<PAGE>
McM Funds
Semi-Annual Report
December 31, 1998
Principal Preservation Fund
Intermediate Fixed Income Fund
Fixed Income Fund
Balanced Fund
Equity Investment Fund
<PAGE>
Dear Shareholder:
Over the last few months of 1998, we were pleased to be featured in a few
publications and evaluated favorably by a couple of the better-known mutual
fund rating agencies. In almost every case, the theme was the same: we were
feted as a family of Funds that earned very competitive returns while taking
less investment risk than the overall market.
The writers of these reports were speaking to investors who were worried about
the volatility in the financial markets. During those volatile periods, many
other investment managers saw problems. We saw opportunities.
Despite headlines dramatizing every market blip, history has repeatedly
demonstrated that, in the long run, the stock and bond markets are excellent
performers. Over time, and despite temporary losses, both stock and bond
markets have steadily gained value. And our shareholders have participated in
those gains to a great extent.
Why have our Funds been successful for shareholders?
o We emphasize consistency while investing for the long term.
o Our market-oriented investment style makes us much less susceptible to
investing trends than a number of other portfolio managers.
o Many of the people who created our superior record of performance have been
with us for a long time -- and as we add staff and plan for the future, we
hire people committed to our disciplined investment style.
Market ups and downs are pretty normal. While others may try to out guess
market cycles and trends, as the managers of your McM Funds, we will remain
committed to a consistent, disciplined, investment program that works.
Sincerely,
[GRAPHIC OMITTED]
Terry A. O'Toole
Chairman of the Board
<PAGE>
Review
In 1998, the capital markets produced another year of stunning performance,
ignoring the troubled world economy and the slowing growth in Asia and Latin
America.
The stock market, as measured by the Standard & Poor's 500 Index, was up 28.7%
while the Lehman Aggregate Bond Index was up 8.7%. U.S. companies continued to
reward investors, another reason stocks held up in the uncertain global
environment. Mergers and acquisitions were common and companies continued to
announce the purchase of their own stock. Corporate balance sheets were strong
as lower interest rates reduced debt expense and many companies chose to pay
down their debt, further improving their financial situation.
In addition to strong domestic factors, the effects of the international
financial shocks in 1998 led the Federal Reserve to lower interest rates in
three separate moves. This allowed rapid money growth to help ease financial
stress.
McMorgan's equity strategy continued to do well. Posting the fourth
double-digit return in a row, the Equity and Balanced Funds added to high
quality, attractive positions in the technology and finance sectors in periods
of "crisis mentality" and trimmed the larger positions of those that performed
well during more buoyant times. While many style biased mutual funds tried to
time the market in 1998, McM portfolios were kept as fully invested as possible
minimizing the "drag" caused by a large cash balances.
Outlook
The bond market continues to look attractive with high expected real rates of
return (yield less inflation). If the economy slows as we expect, bond yields
should decline producing total returns in excess of portfolio yields.
Stocks should continue to do well. Normally, after this many years of strong
economic growth, investors expect inflation to rise and the stock market to
decline. This is not the case. U.S. corporations streamlined operations and
technological advances increased their global competitive advantage. Prices are
actually stable or declining, and as long as inflation remains moderate and
interest rates stay low, U.S. multi-national companies should generate positive
real earnings. We continue to emphasize areas where growth is more predictable,
such as health care, while also investing in sectors that have declined due to
excessive fear. This strategy seeks to produce above-average returns as we
continue in 1999.
- ------------
To be preceded or accompanied by a prospectus. All benchmarks are unmanaged
indices not available for investment. As of January 1, 1999 The McM Funds are
distributed by First Data Distributors Inc. 4400 Computer Drive, Westborough MA
01581. DFU 2/99.
<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 62% of the portfolio. The 7-day and
30-day average yields as of December 31, 1998 were 4.82% and 4.83%,
respectively.
Diversification
Certificates of Deposit 4%
Repurchase Agreements 12%
Commercial Paper 22%
Government 62%
Credit Quality
A-1/P-1 38%
Government 62%
Maturity
91+ days 20%
31-90 days 30%
1-15 days 29%
16-30 days 21%
Average Annual Return (%) Current One Three Since
Yield Year Years Inception
------- ---- ----- ---------
McM Principal Preservation Fund 4.86 5.30 5.27 5.32
Principal Preservation Fund
December 31, 1997 - December 31, 1998
7-Day Average Yield (%)
12/31/97 5.39
1/31/98 5.31
2/27/98 5.29
3/31/98 5.26
4/30/98 5.23
5/31/98 5.23
6/30/98 5.22
7/31/98 5.25
8/31/98 5.25
9/30/98 5.14
10/31/98 5.08
11/30/98 4.96
12/31/98 4.82
Past performance does not guarantee future results.
An investment in the Fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the Fund seeks to
preserve the value of your investment at $1.00 per share, it is possible to lose
money by investing in the Fund.
<PAGE>
Intermediate Fixed Income Fund
This Fund emphasizes high quality and diversification. Government bonds and
AAA-rated bonds represent 66% of the Fund. Mortgage securities, backed by U.S.
Government Agencies, provide yield advantages compared to U.S. Government bonds
with equivalent maturities. The Funds weighted average maturity of 4.4 years
seeks to limit sensitivity to interest rate changes.
NASDAQ Symbol
MCMNX
Diversification
Asset Backed/Other 3%
Government 28%
Mortgage 36%
Corporate 33%
Bond Quality
BAA 7%
Government 29%
AAA 37%
A 25%
AA 2%
Maturity
10+ years 6%
5-10 years 44%
Short-term 2%
1-5 years 48%
Average Annual Returns (%) One Three Since
Year Years Inception
---- ----- ---------
McM Intermediate Fixed Income Fund 7.81 6.59 7.59
Lehman Brothers Intermediate Govt./Corp. Index 8.42 6.75 7.88
<PAGE>
Intermediate Fixed Income Fund
July 14, 1994 Inception Date
Inter Fixed LBInter
12/31/94 $9,957 $10,001
1/31/95 $10,122 $10,170
2/28/95 $10,350 $10,381
3/31/95 $10,398 $10,440
4/30/95 $10,518 $10,568
5/31/95 $10,849 $10,887
6/30/95 $10,918 $10,960
7/31/95 $10,914 $10,961
8/31/95 $11,003 $11,061
9/30/95 $11,078 $11,141
10/31/95 $11,210 $11,264
11/30/95 $11,344 $11,412
12/31/95 $11,445 $11,532
1/31/96 $11,540 $11,631
2/29/96 $11,401 $11,495
3/31/96 $11,340 $11,436
4/30/96 $11,320 $11,396
5/31/96 $11,302 $11,387
6/30/96 $11,420 $11,508
7/31/96 $11,461 $11,542
8/31/96 $11,463 $11,552
9/30/96 $11,617 $11,712
10/31/96 $11,828 $11,920
11/30/96 $11,983 $12,077
12/31/96 $11,916 $12,000
1/31/97 $11,957 $12,046
2/28/97 $11,965 $12,069
3/31/97 $11,880 $11,986
4/30/97 $12,018 $12,126
5/31/97 $12,123 $12,227
6/30/97 $12,236 $12,338
7/31/97 $12,507 $12,589
8/31/97 $12,431 $12,526
9/30/97 $12,582 $12,671
10/31/97 $12,760 $12,812
11/30/97 $12,744 $12,840
12/31/97 $12,859 $12,942
1/30/98 $13,033 $13,112
2/27/98 $13,016 $13,102
3/31/98 $13,051 $13,143
4/30/98 $13,106 $13,209
5/31/98 $13,218 $13,306
6/30/98 $13,300 $13,391
7/31/98 $13,335 $13,438
8/31/98 $13,586 $13,649
9/30/98 $13,874 $13,991
10/31/98 $13,790 $13,977
11/30/98 $13,822 $13,976
12/31/98 $13,865 $14,032
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 6.6 years, 2.2 years longer than the Intermediate
Fixed Income Fund.
NASDAQ Symbol
MCMFX
Diversification
Government 29%
Corporate 33%
Mortgage 38%
Bond Quality
BAA 10%
Government 29%
A 21%
AA 1%
AAA 39%
Maturity
10+ years 4%
1-5 years 16%
Short-term 1%
5-10 years 79%
Average Annual Returns (%) One Three Since
Year Years Inception
---- ----- ---------
McM Fixed Income Fund 8.52 6.99 8.68
Lehman Brothers Aggregate Index 8.67 7.29 8.93
<PAGE>
Fixed Income Fund
July 14, 1994 Inception Date
FIF LB
12/31/94 $9,926 $10,015
1/31/95 $10,114 $10,213
2/28/95 $10,384 $10,456
3/31/95 $10,460 $10,520
4/30/95 $10,604 $10,667
5/31/95 $11,060 $11,080
6/30/95 $11,155 $11,161
7/31/95 $11,112 $11,137
8/31/95 $11,257 $11,271
9/30/95 $11,364 $11,381
10/31/95 $11,533 $11,529
11/30/95 $11,716 $11,702
12/31/95 $11,841 $11,865
1/31/96 $11,929 $11,944
2/29/96 $11,688 $11,736
3/31/96 $11,587 $11,654
4/30/96 $11,485 $11,588
5/31/96 $11,460 $11,565
6/30/96 $11,618 $11,720
7/31/96 $11,629 $11,752
8/31/96 $11,605 $11,732
9/30/96 $11,820 $11,936
10/31/96 $12,104 $12,201
11/30/96 $12,335 $12,410
12/31/96 $12,202 $12,294
1/31/97 $12,225 $12,332
2/28/97 $12,238 $12,363
3/31/97 $12,085 $12,226
4/30/97 $12,263 $12,409
5/31/97 $12,373 $12,527
6/30/97 $12,516 $12,676
7/31/97 $12,912 $13,019
8/31/97 $12,757 $12,908
9/30/97 $12,965 $13,099
10/31/97 $13,181 $13,289
11/30/97 $13,212 $13,350
12/31/97 $13,364 $13,485
1/30/98 $13,573 $13,657
2/27/98 $13,516 $13,647
3/31/98 $13,562 $13,693
4/30/98 $13,619 $13,764
5/31/98 $13,747 $13,895
6/30/98 $13,857 $14,013
7/31/98 $13,866 $14,042
8/31/98 $14,171 $14,271
9/30/98 $14,568 $14,605
10/31/98 $14,385 $14,528
11/30/98 $14,446 $14,611
12/31/98 $14,503 $14,655
Past performance does not guarantee future results.
<PAGE>
Balanced Fund
The Balanced Fund invests in common stocks and bonds. Common stocks represent
about 61.5% of the Fund, bonds about 37% and cash about 1.5%. The common stock
portion is well diversified among 100 companies that represent all economic
sectors. The Funds bond portion is 68% U.S. Government and AAA-rated securities
with a weighted average maturity of 6.2 years.
NASDAQ Symbol
MCMBX
Asset Allocation
Cash 1.5%
Bonds 37%
Stocks 61.5%
Fixed Income Quality
BAA 11%
Government 31%
AAA 37%
A 19%
AA 2%
Average Annual Returns (%) One Three Since
Year Years Inception
----- ----- ---------
McM Balanced Fund 20.62 20.12 19.89
Lehman Brothers Aggregate Index 8.67 7.29 8.93
Standard & Poors 500 Stock Index 28.69 28.27 27.69
Ten Largest Equity Holdings (%)
Intel 4.5
Compaq 4.5
General Electric 3.9
Federal National Mort. Assoc. 3.6
Chase Manhattan 3.2
Philip Morris 2.4
SBC Communications 2.2
International Business Machines 2.1
Citigroup 2.0
Schering Plough 2.0
----
30.4
<PAGE>
Balanced Fund
July 14, 1994 Inception Date
Bal Fund LB S&P
12/31/94 $10,078 $10,015 $10,265
1/31/95 $10,282 $10,213 $10,532
2/28/95 $10,608 $10,456 $10,941
3/31/95 $10,767 $10,520 $11,265
4/30/95 $11,054 $10,667 $11,595
5/31/95 $11,514 $11,080 $12,054
6/30/95 $11,731 $11,161 $12,337
7/31/95 $11,937 $11,137 $12,749
8/31/95 $12,020 $11,271 $12,780
9/30/95 $12,389 $11,381 $13,317
10/31/95 $12,410 $11,529 $13,270
11/30/95 $12,806 $11,702 $13,854
12/31/95 $12,971 $11,865 $14,113
1/31/96 $13,311 $11,944 $14,598
2/29/96 $13,311 $11,736 $14,739
3/31/96 $13,315 $11,654 $14,880
4/30/96 $13,411 $11,588 $15,099
5/31/96 $13,592 $11,565 $15,488
6/30/96 $13,709 $11,720 $15,552
7/31/96 $13,407 $11,752 $14,858
8/31/96 $13,525 $11,732 $15,173
9/30/96 $14,075 $11,936 $16,027
10/31/96 $14,509 $12,201 $16,468
11/30/96 $15,343 $12,410 $17,718
12/31/96 $15,079 $12,294 $17,376
1/31/97 $15,714 $12,332 $18,455
2/28/97 $15,736 $12,363 $18,603
3/31/97 $15,324 $12,226 $17,829
4/30/97 $15,918 $12,409 $18,893
5/31/97 $16,511 $12,527 $20,053
6/30/97 $16,951 $12,676 $20,946
7/31/97 $18,158 $13,019 $22,611
8/31/97 $17,582 $12,908 $21,356
9/30/97 $18,298 $13,099 $22,520
10/31/97 $18,063 $13,289 $21,779
11/30/97 $18,464 $13,350 $22,779
12/31/97 $18,645 $13,485 $23,161
1/30/98 $18,960 $13,657 $23,423
2/27/98 $19,647 $13,647 $25,107
3/31/98 $20,093 $13,693 $26,395
4/30/98 $20,354 $13,764 $26,670
5/31/98 $20,173 $13,895 $26,206
6/30/98 $20,639 $14,013 $27,270
7/31/98 $20,661 $14,042 $26,981
8/31/98 $19,147 $14,271 $23,085
9/30/98 $20,097 $14,605 $24,571
10/31/98 $21,025 $14,528 $26,559
11/30/98 $21,875 $14,611 $28,169
12/31/98 $22,494 $14,655 $29,808
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 95 companies across all
economic sectors. Individual companies are carefully selected and attractive
economic sectors are strategically overweighted as compared to the Standard &
Poors 500 Stock Index.
NASDAQ Symbol
MCMEX
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Ten Largest Holdings (%) Portfolio Characteristics Sector Weightings (%)
Intel 4.8 Price/Earnings Ratio 33.89 Technology 17.7
Compaq 4.6 Beta 1.00 Financial Services 17.0
General Electric 4.1 Avg. Market Capitalization $85.8B Health Care 13.2
Federal Natl Mort. 3.5 Total Number of Stocks 95 Utilities 10.5
Chase Manhattan 3.4 Capital Goods 9.3
Philip Morris 2.4 Average Annual Returns (%) Energy 8.3
Citigroup 2.2 McM Equity S&P 500 Consumer Non-Durables 7.6
SBC Communications 2.0 ---------- ------- Retail 5.9
Merck 2.0 One Year 27.76 28.69 Raw Materials 3.0
Lucent Technologies 1.9 Three Years 29.40 28.27 Consumer Services 1.9
---- Since Inception 27.72 27.69 Consumer Durables 1.9
30.9 Transportation 1.4
Shelter 1.0
Business Equip. & Services 0.8
Multi-Industry 0.5
-----
100.0
</TABLE>
<PAGE>
Equity Investment Fund
July 14, 1994 Inception Date
Equity S&P
12/31/94 10,124 10,265
1/31/95 10,315 10,532
2/28/95 10,709 10,941
3/31/95 10,965 11,265
4/30/95 11,371 11,595
5/31/95 11,786 12,054
6/30/95 12,155 12,337
7/31/95 12,532 12,749
8/31/95 12,552 12,780
9/30/95 13,094 13,317
10/31/95 13,002 13,270
11/30/95 13,543 13,854
12/31/95 13,761 14,113
1/31/96 14,276 14,598
2/29/96 14,513 14,739
3/31/96 14,613 14,880
4/30/96 14,913 15,099
5/31/96 15,294 15,488
6/30/96 15,380 15,552
7/31/96 14,779 14,858
8/31/96 15,058 15,173
9/30/96 15,891 16,027
10/31/96 16,452 16,468
11/30/96 17,814 17,718
12/31/96 17,449 17,376
1/31/97 18,629 18,455
2/28/97 18,629 18,603
3/31/97 17,978 17,829
4/30/97 18,952 18,893
5/31/97 20,021 20,053
6/30/97 20,713 20,946
7/31/97 22,837 22,611
8/31/97 21,880 21,356
9/30/97 23,092 22,520
10/31/97 22,323 21,779
11/30/97 23,156 22,779
12/31/97 23,352 23,161
1/30/98 23,733 23,423
2/27/98 25,238 25,107
3/31/98 26,131 26,395
4/30/98 26,630 26,670
5/31/98 26,079 26,206
6/30/98 26,906 27,270
7/31/98 26,916 26,981
8/31/98 23,342 23,085
9/30/98 24,815 24,571
10/31/98 26,862 26,559
11/30/98 28,600 28,169
12/31/98 29,841 29,808
Past Performance does not guarantee future results.
<PAGE>
McM Funds -- Schedule of Investments (unaudited) December 31, 1998
- --------------------------------------------------------------------------------
Principal Preservation
<TABLE>
<CAPTION>
Principal
Amount Value
FIXED INCOME SECURITIES ------------- -------------
<S> <C> <C>
U.S. Government Agency Notes - 59.17%
Federal Farm Credit Bank - 2.25%
4.69%, 06/15/99 ............................. $1,000,000 $ 978,504
-----------
978,504
-----------
Federal Home Loan Bank - 21.57%
5.65%, 05/19/99 ............................. 2,000,000 2,001,407
5.35%, 01/20/99 ............................. 1,500,000 1,495,765
5.31%, 01/20/99 ............................. 2,000,000 1,994,363
5.24%, 05/05/99 ............................. 1,000,000 981,951
4.42%, 11/24/99 ............................. 2,000,000 1,919,703
4.99%, 01/28/99 ............................. 1,000,000 996,250
-----------
9,389,439
-----------
Federal Home Loan Mortgage Corp. - 12.71%
5.00%, 01/07/99 ............................. 4,000,000 3,996,667
4.99%, 01/28/99 ............................. 1,540,000 1,534,225
-----------
5,530,892
-----------
Federal National Mortgage Association - 22.64%
5.33%, 01/04/99 ............................. 1,000,000 999,556
5.09%, 03/15/99 ............................. 4,000,000 3,958,674
4.92%, 03/18/99 ............................. 2,000,000 1,979,227
4.68%, 07/21/99 ............................. 2,000,000 1,947,740
4.64%, 08/12/99 ............................. 1,000,000 971,257
-----------
9,856,454
-----------
Total U.S. GOVERNMENT AGENCY NOTES ........... 25,755,289
-----------
REPURCHASE AGREEMENTS - 11.95%
Repurchase Agreement
5.00%, 01/04/99 ............................. 4,000,000 4,000,000
Repurchase Agreement
4.60%, 01/04/99 ............................. 1,200,000 1,200,000
-----------
TOTAL REPURCHASE AGREEMENT ................... 5,200,000
-----------
COMMERCIAL PAPER - 29.02%
Dupont (EI) de Nemours & Co.
4.98%, 01/28/99 ............................. 1,000,000 996,265
4.95%, 03/26/99 ............................. 1,000,000 988,450
Ford Motor Credit Corp.
5.37%, 01/15/99 ............................. 1,500,000 1,496,868
General Electric Capital Corp.
4.96%, 03/31/99 ............................. 1,000,000 987,738
General Motors Acceptance Corp.
5.39%, 02/02/99 ............................. 1,000,000 995,182
Goldman Sachs & Co.
5.32%, 02/26/99 ............................. 1,500,000 1,487,727
Imperial Bank
5.05%, 02/16/99 ............................. 1,700,000 1,700,000
Merrill Lynch & Co.
5.05%, 01/29/99 ............................. 2,000,000 1,992,128
Monsanto Co.
5.18%, 01/12/99 ............................. 1,000,000 998,417
Motorola, Inc.
4.95%, 04/01/99 ............................. 1,000,000 987,625
-----------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments (unaudited) December 31, 1998
- --------------------------------------------------------------------------------
Principal Preservation (continued)
<TABLE>
<CAPTION>
Value
FIXED INCOME SECURITIES - (continued) --------------
<S> <C>
TOTAL COMMERCIAL PAPER ..................................... $12,630,400
-----------
TOTAL INVESTMENTS - 100.14% (Cost-$43,585,689).............. 43,585,689
-----------
CASH AND OTHER ASSETS NET OF LIABILITIES - (0.14%) ......... (62,831)
-----------
NET ASSETS - 100.00% ....................................... $43,522,858
===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments (unaudited) December 31, 1998
- --------------------------------------------------------------------------------
Intermediate Fixed Income Fund
<TABLE>
<CAPTION>
Principal
Amount Value
------------- -------------
<S> <C> <C>
FIXED INCOME SECURITIES - 96.97%
Asset Backed Securities - 1.51%
Capital Equipment Receivables Trust 6.57%, 03/15/01 .................... $1,000,000 $1,011,304
CMO Trust 43 Y 8.20%, 05/20/04 ......................................... 23,035 23,492
Olympic Automobile Receivables Trust 1994-B A2 6.25%, 11/15/04 ......... 1,000,000 1,018,785
----------
2,053,581
----------
TOTAL ASSET BACKED SECURITIES
Corporate Bonds - 33.02%
Bank & Insurance - 3.54%
BankAmerica Corp. 6.85%, 03/01/03 ...................................... 1,500,000 1,565,625
Norwest Corp. 5.75%, 02/01/03 .......................................... 2,500,000 2,534,375
Travelers Property Casualty Corp. 6.75%, 04/15/01 ...................... 700,000 721,000
----------
4,821,000
----------
Financial Services - 21.07%
American General Finance Corp. .........................................
6.20%, 03/15/03 ....................................................... 2,000,000 2,042,500
5.75%, 11/01/03 ....................................................... 1,500,000 1,507,500
Associates Corp. Of North America
6.38%, 07/15/02 ....................................................... 400,000 411,000
6.38%, 10/15/02 ....................................................... 330,000 339,488
Beneficial Corp.
8.10%, 11/09/99 ....................................................... 425,000 435,293
6.85%, 06/17/02 ....................................................... 325,000 334,750
Citigroup, Inc.
9.50%, 03/01/02 ....................................................... 500,000 557,648
Commercial Credit Co.
6.00%, 04/15/00 ....................................................... 225,000 226,688
6.38%, 09/15/02 ....................................................... 700,000 719,250
Finova Capital Corp.
6.63%, 09/15/01 ....................................................... 875,000 888,125
7.13%, 05/01/02 ....................................................... 1,025,000 1,053,188
6.12%, 05/28/02 ....................................................... 425,000 423,938
6.50%, 07/28/02 ....................................................... 700,000 707,000
Ford Motor Credit Co.
6.55%, 09/10/02 ....................................................... 2,000,000 2,065,000
6.63%, 06/30/03 ....................................................... 1,000,000 1,045,000
General Motors Acceptance Corp.
5.85%, 04/06/00 ....................................................... 2,000,000 2,012,500
6.70%, 04/30/01 ....................................................... 50,000 51,375
7.13%, 05/01/03 ....................................................... 300,000 317,250
7.25%, 05/15/03 ....................................................... 1,100,000 1,168,750
6.75%, 10/06/03 ....................................................... 1,700,000 1,778,625
5.75%, 11/10/03 ....................................................... 1,200,000 1,207,500
Household Finance Corp.
6.75%, 06/01/00 ....................................................... 650,000 660,563
6.96%, 09/04/01 ....................................................... 175,000 180,906
6.70%, 06/15/02 ....................................................... 500,000 515,625
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments (unaudited) December 31, 1998
- --------------------------------------------------------------------------------
Intermediate Fixed Income Fund (continued)
<TABLE>
<CAPTION>
Principal
Amount Value
------------ -------------
<S> <C> <C>
FIXED INCOME SECURITIES - (continued)
Lehman Brothers, Inc.
6.13%, 02/01/01 ...................................... $ 800,000 $ 797,000
Merrill Lynch & Co Inc
6.00%, 11/15/04 ...................................... 800,000 818,000
Morgan Stanley Dean Witter Discover & Co.
6.88%, 03/01/07 ...................................... 575,000 605,187
NationsBank Corp.
6.13%, 07/15/04 ...................................... 1,500,000 1,537,500
Salomon Smith Barney Holdings, Inc.
5.88%, 02/01/01 ...................................... 1,250,000 1,259,375
7.20%, 02/01/04 ...................................... 1,155,000 1,228,631
Sears Roebuck Acceptance Corp.
6.73%, 08/29/00 ...................................... 1,000,000 1,021,250
6.92%, 10/03/02 ...................................... 225,000 234,562
Transamerica Financial Corp.
7.51%, 04/15/02 ...................................... 150,000 156,375
6.38%, 06/10/02 ...................................... 400,000 404,000
-----------
28,711,342
-----------
Industrial - 8.41%
Enron Corp. 6.45%, 11/15/01 ........................... 2,000,000 2,050,000
Philip Morris Cos., Inc.
7.50%, 01/15/02 ...................................... 1,150,000 1,207,500
7.25%, 01/15/03 ...................................... 800,000 843,000
6.80%, 12/01/03 ...................................... 645,000 674,025
Raytheon Co. 6.45%, 08/15/02 .......................... 2,000,000 2,047,500
TCI Communications, Inc. 6.38%, 05/01/03 .............. 2,500,000 2,593,750
Transcontinental Gas Pipeline 6.13%, 01/15/05 ......... 2,000,000 2,047,500
-----------
11,463,275
-----------
TOTAL CORPORATE BOND .................................. 44,995,617
-----------
U.S. Government Agency Obligations - 24.88%
Federal Farm Credit Bank - 0.47%
6.34%, 02/07/02 ...................................... 615,000 638,124
-----------
638,124
-----------
Federal Home Loan Bank - 1.35%
6.09%, 12/23/02 ...................................... 500,000 519,122
5.77%, 02/03/04 ...................................... 840,000 862,227
7.70%, 09/20/04 ...................................... 400,000 449,449
-----------
1,830,798
-----------
Federal Home Loan Mortgage Corp. - 1.80%
5.63%, 01/10/03 ...................................... 200,000 203,949
5.99%, 12/01/03 ...................................... 1,650,000 1,714,418
6.65%, 03/10/04 ...................................... 500,000 533,112
-----------
2,451,479
-----------
Federal National Mortgage Association - 13.34%
6.45%, 04/23/01 ...................................... 150,000 155,025
7.55%, 04/22/02 ...................................... 2,000,000 2,152,539
6.59%, 05/21/02 ...................................... 1,500,000 1,572,757
6.23%, 07/18/02 ...................................... 200,000 207,865
5.45%, 10/10/03 ...................................... 160,000 162,465
7.88%, 02/24/05 ...................................... 5,340,000 6,070,011
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments (unaudited) December 31, 1998
- --------------------------------------------------------------------------------
Intermediate Fixed Income Fund (continued)
<TABLE>
<CAPTION>
Principal
Amount Value
------------- -------------
<S> <C> <C>
FIXED INCOME SECURITIES - (continued)
5.75%, 06/15/05 ................................. $1,500,000 $ 1,555,452
5.75%, 11/18/21 ................................. 3,000,000 2,960,745
7.40%, 07/01/04 ................................. 1,400,000 1,543,393
5.95%, 10/16/02 ................................. 1,735,000 1,790,421
-----------
18,170,673
-----------
Financing Corp. Coupon Strip - 0.23%
0.00%, 04/06/02 ................................. 375,000 318,092
-----------
318,092
-----------
Guaranteed Export Trust - 1.24%
6.28%, 06/15/04 ................................. 355,882 366,472
6.13%, 06/15/04 ................................. 323,529 326,135
6.55%, 06/15/04 ................................. 970,585 999,503
-----------
1,692,110
-----------
Resolution Funding Strip - 6.45%
0.00%, 04/15/06 ................................. 3,060,000 2,128,610
0.00%, 07/15/08 ................................. 2,700,000 1,660,545
0.00%, 10/15/08 ................................. 3,900,000 2,359,186
0.00%, 04/15/10 ................................. 4,810,000 2,641,198
-----------
8,789,539
-----------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS ......... 33,890,815
-----------
Collateralized Mortgage Obligations - 33.76%
Federal Home Loan Mortgage Corp. - 24.09%
6.50%, 08/15/14 ................................. 314,550 314,570
5.85%, 02/15/18 ................................. 1,500,000 1,503,086
6.40%, 01/15/19 ................................. 1,000,000 1,008,132
6.25%, 05/15/19 ................................. 1,000,000 1,005,648
6.00%, 07/15/19 ................................. 1,500,000 1,509,337
5.50%, 10/15/19 ................................. 1,800,000 1,792,969
6.00%, 02/15/20 ................................. 1,000,000 1,007,195
6.00%, 05/15/20 ................................. 1,550,000 1,551,077
6.00%, 10/15/20 ................................. 1,600,000 1,599,643
6.00%, 12/15/20 ................................. 3,000,000 2,987,475
6.50%, 01/25/21 ................................. 2,000,000 2,011,899
5.25%, 02/15/21 ................................. 2,000,000 1,969,688
5.50%, 04/15/21 ................................. 3,400,000 3,318,757
5.75%, 05/15/21 ................................. 1,600,000 1,589,714
6.35%, 07/15/21 ................................. 1,000,000 1,009,684
6.75%, 05/15/23 ................................. 1,000,000 1,027,405
5.75%, 09/15/23 ................................. 2,000,000 1,955,590
5.75%, 03/15/24 ................................. 2,000,000 1,958,670
5.50%, 01/15/21 ................................. 3,825,000 3,697,206
-----------
32,817,745
-----------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments (unaudited) December 31, 1998
- --------------------------------------------------------------------------------
Intermediate Fixed Income Fund (continued)
<TABLE>
<CAPTION>
Principal
Amount Value
------------ ---------------
<S> <C> <C>
FIXED INCOME SECURITIES - (continued)
Federal National Mortgage Association - 9.67%
5.95%, 05/25/05 ................................................... $ 924,142 $ 924,424
5.40%, 11/25/05 ................................................... 745,001 742,477
6.00%, 04/01/09 ................................................... 13,354 13,298
5.25%, 11/25/13 ................................................... 39,214 39,069
5.75%, 02/25/15 ................................................... 268,532 267,891
5.25%, 09/25/16 ................................................... 26,705 26,531
9.00%, 06/25/18 ................................................... 99,807 105,313
6.60%, 09/25/18 ................................................... 100,000 100,734
6.25%, 01/25/19 ................................................... 2,500,000 2,517,051
5.50%, 02/25/19 ................................................... 1,175,000 1,168,781
6.25%, 07/25/19 ................................................... 600,000 603,150
5.50%, 07/25/20 ................................................... 1,850,000 1,790,874
5.50%, 08/25/21 ................................................... 720,000 709,099
0.00%, 01/25/22 ................................................... 77,309 75,275
6.00%, 01/17/23 ................................................... 1,350,000 1,336,789
6.25%, 01/25/23 ................................................... 2,000,000 2,039,368
5.75%, 09/18/22 ................................................... 725,000 714,606
------------
13,174,730
------------
TOTAL COLATERALIZED MORTGAGE OBLIGATIONS ........................... 45,992,475
------------
U.S. Government Obligations - 3.80%
U.S. Treasury Notes
11.88%, 11/15/03 .................................................. 860,000 1,123,126
11.63%, 11/15/04 .................................................. 1,560,000 2,101,061
7.88%, 11/15/04 ................................................... 1,680,000 1,946,666
------------
TOTAL U.S. TREASURY OBLIGATIONS .................................... 5,170,853
------------
TOTAL FIXED INCOME SECURITIES - 96.97% (Cost-$128,573,355) ......... 132,103,341
------------
CASH AND OTHER ASSETS NET OF LIABILITIES - 3.03% ................... 4,133,934
------------
NET ASSETS - 100.00% ............................................... $136,237,275
============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments (unaudited) December 31, 1998
- --------------------------------------------------------------------------------
Fixed Income Fund
Principal
Amount Value
--------- ------------
FIXED INCOME SECURITIES - 98.25%
Asset Backed Securities -- 0.02%
CMO Trust 39 Y
8.65%, 03/01/03 ...................... $ 5,263 $ 5,357
----------
5,357
----------
TOTAL ASSET BACKED SECURITIES
CORPORATE BONDS - 32.00%
Bank & Insurance - 6.67%
BankAmerica Corp.
6.85%, 03/01/03 ...................... 250,000 260,938
6.63%, 08/01/07 ...................... 100,000 105,875
6.63%, 10/15/07 ...................... 150,000 159,938
KeyCorp
6.75%, 03/15/06 ...................... 280,000 296,100
NationsBank Corp.
7.50%, 09/15/06 ...................... 175,000 193,156
6.38%, 02/15/08 ...................... 200,000 208,750
U.S. Bancorp
6.50%, 02/01/08 ...................... 400,000 419,500
Wells Fargo & Co.
6.25%, 04/15/08 ...................... 105,000 109,068
----------
1,753,325
----------
Financial Services - 15.56%
American General Finance Corp.
6.20%, 03/15/03 ...................... 500,000 510,625
Associates Corp. Of North America
6.38%, 10/15/02 ...................... 120,000 123,450
Beneficial Corp.
9.47%, 03/09/01 20,000 21,500
6.75%, 07/20/04 ...................... 100,000 106,250
6.94%, 12/15/06 ...................... 100,000 108,875
Citigroup, Inc.
9.50%, 03/01/02 ...................... 75,000 83,647
Commercial Credit Co.
6.38%, 09/15/02 ...................... 100,000 102,750
6.63%, 11/15/06 ...................... 225,000 235,969
Finova Capital Corp.
6.50%, 07/28/02 ...................... 300,000 303,000
6.90%, 06/19/04 ...................... 100,000 106,375
6.63%, 09/15/01 ...................... 100,000 101,500
Ford Motor Credit Co.
6.55%, 09/10/02 ...................... 100,000 103,250
6.38%, 11/05/08 ...................... 150,000 158,625
General Motors Acceptance Corp.
6.50%, 12/05/05 ...................... 50,000 51,938
6.13%, 01/22/08 ...................... 350,000 357,875
Household Finance Corp.
6.70%, 06/15/02 ...................... 75,000 77,344
7.65%, 05/15/07 ...................... 100,000 111,000
Lehman Brothers, Inc.
7.63%, 06/01/06 ...................... 80,000 85,000
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments (unaudited) December 31, 1998
- --------------------------------------------------------------------------------
Fixed Income Fund (continued)
Principal
Amount Value
---------- ------------
FIXED INCOME SECURITIES - (continued)
Financial Services - (continued)
Merrill Lynch & Co., Inc.
6.56%, 12/16/07 .......................... $150,000 $ 157,875
Morgan Stanley Dean Witter Discover & Co.
6.88%, 03/01/07 .......................... 125,000 131,563
Salomon Smith Barney Holdings, Inc.
7.20%, 02/01/04 .......................... 100,000 106,375
7.00%, 03/15/04 .......................... 150,000 158,438
7.38%, 05/15/07 .......................... 100,000 108,875
Sears Roebuck Acceptance Corp.
6.13%, 01/15/06 .......................... 100,000 102,125
6.70%, 11/15/06 .......................... 400,000 423,500
Transamerica Financial Corp.
7.50%, 09/14/01 .......................... 75,000 77,916
7.51%, 04/15/02 .......................... 75,000 78,187
----------
4,093,827
----------
Industrial - 9.77%
Enron Corp.
6.63%, 11/15/05 .......................... 450,000 459,563
6.40%, 07/15/06 .......................... 150,000 151,312
Northwest Pipeline Corp.
6.63%, 12/01/07 .......................... 700,000 740,250
Philip Morris Cos., Inc.
7.50%, 01/15/02 .......................... 175,000 183,750
6.80%, 12/01/03 .......................... 50,000 52,250
Raytheon Co.
6.30%, 03/15/05 .......................... 550,000 563,750
Sears Roebuck & Co.
6.25%, 01/15/04 .......................... 50,000 51,312
TCI Communications, Inc.
6.88%, 02/15/06 .......................... 100,000 107,000
Transcontinental Gas Pipeline
6.25%, 01/15/08 .......................... 250,000 259,375
----------
2,568,562
----------
TOTAL CORPORATE BONDS ..................... 8,415,714
----------
U.S. Government Obligations - 17.92%
U.S. Treasury Notes
7.00%, 07/15/06 .......................... 750,000 856,277
6.50%, 10/15/06 .......................... 500,000 556,299
11.88%, 11/15/03 ......................... 725,000 946,821
11.63%, 11/15/04 ......................... 545,000 734,024
7.50%, 11/15/16 .......................... 532,000 661,072
8.88%, 08/15/17 .......................... 130,000 183,195
6.88%, 05/15/06 .......................... 685,000 776,310
----------
TOTAL U.S. TREASURY OBLIGATIONS ........... 4,713,998
----------
U.S. Government Agency Obligations - 11.47%
Federal Home Loan Bank - 2.49%
7.78%, 10/19/01 .......................... 250,000 268,614
5.77%, 02/03/04 .......................... 160,000 164,234
7.52%, 05/24/04 .......................... 200,000 221,845
----------
654,693
----------
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments (unaudited) December 31, 1998
- --------------------------------------------------------------------------------
Fixed Income Fund (continued)
<TABLE>
<CAPTION>
Principal
Amount Value
---------- ------------
<S> <C> <C>
FIXED INCOME SECURITIES - (continued)
Federal Home Loan Mortgage Corp. - 1.29%
7.13%, 11/18/02 ................................. $315,000 $ 338,161
----------
338,161
----------
Federal National Mortgage Association - 6.28%
7.88%, 02/24/05 ................................. 570,000 647,923
5.75%, 06/15/05 ................................. 500,000 518,484
5.75%, 02/18/23 ................................. 500,000 487,788
----------
1,654,195
----------
Guaranteed Export Trust - 0.15%
6.13%, 06/15/04 ................................. 38,824 39,136
----------
39,136
----------
Resolution Funding Strip - 1.26%
0.00%, 10/15/11 ................................. 260,000 128,757
0.00%, 04/15/16 ................................. 310,000 114,957
0.00%, 04/15/17 ................................. 250,000 87,228
----------
330,942
----------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS ......... 3,017,127
----------
Collateralized Mortgage Obligations - 36.84%
Federal Home Loan Mortgage Corp. - 25.92%
6.50%, 10/15/19 ................................. 200,000 202,477
5.50%, 03/15/24 ................................. 400,000 388,125
5.95%, 02/15/22 ................................. 500,000 503,160
6.25%, 11/15/18 ................................. 175,000 176,247
6.25%, 05/15/19 ................................. 250,000 251,764
6.40%, 05/15/19 ................................. 150,000 151,371
6.50%, 06/25/20 ................................. 100,000 102,271
6.35%, 07/15/21 ................................. 150,000 151,453
6.50%, 08/15/21 ................................. 75,000 76,111
6.00%, 02/15/22 ................................. 200,000 201,435
6.65%, 07/15/22 ................................. 150,000 153,028
6.00%, 02/15/23 ................................. 200,000 200,141
6.75%, 05/15/23 ................................. 200,000 205,481
6.00%, 02/15/12 ................................. 500,000 496,553
6.00%, 10/15/21 ................................. 600,000 605,187
5.75%, 06/15/23 ................................. 550,000 538,651
5.75%, 09/15/23 ................................. 600,000 586,677
6.00%, 12/15/23 ................................. 400,000 398,876
5.75%, 03/15/24 ................................. 600,000 587,601
5.75%, 03/15/24 ................................. 300,000 293,048
6.00%, 03/15/24 ................................. 500,000 495,493
5.95%, 01/19/06 ................................. 50,000 52,156
----------
6,817,306
----------
Federal National Mortgage Association - 10.92%
7.40%, 07/01/04 ................................. 35,000 38,585
5.75%, 02/15/08 ................................. 40,000 41,490
7.50%, 07/25/18 ................................. 9,940 10,084
6.00%, 09/25/18 ................................. 40,000 40,178
6.50%, 03/25/19 ................................. 150,000 151,415
6.50%, 04/25/19 ................................. 150,000 151,847
3.50%, 05/25/19 ................................. 125,000 117,491
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments (unaudited) December 31, 1998
- --------------------------------------------------------------------------------
Fixed Income Fund (continued)
<TABLE>
<CAPTION>
Principal
Amount Value
---------- -------------
<S> <C> <C>
FIXED INCOME SECURITIES - (continued)
6.50%, 09/25/19 .................................................. $150,000 $ 151,314
6.25%, 01/25/20 .................................................. 220,000 220,970
6.85%, 10/25/20 .................................................. 40,000 40,829
6.75%, 11/25/20 .................................................. 200,000 203,554
6.75%, 05/25/21 .................................................. 200,000 203,499
6.50%, 10/25/21 .................................................. 200,000 202,680
6.00%, 12/18/22 .................................................. 600,000 591,945
6.00%, 03/25/23 .................................................. 500,000 497,367
7.00%, 06/25/23 .................................................. 200,000 207,658
-----------
2,870,906
-----------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS ......................... 9,688,212
-----------
TOTAL FIXED INCOME SECURITIES - 98.25% (Cost-$24,972,956 )......... 25,840,408
-----------
CASH AND OTHER ASSETS NET OF LIABILITIES - 1.75% .................. 460,336
-----------
NET ASSETS - 100.00% .............................................. $26,300,744
===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments (unaudited) December 31, 1998
- --------------------------------------------------------------------------------
Balanced Fund
Shares Value
-------- ------------
COMMON STOCKS - 61.42%
Business Equipment & Services - 1.04%
Automatic Data Processing, Inc. ......... 7,200 $ 577,350
Berkshire Hathaway Inc. Cl. B ........... 252 592,200
Nielsen Media Research, Inc. ............ 1,150 20,700
----------
1,190,250
----------
Capital Goods - 5.41%
Cooper Industries, Inc. ................. 4,700 224,130
Emerson Electric Co. .................... 9,500 574,750
General Electric Co. .................... 26,500 2,704,656
Honeywell, Inc. ......................... 8,400 632,625
Illinois Tool Works, Inc. ............... 1,800 104,400
Ingersoll-Rand Co. ...................... 3,750 176,016
PPG Industries, Inc. .................... 9,800 570,850
Tyco International, Ltd. ................ 15,700 1,184,369
----------
6,171,796
----------
Consumer Durables - 1.22%
Ford Motor Co. .......................... 12,600 739,462
General Motors Corp. .................... 9,100 651,219
----------
1,390,681
----------
Consumer Non-Durables - 4.93%
Anheuser-Busch Cos., Inc. ............... 5,200 341,250
Bestfoods ............................... 10,500 559,125
Eastman Kodak Co. ....................... 5,500 396,000
General Mills, Inc. ..................... 4,550 353,763
PepsiCo, Inc. ........................... 23,300 953,844
Philip Morris Cos., Inc. ................ 31,400 1,679,900
Procter & Gamble Co. .................... 7,700 703,106
Sara Lee Corp. .......................... 22,400 631,400
----------
5,618,388
----------
Consumer Services - 1.52%
Disney (Walt) Co. ....................... 18,800 564,000
Hilton Hotels Corp. ..................... 11,400 218,025
Knight-Ridder,inc. ...................... 5,900 301,638
Time Warner, Inc. ....................... 10,500 651,656
----------
1,735,319
----------
Energy - 5.29%
Amerada Hess Corp. ...................... 2,300 114,425
Amoco Corp. ............................. 14,300 843,700
Atlantic Richfield Co. .................. 1,100 71,775
Baker Hughes, Inc. ...................... 15,000 265,313
British Petroleum Co. PLC ............... 6,800 646,000
Burlington Resources, Inc. .............. 5,150 184,434
Chevron Corp. ........................... 7,100 588,856
Exxon Corp. ............................. 14,700 1,074,938
Mobil Corp. ............................. 9,200 801,550
Royal Dutch Petroleum Co., ADR .......... 8,500 406,938
Schlumberger, Ltd. ...................... 6,400 295,200
Texaco, Inc. ............................ 11,800 623,925
Unocal Corp. ............................ 3,800 110,912
----------
6,027,966
----------
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments (unaudited) December 31, 1998
- --------------------------------------------------------------------------------
Balanced Fund (continued)
Shares Value
-------- -------------
COMMON STOCKS - (continued)
Financial Services - 9.52%
American International Group, Inc. ............ 8,455 $ 816,964
Associates First Capital Corp. Cl. A .......... 11,506 487,567
BankAmerica Corp. ............................. 20,726 1,246,151
Bankers Trust Corp. ........................... 6,300 538,256
Chase Manhattan Corp. ......................... 31,264 2,127,906
Chubb Corp. ................................... 9,300 603,338
Citigroup, Inc. ............................... 28,350 1,403,325
Federal National Mortgage Association ......... 34,500 2,553,000
Morgan (J.P.) & Co., Inc. ..................... 4,100 430,756
U.S. Bancorp .................................. 18,250 647,875
-----------
10,855,138
-----------
Health Care - 7.86%
Alza Corp. Cl. A .............................. 5,800 303,050
Baxter International, Inc. .................... 11,800 758,888
Bristol-Myers Squibb Co. ...................... 9,900 1,324,744
Columbia/HCA Healthcare Corp. ................. 9,825 243,169
IMS Health, Inc. .............................. 3,450 260,259
Johnson & Johnson ............................. 10,700 897,463
Lilly (Eli) & Co. ............................. 10,300 915,413
Merck & Co., Inc. ............................. 9,400 1,388,262
Schering-Plough Corp. ......................... 25,200 1,392,300
St. Jude Medical, Inc. ........................ 2,830 78,355
United Healthcare Corp. ....................... 7,750 333,734
Warner-Lambert Co. ............................ 14,200 1,067,662
-----------
8,963,299
-----------
Multi-Industry - 0.44%
Minnesota Mining & Mfg. Co. ................... 7,100 504,988
-----------
Raw Materials - 1.67%
Aluminum Co. Of America ....................... 5,350 398,909
Dow Chemical Co. .............................. 4,200 381,938
Dupont (E.I.) De Nemours & Co. ................ 11,100 588,994
Monsanto Co. .................................. 10,700 508,250
Solutia, Inc. ................................. 1,200 26,850
-----------
1,904,941
-----------
Retail - 3.44%
Abercrombie & Fitch Co. Cl. A ................. 4,322 305,782
Albertson's, Inc. ............................. 11,550 735,591
Costco Cos., Inc. ............................. 6,000 433,125
Dillard Dept. Stores, Inc. Cl. A .............. 3,450 97,894
May Department Stores Co. ..................... 8,450 510,168
Penney (J.C.), Inc. ........................... 7,600 356,250
Walgreen Co. .................................. 11,000 644,187
Wal-Mart Stores, Inc. ......................... 10,300 838,806
-----------
3,921,803
-----------
Shelter - 0.69%
Georgia-Pacific Group ......................... 5,600 327,950
Kimberly-Clark Corp. .......................... 8,500 463,250
-----------
791,200
-----------
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments (unaudited) December 31, 1998
- --------------------------------------------------------------------------------
Balanced Fund (continued)
Shares Value
-------- -------------
COMMON STOCKS (continued)
Technology - 10.98%
AMP, Inc. ..................................... 15,050 $ 783,541
Boeing Co. .................................... 5,700 185,963
Compaq Computer Corp. ......................... 74,534 3,125,770
Hewlett-Packard Co. ........................... 14,000 956,375
Imation Corp. ................................. 1 18
Intel Corp. ................................... 26,600 3,153,762
International Business Machines Corp. ......... 7,800 1,441,050
Lucent Technologies, Inc. ..................... 11,464 1,261,040
Motorola, Inc. ................................ 13,850 845,715
Parametric Technology Company ................. 20,000 327,500
Raytheon Co. Cl. A ............................ 357 18,452
Seagate Technology, Inc. ...................... 14,000 423,500
-----------
12,522,686
-----------
Transportation - 0.68%
AMR Corp. ..................................... 8,600 510,625
CSX Corp. ..................................... 6,500 269,750
-----------
780,375
-----------
Utilities - 6.73%
AirTouch Communications, Inc. ................. 15,200 1,096,300
AT & T Corp. .................................. 12,250 921,813
Edison International .......................... 16,000 446,000
El Paso Natural Gas Co. ....................... 6,800 236,725
GTE Corp. ..................................... 19,800 1,287,000
MCI Worldcom, Inc. ............................ 13,309 954,921
PECO Energy Co. ............................... 9,000 374,625
PG&E Corp. .................................... 12,863 405,184
SBC Communications, Inc. ...................... 28,834 1,546,223
Unicom Corp. .................................. 10,400 401,050
-----------
7,669,841
-----------
TOTAL COMMON STOCKS (Cost-$48,085,988)......... 70,048,671
-----------
Principal
Amount Value
---------- ------------
FIXED INCOME SECURITIES - 37.07%
CORPORATE BONDS - 11.60%
Bank and Insurance - 1.98%
BankAmerica Corp.
6.63%, 10/15/07 ............................. $250,000 266,563
Chase Manhattan Corp.
7.13%, 02/01/07 ............................. 200,000 217,500
KeyCorp
6.75%, 03/15/06 ............................. 245,000 259,088
NationsBank Corp.
7.50%, 09/15/06 ............................. 275,000 303,531
6.38%, 02/15/08 ............................. 400,000 417,500
U.S. Bancorp
6.50%, 02/01/08 ............................. 650,000 681,688
Wells Fargo & Co.
6.25%, 04/15/08 ............................. 105,000 109,068
---------
2,254,938
---------
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments (unaudited) December 31, 1998
- --------------------------------------------------------------------------------
Balanced Fund (continued)
Principal
Amount Value
---------- -----------
FIXED INCOME SECURITIES (continued)
Financial Services - 5.76%
American General Finance Corp.
7.45%, 07/01/02 ............................ $175,000 $185,281
6.20%, 03/15/03 ............................ 600,000 612,750
Associates Corp. Of North America
6.38%, 10/15/02 ............................ 50,000 51,438
7.63%, 04/27/05 ............................ 125,000 138,438
Beneficial Corp.
0.10%, 11/27/00 ............................ 150,000 161,813
9.47%, 03/09/01 ............................ 30,000 32,250
6.75%, 07/20/04 ............................ 25,000 26,563
6.96%, 02/13/06 ............................ 150,000 162,375
6.94%, 12/15/06 ............................ 100,000 108,875
Citigroup, Inc.
9.50%, 03/01/02 ............................ 25,000 27,882
6.63%, 09/15/05 ............................ 150,000 157,688
Commercial Credit Co.
6.00%, 04/15/00 ............................ 25,000 25,188
6.38%, 09/15/02 ............................ 50,000 51,375
6.63%, 11/15/06 ............................ 275,000 288,406
Finova Capital Corp.
6.63%, 09/15/01 ............................ 50,000 50,750
6.12%, 05/28/02 ............................ 200,000 199,500
6.50%, 07/28/02 ............................ 460,000 464,600
6.90%, 06/19/04 ............................ 125,000 132,969
Ford Motor Credit Co.
6.55%, 09/10/02 ............................ 300,000 309,750
6.55%, 07/07/03 ............................ 125,000 129,688
6.38%, 11/05/08 ............................ 125,000 132,188
General Motors Acceptance Corp.
6.60%, 11/22/04 ............................ 175,000 183,094
6.13%, 01/22/08 ............................ 500,000 511,250
Household Finance Corp.
6.70%, 06/15/02 ............................ 50,000 51,563
7.25%, 07/15/03 ............................ 125,000 132,656
7.65%, 05/15/07 ............................ 200,000 222,000
Lehman Brothers, Inc.
7.63%, 06/01/06 ............................ 40,000 42,500
6.13%, 02/01/01 ............................ 25,000 24,906
Merrill Lynch & Co., Inc.
6.00%, 11/15/04 ............................ 25,000 25,562
6.56%, 12/16/07 ............................ 250,000 263,125
Morgan Stanley Dean Witter Discover & Co.
6.88%, 03/01/07 ............................ 125,000 131,562
Salomon Smith Barney Holdings, Inc. .........
5.88%, 02/01/01 ............................ 25,000 25,187
6.50%, 10/15/02 ............................ 125,000 128,125
7.00%, 06/15/03 ............................ 325,000 340,843
7.20%, 02/01/04 ............................ 100,000 106,375
7.00%, 03/15/04 ............................ 275,000 290,468
Sears Roebuck Acceptance Corp. ..............
6.90%, 08/01/03 ............................ 125,000 131,718
6.13%, 01/15/06 ............................ 50,000 51,062
Transamerica Corp.
6.75%, 11/15/06 ............................ 200,000 213,250
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments (unaudited) December 31, 1998
- --------------------------------------------------------------------------------
Balanced Fund (continued)
Principal
Amount Value
------------ -------------
FIXED INCOME SECURITIES (continued)
Transamerica Financial Corp.
7.51%, 04/15/02 ............................ $ 30,000 $ 31,275
Travelers Property Casualty Corp.
6.75%, 11/15/06 ............................ 200,000 212,500
-----------
6,568,788
-----------
Industrial - 3.86%
Enron Corp
6.40%, 07/15/06 ............................ 150,000 151,313
6.63%, 11/15/05 ............................ 750,000 765,937
Northwest Pipeline Corp.
6.63%, 12/01/07 ............................ 300,000 317,250
Philip Morris Cos., Inc.
7.50%, 01/15/02 ............................ 50,000 52,500
8.25%, 10/15/03 ............................ 75,000 82,781
6.80%, 12/01/03 ............................ 30,000 31,350
6.38%, 02/01/06 ............................ 25,000 25,719
Raytheon Co.
6.30%, 03/15/05 ............................ 750,000 768,750
6.15%, 11/01/08 ............................ 100,000 101,500
Service Corp. International
6.00%, 12/15/05 ............................ 500,000 498,125
TCI Communications, Inc. (FRN) (MTN)
6.88%, 02/15/06 ............................ 825,000 882,750
Transcontinental Gas Pipeline
6.13%, 01/15/05 ............................ 300,000 307,125
6.25%, 01/15/08 ............................ 400,000 415,000
-----------
4,400,100
-----------
TOTAL CORPORATE BONDS ....................... 13,223,826
-----------
U.S. Government Agency Obligations - 7.23%
Federal Farm Credit Bank - 0.74%
6.35%, 10/30/03 ............................ 500,000 526,814
6.60%, 02/06/04 ............................ 300,000 318,963
-----------
845,777
-----------
Federal Home Loan Bank - 1.27%
7.52%, 05/24/04 ............................ 300,000 332,768
6.91%, 06/03/04 ............................ 350,000 378,337
7.36%, 07/01/04 ............................ 665,000 733,855
-----------
1,444,960
-----------
Federal Home Loan Mortgage Corp. - 1.39%
6.40%, 12/13/06 ............................ 275,000 295,127
5.99%, 12/01/03 ............................ 150,000 155,856
6.65%, 03/10/04 ............................ 780,000 831,655
8.00%, 01/26/05 ............................ 260,000 296,407
-----------
1,579,045
-----------
Federal National Mortgage Association - 3.00%
5.73%, 01/06/03 ............................ 200,000 204,658
5.45%, 10/10/03 ............................ 1,060,000 1,076,330
7.40%, 07/01/04 ............................ 50,000 55,121
7.88%, 02/24/05 ............................ 1,835,000 2,085,856
-----------
3,421,965
-----------
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments (unaudited) December 31, 1998
- --------------------------------------------------------------------------------
Balanced Fund (continued)
<TABLE>
<CAPTION>
Principal
Amount Value
------------ -------------
<S> <C> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS - (continued)
Resolution Funding Strip - 0.51%
0.00%, 07/15/12 ................................. $ 510,000 $ 241,093
0.00%, 04/15/14 ................................. 150,000 63,416
0.00%, 10/15/15 ................................. 45,000 17,145
0.00%, 04/15/18 ................................. 800,000 263,516
585,170
-----------
Student Loan Marketing Association - 0.32%
6.35%, 03/17/03 ................................. 350,000 366,600
-----------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS ......... 8,243,517
-----------
Collateralized Mortgage Obligations - 13.99%
Federal Home Loan Mortgage Corp. - 9.65%
6.30%, 10/15/18 ................................. 100,000 101,337
6.25%, 05/15/19 ................................. 100,000 100,565
6.50%, 10/15/19 ................................. 200,000 202,477
7.00%, 02/15/21 ................................. 100,000 103,089
5.50%, 04/15/21 ................................. 200,000 195,221
5.75%, 04/15/21 ................................. 50,000 49,684
6.50%, 08/15/21 ................................. 240,000 243,557
6.50%, 09/15/21 ................................. 550,000 554,639
6.00%, 10/15/21 ................................. 800,000 806,915
6.50%, 11/15/21 ................................. 300,000 304,603
6.50%, 11/15/21 ................................. 300,000 302,582
5.95%, 11/15/21 ................................. 300,000 296,925
6.00%, 02/15/22 ................................. 100,000 100,718
5.95%, 02/15/22 ................................. 700,000 704,424
6.00%, 05/15/22 ................................. 450,000 440,806
6.65%, 07/15/22 ................................. 100,000 102,019
6.25%, 11/15/22 ................................. 150,000 152,645
6.50%, 11/15/22 ................................. 100,000 101,965
7.00%, 01/15/23 ................................. 200,000 206,144
6.00%, 02/15/23 ................................. 193,000 193,136
6.50%, 02/15/23 ................................. 400,000 411,801
6.75%, 05/15/23 ................................. 150,000 154,111
5.75%, 06/15/23 ................................. 800,000 783,492
5.50%, 03/15/24 ................................. 600,000 582,188
6.00%, 02/15/12 ................................. 750,000 744,828
6.00%, 12/15/23 ................................. 500,000 498,595
5.75%, 03/15/24 ................................. 700,000 685,534
6.00%, 12/15/23 ................................. 800,000 802,500
5.75%, 09/15/23 ................................. 800,000 782,236
5.75%, 03/15/24 ................................. 300,000 293,046
-----------
11,001,782
-----------
Federal National Mortgage Association - 4.34%
5.75%, 02/18/23 ................................. 1,000,000 975,575
7.00%, 06/25/23 ................................. 125,000 129,787
6.00%, 09/25/18 ................................. 50,000 50,222
6.25%, 01/25/20 ................................. 100,000 100,441
6.85%, 10/25/20 ................................. 50,000 51,037
6.75%, 11/25/20 ................................. 100,000 101,878
6.75%, 05/25/21 ................................. 100,000 101,750
6.50%, 10/25/21 ................................. 600,000 608,039
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments (unaudited) December 31, 1998
- --------------------------------------------------------------------------------
Balanced Fund (continued)
<TABLE>
<CAPTION>
Principal
Amount Value
------------ ---------------
<S> <C> <C>
FEDERAL NATIONAL MORTGAGE ASSOCIATION (continued)
6.50%, 11/25/21 .......................................... $ 100,000 $ 101,568
6.00%, 02/25/22 .......................................... 500,000 503,558
6.50%, 04/25/22 .......................................... 400,000 406,372
6.50%, 04/25/22 .......................................... 379,000 385,137
6.50%, 07/18/22 .......................................... 500,000 514,774
6.50%, 07/25/22 .......................................... 350,000 355,491
6.00%, 07/25/22 .......................................... 50,000 50,379
6.80%, 09/25/22 .......................................... 300,000 307,326
6.50%, 11/25/22 .......................................... 200,000 209,263
------------
4,952,597
------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS ................. 15,954,379
------------
U.S. Government Obligations - 4.25%
U.S. Treasury Notes
1.63%, 11/15/04 .......................................... 235,000 316,506
6.88%, 05/15/06 .......................................... 1,725,000 1,954,939
7.00%, 07/15/06 .......................................... 2,260,000 2,580,249
------------
TOTAL U.S. TREASURY OBLIGATIONS ........................... 4,851,694
------------
TOTAL FIXED INCOME SECURITIES (Cost-$40,957,415 ) ......... 42,273,416
------------
TOTAL INVESTMENTS - 98.49% (Cost-$89,043,403 ) ............ 112,322,087
------------
CASH AND OTHER ASSETS NET OF LIABILITIES - 1.51% .......... 1,717,683
------------
NET ASSETS - 100.0% ....................................... $114,039,770
============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments (unaudited) December 31, 1998
- --------------------------------------------------------------------------------
Equity Investment Fund
Shares Value
-------- -------------
COMMON STOCKS - 98.61%
Business Equipment & Service - 1.61%
Automatic Data Processing, Inc. .............. 16,500 $ 1,323,094
Berkshire Hathaway Inc. Class B .............. 609 1,431,150
-----------
2,754,244
-----------
Capital Goods - 9.15%
Cooper Industries, Inc. ...................... 20,000 953,750
Emerson Electric Co. ......................... 24,000 1,452,000
General Electric Co. ......................... 67,000 6,838,187
Honeywell, Inc. .............................. 21,000 1,581,562
Ingersoll-Rand Co. ........................... 4,250 199,484
PPG Industries, Inc. ......................... 27,500 1,601,875
Tyco International, Ltd. ..................... 40,000 3,017,500
-----------
15,644,358
-----------
Consumer Durables - 1.82%
Ford Motor Co. ............................... 30,000 1,760,625
General Motors Corp. ......................... 19,000 1,359,688
-----------
3,120,313
-----------
Consumer Non-Durables - 7.57%
Anheuser-Busch Cos., Inc. .................... 17,000 1,115,625
Bestfoods .................................... 20,000 1,065,000
Eastman Kodak Co. ............................ 14,250 1,026,000
General Mills, Inc. .......................... 8,000 622,000
PepsiCo, Inc. ................................ 62,500 2,558,593
Philip Morris Cos., Inc. ..................... 75,000 4,012,500
Procter & Gamble Co. ......................... 14,000 1,278,375
Sara Lee Corp. ............................... 45,000 1,268,437
-----------
12,946,530
-----------
Consumer Services - 1.89%
Disney (Walt) Co. ............................ 29,000 870,000
Hilton Hotels Corp. .......................... 24,000 459,000
Knight-Ridder, Inc. .......................... 15,500 792,438
Time Warner, Inc. ............................ 18,000 1,117,125
-----------
3,238,563
-----------
Energy - 8.20%
Amoco Corp. .................................. 35,500 2,094,500
Baker Hughes, Inc. ........................... 44,000 778,250
British Petroleum Co. PLC .................... 13,000 1,235,000
Burlington Resources, Inc. ................... 8,000 286,500
Chevron Corp. ................................ 19,020 1,577,470
Exxon Corp. .................................. 29,000 2,120,625
Mobil Corp. .................................. 23,000 2,003,875
Royal Dutch Petroleum Co. ADR ................ 19,500 933,563
Schlumberger, Ltd. ........................... 17,500 807,188
Texaco, Inc. ................................. 33,500 1,771,313
Unocal Corp. ................................. 14,500 423,218
-----------
14,031,502
-----------
Financial Services - 15.76%
American International Group, Inc. ........... 20,000 1,932,500
Associates First Capital Corp. Cl. A ......... 25,006 1,059,629
BankAmerica Corp. ............................ 50,025 3,007,753
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments (unaudited) December 31, 1998
- --------------------------------------------------------------------------------
Equity Investment Fund (continued)
Shares Value
---------- -------------
COMMON STOCKS - (continued)
Financial Services - (continued)
Bankers Trust Corp. ........................... 17,000 $ 1,452,438
Chase Manhattan Corp. ......................... 80,000 5,445,000
Chubb Corp. ................................... 22,580 1,464,878
Citigroup, Inc. ............................... 76,250 3,774,375
Federal National Mortgage Association ......... 80,500 5,957,000
Morgan (J.P.) & Co., Inc. ..................... 11,750 1,234,484
U.S. Bancorp .................................. 46,000 1,633,000
-----------
26,961,057
-----------
Health Care - 12.99%
Alza Corp. Cl. A .............................. 16,000 836,000
Baxter International, Inc. .................... 36,000 2,315,250
Bristol-Myers Squibb Co. ...................... 23,000 3,077,687
Columbia/HCA Healthcare Corp. ................. 33,050 817,987
IMS Health, Inc. .............................. 13,000 980,687
Johnson & Johnson ............................. 22,500 1,887,188
Lilly (Eli) & Co. ............................. 29,000 2,577,375
Merck & Co., Inc. ............................. 22,360 3,302,293
Schering-Plough Corp. ......................... 56,000 3,094,000
St. Jude Medical, Inc. ........................ 6,459 178,834
United Healthcare Corp. ....................... 23,500 1,011,969
Warner-Lambert Co. ............................ 28,500 2,142,844
-----------
22,222,114
-----------
Multi-Industry - 0.54%
Minnesota Mining & Mfg. Co. ................... 13,030 926,759
-----------
Raw Materials - 2.98%
Aluminum Co. Of America ....................... 16,040 1,195,983
Dow Chemical Co. .............................. 10,070 915,741
Dupont (E.I.) De Nemours & Co. ................ 29,000 1,538,813
Monsanto Co. .................................. 29,000 1,377,500
Solutia, Inc. ................................. 3,480 77,865
-----------
5,105,902
-----------
Retail - 5.81%
Abercrombie & Fitch Co. Cl.A .................. 14,507 1,026,370
Albertson's, Inc. ............................. 28,000 1,783,250
Costco Cos.,inc. .............................. 17,000 1,227,187
Dillard Dept. Stores, Inc. Cl. A .............. 8,000 227,000
May Department Stores Co. ..................... 21,000 1,267,875
Penney (J.C.), Inc. ........................... 26,000 1,218,750
Walgreen Co. .................................. 22,500 1,317,655
Wal-Mart Stores, Inc. ......................... 23,000 1,873,063
-----------
9,941,150
-----------
Shelter - 1.02%
Georgia-Pacific Group ......................... 13,500 790,594
Kimberly-Clark Corp. .......................... 17,520 954,840
-----------
1,745,434
-----------
Technology - 17.56%
AMP, Inc. ..................................... 32,500 1,692,031
Boeing Co. .................................... 14,000 456,750
Compaq Computer Corp. ......................... 186,024 7,801,382
Hewlett-Packard Co. ........................... 35,000 2,390,938
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments (unaudited) December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Equity Investment Fund (continued)
Shares Value
-------- ---------------
<S> <C> <C>
COMMON STOCKS - (continued)
Technology - (continued)
Intel Corp. ............................................... 68,500 $ 8,121,531
International Business Machines Corp. ..................... 16,000 2,956,000
Lucent Technologies, Inc. ................................. 29,500 3,245,000
Motorola, Inc. ............................................ 26,000 1,587,625
Parametric Technology Corp. ............................... 47,000 769,625
Raytheon Co. Cl. A ........................................ 816 42,177
Seagate Technology, Inc. .................................. 32,500 983,125
------------
30,046,184
------------
Transportation - 1.38%
AMR Corp. ................................................. 21,500 1,276,563
CSX Corp. ................................................. 26,000 1,079,000
------------
2,355,563
------------
Utilities - 10.33%
AirTouch Communications, Inc. ............................. 32,000 2,308,000
AT & T Corp. .............................................. 25,000 1,881,250
Edison International ...................................... 41,000 1,142,875
El Paso Natural Gas Co. ................................... 24,000 835,500
GTE Corp. ................................................. 48,000 3,120,000
MCI Worldcom, Inc. ........................................ 28,000 2,009,000
PECO Energy Co. ........................................... 21,000 874,125
PG&E Corp. ................................................ 34,570 1,088,955
SBC Communications, Inc. .................................. 63,500 3,405,188
Unicom Corp. .............................................. 26,000 1,002,625
------------
17,667,518
------------
TOTAL COMMON STOCKS - 98.61% (Cost-$116,377,600 ) ......... 168,707,191
------------
CASH AND OTHER ASSETS NET OF LIABILITIES - 1.39% .......... 2,371,637
------------
NET ASSETS - 100.0% ....................................... $171,078,828
============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Statements of Assets and Liabilities (unaudited) December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
McM
McM Intermediate
Principal Fixed
Preservation Income
Fund Fund
---------------- -----------------
<S> <C> <C>
Assets:
Investments in securities at value (cost
$43,585,689, $128,573,355, $24,972,956,
$89,043,403 and $116,377,600, respectively)........ $ 43,585,689 $ 132,103,167
Cash-interest bearing accounts ..................... 96,340 2,152,826
Dividends and interest receivable .................. 19,303 1,452,360
Receivable for fund shares sold .................... 0 915,978
Deferred organization cost (Note A) ................ 2,715 2,715
Due from advisor ................................... 1,510 0
Other assets ....................................... 13,116 14,865
------------ -------------
Total assets ...................................... 43,718,673 136,641,911
------------ -------------
Liabilities:
Payable for securities purchased ................... 0 0
Fund shares redeemed ............................... 0 350,000
Distributions payable .............................. 187,075 0
Accrued expenses ................................... 8,740 15,065
Payable to advisor, net ............................ 0 39,571
------------ -------------
Total liabilities ................................. 195,815 404,636
------------ -------------
Net Assets:
Applicable to 43,522,729, 12,836,773, 2,384,867,
5,883,971 and 6,159,841 shares outstanding,
respectively ...................................... $ 43,522,858 $ 136,237,275
============ =============
Net Assets Consist of:
Capital paid-in .................................... $ 43,522,729 $ 132,477,469
Accumulated undistributed/(distributions in
excess of) net investment income .................. 0 22,761
Accumulated net realized gain on investments ....... 129 207,233
Net unrealized appreciation/depreciation on
investments ....................................... 0 3,529,812
------------ -------------
$ 43,522,858 $ 136,237,275
============ =============
Net asset value and redemption price per
share ............................................. $ 1.00 $ 10.61
============ =============
</TABLE>
<PAGE>
[RESTUBED TABLE FOR ABOVE
<TABLE>
<CAPTION>
McM McM
Fixed McM Equity
Income Balanced Investment
Fund Fund Fund
-------------- --------------- -----------------
<S> <C> <C> <C>
Assets:
Investments in securities at value (cost
$43,585,689, $128,573,355, $24,972,956,
$89,043,403 and $116,377,600, respectively)........ $25,840,408 $112,322,087 $ 168,707,191
Cash-interest bearing accounts ..................... 157,452 1,086,464 2,279,930
Dividends and interest receivable .................. 292,840 656,466 258,412
Receivable for fund shares sold .................... 565,000 4,000 1,018,144
Deferred organization cost (Note A) ................ 2,715 2,715 2,715
Due from advisor ................................... 0 0 0
Other assets ....................................... 14,697 22,769 24,652
----------- ------------ -------------
Total assets ...................................... 26,873,112 114,094,501 172,291,044
----------- ------------ -------------
Liabilities:
Payable for securities purchased ................... 562,344 0 61,935
Fund shares redeemed ............................... 0 5,000 1,056,000
Distributions payable .............................. 0 0 0
Accrued expenses ................................... 9,363 10,009 10,444
Payable to advisor, net ............................ 661 39,722 83,837
----------- ------------ -------------
Total liabilities ................................. 572,368 54,731 1,212,216
----------- ------------ -------------
Net Assets:
Applicable to 43,522,729, 12,836,773, 2,384,867,
5,883,971 and 6,159,841 shares outstanding,
respectively ...................................... $26,300,744 $114,039,770 $ 171,078,828
=========== ============ =============
Net Assets Consist of:
Capital paid-in .................................... $25,409,146 $ 90,040,564 $ 116,776,051
Accumulated undistributed/(distributions in
excess of) net investment income .................. (6,552) (11,005) 16,642
Accumulated net realized gain on investments ....... 30,698 731,527 1,956,544
Net unrealized appreciation/depreciation on
investments ....................................... 867,452 23,278,684 52,329,591
----------- ------------ -------------
$26,300,744 $114,039,770 $ 171,078,828
=========== ============ =============
Net asset value and redemption price per
share ............................................. $ 11.03 $ 19.38 $ 27.77
=========== ============ =============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Statements of Operations (unaudited)
For the Period Ended December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
McM
McM Intermediate
Principal Fixed
Preservation Income
Fund Fund
-------------- --------------
<S> <C> <C>
Investment Income:
Dividends ............................................... $ 0 $ 0
Interest ................................................ 1,221,457 3,853,818
----------- -----------
Total investment income ............................... 1,221,457 3,853,818
----------- -----------
Expenses:
Investment advisory fees (Note E) ....................... 56,566 228,205
Transfer agent fees ..................................... 17,345 13,596
Administration fees ..................................... 23,695 23,346
Accounting fees ......................................... 15,202 26,683
Legal fees .............................................. 1,163 2,872
Custodian fees .......................................... 7,720 11,220
Insurance fees .......................................... 3,440 9,412
Registration expenses ................................... 6,136 11,026
Amortization of organization costs (Note A) ............. 1,820 1,820
Report to shareholder expense ........................... 810 2,173
Auditing fees ........................................... 5,220 6,622
Trustees fees ........................................... 1,010 2,629
Miscellaneous expenses .................................. 151 707
----------- -----------
Total expenses ........................................ 140,278 340,311
Expenses reimbursed (Note E) ............................ (72,398) (14,366)
Expense reimbursement recovery (Note E) ................. 0 0
----------- -----------
Net expenses .......................................... 67,880 325,945
----------- -----------
Net Investment Income .................................... 1,153,577 3,527,873
----------- -----------
Realized and Unrealized Gain on Investments:
Net realized gain on investments ........................ 1,983 259,044
Net change in unrealized appreciation/depreciation on
investments ............................................ 0 1,407,845
----------- -----------
Net realized and unrealized gain on investments ......... 1,983 1,666,889
----------- -----------
Increase in Net Assets from Operations ................... $ 1,155,560 $ 5,194,762
=========== ===========
</TABLE>
<PAGE>
[RESTUBED TABLE FOR ABOVE]
<TABLE>
<CAPTION>
McM McM
Fixed McM Equity
Income Balanced Investment
Fund Fund Fund
--------------- --------------- ----------------
<S> <C> <C> <C>
Investment Income:
Dividends ............................................... $ 0 $ 494,669 $ 1,190,765
Interest ................................................ 731,238 1,208,421 53,659
----------- ----------- ------------
Total investment income ............................... 731,238 1,703,090 1,244,424
----------- ----------- ------------
Expenses:
Investment advisory fees (Note E) ....................... 42,777 227,021 367,169
Transfer agent fees ..................................... 12,569 15,445 18,076
Administration fees ..................................... 23,599 24,070 24,441
Accounting fees ......................................... 15,579 23,836 23,994
Legal fees .............................................. 708 2,375 3,387
Custodian fees .......................................... 3,449 11,794 19,659
Insurance fees .......................................... 1,454 5,927 8,544
Registration expenses ................................... 4,327 10,148 12,688
Amortization of organization costs (Note A) ............. 1,820 1,820 1,820
Report to shareholder expense ........................... 252 1,040 2,175
Auditing fees ........................................... 3,892 5,055 5,561
Trustees fees ........................................... 353 1,516 2,274
Miscellaneous expenses .................................. 177 403 202
----------- ----------- ------------
Total expenses ........................................ 110,956 330,450 489,990
Expenses reimbursed (Note E) ............................ (49,851) (27,780) (1,820)
Expense reimbursement recovery (Note E) ................. 0 0 62,547
----------- ----------- ------------
Net expenses .......................................... 61,105 302,670 550,717
----------- ----------- ------------
Net Investment Income .................................... 670,133 1,400,420 693,707
----------- ----------- ------------
Realized and Unrealized Gain on Investments:
Net realized gain on investments ........................ 57,786 807,774 2,396,824
Net change in unrealized appreciation/depreciation on
investments ............................................ 365,596 7,255,589 15,658,101
----------- ----------- ------------
Net realized and unrealized gain on investments ......... 423,382 8,063,363 18,054,925
----------- ----------- ------------
Increase in Net Assets from Operations ................... $ 1,093,515 $ 9,463,783 $ 18,748,632
=========== =========== ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
McM Principal
Preservation Fund
------------------------------
For the
Period Ended For the
12/31/98 Year Ended
(unaudited) 06/30/98
-------------- --------------
<S> <C> <C>
Operations:
Net investment income ......................... $ 1,153,577 $ 2,011,162
Net realized gain (loss) on investments ....... 1,983 (187)
Net change in unrealized appreciation/
depreciation on investments .................. 0 0
------------ ------------
Increase in net assets ........................ 1,155,560 2,010,975
------------ ------------
Dividends and Distributions to Shareholders:
From net investment income .................... (1,153,577) (2,011,162)
From capital gains ............................ 0 (1,667)
------------ ------------
Total Distributions ........................... (1,153,577) (2,012,829)
------------ ------------
Capital Share Transactions - Note C ............ (4,662,757) 15,482,644
------------ ------------
Total increase in net assets .................. (4,660,774) 15,480,790
Net Assets:
Beginning of year ............................. 48,183,632 32,702,842
------------ ------------
End of year (including undistributed net
investment income/(distributions in excess
of) $0, $0, $22,761, $402,481, ($6,552),
and $72,059, respectively) ................... $ 43,522,858 $ 48,183,632
============ ============
</TABLE>
<PAGE>
[RESTUBED TABLE FOR ABOVE]
<TABLE>
<CAPTION>
McM Intermediate McM Fixed
Fixed Income Fund Income Fund
--------------------------------- -------------------------------
For the For the
Period Ended For the Period Ended For the
12/31/98 Year Ended 12/31/98 Year Ended
(unaudited) 06/30/98 (unaudited) 06/30/98
---------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
Operations:
Net investment income ......................... $ 3,527,873 $ 6,329,678 $ 670,133 $ 901,128
Net realized gain (loss) on investments ....... 259,044 593,160 57,786 44,111
Net change in unrealized appreciation/
depreciation on investments .................. 1,407,845 2,104,618 365,596 436,110
------------ ------------ ----------- -----------
Increase in net assets ........................ 5,194,762 9,027,456 1,093,515 1,381,349
------------ ------------ ----------- -----------
Dividends and Distributions to Shareholders:
From net investment income .................... (3,907,593) (6,233,438) (748,744) (858,916)
From capital gains ............................ (509,218) 0 (51,503) (28,964)
------------ ------------ ----------- -----------
Total Distributions ........................... (4,416,811) (6,233,438) (800,247) (887,880)
------------ ------------ ----------- -----------
Capital Share Transactions - Note C ............ 13,748,903 25,514,515 3,805,783 12,143,298
------------ ------------ ----------- -----------
Total increase in net assets .................. 14,526,854 28,308,533 4,099,051 12,636,767
Net Assets:
Beginning of year ............................. 121,710,421 93,401,888 22,201,693 9,564,926
------------ ------------ ----------- -----------
End of year (including undistributed net
investment income/(distributions in excess
of) $0, $0, $22,761, $402,481, ($6,552),
and $72,059, respectively) ................... $136,237,275 $121,710,421 $26,300,744 $22,201,693
============ ============ =========== ===========
</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
Period Ended For the Period Ended For the
12/31/98 Year Ended 12/31/98 Year Ended
(unaudited) 06/30/98 (unaudited) 06/30/98
---------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Operations:
Net investment income ...................... $ 1,400,420 $ 1,956,593 $ 693,707 $ 992,766
Net realized gain on investments ........... 807,774 382,091 2,396,824 514,315
Net change in unrealized appreciation/
depreciation on investments ............... 7,255,589 10,037,050 15,658,101 22,166,197
------------ ------------ ------------ ------------
Increase in net assets ..................... 9,463,783 12,375,734 18,748,632 23,673,278
------------ ------------ ------------ ------------
Dividends and Distributions to Shareholders:
From net investment income ................. (1,539,960) (1,887,824) (695,327) (1,004,580)
From capital gains ......................... (404,513) 0 (860,636) (176,965)
------------ ------------ ------------ ------------
Total Distributions ........................ (1,944,473) (1,887,824) (1,555,963) (1,181,545)
------------ ------------ ------------ ------------
Capital Share Transactions - Note C ......... 13,319,506 41,772,321 25,345,136 47,456,107
------------ ------------ ------------ ------------
Total increase in net assets ............... 20,838,816 52,260,231 42,537,805 69,947,840
Net Assets:
Beginning of year .......................... 93,200,954 40,940,723 128,541,023 58,593,183
------------ ------------ ------------ ------------
End of year (including undistributed net
investment income/(distributions in excess
of) ($11,005), $128,535 $16,642 and
$18,262, respectively) .................... $114,039,770 $ 93,200,954 $171,078,828 $128,541,023
============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments (unaudited) December 31, 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 -- Schedule of Investments (unaudited) December 31, 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 period ended December 31,
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
------------------------------------------------------------------------
Period Ended Year Ended
December 31, 1998 June 30, 1998
---------------------------------- ------------------------------------
Shares Amount Shares Amount
---------------- ---------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Shares sold ...................... 92,273,433 $ 92,273,433 146,489,995 $ 146,489,995
Shares issued through reinvest-
ment of dividends ............... 931,132 931,132 1,937,721 1,937,721
Shares redeemed .................. (97,867,322) (97,867,322) (132,945,072) (132,945,072)
----------- ------------- ------------ ---------------
Net Increase/(Decrease) .......... (4,662,757) $ (4,662,757) 15,482,644 $ 15,482,644
=========== ============= ============ ===============
[RESTUBED TABLE FOR ABOVE]
<CAPTION>
INTERMEDIATE FIXED INCOME FUND
----------------------------------------------------------------
Period Ended Year Ended
December 31, 1998 June 30, 1998
----------------------------- ---------------------------------
Shares Amount Shares Amount
------------- -------------- --------------- ----------------
<S> <C> <C> <C> <C>
Shares sold ...................... 1,704,442 $ 18,256,176 4,017,645 $ 41,959,179
Shares issued through reinvest-
ment of dividends ............... 407,225 4,330,787 581,272 6,063,815
Shares redeemed .................. (829,676) (8,838,060) (2,149,379) (22,508,479)
--------- ------------ ---------- --------------
Net Increase/(Decrease) .......... 1,281,991 $ 13,748,903 2,449,538 $ 25,514,515
========= ============ ========== ==============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FIXED INCOME FUND
-------------------------------------------------------------
Period Ended Year Ended
December 31, 1998 June 30, 1998
------------------------------ -----------------------------
Shares Amount Shares Amount
------------- --------------- ------------- --------------
<S> <C> <C> <C> <C>
Shares sold ....................... 387,877 $ 4,277,360 1,161,982 $ 12,549,304
Shares issued through reinvest-
ment of dividends ................ 72,571 800,044 82,549 887,523
Shares redeemed ................... (115,218) (1,271,621) (120,810) (1,293,529)
-------- ------------- --------- ------------
Net Increase ...................... 345,230 $ 3,805,783 1,123,721 $ 12,143,298
======== ============= ========= ============
[RESTUBED TABLE FOR ABOVE]
<CAPTION>
BALANCED FUND
------------------------------------------------------------
Period Ended Year Ended
December 31, 1998 June 30, 1998
----------------------------- -----------------------------
Shares Amount Shares Amount
------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Shares sold ....................... 816,254 $ 14,660,414 2,721,124 $ 46,198,090
Shares issued through reinvest-
ment of dividends ................ 104,445 1,915,122 108,340 1,842,078
Shares redeemed ................... (179,191) (3,256,030) (362,674) (6,267,847)
-------- ------------ --------- ------------
Net Increase ...................... 741,508 $ 13,319,506 2,466,790 $ 41,772,321
======== ============ ========= ============
</TABLE>
<PAGE>
McM Funds -- Schedule of Investments (unaudited) December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY INVESTMENT FUND
----------------------------------------------------------------
Period Ended Year Ended
December 31, 1998 June 30, 1998
------------------------------- -------------------------------
Shares Amount Shares Amount
------------- ---------------- ------------- ----------------
<S> <C> <C> <C> <C>
Shares sold ....................... 1,612,401 $ 38,971,592 2,496,173 $ 56,388,235
Shares issued through reinvest-
ment of dividends ................ 58,718 1,527,984 51,001 1,159,261
Shares redeemed ................... (594,479) (15,154,440) (436,532) (10,091,389)
--------- ------------- --------- -------------
Net Increase ...................... 1,076,640 $ 25,345,136 2,110,642 $ 47,456,107
========= ============= ========= =============
</TABLE>
Note (D) Investment Transactions: Aggregate purchases and proceeds from sales
of investment securities (other than short-term investments) for the year ended
December 31, 1998 were:
Aggregate Proceeds from
Purchases Sales
-------------- --------------
Intermediate Fixed Income Fund ......... $38,572,763 $25,134,467
Fixed Income Fund ...................... 5,064,434 1,465,185
Balanced Fund .......................... 21,925,068 6,231,818
Equity Investment Fund ................. 28,700,178 4,860,743
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, 1998 through December 31, 1998, the net amount of expenses the
Advisor absorbed, subject to repayment, totaled $164,395: $72,398 for the
Principal Preservation Fund; $14,366 for the Intermediate Fixed Income Fund;
$49,851 for the Fixed Income Fund; and $27,780 for the Balanced Fund.
The investment advisory agreements provide that any reductions or expense
reimbursements made by the Advisor in its fees are subject to reimbursement by
the Funds within the following three years such reduction or reimbursement
provided that the Funds are able to effect such reimbursement and remain in
compliance with applicable expense limitations. During the period ended
December 31, 1998, the Equity Investment Fund and the Intermediate Fixed Income
Fund reimbursed expenses to the Advisor totaling $70,799 and $4,533,
respectively. Since July 14, 1994 (July 13, 1994 for the Principal Preservation
Fund) through December 31, 1998, the Advisor has reduced its management fee and
otherwise absorbed Fund expenses for each Fund in the following amounts:
Principal Preservation Fund $452,261, Intermediate Fixed Income Fund $361,809,
Fixed Income Fund $340,815, Balanced Fund $347,301 and Equity Investment Fund
$96,107.
<PAGE>
Financial Highlights
- --------------------------------------------------------------------------------
The table below sets forth financial data for a share of beneficial interest
outstanding throughout each period presented.
<TABLE>
<CAPTION>
McM Principal
Preservation Fund
----------------------------
For the
Period Ended For the
12/31/98 Year Ended
(unaudited) 06/30/98
-------------- ------------
<S> <C> <C>
Net Asset Value, beginning of period ........................... $ 1.00 $ 1.00
------- -------
Income from investment operations
Net investment income ......................................... 0.03 0.05
Net realized and unrealized gain (loss) on investments ........ 0.00 0.00
------ -------
Total from investment operations ............................. 0.03 0.05
------ -------
Less Distributions:
From net investment income .................................... (0.03) (0.05)
From capital gains ............................................ 0.00 0.00
------- --------
Total distributions .......................................... (0.03) (0.05)
------- --------
Net Asset Value, end of period ................................. $ 1.00 $ 1.00
======== ========
Total return ................................................... 2.60% 5.41%
Ratios/Supplemental Data
Net assets, end of period (in 000's) .......................... $43,523 $48,184
Ratio of expenses to average net assets before reimburse-
ment and recovery of expenses by Advisor ..................... 0.62% 0.67%
Ratio of expenses to average net assets after reimbursement
of expenses by Advisor ....................................... 0.30% 0.30%
Ratio of net investment income to average net assets before
reimbursement of expenses by Advisor ......................... 4.78% 4.92%
Ratio of net investment income to average net assets after
reimbursement of expenses by Advisor ......................... 5.10% 5.29%
Portfolio turnover ............................................ N/A N/A
[RESTUBED TABLE FOR ABOVE]
<CAPTION>
McM Principal
Preservation Fund
-----------------------------------------
For the For the For the
Year Ended Year Ended Period Ended
06/30/97 06/30/96 06/30/95*
------------ ------------ -------------
<S> <C> <C> <C>
Net Asset Value, beginning of period ........................... $ 1.00 $ 1.00 $ 1.00
------- ------- -------
Income from investment operations
Net investment income ......................................... 0.05 0.05 0.05
Net realized and unrealized gain (loss) on investments ........ 0.00 0.00 0.00
------- ------- -------
Total from investment operations ............................. 0.05 0.05 0.05
------- ------- -------
Less Distributions:
From net investment income .................................... (0.05) (0.05) (0.05)
From capital gains ............................................ 0.00 0.00 0.00
-------- -------- -------
Total distributions .......................................... (0.05) (0.05) (0.05)
-------- -------- -------
Net Asset Value, end of period ................................. $ 1.00 $ 1.00 $ 1.00
======== ======== =======
Total return ................................................... 5.24% 5.39% 5.10%(2)
Ratios/Supplemental Data
Net assets, end of period (in 000's) .......................... $32,703 $24,195 $11,813
Ratio of expenses to average net assets before reimburse-
ment and recovery of expenses by Advisor ..................... 0.77% 0.93% 2.77%(1)
Ratio of expenses to average net assets after reimbursement
of expenses by Advisor ....................................... 0.30% 0.30% 0.30%(1)
Ratio of net investment income to average net assets before
reimbursement of expenses by Advisor ......................... 4.65% 4.60% 2.91%(1)
Ratio of net investment income to average net assets after
reimbursement of expenses by Advisor ......................... 5.12% 5.23% 5.38%(1)
Portfolio turnover ............................................ N/A N/A N/A
</TABLE>
* McM Principal Preservation Fund commenced investment operations on July 13,
1994.
** McM Intermediate Fixed Income Fund commenced investment operations on July
14, 1994.
(1) Annualized.
(2) Not annualized.
N/A Not applicable.
See accompanying notes to financial statements.
<PAGE>
Financial Highlights
- --------------------------------------------------------------------------------
The table below sets forth financial data for a share of beneficial interest
outstanding throughout each period presented.
<TABLE>
<CAPTION>
McM Intermediate
Fixed Income Fund
----------------------------
For the
Period Ended For the
12/31/98 Year Ended
(unaudited) 06/30/98
-------------- ------------
<S> <C> <C>
Net Asset Value, beginning of period ........................... $ 10.53 $ 10.26
-------- --------
Income from investment operations
Net investment income ......................................... 0.29 0.60
Net realized and unrealized gain (loss) on investments ........ 0.15 0.27
-------- --------
Total from investment operations ............................. 0.44 0.87
-------- --------
Less Distributions:
From net investment income .................................... ( 0.32) ( 0.60)
From capital gains ............................................ ( 0.04) 0.00
-------- --------
Total distributions .......................................... ( 0.36) ( 0.60)
--------- --------
Net Asset Value, end of period ................................. $ 10.61 $ 10.53
======== ========
Total return ................................................... 4.24% 8.68%
Ratios/Supplemental Data
Net assets, end of period (in 000's) .......................... $136,237 $121,710
Ratio of expenses to average net assets before reimburse-
ment and recovery of expenses by Advisor ..................... 0.52% 0.55%
Ratio of expenses to average net assets after reimbursement
of expenses by Advisor ....................................... 0.50% 0.50%
Ratio of net investment income to average net assets before
reimbursement of expenses by Advisor ......................... 5.39% 5.74%
Ratio of net investment income to average net assets after
reimbursement of expenses by Advisor ......................... 5.41% 5.79%
Portfolio turnover ............................................ 19.91% 45.44%
[RESTUBED TABLE FOR ABOVE]
<CAPTION>
McM Intermediate
Fixed Income Fund
---------------------------------------
For the For the For the
Year Ended Year Ended Year Ended
06/30/97 06/30/96 06/30/96**
------------ ------------ -----------
<S> <C> <C> <C>
Net Asset Value, beginning of period ........................... $ 10.17 $ 10.37 $ 10.00
------- ------- -------
Income from investment operations
Net investment income ......................................... 0.60 0.57 0.54
Net realized and unrealized gain (loss) on investments ........ 0.11 ( 0.10) 0.34
------- ------- -------
Total from investment operations ............................. 0.71 0.47 0.88
------- ------- -------
Less Distributions:
From net investment income .................................... ( 0.60) ( 0.57) ( 0.51)
From capital gains ............................................ ( 0.02) ( 0.10) 0.00
------- ------- -------
Total distributions .......................................... ( 0.62) ( 0.67) ( 0.51)
------- ------- -------
Net Asset Value, end of period ................................. $ 10.26 $ 10.17 $ 10.37
======= ======= =======
Total return ................................................... 7.14% 4.61% 9.19%
Ratios/Supplemental Data
Net assets, end of period (in 000's) .......................... $93,402 $76,045 $29,936
Ratio of expenses to average net assets before reimburse-
ment and recovery of expenses by Advisor ..................... 0.59% 0.69% 1.72%
Ratio of expenses to average net assets after reimbursement
of expenses by Advisor ....................................... 0.50% 0.50% 0.50%
Ratio of net investment income to average net assets before
reimbursement of expenses by Advisor ......................... 5.80% 5.52% 5.01%
Ratio of net investment income to average net assets after
reimbursement of expenses by Advisor ......................... 5.89% 5.71% 6.24%
Portfolio turnover ............................................ 36.02% 75.26% 227.09%
</TABLE>
* McM Principal Preservation Fund commenced investment operations on July 13,
1994.
** McM Intermediate Fixed Income Fund commenced investment operations on July
14, 1994.
(1) Annualized.
(2) Not annualized.
N/A Not applicable.
See accompanying notes to financial statements.
<PAGE>
Financial Highlights (continued)
- --------------------------------------------------------------------------------
The table below sets forth financial data for a share of beneficial interest
outstanding throughout each period presented.
<TABLE>
<CAPTION>
McM Fixed
Income Fund
----------------------------
For the
Period Ended For the
12/31/98 Year Ended
(unaudited) 06/30/98
-------------- ------------
<S> <C> <C>
Net Asset Value, beginning of period ........................... $ 10.89 $ 10.44
------- -------
Income from investment operations
Net investment income ......................................... 0.30 0.62
Net realized and unrealized gain (loss) on investments ........ 0.20 0.47
------- -------
Total from investment operations ............................. 0.50 1.09
------- -------
Less Distributions:
From net investment income .................................... ( 0.34) ( 0.62)
From capital gains ............................................ ( 0.02) ( 0.02)
------- -------
Total distributions .......................................... ( 0.36) ( 0.64)
------- -------
Net Asset Value, end of period ................................. $ 11.03 $ 10.89
======= =======
Total return ................................................... 4.67% 10.71%
Ratios/Supplemental Data
Net assets, end of period (in 000's) .......................... $26,301 $22,202
Ratio of expenses to average net assets before reimburse-
ment and recovery of expenses by Advisor ..................... 0.91% 1.17%
Ratio of expenses to average net assets after reimbursement
of expenses by Advisor ....................................... 0.50% 0.50%
Ratio of net investment income to average net assets before
reimbursement of expenses by Advisor ......................... 5.08% 5.26%
Ratio of net investment income to average net assets after
reimbursement of expenses by Advisor ......................... 5.48% 5.93%
Portfolio turnover ............................................ 6.14% 58.22%
[RESTUBED TABLE FOR ABOVE]
<CAPTION>
McM Fixed
Income Fund
-----------------------------------------
For the For the For the
Year Ended Year Ended Period Ended
06/30/97 06/30/96 06/30/96*
------------ ------------ -------------
<S> <C> <C> <C>
Net Asset Value, beginning of period ........................... $ 10.33 $ 10.58 $ 10.00
------- ------- -------
Income from investment operations
Net investment income ......................................... 0.65 0.64 0.55
Net realized and unrealized gain (loss) on investments ........ 0.12 ( 0.20) 0.56
------- -------- -------
Total from investment operations ............................. 0.77 0.44 1.11
------- -------- -------
Less Distributions:
From net investment income .................................... ( 0.65) ( 0.63) ( 0.53)
From capital gains ............................................ ( 0.01) ( 0.06) 0.00
-------- -------- --------
Total distributions .......................................... ( 0.66) ( 0.69) ( 0.53)
-------- -------- --------
Net Asset Value, end of period ................................. $ 10.44 $ 10.33 $ 10.58
======== ======== ========
Total return ................................................... 7.72% 4.16% 11.55%(2)
Ratios/Supplemental Data
Net assets, end of period (in 000's) .......................... $ 9,565 $ 7,992 $ 6,599
Ratio of expenses to average net assets before reimburse-
ment and recovery of expenses by Advisor ..................... 1.57% 1.82% 7.29%(1)
Ratio of expenses to average net assets after reimbursement
of expenses by Advisor ....................................... 0.50% 0.50% 0.50%(1)
Ratio of net investment income to average net assets before
reimbursement of expenses by Advisor ......................... 5.25% 4.70% 0.47%(1)
Ratio of net investment income to average net assets after
reimbursement of expenses by Advisor ......................... 6.32% 6.02% 6.33%(1)
Portfolio turnover ............................................ 32.46% 37.62% 150.77%(2)
</TABLE>
* McM Fixed Income Fund and McM Balanced Fund commenced investment operations
on July 14, 1994.
(1) Annualized.
(2) Not annualized.
See accompanying notes to financial statements.
<PAGE>
Financial Highlights (continued)
- --------------------------------------------------------------------------------
The table below sets forth financial data for a share of beneficial interest
outstanding throughout each period presented.
<TABLE>
<CAPTION>
McM Balanced
Fund
----------------------------
For the
Period Ended For the
12/31/98 Year Ended
(unaudited) 06/30/98
-------------- ------------
<S> <C> <C>
Net Asset Value, beginning of period ....................... $ 18.12 $ 15.30
-------- -------
Income from investment operations
Net investment income ..................................... 0.25 0.47
Net realized and unrealized gain on investments ........... 1.36 2.82
-------- -------
Total from investment operations ......................... 1.61 3.29
-------- -------
Less Distributions:
From net investment income ................................ ( 0.28) ( 0.47)
From capital gains ........................................ ( 0.07) 0.00
-------- -------
Total distributions ...................................... ( 0.35) ( 0.47)
-------- -------
Net Asset Value, end of period ............................. $ 19.38 $ 18.12
======== =======
Total return ............................................... 8.98% 21.76%
Ratios/Supplemental Data
Net assets, end of period (in 000's) ...................... $114,040 $93,201
Ratio of expenses to average net assets before reimburse-
ment and recovery of expenses by Advisor ................. 0.66% 0.74%
Ratio of expenses to average net assets after reimbursement
of expenses by Advisor ................................... 0.60% 0.60%
Ratio of net investment income to average net assets before
reimbursement of expenses by Advisor ..................... 2.73% 2.87%
Ratio of net investment income to average net assets after
reimbursement of expenses by Advisor ..................... 2.79% 3.01%
Portfolio turnover ........................................ 6.31% 20.73%
[RESTUBED TABLE FOR ABOVE]
<CAPTION>
McM Balanced
Fund
-----------------------------------------
For the For the For the
Year Ended Year Ended Period Ended
06/30/97 06/30/96 06/30/95*
------------ ------------ -------------
<S> <C> <C> <C>
Net Asset Value, beginning of period ....................... $ 12.75 $ 11.35 $ 10.00
------- ------- -------
Income from investment operations
Net investment income ..................................... 0.43 0.40 0.36
Net realized and unrealized gain on investments ........... 2.54 1.49 1.33
------- ------- -------
Total from investment operations ......................... 2.97 1.89 1.69
------- ------- -------
Less Distributions:
From net investment income ................................ ( 0.42) ( 0.40) ( 0.34)
From capital gains ........................................ 0.00 ( 0.09) 0.00
------- ------- -------
Total distributions ...................................... ( 0.42) ( 0.49) ( 0.34)
------- ------- -------
Net Asset Value, end of period ............................. $ 15.30 $ 12.75 $ 11.35
======= ======= =======
Total return ............................................... 23.65% 16.86% 17.31%
Ratios/Supplemental Data
Net assets, end of period (in 000's) ...................... $40,941 $11,915 $ 3,070
Ratio of expenses to average net assets before reimburse-
ment and recovery of expenses by Advisor ................. 1.01% 2.21% 8.41%
Ratio of expenses to average net assets after reimbursement
of expenses by Advisor ................................... 0.60% 0.60% 0.60%
Ratio of net investment income to average net assets before
reimbursement of expenses by Advisor ..................... 2.97% 1.81% 3.54%
Ratio of net investment income to average net assets after
reimbursement of expenses by Advisor ..................... 3.38% 3.43% 4.28%
Portfolio turnover ........................................ 31.64% 26.16% 81.05%
</TABLE>
* McM Balanced Fund and McM Balanced Fund commenced investment operations on
July 14, 1994.
(1) Annualized.
(2) Not annualized.
See accompanying notes to financial statements.
<PAGE>
Financial Highlights (continued)
- --------------------------------------------------------------------------------
The table below sets forth financial data for a share of beneficial interest
outstanding throughout each period presented.
<TABLE>
<CAPTION>
McM Equity
Investment Fund
----------------------------
For the
Period Ended For the
12/31/98 Year Ended
(unaudited) 06/30/98
-------------- ------------
<S> <C> <C>
Net Asset Value, beginning of period ....................... $ 25.29 $ 19.71
-------- -------
Income from investment operations
Net investment income ..................................... 0.12 0.23
Net realized and unrealized gain on investments ........... 2.62 5.62
-------- -------
Total from investment operations ......................... 2.74 5.85
-------- -------
Less Distributions:
From net investment income ................................ ( 0.12) ( 0.23)
From capital gains ........................................ ( 0.14) ( 0.04)
-------- --------
Total distributions ...................................... ( 0.26) ( 0.27)
-------- --------
Net Asset Value, end of period ............................. $ 27.77 $ 25.29
======== ========
Total return ............................................... 10.90% 29.89%
Ratios/Supplemental Data
Net assets, end of period (in 000's) ...................... $171,079 $128,541
Ratio of expenses to average net assets before reimburse-
ment and recovery of expenses by Advisor ................. 0.67% 0.75%
Ratio of expenses to average net assets after reimbursement
of expenses by Advisor ................................... 0.75% 0.75%
Ratio of net investment income to average net assets before
reimbursement of expenses by Advisor ..................... 0.94% 1.05%
Ratio of net investment income to average net assets after
reimbursement of expenses by Advisor ..................... 0.94% 1.05%
Portfolio turnover ........................................ 3.40% 0.57%
[RESTUBED TABLE FOR ABOVE]
<CAPTION>
McM Equity
Investment Fund
-----------------------------------------
For the For the For the
Year Ended Year Ended Period Ended
06/30/97 06/30/96 06/30/95*
------------ ------------ -------------
<S> <C> <C> <C>
Net Asset Value, beginning of period ....................... $ 14.85 $ 11.95 $ 10.00
------- ------- -------
Income from investment operations
Net investment income ..................................... 0.24 0.21 0.19
Net realized and unrealized gain on investments ........... 4.87 2.94 1.94
------- ------- -------
Total from investment operations ......................... 5.11 3.15 2.13
------- ------- -------
Less Distributions:
From net investment income ................................ ( 0.24) ( 0.21) ( 0.18)
From capital gains ........................................ ( 0.01) ( 0.04) 0.00
------- ------- -------
Total distributions ...................................... ( 0.25) ( 0.25) ( 0.18)
------- ------- -------
Net Asset Value, end of period ............................. $ 19.71 $ 14.85 $ 11.95
======= ======= =======
Total return ............................................... 34.68% 26.53% 21.57%
Ratios/Supplemental Data
Net assets, end of period (in 000's) ...................... $58,593 $23,913 $ 4,866
Ratio of expenses to average net assets before reimburse-
ment and recovery of expenses by Advisor ................. 0.88% 1.72% 8.48%
Ratio of expenses to average net assets after reimbursement
of expenses by Advisor ................................... 0.75% 0.75% 0.75%
Ratio of net investment income to average net assets before
reimbursement of expenses by Advisor ..................... 1.36% 0.80% 5.50%
Ratio of net investment income to average net assets after
reimbursement of expenses by Advisor ..................... 1.49% 1.77% 2.24%
Portfolio turnover ........................................ 0.88% 0.92% 1.81%
</TABLE>
* McM Equity Investment Fund commenced investment operations on July 14, 1994.
(1) Annualized.
(2) Not annualized.
N/R Not required.
See accompanying notes to financial statements.
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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
</TABLE>
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.
SAR1298
[GRAPHIC OMITTED]
