<PAGE>
McM Funds
-------------------------
Annual Report
June 30, 1997
Principal Preservation Fund
Intermediate Fixed Income Fund
Fixed Income Fund
Balanced Fund
Equity Investment Fund
<PAGE>
Dear Shareholder:
Three years ago we launched the McM Funds amidst a market that included about
5,000 mutual funds. The Dow Jones average was at 3,700. The S&P 500 had just
cleared 450.
What a three years it has been!
Today there are over 7,500 mutual funds. The Dow has broken through 8,000. The
S&P average hovered near 940 at the end of July, 1997. And the McM Funds
continue to take systematic advantage of market conditions for our shareholders.
We are proud of our performance, yet, we take as much or greater pride in our
ability to offer a quality product at a most advantageous price. Returns in all
mutual funds will vary year to year, but fees are constant. With lower fees,
more of what a given fund earns can be passed on to the shareholders.
Look closely and you will find our fees for the McM Funds average about 33% less
than comparable funds. And some funds aren't satisfied charging higher
management fees -- they also charge shareholders other "hidden" fees for the
privilege of investing their money. We don't think that's right.
We started the McM Funds with a goal: bring the investment strategies that have
excelled for our institutional clients who trust us with more than $18 billion
in benefit plan assets to individual shareholders -- and do so at a reasonable
cost. Judging from what we hear from shareholders, who also clearly enjoy the
investment results to date, we are accomplishing our goal.
Thank you for your continuing trust and confidence.
Sincerely,
/s/ Terry A. O'Toole
- ----------------------------------
Terry A. O'Toole
Chairman
<PAGE>
Review
The year ending June 30, 1997 was still another strong year for stocks and was a
very good year for bonds. The Standard & Poors 500 Stock Index rose a tremendous
34.7% while the Lehman Brothers Aggregate Bond Index was up 8.2%. Stock prices
climbed as investors showed their preference for equity investments with large,
high-quality companies leading the way. Interest rates fell during the second
quarter of the year as investors put away their inflation fears and invested in
fixed income instruments which offered high expected real returns (yield less
expected inflation).
During the last year, McM Funds were positioned to take advantage of the strong
markets. Cash balances and security turnover were kept to a minimum, as funds
were invested to take advantage of the opportunities presented in the market.
Interest rates moved up and down on investors speculation about the next Fed
move. McM Funds took systematic advantage of this. Rather than using an emotion
of the moment approach used by many funds, McM Funds consistent and disciplined
investment approach stood firm and provided excellent returns.
Outlook
We believe the stock market will continue to do reasonably well as long as
corporate profits remain positive and bond rates remain at recent levels, or
even possibly decline. We dont expect a severe retraction in equity prices
unless the economy grows too rapidly, forcing severe Fed tightening, followed by
a sharp economic slowdown. We are confident that there will be cyclical and
secular swings in the markets over the next few years, but we will focus on
fundamental trends that will be successful.
Adhering to our disciplined investment approach, we will continue building the
Funds to take advantage of the fundamental strengths and substance of the
markets. That means purchasing stocks of well-managed and growing companies.
Likewise, investment grade bonds with slightly longer average maturities
relative to the Fund benchmarks will comprise our portfolios as long as expected
real returns remain high. We believe this approach will take advantage of the
substance of quality companies for our shareholders, knowing that substance not
only survives, it succeeds.
<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. U.S. Government issues represent 92% of the portfolio. The 7-day and
30-day average yields as of June 30, 1997 were 5.29% and 5.28%, respectively.
Diversification Credit Quality Maturity
Certificates Cash & Equivalents 1% A-1/P-1 8% 1-15 days
of Deposit 4% Bankers' Acceptance 3% 16%
91+days 16-30
52% days 2%
31-90
Government 92% Government 92% days 30%
Average Annual Return (%) One Since
Year Inception
---- ---------
McM Principal Preservation Fund 5.24 5.30
- -------------------------------------------------------------------------------
Principal Preservation Fund
July 1, 1996 - June 30, 1997
7.00 -
6.50 -
6.00 - 7-Day Average Yield (%)
5.50 -
5.00 - 5.04 5.04 5.05 5.16 5.29
4.50 -
4.00
|-------------|---------------|----------------|-----------------|-----
7/1/96 9/30/96 12/27/96 3/27/97 6/27/97
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 72% of the Fund. Mortgage securities, backed by U.S.
Government Agencies, provide yield advantages compared to U.S. Government bonds
with equivalent maturities. The Fund's weighted average maturity of 4.2 years
seeks to limit sensitivity to interest rate changes.
NASDAQ Symbol
MCMNX
Diversification Bond Quality Maturity
Corporate 28% Asset Backed/ BAA 5% 10+ years 5% Short-term 5%
Other 2%
A 21%
Government 5-10 years
32% 49%
AA 2%
Government 1-5 years
32% 41%
Mortgage 38% AAA 40%
Average Annual Returns (%) One Since
Year Inception
---- ---------
McM Intermediate Fixed Income Fund 7.14 7.05
Lehman Brothers Intermediate Govt./Corp. Index 7.21 7.34
- -------------------------------------------------------------------------------
$15,000 - Intermediate Fixed Income Fund
July 14, 1994 Inception Date
$14,000 -
$13,000 -
....Lehman Brothers Intermediate Govt./Corp. Index
$12,000 - $10,001 $10,961 $11,526 $11,502 $11,994 $12,370
----Intermediate Fixed Income Fund
$11,000 - $9,957 $10,918 $11,445 $11,420 $11,916 $12,236
$10,000 -
$9,000 --|--|--|--|--|--|--|--|--|--|--|--|--|--|--|--|--|--|--|--|--|--|--|--
12/31/94 6/30/95 12/31/95 6/30/96 12/31/96 6/30/97
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 has a weighted average maturity of 7.1 years, 2.9 years longer than
the Intermediate Fixed Income Fund.
NASDAQ Symbol
MCMFX
Diversification Bond Quality Maturity
Corporate Government BAA 4% Short-term 4%
34% 27% Government 10 + years
27% 10% 1-5 years
13%
A 28%
AA 2%
Mortgage 39% AAA 39% 5-10 years 73%
Average Annual Returns (%) One Since
Year Inception
---- ---------
McM Fixed Income Fund 7.72 7.87
Lehman Brothers Aggregate Index 8.16 8.33
- -------------------------------------------------------------------------------
$18,000 - Fixed Income Fund
July 14, 1994 Inception Date
$17,000 -
$16,000 -
$15,000 -
$14,000 -
...Lehman Brothers Aggregate Index
$13,000 - $10,015 $11,161 $11,865 $11,720 $12,294 $12,676
---Fixed Income Fund
$12,000 - $ 9,926 $11,155 $11,841 $11,618 $12,202 $12,516
$11,000 -
$10,000 -
$9,000 --|--|--|--|--|--|--|--|--|--|--|--|--|--|--|--|--|--|--|--|--|--|--|--
12/31/94 6/30/95 12/31/95 6/30/96 12/31/96 6/30/97
Past performance does not guarantee future results.
- -------------------------------------------------------------------------------
<PAGE>
Balanced Fund
The Balanced Fund invests in common stocks and bonds. Common stocks represent
about 60% of the Fund and bonds about 40%. The common stock portion is well
diversified among 100 companies that represent all economic sectors. The Fund's
bond portion is 74% U.S. Government and AAA-rated securities with a weighted
average maturity of 6.7 years.
NASDAQ Symbol
MCMBX
<TABLE>
<CAPTION>
Asset Allocation Fixed Income Quality Ten Largest Equity Holdings (%)
<S> <C> <C>
Cash 0.5% BAA 1% Intel 4.0
Government A 23%
32% General Electric 3.6
FNMA 3.1
AA 2% Philip Morris 3.1
Chase Manhattan 2.9
Bonds 39.7% Stocks 59.8% AAA 42% Compaq 2.7
Merck 2.2
Average Annual Returns (%) One Since
Year Inception SBC Communications 2.1
---- ---------
McM Balanced Fund 23.65 19.49 BankAmerica 2.0
Lehman Brothes Aggregate Index 8.16 8.33 Citicorp 1.9
---
Standard & Poor's 500 34.68 28.33 27.6
</TABLE>
- -------------------------------------------------------------------------------
$25,000 - Balanced Fund
July 14, 1994 Inception Date
$23,000 -
-.-.-Standard & Poor's 500
$21,000 - $10,267 $12,340 $14,124 $15,564 $17,390 $20,962
$19,000 -
-----Balanced Fund
$17,000 - $10,078 $11,731 $12,971 $13,709 $15,079 $16,951
$15,000 -
$13,000 -
.....Lehman Brothers Aggregate Index
$11,000 - $10,015 $11,161 $11,865 $11,720 $12,294 $12,676
$9,000
--|--|--|--|--|--|--|--|--|--|--|--|--|--|--|--|--|--|--|--|--|--|--|--
12/31/94 6/30/95 12/31/95 6/30/96 12/31/96 6/30/97
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 98 companies across all economic
sectors. Individual companies are carefully selected and attractive economic
sectors are strategically overweighted as compared to the Standard & Poor's
500 Stock Index.
NASDAQ Symbol
MCMEX
<TABLE>
<CAPTION>
Ten Largest Holdings (%) Portfolio Characteristics Sector Weightings (%)
<S> <C> <C>
Intel 4.2 Price/Earnings Ratio 22.31 Financial Services 16.3
Technology 14.7
General Electric 3.6 Beta 0.99 Health-Care 12.2
Energy 10.1
FNMA 3.3 Utilities 9.2
Capital Goods 9.0
Compaq 2.9 Avg. Market Capitalization $50.1 B Consumer Non-Durables 8.8
Retail 6.2
Chase Manhattan 2.9 Total Number of Stocks 98 Raw Materials 4.3
Consumer Services 2.1
Philip Morris 2.8 Consumer Durables 2.0
Transportation 1.9
BankAmerica 2.1 Average Annual Returns (%) Shelter 1.2
One Since Business Equip. & Services 1.1
Merck 2.0 Year Inception Multi-Industry 0.9
---- --------- -----
Citicorp 2.0 McM Equity 34.68 27.85 100.0
SBC Communications 1.9 S&P 500 34.68 28.33
-----
27.7
</TABLE>
- -------------------------------------------------------------------------------
$25,000 - Equity Investment Fund
July 14, 1994 Inception Date
$23,000 -
.....Standard & Poor's 500
$21,000 - $10,267 $12,340 $14,124 $15,564 $17,390 $20,962
$19,000 - -----Equity Investment Fund
$10,124 $12,155 $13,761 $15,380 $17,449 $20,713
$17,000 -
$15,000 -
$13,000 -
$11,000 -
$9,000 --|--|--|--|--|--|--|--|--|--|--|--|--|--|--|--|--|--|--|--|--|--|--|--
12/31/94 6/30/95 12/31/95 6/30/96 12/31/96 6/30/97
Past performance does not guarantee future results.
- -------------------------------------------------------------------------------
<PAGE>
McM Funds -- Schedule of Investments June 30, 1997
- --------------------------------------------------------------------------------
Principal Preservation Fund
<TABLE>
<CAPTION>
Principal
Amount Value
------------- ------------
<S> <C> <C>
FIXED INCOME SECURITIES
U.S. Government Agency Notes - 90.69%
Federal Farm Bank Discount Notes - 6.04%
5.420%, 08/08/97 ........................................................................ $ 1,000,000 $ 994,279
5.420%, 11/17/97 ........................................................................ 1,000,000 979,073
-----------
1,973,352
-----------
Federal Home Loan Bank Notes - 21.17%
5.250%, 07/07/97 ........................................................................ 500,000 499,562
5.190%, 07/10/97 ........................................................................ 1,000,000 998,703
5.210%, 07/31/97 ........................................................................ 500,000 497,829
5.220%, 08/26/97 ........................................................................ 500,000 495,940
5.230%, 08/29/97 ........................................................................ 500,000 495,714
5.210%, 09/19/97 ........................................................................ 400,000 395,369
5.815%, 09/22/97 ........................................................................ 600,000 600,452
5.540%, 10/09/97 ........................................................................ 1,000,000 984,611
5.480%, 11/19/97 ........................................................................ 1,000,000 978,537
5.490%, 12/03/97 ........................................................................ 1,000,000 976,362
-----------
6,923,079
-----------
Federal Home Loan Mortgage Corp. Discount Notes - 25.80%
5.210%, 07/15/97 ........................................................................ 2,000,000 1,995,948
5.250%, 07/15/97 ........................................................................ 500,000 498,979
5.500%, 08/01/97 ........................................................................ 1,000,000 995,264
5.500%, 08/06/97 ........................................................................ 1,500,000 1,491,750
5.420%, 08/26/97 ........................................................................ 1,000,000 991,569
5.460%, 09/04/97 ........................................................................ 1,000,000 990,142
5.410%, 09/22/97 ........................................................................ 1,000,000 987,527
5.400%, 12/19/97 ........................................................................ 500,000 487,175
-----------
8,438,354
-----------
Federal National Mortgage Assn. Notes - 37.68%
5.860%, 07/03/97 ........................................................................ 1,000,000 1,000,020
5.550%, 10/02/97 ........................................................................ 2,000,000 1,971,325
5.570%, 10/07/97 ........................................................................ 1,000,000 984,837
5.560%, 10/09/97 ........................................................................ 1,000,000 984,556
5.580%, 10/14/97 ........................................................................ 1,000,000 983,725
5.550%, 10/20/97 ........................................................................ 2,000,000 1,965,775
5.600%, 10/20/97 ........................................................................ 1,000,000 982,733
5.650%, 10/20/97 ........................................................................ 1,000,000 999,545
5.420%, 11/06/97 ........................................................................ 1,000,000 980,729
5.490%, 11/06/97 ........................................................................ 1,000,000 980,480
5.400%, 11/19/97 ........................................................................ 500,000 489,425
-----------
12,323,150
-----------
Total U.S. Government Agency Notes (Cost $29,657,935) .................................... 29,657,935
-----------
REPURCHASE AGREEMENT - 0.92%
Chase Manhattan Bank, U.S. Treasury Notes, $300,000 par, 6.625% coupon, due 07/31/01,
dated 06/30/97 to be sold on 07/01/97 at $300,049 ........................................ 300,000 300,000
-----------
Total Repurchase Agreement (Cost $300,000)................................................ 300,000
-----------
BANKERS ACCEPTANCE - 3.01%
Chase Manhattan Bank, 5.620%, 10/06/97 ................................................... 1,000,000 984,857
-----------
Total Bankers Acceptance (Cost $984,857) ................................................ 984,857
-----------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1997
- --------------------------------------------------------------------------------
Principal Preservation Fund (continued)
<TABLE>
<CAPTION>
Principal
Amount Value
------------ ------------
<S> <C> <C>
FIXED INCOME SECURITIES - (continued)
CERTIFICATES OF DEPOSIT - 3.67%
Imperial Bank, 5.600%, 08/18/97 ........................ $1,200,000 $ 1,200,000
-----------
Total Certificates of Deposit (Cost $1,200,000)......... 1,200,000
-----------
TOTAL INVESTMENTS** - 98.29% (Cost $32,142,792)......... 32,142,792
-----------
CASH AND OTHER ASSETS NET OF LIABILITIES - 1.71% ...... 560,050
-----------
NET ASSETS - 100.00% ................................. $32,702,842
===========
</TABLE>
** At June 30, 1997, cost is identical for book and federal income tax
purposes.
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1997
- --------------------------------------------------------------------------------
Intermediate Fixed Income Fund
<TABLE>
<CAPTION>
Principal
Amount Value
------------ ------------
<S> <C> <C>
FIXED INCOME SECURITIES - 98.79%
U.S. Government Obligations - 9.05%
U.S. Treasury Notes
6.250%, 04/30/01 ................................................ $ 815,000 $ 812,995
6.250%, 02/15/03 ................................................ 1,745,000 1,732,628
11.875%, 11/15/03 ............................................. 780,000 997,027
5.875%, 02/15/04 ................................................ 1,390,000 1,348,077
7.250%, 08/15/04 ................................................ 1,225,000 1,276,560
7.875%, 11/15/04 ................................................ 500,000 539,375
11.625%, 11/15/04 ............................................. 1,350,000 1,747,872
-----------
Total U.S. Treasury Obligations (Cost $8,432,847) ............... 8,454,534
-----------
U.S. Government Agency Obligations - 22.00%
Federal Home Loan Bank - 3.46%
8.375%, 10/25/99 ................................................ 470,000 491,987
5.940%, 06/13/00 ................................................ 100,000 98,961
6.110%, 07/17/00 ................................................ 150,000 148,929
7.190%, 04/27/01 ................................................ 1,650,000 1,687,207
5.770%, 02/03/04 ................................................ 840,000 802,738
-----------
3,229,822
-----------
Federal Home Loan Mortgage Corp. - 3.01%
7.980%, 01/19/00 ................................................ 410,000 425,777
5.905%, 06/13/00 ................................................ 800,000 790,944
5.990%, 12/01/03 ................................................ 1,650,000 1,597,909
-----------
2,814,630
-----------
Federal National Mortgage Association - 5.65%
8.350%, 11/10/99 ................................................ 1,730,000 1,811,379
5.500%, 02/02/01 ................................................ 400,000 387,856
6.450%, 04/23/01 ................................................ 1,150,000 1,148,712
6.375%, 08/14/01 ................................................ 25,000 24,922
7.500%, 02/11/02 ................................................ 725,000 752,535
6.590%, 05/21/02 ................................................ 1,150,000 1,153,208
-----------
5,278,612
-----------
FICO Coupon Strip - 0.30%
0.000%, 04/06/02* ............................................. 375,000 275,858
-----------
Guaranteed Export Trust - 2.23%
6.130%, 06/15/04 ................................................ 411,765 401,141
6.280%, 06/15/04 ................................................ 452,941 446,972
6.550%, 06/15/04 ................................................ 1,235,293 1,236,404
-----------
2,084,517
-----------
Resolution Funding Corp. - 7.35%
0.000%, 04/15/06* ............................................. 3,060,000 1,717,547
0.000%, 07/15/08* ............................................. 2,715,000 1,296,331
0.000%, 10/15/08* ............................................. 3,900,000 1,829,256
0.000%, 04/15/10* ............................................. 4,810,000 2,020,055
-----------
6,863,189
-----------
Total U.S. Government Agency Obligations (Cost $20,538,518) ...... 20,546,628
-----------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1997
- --------------------------------------------------------------------------------
Intermediate Fixed Income Fund (continued)
<TABLE>
<CAPTION>
Principal
Amount Value
------------ ------------
<S> <C> <C>
FIXED INCOME SECURITIES - (continued)
Collateralized Mortgage Obligations - 38.38%
Federal Home Loan Mortgage Corp. - 24.67%
6.000%, 12/15/06 ................................................ $1,500,000 $ 1,481,036
6.000%, 07/15/07 ................................................ 100,000 98,624
5.500%, 12/15/12 ................................................ 350,000 348,996
5.000%, 03/15/13 ................................................ 75,935 75,718
5.500%, 04/15/13 ................................................ 800,000 797,766
5.500%, 01/15/14 ................................................ 608,977 607,157
5.000%, 08/15/14 ................................................ 142,562 142,119
6.500%, 08/15/14 ................................................ 850,000 853,647
7.500%, 09/15/14 ................................................ 400,000 404,132
5.750%, 02/15/15 ................................................ 950,000 942,562
5.850%, 02/15/18 ................................................ 1,500,000 1,475,163
5.400%, 07/15/18 ................................................ 1,500,000 1,457,174
6.400%, 01/15/19 ................................................ 1,000,000 994,103
5.800%, 02/15/19 ................................................ 1,175,000 1,159,653
6.050%, 05/15/19 ................................................ 700,000 690,796
6.250%, 05/15/19 ................................................ 1,000,000 984,167
6.000%, 07/15/19 ................................................ 1,500,000 1,465,931
6.000%, 02/15/20 ................................................ 1,000,000 971,189
5.500%, 04/15/20 ................................................ 1,100,000 1,076,424
6.000%, 10/15/20 ................................................ 1,600,000 1,561,037
6.500%, 01/25/21 ................................................ 2,000,000 1,963,343
5.750%, 05/15/21 ................................................ 1,600,000 1,543,009
6.350%, 07/15/21 ................................................ 1,000,000 982,102
6.750%, 05/15/23 ................................................ 1,000,000 966,100
-----------
23,041,948
-----------
Federal National Mortgage Association - 13.71%
0.000%, 07/25/98* ................................................ 264,805 251,195
5.950%, 05/25/05 ................................................ 1,500,000 1,485,469
5.400%, 11/25/05 ................................................ 1,300,000 1,276,214
5.900%, 11/25/05 ................................................ 1,600,000 1,583,492
6.000%, 04/01/09 ................................................ 18,551 18,022
5.500%, 07/25/12 ................................................ 225,366 224,384
5.600%, 10/25/13 ................................................ 200,000 199,201
5.250%, 11/25/13 ................................................ 525,000 518,505
5.750%, 02/25/15 ................................................ 1,000,000 993,950
5.250%, 09/25/16 ................................................ 57,950 57,128
6.000%, 11/25/16 ................................................ 1,300,000 1,286,778
9.000%, 06/25/18 ................................................ 171,875 179,836
6.600%, 09/25/18 ................................................ 100,000 99,776
6.250%, 01/25/19 ................................................ 2,500,000 2,457,040
5.500%, 02/25/19 ................................................ 1,175,000 1,143,238
6.250%, 07/25/19 ................................................ 600,000 589,315
0.000%, 01/25/22* ................................................ 233,762 205,820
0.000%, 03/25/22* ................................................ 216,323 207,960
0.000%, 05/25/22* ................................................ 28,241 26,372
-----------
12,803,695
-----------
Total Collateralized Mortgage Obligations (Cost $35,838,833) ...... 35,845,643
-----------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1997
- --------------------------------------------------------------------------------
Intermediate Fixed Income Fund (continued)
<TABLE>
<CAPTION>
Principal
Amount Value
------------ -----------
<S> <C> <C>
FIXED INCOME SECURITIES - (continued)
Asset Backed Securities - 2.19%
Capital Equipment Receivables Trust, 6.570%, 03/15/01 ...... $1,000,000 $1,002,231
CMO Trust 43 Y, 8.200%, 05/20/04 ........................... 43,585 44,449
Morgan Stanley Mortgage Trust, 8.450%, 05/01/17 ............ 7,954 8,041
Olympic Automobile Receivables Trust, 6.250%, 11/15/04 ...... 1,000,000 987,505
----------
Total Asset Backed Securities (Cost $2,040,625)............... 2,042,226
----------
Corporate Bonds - 27.17%
Bank & Insurance - 0.54%
BankAmerica Corp., 6.875%, 11/20/97 ........................ 500,000 502,250
----------
Electric Utility - 0.73%
Commonwealth Edison Co., 6.250%, 10/01/97 .................. 50,000 50,000
Commonwealth Edison Co., 6.000%, 03/15/98 .................. 350,000 350,000
Long Island Lighting Co., 7.625%, 04/15/98 .................. 275,000 277,750
----------
677,750
----------
Financial Services - 22.76%
American General Finance Corp., 6.860%, 09/01/97 ............ 175,000 175,364
American General Finance Corp., 8.000%, 02/15/00 ............ 225,000 233,156
American General Finance Corp., 7.250%, 04/15/00 ............ 400,000 407,000
Associates Corp. North America, 6.750%, 07/15/97 ............ 125,000 125,061
Associates Corp. North America, 6.625%, 11/15/97 ............ 100,000 100,383
Associates Corp. North America, 6.375%, 07/15/02 ............ 400,000 394,000
Associates Corp. North America, 6.375%, 10/15/02 ............ 330,000 325,050
Beneficial Corp., 6.790%, 11/20/97 ........................... 200,000 200,844
Beneficial Corp., 8.100%, 11/09/99 ........................... 425,000 440,937
Beneficial Corp., 6.850%, 06/17/02 ........................... 325,000 326,625
Commercial Credit Co., 6.000%, 04/15/00 ..................... 225,000 221,906
Commercial Credit Co., 6.375%, 09/15/02 ..................... 700,000 689,500
Finova Capital Corp., 6.625%, 09/15/01 ..................... 875,000 867,344
Finova Capital Corp., 7.125%, 05/01/02 ..................... 1,000,000 1,010,000
Finova Capital Corp., 6.120%, 05/28/02 ..................... 425,000 413,844
Ford Motor Credit Co., 7.125%, 12/01/97 ..................... 200,000 201,270
Ford Motor Credit Co., 6.550%, 02/03/98 ..................... 300,000 301,524
Ford Motor Credit Co., 9.250%, 06/15/98 ..................... 100,000 103,148
Ford Motor Credit Co., 8.875%, 06/15/99 ..................... 200,000 209,500
Ford Motor Credit Co., 6.375%, 10/06/00 ..................... 500,000 497,500
Ford Motor Credit Co., 6.250%, 11/08/00 ..................... 700,000 692,125
General Motors Acceptance Corp., 7.000%, 04/15/98 ............ 100,000 100,886
General Motors Acceptance Corp., 6.625%, 03/22/99 ............ 800,000 805,000
General Motors Acceptance Corp., 7.125%, 06/01/99 ............ 100,000 101,500
General Motors Acceptance Corp., 8.000%, 10/01/99 ............ 200,000 207,000
General Motors Acceptance Corp., 6.700%, 04/30/01 ............ 50,000 49,875
General Motors Acceptance Corp., 7.125%, 05/01/03 ............ 300,000 303,000
Household Finance Corp., 6.760%, 01/22/98 .................. 100,000 100,548
Household Finance Corp., 6.750%, 06/01/00 .................. 650,000 652,437
Household Finance Corp., 6.960%, 09/04/01 .................. 175,000 176,313
Household Finance Corp., 6.700%, 06/15/02 .................. 500,000 500,625
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1997
- --------------------------------------------------------------------------------
Intermediate Fixed Income Fund (continued)
<TABLE>
<CAPTION>
Principal
Amount Value
------------ -------------
<S> <C> <C>
FIXED INCOME SECURITIES - (continued)
Corporate Bonds - (continued)
Lehman Brothers, Inc., 6.125%, 02/01/01 ................................................ $ 800,000 $ 783,000
Merrill Lynch & Co., Inc., 6.000%, 01/15/01 ............................................. 775,000 759,500
Morgan Stanley Group, Inc., 7.500%, 09/01/99 ............................................. 550,000 563,750
Salomon, Inc., 6.500%, 03/01/00 ......................................................... 2,000,000 1,990,000
Salomon, Inc., 7.200%, 02/01/04 ......................................................... 1,155,000 1,157,888
Sears Roebuck Acceptance Corp., 6.730%, 08/29/00 ....................................... 1,000,000 1,003,750
Sears Roebuck Acceptance Corp., 6.920%, 10/03/02 ....................................... 225,000 226,125
Smith Barney Holdings, Inc., 7.980%, 03/01/00 .......................................... 375,000 387,656
Smith Barney Holdings, Inc., 5.875%, 02/01/01 .......................................... 1,225,000 1,195,906
Transamerica Financial Group, 8.375%, 02/15/98 .......................................... 450,000 456,489
Transamerica Financial Group, 7.510%, 04/15/02 .......................................... 150,000 154,125
Transamerica Financial Group, 6.375%, 06/10/02 .......................................... 400,000 392,500
Travelers Property Casualty Corp., 6.750%, 04/15/01 .................................... 700,000 700,870
Travelers, Inc., 9.500%, 03/01/02 ...................................................... 500,000 554,375
------------
21,259,204
------------
Industrial - 3.14%
Philip Morris Cos., Inc., 6.200%, 02/09/98 ............................................. 200,000 200,146
Philip Morris Cos., Inc., 7.500%, 01/15/02 ............................................. 1,150,000 1,171,563
Philip Morris Cos., Inc., 6.800%, 12/01/03 ............................................. 420,000 412,125
Sears Roebuck & Co., 9.250%, 04/15/98 ................................................... 25,000 25,591
Tele Communications, Inc., 7.000%, 08/04/97 ............................................. 425,000 425,234
Waste Management, Inc., 6.375%, 07/01/97 ................................................ 375,000 375,000
WMX Technologies, Inc., 8.125%, 02/01/98 ................................................ 325,000 328,819
------------
2,938,478
------------
Total Corporate Bonds (Cost $25,398,541) ................................................ 25,377,682
------------
TOTAL FIXED INCOME SECURITIES - 98.79% (Cost $92,249,364)(1) ............................ 92,266,713
------------
CASH AND OTHER ASSETS NET OF LIABILITIES - 1.21% ....................................... 1,135,175
------------
NET ASSETS - 100.00% ..................................................................... $93,401,888
============
(1) Aggregate cost for federal income tax purposes is $92,249,364 and net unrealized
appreciation is as follows:
Gross unrealized appreciation ......................................................... $ 341,718
Gross unrealized depreciation ......................................................... (324,369)
----------
Net unrealized appreciation ......................................................... $ 17,349
==========
</TABLE>
* Zero coupon bond.
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1997
- --------------------------------------------------------------------------------
Fixed Income Fund
<TABLE>
<CAPTION>
Principal
Amount Value
---------- -----------
<S> <C> <C>
FIXED INCOME SECURITIES - 98.58%
U.S. Government Obligations - 15.80%
U.S. Treasury Notes
6.250%, 02/15/03 ............................................. $ 55,000 $ 54,610
11.875%, 11/15/03 ............................................. 130,000 166,171
7.250%, 08/15/04 ............................................. 255,000 265,733
11.625%, 11/15/04 ............................................. 230,000 297,785
7.500%, 11/15/16 ............................................. 532,000 568,719
8.875%, 08/15/17 ............................................. 130,000 158,336
----------
Total U.S. Treasury Obligations (Cost $1,472,764) ............... 1,511,354
----------
U.S. Government Agency Obligations - 10.76%
Federal Home Loan Bank - 4.34%
7.780%, 10/19/01 ............................................. 250,000 261,705
5.770%, 02/03/04 ............................................. 160,000 152,902
----------
414,607
----------
Federal Home Loan Mortgage Corp. - 3.38%
7.125%, 11/18/02 ............................................. 315,000 323,357
----------
Guaranteed Export Trust - 0.50%
6.130%, 06/15/04 ............................................. 49,412 48,137
----------
Resolution Funding Corp. - 2.54%
0.000%, 10/15/11* ............................................. 260,000 97,815
0.000%, 04/15/16* ............................................. 310,000 82,665
0.000%, 04/15/17* ............................................. 250,000 62,017
----------
242,497
----------
Total U.S. Government Agency Obligations (Cost $1,017,983) ...... 1,028,598
----------
Collateralized Mortgage Obligations - 38.43%
Federal Home Loan Mortgage Corp. - 20.94%
6.250%, 11/15/18 ............................................. 175,000 172,338
6.250%, 05/15/19 ............................................. 250,000 246,545
6.400%, 05/15/19 ............................................. 150,000 148,417
6.500%, 10/15/19 ............................................. 200,000 197,105
5.950%, 11/15/19 ............................................. 200,000 196,784
6.500%, 06/25/20 ............................................. 100,000 98,167
6.350%, 07/15/21 ............................................. 150,000 147,315
6.500%, 08/15/21 ............................................. 75,000 74,061
6.000%, 02/15/22 ............................................. 200,000 192,568
6.650%, 07/15/22 ............................................. 150,000 147,249
6.000%, 02/15/23 ............................................. 200,000 189,528
6.750%, 05/15/23 ............................................. 200,000 193,220
----------
2,003,297
----------
Federal National Mortgage Association - 17.49%
7.500%, 07/25/18 ............................................. 22,251 22,501
6.000%, 09/25/18 ............................................. 40,000 39,031
6.500%, 03/25/19 ............................................. 150,000 148,680
6.500%, 04/25/19 ............................................. 150,000 148,693
3.500%, 05/25/19 ............................................. 125,000 110,706
6.500%, 09/25/19 ............................................. 150,000 144,060
6.250%, 01/25/20 ............................................. 220,000 216,031
6.850%, 10/25/20 ............................................. 40,000 39,056
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1997
- --------------------------------------------------------------------------------
Fixed Income Fund (continued)
<TABLE>
<CAPTION>
Principal
Amount Value
---------- -----------
<S> <C> <C>
FIXED INCOME SECURITIES - (continued)
Collateralized Mortgage Obligations - (continued)
6.750%, 11/25/20 ................................................ $200,000 $ 194,488
6.750%, 05/25/21 ................................................ 200,000 194,523
6.500%, 10/25/21 ................................................ 200,000 194,365
0.000%, 03/25/22* ............................................. 21,632 20,796
7.000%, 06/25/23 ................................................ 200,000 199,880
----------
1,672,810
----------
Total Collateralized Mortgage Obligations (Cost $3,653,047) ...... 3,676,107
----------
Asset Backed Securities - 0.10%
CMO Trust 39 Y, 8.650%, 03/01/03 ................................. 9,551 9,826
----------
Total Asset Backed Securities (Cost $9,623) ..................... 9,826
----------
Corporate Bonds - 33.49%
Bank & Insurance - 4.25%
BankAmerica Corp., 6.875%, 11/20/97 .............................. 50,000 50,225
KeyCorp, 6.750%, 03/15/06 ....................................... 80,000 77,700
NationsBank Corp., 7.500%, 09/15/06 .............................. 175,000 179,156
Wells Fargo & Co., 7.125%, 08/15/06 .............................. 100,000 99,750
----------
406,831
----------
Electric Utility - 0.79%
Commonwealth Edison Co., 6.250%, 10/01/97 ........................ 50,000 50,000
Long Island Lighting Co., 7.625%, 04/15/98 ..................... 25,000 25,250
----------
75,250
----------
Financial Services - 22.72%
Associates Corp. North America, 6.375%, 10/15/02 ............... 120,000 118,200
Beneficial Corp., 8.100%, 11/09/99 .............................. 100,000 103,750
Beneficial Corp., 9.470%, 03/09/01 .............................. 20,000 21,750
Beneficial Corp., 6.940%, 12/15/06 .............................. 100,000 98,625
Commercial Credit Co., 6.375%, 09/15/02 ........................ 100,000 98,500
Commercial Credit Co., 6.625%, 11/15/06 ........................ 225,000 218,531
Finova Capital Corp., 6.625%, 09/15/01 ........................... 100,000 99,125
Finova Capital Corp., 6.900%, 06/19/04 ........................... 100,000 99,500
Ford Motor Credit Co., 6.250%, 11/08/00 ........................ 100,000 98,875
Ford Motor Credit Co., 7.200%, 06/15/07 ........................ 150,000 151,688
General Motors Acceptance Corp., 6.500%, 12/05/05 ............... 50,000 47,875
Household Finance Corp., 6.760%, 01/22/98 ........................ 50,000 50,274
Household Finance Corp., 6.700%, 06/15/02 ........................ 75,000 75,094
Lehman Brothers, Inc., 7.625%, 06/01/06 ........................ 80,000 81,600
Morgan Stanley Group, Inc., 7.500%, 09/01/99 ..................... 75,000 76,875
Morgan Stanley Group, Inc., 6.875%, 03/01/07 ..................... 50,000 49,375
Salomon, Inc., 7.200%, 02/01/04 ................................. 100,000 100,250
Sears Roebuck Acceptance Corp., 6.125%, 01/15/06 ............... 100,000 94,125
Smith Barney Holdings, Inc., 7.000%, 03/15/04 .................. 150,000 150,375
Smith Barney Holdings, Inc., 7.375%, 05/15/07 .................. 100,000 101,250
Transamerica Financial Group, 7.500%, 09/14/01 .................. 75,000 76,867
Transamerica Financial Group, 7.510%, 04/15/02 .................. 75,000 77,063
Travelers, Inc., 9.500%, 03/01/02 .............................. 75,000 83,156
----------
2,172,723
----------
Industrial - 5.73%
International Business Machines Corp., 6.375%, 06/15/00 ......... 75,000 74,906
Philip Morris Cos., Inc., 7.500%, 01/15/02 ..................... 175,000 178,281
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1997
- --------------------------------------------------------------------------------
Fixed Income Fund (continued)
<TABLE>
<CAPTION>
Principal
Amount Value
------------- -----------
<S> <C> <C>
FIXED INCOME SECURITIES - (continued)
Corporate Bonds - (continued)
Philip Morris Cos., Inc., 6.800%, 12/01/03 ............................................. $ 50,000 $ 49,063
Sears Roebuck & Co., 9.250%, 04/15/98 ................................................... 50,000 51,182
TCI Communications, Inc., 6.875%, 02/15/06 ............................................. 100,000 93,875
Tele Communications, Inc., 7.000%, 08/04/97 ............................................. 25,000 25,014
WMX Technologies, Inc., 8.125%, 02/01/98 ................................................ 75,000 75,881
----------
548,202
----------
Total Corporate Bonds (Cost $3,209,728)................................................... 3,203,006
----------
TOTAL FIXED INCOME SECURITIES - 98.58% (Cost $9,363,145)(1)............................... 9,428,891
----------
CASH AND OTHER ASSETS NET OF LIABILITIES - 1.42% ....................................... 136,035
----------
NET ASSETS - 100.00% ..................................................................... $9,564,926
==========
(1)Aggregate cost for federal income tax purposes is $9,363,145 and net unrealized
appreciation is as follows:
Gross unrealized appreciation ......................................................... $ 115,147
Gross unrealized depreciation ......................................................... (49,401)
---------
Net unrealized appreciation ............................................................ $ 65,746
=========
</TABLE>
* Zero coupon bond.
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1997
- --------------------------------------------------------------------------------
Balanced Fund
Shares Value
-------- -----------
COMMON STOCKS - 59.61%
Business Equipment & Service - 0.59%
Automatic Data Processing, Inc. ...... 3,300 $ 155,100
Cognizant Corp. ..................... 2,150 87,075
----------
242,175
----------
Capital Goods - 5.12%
Cooper Industries, Inc. ............... 1,500 74,625
Emerson Electric Co. ............... 4,400 242,275
General Electric Co. .................. 13,400 876,025
Honeywell, Inc. ..................... 3,000 227,625
Illinois Tool Works, Inc. ............ 1,200 59,925
Ingersoll Rand Co. .................. 2,300 142,025
PPG Industries, Inc. .................. 3,800 220,875
Tyco International, Ltd. ............ 3,600 250,425
----------
2,093,800
----------
Consumer Durables - 1.11%
Ford Motor Co. ........................ 6,300 237,825
General Motors Corp. .................. 3,900 217,181
----------
455,006
----------
Consumer Non-Durables - 5.79%
Anheuser Busch Cos., Inc. ............ 3,000 125,813
CPC International, Inc. ............ 2,900 267,706
Eastman Kodak Co. ..................... 2,600 199,550
General Mills, Inc. .................. 1,650 107,456
PepsiCo, Inc. ........................ 11,800 443,237
Philip Morris Cos., Inc. ............ 16,700 741,063
Procter & Gamble Co. ............... 1,700 240,125
Sara Lee Corp. ........................ 5,900 245,587
----------
2,370,537
----------
Consumer Services - 1.33%
Disney (Walt) Co. .................. 2,200 176,550
Hilton Hotels Corp. .................. 2,400 63,750
Knight-Ridder, Inc. .................. 2,800 137,375
Time Warner, Inc. .................. 3,450 166,463
----------
544,138
----------
Energy - 6.69%
Amerada Hess Corp. .................. 2,300 127,794
Amoco Corp. ........................ 3,050 265,159
Atlantic Richfield Co. ............... 800 56,400
Baker Hughes, Inc. .................. 3,000 116,062
British Petroleum Co. PLC ............ 3,500 262,063
Burlington Resources, Inc. ............ 1,450 63,981
Chevron Corp. ........................ 3,500 258,781
Exxon Corp. ........................... 7,400 455,100
Mobil Corp. ........................... 3,800 265,525
Royal Dutch Petroleum Co. ............ 5,200 282,750
Schlumberger, Ltd. .................. 1,000 125,000
Texaco, Inc. ........................ 2,400 261,000
Unocal Corp. ........................ 3,200 124,200
Valero Energy Corp. .................. 2,100 76,125
----------
2,739,940
----------
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1997
- --------------------------------------------------------------------------------
Balanced Fund (continued)
Shares Value
-------- ------------
COMMON STOCKS - (continued)
Financial Services - 9.47%
American International Group, Inc. ...... 1,825 $ 272,609
BankAmerica Corp. ........................ 7,500 484,219
Bankers Trust Corp. ..................... 2,500 217,500
Chase Manhattan Corp. .................. 7,132 692,250
Chubb Corp. .............................. 3,900 260,812
Citicorp ................................. 3,900 470,194
Federal National Mortgage Assn. ......... 17,400 759,075
First Bank System, Inc. .................. 3,150 268,931
General Re Corp. ........................ 1,400 254,800
Morgan (JP) & Co., Inc. .................. 1,900 198,312
-----------
3,878,702
-----------
Health Care - 7.42%
Alza Corp. Cl. A* ........................ 2,600 75,238
Bausch & Lomb, Inc. ..................... 450 21,206
Baxter International, Inc. ............... 4,400 229,900
Bristol-Myers Squibb Co. ............... 5,200 421,200
Columbia/HCA Healthcare Corp. ............ 1,925 75,677
Johnson & Johnson ........................ 5,100 328,313
Lilly (Eli) & Co. ........................ 3,300 360,731
Merck & Co., Inc. ........................ 5,200 538,200
Schering Plough Corp. ..................... 9,800 469,175
St. Jude Medical, Inc.* .................. 1,700 66,300
United Healthcare Corp. .................. 2,750 143,000
Warner-Lambert Co. ........................ 2,500 310,625
-----------
3,039,565
-----------
Multi-Industry - 0.55%
Minnesota Mining & Mfg. Co. ............ 2,200 224,400
-----------
Raw Materials - 2.09%
Aluminum Co. of America .................. 2,050 154,519
Dow Chemical Co. ........................ 2,400 209,100
DuPont (EI) De Nemours & Co. ............ 4,400 276,650
Monsanto Co. .............................. 5,000 215,312
-----------
855,581
-----------
Retail - 3.50%
Albertson's, Inc. ........................ 6,850 250,025
Costco Cos., Inc.* ........................ 4,000 131,500
Darden Restaurants, Inc. .................. 200 1,813
Dillard Dept. Stores, Inc. Cl. A ......... 2,950 102,144
Limited, Inc. ........................... 3,526 71,402
May Department Stores Co. ............... 4,050 191,362
Penney (JC), Inc. ........................ 3,400 177,438
Wal-Mart Stores, Inc. .................. 8,600 290,788
Walgreen Co. .............................. 4,000 214,500
-----------
1,430,972
-----------
Shelter - 0.78%
Georgia-Pacific Corp. ..................... 2,000 170,750
Kimberly-Clark Corp. ..................... 3,000 149,250
-----------
320,000
-----------
Technology - 8.72%
AMP, Inc. .............................. 5,950 248,413
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1997
- --------------------------------------------------------------------------------
Balanced Fund (continued)
Shares Value
-------- ------------
COMMON STOCKS - (continued)
Boeing Co. ................................. 1,200 $ 63,675
Compaq Computer Corp.* ..................... 6,500 645,125
Hewlett-Packard Co. ........................ 7,100 397,600
Intel Corp. ................................. 6,800 964,325
International Business Machines Corp. ...... 3,600 324,675
Lucent Technologies, Inc. .................. 2,882 207,684
Motorola, Inc. .............................. 5,750 437,000
NCR Corp.* ................................. 259 7,705
Seagate Technology, Inc.* .................. 5,100 179,456
Tandem Computers, Inc.* ..................... 4,700 95,175
-----------
3,570,833
-----------
Transportation - 1.02%
AMR Corp.* ................................. 2,600 240,500
CSX Corp. ................................. 3,200 177,600
-----------
418,100
-----------
Utilities - 5.43%
Airtouch Communications, Inc.* ............ 7,700 210,788
AT & T Corp. .............................. 6,550 229,659
Edison International ........................ 7,500 186,562
El Paso Natural Gas Co. ..................... 1,200 66,000
GTE Corp. ................................. 9,300 408,037
MCI Communications Corp. .................. 4,700 179,922
PECO Energy Co. ........................... 8,000 168,000
PG&E Corp. ................................. 6,000 145,500
SBC Communications, Inc. .................. 8,017 496,052
Unicom Corp. .............................. 5,900 131,275
-----------
2,221,795
-----------
TOTAL COMMON STOCKS (Cost $18,523,291) ...... 24,405,544
-----------
Principal
Amount Value
------------ ----------
FIXED INCOME SECURITIES - 39.13%
U.S. Government Obligations - 12.29%
U.S. Treasury Notes
6.875%, 08/31/99 ......................... $ 125,000 126,894
7.500%, 05/15/02 ......................... 660,000 690,993
6.375%, 08/15/02 ......................... 425,000 425,051
11.625%, 11/15/02 ......................... 100,000 123,606
6.250%, 02/15/03 ......................... 600,000 595,746
10.750%, 05/15/03 ......................... 60,000 72,459
7.250%, 08/15/04 ......................... 885,000 922,250
11.625%, 11/15/04 ......................... 1,600,000 2,071,552
---------
Total U.S. Treasury Obligations
(Cost $4,998,895) .......................... 5,028,551
---------
U.S. Government Agency Obligations - 4.06%
Federal Farm Credit Bank - 1.93%
6.350%, 10/30/03 ......................... 500,000 493,050
6.600%, 02/06/04 ......................... 300,000 299,325
---------
792,375
---------
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1997
- --------------------------------------------------------------------------------
Balance Fund (continued)
<TABLE>
<CAPTION>
Principal
Amount Value
----------- ------------
<S> <C> <C>
FIXED INCOME SECURITIES - (continued)
Federal Home Loan Bank - 0.38%
7.360%, 07/01/04 ................................................ $150,000 $ 155,968
-----------
Federal Home Loan Mortgage Corp. - 0.36%
5.990%, 12/01/03 ................................................ 150,000 145,264
-----------
Federal National Mortgage Association - 0.47%
5.730%, 01/06/03 ................................................ 200,000 192,776
-----------
Resolution Funding Corp. - 0.08%
0.000%, 04/15/14** ............................................. 100,000 31,196
-----------
Student Loan Marketing Association - 0.84%
6.350%, 03/17/03 ................................................ 350,000 345,520
-----------
Total U.S. Government Agency Obligations (Cost $1,655,555) ...... 1,663,099
-----------
Collateralized Mortgage Obligations - 12.54%
Federal Home Loan Mortgage Corp. - 7.77%
6.300%, 10/15/18 ................................................ 100,000 97,299
6.250%, 05/15/19 ................................................ 100,000 98,417
6.500%, 10/15/19 ................................................ 200,000 197,105
5.950%, 11/15/19 ................................................ 100,000 98,392
7.000%, 02/15/21 ................................................ 100,000 101,071
6.500%, 08/15/21 ................................................ 240,000 236,996
6.500%, 11/15/21 ................................................ 600,000 585,108
6.000%, 02/15/22 ................................................ 100,000 96,284
6.000%, 05/15/22 ................................................ 400,000 375,890
6.650%, 07/15/22 ................................................ 100,000 98,166
6.250%, 11/15/22 ................................................ 150,000 146,373
6.500%, 11/15/22 ................................................ 100,000 97,178
7.000%, 01/15/23 ................................................ 200,000 200,214
6.000%, 02/15/23 ................................................ 150,000 142,146
6.500%, 02/15/23 ................................................ 350,000 342,390
6.750%, 05/15/23 ................................................ 150,000 144,915
7.000%, 06/25/23 ................................................ 125,000 124,925
-----------
3,182,869
-----------
Federal National Mortgage Association - 4.77%
6.000%, 09/25/18 ................................................ 50,000 48,789
6.250%, 01/25/20 ................................................ 100,000 98,196
6.850%, 10/25/20 ................................................ 50,000 48,820
6.750%, 11/25/20 ................................................ 100,000 99,564
6.750%, 05/25/21 ................................................ 100,000 97,261
6.500%, 10/25/21 ................................................ 300,000 291,547
6.500%, 11/25/21 ................................................ 100,000 97,184
6.500%, 04/25/22 ................................................ 700,000 680,071
6.800%, 09/25/22 ................................................ 300,000 296,477
6.500%, 11/25/22 ................................................ 200,000 193,926
-----------
1,951,835
-----------
Total Collateralized Mortgage Obligations (Cost $5,084,706) ...... 5,134,704
-----------
Corporate Bonds - 10.24%
Bank & Insurance - 1.46%
Chase Manhattan Corp., 7.125%, 02/01/07 ........................ 200,000 199,250
KeyCorp, 6.750%, 03/15/06 ....................................... 45,000 43,706
NationsBank Corp., 7.500%, 09/15/06 .............................. 250,000 255,937
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1997
- --------------------------------------------------------------------------------
Balance Fund (continued)
<TABLE>
<CAPTION>
Principal
Amount Value
-------------- -------------
<S> <C> <C>
FIXED INCOME SECURITIES - (continued)
Wells Fargo & Co., 7.125%, 08/15/06 ...................................................... $ 100,000 $ 99,750
------------
598,643
------------
Financial Services - 8.23%
American General Finance Corp., 7.450%, 07/01/02 ....................................... 175,000 180,031
Associates Corp. North America, 6.375%, 10/15/02 ....................................... 50,000 49,250
Associates Corp. North America, 7.625%, 04/27/05 ....................................... 125,000 129,219
Beneficial Corp., 10.100%, 11/27/00 ...................................................... 150,000 165,562
Beneficial Corp., 9.470%, 03/09/01 ...................................................... 30,000 32,625
Beneficial Corp., 6.940%, 12/15/06 ...................................................... 100,000 98,625
Commercial Credit Co., 6.375%, 09/15/02 ................................................ 50,000 49,250
Commercial Credit Co., 6.625%, 11/15/06 ................................................ 275,000 267,094
Finova Capital Corp., 6.625%, 09/15/01 ................................................... 50,000 49,562
Finova Capital Corp., 6.120%, 05/28/02 ................................................... 200,000 194,750
Finova Capital Corp., 6.900%, 06/19/04 ................................................... 100,000 99,500
Ford Motor Credit Co., 6.250%, 11/08/00 ................................................ 50,000 49,437
Ford Motor Credit Co., 6.550%, 07/07/03 ................................................ 125,000 123,125
Ford Motor Credit Co., 7.200%, 06/15/07 ................................................ 100,000 101,125
General Motors Acceptance Corp., 6.600%, 11/22/04 ....................................... 175,000 170,188
Household Finance Corp., 6.700%, 06/15/02 ................................................ 50,000 50,063
Household Finance Corp., 7.250%, 07/15/03 ................................................ 125,000 127,656
Lehman Brothers, Inc., 7.625%, 06/01/06 ................................................ 40,000 40,800
Morgan Stanley Group, Inc., 6.875%, 03/01/07 ............................................. 100,000 98,750
Salomon, Inc., 7.200%, 02/01/04 ......................................................... 100,000 100,250
Sears Roebuck Acceptance Corp., 6.900%, 08/01/03 ....................................... 125,000 125,000
Sears Roebuck Acceptance Corp., 6.125%, 01/15/06 ....................................... 50,000 47,063
Smith Barney Holdings, Inc., 7.980%, 03/01/00 .......................................... 50,000 51,688
Smith Barney Holdings, Inc., 6.500%, 10/15/02 .......................................... 125,000 123,281
Smith Barney Holdings, Inc., 7.000%, 03/15/04 .......................................... 250,000 250,625
Transamerica Corp., 6.750%, 11/15/06 ................................................... 200,000 194,500
Transamerica Financial Group, 7.510%, 04/15/02 .......................................... 30,000 30,825
Travelers, Inc., 9.500%, 03/01/02 ...................................................... 25,000 27,719
Travelers, Inc., 6.625%, 09/15/05 ...................................................... 150,000 146,063
Travelers Property Casualty Corp., 6.750%, 11/15/06 .................................... 200,000 195,250
------------
3,368,876
------------
Industrial - 0.55%
Philip Morris Cos., Inc., 7.500%, 01/15/02 ............................................. 50,000 50,937
Philip Morris Cos., Inc., 8.250%, 10/15/03 ............................................. 75,000 78,938
Philip Morris Cos., Inc., 6.375%, 02/01/06 ............................................. 25,000 23,594
TCI Communications, Inc., 6.875%, 02/15/06 ............................................. 75,000 70,406
------------
223,875
------------
Total Corporate Bonds (Cost $4,174,800)................................................... 4,191,394
------------
TOTAL FIXED INCOME SECURITIES (Cost $15,913,956).......................................... 16,017,748
------------
TOTAL INVESTMENTS - 98.74% (Cost $34,437,247)(1).......................................... 40,423,292
------------
CASH AND OTHER ASSETS NET OF LIABILITIES - 1.26% ....................................... 517,431
------------
NET ASSETS - 100.00% ..................................................................... $40,940,723
============
(1) Aggregate cost for federal income tax purposes is $34,437,247 and net unrealized
appreciation is as follows:
Gross unrealized appreciation ......................................................... $6,095,456
Gross unrealized depreciation ......................................................... (109,411)
----------
Net unrealized appreciation ......................................................... $5,986,045
==========
</TABLE>
* Non-dividend paying stock.
** Zero coupon bond.
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1997
- --------------------------------------------------------------------------------
Equity Investment Fund
Shares Value
-------- -----------
COMMON STOCKS - 98.46%
Business Equipment & Service - 1.04%
Automatic Data Processing, Inc. ...... 7,500 $ 352,500
Cognizant Corp. ..................... 6,300 255,150
----------
607,650
----------
Capital Goods - 8.77%
Cooper Industries, Inc. ............... 6,300 313,425
Emerson Electric Co. ............... 11,000 605,688
General Electric Co. .................. 31,600 2,065,850
Honeywell, Inc. ..................... 7,760 588,790
Illinois Tool Works, Inc. ............ 1,000 49,937
Ingersoll Rand Co. .................. 3,300 203,775
PPG Industries, Inc. .................. 10,600 616,125
Tyco International, Ltd. ............ 9,980 694,234
----------
5,137,824
----------
Consumer Durables - 1.91%
Ford Motor Co. ........................ 16,000 604,000
General Motors Corp. .................. 9,300 517,894
----------
1,121,894
----------
Consumer Non-Durables - 8.65%
Anheuser Busch Cos., Inc. ............ 8,300 348,081
CPC International, Inc. ............ 6,500 600,031
Eastman Kodak Co. ..................... 5,550 425,962
General Mills, Inc. .................. 3,200 208,400
PepsiCo, Inc. ........................ 23,500 882,719
Philip Morris Cos., Inc. ............ 36,175 1,605,266
Procter & Gamble Co. ............... 3,400 480,250
Sara Lee Corp. ........................ 12,400 516,150
----------
5,066,859
----------
Consumer Services - 2.01%
Disney (Walt) Co. .................. 4,200 337,050
Hilton Hotels Corp. .................. 6,400 170,000
Knight-Ridder, Inc. .................. 6,300 309,094
Time Warner, Inc. .................. 7,500 361,875
----------
1,178,019
----------
Energy - 10.69%
Amerada Hess Corp. .................. 3,700 205,581
Amoco Corp. ........................ 7,400 643,337
Atlantic Richfield Co. ............... 400 28,200
Baker Hughes, Inc. .................. 8,000 309,500
British Petroleum Co. PLC ............ 7,202 539,250
Burlington Resources, Inc. ............ 3,000 132,375
Chevron Corp. ........................ 9,520 703,885
Exxon Corp. ........................... 14,300 879,450
Mobil Corp. ........................... 10,200 712,725
Royal Dutch Petroleum Co. ............ 11,200 609,000
Schlumberger, Ltd. .................. 2,650 331,250
Texaco, Inc. ........................ 7,500 815,625
Unocal Corp. ........................ 4,400 170,775
Valero Energy Corp. .................. 5,000 181,250
----------
6,262,203
----------
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1997
- --------------------------------------------------------------------------------
Equity Investment Fund (continued)
Shares Value
-------- -----------
COMMON STOCKS - (continued)
Financial Services - 16.04%
American International Group, Inc. ...... 4,700 $ 702,063
BankAmerica Corp. ........................ 18,824 1,215,324
Bankers Trust Corp. ..................... 6,000 522,000
Chase Manhattan Corp. ..................... 16,927 1,642,977
Chubb Corp. .............................. 8,980 600,537
Citicorp ................................. 9,400 1,133,287
Federal National Mortgage Assn. ......... 42,700 1,862,788
First Bank System, Inc. .................. 7,200 614,700
General Re Corp. ........................ 3,300 600,600
Morgan (JP) & Co., Inc. .................. 4,850 506,219
----------
9,400,495
----------
Health Care - 11.89%
Alza Corp. Cl. A* ........................ 5,800 167,837
Bausch & Lomb, Inc. ..................... 400 18,850
Baxter International, Inc. ............... 12,200 637,450
Bristol-Myers Squibb Co. .................. 12,500 1,012,500
Columbia/HCA Healthcare Corp. ............ 5,950 233,909
Johnson & Johnson ........................ 11,200 721,000
Lilly (Eli) & Co. ........................ 6,760 738,953
Merck & Co., Inc. ........................ 11,160 1,155,060
Schering Plough Corp. ..................... 20,800 995,800
St. Jude Medical, Inc.* .................. 4,800 187,200
United Healthcare Corp. .................. 6,800 353,600
Warner-Lambert Co. ........................ 6,000 745,500
----------
6,967,659
----------
Multi-Industry - 0.91%
Minnesota Mining & Mfg. Co. ............... 5,230 533,460
----------
Raw Materials - 4.21%
Aluminum Co. of America .................. 5,740 432,653
Dow Chemical Co. ........................ 5,170 450,436
DuPont (EI) De Nemours & Co. ............ 14,200 892,825
Monsanto Co. .............................. 16,000 689,000
----------
2,464,914
----------
Retail - 6.01%
Albertson's, Inc. ........................ 17,700 646,050
Costco Cos., Inc.* ........................ 9,000 295,875
Darden Restaurants, Inc. .................. 100 906
Dillard Dept. Stores, Inc. Cl. A ......... 8,000 277,000
Limited, Inc. ........................... 13,032 263,898
May Department Stores Co. ............... 10,500 496,125
Penney (JC), Inc. ........................ 10,350 540,141
Wal-Mart Stores, Inc. ..................... 17,350 586,647
Walgreen Co. .............................. 7,700 412,913
----------
3,519,555
----------
Shelter - 1.14%
Georgia-Pacific Corp. ..................... 5,400 461,025
Kimberly-Clark Corp. ..................... 4,220 209,945
----------
670,970
----------
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1997
- --------------------------------------------------------------------------------
Equity Investment Fund (continued)
<TABLE>
<CAPTION>
Shares Value
---------------- ------------
<S> <C> <C>
COMMON STOCKS - (continued)
Technology - 14.41%
AMP, Inc. .............................................................................. 14,000 $ 584,500
Boeing Co. .............................................................................. 1,800 95,512
Compaq Computer Corp.* .................................................................. 16,700 1,657,475
Hewlett-Packard Co. ..................................................................... 14,500 812,000
Intel Corp. .............................................................................. 16,900 2,396,631
International Business Machines Corp. ................................................... 9,400 847,763
Lucent Technologies, Inc. ............................................................... 6,853 493,844
Motorola, Inc. ........................................................................... 13,000 988,000
Seagate Technology, Inc.* ............................................................... 11,300 397,619
Tandem Computers, Inc.* .................................................................. 8,500 172,125
-----------
8,445,469
-----------
Transportation - 1.83%
AMR Corp.* .............................................................................. 6,200 573,500
CSX Corp. .............................................................................. 9,000 499,500
-----------
1,073,000
-----------
Utilities - 8.95%
Airtouch Communications, Inc.* ......................................................... 17,400 476,325
AT & T Corp. ........................................................................... 18,530 649,708
Edison International ..................................................................... 16,500 410,438
El Paso Natural Gas Co. .................................................................. 3,500 192,500
GTE Corp. .............................................................................. 18,800 824,850
MCI Communications Corp. ............................................................... 5,400 206,718
PECO Energy Co. ........................................................................ 26,000 546,000
PG&E Corp. .............................................................................. 20,000 485,000
SBC Communications, Inc. ............................................................... 17,348 1,073,408
Unicom Corp. ........................................................................... 17,000 378,250
-----------
5,243,197
-----------
TOTAL COMMON STOCKS - 98.46% (Cost $43,187,875)(1)........................................ 57,693,168
-----------
CASH AND OTHER ASSETS NET OF LIABILITIES - 1.54% ....................................... 900,015
-----------
NET ASSETS - 100.00% ..................................................................... $58,593,183
===========
(1)Aggregate cost for federal income tax purposes is $43,187,875 and net unrealized
appreciation is as follows:
Gross unrealized appreciation ......................................................... $ 14,703,220
Gross unrealized depreciation ......................................................... (197,927)
------------
Net unrealized appreciation ......................................................... $ 14,505,293
============
* Non-dividend paying stock.
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Statement of Assets and Liabilities June 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
McM
McM Intermediate
Principal Fixed
Preservation Income
Fund Fund
-------------- --------------
<S> <C> <C>
Assets:
Investments in securities at value (cost $32,142,792,
$92,249,364, $9,363,145, $34,437,247 and
$43,187,875, respectively) ................................. $32,142,792 $92,266,713
Cash-interest bearing accounts .............................. 236,562 194,091
Dividends and interest receivable ........................... 53,126 966,195
Receivable for fund shares sold .............................. 295,644 1,636
Receivable for securities sold .............................. 0 0
Deferred organization cost (Note A) ........................ 8,145 8,145
Other assets ................................................ 1,811 5,831
------------ -----------
Total assets ............................................. 32,738,080 93,442,611
------------ -----------
Liabilities:
Payable for securities purchased ........................... 0 0
Fund shares redeemed ....................................... 15,284 0
Distributions payable ....................................... 7,698 0
Accrued expenses ............................................. 8,051 9,307
Payable to advisor, net .................................... 4,205 31,416
------------ -----------
Total liabilities .......................................... 35,238 40,723
------------ -----------
Net Assets:
Applicable to 32,702,842, 9,105,244, 915,916, 2,675,673
and 2,972,559 shares outstanding, respectively ............ $32,702,842 $93,401,888
============ ===========
Net Assets Consist of:
Capital paid-in ............................................. $32,702,842 $93,214,051
Accumulated undistributed net investment income ............ 0 275,372
Accumulated net realized gain (loss) on investments ......... 0 (104,884)
Net unrealized appreciation/depreciation on investments 0 17,349
------------ -----------
$32,702,842 $93,401,888
============ ===========
Net asset value and redemption price per share ............... $ 1.00 $ 10.26
============ ===========
<CAPTION>
<PAGE>
McM McM
Fixed McM Equity
Income Balanced Investment
Fund Fund Fund
------------ -------------- ------------
<S> <C> <C> <C>
Assets:
Investments in securities at value (cost $32,142,792,
$92,249,364, $9,363,145, $34,437,247 and
$43,187,875, respectively) ................................. $9,428,891 $40,423,292 $57,693,168
Cash-interest bearing accounts .............................. 44,536 249,007 987,821
Dividends and interest receivable ........................... 107,369 258,992 93,838
Receivable for fund shares sold .............................. 0 87,284 35,151
Receivable for securities sold .............................. 0 2,868 0
Deferred organization cost (Note A) ........................ 8,145 8,145 8,145
Other assets ................................................ 555 1,163 1,924
----------- ----------- -----------
Total assets ............................................. 9,589,496 41,030,751 58,820,047
----------- ----------- -----------
Liabilities:
Payable for securities purchased ........................... 0 64,878 187,021
Fund shares redeemed ....................................... 15,151 0 0
Distributions payable ....................................... 0 0 0
Accrued expenses ............................................. 6,896 8,178 9,115
Payable to advisor, net .................................... 2,523 16,972 30,728
----------- ----------- -----------
Total liabilities .......................................... 24,570 90,028 226,864
----------- ----------- -----------
Net Assets:
Applicable to 32,702,842, 9,105,244, 915,916, 2,675,673
and 2,972,559 shares outstanding, respectively ............ $9,564,926 $40,940,723 $58,593,183
=========== =========== ===========
Net Assets Consist of:
Capital paid-in ............................................. $9,460,065 $34,951,650 $43,984,660
Accumulated undistributed net investment income ............ 29,851 56,694 20,224
Accumulated net realized gain (loss) on investments ......... 9,264 (53,666) 83,006
Net unrealized appreciation/depreciation on investments 65,746 5,986,045 14,505,293
----------- ----------- -----------
$9,564,926 $40,940,723 $58,593,183
=========== =========== ===========
Net asset value and redemption price per share ............... $ 10.44 $ 15.30 $ 19.71
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Statement of Operations
For the Year Ended June 30, 1997
- --------------------------------------------------------------------------------
<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 $ 310,313 $ 855,521
Interest ....................................... 1,363,890 5,608,507 593,428 676,936 34,768
---------- ---------- --------- ---------- -----------
Total investment income ..................... 1,363,890 5,608,507 593,428 987,249 890,289
---------- ---------- --------- ---------- -----------
Expenses:
Investment advisory fees (Note E) ............ 62,891 306,667 30,410 111,590 198,605
Transfer agent fees ........................... 29,440 26,505 24,958 27,671 29,089
Administration fees ........................... 25,844 25,348 24,948 25,728 26,161
Accounting fees .............................. 27,025 49,333 26,932 30,390 29,947
Custodian fees ................................. 11,202 17,364 5,599 22,887 21,904
Insurance fees ................................. 10,485 33,736 3,419 6,292 10,662
Legal fees .................................... 3,422 11,448 1,122 2,649 4,392
Amortization of organization costs (Note A) ... 3,610 3,610 3,610 3,610 3,610
Report to shareholder expense .................. 1,598 6,149 607 1,421 2,430
Registration expenses ........................ 9,864 22,520 5,981 8,329 11,503
Trustees fees ................................. 1,884 5,685 817 1,822 2,792
Auditing fees ................................. 7,500 11,500 7,500 7,500 7,500
Miscellaneous expenses ........................ 242 1,532 546 810 1,805
---------- ---------- --------- ---------- -----------
Total expenses .............................. 195,007 521,397 136,449 250,699 350,400
Expenses reimbursed (Note E) .................. (119,537) (83,302) (93,006) (101,913) (52,492)
---------- ---------- --------- ---------- -----------
Net expenses ................................. 75,470 438,095 43,443 148,786 297,908
---------- ---------- --------- ---------- -----------
Net Investment Income ........................... 1,288,420 5,170,412 549,985 838,463 592,381
---------- ---------- --------- ---------- -----------
Realized and Unrealized Gain (Loss) on
Investments:
Net realized gain (loss) on investments ...... 0 (72,659) 11,263 (31,191) 88,154
Net change in unrealized appreciation/
depreciation on investments .................. 0 873,998 88,107 5,082,280 12,113,724
---------- ---------- --------- ---------- -----------
Net realized and unrealized gain on
investments ................................. 0 801,339 99,370 5,051,089 12,201,878
---------- ---------- --------- ---------- -----------
Increase in Net Assets from Operations ......... $1,288,420 $5,971,751 $ 649,355 $5,889,552 $12,794,259
========== ========== ========= ========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
McM Principal
Preservation Fund
------------------------------
For the For the
Year Ended Year Ended
06/30/97 06/30/96
--------------- -------------
<S> <C> <C>
Operations:
Net investment income ........................ $ 1,288,420 $ 989,059
Net realized gain (loss) on investments ...... 0 1,584
Net change in unrealized appreciation/
depreciation on investments ............... 0 0
------------- -----------
Increase in net assets ..................... 1,288,420 990,643
------------- -----------
Dividends and Distributions to Shareholders:
From net investment income .................. (1,288,657) (989,059)
From capital gains ........................... (1,352) 0
------------- -----------
Total Distributions ........................ (1,290,009) (989,059)
------------- -----------
Capital Share Transactions - Note C ......... 8,509,309 12,380,593
------------- -----------
Total increase in net assets ............... 8,507,720 12,382,177
Net Assets:
Beginning of year ........................... 24,195,122 11,812,945
------------- -----------
End of year (including undistributed net
investment income of $0, $0, $275,372,
$214,359, $29,851 and $23,026,
respectively) .............................. $ 32,702,842 $24,195,122
============= ===========
<CAPTION>
McM Intermediate McM Fixed
Fixed Income Fund Income Fund
-------------------------------- -------------------------
For the For the For the For the
Year Ended Year Ended Year Ended Year Ended
06/30/97 06/30/96 06/30/97 06/30/96
--------------- --------------- ------------ -----------
<S> <C> <C> <C> <C>
Operations:
Net investment income ........................ $ 5,170,412 $ 3,298,089 $ 549,985 $ 439,630
Net realized gain (loss) on investments ...... (72,659) 428,006 11,263 16,664
Net change in unrealized appreciation/
depreciation on investments ............... 873,998 (1,350,540) 88,107 (169,853)
------------- ------------- ---------- ----------
Increase in net assets ..................... 5,971,751 2,375,555 649,355 286,441
------------- ------------- ---------- ----------
Dividends and Distributions to Shareholders:
From net investment income .................. (5,112,892) (3,160,286) (543,122) (433,144)
From capital gains ........................... (164,477) (539,436) (10,144) (37,168)
------------- ------------- ---------- ----------
Total Distributions ........................ (5,277,369) (3,699,722) (553,266) (470,312)
------------- ------------- ---------- ----------
Capital Share Transactions - Note C ......... 16,662,781 47,432,633 1,477,192 1,576,877
------------- ------------- ---------- ----------
Total increase in net assets ............... 17,357,163 46,108,466 1,573,281 1,393,006
Net Assets:
Beginning of year ........................... 76,044,725 29,936,259 7,991,645 6,598,639
------------- ------------- ---------- ----------
End of year (including undistributed net
investment income of $0, $0, $275,372,
$214,359, $29,851 and $23,026,
respectively) .............................. $ 93,401,888 $ 76,044,725 $9,564,926 $7,991,645
============= ============= ========== ==========
</TABLE>
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 Year Ended Year Ended Year Ended
06/30/97 06/30/96 06/30/97 06/30/96
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Operations:
Net investment income ........................ $ 838,463 $ 216,803 $ 592,381 $ 179,744
Net realized gain (loss) on investments ...... (31,191) (15,053) 88,154 18,284
Net change in unrealized appreciation/
depreciation on investments .................. 5,082,280 680,345 12,113,724 2,003,550
----------- ----------- ----------- -----------
Increase in net assets ........................ 5,889,552 882,095 12,794,259 2,201,578
----------- ----------- ----------- -----------
Dividends and Distributions to Shareholders:
From net investment income .................. (796,912) (206,101) (583,073) (171,896)
From capital gains ........................... 0 (33,641) (15,401) (19,520)
----------- ----------- ----------- -----------
Total Distributions ........................... (796,912) (239,742) (598,474) (191,416)
----------- ----------- ----------- -----------
Capital Share Transactions - Note C ............ 23,933,114 8,202,740 22,484,477 17,037,000
----------- ----------- ----------- -----------
Total increase in net assets .................. 29,025,754 8,845,093 34,680,262 19,047,162
Net Assets:
Beginning of year ........................... 11,914,969 3,069,876 23,912,921 4,865,759
----------- ----------- ----------- -----------
End of year (including undistributed net
investment income of $56,694, $15,143,
$20,224 and $10,916, respectively)............ $40,940,723 $11,914,969 $58,593,183 $23,912,921
=========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM FUNDS
Notes to Financial Statements June 30, 1997
- --------------------------------------------------------------------------------
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 & 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 Funds. 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 New York Stock
Exchange. 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 (continued) June 30, 1997
- --------------------------------------------------------------------------------
(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 year ended
June 30, 1997. Accordingly, no provisions for federal income taxes have
been made in the accompanying financial statements. As of June 30, 1997,
the Balanced Fund had capital loss carryforwards for federal income tax
purposes of approximately $51,084, of which $30,784 expires on June 30,
2004 and $20,300 expires on June 30, 2005. These capital loss
carryforwards may be utilized in the current and future years to offset
net realized gains prior to distributing such gains to shareholders.
(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
----------------------------------------------------------------------
Year Ended Year Ended
June 30, 1997 June 30, 1996
---------------------------------- ----------------------------------
Shares Amount Shares Amount
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Shares sold .................. 61,451,444 $ 61,451,444 48,186,845 $ 48,186,845
Shares issued through
reinvestment of dividends ... 1,244,977 1,244,977 954,210 954,210
Shares redeemed ............... (54,187,112) (54,187,112) (36,760,462) (36,760,462)
------------ -------------- ------------ --------------
Net Increase .................. 8,509,309 $ 8,509,309 12,380,593 $ 12,380,593
============ ============== ============ ==============
<CAPTION>
INTERMEDIATE FIXED INCOME FUND
---------------------------------------------------------------
Year Ended Year Ended
June 30, 1997 June 30, 1996
--------------------------------- ----------------------------
Shares Amount Shares Amount
--------------- ---------------- ----------- ---------------
<S> <C> <C> <C> <C>
Shares sold .................. 3,302,865 $ 33,813,474 5,055,407 $ 52,223,621
Shares issued through
reinvestment of dividends ... 500,320 5,114,086 344,344 3,547,475
Shares redeemed ............... (2,172,289) (22,264,779) (813,233) (8,338,463)
----------- -------------- --------- -------------
Net Increase .................. 1,630,896 $ 16,662,781 4,586,518 $ 47,432,633
=========== ============== ========= =============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FIXED INCOME FUND
------------------------------------------------------
Year Ended Year Ended
June 30, 1997 June 30, 1996
-------------------------- --------------------------
Shares Amount Shares Amount
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Shares sold ..................... 136,454 $1,423,356 131,506 $1,383,524
Shares issued through
reinvestment of dividends ...... 53,167 552,893 44,326 467,474
Shares redeemed .................. (47,554) (499,057) (25,846) (274,121)
-------- ---------- -------- ----------
Net Increase .................. 142,067 $1,477,192 149,986 $1,576,877
======== ========== ======== ==========
<CAPTION>
BALANCED FUND
--------------------------------------------------------
Year Ended Year Ended
June 30, 1997 June 30, 1996
-------------------------- ----------------------------
Shares Amount Shares Amount
----------- ------------- ------------ --------------
<S> <C> <C> <C> <C>
Shares sold ..................... 1,730,693 $23,766,367 662,596 $8,186,373
Shares issued through
reinvestment of dividends ...... 53,858 767,164 17,679 218,104
Shares redeemed .................. (43,162) (600,417) (16,574) (201,737)
--------- ----------- -------- ----------
Net Increase .................. 1,741,389 $23,933,114 663,701 $8,202,740
========= =========== ======== ==========
</TABLE>
<PAGE>
McM FUNDS
Notes to Financial Statements (continued) June 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY INVESTMENT FUND
------------------------------------------------------------
Year Ended Year Ended
June 30, 1997 June 30, 1996
---------------------------- -----------------------------
Shares Amount Shares Amount
----------- -------------- ----------- ---------------
<S> <C> <C> <C> <C>
Shares sold ..................... 1,485,441 $24,691,781 1,249,130 $17,659,811
Shares issued through
reinvestment of dividends ...... 33,050 573,358 13,380 186,095
Shares redeemed .................. (155,758) (2,780,662) (59,989) (808,906)
--------- ------------ --------- -----------
Net Increase .................. 1,362,733 $22,484,477 1,202,521 $17,037,000
========= ============ ========= ===========
</TABLE>
Note (D) Investment Transactions: Aggregate purchases and proceeds from sales
of investment securities (other than short-term investments) for the year ended
June 30, 1997 were:
Aggregate Proceeds from
Purchases Sales
-------------- --------------
Intermediate Fixed Income Fund ...... $ 51,836,431 $ 31,260,725
Fixed Income Fund ..................... 4,368,755 2,776,431
Balanced Fund ........................ 31,438,492 7,709,906
Equity Investment Fund ............... 22,370,320 345,908
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, 1996 through June 30, 1997, the Advisor absorbed, subject to
repayment, expenses totaling $450,250; $119,537 for the Principal Preservation
Fund, $83,302 for the Intermediate Fixed Income Fund, $93,006 for the Fixed
Income Fund, $101,913 for the Balanced Fund and $52,492 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. Since July 14, 1994 (July 13, 1994 for the
Principal Preservation Fund) through June 30, 1997, the Advisor has reduced its
management fee and otherwise absorbed Fund expenses for each Fund in the
following amounts: Principal Preservation Fund $268,167, Intermediate Fixed
Income Fund $288,755, Fixed Income Fund $212,498, Balanced Fund $228,730 and
Equity Investment Fund $175,996.
Note (F) Special Meeting of Shareholders: A Special Meeting of Shareholders was
held on December 2, 1996. At the meeting, shareholders of the Funds were asked
to consider the election of three (3) nominees to the Board of Trustees.
The results of all matters voted on by shareholders of the Funds at the Special
Meeting of Shareholders, in dollar weighted values for shares voted by proxy,
were as follows: nominees Mark R. Taylor, Gregory L. Watson and S.D. Sicotte
received 146,622,830, 146,993,113 and 146,993,113 votes FOR, respectively and
374,409, 4,126 and 4,126 votes withholding authority, respectively.
<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
Preservation Fund
------------------------------------------
For the For the For the
Year Ended Year Ended Period Ended
06/30/97 06/30/96 06/30/95*
------------ ------------ --------------
<S> <C> <C> <C>
Net Asset Value, beginning of period ... $ 1.00 $ 1.00 $ 1.00
------- ------- ---------
Income from investment
operations
Net investment income .................. 0.05 0.05 0.05
Net realized and unrealized gain (loss)
on investments ........................ 0.00 0.00 0.00
------- ------- ---------
Total from investment operations ...... 0.05 0.05 0.05
------- ------- ---------
Less Distributions:
From net investment income ............ (0.05) (0.05) (0.05)
From capital gains ..................... 0.00 0.00 0.00
------- ------- ---------
Total distributions .................. (0.05) (0.05) (0.05)
------- ------- ---------
Net Asset Value, end of period ......... $ 1.00 $ 1.00 $ 1.00
======= ======= =========
Total return ........................... 5.24% 5.39% 5.10%(2)
Ratios/Supplemental Data
Net assets, end of period (in 000's) ... $32,703 $24,195 $11,813
Ratio of expenses to average net
assets before reimbursement of
expenses by Advisor .................. 0.77% 0.93% 2.77%(1)
Ratio of expenses to average net
assets after reimbursement of
expenses by Advisor .................. 0.30% 0.30% 0.30%(1)
Ratio of net investment income to
average net assets before reim-
bursement of expenses by Advisor 4.65% 4.60% 2.91%(1)
Ratio of net investment income to
average net assets after reimburse-
ment of expenses by Advisor 5.12% 5.23% 5.38%(1)
Portfolio turnover ..................... N/A N/A N/A
Average commission rate paid ............ N/A N/A N/A
<CAPTION>
<PAGE>
McM Intermediate
Fixed Income Fund
-------------------------------------------------
For the For the For the
Year Ended Year Ended Period Ended
06/30/97 06/30/96 06/30/95**
------------ ------------ ---------------------
<S> <C> <C> <C>
Net Asset Value, beginning of period ... $ 10.17 $ 10.37 $ 10.00
------- ------- ------------
Income from investment
operations
Net investment income .................. 0.60 0.57 0.54
Net realized and unrealized gain (loss)
on investments ........................ 0.11 (0.10) 0.34
------- ------- ------------
Total from investment operations ...... 0.71 0.47 0.88
------- ------- ------------
Less Distributions:
From net investment income ............ (0.60) (0.57) (0.51)
From capital gains ..................... (0.02) (0.10) 0.00
------- ------- ------------
Total distributions .................. (0.62) (0.67) (0.51)
------- ------- ------------
Net Asset Value, end of period ......... $ 10.26 $ 10.17 $ 10.37
======= ======= ============
Total return ........................... 7.14% 4.61% 9.19%(2)
Ratios/Supplemental Data
Net assets, end of period (in 000's) ... $93,402 $76,045 $ 29,936
Ratio of expenses to average net
assets before reimbursement of
expenses by Advisor .................. 0.59% 0.69% 1.72%(1)
Ratio of expenses to average net
assets after reimbursement of
expenses by Advisor .................. 0.50% 0.50% 0.50%(1)
Ratio of net investment income to
average net assets before reim-
bursement of expenses by Advisor 5.80% 5.52% 5.01%(1)
Ratio of net investment income to
average net assets after reimburse-
ment of expenses by Advisor 5.89% 5.71% 6.24%
Portfolio turnover ..................... 36.02% 75.26% 227.09%(2)
Average commission rate paid ............ N/A N/A N/A
</TABLE>
* McM Principal Preservation Fund commenced investment operations on
July 13, 1994.
** McM Intermediate 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 Fixed
Income Fund
------------------------------------------
For the For the For the
Year Ended Year Ended Period Ended
06/30/97 06/30/96 06/30/95*
------------ ------------ --------------
<S> <C> <C> <C>
Net Asset Value, beginning of period ... $ 10.33 $ 10.58 $ 10.00
-------- -------- ------------
Income from investment
operations
Net investment income .................. 0.65 0.64 0.55
Net realized and unrealized gain (loss)
on investments ........................ 0.12 (0.20) 0.56
-------- -------- ------------
Total from investment operations ...... 0.77 0.44 1.11
-------- -------- ------------
Less Distributions:
From net investment income ............ (0.65) (0.63) (0.53)
From capital gains ..................... (0.01) (0.06) 0.00
-------- -------- ------------
Total distributions .................. (0.66) (0.69) (0.53)
-------- -------- ------------
Net Asset Value, end of period ......... $ 10.44 $ 10.33 $ 10.58
======== ======== ============
Total return ........................... 7.72% 4.16% 11.55(2)
Ratios/Supplemental Data
Net assets, end of period (in 000's) ... $ 9,565 $ 7,992 $ 6,599
Ratio of expenses to average net
assets before reimbursement of
expenses by Advisor .................. 1.57% 1.82% 7.29%(1)
Ratio of expenses to average net
assets after reimbursement of
expenses by Advisor .................. 0.50% 0.50% 0.50%(1)
Ratio of net investment income to
average net assets before reim-
bursement of expenses by Advisor 5.25% 4.70% -0.47%(1)
Ratio of net investment income to
average net assets after reimburse-
ment of expenses by Advisor 6.32% 6.02% 6.33%(1)
Portfolio turnover ..................... 32.46% 37.62% 150.77%(2)
Average commission rate paid ............ N/A N/A N/A
<CAPTION>
<PAGE>
McM Balanced
Fund
-----------------------------------------
For the For the For the
Year Ended Year Ended Period Ended
06/30/97 06/30/96 06/30/95*
------------ ------------ -------------
<S> <C> <C> <C>
Net Asset Value, beginning of period ... $ 12.75 $ 11.35 $ 10.00
------- ------- -----------
Income from investment
operations
Net investment income .................. 0.43 0.40 0.36
Net realized and unrealized gain (loss)
on investments ........................ 2.54 1.49 1.33
------- ------- -----------
Total from investment operations ...... 2.97 1.89 1.69
------- ------- -----------
Less Distributions:
From net investment income ............ (0.42) (0.40) (0.34)
From capital gains ..................... 0.00 (0.09) 0.00
------- ------- -----------
Total distributions .................. (0.42) (0.49) (0.34)
------- ------- -----------
Net Asset Value, end of period ......... $ 15.30 $ 12.75 $ 11.35
======= ======= ===========
Total return ........................... 23.65% 16.86% 17.31%(2)
Ratios/Supplemental Data
Net assets, end of period (in 000's) ... $40,941 $11,915 $ 3,070
Ratio of expenses to average net
assets before reimbursement of
expenses by Advisor .................. 1.01% 2.21% 8.41%(1)
Ratio of expenses to average net
assets after reimbursement of
expenses by Advisor .................. 0.60% 0.60% 0.60%(1)
Ratio of net investment income to
average net assets before reim-
bursement of expenses by Advisor 2.97% 1.81% -3.54%(1)
Ratio of net investment income to
average net assets after reimburse-
ment of expenses by Advisor 3.38% 3.43% 4.28%(1)
Portfolio turnover ..................... 31.64% 26.16% 81.05%(2)
Average commission rate paid ............ $0.0600 $0.0600 N/R
</TABLE>
* McM Fixed Income Fund and McM Balanced Fund commenced investment operations
on July 14, 1994.
(1) Annualized.
(2) Not annualized.
See accompanying notes to financial statements.
<PAGE>
Financial Highlights (continued)
- --------------------------------------------------------------------------------
The table below sets forth financial data for a share of beneficial interest
outstanding throughout each period presented.
<TABLE>
<CAPTION>
McM Equity
Investment Fund
-------------------------------------------
For the For the For the
Year Ended Year Ended Period Ended
06/30/97 06/30/96 06/30/95*
------------ ------------ -------------
<S> <C> <C> <C>
Net Asset Value, beginning of period .................................... $ 14.85 $ 11.95 $ 10.00
------- ------- ----------
Income from investment operations
Net investment income ................................................ 0.24 0.21 0.19
Net realized and unrealized gain on investments ........................ 4.87 2.94 1.94
------- ------- ----------
Total from investment operations .................................... 5.11 3.15 2.13
------- ------- ----------
Less Distributions:
From net investment income ............................................. (0.24) (0.21) (0.18)
From capital gains ................................................... (0.01) (0.04) 0.00
------- ------- ----------
Total distributions ................................................... (0.25) (0.25) (0.18)
------- ------- ----------
Net Asset Value, end of period .......................................... $ 19.71 $ 14.85 $ 11.95
======= ======= ==========
Total return ............................................................ 34.68% 26.53% 21.57%(2)
Ratios/Supplemental Data
Net assets, end of period (in 000's) ................................. $58,593 $23,913 $ 4,866
Ratio of expenses to average net assets before reimbursement of expenses
by Advisor ............................................................ 0.88% 1.72% 8.48%(1)
Ratio of expenses to average net assets after reimbursement of expenses
by Advisor ............................................................ 0.75% 0.75% 0.75%(1)
Ratio of net investment income to average net assets before
reimbursement of expenses by Advisor ................................. 1.36% 0.80% -5.50%(1)
Ratio of net investment income to average net assets after reimbursement
of expenses by Advisor ................................................ 1.49% 1.77% 2.24%(1)
Portfolio turnover ................................................... 0.88% 0.92% 1.81%(2)
Average commission rate paid .......................................... $0.0600 $0.0600 N/R
</TABLE>
* 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, 1997, and the related statements of operations for
the year then ended, the statements of changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of
the two years in the period then ended and for the period ended June 30, 1995.
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 based on our audit.
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, 1997, by correspondence with the custodian and brokers. 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,
1997, the results of their operations for the year then ended, the changes in
their net assets for each of the two years in the period then ended and the
financial highlights for each of the two years in the period then ended and for
the period ended June 30, 1995, in conformity with generally accepted
accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
July 11, 1997
<PAGE>
Board of Trustees
Robert R. Barron
Terry A. O'Toole
Walter B. Rose
Kenneth I. Rosenblum
S.D. Sicotte
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, NY 10286
(800) 788-9485
Underwriter Auditors
FPS Broker Services, Inc. Tait, Weller & Baker
3200 Horizon Drive 2 Penn Center Plaza, Suite 700
King of Prussia, PA 19406 Philadelphia, PA 19102
Shareholder Services
FPS Services, Inc.
3200 Horizon Drive
King of Prussia, PA 19406
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.
ANR697
[GRAPHIC OMITTED]
