<PAGE>
[McM Funds Logo]
Semi-Annual Report
December 31, 1997
Principal Preservation Fund
Intermediate Fixed Income Fund
Fixed Income Fund
Balanced Fund
Equity Investment Fund
<PAGE>
Dear Shareholder:
In our very first report to shareholders -- the Semi-Annual report in 1994 --
we wrote the following:
We will do everything in our power to ensure that our shareholders are
never exposed to unnecessary risk, speculative investments or the latest
investment fad. The rigorous implementation of our investment approach and
our dedication to service will remain firm.
I am pleased to report to you that we have fulfilled that promise. And, I
pledge to you, going forward, that our commitment to those standards remains
intact. It's not only the right thing to do for our shareholders, it's been a
wonderfully successful business philosophy too.
o As this report goes to press, assets under management have topped $335
million.
o If you consult Morningstar or other rating services, you'll find the McM
Funds ranked favorably against comparable alternatives.
o The McM Funds have provided excellent investment returns in the midst of
considerable volatility in the financial markets.
o The investment management fees you pay as McM Fund shareholders remain
lower than the industry average, substantially so in some cases.
Looking forward, we see a favorable economic environment -- the details can be
found inside this report. However, regardless of the specific circumstances, we
will continue to build strong portfolios, balancing risk and return to serve
our shareholders' interests.
Thank you for your confidence and trust.
/s/ Terry A. O'Toole
- ------------------------
Terry A. O'Toole
Chairman
<PAGE>
Review
The strength of the U.S. financial markets during 1997 was remarkable. As 1997
came to an end, the stock market was up over 30%, and bonds were up over 9.5%.
The good news was the U.S. economy and the stock market benefited from healthy
corporate profits -- in fact, real profit growth has been extraordinary.
Companies continue to restructure to use their substantial amounts of free
cash flow to buy back their stock or acquire other companies. In addition,
bond yields were not competitive with expected stock returns, so equity
investors did not take profits and increase their bond positions during the
year.
The stock market volatility in the fourth quarter was precipitated by the
cloud of any crisis in Asia and the effect it would have on U.S. corporate
earnings. It is likely that any slowdown in Asia, and other parts of the world
for that matter, will reduce U.S. corporate profits, more in some industries
than others. As with the stock market, the bond market showed strength as
investors continued to buy high quality fixed income securities that gave
historically high expected real return (yield less expected inflation).
Outlook
The key to continued strength in the stock and bond markets will be low
inflation and low interest rates, with a reasonable - high single digit growth
in profits. In this environment, stocks should continue to advance, probably
at a slower pace, and remain attractive compared to cash and bonds. We do not
foresee inflation which would cause an increase in interest rates as a threat
to the ongoing success of the stock and bond markets.
McM portfolios will be invested to continue to take advantage of high quality,
historically successful U.S. companies that are positioned to be successful in
the future --companies that can capitalize on worldwide opportunities. Our
strategy will be to continue to maintain diversified portfolios, especially
with any uncertainty that there may be in the markets in the future.
<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 58% of the portfolio. The 7-day
and 30-day average yields as of December 31, 1997 were 5.34% and 5.32%,
respectively.
Diversification Credit Quality Maturity
Commercial 91+ days
Paper 23% A-1/P-1 42% 31%
Repurchase 1-15 days
Agreements 38%
10%
31-90 days 31%
Bankers' Acceptance 4%
16-30
Certificates days 0%
of Deposit 5%
Government 58% Government 58%
Average Annual Return (%) Current One Three Since
Yield Year Years Inception
----- ---- ----- ---------
McM Principal Preservation Fund 5.43 5.37 5.41 5.32
Principal Preservation Fund
December 31, 1996 - December 31, 1997
7-Day Average Yield (%)
12/27/96 5.05
03/27/97 5.16
06/30/97 5.29
09/24/97 5.31
12/31/97 5.39
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% Government 10+ years 5%
35%
Mortgage 36% Short-term 2%
BAA 5%
Government 5-10 years
34% A 21% 45%
Asset Backed/ AA 2% 1-5 years
Other 2% 48%
AAA 37%
Average Annual Returns (%) One Three Since
Year Years Inception
---- ----- ---------
McM Intermediate Fixed Income Fund 7.91 8.90 7.52
Lehman Brothers Intermediate Govt./Corp. Index 7.86 8.85 7.79
<PAGE>
Intermediate Fixed Income Fund
July 14, 1994 Inception Date
Intermediate Fixed Lehman Brothers Intermediate
Income Fund Govt./Corp. Index
----------- -----------------
06/30/94 $10,000 $ 10,000
07/31/94 $10,050 $ 10,074
08/31/94 $10,046 $ 10,105
09/30/94 $ 9,969 $ 10,012
10/31/94 $ 9,965 $ 10,011
11/30/94 $ 9,921 $ 9,966
12/31/94 $ 9,957 $ 10,001
01/31/95 $10,122 $ 10,170
02/28/95 $10,350 $ 10,381
03/31/95 $10,398 $ 10,440
04/30/95 $10,518 $ 10,569
05/31/95 $10,849 $ 10,888
06/30/95 $10,918 $ 10,961
07/31/95 $10,914 $ 10,962
08/31/95 $11,003 $ 11,062
09/30/95 $11,078 $ 11,142
10/31/95 $11,210 $ 11,266
11/30/95 $11,344 $ 11,413
12/31/95 $11,445 $ 11,526
01/31/96 $11,540 $ 11,625
02/29/96 $11,401 $ 11,489
03/31/96 $11,340 $ 11,431
04/30/96 $11,320 $ 11,391
05/31/96 $11,302 $ 11,382
06/30/96 $11,420 $ 11,502
07/31/96 $11,461 $ 11,537
08/31/96 $11,463 $ 11,546
09/30/96 $11,617 $ 11,706
10/31/96 $11,828 $ 11,914
11/30/96 $11,983 $ 12,071
12/31/96 $11,916 $ 11,994
01/31/97 $11,957 $ 12,040
02/28/97 $11,965 $ 12,066
03/31/97 $11,880 $ 11,982
04/30/97 $12,018 $ 12,157
05/31/97 $12,123 $ 12,258
06/30/97 $12,236 $ 12,370
07/31/97 $12,507 $ 12,621
08/31/97 $12,431 $ 12,558
09/30/97 $12,582 $ 12,703
10/31/97 $12,760 $ 12,845
11/30/97 $12,744 $ 12,873
12/31/97 $12,859 $ 12,976
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 6.8 years, 2.6 years longer
than the Intermediate Fixed Income Fund.
NASDAQ Symbol
MCMFX
Diversification Bond Quality Maturity
Corporate Government Short-term 1%
30% 39%
10+ years
Government BAA 4% 8%
39%
A 24% 1-5 years
Mortgage 31% 13%
AA 3%
5-10 years 78%
AAA 31%
Average Annual Returns (%) One Three Since
Year Years Inception
---- ----- ---------
McM Fixed Income Fund 9.53 10.41 8.72
Lehman Brothers Aggregate Index 9.65 10.42 9.03
<PAGE>
Fixed Income Fund
July 14, 1994 Inception Date
Fixed Income Fund Lehman Brothers Aggregate Index
----------------- -------------------------------
06/30/94 $10,000 $10,000
07/31/94 $10,070 $10,114
08/31/94 $10,097 $10,126
09/30/94 $ 9,937 $ 9,977
10/31/94 $ 9,911 $ 9,968
11/30/94 $ 9,855 $ 9,946
12/31/94 $ 9,926 $10,015
01/31/95 $10,114 $10,213
02/28/95 $10,384 $10,456
03/31/95 $10,460 $10,520
04/30/95 $10,604 $10,667
05/31/95 $11,060 $11,080
06/30/95 $11,155 $11,161
07/31/95 $11,112 $11,137
08/31/95 $11,257 $11,271
09/30/95 $11,364 $11,381
10/31/95 $11,533 $11,529
11/30/95 $11,716 $11,702
12/31/95 $11,841 $11,865
01/31/96 $11,929 $11,944
02/29/96 $11,688 $11,736
03/31/96 $11,587 $11,654
04/30/96 $11,485 $11,588
05/31/96 $11,460 $11,565
06/30/96 $11,618 $11,720
07/31/96 $11,629 $11,752
08/31/96 $11,605 $11,732
09/30/96 $11,820 $11,936
10/31/96 $12,104 $12,201
11/30/96 $12,335 $12,410
12/31/96 $12,202 $12,294
01/31/97 $12,225 $12,332
02/28/97 $12,238 $12,363
03/31/97 $12,085 $12,226
04/30/97 $12,263 $12,409
05/31/97 $12,373 $12,527
06/30/97 $12,516 $12,676
07/31/97 $12,912 $13,019
08/31/97 $12,757 $12,908
09/30/97 $12,965 $13,099
10/31/97 $13,181 $13,289
11/30/97 $13,212 $13,359
12/31/97 $13,364 $13,500
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 102 companies that represent all economic sectors. The
Fund's bond portion is 76% U.S. Government and AAA-rated securities with a
weighted average maturity of 6.6 years.
NASDAQ Symbol
MCMBX
Asset Allocation Fixed Income Quality Ten Largest Equity Holdings (%)
Cash 0.8% Government 41% Compaq 3.9
Stocks 59.9% AAA 35% Intel 3.7
Bonds BAA 2% FNMA 3.6
39.3%
A 20% General Electric 3.2
AA 2% Chase Manhattan 3.1
Philip Morris 2.5
Ten Largest Equity Holdings (%)
Merck 2.1
BankAmerica 2.0
Citicorp 2.0
Schering Plough 1.9
--------------- ---
28.0
Average Annual Returns (%) One Three Since
Year Years Inception
---- ----- ---------
McM Balanced Fund 23.65 22.75 19.68
Lehman Bros. Agg. Index 9.68 10.42 9.03
Standard & Poor's 500 33.30 31.13 27.40
<PAGE>
Balanced Fund
July 14, 1994 Inception Date
Balanced Bond Index Lehman Brothers S&P 500
------------------- --------------- -------
06/30/94 $10,000 $10,000 $10 000
07/31/94 $10,070 $10,114 $10,112
08/31/94 $10,300 $10,126 $10,524
09/30/94 $10,081 $ 9,977 $10,270
10/31/94 $10,152 $ 9,968 $10,505
11/30/94 $ 9,961 $ 9,946 $10,120
12/31/94 $10,078 $10,015 $10,267
01/31/95 $10,282 $10,213 $10,534
02/28/95 $10,608 $10,456 $10,943
03/31/95 $10,767 $10,520 $11,267
04/30/95 $11,054 $10,667 $11,597
05/31/95 $11,514 $11,080 $12,056
06/30/95 $11,731 $11,161 $12,340
07/31/95 $11,937 $11,137 $12,752
08/31/95 $12,020 $11,271 $12,786
09/30/95 $12,389 $11,381 $13,323
10/31/95 $12,410 $11,529 $13,277
11/30/95 $12,806 $11,702 $13,861
12/31/95 $12,971 $11,865 $14,124
01/31/96 $13,311 $11,944 $14,610
02/29/96 $13,311 $11,736 $14,750
03/31/96 $13,315 $11,654 $14,892
04/30/96 $13,411 $11,588 $15,111
05/31/96 $13,592 $11,565 $15,501
06/30/96 $13,709 $11,720 $15,564
07/31/96 $13,407 $11,752 $14,870
08/31/96 $13,525 $11,732 $15,185
09/30/96 $14,075 $11,936 $16,040
10/31/96 $14,509 $12,201 $16,481
11/30/96 $15,343 $12,410 $17,732
12/31/96 $15,079 $12,294 $17,390
01/31/97 $15,714 $12,332 $18,470
02/28/97 $15,736 $12,363 $18,618
03/31/97 $15,324 $12,226 $17,843
04/30/97 $15,918 $12,409 $18,908
05/31/97 $16,511 $12,527 $20,069
06/30/97 $16,951 $12,676 $20,962
07/31/97 $18,158 $13,019 $22,629
08/31/97 $17,582 $12,908 $21,373
09/30/97 $18,298 $13,099 $22,538
10/31/97 $18,063 $13,289 $21,796
11/30/97 $18,464 $13,350 $22,797
12/31/97 $18,649 $13,485 $23,180
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 101 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
Ten Largest Holdings (%) Portfolio Characteristics
Intel 3.6 Price/Earnings Ratio 24.47
FNMA 3.6 Beta 0.98
Compaq 3.6 Avg. Market Capitalization $55.3 B
General Electric 3.4 Total Number of Stocks 101
Chase Manhattan 2.9 Average Annual Returns (%)
Philip Morris 2.5 McM Equity S&P 500
---------- -------
Merck 2.2 One
Year 33.84 33.30
Citicorp 2.1
Three
BankAmerica 2.0 Years 32.10 31.13
Schering Plough 1.8 Since
---- Inception 27.71 27.40
27.7
Sector Weightings (%)
Financial Services 16.5
Technology 13.9
Health-Care 12.2
Energy 10.6
Utilities 10.1
Capital Goods 8.7
Consumer Non-Durables 8.6
Retail 6.3
Raw Materials 4.1
Consumer Services 2.1
Consumer Durables 1.9
Transportation 1.9
Shelter 1.1
Business Equip. & Services 1.3
Multi-Industry 0.7
-----
100.0
<PAGE>
Equity Investment Fund
July 14, 1994 Inception Date
Equity Investment Fund Standard & Poor's 500
---------------------- ---------------------
06/30/94 $10,000 $10,000
07/31/94 $10,040 $10,112
08/31/94 $10,440 $10,524
09/30/94 $10,160 $10,270
10/31/94 $10,320 $10,505
11/30/94 $ 9,989 $10,120
12/31/94 $10,124 $10,267
01/31/95 $10,315 $10,534
02/28/95 $10,709 $10,943
03/31/95 $10,965 $11,267
04/30/95 $11,371 $11,597
05/31/95 $11,786 $12,056
06/30/95 $12,155 $12,340
07/31/95 $12,532 $12,752
08/31/95 $12,552 $12,786
09/30/95 $13,094 $13,323
10/31/95 $13,002 $13,277
11/30/95 $13,543 $13,861
12/31/95 $13,761 $14,124
01/31/96 $14,276 $14,610
02/29/96 $14,513 $14,750
03/31/96 $14,613 $14,892
04/30/96 $14,913 $15,111
05/31/96 $15,294 $15,501
06/30/96 $15,380 $15,564
07/31/96 $14,779 $14,870
08/31/96 $15,058 $15,185
09/30/96 $15,891 $16,040
10/31/96 $16,452 $16,481
11/30/96 $17,814 $17,732
12/31/96 $17,449 $17,390
01/31/97 $18,629 $18,470
02/28/97 $18,629 $18,618
03/31/97 $17,978 $17,843
04/30/97 $18,952 $18,908
05/31/97 $20,021 $20,069
06/30/97 $20,713 $20,962
07/31/97 $22,837 $22,629
08/31/97 $21,880 $21,373
09/30/97 $23,092 $22,538
10/31/97 $22,323 $21,796
11/30/97 $23,156 $22,797
12/31/97 $23,357 $23,180
Past performance does not guarantee future results.
<PAGE>
McM Funds -- Schedule of Investments (unaudited) December 31, 1997
- --------------------------------------------------------------------------------
Principal Preservation Fund
<TABLE>
<CAPTION>
Principal
Amount Value
------------- -------------
<S> <C> <C>
U.S. Government Agency Notes - 57.54%
Federal Farm Bank Discount Notes - 5.60%
5.750%, 09/11/98 ........................................................... $2,000,000 $ 1,999,175
-----------
Federal Home Loan Bank Notes - 25.40%
5.700%, 01/02/98 ........................................................... 2,000,000 1,999,683
5.360%, 01/07/98 ........................................................... 1,500,000 1,498,660
5.390%, 01/09/98 ........................................................... 1,000,000 998,802
5.490%, 01/12/98 ........................................................... 1,000,000 998,347
5.390%, 02/02/98 ........................................................... 1,000,000 995,209
5.400%, 05/14/98 ........................................................... 1,000,000 980,050
5.800%, 09/18/98 ........................................................... 600,000 600,176
6.060%, 10/02/98 ........................................................... 1,000,000 1,002,314
-----------
9,073,241
-----------
Federal Home Loan Mortgage Corp. Discount Notes - 12.59%
5.360%, 01/02/98 ........................................................... 4,000,000 3,999,405
5.400%, 01/02/98 ........................................................... 500,000 499,925
-----------
4,499,330
-----------
Federal National Mortgage Assn. Notes - 13.95%
5.375%, 01/13/98 ........................................................... 1,500,000 1,499,850
5.600%, 03/20/98 ........................................................... 500,000 493,933
5.250%, 03/25/98 ........................................................... 1,000,000 999,158
5.360%, 06/05/98 ........................................................... 500,000 488,461
5.940%, 08/14/98 ........................................................... 1,000,000 1,001,163
6.320%, 09/17/98 ........................................................... 500,000 501,717
-----------
4,984,282
-----------
Total U.S. Government Agency Notes (Cost $20,556,028)........................ 20,556,028
-----------
REPURCHASE AGREEMENT - 9.80%
Chase Manhattan Bank, U.S. Treasury Notes, $3,550,000 par, 6.000% coupon,
due 05/31/98, dated 12/31/97 to be sold on 01/02/98 at $3,501,235 .......... 3,500,000 3,500,000
-----------
Total Repurchase Agreement (Cost $3,500,000) ................................ 3,500,000
-----------
BANKERS ACCEPTANCE -- 4.07%
Chase Manhattan Bank, 5.510%, 02/11/98 ...................................... 1,461,978 1,452,804
-----------
Total Bankers Acceptance (Cost $1,452,804) .................................. 1,452,804
-----------
CERTIFICATES OF DEPOSIT - 4.76%
Imperial Bank, 5.650%, 02/17/98 ............................................. 1,700,000 1,700,000
-----------
Total Certificates of Deposit (Cost $1,700,000) ............................. 1,700,000
-----------
COMMERCIAL PAPER - 23.44%
AIG Funding, Inc., 5.470%, 01/06/98 ......................................... 1,000,000 999,240
Dupont (EI) de Nemours & Co., 5.480%, 06/05/98 .............................. 1,000,000 976,406
Ford Motor Credit Corp., 5.510%, 03/30/98 ................................... 1,000,000 986,531
General Electric Capital Corp., 5.700%, 03/10/98 ............................ 1,455,000 1,439,334
Goldman Sachs & Co., 5.700%, 03/12/98 ....................................... 1,000,000 988,917
Household Finance Corp., 5.500%, 02/10/98 ................................... 1,000,000 993,889
IBM Credit Corp., 5.500%, 01/15/98 .......................................... 1,000,000 997,861
Merrill Lynch & Co., Inc., 5.740%, 03/05/98 ................................. 1,000,000 989,955
-----------
Total Commercial Paper (Cost $8,372,133) .................................... 8,372,133
-----------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments (unaudited) December 31, 1997
- --------------------------------------------------------------------------------
Principal Preservation Fund (continued)
<TABLE>
<CAPTION>
Value
--------------
<S> <C> <C>
TOTAL INVESTMENTS** - 99.61% (Cost $35,580,965) .......... $35,580,965
-----------
CASH AND OTHER ASSETS NET OF LIABILITIES - 0.39% ......... 141,087
-----------
NET ASSETS - 100.00% ..................................... $35,722,052
===========
</TABLE>
** At December 31, 1997, cost is identical for book and federal income tax
purposes.
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments (unaudited) December 31, 1997
- --------------------------------------------------------------------------------
Intermediate Fixed Income Fund
<TABLE>
<CAPTION>
Principal
Amount Value
------------- -------------
<S> <C> <C>
FIXED INCOME SECURITIES - 98.54%
U.S. Government Obligations - 5.70%
U.S. Treasury Notes
6.250%, 10/31/01 .................................................. $2,510,000 $ 2,553,197
11.875%, 11/15/03 ................................................. 790,000 1,028,050
7.250%, 08/15/04 .................................................. 725,000 784,102
7.875%, 11/15/04 .................................................. 1,255,000 1,403,705
11.625%, 11/15/04 ................................................. 400,000 531,224
-----------
Total U.S. Treasury Obligations (Cost $6,175,533)................... 6,300,278
-----------
U.S. Government Agency Obligations - 28.31%
Federal Farm Credit Bank - 0.57%
6.340%, 02/07/02 .................................................. 615,000 624,231
-----------
Federal Home Loan Bank - 3.39%
7.190%, 04/27/01 .................................................. 1,650,000 1,713,624
6.330%, 09/24/02 .................................................. 750,000 760,890
5.770%, 02/03/04 .................................................. 840,000 832,322
7.700%, 09/20/04 .................................................. 400,000 437,544
-----------
3,744,380
-----------
Federal Home Loan Mortgage Corp. - 1.96%
5.990%, 12/01/03 .................................................. 1,650,000 1,653,960
6.645%, 03/10/04 .................................................. 500,000 517,450
-----------
2,171,410
-----------
Federal National Mortgage Association - 13.30%
8.350%, 11/10/99 .................................................. 650,000 678,333
6.450%, 04/23/01 .................................................. 1,150,000 1,169,320
7.500%, 02/11/02 .................................................. 2,275,000 2,404,174
6.780%, 04/10/02 .................................................. 875,000 902,930
7.550%, 04/22/02 .................................................. 3,200,000 3,394,016
6.820%, 04/29/02 .................................................. 500,000 517,160
6.590%, 05/21/02 .................................................. 1,500,000 1,538,190
6.230%, 07/18/02 .................................................. 200,000 202,114
5.950%, 10/16/02 .................................................. 1,735,000 1,736,943
5.450%, 10/10/03 .................................................. 160,000 156,198
7.875%, 02/24/05 .................................................. 1,805,000 2,002,413
-----------
14,701,791
-----------
FICO Coupon Strip - 0.27%
0.000%, 04/06/02* ................................................. 375,000 292,459
-----------
Guaranteed Export Trust - 1.79%
6.280%, 06/15/04 .................................................. 420,588 423,315
6.130%, 06/15/04 .................................................. 382,353 385,423
6.550%, 06/15/04 .................................................. 1,147,057 1,174,471
-----------
1,983,209
-----------
Resolution Funding Corp. - 7.03%
0.000%, 04/15/06* ................................................. 3,060,000 1,899,189
0.000%, 07/15/08* ................................................. 2,700,000 1,460,187
0.000%, 10/15/08* ................................................. 3,900,000 2,076,438
0.000%, 04/15/10* ................................................. 4,810,000 2,329,290
-----------
7,765,104
-----------
Total U.S. Government Agency Obligations (Cost $30,304,242)......... 31,282,584
-----------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments (unaudited) December 31, 1997
- --------------------------------------------------------------------------------
Intermediate Fixed Income Fund (continued)
<TABLE>
<CAPTION>
Principal
Amount Value
------------- -------------
<S> <C> <C>
FIXED INCOME SECURITIES - (continued)
Collateralized Mortgage Obligations - 35.27%
Federal Home Loan Mortgage Corp. - 19.02%
6.000%, 12/15/06 ................................................... $1,500,000 $ 1,497,845
6.000%, 07/15/07 ................................................... 100,000 99,676
5.500%, 04/15/13 ................................................... 347,016 346,050
5.500%, 01/15/14 ................................................... 348,125 346,995
6.500%, 08/15/14 ................................................... 850,000 854,259
7.500%, 09/15/14 ................................................... 319,154 321,634
5.850%, 02/15/18 ................................................... 1,500,000 1,490,991
5.400%, 07/15/18 ................................................... 1,500,000 1,476,799
6.400%, 01/15/19 ................................................... 1,000,000 1,002,895
5.800%, 02/15/19 ................................................... 1,175,000 1,167,320
6.050%, 05/15/19 ................................................... 700,000 697,136
6.250%, 05/15/19 ................................................... 1,000,000 996,904
6.000%, 07/15/19 ................................................... 1,500,000 1,490,252
6.000%, 02/15/20 ................................................... 1,000,000 993,187
5.500%, 04/15/20 ................................................... 1,100,000 1,084,568
6.000%, 10/15/20 ................................................... 1,600,000 1,582,671
6.500%, 01/25/21 ................................................... 2,000,000 1,995,374
5.750%, 05/15/21 ................................................... 1,600,000 1,567,746
6.350%, 07/15/21 ................................................... 1,000,000 1,000,346
6.750%, 05/15/23 ................................................... 1,000,000 1,006,997
-----------
21,019,645
-----------
Federal National Mortgage Association - 16.25%
0.000%, 07/25/98* .................................................. 193,193 188,263
5.950%, 05/25/05 ................................................... 1,500,000 1,496,699
5.400%, 11/25/05 ................................................... 1,185,525 1,174,814
5.900%, 11/25/05 ................................................... 1,459,108 1,455,142
6.000%, 04/01/09 ................................................... 16,700 16,505
5.500%, 07/25/12 ................................................... 98,828 98,388
5.600%, 10/25/13 ................................................... 110,634 110,148
5.250%, 11/25/13 ................................................... 525,000 520,984
5.750%, 02/25/15 ................................................... 1,000,000 997,320
5.250%, 09/25/16 ................................................... 47,245 46,710
6.000%, 11/25/16 ................................................... 1,300,000 1,295,926
9.000%, 06/25/18 ................................................... 149,308 159,818
6.600%, 09/25/18 ................................................... 100,000 100,545
6.250%, 01/25/19 ................................................... 2,500,000 2,494,475
5.500%, 02/25/19 ................................................... 1,175,000 1,156,602
6.250%, 07/25/19 ................................................... 600,000 597,095
5.500%, 07/25/20 ................................................... 1,850,000 1,758,888
5.500%, 08/25/21 ................................................... 720,000 697,424
0.000%, 01/25/22* .................................................. 192,588 177,533
0.000%, 03/25/22* .................................................. 129,983 127,323
0.000%, 05/25/22* .................................................. 19,371 18,481
6.000%, 01/17/23 ................................................... 1,350,000 1,290,849
6.250%, 01/25/23 ................................................... 2,000,000 1,980,644
-----------
17,960,576
-----------
Total Collateralized Mortgage Obligations (Cost $38,637,086)......... 38,980,221
-----------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments (unaudited) December 31, 1997
- --------------------------------------------------------------------------------
Intermediate Fixed Income Fund (continued)
<TABLE>
<CAPTION>
Principal
Amount Value
------------- -------------
<S> <C> <C>
FIXED INCOME SECURITIES - (continued)
Asset Backed Securities - 1.85%
Capital Equipment Receivables Trust, 6.570%, 03/15/01 .......... $1,000,000 $1,008,907
CMO Trust 43 Y, 8.200%, 05/20/04 ............................... 36,181 36,919
Morgan Stanley Mortgage Trust, 8.450%, 05/01/17 ................ 2,048 2,056
Olympic Automobile Receivables Trust, 6.250%, 11/15/04 ......... 1,000,000 999,989
----------
Total Asset Backed Securities (Cost $2,028,045)................. 2,047,871
----------
Corporate Bonds - 27.41%
Automotive Parts & Equipment - 1.82%
Enron Corp., 6.450%, 11/15/01 .................................. 2,000,000 2,010,000
----------
Bank & Insurance - 1.39%
BankAmerica Corp., 6.850%, 03/01/03 ............................ 1,500,000 1,537,500
----------
Electric Utility - 0.57%
Commonwealth Edison Co., 6.000%, 03/15/98 ...................... 350,000 350,000
Long Island Lighting Co., 7.625%, 04/15/98 ..................... 275,000 276,031
----------
626,031
----------
Financial Services - 19.07%
American General Finance Corp., 8.000%, 02/15/00 ............... 225,000 234,000
American General Finance Corp., 7.250%, 04/15/00 ............... 400,000 410,000
Associates Corp. of North America, 7.250%, 09/01/99 ............ 25,000 25,469
Associates Corp. of North America, 6.375%, 07/15/02 ............ 400,000 402,500
Associates Corp. of North America, 6.375%, 10/15/02 ............ 330,000 332,063
Beneficial Corp., 8.100%, 11/09/99 ............................. 425,000 439,344
Beneficial Corp., 6.850%, 06/17/02 ............................. 325,000 333,531
Commercial Credit Co., 6.000%, 04/15/00 ........................ 225,000 224,719
Commercial Credit Co., 6.375%, 09/15/02 ........................ 700,000 707,000
Finova Capital Corp., 6.625%, 09/15/01 ......................... 875,000 883,750
Finova Capital Corp., 7.125%, 05/01/02 ......................... 1,025,000 1,057,031
Finova Capital Corp., 6.120%, 05/28/02 ......................... 425,000 423,938
Ford Motor Credit Co., 6.375%, 10/06/00 ........................ 500,000 503,750
Ford Motor Credit Co., 6.550%, 09/10/02 ........................ 1,500,000 1,520,625
General Motors Acceptance Corp., 7.000%, 04/15/98 .............. 100,000 100,333
General Motors Acceptance Corp., 6.625%, 03/22/99 .............. 800,000 806,000
General Motors Acceptance Corp., 7.125%, 06/01/99 .............. 100,000 101,375
General Motors Acceptance Corp., 8.000%, 10/01/99 .............. 200,000 206,250
General Motors Acceptance Corp., 6.700%, 04/30/01 .............. 50,000 50,750
General Motors Acceptance Corp., 7.125%, 05/01/03 .............. 300,000 311,625
Household Finance Corp., 6.760%, 01/22/98 ...................... 100,000 100,046
Household Finance Corp., 6.750%, 06/01/00 ...................... 650,000 658,937
Household Finance Corp., 6.960%, 09/04/01 ...................... 175,000 179,813
Household Finance Corp., 6.700%, 06/15/02 ...................... 500,000 511,875
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments (unaudited) December 31, 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 $ 798,000
Merrill Lynch & Co., Inc., 6.000%, 01/15/01 .............................................. 800,000 798,000
Morgan Stanley Group, Inc., 7.500%, 09/01/99 ............................................. 575,000 588,656
Salomon, Inc., 6.500%, 03/01/00 .......................................................... 2,000,000 2,015,000
Salomon, Inc., 7.200%, 02/01/04 .......................................................... 1,155,000 1,202,644
Salomon Smith Barney Holdings, Inc., 7.980%, 03/01/00 .................................... 375,000 389,531
Salomon Smith Barney Holdings, Inc., 5.875%, 02/01/01 .................................... 1,250,000 1,234,375
Sears Roebuck Acceptance Corp., 6.730%, 08/29/00 ......................................... 1,000,000 1,015,000
Sears Roebuck Acceptance Corp., 6.920%, 10/03/02 ......................................... 225,000 231,187
Transamerica Financial Group, 8.375%, 02/15/98 ........................................... 450,000 451,174
Transamerica Financial Group, 7.510%, 04/15/02 ........................................... 150,000 157,125
Transamerica Financial Group, 6.375%, 06/10/02 ........................................... 400,000 402,000
Travelers Property Casualty Corp., 6.750%, 04/15/01 ...................................... 700,000 712,250
Travelers, Inc., 9.500%, 03/01/02 ........................................................ 500,000 561,250
------------
21,080,916
------------
Industrial - 4.56%
Philip Morris Cos., Inc., 6.200%, 02/09/98 ............................................... 200,000 200,008
Philip Morris Cos., Inc., 7.500%, 01/15/02 ............................................... 1,150,000 1,191,688
Philip Morris Cos., Inc., 7.250%, 01/15/03 ............................................... 800,000 832,000
Philip Morris Cos., Inc., 6.800%, 12/01/03 ............................................... 445,000 451,675
Raytheon Co., 6.450%, 08/15/02 ........................................................... 2,000,000 2,017,500
Sears Roebuck & Co., 9.250%, 04/15/98 .................................................... 25,000 25,209
WMX Technologies, Inc., 8.125%, 02/01/98 ................................................. 325,000 325,442
------------
5,043,522
------------
Total Corporate Bonds (Cost $29,908,195).................................................. 30,297,969
------------
TOTAL FIXED INCOME SECURITIES - 98.54% (Cost $107,053,101)(1)............................. 108,908,923
------------
CASH AND OTHER ASSETS NET OF LIABILITIES - 1.46% ......................................... 1,617,771
------------
NET ASSETS - 100.00% ..................................................................... $110,526,694
============
(1) Aggregate cost for federal income tax purposes is $107,053,101 and net unrealized
appreciation is as follows:
Gross unrealized appreciation ........................................................ $1,907,768
Gross unrealized depreciation ........................................................ (51,946)
----------
Net unrealized appreciation ........................................................... $1,855,822
==========
</TABLE>
* Zero coupon bond.
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments (unaudited) December 31, 1997
- --------------------------------------------------------------------------------
Fixed Income Fund
<TABLE>
<CAPTION>
Principal
Amount Value
------------- -------------
<S> <C> <C>
FIXED INCOME SECURITIES - 98.45%
U.S. Government Obligations - 29.00%
U.S. Treasury Notes
11.875%, 11/15/03 ................................................. $1,350,000 $1,756,796
11.625%, 11/15/04 ................................................. 840,000 1,115,570
6.500%, 05/15/05 .................................................. 325,000 338,852
7.500%, 11/15/16 .................................................. 532,000 621,349
8.875%, 08/15/17 .................................................. 130,000 172,562
----------
Total U.S. Treasury Obligations (Cost $3,873,352) .................. 4,005,129
----------
U.S. Government Agency Obligations - 9.47%
Federal Home Loan Bank - 4.64%
7.780%, 10/19/01 .................................................. 250,000 265,747
5.770%, 02/03/04 .................................................. 160,000 158,538
7.520%, 05/24/04 .................................................. 200,000 216,150
----------
640,435
----------
Federal Home Loan Mortgage Corp. - 2.39%
7.125%, 11/18/02 .................................................. 315,000 330,712
----------
Guaranteed Export Trust - 0.33%
6.130%, 06/15/04 .................................................. 45,882 46,251
----------
Resolution Funding Corp. - 2.11%
0.000%, 10/15/11* ................................................. 260,000 114,317
0.000%, 04/15/16* ................................................. 310,000 100,601
0.000%, 04/15/17* ................................................. 250,000 76,145
----------
291,063
----------
Total U.S. Government Agency Obligations (Cost $1,237,079) ......... 1,308,461
----------
Collateralized Mortgage Obligations - 30.69%
Federal Home Loan Mortgage Corp. - 18.37%
6.250%, 11/15/18 .................................................. 175,000 174,909
6.250%, 05/15/19 .................................................. 250,000 250,852
6.400%, 05/15/19 .................................................. 150,000 150,242
6.500%, 10/15/19 .................................................. 200,000 200,639
5.950%, 11/15/19 .................................................. 200,000 198,769
6.500%, 06/25/20 .................................................. 100,000 100,901
6.350%, 07/15/21 .................................................. 150,000 150,052
6.500%, 08/15/21 .................................................. 75,000 75,449
5.950%, 02/15/22 .................................................. 500,000 487,795
6.000%, 02/15/22 .................................................. 200,000 197,488
6.650%, 07/15/22 .................................................. 150,000 151,842
6.000%, 02/15/23 .................................................. 200,000 196,414
6.750%, 05/15/23 .................................................. 200,000 201,399
----------
2,536,751
----------
Federal National Mortgage Association - 12.32%
7.500%, 07/25/18 .................................................. 18,776 19,095
6.000%, 09/25/18 .................................................. 40,000 39,675
6.500%, 03/25/19 .................................................. 150,000 150,430
6.500%, 04/25/19 .................................................. 150,000 150,799
3.500%, 05/25/19 .................................................. 125,000 113,599
6.500%, 09/25/19 .................................................. 150,000 148,350
6.250%, 01/25/20 .................................................. 220,000 218,933
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments (unaudited) December 31, 1997
- --------------------------------------------------------------------------------
Fixed Income Fund (continued)
<TABLE>
<CAPTION>
Principal
Amount Value
---------- ------------
<S> <C> <C>
FIXED INCOME SECURITIES - (continued)
Collateralized Mortgage Obligations - (continued)
6.850%, 10/25/20 ................................................... $ 40,000 $ 40,131
6.750%, 11/25/20 ................................................... 200,000 201,381
6.750%, 05/25/21 ................................................... 200,000 202,679
6.500%, 10/25/21 ................................................... 200,000 200,478
0.000%, 03/25/22* .................................................. 12,998 12,732
7.000%, 06/25/23 ................................................... 200,000 203,519
----------
1,701,801
----------
Total Collateralized Mortgage Obligations (Cost $4,137,212) ......... 4,238,552
----------
Asset Backed Securities - 0.06%
CMO Trust 39 Y, 8.650%, 03/01/03 .................................... 8,088 8,311
----------
Total Asset Backed Securities (Cost $8,125) ......................... 8,311
----------
Corporate Bonds - 29.23%
Automotive Parts & Equipment - 0.73%
Enron Corp., 6.625%, 11/15/05 ....................................... 100,000 101,125
----------
Bank & Insurance - 6.38%
BankAmerica Corp., 6.850%, 03/01/03 ................................. 250,000 256,250
BankAmerica Corp., 6.625%, 08/01/07 ................................. 100,000 100,750
BankAmerica Corp., 6.625%, 10/15/07 ................................. 150,000 151,125
KeyCorp, 6.750%, 03/15/06 ........................................... 80,000 81,500
NationsBank Corp., 7.500%, 09/15/06 ................................. 175,000 187,031
Wells Fargo & Co., 7.125%, 08/15/06 ................................. 100,000 104,250
----------
880,906
----------
Electrical Utility - 0.18%
Long Island Lighting Co., 7.625%, 04/15/98 .......................... 25,000 25,094
----------
Financial Services - 18.07%
Associates Corp. of North America, 6.375%, 10/15/02 ................. 120,000 120,750
Beneficial Corp., 9.470%, 03/09/01 .................................. 20,000 21,875
Beneficial Corp., 6.750%, 07/20/04 .................................. 100,000 102,625
Beneficial Corp., 6.940%, 12/15/06 .................................. 100,000 103,375
Commercial Credit Co., 6.375%, 09/15/02 ............................. 100,000 101,000
Commercial Credit Co., 6.625%, 11/15/06 ............................. 225,000 228,375
Finova Captial Corp., 6.625%, 09/15/01 .............................. 100,000 101,000
Finova Capital Corp., 6.900%, 06/19/04 .............................. 100,000 102,875
Ford Motor Credit Co., 6.550%, 09/10/02 ............................. 100,000 101,375
Ford Motor Credit Co., 7.200%, 06/15/07 ............................. 150,000 159,000
General Motors Acceptance Corp., 6.500%, 12/05/05 ................... 50,000 50,063
Household Finance Corp., 6.760%, 01/22/98 ........................... 50,000 50,023
Household Finance Corp., 6.700%, 06/15/02 ........................... 75,000 76,781
Household Finance Corp., 7.650%, 05/15/07 ........................... 100,000 107,625
Lehman Brothers, Inc., 7.625%, 06/01/06 ............................. 80,000 85,500
Merrill Lynch & Co., Inc., 6.560%, 12/16/07 ......................... 150,000 150,937
Morgan Stanley Group, Inc., 7.500%, 09/01/99 ........................ 75,000 76,781
Morgan Stanley Group, Inc., 6.875%, 03/01/07 ........................ 50,000 51,375
Salomon, Inc., 7.200%, 02/01/04 ..................................... 100,000 104,125
Salomon Smith Barney Holdings, Inc., 7.000%, 03/15/04 ............... 150,000 155,063
Salomon Smith Barney Holdings, Inc., 7.375%, 05/15/07 ............... 100,000 106,125
Sears Roebuck Acceptance Corp., 6.125%, 01/15/06 .................... 100,000 98,625
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments (unaudited) December 31, 1997
- --------------------------------------------------------------------------------
Fixed Income Fund (continued)
<TABLE>
<CAPTION>
Principal
Amount Value
------------ --------------
<S> <C> <C>
FIXED INCOME SECURITIES - (continued)
Corporate Bonds - (continued)
Transamerica Financial Group, 7.500%, 09/14/01 ........................................... $ 75,000 $ 78,050
Transamerica Financial Group, 7.510%, 04/15/02 ........................................... 75,000 78,562
Travelers, Inc., 9.500%, 03/01/02 ........................................................ 75,000 84,188
-----------
2,496,073
-----------
Industrial - 3.87%
International Business Machines Corp., 6.375%, 06/15/00 .................................. 75,000 75,656
Philip Morris Cos., Inc., 7.500%, 01/15/02 ............................................... 175,000 181,344
Philip Morris Cos., Inc., 6.800%, 12/01/03 ............................................... 50,000 50,750
Sears Roebuck & Co., 6.250%, 01/15/04 .................................................... 50,000 49,937
TCI Communications, Inc., 6.875%, 02/15/06 ............................................... 100,000 100,875
WMX Technologies, Inc., 8.125%, 02/01/98 ................................................. 75,000 75,102
-----------
533,664
-----------
Total Corporate Bonds (Cost $3,936,617)................................................... 4,036,862
-----------
TOTAL FIXED INCOME SECURITIES - 98.45% (Cost $13,192,385)(1).............................. 13,597,315
-----------
CASH AND OTHER ASSETS NET OF LIABILITIES - 1.55% ......................................... 214,244
-----------
NET ASSETS - 100.00% ..................................................................... $13,811,559
===========
(1) Aggregate cost for federal income tax purposes is $13,192,385 and net unrealized
appreciation is as follows:
Gross unrealized appreciation ........................................................ $408,555
Gross unrealized depreciation ........................................................ (3,625)
--------
Net unrealized appreciation ............................................................ $404,930
========
</TABLE>
* Zero coupon bond.
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments (unaudited) December 31, 1997
- --------------------------------------------------------------------------------
Balanced Fund
Shares Value
-------- ------------
COMMON STOCKS - 59.76%
Business Equipment & Services - 0.72%
Automatic Data Processing, Inc. ......... 5,100 $ 313,013
Cognizant Corp. ......................... 3,450 153,741
----------
466,754
----------
Capital Goods - 5.10%
Cooper Industries, Inc. ................. 3,200 156,800
Emerson Electric Co. .................... 6,500 366,844
General Electric Co. .................... 17,000 1,247,375
Honeywell, Inc. ......................... 6,000 411,000
Illinois Tool Works, Inc. ............... 1,800 108,225
Ingersoll Rand Co. ...................... 3,750 151,875
PPG Industries, Inc. .................... 6,800 388,450
Tyco International, Ltd. ................ 10,300 464,144
----------
3,294,713
----------
Consumer Durables - 1.22%
Ford Motor Co. .......................... 8,600 418,712
General Motors Corp. .................... 6,100 369,813
----------
788,525
----------
Consumer Non-Durables - 5.24%
Anheuser Busch Cos., Inc. ............... 4,500 198,000
CPC International, Inc. ................. 3,700 398,675
Eastman Kodak Co. ....................... 4,500 273,656
General Mills, Inc. ..................... 2,650 189,806
PepsiCo, Inc. ........................... 16,300 593,931
Philip Morris Cos., Inc. ................ 21,600 978,750
Procter & Gamble Co. .................... 4,500 359,156
Sara Lee Corp. .......................... 6,900 388,556
----------
3,380,530
----------
Consumer Services - 1.34%
Disney (Walt) Co. ....................... 3,300 326,906
Hilton Hotels Corp. ..................... 3,900 116,025
Knight-Ridder, Inc. ..................... 3,400 176,800
Time Warner, Inc. ....................... 3,950 244,900
----------
864,631
----------
Energy - 6.69%
Amerada Hess Corp. ...................... 2,300 126,212
Amoco Corp. ............................. 5,150 438,394
Atlantic Richfield Co. .................. 1,100 88,138
Baker Hughes, Inc. ...................... 6,100 266,112
British Petroleum Co. PLC ............... 4,800 382,500
Burlington Resources, Inc. .............. 2,150 96,347
Chevron Corp. ........................... 5,300 408,100
Exxon Corp. ............................. 11,000 673,062
Mobil Corp. ............................. 5,900 425,906
Royal Dutch Petroleum Co. ADR ........... 7,500 406,406
Schlumberger, Ltd. ...................... 3,900 313,950
Texaco, Inc. ............................ 8,300 451,313
Unocal Corp. ............................ 3,800 147,488
Valero Energy Corp. ..................... 3,100 97,456
----------
4,321,384
----------
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments (unaudited) December 31, 1997
- --------------------------------------------------------------------------------
Balanced Fund (continued)
Shares Value
-------- ------------
COMMON STOCKS - (continued)
Financial Services - 9.86%
American International Group, Inc. ............ 3,837 $ 417,274
BankAmerica Corp. ............................. 10,700 781,100
Bankers Trust Corp. ........................... 3,200 359,800
Chase Manhattan Corp. ......................... 10,832 1,186,104
Chubb Corp. ................................... 5,300 400,813
Citicorp ...................................... 6,100 771,269
Federal National Mortgage Association ......... 24,600 1,403,737
General Re Corp. .............................. 1,900 402,800
Morgan (JP) & Co., Inc. ....................... 2,400 270,900
U.S. Bancorp .................................. 3,350 374,991
----------
6,368,788
----------
Health Care - 7.36%
Alza Corp. Cl. A* ............................. 4,600 146,338
Bausch & Lomb, Inc. ........................... 450 17,831
Baxter International, Inc. .................... 7,800 393,412
Bristol-Myers Squibb Co. ...................... 6,700 633,988
Columbia/HCA Healthcare Corp. ................. 6,325 187,378
Crescendo Pharmaceuticals Corp.* .............. 180 2,081
Johnson & Johnson ............................. 6,700 441,363
Lilly (Eli) & Co. ............................. 7,900 550,037
Merck & Co., Inc. ............................. 7,600 807,500
Schering Plough Corp. ......................... 11,700 726,863
St. Jude Medical, Inc.* ....................... 4,600 140,300
United Healthcare Corp. ....................... 4,450 221,109
Warner-Lambert Co. ............................ 3,900 483,600
----------
4,751,800
----------
Multi-Industry - 0.43%
Minnesota Mining & Mfg. Co. ................... 3,400 279,012
----------
Raw Materials - 2.22%
Aluminum Co. of America ....................... 3,650 256,869
Dow Chemical Co. .............................. 3,300 334,950
Dupont (EI) De Nemours & Co. .................. 7,100 426,444
Monsanto Co. .................................. 9,200 386,400
Solutia, Inc. ................................. 1,200 32,025
----------
1,436,688
----------
Retail - 3.39%
Albertson's, Inc. ............................. 9,550 452,431
Costco Cos., Inc* ............................. 4,500 200,813
Dillard Dept. Stores, Inc. Cl. A .............. 3,450 121,612
Limited, Inc. ................................. 5,026 128,163
May Department Stores Co. ..................... 5,950 313,491
Penney (JC), Inc. ............................. 4,400 265,375
Tricon Global Restaurants, Inc.* .............. 1,330 38,653
Wal-Mart Stores, Inc. ......................... 9,800 386,488
Walgreen Co. .................................. 9,000 282,375
----------
2,189,401
----------
Shelter - 0.81%
Georgia-Pacific Corp. ......................... 3,600 218,700
Georgia-Pacific Corp. Timber Group* ........... 3,600 81,675
Kimberly-Clark Corp. .......................... 4,500 221,906
----------
522,281
----------
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments (unaudited) December 31, 1997
- --------------------------------------------------------------------------------
Balanced Fund (continued)
Shares Value
-------- -------------
COMMON STOCKS - (continued)
Technology - 8.78%
AMP, Inc. ...................................... 9,850 $ 413,700
Boeing Co. ..................................... 4,200 205,538
Compaq Computer Corp. .......................... 26,517 1,496,553
Hewlett-Packard Co. ............................ 8,800 550,000
Imation Corp.* ................................. 1 16
Intel Corp. .................................... 20,400 1,433,100
International Business Machines Corp. .......... 4,800 501,900
Lucent Technologies, Inc. ...................... 4,782 381,962
Motorola, Inc. ................................. 8,950 510,709
Raytheon Co. Cl. A ............................. 357 17,610
Seagate Technology, Inc.* ...................... 8,100 155,925
-----------
5,667,013
-----------
Transportation - 0.89%
AMR Corp.* ..................................... 3,000 385,500
CSX Corp. ...................................... 3,500 189,000
-----------
574,500
-----------
Utilities - 5.71%
Airtouch Communications, Inc.* ................. 10,200 423,937
AT & T Corp. ................................... 7,250 444,062
Edison International ........................... 11,000 299,063
El Paso Natural Gas Co. ........................ 2,300 152,950
GTE Corp. ...................................... 12,300 642,675
MCI Communications Corp. ....................... 6,700 286,844
PECO Energy Co. ................................ 9,500 230,375
PG&E Corp. ..................................... 8,363 254,549
SBC Communications, Inc. ....................... 9,917 726,420
Unicom Corp. ................................... 7,400 227,550
-----------
3,688,425
-----------
TOTAL COMMON STOCKS (Cost $29,558,987) ......... 38,594,445
-----------
<TABLE>
<CAPTION>
Principal
Amount Value
------------ ------------
<S> <C> <C>
FIXED INCOME SECURITIES - 38.85%
U.S. Government Obligations - 7.47%
U.S. Treasury Notes
6.375%, 08/15/02 ......................................... $ 225,000 230,890
6.250%, 02/15/03 ......................................... 1,165,000 1,191,970
7.875%, 11/15/04 ......................................... 500,000 559,245
11.625%, 11/15/04 ........................................ 1,835,000 2,436,990
10.750%, 08/15/05 ........................................ 310,000 403,388
---------
Total U.S. Treasury Obligations (Cost $4,719,316) ......... 4,822,483
---------
U.S. GOVERNMENT AGENCIES - 8.50%
Federal Farm Credit Bank - 1.27%
6.350%, 10/30/03 ......................................... 500,000 509,430
6.600%, 02/06/04 ......................................... 300,000 309,345
---------
818,775
---------
Federal Home Loan Bank - 2.17%
7.520%, 05/24/04 ......................................... 300,000 324,225
6.905%, 06/03/04 ......................................... 350,000 366,646
7.360%, 07/01/04 ......................................... 665,000 713,804
---------
1,404,675
---------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments (unaudited) December 31, 1997
- --------------------------------------------------------------------------------
Balanced Fund (continued)
<TABLE>
<CAPTION>
Principal
Amount Value
------------ ------------
<S> <C> <C>
FIXED INCOME SECURITIES - (continued)
Federal Home Loan Mortgage Corp. - 1.92%
5.990%, 12/01/03 .................................................. $ 150,000 $ 150,360
6.645%, 03/10/04 .................................................. 780,000 807,222
6.400%, 12/13/06 .................................................. 275,000 282,133
----------
1,239,715
----------
Federal National Mortgage Association - 2.15%
5.730%, 01/06/03 .................................................. 200,000 198,882
5.450%, 10/10/03 .................................................. 1,060,000 1,034,814
7.400%, 07/01/04 .................................................. 50,000 53,776
7.875%, 02/24/05 .................................................. 90,000 99,843
----------
1,387,315
----------
Resolution Funding Corp. - 0.44%
0.000%, 07/15/12** ................................................ 510,000 212,925
0.000%, 04/15/14** ................................................ 150,000 55,578
0.000%, 10/15/15** ................................................ 45,000 15,086
----------
283,589
----------
Student Loan Marketing Association - 0.55%
6.350%, 03/17/03 .................................................. 350,000 355,996
----------
Total U.S. Government Agency Obligations (Cost $5,361,603) ......... 5,490,065
----------
Collateralized Mortgage Obligations - 13.59%
Federal Home Loan Mortgage Corp. - 7.68%
5.500%, 04/15/13 .................................................. 21,689 21,628
6.300%, 10/15/18 .................................................. 100,000 99,499
6.250%, 05/15/19 .................................................. 100,000 99,690
6.500%, 10/15/19 .................................................. 200,000 200,639
5.950%, 11/15/19 .................................................. 100,000 99,384
7.000%, 02/15/21 .................................................. 100,000 102,632
5.750%, 04/15/21 .................................................. 50,000 49,009
6.500%, 08/15/21 .................................................. 240,000 241,435
6.500%, 09/15/21 .................................................. 550,000 555,511
5.950%, 11/15/21 .................................................. 300,000 292,492
6.500%, 11/15/21 .................................................. 600,000 604,232
5.950%, 02/15/22 .................................................. 700,000 682,914
6.000%, 02/15/22 .................................................. 100,000 98,744
6.000%, 05/15/22 .................................................. 400,000 388,180
6.650%, 07/15/22 .................................................. 100,000 101,228
6.250%, 11/15/22 .................................................. 150,000 149,948
6.500%, 11/15/22 .................................................. 100,000 99,390
7.000%, 01/15/23 .................................................. 200,000 205,630
6.000%, 02/15/23 .................................................. 193,000 189,540
6.500%, 02/15/23 .................................................. 400,000 402,448
6.750%, 05/15/23 .................................................. 150,000 151,050
7.000%, 06/25/23 .................................................. 125,000 127,199
----------
4,962,422
----------
Federal National Mortgage Association - 5.91%
5.500%, 07/25/12 .................................................. 13,177 13,118
6.000%, 11/25/16 .................................................. 50,000 49,843
6.000%, 09/25/18 .................................................. 50,000 49,594
6.250%, 01/25/20 .................................................. 100,000 99,515
6.850%, 10/25/20 .................................................. 50,000 50,163
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments (unaudited) December 31, 1997
- --------------------------------------------------------------------------------
Balanced Fund (continued)
<TABLE>
<CAPTION>
Principal
Amount Value
---------- ------------
<S> <C> <C>
FIXED INCOME SECURITIES - (continued)
Collateralized Mortgage Obligations - (continued)
6.750%, 11/25/20 ................................................... $100,000 $ 101,276
6.750%, 05/25/21 ................................................... 100,000 101,339
6.500%, 10/25/21 ................................................... 600,000 601,434
6.500%, 11/25/21 ................................................... 100,000 100,239
6.000%, 02/25/22 ................................................... 500,000 488,339
6.500%, 04/25/22 ................................................... 750,000 748,289
6.500%, 07/18/22 ................................................... 500,000 502,857
6.000%, 07/25/22 ................................................... 50,000 48,802
6.500%, 07/25/22 ................................................... 350,000 350,836
6.800%, 09/25/22 ................................................... 300,000 305,346
6.500%, 11/25/22 ................................................... 200,000 202,494
----------
3,813,484
----------
Total Collateralized Mortgage Obligations (Cost $8,558,468) ......... 8,775,906
----------
Corporate Bonds - 9.29%
Automotive Parts & Equipment - 0.16%
Enron Corp., 6.625%, 11/15/05 ....................................... 100,000 101,125
----------
Bank & Insurance - 1.40%
BankAmerica Corp., 6.625%, 10/15/07 ................................. 250,000 251,875
Chase Manhattan Corp., 7.125%, 02/01/07 ............................. 200,000 208,000
KeyCorp, 6.750%, 03/15/06 ........................................... 45,000 45,844
NationsBank Corp., 7.500%, 09/15/06 ................................. 275,000 293,906
Wells Fargo & Co., 7.125%, 08/15/06 ................................. 100,000 104,250
----------
903,875
----------
Electrical Utility - 0.04%
Long Island Lighting Co., 7.625%, 04/15/98 .......................... 25,000 25,094
----------
Financial Services - 7.13%
American General Finance Corp., 7.450%, 07/01/02 .................... 175,000 183,313
Associates Corp. of North America, 6.375%, 10/15/02 ................. 50,000 50,312
Associates Corp. of North America, 7.625%, 04/27/05 ................. 125,000 134,219
Beneficial Corp., 10.100%, 11/27/00 ................................. 150,000 165,563
Beneficial Corp., 9.470%, 03/09/01 .................................. 30,000 32,812
Beneficial Corp., 6.750%, 07/20/04 .................................. 25,000 25,656
Beneficial Corp., 6.960%, 02/13/06 .................................. 150,000 154,688
Beneficial Corp., 6.940%, 12/15/06 .................................. 100,000 103,375
Commercial Credit Co., 6.000%, 04/15/00 ............................. 25,000 24,969
Commercial Credit Co., 6.375%, 09/15/02 ............................. 50,000 50,500
Commercial Credit Co., 6.625%, 11/15/06 ............................. 275,000 279,125
Finova Capital Corp., 6.625%, 09/15/01 .............................. 50,000 50,500
Finova Capital Corp., 6.120%, 05/28/02 .............................. 200,000 199,500
Finova Capital Corp., 6.900%, 06/19/04 .............................. 125,000 128,594
Ford Motor Credit Co., 6.550%, 09/10/02 ............................. 300,000 304,125
Ford Motor Credit Co., 6.550%, 07/07/03 ............................. 125,000 126,875
Ford Motor Credit Co., 7.200%, 06/15/07 ............................. 125,000 132,500
General Motors Acceptance Corp., 6.600%, 11/22/04 ................... 175,000 176,531
Household Finance Corp., 6.700%, 06/15/02 ........................... 50,000 51,187
Household Finance Corp., 7.250%, 07/15/03 ........................... 125,000 130,313
Household Finance Corp., 7.650%, 05/15/07 ........................... 200,000 215,250
Lehman Brothers, Inc., 6.125%, 02/01/01 ............................. 25,000 24,938
Lehman Brothers, Inc., 7.625%, 06/01/06 ............................. 40,000 42,750
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments (unaudited) December 31, 1997
- --------------------------------------------------------------------------------
Balanced Fund (continued)
<TABLE>
<CAPTION>
Balanced Fund (continued)
<S> <C> <C>
Principal
Amount Value
FIXED INCOME SECURITIES - (continued)
Corporate Bonds - (continued)
Merrill Lynch & Co., Inc., 6.000%, 01/15/01 .............................................. $ 25,000 $ 24,938
Merrill Lynch & Co., Inc., 6.560%, 12/16/07 .............................................. 250,000 251,562
Morgan Stanley Group, Inc., 7.500%, 09/01/99 ............................................. 25,000 25,594
Morgan Stanley Group, Inc., 6.875%, 03/01/07 ............................................. 100,000 102,750
Salomon, Inc., 7.200%, 02/01/04 .......................................................... 100,000 104,125
Salomon Smith Barney Holdings, Inc., 7.980%, 03/01/00 .................................... 50,000 51,937
Salomon Smith Barney Holdings, Inc., 5.875%, 02/01/01 .................................... 25,000 24,687
Salomon Smith Barney Holdings, Inc., 6.500%, 10/15/02 .................................... 125,000 126,562
Salomon Smith Barney Holdings, Inc., 7.000%, 03/15/04 .................................... 275,000 284,281
Sears Roebuck Acceptance Corp., 6.900%, 08/01/03 ......................................... 125,000 128,750
Sears Roebuck Acceptance Corp., 6.125%, 01/15/06 ......................................... 50,000 49,312
Transamerica Corp., 6.750%, 11/15/06 ..................................................... 200,000 204,000
Transamerica Financial Group, 8.375%, 02/15/98 ........................................... 25,000 25,065
Transamerica Financial Group, 7.510%, 04/15/02 ........................................... 30,000 31,425
Travelers, Inc., 9.500%, 03/01/02 ........................................................ 25,000 28,062
Travelers, Inc., 6.625%, 09/15/05 ........................................................ 150,000 152,813
Travelers Property Casualty Corp., 6.750%, 11/15/06 ...................................... 200,000 204,000
-----------
4,607,458
-----------
Industrial - 0.56%
Northwest Pipeline Corp., 6.625%, 12/01/07 ............................................... 100,000 100,625
Philip Morris Cos., Inc., 7.500%, 01/15/02 ............................................... 50,000 51,813
Philip Morris Cos., Inc., 8.250%, 10/15/03 ............................................... 75,000 81,188
Philip Morris Cos., Inc., 6.800%, 12/01/03 ............................................... 30,000 30,450
Philip Morris Cos., Inc., 6.375%, 02/01/06 ............................................... 25,000 24,719
TCI Communications, Inc., 6.875%, 02/15/06 ............................................... 75,000 75,656
-----------
364,451
-----------
Total Corporate Bonds (Cost $5,823,635) .................................................. 6,002,003
-----------
TOTAL FIXED INCOME SECURITIES (Cost $24,463,022) ......................................... 25,090,457
-----------
TOTAL INVESTMENTS - 98.61% (Cost $54,022,009)(1).......................................... 63,684,902
-----------
CASH AND OTHER ASSETS NET OF LIABILITIES - 1.39% ......................................... 897,458
-----------
NET ASSETS - 100.00% ..................................................................... $64,582,360
===========
(1) Aggregate cost for federal income tax purposes is $54,022,009 and net unrealized
appreciation is as follows:
Gross unrealized appreciation ........................................................ $ 9,874,031
Gross unrealized depreciation ........................................................ (211,138)
-----------
Net unrealized appreciation ........................................................... $ 9,662,893
===========
* Non-dividend paying stock.
** Zero coupon bond.
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments (unaudited) December 31, 1997
- --------------------------------------------------------------------------------
Equity Investment Fund
Shares Value
-------- ------------
COMMON STOCKS - 98.92%
Business Equipment & Service - 1.29%
Automatic Data Processing, Inc. ......... 12,700 $ 779,462
Cognizant Corp. ......................... 9,000 401,063
----------
1,180,525
----------
Capital Goods - 8.63%
Cooper Industries, Inc. ................. 9,000 441,000
Emerson Electric Co. .................... 17,000 959,437
General Electric Co. .................... 42,000 3,081,750
Honeywell, Inc. ......................... 14,760 1,011,060
Illinois Tool Works, Inc. ............... 1,000 60,125
Ingersoll Rand Co. ...................... 5,250 212,625
PPG Industries, Inc. .................... 15,800 902,575
Tyco International, Ltd. ................ 26,660 1,201,366
----------
7,869,938
----------
Consumer Durables - 1.92%
Ford Motor Co. .......................... 20,000 973,750
General Motors Corp. .................... 12,800 776,000
----------
1,749,750
----------
Consumer Non-Durables - 8.50%
Anheuser Busch Cos., Inc. ............... 11,200 492,800
CPC International, Inc. ................. 9,300 1,002,075
Eastman Kodak Co. ....................... 11,650 708,466
General Mills, Inc. ..................... 3,800 272,175
PepsiCo, Inc. ........................... 36,500 1,329,969
Philip Morris Cos., Inc. ................ 50,475 2,287,148
Procter & Gamble Co. .................... 9,200 734,275
Sara Lee Corp. .......................... 16,500 929,156
----------
7,756,064
----------
Consumer Services - 2.06%
Disney (Walt) Co. ....................... 6,000 594,375
Hilton Hotels Corp. ..................... 10,000 297,500
Knight-Ridder, Inc. ..................... 8,200 426,400
Time Warner, Inc. ....................... 9,000 558,000
----------
1,876,275
----------
Energy - 10.51%
Amerada Hess Corp. ...................... 3,200 175,600
Amoco Corp. ............................. 12,900 1,098,112
Atlantic Richfield Co. .................. 400 32,050
Baker Hughes, Inc. ...................... 15,000 654,375
British Petroleum Co. PLC ............... 10,002 797,034
Burlington Resources, Inc. .............. 5,000 224,063
Chevron Corp. ........................... 13,420 1,033,340
Exxon Corp. ............................. 21,400 1,309,413
Mobil Corp. ............................. 15,000 1,082,812
Royal Dutch Petroleum Co. ADR ........... 14,800 801,975
Schlumberger, Ltd. ...................... 7,700 619,850
Texaco, Inc. ............................ 23,000 1,250,625
Unocal Corp. ............................ 8,200 318,263
Valero Energy Corp. ..................... 6,000 188,625
----------
9,586,137
----------
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments (unaudited) December 31, 1997
- --------------------------------------------------------------------------------
Equity Investment Fund (continued)
Shares Value
-------- -------------
COMMON STOCKS - (continued)
Financial Services - 16.31%
American International Group, Inc. ............ 9,350 $ 1,016,813
BankAmerica Corp. ............................. 25,024 1,826,752
Bankers Trust Corp. ........................... 6,100 685,869
Chase Manhattan Corp. ......................... 24,027 2,630,956
Chubb Corp. ................................... 12,680 958,925
Citicorp ...................................... 14,700 1,858,631
Federal National Mortgage Association ......... 57,000 3,252,562
General Re Corp. .............................. 4,400 932,800
Morgan (JP) & Co., Inc. ....................... 6,450 728,044
U.S. Bancorp .................................. 8,800 985,050
-----------
14,876,402
-----------
Health Care - 12.12%
Alza Corp. Cl. A* ............................. 11,500 365,844
Bausch & Lomb, Inc. ........................... 400 15,850
Baxter International, Inc. .................... 20,100 1,013,794
Bristol-Myers Squibb Co. ...................... 16,000 1,514,000
Columbia/HCA Healthcare Corp. ................. 12,550 371,794
Crescendo Pharmaceuticals Corp.* .............. 465 5,377
Johnson & Johnson ............................. 17,000 1,119,875
Lilly (Eli) & Co. ............................. 16,420 1,143,243
Merck & Co., Inc. ............................. 18,660 1,982,625
Schering Plough Corp. ......................... 25,900 1,609,037
St. Jude Medical, Inc.* ....................... 9,500 289,750
United Healthcare Corp. ....................... 11,500 571,406
Warner-Lambert Co. ............................ 8,500 1,054,000
-----------
11,056,595
-----------
Multi-Industry - 0.73%
Minnesota Mining & Mfg. Co. ................... 8,130 667,168
-----------
Raw Materials - 4.04%
Aluminum Co. of America ....................... 11,040 776,940
Dow Chemical Co. .............................. 6,470 656,705
Dupont (EI) De Nemours & Co. .................. 21,500 1,291,344
Monsanto Co. .................................. 20,700 869,400
Solutia, Inc. ................................. 3,480 92,873
-----------
3,687,262
-----------
Retail - 6.19%
Albertson's, Inc. ............................. 24,000 1,137,000
Costco Cos., Inc.* ............................ 12,000 535,500
Dillard Dept. Stores, Inc. Cl. A .............. 8,000 282,000
Limited, Inc. ................................. 13,032 332,316
May Department Stores Co. ..................... 17,000 895,687
Penney (JC), Inc. ............................. 15,150 913,734
Tricon Global Restaurants, Inc.* .............. 2,850 82,828
Wal-Mart Stores, Inc. ......................... 23,550 928,753
Walgreen Co. .................................. 17,300 542,788
-----------
5,650,606
-----------
Shelter - 1.10%
Georgia-Pacific Corp. ......................... 8,000 486,000
Georgia-Pacific Corp. Timber Group* ........... 8,000 181,500
Kimberly-Clark Corp. .......................... 6,820 336,311
-----------
1,003,811
-----------
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments (unaudited) December 31, 1997
- --------------------------------------------------------------------------------
Equity Investment Fund (continued)
<TABLE>
<CAPTION>
Shares Value
-------------- -------------
<S> <C> <C>
COMMON STOCKS - (continued)
Technology - 13.68%
AMP, Inc. ................................................................................ 18,800 $ 789,600
Boeing Co. ............................................................................... 7,000 342,562
Compaq Computer Corp. .................................................................... 57,012 3,217,615
Hewlett-Packard Co. ...................................................................... 21,000 1,312,500
Intel Corp. .............................................................................. 46,000 3,231,500
International Business Machines Corp. .................................................... 13,200 1,380,225
Lucent Technologies, Inc. ................................................................ 9,253 739,083
Motorola, Inc. ........................................................................... 18,800 1,072,775
Raytheon Co. Cl. A ....................................................................... 816 40,252
Seagate Technology, Inc.* ................................................................ 18,500 356,125
-----------
12,482,237
-----------
Transportation - 1.87%
AMR Corp.* ............................................................................... 7,800 1,002,300
CSX Corp. ................................................................................ 13,000 702,000
-----------
1,704,300
-----------
Utilities - 9.97%
Airtouch Communications, Inc.* ........................................................... 20,500 852,031
AT & T Corp. ............................................................................. 24,430 1,496,338
Edison International ..................................................................... 18,500 502,969
El Paso Natural Gas Co. .................................................................. 5,600 372,400
GTE Corp. ................................................................................ 30,000 1,567,500
MCI Communications Corp. ................................................................. 10,000 428,125
PECO Energy Co. .......................................................................... 34,000 824,500
PG&E Corp. ............................................................................... 25,070 763,068
SBC Communications, Inc. ................................................................. 21,948 1,607,691
Unicom Corp. ............................................................................. 22,000 676,500
-----------
9,091,122
-----------
TOTAL COMMON STOCKS - 98.92% (Cost $68,124,082)(1)........................................ 90,238,192
-----------
CASH AND OTHER ASSETS NET OF LIABILITIES - 1.08% ......................................... 986,920
-----------
NET ASSETS - 100.00% ..................................................................... $91,225,112
===========
(1) Aggregate cost for federal income tax purposes is $68,124,082 and net unrealized
appreciation is as follows:
Gross unrealized appreciation ........................................................ $22,578,635
Gross unrealized depreciation ........................................................ (464,525)
-----------
Net unrealized appreciation ........................................................... $22,114,110
===========
*Non-dividend paying stock.
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Statements of Assets and Liabilities (unaudited) December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
McM
McM Intermediate
Principal Fixed
Preservation Income
Fund Fund
-------------- ----------------
<S> <C> <C>
Assets:
Investments in securities at value (cost
$35,580,965, $107,053,101, $13,192,385,
$54,022,009 and $68,124,082, respectively) ......... $35,580,965 $108,908,923
Cash-interest bearing accounts ...................... 149,144 69,504
Dividends and interest receivable ................... 150,202 1,214,848
Receivable for fund shares sold ..................... 0 1,245,000
Deferred organization cost (Note A) ................. 6,325 6,325
Other assets ........................................ 5,628 13,112
----------- ------------
Total assets ....................................... 35,892,264 111,457,712
----------- ------------
Liabilities:
Payable for securities purchased .................... 0 760,352
Fund shares redeemed ................................ 0 51,000
Distributions payable ............................... 166,314 0
Accrued expenses .................................... 2,611 8,542
Payable to advisor, net ............................. 1,287 111,124
----------- ------------
Total liabilities .................................. 170,212 931,018
----------- ------------
Net Assets:
Applicable to 35,726,239, 10,582,180, 1,283,946,
3,897,676 and 4,136,523 shares outstanding,
respectively ....................................... $35,722,052 $110,526,694
=========== ============
Net Assets Consist of:
Capital paid-in ..................................... $35,726,239 $108,537,999
Distributions in excess of net investment income 0 (42,994)
Accumulated net realized gain (loss) on
investments ........................................ (4,187) 175,867
Net unrealized appreciation/depreciation on
investments ........................................ 0 1,855,822
----------- ------------
$35,722,052 $110,526,694
=========== ============
Net asset value and redemption price per share $ 1.00 $ 10.44
=========== ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
McM McM
Fixed McM Equity
Income Balanced Investment
Fund Fund Fund
-------------- -------------- ------------------
<S> <C> <C> <C>
Assets:
Investments in securities at value (cost
$35,580,965, $107,053,101, $13,192,385,
$54,022,009 and $68,124,082, respectively) ......... $13,597,315 $63,684,902 $ 90,238,192
Cash-interest bearing accounts ...................... 93,411 530,336 936,075
Dividends and interest receivable ................... 147,194 378,298 163,964
Receivable for fund shares sold ..................... 50,234 86,124 40,000
Deferred organization cost (Note A) ................. 6,325 6,325 6,325
Other assets ........................................ 1,193 6,146 9,241
----------- ----------- --------------
Total assets ....................................... 13,895,672 64,692,131 91,393,797
----------- ----------- --------------
Liabilities:
Payable for securities purchased .................... 78,795 43,886 23,968
Fund shares redeemed ................................ 0 5,000 0
Distributions payable ............................... 0 0 0
Accrued expenses .................................... 4,358 4,418 2,143
Payable to advisor, net ............................. 960 56,467 142,574
----------- ----------- --------------
Total liabilities .................................. 84,113 109,771 168,685
----------- ----------- --------------
Net Assets:
Applicable to 35,726,239, 10,582,180, 1,283,946,
3,897,676 and 4,136,523 shares outstanding,
respectively ....................................... $13,811,559 $64,582,360 $ 91,225,112
=========== =========== ==============
Net Assets Consist of:
Capital paid-in ..................................... $13,408,678 $54,897,050 $ 69,073,015
Distributions in excess of net investment income (8,885) (7,763) (3,674)
Accumulated net realized gain (loss) on
investments ........................................ 6,836 30,180 41,661
Net unrealized appreciation/depreciation on
investments ........................................ 404,930 9,662,893 22,114,110
----------- ----------- --------------
$13,811,559 $64,582,360 $ 91,225,112
=========== =========== ==============
Net asset value and redemption price per share $ 10.76 $ 16.57 $ 22.05
=========== =========== ==============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Statements of Operations (unaudited)
For the Six Months Ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
McM
McM Intermediate
Principal Fixed
Preservation Income
Fund Fund
-------------- --------------
<S> <C> <C>
Investment Income:
Dividends ............................................. $ 0 $ 0
Interest .............................................. 1,076,115 3,251,392
----------- -----------
Total investment income ............................. 1,076,115 3,251,392
----------- -----------
Expenses:
Investment advisory fees (Note E) ..................... 47,865 181,361
Transfer agent fees ................................... 15,950 13,426
Administration fees ................................... 16,075 15,778
Accounting fees ....................................... 14,315 25,446
Legal fees ............................................ 1,750 5,010
Custodian fees ........................................ 7,229 9,401
Insurance fees ........................................ 6,795 18,942
Registration expenses ................................. 7,986 7,986
Amortization of organization costs (Note A) ........... 1,820 1,820
Report to shareholder expense ......................... 454 1,478
Auditing fees ......................................... 3,915 10,695
Trustees fees ......................................... 1,194 3,735
Miscellaneous expenses ................................ 151 707
----------- -----------
Total expenses ...................................... 125,499 295,785
Expenses reimbursed (Note E) .......................... (68,061) (36,698)
----------- -----------
Net expenses ........................................ 57,438 259,087
----------- -----------
Net Investment Income .................................. 1,018,677 2,992,305
----------- -----------
Realized and Unrealized Gain (Loss) on Investments:
Net realized gain (loss) on investments ............... (4,187) 295,502
Net change in unrealized appreciation/depreciation on
investments .......................................... 0 1,838,473
----------- -----------
Net realized and unrealized gain (loss) on investments (4,187) 2,133,975
----------- -----------
Increase in Net Assets from Operations ................. 1,014,490 5,126,280
=========== ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
McM McM
Fixed McM Equity
Income Balanced Investment
Fund Fund Fund
------------ ------------- -------------
<S> <C> <C> <C>
Investment Income:
Dividends ............................................. $ 0 $ 277,332 $ 704,569
Interest .............................................. 357,196 684,347 35,837
---------- ----------- -----------
Total investment income ............................. 357,196 961,679 740,406
---------- ----------- -----------
Expenses:
Investment advisory fees (Note E) ..................... 19,161 116,903 192,750
Transfer agent fees ................................... 12,637 15,006 16,264
Administration fees ................................... 15,296 16,328 16,872
Accounting fees ....................................... 13,824 18,249 17,346
Legal fees ............................................ 522 2,199 3,122
Custodian fees ........................................ 2,797 9,519 18,344
Insurance fees ........................................ 1,855 7,067 10,507
Registration expenses ................................. 6,153 7,986 9,818
Amortization of organization costs (Note A) ........... 1,820 1,820 1,820
Report to shareholder expense ......................... 136 572 811
Auditing fees ......................................... 2,665 4,813 6,245
Trustees fees ......................................... 530 1,260 1,814
Miscellaneous expenses ................................ 151 403 429
---------- ----------- -----------
Total expenses ...................................... 77,547 202,125 296,142
Expenses reimbursed (Note E) .......................... (50,174) (46,254) (9,003)
---------- ----------- -----------
Net expenses ........................................ 27,373 155,871 287,139
---------- ----------- -----------
Net Investment Income .................................. 329,823 805,808 453,267
---------- ----------- -----------
Realized and Unrealized Gain (Loss) on Investments:
Net realized gain (loss) on investments ............... 26,529 83,872 135,620
Net change in unrealized appreciation/depreciation on
investments .......................................... 339,184 3,676,848 7,608,817
---------- ----------- -----------
Net realized and unrealized gain (loss) on investments 365,713 3,760,720 7,744,437
---------- ----------- -----------
Increase in Net Assets from Operations ................. 695,536 4,566,528 8,197,704
========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
McM Principal
Preservation Fund
--------------------------------
Six Months
Ended For the
12/31/97 Year Ended
(unaudited) 06/30/97
--------------- ---------------
<S> <C> <C>
Operations:
Net investment income .......................... $ 1,018,677 $ 1,288,420
Net realized gain (loss) on investments ........ (4,187) 0
Net change in unrealized appreciation/
depreciation on investments ................... 0 0
------------ ------------
Increase in net assets ......................... 1,014,490 1,288,420
------------ ------------
Dividends and Distributions to Shareholders:
From net investment income ..................... (1,018,677) (1,288,657)
From capital gains ............................. 0 (1,352)
------------ ------------
Total Distributions ............................ (1,018,677) (1,290,009)
------------ ------------
Capital Share Transactions - Note C ............. 3,023,397 8,509,309
------------ ------------
Total increase in net assets ................... 3,019,210 8,507,720
Net Assets:
Beginning of period ............................ 32,702,842 24,195,122
------------ ------------
End of period (including undistributed
(distributions in excess of) net
investment income of $0, $0, ($42,994),
$275,372, ($8,885) and $29,851,
respectively) ................................. $ 35,722,052 $ 32,702,842
============ ============
<CAPTION>
McM Intermediate McM Fixed
Fixed Income Fund Income Fund
------------------------------- ------------------------------
Six Months Six Months
Ended For the Ended For the
12/31/97 Year Ended 12/31/97 Year Ended
(unaudited) 06/30/97 (unaudited) 06/30/97
--------------- -------------- --------------- -------------
<S> <C> <C> <C> <C>
Operations:
Net investment income .......................... $ 2,992,305 $ 5,170,412 $ 329,823 $ 549,985
Net realized gain (loss) on investments ........ 295,502 (72,659) 26,529 11,263
Net change in unrealized appreciation/
depreciation on investments ................... 1,838,473 873,998 339,184 88,107
------------ ------------ ----------- ----------
Increase in net assets ......................... 5,126,280 5,971,751 695,536 649,355
------------ ------------ ----------- ----------
Dividends and Distributions to Shareholders:
From net investment income ..................... (3,325,422) (5,112,892) (368,552) (543,122)
From capital gains ............................. 0 (164,477) (28,964) (10,144)
------------ ------------ ----------- ----------
Total Distributions ............................ (3,325,422) (5,277,369) (397,516) (553,266)
------------ ------------ ----------- ----------
Capital Share Transactions - Note C ............. 15,323,948 16,662,781 3,948,613 1,477,192
------------ ------------ ----------- ----------
Total increase in net assets ................... 17,124,806 17,357,163 4,246,633 1,573,281
Net Assets:
Beginning of period ............................ 93,401,888 76,044,725 9,564,926 7,991,645
------------ ------------ ----------- ----------
End of period (including undistributed
(distributions in excess of) net
investment income of $0, $0, ($42,994),
$275,372, ($8,885) and $29,851,
respectively) ................................. $110,526,694 $ 93,401,888 $13,811,559 $9,564,926
============ ============ =========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
McM Balanced McM Equity
Fund Investment Fund
--------------------------------- ---------------------------------
Six Months Six Months
Ended For the Ended For the
12/31/97 Year Ended 12/31/97 Year Ended
(unaudited) 06/30/97 (unaudited) 06/30/97
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Operations:
Net investment income ........................... $ 805,808 $ 838,463 $ 453,267 $ 592,381
Net realized gain (loss) on investments ......... 83,872 (31,191) 135,620 88,154
Net change in unrealized appreciation/
depreciation on investments .................... 3,676,848 5,082,280 7,608,817 12,113,724
----------- ----------- ----------- -----------
Increase in net assets .......................... 4,566,528 5,889,552 8,197,704 12,794,259
----------- ----------- ----------- -----------
Dividends and Distributions to Shareholders:
From net investment income ...................... (870,291) (796,912) (477,165) (583,073)
From capital gains .............................. 0 0 (176,965) (15,401)
----------- ----------- ----------- -----------
Total Distributions ............................. (870,291) (796,912) (654,130) (598,474)
----------- ----------- ----------- -----------
Capital Share Transactions - Note C .............. 19,945,400 23,933,114 25,088,355 22,484,477
----------- ----------- ----------- -----------
Total increase in net assets .................... 23,641,637 29,025,754 32,631,929 34,680,262
Net Assets:
Beginning of period ............................. 40,940,723 11,914,969 58,593,183 23,912,921
----------- ----------- ----------- -----------
End of period (including undistributed
(distributions in excess of) net
investment income of ($7,763), $56,694,
($3,674) and $20,224, respectively) ............ $64,582,360 $40,940,723 $91,225,112 $58,593,183
=========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM FUNDS
Notes to Financial Statements (unaudited) December 31, 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) (unaudited) December 31, 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 six month
period ended December 31, 1997. Accordingly, no provisions for federal
income taxes have been made in the accompanying financial statements.
(5) Dividends and Distributions: Dividends and distributions to
shareholders are recorded on the ex-dividend date.
(6) Use of Estimates: In preparing financial statements in conformity with
generally accepted accounting principles, management makes estimates and
assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements, as well as the reported amounts of
revenues and expenses during the reporting period. Actual results could
differ from those estimates.
(7) 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
----------------------------------------------------------------------
Six Months Ended
December 31, 1997 Year Ended
(unaudited) June 30, 1997
---------------------------------- ----------------------------------
Shares Amount Shares Amount
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Shares sold ................... 73,341,383 $ 73,341,383 61,451,444 $ 61,451,444
Shares issued through reinvest-
ment of dividends ............ 817,944 817,944 1,244,977 1,244,977
Shares redeemed ............... (71,135,930) (71,135,930) (54,187,112) (54,187,112)
----------- -------------- ----------- --------------
Net Increase .................. 3,023,397 $ 3,023,397 8,509,309 $ 8,509,309
=========== ============== =========== ==============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE FIXED INCOME FUND
------------------------------------------------------------------
Six Months Ended
December 31, 1997 Year Ended
(unaudited) June 30, 1997
------------------------------- ---------------------------------
Shares Amount Shares Amount
------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
Shares sold ................... 2,164,289 $ 22,498,358 3,302,865 $ 33,813,474
Shares issued through reinvest-
ment of dividends ............ 310,913 3,225,403 500,320 5,114,086
Shares redeemed ............... (998,266) (10,399,813) (2,172,289) (22,264,779)
--------- -------------- ---------- --------------
Net Increase .................. 1,476,936 $ 15,323,948 1,630,896 $ 16,662,781
========= ============== ========== ==============
</TABLE>
<TABLE>
<CAPTION>
FIXED INCOME FUND
--------------------------------------------------------
Six Months Ended
December 31, 1997 Year Ended
(unaudited) June 30, 1997
--------------------------- ---------------------------
Shares Amount Shares Amount
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Shares sold ....................... 411,407 $4,407,452 136,454 $1,423,356
Shares issued through reinvest-
ment of dividends ................ 37,303 397,239 53,167 552,893
Shares redeemed ................... (80,680) (856,078) (47,554) (499,057)
------- ---------- ------- ----------
Net Increase ...................... 368,030 $3,948,613 142,067 $1,477,192
======= ========== ======= ==========
<CAPTION>
BALANCED FUND
------------------------------------------------------------
Six Months Ended
December 31, 1997 Year Ended
(unaudited) June 30, 1997
----------------------------- -----------------------------
Shares Amount Shares Amount
------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Shares sold ....................... 1,192,495 $19,465,634 1,730,693 $23,766,367
Shares issued through reinvest-
ment of dividends ................ 52,117 846,782 53,858 767,164
Shares redeemed ................... (22,609) (367,016) (43,162) (600,417)
--------- ----------- --------- -----------
Net Increase ...................... 1,222,003 $19,945,400 1,741,389 $23,933,114
========= =========== ========= ===========
</TABLE>
<PAGE>
McM FUNDS
Notes to Financial Statements (continued) (unaudited) December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY INVESTMENT FUND
---------------------------------------------------------------
Six Months Ended
December 31, 1997 Year Ended
(unaudited) June 30, 1997
------------------------------ ------------------------------
Shares Amount Shares Amount
------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Shares sold ................... 1,312,422 $ 28,282,539 1,485,441 $ 24,691,781
Shares issued through reinvest-
ment of dividends ............ 29,740 641,155 33,050 573,358
Shares redeemed ............... (178,198) (3,835,339) (155,758) (2,780,662)
--------- ------------ --------- ------------
Net Increase .................. 1,163,964 $ 25,088,355 1,362,733 $ 22,484,477
========= ============ ========= ============
</TABLE>
Note (D) Investment Transactions: Aggregate purchases and proceeds from sales
of investment securities (other than short-term investments) for the six month
period ended December 31, 1997 were:
Aggregate Proceeds from
Purchases Sales
-------------- --------------
Intermediate Fixed Income Fund ......... $39,028,584 $21,401,459
Fixed Income Fund ...................... 6,093,121 2,139,672
Balanced Fund .......................... 22,776,668 4,386,271
Equity Investment Fund ................. 25,065,865 270,279
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, 1997 through December 31, 1997, the Advisor absorbed, subject to
repayment, expenses totaling $210,190; $68,061 for the Principal Preservation
Fund, $36,698 for the Intermediate Fixed Income Fund, $50,174 for the Fixed
Income Fund, $46,254 for the Balanced Fund and $9,003 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 December 31, 1997, the Advisor has reduced
its management fee and otherwise absorbed Fund expenses for each Fund in the
following amounts: Principal Preservation Fund $336,228, Intermediate Fixed
Income Fund $325,453, Fixed Income Fund $262,672, Balanced Fund $274,984 and
Equity Investment Fund $184,999.
<PAGE>
Financial Highlights
- --------------------------------------------------------------------------------
The table below sets forth financial data for a share of beneficial interest
outstanding throughout each period presented.
<TABLE>
<CAPTION>
McM Principal
Preservation Fund
----------------------------------------------------------------
Six Months Ended For the For the For the
12/31/97 Year Ended Year Ended Period Ended
(unaudited) 06/30/97 06/30/96 06/30/95*
------------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Net Asset Value, beginning of period ....................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------
Income from investment operations
Net investment income ..................................... 0.03 0.05 0.05 0.05
Net realized and unrealized gain on investments ........... 0.00 0.00 0.00 0.00
------ ------ ------ ------
Total from investment operations ......................... 0.03 0.05 0.05 0.05
------ ------ ------ ------
Less Distributions:
From net investment income ................................ (0.03) (0.05) (0.05) (0.05)
From capital gains ........................................ 0.00 0.00 0.00 0.00
------ ------- ------- ------
Total distributions ...................................... (0.03) (0.05) (0.05) (0.05)
------ ------- ------- ------
Net Asset Value, end of period ............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ======= ======= ======
Total return ............................................... 5.44%(1) 5.24% 5.39% 5.10%(2)
Current Yield .............................................. 5.43%(1) N/A N/A N/A
Ratios/Supplemental Data
Net assets, end of period (in 000's) ...................... 35,722 $32,703 $24,195 $11,813
Ratio of expenses to average net assets before reimburse-
ment of expenses by Advisor .............................. 0.65%(1) 0.77% 0.93% 2.77%(1)
Ratio of expenses to average net assets after reimbursement
of expenses by Advisor ................................... 0.30%(1) 0.30% 0.30% 0.30%(1)
Ratio of net investment income to average net assets before
reimbursement of expenses by Advisor ..................... 4.92%(1) 4.65% 4.60% 2.91%(1)
Ratio of net investment income to average net assets after
reimbursement of expenses by Advisor ..................... 5.27%(1) 5.12% 5.23% 5.38%(1)
Portfolio turnover ........................................ N/A N/A N/A N/A
Average commission rate paid .............................. N/A N/A N/A N/A
</TABLE>
* McM Principal Preservation Fund commenced investment operations on July 13,
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 Intermediate
Fixed Income Fund
-------------------------------------------------------------
Six Months Ended For the For the For the
12/31/97 Year Ended Year Ended Period Ended
(unaudited) 06/30/97 06/30/96 06/30/95*
------------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Net Asset Value, beginning of period ........................... $ 10.26 $ 10.17 $ 10.37 $ 10.00
------- ------- ------- -------
Income from investment operations
Net investment income ......................................... 0.30 0.60 0.57 0.54
Net realized and unrealized gain (loss) on investments ........ 0.21 0.11 (0.10) 0.34
------- ------- ------- -------
Total from investment operations ............................. 0.51 0.71 0.47 0.88
------- ------- ------- -------
Less Distributions:
From net investment income .................................... (0.33) (0.60) (0.57) (0.51)
From capital gains ............................................ 0.00 (0.02) (0.10) 0.00
------- ------- ------- -------
Total distributions .......................................... (0.33) (0.62) (0.67) (0.51)
------- ------- ------- -------
Net Asset Value, end of period ................................. $ 10.44 $ 10.26 $ 10.17 $ 10.37
======= ======= ======= ========
Total return ................................................... 5.08%(2) 7.14% 4.61% 9.19%(2)
Ratios/Supplemental Data
Net assets, end of period (in 000's) .......................... $110,527 $93,402 $76,045 $ 29,936
Ratio of expenses to average net assets before reimburse-
ment of expenses by Advisor .................................. 0.57%(1) 0.59% 0.69% 1.72%(1)
Ratio of expenses to average net assets after reimbursement
of expenses by Advisor ....................................... 0.50%(1) 0.50% 0.50% 0.50%(1)
Ratio of net investment income to average net assets before
reimbursement of expenses by Advisor ......................... 5.67%(1) 5.80% 5.52% 5.01%(1)
Ratio of net investment income to average net assets after
reimbursement of expenses by Advisor ......................... 5.74%(1) 5.89% 5.71% 6.24%(1)
Portfolio turnover ............................................ 21.12%(2) 36.02% 75.26% 227.09%(2)
Average commission rate paid .................................. N/A N/A N/A N/A
</TABLE>
* 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 table below sets forth financial data for a share of beneficial interest
outstanding throughout each period presented.
<TABLE>
<CAPTION>
McM Fixed
Income Fund
-------------------------------------------------------------
Six Months Ended For the For the For the
12/31/97 Year Ended Year Ended Period Ended
(unaudited) 06/30/97 06/30/96 06/30/95*
------------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Net Asset Value, beginning of period ........................... $ 10.44 $ 10.33 $ 10.58 $ 10.00
------- ------- ------- -------
Income from investment operations
Net investment income ......................................... 0.32 0.65 0.64 0.55
Net realized and unrealized gain (loss) on investments ........ 0.38 0.12 (0.20) 0.56
------- ------- -------- -------
Total from investment operations ............................. 0.70 0.77 0.44 1.11
------- ------- -------- -------
Less Distributions:
From net investment income .................................... (0.36) (0.65) (0.63) (0.53)
From capital gains ............................................ (0.02) (0.01) (0.06) 0.00
------- -------- -------- --------
Total distributions .......................................... (0.38) (0.66) ( 0.69) ( 0.53)
------- -------- -------- --------
Net Asset Value, end of period ................................. $ 10.76 $ 10.44 $ 10.33 $ 10.58
======= ======== ======== ========
Total return ................................................... 6.78%(2) 7.72% 4.16% 11.55%(2)
Ratios/Supplemental Data
Net assets, end of period (in 000's) .......................... $13,812 $ 9,565 $ 7,992 $ 6,599
Ratio of expenses to average net assets before reimburse-
ment of expenses by Advisor .................................. 1.41%(1) 1.57% 1.82% 7.29%(1)
Ratio of expenses to average net assets after reimbursement
of expenses by Advisor ....................................... 0.50%(1) 0.50% 0.50% 0.50%(1)
Ratio of net investment income to average net assets before
reimbursement of expenses by Advisor ......................... 5.07%(1) 5.25% 4.70% (0.47%)(1)
Ratio of net investment income to average net assets after
reimbursement of expenses by Advisor ......................... 5.98%(1) 6.32% 6.02% 6.33%(1)
Portfolio turnover ............................................ 19.84%(2) 32.46% 37.62% 150.77%(2)
Average commission rate paid .................................. N/A N/A N/A N/A
</TABLE>
* McM Fixed Income Fund commenced investment operations on July 14, 1994.
(1) Annualized.
(2) Not annualized.
See accompanying notes to financial statements.
<PAGE>
Financial Highlights (continued)
- --------------------------------------------------------------------------------
The table below sets forth financial data for a share of beneficial interest
outstanding throughout each period presented.
<TABLE>
<CAPTION>
McM Balanced
Fund
----------------------------------------------------------------
Six Months Ended For the For the For the
12/31/97 Year Ended Year Ended Period Ended
(unaudited) 06/30/97 06/30/96 06/30/95*
------------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Net Asset Value, beginning of period ....................... $ 15.30 $ 12.75 $ 11.35 $ 10.00
------- ------- ------- -------
Income from investment operations
Net investment income ..................................... 0.23 0.43 0.40 0.36
Net realized and unrealized gain on investments ........... 1.29 2.54 1.49 1.33
------- ------- ------- -------
Total from investment operations ......................... 1.52 2.97 1.89 1.69
------- ------- ------- -------
Less Distributions:
From net investment income ................................ (0.25) (0.42) (0.40) (0.34)
From capital gains ........................................ 0.00 0.00 (0.09) 0.00
-------- ------- ------- -------
Total distributions ...................................... (0.25) (0.42) (0.49) (0.34)
-------- ------- ------- -------
Net Asset Value, end of period ............................. $ 16.57 $ 15.30 $ 12.75 $ 11.35
======== ======= ======= =======
Total return ............................................... 10.01%(2) 23.65% 16.86% 17.31%(2)
Ratios/Supplemental Data
Net assets, end of period (in 000's) ...................... $ 64,582 $ 40,941 $ 11,915 $ 3,070
Ratio of expenses to average net assets before reimburse-
ment of expenses by Advisor .............................. 0.78%(1) 1.01% 2.21% 8.41%(1)
Ratio of expenses to average net assets after reimbursement
of expenses by Advisor ................................... 0.60%(1) 0.60% 0.60% 0.60%(1)
Ratio of net investment income to average net assets before
reimbursement of expenses by Advisor ..................... 2.90%(1) 2.97% 1.81% (3.54%)(1)
Ratio of net investment income to average net assets after
reimbursement of expenses by Advisor ..................... 3.08%(1) 3.38% 3.43% 4.28%(1)
Portfolio turnover ........................................ 8.62%(2) 31.64% 26.16% 81.05%(2)
Average commission rate paid .............................. $ 0.0600 $ 0.0600 $ 0.0600 N/R
</TABLE>
* 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
----------------------------------------------------------------
Six Months Ended For the For the For the
12/31/97 Year Ended Year Ended Period Ended
(unaudited) 06/30/97 06/30/96 06/30/95*
------------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Net Asset Value, beginning of period ....................... $ 19.71 $ 14.85 $ 11.95 $ 10.00
-------- -------- ------- -------
Income from investment operations
Net investment income ..................................... 0.12 0.24 0.21 0.19
Net realized and unrealized gain on investments ........... 2.39 4.87 2.94 1.94
------- ------- ------- -------
Total from investment operations ......................... 2.51 5.11 3.15 2.13
------- ------- ------- -------
Less Distributions:
From net investment income ................................ 0.13) (0.24) (0.21) (0.18)
From capital gains ........................................ 0.04) (0.01) (0.04) 0.00
-------- --------- --------- --------
Total distributions ...................................... (0.17) (0.25) (0.25) (0.18)
-------- --------- --------- --------
Net Asset Value, end of period ............................. $ 22.05 $ 19.71 $ 14.85 $ 11.95
======== ========= ========= ========
Total return ............................................... 12.75%(2) 34.68% 26.53% 21.57%(2)
Ratios/Supplemental Data
Net assets, end of period (in 000's) ...................... $ 91,225 $ 58,593 $ 23,913 $ 4,866
Ratio of expenses to average net assets before reimburse-
ment of expenses by Advisor .............................. 0.76%(1) 0.88% 1.72% 8.48%(1)
Ratio of expenses to average net assets after reimbursement
of expenses by Advisor ................................... 0.75%(1) 0.75% 0.75% 0.75%(1)
Ratio of net investment income to average net assets before
reimbursement of expenses by Advisor ..................... 1.15%(1) 1.36% 0.80% (5.50%)(1)
Ratio of net investment income to average net assets after
reimbursement of expenses by Advisor ..................... 1.16%(1) 1.49% 1.77% 2.24%(1)
Portfolio turnover ........................................ 0.36%2 0.88% 0.92% 1.81%(2)
Average commission rate paid .............................. $ 0.0600 $ 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>
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, New York 10286
Underwriter Legal Counsel
FPS Broker Services, Inc. Paul, Hastings, Janofsky & Walker LLP
3200 Horizon Drive 345 California Street
King of Prussia, PA 19406 San Francisco, CA 94104
Shareholder Services Auditors
FPS Services, Inc. Tait, Weller & Baker
3200 Horizon Drive 8 Penn Center Plaza, Suite 800
King of Prussia, PA 19406 Philadelphia, PA 19103
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.
SAR1297 [GRAPHIC OMITTED]
