UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED

MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number 811-05782

Mercantile Funds, Inc.

(Exact name of registrant as specified in charter)

Two Hopkins Plaza Baltimore, MD	21201
(Address of principal executive offices)	(Zip code)

Jennifer E. Spratley

Two Hopkins Plaza

Baltimore, MD 21201

(Name and address of agent for service)

Registrant’s telephone number, including area code: 1-800-551-2145

Date of fiscal year end: May 31

Date of reporting period: August 31, 2007

Item 1. Schedule of Investments.

File the schedules as of the close of the reporting period as set forth in §§ 210.12-12 - 12-14 of Regulation S-X [17 CFR §§ 210.12-12 - 12-14]. The schedules need not be audited.

Mercantile Funds, Inc.

Prime Money Market Fund

Schedule of Portfolio Investments

August 31, 2007

(Unaudited)

	Par (000)		Value
U.S. GOVERNMENT AGENCY SECURITIES—7.8%
Federal Home Loan Bank—6.7%
Floating Rate Notes, 4.93%, 2/28/08 (a)	$	9,500	$	9,500,000
Notes
5.25%, 11/1/07(b)		10,000		10,000,000
5.27%, 11/21/07(b)		9,500		9,499,937
5.25%, 2/5/08(b)		10,000		10,000,000
5.30%, 3/5/08		8,000		8,000,000
5.30%, 5/29/08		10,000		10,000,000
				56,999,937
Freddie Mac—1.1%
Notes, 5.30%, 2/6/08		10,000		10,000,000
				10,000,000
TOTAL U.S. GOVERNMENT AGENCY SECURITIES (Cost $66,999,937)				66,999,937
CERTIFICATES OF DEPOSIT—23.3%
Canadian Imperial Bank of Commerce, 5.55%, 9/10/07		20,000		20,000,000
Chase Manhattan, 5.28%, 10/3/07		17,000		17,000,000
Deutsche Bank Finance, 5.39%, 10/16/07		9,200		9,200,000
Deutsche Bank, New York, 5.30%, 5/16/08		10,000		10,000,000
Royal Bank of Scotland
5.29%, 9/20/07		15,000		15,000,000
5.27% , 7/3/08(a)(b)		10,000		9,997,524
Societe General, 5.23%, 11/9/07		18,000		17,819,737
Societe Generale, 5.30%, 10/29/07		20,000		20,000,000
Toronto Dominion, 5.30%, 10/12/07		23,000		23,000,000
UBS AG, 5.30%, 9/24/07		32,000		32,000,000
Wells Fargo & Co., 5.35%, 9/28/07		25,000		25,000,000
TOTAL CERTIFICATES OF DEPOSIT (Cost $199,017,261)				199,017,261
COMMERCIAL PAPER—43.7%
Asset Backed Securities—19.8%
Abington Square Funding, 6.50%, 9/11/07 (c)		12,000		11,978,333
Amsterdam Funding Corp, 5.32%, 9/6/07 (c)		21,000		20,984,483
Fairway Finance, 5.30%, 9/14/07 (c)		22,000		21,957,934
Kitty Hawk Funding Corp., 6.02%, 9/4/07 (c)		14,000		13,992,977
Old Line Funding, 5.26%, 9/14/07 (c)		19,500		19,462,961
Park Avenue Receivables, 6.08%, 9/18/07 (c)		10,000		9,971,289
Stratford Receivables, 5.40%, 9/5/07 (c)		23,500		23,485,900
Thames Asset Global, 6.05%, 9/4/07 (c)		8,096		8,091,918
Three Pillars Funding, 6.10%, 9/4/07 (c)		20,000		19,991,167
Windmill Funding Corp, 5.33%, 9/11/07 (c)		19,000		18,971,870
				168,888,832
Banking & Financial Services—14.4%
American Honda Finance, 5.22%, 9/13/07		22,000		21,961,610
Bank Of America Corp., 5.25%, 9/5/07		20,000		19,988,333
Bank Of America NA Corp., 5.36%, 10/12/07		10,000		9,938,956
Citigroup Funding, 5.23%, 9/7/07		28,000		27,975,593
JP Morgan, 5.23%, 9/6/07		22,200		22,183,874
Toyota Motor Credit Corp., 5.30%, 9/12/07		21,000		20,965,992
				123,014,358
Cosmetics/Personal Care—1.4%
Procter & Gamble, 5.22%, 9/19/07 (c)		12,000		11,968,680
				11,968,680
Foreign Banks—8.1%
Barclays US Funding LLC, 5.26%, 10/2/07		25,000		24,886,764
CBA (Delaware) Finance, 5.25%, 9/12/07		23,500		23,462,338
HBOS Treasury Services, 5.25%, 10/5/07		21,000		20,895,875
				69,244,977
TOTAL COMMERCIAL PAPER (Cost $373,116,847)				373,116,847
CORPORATE BONDS—1.7%
Toyota Motor Credit Corp., 5.33%, 10/15/07 (a)		5,000		5,000,225
UBS AG, 5.56%, 6/16/08 (a)		10,000		10,000,000
TOTAL CORPORATE BONDS (Cost $15,000,225)				15,000,225
REPURCHASE AGREEMENTS—14.7%
Bank of America Securities, LLC (Agreement dated 08/31/07 to be repurchased at $23,441,542 collateralized by $20,650,000 (Value $23,860,079) U.S. Treasury Notes, 6.25%, due 8/15/23), 4.95%, 9/4/07		23,429		23,428,656

	Shares/ Par (000)		Value
REPURCHASE AGREEMENTS—Continued
Merrill Lynch Securities (Agreement dated 8/31/07 to be repurchased at $24,013,333 collateralized by $22,255,000 (Value $24,548,006) U.S. Treasury Inflated Index Notes, 2.38%, due 1/15/25) 5.00%, 9/4/07	$	24,000	$	24,000,000
Morgan Stanley Securities (Agreement dated 8/31/07 to be repurchased at $27,015,150 collateralized by $27,145,000 (Value $27,559,204) U.S. Treasury Notes, 4.38%, due 12/15/10) 5.05%, 9/4/07		27,000		27,000,000
UBS Securities (Agreement dated 8/31/07 to be repurchased at $24,013,333 collateralized $18,723,000 (Value $24,519,403) U.S. Treasury Notes, 8.13%, due 8/15/19) 5.00%, 9/4/07		24,000		24,000,000
Wachovia Securities (Agreement dated 8/31/07 to be repurchased at $27,015,270 collateralized by $26,531,000 (Value $27,603,535) U.S. Treasury Inflated Index Notes, 1.88%, 7/15/15) 5.09%, 9/4/07		27,000		27,000,000
TOTAL REPURCHASE AGREEMENTS (Cost $125,428,656)				125,428,656
SECURITIES HELD AS COLLATERAL FOR SECURITIES ON LOAN—3.7%
Investment in Securities Lending Short Term Investment Portfolio held by Credit Suisse First Boston (See Notes 1I and 3 in Notes to Schedules of Portfolio Investments.)		31,348		31,348,340
TOTAL SECURITIES HELD AS COLLATERAL FOR SECURITIES ON LOAN (Cost $31,348,340)				31,348,340
MONEY MARKET FUNDS —8.9%
Goldman Sachs Financial Square Prime Obligations Fund		6,173,598		6,173,598
JP Morgan Prime Money Market Fund		93,979		93,979
Merrill Lynch Premier Institutional Fund		34,419,491		34,419,491
Morgan Stanley Liquidity Prime Fund		35,087,887		35,087,887
TOTAL MONEY MARKET FUNDS (Cost $75,774,955)				75,774,955
TOTAL INVESTMENT IN SECURITIES — 103.8% (Cost $886,686,221) (d)				886,686,221
LIABILITIES IN EXCESS OF OTHER ASSETS — (3.8)%				(32,528,529	)
NET ASSETS — 100.0%			$	854,157,692

(a) Variable or floating rate security. Rate disclosed is as of August 31, 2007.

(b) A portion or all the amounts are temporarily on loan to an unaffiliated broker/dealer. (See Notes 1I and 3 in Notes to Schedules of Portfolio Investments.)

(c) Security exempt from registration under Rule 144A or Section 4(2) of the Securities Act of 1933, as amended, or otherwise restricted as to resale. The securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. The Adviser, using procedures approved by the Board of Directors, has deemed these securities to be liquid.

(d) Aggregate cost for financial reporting and Federal income tax purposes.

See Accompanying Investment Abbreviations and Notes to Schedules of Portfolio Investments.

Mercantile Funds, Inc.

Government Money Market Fund

Schedule of Portfolio Investments

August 31, 2007

(Unaudited)

	Par (000)		Value
U.S. GOVERNMENT AGENCY SECURITIES—61.7%
Fannie Mae— 18.7%
Discount Notes
5.14%, 9/5/07	$	7,000	$	6,996,002
5.14%, 9/12/07		5,000		4,992,147
5.17%, 9/13/07		8,000		7,986,213
5.16%, 9/18/07		8,000		7,980,507
5.13%, 9/19/07		8,000		7,979,465
5.13%, 9/26/07		1,600		1,594,300
4.87%, 10/3/07		5,800		5,774,893
4.72%, 10/4/07		5,000		4,978,390
4.87%, 10/10/07		5,728		5,697,780
5.12%, 10/15/07		5,000		4,968,711
5.12%, 10/19/07		1,225		1,216,637
5.01%, 10/26/07(a)		5,000		4,961,729
4.75%, 10/31/07		3,996		3,964,365
Notes
5.00%, 9/14/07(a)		6,500		6,499,331
5.25%, 10/30/07(a)		5,000		4,999,536
3.65%, 11/30/07		3,000		2,988,101
5.25%, 12/3/07(a)		5,000		4,999,023
5.30%, 1/8/08		3,500		3,500,000
				92,077,130
Federal Farm Credit Bank—6.4%
Discount Notes
5.13%, 9/13/07		5,650		5,640,339
5.11%, 9/20/07		8,000		7,978,424
4.87%, 10/17/07		4,135		4,109,639
4.65%, 10/25/07		6,000		5,958,150
Floating Rate Notes, 5.37%, 4/23/09 (b)		5,000		5,000,000
Notes, 5.25%, 6/18/08		2,500		2,498,501
				31,185,053
Federal Home Loan Bank—17.2%
Discount Notes
5.13%, 9/4/07		7,000		6,997,007
5.09%, 9/17/07		5,000		4,988,689
Floating Rate Notes(b)
4.95% , 1/24/08		2,500		2,500,000
4.93% , 2/28/08		5,000		5,000,000
4.93% , 3/14/08		4,000		4,000,000
5.46% , 3/14/08		5,000		4,999,600
5.20% , 3/20/08		5,000		4,999,038
5.20% , 4/1/08		2,650		2,649,581
Notes
5.25%, 11/1/07		5,000		5,000,000
5.25%, 11/1/07		4,500		4,500,000
5.26%, 11/8/07		4,000		4,000,000
5.27%, 11/21/07(a)		5,000		4,999,967
5.25%, 1/18/08		6,000		6,000,000
5.25%, 2/5/08(a)		2,250		2,250,000
5.25%, 2/13/08		4,000		4,000,000
5.26%, 2/27/08		3,500		3,500,000
5.30%, 3/5/08		4,000		4,000,000
5.27%, 5/21/08		2,500		2,499,458
5.30%, 5/29/08		5,000		5,000,000
5.30%, 7/2/08		2,500		2,500,000
				84,383,340
Freddie Mac—19.4%
Discount Notes
5.15%, 9/5/07		8,000		7,995,422
5.21%, 9/7/07		8,300		8,292,900
5.15%, 9/10/07		6,100		6,092,146
5.15%, 9/17/07		4,650		4,639,444
5.13%, 9/21/07		1,820		1,814,813
5.14%, 9/24/07		4,600		4,584,894
5.02%, 9/26/07		6,000		5,979,083
4.87%, 9/27/07		5,000		4,982,667
5.15%, 9/28/07		8,000		7,969,040
4.75%, 10/5/07		7,050		7,018,373
4.65%, 10/16/07		5,000		4,970,937
5.12%, 10/22/07		1,750		1,737,307
4.75%, 10/29/07		4,170		4,138,088
5.11%, 12/10/07(a)		5,000		4,929,028
4.91%, 2/19/08		4,000		3,908,040
Floating Rate Notes(b)
5.22% , 9/17/07		2,000		1,999,982
5.36% , 3/26/08		4,500		4,499,377
Notes
5.14%, 12/14/07		2,250		2,250,000
5.30%, 2/6/08		2,000		2,000,000
3.15%, 6/4/08		5,650		5,567,976
				95,369,517
TOTAL U.S. GOVERNMENT AGENCY SECURITIES (Cost $303,015,040)				303,015,040
REPURCHASE AGREEMENTS—31.8%
Bank of America Securities, LLC (Agreement dated 8/31/07 to be repurchased at $30,374,911 collateralized by $30,735,00 (Value $30,922,448) U.S. Treasury Notes, 3.88%, due 5/15/09), 4.95%, 9/4/07		30,358		30,358,214
Merrill Lynch Securities (Agreement dated 8/31/07 to be repurchased at $31,017,222 collateralized by $28,551,000 (Value $31,693,162) U.S. Treasury Inflated Index Notes, 2.00%, due 6/15/14), 5.00%, 9/4/07		31,000		31,000,000
Morgan Stanley Securities (Agreement dated 8/31/07 to be repurchased at $32,017,955 collateralized by $32,415,000 (Value $32,638,349) U.S. Treasury Notes, 3.00%, due 11/15/07), 5.05%, 9/4/07		32,000		32,000,000

	Shares/ Par (000)		Value
REPURCHASE AGREEMENTS—Continued
UBS Securities (Agreement dated 8/31/07 to be repurchased at $30,016,667 collateralized $23,404,000 (Value $30,649,581) U.S. Treasury Notes, 8.13%, due 8/15/19, 5.00%, 9/4/07	$	30,000	$	30,000,000
Wachovia Securities (Agreement dated 8/31/07 to be repurchased at $33,018,663 collateralized by $32,426,000 (Value $33,737,654) U.S. Treasury Notes, 1.88%, 7/15/15), 5.09%, 9/4/07		33,000		33,000,000
TOTAL REPURCHASE AGREEMENTS (Cost $156,358,214)				156,358,214
SECURITIES HELD AS COLLATERAL FOR SECURITIES ON LOAN—7.1%
Investment in Securities Lending Short Term Investment Portfolio held by Credit Suisse First Boston (See Notes 1I and 3 in Notes to Schedules of Portfolio Investments.)		34,693		34,692,771
TOTAL SECURITIES HELD AS COLLATERAL FOR SECURITIES ON LOAN (Cost $34,692,771)				34,692,771
MONEY MARKET FUNDS—6.7%
Goldman Sachs Financial Square Government Fund		21,619,159		21,619,159
JP Morgan U.S. Government Money Market Fund		10,910,688		10,910,688
Merrill Lynch Government Money Market Fund		516,831		516,831
TOTAL MONEY MARKET FUNDS (Cost $33,046,678)				33,046,678
TOTAL INVESTMENT IN SECURITIES — 107.3% (Cost $527,112,703) (c)				527,112,703
LIABILITIES IN EXCESS OF OTHER ASSETS — (7.3)%				(35,756,673	)
NET ASSETS — 100.0%			$	491,356,030

(a) A portion or all the amounts are temporarily on loan to an unaffiliated broker/dealer. (See Notes 1I and 3 in Notes to Schedules of Portfolio Investments.)

(b) Variable or floating rate security. Rate disclosed is as of August 31, 2007.

(c) Aggregate cost for financial reporting and Federal income tax purposes.

See Accompanying Investment Abbreviations and Notes to Schedules of Portfolio Investments.

Mercantile Funds, Inc.

Tax-Exempt Money Market Fund

Schedule of Portfolio Investments

August 31, 2007

(Unaudited)

	Par (000)		Value
MUNICIPAL BONDS—101.5%
Alaska— 2.6%
Valdez Alaska Marine Terminal, VRDB, 3.94%, 7/1/37 (a)	$	3,100	$	3,100,000
Valdez Alaska Marine Terminal, RB, VRDB, BP Pipelines, Inc. Project, 3.94%, 6/1/37 (a)		3,200		3,200,000
				6,300,000
Arizona—2.9%
Salt River Agriculture & Power Agency, 3.66%, 12/10/07		7,000		7,000,000
Colorado—2.8%
Colorado Educational & Cultural Facilities Authority, VRDB LOC: JP Morgan Chase, 3.96%, 7/1/36 (a)		6,800		6,800,000
Connecticut—1.0%
Connecticut State, GO, VRDB, SPA: Landesbank Hessen-Thuringen Girozentrale, 4.05%, 2/15/21 (a)		2,500		2,500,000
District of Columbia—3.0%
District of Columbia, RB, VRDB, George Washington University, INS: MBIA, SPA: Bank of America, 3.93%, 9/15/29 (a)		7,200		7,200,000
Florida—5.4%
Jacksonville Electric Authority, 3.72%, 10/9/07		4,000		4,000,000
Sarasota County Florida Public Hospital, RB, VRDB, INS: AMBAC, 4.05%, 7/1/37 (a)		9,180		9,180,000
				13,180,000
Illinois—0.4%
Cook County Community Construction, GO, VRDB, Schaumburg Township, SPA: Heleba, 3.96%, 11/1/31 (a)		1,000		1,000,000
Kansas—0.8%
Salina, Kansas, 4.50%, 8/1/08		1,980		1,993,145
Kentucky—1.5%
Berea Kentucky Educational Facilities, VRDB, 3.99%, 6/1/29 (a)		3,635		3,635,000
Maryland—4.7%
City of Baltimore IDA, RB, VRDB, Capital Acquisition, LOC: Bayerische Landesbank, 3.95%, 8/1/16 (a)		2,000		2,000,000
Maryland Health And Higher Education, 3.72%, 11/8/07		6,000		6,000,000
University Systems of Maryland, COP, VRDB, College Park Business School, LOC: Bank of America, 4.00%, 6/1/15 (a)		3,400		3,400,000
				11,400,000
Massachusetts—3.3%
Massachusetts State Water Resources Authority, RB, VRDB, LIQ: Landesbank Hessen-Thuringen, 4.03%, 8/1/20 (a)		6,000		6,000,000
Massachusetts State, GO, VRDB, SPA: State Street Bank and Trust, 4.05%, 1/1/21 (a)		2,000		2,000,000
				8,000,000
Michigan—2.7%
University of Michigan, RB, VRDB, Medical Service Plan, 3.99%, 12/1/21 (a)		3,400		3,400,000
University of Michigan, RB, VRDB, University Hospital, 3.92%, 12/1/27 (a)		3,000		3,000,000
				6,400,000
Minnesota—2.2%
Rochester Health Facilities
3.75%, 10/11/07		3,000		3,000,000
3.75%, 10/11/07		2,400		2,400,000
				5,400,000
Missouri—1.8%
Missouri State Health & Educational Facilities, RB, VRDB, Cox Health Systems, INS: AMBAC, SPA: Bank of Nova Scotia, 4.05%, 6/1/22 (a)		3,260		3,260,000
Missouri State Health & Educational Facilities, RB, VRDB, Washington University Project, SPA: Morgan Guaranty Trust(a)
3.93% , 9/1/09		350		350,000
3.93% , 9/1/10		840		840,000
				4,450,000
Nevada—1.2%
Las Vegas Water Authority, 3.70%, 9/7/07		3,000		3,000,000
New Hampshire—1.3%
New Hampshire Health & Higher Education Facilities Authority, Dartmouth College, VRDB SPA: JP Morgan Chase, 4.05%, 6/1/41 (a)		3,175		3,175,000
New York—1.7%
New York City Transitional Financial Authority, RB, VRDB, New York City Recovery, SPA: Bank of New York, 3.99%, 11/1/22 (a)		1,400		1,400,000
New York City Water Finance Authority, Water & Sewer System, VRDB SPA: Bank of Nova Scotia, 3.90%, 6/15/38 (a)		2,800		2,800,000
				4,200,000
North Carolina—6.4%
Greensboro North Carolina, 4.25%, 2/1/08		4,300		4,307,221
North Carolina Educational Facilities, Financial Agency Revenue, RB, VRDB, Duke University Project, 3.87%, 6/1/27 (a)		6,420		6,420,000
University of North Carolina, RB, VRDB, 4.05%, 12/1/25 (a)		3,600		3,600,000

	Par (000)		Value
MUNICIPAL BONDS—Continued
North Carolina—Continued
Winston Salem Community Treatment Facilities Partnership, COP, VRDB, SPA: Dexia Credit Local, 3.93%, 8/1/09 (a)	$	1,200	$	1,200,000
				15,527,221
Ohio—6.6%
Franklin County Ohio, 4.00%, VRDB, FSA, 12/1/30 (a)		6,000		6,000,000
Ohio State Higher Educational Facilities Authority, 4.00%, 10/1/31 (a)		1,000		1,000,000
State Air Quality Development Authority, RB, VRDB, LOC: Wachovia Bank, 4.00%, 6/1/23 (a)		6,730		6,730,000
The Ohio State University, 3.75%, 11/6/07		2,285		2,285,000
				16,015,000
Oregon—1.5%
Oregon State, GO, VRDB, SPA: Morgan Guaranty Trust, 3.90%, 12/1/16 (a)		3,600		3,600,000
Pennsylvania—4.6%
Delaware County IDA, RB, VRDB, General Electric(a)
3.87%, 12/1/31		2,835		2,835,000
3.87%, 12/1/31		2,200		2,200,000
Delaware County Pennsylvania IDA, VRDB, LOC Wachovia Bank, 4.05%, 4/1/21 (a)		800		800,000
Pennsylvania State Turnpike Revenue, RB, VRDB, SPA: Westdeutsche Landesbank, Bayerische Landesbank, Gironzentrale, Landesbank Baden, Wurtemburg, 4.00%, 6/1/27 (a)		3,285		3,285,000
Pennsylvania State University, RB, VRDB, SPA: Westdeutsche Landesbank, 3.94%, 3/1/32 (a)		2,000		2,000,000
				11,120,000
South Carolina—4.2%
Berkeley County Pollution Control Facilities, RB, VRDB, Amoco Chemical Company Project, 3.94%, 7/1/12 (a)		4,700		4,700,000
South Carolina Public Services, 3.65%, 11/5/07		5,470		5,470,000
				10,170,000
Texas—16.3%
Austin Utility Systems, 3.72%, 11/6/07		3,000		3,000,000
Gulf Coast Waste Disposal Authority, Texas Pollution, 3.99%, 10/1/17 (a)		4,565		4,565,000
Harris County Texas, 3.78%, 9/21/07		6,000		6,000,000
North Texas Tollway Authority, 3.76%, 11/7/07		5,000		5,000,000
Red River Educational Finance Corp., RB, VRDB, Texas Christian University Project, 4.05%, 3/1/30 (a)		3,100		3,100,000
San Antonio Gas & Electric, RB, LIQ: Bank of America / State Street Bank, 3.72%, 9/12/07		6,200		6,200,000
Texas Public Finance Authority, 3.68%, 12/13/07		6,500		6,500,000
Texas State Tax & Revenue Anticipation Notes, 4.50%, 8/28/08		5,000		5,036,900
				39,401,900
Utah—6.1%
Intermountain Power Agency
3.73%, 10/10/07		6,000		6,000,000
3.72%, 12/5/07		2,000		2,000,000
Intermountain Power Agency, RB, INS: AMBAC, SPA: Landesbank Hessen-Thuringen, 3.55%, 7/1/18 (a)		2,000		2,000,000
Salt Lake County, RB, VRDB, PCRB, Service Station Holdings Project, BP Amoco, 3.94%, 2/1/08 (a)		4,800		4,800,000
				14,800,000
Virginia—14.4%
Fairfax County Virginia, GO, 5.00%, 10/1/07		5,000		5,005,351
IDA of Hampton, RB, Sentara Health System, LIQ: Wachovia Bank, 3.72%, 9/13/07		3,000		3,000,000
Loudoun County Industrial Development Authority, RB, VRDB, Howard Hughes Medical Institute(a)
4.03%, 2/15/38		5,300		5,300,000
4.05%, 2/15/38		4,155		4,155,000
Peninsula Port Authority, 3.72%, 11/7/07		4,005		4,005,000
University Of Virginia, 3.66%, 10/5/07		4,000		4,000,000
Virginia State Housing Develpoment Authority, 4.30%, 1/1/08		2,000		2,003,373

	Shares/ Par (000)		Value
MUNICIPAL BONDS—Continued
Virginia—Continued
Virginia State, Public Building Authority, RB, VRDB, SPA: Dexia Credit Local, 3.92%, 8/1/25 (a)	$	7,300	$	7,300,000
				34,768,724
Washington—2.1%
King County Sewer, 3.72%, 10/17/07		5,000		5,000,000
TOTAL MUNICIPAL BONDS (Cost $246,035,990)				246,035,990
MONEY MARKET FUND —0.4%
Goldman Sachs Financial Square Tax-Free Money Market Fund		1,046,270		1,046,270
TOTAL INVESTMENT IN SECURITIES — 101.9% (Cost $247,082,260) (b)				247,082,260
LIABILITIES IN EXCESS OF OTHER ASSETS — (1.9)%				(4,691,592	)
NET ASSETS — 100.0%			$	242,390,668

(a) Variable or floating rate security. Rate disclosed is as of August 31, 2007.

(b) Aggregate cost for financial reporting and Federal income tax purposes.

See Accompanying Investment Abbreviations and Notes to Schedules of Portfolio Investments.

Mercantile Funds, Inc.

Growth & Income Fund

Schedule of Portfolio Investments

August 31, 2007

(Unaudited)

	Shares	Value
COMMON STOCKS—99.1%
Consumer Discretionary—12.4%
Best Buy Co., Inc. (a)	131,970	$	5,800,082
Coldwater Creek, Inc. (b)	225,710		2,807,832
E.W. Scripps Co. (a)	124,070		5,099,277
Home Depot, Inc.	202,510		7,758,158
Kohl’s Corp. (b)	73,630		4,366,259
News Corp., CL A	140,730		2,846,968
Panera Bread Co., CL A (a)(b)	117,200		5,126,328
Starbucks Corp. (b)	124,300		3,424,465
Target Corp. (a)	30,170		1,989,108
Time Warner Cable (b)	92,710		3,402,457
Time Warner, Inc.	219,170		4,159,847
Urban Outfitters, Inc. (a)(b)	264,190		6,049,951
			52,830,732
Consumer Staples—8.7%
Pepsico, Inc.	84,810		5,769,624
Procter & Gamble Co.	157,460		10,283,713
Unilever PLC- Sponsored ADR	191,800		6,037,864
Walgreen Co. (a)	197,490		8,900,874
Whole Foods Market, Inc. (a)	133,360		5,902,514
			36,894,589
Energy—8.3%
BP PLC – ADR (a)	66,630		4,488,197
ConocoPhillips	71,960		5,892,804
Exxon Mobil Corp.	133,132		11,413,406
Halliburton Co. (a)	153,670		5,315,445
Nabors Industries Ltd. (a)(b)	219,590		6,497,668
Peabody Energy Corp. (a)	37,550		1,596,251
			35,203,771
Financial Services—18.1%
AFLAC, Inc. (a)	104,090		5,549,038
American International Group, Inc. (a)	163,440		10,787,040
Capital One Financial Corp. (a)	81,430		5,265,264
Citigroup, Inc.	275,730		12,926,222
Countrywide Financial Corp. (a)	400,839		7,956,654
Fidelity National Financial, Inc., CL A	186,530		3,392,981
Franklin Resources, Inc.	34,980		4,609,315
The First Marblehead Corp. (a)	201,410		6,745,221
Wachovia Corp. (a)	364,520		17,854,189
Willis Group Holdings Ltd.	50,100		1,948,890
			77,034,814
Health Care—14.3%
Amgen, Inc. (a)(b)	123,845		6,205,873
Boston Scientific Corp. (a)(b)	918,880		11,789,230
Cephalon, Inc. (a)(b)	42,180		3,165,609
Coventry Health Care, Inc. (b)	33,260		1,908,126
Genzyme Corp. (a)(b)	172,526		10,767,348
Novartis AG – ADR	116,770		6,147,941
Omnicare, Inc. (a)	224,530		7,326,414
Pfizer, Inc.	340,850		8,466,714
Pharmaceutical Product Development, Inc. (a)	86,910		3,044,457
Varian Medical Systems, Inc. (b)	51,810		2,092,606
			60,914,318
Industrials—13.0%
Danaher Corp. (a)	78,100		6,065,246
Dover Corp.	202,470		10,002,018
Eaton Corp.	21,320		2,008,770
FedEx Corp.	69,240		7,594,243
General Electric Co.	239,750		9,319,083
Goodrich Corp.	57,260		3,616,542
Graco, Inc.	109,820		4,437,826
Masco Corp. (a)	127,520		3,318,070
Pentair, Inc. (a)	65,970		2,449,466
United Technologies	86,580		6,461,466
			55,272,730
Information Technology—22.5%
Accenture Ltd.	50,710		2,089,759
Apple, Inc. (a)(b)	13,100		1,814,088
Cisco Systems (b)	344,650		11,001,228
Ebay, Inc. (a)(b)	110,290		3,760,889
EMC Corp. (b)	341,520		6,714,283
Intel Corp.	206,195		5,309,521
Jabil Circuit, Inc.	406,340		9,020,748
Maxim Integrated Products	192,400		5,773,924
Microchip Technology, Inc. (a)	151,190		5,823,839
Microsoft	451,770		12,979,352
Motorola, Inc.	188,310		3,191,855
Oracle Corp. (b)	202,300		4,102,644
QLogic Corp. (b)	424,940		5,651,702
QUALCOMM, Inc.	81,460		3,249,439
Symantec Corp. (a)(b)	252,360		4,746,892
Texas Instruments, Inc.	179,390		6,142,314
YAHOO!, Inc. (a)(b)	180,950		4,112,993
			95,485,470
Telecommunications—1.8%
AT&T, Inc.	90,720		3,617,006

	Shares/ Par (000)		Value
COMMON STOCKS—Continued
Telecommunications—Continued
Sprint Nextel Corp.		212,918	$	4,028,409
				7,645,415
TOTAL COMMON STOCKS (Cost $378,085,751)				421,281,839
SECURITIES HELD AS COLLATERAL FOR SECURITIES ON LOAN—33.5%
Investment in Securities Lending Short Term Investment Portfolio held by Credit Suisse First Boston (See Notes 1I and 3 in Notes to Schedules of Portfolio Investments.)	$	142,457		142,457,395
TOTAL SECURITIES HELD AS COLLATERAL FOR SECURITIES ON LOAN (Cost $142,457,395)				142,457,395
REPURCHASE AGREEMENT—0.1%
Morgan Stanley Securities (Agreement dated 8/31/07 to be repurchased at $519,291 collateralized by $445,000 (Value $529,946) U.S. Treasury Notes, 11.75%, due 11/15/14), 5.05%, 9/4/07		519		519,000
TOTAL REPURCHASE AGREEMENT (Cost $519,000)				519,000
TOTAL INVESTMENT IN SECURITIES — 132.7% (Cost $521,062,146) (c)				564,258,234
LIABILITIES IN EXCESS OF OTHER ASSETS — (32.7)%				(139,169,399	)
NET ASSETS — 100.0%			$	425,088,835

(a) A portion or all the share amounts are temporarily on loan to an unaffiliated broker/dealer. (See Notes 1I and 3 in Notes to Schedules of Portfolio Investments.)

(b) Non-income producing security.

(c) Aggregate cost for Federal income tax purposes is $522,665,570. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows:

Excess of value over tax cost	$	57,566,818
Excess of tax cost over value	$	(15,974,154	)

See Accompanying Investment Abbreviations and Notes to Schedules of Portfolio Investments.

Mercantile Funds, Inc.

Equity Income Fund

Schedule of Portfolio Investments

August 31, 2007

(Unaudited)

	Shares	Value
COMMON STOCKS—99.1%
Consumer Discretionary—9.2%
Circuit City Stores, Inc. (b)	130,480	$	1,419,622
E.W. Scripps Co. (b)	32,900		1,352,190
Furniture Brands International, Inc. (b)	63,760		725,589
Home Depot, Inc.	64,070		2,454,522
Kohl’s Corp. (a)	7,890		467,877
Lowe’s Companies, Inc. (b)	38,140		1,184,628
Time Warner, Inc.	48,130		913,507
			8,517,935
Consumer Staples—6.3%
Brinker International, Inc.	31,950		921,438
Del Monte Foods Co.	39,690		418,333
Procter & Gamble Co.	16,620		1,085,452
Unilever PLC- Sponsored ADR	20,460		644,081
Wal-Mart Stores, Inc.	64,324		2,806,456
			5,875,760
Energy—10.8%
BJ Services Co.	44,956		1,115,358
BP PLC - ADR (b)	40,280		2,713,261
ConocoPhillips	16,910		1,384,760
Exxon Mobil Corp.	21,580		1,850,054
Nabors Industries Ltd. (a)(b)	54,910		1,624,787
Patterson-UTI Energy, Inc.	63,130		1,355,401
			10,043,621
Financial Services—24.3%
American International Group, Inc.	45,330		2,991,780
Bank of America Corp.	58,820		2,980,998
Capital One Financial Corp. (b)	24,290		1,570,591
Chubb Corp.	8,540		436,650
Citigroup, Inc.	79,150		3,710,552
Countrywide Financial Corp. (b)	107,971		2,143,224
Fidelity National Financial, Inc., CL A	38,050		692,130
The First Marblehead Corp. (b)	63,290		2,119,582
Wachovia Corp.	90,821		4,448,413
Washington Mutual, Inc. (b)	40,690		1,494,137
			22,588,057
Health Care—14.0%
Amgen, Inc. (a)	36,160		1,811,977
Boston Scientific Corp. (a)(b)	175,010		2,245,378
Cephalon, Inc. (a)(b)	5,420		406,771
Coventry Health Care, Inc. (a)	7,910		453,797
Eli Lilly and Co.	7,620		437,007
Health Management Associates, Inc. (b)	116,270		791,799
Johnson & Johnson	10,810		667,950
Omnicare, Inc. (b)	59,595		1,944,585
Pfizer, Inc.	157,820		3,920,249
Wyeth Co.	7,780		360,214
			13,039,727
Industrials—11.5%
Alaska Air Group, Inc. (a)	18,140		450,235
Avery Dennison Corp.	11,660		697,151
Dover Corp.	51,390		2,538,666
FedEx Corp.	8,720		956,410
General Electric Co.	79,710		3,098,328
Goodrich Corp.	5,600		353,696
Masco Corp. (b)	55,410		1,441,768
Pentair, Inc. (b)	21,460		796,810
Tyco International Ltd.	8,745		386,179
			10,719,243
Information Technology—17.0%
Cisco Systems (a)	20,040		639,677
Comverse Technology, Inc. (a)(b)	30,561		511,897
Dell Computer Corp. (a)	16,880		476,860
EMC Corp. (a)	21,400		420,724
Flextronics International Ltd. (a)(b)	139,068		1,583,985
Intel Corp.	70,480		1,814,860
Jabil Circuit, Inc.	125,500		2,786,100
Maxim Integrated Products	38,150		1,144,881
Microsoft	61,690		1,772,354
Motorola, Inc.	80,510		1,364,644
QLogic Corp. (a)	76,340		1,015,322
Sandisk Corp. (a)(b)	5,220		292,633
Symantec Corp. (a)(b)	59,790		1,124,650
Texas Instruments, Inc.	26,100		893,664
			15,842,251
Materials & Processing—1.0%
Alcoa, Inc.	11,700		427,401
Dow Chemical Co.	12,950		552,058
			979,459
Telecommunications—4.2%
AT&T, Inc.	27,070		1,079,281
Sprint Nextel Corp.	59,220		1,120,443
Verizon Communications (b)	23,980		1,004,282

	Shares/ Par (000)		Value
COMMON STOCKS—Continued
Telecommunications—Continued
Vodafone Group ADR (b)		22,831	$	739,724
				3,943,730
Utilities—0.8%
PNM Resources, Inc. (b)		31,770		734,522
TOTAL COMMON STOCKS (Cost $85,830,115)				92,284,305
SECURITIES HELD AS COLLATERAL FOR SECURITIES LENDING—23.6%
Investment in Securities Lending Short Term Investment Portfolio held by Credit Suisse First Boston (See Notes 1I and 3 in Notes to Schedules of Portfolio Investments.)	$	21,995,815		21,995,815
REPURCHASE AGREEMENT—0.5%
Bank of America Securities, LLC (Agreement dated 08/31/07 to be repurchased at $452,249 collateralized by $455,000 (Value $467,717) U.S. Treasury Notes, 4.50%, due 11/15/10), 4.95%, 9/4/07		452		452,000
TOTAL REPURCHASE AGREEMENT (Cost $452,000)				452,000
TOTAL INVESTMENT IN SECURITIES — 123.2% (Cost $108,277,930) (c)				114,732,120
LIABILITIES IN EXCESS OF OTHER ASSETS — (23.2)%				(21,606,714	)
NET ASSETS — 100.0%			$	93,125,406

(a) Non-income producing security.

(b) A portion or all the share amounts are temporarily on loan to an unaffiliated broker/dealer. (See Notes 1I and 3 in Notes to Schedules of Portfolio Investments.)

(c) Aggregate cost for Federal income tax purposes is $108,737,208. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows:

Excess of value over tax cost	$	11,735,318
Excess of tax cost over value	$	(5,740,406	)

See Accompanying Investment Abbreviations and Notes to Schedules of Portfolio Investments.

Mercantile Funds, Inc.

Equity Growth Fund

Schedule of Portfolio Investments

August 31, 2007

(Unaudited)

	Shares	Value
COMMON STOCKS—99.0%
Consumer Discretionary—17.3%
Best Buy Co., Inc. (a)	15,840	$	696,168
Coldwater Creek, Inc. (b)	27,110		337,248
Comcast Corp., CL A (a)(b)	31,775		829,010
Gildan Activewear, Inc. (b)	20,550		666,026
Kohl’s Corp. (b)	13,230		784,539
Lowe’s Companies, Inc. (a)	37,980		1,179,659
News Corp., CL A	43,510		880,207
Panera Bread Co., CL A (a)(b)	20,470		895,358
Starbucks Corp. (a)(b)	33,490		922,649
Target Corp. (a)	3,890		256,468
Time Warner Cable (b)	18,030		661,701
Urban Outfitters, Inc. (a)(b)	31,970		732,113
			8,841,146
Consumer Staples—7.8%
Hansen Natural Corp. (b)	6,410		287,873
Pepsico, Inc.	10,070		685,062
Procter & Gamble Co.	18,460		1,205,623
Walgreen Co. (a)	22,120		996,948
Whole Foods Market, Inc. (a)	18,260		808,188
			3,983,694
Energy—4.1%
Halliburton Co. (a)	27,300		944,307
Nabors Industries Ltd. (a)(b)	22,320		660,449
Peabody Energy Corp. (a)	12,090		513,946
			2,118,702
Financial Services—7.3%
AFLAC, Inc.	11,940		636,521
American Express Co.	8,630		505,891
American International Group, Inc.	9,690		639,540
Charles Schwab Corp.	25,870		512,226
Franklin Resources, Inc.	4,920		648,308
The First Marblehead Corp. (a)	23,700		793,713
			3,736,199
Health Care—13.6%
Boston Scientific Corp. (a)(b)	72,880		935,050
Cephalon, Inc. (a)(b)	6,450		484,073
Cytyc Corp. (b)	17,580		751,369
Genzyme Corp. (b)	23,900		1,491,599
Medicis Pharmeceutical, CL A (a)	9,330		284,938
Medtronic, Inc.	6,740		356,142
Novartis AG - ADR	17,500		921,375
Omnicare, Inc. (a)	18,060		589,298
Pharmaceutical Product Development, Inc. (a)	17,880		626,336
Varian Medical Systems, Inc. (b)	12,070		487,507
			6,927,687
Industrials—13.7%
Danaher Corp. (a)	13,640		1,059,282
Dover Corp.	21,840		1,078,896
FedEx Corp.	11,530		1,264,610
General Electric Co.	16,070		624,641
Graco, Inc.	17,780		718,490
Rockwell Collins, Inc.	13,910		957,982
United Technologies	9,230		688,835
Uti Worldwide, Inc.	26,500		589,625
			6,982,361
Information Technology—33.4%
Accenture Ltd.	18,650		768,566
Adobe Systems, Inc. (b)	17,910		765,652
Akamai Technologies (a)(b)	7,680		247,450
Apple, Inc. (b)	5,100		706,248
Broadcom Corp., CL A (b)	20,750		715,875
Cisco Systems (b)	63,840		2,037,773
Citrix Systems, Inc. (b)	20,540		746,629
Comverse Technology, Inc. (a)(b)	30,980		518,915
Ebay, Inc. (b)	20,160		687,456
EMC Corp. (b)	43,600		857,176
Intel Corp.	26,010		669,758
Jabil Circuit, Inc.	32,310		717,282
Maxim Integrated Products	23,110		693,531
Microsoft	88,750		2,549,787
Oracle Corp. (b)	35,120		712,234
QLogic Corp. (b)	47,200		627,760
QUALCOMM, Inc.	21,730		866,810
Tessera Technologies, Inc. (b)	12,090		442,857
Texas Instruments, Inc.	27,320		935,437
YAHOO!, Inc. (a)(b)	35,210		800,323
			17,067,519
Materials—0.8%
Allegheny Technologies, Inc.	3,890		386,627

	Shares/ Par (000)		Value
COMMON STOCKS—Continued
Telecommunications— 1.0%
American Tower Corp., CL A (b)		12,560	$	497,627
TOTAL COMMON STOCKS (Cost $44,986,747)				50,541,562
SECURITIES HELD AS COLLATERAL FOR SECURITIES ON LOAN—25.5%
Investment in Securities Lending Short Term Investment Portfolio held by Credit Suisse First Boston (See Notes 1I and 3 in Notes to Schedules of Portfolio Investments.)	$	13,020		13,020,033
TOTAL SECURITIES HELD AS COLLATERAL FOR SECURITIES ON LOAN (Cost $13,020,033)				13,020,033
REPURCHASE AGREEMENT—1.0%
Bank of America, LLC (Agreement Dated 8/31/07 to be repurchased at $511,281 collateralized by $510,000 (Value $528,704) U.S. Treasury Notes, 4.50%, due 11/15/10), 4.95%, 9/4/07		511		511,000
TOTAL REPURCHASE AGREEMENT (Cost $511,000)				511,000
TOTAL INVESTMENT IN SECURITIES — 125.5% (Cost $58,517,780) (c)				64,072,595
LIABILITIES IN EXCESS OF OTHER ASSETS — (25.5)%				(13,026,948	)
NET ASSETS — 100.0%			$	51,045,647

(a) A portion or all the share amounts are temporarily on loan to an unaffiliated broker/dealer. (See Notes 1I and 3 in Notes to Schedules of Portfolio Investments.)

(b) Non-income producing security.

(c) Aggregate cost for Federal income tax purposes is $58,626,920. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows:

Excess of value over tax cost	$	7,138,197
Excess of tax cost over value	$	(1,692,522	)

See Accompanying Investment Abbreviations and Notes to Schedules of Portfolio Investments.

Mercantile Funds, Inc.

Capital Opportunities Fund

Schedule of Portfolio Investments

August 31, 2007

(Unaudited)

	Shares	Value
COMMON STOCKS—96.6%
Autos & Transportation—3.5%
Alexander & Baldwin, Inc.	25,600	$	1,328,896
Kirby Corp. (a)	32,500		1,244,100
Knight Transportation (b)	75,550		1,389,364
Saia, Inc. (a)	15,100		283,729
Skywest, Inc.	28,500		716,205
Thor Industries, Inc.	16,100		708,239
Wabtec (b)	32,600		1,221,522
YRC Worldwide, Inc. (a)(b)	14,100		434,421
			7,326,476
Consumer Discretionary—20.5%
A.H. Belo Corp.	30,100		518,924
Advisory Board (a)	30,300		1,743,159
American Greetings Corp., CL A (b)	29,700		734,778
BJ’S Restaurant, Inc. (a)(b)	52,500		1,189,125
Borders Group, Inc. (b)	47,000		705,000
Brinks Co.	23,400		1,342,224
Brunswick Corp. (b)	26,800		674,020
Casella Waste Systems, CL A (a)(b)	33,300		371,961
Cato Corp.	47,150		1,040,600
CEC Entertainment, Inc. (a)	24,600		755,220
Chipotle Mexican Grill, CL A (a)(b)	33,400		3,473,266
Citi Trends, Inc. (a)(b)	29,000		630,460
Coach, Inc. (a)	47,200		2,101,816
Crocs, Inc. (a)(b)	31,700		1,871,568
Dollar Tree Stores, Inc. (a)	26,100		1,134,045
First Cash Financial Services, Inc. (a)	91,100		1,951,362
Hibbett Sporting Goods, Inc. (a)(b)	41,119		1,025,508
Insight Enterprises, Inc. (a)(b)	33,300		789,876
Life Time Fitness, Inc. (a)(b)	39,100		2,172,787
McCormick & Schmick’s Seafood Restaurants, Inc. (a)	41,700		1,105,050
Meredith Corp.	17,600		983,840
Petsmart, Inc. (b)	24,600		853,620
Ross Stores, Inc.	34,400		957,352
Ruby Tuesday, Inc. (b)	54,500		1,207,175
Service Corp. International	110,100		1,345,422
Stage Stores, Inc. (b)	48,675		843,538
The Men’s Wearhouse, Inc.	22,200		1,125,096
Tuesday Morning Corp. (b)	33,800		356,590
Under Armour, Inc., CL A (a)(b)	35,700		2,320,857
United Stationers, Inc. (a)	17,900		1,056,458
Warnaco Group, Inc. (a)(b)	20,700		722,430
WMS Industries, Inc. (a)(b)	49,500		1,457,280
Wolverine World Wide	32,400		851,796
Zale Corp. (a)(b)	43,100		968,457
Zumiez, Inc. (a)(b)	44,400		2,154,732
			42,535,392
Consumer Staples—0.8%
Chattem, Inc. (a)(b)	900		55,539
Constellation Brands, Inc. (a)(b)	35,300		853,554
Del Monte Foods Co.	79,900		842,146
			1,751,239
Energy—6.2%
Arch Coal, Inc.	20,800		613,392
Cal Dive International, Inc. (a)(b)	106,900		1,495,531
Carbo Ceramics, Inc. (b)	28,300		1,324,440
Cytec Industries, Inc.	16,200		1,075,680
Grey Wolf, Inc. (a)(b)	96,400		640,096
Input/Output, Inc. (a)(b)	99,900		1,417,581
Newfield Exploration Co. (a)	24,000		1,043,760
PNM Resources, Inc.	35,650		824,228
W-H Energy Services, Inc. (a)	49,400		3,139,864
Whiting Petroleum Corp. (a)(b)	33,700		1,252,292
			12,826,864
Financial Services—15.7%
Amerisafe, Inc. (a)	43,100		708,995
Ashford Hospitality Trust	57,800		630,598
Bank of Hawaii Corp.	29,200		1,501,172
BankUnited Financial Corp. (b)	46,400		793,440
Boston Private Financial (b)	42,400		1,151,160
Brandywine Realty Trust (b)	45,422		1,170,979
CastlePoint Holdings Ltd. (b)	92,100		1,042,572
Colonial Bancgroup, Inc.	69,200		1,468,424
Delphi Financial Group	49,950		2,012,985
Education Realty Trust, Inc. (b)	29,000		396,430
Euronet Worldwide, Inc. (a)(b)	40,200		1,088,616
First Midwest Bancgroup, Inc.	22,100		757,809
Harleysville Group	23,800		767,788
Highwoods Properties, Inc.	26,600		949,354
Independent Bank Corp.	15,500		456,475
Infinity Property & Casualty Corp. (b)	20,200		837,492
Meadowbrook Insurance Group, Inc. (a)	57,700		509,491
NBT Bancorp, Inc. (b)	21,700		476,098
Platinum Underwriters	38,400		1,331,712
Portfolio Recovery Associates, Inc. (b)	33,000		1,694,880
Protective Life Corp.	23,500		982,300
Provident Bankshares	37,300		1,152,570
Selective Insurance Group, Inc.	54,300		1,145,730
Signature Bank (a)(b)	43,100		1,489,536
Stancorp Financial Group	23,400		1,102,140
Sterling Financial (b)	82,816		2,109,324
Taleo Corp. (a)	33,600		774,480
Triad Guaranty, Inc. (a)(b)	16,400		274,372
United Fire & Casualty	34,900		1,325,851
Washington Real Estate Investment Trust (b)	36,500		1,195,375
WR Berkley Corp.	44,700		1,336,083
			32,634,231
Health Care—10.2%
Acadia Pharmaceuticals, Inc. (a)(b)	38,900		559,771
Align Technology, Inc. (a)(b)	54,100		1,229,693
AMERIGROUP Corp. (a)	14,800		468,716
AMN Healthcare Services, Inc. (a)(b)	66,800		1,191,044
Angiotech Pharmaceuticals, Inc. (a)	65,600		385,728
Community Health Systems, Inc. (a)	25,400		882,142
Conceptus, Inc. (a)(b)	55,000		962,500
Home Diagnostics, Inc. (a)	71,100		698,202
Medarex, Inc. (a)(b)	88,000		1,509,200
Micrus Endovascular Corp. (a)	25,100		597,882
Nutri/System, Inc. (a)(b)	17,300		938,179
Owens & Minor, Inc.	32,300		1,288,770
PDL BioPharma, Inc. (a)	18,200		355,082
Pediatrix Medical Group, Inc. (a)	27,600		1,646,340
Penwest Pharmaceuticals Co. (a)(b)	129,100		1,594,385
Regeneron Pharmaceuticals, Inc. (a)(b)	46,500		904,890

	Shares		Value
COMMON STOCKS—Continued
Health Care—Continued
Steris Corp.		38,600	$	1,083,502
United Therapeutics Corp. (a)(b)		38,600		2,643,714
Universal Health Services, Inc.		16,300		860,640
Wright Medical Group, Inc. (a)(b)		52,100		1,364,499
				21,164,879
Industrials—0.5%
Gardner Denver, Inc. (a)		26,800		1,069,588
Information Technology—19.1%
Acme Packet, Inc. (a)(b)		59,100		885,318
Acxiom Corp.		46,400		1,136,800
Aecom Technology Corp. (a)		52,600		1,413,362
Allot Communications (a)(b)		109,200		669,396
Aruba Networks, Inc. (a)(b)		70,200		1,268,514
Atheros Communications (a)		52,700		1,576,257
Bell Microproducts (a)(b)		55,900		383,474
Brocade Communications Systems, Inc. (a)		68,900		482,300
Checkpoint Systems, Inc. (a)		38,400		1,069,440
Cirrus Logic, Inc. (a)(b)		101,800		693,258
CommScope, Inc. (a)(b)		15,500		877,300
Compuware Corp. (a)(b)		127,400		1,033,214
Data Domain, Inc. (a)		5,300		148,612
Double-Take Software, Inc. (a)		96,800		1,672,704
Emulex Corp. (a)(b)		54,400		1,062,976
FMC Corp.		13,800		1,242,000
Informatica Corp. (a)(b)		112,800		1,574,688
Microsemi Corp. (a)(b)		87,900		2,229,144
NaviSite, Inc. (a)		196,300		1,554,696
NTELOS Holdings Corp.		18,800		503,464
Omniture, Inc. (a)(b)		63,100		1,565,511
Parametric Technology Corp. (a)		69,700		1,227,417
Powerwave Technologies, Inc. (a)(b)		264,700		1,813,195
Premiere Global Services, Inc. (a)		48,050		628,494
QAD, Inc.		35,100		285,714
ShoreTel, Inc. (a)		102,200		1,365,392
Shutterfly, Inc. (a)(b)		73,400		2,052,264
Sigma Designs, Inc. (a)		9,300		393,483
Sybase, Inc. (a)(b)		46,200		1,064,910
Sykes Enterprises, Inc. (a)(b)		52,900		872,321
Synchronoss Technologies, Inc. (a)(b)		43,900		1,525,086
Synopsys, Inc. (a)		44,800		1,223,936
Verifone Holdings, Inc. (a)(b)		45,300		1,674,288
Vishay Intertechnology, Inc. (a)		84,100		1,112,643
Vocus , Inc. (a)		51,600		1,290,000
				39,571,571
Materials & Processing—12.9%
Albemarle Corp.		31,800		1,286,946
Bowater, Inc. (b)		43,500		732,540
Ceradyne, Inc. (a)(b)		29,200		2,110,576
Crown Holdings, Inc. (a)		55,800		1,340,316
Dynamic Materials Corp.		63,500		2,729,865
Flow International Corp. (a)		124,300		1,020,503
Gilbraltar Industries, Inc. (b)		23,600		471,528
Griffon Corp. (a)(b)		17,000		266,220
Harsco Corp.		22,900		1,274,385
Haynes International, Inc. (a)		26,800		2,238,604
Hercules Offshore, Inc. (a)(b)		33,116		842,471
Hercules, Inc. (a)		25,000		520,500
Hexcel Corp. (a)		59,300		1,292,147
Insteel Industries, Inc.		27,600		521,640
M.D.C. Holdings, Inc. (b)		18,300		814,167
Martek Biosciences Corp. (a)		13,900		375,578
Mueller Industries, Inc.		22,500		779,400
Quanex Corp. (b)		26,300		1,139,053
Texas Industries		11,000		810,920
The Timken Co.		24,800		881,888
Valspar Corp.		30,900		833,373
Volcom, Inc. (a)(b)		41,100		1,604,133
Walter Industries, Inc.		26,300		664,864
Williams Scotsman International, Inc. (a)(b)		79,300		2,165,683
				26,717,300
Producer Durables—5.5%
Actuant Corp., CL A		23,300		1,421,067
Clean Harbors, Inc. (a)(b)		39,600		1,868,724
Entegris, Inc. (a)(b)		64,400		607,936
Lincoln Electric Holdings, Inc.		35,400		2,546,676
Mueller Water Products, Inc.		24,804		271,604
Polycom, Inc. (a)(b)		49,100		1,488,221
Technitrol, Inc.		36,300		998,250
TriMas Corp. (a)		10,300		126,278
Varian Semiconductor Equipment (a)(b)		36,900		2,052,747
				11,381,503
Utilities—1.7%
Black Hills Corp.		15,900		654,921
El Paso Electric Co. (a)(b)		39,800		888,336
Fairpoint Communications, Inc.		24,500		409,885
Otter Tail Corp. (b)		18,200		664,300
Southwest Gas Corp.		28,400		823,884
				3,441,326
TOTAL COMMON STOCKS (Cost $155,426,691)				200,420,369
SECURITIES HELD AS COLLATERAL FOR SECURITIES ON LOAN—38.6%
Investment in Securities Lending Short Term Investment Portfolio held by Credit Suisse First Boston (See Notes 1I and 3 in Notes to Schedules of Portfolio Investments.)	$	80,074		80,073,715
TOTAL SECURITIES HELD AS COLLATERAL FOR SECURITIES ON LOAN (Cost $80,073,715)				80,073,715
U.S. GOVERNMENT AGENCY SECURITIES—3.9%
Fannie Mae— 1.7%
Discount Notes
4.34%, 9/4/07		2,310		2,308,901

	Par (000)		Value
U.S. GOVERNMENT AGENCY SECURITIES—Continued
5.05%, 9/6/07	$	1,230	$	1,228,980
				3,537,881
Federal Home Loan Bank— 1.3%
Discount Notes, 4.92%, 9/12/07		2,695		2,690,643
Freddie Mac— 0.9%
Discount Notes
4.87%, 9/7/07		824		823,231
4.87%, 9/18/07		1,000		997,600
				1,820,831
TOTAL U.S. GOVERNMENT AGENCY SECURITIES (Cost $8,050,406)				8,049,355
TOTAL INVESTMENT IN SECURITIES — 139.1% (Cost $243,550,812) (c)				288,543,439
LIABILITIES IN EXCESS OF OTHER ASSETS — (39.1)%				(81,111,893	)
NET ASSETS — 100.0%			$	207,431,546

(a) Non-income producing security.

(b) A portion or all the share amounts are temporarily on loan to an unaffiliated broker/dealer. (See Notes 1I and 3 in Notes to Schedules of Portfolio Investments.)

(c) Aggregate cost for Federal income tax purposes is $243,890,982. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows:

Excess of value over tax cost	$	52,023,268
Excess of tax cost over value	$	(7,370,811	)

See Accompanying Investment Abbreviations and Notes to Schedules of Portfolio Investments.

Mercantile Funds, Inc.

International Equity Fund

Schedule of Portfolio Investments

August 31, 2007

(Unaudited)

	Shares	Value
COMMON STOCKS—94.8%
Australia—1.7%
Billiton	91,632	$	2,880,463
Brambles Industries Ltd. (a)	32,123		362,704
Fairfax Media Ltd. (b)	33,286		126,368
Fosters Brewing	650,685		3,364,694
Newcrest Mining	49,627		994,814
Orica Ltd.	53,536		1,254,517
Publishing and Broadcasting Ltd.	11,002		161,312
Rio Tinto Ltd. (b)	14,954		1,144,247
Santos Ltd.	254,026		2,753,923
			13,043,042
Austria—1.9%
Erste Bank Der Oester	17,705		1,282,730
Immoeast Immoblien Anagen (a)	71,077		870,358
Oesterreichische Elektrizitaetswirtschafts AG	2,658		131,894
OMV AG	50,037		3,104,480
Raiffeisen International Bank-Holding AG (b)	10,289		1,485,554
Telekom Austria AG	242,953		6,261,129
Wiener Stadtische Allgemeine Versicherung AG	8,199		563,084
Wienerberger Baustoffindustrie AG	12,154		866,984
			14,566,213
Belgium—1.9%
Fortis	6,881		252,217
Fortis NL	163,098		5,975,995
Groupe Bruxelles Lambert S.A.	2,161		255,290
KBC Ancora	16,772		1,740,177
KBC Group SA	56,033		7,023,206
			15,246,885
Bermuda—0.1%
Central European Media Enterprises Ltd. (a)	6,880		635,437
Brazil—0.2%
Companhia Vale do Rio Doce	33,091		1,376,893
British Virgin Islands—0.0%
RenShares Utilities Ltd. (a)	68,938		258,511
Bulgaria—0.0%
Bulgaria Compensation Notes (a)	86,497		24,818
Bulgaria Housing Compensation Notes (a)	46,870		15,531
Bulgaria Registered Compensation Vouchers (a)	19,166		5,910
			46,259
Canada—0.7%
EnCana Corp.	53,992		3,168,329
Ivanhoe Mines Ltd.	111,131		1,247,421
Kinross Gold Corp.	11,713		143,347
Potash Corp. of Saskatchewan Inc.	8,841		786,034
			5,345,131
Chile—0.0%
Quimica Y Minera de Chile SA (ADR)	1,567		249,764
China—0.1%
Weiqiao Textile Co. Ltd.	60,792		134,887
Wumart Stores, Inc. (c)(d)	294,524		257,169
			392,056
Cyprus—0.3%
Bank of Cyprus Publis Co. Ltd.	149,985		2,504,653
Czech Republic—0.7%
Komercni Banka	27,004		5,861,762
Denmark—0.3%
ALK-ABELLO A/S	1,292		250,257
Carlsberg A/S (b)	1,213		163,292
Danske Bank A/S	6,052		248,509
FLSmidth & Co. A/S	651		61,441
Novo Nordisk A, SERIES B	7,708		857,181
Rockwool International A/S	659		229,980
Vestas Wind Systems A/S (a)	3,020		204,379
			2,015,039
Finland—1.0%
Elisa Oyj	4,734		131,672
Fortum Oyj	41,168		1,361,500
Kemira Oyj	12,210		294,373
Kesko Oyj	2,482		145,473
Nokia A Shares	69,535		2,289,230
Nokian Renkaat Oyj	2,666		93,689
OKO Bank PLC	7,192		143,123
Orion Oyj	10,639		253,454
Outotec Oyj	2,407		138,028
Ramirent Oyj	37,631		892,901
Sanomawsoy Oyj-B Shares (b)	15,962		486,583
Stockmann Oyj ABP (b)	8,021		355,841
Uponor Oyj	3,819		146,380
YIT Oyj	40,136		1,210,378
			7,942,625
France—7.5%
Accor SA	1,372		117,753
Aeroports de Paris	13,047		1,492,614
Air Liquide SA	9,854		1,255,641
Alstom	1,744		315,158
Banque Nationale de Paris	40,625		4,284,063
Bouygues	11,688		920,349
Carrefour SA	3,798		265,750
Edf Energies Nouvelles	963		59,499
Electricite De Franc	17,014		1,717,715
Eurazeo	2,470		327,927
France Telecom	158,555		4,781,530
Havas SA	21,868		120,933
Hermes International	1,363		146,983
JC Decaux SA	6,994		213,204
Lafarge SA	40,990		6,364,348
Lagardere Groupe S.C.A.	3,369		274,922
Legrand SA	186,762		6,629,369
LVMH Moet Hennessy	19,308		2,156,291
Neuf Cegetel	4,029		160,576
Nexity	1,590		105,537
Pernod Ricard French	4,851		1,021,065
Pinault-Printemps-Redoute SA	6,672		1,153,259
Remy Cointreau SA	1,870		133,520
Renault	29,399		3,965,197
Sanofi-Synthelabo SA	11,140		909,214
Sodexho Alliance SA	1,787		117,761
St. Gobain	15,062		1,638,405

	Shares	Value
COMMON STOCKS—Continued
France—Continued
Suez SA	26,184	$	1,488,668
Thales SA	4,474		253,817
Total SA	184,072		13,852,536
Veolia Enviornnement	5,887		451,292
Vinci SA	12,242		871,094
Vivendi Universal	20,947		856,243
Wendel Investissement	793		134,100
			58,556,333
Germany—8.1%
Adidas AG	8,922		526,089
Arcandor (a)	8,940		246,344
Bayer AG	149,483		11,842,012
Bayerische Motoren Werke AG	118,326		7,233,397
Bilfinger Berger AG	8,643		716,954
Commerzbank AG	62,745		2,579,334
Continental AG (b)	1,083		141,305
Daimler Chrysler	65,975		5,878,943
Deutsche Boerse AG (b)	4,533		501,547
Deutsche Post	58,046		1,686,446
Deutsche Postbank AG	9,629		699,327
E. On AG	13,218		2,222,444
Fraport AG (b)	34,795		2,383,933
Fresenius	15,889		1,124,324
Fresenius Medical Care	23,874		1,173,928
Henkel Kgaa	9,084		426,880
Henkel Kgaa	4,808		248,927
Hypo Real Estate Holdings	10,172		559,754
IKB Deutsche Industriebank AG (b)	9,859		189,080
IVG Immoblilien AG	34,079		1,213,394
Merck KGAA	1,900		243,918
Metro AG	2,033		175,287
MTU Aero Engines Holdings AG	2,215		141,198
Porsche	3,007		5,373,739
Praktiker Bau-und Heiimwerkermaerkte Holding AG	8,933		375,980
Prosieben AG	16,002		554,063
Puma AG	199		80,149
Rheinmetall AG	2,726		226,090
Rhoen - Klinikum AG	23,894		733,913
RWE AG	99,706		11,217,876
Siemens AG	18,772		2,362,353
			63,078,928
Greece—1.0%
Alapis Holding Industrial and Commercial SA (a)	105,102		286,319
Greek Organization of Football Prognostics	155,280		5,681,079
Hellenic Telecom	29,580		966,982
Marfin Investment Group SA	108,595		1,038,380
			7,972,760
Hong Kong—0.8%
Beijing Capital International Airport Co. Ltd.	1,020,799		1,660,112
China Merchants Holdings International Co. Ltd.	312,550		1,633,523
Galaxy Entertainment Group Ltd. (a)	190,820		183,554
Gome Electical Appliances Holdings Ltd.	516,802		815,281
Hutchison Telecommumincations International Ltd.	60,302		78,733
Melco International Development Ltd.	402,406		616,236
Melco PBL Entertainment Ltd. (ADR) (a)	6,999		91,687
Shun Tak Holdings, Ltd.	982,398		1,476,703
			6,555,829
Hungary—1.1%
Gedeon Richter RT	4,299		846,513
Matav RT	279,674		1,396,110
MOL Hungarian Oil and Gas Nyrt.	1,184		168,869
OTP Bank	131,536		6,615,172
			9,026,664
Indonesia—0.0%
PT Semen Gresik	281,060		148,242
Ireland (Republic of)—0.8%
CRH	140,501		6,034,102
Italy—2.6%
Banca CR Firenze	110,085		985,151
Banca Intesa	110,311		766,299
Banca Popolare (b)	36,621		531,737
Banca Popolare Di Sondrio Scrl	5,748		101,782
Banca Popolare Scarl	20,171		504,440
Banche Popolari Unite Scrl	12,974		331,525
Bulgari SPA - A Shares	17,282		242,460
Buzzi Unicem SPA	26,152		750,192
Capitalia SPA	104,783		998,362
Credito Emiliano	21,109		270,274
Credito Italiano	474,635		4,066,490
Ente Nazionale Idrocarburi (b)	278,026		9,611,392
Finmeccanica SPA	12,907		378,159
Geox SPA	16,564		301,652
Impregilo SPA (a)	8,097		110,169
Luxottica Group SPA	5,532		188,831
Telecom Italia SPA	63,804		180,985
			20,319,900
Japan—17.5%
Acom Co. Ltd. (b)	3,080		92,051
Aeon Credit Service Ltd.	3,545		43,666
Aiful Corporation (b)	3,450		68,988
Aisin Seiki Co. Ltd.	2,301		86,856
Asatsu-DK, Inc. (b)	48,000		1,608,707
Bank of Yokohama	31,997		227,464
Canon, Inc.	177,249		10,135,513
Central Japan Railway Co.	525		5,895,310
Credit Saison	3,218		84,501
Dai Nippon Printing (b)	184,000		2,687,605
Daihatsu Motor Co. Ltd.	12,000		115,678
Daikin Industries Ltd.	6,900		309,925
Daiwa Securities	7,405		73,430
Denso Co.	4,994		175,137
Dentsu, Inc.	67		186,931
East Japan Railway Co.	38		302,963
Eisai Co. Ltd.	2,765		115,119
Fanuc Ltd.	1,600		155,757
Fuji Television Network	49		100,734
Honda Motor Y50	11,579		382,066
Hoya Corp. (b)	115,347		4,005,312
Ibiden Co. Ltd.	3,500		297,789
Itochu Corp.	12,000		130,189

	Shares	Value
COMMON STOCKS—Continued
Japan—Continued
Japan Tobacco, Inc.	93	$	516,533
JS Group Corp.	4,808		95,520
JSR Corp.	196,323		4,400,606
Kansai Electric Power, Inc.	59,400		1,387,898
Kao Corp.	386,000		10,969,509
KDDI Corp.	27		208,733
Keyence Corp. (b)	36,800		8,166,122
Koito Manufacturing Co.	987		11,168
Komatsu Ltd.	4,000		123,348
Kubota Corp.	6,207		48,146
Kyocera Corp.	6,100		558,521
Makita Corp.	4,112		159,124
Matsushita Electric Industrial Co.	23,671		413,021
Mitsubishi Electric Corp.	494,000		5,807,498
Mitsubishi Tokyo Finance	34		325,991
Mitsubishi UFJ Securities Co. Ltd.	4,912		47,605
Mitsui Fudosan Co. Ltd.	3,599		94,195
Mitsui Marine / Fire	841,000		9,487,311
Mitsui Mining & Smelting Co.	2		8
Mizuho Financial Group, Inc.	38		240,598
NGK Spark Plug Co.	13,000		215,038
NHK Spring Co. Ltd.	9,072		81,340
Nikon Corp.	9,000		281,420
Nintendo	901		417,930
Nippon Electric Glass Co. Ltd.	15,000		217,414
Nippon Telegraph & Telephone	44		204,474
Nissan Motor Co. Ltd.	8,580		82,561
Nitto Denko Corp.	139,401		6,502,249
Nomura Securities	5,614		99,410
NSK Ltd.	14,000		120,446
NTT Docomo, Inc.	3,546		5,421,456
Olympus Corp.	1,260		53,765
Omron Corp.	116,300		3,084,055
Oriental Land Co. (b)	101,500		5,733,869
Osaka Gas Co.	706,000		2,622,268
Promise Co. Ltd (b)	3,257		89,745
Ricoh Co. Ltd.	12,000		265,354
Rohm Company Ltd.	3,000		267,168
Sega Sammy Holdings, Inc. (b)	123,000		1,870,977
Seven & I Holdings Co.	4,618		123,258
Sharp Corp.	5,555		96,686
Shinsei Bank NPV	842,000		2,814,667
Sony Corp.	8,885		428,248
Stanley Electric Co. Ltd.	8,629		188,948
Sumitomo Chemical Co. Ltd.	25,000		186,793
Sumitomo Corp.	8,188		141,807
Sumitomo Electric Industries Ltd.	8,400		133,724
Sumitomo Heavy Industries, Ltd.	8,996		100,784
Sumitomo Metal Industries Ltd.	16,180		82,039
Sumitomo Mitsui Financial	1,320		10,432,755
Suzuki Motor Co.	12,831		346,904
T&D Holdings, Inc.	142,050		8,257,722
Taiyo Nippon Sanso Corp.	420,000		3,714,952
Takata Corp.	2,600		89,609
Takeda Chemical Industries	4,600		314,693
Takefuji Corp. (b)	25,170		676,157
Teijin Ltd.	773,000		3,866,002
Toray Industries, Inc.	6,797		51,959
Toyota Motor Corp.	17,344		1,012,745
Yamada Denki Co. Ltd.	4,819		483,690
Yamaha Motor Co. Ltd.	4,201		110,677
Yamanouchi Pharmaceutical	116,900		5,422,415
Yamato Holdings Ltd.	2,600		38,157
Yokogawa Electric Corp.	8,501		105,519
			137,194,995
Luxembourg—0.1%
Millicom International Cellular SA	8,312		700,951
Mexico—0.4%
America Movil SAB de C.V.	156,869		473,572
America Movil SAB de CV	2,976		179,929
Controladora Comercial Mexicana SA de CV	41,590		115,753
Corporacion Moctezuma, SAB de CV	115,501		349,733
Desarrolladora Homex SA de CV ADR	2,240		123,424
Fomento Economico Mexicano	9,405		327,670
Grupo Cementos de Chihuahua, SA de CV	18,578		114,512
Grupo Financiero Banorte SAB de CV (b)	182,376		744,021
Grupo Televisa SA -SPONS GDR	13,372		348,474
Urbi, Desarrollos Urbanos (a)	99,315		372,662
			3,149,750
Netherlands—5.8%
Akzo Nobel NV	74,857		5,890,390
CSM	77,976		2,586,242
Heineken	4,627		292,937
ING Groep	174,826		7,029,617
Kininklijke Vopak NV	3,832		224,442
Koninklijke (Royal) KPN NV	39,086		609,055
Koninklijke Ahold NV	16,640		222,121
Mittal Steel Company NV	86,352		5,689,286
Philips Electronics	15,258		601,250
Royal Dutch Shell PLC (b)	189,154		7,332,629
TNT NV	47,228		1,994,208
Unilever NV (b)	409,615		12,514,526
X5 Retail Group NV GDR (a)	5,733		192,056
			45,178,759
New Zealand—0.1%
Auckland International Airport Ltd.	196,969		418,727
Norway— 0.5%
DNB Holding ASA	9,370		128,469
Marine Harvest (a)(b)	251,405		295,080
Norsk Hydro	30,744		1,139,526
Orkla ASA	7,811		126,529
Statoil ASA	56,515		1,629,233
Telenor ASA	32,337		596,511
			3,915,348
Poland—1.2%
Bank Handlowy W Warszawie SA	30,222		1,276,364
Bank Millennium SA	11,356		50,633
Bank Pekao	22,279		1,943,005
Bank Zachodni WBK SA	12,185		1,100,931
BK Przemyslowo-Handlowy	2,867		926,521
Bre Bank SA (a)	2,073		369,717
ING Bank Slaski SA	366		119,846
Polskie Gornictwo Naftowe I Gazownictwo SA	297,415		553,774
Powszechna Kasa Oszczednosci Bank Polski SA	114,842		2,197,708

	Shares	Value
COMMON STOCKS—Continued
Poland—Continued
Telekomunikacja Polsk	159,298	$	1,233,018
			9,771,517
Portugal—0.2%
Energias De Portugal, SA (b)	23,651		129,827
Jeronimo Martins, SGPS, SA	206,456		1,178,286
			1,308,113
Republic of Korea (South)—0.1%
Hyundai Motor Co. Ltd.	2,687		199,377
Samsung Electronics	1,162		732,134
			931,511
Romania—0.1%
BRD-Groupe Societe Generale	73,614		887,804
Petrom	481,377		104,460
Socep Constanta (a)	665,000		83,253
			1,075,517
Russian Federation—1.9%
AFI Developement PLC (a)(c)	4,032		35,683
Gazprom	92,736		3,849,471
Lukoil Holding ADR	4,791		357,888
Norilsk Nickel	5,945		1,323,951
Novatek OAO	76,238		397,962
Novatek OAO GDR (e)	2,677		134,921
OAO Rosneft Oil Company GDR	190,341		1,560,796
OJSC TNK-BP Holding (c)	95,400		186,030
Open Investments (a)(d)	575		163,875
Pharmstandard GDR (a)(c)(e)	31,968		535,464
Polyus Gold ADR (a)	10,761		431,516
RAO Unified Energy System of Russia GDR	13,456		1,688,281
Sberbank RF	556,071		2,129,752
Silvinit (d)	402		105,726
Sistema Hals GDR (a)(c)(e)	15,050		188,878
TNK-BP Holding (a)(d)	6		104,400
Uralsvyazinform (ADR) (a)	18,163		208,875
URSA Bank OJSC (d)	165,848		323,404
VTB Bank OJSC GDR (a)(c)(e)	58,631		550,545
Wimm-Bill-Dann Foods	4,244		336,974
Wimm-Bill-Dann Foods ADR	4,078		417,424
			15,031,816
Spain—1.5%
Banco Bilbao Vizcaya Argenta (b)	169,318		3,895,310
Corporacion Mapfre (b)	96,421		425,526
Gamesa Corporacion Tecnologica, SA	4,594		183,094
Industria de Diseno Textil SA	9,071		531,909
Telefonica de Espana (b)	278,446		6,910,328
			11,946,167
Sweden—2.4%
Ericsson	3,125,025		11,601,526
Foreningssparbanken	52,285		1,709,800
Getinge AB	11,631		253,849
Hennes & Mauritz AB	9,096		512,464
Modern Times Group	11,442		654,592
Nordic Baltic Holding	84,889		1,292,595
OMX AB	8,592		296,546
Skandinaviska Enskilda Banken	37,973		1,145,407
Skanska AB	35,318		715,763
Svenska Cellulosa AB	17,292		299,664
Telia AB	25,769		200,862
			18,683,068
Switzerland—8.7%
BKW FMB Energie AG	850		83,340
Cie Financiere Richemont	28,677		1,774,813
Credit Suisse Group	9,853		643,633
Flughafen Zuerich AG	1,554		574,746
Givaudan SA	226		204,010
Holcim Ltd.	177,889		19,222,492
Nestle	59,228		25,752,370
Novartis AG	208,800		11,013,569
Roche Holdings	35,716		6,205,825
SGS SA	421		502,999
Swatch Group AG	5,460		1,634,250
Syngenta AG	1,339		250,495
UBS AG	4,544		236,862
			68,099,404
Taiwan—0.0%
Taiwan Semiconductor Manufacturing Co. Ltd.	7,960		78,963
Turkey—0.3%
Dogan Sirketler Grubu Holdings A.S. (a)	333,285		639,304
Haci Omer Sabanci Holding A.S.	53,326		295,776
Turkiye Garanti Bankasi A.S.	128,182		824,528
Turkiye Is Bankasi	156,934		767,684
			2,527,292
Ukraine—0.2%
Raiffeisen Bank Aval (a)	336,586		74,626
UKR Telecom (a)	5,614,790		1,110,903
UKR Telecom GDR	14,159		129,216
Ukrnafta Oil Co. (a)	7,212		566,430
			1,881,175
United Kingdom—22.8%
Aegis Group PLC	69,765		185,302
AMEC PLC	15,081		198,382
Anglo American PLC	18,240		1,045,795
Arriva PLC	8,977		136,909
Astrazeneca	77,723		3,831,073
Billiton	260,554		7,663,816
BP Amoco	705,381		7,927,946
British Aerospace	17,541		163,464
British American Tobacco	551,709		18,296,500
Burberry Group	30,868		379,915
Cadbury Schweppes	1,679,952		19,846,620
Compass Group PLC	188,368		1,234,192
Diageo	122,682		2,619,201
Drax Group PLC	432,768		5,801,881
Firstgroup PLC	12,227		160,593
G4S PLC	30,564		122,156
GlaxoSmithKline	229,330		5,987,185
Go-Ahead Group PLC	3,033		167,967
Hays PLC	2,855,487		9,153,125
HSBC Holdings	144,592		2,614,742
Imperial Tobacco	409,841		18,516,091
Intercontinental Hotels Group PLC	267,080		5,583,573
Interteck Group PLC	21,075		417,226
Johnston Press PLC	159,720		1,240,492
Kingfisher PLC	23,880		100,377
Ladbrokes PLC	914,035		8,024,963

	Shares/ Par (000)		Value
COMMON STOCKS—Continued
United Kingdom—Continued
Lonmin PLC		6,024	$	377,813
National Express Group PLC		6,553		165,665
National Grid PLC		386,556		5,786,300
Peter Hambro Mining (a)		11,570		213,426
Qinetiq PLC		53,461		191,844
Reckitt Benckiser		220,197		11,981,366
Reed International		497,881		6,007,334
Rentokil Initial PLC		48,540		169,488
Rio Tinto PLC		11,289		780,624
Rolls Royce		65,295		672,656
Royal Bank of Scotland		551,007		6,381,742
Scottish & Newcastle		27,213		339,593
Scottish & Southern Energy PLC		139,593		3,990,542
Smith & Nephew		161,774		1,904,643
Smiths Group PLC		4,129		82,159
Smiths Ind. PLC		215,740		4,292,792
South African Breweries PLC		7,678		210,513
Tesco		155,266		1,330,324
Vodafone Group		3,290,546		10,600,755
William Hill PLC		38,440		476,596
Wolseley		7,775		163,014
WPP Group PLC		48,952		696,734
				178,235,409
United States—0.2%
CTC Media, Inc.		17,579		405,020
News Corp., Inc.		52,565		1,142,763
				1,547,783
TOTAL COMMON STOCKS (Cost $556,698,426)				742,853,293
CLOSED END INVESTMENT COMPANIES—0.4%
Australia—0.3%
Macquarie Airports (b)		669,862		2,384,143
Romania— 0.1%
SIF 1 Banat-Crisana		50,000		83,253
SIF 2 Moldova		54,000		83,604
SIF 3 Transilvania Brasov (a)		82,000		84,180
SIF 4 Mutenia Bucuresti		75,000		81,062
SIF 5 Oltenia		47,500		90,786
				422,885
TOTAL CLOSED END INVESTMENT COMPANIES (Cost $1,803,707)				2,807,028
WARRANTS—0.9%
Germany—0.0%
Continental AG, expires 12/31/15, (exercise price: $1.28260) (c)		2,000		0
India— 0.8%
Bharti Televentures Ltd., expires 5/13/10 (exercise price: $0.000001) (a)(e)		48,034		1,032,265
Citigroup Global M CWT, expires 1/20/10 (exercise price: $0.00001) (a)		106,240		1,689,216
Citigroup, expires 1/19/09 (exercise price: $0.00001) (e)		24,695		966,562
State Bank of India, expires 5/13/10, (exercise price: $0.000001) (a)(e)		53,881		2,106,731
				5,794,774
Luxembourg—0.1%
ABN Amro Bank NV, expires 6/30/09 (exercise price: $.00001) (a)(c)		3,313		75,802
Canara Bank, expires 1/19/09, (exercise price: $0.00001) (a)		89,295		507,196
Citigroup - Cw10 Suzlon Energy, expires 1/20/10 (exercise price: $0.00001) (a)(e)		3,302		99,588
Citigroup - Cw12 Idea Cellular, expires 1/17/12 (exercise price: $0.00001) (a)(e)		52,632		147,896
Citigroup Global Markets, expires 1/19/09 (exercise price: $.00001) (a)(e)		7,502		155,291
				985,773
TOTAL WARRANTS (Cost $4,283,852)				6,780,547
SECURITIES HELD AS COLLATERAL FOR SECURITIES ON LOAN—4.6%
Investment in Securities Lending Short Term Investment Portfolio held by Credit Suisse First Boston (See Notes 1I and 3 in Notes to Schedules of Portfolio Investments.)	$	36,020		36,019,800
TOTAL SECURITIES HELD AS COLLATERAL FOR SECURITIES ON LOAN (Cost $36,019,800)				36,019,800
REPURCHASE AGREEMENTS—3.6%
Bank of America Securities, LLC (Agreement dated 8/31/07 to be repurchased at $13,235,275 collateralized by $13,185,000 (Value $13,487,888) U.S. Treasury Notes, 4.50%, due 11/15/10), 4.95%, 9/4/07		13,228		13,228,000
Wachovia Securities (Agreement dated 8/31/07 to be repurchased at $15,008,483 collateralized by $14,740,000 (Value $15,335,302) U.S. Treasury Notes, 1.86%, 7/15/15), 5.09%, 9/4/07		15,000		15,000,000
TOTAL REPURCHASE AGREEMENTS (Cost $28,228,000)				28,228,000
TOTAL INVESTMENT IN SECURITIES — 104.3% (Cost $627,033,785) (f)				816,688,668
LIABILITIES IN EXCESS OF OTHER ASSETS — (4.3)%				(33,606,796	)
NET ASSETS — 100.0%			$	783,081,872

(a) Non-income producing security.

(b) A portion or all the amounts are temporarily on loan to an unaffiliated broker/dealer. (See Notes 1I and 3 in Notes to Schedules of Portfolio Investments.)

(c) Security for which market quotations were not readily available. Security was priced in accordance with procedures adopted by the Fund’s Board of Directors.

(d) Illiquid security. These securities represents 0.12% of net assets at August 31, 2007. (See Note 4 in Notes to Schedules of Portfolio Investments.)

(e) Security exempt from registration under Rule 144A or Section 4(2) of the Securities Act of 1933, as amended, or otherwise restricted as to resale. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. The Adviser, using procedures approved by the Board of Directors, has deemed these securities to be liquid.

(f) Aggregate cost for Federal income tax purposes is $630,518,271. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows:

Excess of value over tax cost	$	205,411,626
Excess of tax cost over value	$	(19,241,229	)

See Accompanying Investment Abbreviations and Notes to Schedules of Portfolio Investments.

Mercantile Funds, Inc.

Diversified Real Estate Fund

Schedule of Portfolio Investments

August 31, 2007

(Unaudited)

	Shares/ Par (000)		Value
REAL ESTATE INVESTMENT TRUSTS AND COMMON STOCKS—99.8%
Diversified—6.4%
Cousins Properties, Inc. (a)		45,460	$	1,248,786
Eastgroup Properties, Inc.		44,340		1,881,346
Vornado Realty Trust (a)		85,200		9,081,468
				12,211,600
Health Care—5.2%
Health Care Property Investors, Inc.		74,420		2,263,856
Medical Properties Trust, Inc. (a)		91,066		1,226,659
Nationwide Health Properties, Inc. (a)		59,310		1,645,853
OMEGA Healthcare Investors, Inc.		101,180		1,506,570
Ventas, Inc. (a)		83,730		3,188,439
				9,831,377
Hotel—8.3%
Hersha Hospitality Trust		80,280		877,460
Hospitality Properties Trust		9,830		387,892
Host Marriott Corp. (a)		269,603		6,009,451
LaSalle Hotel Properties (a)		50,360		2,096,991
Starwood Hotels & Resorts Worldwide, Inc.		73,760		4,508,211
Strategic Hotels & Resorts, Inc. (a)		42,900		882,453
Sunstone Hotel Investors, Inc.		38,550		1,039,308
				15,801,766
Mortgage—1.2%
Anthracite Capital, Inc. (a)		114,600		1,038,276
Newcastle Investment Corp. (a)		72,650		1,208,896
				2,247,172
Office Properties—19.7%
Alexandria Real Estate Equities, Inc. (a)		58,130		5,425,273
BioMed Realty Trust, Inc.		69,952		1,705,430
Boston Properties, Inc.		71,180		7,122,983
Brookfield Properties Corp.		109,030		2,516,412
Corporate Office Properties Trust, Inc.		100,800		4,341,456
Digital Reality Trust, Inc.		72,570		2,830,230
Douglas Emmett, Inc.		42,010		1,027,144
Kilroy Realty Corp.		30,200		1,846,126
Mack-Cali Realty Corp.		38,360		1,601,914
SL Green Realty Corp. (a)		80,161		8,938,753
				37,355,721
Residential—13.8%
American Campus Communities, Inc.		57,810		1,638,335
AvalonBay Communities, Inc. (a)		49,094		5,615,372
Camden Property Trust		60,930		3,746,586
Equity Residential Property (a)		177,240		7,132,138
Essex Property Trust, Inc. (a)		30,060		3,540,767
Mid-America Apartment Communities, Inc.		19,170		950,640
UDR, Inc.		138,400		3,475,224
				26,099,062
Retail—33.2%
Developers Diversified Realty Corp. (a)		130,100		6,957,748
Entertainment Properties Trust (a)		26,790		1,281,634
Federal Realty Investment Trust		40,080		3,369,526
General Growth Properties, Inc. (a)		158,160		7,862,134
Kimco Realty Corp. (a)		184,770		7,911,851
Macerich Co.		93,650		7,606,253
Pennsylvania Real Estate Investment Trust		37,200		1,407,276
Realty Income Corp. (a)		49,800		1,344,600
Regency Centers Corp. (a)		88,750		6,165,462
Simon Property Group, Inc. (a)		139,190		13,211,915
Tanger Factory Outlet Centers, Inc. (a)		34,930		1,329,785
Taubman Centers, Inc.		49,920		2,574,874
Weingarten Realty Investors (a)		49,040		1,971,898
				62,994,956
Storage—5.0%
Public Storage, Inc. (a)		88,700		6,721,686
Sovran Self Storage, Inc. (a)		35,780		1,614,036
U-STORE-IT Trust		85,740		1,162,634
				9,498,356
Warehouse/Industrial—7.0%
AMB Property Corp. (a)		48,030		2,640,689
First Potomac Realty Trust		53,290		1,129,215
Prologis Trust		158,250		9,520,320
				13,290,224
TOTAL REAL ESTATE INVESTMENT TRUSTS AND COMMON STOCKS (Cost $113,602,514)				189,330,234
MONEY MARKET FUND — 0.0%
Goldman Sachs Financial Square Prime Obligations Fund		15,935		15,935
TOTAL MONEY MARKET FUND (Cost $15,935)
SECURITIES HELD AS COLLATERAL FOR SECURITIES ON LOAN—40.1%
Investment in Securities Lending Short Term Investment Protfolio held by Credit Suisse First Boston (See Notes 1I and 3 in Notes to Schedules of Portfolio Investments.)	$	76,038		76,038,327
TOTAL SECURITIES HELD AS COLLATERAL FOR SECURITIES ON LOAN (Cost $76,038,327)				76,038,327
TOTAL INVESTMENT IN SECURITIES — 139.9% (Cost $189,656,776) (b)				265,384,496
LIABILITIES IN EXCESS OF OTHER ASSETS — (39.9)%				(75,737,039	)
NET ASSETS — 100.0%			$	189,647,457

(a) A portion or all the share amounts are temporarily on loan to an unaffiliated broker/dealer. (See Notes 1I and 3 in Notes to Schedules of Portfolio Investments.)

(b) Aggregate cost for Federal income tax purposes is $188,983,540. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows:

Excess of value over tax cost	$	80,352,989
Excess of tax cost over value	$	(3,952,033	)

See Accompanying Investment Abbreviations and Notes to Schedules of Portfolio Investments.

Mercantile Funds, Inc.

Limited Maturity Bond Fund

Schedule of Portfolio Investments

August 31, 2007

(Unaudited)

	Par (000)		Value
U.S. GOVERNMENT AGENCY SECURITIES—34.3%
Fannie Mae—17.6%
Mortgage Backed Securities
5.50%, 10/1/17	$	824	$	821,792
4.84%, 1/1/36		1,502		1,532,268
Notes
4.88%, 4/10/08		2,500		2,495,300
5.25%, 6/15/08		1,750		1,752,957
4.00%, 9/2/08		1,000		992,174
5.25%, 1/15/09		1,250		1,256,900
6.63%, 9/15/09(a)		5,000		5,186,440
3.88%, 2/15/10		3,850		3,779,672
6.00%, 5/15/11(a)		2,000		2,085,660
5.00%, 10/15/11(a)		1,750		1,766,331
				21,669,494
Federal Home Loan Bank—2.1%
Notes, 5.25%, 6/11/10		2,500		2,535,250
Freddie Mac—14.1%
Mortgage Backed Securities
5.50%, 10/1/16		452		451,970
5.50%, 3/1/22		3,265		3,246,719
5.50%, 4/1/22		4,390		4,365,057
5.29%, 2/1/36		1,999		1,987,693
5.07%, 3/1/36		2,649		2,603,237
Notes, 4.13%, 10/18/10(a)		4,700		4,623,202
				17,277,878
Government National Mortgage Association—0.5%
Mortgage Backed Securities
6.50%, 6/15/14		99		101,701
6.50%, 11/15/15		108		111,009
5.50%, 9/15/16		345		344,562
4.50%, 11/15/17		106		102,569
				659,841
TOTAL U.S. GOVERNMENT AGENCY SECURITIES (Cost $42,027,730)				42,142,463
CORPORATE BONDS—37.0%
Auto— 1.1%
Ford Motor Credit, 7.38%, 10/28/09		625		591,701
General Motors Acceptance Corp., 6.00%, 12/15/11		825		709,978
				1,301,679
Banking & Financial Services—20.3%
American Express Credit, 3.00%, 5/16/08		1,500		1,474,515
Bank Of America, 4.25%, 10/1/10		1,000		973,181
Bank of America Corp., 3.25%, 8/15/08		1,500		1,469,935
Bear Stearns, 3.25%, 3/25/09		1,500		1,434,382
Charter One Bank, 5.50%, 4/26/11		1,800		1,841,402
CIT Group, Inc., 3.65%, 11/23/07		1,650		1,634,087
Citigroup, Inc., 5.10%, 9/29/11		2,525		2,512,577
Countrywide Home Loan, 5.63%, 7/15/09		640		605,210
General Electric Capital Corp., 5.88%, 2/15/12		2,500		2,563,550
Goldman Sachs Group Inc., 4.50%, 6/15/10		1,500		1,474,965
Hartford Financial Services Group, 5.25%, 10/15/11		1,500		1,512,330
J.P. Morgan Chase & Co., 6.00%, 2/15/09		1,500		1,519,851
Merrill Lynch & Co., 4.13%, 1/15/09		2,500		2,449,075
Morgan Stanley, 3.88%, 1/15/09		1,000		981,940
Residential Capital Corp., 6.13%, 11/21/08		930		776,755
Wachovia Corp., 3.50%, 8/15/08		1,800		1,762,940
				24,986,695
Beverages—0.6%
Constellation Brands Inc, 8.00%, 2/15/08		750		756,563
Building - Residential & Commercial— 0.5%
D.R. Horton, Inc., 8.00%, 2/1/09		650		645,925
Computers—3.7%
Hewlett-Packard Co., 5.25%, 3/1/12(a)		1,925		1,935,279
IBM, 4.38%, 6/1/09		2,600		2,587,182
				4,522,461
Hotel—1.2%
MGM Mirage, Inc., 8.50%, 9/15/10		750		781,875
Park Place Entertainment Corp., 8.88%, 9/15/08		650		660,562
				1,442,437
Machinery & Equipment—1.8%
Caterpillar Financial Services Corp., 4.70%, 3/15/12		1,300		1,286,411
John Deere Capital Corp., 3.38%, 10/1/07		1,000		998,359
				2,284,770
Manufacturing—0.3%
3M Employee Stock Ownership, 5.62%, 7/15/09(b)		337		340,371
Oil & Exploration—0.4%
Tesoro Petroleum Corp., 6.25%, 11/1/12(a)		500		493,750
Pharmaceuticals—3.0%
Bristol-Myer Squibb, 4.00%, 8/15/08		2,000		1,967,140

	Par (000)		Value
CORPORATE BONDS—Continued
Pharmaceuticals—Continued
Pfizer Inc., 3.30%, 3/2/09	$	1,750	$	1,708,677
				3,675,817
Retail— 2.2%
Target Corp., 3.38%, 3/1/08		2,750		2,718,760
Telecommunications— 0.6%
SBC Communications, 5.30%, 11/15/10		750		749,220
Utilities - Electrical & Electronic— 1.3%
Public Service Co. of Colorado, 4.38%, 10/1/08		1,600		1,585,632
TOTAL CORPORATE BONDS (Cost $45,939,218)				45,504,080
ASSET BACKED SECURITIES—6.3%
AEP Texas Central Transition Funding, 4.98%, 1/1/10		2,206		2,202,930
John Deere Owner Trust, 5.04%, 7/15/11		2,500		2,507,143
USAA Auto Owner Trust, 4.98%, 10/15/12		1,400		1,387,176
Wachovia Auto Owner Trust, 5.35%, 2/22/11		1,600		1,599,520
TOTAL ASSET BACKED SECURITIES (Cost $7,705,761)				7,696,769
COMMERCIAL MORTGAGE BACKED SECURITIES—3.4%
Commercial Mortgage 2006-C8 A2B, 5.25%, 12/10/46		1,500		1,486,695
Commercial Mortgage 2007-CD4 A2B, 5.21%, 12/11/49		2,800		2,764,860
TOTAL COMMERCIAL MORTGAGE BACKED SECURITIES (Cost $4,321,384)				4,251,555
FOREIGN BONDS—8.6%
Corporate Bonds—8.3%
ConocoPhillips Canada, 5.30%, 4/15/12		2,200		2,211,022
Cosan SA Industrial, 9.00%, 11/1/09 (b)		875		922,031
Eksportfinans, 5.13%, 10/26/11		1,200		1,215,576
European Investment Bank, 4.63%, 3/21/12		2,050		2,040,921
HSBC Holding, PLC., 7.50%, 7/15/09		1,500		1,568,888
Hutchison Whampoa International, 5.45%, 11/24/10 (b)		1,500		1,500,480
Royal Caribbean Cruises, 8.75%, 2/2/11		725		773,410
				10,232,328
Sovereign— 0.3%
Brazil de Republic, 9.25%, 10/22/10		350		385,875
TOTAL FOREIGN BONDS (Cost $10,534,354)				10,618,203
SECURITIES HELD AS COLLATERAL FOR SECURITIES ON LOAN—18.6%
Investment in Securities Lending Short Term Investment Portfolio held by Credit Suisse First Boston (See Notes 1I and 3 in Notes to Schedules of Portfolio Investments.)		22,855		22,854,836
TOTAL SECURITIES HELD AS COLLATERAL FOR SECURITIES ON LOAN (Cost $22,854,836)				22,854,836
U.S. TREASURY OBLIGATIONS—8.8%
U.S. Treasury Notes— 8.8%
Notes
3.00%, 2/15/08		1,000		994,770
3.50%, 2/15/10(a)		1,500		1,476,212
4.00%, 4/15/10(a)		2,500		2,489,455
3.88%, 7/15/10		1,800		1,787,490
5.00%, 2/15/11(a)		1,500		1,541,485
5.00%, 8/15/11(a)		2,500		2,574,610
TOTAL U.S. TREASURY OBLIGATIONS (Cost $10,720,920)				10,864,022
MONEY MARKET FUND —0.7%
Victory Institutional Money Market Fund		833,032		833,031
TOTAL MONEY MARKET FUND (Cost $833,031)				833,031
TOTAL INVESTMENT IN SECURITIES — 117.7% (Cost $144,937,234) (c)				144,764,959
LIABILITIES IN EXCESS OF OTHER ASSETS — (17.7)%				(21,687,014	)
NET ASSETS — 100.0%			$	123,077,945

(a) A portion or all the amounts are temporarily on loan to an unaffiliated broker/dealer. (See Notes 1I and 3 in Notes to Schedules of Portfolio Investments.)

(b) Security exempt from registration under Rule 144A of the Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers. The Adviser, using procedures adopted by the Board of Directors, has deemed these securities to be liquid.

(c) Aggregate cost for Federal income tax purposes is $144,976,290. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows:

Excess of value over tax cost	$	575,678
Excess of tax cost over value	$	(787,009	)

See Accompanying Investment Abbreviations and Notes to Schedules of Portfolio Investments.

Mercantile Funds, Inc.

Total Return Bond Fund

Schedule of Portfolio Investments

August 31, 2007

(Unaudited)

	Par (000)		Value
U.S. GOVERNMENT AGENCY SECURITIES—55.6%
Fannie Mae—23.9%
Mortgage Backed Securities
7.50%, 10/1/07	$	0	$	233
7.00%, 4/1/11		6		6,476
5.50%, 10/1/18		1,549		1,543,547
5.00%, 10/1/19		1,517		1,483,826
7.50%, 8/1/26		6		6,399
8.00%, 9/1/26		12		13,065
7.00%, 4/1/27		12		11,944
8.00%, 8/1/27		55		57,992
8.00%, 9/1/27		4		4,412
7.00%, 10/1/27		4		4,052
7.50%, 10/1/27		47		49,311
7.50%, 10/1/27		39		41,035
8.00%, 10/1/27		2		2,572
7.00%, 11/1/27		26		27,139
7.00%, 3/1/29		46		48,167
7.50%, 10/1/29		46		47,687
7.50%, 4/1/30		2		2,296
7.50%, 8/1/30		4		4,290
7.50%, 1/1/31		2		2,147
7.50%, 4/1/31		4		3,867
7.50%, 4/1/31		0		492
7.50%, 7/1/31		17		17,777
7.50%, 8/1/31		23		24,293
6.50%, 2/1/32		605		619,213
6.50%, 10/1/32		736		751,551
5.50%, 1/1/34		2,206		2,160,667
5.50%, 4/1/34		2,973		2,912,660
5.00%, 11/1/35		6,199		5,892,651
4.84%, 1/1/36		1,618		1,650,135
5.50%, 4/1/37		7,365		7,194,022
Notes
3.88%, 2/15/10		6,075		5,964,028
4.38%, 9/15/12		1,000		983,830
4.63%, 5/1/13		2,250		2,215,417
4.63%, 10/15/13		2,350		2,319,614
				36,066,807
Freddie Mac—31.1%
Mortgage Backed Securities
5.50%, 10/1/18		1,836		1,829,171
4.50%, 11/1/18		2,385		2,295,499
5.00%, 11/1/18		2,175		2,131,805
5.00%, 1/1/19		2,027		1,986,319
5.00%, 3/1/19		2,542		2,489,962
5.50%, 7/1/20		1,813		1,803,390
5.00%, 12/1/20		1,610		1,573,210
5.50%, 3/1/22		2,799		2,782,902
7.50%, 7/1/26		7		7,530
8.00%, 10/1/29		6		6,499
7.50%, 9/1/30		4		4,285
8.00%, 9/1/30		1		1,281
8.00%, 12/1/30		1		583
8.00%, 5/1/31		4		4,297
6.00%, 12/1/33		1,838		1,843,446
5.00%, 10/1/34		2,217		2,113,956
6.00%, 10/1/34		1,699		1,702,152
5.50%, 1/1/35		1,952		1,910,408
6.00%, 12/1/35		3,084		3,085,318
5.29%, 2/1/36		2,062		2,050,462
5.07%, 3/1/36		3,072		3,018,880
6.00%, 4/1/37		5,417		5,414,125
Notes
5.88%, 3/21/11		2,000		2,076,680
4.38%, 7/17/15		5,900		5,665,357
5.30%, 5/12/20		1,000		972,985
				46,770,502
Government National Mortgage Association—0.6%
Mortgage Backed Securities
7.00%, 2/15/12		12		12,890
9.00%, 5/15/16		0		522
9.00%, 11/15/16		17		17,853
7.00%, 2/15/17		145		149,933
8.00%, 5/15/17		3		3,250
8.00%, 5/15/17		2		2,616
10.00%, 5/15/19		8		9,623
9.00%, 11/15/19		6		6,747
9.00%, 6/15/21		49		53,166
9.00%, 8/15/21		10		10,763
9.00%, 9/15/21		14		14,822
9.00%, 9/15/21		7		7,255
9.00%, 9/15/21		2		2,145
9.00%, 9/15/21		1		984
8.00%, 2/15/23		70		74,204
7.00%, 5/20/24		6		6,716
7.00%, 10/15/25		7		6,943
6.50%, 2/15/26		7		7,074
7.00%, 2/15/26		79		82,362
6.50%, 3/15/26		6		6,140
7.00%, 1/15/27		7		7,599
7.00%, 2/15/27		47		49,549
8.50%, 8/15/27		17		18,465
7.00%, 9/15/27		9		9,057
8.00%, 9/15/27		12		12,621
7.00%, 10/15/27		44		45,997
7.00%, 10/15/27		8		8,595
7.00%, 10/15/27		3		2,963
7.00%, 11/15/27		56		58,588
7.00%, 12/15/27		5		4,748
7.00%, 4/15/28		2		2,035
6.50%, 7/15/28		48		48,711
6.50%, 12/15/28		59		60,378
6.50%, 1/15/29		49		50,004
7.50%, 10/15/29		26		27,632
7.50%, 1/15/32		18		19,318
				902,268
TOTAL U.S. GOVERNMENT AGENCY SECURITIES (Cost $84,586,969)				83,739,577
CORPORATE BONDS—25.3%
Advertising—0.9%
Omnicom Group, Inc., 5.90%, 4/15/16		1,350		1,349,450
Auto—1.0%
Ford Motor Credit, 7.38%, 10/28/09		760		719,508

	Par (000)		Value
CORPORATE BONDS—Continued
Auto—Continued
General Motors Acceptance Corp., 6.00%, 12/15/11	$	860	$	740,099
				1,459,607
Banking & Financial Services—12.7%
Bank of America
5.38%, 8/15/11		1,000		1,006,210
5.63%, 10/14/16		1,100		1,086,294
Bear Stearns Co., Inc., 5.35%, 2/1/12		2,425		2,329,770
Charter One Bank, 5.50%, 4/26/11		1,450		1,483,352
Citigroup, Inc., 5.10%, 9/29/11		1,500		1,492,620
Countrywide Home Loan, 5.63%, 7/15/09		800		756,512
Credit Suisse USA, Inc., 5.25%, 3/2/11		1,425		1,426,097
General Electric Capital Corp.
5.50%, 4/28/11		785		795,206
6.75%, 3/15/32(a)		1,300		1,432,366
Goldman Sachs Group, Inc., 6.60%, 1/15/12		2,025		2,090,239
J.P. Morgan Chase & Co., 6.00%, 2/15/09		1,475		1,494,520
Merrill Lynch & Co.
6.00%, 2/17/09		1,825		1,836,890
6.40%, 8/28/17		700		714,728
Morgan Stanley, 4.75%, 4/1/14		1,325		1,240,346
				19,185,150
Building - Residential & Commercial—0.5%
D.R. Horton, Inc., 8.00%, 2/1/09		675		670,768
Computers— 0.5%
IBM, 4.38%, 6/1/09		800		796,056
Diversified Manufacturing—1.9%
Freeport McMoran C & G, 8.25%, 4/1/15		760		807,500
General Electric Co., 5.00%, 2/1/13		1,400		1,382,800
Steel Dynamics, Inc., 6.75%, 4/1/15 (b)		750		725,625
				2,915,925
Food—0.5%
Constellation Brands, Inc., 7.25%, 5/15/17 (b)		750		731,250
Health Care—1.5%
HCA, Inc., 9.13%, 11/15/14 (b)		785		806,588
Johnson & Johnson, 5.95%, 8/15/37		1,475		1,507,258
				2,313,846
Hotel—1.0%
MGM Mirage, Inc., 8.50%, 9/15/10		725		755,812
Park Place Entertainment Corp., 8.88%, 9/15/08		700		711,375
				1,467,187
Oil & Exploration—0.5%
Tesoro Petroleum Corp., 6.25%, 11/1/12 (a)		770		760,375
Retail—0.7%
Wal-Mart Stores, Inc., 5.25%, 9/1/35		1,175		1,029,657
Technology—0.5%
United Technologies Corp., 4.38%, 5/1/10		735		725,857
Telecommunications—2.7%
SBC Communications, 5.30%, 11/15/10		1,875		1,873,050
Time Warner, Inc., 5.88%, 11/15/16		800		785,302
Verizon New Jersey, Inc., 5.88%, 1/17/12		1,400		1,423,590
				4,081,942
Utilities - Electrical & Electronic—0.4%
Public Service Co. of Colorado, 4.38%, 10/1/08		650		644,163
TOTAL CORPORATE BONDS (Cost $38,487,088)				38,131,233
FOREIGN BONDS—4.0%
Corporate Bonds—3.4%
Cia Brasileira de Bebida, 8.75%, 9/15/13		725		821,063
Cosan SA Industrial, 9.00%, 11/1/09 (b)		725		763,969
Hutchison Whampoa International, 5.45%, 11/24/10 (b)		900		900,288
Petrobas International Financial Co., 6.13%, 10/6/16		900		887,625
Royal Caribbean Cruises, 8.75%, 2/2/11		775		826,749
Vale Overseas Limited, 6.25%, 1/23/17		925		933,417
				5,133,111
Sovereign—0.6%
Brazil de Republic, 9.25%, 10/22/10		725		799,312
TOTAL FOREIGN BONDS (Cost $5,743,724)				5,932,423
COMMERCIAL MORTGAGE BACKED SECURITIES—6.2%
Bear Stearns Commercial Mortgage Securities, 5.71%, 6/11/40 (b)(c)		760		586,545
CD 2006-CD3 AAB, 5.61%, 10/15/48		1,725		1,721,309
Commercial Mortgage 2006-C8 A2B, 5.25%, 12/10/46		1,750		1,734,477

	Shares/ Par (000)		Value
COMMERCIAL MORTGAGE BACKED SECURITIES—Continued
Commercial Mortgage 2007-CD4 ASB, 5.28%, 12/11/49	$	3,085	$	3,019,752
J.P. Morgan Chase Commercial Mortgage Securities(b)(c)
5.74% , 2/12/49		750		538,733
6.00% , 6/15/49		780		561,600
LB-UBS Commercial Mortgage Securities, BUBS 2006-C6 AAB, 5.34%, 9/15/39		1,250		1,233,125
TOTAL COMMERCIAL MORTGAGE BACKED SECURITIES (Cost $9,866,145)				9,395,541
U.S. TREASURY NOTES—7.7%
Notes
6.75%, 8/15/26		750		922,440
4.38%, 12/15/10		1,500		1,508,790
4.50%, 2/15/09(a)		2,000		2,008,440
4.88%, 8/15/16(a)		1,800		1,845,432
STRIPS
0.00%, 11/15/13		4,800		3,680,400
0.00%, 11/15/22		3,375		1,597,928
TOTAL U.S. TREASURY NOTES (Cost $11,220,799)				11,563,430
MONEY MARKET FUND —1.2%
Victory Institutional Money Market Fund		1,857,645		1,857,645
TOTAL MONEY MARKET FUND (Cost $1,857,645)				1,857,645
SECURITIES HELD AS COLLATERAL FOR SECURITIES ON LOAN—3.7%
Investment in Securities Lending Short Term Investment Portfolio held by Credit Suisse First Boston (See Notes 1I and 3 in Notes to Schedules of Portfolio Investments.)		5,590		5,590,258
TOTAL INVESTMENT IN SECURITIES — 103.7% (Cost $157,352,628) (d)				156,210,107
LIABILITIES IN EXCESS OF OTHER ASSETS — (3.7)%				(5,573,643	)
NET ASSETS — 100.0%			$	150,636,464

(a) A portion or all the amounts are temporarily on loan to an unaffiliated broker/dealer. (See Notes 1I and 3 in Notes to Schedules of Portfolio Investments.)

(b) Security exempt from registration under Rule 144A of the Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers. The Adviser, using procedures adopted by the Board of Directors, has deemed these securities liquid.

(c) Variable or floating rate security. Rate disclosed is as of August 31, 2007.

(d) Aggregate cost for Federal income tax purposes is $157,390,101. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows:

Excess of value over tax cost	$	1,149,805
Excess of tax cost over value	$	(2,329,799	)

See Accompanying Investment Abbreviations and Notes to Schedules of Portfolio Investments.

Mercantile Funds, Inc.

Maryland Tax-Exempt Bond Fund

Schedule of Portfolio Investments

August 31, 2007

(Unaudited)

	Par (000)		Value
MUNICIPAL BONDS—98.6%
District of Columbia—3.0%
Washington D.C., Metro Area, Transit Authority, RB, Refunding, INS: MBIA, 5.00%, 1/1/12	$	500	$	525,515
Washington D.C., Metropolitan Transit Authority, Gross Revenue INS: MBIA, 5.00%, 7/1/10		300		310,263
Washington D.C., Metropolitan Transit Authority, RB, INS: FGIC, 6.00%, 7/1/09		600		624,174
				1,459,952
Maryland—88.3%
Annapolis, GO, CPI, 5.00%, 11/1/16		440		449,654
Anne Arundel County, GO
5.00%, 3/1/16		750		791,925
4.13%, 3/1/23		1,285		1,224,759
4.13%, 3/1/23		810		772,027
Anne Arundel County, GO, Prerefunded 3/1/12 @ 100, 5.25%, 3/1/18		1,000		1,063,990
Baltimore City, Construction, Public Improvements, GO, INS: AMBAC, 5.00%, 10/15/19		715		754,447
Baltimore City, GO, INS: MBIA, 7.00%, 10/15/10		450		493,794
Baltimore City, RB, Waste Water Project, INS: FGIC, 5.00%, 7/1/22		1,000		1,063,210
Baltimore City, RB, Waste Water Project, INS: MBIA, Prerefunded 7/1/15 @ 100, 5.00%, 7/1/21		1,000		1,073,490
Baltimore County, GO
5.00%, 8/1/11		750		788,190
5.13%, 8/1/12		500		511,420
Baltimore County, RB, Catholic Health, 5.00%, 9/1/21		500		511,995
Baltimore Maryland Gas & Electric, 3.88%, 9/6/07		1,200		1,200,000
Charles County, GO, 5.00%, 3/1/12		1,000		1,053,730
Frederick County, GO, Public Facilities, 5.00%, 8/1/17		1,730		1,847,415
Harford County, GO, 5.00%, 7/15/20		600		630,186
Harford County, GO, CPI, UT, 5.00%, 12/1/14		125		127,840
Maryland Environmental Services-Cecil County, RB, Landfill Project
5.13%, 9/1/10		180		184,885
5.30%, 9/1/12		250		259,927
Maryland State And Local Facilities, 5.00%, 8/1/16		2,000		2,116,060
Maryland State Community Development Administration, 3.70%, 9/1/09		1,000		998,860
Maryland State Community Development, RB, Administration Department of Housing & Community Development, Infrastructure, INS: MBIA
5.13%, 6/1/17		325		331,129
5.15%, 6/1/22		390		396,653
Maryland State Economic Development Corporation, 4.02`%, 2/1/34 (a)		850		850,000
Maryland State Economic Development, RB, Corporate Lease, Maryland Department of Transportation Headquarters, 5.00%, 6/1/15		450		`473,076
Maryland State Economic Development, RB, Infrastructure, University of Maryland-College Park Project, INS: AMBAC, 5.38%, 7/1/14		490		518,082
Maryland State Health & Higher Education, RB, Peninsula Medical Center, 5.00%, 7/1/19		500		515,800
Maryland State Health & Higher Education, RB, VRDB, Pooled Loan Program, LOC: Banc One, 3.87%, 4/1/35 (a)		500		500,000
Maryland State Health & Higher Educational Facilities Authority, College of Notre Dame, INS: MBIA, 5.30%, 10/1/18		460		506,994
Maryland State Health & Higher Educational Facilities Authority, Johns Hopkins University, RB, Prerefunded 7/1/09 @ 101, 6.00%, 7/1/39		500		525,275
Maryland State Health & Higher Educational Facilities Authority, Johns Hopkins University, RB, Refunding, 5.63%, 7/1/17		500		510,650
Maryland State Health & Higher Educational Facilities Authority, RB, Board of Child Care
5.50%, 7/1/13		1,650		1,747,828
5.38%, 7/1/32		500		509,410
Maryland State Health & Higher Educational Facilities Authority, RB, Carroll Hospital Center, 5.00%, 7/1/36		1,000		939,020
Maryland State Health & Higher Educational Facilities Authority, RB, Goucher College, 5.38%, 7/1/25		500		515,935
Maryland State Health & Higher Educational Facilities Authority, RB, Johns Hopkins Hospital, 5.13%, 7/1/20		500		514,035
Maryland State Health & Higher Educational Facilities Authority, RB, Johns Hopkins University, 5.13%, 7/1/11		600		618,624
Maryland State Health & Higher Educational Facilities Authority, RB, Refunding, Johns Hopkins University
5.25%, 7/1/16		750		772,605
5.25%, 7/1/17		500		515,025

	Shares/ Par (000)		Value
Maryland State Health & Higher Educational Facilities Authority, Suburban Hospital, RB, 5.50%, 7/1/16	$	750	$	793,590
Maryland State Health & Higher Educational Facilities Authority, University of MD Med System, 4.50%, 7/1/26		200		184,644
Maryland State Health & Higher Educational Facilities Authority, Western MD Health System, INS: MBIA, FHA, 5.00%, 7/1/21		750		783,120
Maryland State Industrial Development, RB, IDA, American Center for Physics, SPA: American Institute of Physics, 5.25%, 12/15/14		500		526,935
Maryland State Industrial Development, RB, National Aquarium Baltimore, 5.50%, 11/1/17		750		800,820
Montgomery County Economic Development, RB, VRDB, Georgetown Prep, LOC: Bank of America, 4.00%, 6/1/35 (a)		500		500,000
Montgomery County Revenue Authority, RB, Olney Indoor Swim Project, 5.25%, 10/1/12		200		200,128
Montgomery County, RB, Economic Development Revenue, Trinity Health Care Group, 5.50%, 12/1/16		930		977,542
Montgomery County, RB, Housing Opportunity Community Housing, Multi-Family, Avalon Knoll, FNMA, 5.70%, 7/1/10		150		152,301
New Baltimore School Board, RB, 5.13%, 11/1/14		455		472,881
Prince Georges County IDA, RB, Upper Marlboro Justice, INS: MBIA
5.00%, 6/30/17		500		524,910
5.00%, 6/30/19		710		742,000
Prince Georges County, RB, IDA, Hyattsville District Court Facility, 6.00%, 7/1/09		675		675,668
Queen Anne’s County, GO, INS: FGIC, 5.00%, 11/15/10		400		416,000
Saint Mary’s County, GO, Refunding, St. Mary’s Hospital, 5.00%, 10/1/09		880		902,238
St. Mary’s College, RB, INS: AMBAC, 5.00%, 9/1/22		995		1,038,253
Talbot County, GO, 5.00%, 3/15/12		480		504,970
Washington County, GO, INS: FGIC, 5.00%, 1/1/16		675		692,003
Washington County, GO, INS: FGIC, Prerefunded 1/1/10 @ 101, 5.50%, 1/1/20		300		314,922
Washington Suburban Sanitary District, GO
5.00%, 6/1/19		680		718,808
5.00%, 6/1/20		1,000		1,052,330
Washington Suburban Sanitary District, GO, General Construction, Prerefunded 6/1/10 @ 100, 5.25%, 6/1/24		440		458,049
Westminster Educational Facilities Revenue, RB, McDaniel College
5.00%, 11/1/21		160		161,277
5.00%, 11/1/23		240		239,983
Wicomico County, GO, INS: FGIC, 5.00%, 2/1/15		755		765,970
				43,777,287
Puerto Rico— 4.3%
Puerto Rico Commonwealth, Public Improvements, GO, INS: MBIA, 5.25%, 7/1/21		1,000		1,063,490
Puerto Rico Electric Power Authority, Power, RB, INS: MBIA, 5.00%, 7/1/19		1,000		1,052,810
				2,116,300
Virgin Islands— 3.0%
Virgin Islands Public Facilities Authority Revenue, 5.50%, 10/1/07		1,500		1,501,585
TOTAL MUNICIPAL BONDS (Cost $48,583,799)				48,855,124
MONEY MARKET FUND —0.6%
Goldman Sachs Financial Square Tax-Free Money Market Fund		301,530		301,530
TOTAL INVESTMENT IN SECURITIES — 99.2% (Cost $48,885,329) (b)				49,156,654
OTHER ASSETS IN EXCESS OF LIABILITIES — 0.8%				407,086
NET ASSETS — 100.0%			$	49,563,740

(a) Variable or floating rate security. Rate disclosed is as of August 31, 2007.

(b) Aggregate cost for Federal income tax purposes is $48,885,329. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows:

Excess of value over tax cost	$	602,494
Excess of tax cost over value	$	(331,169	)

See Accompanying Investment Abbreviations and Notes to Schedules of Portfolio Investments.

Mercantile Funds, Inc.

Tax-Exempt Limited Maturity Bond Fund

Schedule of Portfolio Investments

August 31, 2007

(Unaudited)

	Par (000)		Value
MUNICIPAL BONDS—98.8%
Alaska—2.4%
Valdez Alaska Marine Terminal, 3.94%, 7/1/37 (a)	$	1,400	$	1,400,000
Arizona—4.4%
Arizona School Facilities Board, RB, Prerefunded 7/1/11 @ 100, 5.50%, 7/1/12		1,395		1,485,187
University of Arizona, RB, INS: FSA, 5.25%, 6/1/09		1,050		1,077,457
				2,562,644
California—4.0%
California State, 5.00%, 3/1/12		2,200		2,310,770
Colorado—1.8%
Regional Transportation District, RB, Sales Tax Revenue, INS: AMBAC, 5.25%, 11/1/11		1,000		1,060,330
Florida—16.1%
Brevard County, Health Facilities Authority, INS: MBIA, 5.63%, 10/1/14		2,550		2,553,366
Canaveral Port Authority, RB, INS: FGIC, 5.70%, 6/1/13		280		283,172
Cape Coral Water & Sewer, RB, INS:AMBAC, 5.00%, 10/1/15		1,205		1,288,254
Florida State Division of Bond Finance Dept. General Services, RB, INS: FSA, 5.25%, 7/1/13		1,810		1,847,901
Highlands County Health, 6.00%, 11/15/31, Prerefunded 11/15/11 @ 101		1,300		1,419,886
Sarasota County Florida Public Hospital, RB, VRDB, INS: AMBAC, 4.05%, 7/1/37 (a)		1,000		1,000,000
St. Lucie County, RB, INS: MBIA, 5.50%, 4/1/10		1,000		1,023,840
				9,416,419
Hawaii—2.4%
Hawaii St, 5.00%, 10/1/12		1,340		1,417,948
Illinois—2.7%
Chicago Illinois Park District, 5.50%, 1/1/20, Prerefunded 7/1/11 @ 100		1,500		1,596,975
Maryland—4.5%
Anne Arundel County, GO, 5.00%, 3/1/14		1,000		1,068,430
Maryland State Health & Higher Education, RB, Johns Hopkins Hospital, 5.00%, 5/15/10		500		513,650
Prince Georges County, GO, CPI, INS: FSA, 5.50%, 5/15/09		1,000		1,030,240
				2,612,320
Massachusetts—3.1%
Massachusetts, GO, ETM, 6.50%, 8/1/08		1,770		1,814,144
Michigan—4.9%
Michigan State Building Authority, RB, 5.25%, 10/15/13		1,030		1,058,500
Woodhaven Brownstown Mich Sch Dist, 5.38%, 5/1/16, prerefunded 5/1/12 @ 100		1,710		1,832,128
				2,890,628
Nevada—1.9%
Nevada State Rfdg-Ser A, 5.00%, 7/1/13		1,080		1,103,123
New Jersey—2.8%
New Jersey State Transportation, RB, ETM, INS: MBIA, 6.50%, 6/15/10		1,500		1,611,435
New York—9.6%
New York City, GO
5.00%, 8/1/09		1,130		1,157,798
5.00%, 8/1/10		2,000		2,069,260
5.00%, 8/1/11		1,000		1,044,990
New York State Tobacco Settlement Financing Corporation, 5.50%, 6/1/16		1,300		1,349,348
				5,621,396
North Carolina—2.3%
University of North Carolina, RB, 5.00%, 12/1/11		1,250		1,315,150
Oregon—2.1%
Oregon State, GO, 5.25%, 10/15/13		1,145		1,222,517
Pennsylvania—10.3%
Allegheny County Higher Ed Building Authority, RB, VRDB, Carnegie-Mellon University, SPA: Landesbank Hessen-Thueringen Girozentrale, 4.00%, 12/1/33 (a)		500		500,000
Pennsylvania State Higher Eductation, RB, INS: MBIA, Prerefunded 6/1/10 @ 100, 5.50%, 6/1/18		1,430		1,497,896
Pennsylvania State, GO, 5.00%, 7/1/14		1,800		1,920,834
University Of Pittsburgh Of The Commonwealth System of Higher Education, PA, 5.00%, 8/1/10		2,000		2,069,820
				5,988,550
Puerto Rico—2.8%
Government Development Bank of Puerto Rico 4.20%, 11/5/07		500		499,830

	Shares/ Par (000)		Value
MUNICIPAL BONDS—Continued
Puerto Rico—Continued
4.25%, 11/8/07	$	1,125	$	1,125,472
				1,625,302
South Carolina—8.8%
Berkeley County Pollution Control Facilities, RB, VRDB, Amoco Chemical Company Project, 3.94%, 7/1/12 (a)		700		700,000
Lexington Cnty Sc Health Svcs Dist Inc Hosp, 5.00%, 11/1/17		1,250		1,279,938
Richland County School District, GO, INS: FSA, 5.00%, 3/1/09		1,595		1,625,688
South Carolina Public Service Authority, RB, INS: FSA, 5.00%, 1/1/13		1,460		1,542,913
				5,148,539
Tennessee—1.7%
Shelby County, GO, 5.00%, 4/1/09		1,000		1,019,500
Texas— 4.8%
Corpus Christi Texas Independent School District, 5.00%, 8/15/11		740		741,732
Houston Texas Tax & Revenue, 5.00%, 3/1/15		1,000		1,063,490
Texas Water Dev Brd Rev, 3.99%, 7/15/19 (a), SPA: JP Morgan Chase		1,000		1,000,000
				2,805,222
Virginia—5.4%
Northern Virginia Transportation District, RB, INS: FSA, 5.38%, 7/1/14		1,000		1,032,460
Virginia State, GO, RB, 5.00%, 6/1/13		2,000		2,133,220
				3,165,680
TOTAL MUNICIPAL BONDS (Cost $57,679,413)				57,708,592
MONEY MARKET FUND —0.3%
Goldman Sachs Financial Square Tax-Free Money Market Fund		177,310		177,310
TOTAL MONEY MARKET FUND (Cost $177,310)				177,310
TOTAL INVESTMENT IN SECURITIES — 99.1% (Cost $57,856,723) (b)				57,885,902
OTHER ASSETS IN EXCESS OF LIABILITIES — 0.9%				530,127
NET ASSETS — 100.0%			$	58,416,029

(a) Variable or floating rate security. Rate disclosed is as of August 31, 2007.

(b) Aggregate cost for Federal income tax purposes is $57,856,723. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows:

Excess of value over tax cost	$	191,775
Excess of tax cost over value	$	(162,596	)

See Accompanying Investment Abbreviations and Notes to Schedules of Portfolio Investments.

Mercantile Funds, Inc.

National Tax-Exempt Bond Fund

Schedule of Portfolio Investments

August 31, 2007

(Unaudited)

	Par (000)		Value
MUNICIPAL BONDS—96.6%
Alabama— 1.3%
Auburn University, RB, General Fee Revenue, INS:MBIA, 5.50%, 6/1/13	$	1,000	$	1,060,100
California—13.3%
California Health Facilities Financing Authority, 4.95%, 7/1/26		1,800		1,852,344
California State
5.00%, 12/1/15		2,000		2,137,640
5.00%, 10/1/18		3,000		3,160,890
Glendale California Unified School District, 5.25%, 9/1/17		1,500		1,579,335
Western Riverside County Water & Wastewater Finance Authority, RB, Series A, INS: MBIA, 5.00%, 9/1/30		2,000		2,033,300
				10,763,509
Colorado—2.6%
Adams State College, RB, INS: MBIA, 5.25%, 5/15/24		1,000		1,046,990
Denver City and County, GO, 6.00%, 10/1/10		1,000		1,066,780
				2,113,770
Florida—8.0%
Fleming Island Plantation Community, 7.38%, 5/1/31, Prerefunded 5/1/2010		2,000		2,199,080
Lee County Transit Facilities Revenue, RB, INS: AMBAC, 5.50%, 10/1/14		1,000		1,063,160
Miami-Dade Ed Facilities Authority, RB, University of Miami, INS:AMBAC, 5.00%, 4/1/22 Prerefunded 4/1/14 @ 100		1,000		1,064,400
Sarasota County Florida Public Hospital, RB, VRDB, INS: AMBAC, 4.05%, 7/1/37 (a)		2,200		2,200,000
				6,526,640
Georgia—4.9%
Atlanta Airport, RB, INS: FGIC
5.75%, 1/1/14		2,000		2,101,820
5.88%, 1/1/16		1,760		1,850,834
				3,952,654
Illinois—4.6%
Chicago, GO, INS: AMBAC, 6.25%, 1/1/13		1,000		1,116,480
Illinois Educational Facilities Authority Student Housing, 6.00%, 5/1/22, Prerefunded 5/1/2012 @ 101		1,000		1,104,100
Illinois State: FSA, 5.50%, 4/1/16		1,450		1,542,510
				3,763,090
Louisiana—3.1%
Louisiana Public Facilities, RB, INS: FSA, 5.50%, 8/1/17		2,365		2,497,251
Maryland—1.7%
Maryland State Health & Higher Education, RB, Peninsula Medical Center, 5.00%, 7/1/20		1,325		1,361,053
Massachusetts—4.8%
Massachusetts State: SPA: Dexin 4.03%, 3/1/26 (a)		1,200		1,200,000
Massachusetts State School Building Authority, Dedicated Sales Tax Revenue: FSA, 5.00%, 8/15/17		1,500		1,590,720
Pembroke, GO, INS: FGIC, 5.50%, 11/15/20		1,000		1,066,200
				3,856,920
Michigan—5.4%
Detroit Sewer Disposal, RB, INS: MBIA, 5.00%, 7/1/12		1,000		1,056,430
Michigan State Board Authority, RB, Clean Water, 5.25%, 10/1/18		2,000		2,109,920
Southfield Library, RB, INS: MBIA, 5.00%, 5/1/17		1,135		1,202,237
				4,368,587
New York—7.8%
New York State Environmental Facility Corp. Station Clean Water & Drinking, 5.25%, 6/15/16		1,350		1,429,866
New York State Environmental Facility, RB, 6.00%, 6/15/18		1,775		1,844,190
New York State Tobacco Settlement Financing Corporation, 5.50%, 6/1/16		1,690		1,754,152
New York, NY, 5.00%, 8/1/11		1,250		1,306,238
				6,334,446
North Carolina—3.9%
North Carolina Medical Care Commission Health System Revenue, GO, Mission Health Combined Group, 5.00%, 10/1/22		1,000		1,014,190

	Par (000)		Value
MUNICIPAL BONDS—Continued
North Carolina—Continued
Orange County North Carolina, GO, 5.25%, 4/1/16	$	2,000	$	2,172,760
				3,186,950
Oklahoma—3.8%
Oklahoma City, GO, INS: FGIC, 5.00%, 3/1/14		2,980		3,126,288
Oregon—2.5%
Oregon State Bond Bank, RB, INS: MBIA, 5.50%, 1/1/18		2,000		2,049,380
Pennsylvania—12.1%
Allegheny County Sanitation Authority, RB, INS: MBIA, 5.75%, 12/1/13		1,150		1,230,385
Chester County, GO, 5.50%, 11/15/15		2,235		2,379,113
Mifflin County, GO, INS: FGIC, 5.63%, 9/1/28		2,000		2,112,680
Mifflin County, Pennsylvania, Hospital Authority, 6.00%, 7/1/15, Prerefunded 1/1/11 @ 101		1,895		2,042,412
University Of Pittsburgh Of The Commonwealth System of Higher Education, PA, 5.00%, 8/1/10		2,000		2,069,820
				9,834,410
Puerto Rico—2.8%
Government Development Bank Of Puerto Rico, 4.20%, 11/5/07		2,250		2,249,235
South Carolina—6.7%
Columbia COPs, INS: AMBAC, 5.25%, 6/1/17		2,095		2,230,169
Lexington County, South Carolina, Health Services District, Inc.
5.00%, 11/1/18		1,000		1,015,860
5.50%, 5/1/32, Prerefunded 5/1/14 @ 100		2,000		2,182,220
				5,428,249
Texas—4.6%
Austin Texas Independent School District, 5.00%, 8/1/16		2,500		2,668,275
Northside Texas Independent School District, 5.00%, 2/15/26, Prerefunded 2/15/11 @ 100		1,035		1,079,143
				3,747,418
Washington—2.7%
Energy Northwest Washington Electric, 5.50%, 7/1/15		2,000		2,203,920
TOTAL MUNICIPAL BONDS (Cost $78,392,625)				78,423,870
MONEY MARKET FUND —0.4%
Goldman Sachs Financial Square Tax-Free Money Market Fund		291,450		291,450
TOTAL MONEY MARKET FUND (Cost $291,450)				291,450
TOTAL INVESTMENT IN SECURITIES — 97.0% (Cost $78,684,075) (b)				78,715,320
OTHER ASSETS IN EXCESS OF LIABILITIES — 3.0%				2,436,506
NET ASSETS — 100.0%			$	81,151,826

(a) Variable or floating rate security. Rate disclosed is as of August 31, 2007.

(b) Aggregate cost for Federal income tax purposes is $78,684,076. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows:

Excess of value over tax cost	$	491,788
Excess of tax cost over value	$	(460,544	)

See Accompanying Investment Abbreviations and Notes to Schedules of Portfolio Investments.

Mercantile Funds, Inc.

INVESTMENT ABBREVIATIONS

ADR	American Depositary Receipt
AMBAC	American Municipal Bond Assurance Corp.
CL	Class
COP	Certificate of Participation
CPI	Consolidated Public Improvement
ETM	Escrowed to Maturity
FGIC	Financial Guaranty Insurance Co.
FHA	Federal Housing Administration
FNMA	Federal National Mortgage Association
FSA	Insured by Federal Security Assurance
GDR	Global Depository Receipt
GO	General Obligation
IDA	Industrial Development Agency
INS	Insured
LIQ	Liquidity Facility
LLC	Limited Liability Co.
LOC	Letter of Credit
MBIA	Municipal Bond Investor Assurance
PCRB	Pollution Control Revenue Bond
PLC	Public Liability Co.
RB	Revenue Bond
SPA	Standby Purchase Agreement
STRIPS	Separately Traded Registered Interest and Principal Securities
UT	Unlimited Tax
VRDB	Variable Rate Demand Bond

Mercantile Funds, Inc.

Notes to Schedules of Portfolio Investments

August 31, 2007

(Unaudited)

1. SIGNIFICANT ACCOUNTING POLICIES

Mercantile 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 Incorporation of the Company authorize the Board of Directors to issue up to twenty billion shares, having a par value of $0.001 per share. The Company is a series mutual fund which currently issues shares of common stock representing interests in fourteen investment portfolios: the Prime Money Market Fund, Government Money Market Fund and Tax-Exempt Money Market Fund (the “Money Market Funds”), the Growth & Income Fund, Equity Income Fund, Equity Growth Fund, Capital Opportunities Fund, International Equity Fund and Diversified Real Estate Fund (the “Equity Funds”), and the Limited Maturity Bond Fund, Total Return Bond Fund, Maryland Tax-Exempt Bond Fund, Tax-Exempt Limited Maturity Bond Fund and National Tax-Exempt Bond Fund (the “Bond Funds”), (the Money Market Funds, Equity Funds and Bond Funds collectively, the “Funds,” individually, each a “Fund”).

The preparation of Schedules of Portfolio Investments (“Schedules”) in conformity with accounting principles generally accepted in the United States of America (“generally accepted accounting principles”) requires management to make estimates and assumptions that affect the reported amounts at the date of the Schedules. Actual results could differ from those estimates.

The price of each share class of each Fund is calculated as of the close of trading on the New York Stock Exchange. 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 Money Market Funds are valued under the amortized cost method, which approximates current market value. Under this method, securities are valued at cost when purchased and, thereafter, a constant proportionate amortization of any discount or premium is recorded until maturity of the security. Regular review and monitoring of the valuation is performed pursuant to procedures adopted by the Company’s Board of Directors. 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 Equity Funds and Bond Funds 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 is valued at the last sale price on that exchange or, if there were no sales during the day, at the current quoted bid price. Securities for which the primary market is the National Association of Securities Dealers Automated Quotations National Market System (“NASDAQ”) are valued at the NASDAQ Official Closing Price. Portfolio securities that are primarily traded on foreign exchanges are generally valued at the closing values of such securities on their respective exchanges, provided that if such securities are not traded on the valuation date, they will be valued at fair value in accordance with procedures established by the Board of Directors. The Board of Directors of the Company has determined that movements in relevant indices or other appropriate market indicators, after the close of the foreign securities exchanges, may demonstrate that market quotations no longer represent the fair value of the foreign securities held by the International Equity Fund and may require fair value pricing. Consequently, fair valuation of portfolio securities may occur on a daily basis. In determining such fair value prices, the International Equity Fund utilizes data furnished by an independent pricing service. Over-the-counter securities and securities

listed or traded on foreign exchanges with operations similar to the U.S. over-the-counter market are valued at the mean of the most recent available quoted bid and ask prices in the over-the-counter market. Market or fair value may be determined on the basis of valuations provided by one or more recognized pricing services approved by the Board of Directors, which may rely on matrix pricing systems, electronic data processing techniques and/or quoted bid and ask prices provided by investment dealers. Short-term investments with maturities of 60 days or less are valued at amortized cost, which approximates fair value.

Investments in mutual funds are valued at the closing net asset value per share on the day of valuation. The net asset value per share of the Equity Funds and Bond Funds 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 on financial reporting dates. The cost of investments sold is determined by use of the specific identification method for both financial reporting and income tax purposes.

C) Repurchase Agreements: Each Fund, except the Tax-Exempt Money Market Fund, the Tax-Exempt Limited Maturity Bond Fund, the Maryland Tax-Exempt Bond Fund, and the National Tax-Exempt Bond Fund, may agree to purchase portfolio securities from financial institutions, such as banks and broker-dealers, subject to the seller’s agreement to repurchase them at an agreed upon date and price. In the case of the Prime Money Market Fund and Government Money Market Fund, collateral for repurchase 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 greater than or equal to 102% of the repurchase agreement.

D) Foreign Securities: Investing in foreign securities is subject to certain risks such as currency exchange rate volatility, possible political, social, or economic instability, foreign taxation and/or differences in auditing and other financial standards. The Funds are subject to foreign income taxes by certain countries in which they invest. Foreign income taxes are accrued by the Funds and withheld from dividend and interest income. Gains realized upon disposition of certain foreign securities held by the International Equity Fund may be subject to capital gains tax in that particular country. The tax on realized gains is paid prior to repatriation of sales proceeds. As applicable, the International Equity Fund accrues a deferred tax liability for net unrealized gains on securities subject to a capital gains tax.

E) 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 respective period, purchases and sales of securities and income and expenses at the rate of exchange prevailing on the dates of such transactions. The Funds do not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held.

F) Forward Foreign Currency Contracts: The International Equity Fund may enter into foreign currency exchange spot contracts and forward foreign currency exchange 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 the Fund’s investment securities against a decline in the value of currency, do not eliminate fluctuations 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 currency, at the same time they tend to limit any potential gain that might be realized should the value of such foreign currency increase.

G) Forward Interest Rate Swap Contracts: The Bond Funds may enter into forward interest rate swap contracts in order to hedge their exposure to changes in interest rates on their debt portfolio holdings. All commitments are marked-to-market daily at the applicable interest 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 as a component of realized gain or loss. Such contracts, which protect the value of the Fund’s investment securities against an increase in interest rates, do not eliminate fluctuations in the underlying prices of the securities, but its characteristics are such that the contract’s price tends to move in the opposite direction of the underlying bonds in the portfolio. Also, although such contracts tend to minimize the risk of loss due to an increase in interest rates, at the same time they tend to limit any potential gain that might be realized should interest rates decrease. There were no outstanding forward interest rate swap contracts outstanding as of August 31, 2007.

H) Interest Rate Swap Agreements: The Bond Funds may invest in interest rate swap agreements for the purpose of hedging against changes in interest rates. Interest rate swap agreements involve the exchange by a Fund with another party of their respective commitments to pay or receive interest (e.g., an exchange of floating rate payments for fixed rate payments) with respect to a notional amount of principal. Swaps are marked-to-market daily based upon quotations from market makers. Net payments of interest are recorded as realized gain or loss. Entering into interest rate swap agreements involves, to varying degrees, elements of credit and market risk in excess of the amounts recognized on the Schedules. Such risks involve the possibility that there will be no liquid market for these agreements, that the counterparty to the agreement may default on its obligation to perform and that there may be unfavorable changes in the fluctuation of interest rates. There were no outstanding interest rate swap contracts outstanding as of August 31, 2007.

I) Securities Lending: Pursuant to an agreement with Credit Suisse First Boston, New York Branch, each Fund except the Tax-Exempt Money Market Fund, Maryland Tax-Exempt Bond Fund, Tax-Exempt Limited Maturity Bond Fund and National Tax-Exempt Bond Fund lends its portfolio securities to approved brokers, dealers or other financial institutions to earn additional income. Prior to the close of each business day, loans of securities are secured by collateral at least equal to 102% (105% for the International Equity Fund) of the value of the securities on loan. However, due to market fluctuations, the value of the securities on loan may exceed the value of the collateral. On the next business day, the collateral is adjusted based on the prior day’s market fluctuations and the current day’s lending activity. Cash collateral received in connection with securities lending is invested in certain high quality, liquid investments. Although the collateral mitigates risk; securities lending presents risks of delay in receiving additional collateral or in recovering the securities loaned or even a loss of rights in the collateral if the borrower of the securities fails financially. The Company has the right under the securities lending agreement to recover the loaned securities from the borrower on demand.

At August 31, 2007, the cash collateral received by the Funds was pooled and invested in the following securities. Each of the Funds participating in securities lending at that date owned a pro-rata portion of the securities listed below.

	Par		Value
TIAA Real Estate CDO Trust Ltd., 5.53%, 9/28/07	$	16,500,077	$	16,500,077
Commodore CDO II., 5.44%, 12/12/38		5,929,363		5,929,363
Citrus I Funding, 5.35%, 9/12/07		19,716,000		19,455,749
Ranger, 5.78%, 9/10/07		20,000,000		20,047,972
Rhineland Funding Capital Corp, 5.39, 10/5/07		20,303,000		20,200,989
Winfun, 5.77%, 9/4/07		20,000,000		19,929,722
Allstate Life Global Funding II, 5.65%, 7/15/08		4,000,000		4,000,000
American General Financial Corp, 5.66%, 7/15/08		10,000,000		10,000,000
Angiri, 5.36, 7/7/08		20,000,000		20,000,000
BCPN Finance, 5.37%, 7/2/08		20,000,000		20,000,000
Bear Stearns Co., Inc., 5.67%, 9/15/08		22,000,000		22,000,000
Genworth Financial, 5.67%, 7/15/08		10,000,000		10,000,000
Irish Life & Permanent PLC, 5.56%, 7/21/08		7,000,000		6,998,600
Jackson National Life Funding, 5.38%, 7/1/08		10,000,000		10,000,000
Natixis, 5.63%, 7/15/08		20,000,000		19,995,654
Northern Rock PLC, 5.39%, 7/3/08		12,000,000		12,000,000
SLM Corp., 5.62%, 4/14/08		20,000,000		20,000,000
Caixa Catalunya, 5.39%, 8/7/08		20,000,000		20,000,000
CAJAME, 5.37%, 7/3/08		20,000,000		20,000,000
CIT Group, 5.38%, 4/18/08		25,000,000		25,000,000
Dekabank, 5.40%, 7/21/08		15,000,000		14,997,000
KKR Atlantic, 5.76%, 10/17/07		10,000,000		10,000,000
Rams Funding II LLC,, 5.76%, 2/11/08		17,469,498		17,469,498
AGY AAA TRIREPO 5.25%, 9/4/07		9,348,000		9,348,000
AGY AAA LEH 5.25%, 9/4/07		90,000,000		90,000,000

Securities Legend

CDO	Collaterized Debt Obligation
LLC	Limited Liability Co.
PLC	Public Liability Co.

J) The Diversified Real Estate Fund invests primarily in the securities of companies principally engaged in the real estate business, which are subject to the same risks as direct ownership of real estate, such as supply and demand for properties, the economic health of the country, different regions and local markets, and the strength of specific industries renting properties.

K) The Maryland Tax-Exempt Bond, Tax-Exempt Limited Maturity Bond and National Tax-Exempt Bond Funds’ income may be subject to certain state and local taxes and, depending on an individual shareholder’s tax status, the federal alternative minimum tax. Certain investments owned by the Funds (primarily the Tax-Exempt Money Market Fund, the Maryland Tax-Exempt Bond Fund, the Tax-Exempt Limited Maturity Bond Fund and the National Tax-Exempt Bond Fund) are covered by insurance issued by private insurers, are backed by an escrow or trust containing U.S. Government securities or U.S. Government agency securities, or are otherwise supported by letters of credit, standby purchase agreements or other liquidity facilities. Such enhancements may ensure the timely payment of the security’s principal and interest or (for the Tax-Exempt Money Market Fund) may shorten the security’s maturity. However, such enhancements do not guarantee the market value of the securities or the value of a Fund’s shares.

L) In the normal course of business the Funds enter into contracts that contain a variety of representations that provide general indemnifications. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a Fund that have not yet occurred. However, based on experience, the Funds expect the risk of loss to be remote.

2. FORWARD FOREIGN CURRENCY CONTRACTS

A summary of forward foreign currency contracts in the International Equity Fund which were outstanding at August 31, 2007 is as follows:

Delivery Dates	Sell	Buy	Net Unrealized Appreciation/ (Depreciation)
9/4/2007	EUR 22,403	USD 30,771	$	250
9/4/2007	EUR 43,215	USD 59,356		482
11/20/2007	USD 1,700,432	AUD 1,331,182		56,502
9/24/2007	USD 1,786,128	GBP 896,914		21,299
9/4/2007	USD 120,403	JPY 14,012,460		704
10/31/2007	USD 2,811,283	JPY 329,566,686		60,647
11/8/2007	USD 9,019,692	JPY 1,051,696,101		154,037
			$	293,921
11/20/2007	AUD 1,331,182	USD 1,042,114	$	(44,232	)
11/20/2007	AUD 1,700,432	USD 1,331,182		(56,502	)
11/20/2007	AUD 8,179,339	USD 6,366,446		(308,524	)
11/19/2007	CAD 2,654,857	USD 2,469,520		(48,922	)
9/24/2007	CZK 24,728,422	USD 1,165,281		(54,691	)
9/4/2007	EUR 18,594	USD 25,148		(183	)
9/5/2007	EUR 37,784	USD 51,103		(375	)
9/4/2007	EUR 54,094	USD 73.632		(62	)
11/19/2007	HUF 218,389,299	USD 1,132,713		(24,479	)
11/19/2007	HUF 176,520,155	USD 935,337		(29,167	)
11/23/2007	HUF 246,032,842	USD 1,274,782		(28,610	)
11/19/2007	HUF 793,540,639	USD 4,077,766		(127,013	)
11/20/2007	MXN 28,008,802	USD 2,469,520		(59,196	)
11/19/2007	PLN 19,145,786	USD 6,722,301		(118,917	)
11/19/2007	PLN 4,336,526	USD 1,527,796		(21,742	)
11/19/2007	PLN 4,356,158	USD 1,527,796		(28,757	)
11/19/2007	TRY 2,516,677	USD 1,741,717		(145,477	)
9/21/2007	TRY 970,161	USD 722,491		(19,589	)
9/4/2007	USD 16,410	JPY 1,887,183		(100	)
11/20/2007	USD 2,419,912	JPY 269,808,484		(62,973	)
11/20/2007	USD 2,420,002	JPY 269,980,304		(61,562	)
11/20/2007	USD 3,414,065	JPY 381,094,956		(84,971	)
9/4/2007	USD 35,483	JPY 4,080,515		(216	)
9/4/2007	USD 42,579	JPY 4,896,618		(259	)
11/19/2007	USD 631,159	CAD 664,030		(1,249	)
9/4/2007	USD 94,271	EUR 68,635		(765	)
			$	(1,328,533	)

Currency Legend

AUD	Australian Dollar
CAD	Canadian Dollar
CZK	Czech Republic Koruna
EUR	European Union Euro
GBP	British Pound
HUF	Hungarian Forint
MXN	Mexican Peso
JPY	Japanese Yen
PLN	Polish Zlotych
TRY	Turkish Lira
USD	U.S. Dollar

3. SECURITIES LENDING

At August 31, 2007, the value of securities loaned and collateral was as follows:

	Value of Securities Loaned		Value of Collateral
Prime Money Market Fund	$	30,697,749	$	31,348,340
Government Money Market Fund		34,041,673		34,692,771
Growth & Income Fund		138,401,207		142,457,395
Equity Income Fund		21,305,211		21,995,815
Equity Growth Fund		12,679,703		13,020,033
Capital Opportunities Fund		77,711,090		80,073,715
International Equity Fund		34,220,838		36,019,800
Diversified Real Estate Fund		74,117,025		76,038,327
Limited Maturity Fund		22,417,726		22,854,836
Total Return Bond Fund		5,485,334		5,590,258

4. Restricted and Illiquid Securities

A restricted security is a security which has been purchased through a private offering and cannot be resold to the general public without prior registration under the Securities Act of 1933 (the “1933 Act”) or pursuant to the resale limitations provided by Rule 144 under the 1933 Act, or an exemption from the registration requirements of the 1933 Act. Certain restricted securities may be resold in transactions exempt from registration, normally to qualified institutional buyers, and may be deemed liquid by the Investment Adviser based on procedures established by the Board of Directors. Therefore, not all restricted securities are considered illiquid.

At August 31, 2007 the Mercantile International Equity Fund held restricted securities that were illiquid, representing 0.12% of net assets, as follows:

Security	Acquisition Date	Acquisition Cost ($)	Shares	Value($)
Open Investments	4/26/07	169,625	575	163,875
Silvinit	5/11/07	75,093	402	105,726
TNK-BP Holding	1/29/07	67,500	6	104,400
URSA Bank OJSC	4/11/07	389,751	165,848	323,404
Wumart Stores, Inc.	9/2/04	1,024,984	294,524	257,169

Item 2. Controls and Procedures.

(a) The registrant’s principal executive officer and principal financial officer have concluded, based on their evaluation of the registrant’s disclosure controls and procedures as conducted within 90 days of the filing date of this report, that these disclosure controls and procedures are adequately designed and are operating effectively to ensure that information required to be disclosed by the registrant on Form N-Q is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

(b) There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Act (17 CFR 270.30a-3(d)) that occurred during the registrant’s most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 3. Exhibits.

Certifications pursuant to Rule 30a-2(a) are attached hereto.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Mercantile Funds, Inc.
By:	/s/ Kevin A. McCreadie
	Kevin A. McCreadie
	President
Date:	October 30, 2007

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By:	/s/ Kevin A. McCreadie
	Kevin A. McCreadie
	President
Date:	October 30, 2007
By:	/s/ Jennifer E. Spratley
	Jennifer E. Spratley
	Treasurer
Date:	October 30, 2007