<PAGE>
- --------------------------------------------------------------------------------
LKCM FUND
P.O. BOX 2798
BOSTON, MA 02208-2798
- --------------------------------------------------------------------------------
OFFICERS AND TRUSTEES
J. Luther King, Jr., CFA Jacqui Brownfield
Chairman of the Board, Secretary & Treasurer
President
John M. Corcoran
Paul W. Greenwell Assistant Treasurer
Vice President
Karl O. Hartmann
H. Kirk Downey Assistant Secretary
Trustee
Helen A. Robichaud
Earle A. Shields, Jr. Assistant Secretary
Trustee
- --------------------------------------------------------------------------------
INVESTMENT ADVISER
Luther King Capital Management Corp.
301 Commerce Street, Suite 1600
Fort Worth, TX 76102
- --------------------------------------------------------------------------------
ADMINISTRATOR
Chase Global Funds Services Company
73 Tremont Street
Boston, MA 02108-3913
- --------------------------------------------------------------------------------
CUSTODIAN
The Chase Manhattan Bank
3 Chase MetroTech Center
Brooklyn, NY 11245
- --------------------------------------------------------------------------------
LEGAL COUNSEL
Gardere & Wynne
3000 Thanksgiving Tower
Dallas, TX 75201
Kirkpatrick & Lockhart
1800 Massachusetts Avenue, N.W.
2nd Floor
Washington, D.C. 20036-1800
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS
Deloitte & Touche LLP
125 Summer Street
Boston, MA 02110
- --------------------------------------------------------------------------------
DISTRIBUTOR
Funds Distributor, Inc.
60 State Street, Suite 1300 Boston, MA 02109
- --------------------------------------------------------------------------------
This report has been prepared for shareholders and may be distributed to others
only if preceded or accompanied by a current prospectus.
- --------------------------------------------------------------------------------
LKCM FUND
- --------------------------------------------------------------------------------
SEMI-ANNUAL REPORT
JUNE 30, 1997
<PAGE>
LKCM FUND
--------------------------------------
--------------------------------------
DEAR FELLOW SHAREHOLDER:
We are pleased to report the following performance information for the LKCM
portfolios:
<TABLE>
<CAPTION>
SIX AVERAGE RUSSELL 2000 S&P 500
MONTH ANNUAL SIX MONTH SIX MONTH
TOTAL TOTAL TOTAL TOTAL
NET ASSET RETURN RETURN RETURN RETURN
INCEPTION VALUE AT ENDED SINCE ENDED ENDED
PORTFOLIOS DATES 06/30/97 06/30/97 INCEPTION 06/30/97 06/30/97
- ---------- --------- --------- -------- --------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
LKCM Small Cap
Equity 07/14/94 $16.64 12.27% 25.30% 10.17% 20.61%
LKCM Equity 01/03/96 $12.82 15.31% 22.17% N/A 20.61%
</TABLE>
Once again, the first half of 1997 proved to be an outstanding period to be
invested in the stock market and a challenging environment for many active
equity managers. The stock market kicked-off 1997 with a robust start but, in
the face of rising interest rates, ended up posting a sharp decline in the
final month of the first quarter. Then, as pressure on interest rates began to
abate, the overwhelming demand factors that have dominated the equity markets
during most of the 1990's (mutual fund purchases, mergers, share repurchases)
kicked into high gear and drove stock prices steadily higher into June. The
stocks of large companies continued to dramatically outperform smaller
companies and consumer, finance, healthcare, and technology stocks posted
especially impressive gains. Leadership among the ranks of small stocks
included the consumer and financial sectors but shares of small technology
companies posted mixed performance while small healthcare issues languished.
Energy and utility stocks were laggards across the market capitalization
spectrum. Interest rates over the period were fairly volatile but, on June 30,
stood only modestly above year-end 1996 levels.
The LKCM Small Cap Equity Portfolio continued to produce robust returns in
the first half of 1997, despite the market's continued love affair with large
capitalization companies. After outperforming its small stock bogey, the
Russell 2000, in both 1995 and 1996, the portfolio's return exceeded that of
the benchmark again in 1997's first half. The long standing hallmark of the
portfolio has been stock selection, which continued to emphasize niche
companies that possess unique opportunities to grow their businesses at above-
average returns on invested capital. The portfolio pursues these investment
opportunities at times when the companies' prospects are under-appreciated by
the overall market--when the securities are undervalued. In fact, this
sensitivity to valuation helped to preserve capital during the weakness
experienced by small stocks in the first quarter. But, the portfolio was able
to keep up with the revival in small stock performance during the second
quarter because, in addition to value, the investments provide exceptional
growth opportunities. As of June 30, important sector concentrations included
Energy (12.7%), Financial Services (13.7%), Health Care (10.7%), and Retail
(11.4%). The total net assets of the portfolio as of June 30, 1997 were
$242,639,946 of which $228,099,315 (94.4%) were invested in common and
preferred stocks with the balance held in cash reserves.
The LKCM Equity Portfolio posted a very attractive absolute total return in
the first half of 1997 but was outpaced by its benchmark index, the S&P 500.
The portfolio's focus on both risk as well as reward, via a consciousness of
valuation extremes, capped some of the portfolio's upside while managing the
downside risk. Also, the accumulation, by the portfolio, of shares of mid-
sized companies with unique growth prospects penalized performance in the
short-term. Stock selection within the portfolio, which is comprised of a
diversified mix of medium and large capitalization stocks, continued to add
significant value. Above, attention to valuation was mentioned as a means of
managing risk. The reward portion of the risk/reward formula is driven by our
1
<PAGE>
active pursuit of investing in the securities of companies with strong balance
sheets, established and defensible franchises, and consistent growth prospects
with high and sustainable profitability levels. Many of the larger and more
mature companies generate huge amounts of free cash flow and, therefore,
management stewardship over that cash is a paramount consideration. Share
repurchases are prevalent at many of the companies in which the portfolio is
invested and, in our opinion, remain a viable use of excess capital. As of
June 30, the portfolio had overweighted positions in the Energy sector (13.5%)
and the Health Care sector (12.3%) when compared to the S&P 500. Other
important sectors included Financial Services (10.9%) and Technology (15.4%).
As of June 30, 1997, the total net assets of the portfolio were $38,811,770 of
which $36,794,369 (94.8%) were invested in common stocks with the balance held
in cash reserves.
At the beginning of the year, we indicated that the "market demand"
variables such as strong mutual fund cash flows, heavy corporate share
repurchases, and active industry consolidation would support the market in the
short term. Indeed, those factors have driven the market much higher than we
would have imagined. However, we also warned that the market was increasingly
subject to an earnings related set back as expectations and valuations have
risen to uncomfortable levels. We believe these risks have grown as we enter
the second half of the year. As a result, investors continue to shun valuation
considerations in exchange for earnings stability and we look for this
appetite for high-quality to continue. Nevertheless, the stock market's
impressive advance has attempted, on several occasions in the first half, to
include shares of smaller capitalization companies. While stock market
leadership continues to be narrowly focused around the very largest companies,
the compelling valuations and attractive growth prospects of small companies
bodes well for the stocks over the intermediate term. Regardless of the
investment landscape, the experienced staff at LKCM, coupled with a time
tested philosophy of security selection, is dedicated to uncovering
investments that provide an attractive long-term reward/risk profile.
Regards,
/s/ Luther King
J. Luther King, Jr., CFA
July 14, 1997
2
<PAGE>
LCKM SMALL CAP EQUITY PORTFOLIO
STATEMENT OF NET ASSETS
June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
SHARES VALUE+
<S> <C> <C>
- --------------------------------------------------------------------------------
COMMON STOCKS (94.4%)
- --------------------------------------------------------------------------------
BASIC RESOURCES (4.4%)
Lawter International, Inc. ............................. 140,000 $ 1,767,500
Longview Fibre Co. ..................................... 174,500 2,901,063
Mississippi Chemical Corp. ............................. 90,000 1,867,500
Reliance Steel & Aluminum Co. .......................... 75,000 1,950,000
*Titanium Metals Corp. .................................. 70,000 2,213,750
------------
10,699,813
------------
- --------------------------------------------------------------------------------
BEVERAGE & PERSONAL PRODUCTS (1.0%)
*Carson, Inc. ........................................... 90,000 967,500
Twinlab Corp. .......................................... 60,000 1,440,000
------------
2,407,500
------------
- --------------------------------------------------------------------------------
CONSUMER & COMMERCIAL SERVICES (6.7%)
Boykin Lodging Co. ..................................... 77,000 1,843,187
*CapStar Hotel Co. ...................................... 75,000 2,400,000
*Carmike Cinemas, Inc., Class A.......................... 91,700 3,003,175
La Quinta Motor Inns, Inc. ............................. 120,000 2,625,000
*Norwood Promotional Products, Inc. ..................... 20,000 280,000
*Romac International, Inc. .............................. 50,000 1,637,500
*Source Services Corp. .................................. 45,000 1,209,375
Starwood Lodging Trust.................................. 75,000 3,201,562
------------
16,199,799
------------
- --------------------------------------------------------------------------------
CONSUMER DURABLES (3.3%)
Centex Corp. ........................................... 50,000 2,031,250
*Dal-Tile International, Inc. ........................... 140,000 2,598,750
*Kevco, Inc. ............................................ 50,300 679,050
Lawson Products, Inc. .................................. 78,500 2,119,500
*RDO Equipment Co. ...................................... 20,000 447,500
------------
7,876,050
------------
- --------------------------------------------------------------------------------
ENERGY (12.7%)
*Brown (Tom), Inc. ...................................... 93,000 1,976,250
*Cairn Energy USA, Inc. ................................. 106,000 1,391,250
Carbo Ceramics, Inc. ................................... 40,000 1,090,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
LCKM SMALL CAP EQUITY PORTFOLIO
STATEMENT OF NET ASSETS--(CONTINUED)
June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
SHARES VALUE+
<S> <C> <C>
- --------------------------------------------------------------------------------
COMMON STOCKS--(CONTINUED)
- --------------------------------------------------------------------------------
ENERGY--(CONTINUED)
*Diamond Offshore Drilling, Inc. ........................ 40,000 $ 3,125,000
*Encal Energy Ltd. ...................................... 487,500 1,677,381
*HS Resources, Inc. ..................................... 110,000 1,553,750
ICO, Inc. .............................................. 354,300 1,837,931
*Input/Output, Inc. ..................................... 95,000 1,721,875
Noble Affiliates, Inc. ................................. 97,000 3,752,688
*Seagull Energy Corp. ................................... 65,000 1,137,500
Snyder Oil Corp. ....................................... 110,000 2,021,250
Tidewater, Inc. ........................................ 46,133 2,029,852
*Titan Exploration, Inc. ................................ 70,500 854,813
*Trico Marine Services, Inc. ............................ 100,000 2,181,250
Union Pacific Resources Group, Inc. .................... 50,000 1,243,750
*United Meridian Corp. .................................. 25,000 750,000
*Varco International, Inc. .............................. 32,000 1,032,000
*Weatherford Enterra, Inc. .............................. 20,000 770,000
Wiser Oil Co. .......................................... 40,000 737,500
------------
30,884,040
------------
- --------------------------------------------------------------------------------
ENVIRONMENT (0.9%)
*Cuno Inc. .............................................. 70,000 1,172,500
*U.S. Filter Corp. ...................................... 40,000 1,090,000
------------
2,262,500
------------
- --------------------------------------------------------------------------------
FINANCIAL SERVICES (13.7%)
AmVestors Financial Corp. .............................. 65,000 1,218,750
*AmeriCredit Corp. ...................................... 40,000 840,000
American Heritage Life Investment Co. .................. 1,400 46,200
*Atlantic Gulf Communities Corp. ........................ 124,762 795,358
Bedford Property Investors, Inc. ....................... 35,000 704,375
Brandywine Realty Trust................................. 56,100 1,136,025
Capsure Holdings Corp. ................................. 180,000 2,328,750
Chartwell Re Corp. ..................................... 80,400 2,412,000
*Crescent Operating, Inc. ............................... 6,200 74,400
Crescent Real Estate Equities, Inc. .................... 62,000 1,968,500
Cullen/Frost Bankers, Inc. ............................. 110,000 4,661,250
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
LCKM SMALL CAP EQUITY PORTFOLIO
STATEMENT OF NET ASSETS--(CONTINUED)
June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
SHARES VALUE+
<S> <C> <C>
- --------------------------------------------------------------------------------
COMMON STOCKS--(CONTINUED)
- --------------------------------------------------------------------------------
FINANCIAL SERVICES--(CONTINUED)
E.W. Blanch Holdings, Inc. ............................. 20,000 $ 533,750
*Fairfield Communities, Inc. ............................ 30,000 1,008,750
First Colorado Bancorp, Inc. ........................... 150,000 2,868,750
First Victoria National Bank............................ 19,000 503,500
Gainsco, Inc. .......................................... 53,398 500,606
Guarantee Life Co., Inc. ............................... 46,100 1,158,263
*Hartford Life, Inc. .................................... 33,700 1,263,750
*Penn Treaty American Corp. ............................. 28,000 857,500
Prentiss Properties Trust............................... 75,000 1,921,875
Sterling Bancorp........................................ 116,000 2,160,500
Texas Regional Bancshares Inc., Class A................. 70,000 2,940,000
*The Siebels Bruce Group, Inc. .......................... 50,000 393,750
*Westbridge Capital Corp. ............................... 87,000 842,812
------------
33,139,414
------------
- --------------------------------------------------------------------------------
FOOD, TOBACCO & OTHER (1.7%)
*Armanio Foods Of Distinction, Inc....................... 200,000 212,500
*Suiza Foods Corp. ...................................... 97,000 3,977,000
------------
4,189,500
------------
- --------------------------------------------------------------------------------
HEALTH CARE (10.7%)
*Diagnostic Health Services, Inc. ....................... 10,000 91,250
*Emcare Holdings, Inc. .................................. 128,200 4,695,325
Fisher Scientific International, Inc. .................. 120,000 5,700,000
Kinetic Concepts, Inc. ................................. 123,200 2,217,600
*Magellan Health Services, Inc. ......................... 30,000 885,000
*Maxxim Medical, Inc. ................................... 120,000 2,085,000
*Patterson Dental Co. ................................... 42,500 1,458,281
*Prime Medical Services, Inc. ........................... 80,000 865,000
*ProMedCo Management Co. ................................ 15,000 127,500
*Protein Design Labs, Inc. .............................. 24,000 684,000
*Scherer R.P. Corp. ..................................... 35,000 1,806,875
*Sybron International Corp. ............................. 52,500 2,093,438
*TECNOL Medical Products, Inc. .......................... 142,100 3,161,725
------------
25,870,994
------------
- --------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
LCKM SMALL CAP EQUITY PORTFOLIO
STATEMENT OF NET ASSETS--(CONTINUED)
June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
SHARES VALUE+
<S> <C> <C>
- ---------------------------------------------------------------------------------
COMMON STOCKS--(CONTINUED)
- ---------------------------------------------------------------------------------
HEAVY INDUSTRY / TRANSPORTATION (7.0%)
*AirNet Systems, Inc. .................................... 123,700 $ 2,025,587
Barrick Gold Corp. ...................................... 26,100 574,200
*Covenant Transport, Inc., Class A........................ 90,000 1,473,750
*Genesee & Wyoming, Inc., Class A......................... 70,500 1,850,625
JLG Industries, Inc. .................................... 70,000 953,750
*MTL, Inc. ............................................... 30,000 701,250
NL Industries, Inc. ..................................... 41,000 594,500
*Railamerica, Inc. ....................................... 375,000 1,640,625
*Railtex, Inc. ........................................... 90,000 1,620,000
*Simon Transportation Services, Inc. ..................... 44,000 874,500
*Swift Transportation Co., Inc. .......................... 90,000 2,655,000
TJ International, Inc. .................................. 70,000 1,645,000
*US Xpress Enterprises, Inc. ............................. 20,000 395,000
------------
17,003,787
------------
- ---------------------------------------------------------------------------------
MANUFACTURING (7.7%)
Blount International, Inc. .............................. 100,000 4,256,250
Chart Industries, Inc. .................................. 50,000 1,368,750
ESCO Electronics Corp. .................................. 80,000 1,010,000
*Figgie International, Inc., Class A...................... 118,500 1,629,375
*Foamex International, Inc. .............................. 130,000 1,706,250
*Inter-City Products Corp. ............................... 2,700 14,681
*Kirby Corp. ............................................. 280,000 5,110,000
Lindsay Manufacturing Co. ............................... 110,000 3,602,500
------------
18,697,806
------------
- ---------------------------------------------------------------------------------
PUBLISHING & BROADCASTING (4.7%)
Belo (A.H.) Corp., Class A............................... 80,000 3,330,000
*Chancellor Broadcasting Corp., Class A................... 40,000 1,600,000
Harte-Hanks Communications, Inc. ........................ 70,000 2,065,000
*Heftel Broadcasting Corp. ............................... 33,800 1,867,450
*Heritage Media Corp. .................................... 98,000 1,849,750
*Saga Communication, Inc., Class A........................ 42,968 794,908
------------
11,507,108
------------
- ---------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
LCKM SMALL CAP EQUITY PORTFOLIO
STATEMENT OF NET ASSETS--(CONTINUED)
June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
SHARES VALUE+
<S> <C> <C>
- --------------------------------------------------------------------------------
COMMON STOCKS--(CONTINUED)
- --------------------------------------------------------------------------------
RETAIL (11.4%)
* Acorn Products, Inc. .................................. 70,000 $ 980,000
* Boise Cascade Office Products Corp. ................... 72,500 1,232,500
* Borders Group, Inc. ................................... 140,000 3,377,500
* Cameron Ashley Building Products....................... 141,000 1,956,375
* Coleman Co., Inc. ..................................... 160,000 2,760,000
Justin Industries, Inc. ............................... 291,100 3,711,525
* Lone Star Steakhouse & Saloon, Inc. ................... 72,500 1,885,000
* Party City Corp. ...................................... 15,000 251,250
Pier 1 Imports, Inc. .................................. 110,000 2,915,000
* Play By Play Toys & Novelties, Inc. ................... 121,500 1,852,875
* Proffitt's Inc. ....................................... 20,000 877,500
Stride Rite Corp. ..................................... 50,000 643,750
* Taco Cabana, Class A................................... 174,100 696,400
* The Bombay Company, Inc. .............................. 100,000 500,000
* Tractor Supply Co. .................................... 100,500 1,809,000
* Tuesday Morning Corp. ................................. 105,000 2,113,125
* Unimark Group, Inc. ................................... 15,000 120,000
------------
27,681,800
------------
- --------------------------------------------------------------------------------
TECHNOLOGY (7.4%)
* Bell & Howell Co. ..................................... 50,000 1,540,625
* Compuserve Corp. ...................................... 125,000 1,343,750
Dallas Semiconductor................................... 52,500 2,060,625
Danka Business Systems ADR............................. 50,000 2,043,750
* Intellicall, Inc. ..................................... 100,000 462,500
* Interphase Corp. ...................................... 48,500 419,828
* Kent Electronics Corp. ................................ 145,000 5,319,688
* Physican Computer Network, Inc. ....................... 115,000 776,250
* Qwest Communications International, Inc. .............. 30,000 817,500
* Segue Software Inc. ................................... 17,500 238,438
* Tekelec................................................ 70,000 2,476,250
* Zilog, Inc. ........................................... 20,000 380,000
------------
17,879,204
------------
- --------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
LCKM SMALL CAP EQUITY PORTFOLIO
STATEMENT OF NET ASSETS--(CONTINUED)
June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
SHARES VALUE+
<S> <C> <C>
- -------------------------------------------------------------------------------
COMMON STOCKS--(CONTINUED)
- -------------------------------------------------------------------------------
TELECOMMUNICATIONS (1.1%)
* PageMart Wireless, Inc., Class A..................... 200,000 $ 1,700,000
* Pronet, Inc. ........................................ 250,000 1,000,000
------------
2,700,000
------------
- -------------------------------------------------------------------------------
TOTAL COMMON STOCKS (COST $174,778,809)................ 228,999,315
- -------------------------------------------------------------------------------
PREFERRED STOCK (0.0%)
- -------------------------------------------------------------------------------
FINANCIAL SERVICES (0.0%)
*@#Atlantic Gulf Communications Corp. (COST $98,800)... 10,000 98,800
------------
- -------------------------------------------------------------------------------
<CAPTION>
NO. OF
WARRANTS
- -------------------------------------------------------------------------------
<S> <C> <C>
WARRANTS (0.0%)
- -------------------------------------------------------------------------------
FINANCIAL SERVICES (0.0%)
*@#Atlantic Gulf Communications Corp., Class A, expir-
ing 6/23/04........................................... 6,667 400
*@#Atlantic Gulf Communications Corp., Class B, expir-
ing 6/23/04........................................... 6,667 400
*@#Atlantic Gulf Communications Corp., Class C, expir-
ing 6/23/04........................................... 6,666 400
- -------------------------------------------------------------------------------
TOTAL WARRANTS (COST $1,200)........................... 1,200
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
FACE AMOUNT
- ---------------------------------------------------
<S> <C> <C>
CASH EQUIVALENT (5.1%)
- ---------------------------------------------------
REPURCHASE AGREEMENT
(5.1%)
Chase Securities, Inc.
5.70%, dated 6/30/97,
due 7/1/97, to be
repurchased at
$12,422,967
collateralized by
$13,150,000 U.S.
Treasury Bond 5.625%,
due 2/15/06, valued at
$12,634,784
(COST $12,421,000)........$12,421,000 12,421,000
- ---------------------------------------------------
TOTAL INVESTMENTS (99.5%)
(COST $187,299,809)....... 241,520,315
- ---------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
LCKM SMALL CAP EQUITY PORTFOLIO
STATEMENT OF NET ASSETS--(CONTINUED)
June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
VALUE+
<S> <C>
- ------------------------------------------------------
OTHER ASSETS AND LIABILITIES (0.5%)
- ------------------------------------------------------
Cash.................................. $ 560
Receivable for Investments Sold....... 2,781,948
Receivable for Fund Shares Sold....... 2,500
Dividends Receivable.................. 179,856
Interest Receivable................... 1,967
Other Assets.......................... 35,927
Payable for Investments Purchased..... (1,439,345)
Payable for Investment Advisory Fees.. (409,325)
Payable for Administrative Fees....... (23,410)
Other Liabilities..................... (11,047)
------------
1,119,631
- ------------------------------------------------------
NET ASSETS (100%)
Applicable to 14,582,003 outstanding
shares of beneficial interest
(unlimited authorization, no par
value)............................... $242,639,946
- ------------------------------------------------------
- ------------------------------------------------------
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE........... $ 16.64
- ------------------------------------------------------
- ------------------------------------------------------
</TABLE>
+ See Note A to Financial Statements.
* Non-Income Producing Security.
@ Security issued as a private placement. Restricted as to public resale.
# Security valued at fair value--See Note A to financial statements.
ADR American Depositary Receipt.
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
LKCM EQUITY PORTFOLIO
STATEMENT OF NET ASSETS
June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
SHARES VALUE+
<S> <C> <C>
- --------------------------------------------------------------------------------
COMMON STOCKS (94.8%)
- --------------------------------------------------------------------------------
BASIC RESOURCES (6.9%)
Du Pont (E.I.) De Nemours & Co. .......................... 16,000 $ 1,006,000
Longview Fibre Co. ....................................... 35,000 581,875
Morton International, Inc. ............................... 11,000 332,063
Willamette Industries, Inc. .............................. 11,000 770,000
-----------
2,689,938
-----------
- --------------------------------------------------------------------------------
BEVERAGE & PERSONAL PRODUCTS (8.9%)
Colgate-Palmolive Co. .................................... 17,000 1,109,250
Eastman Kodak Co. ........................................ 8,500 652,375
Kimberly Clark Corp. ..................................... 17,000 845,750
PepsiCo, Inc. ............................................ 22,000 826,375
-----------
3,433,750
-----------
- --------------------------------------------------------------------------------
CONSUMER & COMMERCIAL SERVICES (6.1%)
General Electric Co. ..................................... 16,000 1,046,000
La Quinta Motor Inns, Inc. ............................... 20,000 437,500
Manpower, Inc. ........................................... 20,000 890,000
-----------
2,373,500
-----------
- --------------------------------------------------------------------------------
ENERGY (13.5%)
Amoco Corp. .............................................. 9,000 782,437
Exxon Corp. .............................................. 16,000 984,000
Mobil Corp. .............................................. 12,000 838,500
Noble Affiliates, Inc. ................................... 16,500 638,344
Schlumberger, Ltd. ....................................... 10,000 1,250,000
Tidewater, Inc. .......................................... 17,000 748,000
-----------
5,241,281
-----------
- --------------------------------------------------------------------------------
FINANCIAL SERVICES (10.9%)
American General Corp. ................................... 10,000 477,500
Cullen/Frost Bankers, Inc. ............................... 18,000 762,750
H&R Block, Inc. .......................................... 20,000 645,000
*Hartford Life, Inc. ...................................... 25,000 937,500
Nationwide Financial Services, Inc. ...................... 10,000 265,625
Norwest Corp. ............................................ 20,000 1,125,000
-----------
4,213,375
-----------
- --------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
LKCM EQUITY PORTFOLIO
STATEMENT OF NET ASSETS--(CONTINUED)
June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
SHARES VALUE+
<S> <C> <C>
- ---------------------------------------------------------------------------------
COMMON STOCKS--(CONTINUED)
- ---------------------------------------------------------------------------------
FOOD, TOBACCO & OTHER (1.4%)
Nabisco Holdings Corp., Class A............................ 14,000 $ 558,250
-----------
- ---------------------------------------------------------------------------------
HEALTH CARE (12.3%)
Baxter International, Inc. ................................ 20,000 1,045,000
Merck & Co., Inc. ......................................... 10,000 1,035,000
Pfizer, Inc. .............................................. 20,000 1,195,000
Schering-Plough Corp. ..................................... 22,000 1,053,250
SmithKline Beecham plc ADR................................. 5,000 458,125
-----------
4,786,375
-----------
- ---------------------------------------------------------------------------------
HEAVY INDUSTRY / TRANSPORTATION (1.8%)
Union Pacific Corp. ....................................... 10,000 705,000
-----------
- ---------------------------------------------------------------------------------
MANUFACTURING (4.4%)
Corning, Inc. ............................................. 17,000 945,625
*Kirby Corp. ............................................... 42,000 766,500
-----------
1,712,125
-----------
- ---------------------------------------------------------------------------------
PUBLISHING & BROADCASTING (6.0%)
Belo (A.H.) Corp., Class A................................. 20,000 832,500
Gannett Co., Inc. ......................................... 8,000 790,000
Westinghouse Electric Corp. ............................... 30,000 693,750
-----------
2,316,250
-----------
- ---------------------------------------------------------------------------------
RETAIL (7.2%)
Home Depot, Inc. .......................................... 15,600 1,075,425
*Polo Ralph Lauren Corporation.............................. 33,000 903,375
Sherwin-Williams Co. ...................................... 26,000 802,750
-----------
2,781,550
-----------
- ---------------------------------------------------------------------------------
TECHNOLOGY (15.4%)
AMP, Inc. ................................................. 16,000 668,000
Alltel Corp. .............................................. 10,000 334,375
*Cisco Systems, Inc. ....................................... 14,000 939,750
Electronic Data Systems Corp. ............................. 14,000 574,000
Fisher Scientific International, Inc. ..................... 20,000 950,000
- ---------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
LKCM EQUITY PORTFOLIO
STATEMENT OF NET ASSETS--(CONTINUED)
June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
SHARES VALUE+
<S> <C> <C>
- -------------------------------------------------------------------------------
COMMON STOCKS--(CONTINUED)
- -------------------------------------------------------------------------------
TECHNOLOGY--(CONTINUED)
Hewlett Packard Co. .................................. 15,000 $ 840,000
Intel Corp. .......................................... 2,400 340,350
Motorola, Inc. ....................................... 14,000 1,064,000
*Qwest Communications International, Inc. ............. 10,000 272,500
-----------
5,982,975
-----------
- -------------------------------------------------------------------------------
TOTAL COMMON STOCKS (COST $28,583,060) ................ 36,794,369
- -------------------------------------------------------------------------------
<CAPTION>
FACE
AMOUNT
- -------------------------------------------------------------------------------
<S> <C> <C>
CASH EQUIVALENT (2.2%)
- -------------------------------------------------------------------------------
REPURCHASE AGREEMENT (2.2%)
Chase Securities, Inc. 5.70%, dated 6/30/97, due
7/1/97, to be repurchased at $867,137 collateralized
by $920,000 U.S. Treasury Bond 5.625%, due 2/15/06,
valued at $883,954 (COST $867,000)................... $867,000 867,000
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS (97.0%) (COST $29,450,060)........... 37,661,369
- -------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (3.0%)
- -------------------------------------------------------------------------------
Cash............................................................. $ 769
Receivable for Investments Sold.................................. 1,121,086
Dividends Receivable............................................. 53,280
Receivable for Fund Shares Sold.................................. 13,000
Interest Receivable.............................................. 137
Other Assets..................................................... 4,209
Payable for Investment Advisory Fees............................. (19,392)
Payable for Administrative Fees.................................. (12,115)
Other Liabilities................................................ (10,573)
-----------
1,150,401
- -------------------------------------------------------------------------------
NET ASSETS (100%)
Applicable to 3,027,904 outstanding shares of beneficial inter-
est (unlimited authorization, no par value).................... $38,811,770
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE... $ 12.82
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
+ See Note A to Financial Statements.
* Non-Income Producing Security.
ADR American Depositary Receipt.
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
STATEMENT OF OPERATIONS
For the Period Ended June 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
LKCM
SMALL CAP LKCM
EQUITY EQUITY
PORTFOLIO PORTFOLIO
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends.......................... $ 737,993 $ 280,853
Interest........................... 504,553 46,532
- --------------------------------------------------------------------------------
TOTAL INCOME...................... 1,242,546 327,385
- --------------------------------------------------------------------------------
EXPENSES
Investment Advisory Fees--Note B
Basic Fee......................... $785,456 $123,840
Less: Fee Waived.................. -- 785,456 (88,414) 35,426
-------- --------
Administrative Fees--Note C........ 169,441 77,734
Audit Fees......................... 9,884 8,343
Trustees' Fees--Note E............. 6,831 2,067
Filing and Registration Fees....... 22,838 12,241
Other Expenses..................... 30,728 5,795
- --------------------------------------------------------------------------------
TOTAL EXPENSES.................... 1,025,178 141,606
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME............ 217,368 185,779
- --------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) ON INVEST-
MENTS.............................. 5,335,220 (67,806)
NET CHANGE IN UNREALIZED
APPRECIATION ON INVESTMENTS........ 20,700,578 4,992,832
- --------------------------------------------------------------------------------
TOTAL NET REALIZED GAIN AND NET
CHANGE IN UNREALIZED APPRECIATION.. 26,035,798 4,925,026
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS.................... $26,253,166 $5,110,805
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
LKCM SMALL CAP EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED
1997 DECEMBER 31,
(UNAUDITED) 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net Investment Income............................. $ 217,368 $ 631,886
Net Realized Gain................................. 5,335,220 16,081,149
Net Change in Unrealized Appreciation............. 20,700,578 19,407,252
- --------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from
Operations...................................... 26,253,166 36,120,287
- --------------------------------------------------------------------------------
DISTRIBUTIONS:
Net Investment Income............................. (669,762) (596,495)
Net Realized Gain................................. (16,085,340) (7,691,095)
- --------------------------------------------------------------------------------
Total Distributions.............................. (16,755,102) (8,287,590)
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS: (1)
Issued--Regular................................... 21,888,203 59,310,732
--In Lieu of Cash Distributions................. 15,794,285 7,948,741
Capital Contributions............................. -- 72,187
Redeemed.......................................... (3,628,493) (17,506,494)
- --------------------------------------------------------------------------------
Net Increase from Capital Share Transactions..... 34,053,995 49,825,166
- --------------------------------------------------------------------------------
Total Increase.................................... 43,552,059 77,657,863
Net Assets:
Beginning of Period............................... 199,087,887 121,430,024
- --------------------------------------------------------------------------------
End of Period (2)................................. $242,639,946 $199,087,887
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Shares Issued and Redeemed:
Shares Issued................................... 1,460,032 4,161,147
In Lieu of Cash Distributions................... 1,077,372 619,542
Shares Redeemed................................. (244,605) (1,263,264)
------------ ------------
2,292,799 3,517,425
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(2) Net Assets Consist of:
Paid in Capital................................. $182,934,518 $148,880,523
Undistributed Net Investment Income............. 190,132 642,526
Accumulated Net Realized Gain................... 5,294,790 16,044,910
Unrealized Appreciation......................... 54,220,506 33,519,928
------------ ------------
$242,639,946 $199,087,887
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
LKCM EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED PERIOD FROM
JUNE 30, JANUARY 3, 1996**
1997 TO DECEMBER 31,
(UNAUDITED) 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net Investment Income.......................... $ 185,779 $ 450,324
Net Realized Gain (Loss)....................... (67,806) 1,245,994
Net Change in Unrealized Appreciation.......... 4,992,832 3,218,477
- --------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from
Operations................................... 5,110,805 4,914,795
- --------------------------------------------------------------------------------
DISTRIBUTIONS:
Net Investment Income.......................... (450,305) --
Net Realized Gain.............................. (1,254,463) --
- --------------------------------------------------------------------------------
Total Distributions........................... (1,704,768) --
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS: (1)
Issued--Regular................................ 3,803,858 34,492,749
--In Lieu of Cash Distributions.............. 1,102,609 --
Redeemed....................................... (4,108,622) (4,799,656)
- --------------------------------------------------------------------------------
Net Increase from Capital Share Transactions.. 797,845 29,693,093
- --------------------------------------------------------------------------------
Total Increase................................. 4,203,882 34,607,888
Net Assets:
Beginning of Period............................ 34,607,888 --
- --------------------------------------------------------------------------------
End of Period (2).............................. $38,811,770 $34,607,888
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Shares Issued and Redeemed:
Shares Issued................................ 329,203 3,403,217
In Lieu of Cash Distributions................ 100,237 --
Shares Redeemed.............................. (360,175) (444,578)
----------- -----------
69,265 2,958,639
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(2) Net Assets Consist of:
Paid in Capital.............................. $30,490,938 $29,693,093
Undistributed Net Investment Income.......... 185,779 450,305
Accumulated Net Realized Gain (Loss)......... (76,256) 1,246,013
Unrealized Appreciation...................... 8,211,309 3,218,477
----------- -----------
$38,811,770 $34,607,888
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
** Commencement of Operations.
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
LKCM SMALL CAP EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA & RATIOS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
PERIOD FROM MAY 1, 1995 SIX MONTHS
JULY 14, 1994** TO YEAR ENDED ENDED
TO APRIL 30, DECEMBER 31, DECEMBER 31, JUNE 30, 1997
1995 1995 1996 (UNAUDITED)
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 10.00 $ 11.48 $ 13.84 $ 16.20
- ----------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net Investment Income.. 0.04+ 0.03+ 0.05 0.01
Net Realized and
Unrealized Gain on
Investments........... 1.44 2.33 3.26 1.79
- ----------------------------------------------------------------------------------
Total From Investment
Operations........... 1.48 2.36 3.31 1.80
- ----------------------------------------------------------------------------------
DISTRIBUTIONS:
Net Investment Income.. -- -- (0.07) (0.05)
Net Realized Gain...... -- -- (0.88) (1.31)
- ----------------------------------------------------------------------------------
Total Distributions... -- -- (0.95) (1.36)
- ----------------------------------------------------------------------------------
NET ASSET VALUE, END OF
PERIOD................. $ 11.48 $ 13.84 $ 16.20 $ 16.64
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
TOTAL RETURN............ 14.80%++ 20.56%++ 25.67% 12.27%
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL
DATA:
Net Assets, End of
Period (Thousands)..... $66,736 $121,430 $199,088 $242,640
Ratio of Expenses to
Average Net Assets..... 1.00%* 1.00%* 1.00% 0.98%*
Ratio of Net Investment
Income to Average Net
Assets................. 1.15%* 0.53%* 0.39% 0.21%*
Portfolio Turnover Rate. 53% 57% 66% 19%
Average Commission
Rate#.................. N/A N/A $ 0.0564 $ 0.0567
- ----------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Commencement of Operations.
+ Net of voluntarily waived fees and reimbursed expenses of $0.04 and $0.003
per share for the periods ended April 30, 1995 and December 31, 1995,
respectively.
++ Total return would have been lower had the Adviser not waived or reimbursed
certain expenses.
# For fiscal years beginning on or after September 1, 1995, a portfolio is
required to disclose the average commission rate per share it paid for
portfolio trades on which commissions were charged.
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
LKCM EQUITY PORFOLIO
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA & RATIOS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
PERIOD FROM SIX MONTHS
JANUARY 3, 1996** ENDED
TO DECEMBER 31, JUNE 30, 1997
1996 (UNAUDITED)
- -------------------------------------------------------------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........... $ 10.00 $ 11.70
- -------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income+........................ 0.15 0.06
Net Realized and Unrealized Gain on
Investments.................................. 1.55 1.63
- -------------------------------------------------------------------------------
Total From Investment Operations............. 1.70 1.69
- -------------------------------------------------------------------------------
DISTRIBUTIONS:
Net Investment Income......................... -- (0.15)
Net Realized Gain............................. -- (0.42)
- -------------------------------------------------------------------------------
Total Distributions.......................... -- (0.57)
- -------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD................. $ 11.70 $ 12.82
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
TOTAL RETURN++................................. 17.00% 15.31%
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA:
Net Assets, End of Period (Thousands).......... $34,608 $38,812
Ratio of Expenses to Average Net Assets........ 0.80%* 0.80%*
Ratio of Net Investment Income to Average Net
Assets........................................ 1.50%* 1.05%*
Portfolio Turnover Rate........................ 79% 31%
Average Commission Rate........................ $0.0611 $0.0608
- -------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Commencement of Operations.
+ Net of voluntarily waived fees of $0.05 and $0.03 per share for the periods
ended December 31, 1996 and June 30, 1997, respectively.
++ Total return would have been lower had the adviser not waived certain
expenses.
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
LKCM FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
LKCM Fund (the "Fund") was established under Delaware law by a Declaration
of Trust dated February 10, 1994 and is registered under the Investment
Company Act of 1940 as an open-end, management investment company. The LKCM
Small Cap Equity Portfolio and LKCM Equity Portfolio (the "Portfolios"),
diversified portfolios of the Fund, commenced operations on July 14, 1994 and
January 3, 1996, respectively.
A. SIGNIFICANT ACCOUNTING POLICIES. The following significant accounting
policies are in conformity with generally accepted accounting principles for
investment companies. Such policies are consistently followed by the
Portfolios in the preparation of their financial statements. Generally
accepted accounting principles may require management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results may differ from those estimates.
1. SECURITY VALUATION: Securities listed on a U.S. securities exchange or
NASDAQ for which market quotations are readily available are valued at the
last quoted sale price on the day the valuation is made. Price information
on listed securities is taken from the exchange where the security is
primarily traded. Unlisted U.S. securities and listed U.S. securities not
traded on the valuation date for which market quotations are readily
available are valued at the mean of the most recent quoted bid and asked
price. Securities listed on a foreign exchange for which market quotations
are readily available are valued at the latest quoted sales price available
before the time when assets are valued. Fixed-income securities (other than
obligations having a maturity of 60 days or less) are normally valued on
the basis of quotes obtained from pricing services. Fixed-income securities
purchased with remaining maturities of 60 days or less are valued at
amortized cost if it reflects fair value. Other assets and securities for
which no quotations are readily available (including restricted securities)
will be valued in good faith at fair value using methods determined by the
Board of Trustees.
2. FEDERAL INCOME TAXES: It is each Portfolio's intention to qualify for
taxation as a regulated investment company under the Internal Revenue Code
so that the Portfolios will not be subject to Federal income tax to the
extent it distributes its income to its shareholders.
Paid in capital, undistributed net investment income and accumulated net
realized gain for the Portfolios have been adjusted for permanent book to
tax differences.
At June 30, 1997, cost and unrealized appreciation (depreciation) of
investments for Federal income tax purposes were:
<TABLE>
<CAPTION>
NET
APPRECIATION
LKCM PORTFOLIOS COST APPRECIATION (DEPRECIATION) (DEPRECIATION)
--------------- ------------ ------------ -------------- --------------
<S> <C> <C> <C> <C>
Small Cap Equity.... $187,299,809 $59,623,123 $(5,402,617) $54,220,506
Equity.............. 29,450,060 8,459,804 (248,495) 8,211,309
</TABLE>
3. REPURCHASE AGREEMENTS: The Portfolios may enter into repurchase
agreements with brokers, dealers or banks that meet the credit guidelines
established by the Board of Trustees. In a repurchase agreement, a
Portfolio buys a security from a seller that has agreed to repurchase it at
a mutually agreed upon date and price, reflecting the interest rate
effective for the term of the agreement. The term of these agreements is
usually from overnight to one week and never exceeds one year. A repurchase
agreement may be viewed as a fully collateralized loan of money by the
Portfolio to the seller. The Portfolio always receives securities
18
<PAGE>
LKCM FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)--(CONTINUED)
as collateral with a market value at least equal to the purchase price,
including accrued interest, and this value is maintained during the term of
the agreement. If the seller defaults and the collateral value declines,
the Portfolio might incur a loss. If bankruptcy proceedings are commenced
with respect to the seller, the Portfolio's realization upon the collateral
may be delayed or limited.
4. DISTRIBUTION TO SHAREHOLDERS: The Portfolios intend to pay dividends and
net capital gains distributions, if any, on an annual basis. All
distributions will be recorded on the ex-dividend date.
The amount and character of income and capital gain distributions are
determined in accordance with Federal income tax regulations which may
differ from generally accepted accounting principles.
5. OTHER: Security transactions are accounted for on the date the
securities are purchased or sold. Costs used in determining realized gains
and losses on the sale of investment securities are those of specific
securities sold. Dividend income and distributions to shareholders are
recorded on the ex-dividend date. Interest income is recognized using the
accrual basis.
B. ADVISORY SERVICES: Luther King Capital Management Corporation (the
"Adviser"), serves as the investment adviser to the Portfolios under an
Investment Advisory Agreement (the "Agreement"). Under the Agreement the LKCM
Small Cap Equity Portfolio and LKCM Equity Portfolio pay the Adviser an
advisory fee calculated by applying a quarterly rate, equal on an annual basis
to .75% and .70%, respectively, of the Portfolio's average daily net assets
for the quarter. Until further notice, the Adviser has voluntarily agreed to
waive its advisory fees and reimburse expenses to the extent necessary to keep
total operating expenses from exceeding 1.00% and .80%, respectively.
C. ADMINISTRATIVE SERVICES: Chase Global Funds Services Company (the
"Administrator"), a subsidiary of The Chase Manhattan Bank ("Chase"), provides
the Fund with administrative, fund accounting, dividend disbursing and
transfer agency services pursuant to a fund administration agreement. Chase
provides the Fund with custodial services pursuant to a custodial agreement.
Pursuant to the fund administration agreement and custody agreement, the
Administrator receives an aggregate monthly fee, which on an annualized basis
equals .215% of the first $75 million of the net assets of the Small Cap
Equity Portfolio, plus .135% of the next $75 million of the net assets of the
Small Cap Equity Portfolio, plus .095% of the net assets of the Small Cap
Equity Portfolio in excess of $150 million (with a minimum annual fee of
$145,000 plus .015% of average daily net assets); and .185% of the first $75
million of the net assets of the Equity Portfolio, plus .135% of the next $75
million of the net assets of the Equity Portfolio, plus .095% of the net
assets of the Equity Portfolio in excess of $150 million (with a minimum
annual fee of $100,000 in the first year, $145,000 subsequent years, plus
.015% of average daily net assets).
D. PURCHASES AND SALES: For the period ended June 30, 1997, the cost of
purchases and sales of investment securities other than long-term U.S.
Government Securities and short term securities were:
<TABLE>
<CAPTION>
LKCM PORTFOLIOS PURCHASES SALES
- --------------- ----------- -----------
<S> <C> <C>
Small Cap Equity........................................ $54,787,052 $36,699,817
Equity.................................................. 10,451,067 11,587,549
</TABLE>
There were no purchases or sales of long-term U.S. Government securities for
the Portfolios.
19
<PAGE>
LKCM FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)--(CONTINUED)
E. BOARD OF TRUSTEES: Trustees, other than those who are officers or affiliates
of the Adviser, receive an annual fee plus a meeting fee for each meeting
attended and are reimbursed for expenses incurred in attending Board Meetings.
F. OTHER: At June 30, 1997, the percentage of total shares outstanding and the
number of record shareholders owning 10% or greater of the Portfolios were as
follows:
<TABLE>
<CAPTION>
NO. OF %
LKCM PORTFOLIOS SHAREHOLDERS OWNERSHIP
- --------------- ------------ ---------
<S> <C> <C>
Small Cap Equity......................................... 1 14.07%
</TABLE>
20
