt Bond Fund $ -0-
</TABLE>
It is expected that Mercantile will continue to provide administrative
services to the Company after the Meeting.
OFFICERS. Officers of the Company are elected by the Directors and hold
office until they resign, are removed or are otherwise disqualified to serve.
The following table sets forth certain information about the Company's officers
who are not also Directors.
<TABLE>
<CAPTION>
Principal Occupations
During
Officer Position with Past 5 Years and Other
Name and Address Age Since the Company Affiliations
- ------------------------ --- ------- ------------- ----------------------------
<S> <C> <C> <C> <C>
W. Bruce McConnel, III 54 1989 Secretary Partner of the law firm of
Suite 1100 Drinker Biddle & Reath LLP,
1345 Chestnut Street Philadelphia, Pennsylvania
Philadelphia, PA 19107 since 1977.
</TABLE>
The officers of the Company who are not also Directors receive no
compensation directly from the Company for performing the duties of their
offices. Drinker Biddle & Reath LLP, of which Mr. McConnel is a partner,
receives legal fees for services provided to the Company.
SUB-ADVISER. BlackRock, Inc., the sub-adviser to the Company's
International Equity Fund, has its principal offices at 345 Park Avenue, New
York, New York, 10137.
DISTRIBUTOR. BISYS Fund Services (the "Distributor") serves as the
exclusive distributor of the Shares of the Company. The Distributor's principal
offices are located at 3435 Stelzer Road, Columbus, Ohio 43219.
OTHER MATTERS
The Company does not intend to hold Annual Meetings of Shareholders except
to the extent that such meetings may be required under the 1940 Act or state
law. Shareholders who wish to submit proposals for inclusion in the Proxy
Statement for a subsequent shareholder meeting should send their written
19
<PAGE>
proposals to the Company at its principal office within a reasonable time before
such meeting.
No business other than the matters described above is expected to come
before the Meeting, but should any other matter requiring a vote of shareholders
arise, including any question as to an adjournment of the Meeting, the persons
named in the enclosed Proxy will vote thereon according to their best judgment
in the interests of the Company.
Dated: June ___, 1998
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING AND WHO WISH TO
HAVE THEIR SHARES VOTED ARE REQUESTED TO COMPLETE THE ENCLOSED PROXY AND RETURN
IT IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.
THE COMPANY WILL FURNISH, WITHOUT CHARGE, COPIES OF THE COMPANY'S ANNUAL
AND SEMI-ANNUAL REPORTS TO SHAREHOLDERS DATED MAY 31, 1997 AND NOVEMBER 30,
1997, RESPECTIVELY, TO ANY SHAREHOLDER UPON REQUEST. THE COMPANY'S ANNUAL AND
SEMI-ANNUAL REPORTS TO SHAREHOLDERS MAY BE OBTAINED FROM THE COMPANY BY WRITING
TO THE COMPANY AT TWO HOPKINS PLAZA, BALTIMORE, MARYLAND 21201 OR BY CALLING 1-
800-551-2145.
20
<PAGE>
EXHIBIT A
ADVISORY AGREEMENT
M.S.D.& T. FUNDS, INC.
Two Hopkins Plaza
Baltimore, Maryland 21201
July __, 1998
Mercantile-Safe Deposit & Trust Company
Two Hopkins Plaza
Baltimore, Maryland 21201
Dear Sirs:
This will confirm the agreement, entered into in consideration of the
premises and mutual covenants herein contained, and for other good and valuable
consideration, between the undersigned (the "Company") and you as follows:
4. General. The Company is an open-end investment company. This
-------
Agreement relates to thirteen of the Company's portfolios -- the Prime Money
Market Fund, the Government Money Market Fund, the Tax-Exempt Money Market Fund,
the Growth & Income Fund, the International Equity Fund, the Limited Maturity
Bond Fund, the Maryland Tax-Exempt Bond Fund, the Diversified Real Estate Fund,
the Equity Income Fund, the Equity Growth Fund, the Total Return Bond Fund, the
National Tax-Exempt Bond Fund and the Intermediate Tax-Exempt Bond Fund
(individually, a "Fund" and collectively, the "Funds"). The Company proposes to
engage in the business of investing and reinvesting the assets of each Fund in
the manner and in accordance with the investment objective, policies and
limitations specified with respect to each Fund in the Company's Prospectuses
and Statements of Additional Information relating to the Funds (the
"Prospectus") included in the Company's Registration Statement on Form N-1A, as
amended from time to time, filed under the Investment Company Act of 1940, as
amended (the "1940 Act"), and the Securities Act of 1933, as amended. Copies of
the Prospectus have been furnished to you. Any amendments to the Prospectus
shall be furnished to you promptly.
5. Advisory Services. Subject to the supervision and approval of
-----------------
the Company's Board of Directors, you will provide investment management of each
Fund's portfolio in accordance with
A-1
<PAGE>
such Fund's investment objective, policies and limitations as stated in the
Prospectus as from time to time in effect, and resolutions of the Company's
Board of Directors of which you will be advised. In connection therewith, you
will obtain and provide investment research and will supervise each Fund's
investments and conduct a continuous program of investment, evaluation and, if
appropriate, sale and reinvestment of such Fund's assets.
In the event that the Company establishes one or more portfolios other
than the Funds with respect to which it desires to retain you as investment
adviser hereunder, it shall notify you in writing. If you are willing to render
such services under this Agreement you shall notify the Company in writing,
whereupon such portfolio shall become a Fund hereunder and shall be subject to
the provisions of this Agreement to the same extent as the other Funds except to
the extent that said provisions (including those relating to compensation
payable by such additional Fund to you as investment adviser) are modified with
respect to such additional Fund in writing by you and the Company at the time.
You will comply with all rules and regulations of the Securities and
Exchange Commission applicable to you in connection with your performance of
this Agreement, and will in addition conduct your activities under this
Agreement in accordance with other law, including banking law, applicable to
you.
You will not make loans for the purpose of purchasing or carrying Fund
shares, or make interest-bearing loans to the Company.
You will place orders for the purchase and sale of portfolio
securities and will solicit broker-dealers to execute transactions in accordance
with the Funds' policies and restrictions regarding brokerage allocations. You
will place orders pursuant to your investment determination for the Funds either
directly with the issuer or with any broker or dealer selected by you. In
executing portfolio transactions and selecting brokers or dealers, you will use
your reasonable best efforts to seek the most favorable execution of orders,
after taking into account all factors you deem relevant, including the breadth
of the market in the security, the price of the security, the financial
condition and execution capability of the broker or dealer, and the
reasonableness of the commission, if any, both for the specific transaction and
on a continuing basis. Consistent with this obligation, you may, to the extent
permitted by law, purchase and sell portfolio securities to and from brokers and
dealers who provide brokerage and research services (within the meaning of
Section 28(e) of the Securities Exchange Act of 1934, as amended) to or for the
benefit of the Funds and/or other accounts over which you or any of your
affiliates exercises investment discretion. You are authorized to pay to a
A-2
<PAGE>
broker or dealer who provides such brokerage and research services a commission
for executing a portfolio transaction for any Fund which is in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction if you determine in good faith that such commission was
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer, viewed in terms of either that particular
transaction or your overall responsibilities to the particular Fund and to the
Company. In no instance will portfolio securities be purchased from or sold to
you, or the Funds' principal underwriter, or any affiliated person thereof
except as permitted by the Securities and Exchange Commission.
6. Assistance. You may employ or contract with other persons to
----------
assist you in the performance of this Agreement including, without limitation,
one or more sub-advisers who may perform under your supervision any or all of
the services described under Section 2 for one or more of the Funds; provided,
however, that the retention of any sub-adviser shall be approved as may be
required by the 1940 Act. Such other persons and/or sub-advisers may include
other investment advisory or management firms and officers or employees who are
employed by both you and the Company. The fees or other compensation of any
such other persons or sub-advisers shall be paid by you and no obligation may be
incurred on the Company's behalf to any such person or sub-adviser.
In the event that you appoint a sub-adviser for one or more of the
Funds, you will review, monitor, and report to the Company's Board of Directors
on the performance and investment procedures of any such sub-adviser; assist and
consult with any sub-adviser in connection with such Fund's or Funds' continuous
investment program; and, if applicable, approve lists of foreign countries which
may be recommended by any sub-adviser for investment by such Fund or Funds.
7. Fees. In consideration of the advisory services rendered
----
pursuant to this Agreement, (a) the Prime Money Market Fund, the Government
Money Market Fund and the Tax-Exempt Money Market Fund each will pay you on the
first business day of each month a fee at the annual rate of .25% of the first
$1 billion of such Fund's average daily net assets during the preceding month
plus .20% of such Fund's average daily net assets in excess of $1 billion during
the preceding month, (b) the Growth & Income Fund, the Equity Income Fund and
the Equity Growth Fund each will pay you on the first business day of each month
a fee at the annual rate of .60% of the first $1 billion of such Fund's average
daily net assets during the preceding month plus .40% of such Fund's average
daily net assets in excess of $1 billion during the preceding month, (c) the
Limited Maturity Bond Fund and the Total Return Bond Fund each will pay you on
the first business day of
A-3
<PAGE>
each month a fee at the annual rate of .35% of the first $1 billion of such
Fund's average daily net assets during the preceding month plus .20% of such
Fund's average daily net assets in excess of $1 billion during the preceding
month, (d) the Maryland Tax-Exempt Bond Fund, the National Tax-Exempt Bond Fund
and the Intermediate Tax-Exempt Bond Fund each will pay you on the first
business day of each month a fee at the annual rate of .50% of the first $1
billion of such Fund's average daily net assets during the preceding month plus
.25% of such Fund's average daily net assets in excess of $1 billion during the
preceding month, (e) the International Equity Fund will pay you a fee on the
first business day of each month at the annual rate of .80% of the first $1
billion of such Fund's average daily net assets during the preceding month plus
.70% of such Fund's average daily net assets in excess of $1 billion during the
preceding month, and (f) the Diversified Real Estate Fund shall pay you a fee on
the first business day of each month at the annual rate of .80% of the first $1
billion of such Fund's average daily net assets during the preceding month plus
.60% of such Fund's average daily net assets in excess of $1 billion during the
preceding month. Net asset value shall be computed in the manner, on such days
and at such time or times as described in the Funds' Prospectus from time to
time. The fee for the period from the date of commencement of operations of any
Fund to the end of the first month thereafter shall be prorated according to the
proportion which such period bears to the full monthly period, and upon any
termination of this Agreement with respect to any Fund before the end of any
month, the fee for such part of a month shall be prorated according to the
proportion which such period bears to the full monthly period and shall be
payable upon the date of termination of this Agreement with respect to such
Fund.
8. Expenses. You will bear all of your own expenses in connection
--------
with the performance of your services under this Agreement, provided that such
expenses will not include the expenses to be borne by the Funds, as set forth
below. The expenses to be borne by the Funds include, without limitation, the
following: organizational costs; taxes; interest; brokerage fees and
commissions and other expenses in any way related to the execution, recording
and settlement of portfolio security transactions; fees of Directors who are not
also your officers; Securities and Exchange Commission fees; state Blue Sky
qualification fees; charges of custodians and transfer and dividend paying
agents; premiums for directors and officers liability insurance; costs of
fidelity bonds; industry association fees; outside auditing and legal expenses;
costs of maintaining corporate existence; costs of maintaining required books
and accounts; cost of office facilities and supplies; data processing, clerical,
accounting and bookkeeping services and other administrative expenses; costs
attributable to investor services (including, without limitation, telephone and
personnel
A-4
<PAGE>
expenses); costs of Securities and Exchange Commission regulatory reports; costs
of shareholders' reports and meetings; costs of preparing, printing and mailing
prospectuses for regulatory purposes and for distribution to existing
shareholders; and any extraordinary expenses.
9. Liability. You shall exercise your best judgment in rendering
---------
the services to be provided to each Fund. You shall remit to the particular
Fund or Funds the amount of any recovery you obtain for the benefit of such Fund
or Funds from any person or sub-adviser whom you have employed or with whom you
have contracted pursuant to Section 3 of this Agreement, for the acts and
omissions of such person or sub-adviser. Subject to the foregoing, each Fund
agrees as an inducement to you and others who may assist you in providing
services to such Fund that you and such other persons shall not be liable for
any alleged or actual error of judgment or mistake of law or for any alleged or
actual loss suffered by such Fund or the Company and each Fund and the Company
agree to indemnify and hold harmless you and such other persons against and from
any claims, liabilities, actions, suits, proceedings, judgments or damages (and
expenses as and when incurred in connection therewith, including the reasonable
cost of investigating or defending same, including, but not limited to
attorneys' fees) arising out of any such alleged or actual error of judgment or
mistake of law or loss; provided, however, that nothing herein shall be deemed
-------- -------
to protect or purport to protect you or any such other persons against any
liability to any Fund or to its shareholders to which you or they would
otherwise be subject by reason of willful misfeasance, bad faith or negligence
in the performance of duties hereunder, or by reason of reckless disregard of
the obligations and duties hereunder; and provided further, that this sentence
-------- -------
shall not inure to the benefit of any person or sub-adviser (or others who may
assist any such person or sub-adviser) whom you have employed or with whom you
have contracted pursuant to Section 3 of this Agreement.
10. Other Accounts. The Company understands that you and other
--------------
persons with whom you contract to provide the services hereunder may from time
to time act as investment adviser to one or more other investment companies and
fiduciary or other managed accounts, and the Company has no objection to your or
their so acting. When the purchase or sale of securities of the same issuer is
suitable for the investment objectives of two or more companies or accounts
managed by you or such other persons which have available funds for investment,
the available securities may be allocated in a manner believed by you and such
other persons to be equitable to each company or account. It is recognized that
in some cases this procedure may adversely affect the price paid or received by
a Fund or the size of the position obtainable for or disposed of by a Fund.
A-5
<PAGE>
In addition, it is understood that you and the persons with whom you
contract to assist in the performance of your duties hereunder will not devote
their full time to such service and nothing contained herein shall be deemed to
limit or restrict your or their right to engage in and devote time and attention
to similar or other businesses.
11. Books and Records. In compliance with the requirements of Rule
-----------------
31a-3 under the 1940 Act, you agree that all records which you maintain for the
Company are the property of the Company and you further agree to surrender
promptly to the Company any of such records upon the Company's request. You
further agree to preserve for the periods prescribed by Rule 31a-2 under the
1940 Act such records that you, as investment adviser, are required to maintain
by Rule 31a-1 under the 1940 Act.
12. Term. This Agreement shall continue with respect to each Fund
----
until July 31, 1999 and thereafter shall continue automatically for successive
12-month periods, provided such continuance with respect to each Fund is
specifically approved at least annually by the Company's Board of Directors or
by vote of the lesser of (a) 67% of the shares of such Fund represented at a
meeting if the holders of more than 50% of the outstanding shares of the Fund
are present in person or by proxy or (b) more than 50% of the outstanding shares
of such Fund, provided that in either event its continuance also is approved by
a majority of the Company's Directors who are not "interested persons" (as
defined in the 1940 Act) of any party to this Agreement, by vote cast in person
at a meeting called for the purpose of voting on such approval. This Agreement
is terminable with respect to any Fund without penalty, on 60 days' notice, by
you or by the Company's Board of Directors or by vote of the lesser of (a) 67%
of the shares of such Fund represented at a meeting if the holders of more than
50% of the outstanding shares of the Fund are present in person or by proxy or
(b) more than 50% of the outstanding shares of such Fund. This Agreement will
terminate automatically in the event of its assignment (as defined in the 1940
Act).
13. Amendment. This Agreement may be amended only by an instrument
---------
in writing signed by the party against which enforcement of the amendment is
sought. No amendment of this Agreement shall be effective with respect to a
particular Fund until approved by vote of a majority of such Fund's outstanding
voting securities.
14. M.S.D.& T. or Mercantile-Safe Deposit & Trust Company. The
-----------------------------------------------------
Company recognizes that from time to time your directors, officers and employees
may serve as directors, trustees, partners, officers and employees of other
corporations, business trusts, partnerships or other entities (including other
A-6
<PAGE>
investment companies) and that such other entities may include the name "M.S.D.&
T." or "Mercantile-Safe Deposit & Trust Company" as part of their name. You or
your affiliates may enter into investment advisory or other agreements with such
other entities. If you cease to act as the Company's investment adviser, the
Company agrees that, at your request, the Company will take all necessary action
to change the name of the Company and its Funds to a name not including "M.S.D.&
T." or "Mercantile-Safe Deposit & Trust Company" in any form or combination of
words.
15. Miscellaneous. The captions in this Agreement are included for
-------------
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule, or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by Maryland law; provided, that nothing herein shall be construed in a
manner inconsistent with the 1940 Act, the Investment Advisers Act of 1940, as
amended, or any rule or regulation of the Securities and Exchange Commission
thereunder.
If the foregoing is in accordance with your understanding, will you
kindly so indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
M.S.D.& T. FUNDS, INC.
By: ________________________
President
Accepted:
MERCANTILE-SAFE DEPOSIT &
TRUST COMPANY
By: _______________________
A-7
<PAGE>
[PRELIMINARY COPY]
M.S.D.& T. FUNDS, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF M.S.D.& T. FUNDS,
INC.. (THE "COMPANY") FOR USE AT A SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON
JULY 24, 1998, AT 1:30 P.M. EASTERN TIME, AT THE OFFICES OF MERCANTILE-SAFE
DEPOSIT & TRUST COMPANY, SECOND FLOOR BOARD ROOM, TWO HOPKINS PLAZA, BALTIMORE,
MARYLAND 21201.
THE UNDERSIGNED HEREBY APPOINTS LINDA A. DURKIN, CORNELIA H. KLINE AND
JOSEPH J. DIDOMENICO, JR., AND EACH OF THEM, WITH FULL POWER OF SUBSTITUTION, AS
PROXIES OF THE UNDERSIGNED TO VOTE AT THE ABOVE-STATED SPECIAL MEETING, AND AT
ALL ADJOURNMENTS OR POSTPONEMENTS THEREOF, ALL SHARES OF COMMON STOCK
REPRESENTING INTERESTS IN THE COMPANY'S PRIME MONEY MARKET FUND (THE "FUND")
HELD OF RECORD BY THE UNDERSIGNED ON MAY 21, 1998, THE RECORD DATE FOR THE
MEETING, UPON THE FOLLOWING MATTERS AND UPON ANY OTHER MATTER THAT MAY COME
BEFORE THE MEETING, IN THEIR DISCRETION:
(1) Election of Directors:
[_] For all nominees listed below (except as marked to the contrary below)
[_] Withhold authority to vote for all nominees listed below
INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through his name in the list below:
L.B. Disharoon D.H. Miller E.D. Miller J.R. Murphy
G.R. Packard
(2) Proposal to ratify the selection of Coopers & Lybrand L.L.P. as the
Company's independent accountants for the fiscal year ending May 31, 1999:
[_] FOR [_] AGAINST [_] ABSTAIN
(3) Proposal to approve a new Advisory Agreement between the Company and
Mercantile-Safe Deposit & Trust Company with respect to the Fund.
(4) In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. EVERY PROPERLY SIGNED PROXY WILL BE VOTED IN THE MANNER SPECIFIED
HEREON AND, IN THE ABSENCE OF SPECIFICATION, WILL BE TREATED AS GRANTING
AUTHORITY TO VOTE "FOR" THE PROPOSALS.
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY OR EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A CORPORATION, PLEASE
SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON.
______________________________________________________________________________
SIGNATURE DATE SIGNATURE (JOINT OWNERS) (DATE)
<PAGE>
[PRELIMINARY COPY]
M.S.D.&T. FUNDS, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF M.S.D.& T. FUNDS,
INC.. (THE "COMPANY") FOR USE AT A SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON
JULY 24, 1998, AT 1:30 P.M. EASTERN TIME, AT THE OFFICES OF MERCANTILE-SAFE
DEPOSIT & TRUST COMPANY, SECOND FLOOR BOARD ROOM, TWO HOPKINS PLAZA, BALTIMORE,
MARYLAND 21201.
THE UNDERSIGNED HEREBY APPOINTS LINDA A. DURKIN, CORNELIA H. KLINE AND
JOSEPH J. DIDOMENICO, JR., AND EACH OF THEM, WITH FULL POWER OF SUBSTITUTION, AS
PROXIES OF THE UNDERSIGNED TO VOTE AT THE ABOVE-STATED SPECIAL MEETING, AND AT
ALL ADJOURNMENTS OR POSTPONEMENTS THEREOF, ALL SHARES OF COMMON STOCK
REPRESENTING INTERESTS IN THE COMPANY'S GOVERNMENT MONEY MARKET FUND (THE
"FUND") HELD OF RECORD BY THE UNDERSIGNED ON MAY 21, 1998, THE RECORD DATE FOR
THE MEETING, UPON THE FOLLOWING MATTERS AND UPON ANY OTHER MATTER THAT MAY COME
BEFORE THE MEETING, IN THEIR DISCRETION:
(1) Election of Directors:
[_] For all nominees listed below (except as marked to the contrary below)
[_] Withhold authority to vote for all nominees listed below
INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through his name in the list below:
L.B. Disharoon D.H. Miller E.D. Miller J.R. Murphy
G.R. Packard
(2) Proposal to ratify the selection of Coopers & Lybrand L.L.P. as the
Company's independent accountants for the fiscal year ending May 31, 1999:
[_] FOR [_] AGAINST [_] ABSTAIN
(3) Proposal to approve a new Advisory Agreement between the Company and
Mercantile-Safe Deposit & Trust Company with respect to the Fund.
(4) In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. EVERY PROPERLY SIGNED PROXY WILL BE VOTED IN THE MANNER SPECIFIED
HEREON AND, IN THE ABSENCE OF SPECIFICATION, WILL BE TREATED AS GRANTING
AUTHORITY TO VOTE "FOR" THE PROPOSALS.
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY OR EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A CORPORATION, PLEASE
SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON.
______________________________________________________________________________
SIGNATURE DATE SIGNATURE (JOINT OWNERS) (DATE)
<PAGE>
[PRELIMINARY COPY]
M.S.D.&T. FUNDS, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF M.S.D.& T. FUNDS,
INC.. (THE "COMPANY") FOR USE AT A SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON
JULY 24, 1998, AT 1:30 P.M. EASTERN TIME, AT THE OFFICES OF MERCANTILE-SAFE
DEPOSIT & TRUST COMPANY, SECOND FLOOR BOARD ROOM, TWO HOPKINS PLAZA, BALTIMORE,
MARYLAND 21201.
THE UNDERSIGNED HEREBY APPOINTS LINDA A. DURKIN, CORNELIA H. KLINE AND
JOSEPH J. DIDOMENICO, JR., AND EACH OF THEM, WITH FULL POWER OF SUBSTITUTION, AS
PROXIES OF THE UNDERSIGNED TO VOTE AT THE ABOVE-STATED SPECIAL MEETING, AND AT
ALL ADJOURNMENTS OR POSTPONEMENTS THEREOF, ALL SHARES OF COMMON STOCK
REPRESENTING INTERESTS IN THE COMPANY'S TAX-EXEMPT MONEY MARKET FUND (THE
"FUND") HELD OF RECORD BY THE UNDERSIGNED ON MAY 21, 1998, THE RECORD DATE FOR
THE MEETING, UPON THE FOLLOWING MATTERS AND UPON ANY OTHER MATTER THAT MAY COME
BEFORE THE MEETING, IN THEIR DISCRETION:
(1) Election of Directors:
[_] For all nominees listed below (except as marked to the contrary below)
[_] Withhold authority to vote for all nominees listed below
INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through his name in the list below:
L.B. Disharoon D.H. Miller E.D. Miller J.R. Murphy
G.R. Packard
(2) Proposal to ratify the selection of Coopers & Lybrand L.L.P. as the
Company's independent accountants for the fiscal year ending May 31, 1999:
[_] FOR [_] AGAINST [_] ABSTAIN
(3) Proposal to approve a new Advisory Agreement between the Company and
Mercantile-Safe Deposit & Trust Company with respect to the Fund.
(4) In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. EVERY PROPERLY SIGNED PROXY WILL BE VOTED IN THE MANNER SPECIFIED
HEREON AND, IN THE ABSENCE OF SPECIFICATION, WILL BE TREATED AS GRANTING
AUTHORITY TO VOTE "FOR" THE PROPOSALS.
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY OR EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A CORPORATION, PLEASE
SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON.
______________________________________________________________________________
SIGNATURE DATE SIGNATURE (JOINT OWNERS) (DATE)
<PAGE>
[PRELIMINARY COPY]
M.S.D.&T. FUNDS, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF M.S.D.& T. FUNDS,
INC.. (THE "COMPANY") FOR USE AT A SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON
JULY 24, 1998, AT 1:30 P.M. EASTERN TIME, AT THE OFFICES OF MERCANTILE-SAFE
DEPOSIT & TRUST COMPANY, SECOND FLOOR BOARD ROOM, TWO HOPKINS PLAZA, BALTIMORE,
MARYLAND 21201.
THE UNDERSIGNED HEREBY APPOINTS LINDA A. DURKIN, CORNELIA H. KLINE AND
JOSEPH J. DIDOMENICO, JR., AND EACH OF THEM, WITH FULL POWER OF SUBSTITUTION, AS
PROXIES OF THE UNDERSIGNED TO VOTE AT THE ABOVE-STATED SPECIAL MEETING, AND AT
ALL ADJOURNMENTS OR POSTPONEMENTS THEREOF, ALL SHARES OF COMMON STOCK
REPRESENTING INTERESTS IN THE COMPANY'S TAX-EXEMPT MONEY MARKET FUND (TRUST)
(THE "FUND") HELD OF RECORD BY THE UNDERSIGNED ON MAY 21, 1998, THE RECORD DATE
FOR THE MEETING, UPON THE FOLLOWING MATTERS AND UPON ANY OTHER MATTER THAT MAY
COME BEFORE THE MEETING, IN THEIR DISCRETION:
(1) Election of Directors:
[_] For all nominees listed below (except as marked to the contrary below)
[_] Withhold authority to vote for all nominees listed below
INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through his name in the list below:
L.B. Disharoon D.H. Miller E.D. Miller J.R. Murphy
G.R. Packard
(2) Proposal to ratify the selection of Coopers & Lybrand L.L.P. as the
Company's independent accountants for the fiscal year ending May 31, 1999:
[_] FOR [_] AGAINST [_] ABSTAIN
(3) In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. EVERY PROPERLY SIGNED PROXY WILL BE VOTED IN THE MANNER SPECIFIED
HEREON AND, IN THE ABSENCE OF SPECIFICATION, WILL BE TREATED AS GRANTING
AUTHORITY TO VOTE "FOR" THE PROPOSALS.
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY OR EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A CORPORATION, PLEASE
SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON.
______________________________________________________________________________
SIGNATURE DATE SIGNATURE (JOINT OWNERS) (DATE)
<PAGE>
[PRELIMINARY COPY]
M.S.D.&T. FUNDS, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF M.S.D.& T. FUNDS,
INC.. (THE "COMPANY") FOR USE AT A SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON
JULY 24, 1998, AT 1:30 P.M. EASTERN TIME, AT THE OFFICES OF MERCANTILE-SAFE
DEPOSIT & TRUST COMPANY, SECOND FLOOR BOARD ROOM, TWO HOPKINS PLAZA, BALTIMORE,
MARYLAND 21201.
THE UNDERSIGNED HEREBY APPOINTS LINDA A. DURKIN, CORNELIA H. KLINE AND
JOSEPH J. DIDOMENICO, JR., AND EACH OF THEM, WITH FULL POWER OF SUBSTITUTION, AS
PROXIES OF THE UNDERSIGNED TO VOTE AT THE ABOVE-STATED SPECIAL MEETING, AND AT
ALL ADJOURNMENTS OR POSTPONEMENTS THEREOF, ALL SHARES OF COMMON STOCK
REPRESENTING INTERESTS IN THE COMPANY'S GROWTH & INCOME FUND (THE "FUND") HELD
OF RECORD BY THE UNDERSIGNED ON MAY 21, 1998, THE RECORD DATE FOR THE MEETING,
UPON THE FOLLOWING MATTERS AND UPON ANY OTHER MATTER THAT MAY COME BEFORE THE
MEETING, IN THEIR DISCRETION:
(1) Election of Directors:
[_] For all nominees listed below (except as marked to the contrary below)
[_] Withhold authority to vote for all nominees listed below
INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through his name in the list below:
L.B. Disharoon D.H. Miller E.D. Miller J.R. Murphy
G.R. Packard
(2) Proposal to ratify the selection of Coopers & Lybrand L.L.P. as the
Company's independent accountants for the fiscal year ending May 31, 1999:
[_] FOR [_] AGAINST [_] ABSTAIN
(3) Proposal to approve a new Advisory Agreement between the Company and
Mercantile-Safe Deposit & Trust Company with respect to the Fund.
(4) In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. EVERY PROPERLY SIGNED PROXY WILL BE VOTED IN THE MANNER SPECIFIED
HEREON AND, IN THE ABSENCE OF SPECIFICATION, WILL BE TREATED AS GRANTING
AUTHORITY TO VOTE "FOR" THE PROPOSALS.
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY OR EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A CORPORATION, PLEASE
SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON.
______________________________________________________________________________
SIGNATURE DATE SIGNATURE (JOINT OWNERS) (DATE)
<PAGE>
[PRELIMINARY COPY]
M.S.D.&T. FUNDS, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF M.S.D.& T. FUNDS,
INC.. (THE "COMPANY") FOR USE AT A SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON
JULY 24, 1998, AT 1:30 P.M. EASTERN TIME, AT THE OFFICES OF MERCANTILE-SAFE
DEPOSIT & TRUST COMPANY, SECOND FLOOR BOARD ROOM, TWO HOPKINS PLAZA, BALTIMORE,
MARYLAND 21201.
THE UNDERSIGNED HEREBY APPOINTS LINDA A. DURKIN, CORNELIA H. KLINE AND
JOSEPH J. DIDOMENICO, JR., AND EACH OF THEM, WITH FULL POWER OF SUBSTITUTION, AS
PROXIES OF THE UNDERSIGNED TO VOTE AT THE ABOVE-STATED SPECIAL MEETING, AND AT
ALL ADJOURNMENTS OR POSTPONEMENTS THEREOF, ALL SHARES OF COMMON STOCK
REPRESENTING INTERESTS IN THE COMPANY'S INTERNATIONAL EQUITY FUND (THE "FUND")
HELD OF RECORD BY THE UNDERSIGNED ON MAY 21, 1998, THE RECORD DATE FOR THE
MEETING, UPON THE FOLLOWING MATTERS AND UPON ANY OTHER MATTER THAT MAY COME
BEFORE THE MEETING, IN THEIR DISCRETION:
(1) Election of Directors:
[_] For all nominees listed below (except as marked to the contrary below)
[_] Withhold authority to vote for all nominees listed below
INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through his name in the list below:
L.B. Disharoon D.H. Miller E.D. Miller J.R. Murphy
G.R. Packard
(2) Proposal to ratify the selection of Coopers & Lybrand L.L.P. as the
Company's independent accountants for the fiscal year ending May 31, 1999:
[_] FOR [_] AGAINST [_] ABSTAIN
(3) Proposal to approve a new Advisory Agreement between the Company and
Mercantile-Safe Deposit & Trust Company with respect to the Fund.
(4) In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. EVERY PROPERLY SIGNED PROXY WILL BE VOTED IN THE MANNER SPECIFIED
HEREON AND, IN THE ABSENCE OF SPECIFICATION, WILL BE TREATED AS GRANTING
AUTHORITY TO VOTE "FOR" THE PROPOSALS.
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY OR EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A CORPORATION, PLEASE
SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON.
______________________________________________________________________________
SIGNATURE DATE SIGNATURE (JOINT OWNERS) (DATE)
<PAGE>
[PRELIMINARY COPY]
M.S.D.&T. FUNDS, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF M.S.D.& T. FUNDS,
INC.. (THE "COMPANY") FOR USE AT A SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON
JULY 24, 1998, AT 1:30 P.M. EASTERN TIME, AT THE OFFICES OF MERCANTILE-SAFE
DEPOSIT & TRUST COMPANY, SECOND FLOOR BOARD ROOM, TWO HOPKINS PLAZA, BALTIMORE,
MARYLAND 21201.
THE UNDERSIGNED HEREBY APPOINTS LINDA A. DURKIN, CORNELIA H. KLINE AND
JOSEPH J. DIDOMENICO, JR., AND EACH OF THEM, WITH FULL POWER OF SUBSTITUTION, AS
PROXIES OF THE UNDERSIGNED TO VOTE AT THE ABOVE-STATED SPECIAL MEETING, AND AT
ALL ADJOURNMENTS OR POSTPONEMENTS THEREOF, ALL SHARES OF COMMON STOCK
REPRESENTING INTERESTS IN THE COMPANY'S LIMITED MATURITY BOND FUND (THE "FUND")
HELD OF RECORD BY THE UNDERSIGNED ON MAY 21, 1998, THE RECORD DATE FOR THE
MEETING, UPON THE FOLLOWING MATTERS AND UPON ANY OTHER MATTER THAT MAY COME
BEFORE THE MEETING, IN THEIR DISCRETION:
(1) Election of Directors:
[_] For all nominees listed below (except as marked to the contrary below)
[_] Withhold authority to vote for all nominees listed below
INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through his name in the list below:
L.B. Disharoon D.H. Miller E.D. Miller J.R. Murphy
G.R. Packard
(2) Proposal to ratify the selection of Coopers & Lybrand L.L.P. as the
Company's independent accountants for the fiscal year ending May 31, 1999:
[_] FOR [_] AGAINST [_] ABSTAIN
(3) Proposal to approve a new Advisory Agreement between the Company and
Mercantile-Safe Deposit & Trust Company with respect to the Fund.
(4) In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. EVERY PROPERLY SIGNED PROXY WILL BE VOTED IN THE MANNER SPECIFIED
HEREON AND, IN THE ABSENCE OF SPECIFICATION, WILL BE TREATED AS GRANTING
AUTHORITY TO VOTE "FOR" THE PROPOSALS.
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY OR EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A CORPORATION, PLEASE
SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON.
______________________________________________________________________________
SIGNATURE DATE SIGNATURE (JOINT OWNERS) (DATE)
<PAGE>
[PRELIMINARY COPY]
M.S.D.&T. FUNDS, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF M.S.D.& T. FUNDS,
INC.. (THE "COMPANY") FOR USE AT A SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON
JULY 24, 1998, AT 1:30 P.M. EASTERN TIME, AT THE OFFICES OF MERCANTILE-SAFE
DEPOSIT & TRUST COMPANY, SECOND FLOOR BOARD ROOM, TWO HOPKINS PLAZA, BALTIMORE,
MARYLAND 21201.
THE UNDERSIGNED HEREBY APPOINTS LINDA A. DURKIN, CORNELIA H. KLINE AND
JOSEPH J. DIDOMENICO, JR., AND EACH OF THEM, WITH FULL POWER OF SUBSTITUTION, AS
PROXIES OF THE UNDERSIGNED TO VOTE AT THE ABOVE-STATED SPECIAL MEETING, AND AT
ALL ADJOURNMENTS OR POSTPONEMENTS THEREOF, ALL SHARES OF COMMON STOCK
REPRESENTING INTERESTS IN THE COMPANY'S MARYLAND TAX-EXEMPT BOND FUND (THE
"FUND") HELD OF RECORD BY THE UNDERSIGNED ON MAY 21, 1998, THE RECORD DATE FOR
THE MEETING, UPON THE FOLLOWING MATTERS AND UPON ANY OTHER MATTER THAT MAY COME
BEFORE THE MEETING, IN THEIR DISCRETION:
(1) Election of Directors:
[_] For all nominees listed below (except as marked to the contrary below)
[_] Withhold authority to vote for all nominees listed below
INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through his name in the list below:
L.B. Disharoon D.H. Miller E.D. Miller J.R. Murphy
G.R. Packard
(2) Proposal to ratify the selection of Coopers & Lybrand L.L.P. as the
Company's independent accountants for the fiscal year ending May 31, 1999:
[_] FOR [_] AGAINST [_] ABSTAIN
(3) Proposal to approve a new Advisory Agreement between the Company and
Mercantile-Safe Deposit & Trust Company with respect to the Fund.
(4) In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. EVERY PROPERLY SIGNED PROXY WILL BE VOTED IN THE MANNER SPECIFIED
HEREON AND, IN THE ABSENCE OF SPECIFICATION, WILL BE TREATED AS GRANTING
AUTHORITY TO VOTE "FOR" THE PROPOSALS.
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY OR EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A CORPORATION, PLEASE
SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON.
______________________________________________________________________________
SIGNATURE DATE SIGNATURE (JOINT OWNERS) (DATE)
<PAGE>
[PRELIMINARY COPY]
M.S.D.&T. FUNDS, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF M.S.D.& T. FUNDS,
INC.. (THE "COMPANY") FOR USE AT A SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON
JULY 24, 1998, AT 1:30 P.M. EASTERN TIME, AT THE OFFICES OF MERCANTILE-SAFE
DEPOSIT & TRUST COMPANY, SECOND FLOOR BOARD ROOM, TWO HOPKINS PLAZA, BALTIMORE,
MARYLAND 21201.
THE UNDERSIGNED HEREBY APPOINTS LINDA A. DURKIN, CORNELIA H. KLINE AND
JOSEPH J. DIDOMENICO, JR., AND EACH OF THEM, WITH FULL POWER OF SUBSTITUTION, AS
PROXIES OF THE UNDERSIGNED TO VOTE AT THE ABOVE-STATED SPECIAL MEETING, AND AT
ALL ADJOURNMENTS OR POSTPONEMENTS THEREOF, ALL SHARES OF COMMON STOCK
REPRESENTING INTERESTS IN THE COMPANY'S DIVERSIFIED REAL ESTATE FUND (THE
"FUND") HELD OF RECORD BY THE UNDERSIGNED ON MAY 21, 1998, THE RECORD DATE FOR
THE MEETING, UPON THE FOLLOWING MATTERS AND UPON ANY OTHER MATTER THAT MAY COME
BEFORE THE MEETING, IN THEIR DISCRETION:
(1) Election of Directors:
[_] For all nominees listed below (except as marked to the contrary below)
[_] Withhold authority to vote for all nominees listed below
INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through his name in the list below:
L.B. Disharoon D.H. Miller E.D. Miller J.R. Murphy
G.R. Packard
(2) Proposal to ratify the selection of Coopers & Lybrand L.L.P. as the
Company's independent accountants for the fiscal year ending May 31, 1999:
[_] FOR [_] AGAINST [_] ABSTAIN
(3) Proposal to approve a new Advisory Agreement between the Company and
Mercantile-Safe Deposit & Trust Company with respect to the Fund.
(4) In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. EVERY PROPERLY SIGNED PROXY WILL BE VOTED IN THE MANNER SPECIFIED
HEREON AND, IN THE ABSENCE OF SPECIFICATION, WILL BE TREATED AS GRANTING
AUTHORITY TO VOTE "FOR" THE PROPOSALS.
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY OR EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A CORPORATION, PLEASE
SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON.
______________________________________________________________________________
SIGNATURE DATE SIGNATURE (JOINT OWNERS) (DATE)
<PAGE>
[PRELIMINARY COPY]
M.S.D.&T. FUNDS, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF M.S.D.& T. FUNDS,
INC.. (THE "COMPANY") FOR USE AT A SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON
JULY 24, 1998, AT 1:30 P.M. EASTERN TIME, AT THE OFFICES OF MERCANTILE-SAFE
DEPOSIT & TRUST COMPANY, SECOND FLOOR BOARD ROOM, TWO HOPKINS PLAZA, BALTIMORE,
MARYLAND 21201.
THE UNDERSIGNED HEREBY APPOINTS LINDA A. DURKIN, CORNELIA H. KLINE AND
JOSEPH J. DIDOMENICO, JR., AND EACH OF THEM, WITH FULL POWER OF SUBSTITUTION, AS
PROXIES OF THE UNDERSIGNED TO VOTE AT THE ABOVE-STATED SPECIAL MEETING, AND AT
ALL ADJOURNMENTS OR POSTPONEMENTS THEREOF, ALL SHARES OF COMMON STOCK
REPRESENTING INTERESTS IN THE COMPANY'S EQUITY INCOME FUND (THE "FUND") HELD OF
RECORD BY THE UNDERSIGNED ON MAY 21, 1998, THE RECORD DATE FOR THE MEETING, UPON
THE FOLLOWING MATTERS AND UPON ANY OTHER MATTER THAT MAY COME BEFORE THE
MEETING, IN THEIR DISCRETION:
(1) Election of Directors:
[_] For all nominees listed below (except as marked to the contrary below)
[_] Withhold authority to vote for all nominees listed below
INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through his name in the list below:
L.B. Disharoon D.H. Miller E.D. Miller J.R. Murphy
G.R. Packard
(2) Proposal to ratify the selection of Coopers & Lybrand L.L.P. as the
Company's independent accountants for the fiscal year ending May 31, 1999:
[_] FOR [_] AGAINST [_] ABSTAIN
(3) Proposal to approve a new Advisory Agreement between the Company and
Mercantile-Safe Deposit & Trust Company with respect to the Fund.
(4) In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. EVERY PROPERLY SIGNED PROXY WILL BE VOTED IN THE MANNER SPECIFIED
HEREON AND, IN THE ABSENCE OF SPECIFICATION, WILL BE TREATED AS GRANTING
AUTHORITY TO VOTE "FOR" THE PROPOSALS.
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY OR EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A CORPORATION, PLEASE
SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON.
______________________________________________________________________________
SIGNATURE DATE SIGNATURE (JOINT OWNERS) (DATE)
<PAGE>
[PRELIMINARY COPY]
M.S.D.&T. FUNDS, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF M.S.D.& T. FUNDS,
INC.. (THE "COMPANY") FOR USE AT A SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON
JULY 24, 1998, AT 1:30 P.M. EASTERN TIME, AT THE OFFICES OF MERCANTILE-SAFE
DEPOSIT & TRUST COMPANY, SECOND FLOOR BOARD ROOM, TWO HOPKINS PLAZA, BALTIMORE,
MARYLAND 21201.
THE UNDERSIGNED HEREBY APPOINTS LINDA A. DURKIN, CORNELIA H. KLINE AND
JOSEPH J. DIDOMENICO, JR., AND EACH OF THEM, WITH FULL POWER OF SUBSTITUTION, AS
PROXIES OF THE UNDERSIGNED TO VOTE AT THE ABOVE-STATED SPECIAL MEETING, AND AT
ALL ADJOURNMENTS OR POSTPONEMENTS THEREOF, ALL SHARES OF COMMON STOCK
REPRESENTING INTERESTS IN THE COMPANY'S EQUITY GROWTH FUND (THE "FUND") HELD OF
RECORD BY THE UNDERSIGNED ON MAY 21, 1998, THE RECORD DATE FOR THE MEETING, UPON
THE FOLLOWING MATTERS AND UPON ANY OTHER MATTER THAT MAY COME BEFORE THE
MEETING, IN THEIR DISCRETION:
(1) Election of Directors:
[_] For all nominees listed below (except as marked to the contrary below)
[_] Withhold authority to vote for all nominees listed below
INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through his name in the list below:
L.B. Disharoon D.H. Miller E.D. Miller J.R. Murphy
G.R. Packard
(2) Proposal to ratify the selection of Coopers & Lybrand L.L.P. as the
Company's independent accountants for the fiscal year ending May 31, 1999:
[_] FOR [_] AGAINST [_] ABSTAIN
(3) Proposal to approve a new Advisory Agreement between the Company and
Mercantile-Safe Deposit & Trust Company with respect to the Fund.
(4) In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. EVERY PROPERLY SIGNED PROXY WILL BE VOTED IN THE MANNER SPECIFIED
HEREON AND, IN THE ABSENCE OF SPECIFICATION, WILL BE TREATED AS GRANTING
AUTHORITY TO VOTE "FOR" THE PROPOSALS.
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY OR EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A CORPORATION, PLEASE
SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON.
______________________________________________________________________________
SIGNATURE DATE SIGNATURE (JOINT OWNERS) (DATE)
<PAGE>
[PRELIMINARY COPY]
M.S.D.&T. FUNDS, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF M.S.D.& T. FUNDS,
INC.. (THE "COMPANY") FOR USE AT A SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON
JULY 24, 1998, AT 1:30 P.M. EASTERN TIME, AT THE OFFICES OF MERCANTILE-SAFE
DEPOSIT & TRUST COMPANY, SECOND FLOOR BOARD ROOM, TWO HOPKINS PLAZA, BALTIMORE,
MARYLAND 21201.
THE UNDERSIGNED HEREBY APPOINTS LINDA A. DURKIN, CORNELIA H. KLINE AND
JOSEPH J. DIDOMENICO, JR., AND EACH OF THEM, WITH FULL POWER OF SUBSTITUTION, AS
PROXIES OF THE UNDERSIGNED TO VOTE AT THE ABOVE-STATED SPECIAL MEETING, AND AT
ALL ADJOURNMENTS OR POSTPONEMENTS THEREOF, ALL SHARES OF COMMON STOCK
REPRESENTING INTERESTS IN THE COMPANY'S TOTAL RETURN BOND FUND (THE "FUND") HELD
OF RECORD BY THE UNDERSIGNED ON MAY 21, 1998, THE RECORD DATE FOR THE MEETING,
UPON THE FOLLOWING MATTERS AND UPON ANY OTHER MATTER THAT MAY COME BEFORE THE
MEETING, IN THEIR DISCRETION:
(1) Election of Directors:
[_] For all nominees listed below (except as marked to the contrary below)
[_] Withhold authority to vote for all nominees listed below
INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through his name in the list below:
L.B. Disharoon D.H. Miller E.D. Miller J.R. Murphy
G.R. Packard
(2) Proposal to ratify the selection of Coopers & Lybrand L.L.P. as the
Company's independent accountants for the fiscal year ending May 31, 1999:
[_] FOR [_] AGAINST [_] ABSTAIN
(3) Proposal to approve a new Advisory Agreement between the Company and
Mercantile-Safe Deposit & Trust Company with respect to the Fund.
(4) In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. EVERY PROPERLY SIGNED PROXY WILL BE VOTED IN THE MANNER SPECIFIED
HEREON AND, IN THE ABSENCE OF SPECIFICATION, WILL BE TREATED AS GRANTING
AUTHORITY TO VOTE "FOR" THE PROPOSALS.
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY OR EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A CORPORATION, PLEASE
SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON.
______________________________________________________________________________
SIGNATURE DATE SIGNATURE (JOINT OWNERS) (DATE)
<PAGE>
[PRELIMINARY COPY]
M.S.D.&T. FUNDS, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF M.S.D.& T. FUNDS,
INC.. (THE "COMPANY") FOR USE AT A SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON
JULY 24, 1998, AT 1:30 P.M. EASTERN TIME, AT THE OFFICES OF MERCANTILE-SAFE
DEPOSIT & TRUST COMPANY, SECOND FLOOR BOARD ROOM, TWO HOPKINS PLAZA, BALTIMORE,
MARYLAND 21201.
THE UNDERSIGNED HEREBY APPOINTS LINDA A. DURKIN, CORNELIA H. KLINE AND
JOSEPH J. DIDOMENICO, JR., AND EACH OF THEM, WITH FULL POWER OF SUBSTITUTION, AS
PROXIES OF THE UNDERSIGNED TO VOTE AT THE ABOVE-STATED SPECIAL MEETING, AND AT
ALL ADJOURNMENTS OR POSTPONEMENTS THEREOF, ALL SHARES OF COMMON STOCK
REPRESENTING INTERESTS IN THE COMPANY'S NATIONAL TAX-EXEMPT BOND FUND (THE
"FUND") HELD OF RECORD BY THE UNDERSIGNED ON MAY 21, 1998, THE RECORD DATE FOR
THE MEETING, UPON THE FOLLOWING MATTERS AND UPON ANY OTHER MATTER THAT MAY COME
BEFORE THE MEETING, IN THEIR DISCRETION:
(1) Election of Directors:
[_] For all nominees listed below (except as marked to the contrary below)
[_] Withhold authority to vote for all nominees listed below
INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through his name in the list below:
L.B. Disharoon D.H. Miller E.D. Miller J.R. Murphy
G.R. Packard
(2) Proposal to ratify the selection of Coopers & Lybrand L.L.P. as the
Company's independent accountants for the fiscal year ending May 31, 1999:
[_] FOR [_] AGAINST [_] ABSTAIN
(3) Proposal to approve a new Advisory Agreement between the Company and
Mercantile-Safe Deposit & Trust Company with respect to the Fund.
(4) In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. EVERY PROPERLY SIGNED PROXY WILL BE VOTED IN THE MANNER SPECIFIED
HEREON AND, IN THE ABSENCE OF SPECIFICATION, WILL BE TREATED AS GRANTING
AUTHORITY TO VOTE "FOR" THE PROPOSALS.
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY OR EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A CORPORATION, PLEASE
SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON.
______________________________________________________________________________
SIGNATURE DATE SIGNATURE (JOINT OWNERS) (DATE)
<PAGE>
[PRELIMINARY COPY]
M.S.D.&T. FUNDS, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF M.S.D.& T. FUNDS,
INC.. (THE "COMPANY") FOR USE AT A SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON
JULY 24, 1998, AT 1:30 P.M. EASTERN TIME, AT THE OFFICES OF MERCANTILE-SAFE
DEPOSIT & TRUST COMPANY, SECOND FLOOR BOARD ROOM, TWO HOPKINS PLAZA, BALTIMORE,
MARYLAND 21201.
THE UNDERSIGNED HEREBY APPOINTS LINDA A. DURKIN, CORNELIA H. KLINE AND
JOSEPH J. DIDOMENICO, JR., AND EACH OF THEM, WITH FULL POWER OF SUBSTITUTION, AS
PROXIES OF THE UNDERSIGNED TO VOTE AT THE ABOVE-STATED SPECIAL MEETING, AND AT
ALL ADJOURNMENTS OR POSTPONEMENTS THEREOF, ALL SHARES OF COMMON STOCK
REPRESENTING INTERESTS IN THE COMPANY'S INTERMEDIATE TAX-EXEMPT BOND FUND (THE
"FUND") HELD OF RECORD BY THE UNDERSIGNED ON MAY 21, 1998, THE RECORD DATE FOR
THE MEETING, UPON THE FOLLOWING MATTERS AND UPON ANY OTHER MATTER THAT MAY COME
BEFORE THE MEETING, IN THEIR DISCRETION:
(1) Election of Directors:
[_] For all nominees listed below (except as marked to the contrary below)
[_] Withhold authority to vote for all nominees listed below
INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through his name in the list below:
L.B. Disharoon D.H. Miller E.D. Miller J.R. Murphy
G.R. Packard
(2) Proposal to ratify the selection of Coopers & Lybrand L.L.P. as the
Company's independent accountants for the fiscal year ending May 31, 1999:
[_] FOR [_] AGAINST [_] ABSTAIN
(3) Proposal to approve a new Advisory Agreement between the Company and
Mercantile-Safe Deposit & Trust Company with respect to the Fund.
(4) In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. EVERY PROPERLY SIGNED PROXY WILL BE VOTED IN THE MANNER SPECIFIED
HEREON AND, IN THE ABSENCE OF SPECIFICATION, WILL BE TREATED AS GRANTING
AUTHORITY TO VOTE "FOR" THE PROPOSALS.
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY OR EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A CORPORATION, PLEASE
SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON.
______________________________________________________________________________
SIGNATURE DATE SIGNATURE (JOINT OWNERS) (DATE)
