<PAGE>
McM Funds
Annual Report
June 30, 1998
Principal Preservation Fund
Intermediate Fixed Income Fund
Fixed Income Fund
Balanced Fund
Equity Investment Fund
<PAGE>
Dear Shareholder:
How do you know if your investment portfolio is properly diversified? Is it a
matter of the number of holdings? Do you need to have a certain percentage in
specified market sectors? Is it strictly the total number of mutual funds or
individual issues in which you have invested?
With the McM Funds, you have probably noticed we don't offer as many choices as
some other mutual fund families. We offer enough choices to allow any investor
to effectively diversify a portfolio across three fundamental asset classes:
stocks, bonds and cash.
The menu of investment alternatives to choose from in today's market is pretty
amazing. It's interesting to us that the menu seems to shift decade by decade or
year by year (sometimes month by month!). We remember a big push for gold and
other precious metals as an appropriate investment. That's when gold was around
$600 an ounce! For awhile, international investing was all the rage and then one
problem after another surfaced - most recently, problems in the Asian markets.
There will always be another new and exciting investment option on the horizon -
but you will find the McM Funds remain consistent. We stick to what we know.
We still believe risk is as important a consideration as potential reward....
and we still invest with a long term view. The result may not be a large menu of
choices but we believe it's more than enough to satisfy the savvy investor.
Thank you for your continuing support and trust.
Sincerely,
/s/ Terry A. O'Toole
- ------------------------
Terry A. O'Toole
Chairman of the Board
<PAGE>
Review
All eyes seemed to be focused on Asia's economic and political problems, which
was good news and bad news for the U.S. capital markets. The good news was the
bond market benefited from the flight to quality, as investors around the globe
sought a safe haven for their funds. The bad news, which wasn't terrible news,
was the stock market slowed it's relentless advance in the second quarter of
1998.
Stock buy-back programs and increased merger activity continued to support the
equity market. Many corporations used higher stock prices as currency to acquire
other companies. This consolidation was most prevalent in the health care,
technology, finance and telecommunication areas. Some of the McM Funds equity
holdings participated in attractive corporate combinations.
The overall stock market was up 30% over the last twelve months as measured by
the S&P 500. The Equity Fund returned 29.9%, participating in the strong market
because of our risk control and diversified approach. During the same time
period, interest rates were down slightly, increasing the price of bond issues
as investors took advantage of the high expected real returns (yield less
inflation). The Fixed Income Fund had a total return of 10.7% performing
slightly higher than the Lehman Aggregate Bond Index at 10.5%, with the shorter
maturity Intermediate Fund still participating in the strong market with a
return of 8.7%.
Outlook
Despite the exceptionally strong economic growth and a tight labor market over
the past year, there is virtually no inflation. We expect this low inflationary
environment to continue during the next year. A slow growth, low inflation
economy will provide strength in the stock and bond markets.
Fixed income investments will provide high, expected real returns and stocks
will continue to remain attractive compared to fixed income investments and
cash.
McM Funds portfolios will continue to be invested in a high-quality, diversified
manner, positioned to take advantage of the dynamics in the market.
<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 59% of the portfolio. The 7-day and
30-day average yields as of June 30, 1998 were 5.22% and 5.22%, respectively.
Diversification Credit Quality Maturity
Certificates of Deposit 3% A-1/P-1 41% 1-15 days 27%
Bankers' Acceptance 2% Government 59% 16-30 days 12%
Repurchase Agreements 14% 31-90 days 28%
Commercial Paper 22% 91 + days 33%
Government 59%
<TABLE>
<CAPTION>
Average Annual Returns (%) Current One Three Since
Yield Year Years Inception
----- ---- ----- ---------
<S> <C> <C> <C> <C>
McM Principal Preservation Fund 5.25 5.41 5.34 5.33
</TABLE>
Principal Preservation Fund
June 30, 1997 - June 30, 1998
7-Day Average Yield (%)
6/30/97 5.29 10/23/97 5.30
7/8/97 5.27 11/3/97 5.43
7/17/97 5.30 11/12/97 5.29
7/28/97 5.32 12/12/97 5.30
8/6/97 5.33 12/24/97 5.34
8/14/97 5.31 12/31/97 5.39
8/25/97 5.32 1/31/98 5.31
9/4/97 5.30 2/27/98 5.29
9/15/97 5.33 3/31/98 5.26
9/24/97 5.31 4/30/98 5.23
10/2/97 5.31 5/31/98 5.23
10/14/97 5.28 6/30/98 5.22
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 68% 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 4.4 years
seeks to limit sensitivity to interest rate changes.
NASDAQ Symbol
MCMNX
Diversification Bond Quality Maturity
Asset Backed/Other 1% BAA 6% 1-5 years 45%
Government 30% Government 30% 5-10 years 48%
Mortgage 38% A 23% 10 + years 7%
Corporate 31% AA 4%
AAA 37%
<TABLE>
<CAPTION>
Average Annual Returns (%) One Three Since
Year Years Inception
---- ----- ---------
<S> <C> <C> <C>
McM Intermediate Fixed Income Fund 8.68 6.79 7.46
Lehman Brothers Intermediate Govt./Corp. Index 8.53 6.90 7.64
</TABLE>
Intermediate Fixed Income Fund
July 14, 1994 Inception Date
Lehman Brothers
Intermediate Fixed Income Fund Intermediate Govt./Corp. Index
7/31/94 $10,000 7/31/94 $10,000
9/30/94 $ 9,960 9/30/94 $10,000
10/31/94 $ 9,960 10/31/94 $10,000
11/30/94 $ 9,920 11/30/94 $ 9,960
12/31/94 $ 9,950 12/31/94 $10,000
2/28/95 $10,300 2/28/95 $10,300
3/31/95 $10,300 3/31/95 $10,400
4/30/95 $10,500 4/30/95 $10,500
6/30/95 $10,900 6/30/95 $10,900
7/31/95 $10,900 7/31/95 $10,900
8/31/95 $11,000 8/31/95 $11,000
9/30/95 $11,000 9/30/95 $11,100
11/30/95 $11,300 11/30/95 $11,400
12/31/95 $11,400 12/31/95 $11,500
1/31/96 $11,500 1/31/96 $11,600
3/31/96 $11,300 3/31/96 $11,400
4/30/96 $11,300 4/30/96 $11,300
5/31/96 $11,300 5/31/96 $11,300
7/31/96 $11,400 7/31/96 $11,500
8/31/96 $11,400 8/31/96 $11,500
9/30/96 $11,600 9/30/96 $11,700
10/31/96 $11,800 10/31/96 $11,700
12/31/96 $11,900 12/31/96 $11,900
1/31/97 $11,900 1/31/97 $12,000
2/28/97 $11,900 2/28/97 $12,000
4/30/97 $12,000 4/30/97 $12,100
5/31/97 $12,100 5/31/97 $12,200
6/30/97 $12,200 6/30/97 $12,300
7/31/97 $12,500 7/31/97 $12,600
9/30/97 $12,500 9/30/97 $12,700
10/31/97 $12,700 10/31/97 $12,800
11/30/97 $12,700 11/30/97 $12,800
1/30/98 $13,000 1/30/98 $13,100
2/27/98 $13,000 2/27/98 $13,100
3/31/98 $13,000 3/31/98 $13,100
4/30/98 $13,100 4/30/98 $13,200
6/30/98 $13,300 6/30/98 $13,400
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 and has
a weighted average maturity of 6.9 years, 2.5 years longer than the Intermediate
Fixed Income Fund.
NASDAQ Symbol
MCMFX
Diversification Bond Quality Maturity
Corporate 35% A 25% 1-5 years 13%
Mortgage 39% AA 2% 5-10 years 77%
Government 26% AAA 37% 10 + years 10%
BAA 10%
Government 26%
<TABLE>
<CAPTION>
Average Annual Returns (%) One Three Since
Year Years Inception
---- ----- ---------
<S> <C> <C> <C>
McM Fixed Income Fund 10.71 7.49 8.58
Lehman Brothers Aggregate Index 10.54 7.87 8.88
</TABLE>
Fixed Income Fund
July 14, 1994 Inception Date
Lehman Brothers
Fixed Income Fund Aggregate Index
7/31/94 $10,000 7/31/94 $10,100
8/31/94 $10,000 8/31/94 $10,100
10/31/94 $ 9,910 10/31/94 $ 9,960
11/30/94 $ 9,850 11/30/94 $ 9,940
12/31/94 $ 9,920 12/31/94 $10,000
1/31/95 $10,100 1/31/95 $10,200
3/31/95 $10,400 3/31/95 $10,500
4/30/95 $10,600 4/30/95 $10,600
5/31/95 $11,000 5/31/95 $11,000
6/30/95 $11,100 6/30/95 $11,100
7/31/95 $11,100 7/31/95 $11,100
9/30/95 $11,300 9/30/95 $11,300
10/31/95 $11,500 10/31/95 $11,500
11/30/95 $11,700 11/30/95 $11,700
12/31/95 $11,800 12/31/95 $11,800
2/29/96 $11,600 2/29/96 $11,700
3/31/96 $11,500 3/31/96 $11,600
4/30/96 $11,400 4/30/96 $11,500
5/31/96 $11,400 5/31/96 $11,500
7/31/96 $11,600 7/31/96 $11,700
8/31/96 $11,600 8/31/96 $11,700
9/30/96 $11,800 9/30/96 $11,900
10/31/96 $12,100 10/31/96 $12,200
11/30/96 $12,300 11/30/96 $12,400
1/31/97 $12,200 1/31/97 $12,300
2/28/97 $12,200 2/28/97 $12,300
3/31/97 $12,000 3/31/97 $12,200
4/30/97 $12,200 4/30/97 $12,400
6/30/97 $12,500 6/30/97 $12,600
7/31/97 $12,900 7/31/97 $13,000
8/31/97 $12,700 8/31/97 $12,900
9/30/97 $12,900 9/30/97 $13,000
10/31/97 $13,100 10/31/97 $13,200
12/31/97 $13,300 12/31/97 $13,500
1/30/98 $13,500 1/30/98 $13,600
2/27/98 $13,500 2/27/98 $13,600
3/31/98 $13,500 3/31/98 $13,700
5/31/98 $13,700 5/31/98 $13,900
6/30/98 $13,800 6/30/98 $14,000
Past performance does not guarantee future results.
<PAGE>
Balanced Fund
The Balanced Fund invests in common stocks and bonds. Common stocks represent
about 60% of the Fund and bonds about 40%. The common stock portion is well
diversified among 100 companies that represent all economic sectors. The Fund's
bond portion is 68% U.S. Government and AAA-rated securities with a weighted
average maturity of 6.5 years.
NASDAQ Symbol
MCMBX
Average Annual Returns (%) One Three Since
Year Years Inception
---- ----- ---------
McM Balanced Fund 21.76 20.70 20.06
Lehman Brothers Aggregate Index 10.54 7.87 8.88
Standard & Poor's 500 30.20 30.22 28.80
Asset Allocation Fixed Income Quality
Cash 0.6% A 22%
Bonds 38.9% AA 2%
Stocks 60.5% AAA 39%
BAA 8%
Government 29%
Ten Largest Equity Holdings (%)
General Electric 3.5
FNMA 3.4
Intel 3.4
Compaq 3.3
Chase Manhattan 3.3
Philip Morris 2.3
Merck 2.3
Schering Plough 2.1
SBC Communications 2.1
BankAmerica 2.0
-----
27.7
<PAGE>
Balanced Fund
July 14, 1994 Inception Date
Lehman Brothers
Balanced Fund Aggregate Index Standard & Poor's 500
7/31/94 $10,000 7/31/94 $10,100 7/31/94 $10,100
8/31/94 $10,300 8/31/94 $10,100 8/31/94 $10,500
10/31/94 $10,100 10/31/94 $ 9,960 10/31/94 $10,500
11/30/94 $ 9,960 11/30/94 $ 9,940 11/30/94 $10,100
12/31/94 $10,000 12/31/94 $10,000 12/31/94 $10,200
1/31/95 $10,200 1/31/95 $10,200 1/31/95 $10,500
2/28/95 $10,600 2/28/95 $10,400 2/28/95 $10,900
4/30/95 $11,000 4/30/95 $10,600 4/30/95 $11,500
5/31/95 $11,500 5/31/95 $11,000 5/31/95 $12,000
6/30/95 $11,700 6/30/95 $11,100 6/30/95 $12,300
7/31/95 $11,900 7/31/95 $11,100 7/31/95 $12,700
8/31/95 $12,000 8/31/95 $11,200 8/31/95 $12,700
10/31/95 $12,400 10/31/95 $11,500 10/31/95 $13,200
11/30/95 $12,800 11/30/95 $11,700 11/30/95 $13,800
12/31/95 $12,900 12/31/95 $11,800 12/31/95 $14,100
1/31/96 $13,300 1/31/96 $11,900 1/31/96 $14,600
2/29/96 $13,300 2/29/96 $11,700 2/29/96 $14,700
4/30/96 $13,400 4/30/96 $11,500 4/30/96 $15,100
5/31/96 $13,500 5/31/96 $11,500 5/31/96 $15,500
6/30/96 $13,700 6/30/96 $11,700 6/30/96 $15,500
7/31/96 $13,400 7/31/96 $11,700 7/31/96 $14,800
8/31/96 $13,500 8/31/96 $11,700 8/31/96 $15,100
9/30/96 $14,000 9/30/96 $11,900 9/30/96 $16,000
11/30/96 $15,300 11/30/96 $12,400 11/30/96 $17,700
12/31/96 $15,000 12/31/96 $12,200 12/31/96 $17,300
1/31/97 $15,700 1/31/97 $12,300 1/31/97 $18,400
2/28/97 $15,700 2/28/97 $12,300 2/28/97 $18,600
3/31/97 $15,300 3/31/97 $12,200 3/31/97 $17,800
5/31/97 $16,500 5/31/97 $12,500 5/31/97 $20,000
6/30/97 $16,900 6/30/97 $12,600 6/30/97 $20,900
7/31/97 $18,100 7/31/97 $13,000 7/31/97 $22,600
8/31/97 $17,500 8/31/97 $12,900 8/31/97 $21,300
9/30/97 $18,200 9/30/97 $13,000 9/30/97 $22,500
11/30/97 $18,400 11/30/97 $13,300 11/30/97 $22,700
12/31/97 $18,600 12/31/97 $13,400 12/31/97 $23,100
1/30/98 $18,900 1/30/98 $13,600 1/30/98 $23,400
2/27/98 $19,600 2/27/98 $13,600 2/27/98 $24,900
3/31/98 $20,000 3/31/98 $13,600 3/31/98 $26,200
5/31/98 $20,100 5/31/98 $13,800 5/31/98 $26,000
6/30/98 $20,600 6/30/98 $14,000 6/30/98 $27,000
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 more than 100 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 (%)
General Electric 3.6
Chase Manhattan 3.4
Compaq 3.3
Intel 3.3
FNMA 3.3
BankAmerica 2.2
Philip Morris 2.2
Merck 2.2
Citicorp 2.1
Schering Plough 1.9
----
27.5
Portfolio Characteristics
Price/Earnings Ratio 28.55
Beta 0.98
Avg. Market Capitalization $63.7B
Total Number of Stocks 104
Average Annual Returns (%)
McM Equity S&P 500
---------- -------
One Year 29.89 30.20
Three Years 30.29 30.22
Since Inception 28.36 28.80
Sector Weightings (%)
Financial Services 17.4
Technology 13.7
Health-Care 13.5
Energy 9.7
Utilities 9.6
Capital Goods 9.2
Consumer Non-Durables 7.9
Retail 6.1
Raw Materials 3.9
Consumer Services 2.1
Consumer Durables 1.8
Transportation 1.8
Shelter 1.1
Business Equip. & Services 1.6
Multi-Industry 0.6
-----
100.0
<PAGE>
Equity Investment Fund
July 14, 1994 Inception Date
Equity Investment Fund Standard & Poor's 500
7/31/94 $10,040 7/31/94 $10,110
8/31/94 $10,440 8/31/94 $10,520
9/30/94 $10,160 9/30/94 $10,270
10/31/94 $10,320 10/31/94 $10,500
11/30/94 $ 9,989 11/30/94 $10,120
1/31/95 $10,310 1/31/95 $10,530
2/28/95 $10,700 2/28/95 $10,940
3/31/95 $10,960 3/31/95 $11,260
4/30/95 $11,370 4/30/95 $11,590
5/31/95 $11,780 5/31/95 $12,050
6/30/95 $12,150 6/30/95 $12,340
7/31/95 $12,530 7/31/95 $12,750
8/31/95 $12,550 8/31/95 $12,780
9/30/95 $13,090 9/30/95 $13,320
10/31/95 $13,000 10/31/95 $13,270
11/30/95 $13,540 11/30/95 $13,860
1/31/96 $14,270 1/31/96 $14,610
2/29/96 $14,510 2/29/96 $14,750
3/31/96 $14,610 3/31/96 $14,890
4/30/96 $14,910 4/30/96 $15,110
5/31/96 $15,290 5/31/96 $15,500
6/30/96 $15,380 6/30/96 $15,560
7/31/96 $14,770 7/31/96 $14,870
8/31/96 $15,050 8/31/96 $15,180
9/30/96 $15,890 9/30/96 $16,040
10/31/96 $16,450 10/31/96 $16,480
11/30/96 $17,810 11/30/96 $17,730
12/31/96 $17,440 12/31/96 $17,390
2/28/97 $18,620 2/28/97 $18,610
3/31/97 $17,970 3/31/97 $17,840
4/30/97 $18,950 4/30/97 $18,900
5/31/97 $20,020 5/31/97 $20,060
6/30/97 $20,710 6/30/97 $20,960
7/31/97 $22,830 7/31/97 $22,620
8/31/97 $21,880 8/31/97 $21,370
9/30/97 $23,090 9/30/97 $22,530
10/31/97 $22,320 10/31/97 $21,790
11/30/97 $23,150 11/30/97 $22,790
12/31/97 $23,350 12/31/97 $23,180
2/27/98 $25,230 2/27/98 $25,120
3/31/98 $26,130 3/31/98 $26,410
4/30/98 $26,630 4/30/98 $26,690
5/31/98 $26,070 5/31/98 $26,220
6/30/98 $26,900 6/30/98 $27,290
Past performance does not guarantee future results.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1998
- --------------------------------------------------------------------------------
Principal Preservation Fund
<TABLE>
<CAPTION>
Principal
Amount Value
-------------- --------------
<S> <C> <C>
FIXED INCOME SECURITIES
U.S. Government Agency Notes - 58.96%
Federal Farm Credit Bank - 6.22%
5.700%, 11/03/98 ........................................................................ $ 1,500,000 $ 1,500,905
5.300%, 02/02/99 ........................................................................ 1,500,000 1,497,669
-----------
2,998,574
-----------
Federal Home Loan Bank - 11.56%
5.800%, 09/18/98 ........................................................................ 600,000 600,065
5.380%, 09/25/98 ........................................................................ 1,000,000 987,148
5.645%, 10/02/98 ........................................................................ 1,000,000 1,000,594
6.060%, 10/02/98 ........................................................................ 1,000,000 1,000,820
5.330%, 10/21/98 ........................................................................ 1,000,000 983,418
5.240%, 11/30/98 ........................................................................ 1,000,000 998,842
-----------
5,570,887
-----------
Federal Home Loan Mortgage Corp. - 29.93%
5.410%, 07/07/98 ........................................................................ 5,000,000 4,995,492
5.420%, 07/31/98 ........................................................................ 4,500,000 4,479,656
5.330%, 08/04/98 ........................................................................ 2,000,000 1,989,932
5.260%, 08/06/98 ........................................................................ 1,000,000 994,740
5.370%, 09/30/98 ........................................................................ 1,000,000 986,426
5.360%, 12/31/98 ........................................................................ 1,000,000 972,753
-----------
14,418,999
-----------
Federal National Mortgage Association - 11.25%
5.940%, 08/14/98 ........................................................................ 1,000,000 1,000,238
5.330%, 09/08/98 ........................................................................ 1,000,000 989,784
6.320%, 09/17/98 ........................................................................ 500,000 500,527
5.330%, 12/07/98 ........................................................................ 1,000,000 976,459
5.340%, 12/09/98 ........................................................................ 1,000,000 976,119
5.360%, 12/09/98 ........................................................................ 1,000,000 976,029
-----------
5,419,156
-----------
Total U.S. Government Agency Notes (Cost $28,407,616)..................................... 28,407,616
-----------
REPURCHASE AGREEMENT - 14.11%
Chase Manhattan Bank, U.S. Treasury Notes, $6,955,000 par, 5.375% coupon, due 06/30/00,
dated 06/30/98 to be sold on 07/01/98 at $6,801,077...................................... 6,800,000 6,800,000
-----------
Total Repurchase Agreement (Cost $6,800,000).............................................. 6,800,000
-----------
BANKERS ACCEPTANCE - 2.12%
Chase Manhattan Bank, 5.460%, 07/20/98 ................................................... 1,026,146 1,023,189
-----------
Total Bankers Acceptance (Cost $1,023,189)................................................ 1,023,189
-----------
CERTIFICATES OF DEPOSIT - 3.53%
Imperial Bank, 5.600%, 08/17/98 .......................................................... 1,700,000 1,700,000
-----------
Total Certificates of Deposit (Cost $1,700,000) .......................................... 1,700,000
-----------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1998
- --------------------------------------------------------------------------------
Principal Preservation Fund (continued)
<TABLE>
<CAPTION>
Principal
Amount Value
------------- ---------------
<S> <C> <C>
FIXED INCOME SECURITIES - (continued)
COMMERCIAL PAPER - 22.44%
Dupont (E.I.) De Nemours & Co., 5.430%, 10/29/98 ................. $1,000,000 $ 981,900
Ford Motor Credit Corp., 5.370%, 01/15/99 ........................ 1,500,000 1,455,698
General Motors Acceptance Corp., 5.490%, 07/31/98 ................ 1,500,000 1,493,137
Goldman Sachs & Co., 5.400%, 09/09/98 ............................ 1,000,000 989,500
IBM Credit Corp., 5.410%, 09/01/98 ............................... 1,000,000 990,683
Lucent Technologies, Inc., 5.460%, 07/14/98 ...................... 1,532,000 1,528,979
Merrill Lynch & Co., Inc., 5.500%, 09/03/98 ...................... 1,400,000 1,386,311
Motorola, Inc., 5.500%, 08/20/98 ................................. 1,000,000 992,361
Transamerica, 5.500%, 08/28/98 ................................... 1,000,000 991,139
-----------
Total Commercial Paper (Cost $10,809,708)......................... 10,809,708
-----------
TOTAL INVESTMENTS** - 101.16% (Cost $48,740,513).................. 48,740,513
LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS - (1.16%) ......... (556,881)
-----------
NET ASSETS - 100.00% ............................................. $48,183,632
===========
</TABLE>
** At June 30, 1998, cost is identical for book and federal income tax
purposes.
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1998
- --------------------------------------------------------------------------------
Intermediate Fixed Income Fund
<TABLE>
<CAPTION>
Principal
Amount Value
------------ -------------
<S> <C> <C>
FIXED INCOME SECURITIES - 98.46%
U.S. Government Obligations - 4.56%
U.S. Treasury Notes
7.250%, 08/15/04 .................................................. $ 500,000 $ 543,835
7.875%, 11/15/04 .................................................. 3,230,000 3,628,129
11.625%, 11/15/04 ................................................. 1,040,000 1,375,088
-----------
Total U.S. Treasury Obligations (Cost $5,503,496) .................. 5,547,052
-----------
U.S. Government Agency Obligations - 25.58%
Federal Farm Credit Bank - 0.52%
6.340%, 02/07/02 .................................................. 615,000 628,204
-----------
Federal Home Loan Bank - 2.10%
6.330%, 09/24/02 .................................................. 750,000 767,452
6.085%, 12/23/02 .................................................. 500,000 507,560
5.770%, 02/03/04 .................................................. 840,000 842,327
7.700%, 09/20/04 .................................................. 400,000 440,468
-----------
2,557,807
-----------
Federal Home Loan Mortgage Corp. - 1.96%
5.630%, 01/10/03 .................................................. 200,000 199,444
5.990%, 12/01/03 .................................................. 1,650,000 1,668,876
6.645%, 03/10/04 .................................................. 500,000 522,390
-----------
2,390,710
-----------
Federal National Mortgage Association - 12.53% .....................
6.450%, 04/23/01 .................................................. 150,000 152,907
6.780%, 04/10/02 .................................................. 875,000 907,489
7.550%, 04/22/02 .................................................. 2,000,000 2,126,920
6.820%, 04/29/02 .................................................. 500,000 519,725
6.590%, 05/21/02 .................................................. 1,500,000 1,546,905
6.230%, 07/18/02 .................................................. 200,000 203,774
6.220%, 08/12/02 .................................................. 850,000 866,252
5.950%, 10/16/02 .................................................. 1,735,000 1,750,476
5.250%, 01/15/03 .................................................. 1,450,000 1,425,306
5.450%, 10/10/03 .................................................. 160,000 158,040
7.400%, 07/01/04 .................................................. 3,100,000 3,358,106
7.875%, 02/24/05 .................................................. 2,005,000 2,238,562
-----------
15,254,462
-----------
FICO Coupon Strip - 0.25%
0.000%, 04/06/02* ................................................. 375,000 303,499
-----------
Guaranteed Export Trust - 1.51%
6.130%, 06/15/04 .................................................. 352,941 355,447
6.280%, 06/15/04 .................................................. 388,235 392,655
6.550%, 06/15/04 .................................................. 1,058,821 1,087,906
-----------
1,836,008
-----------
Resolution Funding Corp. - 6.71%
0.000%, 04/15/06* ................................................. 3,060,000 1,984,165
0.000%, 07/15/08* ................................................. 2,700,000 1,537,272
0.000%, 10/15/08* ................................................. 3,900,000 2,187,393
0.000%, 04/15/10* ................................................. 4,810,000 2,459,834
-----------
8,168,664
-----------
Total U.S. Government Agency Obligations (Cost $29,963,853)......... 31,139,354
-----------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1998
- --------------------------------------------------------------------------------
Intermediate Fixed Income Fund (continued)
<TABLE>
<CAPTION>
Principal
Amount Value
------------ -------------
<S> <C> <C>
FIXED INCOME SECURITIES - (continued)
Collateralized Mortgage Obligations - 35.67%
Federal Home Loan Mortgage Corp. - 22.26%
6.000%, 07/15/07 .................................................... $ 100,000 $ 100,183
5.500%, 01/15/14 .................................................... 94,424 94,219
6.500%, 08/15/14 .................................................... 850,000 851,844
5.850%, 02/15/18 .................................................... 1,500,000 1,498,899
5.400%, 07/15/18 .................................................... 1,500,000 1,488,334
6.400%, 01/15/19 .................................................... 1,000,000 1,007,646
5.800%, 02/15/19 .................................................... 1,175,000 1,174,653
6.050%, 05/15/19 .................................................... 700,000 699,649
6.250%, 05/15/19 .................................................... 1,000,000 1,000,361
6.000%, 07/15/19 .................................................... 1,500,000 1,497,649
6.000%, 02/15/20 .................................................... 1,000,000 997,185
5.500%, 04/15/20 .................................................... 1,100,000 1,093,066
6.000%, 05/15/20 .................................................... 1,550,000 1,542,792
6.000%, 10/15/20 .................................................... 1,600,000 1,589,712
6.000%, 12/15/20 .................................................... 3,000,000 2,962,530
6.500%, 01/25/21 .................................................... 2,000,000 2,002,264
5.750%, 05/15/21 .................................................... 1,600,000 1,576,885
6.350%, 07/15/21 .................................................... 1,000,000 1,002,547
6.750%, 05/15/23 .................................................... 1,000,000 1,020,966
5.750%, 09/15/23 .................................................... 2,000,000 1,943,140
5.750%, 03/15/24 .................................................... 2,000,000 1,943,800
-----------
27,088,324
-----------
Federal National Mortgage Association - 13.41%
5.950%, 05/25/05 .................................................... 1,243,529 1,242,172
5.400%, 11/25/05 .................................................... 962,434 956,178
5.900%, 11/25/05 .................................................... 1,184,534 1,183,072
6.000%, 04/01/09 .................................................... 15,232 15,147
5.600%, 10/25/13 .................................................... 1,571 1,565
5.250%, 11/25/13 .................................................... 412,889 411,279
5.750%, 02/25/15 .................................................... 827,522 825,800
5.250%, 09/25/16 .................................................... 36,833 36,519
6.000%, 11/25/16 .................................................... 1,221,831 1,219,302
9.000%, 06/25/18 .................................................... 125,553 135,498
6.600%, 09/25/18 .................................................... 100,000 100,721
6.250%, 01/25/19 .................................................... 2,500,000 2,496,288
5.500%, 02/25/19 .................................................... 1,175,000 1,163,637
6.250%, 07/25/19 .................................................... 600,000 599,218
5.500%, 07/25/20 .................................................... 1,850,000 1,769,021
5.500%, 08/25/21 .................................................... 720,000 701,401
0.000%, 01/25/22* ................................................... 134,861 127,484
0.000%, 03/25/22* ................................................... 25,965 25,845
0.000%, 05/25/22* ................................................... 9,730 9,486
6.000%, 01/17/23 .................................................... 1,350,000 1,303,815
6.250%, 01/25/23 .................................................... 2,000,000 2,004,131
-----------
16,327,579
-----------
Total Collateralized Mortgage Obligations (Cost $43,010,654) ......... 43,415,903
-----------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1998
- --------------------------------------------------------------------------------
Intermediate Fixed Income Fund (continued)
<TABLE>
<CAPTION>
Principal
Amount Value
------------- -------------
<S> <C> <C>
FIXED INCOME SECURITIES - (continued)
Asset Backed Securities - 1.68%
Capital Equipment Receivables Trust, 6.570%, 03/15/01 ............... $1,000,000 $ 1,010,288
CMO Trust 43 Y, 8.200%, 05/20/04 .................................... 29,275 29,874
Olympic Automobile Receivables Trust, 6.250%, 11/15/04 .............. 1,000,000 1,004,512
-----------
Total Asset Backed Securities (Cost $2,019,951) ..................... 2,044,674
-----------
Corporate Bonds - 30.97%
Automotive Parts & Equipment - 1.66%
Enron Corp., 6.450%, 11/15/01 ....................................... 2,000,000 2,020,000
-----------
Bank & Insurance - 3.31%
BankAmerica Corp., 6.850%, 03/01/03 ................................. 1,500,000 1,550,625
Norwest Corp., 5.750%, 02/01/03 ..................................... 2,500,000 2,481,250
-----------
4,031,875
-----------
Financial Services - 20.04%
American General Finance Corp., 6.200%, 03/15/03 .................... 2,000,000 2,002,500
Associates Corp. North America, 6.375%, 07/15/02 .................... 400,000 405,000
Associates Corp. North America, 6.375%, 10/15/02 .................... 330,000 334,125
Beneficial Corp., 8.100%, 11/09/99 .................................. 425,000 436,947
Beneficial Corp., 6.850%, 06/17/02 .................................. 325,000 333,937
Commercial Credit Co., 6.000%, 04/15/00 ............................. 225,000 225,563
Commercial Credit Co., 6.375%, 09/15/02 ............................. 700,000 710,500
Finova Capital Corp., 6.625%, 09/15/01 .............................. 875,000 887,031
Finova Capital Corp., 7.125%, 05/01/02 .............................. 1,025,000 1,059,594
Finova Capital Corp., 6.120%, 05/28/02 .............................. 425,000 426,594
Finova Capital Corp., 6.500%, 07/28/02 .............................. 700,000 709,625
Ford Motor Credit Co., 6.550%, 09/10/02 ............................. 2,000,000 2,040,000
Ford Motor Credit Co., 6.625%, 06/30/03 ............................. 1,000,000 1,022,500
General Motors Acceptance Corp., 6.700%, 04/30/01 ................... 50,000 50,875
General Motors Acceptance Corp., 5.875%, 01/22/03 ................... 1,200,000 1,182,000
General Motors Acceptance Corp., 7.125%, 05/01/03 ................... 300,000 310,500
General Motors Acceptance Corp., 7.250%, 05/15/03 ................... 1,100,000 1,146,750
Household Finance Corp., 6.750%, 06/01/00 ........................... 650,000 658,938
Household Finance Corp., 6.960%, 09/04/01 ........................... 175,000 180,031
Household Finance Corp., 6.700%, 06/15/02 ........................... 500,000 513,750
Lehman Brothers, Inc., 6.125%, 02/01/01 ............................. 800,000 800,000
Merrill Lynch & Co., Inc., 6.000%, 01/15/01 ......................... 800,000 802,000
Morgan Stanley Dean Witter Discover & Co., 6.875%, 03/01/07 ......... 575,000 598,000
Salomon, Inc., 6.500%, 03/01/00 ..................................... 2,000,000 2,020,000
Salomon Smith Barney Holdings, Inc., 5.875%, 02/01/01 ............... 1,250,000 1,245,312
Sears Roebuck Acceptance Corp., 6.730%, 08/29/00 .................... 1,000,000 1,015,000
Sears Roebuck Acceptance Corp., 6.920%, 10/03/02 .................... 225,000 231,469
Transamerica Financial Corp., 7.510%, 04/15/02 ...................... 150,000 157,312
Transamerica Financial Corp., 6.375%, 06/10/02 ...................... 400,000 404,500
Travelers, Inc., 9.500%, 03/01/02 ................................... 500,000 557,500
Travelers Group, Inc., 7.200%, 02/01/04 ............................. 1,155,000 1,211,306
Travelers Property Casualty Corp., 6.750%, 04/15/01 ................. 700,000 714,000
-----------
24,393,159
-----------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1998
- --------------------------------------------------------------------------------
Intermediate Fixed Income Fund (continued)
<TABLE>
<CAPTION>
Principal
Amount Value
------------- ----------------
<S> <C> <C>
FIXED INCOME SECURITIES - (continued)
Industrial - 5.96%
Philip Morris Cos., Inc., 7.500%, 01/15/02 ............................................... $1,150,000 $ 1,196,000
Philip Morris Cos., Inc., 7.250%, 01/15/03 ............................................... 800,000 831,000
Philip Morris Cos., Inc., 6.800%, 12/01/03 ............................................... 645,000 658,706
Raytheon Co., 6.450%, 08/15/02 ........................................................... 2,000,000 2,030,000
TCI Communications, Inc., 6.375%, 05/01/03 .............................................. 2,500,000 2,531,250
-------------
7,246,956
-------------
Total Corporate Bond (Cost $37,219,052) .................................................. 37,691,990
-------------
TOTAL FIXED INCOME SECURITIES - 98.46% (Cost $117,717,006)(1)............................. 119,838,973
CASH AND OTHER ASSETS NET OF LIABILITIES - 1.54% ......................................... 1,871,448
-------------
NET ASSETS - 100.00% ..................................................................... $ 121,710,421
=============
(1)Aggregate cost for federal income tax purposes is $117,717,006 and net unrealized
appreciation is as follows:
Gross unrealized appreciation ......................................................... $2,193,697
Gross unrealized depreciation ......................................................... (71,730)
----------
Net unrealized appreciation ........................................................... $2,121,967
==========
</TABLE>
* Zero coupon bond.
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1998
- --------------------------------------------------------------------------------
Fixed Income Fund
<TABLE>
<CAPTION>
Principal
Amount Value
---------- ------------
<S> <C> <C>
FIXED INCOME SECURITIES - 98.49%
U.S. Government Obligations - 15.36%
U.S. Treasury Notes
6.625%, 04/30/02 ................................................. $ 75,000 $ 77,741
11.875%, 11/15/03 ................................................ 910,000 1,173,117
11.625%, 11/15/04 ................................................ 845,000 1,117,259
6.500%, 08/15/05 ................................................. 215,000 226,864
7.500%, 11/15/16 ................................................. 532,000 638,756
8.875%, 08/15/17 ................................................. 130,000 177,113
----------
Total U.S. Treasury Obligations (Cost $3,260,178) ................. 3,410,850
----------
U.S. Government Agency Obligations - 9.45%
Federal Home Loan Bank - 2.90%
7.780%, 10/19/01 ................................................. 250,000 265,487
5.770%, 02/03/04 ................................................. 160,000 160,443
7.520%, 05/24/04 ................................................. 200,000 217,580
----------
643,510
----------
Federal Home Loan Mortgage Corp. - 1.72%
7.125%, 11/18/02 ................................................. 315,000 332,032
5.950%, 01/19/06 ................................................. 50,000 50,391
----------
382,423
----------
Federal National Mortgage Association - 3.23%
5.250%, 01/15/03 ................................................. 40,000 39,319
7.875%, 02/24/05 ................................................. 570,000 636,399
5.750%, 02/15/08 ................................................. 40,000 39,793
----------
715,511
----------
Guaranteed Export Trust - 0.19%
6.130%, 06/15/04 ................................................. 42,353 42,654
----------
Resolution Funding Corp. - 1.41%
0.000%, 10/15/11* ................................................ 260,000 120,835
0.000%, 04/15/16* ................................................ 310,000 109,808
0.000%, 04/15/17* ................................................ 250,000 83,385
----------
314,028
----------
Total U.S. Government Agency Obligations (Cost $2,005,163)......... 2,098,126
----------
Collateralized Mortgage Obligations - 38.33%
Federal Home Loan Mortgage Corp. - 25.85%
6.000%, 02/15/12 ................................................. 500,000 496,040
6.250%, 11/15/18 ................................................. 175,000 175,032
6.250%, 05/15/19 ................................................. 250,000 251,905
6.400%, 05/15/19 ................................................. 150,000 150,672
6.500%, 10/15/19 ................................................. 200,000 201,342
5.950%, 11/15/19 ................................................. 200,000 199,626
6.500%, 06/25/20 ................................................. 100,000 101,198
6.350%, 07/15/21 ................................................. 150,000 150,382
6.500%, 08/15/21 ................................................. 75,000 75,581
6.000%, 10/15/21 ................................................. 600,000 594,454
5.950%, 02/15/22 ................................................. 500,000 494,036
6.000%, 02/15/22 ................................................. 200,000 198,314
6.650%, 07/15/22 ................................................. 150,000 152,422
6.000%, 02/15/23 ................................................. 200,000 198,398
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1998
- --------------------------------------------------------------------------------
Fixed Income Fund (continued)
<TABLE>
<CAPTION>
Principal
Amount Value
---------- ------------
<S> <C> <C>
FIXED INCOME SECURITIES - (continued)
Collateralized Mortgage Obligations - (continued)
6.750%, 05/15/23 .................................................. $200,000 $ 204,193
5.750%, 06/15/23 .................................................. 550,000 535,095
5.750%, 09/15/23 .................................................. 600,000 582,942
6.000%, 12/15/23 .................................................. 400,000 395,068
5.750%, 03/15/24 .................................................. 600,000 583,140
----------
5,739,840
----------
Federal National Mortgage Association - 12.48%
7.500%, 07/25/18 .................................................. 14,394 14,630
6.000%, 09/25/18 .................................................. 40,000 39,882
6.500%, 03/25/19 .................................................. 150,000 150,793
6.500%, 04/25/19 .................................................. 150,000 150,755
3.500%, 05/25/19 .................................................. 125,000 115,399
6.500%, 09/25/19 .................................................. 150,000 149,711
6.250%, 01/25/20 .................................................. 220,000 219,728
6.850%, 10/25/20 .................................................. 40,000 40,378
6.750%, 11/25/20 .................................................. 200,000 202,552
6.750%, 05/25/21 .................................................. 200,000 202,845
6.500%, 10/25/21 .................................................. 200,000 201,332
0.000%, 03/25/22* ................................................. 2,597 2,585
6.000%, 12/18/22 .................................................. 600,000 578,610
6.000%, 03/25/23 .................................................. 500,000 494,215
7.000%, 06/25/23 .................................................. 200,000 205,979
----------
2,769,394
----------
Total Collateralized Mortgage Obligations (Cost $8,401,601)......... 8,509,234
----------
Asset Backed Securities - 0.03%
CMO Trust 39 Y, 8.650%, 03/01/03 ................................... 6,713 6,775
----------
Total Asset Backed Securities (Cost $6,724)......................... 6,775
----------
Corporate Bonds - 35.32%
Automotive Parts & Equipment - 2.07%
Enron Corp., 6.625%, 11/15/05 ...................................... 450,000 459,000
----------
Bank & Insurance - 5.85%
BankAmerica Corp., 6.850%, 03/01/03 ................................ 250,000 258,437
BankAmerica Corp., 6.625%, 08/01/07 ................................ 100,000 102,625
BankAmerica Corp., 6.625%, 10/15/07 ................................ 150,000 153,938
KeyCorp, 6.750%, 03/15/06 .......................................... 280,000 288,400
NationsBank Corp., 7.500%, 09/15/06 ................................ 175,000 189,656
NationsBank Corp., 6.375%, 02/15/08 ................................ 200,000 201,250
Wells Fargo & Co., 7.125%, 08/15/06 ................................ 100,000 105,375
----------
1,299,681
----------
Financial Services - 19.95%
American General Finance Corp., 6.200%, 03/15/03 ................... 500,000 500,625
Associates Corp. North America, 6.375%, 10/15/02 ................... 120,000 121,500
Beneficial Corp., 9.470%, 03/09/01 ................................. 20,000 21,675
Beneficial Corp., 6.750%, 07/20/04 ................................. 100,000 102,625
Beneficial Corp., 6.940%, 12/15/06 ................................. 100,000 104,500
Commercial Credit Co., 6.375%, 09/15/02 ............................ 100,000 101,500
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1998
- --------------------------------------------------------------------------------
Fixed Income Fund (continued)
<TABLE>
<CAPTION>
Principal
Amount Value
------------ -------------
<S> <C> <C>
FIXED INCOME SECURITIES - (continued)
Corporate Bonds - (continued)
Commercial Credit Co., 6.625%, 11/15/06 .................................................. $ 225,000 $ 230,906
Finova Captial Corp., 6.625%, 09/15/01 ................................................... 100,000 101,375
Finova Capital Corp., 6.500%, 07/28/02 ................................................... 300,000 304,125
Finova Capital Corp., 6.900%, 06/19/04 ................................................... 100,000 103,625
Ford Motor Credit Co., 6.550%, 09/10/02 .................................................. 100,000 102,000
Ford Motor Credit Co., 7.200%, 06/15/07 .................................................. 150,000 160,125
General Motors Acceptance Corp., 6.500%, 12/05/05 ........................................ 50,000 50,750
General Motors Acceptance Corp., 6.125%, 01/22/08 ........................................ 350,000 344,750
Household Finance Corp., 6.700%, 06/15/02 ................................................ 75,000 77,063
Household Finance Corp., 7.650%, 05/15/07 ................................................ 100,000 107,875
Lehman Brothers, Inc., 7.625%, 06/01/06 .................................................. 80,000 86,300
Merrill Lynch & Co., Inc., 6.560%, 12/16/07 .............................................. 150,000 152,812
Morgan Stanley Deane Witter Discover & Co., 6.875%, 03/01/07 ............................. 125,000 130,000
Salomon Smith Barney Holdings, Inc., 7.000%, 03/15/04 .................................... 150,000 156,188
Salomon Smith Barney Holdings, Inc., 7.375%, 05/15/07 .................................... 100,000 107,125
Sears Roebuck Acceptance Corp., 6.125%, 01/15/06 ......................................... 100,000 99,000
Sears Roebuck Acceptance Corp., 6.700%, 11/15/06 ......................................... 400,000 410,500
Transamerica Financial Corp., 7.500%, 09/14/01 ........................................... 75,000 77,966
Transamerica Financial Corp., 7.510%, 04/15/02 ........................................... 75,000 78,656
Travelers, Inc., 9.500%, 03/01/02 ........................................................ 75,000 83,625
Travelers Group, Inc., 7.200%, 02/01/04 .................................................. 100,000 104,875
U.S. Bancorp, 6.500%, 02/01/08 ........................................................... 400,000 407,000
-----------
4,429,066
-----------
Industrial - 7.45%
Northwest Pipeline Corp., 6.625%, 12/01/07 ............................................... 700,000 712,250
Philip Morris Cos., Inc., 7.500%, 01/15/02 ............................................... 175,000 182,000
Philip Morris Cos., Inc., 6.800%, 12/01/03 ............................................... 50,000 51,063
Raytheon Co., 6.300%, 03/15/05 ........................................................... 550,000 553,437
Sears Roebuck & Co., 6.250%, 01/15/04 .................................................... 50,000 50,625
TCI Communications, Inc., 6.875%, 02/15/06 ............................................... 100,000 103,500
-----------
1,652,875
-----------
Total Corporate Bonds (Cost $7,690,085)................................................... 7,840,622
-----------
TOTAL FIXED INCOME SECURITIES - 98.49% (Cost $21,363,751)(1).............................. 21,865,607
CASH AND OTHER ASSETS NET OF LIABILITIES - 1.51% ......................................... 336,086
-----------
NET ASSETS - 100.00% ..................................................................... $22,201,693
===========
(1)Aggregate cost for federal income tax purposes is $21,363,751 and net unrealized
appreciation is as follows:
Gross unrealized appreciation ......................................................... $ 523,766
Gross unrealized depreciation ......................................................... (21,910)
---------
Net unrealized appreciation ............................................................ $ 501,856
=========
</TABLE>
* Zero coupon bond.
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1998
- --------------------------------------------------------------------------------
Balanced Fund
Shares Value
-------- ------------
COMMON STOCKS - 60.18%
Business Equipment & Service - 0.76%
Automatic Data Processing, Inc. ......... 6,700 $ 488,262
Cognizant Corp. ......................... 3,450 217,350
----------
705,612
----------
Capital Goods - 5.29%
Cooper Industries, Inc. ................. 4,700 258,206
Emerson Electric Co. .................... 9,000 542,813
General Electric Co. .................... 21,900 1,992,900
Honeywell, Inc. ......................... 6,500 543,156
Illinois Tool Works, Inc. ............... 1,800 120,037
Ingersoll-Rand Co. ...................... 3,750 165,234
PPG Industries, Inc. .................... 7,800 542,588
Tyco International, Ltd. ................ 12,200 768,600
----------
4,933,534
----------
Consumer Durables - 1.22%
Ford Motor Co. .......................... 10,600 625,400
General Motors Corp. .................... 7,600 507,775
----------
1,133,175
----------
Consumer Non-Durables - 4.77%
Anheuser-Busch Cos., Inc. ............... 4,500 212,344
Bestfoods ............................... 8,500 493,531
Eastman Kodak Co. ....................... 5,000 365,312
General Mills, Inc. ..................... 3,550 242,731
PepsiCo, Inc. ........................... 19,300 794,919
Philip Morris Cos., Inc. ................ 32,400 1,275,750
Procter & Gamble Co. .................... 6,000 546,375
Sara Lee Corp. .......................... 9,200 514,625
----------
4,445,587
----------
Consumer Services - 1.47%
Disney (Walt) Co. ....................... 4,600 483,288
Hilton Hotels Corp. ..................... 4,900 139,650
Knight-Ridder, Inc. ..................... 4,400 242,275
Time Warner, Inc. ....................... 5,950 508,353
----------
1,373,566
----------
Energy - 6.17%
Amerada Hess Corp. ...................... 2,300 124,919
Amoco Corp. ............................. 14,300 595,237
Atlantic Richfield Co. .................. 1,100 85,938
Baker Hughes, Inc. ...................... 10,100 349,081
British Petroleum Co. PLC ............... 6,800 600,100
Burlington Resources, Inc. .............. 4,150 178,709
Chevron Corp. ........................... 7,100 589,744
Exxon Corp. ............................. 14,000 998,375
Mobil Corp. ............................. 8,600 658,975
Royal Dutch Petroleum Co. ADR ........... 8,500 465,906
Schlumberger, Ltd. ...................... 5,400 368,888
Texaco, Inc. ............................ 10,000 596,875
Unocal Corp. ............................ 3,800 135,850
----------
5,748,597
----------
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1998
- --------------------------------------------------------------------------------
Balanced Fund (continued)
Shares Value
-------- ------------
COMMON STOCKS - (continued)
Financial Services - 10.43%
American International Group, Inc. ............ 4,237 $ 618,602
Associates First Capital Corp. Cl. A .......... 4,253 326,949
BankAmerica Corp. ............................. 13,200 1,140,975
Bankers Trust Corp. ........................... 4,500 522,281
Chase Manhattan Corp. ......................... 24,264 1,831,932
Chubb Corp. ................................... 7,800 626,925
Citicorp ...................................... 7,600 1,134,300
Federal National Mortgage Association ......... 31,800 1,931,850
General Re Corp. .............................. 2,400 608,400
Morgan (J.P.) & Co., Inc. ..................... 2,900 339,663
U.S. Bancorp .................................. 14,750 634,250
----------
9,716,127
----------
Health Care - 7.70%
Alza Corp. Cl. A* ............................. 5,600 242,200
Bausch & Lomb, Inc. ........................... 450 22,556
Baxter International, Inc. .................... 11,500 618,844
Bristol-Myers Squibb Co. ...................... 8,500 976,969
Columbia/HCA Healthcare Corp. ................. 7,825 227,903
Crescendo Pharmaceuticals Corp.* .............. 180 2,284
Johnson & Johnson ............................. 10,000 737,500
Lilly (Eli) & Co. ............................. 8,500 561,531
Merck & Co., Inc. ............................. 9,500 1,270,625
Schering-Plough Corp. ......................... 12,600 1,154,475
St. Jude Medical, Inc.* ....................... 2,830 104,179
United Healthcare Corp. ....................... 5,950 377,825
Warner-Lambert Co. ............................ 12,700 881,063
----------
7,177,954
----------
Multi-Industry - 0.46%
Minnesota Mining & Mfg. Co. ................... 5,200 427,375
----------
Raw Materials - 2.18%
Aluminum Co. of America ....................... 5,350 352,766
Dow Chemical Co. .............................. 4,200 406,087
Dupont (E.I.) De Nemours & Co. ................ 8,600 641,775
Monsanto Co. .................................. 10,700 597,863
Solutia, Inc. ................................. 1,200 34,425
----------
2,032,916
----------
Retail - 3.45%
Abercrombie & Fitch Co. Cl. A* ................ 4,322 190,168
Albertson's, Inc. ............................. 11,550 598,434
Costco Cos., Inc.* ............................ 4,500 283,781
Dillard Dept. Stores, Inc. Cl. A .............. 3,450 142,959
May Department Stores Co. ..................... 8,450 553,475
Penney (J.C.), Inc. ........................... 5,600 404,950
Walgreen Co. .................................. 10,000 413,125
Wal-Mart Stores, Inc. ......................... 10,300 625,725
----------
3,212,617
----------
Shelter - 0.75%
Georgia-Pacific Group ......................... 4,600 271,113
Georgia-Pacific Timber Group .................. 3,600 82,800
Kimberly-Clark Corp. .......................... 7,500 344,063
----------
697,976
----------
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1998
- --------------------------------------------------------------------------------
Balanced Fund (continued)
Shares Value
-------- -------------
COMMON STOCKS - (continued)
Technology - 8.37%
AMP, Inc. ...................................... 15,050 $ 517,344
Boeing Co. ..................................... 5,700 254,006
Compaq Computer Corp. .......................... 66,034 1,873,715
Hewlett-Packard Co. ............................ 10,000 598,750
Imation Corp.* ................................. 1 17
Intel Corp. .................................... 25,600 1,897,600
International Business Machines Corp. .......... 7,000 803,687
Lucent Technologies, Inc. ...................... 10,764 895,430
Motorola, Inc. ................................. 11,850 622,866
Raytheon Co. Cl. A ............................. 357 20,572
Seagate Technology, Inc.* ...................... 13,500 321,469
-----------
7,805,456
-----------
Transportation - 0.94%
AMR Corp.* ..................................... 7,000 582,750
CSX Corp. ...................................... 6,500 295,750
-----------
878,500
-----------
Utilities - 6.22%
AirTouch Communications, Inc.* ................. 14,200 829,813
AT & T Corp. ................................... 9,750 556,969
Edison International ........................... 14,500 428,656
El Paso Natural Gas Co. ........................ 4,600 175,950
GTE Corp. ...................................... 17,800 990,125
MCI Communications Corp. ....................... 10,700 621,938
PECO Energy Co. ................................ 10,500 306,469
PG&E Corp. ..................................... 12,863 405,988
SBC Communications, Inc. ....................... 28,834 1,153,360
Unicom Corp. ................................... 9,400 329,587
-----------
5,798,855
-----------
TOTAL COMMON STOCKS (Cost $40,867,411) ......... 56,087,847
-----------
Principal
Amount Value
---------- -----------
FIXED INCOME SECURITIES - 38.29%
U.S. Government Obligations - 1.75%
U.S. Treasury Notes
11.625%, 11/15/04 .................................. $935,000 1,236,257
6.500%, 08/15/05 ................................... 375,000 395,692
-----------
Total U.S. Treasury Obligations (Cost $1,596,362) ... 1,631,949
-----------
U.S. Government Agency Obligations - 9.45%
Federal Farm Credit Bank - 0.89%
6.350%, 10/30/03 ................................... 500,000 514,245
6.600%, 02/06/04 ................................... 300,000 312,615
-----------
826,860
-----------
Federal Home Loan Bank - 1.52%
7.520%, 05/24/04 ................................... 300,000 326,370
6.905%, 06/03/04 ................................... 350,000 370,206
7.360%, 07/01/04 ................................... 665,000 719,031
-----------
1,415,607
-----------
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1998
- --------------------------------------------------------------------------------
Balanced Fund (continued)
<TABLE>
<CAPTION>
Principal
Amount Value
------------ ------------
<S> <C> <C>
FIXED INCOME SECURITIES - (continued)
Federal Home Loan Mortgage Corp. - 1.66%
5.990%, 12/01/03 .................................................. $ 150,000 $ 151,716
6.645%, 03/10/04 .................................................. 780,000 814,928
8.000%, 01/26/05 .................................................. 260,000 292,069
6.400%, 12/13/06 .................................................. 275,000 285,329
----------
1,544,042
----------
Federal National Mortgage Association - 4.67%
5.730%, 01/06/03 .................................................. 200,000 200,232
5.450%, 10/10/03 .................................................. 1,060,000 1,047,015
7.400%, 07/01/04 .................................................. 50,000 54,163
7.875%, 02/24/05 .................................................. 2,735,000 3,053,600
----------
4,355,010
----------
Resolution Funding Corp. - 0.32%
0.000%, 07/15/12** ................................................ 510,000 226,374
0.000%, 04/15/14** ................................................ 150,000 59,892
0.000%, 10/15/15** ................................................ 45,000 16,439
----------
302,705
----------
Student Loan Marketing Association - 0.39%
6.350%, 03/17/03 .................................................. 350,000 359,243
----------
Total U.S. Government Agency Obligations (Cost $8,601,580) ......... 8,803,467
----------
Collateralized Mortgage Obligations - 14.96%
Federal Home Loan Mortgage Corp. - 10.69%
6.000%, 09/15/07 .................................................. 500,000 493,835
6.000%, 02/15/12 .................................................. 750,000 744,060
6.300%, 10/15/18 .................................................. 100,000 100,105
6.250%, 05/15/19 .................................................. 100,000 100,036
6.500%, 10/15/19 .................................................. 200,000 201,342
5.950%, 11/15/19 .................................................. 100,000 99,813
7.000%, 02/15/21 .................................................. 100,000 102,886
5.750%, 04/15/21 .................................................. 50,000 49,292
6.500%, 08/15/21 .................................................. 240,000 241,858
6.500%, 09/15/21 .................................................. 550,000 558,893
6.000%, 10/15/21 .................................................. 800,000 792,605
5.950%, 11/15/21 .................................................. 300,000 294,320
6.500%, 11/15/21 .................................................. 600,000 607,378
5.950%, 02/15/22 .................................................. 700,000 691,651
6.000%, 02/15/22 .................................................. 100,000 99,157
6.000%, 05/15/22 .................................................. 450,000 438,461
6.650%, 07/15/22 .................................................. 100,000 101,615
6.250%, 11/15/22 .................................................. 150,000 150,437
6.500%, 11/15/22 .................................................. 100,000 100,738
7.000%, 01/15/23 .................................................. 200,000 206,211
6.000%, 02/15/23 .................................................. 193,000 191,454
6.500%, 02/15/23 .................................................. 400,000 406,939
6.750%, 05/15/23 .................................................. 150,000 153,145
5.750%, 06/15/23 .................................................. 800,000 778,320
5.750%, 09/15/23 .................................................. 800,000 777,256
6.000%, 12/15/23 .................................................. 800,000 799,736
5.750%, 04/15/28 .................................................. 700,000 680,330
----------
9,961,873
----------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1998
- --------------------------------------------------------------------------------
Balanced Fund (continued)
<TABLE>
<CAPTION>
Principal
Amount Value
---------- -------------
<S> <C> <C>
FIXED INCOME SECURITIES - (continued)
Federal National Mortgage Association - 4.27%
6.000%, 11/25/16 .................................................... $ 46,994 $ 46,896
6.000%, 09/25/18 .................................................... 50,000 49,852
6.250%, 01/25/20 .................................................... 100,000 99,876
6.850%, 10/25/20 .................................................... 50,000 50,473
6.750%, 11/25/20 .................................................... 100,000 101,546
6.750%, 05/25/21 .................................................... 100,000 101,423
6.500%, 10/25/21 .................................................... 600,000 603,997
6.500%, 11/25/21 .................................................... 100,000 100,665
6.000%, 02/25/22 .................................................... 500,000 494,508
6.500%, 04/25/22 .................................................... 779,000 784,327
6.500%, 07/18/22 .................................................... 500,000 507,210
6.000%, 07/25/22 .................................................... 50,000 49,305
6.500%, 07/25/22 .................................................... 350,000 352,331
6.800%, 09/25/22 .................................................... 300,000 305,593
6.500%, 11/25/22 .................................................... 200,000 204,949
7.000%, 06/25/23 .................................................... 125,000 128,737
-----------
3,981,688
-----------
Total Collateralized Mortgage Obligations (Cost $13,646,838) ......... 13,943,561
-----------
Corporate Bonds - 12.13%
Automotive Parts & Equipment - 0.82%
Enron Corp., 6.625%, 11/15/05 ........................................ 750,000 765,000
-----------
Bank & Insurance - 2.35%
BankAmerica Corp., 6.625%, 10/15/07 .................................. 250,000 256,563
Chase Manhattan Corp., 7.125%, 02/01/07 .............................. 200,000 210,250
KeyCorp, 6.750%, 03/15/06 ............................................ 245,000 252,350
NationsBank Corp., 7.500%, 09/15/06 .................................. 275,000 298,031
NationsBank Corp., 6.375%, 02/15/08 .................................. 400,000 402,500
U.S. Bancorp, 6.500%, 02/01/08 ....................................... 650,000 661,375
Wells Fargo & Co., 7.125%, 08/15/06 .................................. 100,000 105,375
-----------
2,186,444
-----------
Financial Services - 6.92%
American General Finance Corp., 7.450%, 07/01/02 ..................... 175,000 183,531
American General Finance Corp., 6.200%, 03/15/03 ..................... 600,000 600,750
Associates Corp. North America, 6.375%, 10/15/02 ..................... 50,000 50,625
Associates Corp. North America, 7.625%, 04/27/05 ..................... 125,000 135,313
Beneficial Corp., 10.100%, 11/27/00 .................................. 150,000 163,500
Beneficial Corp., 9.470%, 03/09/01 ................................... 30,000 32,512
Beneficial Corp., 6.750%, 07/20/04 ................................... 25,000 25,656
Beneficial Corp., 6.960%, 02/13/06 ................................... 150,000 156,375
Beneficial Corp., 6.940%, 12/15/06 ................................... 100,000 104,500
Commercial Credit Co., 6.000%, 04/15/00 .............................. 25,000 25,063
Commercial Credit Co., 6.375%, 09/15/02 .............................. 50,000 50,750
Commercial Credit Co., 6.625%, 11/15/06 .............................. 275,000 282,219
Finova Capital Corp., 6.625%, 09/15/01 ............................... 50,000 50,688
Finova Capital Corp., 6.120%, 05/28/02 ............................... 200,000 200,750
Finova Capital Corp., 6.500%, 07/28/02 ............................... 460,000 466,325
Finova Capital Corp., 6.900%, 06/19/04 ............................... 125,000 129,531
Ford Motor Credit Co., 6.550%, 09/10/02 .............................. 300,000 306,000
Ford Motor Credit Co., 6.550%, 07/07/03 .............................. 125,000 127,344
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1998
- --------------------------------------------------------------------------------
Balanced Fund (continued)
<TABLE>
<CAPTION>
Principal
Amount Value
------ -----
<S> <C> <C>
FIXED INCOME SECURITIES - (continued)
Corporate Bonds - (continued)
Ford Motor Credit Co., 7.200%, 06/15/07 .................................................. $ 125,000 $ 133,437
General Motors Acceptance Corp., 6.600%, 11/22/04 ........................................ 175,000 178,062
General Motors Acceptance Corp., 6.125%, 01/22/08 ........................................ 500,000 492,500
Household Finance Corp., 6.700%, 06/15/02 ................................................ 50,000 51,375
Household Finance Corp., 7.250%, 07/15/03 ................................................ 125,000 130,469
Household Finance Corp., 7.650%, 05/15/07 ................................................ 200,000 215,750
Lehman Brothers, Inc., 6.125%, 02/01/01 .................................................. 25,000 25,000
Lehman Brothers, Inc., 7.625%, 06/01/06 .................................................. 40,000 43,150
Merrill Lynch & Co., Inc., 6.000%, 01/15/01 .............................................. 25,000 25,063
Merrill Lynch & Co., Inc., 6.560%, 12/16/07 .............................................. 250,000 254,688
Morgan Stanley Deane Witter Discover & Co., 6.875%, 03/01/07 ............................. 125,000 130,000
Salomon Smith Barney Holdings, Inc. 5.875%, 02/01/01 ..................................... 25,000 24,906
Salomon Smith Barney Holdings, Inc., 6.500%, 10/15/02 .................................... 125,000 127,031
Salomon Smith Barney Holdings, Inc., 7.000%, 03/15/04 .................................... 275,000 286,344
Sears Roebuck Acceptance Corp., 6.900%, 08/01/03 ......................................... 125,000 128,750
Sears Roebuck Acceptance Corp., 6.125%, 01/15/06 ......................................... 50,000 49,500
Transamerica Corp., 6.750%, 11/15/06 ..................................................... 200,000 206,250
Transamerica Financial Corp., 7.510%, 04/15/02 ........................................... 30,000 31,462
Travelers, Inc., 9.500%, 03/01/02 ........................................................ 25,000 27,875
Travelers Group, Inc., 7.000%, 06/15/03 .................................................. 325,000 334,344
Travelers Group, Inc., 7.200%, 02/01/04 .................................................. 100,000 104,875
Travelers Group, Inc., 6.625%, 09/15/05 .................................................. 150,000 154,688
Travelers Property Casualty Corp., 6.750%, 11/15/06 ...................................... 200,000 206,500
-----------
6,453,451
-----------
Industrial - 2.04%
Northwest Pipeline Corp., 6.625%, 12/01/07 ............................................... 100,000 101,750
Philip Morris Cos., Inc., 7.500%, 01/15/02 ............................................... 50,000 52,000
Philip Morris Cos., Inc., 8.250%, 10/15/03 ............................................... 75,000 81,281
Philip Morris Cos., Inc., 6.800%, 12/01/03 ............................................... 30,000 30,638
Philip Morris Cos., Inc., 6.375%, 02/01/06 ............................................... 25,000 24,687
Raytheon Co., 6.300%, 03/15/05 ........................................................... 750,000 754,687
TCI Communications, Inc., 6.875%, 02/15/06 ............................................... 825,000 853,875
-----------
1,898,918
-----------
Total Corporate Bonds (Cost $11,035,351) ................................................. 11,303,813
-----------
TOTAL FIXED INCOME SECURITIES (Cost $34,880,131) ......................................... 35,682,790
-----------
TOTAL INVESTMENTS - 98.47% (Cost $75,747,542)(1) ......................................... 91,770,637
CASH AND OTHER ASSETS NET OF LIABILITIES - 1.53% ......................................... 1,430,317
-----------
NET ASSETS - 100.00% ..................................................................... $93,200,954
===========
(1)Aggregate cost for federal income tax purposes is $75,747,542 and net unrealized
appreciation is as follows:
Gross unrealized appreciation ......................................................... $16,312,463
Gross unrealized depreciation ......................................................... (289,368)
-----------
Net unrealized appreciation ............................................................ $16,023,095
===========
* Non-dividend paying stock.
** Zero coupon bond.
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1998
- --------------------------------------------------------------------------------
Equity Investment Fund
Shares Value
-------- -------------
COMMON STOCKS - 98.66%
Business Equipment & Service - 1.59%
Automatic Data Processing, Inc. ............ 16,800 $ 1,224,300
Cognizant Corp. ............................ 13,000 819,000
-----------
2,043,300
-----------
Capital Goods - 9.11%
Cooper Industries, Inc. .................... 12,500 686,719
Emerson Electric Co. ....................... 21,000 1,266,562
General Electric Co. ....................... 50,500 4,595,500
Honeywell, Inc. ............................ 17,760 1,484,070
Illinois Tool Works, Inc. .................. 1,000 66,688
Ingersoll-Rand Co. ......................... 5,250 231,328
PPG Industries, Inc. ....................... 19,500 1,356,469
Tyco International, Ltd. ................... 32,060 2,019,780
-----------
11,707,116
-----------
Consumer Durables - 1.76%
Ford Motor Co. ............................. 22,000 1,298,000
General Motors Corp. ....................... 14,500 968,781
-----------
2,266,781
-----------
Consumer Non-Durables - 7.88%
Anheuser-Busch Cos., Inc. .................. 14,000 660,625
Bestfoods .................................. 21,000 1,219,312
Corn Products International, Inc.* ......... 2,425 82,147
Eastman Kodak Co. .......................... 14,250 1,041,141
General Mills, Inc. ........................ 5,000 341,875
PepsiCo, Inc. .............................. 47,000 1,935,813
Philip Morris Cos., Inc. ................... 70,575 2,778,891
Procter & Gamble Co. ....................... 10,400 947,050
Sara Lee Corp. ............................. 20,000 1,118,750
-----------
10,125,604
-----------
Consumer Services - 2.11%
Disney (Walt) Co. .......................... 7,500 787,969
Hilton Hotels Corp. ........................ 14,000 399,000
Knight-Ridder, Inc. ........................ 10,500 578,156
Time Warner, Inc. .......................... 11,000 939,812
-----------
2,704,937
-----------
Energy - 9.66%
Amerada Hess Corp. ......................... 3,200 173,800
Amoco Corp. ................................ 33,000 1,373,625
Atlantic Richfield Co. ..................... 400 31,250
Baker Hughes, Inc. ......................... 27,000 933,188
British Petroleum Co. PLC .................. 12,502 1,103,302
Burlington Resources, Inc. ................. 6,800 292,825
Chevron Corp. .............................. 15,320 1,272,517
Exxon Corp. ................................ 26,000 1,854,125
Mobil Corp. ................................ 18,700 1,432,888
Royal Dutch Petroleum Co. ADR .............. 17,000 931,812
Schlumberger, Ltd. ......................... 11,800 806,087
Texaco, Inc. ............................... 28,500 1,701,094
Unocal Corp. ............................... 11,500 411,125
Valero Energy Corp. ........................ 3,000 99,750
-----------
12,417,388
-----------
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1998
- --------------------------------------------------------------------------------
Equity Investment Fund (continued)
Shares Value
-------- -------------
COMMON STOCKS - (continued)
Financial Services - 17.27%
American International Group, Inc. ............ 11,250 $ 1,642,500
Associates First Capital Corp. Cl. A .......... 5,503 423,043
BankAmerica Corp. ............................. 32,824 2,837,225
Bankers Trust Corp. ........................... 8,300 963,319
Chase Manhattan Corp. ......................... 56,654 4,277,377
Chubb Corp. ................................... 16,380 1,316,542
Citicorp ...................................... 18,000 2,686,500
Federal National Mortgage Association ......... 69,000 4,191,750
General Re Corp. .............................. 5,800 1,470,300
Morgan (J.P.) & Co., Inc. ..................... 8,150 954,569
U.S. Bancorp .................................. 33,000 1,419,000
-----------
22,182,125
-----------
Health Care - 12.75%
Alza Corp. Cl. A* ............................. 12,500 540,625
Bausch & Lomb, Inc. ........................... 400 20,050
Baxter International, Inc. .................... 33,500 1,802,719
Bristol-Myers Squibb Co. ...................... 18,300 2,103,356
Columbia/HCA Healthcare Corp. ................. 19,050 554,831
Crescendo Pharmaceuticals Corp.* .............. 465 5,900
Johnson & Johnson ............................. 17,500 1,290,625
Lilly (Eli) & Co. ............................. 27,020 1,785,009
Merck & Co., Inc. ............................. 20,760 2,776,650
Schering-Plough Corp. ......................... 26,600 2,437,225
St. Jude Medical, Inc.* ....................... 6,459 237,772
United Healthcare Corp. ....................... 15,000 952,500
Warner-Lambert Co. ............................ 27,200 1,887,000
-----------
16,394,262
-----------
Multi-Industry - 0.67%
Minnesota Mining & Mfg. Co. ................... 10,530 865,434
-----------
Raw Materials - 3.83%
Aluminum Co. of America ....................... 14,540 958,731
Dow Chemical Co. .............................. 8,070 780,268
Dupont (E.I.) De Nemours & Co. ................ 24,500 1,828,312
Monsanto Co. .................................. 22,500 1,257,188
Solutia, Inc. ................................. 3,480 99,832
-----------
4,924,331
-----------
Retail - 6.03%
Abercrombie & Fitch Co. Cl. A* ................ 11,207 493,108
Albertson's, Inc. ............................. 25,500 1,321,219
Costco Cos., Inc.* ............................ 12,000 756,750
Dillard Dept. Stores, Inc. Cl. A .............. 8,000 331,500
May Department Stores Co. ..................... 19,000 1,244,500
Penney (J.C.), Inc. ........................... 16,750 1,211,234
Tricon Global Restaurants, Inc.* .............. 2,850 90,309
Walgreen Co. .................................. 20,500 846,906
Wal-Mart Stores, Inc. ......................... 24,050 1,461,037
-----------
7,756,563
-----------
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1998
- --------------------------------------------------------------------------------
Equity Investment Fund (continued)
<TABLE>
<CAPTION>
Shares Value
-------------- ---------------
<S> <C> <C>
COMMON STOCKS - (continued)
Shelter - 1.07%
Georgia-Pacific Group .................................................................... 9,400 $ 554,013
Georgia-Pacific Timber Group ............................................................. 8,000 184,000
Kimberly-Clark Corp. ..................................................................... 14,020 643,167
------------
1,381,180
------------
Technology - 13.59%
AMP, Inc. ................................................................................ 30,000 1,031,250
Boeing Co. ............................................................................... 13,000 579,313
Compaq Computer Corp. .................................................................... 149,024 4,228,556
Hewlett-Packard Co. ...................................................................... 28,000 1,676,500
Intel Corp. .............................................................................. 57,000 4,225,125
International Business Machines Corp. .................................................... 16,500 1,894,406
Lucent Technologies, Inc. ................................................................ 22,906 1,905,493
Motorola, Inc. ........................................................................... 23,000 1,208,937
Raytheon Co. Cl. A ....................................................................... 816 47,022
Seagate Technology, Inc.* ................................................................ 28,000 666,750
------------
17,463,352
------------
Transportation - 1.79%
AMR Corp.* ............................................................................... 17,000 1,415,250
CSX Corp. ................................................................................ 19,500 887,250
------------
2,302,500
------------
Utilities - 9.55%
AirTouch Communications, Inc.* ........................................................... 26,000 1,519,375
AT & T Corp. ............................................................................. 25,430 1,452,689
Edison International ..................................................................... 23,000 679,938
El Paso Natural Gas Co. .................................................................. 16,000 612,000
GTE Corp. ................................................................................ 38,000 2,113,750
MCI Communications Corp. ................................................................. 15,000 871,875
PECO Energy Co. .......................................................................... 35,500 1,036,156
PG&E Corp. ............................................................................... 30,570 964,866
SBC Communications, Inc. ................................................................. 55,096 2,203,840
Unicom Corp. ............................................................................. 23,500 823,969
------------
12,278,458
------------
TOTAL COMMON STOCKS - 98.66% (Cost $90,141,841)(1)........................................ 126,813,331
CASH AND OTHER ASSETS NET OF LIABILITIES - 1.34% ......................................... 1,727,692
------------
NET ASSETS - 100.00% ..................................................................... $128,541,023
============
(1)Aggregate cost for federal income tax purposes is $90,141,841 and net unrealized
appreciation is as follows:
Gross unrealized appreciation ......................................................... $37,368,716
Gross unrealized depreciation ......................................................... (697,226)
-----------
Net unrealized appreciation ........................................................... $36,671,490
===========
* Non-dividend paying stock.
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Statements of Assets and Liabilities June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
McM
McM Intermediate
Principal Fixed
Preservation Income
Fund Fund
-------------- -----------------
<S> <C> <C>
Assets:
Investments in securities at value (cost
$48,740,513, $117,717,006, $21,363,751,
$75,747,542 and $90,141,841, respectively)......... $48,740,513 $ 119,838,973
Cash-interest bearing accounts ..................... 0 309,310
Dividends and interest receivable .................. 126,333 1,383,762
Receivable for fund shares sold .................... 0 238,873
Deferred organization cost (Note A) ................ 4,535 4,535
Other assets ....................................... 1,436 3,346
----------- -------------
Total assets ...................................... 48,872,817 121,778,799
----------- -------------
Liabilities:
Cash overdraft ..................................... 25,191 0
Payable for securities purchased ................... 0 0
Fund shares redeemed ............................... 640,839 0
Distributions payable .............................. 5,194 0
Accrued expenses ................................... 12,837 22,518
Payable to advisor, net ............................ 5,124 45,860
----------- -------------
Total liabilities ................................. 689,185 68,378
----------- -------------
Net Assets:
Applicable to 48,185,486, 11,554,782, 2,039,637,
5,142,463 and 5,083,201 shares outstanding,
respectively .................................... $48,183,632 $ 121,710,421
=========== =============
Net Assets Consist of:
Capital paid-in .................................... $48,185,486 $ 118,728,566
Accumulated undistributed net investment income 0 402,481
Accumulated net realized gain (loss) on
investments ....................................... (1,854) 457,407
Net unrealized appreciation/depreciation on
investments ....................................... 0 2,121,967
----------- -------------
$48,183,632 $ 121,710,421
=========== =============
Net asset value and redemption price per share ...... $ 1.00 $ 10.53
=========== =============
</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
$48,740,513, $117,717,006, $21,363,751,
$75,747,542 and $90,141,841, respectively)......... $ 21,865,607 $ 91,770,637 $ 126,813,331
Cash-interest bearing accounts ..................... 102,203 543,120 1,382,896
Dividends and interest receivable .................. 246,606 550,826 188,950
Receivable for fund shares sold .................... 0 375,000 337,839
Deferred organization cost (Note A) ................ 4,535 4,535 4,535
Other assets ....................................... 304 2,499 2,358
------------ ------------ -------------
Total assets ...................................... 22,219,255 93,246,617 128,729,909
------------ ------------ -------------
Liabilities:
Cash overdraft ..................................... 0 0 0
Payable for securities purchased ................... 0 0 88,518
Fund shares redeemed ............................... 0 0 7,000
Distributions payable .............................. 0 0 0
Accrued expenses ................................... 11,310 14,094 18,809
Payable to advisor, net ............................ 6,252 31,569 74,559
------------ ------------ -------------
Total liabilities ................................. 17,562 45,663 188,886
------------ ------------ -------------
Net Assets:
Applicable to 48,185,486, 11,554,782, 2,039,637,
5,142,463 and 5,083,201 shares outstanding,
respectively .................................... $ 22,201,693 $ 93,200,954 $ 128,541,023
============ ============ =============
Net Assets Consist of:
Capital paid-in .................................... $ 21,603,363 $ 76,721,058 $ 91,430,915
Accumulated undistributed net investment income 72,059 128,535 18,262
Accumulated net realized gain (loss) on
investments ....................................... 24,415 328,266 420,356
Net unrealized appreciation/depreciation on
investments ....................................... 501,856 16,023,095 36,671,490
------------ ------------ -------------
$ 22,201,693 $ 93,200,954 $ 128,541,023
============ ============ =============
Net asset value and redemption price per share ...... $ 10.89 $ 18.12 $ 25.29
============ ============ =============
</TABLE>
See accompanying notes to financial statements
<PAGE>
Statements of Operations
For the Year Ended June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
McM
McM Intermediate
Principal Fixed
Preservation Income
Fund Fund
-------------- --------------
<S> <C> <C>
Investment Income:
Dividends ............................................. $ 0 $ 0
Interest .............................................. 2,125,254 6,876,226
----------- -----------
Total investment income ............................. 2,125,254 6,876,226
----------- -----------
Expenses:
Investment advisory fees (Note E) ..................... 95,077 382,596
Transfer agent fees ................................... 34,347 27,716
Administration fees ................................... 39,466 39,144
Accounting fees ....................................... 29,564 53,598
Legal fees ............................................ 2,653 8,487
Custodian fees ........................................ 15,370 21,439
Insurance fees ........................................ 10,987 28,708
Registration expenses ................................. 10,113 14,973
Amortization of organization costs (Note A) ........... 3,610 3,610
Report to shareholder expense ......................... 1,496 4,560
Auditing fees ......................................... 10,000 13,489
Trustees fees ......................................... 1,921 5,164
Taxes-other expense ................................... 0 0
Miscellaneous expenses ................................ 410 1,752
----------- -----------
Total expenses ...................................... 255,014 605,236
Expenses reimbursed (Note E) .......................... (140,922) (347,443)
Expense reimbursement recovery (Note E) ............... 0 288,755
----------- -----------
Net expenses ........................................ 114,092 546,548
----------- -----------
Net Investment Income .................................. 2,011,162 6,329,678
----------- -----------
Realized and Unrealized Gain (Loss) on Investments:
Net realized gain (loss) on investments ............... (187) 593,160
Net change in unrealized appreciation/depreciation on
investments .......................................... 0 2,104,618
----------- -----------
Net realized and unrealized gain (loss) on investments (187) 2,697,778
----------- -----------
Increase in Net Assets from Operations ................. $ 2,010,975 $ 9,027,456
=========== ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
McM McM
Fixed McM Equity
Income Balanced Investment
Fund Fund Fund
--------------- ---------------- ----------------
<S> <C> <C> <C>
Investment Income:
Dividends ............................................. $ 0 $ 662,314 $ 1,617,129
Interest .............................................. 977,111 1,684,779 83,145
----------- ------------ ------------
Total investment income ............................. 977,111 2,347,093 1,700,274
----------- ------------ ------------
Expenses:
Investment advisory fees (Note E) ..................... 53,188 292,875 471,723
Transfer agent fees ................................... 26,020 31,074 35,954
Administration fees ................................... 38,314 39,088 40,160
Accounting fees ....................................... 29,523 43,172 40,944
Legal fees ............................................ 1,192 4,147 6,065
Custodian fees ........................................ 6,240 21,220 37,967
Insurance fees ........................................ 2,744 11,644 17,390
Registration expenses ................................. 7,541 15,809 15,976
Amortization of organization costs (Note A) ........... 3,610 3,610 3,610
Report to shareholder expense ......................... 481 2,175 3,115
Auditing fees ......................................... 7,500 10,000 10,000
Trustees fees ......................................... 659 2,965 4,374
Taxes-other expense ................................... 0 2,913 9,852
Miscellaneous expenses ................................ 604 599 1,288
----------- ------------ ------------
Total expenses ...................................... 177,616 481,291 698,418
Expenses reimbursed (Note E) .......................... (101,633) (302,551) (166,906)
Expense reimbursement recovery (Note E) ............... 0 211,760 175,996
----------- ------------ ------------
Net expenses ........................................ 75,983 390,500 707,508
----------- ------------ ------------
Net Investment Income .................................. 901,128 1,956,593 992,766
----------- ------------ ------------
Realized and Unrealized Gain (Loss) on Investments:
Net realized gain (loss) on investments ............... 44,111 382,091 514,315
Net change in unrealized appreciation/depreciation on
investments .......................................... 436,110 10,037,050 22,166,197
----------- ------------ ------------
Net realized and unrealized gain (loss) on investments 480,221 10,419,141 22,680,512
----------- ------------ ------------
Increase in Net Assets from Operations ................. $ 1,381,349 $ 12,375,734 $ 23,673,278
=========== ============ ============
</TABLE>
See accompanying notes to financial statements
<PAGE>
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
McM Principal
Preservation Fund
-------------------------------
For the For the
Year Ended Year Ended
06/30/98 06/30/97
-------------- ---------------
<S> <C> <C>
Operations:
Net investment income .......................... $ 2,011,162 $ 1,288,420
Net realized gain (loss) on investments ........ (187) 0
Net change in unrealized appreciation/
depreciation on investments ................... 0 0
------------ ------------
Increase in net assets ......................... 2,010,975 1,288,420
------------ ------------
Dividends and Distributions to Shareholders:
From net investment income ..................... (2,011,162) (1,288,657)
From capital gains ............................. (1,667) (1,352)
------------ ------------
Total Distributions ............................ (2,012,829) (1,290,009)
------------ ------------
Capital Share Transactions - Note C ............. 15,482,644 8,509,309
------------ ------------
Total increase in net assets ................... 15,480,790 8,507,720
Net Assets:
Beginning of year .............................. 32,702,842 24,195,122
------------ ------------
End of year (including undistributed net
investment income of $0, $0, $402,481,
$275,372, $72,059 and $29,851,
respectively) ............................... $ 48,183,632 $ 32,702,842
============ ============
<CAPTION>
McM Intermediate McM Fixed
Fixed Income Fund Income Fund
------------------------------- -----------------------------
For the For the For the For the
Year Ended Year Ended Year Ended Year Ended
06/30/98 06/30/97 06/30/98 06/30/97
--------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
Operations:
Net investment income .......................... $ 6,329,678 $ 5,170,412 $ 901,128 $ 549,985
Net realized gain (loss) on investments ........ 593,160 (72,659) 44,111 11,263
Net change in unrealized appreciation/
depreciation on investments ................... 2,104,618 873,998 436,110 88,107
------------ ------------ ----------- ----------
Increase in net assets ......................... 9,027,456 5,971,751 1,381,349 649,355
------------ ------------ ----------- ----------
Dividends and Distributions to Shareholders:
From net investment income ..................... (6,233,438) (5,112,892) (858,916) (543,122)
From capital gains ............................. 0 (164,477) (28,964) (10,144)
------------ ------------ ----------- ----------
Total Distributions ............................ (6,233,438) (5,277,369) (887,880) (553,266)
------------ ------------ ----------- ----------
Capital Share Transactions - Note C ............. 25,514,515 16,662,781 12,143,298 1,477,192
------------ ------------ ----------- ----------
Total increase in net assets ................... 28,308,533 17,357,163 12,636,767 1,573,281
Net Assets:
Beginning of year .............................. 93,401,888 76,044,725 9,564,926 7,991,645
------------ ------------ ----------- ----------
End of year (including undistributed net
investment income of $0, $0, $402,481,
$275,372, $72,059 and $29,851,
respectively) ............................... $121,710,421 $ 93,401,888 $22,201,693 $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
--------------------------------- ---------------------------------
For the For the For the For the
Year Ended Year Ended Year Ended Year Ended
06/30/98 06/30/97 06/30/98 06/30/97
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Operations:
Net investment income ........................... $ 1,956,593 $ 838,463 $ 992,766 $ 592,381
Net realized gain (loss) on investments ......... 382,091 (31,191) 514,315 88,154
Net change in unrealized appreciation/
depreciation on investments .................... 10,037,050 5,082,280 22,166,197 12,113,724
------------ ----------- ------------ -----------
Increase in net assets .......................... 12,375,734 5,889,552 23,673,278 12,794,259
------------ ----------- ------------ -----------
Dividends and Distributions to Shareholders:
From net investment income ...................... (1,887,824) (796,912) (1,004,580) (583,073)
From capital gains .............................. 0 0 (176,965) (15,401)
------------ ----------- ------------ -----------
Total Distributions ............................. (1,887,824) (796,912) (1,181,545) (598,474)
------------ ----------- ------------ -----------
Capital Share Transactions - Note C .............. 41,772,321 23,933,114 47,456,107 22,484,477
------------ ----------- ------------ -----------
Total increase in net assets .................... 52,260,231 29,025,754 69,947,840 34,680,262
Net Assets:
Beginning of year ............................... 40,940,723 11,914,969 58,593,183 23,912,921
------------ ----------- ------------ -----------
End of year (including undistributed net
investment income of $128,535, $56,694,
$18,262 and $20,224, respectively) ........... $ 93,200,954 $40,940,723 $128,541,023 $58,593,183
============ =========== ============ ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM FUNDS
Notes to Financial Statements June 30, 1998
- --------------------------------------------------------------------------------
Note (A) Significant Accounting Policies: McM Funds (the "Trust") is a Delaware
business trust, 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 Trust is a no-load, open-end management investment
company which is registered under the Investment Company Act of 1940, as
amended the "Act". The Trust 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 Trust
officers serve without direct compensation from the Funds. The following is a
summary of the significant accounting policies consistently followed by each
Fund in the preparation of its financial statements. These policies are in
conformity with generally accepted accounting principles.
(1) Security Valuation: The net asset value per share of each Fund is
computed as of the close of regular trading on the New York Stock
Exchange. The net asset value per share is computed by adding the value of
all securities and other assets in the portfolio, deducting any
liabilities (expenses and fees are accrued daily) and dividing by the
number of shares outstanding. The equity securities of each Fund listed or
traded on a stock exchange are valued at the last sale price on its
principal exchange. If no sale price is reported, the mean of the last bid
and asked prices is used. Securities traded over-the-counter are priced at
the mean of the last bid and asked prices. Fixed-income securities are
valued through valuations obtained from a commercial pricing service or at
the most recent mean of the bid and asked prices provided by investment
dealers in accordance with procedures established by the Board of
Trustees. All securities held in the portfolio of the Principal
Preservation Fund, and the debt securities with maturities of 60 days or
less held by the other Funds, are valued at amortized cost. When a
security is valued at amortized cost, it is valued at its cost when
purchased, and thereafter by assuming a constant amortization to maturity
of any discount or premium, regardless of the impact of fluctuating
interest rates on the market value of the instrument. When market
quotations are not readily available, securities and other assets are
valued at fair value as determined in good faith by the Board of Trustees.
(2) Repurchase Agreements: Each Fund may enter into repurchase agreements
to earn income. The Funds may only enter into repurchase agreements with
financial institutions that are deemed to be creditworthy by the Advisor,
pursuant to guidelines established by the Funds' Board of Trustees. During
the term of any repurchase agreement, the Advisor will continue to monitor
the creditworthiness of the seller. Repurchase agreements are considered
under the Act to be collateralized loans by a Fund to the seller secured
by the securities transferred to the Fund. Repurchase agreements under the
Act will be fully collateralized by securities in which the Fund may
invest directly. Such collateral will be marked-to-market daily. If the
seller of the underlying security under the repurchase agreement should
default on its obligation to repurchase the underlying security, a Fund
may experience delay or difficulty in exercising its right to realize upon
the security and, in addition, may incur a loss if the value of the
security should decline, as well as disposition costs in liquidating the
security.
(3) Investment Income and Securities Transactions: Dividend income is
recorded on the ex-dividend date. Interest income is accrued daily.
Securities transactions are accounted for on the date securities are
purchased or sold. The cost of securities sold is determined using the
first-in-first-out method.
<PAGE>
McM FUNDS
Notes to Financial Statements (continued) June 30, 1998
- --------------------------------------------------------------------------------
(4) Federal Income Taxes: The Trust has elected to be treated as a
"regulated investment company" under Sub-chapter M of the Internal Revenue
Code and to distribute substantially all of the Funds' net taxable income.
Each Fund qualified for such treatment for the year ended June 30, 1998.
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
------------------------------------------------------------------------
Year Ended Year Ended
June 30, 1998 June 30, 1997
------------------------------------ ----------------------------------
Shares Amount Shares Amount
----------------- ----------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Shares sold ...................... 146,489,995 $ 146,489,995 61,451,444 $ 61,451,444
Shares issued through
reinvestment of dividends ....... 1,937,721 1,937,721 1,244,977 1,244,977
Shares redeemed .................. (132,945,072) (132,945,072) (54,187,112) (54,187,112)
------------ --------------- ----------- --------------
Net Increase ..................... 15,482,644 $ 15,482,644 8,509,309 $ 8,509,309
============ =============== =========== ==============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE FIXED INCOME FUND
--------------------------------------------------------------------
Year Ended Year Ended
June 30, 1998 June 30, 1997
--------------------------------- ---------------------------------
Shares Amount Shares Amount
--------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
Shares sold ...................... 4,017,645 $ 41,959,179 3,302,865 $ 33,813,474
Shares issued through
reinvestment of dividends ....... 581,272 6,063,815 500,320 5,114,086
Shares redeemed .................. (2,149,379) (22,508,479) (2,172,289) (22,264,779)
---------- -------------- ---------- --------------
Net Increase ..................... 2,449,538 $ 25,514,515 1,630,896 $ 16,662,781
========== ============== ========== ==============
</TABLE>
<TABLE>
<CAPTION>
FIXED INCOME FUND
----------------------------------------------------------
Year Ended Year Ended
June 30, 1998 June 30, 1997
----------------------------- ---------------------------
Shares Amount Shares Amount
------------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Shares sold .................... 1,161,982 $ 12,549,304 136,454 $1,423,356
Shares issued through
reinvestment of dividends ..... 82,549 887,523 53,167 552,893
Shares redeemed ................ (120,810) (1,293,529) (47,554) (499,057)
--------- ------------ ------- ----------
Net Increase ................... 1,123,721 $ 12,143,298 142,067 $1,477,192
========= ============ ======= ==========
<CAPTION>
BALANCED FUND
------------------------------------------------------------
Year Ended Year Ended
June 30, 1998 June 30, 1997
----------------------------- -----------------------------
Shares Amount Shares Amount
------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Shares sold .................... 2,721,124 $ 46,198,090 1,730,693 $23,766,367
Shares issued through
reinvestment of dividends ..... 108,340 1,842,078 53,858 767,164
Shares redeemed ................ (362,674) (6,267,847) (43,162) (600,417)
--------- ------------ --------- -----------
Net Increase ................... 2,466,790 $ 41,772,321 1,741,389 $23,933,114
========= ============ ========= ===========
</TABLE>
<PAGE>
McM FUNDS
Notes to Financial Statements (continued) June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY INVESTMENT FUND
--------------------------------------------------------------
Year Ended Year Ended
June 30, 1998 June 30, 1997
------------------------------- -----------------------------
Shares Amount Shares Amount
------------- ---------------- ------------- --------------
<S> <C> <C> <C> <C>
Shares sold .................... 2,496,173 $ 56,388,235 1,485,441 $ 24,691,781
Shares issued through
reinvestment of dividends ..... 51,001 1,159,261 33,050 573,358
Shares redeemed ................ (436,532) (10,091,389) (155,758) (2,780,662)
--------- ------------- --------- ------------
Net Increase ................... 2,110,642 $ 47,456,107 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 year ended
June 30, 1998 were:
Aggregate Proceeds from
Purchases Sales
-------------- --------------
Intermediate Fixed Income Fund ......... $77,524,478 $48,958,505
Fixed Income Fund ...................... 20,773,996 8,746,144
Balanced Fund .......................... 53,195,381 13,324,568
Equity Investment Fund ................. 46,963,271 528,841
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 June 30, 1998, the net amount the Advisor absorbed,
subject to repayment, expenses totaling $392,034; $140,922 for the Principal
Preservation Fund, $58,688 for the Intermediate Fixed Income Fund, $101,633 for
the Fixed Income Fund, and $90,791 for the Balanced Fund.
The investment advisory agreements provide that any fee reductions or expense
reimbursements made by the Advisor are subject to repayment by the Funds within
the three years following such reduction or reimbursement provided that the
Funds are able to make such repayments and remain in compliance with applicable
expense limitations. Since July 14, 1994 (July 13, 1994 for the Principal
Preservation Fund) through June 30, 1998, the Advisor has reduced its
management fee and otherwise absorbed Fund expenses for each Fund in the
following amounts: Principal Preservation Fund $379,863, Intermediate Fixed
Income Fund $347,443, Fixed Income Fund $290,964, Balanced Fund $319,521 and
Equity Investment Fund $166,906.
<PAGE>
Financial Highlights
- --------------------------------------------------------------------------------
The tables below set forth financial data for a share of beneficial interest
outstanding throughout each period presented.
<TABLE>
<CAPTION>
McM Principal
Preservation Fund
----------------------------------------------------------
For the For the For the For the
Year Ended Year Ended Year Ended Period Ended
06/30/98 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 ..................................... 0.05 0.05 0.05 0.05
------- ------ ------ -------
Total from investment operations ........................ 0.05 0.05 0.05 0.05
------- ------ ------ -------
Less Distributions:
From net investment income ................................ (0.05) (0.05) (0.05) (0.05)
------- ------- ------- -------
Total distributions ..................................... (0.05) (0.05) (0.05) (0.05)
------- ------- ------- -------
Net Asset Value, end of period ............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= =======
Total return ............................................... 5.41% 5.24% 5.39% 5.10%(2)
Ratios/Supplemental Data
Net assets, end of period (in 000's) ...................... $48,184 $32,703 $24,195 $11,813
Ratio of expenses to average net assets before reimburse-
ment and recovery of expenses by Advisor ................. 0.67% 0.77% 0.93% 2.77%(1)
Ratio of expenses to average net assets after reimbursement
of expenses by Advisor ................................... 0.30% 0.30% 0.30% 0.30%(1)
Ratio of net investment income to average net assets before
reimbursement of expenses by Advisor ..................... 4.92% 4.65% 4.60% 2.91%(1)
Ratio of net investment income to average net assets after
reimbursement of expenses by Advisor ..................... 5.29% 5.12% 5.23% 5.38%(1)
Portfolio turnover ........................................ 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.
N/A Not applicable.
See accompanying notes to financial statements.
<PAGE>
Financial Highlights (continued)
- --------------------------------------------------------------------------------
The tables below set forth financial data for a share of beneficial interest
outstanding throughout each period presented.
<TABLE>
<CAPTION>
McM Intermediate
Fixed Income Fund
----------------------------------------------------------
For the For the For the For the
Year Ended Year Ended Year Ended Period Ended
06/30/98 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 .......................................... 0.60 0.60 0.57 0.54
Net realized and unrealized gain (loss) on investments ......... 0.27 0.11 (0.10) 0.34
------- ------- ------- --------
Total from investment operations ........................ ..... 0.87 0.71 0.47 0.88
------- ------- ------- --------
Less Distributions:
From net investment income ..................................... (0.60) (0.60) (0.57) (0.51)
From capital gains ............................................. 0.00 (0.02) (0.10) 0.00
-------- ------- ------- --------
Total distributions ..................................... ..... (0.60) (0.62) (0.67) (0.51)
-------- ------- ------- --------
Net Asset Value, end of period .................................. $ 10.53 $ 10.26 $ 10.17 $ 10.37
======= ======= ======= ========
Total return .................................................... 8.68% 7.14% 4.61% 9.19%(2)
Ratios/Supplemental Data
Net assets, end of period (in 000's) ........................... $121,710 $93,402 $76,045 $ 29,936
Ratio of expenses to average net assets before reimburse-
ment and recovery of expenses by Advisor ...................... 0.55% 0.59% 0.69% 1.72%(1)
Ratio of expenses to average net assets after reimbursement
of expenses by Advisor ........................................ 0.50% 0.50% 0.50% 0.50%(1)
Ratio of net investment income to average net assets before
reimbursement of expenses by Advisor .......................... 5.74% 5.80% 5.52% 5.01%(1)
Ratio of net investment income to average net assets after
reimbursement of expenses by Advisor .......................... 5.79% 5.89% 5.71% 6.24%(1)
Portfolio turnover ............................................. 45.44% 36.02% 75.26% 227.09%(2)
</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 tables below set forth financial data for a share of beneficial interest
outstanding throughout each period presented.
<TABLE>
<CAPTION>
McM Fixed
Income Fund
----------------------------------------------------------
For the For the For the For the
Year Ended Year Ended Year Ended Period Ended
06/30/98 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 .......................................... 0.62 0.65 0.64 0.55
Net realized and unrealized gain (loss) on investments ......... 0.47 0.12 (0.20) 0.56
------- ------- -------- -------
Total from investment operations .............................. 1.09 0.77 0.44 1.11
------- ------- -------- -------
Less Distributions:
From net investment income ..................................... (0.62) (0.65) (0.63) (0.53)
From capital gains ............................................. (0.02) (0.01) (0.06) 0.00
------- -------- -------- --------
Total distributions ........................................... (.64) (0.66) (0.69) (0.53)
------- -------- -------- --------
Net Asset Value, end of period .................................. $ 10.89 $ 10.44 $ 10.33 $ 10.58
======= ======== ======== ========
Total return .................................................... 10.71% 7.72% 4.16% 11.55%(2)
Ratios/Supplemental Data
Net assets, end of period (in 000's) ........................... $22,202 $ 9,565 $ 7,992 $ 6,599
Ratio of expenses to average net assets before reimburse-
ment and recovery of expenses by Advisor ...................... 1.17% 1.57% 1.82% 7.29%(1)
Ratio of expenses to average net assets after reimbursement
of expenses by Advisor ........................................ 0.50% 0.50% 0.50% 0.50%(1)
Ratio of net investment income to average net assets before
reimbursement of expenses by Advisor .......................... 5.26% 5.25% 4.70% (0.47%)(1)
Ratio of net investment income to average net assets after
reimbursement of expenses by Advisor .......................... 5.93% 6.32% 6.02% 6.33%(1)
Portfolio turnover ............................................. 58.22% 32.46% 37.62% 150.77%(2)
</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 tables below set forth financial data for a share of beneficial interest
outstanding throughout each period presented.
<TABLE>
<CAPTION>
McM Balanced
Fund
----------------------------------------------------------
For the For the For the For the
Year Ended Year Ended Year Ended Period Ended
06/30/98 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 ..................................... 0.47 0.43 0.40 0.36
Net realized and unrealized gain on investments ........... 2.82 2.54 1.49 1.33
------- ------- ------- -------
Total from investment operations ......................... 3.29 2.97 1.89 1.69
------- ------- ------- -------
Less Distributions:
From net investment income ................................ (0.47) (0.42) (0.40) (0.34)
From capital gains ........................................ 0.00 0.00 (0.09) 0.00
------- ------- ------- -------
Total distributions ...................................... (0.47) (0.42) (0.49) (0.34)
------- ------- ------- -------
Net Asset Value, end of period ............................. $18.12 $ 15.30 $ 12.75 $11.35
======= ======= ======= ======
Total return ............................................... 21.76% 23.65% 16.86% 17.31%(2)
Ratios/Supplemental Data
Net assets, end of period (in 000's) ...................... $93,201 $40,941 $11,915 $ 3,070
Ratio of expenses to average net assets before reimburse-
ment and recovery of expenses by Advisor ................. 0.74% 1.01% 2.21% 8.41%(1)
Ratio of expenses to average net assets after reimbursement
of expenses by Advisor ................................... 0.60% 0.60% 0.60% 0.60%(1)
Ratio of net investment income to average net assets before
reimbursement of expenses by Advisor ..................... 2.87% 2.97% 1.81% (3.54%)(1)
Ratio of net investment income to average net assets after
reimbursement of expenses by Advisor ..................... 3.01% 3.38% 3.43% 4.28%(1)
Portfolio turnover ........................................ 20.73% 31.64% 26.16% 81.05%(2)
</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 tables below set forth financial data for a share of beneficial interest
outstanding throughout each period presented.
<TABLE>
<CAPTION>
McM Equity
Investment Fund
----------------------------------------------------------
For the For the For the For the
Year Ended Year Ended Year Ended Period Ended
06/30/98 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 ....................................... 0.23 0.24 0.21 0.19
Net realized and unrealized gain on investments ............. 5.62 4.87 2.94 1.94
------- ------- ------ -------
Total from investment operations ........................... 5.85 5.11 3.15 2.13
------- ------- ------ -------
Less Distributions:
From net investment income .................................. (0.23) (0.24) (0.21) (0.18)
From capital gains .......................................... (0.04) (0.01) (0.04) 0.00
-------- ------- ------ --------
Total distributions ........................................ (0.27) (0.25) (0.25) (0.18)
-------- ------- ------ --------
Net Asset Value, end of period ............................... $ 25.29 $ 19.71 $ 14.85 $ 11.95
======== ======= ======= ========
Total return ................................................. 29.89% 34.68% 26.53% 21.57%(2)
Ratios/Supplemental Data
Net assets, end of period (in 000's) ........................ $128,541 $58,593 $23,913 $ 4,866
Ratio of expenses to average net assets before
reimbursement and recovery of expenses by Advisor ......... 0.75% 0.88% 1.72% 8.48%(1)
Ratio of expenses to average net assets
after reimbursement of expenses by Advisor ................ 0.75% 0.75% 0.75% 0.75%(1)
Ratio of net investment income to average net assets
before reimbursement of expenses by Advisor ............... 1.05% 1.36% 0.80% (5.50%)(1)
Ratio of net investment income to average net assets
after reimbursement of expenses by Advisor ................ 1.05% 1.49% 1.77% 2.24%(1)
Portfolio turnover .......................................... 0.57% 0.88% 0.92% 1.81%(2)
</TABLE>
* McM Equity Investment Fund commenced investment operations on July 14, 1994.
(1) Annualized.
(2) Not annualized.
See accompanying notes to financial statements.
<PAGE>
McM FUNDS
Report of Independent Certified Public Accounts
- --------------------------------------------------------------------------------
To the Shareholders and Trustees of McM Funds:
We have audited the accompanying statements of assets and liabilities of McM
Principal Preservation Fund, McM Intermediate Fixed Income Fund, McM Fixed
Income Fund, McM Balanced Fund, and McM Equity Investment Fund, each a series
of shares of beneficial interest of McM Funds, including the schedules of
investments, as of June 30, 1998, and the related statements of operations for
the year then ended, the statements of changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of
the three years in the period then ended and for the period ended June 30,
1995. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of June
30, 1998, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of McM
Principal Preservation Fund, McM Intermediate Fixed Income Fund, McM Fixed
Income Fund, McM Balanced Fund and McM Equity Investment Fund as of June 30,
1998, the results of their operations for the year then ended, the changes in
their net assets for each of the two years in the period then ended and the
financial highlights for each of the three years in the period then ended and
for the period ended June 30, 1995, in conformity with generally accepted
accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
July 21, 1998
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<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
First Data Investor Services Group, 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.
AR0698
UNION BUG
