<PAGE>
M.S.D.&T. Funds, Inc.
Semi-Annual Report
November 30, 1998
<PAGE>
Table of Contents
Chairman's Letter i
Funds Reviews ii
Statements of Net Assets
Prime Money Market Fund 1
Government Money Market Fund 3
Tax-Exempt Money Market Fund 5
Tax-Exempt Money Market Fund (Trust) 8
Growth & Income Fund 11
Equity Income Fund 13
Equity Growth Fund 16
International Equity Fund 18
Diversified Real Estate Fund 21
Limited Maturity Bond Fund 23
Total Return Bond Fund 26
Maryland Tax-Exempt Bond Fund 29
Intermediate Tax-Exempt Bond Fund 32
National Tax-Exempt Bond Fund 35
Investment Abbreviations 39
Statements of Operations 40
Statements of Changes in Net Assets 43
Financial Highlights 49
Notes to Financial Statements 57
<PAGE>
Dear Shareholder,
It is a pleasure to present the semi-annual report for the M.S.D.&T. Funds,
Inc. for the six-month period ended November 30, 1998. The report includes fi-
nancial information and fund synopses for the four Money Market Funds, five
Equity Funds and five Bond Funds. Also included is a Statement of Net Assets
for each of the Funds listing the securities held as of November 30, 1998.
Volatility has become the watchword in the financial markets during the past
six months. After reaching a record high during the month of July, the S&P 500
Index suffered a severe correction in the late summer. However, with the Fed-
eral Reserve Bank's reversal in policy and reductions in the base interest
rate, the stock market has been able to recover smartly and has set a subse-
quent record level. Conversely, long term bonds became the asset of choice
during the stock market's turmoil and yields continued to move down to
generational lows. Recently, with the stock market's improvement, interest
rates on high-grade bonds have drifted somewhat higher.
The adviser believes financial market volatility will most likely be with us
in the intermediate future. The United States economy must deal with the im-
balances created by a negative personal savings rate and a big current account
deficit. At the same time, the Japanese economy (the world's second largest)
has the exact opposite situation with excessive private savings and a large
current account surplus. Many less developed economies remain hooked on for-
eign credit while mired in severe economic recessions. Unwinding these imbal-
ances will prove to be a challenge for policy makers and financial markets
will remain subject to uncertainty while this situation plays out.
The pages that follow discuss the objectives, performance, structure and
strategy of each of the M.S.D.&T. Funds. We appreciate your investment in the
M.S.D.&T. Funds and welcome any questions or comments.
Best Regards,
/s/ Leslie B. Disharoom
Leslie B. Disharoon
Chairman and President
Shares of M.S.D.&T. Funds, Inc. are not bank deposits or obligations of, or
guaranteed, endorsed, or otherwise supported by Mercantile-Safe Deposit and
Trust Company, its parent company or its affiliates, and such shares are not
federally insured by the U.S. Government, the Federal Deposit Insurance Corpo-
ration, the Federal Reserve Board or any other governmental agency. Investment
in the Funds involves risk, including the possible loss of principal. Money
Market Funds are neither insured nor guaranteed by the FDIC or any other gov-
ernment agency. Although the Fund strives to maintain a net asset value of
$1.00 per share, it is possible to lose money by investing in the Fund. Yields
will fluctuate as market conditions change. Past performance is not a guaran-
tee of future results. For more complete information on the M.S.D.&T. Funds,
Inc., including charges, expenses, and ongoing fees, please call 1-800-551-
2145 to receive a prospectus, which should be read carefully before investing.
BISYS Fund Services serves as the Funds' distributor.
<PAGE>
Funds Reviews
The M.S.D.&T. Growth & Income Fund
For the six-month period ended November 30, 1998, the Growth & Income Fund re-
turned 6.7% versus 7.5% for the S&P 500 Index and 3.4% for the Dow Jones In-
dustrial Average(1).
The equity markets exhibited true volatility over the past six months. Howev-
er, large capitalization growth stocks such as Microsoft, Intel, Wal-Mart,
Merck and Cisco, out-performed the S&P 500 Index and delivered robust earnings
growth in this period. The Growth & Income Fund is a blend of large-cap value
and large-cap growth stocks and therefore benefited from its exposure to the
large-cap growth sector. The Fund holds large-cap growth stocks in selected
heath care, technology and financial companies. The Fund's top five holdings
are IBM (3.8%), Pfizer (3.6%), Johnson & Johnson (3.3%), Intel (3.2%) and
Philip Morris (3.1%)(2).
Looking forward, the U.S. economy continues to grow at a robust pace while
showing minimal inflation. Increased equity market volatility could come with
any change in corporate earnings, the inflation rate or interest rates. The
Growth & Income Fund is broadly diversified in high quality companies offer-
ing, in the adviser's opinion, good prospects for above average returns at ac-
ceptable risk levels. The Fund continues to hold minimal cash reserves.
The M.S.D.&T. Equity Income Fund
The Equity Income Fund has had an impressive recovery from this autumn's de-
pressed equity market price levels. For the six-month period ending November
30, 1998, the Fund produced a total return of 4.4% while the S&P 500 Index re-
turned 7.5% and the Dow Jones Industrial Average returned 3.4%(1).
The Fund's best performers during the past six months were Intel (1.7%),
Philip Morris (2.5%), Amoco (1.2%), Gallaher Group (1.1%), and BellSouth
(1.3%)(2). Contributing to the Fund's overall results was the widespread cor-
porate "urge to merge." During the past half-year, the following combinations
involving the Fund's portfolio holdings were announced: Bell Atlantic and GTE
(1.9%), British Petroleum (1.5%) and Amoco (1.2%), Exxon (2.2%) and Mobil
(1.8%), International Paper and Union Camp (1.3%), and Tyco and AMP (2.0%).
While the premiums received in these transactions are pleasing, it may reveal
concerns among corporate chieftains about a significant slowing in the growth
of future profit rates. Underachievers for the six months included Timken
(0.7%), Schlumberger (0.9%), Halliburton (1.0%), Tupperware (0.3%), and Deere
(1.3%).
The Fund remains overweighted versus the S&P 500 Index in Capital Goods, En-
ergy and Utilities and significantly underweighted in Technology, Consumer
Cyclicals and Consumer Services. Additions to the portfolio during the period
included Deluxe (1.1%), International Flavors & Fragrances (0.7%), Media One
(1.0%) and Union Planters (1.1%). Eliminated from the portfolio were American
Stores, AMGEN, General Re, Rubbermaid and Southwest Airlines.
ii
<PAGE>
The M.S.D.&T. Equity Growth Fund
The past six months has been a remarkable period. Early summer could be char-
acterized as Goldilock's period when everything was "just right" and equities
posted strong returns. However, early autumn saw painful equity price declines
caused by problems in developing economies, Russia's debt repudiation and a
hedge fund's collapse. The S&P 500 Index dropped a stomach churning 22% from
peak to trough. In early October, fear reigned and the equity markets seemed
poised for further declines. Just when things appeared their blackest, the
Federal Reserve's Chairman, Alan Greenspan, engineered the first of three in-
terest rate cuts to resuscitate the markets.
Looking ahead, the adviser believes any of number of things could derail the
market in 1999. First, investors may be unnerved by corporate earnings growth
that seems to be decelerating. Second, market psychology may be impacted by
the threat of impeachment and the possibility of a President Gore. Finally,
earnings may be impacted by Year 2000 ("Y2K") software and hardware problems.
At this juncture, the adviser believes Y2K's long-term effects will be modest,
but will remain alert to its short-term consequences.
For the six-month period ended November 30, 1998, the Equity Growth Fund re-
turned 9.4%, while the S&P 500 Index and the Dow Jones Industrial Average re-
turned 7.5% and 3.4%, respectively(1). The Fund's largest sector was Computers
Equipment & Software where healthy earnings growth led to strong stock perfor-
mance. The adviser believes this sector continues to offer excellent long-term
growth prospects. The Fund's three best price gains during the six-month pe-
riod were 54% by Genzyme (0.9%), 51% from Intel (2.3%) and 50% at Cisco
(1.9%)(2). The worst performers were Halliburton (0.6%) down 38%, Storage
Technology (0.0%) off 17%, and Hershey Foods (1.2%) drop of 11%.
The M.S.D.&T. International Equity Fund(3)
Over the six months ended November 30, 1998, the International Equity Fund
produced a total return of negative 5.2%. The Fund's benchmark, the MSCI All
Country World ex-U.S. Index, fell 1.6% over the same period(1).
The Japanese economic picture continued to deteriorate with ongoing problems
in the banking sector, weak political leadership and fears of unemployment
creating a severe decline in consumer confidence. Other Pacific markets were
also relatively weak during the period.
Continental European markets were down almost 3% over the six months and were
characterized by extremely high levels of volatility. The general malaise
throughout the global markets was the main influence on performance. U.K.
stocks declined just over 1% in U.S. dollar terms as larger stocks with pre-
dictable earnings led the market while cyclical stocks were poor performers.
The emerging markets were also extremely volatile during the six months. De-
spite its small size, investor attention focused on the Russian market as the
government announced that it would not be repaying on schedule debt owed to
foreigners. Though not a great surprise, it triggered the high profile col-
lapse of Long Term Capital Management, a highly leveraged hedge fund and led
to problems throughout the globe.
iii
<PAGE>
The M.S.D.&T. Diversified Real Estate Fund
For the six-month period ended November 30, 1998, the Diversified Real Estate
Fund returned a negative 10.7% verses a negative 11.0% for the Wilshire Real
Estate Index(1). REITs have performed poorly this year after strong perfor-
mances in 1996 and 1997. The strong performance of REITs in those years was
linked to the rebound in the commercial real estate market from its depressed
levels in the early part of the decade.
REITs represent a small market segment with a total capitalization of approxi-
mately $140 billion. Since the end of February, investors have been moving
capital out of REITs at a rate of $30 million per week causing negative pres-
sure on share prices. Investors have been concerned about a possible supply
and demand imbalance caused by increased construction levels. An oversupply
would signal a downturn in real estate values. Decreases in share prices and a
tightening in the credit markets have limited the ability of REITs to acquire
or develop new property, thus effectively curtailing new supply.
The investment adviser believes that real estate markets have reached a state
of equilibrium. REIT share prices that overcorrected due to investor concerns
have yet to fully recover. As an example, some REITs have announced liquida-
tions or privatizations at values above current market levels. The adviser
feels that REIT stocks represent an attractive value with the added benefit of
a strong dividend yield.
The M.S.D.&T. Limited Maturity Bond Fund
Fixed income investors enjoyed strong, if not volatile returns during the six
months ended November 30, 1998. Interest rates were initially influenced by
the continued economic strength in the U.S., worries of rising wages, higher
inflation rates and the likelihood that the Federal Reserve would raise short-
term rates in an effort to slow the breakneck speed of the domestic economy.
However, by the end of the summer, investors' attention had turned to the
problems surfacing in Japan, Russia and Latin America. Financial problems
around the world caused investors to re-evaluate risk levels in all securi-
ties, with the result being that U.S. Treasury securities became the financial
markets' safe haven. Credit risk spreads widened on all non-Treasury securi-
ties to levels not seen since early in the decade. Mortgage security yield
spreads also widened as investors worried about a surge in homeowner refinanc-
ing. The Federal Reserve fluidly changed its perspective from the domestic
economy to the global financial system and, as a result, reversed its policy
direction from a tightening bias to an outright easing of monetary conditions
by lowering short-term rates 0.75%.
The Fund enjoyed a strong 3.9% return for the six-month period as income re-
turns were augmented by a rise in the share price from $10.45 to $10.56(1).
The Fund's benchmark index, the Lehman Intermediate Government/Corporate In-
dex, returned 5.1% for the same period. The Index's longer maturity structure
aided its total return in a declining interest rate environment.
Taking advantage of the above-described yield spread widening, the Fund in-
creased its investments in corporate and mortgage securities while reducing
the Treasury market exposure. Investments were made in Industrial, Electric
and Gas, Finance and International sectors of the corporate markets. Invest-
ments in "A" rated issuers were increased from 6% to 14% of the Fund, and ex-
posure in the "BAA" portion of the investment grade market was initiated at 3%
of the Fund. The government agency mortgage backed sector was increased from
5% to 12%. The average life of the portfolio was increased from 2.2 to 2.8
years over the period(2).
iv
<PAGE>
The M.S.D.&T. Total Return Bond Fund
Yields on high quality fixed income securities continued their downward trend
during the six months ended November 30, 1998, providing shareholders in the
Total Return Bond Fund with a 4.7% total return for the period(1). Interna-
tional events such as the Russian debt default, the Japanese banking crisis
and the uncertainty roiling Latin American capital markets provided U.S. Trea-
sury bonds with sizable flows seeking safety. Domestically, the effective col-
lapse and subsequent rescue of the hedge fund run by Long Term Capital Manage-
ment added to the demand for very high quality fixed income investments.
Credit risk spreads have widened resulting in all non-Treasury securities un-
der performing their respective government benchmarks.
The Federal Reserve Bank reversed its bias toward higher interest rates as it
broadened its perspective to a more global horizon. To ensure orderly markets
worldwide, the U.S. central bank initiated a series of base rate cuts this au-
tumn and provided financial markets with ample liquidity.
The Fund has been repositioned to significantly underweight its holdings in
U.S. Treasury securities relative to the unmanaged benchmark, the Lehman
Brothers Aggregate Bond Index. During the past three months investments have
been redirected toward U.S. Government Agencies, corporate debt and mortgage-
backed securities which currently offer historically attractive yield advan-
tages(2). The maturity of the Fund is centered toward the intermediate-term,
mostly in 2- to 10-year with the Fund having a somewhat shorter average matu-
rity than the Index. The adviser's strategy is to produce a competitive income
stream, recognizing that interest rates have decreased significantly during
the past year and at some point may reverse direction.
The M.S.D.&T. Maryland Tax-Exempt Fund
The Maryland Tax-Exempt Fund's total rate of return for the six months ended
November 30, 1998 was 3.3%(1). Over this time period, the Maryland municipal
debt market continued to suffer from a lack of supply. This resulted in a nar-
rowing of quality spreads between AAA high-grade Maryland issues and those of
lesser credit quality. This benefited long-time holders of Maryland issues but
made a difficult investing landscape for those having to invest at the current
low rate levels. However, as a whole, Maryland bond funds managed to perform
fairly well when compared to their National counterparts.
The adviser intends to maintain a duration similar to that of the unmanaged
Lehman Municipal Bond Index and continue searching for diversification oppor-
tunities. The overall financial outlook for the State and its various munici-
palities remains quite positive. The adviser feels that the Maryland Tax-Ex-
empt Bond Fund is poised to perform quite well moving forward and will con-
tinue to offer extremely attractive taxable equivalent yields.
v
<PAGE>
The M.S.D.&T. Intermediate Tax-Exempt and National Tax-Exempt Funds
The total rate of return for the six months ended November 30, 1998 for the
Intermediate Tax-Exempt Bond Fund was 3.3% and the National Tax-Exempt Bond
Fund was 3.6%(1). Over this time period, municipal bond yields decreased but
not nearly as much as U.S. Treasury bond yields. For example, 10-year AAA mu-
nicipal bond yields dropped 0.29% as compared to 0.82% for the 10-year Trea-
sury. Similarly, 30-year AAA municipal bond yields dropped 0.16% versus 0.72%
for the 30-year Treasury. Hence, the municipal market cheapened dramatically
up and down the yield curve when compared to the Treasury market reaching the
absolute cheapest levels in recent memory back in early October.
A few opportunities arose in specialty states such as New York, Massachusetts
and Pennsylvania based on specific supply and demand factors. Also, a number
of non-callable bonds were purchased in the 5- and 10-year sector to substi-
tute for callable bonds with longer maturities in the fifteen-year sector(2).
The adviser remains confident that the municipal market as a whole is poised
to perform quite well when compared to other fixed income asset classes moving
into 1999.
vi
<PAGE>
(1) Total return and principal value of investments will fluctuate with market
changes and shares, when redeemed, may be worth more or less than their origi-
nal cost. Figures for the period indicated reflect fee waivers in effect, re-
investment of dividends, distributions, and capital gains as well as changes
in share price. Fee waivers may result in higher total returns than would oc-
cur if full fees were charged. Past performance is not a guarantee of future
results.
<TABLE>
<CAPTION>
Diversified
Growth & Equity Equity International Real Estate
Income Fund Income Fund Growth Fund Equity Fund Fund
----------- ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Total Return for the one
year ended December 31,
1998................... 26.20% N/A N/A 11.98% -13.57%
Annualized Total Return
for five years ended
December 31, 1998...... 20.91% N/A N/A 7.73% N/A
Inception Date.......... 2/28/91 3/1/98 3/1/98 7/2/93 8/1/97
Average annual total
return since inception
to December 31, 1998... 17.22% 10.86% 24.97% 9.48% 4.48%
<CAPTION>
Limited Total Maryland Intermediate National
Maturity Return Tax-Exempt Tax-Exempt Tax-Exempt
Bond Fund Bond Fund Bond Fund Bond Fund Bond Fund
--------- --------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Total Return for the one
year ended December 31,
1998................... 7.11% N/A 5.56% N/A N/A
Annualized Total Return
for five years ended
December 31, 1998...... 5.98% N/A 4.71% N/A N/A
Inception Date.......... 3/14/91 3/1/98 6/2/92 3/1/98 3/1/98
Average annual total
return since inception
to December 31, 1998... 6.59% 8.28% 6.22% 5.79% 6.90%
</TABLE>
(2) Portfolio composition is subject to change.
(3) International investing is subject to certain risks, such as currency ex-
change rate volatility, possible political, social or economic instability,
foreign taxation and/or differences in auditing and other financial standards.
vii
<PAGE>
M.S.D.&T. Funds, Inc.
PRIME MONEY MARKET FUND
Statement of Net Assets
November 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Par
(000) Value
----- -----
<S> <C> <C>
CERTIFICATES OF DEPOSIT -- 18.7%
Yankee -- 18.7%
ABN AMRO N.A. Finance
5.50%, 02/02/99.......................................... $ 7,000 $ 6,997,904
5.00%, 03/30/99.......................................... 13,000 13,000,000
Bank of America
5.02%, 04/09/99.......................................... 10,000 10,000,000
4.85%, 10/06/99.......................................... 10,000 10,000,000
Bank of Montreal
5.00%, 12/21/98.......................................... 10,000 10,000,000
Candian Imperial Bank of Canada
5.26%, 12/04/98.......................................... 10,000 10,000,000
5.07%, 04/12/99.......................................... 10,000 10,000,000
Rabobank Netherlands
5.37%, 01/15/99.......................................... 10,000 10,000,000
5.25%, 03/19/99.......................................... 10,000 10,000,000
------------
TOTAL CERTIFICATES OF DEPOSIT
(Cost $89,997,904)....................................... 89,997,904
------------
COMMERCIAL PAPER -- 48.1%
Banks -- 4.1%
SunTrust Banks, Inc.
5.30%, 12/21/98.......................................... 10,000 9,970,555
Toronto Dominion Holdings
5.57%, 01/22/99.......................................... 10,000 10,000,000
------------
19,970,555
------------
Beverages -- 4.1%
Coca-Cola Co., Inc.
5.00%, 02/01/99.......................................... 10,000 9,913,889
5.00%, 02/09/99.......................................... 10,000 9,902,778
------------
19,816,667
------------
Chemicals -- 6.6%
Abbott Labs
4.80%, 12/10/98.......................................... 12,032 12,017,562
E.I. duPont deNemours & Co.
5.17%, 12/09/98.......................................... 10,000 9,988,511
5.14%, 12/22/98.......................................... 10,000 9,970,017
------------
31,976,090
------------
Diversified -- 4.1%
Minnesota Mining and Manufacturing
4.80%, 12/23/98.......................................... 20,000 19,941,333
------------
</TABLE>
<TABLE>
<CAPTION>
Par
(000) Value
----- -----
<S> <C> <C>
COMMERCIAL PAPER -- Continued
Finance -- 21.5%
Amoco Corp.
5.08%, 01/19/99.......................................... $ 5,800 $ 5,759,896
5.05%, 01/21/99.......................................... 5,000 4,964,229
Associates Corp. N.A.
5.17%, 02/08/99.......................................... 15,000 14,851,362
Centric Capital Corp.
5.25%***, 02/03/99....................................... 10,000 9,906,667
5.22%, 02/22/99.......................................... 12,000 11,855,580
General Electric Capital Corp.
5.23%, 02/12/99.......................................... 11,000 10,883,342
4.88%, 02/16/99.......................................... 10,000 9,895,622
Merrill Lynch & Co.
5.06%, 04/16/99.......................................... 11,000 10,789,729
Norwest Financial Inc.
4.85%, 02/24/99.......................................... 5,000 4,942,743
UBS Financial Inc.
5.135%, 02/05/99......................................... 20,000 19,811,717
------------
103,660,887
------------
Telecommunications -- 4.1%
BellSouth Corp.
4.98%, 12/02/98.......................................... 20,000 19,997,233
------------
Utilities -- Electric -- 3.5%
TECO Finance Corp.***
5.05%, 12/17/98.......................................... 5,000 4,988,778
5.00%, 01/28/99.......................................... 12,000 11,903,333
------------
16,892,111
------------
TOTAL COMMERCIAL PAPER
(Cost $232,254,876)...................................... 232,254,876
------------
CORPORATE BONDS -- 11.2%
Financial Services--11.2%
Associates Corp. N.A.
7.50%, 05/15/99.......................................... 3,000 3,022,971
First Chicago Corp.
9.875%, 07/01/99......................................... 4,000 4,092,452
First National Bank of Chicago
5.570%, 01/25/99......................................... 10,000 10,000,000
Goldman Sachs, FRN**
5.655%, 12/02/98......................................... 10,000 10,004,360
J.P. Morgan & Co., Inc., FRN**
5.173%, 12/30/98......................................... 12,000 11,995,819
</TABLE>
See Accompanying Notes to Financial Statements.
1
<PAGE>
M.S.D.&T. Funds, Inc.
PRIME MONEY MARKET FUND
Statement of Net Assets -- Concluded
November 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Par
(000) Value
----- -----
<S> <C> <C>
CORPORATE BONDS -- Continued
Merrill Lynch, FRN**
5.17%, 12/30/98........................................ $10,000 $ 10,000,000
Norwest Financial Inc.
6.25%, 03/15/99........................................ 5,000 5,010,066
------------
TOTAL CORPORATE BONDS
(Cost $54,125,668)..................................... 54,125,668
------------
REPURCHASE AGREEMENTS -- 22.1%
Goldman Sachs & Co.
(Agreement dated 11/30/98 to be repurchased at
$25,003,576.39 collateralized by $20,355,000 (Value
$25,599,731.25) U.S. Treasury Notes, 10.75%, due
02/15/03) 5.15%, 12/01/98............................. 25,000 25,000,000
Merrill Lynch Government Securities, Inc.
(Agreement dated 11/30/98 to be repurchased at
$11,368,641.9 collateralized by $7,600,000 (Value
$11,650,785.57) U.S. Treasury Notes, 9.875%, due
11/15/15) 5.20%, 12/01/98............................. 11,367 11,367,000
Morgan Stanley & Co., Inc.
(Agreement dated 11/30/98 to be repurchased at
$25,003,555.56 collateralized by $24,885,000 (Value
$25,512,946.68) U.S. Treasury Bills, 5.75%, due
10/31/00) 5.12%, 12/01/98............................. 25,000 25,000,000
NationsBanc Montgomery Securities LLC
(Agreement dated 11/30/98 to be repurchased at
$45,006,437.50 collateralized by $43,310,000 (Value
$45,996,573.44) U.S. Treasury Notes, 5.75%, due
08/15/03) 5.15%, 12/01/98............................. 45,000 45,000,000
------------
TOTAL REPURCHASE AGREEMENTS
(Cost $106,367,000).................................... 106,367,000
------------
</TABLE>
<TABLE>
<CAPTION>
Value
-----
<S> <C> <C> <C>
TOTAL INVESTMENTS IN SECURITIES -- 100.1%
(Cost $482,745,448*).......... $482,745,448
LIABILITIES IN EXCESS OF OTHER
ASSETS -- (0.1)%.............. (287,515)
------------
NET ASSETS -- 100.0%
(equivalent to $1.00 per share
based on 482,563,629 shares
outstanding).................. $482,457,933
============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE
($482,457,933 / 482,563,629).. $1.00
=====
</TABLE>
- --------
* Aggregate cost for Federal income tax purposes.
** The rate shown is as of November 30, 1998 and the maturity date shown is
the longer of (i) the next interest readjustment date or (ii) the date on
which the principal amount can be recovered through demand.
*** Security was purchased pursuant to Section 4(2) of the Securities Act of
1933 and may be resold only to qualified buyers.
See Accompanying Notes to Financial Statements.
2
<PAGE>
M.S.D.&T. Funds, Inc.
GOVERNMENT MONEY MARKET FUND
Statement of Net Assets
November 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Par
(000) Value
----- -----
<S> <C> <C>
AGENCY OBLIGATIONS -- 75.4%
Federal Farm Credit Bank -- 12.0%
Notes
5.48%, 12/01/98...................................... $15,000 $ 15,000,000
4.85%, 02/01/99...................................... 15,000 15,000,000
5.48%, 03/01/99...................................... 5,000 5,000,000
4.90%, 03/01/99...................................... 15,000 15,000,000
------------
50,000,000
------------
Federal Home Loan Bank -- 16.8%
Discount Notes
4.77%, 01/20/99...................................... 10,000 9,933,750
Floating Rate Notes**
4.98%, 12/07/98...................................... 15,500 15,496,080
4.83%, 12/30/98...................................... 10,000 9,998,438
4.95%, 04/01/99...................................... 10,000 9,997,845
Notes
5.435%, 02/02/99..................................... 5,000 4,999,259
4.82%, 03/09/99...................................... 20,000 19,737,578
------------
70,162,950
------------
Federal Home Loan Mortgage Corp. -- 23.8%
Discount Notes
5.27%, 01/06/99...................................... 8,000 7,957,840
5.22%, 02/03/99...................................... 10,000 9,907,200
5.17%, 02/12/99...................................... 10,000 9,895,164
4.68%, 02/24/99...................................... 10,000 9,889,500
4.59%, 03/26/99...................................... 10,000 9,853,375
4.92%, 03/29/99...................................... 12,000 11,806,480
Floating Rate Notes**
4.86%, 12/30/98...................................... 15,000 14,996,581
Notes
4.98%, 02/05/99...................................... 10,000 9,908,700
4.92%, 02/09/99...................................... 10,000 9,908,806
5.544%, 08/13/99..................................... 5,000 5,027,556
------------
99,151,202
------------
Federal National Mortgage Association -- 22.8%
Discount Notes
5.38%, 12/14/98...................................... 12,000 11,976,687
4.70%, 02/01/99...................................... 10,000 9,919,056
5.14%, 02/26/99...................................... 10,000 9,875,783
4.83%, 04/01/99...................................... 10,000 9,837,658
4.75%, 04/15/99...................................... 12,000 11,786,250
</TABLE>
<TABLE>
<CAPTION>
Par
(000) Value
----- -----
<S> <C> <C>
AGENCY OBLIGATIONS -- Continued
Federal National Mortgage Association -- Continued
Floating Rate Notes**
4.96%, 12/07/98........................................ $15,000 $ 14,997,843
Notes
5.08%, 02/16/99........................................ 27,000 26,711,250
------------
95,104,527
------------
TOTAL AGENCY OBLIGATIONS
(Cost $314,418,679).................................... 314,418,679
------------
REPURCHASE AGREEMENTS -- 28.4%
Merrill Lynch Government Securities, Inc.
(Agreement dated 11/30/98 to be repurchased at
$33,561,647 collateralized by $32,795,000 (Value
$34,233,346) U.S. Treasury Notes, 5.25%, due 8/15/03)
5.20%, 12/01/98....................................... 33,557 33,557,000
Morgan Stanley & Co., Inc.
(Agreement dated 11/30/98 to be repurchased at
$35,004,978 collateralized by $34,080,000 (Value
$35,731,544 U.S. Treasury Notes, 6.25%, due 10/31/01)
5.12%, 12/01/98....................................... 35,000 35,000,000
NationsBanc Montgomery Securities LLC
(Agreement dated 11/30/98 to be repurchased at
$50,007,153 collateralized by $48,120,000 (Value
$51,104,944) U.S. Treasury Notes, 5.75%, due 8/15/03)
5.15%, 12/01/98....................................... 50,000 50,000,000
------------
TOTAL REPURCHASE AGREEMENTS
(Cost $118,557,000).................................... 118,557,000
------------
</TABLE>
See Accompanying Notes to Financial Statements.
3
<PAGE>
M.S.D.&T. Funds, Inc.
GOVERNMENT MONEY MARKET FUND
Statement of Net Assets -- Concluded
November 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Par
(000) Value
----- -----
<S> <C> <C>
TOTAL INVESTMENTS IN SECURITIES -- 103.8%
(Cost $432,975,679*).......... $432,975,679
LIABILITIES IN EXCESS OF OTHER
ASSETS -- (3.8)%.............. (15,877,533)
------------
NET ASSETS -- 100.0%
(equivalent to $1.00 per share
based on 417,224,352 shares
outstanding).................. $417,098,146
============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE
($417,098,146 / 417,224,352).. $1.00
=====
</TABLE>
- --------
* Aggregate cost for Federal income tax purposes.
** The rate shown is as of November 30, 1998 and the maturity date shown is the
longer of (i) the next interest readjustment date or (ii) the date on which
the principal amount can be recovered through demand.
See Accompanying Notes to Financial Statements.
4
<PAGE>
M.S.D.&T. Funds, Inc.
TAX-EXEMPT MONEY MARKET FUND
Statement of Net Assets
November 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Par
(000) Value
----- -----------
<S> <C> <C>
DISTRICT OF COLUMBIA -- 1.2%
Howard University, RB, ETM
6.80%, 10/01/99......................................... $ 1,000 $ 1,030,322
-----------
FLORIDA -- 6.3%
Jacksonville Electric Authority, TECP, LA: Morgan
Guaranty Trust Co. NY
3.55%, 12/14/98......................................... 2,000 2,000,000
Volusia County Health Facilities, VRDN, Aces-Pooled
Hospital Learning Program, SPA: SunTrust Bank, INS:
FGIC**
3.15%, 12/07/98......................................... 3,600 3,600,000
-----------
5,600,000
-----------
ILLINOIS -- 8.5%
Bedford Park, VRDN, Environmental Revenue, Minnesota
Mining & Manufacturing
3.40%, 12/07/98......................................... 500 500,000
Illinois Educational Facilities, VRDN, Northwestern
University, LIC: Northern Trust Co.**
3.15%, 12/07/98......................................... 3,000 3,000,000
3.05%, 03/11/99......................................... 4,010 4,010,000
-----------
7,510,000
-----------
KENTUCKY -- 4.7%
Jefferson County, TECP, PCR, Louisville Gas & Electric
3.10%, 01/21/99......................................... 1,500 1,500,000
Trimble County, TECP, PCR, Louisville Gas & Electric
3.10%, 01/29/99......................................... 2,650 2,650,000
-----------
4,150,000
-----------
LOUISIANA -- 5.3%
Plaquemine Parish Port & Harbor Terminal District, TECP,
TECO Energy, Inc.
3.00%, 02/24/99......................................... 3,500 3,500,000
St. Charles Parish, VDRN, PCRB, Shell Oil Co. Project**
3.30%, 12/01/98......................................... 1,200 1,200,000
-----------
4,700,000
-----------
</TABLE>
<TABLE>
<CAPTION>
Par
(000) Value
----- -----
<S> <C> <C>
MICHIGAN -- 4.6%
University of Michigan, VRDN, Hospital Revenue**
3.35%, 12/01/98......................................... $ 2,100 $ 2,100,000
3.35%, 12/01/98......................................... 2,000 2,000,000
-----------
4,100,000
-----------
MINNESOTA -- 4.5%
Minneapolis, GO, Special School District
3.15%, 12/07/98......................................... 4,000 4,000,000
-----------
MISSISSIPPI -- 1.1%
Jackson County, VRDN, Port Facilities, Chevron USA Inc.**
3.30%, 12/01/98......................................... 1,000 1,000,000
-----------
MISSOURI -- 2.0%
Missouri State Health & Educational Facilities, VRDN,
Washington University Project, SPA: Morgan Guaranty
Trust Co. NY**
3.15%, 12/07/98......................................... 1,750 1,750,000
-----------
NEW JERSEY -- 1.1%
New Jersey State Transportation, RB, ETM, Transportations
Systems
5.00%, 12/15/98......................................... 1,000 1,000,542
-----------
NORTH CAROLINA -- 10.5%
City of Durham, VRDN, COP, SPA: Wachovia Bank N.A.**
3.15%, 12/07/98......................................... 2,800 2,800,000
City of Winston-Salem, VRDN, COP, SPA: Wachovia Bank
N.A.**
3.15%, 12/07/98......................................... 2,200 2,200,000
3.15%, 12/07/98......................................... 800 800,000
North Carolina Eastern Municipal Power Agency, TECP, LOC:
Candian Imperial Bank
3.00%, 02/17/99......................................... 2,500 2,500,000
North Carolina Educational Facilities, VRDN, SPA:
Wachovia Bank N.A., Wake Forest University Project**
3.15%, 12/07/98......................................... 1,000 1,000,000
-----------
9,300,000
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
5
<PAGE>
M.S.D.&T. Funds, Inc.
TAX-EXEMPT MONEY MARKET FUND
Statement of Net Assets -- Continued
November 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Par
(000) Value
----- -----
<S> <C> <C>
OHIO -- 8.1%
Cuyahoga County, VRDN, Hospital Revenue, Cleveland
Clinic**
3.30%, 12/01/98......................................... $ 1,900 $ 1,900,000
3.15%, 12/07/98......................................... 1,500 1,500,000
Warren County Health Care, VRDN, Otterbein Homes, LOC:
Fifth Third Bank**
3.40%, 12/07/98......................................... 3,800 3,800,000
-----------
7,200,000
-----------
OREGON -- 1.8%
State of Oregon, GO, VRDN, Veterans Welfare Board, LOC:
Morgan Guaranty Trust Co. NY**
3.15%, 12/07/98......................................... 1,600 1,600,000
-----------
SOUTH CAROLINA -- 3.7%
York County, PCR, TECP, Duke Power Project
3.15%, 12/09/98......................................... 3,300 3,300,000
-----------
TEXAS -- 22.0%
City of Austin, TECP, LOC: Morgan Guaranty Trust Co. NY
3.55%, 01/22/99......................................... 1,150 1,150,000
City of Beaumont, GO, FGIC
4.75%, 03/01/99......................................... 4,345 4,361,411
Gulf Coast Waste Disposal Authority, PCR, VRDN, Exxon
Project**
3.30%, 12/01/98......................................... 2,500 2,500,000
Harris County, Health Facilities Development, VRDN, St.
Luke's Episcopal Hospital Project, SPA: Morgan Guaranty
Trust Co. NY**
3.25%, 12/01/98......................................... 4,000 4,000,000
San Antonio Electric & Gas, RB
7.00%, 02/01/99......................................... 1,500 1,508,572
State of Texas, GO, TECP
3.20%, 01/12/99......................................... 4,000 4,000,000
State of Texas, Multi-Modal Water Development, VRDN, SPA:
Canadian Imperial Bank
3.30%, 12/01/98......................................... 2,000 2,000,000
-----------
19,519,983
-----------
</TABLE>
<TABLE>
<CAPTION>
Par
(000) Value
----- -----
<S> <C> <C>
UTAH -- 4.3%
Intermountain Power Agency Utah Power, TECP, LOC: Bank of
America
3.35%, 01/13/99.......................................... $ 3,800 $ 3,800,000
-----------
VIRGINIA -- 1.7%
Henrico County, Virginia State Public School Authority,
Prefunded @ 101
6.75%, 01/15/99.......................................... 1,500 1,520,760
-----------
WASHINGTON -- 2.4%
Washington State Higher Education Facilities, Prefunded @
100, Seattle University Project
7.35%, 11/01/99.......................................... 2,000 2,078,993
-----------
WISCONSIN -- 2.3%
State of Wisconsin, GO,
Prefunded @ 101
6.50%, 04/30/99.......................................... 2,000 2,042,234
-----------
WYOMING -- 3.4%
Sweetwater County, TECP, PacificCorp, LOC: UBS AG
3.25%, 12/08/98.......................................... 3,000 3,000,000
-----------
TOTAL MUNICIPAL BONDS
(Cost $88,202,834)....................................... 88,202,834
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
6
<PAGE>
M.S.D.&T. Funds, Inc.
TAX-EXEMPT MONEY MARKET FUND
Statement of Net Assets -- Concluded
November 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Number of
Shares Value
--------- -----
<S> <C> <C>
INVESTMENT COMPANIES -- 0.3%
Goldman Sachs Financial Square Tax-Free Money Market
Fund................................................... 281,402 $ 281,402
Municipal Fund for Temporary Investments -- MuniFund.... 10,942 10,942
-----------
TOTAL INVESTMENT COMPANIES
(Cost $292,344)........................................ 292,344
-----------
TOTAL INVESTMENTS IN SECURITIES -- 99.8%
(Cost $88,495,178*)............................................... 88,495,178
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.2%..................... 191,707
-----------
NET ASSETS -- 100%
(equivalent to $1.00 per share based on 88,694,686 shares
outstanding)..................................................... $88,686,885
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($88,686,885 / 88,694,686)....................................... $1.00
=====
</TABLE>
- --------
* Aggregate cost for Federal income tax purposes.
** The rate shown is as of November 30, 1998 and the maturity date shown is the
longer of (i) the next interest readjustment date or (ii) the date on which
the principal amount can be recovered through demand.
See Accompanying Notes to Financial Statements.
7
<PAGE>
M.S.D.&T. Funds, Inc.
TAX-EXEMPT MONEY MARKET FUND (TRUST)
Statement of Net Assets
November 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Par
(000) Value
----- -----
<S> <C> <C>
ALASKA -- 1.5%
Alaska Marine, VRDN, Exxon Corp., Valdez Project**
3.30%, 12/01/98......................................... $ 1,000 $ 1,000,000
-----------
FLORIDA -- 3.1%
Volusia County Health Facilities, VRDN, FGIC, Aces-Pooled
Hospital Learning Program, SPA: SunTrust Bank**
3.15%, 12/07/98......................................... 2,000 2,000,000
-----------
GEORGIA -- 4.6%
Burke County Development Authority, PCR, VRDN, Georgia
Power Co. PLT Bowen Project**
3.35%, 12/01/98......................................... 2,500 2,500,000
Downtown Savannah Authority, RB, Chatham County House
Renovation Improvement, Prerefunded @ 102
6.75%, 01/01/99......................................... 500 511,286
-----------
3,011,286
-----------
ILLINOIS -- 9.1%
Illinois Development Finance Authority, VRDN, RB, PCR,
Amoco Oil Co. Project**
3.30%, 12/01/98......................................... 1,200 1,200,000
Illinois Educational Facilities, VRDN, Northwestern
University, LIC: Northern Trust Co.**
3.15%, 12/07/98......................................... 2,700 2,700,000
Illinois Health Facilities Authority, TECP, St. Luke's
Medical Center, LOC: Northern Trust
3.25%, 01/08/99......................................... 2,100 2,100,000
-----------
6,000,000
-----------
KENTUCKY -- 0.8%
Jefferson County, PCR, TECP, Louisville Gas & Electric
3.10%, 01/29/99......................................... 500 500,000
-----------
</TABLE>
<TABLE>
<CAPTION>
Par
(000) Value
----- -----
<S> <C> <C>
LOUISIANA -- 4.1%
Plaquemine Parish Port & Harbor Terminal District, TECP,
TECO Energy, Inc.
3.45%, 01/13/99......................................... $ 2,700 $ 2,700,000
-----------
MARYLAND -- 4.5%
Harford County Maryland, GO, CPI
4.40%, 12/01/98......................................... 1,920 1,920,000
Maryland Department of Transportation, RB, Prerefunded
@ 102
6.80%, 11/01/99......................................... 1,000 1,054,028
-----------
2,974,028
-----------
MICHIGAN -- 3.8%
University of Michigan, VRDN, Hospital Revenue**
3.35%, 12/01/98......................................... 2,520 2,520,000
-----------
MINNESOTA -- 3.1%
University of Minneapolis, VRDN, Gateway Project, SPA:
Norwest Bank**
3.15%, 12/07/98......................................... 2,000 2,000,000
-----------
MISSISSIPPI -- 1.7%
Harrison County, VRDN, PCRB, E.I. duPont de Nemours &
Co.**
3.35%, 12/01/98......................................... 1,100 1,100,000
-----------
MISSOURI -- 2.9%
Boone County Missouri, VDRN, PCR, GTD Minnesota Mining &
Manufacturing Project**
3.40%, 12/07/98......................................... 500 500,000
Missouri State Health & Educational Facilities, VRDN,
Washington University Project, SPA: Morgan Guaranty
Trust**
3.15%, 12/07/98......................................... 1,440 1,440,000
-----------
1,940,000
-----------
NEW JERSEY -- 1.5%
New Jersey State Transportation, RB, ETM, Transportations
Systems
5.00%, 12/15/98......................................... 1,000 1,000,541
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
8
<PAGE>
M.S.D.&T. Funds, Inc.
TAX-EXEMPT MONEY MARKET FUND (TRUST)
Statement of Net Assets -- Continued
November 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Par
(000) Value
----- -----
<S> <C> <C>
NORTH CAROLINA -- 9.4%
City of Durham, VRDN, COP, SPA: Wachovia Bank of North
Carolina**
3.15%, 12/07/98......................................... $ 2,200 $ 2,200,000
North Carolina Eastern Municipal Power Agency, TECP, LOC:
Candian Imperial Bank
3.55%, 12/10/98......................................... 2,500 2,500,000
North Carolina Educational Facilities, VRDN, SPA:
Wachovia Bank N.A., Wake Forest University Project**
3.15%, 12/07/98......................................... 1,500 1,500,000
-----------
6,200,000
-----------
OHIO -- 5.3%
Cuyahoga County, VRDN, Hospital Revenue, Cleveland
Clinic**
3.15%, 12/07/98......................................... 1,500 1,500,000
Warren County Health Care, VRDN, Otterbein Homes, LOC:
Fifth Third Bank**
3.40%, 12/07/98......................................... 2,000 2,000,000
-----------
3,500,000
-----------
OREGON -- 1.5%
Oregon State, GO, VRDN, Veterans Welfare Board, LOC:
Morgan Guaranty Trust Co.**
3.15%, 12/07/98......................................... 1,000 1,000,000
-----------
PENNSYLVANIA -- 3.3%
Delaware County, IDA, VRDN, General Electric Capital
Corp.**
3.15%, 12/07/98......................................... 2,200 2,200,000
-----------
SOUTH CAROLINA -- 2.3%
York County, PCR, TECP, Duke Power Co. Project
3.15%, 12/09/98......................................... 1,500 1,500,000
-----------
TENNESSEE -- 1.7%
Tennessee State, VRDN, BAN, SPA: Tennessee State
Retirement System**
3.15%, 12/07/98......................................... 1,100 1,100,000
-----------
</TABLE>
<TABLE>
<CAPTION>
Par
(000) Value
----- -----
<S> <C> <C>
TEXAS -- 17.0%
City of Beaumont, GO, FGIC
4.75%, 03/01/99......................................... $ 1,300 $ 1,305,472
Corpus Christi, GO, Independent School District,
5.00%, 08/13/99......................................... 1,875 1,899,840
Harris County, Health Facilities Development, VRDN,
Methodist Hospital, SPA: Morgan Guaranty Trust Co.**
3.30%, 12/01/98......................................... 1,000 1,000,000
Harris County, Health Facilities Development, VRDN, St.
Luke's Episcopal Hospital Project, SPA: Morgan Guaranty
Trust Co.**
3.25%, 12/01/98......................................... 1,300 1,300,000
North Central Texas Health Facilities Development, VRDN,
Presbyterian Medical Center, SPA: Bankamerica**
3.25%, 12/01/98......................................... 2,700 2,700,000
State of Texas, GO, TECP
3.20%, 01/12/99......................................... 1,000 1,000,000
State of Texas, Multi-Modal Water Development, VRDN, SPA:
Canadian Imperial Bank**
3.30%, 12/01/98......................................... 2,000 2,000,000
-----------
11,205,312
-----------
UTAH -- 3.6%
Intermountain Power Agency Utah Power, TECP, LOC: Bank of
America
3.35%, 01/13/99......................................... 2,400 2,400,000
-----------
WASHINGTON -- 3.5%
Washington State Higher Education Facilities, Prefunded @
100, Seattle University Project
7.35%, 11/01/99......................................... 2,185 2,271,300
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
9
<PAGE>
M.S.D.&T. Funds, Inc.
TAX-EXEMPT MONEY MARKET FUND (TRUST)
Statement of Net Assets -- Concluded
November 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Par
(000) Value
----- -----
<S> <C> <C>
WISCONSIN -- 3.9%
State of Wisconsin, GO, ETM, Prerefunded @ 101
6.40%, 05/01/99.......................................... $ 1,500 $ 1,535,010
State of Wisconsin, GO, Prerefunded @ 101
6.50%, 05/01/99.......................................... 1,000 1,021,117
-----------
2,556,127
-----------
WYOMING -- 5.8%
Lincoln County, VRDN, PCRB, Exxon Corp. Project**
3.30%, 12/01/98.......................................... 1,300 1,300,000
Sweetwater County, TECP, PacificCorp, LOC: UBS AG
3.00%, 01/13/99.......................................... 2,500 2,500,000
-----------
3,800,000
-----------
TOTAL MUNICIPAL BONDS
(Cost $64,478,594)....................................... 64,478,594
-----------
</TABLE>
<TABLE>
<CAPTION>
Number of
Shares Value
--------- -----
<S> <C> <C>
INVESTMENT COMPANIES -- 1.7%
Goldman Sachs Financial Square Tax-Free Money Market
Fund.................................................... 304,453 $ 304,453
Municipal Fund for Temporary Investments -- MuniFund..... 814,858 814,858
-----------
TOTAL INVESTMENT COMPANIES
(Cost $1,119,311)....................................... 1,119,311
-----------
TOTAL INVESTMENTS IN SECURITIES -- 99.7%
(Cost $65,597,905*)..................................... 65,597,905
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.3%....................... 166,255
-----------
NET ASSETS -- 100.0%
(equivalent to $1.00 per share based on 65,765,307 shares
outstanding)....................................................... $65,764,160
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($65,764,160/65,765,307)........................................... $1.00
=====
</TABLE>
- --------
* Aggregate cost for Federal income tax purposes.
** The rate shown is as of November 30, 1998 and the maturity date shown is
the longer of (i) the next interest readjustment date or (ii) the date on
which the principal amount can be recovered through demand.
See Accompanying Notes to Financial Statements.
10
<PAGE>
M.S.D.&T. Funds, Inc.
GROWTH & INCOME FUND
Statement of Net Assets
November 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Number of
Shares Value
--------- -----
<S> <C> <C>
COMMON STOCK -- 98.5%
Airlines -- 2.3%
Southwest Airlines Co. ................................ 421,800 $ 9,068,700
------------
Banks -- 5.6%
Comerica Inc. ......................................... 14,400 928,800
J.P. Morgan & Co. ..................................... 60,400 6,455,250
Regions Financial Corp. ............................... 198,500 7,691,875
SunTrust Banks Inc. ................................... 60,000 4,188,750
Union Planters Corp. .................................. 57,000 2,714,625
------------
21,979,300
------------
Beverages -- 1.8%
Pepsico Inc. .......................................... 183,200 7,087,550
------------
Chemicals -- 4.5%
Air Products & Chemicals Inc. ......................... 99,800 3,804,875
E.I. duPont deNemours & Co. ........................... 114,300 6,715,125
RPM Inc. .............................................. 422,250 6,914,344
------------
17,434,344
------------
Computer Equipment -- 6.0%
Hewlett-Packard Co. ................................... 138,200 8,672,050
I B M.................................................. 88,600 14,619,000
------------
23,291,050
------------
Computer Software -- 3.2%
Cisco Systems Inc.* ................................... 127,200 9,587,700
Microsoft*............................................. 22,800 2,781,600
------------
12,369,300
------------
Consumer Goods -- 7.3%
Colgate-Palmolive Co. ................................. 90,900 7,783,313
Gillette Co. .......................................... 80,000 3,675,000
Newell Co. ............................................ 110,000 4,867,500
Procter & Gamble Co. .................................. 76,100 6,668,262
Unilever NV............................................ 69,100 5,342,294
------------
28,336,369
------------
Electrical Equipment -- 2.9%
General Electric Co. .................................. 124,250 11,244,625
------------
</TABLE>
<TABLE>
<CAPTION>
Number of
Shares Value
--------- -----
<S> <C> <C>
COMMON STOCK -- Continued
Electronics -- 6.8%
Amp, Inc. ............................................. 133,223 $ 6,444,663
Intel Corp. ........................................... 115,800 12,462,975
Motorola, Inc. ........................................ 128,600 7,973,200
------------
26,880,838
------------
Financial Services -- 0.2%
Federal Home Loan Mortgage Corp. ...................... 15,000 907,500
------------
Foods -- 6.7%
Bestfoods.............................................. 68,400 3,975,750
ConAgra Inc. .......................................... 150,900 4,743,919
Kellogg Co. ........................................... 136,300 4,991,987
McCormick & Co., Inc. ................................. 100,600 3,357,525
Nestle Registered ADR.................................. 86,900 9,055,397
------------
26,124,578
------------
Industrial Goods -- 1.5%
Corning Inc. .......................................... 141,700 5,685,712
------------
Insurance -- 5.9%
Chubb Corp. ........................................... 87,500 6,130,469
General RE Corp. ...................................... 22,350 5,218,725
Jefferson Pilot Corp. ................................. 167,650 11,442,112
Unum Corp. ............................................ 7,000 377,125
------------
23,168,431
------------
Machinery & Heavy Equipment -- 5.6%
Caterpillar, Inc. ..................................... 160,000 7,910,000
Deere & Co. ........................................... 172,200 6,016,237
Illinois Tool Works, Inc. ............................. 121,120 7,698,690
------------
21,624,927
------------
Medical Instruments & Supplies -- 3.3%
Johnson & Johnson...................................... 158,500 12,878,125
------------
Office Equipment -- 1.3%
Pitney Bowes Inc. ..................................... 88,700 4,967,200
------------
Oil Equipment & Services -- 1.9%
Halliburton Co. ....................................... 84,572 2,484,302
Schlumberger Ltd. ADR.................................. 112,300 5,018,406
------------
7,502,708
------------
</TABLE>
See Accompanying Notes to Financial Statements.
11
<PAGE>
M.S.D.&T. Funds, Inc.
GROWTH & INCOME FUND
Statement of Net Assets -- Concluded
November 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Number of
Shares Value
--------- -----
<S> <C> <C>
COMMON STOCK -- Continued
Petroleum -- 3.6%
Chevron Corp. ......................................... 78,100 $ 6,531,112
Exxon Corp. ........................................... 40,000 3,002,500
Mobil Corp. ........................................... 53,100 4,576,556
------------
14,110,168
------------
Paper Products -- 0.2%
Union Camp Corp. ...................................... 14,000 905,625
------------
Pharmaceuticals -- 14.6%
Abbott Laboratories.................................... 139,400 6,691,200
American Home Products Corp. .......................... 70,000 3,727,500
Amgen Inc.*............................................ 85,600 6,441,400
Bristol-Myers Squibb Co. .............................. 96,900 11,876,306
Merck & Co., Inc. ..................................... 37,600 5,823,300
Pfizer Inc. ........................................... 126,380 14,107,168
Schering Plough Corp. ................................. 77,900 8,286,613
------------
56,953,487
------------
Retail Department Stores -- 4.3%
May Department Stores Co. ............................. 113,800 6,863,563
Nordstrom Inc. ........................................ 58,700 2,186,575
Wal-Mart Stores, Inc. ................................. 104,200 7,847,563
------------
16,897,701
------------
Telecommunications -- 4.3%
BellSouth Corp. ....................................... 27,000 2,355,750
Ericsson (LM) Tel--ADR................................. 146,300 4,041,538
Lucent Technologies Inc. .............................. 121,236 10,433,873
------------
16,831,161
------------
Tobacco -- 3.0%
Philip Morris Inc. .................................... 212,820 11,904,619
------------
Utilities-Telephone -- 1.7%
MCI WorldCom Inc.*..................................... 113,097 6,672,723
------------
TOTAL COMMON STOCK
(Cost $224,774,647).................................... 384,826,741
------------
</TABLE>
<TABLE>
<CAPTION>
Par
(000) Value
----- -----
<S> <C> <C>
COMMON STOCK -- Continued
REPURCHASE AGREEMENT -- 1.4%
Morgan Stanley & Co., Inc.
(Agreement dated 11/30/98
to be repurchased at
$5,361,717.78,
collateralized by
$4,165,000 (Value
$5,477,295.00) U.S.
Treasury Notes, 11.875%,
due 11/15/03) 5.12%,
12/01/98.................. $ 5,361 $ 5,361,000
------------
TOTAL REPURCHASE AGREEMENT
(Cost $5,361,000).......... 5,361,000
------------
TOTAL INVESTMENTS IN
SECURITIES -- 99.9%
(Cost $230,135,647**)...... 390,187,741
OTHER ASSETS IN EXCESS OF
LIABILITIES -- 0.1%........ 299,229
------------
NET ASSETS -- 100.0%
(equivalent to $22.73 per
share based on 17,175,756
shares outstanding)....... $390,486,970
============
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
SHARE
($390,486,970 / 17,175,756)... $22.73
======
</TABLE>
- --------
* Non-income producing securities.
** Cost for Federal income tax purposes is $230,320,653. The aggregate gross
unrealized appreciation (depreciation) for all securities is as follows:
<TABLE>
<S> <C>
Excess of value over tax cost................................ $164,025,414
Excess of tax cost over value................................ $ (4,158,326)
</TABLE>
See Accompanying Notes to Financial Statements.
12
<PAGE>
M.S.D.&T. Funds, Inc.
EQUITY INCOME FUND
Statement of Net Assets
November 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Number of
Shares Value
--------- -----
<S> <C> <C>
COMMON STOCK -- 94.7%
Aerospace -- 5.2%
Boeing Corp. .......................................... 130,000 $ 5,281,250
Kaman Corp............................................. 129,406 2,102,848
Raytheon Co -- Class B................................. 44,300 2,453,112
United Technologies.................................... 59,446 6,371,868
------------
16,209,078
------------
Banking -- 4.6%
First Union Corp. N.C. ................................ 76,140 4,625,505
J. P. Morgan & Co...................................... 32,306 3,452,704
Regions Financial Corp. ............................... 72,300 2,801,625
Union Planters Corp.................................... 72,000 3,429,000
------------
14,308,834
------------
Beverages -- 1.0%
Pepsico Inc............................................ 84,000 3,249,750
------------
Chemicals -- 1.9%
E.I. duPont deNemours & Co............................. 100,562 5,908,018
------------
Computer Equipment & Software -- 1.9%
Electronic Data Services Corp. ........................ 109,900 4,286,100
Gateway 2000, Inc.*.................................... 30,300 1,700,588
------------
5,986,688
------------
Consumer Goods -- 2.8%
Procter & Gamble....................................... 80,000 7,010,000
V F Corp. ............................................. 35,060 1,720,131
------------
8,730,131
------------
Diversified -- 0.4%
Fortune Brands......................................... 35,000 1,192,188
------------
Electrical Equipment -- 2.3%
General Electric Co.................................... 80,000 7,240,000
------------
Electric Utility -- 3.0%
DPL Inc................................................ 117,651 2,353,020
Edison International................................... 70,000 1,925,000
Pacificorp............................................. 13,410 251,438
Texas Utilities........................................ 40,262 1,794,175
Wisconsin Energy Corp.................................. 94,604 2,926,810
------------
9,250,443
------------
</TABLE>
<TABLE>
<CAPTION>
Number of
Shares Value
--------- -----
<S> <C> <C>
COMMON STOCK -- Continued
Electronics -- 4.9%
Amp, Inc. ............................................. 129,529 $ 6,265,965
Intel Corp. ........................................... 55,000 5,381,250
Motorola, Inc.......................................... 60,000 3,720,000
------------
15,367,215
------------
Engineering & Construction -- 1.5%
Fluor Corp............................................. 111,600 4,777,875
------------
Financial Services -- 2.7%
CIT Group Inc. ........................................ 114,500 3,213,156
Washington Mutual Inc.................................. 134,400 5,208,000
------------
8,421,156
------------
Food Products -- 1.6%
Bestfoods.............................................. 43,008 2,499,840
McCormick & Co., Inc. ................................. 70,879 2,365,587
------------
4,865,427
------------
Food Processing -- 1.0%
Universal Foods........................................ 120,000 2,977,500
------------
Industrial Goods -- 1.9%
Corning Inc............................................ 99,616 3,997,092
Harsco Corp. .......................................... 54,758 1,772,790
------------
5,769,882
------------
Insurance -- 6.9%
Aetna Inc.............................................. 42,000 3,247,125
Chubb Corp............................................. 61,036 4,276,335
HSB Group.............................................. 75,000 3,103,125
Jefferson Pilot Corp................................... 53,475 3,649,669
Lincoln National Corp.................................. 40,000 3,347,500
Marsh & McLennan Co. .................................. 63,111 3,672,271
------------
21,296,025
------------
Iron/Steel -- 0.6%
Worthington Industries Inc............................. 165,600 2,018,250
------------
Machinery & Equipment -- 3.7%
Browning-Ferris Industries............................. 76,182 2,247,369
Caterpillar, Inc....................................... 105,992 5,239,980
Deere & Co. ........................................... 112,211 3,920,372
------------
11,407,721
------------
</TABLE>
See Accompanying Notes to Financial Statements.
13
<PAGE>
M.S.D.&T. Funds, Inc.
EQUITY INCOME FUND
Statement of Net Assets -- Continued
November 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Number of
Shares Value
--------- -----
<S> <C> <C>
COMMON STOCK -- Continued
Manufacturing -- 2.7%
Eastman Kodak Co....................................... 53,600 $ 3,889,350
International Flavors & Fragrances..................... 50,000 2,093,750
Minnesota Mining & Manufacturing....................... 20,000 1,606,250
Tupperware Corp. ...................................... 45,000 784,687
------------
8,374,037
------------
Medical Equipment & Supplies -- 2.4%
Johnson & Johnson...................................... 90,000 7,312,500
------------
Metals & Mining -- 1.2%
Homestake Mining Co. .................................. 75,007 806,325
Phelps Dodge Corp...................................... 15,000 850,312
Timken Co.............................................. 104,000 2,002,000
------------
3,658,637
------------
Natural Gas Utility -- 2.4%
Equitable Resources, Inc. ............................. 120,386 3,543,863
Keyspan Energy Corp. .................................. 139,934 4,154,291
------------
7,698,154
------------
Office/Business Equipment & Supplies -- 2.1%
Deluxe Corp. .......................................... 100,000 3,475,000
Hewlett-Packard Co. ................................... 48,500 3,043,375
------------
6,518,375
------------
Oil & Gas Equipment/Services -- 2.9%
Enron Corp............................................. 65,400 3,437,588
Halliburton Co......................................... 100,000 2,937,500
Schlumberger Ltd. ADR.................................. 60,796 2,716,820
------------
9,091,908
------------
Oil & Gas Exploration Product & Services -- 10.2%
Amoco Corp............................................. 65,000 3,830,938
Atlantic Richfield Co.................................. 39,688 2,639,252
British Petroleum ADR.................................. 50,952 4,693,953
Chevron Corp........................................... 69,697 5,828,412
Exxon Corp............................................. 90,956 6,827,385
Mobil Corp. ........................................... 64,596 5,567,368
Murphy Oil Corp........................................ 58,434 2,330,056
------------
31,717,364
------------
</TABLE>
<TABLE>
<CAPTION>
Number of
Shares Value
--------- -----
<S> <C> <C>
COMMON STOCK -- Continued
Paper Products -- 1.6%
P.H. Glatfelter Co. ................................... 80,179 $ 1,032,305
Union Camp Corp........................................ 62,000 4,010,625
------------
5,042,930
------------
Pharmaceuticals -- 7.7%
American Home Products................................. 100,000 5,325,000
Bristol-Myers Squibb Co. .............................. 50,200 6,152,638
Merck & Company, Inc. ................................. 40,000 6,195,000
Pfizer Inc. ........................................... 55,054 6,145,403
------------
23,818,041
------------
Printing & Publishing -- 2.5%
R.R. Donnelley & Sons Co............................... 66,500 2,822,093
Readers Digest Assn.................................... 100,000 2,406,250
Washington Post Co..................................... 5,012 2,667,323
------------
7,895,666
------------
Railroads -- 0.8%
Norfolk Southern Corp. ................................ 86,968 2,641,653
------------
Restaurants -- 1.0%
McDonald's Corp. ...................................... 42,600 2,984,663
------------
Retail Stores -- 1.6%
May Department Stores Co............................... 41,800 2,521,062
J.C. Penney............................................ 42,000 2,310,000
------------
4,831,062
------------
Telecommunications -- 4.1%
BellSouth Corp......................................... 45,000 3,926,250
GTE Corp. ............................................. 95,000 5,890,000
Media One Group Inc. (PIES Airtouch Communications).... 50,000 2,806,250
------------
12,622,500
------------
Tobacco -- 3.6%
Gallaher Group ADR..................................... 124,973 3,460,190
Philip Morris Inc. .................................... 140,640 7,867,050
------------
11,327,240
------------
TOTAL COMMON STOCK
(Cost $155,794,743).................................... 294,510,911
------------
</TABLE>
See Accompanying Notes to Financial Statements.
14
<PAGE>
M.S.D.&T. Funds, Inc.
EQUITY INCOME FUND
Statement of Net Assets -- Concluded
November 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Par
(000) Value
----- -----
<S> <C> <C>
REPURCHASE AGREEMENT -- 5.1%
Morgan Stanley & Co., Inc.
(Agreement dated 11/30/98 to be repurchased at
$15,808,248 collateralized by $12,830,000 (Value
$16,135,817) U.S. Treasury Notes, 10.75%, due
02/15/03)
5.12%, 12/01/98...................................... $15,806 $ 15,806,000
------------
TOTAL REPURCHASE AGREEMENT
(Cost $15,806,000).................................... 15,806,000
------------
TOTAL INVESTMENTS IN SECURITIES -- 99.8%
(Cost $171,600,743**)............................................. 310,316,911
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.2% ..................... 608,687
------------
NET ASSETS -- 100.0%
(equivalent to $10.57 per share based on 29,407,510 shares
outstanding)..................................................... $310,925,598
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($310,925,598 / 29,407,510)....................................... $10.57
======
</TABLE>
- --------
* Non-income producing securities.
** Aggregate cost for Federal income tax purposes. The aggregate gross
unrealized appreciation (depreciation) for all securities is as follows:
<TABLE>
<S> <C>
Excess of value over tax cost................................. $141,364,856
Excess of tax cost over value................................. $ (2,648,688)
</TABLE>
See Accompanying Notes to Financial Statements.
15
<PAGE>
M.S.D.&T. Funds, Inc.
EQUITY GROWTH FUND
Statement of Net Assets
November 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Number of
Shares Value
--------- -----
<S> <C> <C>
COMMON STOCK -- 97.9%
Airlines -- 2.0%
Southwest Airlines Co. .................................. 34,500 $ 741,750
----------
Banking -- 3.4%
Comerica, Inc. .......................................... 7,500 483,750
First Union Corp. N.C. .................................. 7,340 445,905
Regions Financial Corp. ................................. 8,500 329,375
----------
1,259,030
----------
Beverages -- 2.5%
Coca-Cola Co., Inc....................................... 6,000 420,375
Pepsico Inc.............................................. 12,600 487,463
----------
907,838
----------
Broadcasting -- 1.9%
Cox Communications....................................... 13,000 684,938
----------
Communications Equipment -- 1.7%
Airtouch Communications Inc.*............................ 11,000 629,062
----------
Computer Equipment & Software -- 18.7%
3Com Corp.*.............................................. 10,000 386,875
American Power Conversion*............................... 10,000 413,750
Auto Desk................................................ 19,000 691,125
Cabletron Systems*....................................... 30,000 420,000
Cisco Systems, Inc.*..................................... 9,000 678,375
Compaq Computer Corp..................................... 10,000 325,000
Electronic Data Services Corp............................ 12,000 468,000
Gateway 2000, Inc.*...................................... 12,000 673,500
I B M.................................................... 3,500 577,500
Intel Corp............................................... 9,000 968,625
Microsoft*............................................... 10,000 1,220,000
----------
6,822,750
----------
Consumer Goods -- 3.6%
Colgate-Palmolive Co..................................... 5,000 428,125
Gap Inc.................................................. 5,000 367,813
Rubbermaid Inc. ......................................... 16,000 529,000
----------
1,324,938
----------
Cruise Lines -- 1.0%
Carnival Cruise.......................................... 11,000 379,500
----------
</TABLE>
<TABLE>
<CAPTION>
Number of
Shares Value
--------- -----
<S> <C> <C>
COMMON STOCK--Continued
Electrical & Electronic -- 2.3%
Avnet Inc............................................... 6,000 $ 349,125
Teradyne Inc.*.......................................... 15,000 480,938
-----------
830,063
-----------
Electrical Equipment -- 5.8%
Emerson Electric Co. ................................... 6,400 416,000
General Electric & Co. ................................. 10,400 941,200
Honeywell Inc. ......................................... 4,500 359,719
Hubbell, Inc. Class B................................... 10,000 403,125
-----------
2,120,044
-----------
Entertainment -- 2.1%
Walt Disney Co.......................................... 24,000 772,500
-----------
Financial Services -- 4.1%
American Express Co..................................... 6,100 610,380
CIT Group Inc........................................... 12,000 336,750
T. Rowe Price Assoc..................................... 10,000 357,500
Washington Mutual Inc................................... 5,000 193,750
-----------
1,498,380
-----------
Food Products -- 3.6%
Bestfoods............................................... 6,000 348,750
Hershey Foods Corp...................................... 6,500 437,125
Nestle Registered ADR*.................................. 5,000 521,000
-----------
1,306,875
-----------
Insurance -- 8.0%
Allstate Corp........................................... 11,000 448,250
General Re Corp. ....................................... 4,000 934,000
Lincoln National Corp................................... 8,000 669,500
Unum Corp............................................... 16,000 862,000
-----------
2,913,750
-----------
Manufacturing -- 1.2%
Newell Co. ............................................. 10,000 442,500
-----------
Medical Equipment & Supplies -- 3.7%
Baxter International.................................... 10,000 635,625
Johnson & Johnson....................................... 9,100 739,375
-----------
1,375,000
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
16
<PAGE>
M.S.D.&T. Funds, Inc.
EQUITY GROWTH FUND
Statement of Net Assets -- Concluded
November 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Number of
Shares Value
--------- -----
<S> <C> <C>
COMMON STOCK--Continued
Oil/Gas--Equipment & Services -- 3.6%
Enron Corp. ............................................ 6,000 $ 315,375
Halliburton Co.......................................... 7,534 221,311
Illinois Tool Works, Inc. .............................. 9,000 572,063
Schlumberger Ltd. ADR................................... 4,600 205,563
-----------
1,314,312
-----------
Oil & Gas Exploration Product & Services -- 3.2%
Exxon Corp.............................................. 7,500 562,968
Mobil Corp. ............................................ 7,000 603,313
-----------
1,166,281
-----------
Pharmaceuticals -- 10.0%
American Home Products.................................. 13,000 692,250
Bristol-Myers Squibb Co. ............................... 7,000 857,937
Chiron Corp.*........................................... 9,000 203,625
Genzyme Corp.*.......................................... 7,400 311,263
Genzyme Molecular....................................... 800 2,799
Pfizer Inc. ............................................ 6,000 669,750
Schering Plough......................................... 3,000 319,125
SmithKline Beecham...................................... 10,000 609,375
-----------
3,666,124
-----------
Restaurants -- 0.8%
McDonald's Corp......................................... 4,000 280,250
-----------
Retail Stores -- 5.8%
Home Depot Inc.......................................... 14,000 696,500
Nordstrom Inc. ......................................... 9,000 335,250
Staples*................................................ 10,000 349,375
Wal-Mart Stores, Inc.................................... 10,000 753,125
-----------
2,134,250
-----------
Telecommunications-Services & Equipment -- 8.9%
Cable & Wireless ADR.................................... 18,000 679,500
Ericsson Tel--Sp ADR.................................... 16,000 442,000
Lucent Technologies..................................... 4,416 380,052
MCI Worldcom Inc.*...................................... 24,026 1,417,533
Oak Industries*......................................... 10,500 324,187
-----------
3,243,272
-----------
TOTAL COMMON STOCK
(Cost $22,225,794)...................................... 35,813,407
-----------
</TABLE>
<TABLE>
<CAPTION>
Par
(000) Value
----- -----
<S> <C> <C>
REPURCHASE AGREEMENT -- 2.1%
Morgan Stanley & Co., Inc.
(Agreement dated 11/30/98 to be repurchased at $750,107,
collateralized by $730,000 (Value $768,083) U.S. Treasury
Notes, 8.25%, due 05/15/05) 5.12%, 12/01/98.............. $750 $ 750,000
-----------
TOTAL REPURCHASE AGREEMENT
(Cost $750,000)........................................... 750,000
-----------
TOTAL INVESTMENTS IN SECURITIES -- 100.0%
(Cost $22,975,794**)............................................... 36,563,407
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.0%....................... 13,331
-----------
NET ASSETS -- 100.0%
(equivalent to $11.22 per share based on 3,261,337 shares
outstanding)...................................................... $36,576,738
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($36,576,738 / 3,261,337).......................................... $11.22
======
</TABLE>
- --------
* Non-income producing securities.
** Cost for Federal income tax purposes is $23,079,488. The aggregate gross
unrealized appreciation (depreciation) for all securities is as follows:
<TABLE>
<S> <C>
Excess of value over tax cost.................................. $13,504,535
Excess of tax cost over value.................................. $ (20,616)
</TABLE>
See Accompanying Notes to Financial Statements.
17
<PAGE>
M.S.D.&T. Funds, Inc.
INTERNATIONAL EQUITY FUND
Statement of Net Assets
November 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Number of
Shares Value
--------- -----
<S> <C> <C>
COMMON STOCK, PREFERRED STOCK & RIGHTS -- 96.4%
Australia -- 1.1%
Cable & Wireless Optus*................................. 81,000 $ 151,780
John Fairfax............................................ 69,000 136,583
National Australian Bank................................ 16,000 239,648
North Limited........................................... 74,000 138,663
Telstra................................................. 41,000 182,528
-----------
849,202
-----------
Brazil -- 1.7%
Telebras Certificate*................................... 8,700 824,869
Unibanco GDR............................................ 24,324 507,764
-----------
1,332,633
-----------
Denmark -- 0.7%
Tele Danmank 'B'........................................ 5,000 560,048
-----------
Finland -- 0.6%
Nokia "A'............................................... 5,000 491,076
-----------
France -- 10.6%
AXA -- UAP.............................................. 12,500 1,620,025
Alcatel................................................. 5,000 662,998
Danone.................................................. 4,000 1,170,826
Dexia France............................................ 4,400 661,799
Lafarge................................................. 11,000 1,039,637
Suez Lyonnaise Des Eaux................................. 5,800 1,148,503
Total "B'............................................... 8,500 1,056,653
Vivendi................................................. 4,500 1,020,417
-----------
8,380,858
-----------
Germany -- 9.0%
Allianz................................................. 2,875 1,038,094
GEA Preferred........................................... 29,500 697,903
Man..................................................... 3,000 853,453
Mannesman............................................... 12,500 1,356,623
Siemens................................................. 8,000 558,323
Veba.................................................... 15,000 833,935
Volkswagen.............................................. 21,380 1,745,018
-----------
7,083,349
-----------
Greece -- 1.5%
Alpha Credit Bank....................................... 6,800 647,094
National Bank of Greece GDR*............................ 15,864 568,724
-----------
1,215,818
-----------
COMMON STOCK, PREFERRED STOCK & RIGHTS -- Continued
Number of
Shares Value
Hong Kong -- 1.7% ---------- -----------
China Telecom*.......................................... 153,000 $ 305,289
Dao Heng Bank........................................... 60,100 175,418
First Tractor........................................... 750,000 220,360
Hong Kong Electric...................................... 118,000 392,419
Hutchison Whampoa....................................... 39,000 278,284
-----------
1,371,770
-----------
India -- 0.3%
State Bank of India GDR................................. 35,000 258,125
-----------
Ireland -- 1.2%
Bank of Ireland......................................... 46,800 969,464
-----------
Italy -- 7.1%
BCA Nazionale Lavaro*................................... 75,000 211,451
ENI..................................................... 146,000 908,276
INA..................................................... 380,000 1,005,525
Telecom Italia Mobile................................... 155,000 1,018,427
Telecom Italia Spa...................................... 160,000 1,300,242
Unicredito Italiano..................................... 200,000 1,140,280
-----------
5,584,201
-----------
Japan -- 16.8%
Bridgestone............................................. 28,000 656,036
Daiwa Securities........................................ 85,000 303,571
Dowa Fire & Marine...................................... 148,000 512,919
Eisai................................................... 41,000 633,745
Fuji Photo Film......................................... 15,000 561,341
Hitachi................................................. 116,000 699,284
Industrial Bank......................................... 35,000 189,351
Ito Yokado.............................................. 11,000 672,958
Komori.................................................. 26,000 540,433
Kuraray................................................. 50,000 521,477
Mabuchi Motor........................................... 8,600 633,176
Matsushita Electric Industrial.......................... 44,000 708,753
Mitsui Fudosan.......................................... 79,000 606,703
Nintendo................................................ 3,700 343,451
Nishimatsu Construction................................. 79,000 433,819
Nippon Telegraph & Telephone............................ 68 508,949
NTT Mobile Comm......................................... 9 344,126
Ricoh................................................... 62,000 597,706
Sanwa Bank.............................................. 39,000 353,767
</TABLE>
See Accompanying Notes to Financial Statements.
18
<PAGE>
M.S.D.&T. Funds, Inc.
INTERNATIONAL EQUITY FUND
Statement of Net Assets -- Continued
November 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Number of
Shares Value
--------- -----
<S> <C> <C>
COMMON STOCK, PREFERRED STOCK & RIGHTS -- Continued
Japan -- Continued
Sekisui Chemical..................................... 96,000 $ 585,747
Shin-Etsu Chemical................................... 25,000 559,307
Shiseido............................................. 27,000 307,737
Sony................................................. 3,000 219,899
Sumitomo Bank........................................ 32,000 356,394
Sumitomo Marine & Fire............................... 19,000 113,610
Suzuki Motor......................................... 53,000 607,956
Teijin............................................... 95,000 340,831
Tsubaki Nakashima.................................... 52,000 298,243
-----------
13,211,289
-----------
Mexico -- 0.6%
Cemex CPO............................................ 185,400 449,168
-----------
Netherlands -- 5.0%
ING.................................................. 7,800 447,975
Ahold................................................ 15,000 521,615
Laurus............................................... 7,700 191,836
Philips Electronic................................... 14,000 888,502
Vedior............................................... 23,975 490,420
Vendex International................................. 11,000 259,627
VNU.................................................. 33,500 1,154,397
-----------
3,954,372
-----------
Norway -- 0.3%
Petroleum Geo-Services*.............................. 14,100 209,673
-----------
Philippines -- 0.1%
Benpres Holdings Corp. GDR*.......................... 30,000 55,500
Far East Bank & Trust................................ 1,152 1,155
-----------
56,655
-----------
Poland -- 0.7%
Bank Handlowy Warszawie GDR*......................... 45,000 542,867
-----------
Singapore -- 3.6%
Development Bank of Singapore (Foreign).............. 70,200 532,795
GP Batteries International........................... 170,000 369,526
Singapore Airlines (Foreign)......................... 38,000 265,335
Singapore Press...................................... 54,929 583,650
</TABLE>
<TABLE>
<CAPTION>
Number of
Shares Value
--------- -----
<S> <C> <C>
COMMON STOCK, PREFERRED STOCK & RIGHTS -- Continued
Singapore -- Continued
Singapore Telecom.................................... 447,000 $ 746,368
United Overseas Bank (Foreign)....................... 60,000 347,910
-----------
2,845,584
-----------
South Africa -- 0.5%
AECI................................................. 140,000 226,362
Murray & Roberts..................................... 220,000 162,390
-----------
388,752
-----------
Spain -- 3.5%
Argentaria........................................... 38,500 899,082
Banco Santander...................................... 20,000 410,064
Telefonica de Espana................................. 30,000 1,413,678
-----------
2,722,824
-----------
Sweden -- 1.1%
Forenings Sparbanken................................. 30,000 843,143
-----------
Switzerland -- 5.9%
Credit Suisse Group Registered....................... 2,800 482,934
Nestle Registered.................................... 510 1,062,886
Novartis Registered.................................. 666 1,253,990
Roche Holdings 1/10 PC Non-Voting.................... 90 1,060,730
UBS Registered....................................... 2,700 814,951
-----------
4,675,491
-----------
Thailand -- 0.4%
Bangkok Expressway*.................................. 353,600 337,928
-----------
United Kingdom -- 22.4%
Abbey National....................................... 31,000 637,561
Allied Zurich........................................ 46,000 663,608
Asda................................................. 155,000 403,593
Barclays............................................. 26,939 618,960
BG................................................... 132,000 908,012
Boots................................................ 25,000 405,635
British Aerospace.................................... 72,000 623,927
British Petroleum.................................... 91,507 1,431,874
British Telecom...................................... 78,000 1,082,761
Bryant............................................... 135,000 189,406
Cadbury Schweppes.................................... 33,000 499,488
</TABLE>
See Accompanying Notes to Financial Statements.
19
<PAGE>
M.S.D.&T. Funds, Inc.
INTERNATIONAL EQUITY FUND
Statement of Net Assets -- Concluded
November 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Number of
Shares Value
--------- -----
<S> <C> <C>
COMMON STOCK, PREFERRED STOCK & RIGHTS -- Continued
United Kingdom -- Continued
Diageo............................................... 59,168 $ 667,525
General Electric Co.................................. 77,000 631,351
Glaxo Wellcome....................................... 47,000 1,493,381
Granada.............................................. 37,000 582,629
HSBC Holdings........................................ 11,000 299,039
HW Group............................................. 36,300 52,128
IMS Group............................................ 96,115 107,087
Jarvis Hotels........................................ 135,000 279,653
Kingfisher........................................... 40,000 381,949
Limelight*........................................... 210,000 100,522
Lloyds TSB........................................... 41,000 573,543
NFC.................................................. 97,500 190,706
Norwich Union........................................ 75,000 525,201
Peninsular Oriental Steam............................ 25,000 304,330
Royal & Sun Alliance................................. 63,000 529,818
Scottish Hydro-Electric.............................. 45,500 527,969
SmithKline Beecham................................... 100,000 1,236,300
Vodafone............................................. 57,000 842,995
Whitbread............................................ 30,172 409,620
Yorkshire Water...................................... 44,000 396,902
-----------
17,597,473
-----------
TOTAL COMMON STOCK, PREFERRED STOCK & RIGHTS
(Cost $67,877,570)................................... 75,931,763
-----------
</TABLE>
<TABLE>
<CAPTION>
Par
(000) Value
----- -----
<S> <C> <C>
SHORT-TERM INVESTMENTS -- 5.3%
Eurodollar Time Deposit
State Street Bank & Trust Co. 3.75%, 12/01/98........... $ 4,211 $ 4,211,000
-----------
TOTAL SHORT-TERM INVESTMENTS
(Cost $4,211,000)....................................... 4,211,000
-----------
TOTAL INVESTMENTS IN SECURITIES -- 101.7%
(Cost $72,088,570**)............................................. 80,142,763
LIABILITIES IN EXCESS OF OTHER ASSETS -- (1.7)%................... (1,340,967)
-----------
NET ASSETS -- 100.0%
(equivalent to $13.10 per share based on 6,013,251 shares
outstanding)..................................................... $78,801,796
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($78,801,796 / 6,013,251)........................................ $13.10
======
</TABLE>
- --------
* Non-income producing securities.
** Cost for Federal income tax purposes is $72,089,444. The aggregate gross
unrealized appreciation (depreciation) for all securities is as follows:
<TABLE>
<S> <C>
Excess of value over tax cost.................................. $14,537,960
Excess of tax cost over value.................................. $(6,484,641)
</TABLE>
See Accompanying Notes to Financial Statements.
20
<PAGE>
M.S.D.&T. Funds, Inc.
DIVERSIFIED REAL ESTATE FUND
Statement of Net Assets
November 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Number of
Shares Value
--------- -----
<S> <C> <C>
REAL ESTATE INVESTMENT TRUSTS -- 93.6%
Apartments -- 20.5%
AMLI Residential Properties Trust........................ 2,200 $ 47,712
Archstone Communities.................................... 10,000 208,750
Avalonbay Communities.................................... 7,134 241,664
Equity Residential Properties Trust...................... 4,450 188,291
Gables Residential Trust................................. 3,700 91,806
Home Property............................................ 2,000 49,250
Irvine Apartment Communities............................. 3,300 88,481
Post Properties Inc. .................................... 4,000 153,000
Charles E Smith Residential Realty....................... 1,700 50,256
Summit Properties, Inc. ................................. 2,500 43,750
United Dominion Realty Trust, Inc. ...................... 7,000 75,687
----------
1,238,647
----------
Construction -- 3.7%
Centex Corp. ............................................ 2,000 71,375
Kaufman & Broad Home Corp. .............................. 3,000 75,562
Ryland Group............................................. 3,000 79,687
----------
226,624
----------
Diversified -- 14.9%
Colonial Properties Trust................................ 5,400 146,137
Duke Realty Investments, Inc. ........................... 5,400 122,512
Eastgroup Properties..................................... 7,900 146,644
Liberty Property Trust................................... 6,800 167,450
MGI Properties........................................... 4,600 127,937
Spieker Properties, Inc. ................................ 5,300 191,462
----------
902,142
----------
Health Care -- 3.6%
Health Care REIT, Inc. .................................. 3,500 79,187
Meditrust Companies...................................... 3,004 45,623
Nationwide Health Properties, Inc. ...................... 4,100 91,738
----------
216,548
----------
Hotels & Lodging -- 5.6%
Host Marriott Corp.*..................................... 5,000 73,437
Jameson Inns Inc. ....................................... 6,000 60,750
Patriot American Hotel................................... 4,000 29,500
</TABLE>
<TABLE>
<CAPTION>
Number of
Shares Value
--------- -----
<S> <C> <C>
REAL ESTATE INVESTMENT TRUSTS -- Continued
Hotels & Lodging -- Continued
RFS Hotel Investors Inc. ................................ 5,500 $ 78,719
Starwood Hotels & Resorts................................ 3,100 94,163
----------
336,569
----------
Investment Company -- 1.3%
Wellsford Real Properties*............................... 8,500 77,563
----------
Office Properties -- 22.7%
Arden Realty Group, Inc. ................................ 5,500 126,500
Boston Properties, Inc. ................................. 2,800 88,375
Carramerica Realty Corp. ................................ 3,400 82,450
Cornersone Properties, Inc. ............................. 6,000 94,125
Cousins Properties Inc. ................................. 3,400 104,975
Crescent Real Estate Equities, Inc. ..................... 3,000 74,438
Equity Office Properties Trust........................... 9,200 231,150
Highwood Properties, Inc. ............................... 3,000 81,563
Mack Cali Realty Corp. .................................. 2,800 83,125
Prentiss Properties Trust................................ 7,700 167,475
Reckson Service Ind. .................................... 4,704 13,783
Reckson Association Realty Corp. ........................ 9,800 226,013
----------
1,373,972
----------
Retail -- 12.4%
Burnham Pacific Property, Inc. .......................... 3,400 43,775
CBL & Associates Properties, Inc. ....................... 3,900 97,988
Federal Realty Investment Trust.......................... 3,800 90,963
IRT Property Co. ........................................ 7,800 78,000
Prime Retail............................................. 5,000 52,813
Rouse Co. ............................................... 3,300 90,131
Taubman Centers Inc. .................................... 7,800 108,225
Urban Shopping Centers, Inc. ............................ 3,100 101,913
Western Investment Real Estate Trust..................... 7,500 87,656
----------
751,464
----------
Storage -- 2.9%
Public Storage Inc. ..................................... 1,600 42,500
Sovran Self Storage Inc. ................................ 3,400 86,700
Storage USA, Inc. ....................................... 1,400 44,450
----------
173,650
----------
</TABLE>
See Accompanying Notes to Financial Statements.
21
<PAGE>
M.S.D.&T. Funds, Inc.
DIVERSIFIED REAL ESTATE FUND
Statement of Net Assets -- Concluded
November 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Number of
Shares Value
--------- -----
<S> <C> <C>
REAL ESTATE INVESTMENT TRUSTS -- Continued
Warehouse/Industrial -- 6.0%
Centerpoint Properties................................... 3,000 $ 102,000
First Industrial Realty Trust, Inc. ..................... 3,100 74,981
Meridan Industrial Trust................................. 2,200 53,075
Prologis Trust........................................... 2,200 48,675
Weeks Corp. ............................................. 3,100 88,738
----------
367,469
----------
TOTAL REAL ESTATE INVESTMENT TRUSTS
(Cost $6,386,839)........................................ 5,664,648
----------
INVESTMENT COMPANIES -- 5.7%
Goldman Sachs Financial Square Prime Obligations Fund.... 76,226 76,226
Temporary Investment Fund --TempFund..................... 270,330 270,330
----------
TOTAL INVESTMENT COMPANIES
(Cost $346,556)..................................................... 346,556
----------
</TABLE>
<TABLE>
<CAPTION>
Par
(000) Value
----- -----
<S> <C> <C>
U.S. TREASURY OBLIGATIONS -- 4.1%
U.S. Treasury Bills
4.62%, 02/25/99............................................. $250 $ 247,365
----------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $247,354)............................................. 247,365
----------
TOTAL INVESTMENTS IN SECURITIES -- 103.4%
(Cost $6,980,749**)......................................... 6,258,569
LIABILITIES IN EXCESS OF OTHER ASSETS -- (3.4)% (209,141)
----------
NET ASSETS -- 100.0%
(equivalent to $8.83 per share based on 684,722 shares
outstanding)...................................................... $6,049,428
==========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($6,049,428 / 684,722)............................................. $ 8.83
==========
</TABLE>
- --------
* Non-income producing securities.
** Aggregate cost for Federal income tax purposes. The aggregate gross
unrealized appreciation (depreciation) for all securities is as follows:
<TABLE>
<S> <C>
Excess of value over tax cost.................................... $ 65,807
Excess of tax cost over value.................................... $(787,987)
</TABLE>
See Accompanying Notes to Financial Statements.
22
<PAGE>
M.S.D.&T. Funds, Inc.
LIMITED MATURITY BOND FUND
Statement of Net Assets
November 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Par
(000) Value
------- ------------
<S> <C> <C>
AGENCY OBLIGATIONS -- 13.9%
Federal Home Loan Mortgage Corp. -- 1.2%
Debentures
7.01%, 07/11/07.......................................... $ 1,000 $ 1,059,150
Mortgage Backed Securities
6.50%, 03/01/08 (Pool #E00201)........................... 112 113,530
6.50%, 10/01/12 (Pool #E67991)........................... 22 22,637
6.50%, 11/01/12 (Pool #E68311)........................... 757 768,651
------------
1,963,968
------------
Federal National Mortgage Association -- 2.0%
Notes
6.00%, 05/15/08.......................................... 2,000 2,106,040
Mortgage Backed Securities
6.00%, 07/01/08 (Pool #227994)........................... 536 537,131
7.50%, 05/01/09 (Pool #282608)........................... 442 454,388
------------
3,097,559
------------
Government National Mortgage Association -- 10.7%
Mortgage Backed Securities
8.00%, 11/15/06 (Pool #308751)........................... 156 161,197
8.00%, 12/15/06 (Pool #319511)........................... 44 46,095
6.50%, 12/15/08 (Pool #351994)........................... 157 160,449
6.50%, 01/15/09 (Pool #359462)........................... 173 176,114
6.00%, 01/15/09 (Pool #372668)........................... 576 578,721
8.00%, 04/15/09 (Pool #389481)........................... 182 188,288
8.00%, 11/15/09 (Pool #401484)........................... 485 502,653
6.00%, 01/15/11 (Pool #410492)........................... 124 124,446
6.00%, 02/15/11 (Pool #410497)........................... 524 526,895
6.50%, 03/15/11 (Pool #398485)........................... 140 143,206
6.50%, 03/15/11 (Pool #417313)........................... 1,211 1,234,684
6.50%, 04/15/11 (Pool #421869)........................... 80 81,200
6.50%, 01/15/12 (Pool #442244)........................... 72 73,646
6.50%, 03/15/12 (Pool #442139)........................... 190 193,859
6.00%, 05/15/13 (Pool #473931)........................... 261 261,928
6.00%, 06/15/13 (Pool #450885)........................... 1,498 1,505,653
6.00%, 06/15/13 (Pool #454567)........................... 477 479,988
6.00%, 06/15/13 (Pool #455133)........................... 1,071 1,076,315
6.00%, 06/15/13 (Pool #456934)........................... 2,465 2,477,594
6.00%, 06/15/13 (Pool #471748)........................... 988 992,886
6.00%, 06/15/13 (Pool #475396)........................... 978 983,277
6.00%, 07/15/13 (Pool #477619)........................... 1,346 1,352,855
6.00%, 07/15/13 (Pool #433894)........................... 3,552 3,570,742
------------
16,892,691
------------
TOTAL AGENCY OBLIGATIONS
(Cost $21,563,880)....................................... 21,954,218
------------
</TABLE>
<TABLE>
<CAPTION>
Par
(000) Value
------- ------------
<S> <C> <C>
CORPORATE BONDS -- 32.2%
Beverages -- 4.5%
Anheuser Busch Co. Inc.
5.375%, 09/15/08......................................... $ 2,000 $ 2,000,000
Coca-Cola Enterprises, Inc.
5.75%, 11/01/08.......................................... 1,000 997,500
Coca-Cola Enterprises Putable Asset Trust
6.00%, 03/15/01.......................................... 1,000 1,017,500
Pepsico Inc. Medium Term Note
5.75%, 01/02/03.......................................... 3,000 3,071,250
------------
7,086,250
------------
Chemicals -- 1.3%
E.I. duPont deNemours & Co. Medium Term Note
6.00%, 03/06/03.......................................... 2,000 2,057,500
------------
Electronics -- 1.1%
Motorola
5.80%, 10/15/08.......................................... 1,675 1,704,313
------------
Finance -- 11.7%
Associates Corp. North America
6.50%, 07/15/02.......................................... 2,000 2,067,500
CIT Group Holdings
6.375%, 08/01/02......................................... 3,500 3,605,000
Ford Motor Credit Corp.
6.00%, 01/14/03.......................................... 2,800 2,870,000
General Motors Acceptance Corp.
6.375%, 12/01/01......................................... 1,000 1,022,500
IBM Credit, Medium Term Note
5.76%, 05/15/01.......................................... 2,000 2,027,500
Merrill Lynch & Co., Inc.
6.00%, 02/12/03.......................................... 1,725 1,765,969
Norwest Financial, Inc.
6.00%, 08/01/99.......................................... 1,000 1,006,530
6.375%, 11/15/03......................................... 1,000 1,043,750
SunTrust Banks, Inc.
6.25%, 06/01/08.......................................... 2,000 2,085,000
Toyota Motor Credit
5.625%, 11/13/03......................................... 1,000 1,011,250
------------
18,504,999
------------
</TABLE>
See Accompanying Notes to Financial Statements.
23
<PAGE>
M.S.D.&T. Funds, Inc.
LIMITED MATURITY BOND FUND
Statement of Net Assets -- Continued
November 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Par
(000) Value
------- ------------
<S> <C> <C>
CORPORATE BONDS -- Continued
Foods -- 0.7%
Campbell Soup Co.
6.15%, 12/01/02.......................................... $ 1,000 $ 1,041,250
------------
Governments (Foreign) -- 1.9%
Deutsche Ausgleichsbank
5.125%, 09/22/03......................................... 2,000 2,013,400
Ontario Province Global Notes
5.50%, 10/01/08.......................................... 1,000 1,007,500
------------
3,020,900
------------
Oil & Gas Transmission -- 1.8%
Enron Corp.
6.625%, 11/15/05......................................... 2,750 2,849,688
------------
Printing & Publishing -- 1.3%
Dow Jones & Co. Inc.
5.75%, 12/01/00.......................................... 2,000 2,025,000
------------
Retail Merchandising -- 1.7%
Sears Roebuck Acceptance Corp.
6.34%, 10/12/00.......................................... 2,600 2,642,250
------------
Telecommunications -- 1.3%
World Com
6.125%, 08/15/01......................................... 2,000 2,032,500
------------
Utilities--Gas -- 4.3%
Baltimore Gas & Electric Co.
6.50%, 02/15/03.......................................... 3,000 3,161,250
Consolidated Natural Gas Co.
5.75%, 08/01/03.......................................... 475 487,469
Northern Illinois Gas Co.
5.875%, 05/01/00......................................... 500 500,000
6.45%, 08/01/01.......................................... 2,500 2,575,000
------------
6,723,719
------------
Utilities--Telephone -- 0.7%
Ameritech Capital Funding
6.125%, 10/15/01......................................... 1,200 1,230,000
------------
TOTAL CORPORATE BONDS
(Cost $49,794,198)....................................... 50,918,369
------------
</TABLE>
<TABLE>
<CAPTION>
Par
(000) Value
------- ------------
<S> <C> <C>
ASSET BACKED SECURITIES -- 8.6%
Auto Loan -- 3.4%
Banc One Auto Grantor Trust
6.27%, 11/20/03........................................ $ 1,797 $ 1,820,505
Ford Credit Auto Owner Trust
6.75%, 09/15/00........................................ 2,000 2,020,920
Premier Auto Trust
6.575%, 10/06/00....................................... 1,500 1,510,410
------------
5,351,835
------------
Credit Card -- 2.7%
Citibank Credit Card Master Trust
6.839%, 02/10/04....................................... 4,250 4,319,573
------------
Recreational Vehicles -- 1.9%
CIT RV Trust
5.99%, 05/15/09........................................ 3,000 3,022,500
------------
Utility -- 0.6%
California Infrastructure
6.17%, 03/25/03........................................ 1,000 1,013,200
------------
TOTAL ASSET-BACKED SECURITIES
(Cost $13,596,270)..................................... 13,707,108
------------
U.S. TREASURY OBLIGATIONS -- 36.9%
U.S. Treasury Notes
5.50%, 02/28/99........................................ 6,500 6,515,275
7.00%, 04/15/99........................................ 6,500 6,557,785
6.50%, 04/30/99........................................ 1,000 1,007,950
6.875%, 07/31/99....................................... 1,000 1,014,070
7.50%, 10/31/99........................................ 13,000 13,324,740
5.875%, 11/15/99....................................... 4,000 4,044,440
5.375%, 01/31/00....................................... 5,000 5,041,450
7.125%, 02/29/00....................................... 5,500 5,664,395
6.375%, 05/15/00....................................... 2,000 2,049,080
6.25%, 05/31/00........................................ 3,500 3,582,110
6.00%, 08/15/00........................................ 2,035 2,080,726
6.50%, 05/31/01........................................ 4,040 4,217,194
6.125%, 12/31/01....................................... 3,000 3,127,260
------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $57,099,614)..................................... 58,226,475
------------
</TABLE>
See Accompanying Notes to Financial Statements.
24
<PAGE>
M.S.D.&T. Funds, Inc.
LIMITED MATURITY BOND FUND
Statement of Net Assets -- Concluded
November 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Par
(000) Value
------- ------------
<S> <C> <C>
REPURCHASE AGREEMENTS -- 4.0%
Morgan Stanley & Co., Inc.
(Agreement dated 11/30/98 to be repurchased at
$3,000,426.67 collateralized by $2,190,000 (Value
$3,066,966.07) U.S. Treasury Notes, 12.00%, due 5/15/05)
5.12%, 12/01/98.......................................... $ 3,000 $ 3,000,000
NationsBanc Montgomery Securities LLC
(Agreement dated 11/30/98 to be repurchased at
$3,251,465.07 collateralized by $3,130,000 (Value
$3,324,157.81) U.S. Treasury Notes, 5.75%, due 8/15/03)
5.15%, 12/01/98.......................................... 3,251 3,251,000
------------
TOTAL REPURCHASE AGREEMENTS
(Cost $6,251,000)........................................ 6,251,000
------------
</TABLE>
<TABLE>
<CAPTION>
Number of
Shares Value
--------- ------------
<S> <C> <C>
INVESTMENT COMPANIES -- 3.8%
Goldman Sachs Financial Square Prime Obligations Fund... 2,000 $ 2,000,000
Temporary Investment Fund--TempFund..................... 4,000 4,000,000
------------
TOTAL INVESTMENT COMPANIES
(Cost $6,000,000)...................................... 6,000,000
------------
TOTAL INVESTMENTS IN SECURITIES -- 99.4%
(Cost $154,304,962*) ............................................. 157,057,170
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.6% ..................... 877,754
------------
NET ASSETS -- 100.0%
(equivalent to $10.56 per share based on 14,957,561 shares
outstanding)..................................................... $157,934,924
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($157,934,924 / 14,957,561)....................................... $10.56
======
</TABLE>
- --------
* Aggregate cost for Federal income tax purposes. The aggregate gross
unrealized appreciation (depreciation) for all securities is as follows:
<TABLE>
<S> <C>
Excess of value over tax cost................................... $2,753,400
Excess of tax cost over value................................... $ (1,192)
</TABLE>
See Accompanying Notes to Financial Statements.
25
<PAGE>
M.S.D.&T. Funds, Inc.
TOTAL RETURN BOND FUND
Statement of Net Assets
November 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Par
(000) Value
------- ------------
<S> <C> <C>
AGENCY OBLIGATIONS -- 47.5%
Federal Home Loan Bank -- 1.9%
Mortgage Backed Securities
6.185%, 06/07/00...................................... $ 1,500 $ 1,528,485
5.125%, 09/15/03...................................... 500 502,380
------------
2,030,865
------------
Federal Home Loan Mortgage Corp. -- 8.4%
Debentures
7.30%, 08/24/06....................................... 1,000 1,056,880
Mortgage Backed Securities
6.25%, 12/15/16 (Pool #C2018PA)....................... 250 255,150
6.175%, 08/15/18 (Pool #2035)......................... 500 517,905
6.50%, 09/01/24 (Pool #G00320)........................ 2,431 2,451,602
7.50%, 07/01/26 (Pool #D72963)........................ 292 300,684
7.50%, 10/01/27 (Pool #D82914)........................ 319 327,768
6.50%, 10/01/27 (Pool #D83095)........................ 41 41,379
6.50%, 10/01/27 (Pool #D83337)........................ 980 988,475
6.50%, 10/01/27 (Pool #C00561)........................ 33 33,657
7.00%, 11/01/27 (Pool #D83947)........................ 2,048 2,092,586
6.00%, 05/01/28 (Pool #786307)........................ 914 934,204
------------
9,000,290
------------
Federal National Mortgage Association -- 21.9%
Debentures
6.30%, 12/03/01....................................... 600 600,030
5.875%, 02/02/06...................................... 2,750 2,868,030
Medium Term Notes
6.50%, 12/27/01....................................... 250 253,880
7.14%, 03/12/07....................................... 245 259,592
7.00%, 08/27/12....................................... 1,000 1,080,040
Mortgage Backed Securities
7.00%, 04/01/04 (Pool #377898)........................ 229 233,756
7.50%, 10/01/07 (Pool #177233)........................ 139 143,099
6.00%, 01/01/09 (Pool #265989)........................ 1,375 1,377,325
7.00%, 04/01/11 (Pool #338884)........................ 517 528,780
5.70%, 06/25/17 (Pool #X-225C)........................ 871 869,295
6.00%, 11/18/17 (Pool #1998-26)....................... 1,250 1,250,138
7.50%, 08/01/26 (Pool #349416)........................ 231 237,546
8.00%, 09/01/26 (Pool #250675)........................ 438 453,838
7.00%, 04/01/27 (Pool #313458)........................ 641 654,897
5.982%, 04/01/27 (Pool #378044)....................... 1,775 1,816,442
8.00%, 08/01/27 (Pool #392496)........................ 626 648,567
8.00%, 09/01/27 (Pool #398392)........................ 57 59,265
</TABLE>
<TABLE>
<CAPTION>
Par
(000) Value
------- ------------
<S> <C> <C>
AGENCY OBLIGATIONS -- Continued
Federal National Mortgage Association -- Continued
8.00%, 10/01/27 (Pool # 331320).......................... $ 142 $ 147,335
7.50%, 10/01/27 (Pool #395593)........................... 843 867,585
8.00%, 10/01/27 (Pool #395770)........................... 18 18,869
7.50%, 10/01/27 (Pool #396031)........................... 954 981,445
7.00%, 10/01/27 (Pool #398928)........................... 335 341,748
6.50%, 10/01/27 (Pool #399065)........................... 454 457,614
8.00%, 10/01/27 (Pool #399081)........................... 796 824,399
8.00%, 10/01/27 (Pool #402178)........................... 433 448,707
7.00%, 11/01/27 (Pool #251286)........................... 877 895,642
6.50%, 11/01/27 (Pool #402786)........................... 181 182,418
6.50%, 12/01/27 (Pool #354802)........................... 633 638,157
6.50%, 01/01/28 (Pool #406700)........................... 1,811 1,825,057
6.00%, 10/01/28 (Pool #445789)........................... 999 986,940
6.50%, 12/10/28 (Pool #TBA).............................. 1,500 1,507,031
------------
23,457,467
------------
Government National Mortgage Association -- 14.3%
Mortgage Backed Securities
9.00%, 05/15/16 (Pool #163606)........................... 18 18,735
9.00%, 11/15/16 (Pool #181127)........................... 191 203,268
9.00%, 11/15/16 (Pool #183984)........................... 5 4,876
9.00%, 01/15/17 (Pool #175218)........................... 4 4,347
8.00%, 05/15/17 (Pool #180719)........................... 55 57,666
8.00%, 05/15/17 (Pool #217626)........................... 107 111,815
9.00%, 09/15/17 (Pool #222594)........................... 78 83,163
9.00%, 04/15/18 (Pool #236277)........................... 16 16,663
10.00%, 09/15/18 (Pool #255652).......................... 27 29,050
10.00%, 05/15/19 (Pool #274305).......................... 37 40,812
9.00%, 11/15/19 (Pool #247019)........................... 86 92,102
9.00%, 06/15/21 (Pool #305720)........................... 96 102,028
9.00%, 06/15/21 (Pool #309078)........................... 176 187,493
9.00%, 07/15/21 (Pool #309027)........................... 80 85,494
9.00%, 07/15/21 (Pool #309084)........................... 108 115,291
9.00%, 08/15/21 (Pool #296154)........................... 105 112,205
9.00%, 08/15/21 (Pool #306259)........................... 114 121,425
9.00%, 09/15/21 (Pool #272061)........................... 51 54,725
9.00%, 09/15/21 (Pool #305911)........................... 74 78,981
9.00%, 09/15/21 (Pool #308283)........................... 140 149,498
9.00%, 09/15/21 (Pool #308920)........................... 115 122,367
9.00%, 09/15/21 (Pool #313023)........................... 32 34,009
9.00%, 09/15/21 (Pool #314939)........................... 40 42,107
8.00%, 02/15/23 (Pool #332531)........................... 1,406 1,464,410
7.00%, 05/20/24 (Pool #1716)............................. 183 186,857
</TABLE>
See Accompanying Notes to Financial Statements.
26
<PAGE>
M.S.D.&T. Funds, Inc.
TOTAL RETURN BOND FUND
Statement of Net Assets -- Continued
November 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Par
(000) Value
------- ------------
<S> <C> <C>
AGENCY OBLIGATIONS -- Continued
Government National Mortgage Association -- Continued
7.00%, 10/15/25 (Pool #409958)........................... $ 399 $ 408,953
7.00%, 01/15/26 (Pool #382719)........................... 339 347,465
7.00%, 01/15/26 (Pool #422404)........................... 297 303,869
6.50%, 02/15/26 (Pool #405214)........................... 146 147,650
7.00%, 02/15/26 (Pool #421686)........................... 1,002 1,026,994
6.50%, 02/15/26 (Pool #425085)........................... 112 113,041
6.50%, 03/15/26 (Pool #395468)........................... 203 205,720
7.00%, 01/15/27 (Pool #436748)........................... 416 425,822
7.00%, 02/15/27 (Pool #428935)........................... 408 418,513
7.00%, 08/15/27 (Pool #443508)........................... 320 327,711
8.50%, 08/15/27 (Pool #453213)........................... 402 425,649
6.50%, 08/20/27 (Pool #80104)............................ 1,689 1,712,822
8.00%, 09/15/27 (Pool #453740)........................... 251 261,555
7.00%, 09/15/27 (Pool #453980)........................... 327 335,358
7.00%, 09/15/27 (Pool #454825)........................... 34 35,345
7.00%, 10/15/27 (Pool #445227)........................... 335 343,020
7.00%, 10/15/27 (Pool #453576)........................... 110 113,025
7.00%, 10/15/27 (Pool #455319)........................... 294 301,716
7.00%, 11/15/27 (Pool #452737)........................... 447 458,093
7.00%, 12/15/27 (Pool #443780)........................... 416 426,676
7.00%, 04/15/28 (Pool #471672)........................... 61 62,350
6.50%, 07/15/28 (Pool #468090)........................... 986 996,834
6.00%, 08/15/28 (Pool #465553)........................... 549 544,783
6.00%, 08/15/28 Pool #471573)............................ 156 154,645
6.00%, 09/15/28 Pool #488125)............................ 304 301,267
6.50%, 12/17/28 (Pool #TBA).............................. 1,500 1,512,656
------------
15,230,919
------------
Tennessee Valley Authority -- 1.0%
Debentures
6.00%, 11/01/00.......................................... 1,000 1,017,500
------------
TOTAL AGENCY OBLIGATIONS
(Cost $49,641,383)....................................... 50,737,041
------------
CORPORATE BONDS -- 19.6%
Automotive -- 1.9%
General Motors Acceptance Corp.
6.375%, 12/01/01......................................... 2,000 2,045,000
------------
Banking and Financial Services -- 7.2%
American Express
6.25%, 08/10/05.......................................... 1,000 1,012,500
</TABLE>
<TABLE>
<CAPTION>
Par
(000) Value
------- ------------
<S> <C> <C>
CORPORATE BONDS -- Continued
Banking and Financial Services -- Continued
Associates Corp.
6.25%, 11/01/08........................................ $ 1,000 $ 1,031,250
Chrysler Financial Corp.
5.88%, 12/21/98........................................ 800 800,388
CIT Group
5.625%, 10/15/03....................................... 1,000 990,000
Ford Motor Credit Corp.
8.00%, 01/15/99........................................ 325 326,080
General Motors Acceptance Corp.
7.125%, 05/01/01....................................... 400 414,500
Merrill Lynch
6.000%, 02/12/03....................................... 1,000 1,023,750
SunTrust Banks, Inc.
6.250%, 06/01/08....................................... 2,000 2,085,000
------------
7,683,468
------------
Beverages -- 1.4%
Anheuser Busch Co., Inc.
6.75%, 06/01/05........................................ 500 522,500
Coca-Cola Enterprises, Inc.
5.75%, 11/01/08........................................ 1,000 997,500
------------
1,520,000
------------
Electrical and Electronic -- 4.4%
IBM Corp.
6.50%, 01/15/28........................................ 2,500 2,656,250
Motorola
5.80%, 10/15/08........................................ 1,000 1,017,500
6.50%, 11/15/28........................................ 1,050 1,084,125
------------
4,757,875
------------
Foreign Agencies -- 3.0%
Republic of Korea
8.875%, 04/15/08....................................... 1,750 1,756,563
Manitoba Province Canada
6.125%, 01/19/04....................................... 1,000 1,038,750
Mexico
6.25%, 12/31/19........................................ 500 386,875
------------
3,182,188
------------
Petroleum -- 0.2%
Mobil Oil Co.
9.17%, 02/29/00........................................ 221 223,208
------------
</TABLE>
See Accompanying Notes to Financial Statements.
27
<PAGE>
M.S.D.&T. Funds, Inc.
TOTAL RETURN BOND FUND
Statement of Net Assets -- Concluded
November 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Par
(000) Value
------- ------------
<S> <C> <C>
CORPORATE BONDS -- Continued
Transportation & Shipping -- 1.0%
Union Pacific
7.25%, 11/01/08........................................ $ 1,000 $ 1,040,000
------------
Utilities--Electric -- 0.5%
Duke Power Co.
7.50%, 04/01/99........................................ 500 503,750
------------
TOTAL CORPORATE BONDS
(Cost $20,272,001)..................................... 20,955,489
------------
ASSET BACKED SECURITIES -- 9.6%
Auto Loan -- 5.1%
BancOne Auto Grantor Trust
6.27%, 11/20/03........................................ 1,320 1,336,771
Barnett Auto Trust
6.03%, 11/15/01........................................ 2,400 2,453,304
Chase Manhattan Grantor Trust
6.00%, 09/17/01........................................ 416 416,624
Premier Auto Trust
6.35%, 04/06/02........................................ 1,170 1,202,876
------------
5,409,575
------------
Credit Card -- 4.5%
Chase Credit Card Master Trust
6.30%, 04/15/03........................................ 1,000 1,016,020
Citibank Credit Card Master Trust
6.839%, 02/10/04....................................... 3,750 3,811,388
------------
4,827,408
------------
TOTAL ASSET-BACKED SECURITIES
(Cost $10,108,302)..................................... 10,236,983
------------
U.S. TREASURY OBLIGATIONS -- 12.5%
U.S. Treasury Notes
5.125%, 12/31/98....................................... 1,000 1,000,712
6.50%, 04/30/99........................................ 1,100 1,108,745
4.75%, 11/15/08........................................ 2,150 2,152,688
U.S. Treasury Bonds
8.00%, 11/15/21........................................ 1,000 1,349,500
6.25%, 08/15/23........................................ 1,500 1,690,395
6.875%, 08/15/25....................................... 3,100 3,787,920
6.125%, 11/15/27....................................... 2,000 2,258,920
------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $11,912,066)..................................... 13,348,880
------------
</TABLE>
<TABLE>
<CAPTION>
Par
(000) Value
------- ------------
<S> <C> <C>
REPURCHASE AGREEMENTS -- 9.6%
Morgan Stanley & Co., Inc.
(Agreement dated 11/30/98 to be repurchased at
$10,319,467 collateralized by $9,745,000 (Value
$10,529,496) U.S. Treasury Notes, 8%, due 5/15/01)
5.12%, 12/01/98.......................................... $10,318 $ 10,318,000
------------
TOTAL REPURCHASE AGREEMENT
(Cost $10,318,000)....................................... 10,318,000
------------
</TABLE>
<TABLE>
<CAPTION>
Number of
Shares Value
--------- -----
<S> <C> <C>
INVESTMENT COMPANY -- 3.6%
Goldman Sachs Financial Square Prime Obligations Fund.. 3,830,705 3,830,705
------------
TOTAL INVESTMENT COMPANY
(Cost $3,830,705)..................................... 3,830,705
------------
TOTAL INVESTMENTS IN SECURITIES -- 102.4%
(Cost $106,082,457*)............................................ 109,427,098
LIABILITIES IN EXCESS OF OTHER ASSETS -- (2.4)%.................. (2,573,609)
------------
NET ASSETS -- 100.0%
(equivalent to $10.19 per share based on 10,490,987 shares
outstanding).................................................... $106,853,489
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($106,853,489 / 10,490,987)..................................... $10.19
======
</TABLE>
- --------
* Cost for Federal income tax purposes is $106,152,707. The aggregate gross
unrealized appreciation (depreciation) for all securities is as follows:
<TABLE>
<S> <C>
Excess of value over tax cost................................. $ 3,324,564
Excess of tax cost over value................................. $ (50,173)
</TABLE>
See Accompanying Notes to Financial Statements.
28
<PAGE>
M.S.D.&T. Funds, Inc.
MARYLAND TAX-EXEMPT BOND FUND
Statement of Net Assets
November 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Par
(000) Value
------- -----------
<S> <C> <C>
MARYLAND -- 99.0%
Allegany County, PCRB, Westvaco Corp. Project
5.90%, 07/01/04.......................................... $ 200 $ 216,500
Annapolis, GO, CPI
5.00%, 11/01/16.......................................... 440 448,800
Anne Arundel County, GO, CGI
5.30%, 07/15/12.......................................... 400 419,000
Baltimore City, GO, CPI, INS: FGIC
5.00%, 10/15/16.......................................... 500 507,500
Baltimore City, RB, Waste Water Project, INS: FGIC
5.50%, 07/01/26.......................................... 300 315,750
Baltimore County, GO, Refunding --CPI
5.20%, 04/01/09.......................................... 400 420,500
Calvert County, GO
5.05%, 01/01/01.......................................... 850 874,437
Carroll County, GO, CPI
4.80%, 12/01/12.......................................... 855 879,581
Charles County, GO
6.25%, 06/01/02.......................................... 500 540,625
4.40%, 06/01/03.......................................... 350 358,750
Frederick County, GO
5.00%, 08/01/09.......................................... 500 525,000
4.20%, 07/01/11.......................................... 500 489,375
Harford County, GO, CPI, UT
5.60%, 09/01/06.......................................... 325 348,969
5.00%, 12/01/14.......................................... 250 257,812
Howard County, GO, CPI, Prerefunded @ 102
5.25%, 08/15/09.......................................... 180 194,175
Howard County, GO, CPI, Unrefunded Balance
5.25%, 08/15/09.......................................... 220 234,300
Howard County, GO, CPI
5.25%, 08/15/12.......................................... 250 269,062
Maryland National Capital Park & Planning Commission --
Prince George's County, GO
6.90%, 07/01/99.......................................... 250 255,375
</TABLE>
<TABLE>
<CAPTION>
Par
(000) Value
------- -----------
<S> <C> <C>
MARYLAND -- Continued
Maryland National Capital Park & Planning Commission --
Prince George's County, GO, Prerefunded @ 102
5.15%, 07/01/11.......................................... $ 10 $ 10,712
Maryland National Capital Park & Planning Commission --
Prince George's County, GO, Unrefunded Balance
5.15%, 07/01/11.......................................... 290 301,962
Maryland State & Local Facilities, GO
4.75%, 03/01/05.......................................... 750 785,625
Maryland State Community Development, RB, Administration
Department of Housing & Community Development
5.00%, 01/01/05.......................................... 860 894,400
5.125%, 06/01/17......................................... 325 328,656
5.05%, 05/15/18.......................................... 250 250,625
5.15%, 06/01/22.......................................... 390 393,900
Maryland State Health & Higher Educational Facilities
Authority, RB, Anne Arundel County Medical Center, INS:
FSA
5.125%, 07/01/28......................................... 865 876,894
Maryland State Health & Higher Educational Facilities
Authority, RB, College of Notre Dame, INS: MBIA
4.45%, 10/01/12.......................................... 290 287,463
Maryland State Health & Higher Educational Facilities
Authority, RB, Francis Scott Key Medical Center, INS:
FGIC
5.00%, 07/01/23.......................................... 400 400,500
Maryland State Health & Higher Educational Facilities
Authority, RB, Howard County General Hospital, ETM
5.50%, 07/01/21.......................................... 335 355,937
</TABLE>
See Accompanying Notes to Financial Statements.
29
<PAGE>
M.S.D.&T. Funds, Inc.
MARYLAND TAX-EXEMPT BOND FUND
Statement of Net Assets -- Continued
November 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Par
(000) Value
------- -----------
<S> <C> <C>
MARYLAND -- Continued
Maryland State Health & Higher Educational Facilities
Authority, RB, Johns Hopkins Hospital
5.00%, 07/01/23.......................................... $ 300 $ 296,625
Maryland State Health & Higher Educational Facilities
Authority, RB, Johns Hopkins University
5.25%, 07/01/17.......................................... 500 513,750
Maryland State Health & Higher Educational Facilities
Authority, RB, Loyola College, INS: MBIA
5.375%, 10/01/26......................................... 550 571,312
Maryland State Health & Higher Educational Facilities
Authority, RB, University of Maryland Medical System,
INS: FGIC
5.40%, 07/01/07.......................................... 300 322,125
Maryland State Stadium Authority Sports Facilities, RB
5.300%, 03/01/01......................................... 660 683,100
Maryland State Stadium Authority Lease Revenue, RB, Ocean
City Convention Center
5.375%, 12/15/15......................................... 400 412,000
Maryland State Transportation Authority, RB
4.60%, 12/15/02.......................................... 500 516,875
5.50%, 07/01/03.......................................... 800 854,000
5.75%, 07/01/15.......................................... 150 154,688
Maryland Water Quality Financing Administration, RB,
Revolving Loan Fund
5.50%, 09/01/11.......................................... 200 211,750
5.40%, 09/01/12.......................................... 300 311,250
Montgomery County, GO, CPI
4.875%, 05/01/09......................................... 350 372,313
4.90%, 10/01/10.......................................... 500 519,375
Montgomery County Revenue Authority, RB, Olney Indoor Swim
Project
5.25%, 10/01/12.......................................... 250 260,625
</TABLE>
<TABLE>
<CAPTION>
Par
(000) Value
------- -----------
<S> <C> <C>
MARYLAND -- Continued
Montgomery County, RB, Housing Opportunity Community
Housing Multi-Family, Avalon Knoll, FNMA COLL
5.70%, 07/01/10........................................... $ 150 $ 160,688
Prince George's County, GO, CPI, INS: MBIA
5.25%, 03/15/03........................................... 500 528,125
5.25%, 03/15/15........................................... 400 418,000
Saint Mary's County, GO, CPI, INS: MBIA
4.10%, 07/01/00........................................... 550 556,188
4.60%, 09/01/04........................................... 500 518,125
University of Maryland System Auxiliary Facilities &
Tuition RB
5.000%, 04/01/05.......................................... 250 264,375
5.125%, 04/01/13.......................................... 400 413,000
Washington County, GO, Refunding-- CPI UT, INS: FGIC
5.25%, 01/01/06........................................... 200 212,750
Washington Suburban Sanitary District, GO, General
Construction
5.10%, 06/01/16........................................... 300 308,250
Washington Suburban Sanitary District, GO, Water Supply
5.25%, 06/01/16........................................... 250 267,188
Wicomico County, GO, CPI, INS: MBIA
3.75%, 12/01/98........................................... 500 500,007
Worcester County, GO, CPI
5.00%, 08/01/99........................................... 500 506,050
-----------
TOTAL MUNICIPAL BONDS
(Cost $22,465,643)........................................ 23,094,719
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
30
<PAGE>
M.S.D.&T. Funds, Inc.
MARYLAND TAX-EXEMPT BOND FUND
Statement of Net Assets -- Concluded
November 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Number
of Shares Value
--------- -----------
<S> <C> <C>
INVESTMENT COMPANIES -- 0.8%
Goldman Sachs Financial Square Tax-Free Money Market
Fund.................................................... 105,651 $ 105,651
Municipal Fund for Temporary Investments--MuniFund....... 71,633 71,633
-----------
TOTAL INVESTMENT COMPANIES
(Cost $177,284)......................................... 177,284
-----------
TOTAL INVESTMENTS IN SECURITIES -- 99.8%
(Cost $22,642,927*)................................................ 23,272,003
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.2%....................... 46,687
-----------
NET ASSETS -- 100.0%
(equivalent to $10.95 per share based on 2,130,078 shares
outstanding)....................................................... $23,318,690
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($23,318,690 / 2,130,078).......................................... $10.95
======
</TABLE>
- --------
* Aggregate cost for Federal income tax purposes. The aggregate gross
unrealized appreciation (depreciation) for all securities is as follows:
<TABLE>
<S> <C>
Excess of value over tax cost..................................... $639,292
Excess of tax cost over value..................................... $(10,216)
</TABLE>
See Accompanying Notes to Financial Statements.
31
<PAGE>
M.S.D.&T. Funds, Inc.
INTERMEDIATE TAX-EXEMPT BOND FUND
Statement of Net Assets
November 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Par
(000) Value
------ -----------
<S> <C> <C>
Connecticut -- 1.1%
Connecticut State, GO
5.50%, 10/01/00........................................... $1,000 $ 1,036,250
-----------
Delaware -- 2.2%
Delaware State, GO
5.00%, 04/01/01........................................... 2,000 2,060,000
-----------
District of Columbia -- 3.5%
District of Columbia, RB, Howard University, INS: MBIA
5.25%, 10/01/02........................................... 3,040 3,207,200
-----------
Florida -- 6.7%
Broward County Water & Sewer, RB, INS: AMBAC
4.30%, 10/01/00........................................... 2,500 2,540,625
Florida Gas Utility, RB, INS: FSA
4.00%, 12/01/04........................................... 1,790 1,794,475
Jacksonville Electric Authority, RB, St Johns River
6.40%, 10/01/00........................................... 1,750 1,848,438
-----------
6,183,538
-----------
Georgia -- 6.1%
Fulton County, GO
4.70%, 01/01/02........................................... 1,300 1,335,750
Private Colleges & Universities Authority, RB, Emory
University
5.375%, 11/01/05.......................................... 4,000 4,325,000
-----------
5,660,750
-----------
Illinois -- 4.7%
Illinois State Civic Center, RB, INS: AMBAC
5.00%, 12/15/07........................................... 2,105 2,236,563
Illinois State, GO, INS: FGIC
5.25%, 07/01/02........................................... 2,000 2,102,500
-----------
4,339,063
-----------
Kentucky -- 2.3%
Kentucky State Turnpike Authority, RB, Economic Development
Road Revenue, INS: AMBAC
5.00%, 07/01/02........................................... 2,000 2,087,500
-----------
</TABLE>
<TABLE>
<CAPTION>
Par
(000) Value
------ -----------
<S> <C> <C>
Louisiana -- 2.3%
Louisiana State, GO, INS: FGIC
5.50%, 04/15/02........................................... $2,000 $ 2,107,500
-----------
Maryland -- 6.0%
Calvert County, GO
5.05%, 01/01/01........................................... 150 154,313
Howard County, GO, CPI, Prerefunded @ 100
5.75%, 02/15/02........................................... 1,000 1,046,250
Maryland State, GO, State & Local Facilities
5.20%, 10/15/01........................................... 1,000 1,043,750
5.00%, 03/15/00........................................... 2,000 2,042,500
Maryland State Stadium Authority Sports, RB
5.30%, 03/01/01........................................... 600 621,000
Maryland Transportation Authority, RB
5.50%, 07/01/03........................................... 200 213,500
St. Mary's County, GO, Public Facilities and Hospital, INS:
AMBAC
4.10%, 07/01/00........................................... 450 455,063
-----------
5,576,376
-----------
Massachusetts -- 7.6%
Massachusetts State, GO, Construction Loan, INS: MBIA
5.00%, 01/01/01........................................... 1,420 1,459,050
Massachusetts State, GO, Construction Loan, INS: FGIC
5.00%, 06/01/01........................................... 1,260 1,300,950
Massachusetts State, GO
5.50%, 11/01/01........................................... 1,000 1,051,250
Massachusetts Highway Grant Anticipation Note, RB
5.25%, 06/15/08........................................... 3,000 3,236,250
-----------
7,047,500
-----------
Michigan -- 7.5%
East China School District, GO, INS: FGIC
5.00%, 05/01/07........................................... 2,000 2,122,500
</TABLE>
See Accompanying Notes to Financial Statements.
32
<PAGE>
M.S.D.&T. Funds, Inc.
INTERMEDIATE TAX-EXEMPT BOND FUND
Statement of Net Assets -- Continued
November 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Par
(000) Value
------ -----------
<S> <C> <C>
Michigan -- Continued
Michigan Municipal Bond Authority, RB, Pooled Project
5.75%, 10/01/05........................................... $2,120 $ 2,332,000
Michigan State University, RB
5.00%, 08/15/07........................................... 2,380 2,525,775
-----------
6,980,275
-----------
Minnesota -- 1.1%
St Paul, GO
5.40%, 03/01/99........................................... 1,000 1,005,620
-----------
Missouri -- 1.2%
Kansas City, RB, Water
5.60%, 12/01/01........................................... 1,020 1,074,825
-----------
New Mexico -- 5.5%
Albuquerque Water & Sewer, RB
5.50%, 07/01/01........................................... 1,000 1,045,000
New Mexico Highway, RB
4.25%, 06/15/05........................................... 4,090 4,090,000
-----------
5,135,000
-----------
New York -- 3.5%
New York State, GO
5.00%, 09/15/04........................................... 3,100 3,258,875
-----------
North Carolina -- 2.3%
Greensboro, GO, CPI, Prerefunded @102
6.25%, 03/01/02........................................... 1,000 1,096,250
Wake County, GO
4.80%, 03/01/02........................................... 1,000 1,035,000
-----------
2,131,250
-----------
Ohio -- 1.1%
Ohio State Public Facilities Commission, RB, Higher
Educational Capital Facilities
4.75%, 05/01/01........................................... 1,000 1,026,250
-----------
Pennsylvania -- 7.4%
Bristol Township School District, GO, Prerefunded @ 102,
INS: MBIA
6.625%, 02/15/12.......................................... 2,000 2,210,000
</TABLE>
<TABLE>
<CAPTION>
Par
(000) Value
------ -----------
<S> <C> <C>
Pennsylvania -- Continued
Pennsylvania State Higher Education, RB, Temple University,
INS: MBIA
5.00%, 04/01/05............................................ $2,005 $ 2,110,263
Pennsylvania State, GO
4.625%, 05/01/00........................................... 1,000 1,016,250
Pennsylvania State, GO, INS: AMBAC
5.125%, 03/15/02........................................... 1,440 1,503,000
-----------
6,839,513
-----------
South Carolina -- 2.8%
South Carolina Transportation, RB, INS: MBIA
5.00%, 10/01/04............................................ 2,495 2,638,461
-----------
Texas -- 3.4%
Harris County, GO, Permanent Improvement
5.80%, 10/01/99............................................ 1,000 1,022,180
San Antonio Electric & Gas, RB
5.00%, 02/01/05............................................ 2,000 2,102,500
-----------
3,124,680
-----------
Utah -- 4.3%
Alpine School District, GO
5.40%, 03/15/04............................................ 3,820 3,977,575
-----------
Virginia -- 1.1%
Virginia State Transportation Board, RB, Route 28 Project
5.80%, 04/01/01............................................ 1,000 1,046,250
-----------
Washington -- 8.9%
King County School District, Number 403 Renton, GO
4.75%, 06/01/04............................................ 3,910 4,051,737
Washington State, GO
6.60%, 02/01/02............................................ 1,000 1,085,000
5.500%, 09/01/03........................................... 2,900 3,110,250
-----------
8,246,987
-----------
Wisconsin -- 3.0%
Fox Valley Technical College, GO
4.60%, 04/01/07............................................ 2,690 2,767,337
-----------
TOTAL MUNICIPAL BONDS
(Cost $87,182,367)......................................... 88,558,575
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
33
<PAGE>
M.S.D.&T. Funds, Inc.
INTERMEDIATE TAX-EXEMPT BOND FUND
Statement of Net Assets -- Concluded
November 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Number
of Shares Value
--------- -----------
<S> <C> <C>
INVESTMENT COMPANIES -- 5.9%
Goldman Sachs Financial Square Tax-Free Money Market
Fund................................................... 3,970,632 $ 3,970,632
Municipal Fund for Temporary Investments--MuniFund...... 1,488,764 1,488,764
-----------
TOTAL INVESTMENT COMPANIES
(Cost $5,459,396)...................................... 5,459,396
-----------
TOTAL INVESTMENTS IN SECURITIES -- 101.5%
(Cost $92,641,763*)............................................... 94,017,971
LIABILITIES IN EXCESS OF OTHER ASSETS -- (1.5)%.................... (1,394,511)
-----------
NET ASSETS -- 100.0%
(equivalent to $10.14 per share based on 9,132,350 shares
outstanding)...................................................... $92,623,460
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($92,623,460 / 9,132,350)......................................... $10.14
======
</TABLE>
* Aggregate cost for Federal income tax purposes. The aggregate gross
unrealized appreciation (depreciation) for all securities is as follows:
<TABLE>
<S> <C>
Excess of value over tax cost................................... $1,479,056
Excess of tax cost over value................................... $ (102,848)
</TABLE>
See Accompanying Notes to Financial Statements.
34
<PAGE>
M.S.D.&T. Funds, Inc.
NATIONAL TAX-EXEMPT BOND FUND
Statement of Net Assets
November 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Par
(000) Value
------- ------------
<S> <C> <C>
Arizona -- 3.3%
Phoenix Civic Improvement Corp, Waste Water System Lease,
RB
5.70%, 07/01/03......................................... $ 5,580 $ 5,998,500
------------
Colorado -- 0.9%
Colorado Springs, RB, Utility Revenue, ETM
5.875%, 11/15/17........................................ 1,500 1,698,750
------------
Delaware -- 1.0%
Delaware State Economic Development Authority, RB,
Osteopathic Hospital Assoc., ETM
6.75%, 01/01/13......................................... 1,500 1,768,125
------------
Florida -- 4.5%
Brevard County, GO, INS: AMBAC
5.375%, 09/01/11........................................ 1,180 1,299,475
Florida State, GO, Jacksonville Transportation,
Prerefunded @ 101
6.40%, 07/01/22......................................... 2,500 2,746,875
Florida State Board of Education, GO, Public Education
5.50%, 06/01/14......................................... 1,860 1,969,275
Seacoast Florida Authority Water & Sewer, RB, INS: FGIC
5.50%, 03/01/16......................................... 2,000 2,190,000
------------
8,205,625
------------
Illinois -- 2.5%
Illinois Education Facility Authority, The Art Institute
of Chicago, RB
4.65%, 03/01/30......................................... 2,405 2,405,000
Illinois State, GO, Prerefunded @102
6.60%, 06/01/09......................................... 2,000 2,177,500
------------
4,582,500
------------
Maryland -- 10.3%
Anne Arundel County, GO
5.00%, 09/01/12......................................... 2,000 2,080,000
Baltimore County, GO, CPI
5.25%, 06/01/11......................................... 1,000 1,067,500
Baltimore County Metro District, GO
6.80%, 04/01/00......................................... 1,000 1,045,000
</TABLE>
<TABLE>
<CAPTION>
Par
(000) Value
------- ------------
<S> <C> <C>
Maryland -- Continued
Carroll County, GO, CPI
5.125%, 12/01/13........................................ $ 1,000 $ 1,038,750
Howard County, GO, CPI,
Partially Prerefunded @102
5.25%, 02/15/06......................................... 1,670 1,774,375
Howard County, GO,
Prerefunded @ 102
5.25%, 08/15/09......................................... 450 485,438
Howard County, GO,
Unrefunded Balance
5.25%, 08/15/09......................................... 550 585,750
Maryland National Capital Park & Planning Commission --
Prince George's County, GO, Prerefunded @ 101
5.00%, 07/01/08......................................... 190 202,825
Maryland National Capital Park & Planning Commission --
Prince George's County, GO,
Unrefunded Balance
5.00%, 07/01/08......................................... 810 858,600
Maryland State Community Development, RB,
Administration Department of
Housing & Community
Development, Multi-Family
6.70%, 05/15/27......................................... 1,000 1,068,750
Maryland State Community Development, RB,
Administration Department of
Housing & Community
Development, Single Family
6.55%, 04/01/17......................................... 1,330 1,418,113
Maryland State Department of Transportation, RB,
Prerefunded @100.75
6.10%, 09/01/01......................................... 1,095 1,152,488
Maryland State Health & Higher Education Facilities
Authority, RB, Anne Arundel Medical Center, INS: FSA
5.125%, 07/01/28........................................ 150 152,063
</TABLE>
See Accompanying Notes to Financial Statements.
35
<PAGE>
M.S.D.&T. Funds, Inc.
NATIONAL TAX-EXEMPT BOND FUND
Statement of Net Assets -- Continued
November 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Par
(000) Value
------- ------------
<S> <C> <C>
Maryland -- Continued
Maryland State Health & Higher Education Facilities
Authority, RB, Loyola College, INS: MBIA
5.375%, 10/01/26........................................ $ 2,000 $ 2,077,500
Montgomery County, GO, CPI
5.50%, 04/01/06......................................... 1,000 1,062,500
Prince George's County, RB, Pkg Authority Revenue Justice
Center Facility Project
6.35%, 05/01/04......................................... 1,000 1,083,750
Washington Suburban Sanitary District, GO
5.25%, 06/01/16......................................... 1,400 1,496,250
------------
18,649,652
------------
Massachusetts -- 8.6%
Massachusetts Bay Transportation, RB, INS: FGIC
5.75%, 03/01/10......................................... 4,000 4,495,000
Massachusetts State, GO, Construction Loan
4.25%, 03/01/99......................................... 2,775 2,782,937
Massachusetts Highway Grant Anticipation Note, RB
5.25%, 06/15/08......................................... 2,000 2,157,500
Massachusetts State Special Obligation, RB, Prerefunded
@100, INS: AMBAC
6.00%, 06/01/02......................................... 3,600 3,870,000
Massachusetts State Water
Pollution, RB, Abatement
Pooled Loan Program
5.70%, 02/01/11......................................... 2,010 2,188,387
------------
15,493,824
------------
Michigan -- 1.6%
Michigan State Building Authority, RB, INS: AMBAC
6.75%, 10/01/07......................................... 1,800 1,964,250
Ypsilanti School District, GO,
INS: FGIC
4.50%, 05/01/10......................................... 1,000 1,006,250
------------
2,970,500
------------
</TABLE>
<TABLE>
<CAPTION>
Par
(000) Value
------- ------------
<S> <C> <C>
Minnesota -- 1.2%
Minneapolis Special School District No. 001, GO
5.00%, 02/01/04......................................... $ 1,000 $ 1,048,750
Minnesota State, GO, Prerefunded
6.00%, 10/01/04......................................... 1,000 1,085,000
------------
2,133,750
------------
Mississippi -- 1.9%
Mississippi State, GO
5.25%, 11/01/07......................................... 3,210 3,462,788
------------
Missouri -- 1.6%
Lake of the Ozarks Community Board, RB, Prerefunded @102
4.00%, 12/01/25......................................... 2,450 2,884,875
------------
Nevada -- 1.0%
Nevada State, Colorado River Commission, RB,
Prerefunded @ 101
6.25%, 10/01/03......................................... 1,705 1,862,712
------------
New Jersey -- 3.1%
New Jersey State, GO
9.40%, 04/01/99......................................... 1,000 1,020,110
New Jersey State Highway Authority, RB, Garden State
Parkway General Revenue, ETM
6.00%, 01/01/19......................................... 4,010 4,601,475
------------
5,621,585
------------
New Mexico --3.2%
New Mexico Finance Authority, RB, INS: AMBAC
4.75%, 09/01/07......................................... 2,720 2,822,000
New Mexico State Highway Commission, RB
4.25%, 06/15/05......................................... 3,000 3,000,000
------------
5,822,000
------------
New York -- 8.7%
Municipal Assistance Corp for City of New York, RB
4.85%, 07/01/01......................................... 3,315 3,406,163
New York State Dorm Authority, RB, INS: MBIA
5.25%, 08/15/09......................................... 3,040 3,283,200
</TABLE>
See Accompanying Notes to Financial Statements.
36
<PAGE>
M.S.D.&T. Funds, Inc.
NATIONAL TAX-EXEMPT BOND FUND
Statement of Net Assets -- Continued
November 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Par
(000) Value
------- ------------
<S> <C> <C>
New York --
Continued
New York State Power Authority, RB, General Purpose,
Prerefunded @102
5.25%, 01/01/18......................................... $ 1,375 $ 1,471,250
New York State Power Authority, RB, Prerefunded @102,
INS: FGIC
5.25%, 01/01/18......................................... 2,250 2,410,312
New York State Power Authority Revenue, RB, INS: FGIC,
ETM
5.125%, 01/01/11........................................ 1,000 1,067,500
Triborough Bridge & Tunnel Authority, RB, General Purpose
6.00%, 01/01/12......................................... 2,000 2,297,500
Westchester County, GO
6.70%, 02/01/05......................................... 1,560 1,797,900
------------
15,733,825
------------
North Carolina -- 0.6%
Mecklenburg County, GO
5.90%, 03/01/04......................................... 1,000 1,072,500
------------
Ohio -- 3.1%
Cleveland Waterworks Revenue, RB, INS: MBIA
5.50%, 01/01/21......................................... 3,000 3,262,500
Ohio State, GO
6.65%, 09/01/09......................................... 2,000 2,367,500
------------
5,630,000
------------
Oklahoma -- 1.1%
Oklahoma State Turnpike, RB, ETM
4.70%, 01/01/06......................................... 920 947,600
Tulsa County Home Finance Single Family, RB, INS: FGIC,
ETM
6.70%, 08/01/99......................................... 1,050 1,075,190
------------
2,022,790
------------
Pennsylvania -- 12.8%
Avonworth School District, GO
4.25%, 11/15/00......................................... 1,000 1,004,880
Berks County, GO, INS: FGIC
5.60%, 11/15/08......................................... 1,700 1,782,875
</TABLE>
<TABLE>
<CAPTION>
Par
(000) Value
------- ------------
<S> <C> <C>
Pennsylvania -- Continued
Dauphin County General Authority, RB, School District
Pooled Program II, INS: AMBAC
4.45%, 09/01/01.......................................... $ 4,000 $ 4,075,000
Jim Thorpe Area School District, GO, INS: MBIA
5.375%, 03/15/27......................................... 2,000 2,055,000
Pennsylvania Convention Center Authority, RB, INS: FGIC,
ETM
6.00%, 09/01/19.......................................... 2,675 3,036,125
Pennsylvania State Higher Educational Facilities, RB,
University of Pennsylvania
5.90%, 09/01/05.......................................... 2,500 2,696,875
Pennsylvania State Higher Educational Facilities, RB,
Temple University, INS: MBIA
5.00%, 04/01/05.......................................... 2,000 2,105,000
Pittsburgh Water & Sewer, RB,
INS: FGIC, ETM
6.00%, 09/01/16.......................................... 1,755 2,009,475
York County Solid Waste & Refuse Authority, RB, INS: FGIC
5.25%, 12/01/08.......................................... 3,985 4,308,781
------------
23,074,011
------------
Rhode Island -- 0.9%
Rhode Island State, Unrefunded Balance, INS: FGIC
6.25%, 06/15/07.......................................... 1,545 1,682,119
------------
Tennessee -- 1.6%
Knoxville, GO
5.00%, 05/01/09.......................................... 2,820 2,975,100
------------
Texas --
12.6%
Austin Utility System, RB,
INS: AMBAC
6.375%, 11/15/04......................................... 2,850 3,216,937
Conroe Independent School District, GO, INS: PSFG
5.50%, 08/15/21.......................................... 2,900 2,990,625
Dallas Independent School District, GO, Unrefunded
Balance,
INS: PSFG
5.60%, 08/15/04.......................................... 1,080 1,155,600
</TABLE>
See Accompanying Notes to Financial Statements.
37
<PAGE>
M.S.D.&T. Funds, Inc.
NATIONAL TAX-EXEMPT BOND FUND
Statement of Net Assets -- Concluded
November 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Par
(000) Value
------- ------------
<S> <C> <C>
Texas -- Continued
El Paso, GO
5.25%, 08/15/15......................................... $ 2,500 $ 2,600,000
San Antonio Electric & Gas, RB, Unrefunded Balance
6.00%, 02/01/08......................................... 1,785 1,896,562
San Antonio Electric & Gas, RB
5.125%, 02/01/09........................................ 2,000 2,130,000
Texas Public Finance Authority Bldg, RB, INS: AMBAC
6.10%, 02/01/04......................................... 2,075 2,287,686
Texas Water Development Board, RB
5.75%, 07/15/09......................................... 2,000 4,285,000
Trinity River Authority Waste Water Systems, RB, INS:
AMBAC
5.75%, 08/01/08......................................... 2,000 2,127,500
------------
22,689,910
------------
Utah -- 6.0%
Davis County School District, GO
4.875%, 06/01/05........................................ 2,700 2,838,375
Salt Lake City Redevelopment Agency, TAN
4.35%, 10/01/03......................................... 2,000 2,085,900
Salt Lake City Municipal Building Authority, RB, INS:
MBIA
5.00%, 10/01/06......................................... 2,000 3,821,300
Utah County Hospital Revenue, RB, IHC Health, INS: MBIA
5.25%, 08/15/26......................................... 2,000 2,027,500
------------
10,773,075
------------
Virginia -- 2.7%
Norfolk Virginia, GO, INS: MBIA
5.75%, 06/01/13......................................... 1,500 1,629,375
Virginia State Transportation Board, RB, US Route 58
5.625%, 05/15/13........................................ 3,000 3,172,500
------------
4,801,875
------------
Washington -- 5.1%
King County School District,
No 414 Lake Washington, GO
5.00%, 12/01/16......................................... 4,020 4,080,300
</TABLE>
<TABLE>
<CAPTION>
Par
(000) Value
--------- ------------
<S> <C> <C>
Washington -- Continued
Port Seattle, RB,
Prerefunded @ 102, INS: MBIA
6.625%, 08/01/17...................................... $ 4,495 $ 5,011,925
------------
9,092,225
------------
Wisconsin -- 1.8%
Wisconsin State, GO
5.125%, 11/01/11...................................... 3,000 3,183,750
------------
TOTAL MUNICIPAL BONDS
(Cost $174,989,779)................................... 183,886,366
------------
<CAPTION>
Number
of Shares
---------
<S> <C> <C>
INVESTMENT COMPANIES -- 5.7%
Goldman Sachs Financial Square Tax-Free Money Market
Fund.................................................. 3,018,134 3,018,134
Municipal Fund for Temporary Investments -- MuniFund... 7,331,232 7,331,232
------------
TOTAL INVESTMENT COMPANIES
(Cost $10,349,366).................................... 10,349,366
------------
TOTAL INVESTMENTS IN SECURITIES -- 107.4%
(Cost $185,339,145*)............................................. 194,235,732
LIABILITIES IN EXCESS OF
OTHER ASSETS -- (7.4)%........................................... (13,417,620)
------------
NET ASSETS -- 100.0%
(equivalent to $10.19 per share based on 17,744,513 shares
outstanding)..................................................... $180,818,112
============
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
PER SHARE
($180,818,112 / 17,744,513)...................................... $10.19
======
</TABLE>
- --------
* Aggregate cost for Federal income tax purposes. The aggregate gross
unrealized appreciation (depreciation) for all securities is as follows:
<TABLE>
<S> <C>
Excess of value over tax cost................................... $9,021,173
Excess of tax cost over value................................... $ (124,586)
</TABLE>
See Accompanying Notes to Financial Statements.
38
<PAGE>
M.S.D.&T. Funds, Inc.
INVESTMENT ABBREVIATIONS
<TABLE>
<S> <C>
ADR American Depository Receipt
BAN Bond Anticipation Notes
CGI Consolidated General Improvement
COP Certificates of Deposit
CPI Consolidated Public Improvement
ETM Escrowed to Maturity in U.S. Government Obligations
FGIC Financial Guaranty Insurance Co.
FRN Floating Rate Notes
GDR Global Depository Receipt
GO General Obligation
GPI General Public Improvement
GTD Guaranteed
IDA Industrial Development Authority
INS Insured
LA Liquidity Agreement
LIC Line of Credit
LOC Letter of Credit
MB Municipal Bonds
MBIA Municipal Bond Investor Association
MPB Municipal Put Bonds
PCR Pollution Control Revenue
PCRB Pollution Control Revenue Bonds
RAN Revenue Anticipation Notes
RB Revenue Bonds
SAW State Aid Withholding
SPA Standby Purchase Agreement
TAN Tax Anticipation Notes
TECP Tax-Exempt Commercial Paper
TRAN Tax and Revenue Anticipation Notes
UT Unlimited Tax
VRDN Variable Rate Demand Notes
</TABLE>
39
<PAGE>
M.S.D.&T. Funds, Inc.
Statements of Operations
For the Six Months Ended November 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Prime Government Tax-Exempt Tax-Exempt
Money Market Money Market Money Market Money Market
Fund Fund Fund Fund (Trust)
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest............... $12,788,214 $10,713,034 $1,557,741 $1,063,389
----------- ----------- ---------- ----------
EXPENSES:
Investment advisory
fees.................. 582,419 497,401 114,508 --
Administration fees.... 291,209 248,700 57,254 39,197
Accounting agent fees.. 46,594 39,792 13,741 9,407
Custodian fees......... 16,341 14,360 6,754 5,482
Directors' fees........ 8,956 7,543 1,803 1,146
Transfer agent fees.... 15,052 10,626 9,540 8,869
Legal.................. 25,047 21,079 5,002 3,293
Audit.................. 21,505 18,538 4,307 2,918
Other.................. 38,346 33,532 9,005 6,352
----------- ----------- ---------- ----------
1,045,469 891,571 221,914 76,664
Fees waived by
Investment Adviser.... (46,594) (59,688) (13,741) --
Fees waived by
Administrator......... (125,247) (85,782) (36,412) (7,678)
----------- ----------- ---------- ----------
TOTAL EXPENSES....... 873,628 746,101 171,761 68,986
----------- ----------- ---------- ----------
NET INVESTMENT INCOME... 11,914,586 9,966,933 1,385,980 994,403
----------- ----------- ---------- ----------
REALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain
(loss) on investments
sold.................. 3,130 0 0 0
----------- ----------- ---------- ----------
Net gain (loss) on
investments........... 3,130 0 0 0
----------- ----------- ---------- ----------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS........ $11,917,716 $ 9,966,933 $1,385,980 $ 994,403
=========== =========== ========== ==========
</TABLE>
See Accompanying Notes to Financial Statements.
40
<PAGE>
M.S.D.&T. Funds, Inc.
Statements of Operations
For the Six Months Ended November 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Growth Equity Equity International Diversified
& Income Income Growth Equity Real Estate
Fund Fund Fund Fund Fund
-------- ------ ------ ------------- -----------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest............... $ 102,325 $ 349,982 $ 24,194 $ 54,835 $ 13,115
Dividends.............. 2,601,502(1) 3,312,891 173,872 644,263(2) 188,123
----------- ------------ ---------- ----------- ---------
TOTAL INVESTMENT
INCOME.............. 2,703,827 3,662,873 198,066 699,098 201,238
----------- ------------ ---------- ----------- ---------
EXPENSES:
Investment advisory
fees.................. 1,098,946 908,162 102,063 320,640 24,635
Administration fees.... 228,947 189,200 21,263 50,100 3,849
Accounting agent fees.. 54,947 45,408 5,103 20,040 924
Custodian fees......... 6,865 7,400 5,159 29,973 1,768
Directors' fees........ 7,367 6,218 687 1,663 127
Transfer agent fees.... 18,342 9,710 9,252 11,990 9,228
Legal.................. 20,147 16,511 1,852 4,440 339
Audit.................. 15,407 14,728 1,640 3,846 292
Registration fees...... (1,914) 41,611 6,688 4,512 3,246
Printing costs......... 21,032 18,110 2,013 4,840 370
Other.................. 3,460 3,535 1,850 4,136 1,399
----------- ------------ ---------- ----------- ---------
1,473,546 1,260,593 157,570 456,180 46,177
Fees waived by
Investment Advisers... (191,441) (176,697) (32,874) (29,088) (15,000)
Fees waived by
Administrator......... -- (24,372) (5,622) (26,292) (383)
----------- ------------ ---------- ----------- ---------
TOTAL EXPENSES....... 1,282,105 1,059,524 119,074 400,800 30,794
----------- ------------ ---------- ----------- ---------
NET INVESTMENT INCOME... 1,421,722 2,603,349 78,992 298,298 170,444
----------- ------------ ---------- ----------- ---------
REALIZED AND UNREALIZED
GAIN (LOSS) ON
INVESTMENTS AND FOREIGN
CURRENCY:
Net realized gain
(loss) from:
Investments........... 10,572,322 28,553,373 893,641 4,068,256 (154,619)
Foreign currency
transactions......... -- -- -- (143,174) --
----------- ------------ ---------- ----------- ---------
10,572,322 28,553,373 893,641 3,925,082 (154,619)
----------- ------------ ---------- ----------- ---------
Net unrealized
appreciation
(depreciation):
Investments........... 12,619,498 (18,540,111) 2,160,221 (8,700,821) (728,604)
Translation of assets
and liablilities in
foreign currencies... -- -- -- (141,576) --
----------- ------------ ---------- ----------- ---------
12,619,498 (18,540,111) 2,160,221 (8,842,397) (728,604)
----------- ------------ ---------- ----------- ---------
Net gain (loss) on
investments and
foreign currency
transactions.......... 23,191,820 10,013,262 3,053,862 (4,917,315) (883,223)
----------- ------------ ---------- ----------- ---------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS........ $24,613,542 $ 12,616,611 $3,132,854 $(4,619,017) $(712,779)
=========== ============ ========== =========== =========
</TABLE>
- --------
(1) Net of witholding taxes of $405
(2) Net of witholding taxes of $98,320
See Accompanying Notes to Financial Statements.
41
<PAGE>
M.S.D.&T. Funds, Inc.
Statements of Operations
For the Six Months Ended November 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Limited Total Maryland Intermediate National
Maturity Return Tax-Exempt Tax-Exempt Tax-Exempt
Bond Fund Bond Fund Bond Fund Bond Fund Bond Fund
--------- --------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest............... $4,669,735 $3,325,941 $446,584 $2,004,630 $4,349,941
---------- ---------- -------- ---------- ----------
EXPENSES:
Investment advisory
fees.................. 271,015 185,518 48,360 231,857 448,876
Administration fees.... 96,791 66,256 12,090 57,964 112,219
Accounting agent fees.. 23,230 15,902 3,869 18,549 35,910
Custodian fees......... 8,323 9,809 3,433 6,117 6,113
Directors' fees........ 2,986 2,027 325 1,828 3,509
Transfer agent fees.... 13,916 9,458 10,043 9,513 9,556
Legal.................. 8,413 5,653 992 4,972 9,640
Audit.................. 6,171 4,996 822 4,470 8,520
Registration fees...... 2,852 15,628 2,595 14,098 24,424
Pricing service fees... 5,808 10,680 3,131 3,662 5,691
Other.................. 9,566 6,829 1,138 6,091 11,526
---------- ---------- -------- ---------- ----------
449,071 332,756 86,798 359,121 675,984
Fees waived by
Investment Adviser.... (81,267) (68,907) (37,629) (129,840) (248,418)
Fees waived by
Administrator......... (19,358) (25,326) (5,646) (20,609) (23,577)
---------- ---------- -------- ---------- ----------
TOTAL EXPENSES....... 348,446 238,523 43,523 208,672 403,989
---------- ---------- -------- ---------- ----------
NET INVESTMENT INCOME.. 4,321,289 3,087,418 403,061 1,795,958 3,945,952
---------- ---------- -------- ---------- ----------
REALIZED AND UNREALIZED
GAIN (LOSS) ON
INVESTMENTS:
Net realized gain
(loss)................ 458,729 736,902 15,519 754,479 1,858,895
Net unrealized
appreciation
(depreciation)........ 1,192,927 1,039,119 218,454 467,359 541,384
---------- ---------- -------- ---------- ----------
Net gain (loss) on
investments........... 1,651,656 1,776,021 233,973 1,221,838 2,400,279
---------- ---------- -------- ---------- ----------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS........ $5,972,945 $4,863,439 $637,034 $3,017,796 $6,346,231
========== ========== ======== ========== ==========
</TABLE>
See Accompanying Notes to Financial Statements.
42
<PAGE>
M.S.D.&T. Funds, Inc.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Prime Prime Government Government
Money Market Money Market Money Market Money Market
Fund For the Fund For The Fund For the Fund For The
Six Months Ended Year Ended Six Months Ended Year Ended
November 30, 1998 May 31, 1998 November 30, 1998 May 31, 1998
----------------- ------------ ----------------- ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS:
Operations:
Net investment income.. $ 11,914,586 $ 20,886,323 $ 9,966,933 $ 18,472,270
Net gain (loss) on
investments........... 3,130 (29,550) 0 58
------------ ------------ ------------ ------------
Net increase (decrease)
in net assets
resulting from
operations............ 11,917,716 20,856,773 9,966,933 18,472,328
------------ ------------ ------------ ------------
Distributions to
shareholders from net
investment income...... (11,914,586) (20,886,323) (9,966,933) (18,472,270)
Increase (decrease) in
net assets derived from
capital share
transactions........... 33,704,206 79,927,207 25,964,943 50,324,122
------------ ------------ ------------ ------------
TOTAL INCREASE
(DECREASE) IN
NET ASSETS............. 33,707,336 79,897,657 25,964,943 50,324,180
NET ASSETS:
Beginning of period.... 448,750,597 368,852,940 391,133,203 340,809,023
------------ ------------ ------------ ------------
End of period.......... $482,457,933 $448,750,597 $417,098,146 $391,133,203
============ ============ ============ ============
<CAPTION>
Tax-Exempt Tax-Exempt
Tax-Exempt Tax-Exempt Money Market Money Market
Money Market Money Market Fund (Trust) Fund (Trust)
Fund For the Fund For the For the Six Fund For the
Six Months Ended Year Ended Months Ended Year Ended
November 30, 1998 May 31, 1998 November 30, 1998 May 31, 1998
----------------- ------------ ----------------- ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS:
Operations:
Net investment income.. $ 1,385,980 $ 2,738,472 $ 994,403 $ 1,895,319
Net gain (loss) on
investments........... 0 (1,234) 0 (669)
------------ ------------ ------------ ------------
Net increase (decrease)
in net assets
resulting from
operations............ 1,385,980 2,737,238 994,403 1,894,650
------------ ------------ ------------ ------------
Distributions to
shareholders from:
Net investment income.. (1,385,980) (2,738,472) (994,403) (1,895,319)
------------ ------------ ------------ ------------
Total distributions to
shareholders.......... (1,385,980) (2,738,472) (994,403) (1,895,319)
------------ ------------ ------------ ------------
Increase (decrease) in
net assets derived from
capital share
transactions........... (1,277,718) 10,473,945 7,542,652 8,678,427
------------ ------------ ------------ ------------
TOTAL INCREASE
(DECREASE) IN
NET ASSETS............. (1,277,718) 10,472,711 7,542,652 8,677,758
NET ASSETS:
Beginning of period.... 89,964,603 79,491,893 58,221,508 49,543,750
------------ ------------ ------------ ------------
End of period.......... $ 88,686,885 $ 89,964,604 $ 65,764,160 $ 58,221,508
============ ============ ============ ============
</TABLE>
See Accompanying Notes to Financial Statements.
43
<PAGE>
M.S.D.&T. Funds, Inc.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Equity
Growth & Growth & Equity Income Fund
Income Fund Income Fund Income Fund For the
For the For the For the Period From
Six Months Ended Year Ended Six Months Ended March 1, 1998(1)
November 30, 1998 May 31, 1998 November 30, 1998 To May 31, 1998
----------------- ------------ ----------------- ----------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS:
Operations:
Net investment income.. $ 1,421,722 $ 1,764,081 $ 2,603,349 $ 1,213,436
Net realized gain
(loss) on
investments........... 10,572,322 14,390,348 28,553,373 13,570,767
Net increase (decrease)
in unrealized
appreciation
(depreciation) on
investments........... 12,619,498 24,784,580 (18,540,111) (7,001,182)
------------ ------------ ------------ ------------
Net increase (decrease)
in net assets
resulting from
operations............ 24,613,542 40,939,009 12,616,611 7,783,021
------------ ------------ ------------ ------------
Distributions to
shareholders from:
Net investment income
Institutional Class... (1,250,939) (1,930,172) (2,534,761) (594,910)
AFBA Five Star Class.. -- (3,042)
Net realized capital
gains
Institutional Class... -- (15,671,140) -- --
AFBA Five Star Class.. -- --
------------ ------------ ------------ ------------
Total distributions
to shareholders..... (1,250,939) (17,604,354) (2,534,761) (594,910)
------------ ------------ ------------ ------------
Capital Share
Transactions:
Proceeds of shares sold
Institutional Class... 21,127,114 50,484,257 3,866,330 142,353
AFBA Five Star Class.. -- 41,862
Value of shares issued
in conversion of
Common Funds.......... -- 181,773,462 -- 328,878,344
Proceeds of shares
issued due to the
exchange of AFBA Five
Star shares for
Institutional shares.. -- 516,427
Cost of shares redeemed
Institutional Class... (28,242,579) (34,968,577) (23,041,990) (16,237,364)
AFBA Five Star Class.. -- (1,537,343)
Cost of shares redeemed
due to exchange of
AFBA Five Star shares
for Institutional
shares................ -- (516,427)
Value of shares issued
in reinvestment
of dividends
Institutional Class... 375,175 10,488,194 47,911 53
AFBA Five Star Class.. -- 2,953
------------ ------------ ------------ ------------
Increase (decrease) in
net assets derived from
capital share
transactions........... (6,740,290) 206,284,808 (19,127,749) 312,783,386
------------ ------------ ------------ ------------
TOTAL INCREASE
(DECREASE) IN
NET ASSETS............. 16,622,313 229,619,463 (9,045,899) 319,971,497
NET ASSETS:
Beginning of period.... 373,864,657 144,245,194 319,971,497 --
------------ ------------ ------------ ------------
End of period.......... $390,486,970 $373,864,657 $310,925,598 $319,971,497
============ ============ ============ ============
</TABLE>
- --------
(1) Commencement of Operations
See Accompanying Notes to Financial Statements.
44
<PAGE>
M.S.D.&T. Funds, Inc.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Equity International
Growth Fund Equity Growth Fund Equity Fund International
For the For the Period From For the Equity Fund
Six Months Ended March 1, 1998(1) Six Months Ended For the Year Ended
November 30, 1998 To May 31, 1998 November 30, 1998 May 31, 1998
----------------- ------------------- ----------------- ------------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS:
Operations:
Net investment income.. $ 78,992 $ 61,732 $ 298,298 $ 762,757
Net realized gain
(loss) on investments
and foreign currency.. 893,641 2,420,386 3,925,082 3,708,455
Net increase (decrease)
in unrealized
appreciation
(depreciation) on
investments and
translation of assets
and liabilites in
foreign currency...... 2,160,221 (1,454,880) (8,842,397) 4,894,140
----------- ----------- ------------ ------------
Net increase (decrease)
in net assets
resulting from
operations............ 3,132,854 1,027,238 (4,619,017) 9,365,352
----------- ----------- ------------ ------------
Distributions to
shareholders from:
Net investment income.. (90,202) (31,588) (500,859) (940,289)
Net realized capital
gains................. (3,970,934)
----------- ----------- ------------ ------------
Total distributions to
shareholders......... (90,202) (31,588) (500,859) (4,911,223)
----------- ----------- ------------ ------------
Capital Share
Transactions:
Proceeds of shares
sold.................. 1,623,633 135,941 9,454,076 11,904,930
Value of shares issued
in conversion of
Common Funds.......... 35,428,852
Cost of shares
redeemed.............. (2,966,018) (1,684,409) (11,007,584) (15,013,205)
Value of shares issued
in reinvestment of
dividends............. 437 -- 72,901 743,082
----------- ----------- ------------ ------------
Increase (decrease) in
net assets derived from
capital share
transactions........... (1,341,948) 33,880,384 (1,480,607) (2,365,193)
----------- ----------- ------------ ------------
TOTAL INCREASE
(DECREASE) IN NET
ASSETS................. 1,700,704 34,876,034 (6,600,483) 2,088,936
NET ASSETS:
Beginning of period.... 34,876,034 -- 85,402,279 83,313,343
----------- ----------- ------------ ------------
End of period.......... $36,576,738 $34,876,034 $ 78,801,796 $ 85,402,279
=========== =========== ============ ============
</TABLE>
- --------
(1) Commencement of Operations
See Accompanying Notes to Financial Statements.
45
<PAGE>
M.S.D.&T. Funds, Inc.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Diversified Real Limited
Diversified Real Estate Fund Limited Maturity Maturity
Estate Fund For the Bond Fund Bond Fund
For the Period From For the For the
Six Months Ended August 1, 1997(1) Six Months Ended Year Ended
November 30, 1998 To May 31, 1998 November 30, 1998 May 31, 1998
----------------- ----------------- ----------------- ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS:
Operations:
Net investment income.. $ 170,444 $ 207,674 $ 4,321,289 $ 2,476,316
Net realized gain
(loss) on
investments........... (154,619) 1,885 458,729 414,753
Net increase (decrease)
in unrealized
appreciation
(depreciation) on
investments........... (728,604) 6,424 1,192,927 652,638
---------- ---------- ------------ ------------
Net increase (decrease)
in net assets
resulting from
operations............ (712,779) 215,983 5,972,945 3,543,707
---------- ---------- ------------ ------------
Distributions to
shareholders from:
Net investment income
Institutional Class... (151,121) (157,428) (4,321,289) (2,468,821)
AFBA Five Star Class.. -- (7,495)
Net realized capital
gains
Institutional Class... -- (328,300)
Return of Capital
Distributions.......... (21,718) -- --
---------- ---------- ------------ ------------
Total distributions
to shareholders..... (151,121) (179,146) (4,321,289) (2,804,616)
---------- ---------- ------------ ------------
Capital Share
Transactions:
Proceeds of shares sold
Institutional Class... 315,410 6,873,111 13,013,779 11,931,472
AFBA Five Star Class.. -- 5,925
Value of shares issued
in conversion of
Common Funds.......... -- 108,063,470
Proceeds of shares
issued due to exchange
of AFBA Five Star
shares for
Institutional shares.. -- 90,250
Cost of shares redeemed
Institutional Class... (87,354) (234,569) (9,345,819) (13,385,141)
AFBA Five Star Class.. -- (772,799)
Cost of shares redeemed
due to exchange
of AFBA Five Star
shares for
Institutional shares.. -- (90,250)
Value of shares issued
in reinvestment
of dividends
Institutional Class... 8,055 1,838 692,929 1,481,477
AFBA Five Star Class.. -- 10,229
---------- ---------- ------------ ------------
Increase (decrease) in
net assets derived from
capital share
transactions........... 236,111 6,640,380 4,360,889 107,334,633
---------- ---------- ------------ ------------
TOTAL INCREASE
(DECREASE) IN
NET ASSETS............. (627,789) 6,677,217 6,012,545 108,073,724
NET ASSETS:
Beginning of period.... 6,677,217 -- 151,922,379 43,848,655
---------- ---------- ------------ ------------
End of period.......... $6,049,428 $6,677,217 $157,934,924 $151,922,379
========== ========== ============ ============
</TABLE>
- --------
(1) Commencement of Operations
See Accompanying Notes to Financial Statements.
46
<PAGE>
M.S.D.&T. Funds, Inc.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Total Return Maryland
Bond Fund Maryland Tax-Exempt
Total Return Bond For the Tax-Exempt Bond Fund
Fund For the Period From Bond Fund For the For the
Six Months Ended March 1, 1998(1) Six Months Ended Year Ended
November 30, 1998 To May 31, 1998 November 30, 1998 May 31, 1998
----------------- ---------------- ----------------- ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS:
Operations:
Net investment income.. $ 3,087,418 $ 1,497,995 $ 403,061 $ 457,188
Net realized gain
(loss) on
investments........... 736,902 9,544 15,519 114,613
Net increase (decrease)
in unrealized
appreciation
(depreciation)
on investments........ 1,039,119 157,571 218,454 267,492
------------ ------------ ----------- -----------
Net increase (decrease)
in net assets
resulting from
operations............ 4,863,439 1,665,110 637,034 839,293
------------ ------------ ----------- -----------
Distributions to
shareholders from:
Net investment income.. (3,087,419) (1,497,995) (403,061) (457,188)
------------ ------------ ----------- -----------
Capital Share
Transactions:
Proceeds of shares
sold.................. 10,552,439 6,084,472 11,648,744 7,019,522
Value of shares issued
in acquisition of
Common Funds.......... 99,660,947
Cost of shares
redeemed.............. (6,925,301) (4,549,206) (3,600,314) (817,640)
Value of shares issued
in reinvestment
of dividends.......... 86,832 171 55,798 98,693
------------ ------------ ----------- -----------
Increase (decrease) in
net assets derived
from capital share
transactions.......... 3,713,970 101,196,384 8,104,228 6,300,575
------------ ------------ ----------- -----------
TOTAL INCREASE
(DECREASE) IN
NET ASSETS............. 5,489,990 101,363,499 8,338,201 6,682,680
NET ASSETS:
Beginning of period.... 101,363,499 -- 14,980,489 8,297,809
------------ ------------ ----------- -----------
End of period.......... $106,853,489 $101,363,499 $23,318,690 $14,980,489
============ ============ =========== ===========
</TABLE>
- --------
(1) Commencement of Operations
See Accompanying Notes to Financial Statements.
47
<PAGE>
M.S.D.&T. Funds, Inc.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Intermediate National
Intermediate Tax-Exempt Tax-Exempt
Tax-Exempt Bond Fund National Bond Fund
Bond Fund For the Tax-Exempt For the
For the Period From Bond Fund For the Period From
Six Months Ended March 1, 1998(1) Six Months Ended March 1, 1998(1)
November 30, 1998 To May 31, 1998 November 30, 1998 To May 31, 1998
----------------- ---------------- ----------------- ----------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS:
Operations:
Net investment income.. $ 1,795,958 $ 943,803 $ 3,945,952 $ 1,995,615
Net realized gain
(loss) on
investments........... 754,479 44,439 1,858,895 437,736
Net increase (decrease)
in unrealized
appreciation
(depreciation) on
investments........... 467,359 32,609 541,384 512,032
----------- ----------- ------------ ------------
Net increase (decrease)
in net assets
resulting from
operations............ 3,017,796 1,020,851 6,346,231 2,945,383
----------- ----------- ------------ ------------
Distributions to
shareholders from:
Net investment income.. (1,795,958) (943,803) (3,945,952) (1,995,615)
----------- ----------- ------------ ------------
Capital Share
Transactions:
Proceeds of shares
sold.................. 4,022,628 2,583,190 8,466,649 5,109,502
Value of shares issued
in acquisition of
Common Funds.......... 98,001,170 175,761,930
Cost of shares
redeemed.............. (6,613,610) (6,668,912) (8,165,348) (3,704,846)
Value of shares issued
in reinvestment of
dividends............. 107 1 177 1
----------- ----------- ------------ ------------
Increase (decrease) in
net assets derived from
capital share
transactions........... (2,590,875) 93,915,449 301,478 177,166,587
----------- ----------- ------------ ------------
TOTAL INCREASE
(DECREASE) IN
NET ASSETS............. (1,369,037) 93,992,497 2,701,757 178,116,355
NET ASSETS:
Beginning of period.... 93,992,497 -- 178,116,355 --
----------- ----------- ------------ ------------
End of period.......... $92,623,460 $93,992,497 $180,818,112 $178,116,355
=========== =========== ============ ============
</TABLE>
- --------
(1) Commencement of Operations
See Accompanying Notes to Financial Statements.
48
<PAGE>
M.S.D.&T. Funds, Inc.
Financial Highlights
(For a Share Outstanding Throughout the Period)
<TABLE>
<CAPTION>
Prime Money Market Fund
----------------------------------------------------------------------------------
For the Six
Months Ended For the Years Ended
November 30, 1998 May 31, 1998 May 31, 1997 May 31, 1996 May 31, 1995 May 31, 1994
----------------- ------------ ------------ ------------ ------------ ------------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- --------
Income From Investment
Operations:
Net Investment Income..... 0.0256 0.0521 0.0498 0.0532 0.0491 0.0296
-------- -------- -------- -------- -------- --------
Total From
Investment Operations.. 0.0256 0.0521 0.0498 0.0532 0.0491 0.0296
-------- -------- -------- -------- -------- --------
Less Distributions to
Shareholders from:
Net Investment Income..... (0.0256) (0.0521) (0.0498) (0.0532) (0.0491) (0.0296)
-------- -------- -------- -------- -------- --------
Total Distributions..... (0.0256) (0.0521) (0.0498) (0.0532) (0.0491) (0.0296)
-------- -------- -------- -------- -------- --------
Net Asset Value, End of
Period................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ========
- --------------------------------------------------------------------------------------------------------------
Total Return............... 2.59% 5.33% 5.10% 5.45% 5.02% 3.00%
- --------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period
(000).................... $482,458 $448,751 $368,853 $326,878 $382,059 $346,694
Ratio of Expenses to
Average Net Assets
After Expense Waiver..... 0.38%(1) 0.42% 0.43% 0.43% 0.43% 0.38%
Before Expense Waiver.... 0.45%(1) 0.47% 0.48% 0.48% 0.48% 0.47%
Ratio of Net Investment
Income to Average Net
Assets................... 5.13%(1) 5.21% 4.98% 5.33% 4.92% 2.95%
<CAPTION>
Government Money Market Fund
----------------------------------------------------------------------------------
For the Six
Months Ended For the Years Ended
November 30, 1998 May 31, 1998 May 31, 1997 May 31, 1996 May 31, 1995 May 31, 1994
----------------- ------------ ------------ ------------ ------------ ------------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- --------
Income From Investment
Operations:
Net Investment Income..... 0.0251 0.0515 0.0495 0.0526 0.0485 0.0294
-------- -------- -------- -------- -------- --------
Total From Investment
Operations............. 0.0251 0.0515 0.0495 0.0526 0.0485 0.0294
-------- -------- -------- -------- -------- --------
Less Distributions to
Shareholders from:
Net Investment Income..... (0.0251) (0.0515) (0.0495) (0.0526) (0.0485) (0.0294)
-------- -------- -------- -------- -------- --------
Total Distributions..... (0.0251) (0.0515) (0.0495) (0.0526) (0.0485) (0.0294)
-------- -------- -------- -------- -------- --------
Net Asset Value, End of
Period................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ========
- --------------------------------------------------------------------------------------------------------------
Total Return............... 2.54% 5.27% 5.06% 5.39% 4.95% 2.98%
- --------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period
(000).................... $417,098 $391,133 $340,809 $264,725 $263,752 $273,790
Ratio of Expenses to
Average Net Assets
After Expense Waiver..... 0.38%(1) 0.42% 0.43% 0.43% 0.43% 0.38%
Before Expense Waiver.... 0.45%(1) 0.46% 0.49% 0.48% 0.48% 0.47%
Ratio of Net Investment
Income to Average Net
Assets................... 5.01%(1) 5.15% 4.95% 5.27% 4.85% 2.94%
</TABLE>
- --------
(1) Annualized
See Accompanying Notes to Financial Statements.
49
<PAGE>
M.S.D.&T. Funds, Inc.
Financial Highlights
(For a Share Outstanding Throughout the Period)
<TABLE>
<CAPTION>
Tax-Exempt Money Market Fund
----------------------------------------------------------------------------------
For the Six
Months Ended For the Years Ended
November 30, 1998 May 31, 1998 May 31, 1997 May 31, 1996 May 31, 1995 May 31, 1994
----------------- ------------ ------------ ------------ ------------ ------------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- --------
Income From Investment
Operations:
Net Investment Income.. 0.0152 0.0318 0.0304 0.0321 0.0303 0.0202
Net Realized Gain on
Investments........... -- -- -- -- -- 0.0004
-------- -------- -------- -------- -------- --------
Total From Investment
Operations.......... 0.0152 0.0318 0.0304 0.0321 0.0303 0.0206
-------- -------- -------- -------- -------- --------
Less Distributions to
Shareholders from:
Net Investment Income.. (0.0152) (0.0318) (0.0304) (0.0321) (0.0303) (0.0202)
Net Capital Gains...... -- -- -- -- -- (0.0004)
-------- -------- -------- -------- -------- --------
Total Distributions.. (0.0152) (0.0318) (0.0304) (0.0321) (0.0303) (0.0206)
-------- -------- -------- -------- -------- --------
Net Asset Value, End of
Period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------------------------------------------------------------------------
Total Return............ 1.53% 3.22% 3.09% 3.26% 3.08% 2.08%
- ------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of
Period (000).......... $ 88,687 $ 89,965 $ 79,492 $ 50,137 $ 69,100 $ 82,222
Ratio of Expenses to
Average Net Assets
After Expense Waiver.. 0.38%(1) 0.43% 0.43% 0.43% 0.43% 0.38%
Before Expense
Waiver............... 0.48%(1) 0.50% 0.53% 0.51% 0.52% 0.50%
Ratio of Net Investment
Income to Average
Net Assets............ 3.03%(1) 3.17% 3.05% 3.22% 3.01% 2.02%
<CAPTION>
Tax-Exempt Money Market Fund (Trust)
----------------------------------------------------------------------------------
For the Six
Months Ended For the Years Ended
November 30, 1998 May 31, 1998 May 31, 1997 May 31, 1996 May 31, 1995 May 31, 1994
----------------- ------------ ------------ ------------ ------------ ------------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- --------
Income From Investment
Operations:
Net Investment Income.. 0.0159 0.0338 0.0325 0.0340 0.0320 0.0219
Net Realized Gain on
Investments........... -- -- -- -- -- 0.0003
-------- -------- -------- -------- -------- --------
Total From Investment
Operations.......... 0.0159 0.0338 0.0325 0.0340 0.0320 0.0222
-------- -------- -------- -------- -------- --------
Less Distributions to
Shareholders from:
Net Investment Income.. (0.0159) (0.0338) (0.0325) (0.0340) (0.0320) (0.0219)
Net Capital Gains...... -- -- -- -- -- (0.0003)
-------- -------- -------- -------- -------- --------
Total Distributions.. (0.0159) (0.0338) (0.0325) (0.0340) (0.0320) (0.0222)
-------- -------- -------- -------- -------- --------
Net Asset Value, End of
Period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ========
- ------------------------------------------------------------------------------------------------------------
Total Return............ 1.60% 3.43% 3.30% 3.45% 3.25% 2.24%
- ------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of
Period (000).......... $ 65,764 $ 58,222 $ 49,544 $ 46,541 $ 55,043 $ 73,230
Ratio of Expenses to
Average Net Assets
After Expense Waiver.. 0.22%(1) 0.22% 0.22% 0.22% 0.22% 0.20%
Before Expense
Waiver............... 0.24%(1) 0.27% 0.28% 0.27% 0.28% 0.26%
Ratio of Net Investment
Income to Average
Net Assets............ 3.17%(1) 3.37% 3.24% 3.40% 3.14% 2.19%
</TABLE>
- --------
(1) Annualized
See Accompanying Notes to Financial Statements.
50
<PAGE>
M.S.D.&T. Funds, Inc.
Financial Highlights
(For a Share Outstanding Throughout the Period)
<TABLE>
<CAPTION>
Growth & Income Fund
----------------------------------------------------------------------------------
Institutional Shares
----------------------------------------------------------------------------------
For the Six For the Years Ended
Months Ended ----------------------------------------------------------------
November 30, 1998 May 31, 1998 May 31, 1997 May 31, 1996 May 31, 1995 May 31, 1994
----------------- ------------ ------------ ------------ ------------ ------------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Period............ $ 21.37 $ 18.25 $ 14.58 $ 13.42 $ 12.14 $ 12.39
-------- -------- -------- -------- ------- -------
Income From
Investment
Operations:
Net Investment
Income........... 0.08 0.20 0.23 0.33 0.35 0.29
Net Realized and
Unrealized Gain
(Loss) on
Investments...... 1.35 5.01 4.19 1.89 1.55 (0.18)
-------- -------- -------- -------- ------- -------
Total From
Investment
Operations..... 1.43 5.21 4.42 2.22 1.90 0.11
-------- -------- -------- -------- ------- -------
Less Distributions
to Shareholders
from:
Net Investment
Income........... (0.07) (0.23) (0.25) (0.35) (0.34) (0.28)
Net Capital
Gains............ 0.00 (1.86) (0.50) (0.71) (0.28) (0.08)
-------- -------- -------- -------- ------- -------
Total
Distributions.. (0.07) (2.09) (0.75) (1.06) (0.62) (0.36)
-------- -------- -------- -------- ------- -------
Net Asset Value,
End of Period..... $ 22.73 $ 21.37 $ 18.25 $ 14.58 $ 13.42 $ 12.14
======== ======== ======== ======== ======= =======
- -------------------------------------------------------------------------------------------------------
Total Return....... 6.74% 29.40% 31.26% 17.24% 16.22% 0.87%
- -------------------------------------------------------------------------------------------------------
Ratios/Supplemental
Data
Net Assets, End of
Period (000)..... $390,487 $373,864 $142,452 $107,233 $91,277 $53,240
Ratio of Expenses
to Average Net
Assets
After Expense
Waiver......... 0.70%(2) 0.71% 0.73% 0.73% 0.73% 0.68%
Before Expense
Waiver......... 0.80%(2) 0.88% 0.89% 0.89% 0.89% 0.87%
Ratio of Net
Investment Income
to Average Net
Assets........... 0.78%(2) 0.99% 1.52% 2.38% 2.99% 2.41%
Portfolio turnover
rate.............. 10.26% 24.09% 27.10% 45.15% 33.26% 61.16%
<CAPTION>
AFBA Five Star Shares
----------------------------------------------------
For the Period For the For the Period
June 1, 1997 to Year Ended December 31, 1995(1)
August 8, 1997 (3) May 31, 1997 to May 31, 1996(1)
------------------ ------------ --------------------
<S> <C> <C> <C>
Net Asset Value,
Beginning of
Period............ $18.22 $14.56 $13.61
------------------ ------------ --------------------
Income From
Investment
Operations:
Net Investment
Income........... 0.02 0.16 0.14
Net Realized and
Unrealized Gain
(Loss) on
Investments...... 1.92 4.21 0.91
------------------ ------------ --------------------
Total From
Investment
Operations..... 1.94 4.37 1.05
------------------ ------------ --------------------
Less Distributions
to Shareholders
from:
Net Investment
Income........... (0.03) (0.21) (0.10)
Net Capital
Gains............ 0.00 (0.50) 0.00
------------------ ------------ --------------------
Total
Distributions.. (0.03) (0.71) (0.10)
------------------ ------------ --------------------
Net Asset Value,
End of Period..... $20.13 $18.22 $14.56
================== ============ ====================
- -------------------------------------------------------------------------------------------------------
Total Return....... 10.66% 30.92% 7.72%
- -------------------------------------------------------------------------------------------------------
Ratios/Supplemental
Data
Net Assets, End of
Period (000)..... $ 516 $1,793 $ 330
Ratio of Expenses
to Average Net
Assets
After Expense
Waiver......... 0.98%(2) 0.98% 0.98%(2)
Before Expense
Waiver......... 1.14%(2) 1.15% 1.15%(2)
Ratio of Net
Investment Income
to Average Net
Assets........... 0.60%(2) 1.74% 2.36%(2)
Portfolio turnover
rate.............. 12.78% 27.10% 45.15%
</TABLE>
- --------
(1) Commencement of public offering.
(2) Annualized.
(3) Since August 8, 1997, no AFBA Five Star Shares have been outstanding.
See Accompanying Notes to Financial Statements.
51
<PAGE>
M.S.D.&T. Funds, Inc.
Financial Highlights
(For a Share Outstanding Throughout the Period)
<TABLE>
<CAPTION>
Equity Income Fund Equity Growth Fund Diversified Real Estate Fund
---------------------------------- ---------------------------------- -----------------------------------
For the Six For the Period For the Six For the Period For the Six For the Period
Months Ended March 1, 1998(1) Months Ended March 1, 1998(1) Months Ended August 1, 1997(1)
November 30, 1998 to May 31, 1998 November 30, 1998 to May 31, 1998 November 30, 1998 to May 31, 1998
----------------- ---------------- ----------------- ---------------- ----------------- -----------------
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.. $ 10.21 $ 10.00 $ 10.28 $ 10.00 $10.13 $10.00
-------- -------- ------- ------- ------ ------
Income From
Investment
Operations:
Net Investment
Income.......... 0.08 0.04 0.03 0.02 0.26 0.35
Net Realized and
Unrealized Gain
(Loss) on
Investments..... 0.36 0.19 0.94 0.27 (1.33) 0.09
-------- -------- ------- ------- ------ ------
Total From
Investment
Operations.... 0.44 0.23 0.97 0.29 (1.07) 0.44
-------- -------- ------- ------- ------ ------
Less Distributions
to Shareholders
from:
Net Investment
Income.......... (0.08) (0.02) (0.03) (0.01) (0.23) (0.31)
-------- -------- ------- ------- ------ ------
Total
Distributions.. (0.08) (0.02) (0.03) (0.01) (0.23) (0.31)
-------- -------- ------- ------- ------ ------
Net Asset Value,
End of Period.... $ 10.57 $ 10.21 $ 11.22 $ 10.28 $ 8.83 $10.13
======== ======== ======= ======= ====== ======
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return...... 4.41% 2.28% 9.44% 2.89% (10.67)% 4.31%
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental
Data
Net Assets, End
of Period
(000)........... $310,926 $319,971 $36,577 $34,876 $6,049 $6,677
Ratio of Expenses
to Average Net
Assets
After Expense
Reimbursement
and Waiver.... 0.70%(2) 0.70%(2) 0.70%(2) 0.70%(2) 1.00 %(2) 1.00%(2)
Before Expense
Reimbursement
and Waiver.... 0.83%(2) 0.93%(2) 0.93%(2) 1.02%(2) 1.50 %(2) 2.25%(2)
Ratio of Net
Investment
Income to
Average Net
Assets.......... 1.72%(2) 1.45%(2) 0.46%(2) 0.68%(2) 5.53 %(2) 4.17%(2)
Portfolio turnover
rate............. 10.94% 2.00% 27.88% 7.99% 4.73 % 0.84%
</TABLE>
- --------
(1) Commencement of operations.
(2) Annualized.
See Accompanying Notes to Financial Statements.
52
<PAGE>
M.S.D.&T. Funds, Inc.
Financial Highlights
(For a Share Outstanding Throughout the Period)
<TABLE>
<CAPTION>
International Equity Fund
--------------------------------------------------------------------------------------
For the Six For the Period
Months Ended For the Years Ended July 2, 1993 (1)
November 30, 1998 May 31, 1998 May 31, 1997 May 31, 1996 May 31, 1995 to May 31, 1994
----------------- ------------ ------------ ------------ ------------ ----------------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.............. $ 13.90 $ 13.18 $ 12.47 $ 11.60 $ 11.81 $ 10.00
------- ------- ------- ------- ------- -------
Income From Investment Operations:
Net Investment Income............ 0.02 0.12 0.31 0.09 0.03 0.08
Net Realized and Unrealized Gain
(Loss) on Investments and
Foreign Currency................ (0.74) 1.42 0.88 1.51 0.08 1.81
------- ------- ------- ------- ------- -------
Total From Investment
Operations.................... (0.72) 1.54 1.19 1.60 0.11 1.89
------- ------- ------- ------- ------- -------
Less Distributions to Shareholders
from:
Net Investment Income............ (0.08) (0.15) (0.24) (0.07) (0.04) (0.07)
Net Capital Gains................ 0.00 (0.67) (0.24) (0.66) (0.28) (0.01)
------- ------- ------- ------- ------- -------
Total Distributions............ (0.08) (0.82) (0.48) (0.73) (0.32) (0.08)
------- ------- ------- ------- ------- -------
Net Asset Value, End of Period.... $ 13.10 $ 13.90 $ 13.18 $ 12.47 $ 11.60 $ 11.81
======= ======= ======= ======= ======= =======
- --------------------------------------------------------------------------------------------------------------------------
Total Return...................... (5.21)% 12.77% 9.81% 14.27% 0.82% 18.98%
- --------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (000).. $78,802 $85,402 $83,313 $75,676 $69,172 $47,472
Ratio of Expenses to Average Net
Assets
After Expense Waiver........... 1.00%(2) 1.03% 1.05% 1.05% 1.05% 1.00%(2)
Before Expense Waiver.......... 1.14%(2) 1.14% 1.16% 1.17% 1.16% 1.20%(2)
Ratio of Net Investment Income to
Average Net Assets.............. 0.74%(2) 0.92% 0.97% 0.78% 0.06% 0.82%(2)
Portfolio turnover rate........... 34.41% 55.55% 74.15% 53.58% 42.15% 39.49%
</TABLE>
- --------
(1) Commencement of operations.
(2) Annualized.
See Accompanying Notes to Financial Statements.
53
<PAGE>
M.S.D.&T. Funds, Inc.
Financial Highlights
(For a Share Outstanding Throughout the Period)
<TABLE>
<CAPTION>
Limited Maturity Bond Fund
----------------------------------------------------------------------------------------------------
Institutional Shares
----------------------------------------------------------------------------------
For the Six For the Period
Months Ended For the Years Ended June 1, 1997 to
November 30, 1998 May 31, 1998 May 31, 1997 May 31, 1996 May 31, 1995 May 31, 1994 August 8, 1997(3)
----------------- ------------ ------------ ------------ ------------ ------------ -----------------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.. $ 10.45 $ 10.31 $ 10.19 $ 10.43 $ 10.10 $ 10.55 $10.33
-------- -------- ------- ------- ------- ------- ------
Income From
Investment
Operations:
Net Investment
Income........... 0.29 0.60 0.59 0.59 0.56 0.50 0.10
Net Realized and
Unrealized Gain
(Loss) on
Investments...... 0.11 0.22 0.12 (0.24) 0.33 (0.39) 0.08
-------- -------- ------- ------- ------- ------- ------
Total From
Investment
Operations..... 0.40 0.82 0.71 0.35 0.89 0.11 0.18
-------- -------- ------- ------- ------- ------- ------
Less Distributions
to Shareholders
from:
Net Investment
Income........... (0.29) (0.60) (0.59) (0.59) (0.56) (0.50) (0.10)
Net Capital
Gains............ 0.00 (0.08) -- -- -- (0.06) --
-------- -------- ------- ------- ------- ------- ------
Total
Distributions.. (0.29) (0.68) (0.59) (0.59) (0.56) (0.56) (0.10)
-------- -------- ------- ------- ------- ------- ------
Net Asset Value,
End of Period..... $ 10.56 $ 10.45 $ 10.31 $ 10.19 $ 10.43 $ 10.10 $10.41
======== ======== ======= ======= ======= ======= ======
- ----------------------------------------------------------------------------------------------------------------------------
Total Return....... 3.91% 8.15% 7.12% 3.38% 9.13% 0.94% 1.78%
- ----------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental
Data
Net Assets,
End of Period (000).. $157,935 $151,922 $43,010 $44,102 $44,652 $35,008 $ 90
Ratio of Expenses
to Average Net
Assets
After Expense
Waiver......... 0.45%(2) 0.50% 0.60% 0.60% 0.60% 0.55% 0.90%(2)
Before Expense
Waiver......... 0.58%(2) 0.78% 0.75% 0.72% 0.70% 0.66% 1.16%(2)
Ratio of Net
Investment Income
to Average Net
Assets........... 5.58%(2) 5.71% 5.72% 5.66% 5.56% 4.75% 5.25%(2)
Portfolio turnover
rate.............. 27.52% 48.24% 20.92% 52.79% 22.01% 48.58% 43.13%
<CAPTION>
AFBA Five
Star Shares
---------------------------------
For the For the Period
Year Ended December 1, 1995 (1)
May 31, 1997 to May 31, 1996
------------ --------------------
<S> <C> <C>
Net Asset Value,
Beginning of Period.. $10.20 $10.61
------------ --------------------
Income From
Investment
Operations:
Net Investment
Income........... 0.55 0.28
Net Realized and
Unrealized Gain
(Loss) on
Investments...... 0.13 (0.41)
------------ --------------------
Total From
Investment
Operations..... 0.68 (0.13)
------------ --------------------
Less Distributions
to Shareholders
from:
Net Investment
Income........... (0.55) (0.28)
Net Capital
Gains............ -- --
------------ --------------------
Total
Distributions.. (0.55) (0.28)
------------ --------------------
Net Asset Value,
End of Period..... $10.33 $10.20
============ ====================
- ----------------------------------------------------------------------------------------------------------------------------
Total Return....... 6.80% (1.23)%
- ----------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental
Data
Net Assets,
End of Period (000).. $ 839 $ 346
Ratio of Expenses
to Average Net
Assets
After Expense
Waiver......... 0.90% 0.90%(2)
Before Expense
Waiver......... 1.05% 1.06%(2)
Ratio of Net
Investment Income
to Average Net
Assets........... 5.43% 5.50%(2)
Portfolio turnover
rate.............. 20.92% 52.79%
</TABLE>
- --------
(1) Commencement of public offering.
(2) Annualized.
(3) Since August 8, 1997, no AFBA Five Star Shares have been outstanding.
See Accompanying Notes to Financial Statements.
54
<PAGE>
M.S.D.&T. Funds, Inc.
Financial Highlights
(For a Share Outstanding Throughout the Period)
<TABLE>
<CAPTION>
Total Return Bond Fund Intermediate Tax-Exempt Bond Fund National Tax-Exempt Bond Fund
---------------------------------- ---------------------------------- ----------------------------------
For the Six For the Period For the Six For the Period For the Six For the Period
Months Ended March 1, 1998(1) Months Ended March 1, 1998(1) Months Ended March 1, 1998(1)
November 30, 1998 to May 31, 1998 November 30, 1998 to May 31, 1998 November 30, 1998 to May 31, 1998
----------------- ---------------- ----------------- ---------------- ----------------- ----------------
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.. $ 10.02 $ 10.00 $ 10.01 $ 10.00 $ 10.05 $ 10.00
-------- -------- ------- ------- -------- --------
Income From
Investment
Operations:
Net Investment
Income.......... 0.29 0.15 0.20 0.10 0.22 0.11
Net Realized and
Unrealized Gain
(Loss) on
Investments..... 0.17 0.02 0.13 0.01 0.14 0.05
-------- -------- ------- ------- -------- --------
Total From
Investment
Operations.... 0.46 0.17 0.33 0.11 0.36 0.16
-------- -------- ------- ------- -------- --------
Less Distributions
to Shareholders
from:
Net Investment
Income.......... (0.29) (0.15) (0.20) (0.10) (0.22) (0.11)
-------- -------- ------- ------- -------- --------
Total
Distributions.. (0.29) (0.15) (0.20) (0.10) (0.22) (0.11)
-------- -------- ------- ------- -------- --------
Net Asset Value,
End of Period.... $ 10.19 $ 10.02 $ 10.14 $ 10.01 $ 10.19 $ 10.05
======== ======== ======= ======= ======== ========
- --------------------------------------------------------------------------------------------------------------------------------
Total Return...... 4.70% 1.69% 3.28% 1.07% 3.64% 1.64%
- --------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental
Data
Net Assets,
End of Period (000).. $106,853 $101,363 $92,623 $93,992 $180,818 $178,116
Ratio of Expenses
to Average Net
Assets
After Expense
Reimbursement
and Waiver.... 0.45%(2) 0.45%(2) 0.45%(2) 0.45%(2) 0.45%(2) 0.45%(2)
Before Expense
Reimbursement
and Waiver.... 0.63%(2) 0.73%(2) 0.77%(2) 0.88%(2) 0.75%(2) 0.86%(2)
Ratio of Net
Investment
Income to
Average Net
Assets.......... 5.82%(2) 5.89%(2) 3.87%(2) 3.84%(2) 4.40%(2) 4.49%(2)
Portfolio turnover
rate............. 34.07% 10.51% 80.62% 10.13% 49.91% 7.37%
</TABLE>
- --------
(1) Commencement of operations.
(2) Annualized.
See Accompanying Notes to Financial Statements.
55
<PAGE>
M.S.D.&T. Funds, Inc.
Financial Highlights
(For a Share Outstanding Throughout the Period)
<TABLE>
<CAPTION>
Maryland Tax-Exempt Bond Fund
----------------------------------------------------------------------------------
For the Six
Months Ended For the Years Ended
November 30, 1998 May 31, 1998 May 31, 1997 May 31, 1996 May 31, 1995 May 31, 1994
----------------- ------------ ------------ ------------ ------------ ------------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 10.82 $ 10.38 $10.20 $ 10.40 $ 10.25 $ 10.55
------- ------- ------ ------- ------- -------
Income From Investment
Operations:
Net Investment Income.. 0.23 0.48 0.50 0.49 0.49 0.50
Net Realized and
Unrealized Gain (Loss)
on Investments........ 0.13 0.44 0.18 (0.20) 0.15 (0.28)
------- ------- ------ ------- ------- -------
Total From Investment
Operations.......... 0.36 0.92 0.68 0.29 0.64 0.22
------- ------- ------ ------- ------- -------
Less Distributions to
Shareholders from:
Net Investment Income.. (0.23) (0.48) (0.50) (0.49) (0.49) (0.50)
Net Capital Gains...... -- -- -- -- -- (0.02)
------- ------- ------ ------- ------- -------
Total Distributions.. (0.23) (0.48) (0.50) (0.49) (0.49) (0.52)
------- ------- ------ ------- ------- -------
Net Asset Value,
End of Period.......... $ 10.95 $ 10.82 $10.38 $ 10.20 $ 10.40 $ 10.25
======= ======= ====== ======= ======= =======
- ------------------------------------------------------------------------------------------------------------
Total Return............ 3.33% 9.03% 6.80% 2.84% 6.48% 1.99%
- ------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets,
End of Period (000)... $23,319 $14,980 $8,298 $10,186 $12,360 $20,008
Ratio of Expenses to
Average Net Assets
After Expense
Waiver.............. 0.45%(1) 0.49% 0.55% 0.62% 0.62% 0.55%
Before Expense
Waiver.............. 0.90%(1) 1.03% 1.13% 1.04% 0.97% 0.86%
Ratio of Net Investment
Income to Average Net
Assets................ 4.17%(1) 4.49% 4.84% 4.74% 4.83% 4.66%
Portfolio turnover
rate................... 16.41% 55.95% 28.11% 20.58% 36.80% 33.89%
</TABLE>
- --------
(1) Annualized.
See Accompanying Notes to Financial Statements.
56
<PAGE>
M.S.D.&T. Funds, Inc.
Notes to Financial Statements
(Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
M.S.D.&T. Funds, Inc. (the "Company") is registered under the Investment
Company Act of 1940, as amended, as an open-end management investment company.
The Company was incorporated in Maryland on March 7, 1989. The Articles of In-
corporation of the Company authorize the Board of Directors to issue up to ten
billion shares, having a par value of $.001 per share. The Company is a series
fund which currently issues fourteen classes of common stock representing in-
terests in fourteen investment portfolios: the Prime Money Market Fund (Class
A), the Government Money Market Fund (Class B), the Tax-Exempt Money Market
Fund (Class C), the Tax-Exempt Money Market Fund (Trust) (Class D), the Growth
& Income Fund (Class E), the Limited Maturity Bond Fund (Class F), the Mary-
land Tax-Exempt Bond Fund (Class G), the International Equity Fund (Class H),
the Diversified Real Estate Fund (Class J), the National Tax-Exempt Bond Fund
(Class K), the Total Return Bond Fund (Class L), the Equity Growth Fund (Class
M), the Equity Income Fund (Class N) and the Intermediate Tax-Exempt Bond Fund
(Class O)--(the "Funds").
The preparation of financial statements in conformity with generally ac-
cepted accounting principles requires management to make estimates and assump-
tions that affect the reported amounts of assets and liabilities and disclo-
sure of contingent assets and liabilities at the date of the financial state-
ments and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by
the Funds in the preparation of their financial statements.
A) Security Valuation: Investment securities held by the Prime Money Market
Fund, Government Money Market Fund, Tax-Exempt Money Market Fund and
Tax-Exempt Money Market Fund (Trust) (the "Money Market Funds") are val-
ued under the amortized cost method, which approximates current market
value. Under this method, securities are valued at cost when purchased
and, thereafter, a constant proportionate amortization of any discount
or premium is recorded until maturity of the security. Regular review
and monitoring of the valuation is performed pursuant to procedures
adopted by the Company's Board of Directors in an attempt to avoid dilu-
tion or other unfair results to shareholders. Each Money Market Fund
seeks to maintain a stable net asset value of $1.00 per share, but there
can be no assurance that it will be able to do so.
Investments held by the Growth & Income Fund, Equity Income Fund, Eq-
uity Growth Fund, International Equity Fund, Diversified Real Estate
Fund, Limited Maturity Bond Fund, Total Return Bond Fund, Maryland Tax-
Exempt Bond Fund, Intermediate Tax-Exempt Bond Fund and National Tax-
Exempt Bond Fund are valued at market value or, in the absence of a
market value with respect to any portfolio securities, at fair value. A
security that is primarily traded on a domestic security exchange (in-
cluding securities traded through the National Market System) is valued
at the last sale price on that exchange or, if there were no sales dur-
ing the day, at the current quoted bid price. Portfolio securities that
are primarily traded
57
<PAGE>
M.S.D.&T. Funds, Inc.
Notes to Financial Statements -- Continued
(Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES -- Continued
on foreign exchanges are generally valued at the closing values of such
securities on their respective exchanges, provided that if such securi-
ties are not traded on the valuation date, they will be valued at the
preceding closing values and provided further, that when an occurrence
subsequent to the time of valuation is likely to have changed the val-
ue, then the fair value of those securities will be determined through
consideration of other factors by or under the direction of the
Company's Board of Directors. Over-the-counter securities and securi-
ties listed or traded on foreign exchanges with operations similar to
the U.S. over-the-counter market are valued at the mean of the most re-
cent available quoted bid and asked prices in the over-the-counter mar-
ket. Market or fair value may be determined on the basis of valuations
provided by one or more recognized pricing services approved by the
Board of Directors, which may rely on matrix pricing systems, elec-
tronic data processing techniques and/or quoted bid and asked prices
provided by investment dealers. Short-term investments with maturities
of 60 days or less are valued at amortized cost which approximates fair
value. The net asset value per share of the Growth & Income Fund, Eq-
uity Income Fund, Equity Growth Fund, International Equity Fund, Diver-
sified Real Estate Fund, Limited Maturity Bond Fund, Total Return Bond
Fund, Maryland Tax-Exempt Bond Fund, Intermediate Tax-Exempt Bond Fund
and National Tax-Exempt Bond Fund will fluctuate as the values of their
respective investment portfolios change.
B) Security Transactions and Investment Income: Security transactions are
accounted for on the trade date. The cost of investments sold is deter-
mined by use of the specific identification method for both financial
reporting and income tax purposes. Interest income is recorded on the
accrual basis; dividend income is recorded on the ex-dividend date. The
Company accounts separately for the assets, liabilities and operations
of each Fund. Direct expenses of a Fund are charged to that Fund while
general expenses of the Company are allocated among the Funds based on
relative net assets. Until August 8, 1997, the investment income and ex-
penses of each of the Growth & Income Fund and Limited Maturity Bond
Fund (other than the expenses incurred under the Service Plan, described
in Note 2 below, and class specific expenses) and realized and
unrealized gains and losses on the investments of each such Fund were
allocated to the separate classes of shares of each such Fund based upon
their relative net asset value on the date income was earned or expenses
and realized and unrealized gains and losses were incurred.
C) Dividends and Distributions to Shareholders: Dividends from net invest-
ment income are declared daily and paid monthly to shareholders of the
Money Market Funds, Limited Maturity Bond Fund, Total Return Bond Fund,
Maryland Tax-Exempt Bond Fund, Intermediate Tax-Exempt Bond Fund and Na-
tional Tax-Exempt Bond Fund; are declared and paid monthly to sharehold-
ers of the Growth & Income Fund, Equity Income Fund and Equity Growth
Fund; are declared and paid quarterly to shareholders of the Diversified
Real Estate Fund; and are declared and paid semi-annually to sharehold-
ers of the International Equity Fund. Any net realized capital gains are
distributed annually.
58
<PAGE>
M.S.D.&T. Funds, Inc.
Notes to Financial Statements -- Continued
(Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES -- Continued
Income distributions and capital gains distributions are determined in
accordance with income tax regulations which may differ from generally
accepted accounting principles. These differences are primarily due to
differing treatments for foreign currency transactions.
D) Federal Income Taxes: Each of the Funds is a separate taxable entity and
intends to continue to qualify for the tax treatment applicable to regu-
lated investment companies under the Internal Revenue Code of 1986, as
amended, and, among other things, is required to make the requisite dis-
tributions to its shareholders which will relieve it from Federal income
or excise taxes. Therefore, no provision has been recorded for Federal
income or excise taxes.
Under current tax law, capital losses realized after October 31 may be
deferred and treated as occurring on the first day of the following
fiscal year. The following losses will be treated as arising on the
first day of fiscal year ended May 31, 1999:
<TABLE>
<CAPTION>
Capital Losses
Deferred
--------------
<S> <C>
International Equity Fund................................... $201,410
Maryland Tax-Exempt Bond Fund............................... 1,285
</TABLE>
E) Repurchase Agreements: The Prime Money Market Fund, Government Money
Market Fund, Growth & Income Fund, Equity Income Fund, Equity Growth
Fund, International Equity Fund, Diversified Real Estate Fund, Limited
Maturity Bond Fund, Total Return Bond Fund, Maryland Tax-Exempt Bond
Fund, Intermediate Tax-Exempt Bond Fund and National Tax-Exempt Bond
Fund may agree to purchase portfolio securities from financial institu-
tions, such as banks and broker-dealers, subject to the seller's agree-
ment to repurchase them at an agreed upon date and price. In the case of
the Prime Money Market Fund and Government Money Market Fund, collateral
for repurchase agreements may have longer maturities than the maximum
permissible remaining maturity of portfolio investments. The seller will
be required on a daily basis to maintain the value of the securities
subject to the repurchase agreement at not less than the repurchase
price (including accrued interest), plus the transaction costs the Funds
could expect to incur if the seller defaults, marked-to-market daily.
Repurchase agreements are accounted for as collateralized financings.
The policy of the Funds is to obtain possession of collateral with a
market value equal to 102% of the repurchase agreement.
F) Foreign Currency Translation: Foreign currency amounts are translated
into U.S. dollars at prevailing exchange rates as follows: assets and
liabilities at the rate of exchange prevailing at the end of the respec-
tive period, purchases and sales of securities and income and expenses
at the rate of exchange prevailing on the dates of such transactions.
The International Equity Fund does not isolate that portion of the re-
sults of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices
of securities held. Such fluctuations are included with the net realized
and unrealized gain or loss from investments.
59
<PAGE>
M.S.D.&T. Funds, Inc.
Notes to Financial Statements -- Continued
(Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES -- Continued
G) Forward Foreign Currency Contracts: The International Equity Fund enters
into forward foreign currency contracts in order to hedge its exposure
to changes in foreign currency exchange rates on its foreign portfolio
holdings. All commitments are marked-to-market daily at the applicable
foreign exchange rate and any resulting unrealized gains or losses are
recorded currently. The gain or loss arising from the difference between
the original contracts and the closing of such contracts is included in
income as a component of realized gain or loss on foreign currency. Such
contracts, which protect the value of a Fund's investment securities
against a decline in the value of currency, do not eliminate fluctua-
tions in the underlying prices of the securities, but merely establish
an exchange rate at a future date. Also, although such contracts tend to
minimize the risk of loss due to a decline in the value of a hedged cur-
rency, at the same time they tend to limit any potential gain that might
be realized should the value of such foreign currency increase.
H) International investing is subject to certain factors such as currency
exchange rate volatility, possible political, social or economic insta-
bility, foreign taxation and/or differences in auditing and other finan-
cial standards.
I) Investing in the securities of companies principally engaged in the real
estate business is subject to the same risks as direct ownership of real
estate, such as supply and demand for properties, the economic health of
the company, different regions and local markets, and the strength of
specific industries renting properties.
2. INVESTMENT ADVISER, ADMINISTRATOR, DISTRIBUTOR AND OTHER RELATED PARTY
TRANSACTIONS
Mercantile-Safe Deposit and Trust Company ("Mercantile") provides investment
advisory and administration services to each Fund pursuant to Investment Advi-
sory Agreements and an Administration Agreement. For its services as Adviser,
Mercantile receives an advisory fee computed daily and payable monthly at an
annual rate of .25% of the average daily net assets of each of the Prime Money
Market Fund, Government Money Market Fund, and Tax-Exempt Money Market Fund;
.60% of the average daily net assets of each of the Growth & Income Fund, Eq-
uity Income Fund and Equity Growth Fund; .80% of the average daily net assets
of the International Equity Fund (.45% of which fee Mercantile pays to Black-
Rock, Inc. as sub-adviser); .80% of the average daily net assets of the Diver-
sified Real Estate Fund; .35% of the average daily net assets of each of the
Limited Maturity Bond Fund and Total Return Bond Fund; and .50% of the average
daily net assets of each of the Maryland Tax-Exempt Bond Fund, Intermediate
Tax-Exempt Bond Fund and National Tax-Exempt Bond Fund. For its services as
Administrator, Mercantile receives an administration fee computed daily and
payable monthly at an annual rate of .125% of the average daily net assets of
each Fund. Mercantile may, at its discretion, voluntarily waive any portion of
its advisory fee or its administration fee for any Fund. Mercantile does not
receive a fee for advisory services provided to the Tax-Exempt Money Market
Fund (Trust).
60
<PAGE>
M.S.D.&T. Funds, Inc.
Notes to Financial Statements -- Continued
(Unaudited)
2. INVESTMENT ADVISER, ADMINISTRATOR, DISTRIBUTOR AND OTHER RELATED PARTY
TRANSACTIONS -- Continued
Under the Service Plan which was in effect with respect to AFBA Five Star
Shares, institutions ("Service Organizations") agreed to provide support serv-
ice to their clients who were the beneficial owners of AFBA Five Star Shares
of the Growth & Income and Limited Maturity Bond Funds. For these services,
the Funds agreed to pay the Service Organizations an annual rate of .25% of
the average daily net assets of each Fund's outstanding AFBA Five Star Shares.
Shares in each Fund are sold on a continuous basis without a sales load by
the Company's distributor, BISYS Fund Services ("the Distributor"). The Dis-
tributor receives no fee for these services. BISYS Fund Services Ohio, Inc.,
an affiliate of the Distributor, receives fees for fund accounting services
provided to the Funds.
Each director of the Company received from the Company an annual fee of
$3,500 and a fee of $1,625 for each Board meeting attended and was reimbursed
for all out-of-pocket expenses relating to attendance at meetings. Officers of
the Company do not receive compensation from the Company for serving as offi-
cers. No person who is a director, officer or employee of Mercantile serves as
a director, officer or employee of the Company. During the six months ended
November 30, 1998, the Funds paid legal fees to a law firm, a partner of which
serves as Secretary of the Company.
3. NET ASSETS
At November 30, 1998, net assets consisted of the following:
<TABLE>
<CAPTION>
Prime Government Tax-Exempt Tax-Exempt
Money Market Money Market Money Market Money Market
Fund Fund Fund Fund (Trust)
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Capital Paid-In......... $482,563,629 $417,224,352 $88,694,685 $65,765,307
Accumulated Realized
Gain (Loss) on
Investments............ (105,696) (126,206) (7,800) (1,147)
------------ ------------ ----------- -----------
$482,457,933 $417,098,146 $88,686,885 $65,764,160
============ ============ =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Growth & Equity Equity International Diversified
Income Income Growth Equity Real Estate
Fund Fund Fund Fund Fund
------------ ------------ ----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Capital Paid-In......... $295,209,946 $293,655,637 $32,538,436 $67,057,872 $6,876,491
Accumulated Realized
Gain (Loss) on
Investments and Foreign
Currency............... 11,180,977 42,124,140 3,314,027 3,866,173 (152,734)
Net Unrealized
Appreciation
(Depreciation) on
Investments and Foreign
Currency............... 83,771,933 (25,541,293) 705,341 8,055,123 (722,180)
Undistributed Net
Investment Income
(Distribution in Excess
of Net Investment
Income)................ 324,114 687,114 18,934 (177,372) 47,851
------------ ------------ ----------- ----------- ----------
$390,486,970 $310,925,598 $36,576,738 $78,801,796 $6,049,428
============ ============ =========== =========== ==========
</TABLE>
61
<PAGE>
M.S.D.&T. Funds, Inc.
Notes to Financial Statements -- Continued
(Unaudited)
3. NET ASSETS -- Continued
<TABLE>
<CAPTION>
Limited Total Maryland Intermediate National
Maturity Bond Return Bond Tax-Exempt Tax-Exempt Tax-Exempt
Fund Fund Bond Fund Bond Fund Bond Fund
------------- ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Capital Paid-In......... $155,676,511 $104,910,353 $23,124,450 $91,324,575 $177,468,065
Accumulated Realized
Gain (Loss) on
Investments............ 462,476 740,208 (434,836) 798,917 2,296,631
Net Unrealized
Appreciation
(Depreciation) on
Investments............ 1,788,092 1,196,690 629,076 499,968 1,053,416
Undistributed Net
Investment Income
(Distribution in Excess
of Net Investment
Income)................ 7,845 6,238 -- -- --
------------ ------------ ----------- ----------- ------------
$157,934,924 $106,853,489 $23,318,690 $92,623,460 $180,818,112
============ ============ =========== =========== ============
</TABLE>
4. CAPITAL STOCK
Transactions in shares of the Company are summarized as follows:
<TABLE>
<CAPTION>
Prime Money Market Fund Government Money Market Fund
------------------------------ ------------------------------
For the Six For the Year For the Six For the Year
Months Ended Ended Months Ended Ended
November 30, 1998 May 31, 1998 November 30, 1998 May 31, 1998
----------------- ------------ ----------------- ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Shares Sold............. 367,040,775 576,074,807 279,192,044 565,932,193
Shares Redeemed......... (333,815,625) (497,024,467) (254,021,841) (516,412,638)
Shares Reinvested....... 479,056 876,867 794,740 804,567
------------ ------------ ------------ ------------
Net Increase (Decrease)
in Shares.............. 33,704,206 79,927,207 25,964,943 50,324,122
Shares Outstanding:
Beginning of Period.... 448,859,423 368,932,216 391,259,409 340,935,287
------------ ------------ ------------ ------------
End of Period.......... 482,563,629 448,859,423 417,224,352 391,259,409
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
Tax-Exempt
Tax-Exempt Money Market Fund Money Market Fund (Trust)
------------------------------ ------------------------------
For the Six For the Year For the Six For the Year
Months Ended Ended Months Ended Ended
November 30, 1998 May 31, 1998 November 30, 1998 May 31, 1998
----------------- ------------ ----------------- ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Shares Sold............. 67,460,710 130,461,894 36,121,684 57,909,674
Shares Redeemed......... (68,747,899) (119,994,966) (28,579,032) (49,231,247)
Shares Reinvested....... 9,471 7,017
----------- ------------ ----------- -----------
Net Increase (Decrease)
in Shares.............. (1,277,718) 10,473,945 7,542,652 8,678,427
Shares Outstanding:
Beginning of Period.... 89,972,404 79,498,459 58,222,655 49,544,228
----------- ------------ ----------- -----------
End of Period.......... 88,694,686 89,972,404 65,765,307 58,222,655
=========== ============ =========== ===========
</TABLE>
62
<PAGE>
M.S.D.&T. Funds, Inc.
Notes to Financial Statements -- Continued
(Unaudited)
4. CAPITAL STOCK -- Continued
<TABLE>
<CAPTION>
Growth & Income Fund*
----------------------------------------------------
Institutional Shares AFBA Five Star Shares
------------------------------ ---------------------
For the Period
For the Six For the Year June 1, 1997
Months Ended Ended through
November 30, 1998 May 31, 1998 August 8, 1997
----------------- ------------ ---------------------
(Unaudited)
<S> <C> <C> <C>
Shares Sold.............. 1,015,532 2,469,614 2,163
Shares Redeemed.......... (1,354,984) (1,673,194) (75,061)
Shares Reinvested........ 18,374 511,819 153
Shares Issued Due to
Acquisition of Common
Funds................... 8,357,400
Shares Issued Due to
Exchange of AFBA Five
Star Shares for
Institutional Shares.... 25,655
Shares Redeemed Due to
Exchange of AFBA Five
Star Shares for
Institutional Shares.... (25,655)
---------- ---------- -------
Net Increase (Decrease)
in Shares............... (321,078) 9,691,294 (98,400)
Shares Outstanding:
Beginning of Period..... 17,496,834 7,805,540 98,400
---------- ---------- -------
End of Period........... 17,175,756 17,496,834 0
========== ========== =======
</TABLE>
- --------
* Transactions in shares reflect the exchange of AFBA Five Star Shares for In-
stitutional Shares on August 8, 1997.
<TABLE>
<CAPTION>
Equity Income Fund Equity Growth Fund
-------------------------------- --------------------------------
For the Period For the Period
For the Six March 1, 1998 For the Six March 1, 1998
Months Ended through Months Ended through
November 30, 1998 May 31, 1998 November 30, 1998 May 31, 1998
----------------- -------------- ----------------- --------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Shares Sold............. 394,489 13,770 163,450 13,002
Shares Redeemed......... (2,324,522) (1,569,131) (294,269) (163,776)
Shares Reinvested....... 5,065 5 45 0
Shares Issued Due to
Acquisition of
Common Funds........... 32,887,834 0 3,542,885
---------- ---------- --------- ---------
Net Increase (Decrease)
in Shares.............. (1,924,968) 31,332,478 (130,774) 3,392,111
Shares Outstanding:
Beginning of Period.... 31,332,478 0 3,392,111 0
---------- ---------- --------- ---------
End of Period.......... 29,407,510 31,332,478 3,261,337 3,392,111
========== ========== ========= =========
</TABLE>
63
<PAGE>
M.S.D.&T. Funds, Inc.
Notes to Financial Statements -- Continued
(Unaudited)
4. CAPITAL STOCK -- Continued
<TABLE>
<CAPTION>
International Equity Fund Diversified Real Estate Fund
------------------------------ --------------------------------
For the Period
For the Six For the Year For the Six August 1, 1997
Months Ended Ended Months Ended through
November 30, 1998 May 31, 1998 November 30, 1998 May 31, 1998
----------------- ------------ ----------------- --------------
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Shares Sold............. 740,606 899,337 35,043 680,394
Shares Redeemed......... (877,543) (1,136,494) (10,058) (21,706)
Shares Reinvested....... 5,275 61,632 874 175
--------- ---------- ------- -------
Net Increase (Decrease)
in Shares.............. (131,662) (175,525) 25,859 658,863
Shares Outstanding:
Beginning of Period.... 6,144,913 6,320,438 658,863 0
--------- ---------- ------- -------
End of Period.......... 6,013,251 6,144,913 684,722 658,863
========= ========== ======= =======
</TABLE>
<TABLE>
<CAPTION>
Limited Maturity Bond Fund**
----------------------------------------------------
Institutional Shares AFBA Five Star Shares
------------------------------ ---------------------
For the Period
For the Six For the Year June 1, 1997
Months Ended Ended through
November 30, 1998 May 31, 1998 August 8, 1997
----------------- ------------ ---------------------
(Unaudited)
<S> <C> <C> <C>
Shares Sold.............. 1,238,243 1,139,538 570
Shares Redeemed.......... (889,743) (1,279,065) (74,140)
Shares Reinvested........ 65,890 141,784 984
Shares Issued Due to
Acquisition of Common
Funds................... 10,360,829
Shares Issued Due to
Exchange of AFBA Five
Star Shares for
Institutional Shares.... 8,670
Shares Redeemed Due to
Exchange of AFBA Five
Star Shares for
Institutional Shares.... (8,670)
---------- ---------- -------
Net Increase (Decrease)
in Shares............... 414,390 10,371,756 (81,256)
Shares Outstanding:
Beginning of Period..... 14,543,171 4,171,415 81,256
---------- ---------- -------
End of Period........... 14,957,561 14,543,171 0
========== ========== =======
</TABLE>
- --------
** Transactions in shares reflect the exchange of AFBA Five Star Shares for In-
stitutional Shares on August 8, 1997.
64
<PAGE>
M.S.D.&T. Funds, Inc.
Notes to Financial Statements -- Continued
(Unaudited)
4. CAPITAL STOCK -- Continued
<TABLE>
<CAPTION>
Total Return Bond Fund Maryland Tax-Exempt Bond Fund
-------------------------------- ------------------------------
For the Period
For the Six March 1, 1998 For the Six For the Year
Months Ended through Months Ended Ended
November 30, 1998 May 31, 1998 November 30, 1998 May 31, 1998
----------------- -------------- ----------------- ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Shares Sold............. 1,047,407 608,803 1,072,687 652,667
Shares Redeemed......... (684,836) (455,066) (332,219) (76,513)
Shares Reinvested....... 8,567 17 5,129 9,255
Shares Issued Due to
Acquisition of
Common Funds........... 9,966,095
---------- ---------- --------- ---------
Net Increase (Decrease)
in Shares.............. 371,138 10,119,849 745,597 585,409
Shares Outstanding:
Beginning of Period.... 10,119,849 0 1,384,481 799,072
---------- ---------- --------- ---------
End of Period.......... 10,490,987 10,119,849 2,130,078 1,384,481
========== ========== ========= =========
</TABLE>
<TABLE>
<CAPTION>
Intermediate
Tax-Exempt Bond Fund National Tax-Exempt Bond Fund
-------------------------------- --------------------------------
For the Period For the Period
For the Six March 1, 1998 For the Six March 1, 1998
Months Ended through Months Ended through
November 30, 1998 May 31, 1998 November 30, 1998 May 31, 1998
----------------- -------------- ----------------- --------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Shares Sold............. 398,174 258,403 835,397 510,766
Shares Redeemed......... (656,753) (667,602) (807,306) (370,554)
Shares Reinvested....... 11 0 17 0
Shares Issued Due to
Acquisition of
Common Funds........... 9,800,117 17,576,193
--------- --------- ---------- ----------
Net Increase (Decrease)
in Shares.............. (258,568) 9,390,918 28,108 17,716,405
Shares Outstanding:
Beginning of Period.... 9,390,918 0 17,716,405 0
--------- --------- ---------- ----------
End of Period.......... 9,132,350 9,390,918 17,744,513 17,716,405
========= ========= ========== ==========
</TABLE>
65
<PAGE>
M.S.D.&T. Funds, Inc.
Notes to Financial Statements -- Continued
(Unaudited)
5. PURCHASES & SALES OF SECURITIES
For the six months ended November 30, 1998, total aggregate purchases and
proceeds from sales of investment securities (excluding short-term securities)
were as follows:
<TABLE>
<CAPTION>
U.S. Government U.S. Government
Purchases* Sales* Purchases Sales
----------- ----------- --------------- ---------------
<S> <C> <C> <C> <C>
Growth & Income Fund.... $36,881,954 $39,904,867 $ 0 $ 0
Equity Income Fund...... 31,387,532 55,268,040 0 0
Equity Growth Fund...... 7,986,583 9,338,038 0 0
International Equity
Fund................... 26,433,746 27,248,014 0 0
Diversified Real Estate
Fund................... 706,020 269,628 0 0
Limited Maturity Bond
Fund................... 29,727,680 9,031,033 15,907,124 29,732,473
Total Return Bond Fund.. 16,659,810 4,204,430 23,990,375 26,734,874
Maryland Tax-Exempt Bond
Fund................... 11,908,647 2,915,252 0 0
Intermediate Tax-Exempt
Bond Fund.............. 73,195,692 77,235,402 0 0
National Tax-Exempt Bond
Fund................... 97,034,019 87,520,397 0 0
</TABLE>
- --------
* (excluding short-term and U.S. Government securities)
6. CAPITAL LOSS CARRYOVERS
At May 31, 1998, the following Funds had capital loss carryovers:
<TABLE>
<CAPTION>
Capital Loss Expiration
Carryover Year
------------ -----------------
<S> <C> <C>
Prime Money Market Fund....................... $108,826 2003 through 2005
Government Money Market Fund.................. 126,206 2003 through 2005
Tax-Exempt Money Market Fund.................. 7,800 2003 through 2005
Tax-Exempt Money Market Fund (Trust).......... 1,147 2003 through 2005
Maryland Tax-Exempt Bond Fund................. 449,071 2003 through 2005
</TABLE>
The capital loss carryovers are available to offset possible future capital
gains, if any, of the respective Funds.
7. TERMINATION OF AFBA FIVE STAR SHARES
On June 5, 1997, the Board of Directors of the Company approved the termina-
tion of the offering of AFBA Five Star Shares of the Growth & Income Fund and
Limited Maturity Bond Fund. As of the close of business on August 8, 1997, all
outstanding AFBA Five Star Shares of a Fund were automatically exchanged for
Institutional Shares of the same Fund at net asset value without payment of
any exchange fee.
66
<PAGE>
M.S.D.&T. Funds, Inc.
Notes to Financial Statements -- Concluded
(Unaudited)
8. ACQUISITION OF COMMON & COLLECTIVE TRUST FUNDS
On March 1, 1998, the Equity Income Fund, Equity Growth Fund, Total Return
Bond Fund, Intermediate Tax-Exempt Bond Fund and National Tax-Exempt Bond Fund
commenced operations with the acquisition of all of the assets of various com-
mon and collective trust funds maintained by Mercantile-Safe Deposit & Trust
Co. On May 22, 1998, the Growth & Income Fund and Limited Maturity Bond Fund
acquired all of the assets of various common and collective trust funds main-
tained by Mercantile-Safe Deposit & Trust Co. The following is a summary of
shares issued, net assets acquired, net asset value per share and unrealized
appreciation as of the date acquired:
<TABLE>
<CAPTION>
Net Asset Unrealized
Shares Net Assets Value Appreciation
---------- ------------ --------- ------------
<S> <C> <C> <C> <C>
Growth & Income Fund........... 8,357,400 $181,773,462 $21.75 $ 76,280,161
Equity Income Fund............. 32,887,834 328,878,344 10.00 164,257,461
Equity Growth Fund............. 3,542,885 35,428,852 10.00 12,882,272
Limited Maturity Bond Fund..... 10,360,829 108,063,470 10.43 964,116
Total Return Bond Fund......... 9,966,095 99,660,947 10.00 2,147,951
Intermediate Tax-Exempt Bond
Fund.......................... 9,800,117 98,001,170 10.00 876,240
National Tax-Exempt Bond Fund.. 17,576,193 175,761,930 10.00 7,843,171
</TABLE>
9. SUBSEQUENT EVENT -- CONSOLIDATION OF TAX-EXEMPT MONEY MARKET FUNDS
On April 24, 1998, the Board of Directors of the Company approved the con-
solidation of the Tax-Exempt Money Market Fund (Trust) with the Tax-Exempt
Money Market Fund. The consolidation was effective on January 4, 1999 through
(i) the redemption of all of the outstanding shares of the Tax-Exempt Money
Market Fund (Trust) by the shareholders of record, (ii) the issuance to the
redeeming shareholders of the same number of shares of the Tax-Exempt Money
Market Fund that such shareholders redeemed from the Tax-Exempt Money Market
Fund (Trust), and (iii) the transfer of substantially all of the assets of the
Tax-Exempt Money Market Fund (Trust) to the Tax-Exempt Money Market Fund. The
aggregate net assets of the Funds immediately before the combination were
$61,657,386.92 for the Tax-Exempt Money Market Fund (Trust) and $93,339,760.39
for the Tax-Exempt Money Market Fund.
67
<PAGE>
Investment Adviser and Administrator:
Mercantile-Safe Deposit and Trust Company
Baltimore, Maryland
Custodian (except for the International Equity Fund)
The Fifth Third Bank
Cincinnati, Ohio
Distributor:
BISYS Fund Services
Columbus, Ohio
Custodian for the International Equity Fund and Transfer Agent:
State Street Bank and Trust Company
Boston, Massachusetts
This report is submitted for the general information of the shareholders of
M.S.D.&T. Funds, Inc. It is not authorized for distribution to prospective
investors unless accompanied or preceded by current Prospectuses for the Funds
which contain information concerning the Funds' investment policies and expenses
as well as other pertinent information.
Shares of the Funds are nor bank deposits or obligations of, or
guaranteed, endorsed or otherwise supported by Mercantile-Safe Deposit and Trust
Company, its parent company or its affiliates and are not federally insured or
guaranteed by the U.S. Government, the Federal Deposit Insurance Corporation,
the Federal Reserve Board or any other governmental agency. Investment in the
Funds involves investment risks, including possible loss of principal.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> M.S.D.&T. PRIME MONEY MARKET FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1999
<PERIOD-START> JUN-01-1998
<PERIOD-END> NOV-30-1998
<INVESTMENTS-AT-COST> 482,745
<INVESTMENTS-AT-VALUE> 482,745
<RECEIVABLES> 1,796
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 484,541
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,083
<TOTAL-LIABILITIES> 2,083
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 482,564
<SHARES-COMMON-STOCK> 482,564
<SHARES-COMMON-PRIOR> 448,859
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> M.S.D.&T. GOVERNMENT MONEY MAEKET FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
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<PER-SHARE-NAV-BEGIN> 1.00
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> M.S.D.&T. TAX-EXEMPT MONEY MARKET FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
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<PERIOD-START> JUN-01-1998
<PERIOD-END> NOV-30-1998
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> M.S.D.&T. GROWTH & INCOME FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1999
<PERIOD-START> JUN-01-1998
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 6
<NAME> M.S.D.&T. LIMITED MATURITY BOND FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1999
<PERIOD-START> JUN-01-1998
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 7
<NAME> M.S.D.&T. MARYLAND TAX-EXEMPT BOND FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 8
<NAME> M.S.D&T. INTERNATIONAL EQUITY FUND
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<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1999
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 9
<NAME> M.S.D.&T. DIVERSIFIED REAL ESTATE FUND
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<S> <C>
<PERIOD-TYPE> 6-MOS
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 10
<NAME> M.S.D.&T. NATIONAL TAX-EXEMPT BOND FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> M.S.D.&T. TOTAL RETURN BOND FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1999
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<TABLE> <S> <C>
<PAGE>
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<NAME> M.S.D.&T. EQUITY GROWTH FUND
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<S> <C>
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 13
<NAME> M.S.D.&T. EQUITY INCOME FUND
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<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1999
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 14
<NAME> M.S.D.&T. INTERMEDIATE TAX-EXEMPT BOND FUND
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<S> <C>
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</TABLE>
