<PAGE>
McM FUNDS
-----------------------------
Annual Report
June 30, 1996
Principal Preservation Fund
Intermediate Fixed Income Fund
Fixed Income Fund
Balanced Fund
Equity Investment Fund
<PAGE>
Dear Shareholder:
When we created the McM Funds two years ago, we were one of 5,000 available
mutual funds in the marketplace. Today, there are a staggering 7,000 funds from
which to choose. That means our goal of making the McM Funds the best in the
industry is a challenging one indeed.
We believe three important elements make the difference in maintaining a
successful investment management organization -- people, processes and
performance. With that in mind, we hire and retain the highest quality
personnel, creating a lean, qualified, efficient team with a disciplined
approach designed for all markets. That team maintains the integrity of our
investment processes which, to date, have yielded performance we're proud to
report to you in this Annual Report.
During this past year, I was pleased to be named Chairman of the Board of the
McM Funds. I bring to this position an absolute resolve to continue improving
the Funds for our shareholders. You deserve our best efforts to achieve
excellent performance and outstanding customer service. As we move into our
third year of operation, all McM Funds personnel know I will settle for nothing
less.
Thank you for your continuing trust in us. We appreciate the opportunity to
serve your investment needs.
Sincerely,
/s/ Terry A. O'Toole
- ------------------------------
Terry A. O'Toole
Chairman
<PAGE>
Review
This year the bond and stock markets have had to deal with two opposite views of
the U.S. economy. As the year began, investors worried about slow economic
growth and some strategists even said the "R" word (recession). Strong first
quarter 1996 economic production results (2.3%), higher oil and commodity
prices, and a confident consumer shifted this concern to the opposite end of the
spectrum. Worries about a strong economy, inflation, the Federal Reserve
tightening the money supply and higher interest rates have caused volatility in
the capital markets.
Investment returns for the first six months of 1996 were mixed, unlike the
spectacular year for the financial markets in 1995. Stocks continued to advance
while bonds were down modestly year-to-date. The stock market continues to
advance into record territory, only recently responding to higher interest rates
and concerns of increased inflation. Several factors have contributed to this
overall positive performance, including massive flows of funds into equity
mutual funds as investors save for retirement, solid corporate earnings reports
in the first quarter and expectations for stable interest rates in the second
half of 1996. If interest rates rise, bonds could become more competitive
relative to stocks, causing shifts in asset allocation. The risk of this
movement away from stocks exists, but is unlikely in the near-term.
Outlook
Our view is that no extreme economic scenario will unfold as the year
progresses. The stock market has ignored many investors' concerns and has been
advancing, while the bond market has been affected by higher interest rates both
at the short and long end of the yield curve. We believe high inflation fears
are not warranted, because these higher bond rates will serve to slow the
economy, causing yields to remain stable or decline late in the second half of
1996. Corporate earnings growth should be 7% to 10% for U.S. companies,
supported by continued cost cutting, low inflation and stable interest rates.
We remain moderately constructive on the bond market for 1996 because of the
high expected real rates of return (yield less inflation), and an expected
slowing in the growth of the economy. At the present time, short-term interest
rates are 5.25% and long U.S. Treasuries offer yields as high as 7.30%. If
inflation remains subdued at 3.0%, expected real returns may exceed 4.0%. For
fixed income investing, this is a very attractive real return in an historical
context.
<PAGE>
Principal Preservation Fund
The Principal Preservation Fund emphasizes high quality, liquid securities. The
Fund seeks to realize maximum current income, consistent with preservation of
capital. To meet this objective, U.S. Government issues represent 94% of the
portfolio. The 7-day and 30-day average yields as of June 30, 1996 were 5.01%
and 4.98%, respectively.
DIVERSIFICATION CREDIT QUALITY MATURITY
Government 88% A-1/P-1 6% 31-90 days 43%
Repurchase Agreements 6% Government 94% 91 + days 34%
Commercial Paper 4% 1-15 days 23%
Money Market 2% 16-30 days 0%
Average Annual Return (%) One Since
Year Inception
---- ---------
McM Principal Preservation Fund 5.39 5.34
Principal Preservation Fund
July 13, 1994 Inception Date
Current Yield
7/3/95 5.64%
8/14/95 5.58%
9/25/95 5.48%
11/ 6/95 5.40%
12/18/95 5.34%
1/29/96 5.24%
3/18/96 4.94%
4/29/96 4.92%
6/10/96 4.97%
Past performance does not guarantee future results.
<PAGE>
Intermediate Fixed Income Fund
This Fund emphasizes high quality and diversification. Government bonds and
AAA-rated bonds represent 67% of the Fund. Mortgage securities, backed by the
U.S. Government, provide yield advantages compared to U.S. Government bonds with
equivalent maturities. The Fund's weighted average maturity of 4.1 years seeks
to limit sensitivity to interest rate changes.
NASDAQ SYMBOL
MCMNX
DIVERSIFICATION BOND QUALITY MATURITY
Mortgage 41% AAA 41% 1 - 5 years 48%
Corporate 32% Government 26% 5 - 10 years 42%
Government 26% A 26% Short term 6%
Asset Backed/Other 1% AA 4% 10 + years 4%
BAA 3%
Average Annual Returns (%) One Since
Year Inception
---- ---------
McM Intermediate Fixed Income Fund 4.6 7.0
Lehman Mutual Fund Intermediate Index 4.7 7.1
Intermediate Fixed Income Fund
July 14, 1994 Inception Date
Intermediate Fixed Lehman Mutual Fund
Income Fund Intermediate Fund
------------------ -------------------
9/94 $ 9,969 $10,012
12/94 9,957 10,001
3/95 10,398 10,440
6/95 10,918 10,961
9/95 11,078 11,142
12/95 11,445 11,533
3/96 11,340 11,437
6/96 11,420 11,509
Past performance does not guarantee future results.
<PAGE>
Fixed Income Fund
The Fixed Income Fund is structured similarly to the Intermediate Fixed Income
Fund. It invests primarily in investment grade and U.S. Government bonds.
However, it is more aggressive with a weighted average maturity of 6.8 years,
2.7 years longer than the Intermediate Fixed Income Fund.
DIVERSIFICATION BOND QUALITY MATURITY
Mortgage 42% AAA 41% 5 - 10 years 73%
Corporate 27% Government 31% 10 + years 15%
Government 31% A 21% 1 - 5 years 10%
BAA 5% Short term 2%
AA 2%
Average Annual Returns (%) One Since
Year Inception
---- ---------
McM Fixed Income Fund 4.2 7.9
Lehman Mutual Fund Aggregate Index 5.0 8.1
Fixed Income Fund
July 14, 1994 Inception Date
Fixed Lehman Mutual Fund
Income Fund Aggregate Index
------------------ -------------------
9/94 $ 9,937 $ 9,977
12/94 9,926 10,015
3/95 10,460 10,520
6/95 11,155 11,161
9/95 11,364 11,381
12/95 11,841 11,865
3/96 11,587 11,654
6/96 11,618 11,720
Past performance does not guarantee future results.
<PAGE>
Balanced Fund
The Balanced Fund invests in common stocks and bonds. Common stocks represent
59% of the Fund and bonds represent 39%. The common stock portion is well
diversified among 103 companies that represent all economic sectors. The Fund's
bond portion is 85% U.S. Government and AAA-rated securities with a weighted
average maturity of 6.8 years.
Bond
Asset Allocation Quality Ten Largest Equity Holdings
Stocks 59% Government 50% General Electric 1.9%
Bonds 39% AAA 35% Intel 1.8%
Cash 2% A 10% FNMA 1.8%
BAA 4% Philip Morris 1.7%
AA 1% Chase Manhattan 1.3%
AT&T 1.2%
Merck 1.2%
BankAmerica 1.2%
Hewlett-Packard 1.2%
GTE 1.2%
-----
14.5%
Average Annual Returns (%) One Since
Year Inception
---- ---------
McM Balanced Fund 16.9 17.4
Standard & Poor's 500 26.0 24.6
Lehman Mutual Fund Aggregate Index 5.0 8.1
Balanced Fund
July 14, 1994 Inception Date
Balanced Lehman Mutual Fund Standard & Poor's
Fund Aggregate Index 500
-------- ------------------ -----------------
9/94 $10,081 $ 9,977 $10,270
12/94 10,078 10,015 10,267
3/95 10,767 10,520 11,267
6/95 11,731 11,161 12,340
9/95 12,389 11,381 13,323
12/95 12,971 11,865 14,124
3/96 13,315 11,654 14,892
6/96 13,709 11,720 15,564
Past performance does not guarantee future results.
<PAGE>
Equity Investment Fund
The Equity Investment Fund invests in common stocks of large, high quality
companies. It is well diversified among 102 companies across all economic
sectors. Individual companies are carefully selected and attractive economic
sectors are slightly overweighted as compared to the Standard & Poor's 500.
NASDAQ Symbol
MCMEX
Ten Largest Holdings (%)
FNMA 3.2
Intel 3.1
General Electric 2.9
Philip Morris 2.8
AT&T 2.0
Merck 2.0
Chase Manhattan 2.0
PepsiCo 1.9
GTE 1.9
Compaq 1.8
----
23.6
Portfolio Characteristics
Price/Earnings Ratio 22.17
Beta 1.00
Avg. Market Capitalization $35.4 B
Total Number of Stocks 102
<PAGE>
Average Annual Returns (%)
One Since
Year Inception
---- ---------
McM Equity 26.5 24.5
S&P 500 26.0 24.6
Sector Weightings (%)
Financial Services 14.8
Technology 13.3
Health-Care 11.6
Utilities 11.2
Energy 11.1
Consumer Non-Durables 9.4
Capital Goods 7.3
Retail 6.1
Raw Materials 4.1
Consumer Durables 3.0
Consumer Services 2.2
Transportation 1.9
Shelter 1.6
Business Equip. & Services 1.5
Multi-Industry 0.9
-----
100.0
Equity Investment Fund
July 14, 1994 Inception Date
Equity Standard & Poor's
Investment Fund 500
--------------- -----------------
9/94 $10,160 $10,270
12/94 10,124 10,267
3/95 10,965 11,267
6/95 12,155 12,340
9/95 13,094 13,323
12/95 13,761 14,124
3/96 14,613 14,892
6/96 15,380 15,564
Past performance does not guarantee future results.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1996
- -------------------------------------------------------------------------------
PRINCIPAL PRESERVATION FUND
<TABLE>
<CAPTION>
Principal
Amount Value
----------- ------------
<S> <C> <C>
FIXED INCOME SECURITIES - 85.02%
U.S. Government Obligations - 0.41%
U.S. Treasury Bill, 4.920%, 08/22/96 ................................... $ 100,000 $ 99,289
------------
Total U.S. Government Obligations (Cost $99,289) ....................... 99,289
------------
U.S. Government Agency Notes - 84.61%
Federal Farm Bank Discount Notes - 14.74%
4.250%, 10/29/96 ...................................................... 1,125,000 1,122,042
5.200%, 12/02/96 ...................................................... 2,500,000 2,444,389
------------
3,566,431
------------
Federal Home Loan Bank Discount Notes - 16.26%
5.190%, 07/15/96 ...................................................... 1,500,000 1,496,973
5.140%, 11/29/96 ...................................................... 1,500,000 1,467,661
5.400%, 01/13/97 ...................................................... 1,000,000 970,600
------------
3,935,234
------------
Federal Home Loan Mortgage Corp. Discount Notes - 22.86%
5.210%, 07/09/96 ...................................................... 1,000,000 998,842
5.200%, 08/15/96 ...................................................... 1,000,000 993,500
5.300%, 09/16/96 ...................................................... 1,500,000 1,482,996
4.125%, 10/21/96 ...................................................... 1,000,000 996,976
5.130%, 10/21/96 ...................................................... 1,075,000 1,057,843
------------
5,530,157
------------
Federal National Mortgage Assn. Discount Notes - 30.75%
5.190%, 07/12/96 ..................................................... 1,000,000 998,414
5.200%, 08/22/96 ..................................................... 900,000 893,240
5.270%, 08/22/96 ..................................................... 1,600,000 1,587,821
5.010%, 08/23/96 ..................................................... 2,000,000 1,985,248
5.190%, 09/27/96 ..................................................... 2,000,000 1,974,627
------------
7,439,350
------------
Total U.S. Government Agency Notes (Cost $20,471,172) .................. 20,471,172
------------
TOTAL FIXED INCOME SECURITIES (Cost $20,570,461) ....................... 20,570,461
------------
REPURCHASE AGREEMENT - 5.79%
Chase Manhattan Bank, U.S. Treasury Notes, $1,430,000 par, 6.125% coupon,
due 05/31/97, dated 06/28/96 to be sold on 07/01/96 at $1,400,624 .... 1,400,000 1,400,000
------------
Total Repurchase Agreement (Cost $1,400,000) ........................... 1,400,000
------------
CERTIFICATES OF DEPOSIT - 4.13%
Imperial Bank, 5.450%, 08/22/96 ........................................ 1,000,000 1,000,000
------------
Total Certificates of Deposit (Cost $1,000,000) ........................ 1,000,000
------------
COMMERCIAL PAPER - 4.11%
Xerox Corp., 5.260%, 08/13/96 .......................................... 1,000,000 993,717
------------
Total Commercial Paper (Cost $993,717) ................................. 993,717
------------
TOTAL INVESTMENTS - 99.05% (Cost $23,964,178)(1)......................... 23,964,178
------------
CASH AND OTHER ASSETS NET OF LIABILITIES - 0.95% ....................... 230,944
------------
NET ASSETS - 100.00% ................................................... $24,195,122
============
</TABLE>
(1) At June 30, 1996, cost is identical for book and federal income tax
purposes.
See Accompanying Notes to Financial Statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1996
- -------------------------------------------------------------------------------
INTERMEDIATE FIXED INCOME FUND
<TABLE>
<CAPTION>
Principal
Amount Value
----------- ------------
<S> <C> <C>
FIXED INCOME SECURITIES - 98.98%
U.S. Government Obligations - 5.35%
U.S. Treasury Notes
6.000%, 08/31/97 ........................................ $ 75,000 $ 75,084
0.000%, 08/15/98* ....................................... 290,000 255,069
6.875%, 07/31/99 ........................................ 215,000 218,339
5.625%, 11/30/00 ........................................ 2,375,000 2,301,494
6.250%, 04/30/01 ........................................ 400,000 396,352
7.500%, 05/15/02 ........................................ 405,000 424,464
11.875%, 11/15/03 ....................................... 305,000 397,259
------------
Total U.S. Treasury Obligations (Cost $4,054,707) ......... 4,068,061
------------
U.S. Government Agency Obligations - 20.70%
Federal Home Loan Bank - 1.25%
8.375%, 10/25/99 ........................................ 670,000 708,063
5.940%, 06/13/00 ........................................ 100,000 97,733
6.110%, 07/17/00 ........................................ 150,000 147,422
------------
953,218
------------
Federal Home Loan Mortgage Corp. - 2.32%
6.550%, 04/19/99 ........................................ 550,000 552,151
7.980%, 01/19/00 ........................................ 410,000 427,359
5.905%, 06/13/00 ........................................ 800,000 780,904
------------
1,760,414
------------
Federal National Mortgage Association - 9.06%
8.700%, 06/10/99 ........................................ 1,635,000 1,734,719
8.350%, 11/10/99 ........................................ 3,615,000 3,817,837
5.500%, 02/02/01 ........................................ 1,400,000 1,337,154
------------
6,889,710
------------
Guaranteed Export Trust - 3.30%
6.130%, 06/15/04 ........................................ 500,000 476,430
6.280%, 06/15/04 ........................................ 550,000 540,100
6.550%, 06/15/04 ........................................ 1,500,000 1,494,600
------------
2,511,130
------------
Resolution Funding Corp. - 4.77%
0.000%, 01/15/00* ....................................... 321,000 256,148
0.000%, 04/15/06* ....................................... 3,060,000 1,560,325
0.000%, 04/15/10* ....................................... 4,810,000 1,813,658
------------
3,630,131
------------
Total U.S. Government Agency Obligations (Cost $16,147,042) . 15,744,603
------------
Collateralized Mortgage Obligations - 40.94%
Federal Home Loan Mortgage Corp. - 27.58%
6.000%, 12/15/06 ........................................ 1,500,000 1,458,677
6.000%, 07/15/07 ........................................ 100,000 97,219
5.500%, 12/15/12 ........................................ 350,000 344,036
5.000%, 03/15/13 ........................................ 200,000 197,839
</TABLE>
See Accompanying Notes to Financial Statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1996
- -------------------------------------------------------------------------------
INTERMEDIATE FIXED INCOME FUND (Continued)
<TABLE>
<CAPTION>
Principal
Amount Value
----------- ------------
<S> <C> <C>
FIXED INCOME SECURITIES - (continued)
Collateralized Mortgage Obligations - (continued)
5.500%, 04/15/13 ........................................ $ 800,000 $ 788,018
5.500%, 01/15/14 ........................................ 525,000 516,597
5.000%, 08/15/14 ........................................ 300,000 296,546
6.500%, 08/15/14 ........................................ 850,000 849,065
7.500%, 09/15/14 ........................................ 400,000 407,612
5.750%, 02/15/15 ........................................ 950,000 930,867
5.850%, 02/15/18 ........................................ 1,500,000 1,460,422
5.400%, 07/15/18 ........................................ 1,500,000 1,428,985
6.400%, 01/15/19 ........................................ 1,000,000 983,612
5.800%, 02/15/19 ........................................ 1,175,000 1,143,656
6.050%, 05/15/19 ........................................ 700,000 686,016
6.250%, 05/15/19 ........................................ 1,000,000 969,078
6.000%, 07/15/19 ........................................ 1,500,000 1,435,867
6.000%, 02/15/20 ........................................ 1,000,000 955,128
5.500%, 04/15/20 ........................................ 1,100,000 1,059,698
6.000%, 10/15/20 ........................................ 1,600,000 1,534,238
5.750%, 05/15/21 ........................................ 1,600,000 1,512,424
6.350%, 07/15/21 ........................................ 1,000,000 971,532
6.750%, 05/15/23 ........................................ 1,000,000 946,208
------------
20,973,340
------------
Federal National Mortgage Association - 13.34%
8.670%, 06/01/97 ........................................ 21,440 21,453
0.000%, 07/25/98* ....................................... 374,141 340,599
5.950%, 05/25/05 ........................................ 1,500,000 1,468,581
5.400%, 11/25/05 ........................................ 1,300,000 1,255,681
5.900%, 11/25/05 ........................................ 1,600,000 1,565,028
6.000%, 04/01/09 ........................................ 22,373 21,426
5.500%, 07/25/12 ........................................ 375,000 371,482
5.600%, 10/25/13 ........................................ 200,000 196,769
5.250%, 11/25/13 ........................................ 525,000 510,327
5.750%, 02/25/15 ........................................ 1,000,000 982,080
5.250%, 09/25/16 ........................................ 81,184 79,238
6.000%, 11/25/16 ........................................ 1,300,000 1,273,720
9.000%, 06/25/18 ........................................ 211,793 221,094
6.600%, 09/25/18 ........................................ 100,000 98,972
5.500%, 02/25/19 ........................................ 1,175,000 1,129,969
0.000%, 01/25/22* ....................................... 301,757 244,773
0.000%, 03/25/22* ....................................... 351,227 323,353
0.000%, 05/25/22* ....................................... 47,376 42,418
------------
10,146,963
------------
Government National Mortgage Association - 0.02%
11.000%, 12/15/09 ....................................... 1,516 1,696
11.000%, 02/15/10 ....................................... 2,397 2,682
11.500%, 01/15/13 ....................................... 1,164 1,318
11.500%, 07/15/13 ....................................... 3,588 4,062
11.000%, 11/15/13 ....................................... 1,993 2,230
12.000%, 03/15/14 ....................................... 1,886 2,162
------------
14,150
------------
Total Collateralized Mortgage Obligations (Cost $31,415,701) 31,134,453
------------
</TABLE>
See Accompanying Notes to Financial Statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1996
- -------------------------------------------------------------------------------
INTERMEDIATE FIXED INCOME FUND (Continued)
<TABLE>
<CAPTION>
Principal
Amount Value
----------- ---------
<S> <C> <C>
FIXED INCOME SECURITIES - (continued)
Asset Backed Securities - 0.26%
CMO Trust 43 Y, 8.200%, 05/20/04 ................. $ 60,962 $ 62,191
GMAC 1992 F Grantor Trust, 4.500%, 09/15/97 ...... 29,335 29,165
Morgan Stanley Mortgage Trust, 8.450%, 05/01/17 .. 19,948 20,401
Premier Auto Trust 1992, 5.050%, 01/15/98 ........ 70,461 70,066
Premier Auto Trust 1992, 4.550%, 03/15/98 ........ 8,608 8,522
Shearson Lehman CMO, Inc., 8.750%, 08/27/17 ...... 10,047 10,145
---------
Total Asset Backed Securities (Cost $200,372) .... 200,490
---------
Corporate Bonds - 31.73%
Bank & Insurance - 0.66%
BankAmerica Corp., 6.875%, 11/20/97 .............. 500,000 502,645
---------
Electric Utility - 1.15%
Commonwealth Edison Co., 6.250%, 10/01/97 ........ 50,000 50,187
Commonwealth Edison Co., 6.000%, 03/15/98 ........ 350,000 346,937
Houston Lighting & Power Co., 7.625%, 03/01/97 ... 100,000 101,000
Long Island Lighting Co., 8.750%, 02/15/97 ....... 100,000 101,125
Long Island Lighting Co., 7.625%, 04/15/98 ....... 275,000 275,688
---------
874,937
---------
Financial Services - 24.15%
American General Finance Corp., 6.860%, 09/01/97 . 175,000 176,274
American General Finance Corp., 8.000%, 02/15/00 . 200,000 208,000
American General Finance Corp., 7.250%, 04/15/00 . 400,000 406,500
Associates Corp. North America, 7.500%, 10/15/96 . 550,000 552,585
Associates Corp. North America, 8.625%, 06/15/97 . 200,000 204,654
Associates Corp. North America, 6.750%, 07/15/97 . 125,000 125,773
Associates Corp. North America, 6.625%, 11/15/97 . 400,000 402,000
Associates Corp. North America, 6.375%, 10/15/02 . 330,000 320,100
Beneficial Corp., 6.790%, 11/20/97 ............... 200,000 201,308
Beneficial Corp., 8.100%, 11/09/99 ............... 425,000 442,531
Beneficial Corp., 6.850%, 06/17/02 ............... 325,000 322,562
Chrysler Financial Corp., 5.080%, 01/27/97 ....... 200,000 199,264
Commercial Credit Co., 6.000%, 04/15/00 .......... 200,000 195,250
Commercial Credit Co., 6.375%, 09/15/02 .......... 700,000 679,000
Finova Capital Corp., 6.625%, 09/15/01 ........... 875,000 859,688
Ford Motor Credit Co., 8.000%, 10/01/96 .......... 100,000 100,573
Ford Motor Credit Co., 5.625%, 03/03/97 .......... 25,000 24,963
Ford Motor Credit Co., 7.125%, 12/01/97 .......... 200,000 203,120
Ford Motor Credit Co., 6.550%, 02/03/98 .......... 300,000 301,125
Ford Motor Credit Co., 9.250%, 06/15/98 .......... 100,000 105,250
Ford Motor Credit Co., 8.875%, 06/15/99 .......... 200,000 212,000
Ford Motor Credit Co., 6.375%, 10/06/00 .......... 500,000 491,875
Ford Motor Credit Co., 6.250%, 11/08/00 .......... 700,000 686,000
General Motors Acceptance Corp., 5.200%, 08/20/96 . 50,000 49,975
General Motors Acceptance Corp., 7.375%, 01/15/97 . 175,000 176,577
General Motors Acceptance Corp., 7.650%, 02/04/97 . 100,000 101,083
General Motors Acceptance Corp., 7.600%, 02/10/97 . 100,000 101,066
General Motors Acceptance Corp., 8.375%, 05/01/97 . 200,000 203,946
General Motors Acceptance Corp., 7.450%, 06/09/97 . 100,000 101,263
General Motors Acceptance Corp., 7.000%, 04/15/98 . 100,000 101,000
General Motors Acceptance Corp., 6.625%, 03/22/99 . 800,000 801,000
General Motors Acceptance Corp., 7.125%, 06/01/99 . 100,000 101,250
</TABLE>
See Accompanying Notes to Financial Statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1996
- -------------------------------------------------------------------------------
INTERMEDIATE FIXED INCOME FUND (Continued)
<TABLE>
<CAPTION>
Principal
Amount Value
----------- -------------
<S> <C> <C>
FIXED INCOME SECURITIES - (continued)
Corporate Bonds - (continued)
General Motors Acceptance Corp., 8.000%, 10/01/99 .............................................. $ 200,000 $ 207,500
Household Finance Corp., 6.250%, 10/15/97 ...................................................... 175,000 175,191
Household Finance Corp., 6.760%, 01/22/98 ...................................................... 100,000 100,625
Household Finance Corp., 6.750%, 06/01/00 ...................................................... 650,000 649,187
Household Finance Corp., 6.700%, 06/15/02 ...................................................... 500,000 495,625
Lehman Brothers, Inc., 6.125%, 02/01/01 ........................................................ 800,000 770,000
Merrill Lynch & Co., Inc., 6.000%, 01/15/01 .................................................... 775,000 747,875
Morgan Stanley Group, Inc., 7.320%, 01/15/97 ................................................... 75,000 75,576
Morgan Stanley Group, Inc., 5.650%, 06/15/97 ................................................... 250,000 249,035
Morgan Stanley Group, Inc., 7.500%, 09/01/99 ................................................... 550,000 562,375
Norwest Financial, Inc., 7.850%, 04/15/97 ...................................................... 375,000 380,955
Sears Roebuck Acceptance Corp., 6.730%, 08/29/00 ............................................... 1,000,000 995,000
Smith Barney Holdings, Inc., 7.980%, 03/01/00 .................................................. 375,000 390,000
Smith Barney Holdings, Inc., 5.875%, 02/01/01 .................................................. 1,225,000 1,177,531
Transamerica Financial Group, 8.375%, 02/15/98 ................................................. 425,000 437,219
Transamerica Financial Group, 7.510%, 04/15/02 ................................................. 150,000 152,812
Transamerica Financial Group, 6.375%, 06/10/02 ................................................. 400,000 386,000
Travelers/Aetna P&C, 6.750%, 04/15/01 .......................................................... 700,000 694,750
Travelers, Inc., 9.500%, 03/01/02 .............................................................. 500,000 556,875
-------------
18,361,686
-------------
Industrial - 5.77%
Philip Morris Cos., Inc., 8.100%, 08/21/96 ..................................................... 150,000 150,375
Philip Morris Cos., Inc., 6.375%, 01/15/98 ..................................................... 250,000 250,000
Philip Morris Cos., Inc., 6.200%, 02/09/98 ..................................................... 200,000 199,500
Philip Morris Cos., Inc., 7.125%, 12/01/99 ..................................................... 50,000 50,500
Philip Morris Cos., Inc., 7.500%, 01/15/02 ..................................................... 1,150,000 1,170,125
Sara Lee Corp., 4.800%, 01/13/97 ............................................................... 700,000 694,750
Sears Roebuck & Co., 5.210%, 02/18/97 .......................................................... 300,000 298,125
Sears Roebuck & Co., 7.520%, 02/19/97 .......................................................... 100,000 101,051
Sears Roebuck & Co., 9.250%, 08/01/97 .......................................................... 225,000 232,031
Sears Roebuck & Co., 9.250%, 04/15/98 .......................................................... 25,000 26,188
Tele Communications, Inc., 5.340%, 08/19/96 .................................................... 25,000 24,969
Tele Communications, Inc., 7.000%, 08/04/97 .................................................... 425,000 427,125
Texaco Capital, Inc., 8.620%, 06/16/97 ......................................................... 50,000 51,207
Waste Management, Inc., 6.375%, 07/01/97 ....................................................... 375,000 375,937
WMX Technologies, Inc., 8.125%, 02/01/98 ....................................................... 325,000 333,531
-------------
4,385,414
-------------
Total Corporate Bonds (Cost $24,311,116) ....................................................... 24,124,682
-------------
TOTAL FIXED INCOME SECURITIES - 98.98% (Cost $76,128,938)(1) ................................... 75,272,289
-------------
CASH AND OTHER ASSETS NET OF LIABILITIES - 1.02% ............................................... 772,436
-------------
NET ASSETS - 100.00% ........................................................................... $76,044,725
=============
(1)Aggregate cost for federal income tax purposes is $76,128,938 and net unrealized depreciation is
as follows:
Gross unrealized appreciation ............................................................ $ 135,648
Gross unrealized depreciation ............................................................ (992,297)
-----------
Net unrealized depreciation .................................................................. $ (856,649)
===========
</TABLE>
*Zero coupon bond.
See Accompanying Notes to Financial Statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1996
- -------------------------------------------------------------------------------
FIXED INCOME FUND
<TABLE>
<CAPTION>
Principal
Amount Value
----------- -----------
<S> <C> <C>
FIXED INCOME SECURITIES - 98.35%
U.S. Government Obligations - 19.11%
U.S. Treasury Notes
7.500%, 05/15/02 ...................................... $140,000 $ 146,729
6.375%, 08/15/02 ...................................... 350,000 347,263
6.250%, 02/15/03 ...................................... 45,000 44,256
11.875%, 11/15/03 ..................................... 210,000 273,523
7.500%, 11/15/16 ...................................... 532,000 559,387
8.875%, 08/15/17 ...................................... 130,000 156,170
-----------
Total U.S. Treasury Obligations (Cost $1,506,280) ...... 1,527,328
-----------
U.S. Government Agency Obligations - 11.49%
Federal Home Loan Bank - 5.55%
7.440%, 08/10/01 ...................................... 150,000 154,915
7.780%, 10/19/01 ...................................... 275,000 288,398
-----------
443,313
-----------
Federal Home Loan Mortgage Corp. - 4.01%
7.125%, 11/18/02 ...................................... 315,000 320,194
-----------
Guaranteed Export Trust - 0.71%
6.130%, 06/15/04 ...................................... 60,000 57,172
-----------
Resolution Funding Corp. - 1.22%
0.000%, 10/15/06* ..................................... 85,000 41,835
0.000%, 04/15/17* ..................................... 250,000 55,415
-----------
97,250
-----------
Total U.S. Government Agency Obligations (Cost $918,456) . 917,929
-----------
Collateralized Mortgage Obligations - 40.67%
Federal Home Loan Mortgage Corp. - 22.20%
6.250%, 11/15/18 ...................................... 175,000 169,766
6.250%, 05/15/19 ...................................... 250,000 242,917
6.400%, 05/15/19 ...................................... 150,000 146,312
5.950%, 11/15/19 ...................................... 200,000 195,243
6.500%, 06/25/20 ...................................... 100,000 97,580
6.350%, 07/15/21 ...................................... 150,000 145,730
6.500%, 08/15/21 ...................................... 75,000 73,329
6.000%, 02/15/22 ...................................... 200,000 185,394
6.650%, 07/15/22 ...................................... 150,000 144,240
6.000%, 02/15/23 ...................................... 200,000 184,055
6.750%, 05/15/23 ...................................... 200,000 189,242
-----------
1,773,808
-----------
Federal National Mortgage Association - 18.47%
7.500%, 07/25/18 ...................................... 30,934 31,170
6.000%, 09/25/18 ...................................... 40,000 38,233
6.500%, 03/25/19 ...................................... 150,000 146,695
6.500%, 04/25/19 ...................................... 150,000 146,733
3.500%, 05/25/19 ...................................... 125,000 106,396
6.500%, 09/25/19 ...................................... 150,000 142,647
6.250%, 01/25/20 ...................................... 220,000 212,645
6.850%, 10/25/20 ...................................... 40,000 38,773
6.750%, 11/25/20 ...................................... 200,000 192,944
</TABLE>
See Accompanying Notes to Financial Statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1996
- -------------------------------------------------------------------------------
FIXED INCOME FUND (Continued)
<TABLE>
<CAPTION>
Principal
Amount Value
----------- -----------
<S> <C> <C>
FIXED INCOME SECURITIES - (continued)
Collateralized Mortgage Obligations - (continued)
6.750%, 05/25/21 ........................................ $200,000 $ 192,980
0.000%, 03/25/22* ....................................... 35,123 32,335
7.000%, 06/25/23 ........................................ 200,000 194,443
-----------
1,475,994
-----------
Total Collateralized Mortgage Obligations (Cost $3,262,716) 3,249,802
-----------
Asset Backed Securities - 0.22%
CMO Trust 39 Y, 8.650%, 03/01/03 ......................... 13,145 13,556
Premier Auto Trust 1992, 4.550%, 03/15/98 ................ 4,304 4,261
-----------
Total Asset Backed Securities (Cost $17,593) ............. 17,817
-----------
Corporate Bonds - 26.86%
Bank & Insurance - 1.59%
BankAmerica Corp., 6.875%, 11/20/97 ...................... 50,000 50,264
KeyCorp, 6.750%, 03/15/06 ................................ 80,000 76,400
-----------
126,664
-----------
Electric Utility - 0.94%
Commonwealth Edison Co., 6.250%, 10/01/97 ................ 50,000 50,188
Long Island Lighting Co., 7.625%, 04/15/98 ............... 25,000 25,062
-----------
75,250
-----------
Financial Services - 17.49%
Associates Corp. North America, 6.375%, 10/15/02 ......... 120,000 116,400
Beneficial Corp., 8.100%, 11/09/99 ....................... 100,000 104,125
Beneficial Corp., 9.470%, 03/09/01 ....................... 20,000 22,000
Chrysler Financial Corp., 6.500%, 06/15/98 ............... 25,000 25,031
Commercial Credit Co., 8.250%, 11/01/01 .................. 75,000 79,500
Commercial Credit Co., 6.375%, 09/15/02 .................. 100,000 97,000
Finova Capital Corp., 6.625%, 09/15/01 ................... 100,000 98,250
Ford Motor Credit Co., 6.250%, 11/08/00 .................. 100,000 98,000
General Motors Acceptance Corp., 6.500%, 12/05/05 ........ 50,000 47,000
Household Finance Corp., 6.760%, 01/22/98 ................ 50,000 50,312
Household Finance Corp., 6.700%, 06/15/02 ................ 75,000 74,344
Lehman Brothers, Inc., 7.625%, 06/01/06 .................. 80,000 79,500
Morgan Stanley Group, Inc., 5.650%, 06/15/97 ............. 50,000 49,807
Morgan Stanley Group, Inc., 7.500%, 09/01/99 ............. 75,000 76,688
Norwest Financial, Inc., 7.850%, 04/15/97 ................ 50,000 50,794
Sears Roebuck Acceptance Corp., 6.125%, 01/15/06 ......... 100,000 92,500
Transamerica Financial Group, 7.500%, 09/14/01 ........... 75,000 76,671
Transamerica Financial Group, 7.510%, 04/15/02 ........... 75,000 76,406
Travelers, Inc., 9.500%, 03/01/02 ........................ 75,000 83,531
-----------
1,397,859
-----------
Industrial - 6.84%
International Business Machines Corp., 6.375%, 06/15/00 .. 75,000 74,250
Philip Morris Cos., Inc., 6.375%, 01/15/98 ............... 50,000 50,000
Philip Morris Cos., Inc., 7.500%, 01/15/02 ............... 175,000 178,063
Sears Roebuck & Co., 9.250%, 04/15/98 .................... 50,000 52,375
</TABLE>
See Accompanying Notes to Financial Statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1996
- -------------------------------------------------------------------------------
FIXED INCOME FUND (Continued)
<TABLE>
<CAPTION>
Principal
Amount Value
----------- -------------
<S> <C> <C>
FIXED INCOME SECURITIES - (continued)
Corporate Bonds - (continued)
Tele Communications, Inc., 7.000%, 08/04/97 .................................................... $ 25,000 $ 25,125
Tele Communications, Inc., 6.875%, 02/15/06 .................................................... 100,000 90,250
WMX Technologies, Inc., 8.125%, 02/01/98 ....................................................... 75,000 76,969
-----------
547,032
-----------
Total Corporate Bonds (Cost $2,176,997) ........................................................ 2,146,805
-----------
TOTAL FIXED INCOME SECURITIES - 98.35% (Cost $7,882,042)(1)...................................... 7,859,681
-----------
CASH AND OTHER ASSETS NET OF LIABILITIES - 1.65% ............................................... 131,964
-----------
NET ASSETS 100.00% ............................................................................. $7,991,645
===========
(1) Aggregate cost for federal income tax purposes is $7,882,042 and net unrealized depreciation
is as follows:
Gross unrealized appreciation .............................................................. $ 72,584
Gross unrealized depreciation .............................................................. (94,945)
---------
Net unrealized depreciation ................................................................. $(22,361)
=========
</TABLE>
* Zero coupon bond.
See Accompanying Notes to Financial Statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1996
- -------------------------------------------------------------------------------
BALANCED FUND
<TABLE>
<CAPTION>
Shares Value
-------- ----------
<S> <C> <C>
COMMON STOCKS - 59.29%
Business Equipment & Service - 0.86%
Automatic Data Processing, Inc. ... 1,500 $ 57,938
Dun & Bradstreet Corp. ............ 450 28,125
Flightsafety International, Inc. .. 300 16,275
----------
102,338
----------
Capital Goods - 4.79%
Cooper Industries, Inc. ........... 900 37,350
Emerson Electric Co. .............. 800 72,300
General Electric Co. .............. 2,650 229,225
Illinois Tool Works, Inc. ......... 300 20,287
Ingersoll Rand Co. ................ 1,500 65,625
PPG Industries, Inc. .............. 1,500 73,125
Tyco International, Ltd. . ........ 1,800 73,350
----------
571,262
----------
Consumer Durables - 1.26%
Ford Motor Co. .................... 2,700 87,413
General Motors Corp. .............. 1,200 62,850
----------
150,263
----------
Consumer Non-Durables - 6.07%
Anheuser Busch Cos., Inc. ......... 600 45,000
CPC International, Inc. ........... 1,100 79,200
Darden Restaurants, Inc. .......... 200 2,150
Earthgrains Co. ................... 12 393
Eastman Kodak Co. ................. 800 62,200
General Mills, Inc. ............... 650 35,425
PepsiCo, Inc. ..................... 3,800 134,425
Philip Morris Cos., Inc. .......... 2,000 208,000
Procter & Gamble Co. .............. 800 72,500
Sara Lee Corp. .................... 2,600 84,175
----------
723,468
----------
Consumer Services - 1.36%
Walt Disney Co. ................... 1,000 62,875
Hilton Hotels Corp. ............... 150 16,875
Knight-Ridder, Inc. ............... 300 21,750
Time Warner, Inc. ................. 1,550 60,837
----------
162,337
----------
Energy - 6.51%
Amerada Hess Corp. ................ 500 26,813
Amoco Corp. ....................... 1,050 75,994
Atlantic Richfield Co. ............ 200 23,700
Baker Hughes, Inc. . .............. 800 26,300
British Petroleum Co. PLC ......... 650 69,469
Burlington Resources, Inc. ........ 550 23,650
Chevron Corp. ..................... 1,400 82,600
Exxon Corp. ....................... 1,400 121,625
Mobil Corp. ....................... 800 89,700
Royal Dutch Petroleum Co. ......... 350 53,812
Schlumberger, Ltd. ................ 600 50,550
Texaco, Inc. ...................... 900 75,487
Unocal Corp. ...................... 1,000 33,750
Valero Energy Corp. ............... 900 22,500
----------
775,950
----------
</TABLE>
See Accompanying Notes to Financial Statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1996
- -------------------------------------------------------------------------------
BALANCED FUND (Continued)
<TABLE>
<CAPTION>
Shares Value
-------- -----------
<S> <C> <C>
COMMON STOCKS - (continued)
Financial Services - 8.59%
American International Group, Inc. ..... 675 $ 66,572
BankAmerica Corp. ...................... 1,850 140,138
Bankers Trust Corp. .................... 700 51,713
Chase Manhattan Corp. .................. 2,232 157,635
Chubb Corp. ............................ 1,400 69,825
Citicorp . ............................. 1,600 132,200
Federal National Mortgage Assn. ........ 6,300 211,050
First Bank System, Inc. ................ 1,450 84,100
General RE Corp. ....................... 450 68,512
Morgan (JP) & Co., Inc. ................ 500 42,313
-----------
1,024,058
-----------
Health Care - 6.57%
Alza Corp. Cl. A* ...................... 900 24,638
Bausch & Lomb, Inc. .................... 450 19,125
Baxter International, Inc. ............. 1,400 66,150
Bristol-Myers Squibb Co. ............... 1,000 90,000
Columbia/HCA Healthcare Corp. .......... 550 29,356
Johnson & Johnson ...................... 1,800 89,100
Lilly Eli & Co. ........................ 1,100 71,500
Merck & Co., Inc. ...................... 2,200 142,175
Schering Plough Corp. .................. 1,900 119,225
St. Jude Medical, Inc.* ................ 800 26,800
United Healthcare Corp. ................ 650 32,825
Warner-Lambert Co. ..................... 1,300 71,500
-----------
782,394
-----------
Multi-Industry - 0.64%
Minnesota Mining & Mfg. Co. ............ 1,100 75,900
-----------
Raw Materials - 2.32%
Aluminum Co. of America ................ 750 43,031
Dow Chemical Co. ....................... 1,000 76,000
Dupont (EI) De Nemours & Co. ........... 1,000 79,125
Monsanto Co. ........................... 2,400 78,000
-----------
276,156
-----------
Retail - 4.00%
Albertsons, Inc. ....................... 1,850 76,544
Dillard Dept. Stores, Inc. Cl. A . ..... 1,350 49,275
Limited, Inc. .......................... 526 11,309
May Department Stores Co. .............. 1,550 67,812
Payless Shoesource, Inc.* .............. 184 5,842
Penney (JC), Inc. ...................... 1,000 52,500
Price/Costco, Inc.* .................... 1,900 41,087
Toys R Us, Inc.* ....................... 500 14,250
Wal Mart Stores, Inc. .................. 4,100 104,038
Walgreen Co. ........................... 1,600 53,600
-----------
476,257
-----------
Shelter - 0.93%
Georgia-Pacific Corp. .................. 900 63,900
Kimberly-Clark Corp. ................... 600 46,350
Schweitzer-Mauduit International, Inc.* . 25 703
-----------
110,953
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1996
- -------------------------------------------------------------------------------
BALANCED FUND (Continued)
<TABLE>
<CAPTION>
Shares Value
-------- -----------
<S> <C> <C>
COMMON STOCKS - (continued)
Technology - 8.11%
Airtouch Communications* ............. 2,400 $ 67,800
AMP, Inc. ............................ 1,850 74,231
Boeing Co. ........................... 300 26,138
Compaq Computer Corp.* ............... 2,500 123,125
Hewlett-Packard Co. .................. 1,400 139,475
Honeywell, Inc. ...................... 1,300 70,850
Intel Corp. .......................... 2,900 212,969
International Business Machines Corp. . 850 84,150
Motorola, Inc. ....................... 1,950 122,606
Seagate Technology, Inc.* ............ 800 36,000
Tandem Computers, Inc.* .............. 700 8,662
-----------
966,006
-----------
Transportation - 0.98%
AMR Corp.* ........................... 800 72,800
CSX Corp. ............................ 900 43,425
-----------
116,225
-----------
Utilities - 6.30%
AT & T Corp. ......................... 2,350 145,700
Edison International ................. 3,700 65,213
El Paso Natural Gas Co. .............. 500 19,250
GTE Corp. ............................ 3,100 138,725
MCI Communications Corp. ............. 2,700 69,188
Pacific Gas & Electric Co. ........... 2,150 49,987
Pacific Telesis Group ................ 1,500 50,625
PECO Energy Co. ...................... 2,100 54,600
SBC Communications, Inc. ............. 1,950 96,037
Unicom Corp. ......................... 2,200 61,325
-----------
750,650
-----------
TOTAL COMMON STOCKS (Cost $6,106,652) . 7,064,217
-----------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
----------- -----------
<S> <C> <C>
FIXED INCOME SECURITIES - 38.95%
U.S. Government Obligations - 19.56%
U.S. Treasury Notes
7.500%, 05/15/02 ................................... $915,000 958,975
6.375%, 08/15/02 ................................... 565,000 560,582
11.625%, 11/15/02 .................................. 100,000 125,959
6.250%, 02/15/03 ................................... 20,000 19,669
10.750%, 05/15/03 .................................. 495,000 607,266
8.875%, 08/15/17 ................................... 48,000 57,663
-----------
Total U.S. Treasury Obligations (Cost $2,364,363) .... 2,330,114
-----------
U.S. Government Agency Obligations - 0.09%
Resolution Funding Corp., 0.000%, 10/15/12** ......... 35,000 11,006
-----------
Total U.S. Government Agency Obligations (Cost $12,623) 11,006
-----------
Collateralized Mortgage Obligations - 13.77%
Federal Home Loan Mortgage Corp. - 8.71%
6.300%, 10/15/18 ................................... 100,000 96,109
6.250%, 05/15/19 ................................... 100,000 96,908
</TABLE>
See Accompanying Notes to Financial Statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1996
- -------------------------------------------------------------------------------
BALANCED FUND (Continued)
<TABLE>
<CAPTION>
Principal
Amount Value
------------ -------------
<S> <C> <C>
FIXED INCOME SECURITIES - (continued)
Collateralized Mortgage Obligations - (continued)
5.950%, 11/15/19 .......................................................................... $ 100,000 $ 97,622
7.000%, 02/15/21 .......................................................................... 100,000 98,350
6.500%, 08/15/21 .......................................................................... 40,000 39,109
6.000%, 02/15/22 .......................................................................... 100,000 92,697
6.650%, 07/15/22 .......................................................................... 100,000 96,160
6.250%, 11/15/22 .......................................................................... 150,000 141,201
6.000%, 02/15/23 .......................................................................... 150,000 138,041
6.750%, 05/15/23 .......................................................................... 150,000 141,931
-------------
1,038,128
-------------
Federal National Mortgage Association - 5.06%
6.000%, 09/25/18 .......................................................................... 50,000 47,791
6.250%, 01/25/20 .......................................................................... 100,000 96,657
6.850%, 10/25/20 .......................................................................... 50,000 48,466
6.750%, 11/25/20 .......................................................................... 100,000 96,901
6.750%, 05/25/21 .......................................................................... 100,000 96,490
6.500%, 11/25/21 .......................................................................... 100,000 95,116
7.000%, 06/25/23 .......................................................................... 125,000 121,527
-------------
602,948
-------------
Total Collateralized Mortgage Obligations (Cost $1,644,077) ................................. 1,641,076
-------------
Corporate Bonds - 5.53%
Bank & Insurance - 0.36%
KeyCorp, 6.750%, 03/15/06 ................................................................... 45,000 42,975
-------------
Financial Services - 3.98%
Associates Corp. North America, 6.375%, 10/15/02 ............................................ 50,000 48,500
Beneficial Corp., 9.470%, 03/09/01 .......................................................... 30,000 33,000
Commercial Credit Co., 6.375%, 09/15/02 ..................................................... 50,000 48,500
Finova Capital Corp., 6.625%, 09/15/01 ...................................................... 50,000 49,125
Ford Motor Credit Co., 6.250%, 11/08/00 ..................................................... 50,000 49,000
Household Finance Corp., 6.700%, 06/15/02 ................................................... 50,000 49,563
Lehman Brothers, Inc., 7.625%, 06/01/06 ..................................................... 40,000 39,750
Sears Roebuck Acceptance Corp., 6.125%, 01/15/06 ............................................ 50,000 46,250
Smith Barney Holdings, Inc., 7.980%, 03/01/00 ............................................... 50,000 52,000
Transamerica Financial Group, 7.510%, 04/15/02 .............................................. 30,000 30,562
Travelers, Inc., 9.500%, 03/01/02 ........................................................... 25,000 27,844
-------------
474,094
-------------
Industrial - 1.19%
Philip Morris Cos., Inc., 7.500%, 01/15/02 .................................................. 50,000 50,875
Philip Morris Cos., Inc., 6.375%, 02/01/06 .................................................. 25,000 23,250
Tele Communications, Inc., 6.875%, 02/15/06 ................................................. 75,000 67,687
-------------
141,812
-------------
Total Corporate Bonds (Cost $673,814) ....................................................... 658,881
-------------
TOTAL FIXED INCOME SECURITIES (Cost $4,694,877) ............................................. 4,641,077
-------------
TOTAL INVESTMENTS - 98.24% (Cost $10,801,529)(1).............................................. 11,705,294
-------------
CASH AND OTHER ASSETS NET OF LIABILITIES - 1.76% ............................................ 209,675
-------------
NET ASSETS - 100.00% ........................................................................ $11,914,969
=============
(1)Aggregate cost for federal income tax purposes is $10,801,529 and net unrealized appreciation
is as follows:
Gross unrealized appreciation ......................................................... $1,008,671
Gross unrealized depreciation ......................................................... (104,906)
------------
Net unrealized appreciation ............................................................... $ 903,765
============
</TABLE>
* Non-dividend paying stock.
**Zero coupon bond.
See Accompanying Notes to Financial Statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1996
- -------------------------------------------------------------------------------
EQUITY INVESTMENT FUND
<TABLE>
<CAPTION>
Shares Value
-------- -----------
<S> <C> <C>
COMMON STOCKS - 98.71%
Business Equipment & Service - 1.51%
Automatic Data Processing, Inc. .... 5,000 $ 193,125
Dun & Bradstreet Corp. ............. 1,000 62,500
Flightsafety International, Inc. ... 1,950 105,788
-----------
361,413
-----------
Capital Goods - 7.29%
Cooper Industries, Inc. ............ 2,100 87,150
Emerson Electric Co. ............... 2,900 262,088
General Electric Co. ............... 8,050 696,325
Illinois Tool Works, Inc. .......... 500 33,813
Ingersoll Rand Co. ................. 3,300 144,375
PPG Industries, Inc. ............... 5,500 268,125
Tyco International, Ltd. ........... 6,180 251,835
-----------
1,743,711
-----------
Consumer Durables - 2.13%
Ford Motor Co. ..................... 8,150 263,856
General Motors Corp. ............... 4,700 246,162
-----------
510,018
-----------
Consumer Non-Durables - 10.02%
Anheuser Busch Cos., Inc. .......... 2,500 187,500
CPC International, Inc. ............ 3,850 277,200
Darden Restaurants, Inc. ........... 100 1,075
Earthgrains Co. .................... 64 2,096
Eastman Kodak Co. .................. 2,950 229,363
General Mills, Inc. ................ 2,100 114,450
PepsiCo, Inc. ...................... 12,800 452,800
Philip Morris Cos., Inc. ........... 6,525 678,600
Procter & Gamble Co. ............... 2,200 199,375
Sara Lee Corp. ..................... 7,800 252,525
-----------
2,394,984
-----------
Consumer Services - 2.20%
Walt Disney Co. .................... 3,300 207,487
Hilton Hotels Corp. ................ 400 45,000
Knight-Ridder, Inc. ................ 1,700 123,250
Time Warner, Inc. .................. 3,800 149,150
-----------
524,887
-----------
Energy - 10.92%
Amerada Hess Corp. ................. 2,300 123,337
Amoco Corp. ........................ 4,300 311,212
Atlantic Richfield Co. ............. 200 23,700
Baker Hughes, Inc. ................. 2,800 92,050
British Petroleum Co. PLC .......... 2,301 245,919
Burlington Resources, Inc. ......... 2,300 98,900
Chevron Corp. ...................... 4,620 272,580
Exxon Corp. ........................ 4,000 347,500
Mobil Corp. ........................ 2,500 280,313
Royal Dutch Petroleum Co. .......... 1,200 184,500
Schlumberger, Ltd. ................. 1,250 105,313
Texaco, Inc. ....................... 4,300 360,663
Unocal Corp. ....................... 2,700 91,125
Valero Energy Corp. ................ 3,000 75,000
-----------
2,612,112
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1996
- -------------------------------------------------------------------------------
EQUITY INVESTMENT FUND (Continued)
<TABLE>
<CAPTION>
Shares Value
-------- -----------
<S> <C> <C>
COMMON STOCKS - (continued)
Financial Services - 14.64%
American International Group, Inc. . 2,700 $ 266,287
BankAmerica Corp. ................. 5,612 425,109
Bankers Trust Corp. ............... 2,500 184,688
Chase Manhattan Corp. ............. 6,627 468,032
Chubb Corp. ....................... 4,980 248,378
Citicorp .......................... 5,000 413,125
Federal National Mortgage Assn. ... 23,000 770,500
First Bank System, Inc. ........... 4,700 272,600
General RE Corp. .................. 1,500 228,375
Morgan JP & Co., Inc. ............. 2,650 224,256
-----------
3,501,350
-----------
Health Care - 11.43%
Alza Corp. Cl. A* ................. 3,000 82,125
Bausch & Lomb, Inc. ............... 1,000 42,500
Baxter International, Inc. ........ 5,800 274,050
Bristol-Myers Squibb Co. .......... 4,200 378,000
Columbia/HCA Healthcare Corp. ..... 2,100 112,088
Johnson & Johnson ................. 5,700 282,150
Lilly Eli & Co. ................... 4,660 302,900
Merck & Co., Inc. ................. 7,260 469,177
Schering Plough Corp. ............. 6,200 389,050
St. Jude Medical, Inc.* ........... 2,300 77,050
United Healthcare Corp. ........... 2,400 121,200
Warner-Lambert Co. ................ 3,700 203,500
-----------
2,733,790
-----------
Multi-Industry - 0.87%
Minnesota Mining & Mfg. Co. ....... 3,030 209,070
-----------
Raw Materials - 4.08%
Aluminum Co. of America ........... 3,940 226,057
Dow Chemical Co. .................. 2,470 187,720
Dupont (EI) De Nemours & Co. ...... 4,400 348,150
Monsanto Co. ...................... 6,600 214,500
-----------
976,427
-----------
Retail - 6.06%
Albertsons, Inc. .................. 6,500 268,937
Dillard Dept. Stores, Inc. Cl. A .. 3,800 138,700
Limited, Inc. ..................... 3,532 75,938
May Department Stores Co. ......... 4,700 205,625
Payless Shoesource, Inc.* ......... 432 13,716
Penney (JC), Inc. ................. 3,150 165,375
Price/Costco, Inc.* ............... 6,000 129,750
Toys R Us, Inc.* .................. 1,000 28,500
Wal Mart Stores, Inc. ............. 10,050 255,019
Walgreen Co. ...................... 5,000 167,500
-----------
1,449,060
-----------
Shelter - 1.55%
Georgia-Pacific Corp. ............. 3,200 227,200
Kimberly-Clark Corp. .............. 1,860 143,685
-----------
370,885
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1996
- -------------------------------------------------------------------------------
EQUITY INVESTMENT FUND (Continued)
<TABLE>
<CAPTION>
Shares Value
------------ -------------
<S> <C> <C>
COMMON STOCKS - (continued)
Technology - 13.15%
Airtouch Communications* ...................................................................... 6,150 $ 173,737
AMP, Inc. ..................................................................................... 6,200 248,775
Boeing Co. .................................................................................... 300 26,137
Compaq Computer Corp.* ........................................................................ 8,700 428,475
Hewlett-Packard Co. ........................................................................... 4,200 418,425
Honeywell, Inc. ............................................................................... 4,460 243,070
Intel Corp. ................................................................................... 10,000 734,375
International Business Machines Corp. ......................................................... 3,400 336,600
Motorola, Inc. ................................................................................ 5,700 358,387
Seagate Technology, Inc.* ..................................................................... 3,100 139,500
Tandem Computers, Inc.* ....................................................................... 2,900 35,888
-------------
3,143,369
-------------
Transportation - 1.84%
AMR Corp.* .................................................................................... 2,700 245,700
CSX Corp. ..................................................................................... 4,000 193,000
-------------
438,700
-------------
Utilities - 11.02%
AT & T Corp. .................................................................................. 7,630 473,060
Edison International .......................................................................... 10,000 176,250
El Paso Natural Gas Co. ....................................................................... 3,500 134,750
GTE Corp. ..................................................................................... 10,000 447,500
MCI Communications Corp. ...................................................................... 5,400 138,375
Pacific Gas & Electric Co. .................................................................... 11,500 267,375
Pacific Telesis Group ......................................................................... 4,400 148,500
PECO Energy Co. ............................................................................... 11,000 286,000
SBC Communications, Inc. ...................................................................... 6,900 339,825
Unicom Corp. .................................................................................. 8,000 223,000
-------------
2,634,635
-------------
TOTAL COMMON STOCKS - 98.71% (Cost $21,212,842)(1).............................................. 23,604,411
-------------
CASH AND OTHER ASSETS NET OF LIABILITIES - 1.29% .............................................. 308,510
-------------
NET ASSETS - 100.00% .......................................................................... $23,912,921
=============
(1) Aggregate cost for federal income tax purposes is $21,212,842 and net unrealized appreciation
is as follows:
Gross unrealized appreciation ............................................................ $2,486,162
Gross unrealized depreciation ............................................................ (94,593)
------------
Net unrealized appreciation ................................................................ $2,391,569
============
</TABLE>
* Non-dividend paying stock.
See Accompanying Notes to Financial Statements.
<PAGE>
Statement of Assets and Liabilities June 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
McM
McM Intermediate McM McM
Principal Fund Fixed McM Equity
Preservation Income Income Balanced Investment
Fund Fund Fund Fund Fund
-------------- -------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments in securities at value
(cost $23,964,178, $76,128,938,
$7,882,042, $10,801,529 and
$21,212,842, respectively) ....... $23,964,178 $75,272,289 $7,859,681 $11,705,294 $23,604,411
Cash-interest bearing accounts ...... 313,311 25,050 37,620 678,483 488,520
Dividends and interest receivable ... 23,940 752,428 91,959 67,558 45,235
Receivable for fund shares sold ..... 0 1,642 0 0 0
Receivable for maturities ........... 0 619 0 0 0
Receivable for securities sold ...... 0 0 119 0 0
Deferred organization cost (Note A) . 11,754 11,754 11,754 11,754 11,754
Other assets ........................ 645 2,333 6,353 2,373 297
-------------- -------------- ------------ ------------- -------------
Total assets ................ 24,313,828 76,066,115 8,007,486 12,465,462 24,150,217
-------------- -------------- ------------ ------------- -------------
Liabilities:
Payable for securities purchased .... 0 0 0 534,233 169,010
Fund shares redeemed ................ 99,121 0 0 0 50,000
Distributions payable ............... 2,543 0 0 0 0
Accrued expenses .................... 7,444 9,712 6,740 7,794 9,358
Payable to advisor, net ............. 9,598 11,678 9,101 8,466 8,928
-------------- -------------- ------------ ------------- -------------
Total liabilities ........... 118,706 21,390 15,841 550,493 237,296
-------------- -------------- ------------ ------------- -------------
Net Assets:
Applicable to 24,193,533, 7,474,348,
773,849, 934,284 and 1,609,826
shares outstanding, respectively ... $24,195,122 $76,044,725 $7,991,645 $11,914,969 $23,912,921
============== ============== ============ ============= =============
Net Assets Consist of:
Capital paid-in ..................... $24,193,533 $76,551,270 $7,982,873 $11,018,536 $21,500,183
Accumulated undistributed net
investment income ................ 0 214,359 23,026 15,143 10,916
Accumulated net realized gain (loss)
on investments ................... 1,589 135,745 8,107 (22,475) 10,253
Net unrealized appreciation/
depreciation on investments ...... 0 (856,649) (22,361) 903,765 2,391,569
-------------- -------------- ------------ ------------- -------------
$24,195,122 $76,044,725 $7,991,645 $11,914,969 $23,912,921
============== ============== ============ ============= =============
Net asset value and redemption price
per share ........................... $ 1.00 $ 10.17 $ 10.33 $ 12.75 $ 14.85
============== ============== ============ ============= =============
</TABLE>
See Accompanying Notes to Financial Statements.
<PAGE>
Statement of Operations
For The Year Ended June 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
McM
McM Intermediate McM McM
Principal Fixed Fixed McM Equity
Preservation Income Income Balanced Investment
Fund Fund Fund Fund Fund
-------------- -------------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Investment Income:
Dividends ............................... $ 0 $ 0 $ 0 $ 90,011 $ 239,861
Interest ................................ 1,046,009 3,586,513 476,154 164,706 15,830
-------------- -------------- ----------- ----------- ------------
Total investment income ......... 1,046,009 3,586,513 476,154 254,717 255,691
-------------- -------------- ----------- ----------- ------------
Expenses:
Investment advisory fees (Note E) ....... 47,458 201,896 25,566 28,436 50,631
Transfer agent fees ..................... 29,262 25,534 25,214 26,306 27,601
Administration fees ..................... 21,704 20,112 19,747 20,563 20,987
Accounting fees ......................... 25,773 44,573 28,603 25,111 24,474
Custodian fees .......................... 12,188 19,637 5,864 16,220 23,534
Insurance fees .......................... 11,208 39,398 6,669 3,776 5,403
Legal fees .............................. 5,961 16,510 2,324 1,663 2,453
Amortization of organization costs (Note A) 3,620 3,620 3,620 3,620 3,620
Registration expenses ................... 7,794 13,699 5,963 4,737 5,310
Trustees fees ........................... 2,747 5,700 1,400 1,201 1,583
Auditing fees ........................... 7,500 7,500 7,500 7,500 7,500
Miscellaneous expenses .................. 371 974 152 137 222
Other expenses .......................... 768 372 227 660 846
-------------- -------------- ----------- ----------- ------------
Total expenses .................. 176,354 399,525 132,849 139,930 174,164
Expenses reimbursed (Note E) ............ (119,404) (111,101) (96,325) (102,016) (98,217)
-------------- -------------- ----------- ----------- ------------
Net expenses .................... 56,950 288,424 36,524 37,914 75,947
-------------- -------------- ----------- ----------- ------------
Net Investment Income ..................... 989,059 3,298,089 439,630 216,803 179,744
-------------- -------------- ----------- ----------- ------------
Realized and Unrealized Gain (Loss) on
Investments:
Net realized gain (loss) on investments . 1,584 428,006 16,664 (15,053) 18,284
Net change in unrealized appreciation/
depreciation on investments .......... 0 (1,350,540) (169,853) 680,345 2,003,550
-------------- -------------- ----------- ----------- ------------
Net realized and unrealized gain (loss) on
investments .......................... 1,584 (922,534) (153,189) 665,292 2,021,834
-------------- -------------- ----------- ----------- ------------
Increase in Net Assets from Operations .... $ 990,643 $ 2,375,555 $ 286,441 $ 882,095 $2,201,578
============== ============== =========== =========== ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
McM Principal McM Intermediate McM Fixed
Preservation Fund Fixed Income Fund Income Fund
------------------------------- ------------------------------- ----------------------------
For the For the For the For the For the For the
Year Ended Period Ended Year Ended Period Ended Year Ended Period Ended
06/30/96 06/30/95* 06/30/96 06/30/95** 06/30/96 06/30/95**
------------- -------------- ------------- -------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income ...... $ 989,059 $ 227,772 $ 3,298,089 $ 478,032 $ 439,630 $ 86,013
Net realized gain on investments 1,584 5 428,006 248,988 16,664 28,635
Net change in unrealized
appreciation/
depreciation on investments 0 0 (1,350,540) 493,891 (169,853) 147,492
------------- -------------- ------------- -------------- ------------ --------------
Increase in net assets ..... 990,643 227,777 2,375,555 1,220,911 286,441 262,140
------------- -------------- ------------- -------------- ------------ --------------
Dividends and Distributions to
Shareholders:
From net investment income . (989,059) (227,772) (3,160,286) (403,289) (433,144) (69,497)
From capital gains ......... 0 0 (539,436) 0 (37,168) 0
------------- -------------- ------------- -------------- ------------
--------------
Total Distributions ........ (989,059) (227,772) (3,699,722) (403,289) (470,312) (69,497)
------------- -------------- ------------- -------------- ------------ --------------
Capital Share Transactions -
Note C ..................... 12,380,593 11,812,940 47,432,633 29,118,637 1,576,877 6,405,996
------------- -------------- ------------- -------------- ------------ --------------
Total increase in net assets . 12,382,177 11,812,945 46,108,466 29,936,259 1,393,006 6,598,639
Net Assets:
Beginning of period ........ 11,812,945 0 29,936,259 0 6,598,639 0
------------- -------------- ------------- -------------- ------------ --------------
End of period (including
undistributed net investment
income of $0, $0, $214,359,
$74,760, $23,026 and $16,516,
respectively) ............ $24,195,122 $11,812,945 $76,044,725 $29,936,259 $7,991,645 $6,598,639
============= ============== ============= ============== ============ ==============
==============
</TABLE>
* McM Principal Preservation Fund commenced investment operations on July
13, 1994.
** McM Intermediate Fixed Income Fund and McM Fixed Income Fund commenced
investment operations on July 14, 1994.
See accompanying notes to financial statements.
<PAGE>
Statement of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
McM Balanced McM Equity
Fund Investment Fund
------------------------------- -------------------------------
For the For the For the For the
Year Ended Period Ended Year Ended Period Ended
06/30/96 06/30/95* 06/30/96 06/30/95*
------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Operations:
Net investment income ................... $ 216,803 $ 54,300 $ 179,744 $ 29,015
Net realized gain (loss) on investments . (15,053) 26,219 18,284 11,489
Net change in unrealized appreciation/
depreciation on investments .......... 680,345 223,420 2,003,550 388,019
------------- -------------- ------------- --------------
Increase in net assets .................. 882,095 303,939 2,201,578 428,523
------------- -------------- ------------- --------------
Dividends and Distributions to Shareholders:
From net investment income .............. (206,101) (49,859) (171,896) (25,947)
From capital gains ...................... (33,641) 0 (19,520) 0
------------- -------------- ------------- --------------
Total Distributions ..................... (239,742) (49,859) (191,416) (25,947)
------------- -------------- ------------- --------------
Capital Share Transactions - Note C ....... 8,202,740 2,815,796 17,037,000 4,463,183
------------- -------------- ------------- --------------
Total increase in net assets ............. 8,845,093 3,069,876 19,047,162 4,865,759
Net Assets:
Beginning of period ..................... 3,069,876 0 4,865,759 0
------------- -------------- ------------- --------------
End of period (including undistributed net
investment income of $15,143, $4,441,
$10,916 and $3,068, respectively) .... $11,914,969 $3,069,876 $23,912,921 $4,865,759
============= ============== ============= ==============
</TABLE>
* MCM Balanced Fund and McM Equity Investment Fund commenced investment
operations on July 14, 1994.
See accompanying notes to financial statements.
<PAGE>
McM FUNDS
Notes to Financial Statements June 30, 1996
- -------------------------------------------------------------------------------
Note (A) Significant Accounting Policies: McM Funds (the "Company") operates
as a series company currently issuing five series of shares of beneficial
interest (collectively, the "Funds"): McM Principal Preservation Fund (the
"Principal Preservation Fund"), McM Intermediate Fixed Income Fund (the
"Intermediate Fixed Income Fund"), McM Fixed Income Fund (the "Fixed Income
Fund"), McM Balanced Fund (the "Balanced Fund") and McM Equity Investment
Fund (the "Equity Investment Fund"). The Company is a no-load, open-end
management investment company which is registered under the Investment
Company Act of 1940 (the "Act"), as amended. The Company was organized as a
Delaware business trust on February 3, 1994. The Principal Preservation Fund
commenced investment operations on July 13, 1994. The Intermediate Fixed
Income Fund, Fixed Income Fund, Balanced Fund and Equity Investment Fund
commenced investment operations on July 14, 1994. Investment in the Principal
Preservation Fund is neither insured nor guaranteed by the U.S. Government,
and there can be no assurance that the Principal Preservation Fund will be
able to maintain a stable net asset value of $1.00. Certain officers and
trustees of the Funds are also officers and directors of McMorgan and Company
(the "Advisor"). No officer or employee of the Advisor receives any
compensation from the Funds for acting as a trustee of the Funds. The
officers of the Funds receive no compensation directly from the Funds for
performing the duties of their offices. All Company officers serve without
direct compensation from the Fund. The following is a summary of the
significant accounting policies consistently followed by each Fund in the
preparation of its financial statements. These policies are in conformity
with generally accepted accounting principles.
(1) Security Valuation: The net asset value per share of each Fund is
computed as of the close of regular trading on the NYSE. The net asset
value per share is computed by adding the value of all securities and
other assets in the portfolio, deducting any liabilities (expenses and
fees are accrued daily) and dividing by the number of shares outstanding.
The equity securities of each Fund listed or traded on a stock exchange
are valued at the last sale price on its principal exchange. If no sale
price is reported, the mean of the last bid and asked prices is used.
Securities traded over-the-counter are priced at the mean of the last bid
and asked prices. Fixed- income securities are valued through valuations
obtained from a commercial pricing service or at the most recent mean of
the bid and asked prices provided by investment dealers in accordance
with procedures established by the Board of Trustees. All securities held
in the portfolio of the Principal Preservation Fund, and the debt
securities with maturities of 60 days or less held by the other Funds,
are valued at amortized cost. When a security is valued at amortized
cost, it is valued at its cost when purchased, and thereafter by assuming
a constant amortization to maturity of any discount or premium,
regardless of the impact of fluctuating interest rates on the market
value of the instrument. When market quotations are not readily
available, securities and other assets are valued at fair value as
determined in good faith by the Board of Trustees.
(2) Repurchase Agreements: Each Fund may enter into repurchase agreements
to earn income. The Funds may only enter into repurchase agreements with
financial institutions that are deemed to be creditworthy by the Advisor,
pursuant to guidelines established by the Funds' Board of Trustees.
During the term of any repurchase agreement, the Advisor will continue to
monitor the creditworthiness of the seller. Repurchase agreements are
considered under the Act to be collateralized loans by a Fund to the
seller secured by the securities transferred to the Fund. Repurchase
agreements under the Act will be fully collateralized by securities in
which the Fund may invest directly. Such collateral will be
marked-to-market daily. If the seller of the underlying security under
the repurchase agreement should default on its obligation to repurchase
the underlying security, a Fund may experience delay or difficulty in
exercising its right to realize upon the security and, in addition, may
incur a loss if the value of the security should decline, as well as
disposition costs in liquidating the security.
(3) Investment Income and Securities Transactions: Dividend income is
recorded on the ex-dividend date. Interest income is accrued daily.
Securities transactions are accounted for on the date securities are
purchased or sold. The cost of securities sold is determined using the
first-in-first-out method.
<PAGE>
McM FUNDS
Notes to Financial Statements June 30, 1996
- -------------------------------------------------------------------------------
(4) Federal Income Taxes: The Funds have elected to be treated as
"regulated investment companies" under Sub-chapter M of the Internal
Revenue Code and to distribute substantially all of their respective net
taxable income. Each Fund qualified for such treatment for the fiscal
year ended June 30, 1996. Accordingly, no provisions for federal income
taxes have been made in the accompanying financial statements.
(5) Dividends and Distributions: Dividends and distributions to
shareholders are recorded on the ex- dividend date.
(6) Organization Costs: Organization costs are being amortized on a
straight-line basis over five years.
Note (B) Dividends from Net Investment Income and Distributions of Capital
Gains: The Principal Preservation Fund declares dividends daily from its net
investment income. The Principal Preservation Fund's dividends are payable
monthly and are automatically reinvested in additional Fund shares, at the
month-end net asset value, for those shareholders that have elected the
reinvestment option. The Intermediate Fixed Income Fund and the Fixed Income
Fund distribute their respective net investment income to shareholders
monthly and net capital gains, if any, are distributed annually. With respect
to the Balanced Fund and the Equity Investment Fund, dividends from net
investment income are distributed quarterly and net realized gains from
investment transactions, if any, are distributed to shareholders annually.
Note (C) Capital Share Transactions: Each Fund is authorized to issue an
unlimited number of shares of beneficial interest with no par value.
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
PRINCIPAL PRESERVATION FUND NTERMEDIATE FIXED INCOME FUND
------------------------------------------------------- --------------------------------------------------
Year Ended Period Ended Year Ended Period Ended
June 30, 1996 June 30, 1995 June 30, 1996 June 30, 1995
----------------------------- -------------------------- ------------------------ -------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
------------- -------------- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold ..... 48,186,845 $ 48,186,845 20,195,224 $20,195,224 5,055,407 $52,223,621 3,011,283 $30,365,363
Shares issued
through
reinvestment of
dividends ...... 954,210 954,210 210,250 210,250 344,344 3,547,475 39,660 403,289
Shares redeemed . (36,760,462) (36,760,462) (8,592,534) (8,592,534) (813,233) (8,338,463) (163,113) (1,650,015)
------------- -------------- ------------ ------------ ----------- ------------- ----------- ------------
Net Increase .... 12,380,593 $ 12,380,593 11,812,940 $11,812,940 4,586,518 $47,432,633 2,887,830 $29,118,637
============= ============== ============ ============ =========== ============= =========== ============
</TABLE>
<TABLE>
<CAPTION>
FIXED INCOME FUND BALANCED FUND
-------------------------------------------------- --------------------------------------------------
Year Ended Period Ended Year Ended Period Ended
June 30, 1996 June 30, 1995 June 30, 1996 June 30, 1995
-------------------------- ------------------------ --------------------------- ---------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------- ------------ --------- ----------- --------- ------------ --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold .............. 131,506 $1,383,524 620,161 $6,367,978 662,596 $8,186,373 267,068 $2,777,969
Shares issued through
reinvestment of dividends . 44,326 467,474 6,778 69,497 17,679 218,104 3,518 37,857
Shares redeemed .......... (25,846) (274,121) (3,076) (31,479) (16,574) (201,737) (3) (30)
---------- ------------ --------- ------------ ---------- ------------ --------- ----------
Net Increase ............. 149,986 $1,576,877 623,863 $6,405,996 663,701 $8,202,740 270,583 $2,815,796
========== ============ ========= ============ ========== ============ ========= ==========
</TABLE>
<TABLE>
<CAPTION>
EQUITY INVESTMENT FUND
--------------------------------------------------------
Year Ended Period Ended
June 30, 1996 June 30, 1995
----------------------------- -------------------------
Shares Amount Shares Amount
----------- -------------- --------- ------------
<S> <C> <C> <C> <C>
Shares sold ............. 1,249,130 $17,659,811 412,880 $4,521,599
Shares issued through
reinvestment of dividends 13,380 186,095 2,306 25,947
Shares redeemed ......... (59,989) (808,906) (7,881) (84,363)
----------- -------------- --------- ------------
Net Increase ............ 1,202,521 $17,037,000 407,305 $4,463,183
=========== ============== ========= ============
</TABLE>
<PAGE>
McM FUNDS
Notes to Financial Statements June 30, 1996
- -------------------------------------------------------------------------------
Note (D) Investment Transactions: Aggregate purchases and proceeds from sales
of investment securities (other than short-term investments) for the year
ended June 30, 1996 were:
<TABLE>
<CAPTION>
Aggregate Proceeds from
Purchases Sales
-------------- ---------------
<S> <C> <C>
Intermediate Fixed Income Fund . $94,324,274 $42,746,752
Fixed Income Fund ............ 4,590,835 2,697,154
Balanced Fund ................ 9,700,219 1,655,772
Equity Investment Fund ....... 16,954,131 93,479
</TABLE>
Note (E) Advisory, Administration and Distribution Services Agreements: Under
its investment advisory agreements with each of the Funds, the Advisor
provides investment advisory services to the Funds. The Funds will pay the
Advisor at the following annual percentage rates of the average daily net
assets of each Fund: 0.25% for the Principal Preservation Fund; 0.35% for the
Intermediate Fixed Income Fund; 0.35% for the Fixed Income Fund; 0.45% for
the Balanced Fund; and 0.50% for the Equity Investment Fund. These fees are
accrued daily and paid monthly. The Advisor has voluntarily undertaken to
absorb for the Principal Preservation Fund, Intermediate Fixed Income Fund,
Fixed Income Fund, Balanced Fund and Equity Investment Fund operating
expenses which cause total expenses to exceed 0.30%, 0.50%, 0.50%, 0.60%, and
0.75%, respectively. For the period July 1, 1995 through June 30, 1996, the
Advisor absorbed, subject to repayment, expenses totaling $527,063; $119,404
for the Principal Preservation Fund, $111,101 for the Intermediate Fixed
Income Fund, $96,325 for the Fixed Income Fund, $102,016 for the Balanced
Fund, and $98,217 for the Equity Investment Fund.
The investment advisory agreements provide that any fee reductions or expense
reimbursements made by the Advisor are subject to reimbursement by the Funds
within the three years following such reduction or reimbursement provided
that the Funds are able to make such reimbursements and remain in compliance
with applicable expense limitations. From July 14, 1994 (July 13, 1994 for
the Principal Preservation Fund) through June 30, 1996, the Advisor has
reduced its management fee and otherwise absorbed Fund expenses for each Fund
in the following amounts: Principal Preservation Fund $148,630, Intermediate
Fixed Income Fund $205,453, Fixed Income Fund $119,492, Balanced Fund
$126,817 and Equity Investment Fund $123,504.
<PAGE>
Financial Highlights
- --------------------------------------------------------------------------------
The tables below set forth financial data for a share of beneficial interest
outstanding throughout each period presented.
<TABLE>
<CAPTION>
McM Principal McM Intermediate McM Fixed
Preservation Fund Fixed Income Fund Income Fund
------------------------------ ------------------------------ ----------------------------
For the For the For the For the For the For the
Year Ended Period Ended Year Ended Period Ended Year Ended Period Ended
06/30/96 06/30/95* 06/30/96 06/30/95** 06/30/96 06/30/95**
------------ -------------- ------------ -------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period $ 1.00 $ 1.00 $ 10.37 $ 10.00 $ 10.58 $ 10.00
------------ -------------- ------------ -------------- ------------ ------------
Income from investment operations
Net investment income ........... 0.05 0.05 0.57 0.54 0.64 0.55
Net realized and unrealized gain
(loss) on investments ........ 0.00 0.00 (0.10) 0.34 (0.20) 0.56
------------ -------------- ------------ -------------- ------------ ------------
Total from investment operations 0.05 0.05 0.47 0.88 0.44 1.11
------------ -------------- ------------ -------------- ------------ -----------
Less Distributions:
From net investment income ...... (0.05) (0.05) (0.57) (0.51) (0.63) (0.53)
From capital gains .............. 0.00 0.00 (0.10) 0.00 (0.06) 0.00
------------ -------------- ------------ -------------- ------------ ------------
Total distributions .......... (0.05) (0.05) (0.67) (0.51) (0.69) (0.53)
------------ -------------- ------------ -------------- ------------ ------------
Net Asset Value, end of period .... $ 1.00 $ 1.00 $ 10.17 $ 10.37 $ 10.33 $ 10.58
============ ============== ============ ============== ============ ============
Total return ...................... 5.39% 5.10%(2) 4.61% 9.19%(2) 4.16% 11.55%(2)
Ratios/Supplemental Data
Net assets, end of period (in 000's) $24,195 $11,813 $76,045 $29,936 $7,992 $6,599
Ratio of expenses to average net
assets before reimbursement of
expenses by Advisor .......... 0.93% 2.77%(1) 0.69% 1.72%(1) 1.82% 7.29%(1)
Ratio of expenses to average net
assets after reimbursement of
expenses by Advisor .......... 0.30% 0.30%(1) 0.50% 0.50%(1) 0.50% 0.50%(1)
Ratio of net investment income to
average net assets before
reimbursement of expenses by
Advisor ...................... 4.60% 2.91%(1) 5.52% 5.01%(1) 4.70% -0.47%(1)
Ratio of net investment income after
reimbursement of expenses by
Advisor ...................... 5.23% 5.38%(1) 5.71% 6.24%(1) 6.02% 6.33%(1)
Portfolio turnover .............. N/A N/A 75.26% 227.09%(2) 37.62% 150.77%(2)
Average commission rate paid .... N/A N/A N/A N/A N/A N/A
</TABLE>
* McM Principal Preservation Fund commenced investment operations on July
13, 1994.
** McM Intermediate Fixed Income Fund and McM Fixed Income Fund commenced
investment operations on July 14, 1994.
(1) Annualized.
(2) Not annualized.
See accompanying notes to financial statements.
<PAGE>
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
The tables below set forth financial data for a share of beneficial interest
outstanding throughout each period presented.
<TABLE>
<CAPTION>
McM Balanced McM Equity
Fund Investment Fund
------------------------------ ------------------------------
For the For the For the For the
Year Ended Period Ended Year Ended Period Ended
06/30/96 06/30/95* 06/30/96 06/30/95*
------------ -------------- ------------ --------------
<S> <C> <C> <C> <C>
Net Asset Value, beginning of period ........... $ 11.35 $ 10.00 $ 11.95 $ 10.00
------------ -------------- ------------ --------------
Income from investment operations
Net investment income ........................ 0.40 0.36 0.21 0.19
Net realized and unrealized gain on investments 1.49 1.33 2.94 1.94
------------ -------------- ------------ --------------
Total from investment operations .......... 1.89 1.69 3.15 2.13
------------ -------------- ------------ --------------
Less Distributions:
From net investment income ................... (0.40) (0.34) (0.21) (0.18)
From capital gains ........................... (0.09) 0.00 (0.04) 0.00
------------ -------------- ------------ --------------
Total distributions ....................... (0.49) (0.34) (0.25) (0.18)
------------ -------------- ------------ --------------
Net Asset Value, end of period ................. $ 12.75 $ 11.35 $ 14.85 $ 11.95
============ ============== ============ ==============
Total return ................................... 16.86% 17.31%(2) 26.53% 21.57%(2)
Ratios/Supplemental Data
Net assets, end of period (in 000's) ......... $11,915 $3,070 $23,913 $4,866
Ratio of expenses to average net assets before
reimbursement of expenses by Advisor ...... 2.21% 8.41%(1) 1.72% 8.48%(1)
Ratio of expenses to average net assets after
reimbursement of expenses by Advisor ...... 0.60% 0.60%(1) 0.75% 0.75%(1)
Ratio of net investment income to average net assets
before reimbursement of expenses by Advisor . 1.81% -3.54%(1) 0.80% -5.50%(1)
Ratio of net investment income after reimbursement
of expenses by Advisor .................... 3.43% 4.28%(1) 1.77% 2.24%(1)
Portfolio turnover ........................... 26.16% 81.05%(2) 0.92% 1.81%(2)
Average commission rate paid ................. $ 0.0600 N/R $ 0.0600 N/R
</TABLE>
* McM Balanced Fund and McM Equity Investment Fund commenced investment
operations on July 14, 1994.
(1) Annualized.
(2) Not annualized.
See accompanying notes to financial statements.
<PAGE>
McM FUNDS
Report of Independent Certified Public Accountants
- -------------------------------------------------------------------------------
To the Shareholders and Trustees of McM Funds:
We have audited the accompanying statements of assets and liabilities of McM
Principal Preservation Fund, McM Intermediate Fixed Income Fund, McM Fixed
Income Fund, McM Balanced Fund, and McM Equity Investment Fund, each a series
of shares of beneficial interest of McM Funds, including the schedules of
investments, as of June 30, 1996, and the related statements of operations,
the statements of changes in net assets, and the financial highlights for the
year ended June 30, 1996. These financial statements and financial highlights
are the responsibility of the Trust's management. Our responsibility is to
express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of June 30, 1996, by correspondence with the custodian.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of McM
Principal Preservation Fund, McM Intermediate Fixed Income Fund, McM Fixed
Income Fund, McM Balanced Fund and McM Equity Investment Fund as of June 30,
1996, the results of their operations, the changes in their net assets, and
their financial highlights for the year ended June 30, 1996, in conformity
with generally accepted accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
July 21, 1996
<PAGE>
Board of Trustees
Robert R. Barron
David B. McCleary
Terry A. O'Toole
Walter B. Rose
Kenneth I. Rosenblum
Mark R. Taylor
Gregory L. Watson
Officers
Terry A. O'Toole, CEO and President
Robert R. Barron, Vice President and Treasurer
Deane A. Nelson, Vice President and Secretary
Investment Advisor Custodian
McMorgan & Company The Bank of New York
One Bush Street, Suite 800 48 Wall Street
San Francisco, CA 94104 New York, New York 10286
(800) 788-9485
Underwriter Legal Counsel
Fund/Plan Broker Services, Inc. Heller, Ehrman, White & McAuliffe
2 W. Elm Street 333 Bush Street
Conshohocken, PA 19428 San Francisco, CA 94104-2878
Shareholder Services Auditors
Fund/Plan Services, Inc. Tait, Weller & Baker
2 W. Elm Street 2 Penn Center Plaza, Suite 700
Conshohocken, PA 19428 Philadelphia, PA 19102-1707
For Additional Information about
McM Funds call:
(800) 788-9485
This report is submitted for general information of the shareholders of the
Funds. It is not authorized for distribution to prospective investors in the
Funds unless preceded or accompanied by an effective Prospectus which
includes details regarding the Funds' objectives, policies, expenses and
other information.
