<PAGE>
McM Funds
------------------------------
Annual Report
June 30, 1999
Principal Preservation Fund
Intermediate Fixed Income Fund
Fixed Income Fund
Balanced Fund
Equity Investment Fund
<PAGE>
Dear Shareholder:
Five years ago we created the McM Funds with a specific goal in mind: serve
investors who seek both consistent results over time and lower management fees.
We also wanted to bring the McMorgan & Company investment program, previously
available to only large institutional investors, to smaller institutional
investors and individuals.
Based on the development of the Funds, our investment performance, and the
notice we have garnered from various ratings services, I believe we are
achieving our goals. In a world flooded with mutual fund alternatives, investors
like you have found McM Funds a desirable investment alternative.
In one of our very first reports to investors, we made the following commitment:
"We will do everything in our power to ensure that our shareholders are
never exposed to unnecessary risk, speculative investment, or the latest
`investment fad.' The rigorous implementation of our investment approach
and dedication to service will remain firm."
The McM Funds are now five years old, and McMorgan & Company, the investment
manager of the Funds, celebrated its 30th anniversary in July of this year. With
so many years of experience behind us and an outstanding record of service based
on the above commitment, there is no reason for us (or you) to change anything
now.
Thank you for continuing to place your trust and confidence in us.
Sincerely,
/s/ Terry A. O'Toole
- ---------------------
Terry A. O'Toole
Chairman of the Board
<PAGE>
Review
The U.S. equity market has been bullish for the last few years--inflation
remains low as the longest economic expansion in history continues. Investors
poured money into large-capitalization stocks at record levels this past year,
learning to "buy on dips" when the market declined.
Even with a robust economy and low inflation, the expectation of higher
inflation created a rise in interest rates over the past year. This produced a
less than stellar year for fixed income investments.
We chose not to speculate in certain high-growth stocks whose earnings were weak
in relation to price. Our selection of investments looked to produce the highest
level of return while avoiding excessive risk.
Outlook
Looking forward, we expect the U.S. economy to slow modestly during the second
half of 1999. Factors leading to this slowing include higher interest rates, the
lessening impact of year-end bonuses and early income tax refunds, and a decline
in refinancing activity. On a longer-term basis, the outlook for the U.S.
economy remains favorable.
We do not believe that the expected rise in short-term interest rates will harm
the economy, as the market has already accounted for this by repricing the yield
curve. The environment continues to be favorable for the capital markets. As we
move further into 1999 and the new century, the returns from bonds and stocks
should remain positive in the absence of a significant rise in interest rates or
unexpected political or financial shocks.
The McM portfolios continue to be structured for long-term investment. Over the
past three and five years, our portfolios have performed well, and we look
forward to the future.
- --------------------
To be preceded or accompanied by a prospectus. Past performance does not
guarantee future results. Shares, when redeemed, may be more or less than their
original cost. 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 8/99.
<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 42% of the portfolio. The 7-day and
30-day average yields as of June 30, 1999 were 4.47% and 4.56%, respectively.
Diversification Credit Quality Maturity
- --------------- -------------- --------
Certificates of Deposit 3% A-1/P-1 42% 1-15 days 31%
Repurchase Agreements 16% Government 58% 16-30 days 27%
Commercial Paper 39% 31-90 days 25%
Government 42% 91+ days 17%
Average Annual Return (%) Current One Three Since
Yield Year Years Inception
------- ---- ----- ---------
McM Principal Preservation Fund 4.58 4.97 5.21 5.26
<PAGE>
- --------------------------------------------------------------------------------
Principal Preservation Fund
July 13, 1994 Inception Date
June 30, 1998 - June 30, 1999
7-Day Average Yield (%)
3/13/95 5.70 3/11/96 4.93 3/14/97 5.13
3/20/95 5.80 3/18/96 4.94 3/21/97 5.14
3/27/95 5.80 3/25/96 4.93 3/27/97 5.16
4/03/95 5.80 4/01/96 4.94 4/04/97 5.18
4/10/95 5.80 4/08/96 4.91 4/11/97 5.17
4/17/95 5.80 4/15/96 4.91 4/18/97 5.19
4/24/95 5.74 4/22/96 4.90 4/25/97 5.17
5/01/95 5.74 4/29/96 4.92 5/02/97 5.18
5/08/95 5.74 5/06/96 4.92 5/09/97 5.21
5/15/95 5.74 5/13/96 4.94 5/16/97 5.23
5/21/95 5.74 5/20/96 4.98 5/30/97 5.25
5/30/95 5.74 5/28/96 4.98 6/06/97 5.26
6/05/95 5.69 6/03/96 4.96 6/13/97 5.27
6/12/95 5.71 6/10/96 4.97 6/20/97 5.31
6/19/95 5.71 6/17/96 4.98 6/30/97 5.29
6/26/95 5.71 6/24/96 5.03 7/08/97 5.27
7/03/95 5.64 7/01/96 5.04 7/17/97 5.30
7/10/95 5.61 7/08/96 5.04 7/28/97 5.32
7/17/95 5.61 7/22/96 5.01 8/06/97 5.33
7/24/95 5.60 7/29/96 5.01 8/14/97 5.31
7/31/95 5.62 8/05/96 5.05 8/25/97 5.32
8/07/95 5.60 8/12/96 5.02 9/04/97 5.30
8/14/95 5.58 8/20/96 5.01 9/15/97 5.33
8/21/95 5.58 8/26/96 5.03 9/24/97 5.31
8/28/95 5.57 9/03/96 5.06 10/02/97 5.31
9/05/95 5.53 9/10/96 5.03 10/14/97 5.28
9/11/95 5.54 9/16/96 5.05 10/23/97 5.30
9/18/95 5.47 9/23/96 5.04 11/03/97 5.43
9/25/95 5.48 9/30/96 5.04 11/12/97 5.29
10/02/95 5.36 10/07/96 5.04 12/12/97 5.30
10/09/95 5.44 10/15/96 5.03 12/24/97 5.34
10/16/95 0.05 10/28/96 5.02 12/31/97 5.39
10/23/95 0.05 10/28/96 5.01 1/31/98 5.31
10/30/95 5.41 11/15/96 5.06 2/27/98 5.29
11/06/95 5.40 11/22/96 5.06 3/31/98 5.26
11/27/96 5.40 11/29/96 5.03 4/30/98 5.23
12/04/96 5.35 12/09/96 5.02 5/31/98 5.23
12/11/96 5.36 12/13/96 5.01 6/30/98 5.22
12/18/96 5.34 12/20/96 5.05 7/31/98 5.25
12/26/96 5.35 12/27/96 5.05 8/31/98 5.25
1/02/96 5.27 1/03/97 5.18 9/30/98 5.14
1/09/96 5.29 1/10/97 5.18 10/31/98 5.08
1/15/96 5.28 1/17/97 5.19 11/30/98 4.96
1/22/96 5.26 1/24/97 5.22 12/31/98 4.82
1/29/96 5.24 1/31/97 5.20 1/31/99 4.69
2/05/96 5.11 2/07/97 5.16 2/28/99 4.63
2/12/96 5.10 2/14/97 5.16 3/31/99 4.59
2/20/96 5.02 2/21/97 5.15 4/30/99 4.59
2/26/96 4.99 2/28/97 5.05 5/31/99 4.55
3/04/96 5.00 3/07/97 5.14 6/30/99 4.57
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 64% of the Fund. Mortgage securities, backed by U.S.
Government Agencies, provide yield advantages compared to U.S. Government bonds
with equivalent maturities. The Fund's weighted average maturity of 5.1 years
seeks to limit sensitivity to interest rate changes.
NASDAQ Symbol: MCMNX
Diversification Bond Quality Maturity
- --------------- ---------------- ----------------
Asset Backed/Other 1% BAA 7% 1-5 years 54%
Government 26% AAA 38% 5-10 years 40%
Corporate 35% AA 11% 10+ years 6%
Mortgage 38% A 18%
Government 26%
Average Annual Returns (%) One Three Since
Year Years Inception
---- ----- ---------
McM Intermediate Fixed Income Fund 3.25 6.33 6.60
Lehman Brothers Intermediate Govt./Corp. Index 4.18 6.63 6.94
<PAGE>
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Intermediate Fixed Income Fund
July 14, 1994 Inception Date
McM Lehman
Intermediate Intermediate
Fund Fund
----------- ------------
7/31/94 $10,050 $10,074
8/31/94 $10,046 $10,105
9/30/94 $ 9,969 $10,012
10/31/94 $ 9,965 $10,011
11/30/94 $ 9,921 $ 9,966
12/31/94 $ 9,957 $10,001
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
1/31/99 $13,936 $14,109
2/28/99 $13,731 $13,901
3/31/99 $13,869 $14,006
4/30/99 $13,874 $14,049
5/31/99 $13,750 $13,941
6/30/99 $13,734 $13,951
Past performance does not guarantee future results.
- --------------------------------------------------------------------------------
The chart reflects a hypothetical investment of $10,000 with reinvestment of
dividends and capital gains. U.S. Treasury bonds, unlike mutual funds, are
direct obligations of the U.S. Government that offer a fixed rate of return when
held to maturity. Ratings such as "AAA" refer to individual bonds and not to the
fund.
<PAGE>
Fixed Income Fund
The Fixed Income Fund is structured similarly to the Intermediate Fixed Income
Fund. It invests primarily in investment grade and U.S. Government bonds and has
a weighted average maturity of 6.9 years, 1.8 years longer than the Intermediate
Fixed Income Fund.
NASDAQ Symbol: MCMFX
Diversification Bond Quality Maturity
- --------------- ---------------- ----------------
Government 16% BAA 14% 1-5 years 15%
Corporate 40% AAA 41% 5-10 years 82%
Mortgage 44% AA 13% 10+ years 3%
A 16%
Government 16%
Average Annual Returns (%) One Three Since
Year Years Inception
---- ----- ---------
McM Fixed Income Fund 2.34 6.87 7.29
Lehman Brothers Aggregate Index 3.13 7.23 7.70
<PAGE>
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Fixed Income Fund
July 14, 1994 Inception Date
Fixed Lehman Brothers
Income Fund Aggregate Index
----------- ---------------
7/31/94 $10,070 $10,114
8/31/94 $10,097 $10,126
9/30/94 $ 9,937 $ 9,977
10/31/94 $ 9,911 $ 9,968
11/30/94 $ 9,855 $ 9,946
12/31/94 $ 9,926 $10,015
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
1/31/99 $14,568 $14,759
2/28/99 $14,248 $14,500
3/31/99 $14,417 $14,580
4/30/99 $14,400 $14,627
5/31/99 $14,221 $14,498
6/30/99 $14,179 $14,452
Past performance does not guarantee future results.
- --------------------------------------------------------------------------------
The chart reflects a hypothetical investment of $10,000 with reinvestment of
dividends and capital gains. U.S. Treasury bonds, unlike mutual funds, are
direct obligations of the U.S. Government that offer a fixed rate of return when
held to maturity. Ratings such as "AAA" refer to individual bonds and not to the
fund.
<PAGE>
Balanced Fund
The Balanced Fund invests in common stocks and bonds. Common stocks represent
about 60% of the Fund and bonds about 40%. The common stock portion is well
diversified among 100 companies that represent all economic sectors. The Fund's
bond portion is 67% U.S. Government and AAA-rated securities with a weighted
average maturity of 6.6 years.
NASDAQ Symbol: MCMBX
Asset Allocation Fixed Income Quality
- ---------------- --------------------
Cash 1% BAA 11%
Bonds 39% AAA 32%
Stocks 60% AA 7%
A 15%
Government 35%
Average Annual Returns (%) One Three Since
Year Years Inception
---- ----- ---------
McM Balanced Fund 14.60 19.94 18.94
Lehman Brothers Aggregate Index 3.13 7.23 7.70
Standard & Poor's 500 22.70 29.10 27.54
Ten Largest Equity Holdings (%)
Intel Corp. 4.0
General Electric Co. 3.9
Chase Manhattan Corp. 3.4
Federal Natl. Mortgage Assn. 3.1
Tyco Intl. Ltd. 3.0
Citigroup Inc. 2.6
Compaq Computer Corp. 2.3
International Business Machines 2.2
Bank of America Corp. 2.1
Lucent Technologies Inc. 2.0
----
28.6
<PAGE>
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Balanced Fund
July 14, 1994 Inception Date
McM Lehman
Balanced Aggregate
Fund Bond Index S&P 500
---- ---------- -------
7/31/94 $10,070 $10,114 $10,110
8/31/94 $10,300 $10,126 $10,521
9/30/94 $10,081 $ 9,977 $10,268
10/31/94 $10,152 $ 9,968 $10,503
11/30/94 $ 9,961 $ 9,946 $10,118
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
1/31/99 $22,934 $14,759 $31,042
2/28/99 $22,308 $14,500 $30,077
3/31/99 $22,674 $14,580 $31,286
4/30/99 $23,268 $14,627 $32,478
5/31/99 $22,896 $14,498 $31,728
6/30/99 $23,652 $14,452 $33,463
Past performance does not guarantee future results.
- --------------------------------------------------------------------------------
The chart reflects a hypothetical investment of $10,000 with reinvestment of
dividends and capital gains. U.S. Treasury bonds, unlike mutual funds, are
direct obligations of the U.S. Government that offer a fixed rate of return when
held to maturity. Ratings such as "AAA" refer to individual bonds and not to the
fund.
<PAGE>
Equity Investment Fund
The Equity Investment Fund invests in common stocks of large, high quality
companies. It is diversified among 99 companies across all economic sectors.
Individual companies are carefully selected and attractive economic sectors are
strategically overweighted as compared to the Standard & Poor's 500 Stock Index.
NASDAQ Symbol: MCMEX
Ten Largest Holdings (%) Portfolio Characteristics
Intel Corp. 4.0 Price/Earnings Ratio 36.44
General Electric Co. 3.8 Beta 0.97
Chase Manhattan Corp. 3.4 Avg. Market Capitalization $91.2B
Federal Natl. Mortgage Assn. 3.1 Total Number of Stocks 99
Tyco Intl. Ltd. 2.9
Citigroup Inc. 2.6 Average Annual Returns (%)
Compaq Computer Corp. 2.3 McM Equity S&P 500
---------- -------
Intl. Business Machines 2.2 One Year 21.70 22.70
Bank of America Corp. 2.1 Three Years 28.65 29.10
Lucent Technologies Inc. 1.9 Since Inception 26.99 27.54
----
28.3
Sector Weightings (%)
Financial Services 17.3
Technology 15.4
Utilities 12.2
Health-Care 11.9
Capital Goods 10.5
Energy 9.1
Consumer Non-Durables 6.5
Retail 5.7
Raw Materials 3.3
Consumer Services 2.0
Consumer Durables 1.8
Transportation 1.6
Shelter 1.2
Business Equip. & Services 0.8
Multi-Industry 0.7
-----
100.0
<PAGE>
- --------------------------------------------------------------------------------
Equity Investment Fund
July 14, 1994 Inception Date
Equity Standard & Poor's
Investment Fund 500 Index
--------------- -----------------
7/31/94 10,040 10,110
8/31/94 10,440 10,521
9/30/94 10,160 10,268
10/31/94 10,320 10,503
11/30/94 9,989 10,118
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
1/31/99 30,668 31,042
2/28/99 29,702 30,077
3/31/99 30,331 31,286
4/30/99 31,687 32,478
5/31/99 31,054 31,728
6/30/99 32,752 33,463
Past performance does not guarantee future results.
- --------------------------------------------------------------------------------
The chart reflects a hypothetical investment of $10,000
with reinvestment of dividends and capital gains.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1999
- --------------------------------------------------------------------------------
Principal Preservation Fund
<TABLE>
<CAPTION>
Principal
Amount Value
FIXED INCOME SECURITIES ------------- -------------
<S> <C> <C>
U.S. Government Agency Notes - 90.62%
Fannie Mae - 17.29%
4.88%, 07/01/99 ............................................. $ 5,000,000 $ 5,000,000
4.90%, 07/21/99 ............................................. 2,000,000 1,994,800
4.86%, 08/12/99 ............................................. 1,000,000 994,587
4.82%, 09/09/99 ............................................. 1,000,000 991,036
4.88%, 10/01/99 ............................................. 1,000,000 988,065
4.89%, 10/08/99 ............................................. 2,000,000 1,974,095
4.83%, 01/11/00 ............................................. 1,000,000 1,000,000
5.12%, 05/12/00 ............................................. 2,100,000 2,096,144
-----------
15,038,727
-----------
Federal Home Loan Bank - 34.38%
4.87%, 07/01/99 ............................................. 18,000,000 18,000,000
4.93%, 07/09/99 ............................................. 2,000,000 1,997,853
4.77%, 09/16/99 ............................................. 1,000,000 990,268
4.69%, 11/24/99 ............................................. 2,000,000 1,964,149
4.88%, 12/02/99 ............................................. 1,000,000 980,194
5.00%, 02/24/00 ............................................. 1,000,000 999,683
5.30%, 03/16/00 ............................................. 1,000,000 963,884
5.13%, 03/16/00 ............................................. 2,000,000 1,998,345
5.08%, 04/28/00 ............................................. 2,000,000 1,994,447
-----------
29,888,823
-----------
Freddie Mac - 6.79%
4.97%, 09/02/99 ............................................. 2,000,000 1,983,270
4.90%, 09/09/99 ............................................. 1,000,000 990,803
4.93%, 11/19/99 ............................................. 1,000,000 981,474
5.14%, 01/21/00 ............................................. 2,000,000 1,946,393
-----------
5,901,940
-----------
Sallie Mae - 32.16%
4.68%, 07/12/99 ............................................. 28,000,000 27,957,735
-----------
TOTAL U.S. GOVERNMENT AGENCY NOTES (Cost $78,787,225)......... 78,787,225
-----------
CERTIFICATES OF DEPOSITS - 2.88%
Imperial Bank ................................................
5.05%, 08/17/99 ............................................. 2,500,000 2,500,000
-----------
TOTAL CERTIFICATES OF DEPOSIT (Cost-$2,500,000) .............. 2,500,000
-----------
COMMERCIAL PAPER - 26.32%
AT & T Corp.
4.88%, 07/27/99 ............................................. 2,000,000 1,993,139
4.92%, 08/09/99 ............................................. 2,000,000 1,989,318
Disney (Walt) Co.
4.77%, 07/12/99 ............................................. 2,000,000 1,997,103
Dupont (EI) de Nemours & Co.
5.09%, 09/17/99 ............................................. 2,000,000 1,978,550
Eastman Kodak Co.
4.86%, 07/20/99 ............................................. 2,000,000 1,994,965
Ford Motor Credit Corp.
4.81%, 07/19/99 ............................................. 2,000,000 1,995,270
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1999
- --------------------------------------------------------------------------------
Principal Preservation Fund (continued)
<TABLE>
<CAPTION>
Principal
Amount Value
FIXED INCOME SECURITIES - (continued) ------------- ----------------
<S> <C> <C>
General Electric Capital Corp. ..............................
4.91%, 07/15/99 ............................................ $1,000,000 $ 998,145
5.06%, 10/25/99 ............................................ 1,000,000 984,469
Goldman Sachs & Co. .........................................
4.88%, 08/24/99 ............................................ 2,000,000 1,985,540
Merrill Lynch & Co., Inc. ...................................
4.91%, 07/30/99 ............................................ 2,000,000 1,992,267
Morgan Stanley Dean Witter Discover & Co.
4.91%, 07/15/99 ............................................ 1,000,000 998,145
4.82%, 09/07/99 ............................................ 2,000,000 1,981,678
Motorola, Inc.
4.89%, 07/16/99 ............................................ 2,000,000 1,996,042
-------------
TOTAL COMMERCIAL PAPER (Cost $22,884,631).................... 22,884,631
-------------
TOTAL INVESTMENTS * - 119.82% (Cost-$104,171,856) ........... 104,171,856
-------------
CASH AND OTHER ASSETS NET OF LIABILITIES - (19.82%) ......... (17,231,699)
-------------
NET ASSETS - 100.00% ........................................ $ 86,940,157
=============
</TABLE>
* At June 30, 1999, cost is identical for book and federal income tax purposes.
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1999
- --------------------------------------------------------------------------------
Intermediate Fixed Income Fund
<TABLE>
<CAPTION>
Principal
Amount Value
------------- -------------
<S> <C> <C>
FIXED INCOME SECURITIES - 97.09%
Asset Backed Securities - 1.30%
Capital Equipment Receivables Trust
6.57%, 03/15/01 ....................................... $1,000,000 $1,003,890
Olympic Automobile Receivables Trust 1994-B A2
6.25%, 11/15/04 ....................................... 1,000,000 989,300
----------
TOTAL ASSET BACKED SECURITIES (Cost $1,992,387)......... 1,993,190
----------
Corporate Bonds - 33.39%
Bank & Insurance - 4.61%
BankAmerica Corp.
6.85%, 03/01/03 ....................................... 1,500,000 1,513,125
6.38%, 05/15/05 ....................................... 1,500,000 1,473,750
Travelers Property Casualty Corp.
6.88%, 12/15/03 ....................................... 1,250,000 1,262,500
7.20%, 02/01/04 ....................................... 1,155,000 1,178,100
U.S. Bancorp
6.75%, 10/15/05 ....................................... 1,650,000 1,635,562
----------
7,063,037
----------
Financial Services - 20.34%
American General Finance Corp.
6.20%, 03/15/03 ....................................... 2,000,000 1,975,000
5.75%, 11/01/03 ....................................... 1,500,000 1,451,250
Associates Corp. of North America
6.38%, 07/15/02 ....................................... 400,000 400,000
6.38%, 10/15/02 ....................................... 330,000 330,000
5.50%, 02/15/04 ....................................... 225,000 215,438
6.10%, 01/15/05 ....................................... 700,000 679,000
7.55%, 07/17/06 ....................................... 3,000,000 3,120,000
Beneficial Corp.
8.10%, 11/09/99 ....................................... 425,000 428,634
6.85%, 06/17/02 ....................................... 325,000 328,250
Citigroup, Inc.
9.50%, 03/01/02 ....................................... 500,000 537,346
Finova Capital Corp.
7.13%, 05/01/02 ....................................... 1,025,000 1,042,938
6.12%, 05/28/02 ....................................... 425,000 421,281
6.50%, 07/28/02 ....................................... 700,000 700,000
6.20%, 03/01/04 ....................................... 875,000 853,125
6.38%, 05/15/05 ....................................... 700,000 673,995
Ford Motor Credit Corp.
6.55%, 09/10/02 ....................................... 2,000,000 2,005,000
6.63%, 06/30/03 ....................................... 1,000,000 1,001,250
General Motors Acceptance Corp.
5.91%, 03/11/02 ....................................... 2,000,000 1,975,000
7.13%, 05/01/03 ....................................... 300,000 304,500
7.25%, 05/15/03 ....................................... 1,100,000 1,120,625
6.75%, 10/06/03 ....................................... 1,700,000 1,702,125
5.75%, 11/10/03 ....................................... 1,200,000 1,156,500
6.63%, 10/15/05 ....................................... 50,000 49,188
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1999
- --------------------------------------------------------------------------------
Intermediate Fixed Income Fund (continued)
<TABLE>
<CAPTION>
Principal
Amount Value
------------ -------------
<S> <C> <C>
FIXED INCOME SECURITIES - (continued)
Household Finance Corp.
6.75%, 06/01/00 ................................ $ 650,000 $ 653,887
6.96%, 09/04/01 ................................ 175,000 176,969
6.70%, 06/15/02 ................................ 500,000 503,125
Lehman Brothers, Inc.
6.13%, 02/01/01 ................................ 800,000 793,000
Merrill Lynch & Co., Inc.
6.00%, 11/15/04 ................................ 800,000 781,000
Morgan Stanley Dean Witter Discover & Co.
5.63%, 01/20/04 ................................ 995,000 958,931
6.88%, 03/01/07 ................................ 575,000 574,281
Norwest Corp.
5.75%, 02/01/03 ................................ 2,500,000 2,437,500
Sears Roebuck Acceptance Corp.
6.73%, 08/29/00 ................................ 1,000,000 1,008,970
6.92%, 10/03/02 ................................ 225,000 227,812
Transamerica Financial Corp.
7.51%, 04/15/02 ................................ 150,000 154,125
6.38%, 06/10/02 ................................ 400,000 399,500
-----------
31,139,545
-----------
Industrial - 8.44%
Enron Corp.
6.45%, 11/15/01 ................................ 2,000,000 2,002,500
MCI Worldcom, Inc.
6.40%, 08/15/05 ................................ 1,925,000 1,879,281
Philip Morris Cos., Inc.
7.50%, 01/15/02 ................................ 1,150,000 1,173,000
7.25%, 01/15/03 ................................ 800,000 812,000
6.80%, 12/01/03 ................................ 645,000 643,388
Raytheon Co.
6.45%, 08/15/02 ................................ 2,000,000 2,000,000
TCI Communications, Inc.
6.38%, 05/01/03 ................................ 2,500,000 2,481,250
Transcontinental Gas Pipeline
6.13%, 01/15/05 ................................ 2,000,000 1,927,500
-----------
12,918,919
-----------
TOTAL CORPORATE BONDS (Cost $51,868,649)......... 51,121,501
-----------
U.S. Government Agency Obligations - 23.85%
Federal Farm Credit Bank - 0.40%
6.34%, 02/07/02 ................................ 615,000 620,799
-----------
Federal Home Loan Bank - 1.78%
6.08%, 12/23/02 ................................ 500,000 501,925
5.13%, 09/15/03 ................................ 1,000,000 964,210
5.77%, 02/03/04 ................................ 840,000 828,005
7.70%, 09/20/04 ................................ 400,000 427,084
-----------
2,721,224
-----------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1999
- --------------------------------------------------------------------------------
Intermediate Fixed Income Fund (continued)
<TABLE>
<CAPTION>
Principal
Amount Value
------------ -------------
<S> <C> <C>
FIXED INCOME SECURITIES - (continued)
Fannie Mae - 13.59%
6.45%, 04/23/01 ................................................... $ 150,000 $ 151,611
7.55%, 04/22/02 ................................................... 1,500,000 1,561,425
5.13%, 02/13/04 ................................................... 9,658,000 9,283,270
5.75%, 06/15/05 ................................................... 6,915,000 6,791,982
7.12%, 07/03/06 ................................................... 2,905,000 3,013,937
-----------
20,802,225
-----------
Freddie Mac - 1.53%
5.63%, 01/10/03 ................................................... 200,000 197,426
5.99%, 12/01/03 ................................................... 1,650,000 1,641,701
6.64%, 03/10/04 ................................................... 500,000 509,895
-----------
2,349,022
-----------
Financing Corp. Coupon Strip - 0.21%
0.00%, 04/06/02* .................................................. 375,000 317,531
-----------
Guaranteed Export Trust - 0.98%
6.13%, 06/15/04 ................................................... 294,118 288,710
6.28%, 06/15/04 ................................................... 323,529 323,297
6.55%, 06/15/04 ................................................... 882,349 885,962
-----------
1,497,969
-----------
Resolution Funding Strip - 5.36%
0.00%, 07/15/08* .................................................. 2,700,000 1,542,564
0.00%, 10/15/08* .................................................. 3,900,000 2,189,967
0.00%, 04/15/09* .................................................. 3,690,000 2,012,489
0.00%, 04/15/10* .................................................. 4,810,000 2,455,505
-----------
8,200,525
-----------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (Cost $36,711,624)......... 36,509,295
-----------
Collateralized Mortgage Obligations - 36.83%
Collateralized Mortgage Obligation Trust - 0.01%
8.20%, 05/20/04 ................................................... 17,081 17,404
-----------
Fannie Mae - 9.57%
5.95%, 05/25/05 ................................................... 613,642 612,789
5.40%, 11/25/05 ................................................... 533,058 530,841
6.00%, 04/01/09 ................................................... 11,408 11,161
5.25%, 09/25/16 ................................................... 16,854 16,762
9.00%, 06/25/18 ................................................... 80,731 84,587
6.60%, 09/25/18 ................................................... 87,445 87,761
6.25%, 01/25/19 ................................................... 2,500,000 2,488,825
5.50%, 02/25/19 ................................................... 868,305 863,990
6.25%, 07/25/19 ................................................... 600,000 597,300
5.50%, 07/25/20 ................................................... 1,850,000 1,767,397
5.50%, 08/25/21 ................................................... 720,000 701,777
5.75%, 11/18/21 ................................................... 3,000,000 2,887,935
0.00%, 01/25/22 ................................................... 22,446 22,068
5.75%, 09/18/22 ................................................... 725,000 689,469
6.00%, 01/17/23 ................................................... 1,350,000 1,328,967
6.25%, 01/25/23 ................................................... 2,000,000 1,964,240
-----------
14,655,869
-----------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1999
- --------------------------------------------------------------------------------
Intermediate Fixed Income Fund (continued)
<TABLE>
<CAPTION>
Principal
Amount Value
------------- ---------------
<S> <C> <C>
FIXED INCOME SECURITIES - (continued)
Freddie Mac - 27.25%
5.85%, 02/15/18 ......................................................................... $1,137,397 $ 1,136,794
6.40%, 01/15/19 ......................................................................... 1,000,000 1,005,730
6.25%, 05/15/19 ......................................................................... 1,000,000 997,240
6.00%, 07/15/19 ......................................................................... 1,500,000 1,491,150
5.50%, 10/15/19 ......................................................................... 1,800,000 1,705,977
5.75%, 02/15/20 ......................................................................... 1,750,000 1,679,858
6.00%, 02/15/20 ......................................................................... 1,000,000 990,200
6.00%, 05/15/20 ......................................................................... 1,550,000 1,514,931
6.00%, 12/15/20 ......................................................................... 3,000,000 2,914,365
5.50%, 01/15/21 ......................................................................... 3,825,000 3,622,361
6.50%, 01/25/21 ......................................................................... 2,000,000 1,993,460
5.25%, 02/15/21 ......................................................................... 2,000,000 1,869,197
5.50%, 04/15/21 ......................................................................... 5,400,000 5,094,609
6.00%, 04/15/21 ......................................................................... 1,450,000 1,405,913
5.75%, 05/15/21 ......................................................................... 1,600,000 1,578,096
6.35%, 07/15/21 ......................................................................... 1,000,000 996,140
6.00%, 03/15/22 ......................................................................... 2,500,000 2,406,938
5.75%, 02/15/23 ......................................................................... 1,600,000 1,498,072
6.75%, 05/15/23 ......................................................................... 1,000,000 1,002,240
5.50%, 07/15/23 ......................................................................... 3,300,000 3,037,843
5.75%, 09/15/23 ......................................................................... 2,000,000 1,883,250
5.75%, 03/15/24 ......................................................................... 2,000,000 1,886,250
-----------
41,710,614
-----------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost $57,464,798).............................. 56,383,887
-----------
U.S. Government Obligations - 1.72%
U.S. Treasury Bond
11.88%, 11/15/03 ........................................................................ 460,000 564,300
U.S. Treasury Note
7.88%, 11/15/04 ......................................................................... 1,890,000 2,061,348
-----------
TOTAL U.S. TREASURY OBLIGATIONS (Cost $2,710,586)......................................... 2,625,648
-----------
TOTAL FIXED INCOME SECURITIES - 97.09% (Cost-$150,748,044)(1) ............................ 148,633,521
-----------
CASH AND OTHER ASSETS NET OF LIABILITIES - 2.91% ......................................... 4,462,386
-----------
NET ASSETS - 100.00% ..................................................................... $153,095,907
============
(1) Aggregate cost for federal income tax purposes is $150,748,044 and net unrealized
appreciation is as follows:
Gross unrealized appreciation ....................................................... $ 659,859
Gross unrealized depreciation ....................................................... (2,774,382)
============
Net unrealized depreciation ........................................................ ($ 2,114,523)
============
* Zero coupon bond
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1999
- --------------------------------------------------------------------------------
Fixed Income Fund
<TABLE>
<CAPTION>
Principal
Amount Value
---------- ------------
FIXED INCOME SECURITIES - 98.86%
Corporate Bonds - 37.26%
Bank & Insurance - 8.11%
<S> <C> <C>
BankAmerica Corp.
6.85%, 03/01/03 ............................. $ 250,000 $ 252,187
6.63%, 08/01/07 ............................. 100,000 97,625
6.63%, 10/15/07 ............................. 150,000 146,438
KeyCorp
6.75%, 03/15/06 ............................. 280,000 275,800
NationsBank Corp. ............................
7.50%, 09/15/06 ............................. 175,000 180,250
6.38%, 02/15/08 ............................. 200,000 193,250
Travelers Property Casualty Corp. ............
7.20%, 02/01/04 ............................. 100,000 102,000
U.S. Bancorp
6.50%, 02/01/08 ............................. 900,000 875,250
Wells Fargo & Co. ............................
6.25%, 04/15/08 ............................. 105,000 100,800
----------
2,223,600
----------
Financial Services - 18.59%
American General Finance Corp. ...............
6.20%, 03/15/03 ............................. 500,000 493,750
Associates Corp. of North America
6.38%, 10/15/02 ............................. 120,000 120,000
6.10%, 01/15/05 ............................. 200,000 194,000
7.55%, 07/17/06 ............................. 600,000 624,000
Beneficial Corp. .............................
9.47%, 03/09/01 ............................. 20,000 21,025
6.75%, 07/20/04 ............................. 100,000 100,250
6.94%, 12/15/06 ............................. 100,000 100,000
Citigroup, Inc. ..............................
9.50%, 03/01/02 ............................. 75,000 80,602
Commercial Credit Co. ........................
6.63%, 11/15/06 ............................. 225,000 221,063
Finova Capital Corp. .........................
6.50%, 07/28/02 ............................. 300,000 300,000
6.20%, 03/01/04 ............................. 100,000 97,500
6.90%, 06/19/04 ............................. 100,000 99,750
6.75%, 03/09/09 ............................. 200,000 194,000
Ford Motor Credit Co. ........................
7.75%, 03/15/05 ............................. 225,000 235,687
6.38%, 11/05/08 ............................. 450,000 433,125
General Motors Acceptance Corp. ..............
6.50%, 12/05/05 ............................. 50,000 48,812
6.13%, 01/22/08 ............................. 350,000 331,625
Household Finance Corp. ......................
6.70%, 06/15/02 ............................. 75,000 75,469
7.65%, 05/15/07 ............................. 100,000 103,625
Lehman Brothers, Inc. ........................
7.63%, 06/01/06 ............................. 80,000 80,700
Merrill Lynch & Co., Inc. ....................
6.56%, 12/16/07 ............................. 150,000 145,875
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1999
- --------------------------------------------------------------------------------
Fixed Income Fund (continued)
<TABLE>
<CAPTION>
Principal
Amount Value
---------- -------------
<S> <C> <C>
FIXED INCOME SECURITIES - (continued)
Morgan Stanley Dean Witter Discover & Co.
6.88%, 03/01/07 ................................. $125,000 $ 124,844
Salomon Smith Barney Holdings, Inc.
7.00%, 03/15/04 ................................. 150,000 151,313
7.38%, 05/15/07 ................................. 100,000 100,750
Sears Roebuck Acceptance Corp.
6.25%, 01/15/04 ................................. 50,000 49,562
6.13%, 01/15/06 ................................. 100,000 95,625
6.70%, 11/15/06 ................................. 400,000 394,000
Transamerica Financial Corp.
7.51%, 04/15/02 ................................. 75,000 77,062
-----------
5,094,014
-----------
Industrial - 10.56%
Enron Corp.
6.63%, 11/15/05 ................................. 450,000 438,187
6.40%, 07/15/06 ................................. 150,000 143,625
MCI Worldcom, Inc.
7.75%, 04/01/07 ................................. 500,000 525,625
Northwest Pipeline Corp.
6.63%, 12/01/07 ................................. 700,000 682,500
Philip Morris Cos., Inc.
7.50%, 01/15/02 ................................. 175,000 178,500
6.80%, 12/01/03 ................................. 50,000 49,875
Raytheon Co.
6.30%, 03/15/05 ................................. 550,000 535,563
TCI Communications, Inc. (FRN) (MTN)
6.88%, 02/15/06 ................................. 100,000 99,875
Transcontinental Gas Pipeline
6.25%, 01/15/08 ................................. 250,000 239,375
-----------
2,893,125
-----------
TOTAL CORPORATE BONDS (Cost $10,495,550) ......... 10,210,739
-----------
U.S. Government Agency Obligations - 9.85%
Federal Home Loan Bank - 2.52%
7.13%, 11/18/02 ................................. 315,000 326,056
5.77%, 02/03/04 ................................. 160,000 157,715
7.52%, 05/24/04 ................................. 150,000 158,498
5.95%, 01/19/06 ................................. 50,000 48,809
-----------
691,078
-----------
Fannie Mae - 5.08%
5.13%, 02/13/04 ................................. 937,000 900,645
5.75%, 06/15/05 ................................. 500,000 491,105
-----------
1,391,750
-----------
Freddie Mac - 0.14%
5.75%, 04/15/08 ................................. 40,000 38,085
-----------
Guaranteed Export Trust - 0.12%
6.13%, 06/15/04 ................................. 35,294 34,645
-----------
Resolution Funding Strip - 1.99%
0.00%, 10/15/11 * ............................... 260,000 119,311
0.00%, 04/15/16 * ............................... 310,000 104,548
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1999
- --------------------------------------------------------------------------------
Fixed Income Fund (continued)
<TABLE>
<CAPTION>
Principal
Amount Value
------------ ------------
<S> <C> <C>
FIXED INCOME SECURITIES - (continued)
U.S. Government Agency Obligations - (continued)
0.00%, 04/15/17 * ................................................ $ 250,000 $ 79,025
0.00%, 01/15/19 * ................................................ 440,000 123,952
0.00%, 10/15/19 * ................................................ 440,000 118,070
----------
544,906
----------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (Cost $2,677,623)......... 2,700,464
----------
Collateralized Mortgage Obligations - 43.80%
Collateralized Mortgage Obligation Trust - 0.01%
8.65%, 03/01/03 .................................................. 3,926 3,949
----------
Fannie Mae - 12.58%
7.50%, 07/25/18 .................................................. 5,633 5,677
6.00%, 09/25/18 .................................................. 40,000 39,700
6.50%, 03/25/19 .................................................. 150,000 150,010
6.50%, 04/25/19 .................................................. 150,000 149,983
3.50%, 05/25/19 .................................................. 125,000 117,937
6.50%, 09/25/19 .................................................. 150,000 149,746
6.85%, 10/25/20 .................................................. 40,000 40,269
6.75%, 11/25/20 .................................................. 200,000 200,840
6.75%, 05/25/21 .................................................. 200,000 200,816
6.50%, 10/25/21 .................................................. 200,000 197,880
6.00%, 12/18/22 .................................................. 600,000 570,483
5.75%, 12/25/22 .................................................. 500,000 467,198
5.75%, 02/18/23 .................................................. 500,000 471,463
6.00%, 03/25/23 .................................................. 500,000 483,513
7.00%, 06/25/23 .................................................. 200,000 202,414
----------
3,447,929
----------
Freddie Mac - 31.21%
6.25%, 05/15/19 .................................................. 250,000 248,841
6.40%, 05/15/19 .................................................. 150,000 150,014
6.50%, 10/15/19 .................................................. 200,000 199,118
6.50%, 06/25/20 .................................................. 100,000 99,180
6.35%, 07/15/21 .................................................. 150,000 149,421
6.50%, 08/15/21 .................................................. 75,000 74,978
6.00%, 10/15/21 .................................................. 600,000 583,926
5.95%, 02/15/22 .................................................. 500,000 485,325
6.00%, 02/15/22 .................................................. 200,000 196,052
6.65%, 07/15/22 .................................................. 150,000 149,630
5.25%, 10/15/22 .................................................. 700,000 639,838
5.75%, 02/15/23 .................................................. 700,000 655,407
6.00%, 02/15/23 .................................................. 200,000 194,277
6.75%, 05/15/23 .................................................. 200,000 200,448
5.75%, 06/15/23 .................................................. 550,000 515,567
5.50%, 07/15/23 .................................................. 1,000,000 920,558
5.75%, 09/15/23 .................................................. 600,000 564,975
6.00%, 12/15/23 .................................................. 400,000 385,316
6.00%, 01/20/24 .................................................. 300,000 284,063
5.50%, 03/15/24 .................................................. 400,000 368,312
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1999
- --------------------------------------------------------------------------------
Fixed Income Fund (continued)
<TABLE>
<CAPTION>
Principal
Amount Value
---------- ---------------
<S> <C> <C>
FIXED INCOME SECURITIES - (continued)
Collateralized Mortgage Obligations - (continued)
5.75%, 03/15/24 ......................................................................... $900,000 $ 847,588
6.00%, 03/15/24 ......................................................................... 500,000 476,563
6.00%, 07/15/24 ......................................................................... 175,000 164,194
----------
8,553,591
----------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost $12,289,168) ............................. 12,005,469
----------
U.S. Government Obligations - 7.95%
U.S. Treasury Notes
7.00%, 07/15/06 ......................................................................... 395,000 418,554
6.50%, 10/15/06 ......................................................................... 100,000 103,262
6.25%, 02/15/07 ......................................................................... 875,000 891,896
7.50%, 11/15/16 ......................................................................... 532,000 599,383
8.88%, 08/15/17 ......................................................................... 130,000 166,019
----------
TOTAL U.S. TREASURY OBLIGATIONS (Cost $2,136,999) ........................................ 2,179,114
----------
TOTAL FIXED INCOME SECURITIES - 98.86% (Cost-$27,599,340)(1).............................. 27,095,786
----------
CASH AND OTHER ASSETS NET OF LIABILITIES - 1.14% ......................................... 312,162
----------
NET ASSETS - 100.00% ..................................................................... $27,407,948
===========
(1) Aggregate cost for federal income tax purposes is $27,599,340 and net unrealized
appreciation is as follows:
Gross unrealized appreciation ....................................................... $ 191,126
Gross unrealized depreciation ....................................................... (694,680)
===========
Net unrealized depreciation ........................................................ ($ 503,554)
===========
</TABLE>
* Zero coupon bond
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1999
- --------------------------------------------------------------------------------
Balanced Fund
<TABLE>
<CAPTION>
Shares Value
-------- ------------
<S> <C> <C>
COMMON STOCKS - 59.66%
Business Equipment and Services - 0.65%
Automatic Data Processing, Inc. ................ 15,200 $ 668,800
Berkshire Hathaway Inc. Cl. B * ................ 152 340,480
----------
1,009,280
----------
Capital Goods - 6.06%
Cooper Industries, Inc. ........................ 4,700 244,400
Delphi Automotive Systems Corp. ................ 6,360 118,057
Emerson Electric Co. ........................... 13,000 817,375
General Electric Co. ........................... 30,500 3,446,500
Honeywell, Inc. ................................ 9,000 1,042,875
Illinois Tool Works, Inc. ...................... 1,800 147,600
Ingersoll-Rand Co. ............................. 2,750 177,719
PPG Industries, Inc. ........................... 12,300 726,469
Tyco International, Ltd. ....................... 27,998 2,652,810
----------
9,373,805
----------
Consumer Durables - 0.98%
Ford Motor Co. ................................. 16,100 908,644
General Motors Corp. ........................... 9,100 600,600
----------
1,509,244
----------
Consumer Non-Durables - 4.40%
Anheuser-Busch Cos., Inc. ...................... 5,200 368,875
Bestfoods ...................................... 15,100 747,450
Eastman Kodak Co. .............................. 9,000 609,750
General Mills, Inc. ............................ 4,550 365,706
PepsiCo, Inc. .................................. 30,800 1,191,575
Philip Morris Cos., Inc. ....................... 45,300 1,820,494
Procter & Gamble Co. ........................... 10,700 954,975
Sara Lee Corp. ................................. 32,900 746,419
----------
6,805,244
----------
Consumer Services - 1.36%
Disney (Walt) Co. .............................. 20,500 631,656
Hilton Hotels Corp. ............................ 19,400 275,237
Knight-Ridder,inc .............................. 4,400 241,725
Park Place Entertainment Corp. * ............... 11,400 110,438
Time Warner, Inc. .............................. 11,500 845,250
----------
2,104,306
----------
Energy - 5.78%
Amerada Hess Corp. ............................. 2,300 136,850
Amoco Corp. .................................... 15,761 1,710,068
Atlantic Richfield Co. ......................... 1,100 91,919
Baker Hughes, Inc. ............................. 22,000 737,000
Burlington Resources, Inc. ..................... 7,150 309,237
Chevron Corp. .................................. 10,500 999,469
Exxon Corp. .................................... 20,200 1,557,925
Mobil Corp. .................................... 9,600 950,400
Royal Dutch Petroleum Co., ADR ................. 8,000 482,000
Schlumberger, Ltd. ............................. 8,900 566,819
Texaco, Inc. ................................... 19,500 1,218,750
Unocal Corp. ................................... 4,500 178,313
----------
8,938,750
----------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1999
- --------------------------------------------------------------------------------
Balanced Fund (continued)
<TABLE>
<CAPTION>
Shares Value
-------- -------------
COMMON STOCKS - (continued)
Financial Services - 9.17%
<S> <C> <C>
American International Group, Inc. ........... 8,455 $ 989,763
Associates First Capital Corp. Cl. A ......... 11,506 509,860
BankAmerica Corp. ............................ 26,826 1,966,681
Chase Manhattan Corp. ........................ 34,264 2,968,119
Chubb Corp. .................................. 14,000 973,000
Citigroup, Inc. .............................. 42,525 2,019,938
Federal National Mortgage Association ........ 44,000 3,008,500
Morgan (J.P.) & Co., Inc. .................... 5,600 786,800
U.S. Bancorp ................................. 28,250 960,500
-----------
14,183,161
-----------
Health Care - 8.17%
Alza Corp. Cl. A * ........................... 7,800 396,825
Baxter International, Inc. ................... 14,800 897,250
Bristol-Myers Squibb Co. ..................... 23,800 1,676,412
Columbia/HCA Healthcare Corp. ................ 13,825 315,383
IMS Health, Inc. ............................. 14,400 450,000
Johnson & Johnson ............................ 14,200 1,391,600
Lifepoint Hospitals, Inc. * .................. 727 9,769
Lilly (Eli) & Co. ............................ 18,500 1,325,062
Merck & Co., Inc. ............................ 27,000 1,998,000
Schering-Plough Corp. ........................ 34,700 1,839,100
St. Jude Medical, Inc. ....................... 2,830 100,819
Triad Hospitals, Inc. * ...................... 727 9,815
United Healthcare Corp. ...................... 10,750 673,219
Warner-Lambert Co. ........................... 22,200 1,540,125
-----------
12,623,379
-----------
Multi-Industry - 0.52%
Minnesota Mining & Mfg. Co. .................. 9,200 799,825
-----------
Raw Materials - 1.79%
Aluminum Co. of America ...................... 10,700 662,062
Dow Chemical Co. ............................. 4,700 596,313
Dupont (E.I.) de Nemours & Co. ............... 14,500 990,531
Monsanto Co. ................................. 12,500 492,969
Solutia, Inc. ................................ 1,200 25,575
-----------
2,767,450
-----------
Retail - 3.55%
Abercrombie & Fitch Co. Cl. A * .............. 12,644 606,912
Albertson's, Inc. ............................ 17,050 879,141
Costco Cos., Inc. ............................ 7,000 560,437
Dillard Dept. Stores, Inc. Cl. A ............. 1,950 68,494
May Department Stores Co. .................... 19,425 793,997
Penney (J.C.), Inc. .......................... 13,900 675,019
Walgreen Co. ................................. 22,000 646,250
Wal-Mart Stores, Inc. ........................ 26,100 1,259,325
-----------
5,489,575
-----------
Shelter - 0.65%
Georgia-Pacific Group ........................ 9,700 459,537
Kimberly-Clark Corp. ......................... 9,500 541,500
-----------
1,001,037
-----------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1999
- --------------------------------------------------------------------------------
Balanced Fund (continued)
<TABLE>
<CAPTION>
Shares Value
-------- -------------
COMMON STOCKS - (continued)
Technology - 9.22%
<S> <C> <C>
Boeing Co. ..................................... 6,700 $ 296,056
Compaq Computer Corp. .......................... 91,334 2,163,474
Hewlett-Packard Co. ............................ 16,000 1,608,000
Intel Corp. .................................... 60,700 3,611,650
International Business Machines Corp. .......... 18,100 2,339,425
Lucent Technologies, Inc. ...................... 25,428 1,714,801
Motorola, Inc. ................................. 15,350 1,454,412
Parametric Technology Corp. * .................. 32,000 444,000
Raytheon Co. Cl. A ............................. 357 24,588
Seagate Technology, Inc. * ..................... 23,500 602,188
-----------
14,258,594
-----------
Transportation - 0.86%
AMR Corp. * .................................... 11,600 791,700
CSX Corp. ...................................... 12,000 543,750
-----------
1,335,450
-----------
Utilities - 6.50%
AT & T Corp. ................................... 24,625 1,374,383
Edison International ........................... 21,500 575,125
El Paso Natural Gas Co. ........................ 7,200 253,350
GTE Corp. ...................................... 22,800 1,727,100
MCI Worldcom, Inc. * ........................... 14,309 1,231,468
PECO Energy Co. ................................ 9,000 376,875
PG&E Corp. ..................................... 17,063 554,547
SBC Communications, Inc. ....................... 33,834 1,962,372
Unicom Corp. ................................... 15,400 593,863
Vodafone AirTouch plc ADR ...................... 7,100 1,398,700
-----------
10,047,783
-----------
TOTAL COMMON STOCKS (Cost-$63,259,147) ......... 92,246,883
-----------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
------------ ------------
FIXED INCOME SECURITIES - 38.39%
CORPORATE BONDS - 10.84%
Bank and Insurance - 1.98%
<S> <C> <C>
BankAmerica Corp. ............................
6.63%, 10/15/07 ............................. $ 250,000 $ 244,063
Chase Manhattan Corp. ........................
7.13%, 02/01/07 ............................. 200,000 201,250
KeyCorp
6.75%, 03/15/06 ............................. 245,000 241,325
NationsBank Corp. ............................
7.50%, 09/15/06 ............................. 275,000 283,250
6.38%, 02/15/08 ............................. 400,000 386,500
U.S. Bancorp
6.50%, 02/01/08 ............................. 1,650,000 1,604,625
Wells Fargo & Co. ............................
6.25%, 04/15/08 ............................. 105,000 100,800
----------
3,061,813
----------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1999
- --------------------------------------------------------------------------------
Balanced Fund (continued)
<TABLE>
<CAPTION>
Principal
Amount Value
------------ ------------
FIXED INCOME SECURITIES (continued)
Financial Services - 5.85%
<S> <C> <C>
American General Finance Corp.
7.45%, 07/01/02 ................................. $ 175,000 $ 179,812
6.20%, 03/15/03 ................................. 600,000 592,500
Associates Corp. of North America
6.38%, 10/15/02 ................................. 50,000 50,000
5.50%, 02/15/04 ................................. 25,000 23,937
6.10%, 01/15/05 ................................. 200,000 194,000
7.63%, 04/27/05 ................................. 125,000 130,156
7.55%, 07/17/06 ................................. 1,000,000 1,040,000
Beneficial Corp. .................................
10.10%, 11/27/00 ................................ 150,000 158,322
9.47%, 03/09/01 ................................. 30,000 31,537
6.75%, 07/20/04 ................................. 25,000 25,063
6.96%, 02/13/06 ................................. 150,000 150,187
6.94%, 12/15/06 ................................. 100,000 100,000
Citigroup, Inc. ..................................
9.50%, 03/01/02 ................................. 25,000 26,867
6.63%, 09/15/05 ................................. 150,000 147,188
Commercial Credit Co. ............................
6.63%, 11/15/06 ................................. 275,000 270,188
Finova Capital Corp. .............................
6.12%, 05/28/02 ................................. 200,000 198,250
6.50%, 07/28/02 ................................. 460,000 460,000
6.20%, 03/01/04 ................................. 50,000 48,750
6.90%, 06/19/04 ................................. 125,000 124,688
6.75%, 03/09/09 ................................. 300,000 291,000
Ford Motor Credit Co. ............................
6.55%, 07/07/03 ................................. 125,000 124,844
7.75%, 03/15/05 ................................. 300,000 314,250
6.38%, 11/05/08 ................................. 775,000 745,938
General Motors Acceptance Corp. ..................
6.60%, 11/22/04 ................................. 175,000 174,781
6.15%, 04/05/07 ................................. 700,000 668,500
6.13%, 01/22/08 ................................. 500,000 473,750
Household Finance Corp. ..........................
6.70%, 06/15/02 ................................. 50,000 50,313
7.25%, 07/15/03 ................................. 125,000 127,656
7.65%, 05/15/07 ................................. 200,000 207,250
Lehman Brothers, Inc. ............................
6.13%, 02/01/01 ................................. 25,000 24,781
7.63%, 06/01/06 ................................. 40,000 40,350
Merrill Lynch & Co., Inc. ........................
6.00%, 11/15/04 ................................. 25,000 24,406
6.56%, 12/16/07 ................................. 250,000 243,125
Morgan Stanley Dean Witter Discover & Co. ........
6.88%, 03/01/07 ................................. 125,000 124,844
Salomon Smith Barney Holdings, Inc. ..............
6.50%, 10/15/02 ................................. 125,000 125,156
7.00%, 06/15/03 ................................. 325,000 329,469
7.00%, 03/15/04 ................................. 275,000 277,406
Sears Roebuck Acceptance Corp. ...................
6.90%, 08/01/03 ................................. 125,000 126,250
6.13%, 01/15/06 ................................. 50,000 47,813
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1999
- --------------------------------------------------------------------------------
Balanced Fund (continued)
<TABLE>
<CAPTION>
Principal
Amount Value
------------ -------------
<S> <C> <C>
FIXED INCOME SECURITIES (continued)
Corporate Bonds - (continued)
Transamerica Corp.
6.75%, 11/15/06 ................................ $ 200,000 $ 196,750
Transamerica Financial Corp.
7.51%, 04/15/02 ................................ 30,000 30,825
Travelers Property Casualty Corp.
6.88%, 12/15/03 ................................ 25,000 25,250
7.20%, 02/01/04 ................................ 100,000 102,000
6.75%, 11/15/06 ................................ 200,000 196,250
-----------
9,044,402
-----------
Industrial - 3.01%
Enron Corp.
6.63%, 11/15/05 ................................ 750,000 730,312
6.40%, 07/15/06 ................................ 150,000 143,625
MCI Worldcom, Inc.
7.75%, 04/01/07 ................................ 500,000 525,625
Northwest Pipeline Corp.
6.63%, 12/01/07 ................................ 300,000 292,500
Philip Morris Cos., Inc.
7.50%, 01/15/02 ................................ 50,000 51,000
8.25%, 10/15/03 ................................ 75,000 79,031
6.80%, 12/01/03 ................................ 30,000 29,925
6.38%, 02/01/06 ................................ 25,000 23,875
Raytheon Co.
6.30%, 03/15/05 ................................ 750,000 730,313
6.15%, 11/01/08 ................................ 100,000 94,375
Service Corp. International
6.00%, 12/15/05 ................................ 500,000 461,250
TCI Communications, Inc. (FRN) (MTN)
6.88%, 02/15/06 ................................ 825,000 823,969
Transcontinental Gas Pipeline
6.13%, 01/15/05 ................................ 300,000 289,125
6.25%, 01/15/08 ................................ 400,000 383,000
-----------
4,657,925
-----------
TOTAL CORPORATE BONDS (Cost $17,208,499)......... 16,764,140
-----------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 8.13%
Federal Farm Credit Bank - 0.52%
6.35%, 10/30/03 ................................ 500,000 504,640
6.60%, 02/06/04 ................................ 300,000 305,550
-----------
810,190
-----------
Fannie Mae - 2.04%
5.13%, 02/13/04 ................................ 2,129,000 2,046,395
7.12%, 07/03/06 ................................ 1,060,000 1,099,750
-----------
3,146,145
-----------
Federal Home Loan Bank - 0.89%
7.52%, 05/24/04 ................................ 300,000 316,995
6.91%, 06/03/04 ................................ 350,000 360,903
7.36%, 07/01/04 ................................ 665,000 698,895
-----------
1,376,793
-----------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1999
- --------------------------------------------------------------------------------
Balanced Fund (continued)
<TABLE>
<CAPTION>
Principal
Amount Value
------------ -------------
<S> <C> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS (continued)
Freddie Mac - 3.75%
5.99%, 12/01/03 .................................................... $ 150,000 $ 149,246
6.64%, 03/10/04 .................................................... 780,000 795,436
8.00%, 01/26/05 .................................................... 260,000 280,095
6.75%, 05/30/06 .................................................... 1,570,000 1,600,191
6.40%, 12/13/06 .................................................... 275,000 274,183
7.10%, 04/10/07 .................................................... 2,600,000 2,701,686
-----------
5,800,837
-----------
Resolution Funding Strip - 0.70%
0.00%, 07/15/12 ** ................................................. 510,000 222,324
0.00%, 04/15/14 ** ................................................. 150,000 58,077
0.00%, 10/15/15 ** ................................................. 45,000 15,651
0.00%, 04/15/18 ** ................................................. 800,000 237,464
0.00%, 01/15/19 ** ................................................. 980,000 276,076
0.00%, 10/15/19 ** ................................................. 980,000 262,973
-----------
1,072,565
-----------
Student Loan Marketing Association - 0.23%
6.35%, 03/17/03 .................................................... 350,000 353,517
-----------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (Cost $12,825,671) ......... 12,560,047
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS - 16.69%
Fannie Mae - 6.18%
6.21%, 11/01/07 .................................................... 2,530,000 2,492,581
6.00%, 09/25/18 .................................................... 50,000 49,625
6.85%, 10/25/20 .................................................... 50,000 50,336
6.75%, 11/25/20 .................................................... 100,000 100,233
6.75%, 05/25/21 .................................................... 100,000 100,408
6.50%, 10/25/21 .................................................... 600,000 593,640
6.50%, 11/25/21 .................................................... 100,000 98,941
6.00%, 02/25/22 .................................................... 500,000 484,525
6.50%, 04/25/22 .................................................... 779,000 770,646
6.50%, 07/18/22 .................................................... 500,000 497,205
6.00%, 07/25/22 .................................................... 50,000 48,505
6.50%, 07/25/22 .................................................... 350,000 346,300
6.80%, 09/25/22 .................................................... 300,000 300,555
6.50%, 11/25/22 .................................................... 200,000 197,834
5.75%, 12/25/22 .................................................... 1,500,000 1,401,593
5.75%, 02/18/23 .................................................... 1,000,000 942,925
7.00%, 06/25/23 .................................................... 125,000 126,509
6.00%, 05/25/25 .................................................... 1,000,000 954,844
-----------
9,557,205
-----------
Freddie Mac - 10.51%
6.25%, 05/15/19 .................................................... 100,000 99,724
6.50%, 10/15/19 .................................................... 200,000 199,118
7.00%, 02/15/21 .................................................... 100,000 101,233
5.50%, 04/15/21 .................................................... 1,200,000 1,130,652
5.75%, 04/15/21 .................................................... 50,000 49,334
6.50%, 08/15/21 .................................................... 240,000 239,930
6.00%, 09/15/21 .................................................... 500,000 485,105
6.50%, 09/15/21 .................................................... 550,000 542,534
</TABLE>
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1999
- --------------------------------------------------------------------------------
Balanced Fund (continued)
<TABLE>
<CAPTION>
Principal
Amount Value
------------ ---------------
<S> <C> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS (continued)
6.00%, 10/15/21 ......................................................................... $ 800,000 $ 778,568
5.95%, 11/15/21 ......................................................................... 300,000 290,286
6.50%, 11/15/21 ......................................................................... 600,000 595,196
5.95%, 02/15/22 ......................................................................... 700,000 679,455
6.00%, 02/15/22 ......................................................................... 100,000 98,026
6.00%, 05/15/22 ......................................................................... 450,000 434,443
6.65%, 07/15/22 ......................................................................... 100,000 99,753
5.25%, 10/15/22 ......................................................................... 1,000,000 914,055
6.25%, 11/15/22 ......................................................................... 150,000 148,464
6.50%, 11/15/22 ......................................................................... 100,000 99,051
7.00%, 01/15/23 ......................................................................... 200,000 202,694
5.75%, 02/15/23 ......................................................................... 1,000,000 936,295
6.00%, 02/15/23 ......................................................................... 193,000 187,477
6.50%, 02/15/23 ......................................................................... 400,000 398,060
6.75%, 05/15/23 ......................................................................... 150,000 150,336
5.75%, 06/15/23 ......................................................................... 800,000 749,916
5.50%, 07/15/23 ......................................................................... 750,000 690,419
5.75%, 09/15/23 ......................................................................... 800,000 753,300
6.00%, 12/15/23 ......................................................................... 1,300,000 1,250,217
6.00%, 01/20/24 ......................................................................... 150,000 142,031
5.50%, 01/15/24 ......................................................................... 1,500,000 1,375,433
5.50%, 03/15/24 ......................................................................... 600,000 552,468
5.75%, 03/15/24 ......................................................................... 1,000,000 941,901
5.75%, 07/15/24 ......................................................................... 1,000,000 936,295
------------
16,251,769
------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost $26,278,954).............................. 25,808,974
------------
U.S. GOVERNMENT OBLIGATIONS - 2.73%
U.S. Treasury Notes
6.88%, 05/15/06 ......................................................................... 425,000 447,601
7.00%, 07/15/06 ......................................................................... 725,000 768,232
6.50%, 10/15/06 ......................................................................... 215,000 222,013
6.25%, 02/15/07 ......................................................................... 2,725,000 2,777,620
------------
TOTAL U.S. TREASURY OBLIGATIONS (Cost $4,299,066)......................................... 4,215,466
------------
TOTAL FIXED INCOME SECURITIES (Cost-$60,612,190) ......................................... 59,348,627
------------
TOTAL INVESTMENTS - 98.05% (Cost-$123,871,337)(1)......................................... 151,595,510
------------
CASH AND OTHER ASSETS NET OF LIABILITIES - 1.95% ......................................... 3,019,988
------------
NET ASSETS - 100.00% ..................................................................... $154,615,498
============
(1) Aggregate cost for federal income tax purposes is $123,871,337 and net unrealized
appreciation is as follows:
Gross unrealized appreciation ....................................................... $ 29,363,663
Gross unrealized depreciation ....................................................... (1,639,490)
============
Net unrealized appreciation ....................................................... $ 27,724,173
============
</TABLE>
* Non-dividend paying stock
** Zero coupon bond
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1999
- --------------------------------------------------------------------------------
Equity Investment Fund
Shares Value
-------- -------------
COMMON STOCKS -- 98.63%
Business Equipment and Services - 1.51%
Automatic Data Processing, Inc. ........... 39,000 $ 1,716,000
Berkshire Hathaway Inc. Class B * ......... 609 1,364,160
-----------
3,080,160
-----------
Capital Goods -- 10.87%
Cooper Industries, Inc. ................... 22,000 1,144,000
Delphi Automotive Systems Corp. ........... 14,328 265,963
Emerson Electric Co. ...................... 29,500 1,854,813
General Electric Co. ...................... 70,000 7,910,000
Honeywell, Inc. ........................... 23,000 2,665,125
Ingersoll-Rand Co. ........................ 4,250 274,656
PPG Industries, Inc. ...................... 33,500 1,978,594
Tyco International, Ltd. .................. 64,200 6,082,950
-----------
22,176,101
-----------
Consumer Durables -- 1.64%
Ford Motor Co. ............................ 35,500 2,003,531
General Motors Corp. ...................... 20,500 1,353,000
-----------
3,356,531
-----------
Consumer Non-Durables -- 6.60%
Anheuser-Busch Cos., Inc. ................. 17,000 1,205,937
Bestfoods ................................. 21,500 1,064,250
Eastman Kodak Co. ......................... 20,050 1,358,388
General Mills, Inc. ....................... 8,000 643,000
PepsiCo, Inc. ............................. 69,000 2,669,437
Philip Morris Cos., Inc. .................. 96,000 3,858,000
Procter & Gamble Co. ...................... 16,500 1,472,625
Sara Lee Corp. ............................ 53,000 1,202,438
-----------
13,474,075
-----------
Consumer Services -- 2.01%
Disney (Walt) Co. ......................... 33,000 1,016,813
Hilton Hotels Corp. ....................... 27,500 390,156
Knight-Ridder, Inc. ....................... 19,500 1,071,281
Park Place Entertainment Corp. * .......... 24,000 232,500
Time Warner, Inc. ......................... 18,900 1,389,150
-----------
4,099,900
-----------
Energy -- 9.29%
Amoco Corp. ............................... 36,000 3,906,000
Baker Hughes, Inc. ........................ 49,000 1,641,500
Burlington Resources, Inc. ................ 11,800 510,350
Chevron Corp. ............................. 23,720 2,257,847
Exxon Corp. ............................... 32,500 2,506,563
Mobil Corp. ............................... 23,300 2,306,700
Royal Dutch Petroleum Co. ADR ............. 20,000 1,205,000
Schlumberger, Ltd. ........................ 18,500 1,178,219
Texaco, Inc. .............................. 45,000 2,812,500
Unocal Corp. .............................. 16,000 634,000
-----------
18,958,679
-----------
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1999
- --------------------------------------------------------------------------------
Equity Investment Fund (continued)
Shares Value
---------- -------------
COMMON STOCKS (continued)
Financial Services - 16.13%
American International Group, Inc. ............ 21,500 $ 2,516,844
First Capital Corp. Cl. A ..................... 30,006 1,329,641
BankAmerica Corp. ............................. 59,525 4,363,927
Chase Manhattan Corp. ......................... 80,500 6,973,312
Chubb Corp. ................................... 29,580 2,055,810
Citigroup, Inc. ............................... 114,250 5,426,875
Federal National Mortgage Association ......... 94,000 6,427,250
Morgan (J.P.) & Co., Inc. ..................... 12,800 1,798,400
U.S. Bancorp .................................. 60,000 2,040,000
-----------
32,932,059
-----------
Health Care -- 12.19%
Alza Corp. Cl. A * ............................ 19,500 992,062
Baxter International, Inc. .................... 38,000 2,303,750
Bristol-Myers Squibb Co. ...................... 51,500 3,627,531
Columbia/HCA Healthcare Corp. ................. 40,050 913,641
IMS Health, Inc. .............................. 28,500 890,625
Johnson & Johnson ............................. 24,000 2,352,000
Lifepoint Hospitals, Inc. * ................... 2,107 28,312
Lilly (Eli) & Co. ............................. 34,300 2,456,738
Merck & Co., Inc. ............................. 48,820 3,612,680
Schering-Plough Corp. ......................... 61,500 3,259,500
St. Jude Medical, Inc. ........................ 6,459 230,102
Triad Hospitals, Inc. * ....................... 2,107 28,445
United Healthcare Corp. ....................... 26,500 1,659,562
Warner-Lambert Co. ............................ 36,500 2,532,188
-----------
24,887,136
-----------
Multi-Industry -- 0.68%
Minnesota Mining & Mfg. Co. ................... 16,030 1,393,608
-----------
Raw Materials -- 3.40%
Aluminum Co. of America ....................... 32,680 2,022,075
Dow Chemical Co. .............................. 9,800 1,243,375
Dupont (E.I.) de Nemours & Co. ................ 33,000 2,254,312
Monsanto Co. .................................. 34,000 1,340,875
Solutia, Inc. ................................. 3,480 74,168
-----------
6,934,805
-----------
Retail -- 5.77%
Abercrombie & Fitch Co. Cl. A * ............... 29,414 1,411,872
Albertson's, Inc. ............................. 37,000 1,907,812
Costco Cos., Inc. ............................. 17,500 1,401,094
Dillard Dept. Stores, Inc. Cl. A .............. 8,000 281,000
May Department Stores Co. ..................... 35,750 1,461,281
Penney (J.C.), Inc. ........................... 32,000 1,554,000
Walgreen Co. .................................. 54,000 1,586,250
Wal-Mart Stores, Inc. ......................... 45,000 2,171,250
-----------
11,774,559
-----------
See accompanying notes to financial statements.
<PAGE>
McM Funds -- Schedule of Investments June 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Equity Investment Fund (continued)
Shares Value
---------- ---------------
<S> <C> <C>
COMMON STOCKS (continued)
Shelter --- 1.22%
Georgia-Pacific Group ...................................... 25,600 $ 1,212,800
Kimberly-Clark Corp. ....................................... 22,520 1,283,640
------------
2,496,440
------------
Technology -- 14.89%
Boeing Co. ................................................. 14,500 640,719
Compaq Computer Corp. ...................................... 200,524 4,749,912
Hewlett-Packard Co. ........................................ 37,500 3,768,750
Intel Corp. ................................................ 138,000 8,211,000
International Business Machines Corp. ...................... 35,200 4,549,600
Lucent Technologies, Inc. .................................. 59,500 4,012,531
Motorola, Inc. ............................................. 26,800 2,539,300
Parametric Technology Corp. * .............................. 65,500 908,813
Raytheon Co. Cl. A ......................................... 816 56,202
Seagate Technology, Inc. * ................................. 37,000 948,125
------------
30,384,952
------------
Transportation -- 1.66%
AMR Corp. * ................................................ 27,000 1,842,750
CSX Corp. .................................................. 34,000 1,540,625
------------
3,383,375
------------
Utilities -- 10.77%
AT & T Corp. ............................................... 41,000 2,288,312
Edison International ....................................... 55,000 1,471,250
El Paso Natural Gas Co. .................................... 28,500 1,002,844
GTE Corp. .................................................. 51,500 3,901,125
MCI Worldcom, Inc. * ....................................... 30,000 2,581,875
PECO Energy Co. ............................................ 21,500 900,312
PG&E Corp. ................................................. 46,070 1,497,275
SBC Communications, Inc. ................................... 66,500 3,857,000
Unicom Corp. ............................................... 33,000 1,272,563
Vodafone AirTouch plc ADR .................................. 16,250 3,201,250
------------
21,973,806
------------
TOTAL COMMON STOCKS -- 98.63% (Cost-$132,797,576)(1)........ 201,306,186
CASH AND OTHER ASSETS NET OF LIABILITIES -- 1.37% .......... 2,795,632
------------
NET ASSETS -- 100.00% ...................................... $204,101,818
============
(1) Aggregate cost for federal income tax purposes is
$132,797,576 and net unrealized appreciation is as follows:
Gross unrealized appreciation ............................ $ 68,806,767
Gross unrealized depreciation ............................ (298,157)
------------
Net unrealized appreciation ........................... $ 68,508,610
============
* Non-dividend paying stock
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Statements of Assets and Liabilities June 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
McM
McM Intermediate
Principal Fixed
Preservation Income
Fund Fund
----------------- ----------------
<S> <C> <C>
Assets:
Investments in securities at value (cost
$104,171,856, $150,748,044, $27,599,340,
$123,871,337 and $132,797,576, respectively) $ 104,171,856 $148,633,521
Cash-interest bearing accounts ..................... 952,521 2,796,522
Dividends and interest receivable .................. 108,990 1,614,096
Receivable for investments sold .................... 0 715,020
Receivable for fund shares sold .................... 85,059 100,084
Deferred organization cost (Note A) ................ 925 925
Due from advisor, net .............................. 438 0
Other assets ....................................... 1,355 4,103
------------- ------------
Total assets ...................................... 105,321,144 153,864,271
------------- ------------
Liabilities:
Payable for securities purchased ................... 18,978,586 680,759
Fund shares redeemed ............................... 343,551 0
Distributions payable .............................. 32,282 0
Accrued expenses ................................... 26,568 43,707
Payable to advisor, net ............................ 0 43,898
------------- ------------
Total liabilities ................................. 19,380,987 768,364
------------- ------------
Net Assets:
Applicable to 85,939,856, 14,914,938, 2,605,573,
7,674,472 and 6,720,800 shares outstanding,
respectively ...................................... $ 85,940,157 $153,095,907
============= ============
Net Assets Consist of:
Capital paid-in .................................... $ 85,939,856 $154,222,466
Accumulated undistributed net investment
income ............................................ 0 441,961
Accumulated net realized gain on investments ....... 301 546,003
Net unrealized appreciation/depreciation on
investments ....................................... 0 (2,114,523)
------------- ------------
$ 85,940,157 $153,095,907
============= ============
Net asset value and redemption price per share $ 1.00 $ 10.26
============= ============
</TABLE>
<PAGE>
[RESTUBBED]
<TABLE>
<CAPTION>
McM McM
Fixed McM Equity
Income Balanced Investment
Fund Fund Fund
-------------- ----------------- -----------------
<S> <C> <C> <C>
Assets:
Investments in securities at value (cost
$104,171,856, $150,748,044, $27,599,340,
$123,871,337 and $132,797,576, respectively) $27,095,786 $ 151,595,510 $ 201,306,186
Cash-interest bearing accounts ..................... 291,631 2,367,249 2,857,714
Dividends and interest receivable .................. 319,044 863,982 257,958
Receivable for investments sold .................... 0 0 0
Receivable for fund shares sold .................... 0 3,799 52,940
Deferred organization cost (Note A) ................ 925 925 925
Due from advisor, net .............................. 2,993 0 0
Other assets ....................................... 777 2,948 4,184
----------- ------------- -------------
Total assets ...................................... 27,711,156 154,834,413 204,479,907
----------- ------------- -------------
Liabilities:
Payable for securities purchased ................... 285,512 142,756 243,240
Fund shares redeemed ............................... 0 0 4,919
Distributions payable .............................. 0 0 0
Accrued expenses ................................... 17,696 29,898 39,299
Payable to advisor, net ............................ 0 46,261 90,631
----------- ------------- -------------
Total liabilities ................................. 303,208 218,915 378,089
----------- ------------- -------------
Net Assets:
Applicable to 85,939,856, 14,914,938, 2,605,573,
7,674,472 and 6,720,800 shares outstanding,
respectively ...................................... $27,407,948 $ 154,615,498 $ 204,101,818
=========== ============= =============
Net Assets Consist of:
Capital paid-in .................................... $27,775,933 $ 125,134,167 $ 132,534,862
Accumulated undistributed net investment
income ............................................ 87,028 231,046 85,449
Accumulated net realized gain on investments ....... 48,541 1,526,112 2,972,897
Net unrealized appreciation/depreciation on
investments ....................................... (503,554) 27,724,173 68,508,610
----------- ------------- -------------
$27,407,948 $ 154,615,498 $ 204,101,818
=========== ============= =============
Net asset value and redemption price per share $ 10.52 $ 20.15 $ 30.37
=========== ============= =============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Statements of Operations
For the Year Ended June 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
McM
McM Intermediate
Principal Fixed
Preservation Income
Fund Fund
-------------- ---------------
<S> <C> <C>
Investment Income:
Dividends (net of foreign withholding taxes of $0, $0, $0,
$0 and $2,400, respectively) ............................ $ 0 $ 0
Interest ................................................. 2,592,646 8,135,667
---------- -------------
Total investment income ................................. 2,592,646 8,135,667
---------- -------------
Expenses:
Investment advisory fees (Note E) ........................ 126,005 480,705
Transfer agent fees ...................................... 37,870 27,661
Administration fees ...................................... 53,963 53,391
Accounting fees .......................................... 31,681 51,696
Legal fees ............................................... 1,920 3,628
Custodian fees ........................................... 16,540 23,304
Insurance fees ........................................... 6,995 20,174
Registration expenses .................................... 13,217 25,221
Amortization of organization costs (Note A) .............. 3,610 3,610
Report to shareholder expense ............................ 2,158 4,991
Auditing fees ............................................ 12,000 14,011
Trustees fees ............................................ 2,132 5,544
Miscellaneous expenses ................................... 407 496
---------- -------------
Total expenses .......................................... 308,498 714,432
Expenses reimbursed (Note E) ............................. (156,860) (27,773)
Expense reimbursement recovery (Note E) .................. 0 0
---------- -------------
Net expenses ............................................ 151,638 686,659
---------- -------------
Net Investment Income ..................................... 2,441,008 7,449,008
---------- -------------
Realized and Unrealized Gain (Loss) on Investments:
Net realized gain on investments ......................... 2,155 597,813
Net change in unrealized appreciation/depreciation on
investments ............................................. 0 (4,236,490)
---------- -------------
Net realized and unrealized gain (loss) on investments ... 2,155 (3,638,677)
---------- -------------
Increase in Net Assets from Operations .................... $2,443,163 $ 3,810,331
========== =============
</TABLE>
<PAGE>
[RESTUBBED]
<TABLE>
<CAPTION>
McM McM
Fixed McM Equity
Income Balanced Investment
Fund Fund Fund
--------------- --------------- ---------------
<S> <C> <C> <C>
Investment Income:
Dividends (net of foreign withholding taxes of $0, $0, $0,
$0 and $2,400, respectively) ............................ $ 0 $ 1,104,687 $ 2,571,579
Interest ................................................. 1,554,547 2,836,356 108,631
------------- ----------- -----------
Total investment income ................................. 1,554,547 3,941,043 2,680,210
------------- ----------- -----------
Expenses:
Investment advisory fees (Note E) ........................ 89,322 531,856 833,469
Transfer agent fees ...................................... 25,568 32,840 40,269
Administration fees ...................................... 53,871 54,540 55,958
Accounting fees .......................................... 30,013 49,149 53,333
Legal fees ............................................... 747 3,822 5,777
Custodian fees ........................................... 5,566 27,032 42,194
Insurance fees ........................................... 3,494 13,661 19,520
Registration expenses .................................... 12,497 21,877 27,604
Amortization of organization costs (Note A) .............. 3,610 3,610 3,610
Report to shareholder expense ............................ 958 3,953 5,712
Auditing fees ............................................ 9,500 12,000 12,000
Trustees fees ............................................ 1,142 4,612 6,446
Miscellaneous expenses ................................... 277 692 305
------------- ----------- -----------
Total expenses .......................................... 236,565 759,644 1,106,197
Expenses reimbursed (Note E) ............................. (108,967) (50,527) (3,610)
Expense reimbursement recovery (Note E) .................. 0 0 147,691
------------- ----------- -----------
Net expenses ............................................ 127,598 709,117 1,250,278
------------- ----------- -----------
Net Investment Income ..................................... 1,426,949 3,231,926 1,429,932
------------- ----------- -----------
Realized and Unrealized Gain (Loss) on Investments:
Net realized gain on investments ......................... 75,632 1,602,359 3,413,177
Net change in unrealized appreciation/depreciation on
investments ............................................. (1,005,410) 11,701,078 31,837,120
------------- ----------- -----------
Net realized and unrealized gain (loss) on investments ... (929,778) 13,303,437 35,250,297
------------- ----------- -----------
Increase in Net Assets from Operations .................... $ 497,171 $16,535,363 $36,680,229
============= =========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
McM Principal
Preservation Fund
-------------------------------
For the For the
Year Ended Year Ended
06/30/99 06/30/98
--------------- --------------
<S> <C> <C>
Operations:
Net investment income ......................... $ 2,441,008 $ 2,011,162
Net realized gain (loss) on investments ....... 2,155 (187)
Net change in unrealized appreciation/
depreciation on investments .................. 0 0
------------ ------------
Increase in net assets ........................ 2,443,163 2,010,975
------------ ------------
Dividends and Distributions to Shareholders:
From net investment income .................... (2,441,008) (2,011,162)
From capital gains ............................ 0 (1,667)
------------ ------------
Total Distributions ........................... (2,441,008) (2,012,829)
------------ ------------
Capital Share Transactions - Note C ............ 37,754,370 15,482,644
------------ ------------
Total increase in net assets .................. 37,756,525 15,480,790
Net Assets:
Beginning of year ............................. 48,183,632 32,702,842
------------ ------------
End of year (including undistributed net
investment income of $0, $0, $441,961,
$402,481, $87,028, and $72,059,
respectively) ................................ $ 85,940,157 $ 48,183,632
============ ============
</TABLE>
<PAGE>
[RESTUBBED]
<TABLE>
<CAPTION>
McM Intermediate McM Fixed
Fixed Income Fund Income Fund
-------------------------------- --------------------------------
For the For the For the For the
Year Ended Year Ended Year Ended Year Ended
06/30/99 06/30/98 06/30/99 06/30/98
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Operations:
Net investment income ......................... $ 7,449,008 $ 6,329,678 $ 1,426,949 $ 901,128
Net realized gain (loss) on investments ....... 597,813 593,160 75,632 44,111
Net change in unrealized appreciation/
depreciation on investments .................. (4,236,490) 2,104,618 (1,005,410) 436,110
------------ ------------ ------------ -----------
Increase in net assets ........................ 3,810,331 9,027,456 497,171 1,381,349
------------ ------------ ------------ -----------
Dividends and Distributions to Shareholders:
From net investment income .................... (7,409,528) (6,233,438) (1,411,983) (858,916)
From capital gains ............................ (509,217) 0 (51,503) (28,964)
------------ ------------ ------------ -----------
Total Distributions ........................... (7,918,745) (6,233,438) (1,463,486) (887,880)
------------ ------------ ------------ -----------
Capital Share Transactions - Note C ............ 35,493,900 25,514,515 6,172,570 12,143,298
------------ ------------ ------------ -----------
Total increase in net assets .................. 31,385,486 28,308,533 5,206,255 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 of $0, $0, $441,961,
$402,481, $87,028, and $72,059,
respectively) ................................ $153,095,907 $121,710,421 $ 27,407,948 $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 For the For the
Year Ended Year Ended Year Ended Year Ended
06/30/99 06/30/98 06/30/99 06/30/98
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Operations:
Net investment income ...................... $ 3,231,926 $ 1,956,593 $ 1,429,932 $ 992,766
Net realized gain on investments ........... 1,602,359 382,091 3,413,177 514,315
Net change in unrealized appreciation on
investments ............................... 11,701,078 10,037,050 31,837,120 22,166,197
------------ ------------ ------------ ------------
Increase in net assets ..................... 16,535,363 12,375,734 36,680,229 23,673,278
------------ ------------ ------------ ------------
Dividends and Distributions to Shareholders:
From net investment income ................. (3,129,415) (1,887,824) (1,362,745) (1,004,580)
From capital gains ......................... (404,513) 0 (860,636) (176,965)
------------ ------------ ------------ ------------
Total Distributions ........................ (3,533,928) (1,887,824) (2,223,381) (1,181,545)
------------ ------------ ------------ ------------
Capital Share Transactions - Note C ......... 48,413,109 41,772,321 41,103,947 47,456,107
------------ ------------ ------------ ------------
Total increase in net assets ............... 61,414,544 52,260,231 75,560,795 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 of $231,046, $128,535,
$85,449 and $18,262, respectively ......... $154,615,498 $ 93,200,954 $204,101,818 $128,541,023
============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Financial Highlights
- --------------------------------------------------------------------------------
The tables below set forth financial data for a share of beneficial interest
outstanding throughout each period presented.
<TABLE>
<CAPTION>
McM Principal
Preservation Fund
--------------------------
For the For the
Year Ended Year Ended
06/30/99 06/30/98
------------ ------------
<S> <C> <C>
Net Asset Value, beginning of period ...................... $ 1.00 $ 1.00
------- -------
Income from investment operations
Net investment income .................................... 0.05 0.05
------- -------
Total from investment operations ........................ 0.05 0.05
------- -------
Less Distributions:
From net investment income ............................... ( 0.05) ( 0.05)
-------- --------
Total distributions ..................................... ( 0.05) ( 0.05)
-------- --------
Net Asset Value, end of period ............................ $ 1.00 $ 1.00
======== ========
Total return .............................................. 4.97% 5.41%
Ratios/Supplemental Data
Net assets, end of period (in 000's) ..................... $ 85,940 $ 48,184
Ratio of expenses to average net assets before reimburse-
ment and recovery of expenses by Advisor ................ 0.61% 0.67%
Ratio of expenses to average net assets after reimburse-
ment of expenses by Advisor ............................. 0.30% 0.30%
Ratio of net investment income to average net assets
before reimbursement of expenses by Advisor ............. 4.53% 4.92%
Ratio of net investment income to average net assets after
reimbursement of expenses by Advisor .................... 4.84% 5.29%
Portfolio turnover ....................................... N/A N/A
</TABLE>
<PAGE>
[RESTUBBED]
<TABLE>
<CAPTION>
McM Principal
Preservation Fund
-----------------------------------------
For the For the For the
Year Ended Year Ended Period Ended
06/30/97 06/30/96 06/30/95*
------------ ------------ -------------
<S> <C> <C> <C>
Net Asset Value, beginning of period ...................... $ 1.00 $ 1.00 $ 1.00
------- ------- -------
Income from investment operations
Net investment income .................................... 0.05 0.05 0.05
------- ------- --------
Total from investment operations ........................ 0.05 0.05 0.05
------- ------- --------
Less Distributions:
From net investment income ............................... ( 0.05) ( 0.05) ( 0.05)
-------- -------- --------
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 reimburse-
ment 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.
(1) Annualized.
(2) Not annualized.
See accompanying notes to financial statements.
<PAGE>
Financial Highlights (continued)
- --------------------------------------------------------------------------------
The tables below set forth financial data for a share of beneficial interest
outstanding throughout each period presented.
<TABLE>
<CAPTION>
McM Intermediate
Fixed Income Fund
--------------------------
For the For the
Year Ended Year Ended
06/30/99 06/30/98
------------ ------------
<S> <C> <C>
Net Asset Value, beginning of period ...................... $ 10.53 $ 10.26
-------- -------
Income from investment operations
Net investment income .................................... 0.57 0.60
Net realized and unrealized gain (loss) on investments ... (0.23) 0.27
-------- -------
Total from investment operations ........................ 0.34 0.87
-------- -------
Less Distributions:
From net investment income ............................... (0.57) (0.60)
From capital gains ....................................... (0.04) 0.00
-------- --------
Total distributions ..................................... (0.61) (0.60)
-------- --------
Net Asset Value, end of period ............................ $ 10.26 $ 10.53
======== ========
Total return .............................................. 3.25% 8.68%
Ratios/Supplemental Data
Net assets, end of period (in 000's) ..................... $153,096 $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 reimburse-
ment of expenses by Advisor ............................. 0.50% 0.50%
Ratio of net investment income to average net assets
before reimbursement of expenses by Advisor ............. 5.40% 5.74%
Ratio of net investment income to average net assets after
reimbursement of expenses by Advisor .................... 5.42% 5.79%
Portfolio turnover ....................................... 40.40% 45.44%
</TABLE>
<PAGE>
[RESTUBBED]
<TABLE>
<CAPTION>
McM Intermediate
Fixed Income Fund
-----------------------------------------
For the For the For the
Year Ended Year Ended Period Ended
06/30/97 06/30/96 06/30/95*
------------ ------------ -------------
<S> <C> <C> <C>
Net Asset Value, beginning of period ...................... $ 10.17 $ 10.37 $ 10.00
------- ------- --------
Income from investment operations
Net investment income .................................... 0.60 0.57 0.54
Net realized and unrealized gain (loss) on investments ... 0.11 (0.10) 0.34
------- ------- --------
Total from investment operations ........................ 0.71 0.47 0.88
------- ------- --------
Less Distributions:
From net investment income ............................... (0.60) (0.57) (0.51)
From capital gains ....................................... (0.02) (0.10) 0.00
------- ------- ---------
Total distributions ..................................... (0.62) (0.67) (0.51)
------- ------- ---------
Net Asset Value, end of period ............................ $ 10.26 $ 10.17 $ 10.37
======= ======= =========
Total return .............................................. 7.14% 4.61% 9.19%(2)
Ratios/Supplemental Data
Net assets, end of period (in 000's) ..................... $93,402 $76,045 $ 29,936
Ratio of expenses to average net assets before reimburse-
ment and recovery of expenses by Advisor ................ 0.59% 0.69% 1.72%(1)
Ratio of expenses to average net assets after reimburse-
ment 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 ............. 5.80% 5.52% 5.01%(1)
Ratio of net investment income to average net assets after
reimbursement of expenses by Advisor .................... 5.89% 5.71% 6.24%(1)
Portfolio turnover ....................................... 36.02% 75.26% 227.09%(2)
</TABLE>
* McM Intermediate Fixed Income Fund commenced investment operations on July
14, 1994.
(1) Annualized.
(2) Not annualized.
<PAGE>
Financial Highlights (continued)
- --------------------------------------------------------------------------------
The tables below set forth financial data for a share of beneficial interest
outstanding throughout each period presented.
<TABLE>
<CAPTION>
McM Fixed
Income Fund
--------------------------
For the For the
Year Ended Year Ended
06/30/99 06/30/98
------------ ------------
<S> <C> <C>
Net Asset Value, beginning of period ............................. $ 10.89 $ 10.44
------- -------
Income from investment operations
Net investment income ........................................... 0.61 0.62
Net realized and unrealized gain (loss) on investments .......... (0.35) 0.47
------- -------
Total from investment operations ............................... 0.26 1.09
------- -------
Less Distributions:
From net investment income ...................................... (0.61) (0.62)
From capital gains .............................................. (0.02) (0.02)
------- -------
Total distributions ............................................ (0.63) (0.64)
------- -------
Net Asset Value, end of period ................................... $ 10.52 $ 10.89
======= =======
Total return ..................................................... 2.34% 10.71%
Ratios/Supplemental Data
Net assets, end of period (in 000's) ............................ $27,408 $22,202
Ratio of expenses to average net assets before reimburse-
ment and recovery of expenses by Advisor ....................... 0.93% 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 ........................... 5.16% 5.26%
Ratio of net investment income to average net assets after
reimbursement of expenses by Advisor ........................... 5.59% 5.93%
Portfolio turnover .............................................. 29.32% 58.22%
</TABLE>
<PAGE>
[RESTUBBED]
<TABLE>
<CAPTION>
McM Fixed
Income Fund
-----------------------------------------
For the For the For the
Year Ended Year Ended Period Ended
06/30/97 06/30/96 06/30/95*
------------ ------------ -------------
<S> <C> <C> <C>
Net Asset Value, beginning of period ............................. $ 10.33 $ 10.58 $ 10.00
------- ------- --------
Income from investment operations
Net investment income ........................................... 0.65 0.64 0.55
Net realized and unrealized gain (loss) on investments .......... 0.12 (0.20) 0.56
------- -------- --------
Total from investment operations ............................... 0.77 0.44 1.11
------- -------- --------
Less Distributions:
From net investment income ...................................... (0.65) (0.63) (0.53)
From capital gains .............................................. (0.01) (0.06) 0.00
-------- -------- ---------
Total distributions ............................................ (0.66) (0.69) (0.53)
-------- -------- ---------
Net Asset Value, end of period ................................... $ 10.44 $ 10.33 $ 10.58
======== ======== =========
Total return ..................................................... 7.72% 4.16% 11.55%(2)
Ratios/Supplemental Data
Net assets, end of period (in 000's) ............................ $ 9,565 $ 7,992 $ 6,599
Ratio of expenses to average net assets before 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 commenced investment operations on July 14, 1994.
(1) Annualized.
(2) Not annualized.
See accompanying notes to financial statements.
<PAGE>
Financial Highlights (continued)
- --------------------------------------------------------------------------------
The tables below set forth financial data for a share of beneficial interest
outstanding throughout each period presented.
<TABLE>
<CAPTION>
McM Balanced
Fund
--------------------------
For the For the
Year Ended Year Ended
06/30/99 06/30/98
------------ ------------
<S> <C> <C>
Net Asset Value, beginning of period ......................... $ 18.12 $ 15.30
-------- -------
Income from investment operations ...........................
Net investment income ....................................... 0.50 0.47
Net realized and unrealized gain on investments ............. 2.10 2.82
-------- -------
Total from investment operations ........................... 2.60 3.29
-------- -------
Less Distributions:
From net investment income .................................. (0.50) (0.47)
From capital gains .......................................... (0.07) 0.00
-------- -------
Total distributions ........................................ (0.57) (0.47)
-------- -------
Net Asset Value, end of period ............................... $ 20.15 $ 18.12
======== =======
Total return ................................................. 14.60% 21.76%
Ratios/Supplemental Data
Net assets, end of period (in 000's) ........................ $154,615 $93,201
Ratio of expenses to average net assets before reimburse-
ment and recovery of expenses by Advisor ................... 0.64% 0.74%
Ratio of expenses to average net assets after reimbursement
and recovery of expenses by Advisor ........................ 0.60% 0.60%
Ratio of net investment income to average net assets before
reimbursement and recovery of expenses by Advisor .......... 2.70% 2.87%
Ratio of net investment income to average net assets after
reimbursement and recovery of expenses by Advisor .......... 2.74% 3.01%
Portfolio turnover .......................................... 18.58% 20.73%
</TABLE>
<PAGE>
[RESTUBBED]
<TABLE>
<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%(2)
Ratios/Supplemental Data
Net assets, end of period (in 000's) ........................ $40,941 $11,915 $ 3,070
Ratio of expenses to average net assets before reimburse-
ment and recovery of expenses by Advisor ................... 1.01% 2.21% 8.41%(1)
Ratio of expenses to average net assets after reimbursement
and recovery of expenses by Advisor ........................ 0.60% 0.60% 0.60%(1)
Ratio of net investment income to average net assets before
reimbursement and recovery of expenses by Advisor .......... 2.97% 1.81% (3.54%)(1)
Ratio of net investment income to average net assets after
reimbursement and recovery of expenses by Advisor .......... 3.38% 3.43% 4.28%(1)
Portfolio turnover .......................................... 31.64% 26.16% 81.05%(2)
</TABLE>
* McM Balanced Fund commenced investment operations on July 14, 1994.
(1) Annualized.
(2) Not annualized.
See accompanying notes to financial statements.
<PAGE>
Financial Highlights (continued)
- --------------------------------------------------------------------------------
The tables below set forth financial data for a share of beneficial interest
outstanding throughout each period presented.
<TABLE>
<CAPTION>
McM Equity
Investment Fund
--------------------------
For the For the
Year Ended Year Ended
06/30/99 06/30/98
------------ ------------
$25.29 $19.71
Net Asset Value, beginning of period ------------ ------------
<S> <C> <C>
Income from investment operations
Net investment income ......................................... 0.23 0.23
Net realized and unrealized gain (loss) on investments ........ 5.21 5.62
-------- -------
Total from investment operations ............................. 5.44 5.85
-------- -------
Less Distributions:
From net investment income .................................... (0.22) (0.23)
From capital gains ............................................ (0.14) (0.04)
-------- --------
Total distributions .......................................... (0.36) (0.27)
-------- --------
Net Asset Value, end of period ................................. $ 30.37 $ 25.29
======== ========
Total return ................................................... 21.70% 29.89%
Ratios/Supplemental Data
Net assets, end of period (in 000's) .......................... $204,102 $128,541
Ratio of expenses to average net assets before reimburse-
ment and recovery of expenses by Advisor ..................... 0.66% 0.75%
Ratio of expenses to average net assets after reimbursement
and recovery of expenses by Advisor .......................... 0.75% 0.75%
Ratio of net investment income to average net assets before
reimbursement and recovery of expenses by Advisor ............ 0.95% 1.05%
Ratio of net investment income to average net assets after
reimbursement and recovery of expenses by Advisor ............ 0.86% 1.05%
Portfolio turnover ............................................ 4.79% 0.57%
<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*
------------ ------------ -------------
$14.85 $11.95 $10.00
Net Asset Value, beginning of period ------------ ------------ -------------
<S> <C> <C> <C>
Income from investment operations
Net investment income ......................................... 0.24 0.21 0.19
Net realized and unrealized gain (loss) on investments ........ 4.87 2.94 1.94
------ ------ -------
Total from investment operations ............................. 5.11 3.15 2.13
------ ------ -------
Less Distributions:
From net investment income .................................... (0.24) (0.21) (0.18)
From capital gains ............................................ (0.01) (0.04) 0.00
------- ------- -------
Total distributions .......................................... (0.25) (0.25) (0.18)
------- ------- -------
Net Asset Value, end of period ................................. $ 19.71 $ 14.85 $ 11.95
======= ======= =======
Total return ................................................... 34.68% 26.53% 21.57%(2)
Ratios/Supplemental Data
Net assets, end of period (in 000's) .......................... $58,593 $23,913 $ 4,866
Ratio of expenses to average net assets before reimburse-
ment and recovery of expenses by Advisor ..................... 0.88% 1.72% 8.48%(1)
Ratio of expenses to average net assets after reimbursement
and recovery of expenses by Advisor .......................... 0.75% 0.75% 0.75%(1)
Ratio of net investment income to average net assets before
reimbursement and recovery of expenses by Advisor ............ 1.36% 0.80% (5.50%)(1)
Ratio of net investment income to average net assets after
reimbursement and recovery of expenses by Advisor ............ 1.49% 1.77% 2.24%(1)
Portfolio turnover ............................................ 0.88% 0.92% 1.81%(2)
</TABLE>
* McM Equity Investment Fund commenced investment operations on July 14, 1994.
(1) Annualized.
(2) Not annualized.
See accompanying notes to financial statements.
<PAGE>
McM FUNDS -- Notes to Financial Statements June 30, 1999
- --------------------------------------------------------------------------------
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. All Trust officers serve without direct compensation
from the Funds. The following is a summary of the significant accounting
policies consistently followed by each Fund in the preparation of its financial
statements. These policies are in conformity with generally accepted accounting
principles.
(1) Security Valuation: The net asset value per share of each Fund is
computed as of the close of regular trading on the New York Stock
Exchange. The net asset value per share is computed by adding the value of
all securities and other assets in the portfolio, deducting any
liabilities (expenses and fees are accrued daily) and dividing by the
number of shares outstanding. The equity securities of each Fund listed or
traded on a stock exchange are valued at the last sale price on its
principal exchange. If no sale price is reported, the mean of the last bid
and asked prices is used. Securities traded over-the-counter are priced at
the mean of the last bid and asked prices. Fixed-income securities are
valued through valuations obtained from a commercial pricing service or at
the most recent mean of the bid and asked prices provided by investment
dealers in accordance with procedures established by the Board of
Trustees. All securities held in the portfolio of the Principal
Preservation Fund, and the debt securities with maturities of 60 days or
less held by the other Funds, are valued at amortized cost. When a
security is valued at amortized cost, it is valued at its cost when
purchased, and thereafter by assuming a constant amortization to maturity
of any discount or premium, regardless of the impact of fluctuating
interest rates on the market value of the instrument. When market
quotations are not readily available, securities and other assets are
valued at fair value as determined in good faith by the Board of Trustees.
(2) Repurchase Agreements: Each Fund may enter into repurchase agreements
to earn income. The Funds may only enter into repurchase agreements with
financial institutions that are deemed to be creditworthy by the Advisor,
pursuant to guidelines established by the Funds' Board of Trustees. During
the term of any repurchase agreement, the Advisor will continue to monitor
the creditworthiness of the seller. Repurchase agreements are considered
under the Act to be collateralized loans by a Fund to the seller secured
by the securities transferred to the Fund. Repurchase agreements under the
Act will be fully collateralized by securities in which the Fund may
invest directly. Such collateral will be marked-to-market daily. If the
seller of the underlying security under the repurchase agreement should
default on its obligation to repurchase the underlying security, a Fund
may experience delay or difficulty in exercising its right to realize upon
the security and, in addition, may incur a loss if the value of the
security should decline, as well as disposition costs in liquidating the
security.
(3) Investment Income and Securities Transactions: Dividend income is
recorded on the ex-dividend date. Interest income is accrued daily.
Securities transactions are accounted for on the date securities are
purchased or sold. The cost of securities sold is determined using the
first-in-first-out method.
<PAGE>
McM FUNDS -- Notes to Financial Statements (continued) June 30, 1999
- --------------------------------------------------------------------------------
(4) Federal Income Taxes: The Trust has elected to be treated as a
"regulated investment company" under Sub-chapter M of the Internal Revenue
Code and to distribute substantially all of the Funds' net taxable income.
Each Fund qualified for such treatment for the year ended June 30, 1999.
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:
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL PRESERVATION FUND
--------------------------------------------------------------------------
Year Ended Year Ended
June 30, 1999 June 30, 1998
------------------------------------ ------------------------------------
Shares Amount Shares Amount
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Shares sold ................... 204,601,680 $ 204,601,680 146,489,995 $ 146,489,995
Shares issued through reinvest-
ment of dividends ............ 2,334,795 2,334,795 1,937,721 1,937,721
Shares redeemed ............... (169,182,105) (169,182,105) (132,945,072) (132,945,072)
------------ --------------- ------------ ---------------
Net Increase .................. 37,754,370 $ 37,754,370 15,482,644 $ 15,482,644
============ =============== ============ ===============
<CAPTION>
INTERMEDIATE FIXED INCOME FUND
--------------------------------------------------------------------
Year Ended Year Ended
June 30, 1999 June 30, 1998
--------------------------------- ---------------------------------
Shares Amount Shares Amount
--------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
Shares sold ................... 4,079,524 $ 43,112,966 4,017,645 $ 41,959,179
Shares issued through reinvest-
ment of dividends ............ 738,623 7,776,483 581,272 6,063,815
Shares redeemed ............... (1,457,991) (15,395,549) (2,149,379) (22,508,479)
---------- -------------- ---------- --------------
Net Increase .................. 3,360,156 $ 35,493,900 2,449,538 $ 25,514,515
========== ============== ========== ==============
</TABLE>
<TABLE>
<CAPTION>
FIXED INCOME FUND
------------------------------------------------------------
Year Ended Year Ended
June 30, 1999 June 30, 1998
------------------------------ ----------------------------
Shares Amount Shares Amount
------------- --------------- ------------ --------------
<S> <C> <C> <C> <C>
Shares sold ....................... 616,046 $ 6,728,274 1,161,982 $ 12,549,304
Shares issued through reinvest-
ment of dividends ................ 134,206 1,460,844 82,549 887,523
Shares redeemed ................... (184,316) (2,016,548) (120,810) (1,293,529)
-------- ------------- --------- ------------
Net Increase ...................... 565,936 $ 6,172,570 1,123,721 $ 12,143,298
======== ============= ========= ============
<CAPTION>
BALANCED FUND
----------------------------------------------------------
Year Ended Year Ended
June 30, 1999 June 30, 1998
---------------------------- ----------------------------
Shares Amount Shares Amount
------------ -------------- ------------ --------------
<S> <C> <C> <C> <C>
Shares sold ....................... 2,831,668 $ 54,224,052 2,721,124 $ 46,198,090
Shares issued through reinvest-
ment of dividends ................ 184,581 3,481,542 108,340 1,842,078
Shares redeemed ................... (484,240) (9,292,485) (362,674) (6,267,847)
--------- ------------ --------- ------------
Net Increase ...................... 2,532,009 $ 48,413,109 2,466,790 $ 41,772,321
========= ============ ========= ============
</TABLE>
<PAGE>
McM FUNDS -- Notes to Financial Statements (continued) June 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY INVESTMENT FUND
--------------------------------------------------------------
Year Ended Year Ended
June 30, 1999 June 30, 1998
------------------------------ ------------------------------
Shares Amount Shares Amount
------------ ---------------- ------------ ----------------
<S> <C> <C> <C> <C>
Shares sold .................... 2,552,391 $ 65,846,183 2,496,173 $ 56,388,235
Shares issued through
reinvestment of dividends ..... 81,486 2,184,225 51,001 1,159,261
Shares redeemed ................ (996,278) (26,926,461) (436,532) (10,091,389)
--------- ------------- --------- -------------
Net Increase ................... 1,637,599 $ 41,103,947 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
June 30, 1999 were:
Aggregate Proceeds from
Purchases Sales
-------------- --------------
Intermediate Fixed Income Fund ......... $91,313,989 $54,148,095
Fixed Income Fund ...................... 13,569,649 7,348,673
Balanced Fund .......................... 68,922,593 21,705,992
Equity Investment Fund ................. 47,077,453 7,834,316
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 June 30, 1999, the net amount of expenses the
Advisor absorbed, subject to repayment, totaled $344,127: $156,860 for the
Principal Preservation Fund; $27,773 for the Intermediate Fixed Income Fund;
$108,967 for the Fixed Income Fund; and $50,527 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 year ended June 30,
1999, the Equity Investment Fund and the Intermediate Fixed Income Fund
reimbursed expenses to the Advisor totaling $147,691 and $4,533, respectively.
Since July 14, 1994 (July 13, 1994 for the Principal Preservation Fund) through
June 30, 1999, the Advisor has reduced its management fee and otherwise
absorbed Fund expenses for each Fund in the following amounts: Principal
Preservation Fund $417,319, Intermediate Fixed Income Fund $375,216, Fixed
Income Fund $303,606, Balanced Fund $370,048 and Equity Investment Fund $19,215.
<PAGE>
McM FUNDS
Report of Independent Certified Public Accountants
- --------------------------------------------------------------------------------
To the Shareholders and Trustees of McM Funds
San Francisco, California
We have audited the accompanying statements of assets and liabilities of McM
Principal Preservation Fund, McM Intermediate Fixed Income Fund, McM Fixed
Income Fund, McM Balanced Fund and McM Equity Investment Fund, each a series of
shares of beneficial interest of McM Funds, including the schedules of
investments, as of June 30, 1999 and the related statements of operations for
the year then ended, the statements of changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of
the four years in the period then ended and for the period ended June 30, 1995.
These financial statements and financial highlights are the responsibility of
the Trust's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of June
30, 1999, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of McM
Principal Preservation Fund, McM Intermediate Fixed Income Fund, McM Fixed
Income Fund, McM Balanced Fund and McM Equity Investment Fund as of June 30,
1999, the results of their operations for the year then ended, the changes in
their net assets for each of the two years in the period then ended and the
financial highlights for each of the four years in the period then ended and
for the period ended June 30, 1995, in conformity with generally accepted
accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
July 22, 1999
<PAGE>
Board of Trustees
Robert R. Barron
Terry A. O'Toole
Walter B. Rose
Kenneth I. Rosenblum
S.D. Sicotte
Mark R. Taylor
Gregory L. Watson
Officers
Terry A. O'Toole, CEO and President
Robert R. Barron, Vice President and Treasurer
Deane A. Nelson, Vice President and Secretary
Investment Advisor Custodian
McMorgan & Company The Bank of New York
One Bush Street, Suite 800 48 Wall Street
San Francisco, CA 94104 New York, New York 10286
Underwriter Legal Counsel
First Data Distributors, Inc. Paul, Hastings, Janofsky & Walker LLP
4400 Computer Drive 345 California Street
Westborough, MA 01581 San Francisco, CA 94104
Shareholder Services Auditors
First Data Investor Services Group, Inc. Tait, Weller & Baker
211 South Gulph Road 8 Penn Center Plaza, Suite 800
King of Prussia, PA 19406 Philadelphia, PA 19103
For Additional Information about
McM Funds call:
(800) 788-9485
This report is submitted for general information of the shareholders of the
Funds. It is not authorized for distribution to prospective investors in the
Funds unless preceded or accompanied by an effective Prospectus which includes
details regarding the Funds' objectives, policies, expenses and other
information.
AR0699
[GRAPHIC OMITTED]
