LKCM Funds NCSR Certified annual shareholder report (management investment company)

As filed with the Securities and Exchange Commission on March 9, 2018

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-8352

LKCM Funds

(Exact name of registrant as specified in charter)

c/o Luther King Capital Management Corporation

301 Commerce Street, Suite 1600

Fort Worth, TX 76102

(Address of principal executive offices) (Zip code)

K&L Gates LLP

1601 K Street, NW

Washington, DC 20006

(Name and address of agent for service)

1-800-688-LKCM and 1-800-423-6369

Registrant’s telephone number, including area code

Date of fiscal year end: December 31

Date of reporting period: December 31, 2017

Item 1.

Reports to Stockholders.

LKCM

FUNDS

LKCM Small Cap Equity Fund

LKCM Small-Mid Cap Equity Fund

LKCM Equity Fund

LKCM Balanced Fund

LKCM Fixed Income Fund

Annual Report

December 31, 2017

Dear Fellow Shareholders:

We report the following performance information for the LKCM Funds for the indicated periods ended December 31, 2017:


Funds	Inception Dates		NAV @ 12/31/17		Net Expense Ratio, *		Gross Expense Ratio**		One Year Total Return Ended 12/31/17		Five Year Average Annualized Return Ended 12/31/17		Ten Year Average Annualized Return Ended 12/31/17		Avg. Annual Total Return Since Incept.
LKCM Equity Fund -
Institutional Class		1/3/96	$	26.02		0.80%		0.98%		21.69%		12.76%		8.31%		8.65%
S&P 500^® Index⁽¹⁾										21.83%		15.79%		8.50%		8.90%
LKCM Small Cap Equity Fund -
Institutional Class		7/14/94	$	18.44		1.00%		1.05%		17.04%		9.59%		6.88%		10.47%
Russell 2000^® Index⁽²⁾										14.65%		14.12%		8.71%		9.60%
LKCM Small Cap Equity Fund -
Adviser Class		6/5/03	$	17.13		1.25%		1.30%		16.70%		9.31%		6.61%		9.27%
Russell 2000^® Index⁽²⁾										14.65%		14.12%		8.71%		10.13%
LKCM Small-Mid Cap Equity Fund -
Institutional Class		5/2/11	$	10.60		1.02%		1.25%		24.13%		9.67%		N/A		6.64%
Russell 2500^® Index⁽³⁾										16.81%		14.33%		N/A		11.00%
LKCM Balanced Fund		12/30/97	$	22.18		0.81%		1.04%		12.88%		10.28%		7.47%		6.64%
S&P 500^® Index⁽¹⁾										21.83%		15.79%		8.50%		7.19%
Bloomberg Barclays U.S. Intermediate Government/Credit Bond Index⁽⁴⁾										2.14%		1.50%		3.32%		4.54%
LKCM Fixed Income Fund		12/30/97	$	10.68		0.51%		0.79%		2.15%		1.49%		3.63%		4.34%
Bloomberg Barclays U.S. Intermediate Government/Credit Bond Index⁽⁴⁾										2.14%		1.50%		3.32%		4.54%

Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. Current performance of the Funds may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling 1-800-688-LKCM. The Funds impose a 1.00% redemption fee on shares held less than 30 days. If reflected, the fee would reduce performance shown.

Luther King Capital Management Corporation, the Funds’ investment adviser, has contractually agreed to waive all or a portion of its management fee and/or reimburse expenses of each Fund to maintain the expense ratios designated in the Funds’ current prospectus through May 1, 2018. This expense limitation excludes interest, taxes, brokerage commissions, indirect fees and expenses related to investments in other investment companies, including money market funds, and extraordinary expenses. Investment performance reflects fee waivers, if any, in effect during the relevant period. In the absence of such waivers, total return would be reduced. Investment performance is based upon the net expense ratio. LKCM waived management fees and/or reimbursed expenses for each Fund during the fiscal year ended December 31, 2017.

**	Expense ratios above are as of May 1, 2017, as reported in the Funds’ current prospectus. Expense ratios reported for other periods in the financial highlights of this report may differ.

(1)	The S&P 500^® Index is an unmanaged capitalization-weighted index of 500 selected stocks that is generally considered representative of the performance of large capitalization companies in the U.S. stock market.

(2)	The Russell 2000^® Index is an unmanaged index which measures the performance of the 2,000 smallest companies in the Russell 3000^® Index.

(3)	The Russell 2500^® Index is an unmanaged index which measures the performance of the 2,500 smallest companies in the Russell 3000^® Index.

(4)

The Bloomberg Barclays U.S. Intermediate Government/Credit Bond Index is an unmanaged market value weighted index measuring both the principal price changes of, and income provided by, the underlying universe of securities that comprise the index. Securities included in the index must meet the following criteria: fixed as opposed to variable rate; remaining maturity of one to ten years; minimum outstanding par value of $250 million; rated investment grade or higher by Moody’s Investors Service or equivalent; must be dollar denominated and non-convertible; and must be publicly issued.

Note: The indices defined above are not available for direct investment and the index performance therefore does not include fees, expenses or taxes.

2017 Review

A year ago investors were attempting to understand the implications of President-elect Donald Trump’s agenda of tax reform, lighter regulation, and infrastructure spending to spur economic growth and create jobs. Initial investor optimism eroded in March as the failure to repeal and replace Obamacare, a Republican-controlled Congress’ multi-year objective, cast doubt on the potential for the White House to accomplish other legislative agenda items, chiefly tax reform. Despite the legislative set back, three interest rate hikes by the Federal Reserve Board, and trade policy concerns, healthy corporate profit growth following two years of stagnation propelled the equity market to a record high in 2017. The S&P 500^® Index rose 21.83% for the year ended December 31, 2017, driven by higher earnings growth and expanded earnings multiples. The market advance was broad-based and persistent. Nine of the eleven equity market sectors recorded a positive return for the year, led by the Information Technology sector. In addition, the S&P 500^® Index rose during each month of the year—a first for the index. We believe the strong equity market performance reflected the continued improvement of economic data, particularly related to manufacturing, housing, and jobs.

Despite significant strength in broad equity market indices over the past year, we believe equity market internals were less impressive. First, the S&P 500^® Index, which is market-capitalization weighted, outperformed the S&P 500^® Equal Weight Index an equal-weighted version of the S&P 500^® Index, by 2.9% during the year. We believe this market characteristic is often associated with undistinguished market performance. Second, the performance of small capitalization stocks, as measured by the Russell 2000^® Index, trailed the S&P 500^® Index, which is generally comprised of large capitalization stocks, by approximately 7.2% for the year. We believe the performance of the equity market in 2017 was also remarkable for its lack of daily volatility. There were only seven trading days in 2017 when the S&P 500^® Index changed by greater than 1% but less than 2%. Moreover, the last year in which the equity markets, as measured by the S&P 500^® Index, recorded no daily moves greater than 2% was 2005.

Turning to interest rates, after a roller-coaster year the yield on the 10-Year Treasury closed 2017 at 2.41%, a mere 0.04% less than where the yield began the year. The peak in yield on the 10-Year Treasury during 2017 of 2.63% occurred in March, two days prior to the third interest rate increase by the Federal Reserve Board for this tightening cycle. It appeared that jobs data was improving and investors began discounting the potential for rising inflation and further interest rate hikes by the Federal Reserve Board. The peak in the 10-Year Treasury yield coincided with investor concern regarding the White House agenda following the failure of Congress and the Administration to revamp health care regulation. In addition, geopolitical tension with regard to Syria and North Korea was rising and the U.S. dollar continued to weaken. On the heels of the 0.25% interest rate increase by the Federal Reserve Board in March, the Federal Reserve Board raised rates an additional 0.25% in June and December. The short end of the yield curve rose dramatically, partially in reaction to an increased pace of interest rate hikes. The yield on the 2-Year Treasury reached a nine-year high by late October and finished the year yielding 1.89%. The result was a dramatic flattening of the yield curve, or the difference in yields between the 2-Year Treasury and the 10-Year Treasury. In our view, a flattening of the yield curve has historically been viewed as a harbinger of slowing economic growth and rising recession risk. We believe that this traditional reading of a flattening yield curve is less applicable in today’s environment where long yields are weighed down by ultra-low global bond yields, particularly in the Eurozone. Finally, due to the sharp rise in the 2-Year Treasury yield during 2017 we believe it is competitive with the dividend yield on the S&P 500^® Index for the first time since 2008.

In our view, the current expansion is likely to continue as fiscal stimulus in the form of lower tax rates and the probability of infrastructure spending should propel economic growth into the second half of 2019. We believe if the economy were to post two consecutive quarters of economic contraction, it would likely be the result of overly tight monetary policy or the ever possible exogenous shock to the economy caused by a geopolitical event. We believe such risks are unlikely to occur, but the possibility remains. We believe it is much more likely that the Federal Reserve Board accelerates its pace of interest rate hikes in 2018 in response to rising inflation.

2018 Outlook

The prior year ended with passage of the most sweeping tax reform legislation in over 30 years. We believe the permanent reduction in the corporate tax rate to 21% from the highest 35% bracket will have significant, though uneven, implications for corporations. We are mindful of a corporation’s effective tax rate, which represents the amount corporations actually pay in taxes as a share of their pre-tax income. Historically, the effective tax rate could be materially less than the highest statutory tax rate of 35%. This paradox was especially true of multinational companies owing to the peculiar nature of our nation’s approach to the taxation of foreign earnings of domestic companies.

We believe the reduction in the corporate tax rate is a clear near-term tailwind for corporate earnings and we have upgraded our outlook for the equity market in 2018. We also believe it would be unusual for the equity market to decline during a year in which we anticipate corporate profits to rise at a mid-teen growth rate. While optimistic about the prospects for economic growth and the equity market, we believe the timing of the tax cuts paradoxically increases the risk of shortening the current business cycle. In the past, Congress has used tax cuts to revive economic growth following recessions. The recent tax cut, in contrast, arrives in year nine of economic growth and amidst what we believe are clear signs of strengthening manufacturing, better housing data, tightening labor conditions, rising energy prices, and a falling U.S. dollar. We believe real economic growth should accelerate from the 2% level recorded in recent years to closer to 3% for 2018. Such a move could ignite inflationary pressures thereby prompting the Federal Reserve Board to quicken its pace of interest rate hikes and bring about the familiar close of a business cycle through an overtightening of monetary policy. We believe inflationary readings will be key data to monitor in 2018 for signs the Federal Reserve may accelerate monetary tightening.

We anticipate that Gross Domestic Product, or GDP, growth will accelerate in 2018 driven in part by higher personal consumption, which represents almost 70% of GDP. We believe most workers should see an increase in their payroll check this year because of the new tax legislation. This incremental consumer income is arriving at a time when the personal savings rate of 2.9% of personal disposable income is near a decade low level. Americans were saving an average of 6.0% of personal disposable income as recently as the fourth quarter of 2015. We believe real GDP growth could potentially rise to 3% for 2018 and corporate profits could grow between 15% and 18% year-over-year, which would indicate the economy is set to receive a near-term dose of fiscal stimulus. We believe it would be unusual for equity prices to perform poorly against this economic backdrop although we would not be surprised if the equity market retraced 5% to 10%, or greater, at some point within the next year as we believe the equity market is historically overdue for a correction.

LKCM Equity Fund

The LKCM Equity Fund posted a return of 21.69% for the year ended December 31, 2017 compared to a return of 21.83% for the S&P 500^® Index, the Fund’s benchmark. The Fund generated solid performance results from stock selection in the Industrials, Healthcare and Financials sectors relative to the benchmark, although stock selection in the Information Technology and Energy sectors underperformed relative to the benchmark. The Fund benefited from an underweight position in the Telecommunications, Utilities and Real Estate sectors

relative to the benchmark, which was offset by the Fund’s overweight position in the Energy and Information Technology sectors. We remain committed to our investment strategy and stock selection process for the Fund, and we believe the Fund is well positioned for 2018 with a portfolio of companies that we believe are high quality, have solid balance sheets, are reasonably valued, and otherwise meet our stringent investment criteria.

LKCM Small Cap Equity Fund

The LKCM Small Cap Equity Fund—Institutional Class returned 17.04% for the year ended December 31, 2017 and outperformed its benchmark, the Russell 2000^® Index, which returned 14.65% for the year. For 2017, stock selection was responsible for the vast majority of the Fund’s relative outperformance although sector allocation decisions for the Fund were also positive and contributed to the Fund’s relative performance. Stock selection in the Consumer Discretionary, Industrials and Materials sectors was strong and contributed significantly to the Fund’s outperformance relative to the benchmark. Stock selection in the Healthcare sector was the biggest detractor to the Fund’s relative performance. The Fund’s overweight position in the Energy sector was also a drag on the Fund’s relative performance, especially during the first part of the year. The Fund also benefited during the year from a tilt toward growth companies and underweight positions in those sectors more sensitive to interest rates. The Fund further benefited during the year from five portfolio companies being acquired and four portfolio companies graduating out of our small cap investment strategy due to market appreciation. We continue to remain confident in our strategy of investing in companies that we believe are high quality and competitively advantaged and otherwise meet our stringent investment criteria.

LKCM Balanced Fund

The LKCM Balanced Fund advanced 12.88% for the year ended December 31, 2017 versus the 21.83% return for the S&P 500^® Index and the 2.14% return for the Bloomberg Barclays Intermediate Government/Credit Bond Index. While generating significant absolute returns, the Fund’s equity portfolio lagged the performance of the S&P 500^® Index. The Fund benefited from strong stock selection in the Healthcare and Financials sectors relative to the benchmark, while stock selection in the Consumer Discretionary and Information Technology sectors detracted from the Fund’s relative performance. We believe the Fund’s equity portfolio is well-positioned for a gradual lift in interest rates, with relatively low exposure to interest rate sensitive sectors like Real Estate and Utilities. The Fund’s fixed income portfolio slightly outperformed the Bloomberg Barclays Intermediate Government/Credit Bond Index during the year. The Fund’s fixed income portfolio remains focused on high quality intermediate maturity bonds, which serves the dual objective of generating income and moderating the overall risk level of the Fund’s total portfolio.

LKCM Fixed Income Fund

The LKCM Fixed Income Fund advanced 2.15% for the year ended December 31, 2017 compared to 2.14% for the Fund’s benchmark, the Bloomberg Barclays Intermediate Government/Credit Bond Index. The Fund’s overweight position in corporate bonds relative to the benchmark, specifically BBB rated corporate bonds and those in the Healthcare, Capital Goods and Information Technology sectors, were additive to the Fund’s relative performance as credit spreads tightened. Floating rate and U.S. Government agency step-up fixed income securities were also additive to the Fund’s relative performance as short-term interest rates rose and the yield curve flattened as the Federal Reserve Board tightened monetary policy. The Fund’s underweight position in the U.S. Government sector also benefitted the Fund’s relative performance as U.S. Treasuries and U.S. Government agency fixed income securities underperformed their lower quality counterparts in the corporate bond sector. The Fund’s defensive duration posture of approximately 3.2 years, versus 4.0 years for the benchmark, detracted from the Fund’s relative performance as the yield curve flattened and longer duration issues outperformed their shorter duration counterparts. The Fund remains largely focused on short-to-intermediate investment grade corporate bonds with strong underlying credit fundamentals in an effort to mitigate interest rate and credit risk as expectations for inflation and growth increase.

LKCM Small-Mid Cap Equity Fund

The LKCM Small-Mid Cap Equity Fund returned 24.13% for the year ended December 31, 2017 and outperformed its benchmark, the Russell 2500^® Index, which returned 16.81% for the year. For 2017, stock selection was responsible for the vast majority of the Fund’s relative outperformance although sector allocation decisions for the Fund were also positive and contributed to the Fund’s relative performance. Stock selection in the Financials, Consumer Discretionary, Healthcare, Information Technology and Materials sectors was strong and contributed significantly to the Fund’s outperformance relative to the benchmark. The Fund’s overweight position in the Energy sector was a drag on the Fund’s relative performance, especially during the first part of the year. The Fund also benefited during the year from a tilt toward growth companies and underweight positions in those sectors more sensitive to interest rates. The Fund further benefited during the year from three portfolio companies being acquired and three portfolio companies graduating out of our small-mid cap investment strategy due to market appreciation. We continue to remain confident in our strategy of investing in companies that we believe are high quality and competitively advantaged and otherwise meet our stringent investment criteria

LOGO

J. Luther King, Jr., CFA, CIC

February 3, 2018

The information provided herein represents the opinion of J. Luther King, Jr., CFA, CIC and is not intended to be a forecast of future events, a guarantee of future results, nor investment advice.

Please refer to the Schedule of Investments found on pages 16-28 of the report for more information on Fund holdings. Fund holdings and sector allocations are subject to change and are not recommendations to buy or sell any securities.

Mutual fund investing involves risk. Principal loss is possible. Past performance is not a guarantee of future results. Small and medium capitalization funds typically carry additional risks, since smaller companies generally have a higher risk of failure, and, historically, their stocks have experienced a greater degree of market volatility than stocks on average. Investments in debt securities typically decrease in value when interest rates rise. This risk is greater for longer-term debt securities. Investments in mortgage backed securities include additional risks that investors should be aware of such as credit risk, prepayment risk, possible illiquidity and default, as well as increased susceptibility to adverse economic developments. These risks are discussed in the Funds’ summary and statutory prospectuses.

Earnings growth is not a measure of future performance.

Duration is a commonly used measure of the potential volatility of the price of a debt security, or the aggregate market value of a portfolio of debt securities, prior to maturity. Securities with a longer duration generally have more volatile prices than securities of comparable quality with a shorter duration.

Spread is the percentage point difference between yields of various classes of bonds compared to treasury bonds.

BBB refers to bond ratings. Bond ratings are grades given to bonds that indicate their credit quality as determined by private independent rating services such as Standard & Poor’s, Moody’s and Fitch. These firms evaluate a bond issuer’s financial strength, or its ability to pay a bond’s principal and interest in a timely fashion. Ratings are expressed as letters ranging from ‘AAA’, which is the highest grade, to ‘D’, which is the lowest grade.

Dividend yield is a dividend expressed as a percentage of current share price.

The S&P 500^® Equal Weight Index is the equal-weight version of the S&P 500^® Index. It has the same constituents as the capitalization weighted S&P 500^® Index, but each company is allocated a fixed weight of 0.2 percent quarterly.

Investment grade is a level of credit rating regarded as carrying a relatively low level of risk to investors.

Must be preceded or accompanied by a prospectus.

Quasar Distributors, LLC, distributor.

PERFORMANCE:

The following information illustrates the historical performance of the LKCM Small Cap Equity Fund as of December 31, 2017 compared to the Fund’s representative benchmark and peer group indices.

Performance data quoted represents past performance; past performance does not guarantee future results. The graph and table reflect the reinvestment of dividends and other distributions, if any, but do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling 1-800-688-LKCM. Returns would have been lower if LKCM had not waived a portion of its management fee and/or reimbursed certain expenses of the Fund. Please see Note B to the Notes to the Financial Statements for specific information regarding management fee waiver and/or expense reimbursement arrangements for the Fund.

An index is an unmanaged portfolio and does not trade or incur any expenses. The Lipper Small-Cap Core Funds Index, however, does reflect the fees and expenses borne by the Funds included in that index. One can not invest in an unmanaged index.

AVERAGE ANNUAL TOTAL RETURN (Periods Ended December 31, 2017)


	Past 1 Year		Past 5 Years⁽¹⁾		Past 10 Years⁽¹⁾		Since Inception⁽¹⁾⁽²⁾
LKCM Small Cap Equity Fund – Institutional Class		17.04%		9.59%		6.88%		10.47%
Russell 2000^® Index		14.65%		14.12%		8.71%		9.60%
Lipper Small-Cap Core Funds Index		13.95%		13.64%		8.69%		10.41%

⁽¹⁾	Annualized.

⁽²⁾	July 14, 1994

A HYPOTHETICAL $10,000 INVESTMENT IN LKCM SMALL CAP EQUITY FUND – INSTITUTIONAL CLASS

(for the ten years ended December 31, 2017)

LOGO

The Russell 2000^® Index is an unmanaged index consisting of the 2,000 smallest companies in the Russell 3000^® Index.

The Lipper Small-Cap Core Funds Index is an unmanaged index generally considered representative of small cap core mutual funds tracked by Lipper, Inc.

AVERAGE ANNUAL TOTAL RETURN (Periods Ended December 31, 2017)


	Past 1 Year		Past 5 Years⁽¹⁾		Past 10 Years⁽¹⁾		Since Inception⁽¹⁾⁽²⁾
LKCM Small Cap Equity Fund – Adviser Class		16.70%		9.31%		6.61%		9.27%
Russell 2000^® Index		14.65%		14.12%		8.71%		10.13%
Lipper Small-Cap Core Funds Index		13.95%		13.64%		8.69%		10.49%

⁽¹⁾	Annualized.

⁽²⁾	June 5, 2003

A HYPOTHETICAL $10,000 INVESTMENT IN LKCM SMALL CAP EQUITY FUND – ADVISER CLASS

(for the ten years ended December 31, 2017)

LOGO

The Russell 2000^® Index is an unmanaged index consisting of the 2,000 smallest companies in the Russell 3000^® Index.

The Lipper Small-Cap Core Funds Index is an unmanaged index generally considered representative of small cap core mutual funds tracked by Lipper, Inc.

PERFORMANCE:

The following information illustrates the historical performance of the LKCM Small-Mid Cap Equity Fund as of December 31, 2017 compared to the Fund’s benchmark and peer group indices.

AVERAGE ANNUAL TOTAL RETURN (Periods Ended December 31, 2017)


	Past 1 Year		Past 5 Years⁽¹⁾		Since Inception⁽¹⁾⁽²⁾
LKCM Small-Mid Cap Equity Fund – Institutional Class		24.13%		9.67%		6.64%
Russell 2500^® Index		16.81%		14.33%		11.00%
Lipper Small-Cap Core Funds Index		13.95%		13.64%		10.24%

⁽¹⁾	Annualized.

⁽²⁾	May 2, 2011

A HYPOTHETICAL $10,000 INVESTMENT IN LKCM SMALL-MID CAP EQUITY FUND – INSTITUTIONAL CLASS

(for the period from May 2, 2011 to December 31, 2017)

LOGO

The Russell 2500^® Index is an unmanaged index consisting of the 2,500 smallest companies in the Russell 3000^® Index.

The Lipper Small-Cap Core Funds Index is an unmanaged index generally considered representative of small cap core mutual funds tracked by Lipper, Inc.

PERFORMANCE:

The following information illustrates the historical performance of the LKCM Equity Fund as of December 31, 2017 compared to the Fund’s benchmark and peer group indices.

An index is an unmanaged portfolio and does not trade or incur any expenses. The Lipper Large-Cap Core Funds Index, however, does reflect the fees and expenses borne by the Funds included in that index. One can not invest in an unmanaged index.

AVERAGE ANNUAL TOTAL RETURN (Periods Ended December 31, 2017)


	Past 1 Year		Past 5 Years⁽¹⁾		Past 10 Years⁽¹⁾		Since Inception⁽¹⁾⁽²⁾
LKCM Equity Fund – Institutional Class		21.69%		12.76%		8.31%		8.65%
S&P 500^® Index		21.83%		15.79%		8.50%		8.90%
Lipper Large-Cap Core Funds Index		20.90%		14.63%		7.58%		7.93%

⁽¹⁾	Annualized.

⁽²⁾	January 3, 1996

A HYPOTHETICAL $10,000 INVESTMENT IN LKCM EQUITY FUND – INSTITUTIONAL CLASS

(for the ten years ended December 31, 2017)

LOGO

The S&P 500^® Index is an unmanaged capitalization-weighted index of 500 selected stocks that is generally considered representative of the performance of large capitalization companies in the U.S. stock market.

The Lipper Large-Cap Core Funds Index is an unmanaged index generally considered representative of large cap core mutual funds tracked by Lipper, Inc.

PERFORMANCE:

The following information illustrates the historical performance of the LKCM Balanced Fund as of December 31, 2017 compared to the Fund’s benchmark and peer group indices.

An index is an unmanaged portfolio and does not trade or incur any expenses. The Lipper Mixed-Asset Target Allocation Growth Funds Index, however, does reflect the fees and expenses borne by the Funds included in that index. One can not invest in an unmanaged index.

AVERAGE ANNUAL TOTAL RETURN (Periods Ended December 31, 2017)


	Past 1 Year		Past 5 Years⁽¹⁾		Past 10 Years⁽¹⁾		Since Inception⁽¹⁾⁽²⁾
LKCM Balanced Fund		12.88%		10.28%		7.47%		6.64%
Bloomberg Barclays U.S. Intermediate Government/Credit Bond Index		2.14%		1.50%		3.32%		4.54%
S&P 500^® Index		21.83%		15.79%		8.50%		7.19%
Lipper Mixed-Asset Target Allocation Growth Funds Index		16.67%		9.96%		6.24%		6.44%

⁽¹⁾	Annualized.

⁽²⁾	December 30, 1997

A HYPOTHETICAL $10,000 INVESTMENT IN LKCM BALANCED FUND

(for the ten years ended December 31, 2017)

LOGO

The Bloomberg Barclays U.S. Intermediate Government/Credit Bond Index is an unmanaged market value weighted index measuring both the principal price changes of, and income provided by, the underlying universe of securities that comprise the index. Securities included in the index must meet the following criteria; fixed as opposed to variable rate; remaining maturity of one to ten years; minimum outstanding par value of $250 million; rated investment grade or higher by Moody’s Investors Service or equivalent; must be dollar denominated and non-convertible; and must be publicly issued.

The Lipper Mixed-Asset Target Allocation Growth Funds Index is an unmanaged index generally considered representative of mutual funds tracked by Lipper, Inc. that, by portfolio practice, maintain a mix of between 60%-80% equity securities, with the remainder invested in bonds, cash and cash equivalents.

PERFORMANCE:

The following information illustrates the historical performance of the LKCM Fixed Income Fund as of December 31, 2017 compared to the Fund’s benchmark and peer group indices.

An index is an unmanaged portfolio and does not trade or incur any expenses. The Lipper Short Intermediate Investment-Grade Debt Funds Index, however, does reflect the fees and expenses borne by the Funds included in that index. One can not invest in an unmanaged index.

AVERAGE ANNUAL TOTAL RETURN (Periods Ended December 31, 2017)


	Past 1 Year		Past 5 Years⁽¹⁾		Past 10 Years⁽¹⁾		Since Inception⁽¹⁾⁽²⁾
LKCM Fixed Income Fund		2.15%		1.49%		3.63%		4.34%
Bloomberg Barclays U.S. Intermediate Government/Credit Bond Index		2.14%		1.50%		3.32%		4.54%
Lipper Short Intermediate Investment-Grade Debt Funds Index		2.25%		1.44%		3.06%		4.01%

⁽¹⁾	Annualized.

⁽²⁾	December 30, 1997

A HYPOTHETICAL $10,000 INVESTMENT IN LKCM FIXED INCOME FUND

(for the ten years ended December 31, 2017)

LOGO

The Lipper Short Intermediate Investment-Grade Debt Funds Index is an unmanaged index generally considered representative of short intermediate investment grade mutual funds tracked by Lipper, Inc.

LKCM Funds Expense Example — December 31, 2017

As a shareholder of the Funds, you incur two types of costs: (1) transaction costs, including redemption fees; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (7/1/17-12/31/17).

ACTUAL EXPENSES

The first line of the tables below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. Although the Funds charge no sales load, you will be assessed fees for outgoing wire transfers, returned checks and stop payment orders at prevailing rates charged by U.S. Bancorp Fund Services, LLC, the Funds’ transfer agent. If you request that a redemption be made by wire transfer, currently a $15.00 fee is charged by the Funds’ transfer agent. You will be charged a redemption fee equal to 1.00% of the net amount of the redemption if you redeem your shares of the LKCM Small Cap Equity, Small-Mid Cap Equity, Equity, Balanced and Fixed Income Funds within 30 days of purchase, unless otherwise determined by the Funds in their discretion. To the extent the Funds invest in shares of other investment companies as part of their investment strategies, you will indirectly bear your proportionate share of any fees and expenses charged by the underlying funds in which the Funds invest in addition to the expenses of the Funds. Actual expenses of the underlying funds are expected to vary among the various underlying funds. These expenses are not included in the example below. The example below includes management fees, registration fees and other expenses. However, the example below does not include portfolio trading commissions and related expenses and other extraordinary expenses as determined under generally accepted accounting principles.

HYPOTHETICAL EXAMPLES FOR COMPARISON PURPOSES

The second line of the tables below provides information about hypothetical account values and hypothetical expenses based on the Funds’ actual expense ratios and an assumed rate of return of 5% per year before expenses, which are not the Funds’ actual returns. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Funds and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactions costs were included, your costs would have been higher.


	LKCM Small Cap Equity Fund – Institutional Class
	Beginning Account Value 7/1/17		Ending Account Value 12/31/17		Expenses Paid During Period* 7/1/17–12/31/17
Actual	$	1,000.00	$	1,093.10	$	5.28
Hypothetical (5% return before expense)	$	1,000.00	$	1,020.16	$	5.09

*	Expenses are equal to the Fund’s annualized net expense ratio of 1.00%, multiplied by the average account value over the period, multiplied by 184/365 to reflect the one-half year period.


	LKCM Small Cap Equity Fund – Adviser Class
	Beginning Account Value 7/1/17		Ending Account Value 12/31/17		Expenses Paid During Period* 7/1/17–12/31/17
Actual	$	1,000.00	$	1,090.80	$	6.59
Hypothetical (5% return before expense)	$	1,000.00	$	1,018.90	$	6.36

*	Expenses are equal to the Fund’s annualized net expense ratio of 1.25%, multiplied by the average account value over the period, multiplied by 184/365 to reflect the one-half year period.


	LKCM Small-Mid Cap Equity Fund
	Beginning Account Value 7/1/17		Ending Account Value 12/31/17		Expenses Paid During Period* 7/1/17–12/31/17
Actual	$	1,000.00	$	1,151.00	$	5.42
Hypothetical (5% return before expense)	$	1,000.00	$	1,020.16	$	5.09

*	Expenses are equal to the Fund’s annualized net expense ratio of 1.00%, multiplied by the average account value over the period, multiplied by 184/365 to reflect the one-half year period.


	LKCM Equity Fund
	Beginning Account Value 7/1/17		Ending Account Value 12/31/17		Expenses Paid During Period* 7/1/17–12/31/17
Actual	$	1,000.00	$	1,103.20	$	4.24
Hypothetical (5% return before expense)	$	1,000.00	$	1,021.17	$	4.08

*	Expenses are equal to the Fund’s annualized net expense ratio of 0.80%, multiplied by the average account value over the period, multiplied by 184/365 to reflect the one-half year period.


	LKCM Balanced Fund
	Beginning Account Value 7/1/17		Ending Account Value 12/31/17		Expenses Paid During Period* 7/1/17–12/31/17
Actual	$	1,000.00	$	1,063.90	$	4.16
Hypothetical (5% return before expense)	$	1,000.00	$	1,021.17	$	4.08

*	Expenses are equal to the Fund’s annualized net expense ratio of 0.80%, multiplied by the average account value over the period, multiplied by 184/365 to reflect the one-half year period.


	LKCM Fixed Income Fund
	Beginning Account Value 7/1/17		Ending Account Value 12/31/17		Expenses Paid During Period* 7/1/17–12/31/17
Actual	$	1,000.00	$	1,005.40	$	2.53
Hypothetical (5% return before expense)	$	1,000.00	$	1,022.68	$	2.55

*	Expenses are equal to the Fund’s annualized net expense ratio of 0.50%, multiplied by the average account value over the period, multiplied by 184/365 to reflect the one-half year period.

ALLOCATION OF PORTFOLIO HOLDINGS — LKCM Funds — December 31, 2017

Percentages represent market value as a percentage of total investments.

LKCM Small Cap Equity Fund

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LKCM Equity Fund

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LKCM Fixed Income Fund

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LKCM Small-Mid Cap Equity Fund

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LKCM Balanced Fund

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LKCM SMALL CAP EQUITY FUND

SCHEDULEOF INVESTMENTS

December 31, 2017


COMMON STOCKS - 99.9%	Shares		Value
Aerospace & Defense - 2.8%
Hexcel Corporation		26,855	$	1,660,982
Mercury Systems, Inc. (a)		76,950		3,951,382

				5,612,364

Banks - 10.8%
BancorpSouth Bank		104,014		3,271,240
Cadence BanCorporation (a)		103,310		2,801,767
CBTX, Inc.		51,540		1,528,676
Glacier Bancorp, Inc.		56,265		2,216,278
Green Bancorp, Inc. (a)		84,060		1,706,418
Hanmi Financial Corporation		82,490		2,503,572
LegacyTexas Financial Group, Inc.		50,575		2,134,771
Pinnacle Financial Partners, Inc.		49,125		3,256,988
Seacoast Banking Corporation of Florida (a)		91,935		2,317,681

				21,737,391

Biotechnology - 3.6%
Charles River Laboratories International, Inc. (a)		36,135		3,954,976
Neogen Corporation (a)		39,353		3,235,210

				7,190,186

Building Products - 5.1%
American Woodmark Corporation (a)		17,140		2,232,485
Builders FirstSource, Inc. (a)		165,195		3,599,599
CSW Industrials, Inc. (a)		35,200		1,617,440
PGT, Inc. (a)		165,056		2,781,194

				10,230,718

Capital Markets - 1.2%
BGC Partners Inc - Class A		155,585		2,350,889

Chemicals - 3.2%
Ferro Corporation (a)		103,545		2,442,627
Ferroglobe PLC (a) (b)		214,125		3,468,825
GCP Applied Technologies Inc. (a)		20,000		638,000

				6,549,452

Commercial Services & Supplies - 1.8%
Healthcare Services Group, Inc.		70,315		3,707,007

Communication Equipment - 1.7%
Alarm.com Holdings, Inc. (a)		50,175		1,894,106
Finisar Corporation (a)		15,000		305,250
Infinera Corporation (a)		221,830		1,404,184

				3,603,540

Construction & Engineering - 2.6%
EMCOR Group, Inc.		39,285		3,211,548
MasTec Inc. (a)		41,485		2,030,691

				5,242,239

Construction Materials - 1.6%
Summit Materials, Inc. - Class A (a)		104,294		3,279,003

Consumer Finance - 2.6%
First Cash Financial Services, Inc.		76,425		5,154,866


COMMON STOCKS	Shares		Value
Electronic Equipment & Instruments - 1.9%
Littelfuse, Inc.		10,505	$	2,078,099
Mesa Laboratories, Inc.		14,535		1,806,701

				3,884,800

Energy Equipment & Services - 0.3%
Mammoth Energy Services, Inc. (a)		30,000		588,900

Food & Drug Retailing - 0.6%
Sprouts Farmers Market, Inc. (a)		48,280		1,175,618

Food Products - 0.3%
Hostess Brands, Inc. (a)		47,695		706,363

Health Care Equipment & Supplies - 4.8%
Cantel Medical Corp.		37,890		3,897,744
K2M Group Holdings Inc. (a)		18,575		334,350
PRA Health Sciences, Inc. (a)		58,662		5,342,349
STAAR Surgical Company (a)		10,000		155,000

				9,729,443

Health Care Providers & Services - 3.7%
HealthEquity, Inc. (a)		56,305		2,627,191
Omnicell, Inc. (a)		54,275		2,632,338
U.S. Physical Therapy, Inc.		30,140		2,176,108

				7,435,637

Hotel, Restaurants & Leisure - 1.1%
Planet Fitness, Inc. - Class A (a)		62,410		2,161,258

Insurance - 0.7%
Trupanion, Inc. (a)		47,955		1,403,643

Internet & Catalog Retail - 1.7%
Nutrisystem, Inc.		66,005		3,471,863

Internet Software & Services - 6.4%
Carbonite Inc. (a)		46,815		1,175,056
Coupa Software Incorporated (a)		55,000		1,717,100
Euronet Worldwide, Inc. (a)		36,470		3,073,327
New Relic, Inc. (a)		77,070		4,452,334
The Trade Desk, Inc. - Class A (a)		29,750		1,360,468
Twilio Inc. - Class A (a)		45,540		1,074,744

				12,853,029

IT Consulting & Services - 1.6%
Acxiom Corporation (a)		65,871		1,815,405
FireEye, Inc. (a)		106,820		1,516,844

				3,332,249

Leisure Equipment & Products - 1.2%
Pool Corporation		18,670		2,420,566

Machinery - 5.7%
John Bean Technologies Corporation		31,250		3,462,500
Kennametal Inc.		85,760		4,151,641
Lindsay Corporation		25,815		2,276,883
Watts Water Technologies, Inc. - Class A		20,465		1,554,317

				11,445,341

The accompanying notes are an integral part of these financial statements.

LKCM SMALL CAP EQUITY FUND

SCHEDULEOF INVESTMENTS, CONTINUED

December 31, 2017


COMMON STOCKS	Shares		Value
Marine - 0.9%
Kirby Corporation (a)		26,500	$	1,770,200

Metals & Mining - 1.5%
Carpenter Technology Corporation		59,375		3,027,531

Multiline Retail - 3.3%
Five Below, Inc. (a)		23,170		1,536,634
Ollie’s Bargain Outlet Holdings, Inc. (a)		94,380		5,025,735

				6,562,369

Oil & Gas & Consumable Fuels - 3.6%
Matador Resources Company (a)		50,000		1,556,500
Oasis Petroleum Inc. (a)		150,000		1,261,500
PDC Energy, Inc. (a)		19,405		1,000,134
WPX Energy Inc. (a)		244,055		3,433,854

				7,251,988

Pharmaceuticals - 0.9%
Cambrex Corp. (a)		38,535		1,849,680

Real Estate Investment Trusts - 3.5%
First Industrial Realty Trust, Inc.		90,400		2,844,888
Life Storage, Inc.		25,000		2,226,750
Outfront Media Inc.		2,850		66,120
Stag Industrial, Inc.		72,840		1,990,717

				7,128,475

Road & Rail - 1.4%
Genesee & Wyoming Inc. - Class A (a)		36,400		2,865,772

Semiconductor Equipment & Products - 0.6%
Lattice Semiconductor Corporation (a)		5,000		28,900
Rambus Inc. (a)		76,690		1,090,532

				1,119,432

Software - 7.3%
ACI Worldwide, Inc. (a)		100,060		2,268,360
Callidus Software, Inc. (a)		50,535		1,447,828
Envestnet, Inc. (a)		71,081		3,543,388
Fair Isaac Corporation		16,220		2,484,904
Manhattan Associates, Inc. (a)		11,145		552,123
Proofpoint, Inc. (a)		24,635		2,187,834
RealPage, Inc. (a)		40,900		1,811,870
SecureWorks Corp. - Class A (a)		47,196		418,629

				14,714,936

Textiles, Apparel & Luxury Goods - 2.7%
Columbia Sportswear Company		40,996		2,946,793
Oxford Industries, Inc.		34,485		2,592,927

				5,539,720

Thrifts & Mortgage Finance - 2.9%
Banc of California, Inc.		124,125		2,563,181
Home BancShares Inc.		142,881		3,321,983

				5,885,164


COMMON STOCKS	Shares		Value
Trading Companies & Distributors - 4.3%
MSC Industrial Direct Co., Inc. - Class A		18,040	$	1,743,746
Textainer Group Holdings Limited (a) (b)		162,925		3,502,888
Triton International Limited of Bermuda (b)		88,985		3,332,488

				8,579,122

TOTAL COMMON STOCKS
(Cost $134,630,193)				201,560,754


SHORT-TERM INVESTMENTS - 0.3%
Money Market Funds - 0.3%
Invesco Short-Term Investments Trust - Government & Agency Portfolio - Institutional Shares, 1.21% (c)		579,421		579,421

TOTAL SHORT-TERM INVESTMENTS
(Cost $579,421)				579,421

Total Investments - 100.2%
(Cost $135,209,614)				202,140,175
Liabilities in Excess of Other Assets - (0.2)%				(477,695	)

TOTAL NET ASSETS - 100.0%			$	201,662,480

(a)	Non-income producing security.

(b)	Security issued by non-U.S. incorporated company.

(c)	The rate quoted is the annualized seven-day yield of the fund at period end.

Investments are classified by industry pursuant to the Global Industry Classification Standard (GICS^®), which was developed by and/or is the exclusive property of Morgan Stanley Capital International, Inc. (“MSCI”) and Standard & Poor’s Financial Services LLC (“S&P”). GICS is a service mark of MSCI and S&P and has been licensed for use by U.S. Bancorp Fund Services, LLC.

The accompanying notes are an integral part of these financial statements.

LKCM SMALL-MID CAP EQUITY FUND

SCHEDULEOF INVESTMENTS

December 31, 2017


COMMON STOCKS - 100.0%	Shares		Value
Aerospace & Defense - 3.6%
HEICO Corporation		3,878	$	365,889
Mercury Systems, Inc. (a)		6,310		324,019

				689,908

Banks - 6.2%
LegacyTexas Financial Group, Inc.		8,370		353,298
Pinnacle Financial Partners, Inc.		4,475		296,692
SVB Financial Group (a)		2,340		547,022

				1,197,012

Biotechnology - 1.9%
Charles River Laboratories International, Inc. (a)		3,430		375,413

Building Products - 3.5%
Builders FirstSource, Inc. (a)		18,115		394,726
Fortune Brands Home & Security Inc.		4,135		282,999

				677,725

Capital Markets - 3.9%
Lazard Ltd - Class A (b)		7,660		402,150
SEI Investments Company		5,040		362,174

				764,324

Chemicals - 7.3%
CF Industries Holdings, Inc.		8,775		373,288
FMC Corporation		7,380		698,591
Ferroglobe PLC (a) (b)		21,295		344,979

				1,416,858

Commercial Services & Supplies - 1.7%
Healthcare Services Group, Inc.		6,074		320,221

Consumer Finance - 3.3%
First Cash Financial Services, Inc.		9,350		630,658

Diversified Financials - 2.4%
MSCI Inc.		3,620		458,075

Electronic Equipment & Instruments - 6.6%
FLIR Systems, Inc.		7,500		349,650
Littelfuse, Inc.		1,710		338,272
Trimble Navigation Limited (a)		14,550		591,312

				1,279,234

Food Products - 1.5%
Snyder’s-Lance, Inc.		5,690		284,955

Health Care Equipment & Supplies - 5.6%
Cantel Medical Corp.		4,070		418,681
PRA Health Sciences, Inc. (a)		7,295		664,356

				1,083,037

Health Care Providers & Services - 1.4%
HealthEquity, Inc. (a)		5,725		267,129

Internet & Catalog Retail - 2.1%
Nutrisystem, Inc.		7,800		410,280


COMMON STOCKS	Shares		Value
Internet Software & Services - 3.2%
Akamai Technologies, Inc. (a)		5,290	$	344,062
Euronet Worldwide, Inc. (a)		3,320		279,776

				623,838

IT Consulting & Services - 1.1%
Acxiom Corporation (a)		7,500		206,700

Leisure Equipment & Products - 3.1%
Polaris Industries Inc.		2,885		357,711
Pool Corporation		1,855		240,501

				598,212

Machinery - 3.7%
John Bean Technologies Corporation		3,325		368,410
Kennametal Inc.		7,375		357,024

				725,434

Marine - 1.1%
Kirby Corporation (a)		3,310		221,108

Metals & Mining - 1.8%
Reliance Steel & Aluminum Co.		4,080		350,023

Multiline Retail - 2.0%
Ollie’s Bargain Outlet Holdings, Inc. (a)		7,445		396,446

Oil & Gas & Consumable Fuels - 6.7%
Diamondback Energy Inc. (a)		2,685		338,981
Matador Resources Company (a)		8,640		268,963
Parsley Energy, Inc. - Class A (a)		10,175		299,552
WPX Energy Inc. (a)		28,125		395,719

				1,303,215

Real Estate Investment Trusts - 3.8%
CyrusOne Inc.		4,965		295,567
First Industrial Realty Trust, Inc.		7,405		233,035
Life Storage, Inc.		2,370		211,096

				739,698

Road & Rail - 1.9%
Genesee & Wyoming Inc. - Class A (a)		4,770		375,542

Software - 9.5%
Envestnet, Inc. (a)		6,070		302,590
Fair Isaac Corporation		2,300		352,360
Fortinet Inc. (a)		7,315		319,592
Guidewire Software Inc. (a)		4,770		354,220
Take-Two Interactive Software, Inc. (a)		4,655		511,026

				1,839,788

Specialty Retail - 1.6%
Tiffany & Co.		2,990		310,811

Textiles, Apparel & Luxury Goods - 3.5%
Columbia Sportswear Company		3,900		280,332
Michael Kors Holdings Limited (a) (b)		6,455		406,342

				686,674

Thrifts & Mortgage Finance - 1.3%
Home BancShares Inc.		10,575		245,869

The accompanying notes are an integral part of these financial statements.

LKCM SMALL-MID CAP EQUITY FUND

SCHEDULEOF INVESTMENTS, CONTINUED

December 31, 2017


COMMON STOCKS	Shares		Value
Trading Companies & Distributors - 4.7%
MSC Industrial Direct Co., Inc. - Class A		2,465	$	238,267
Triton International Limited of Bermuda (b)		8,305		311,022
Watsco, Inc.		2,065		351,133

				900,422

TOTAL COMMON STOCKS
(Cost $13,859,024)				19,378,609


SHORT-TERM INVESTMENTS - 0.3%
Money Market Funds - 0.3%
Invesco Short-Term Investments Trust - Government & Agency Portfolio - Institutional Shares, 1.21% (c)		56,384		56,384

TOTAL SHORT-TERM INVESTMENTS
(Cost $56,384)				56,384

Total Investments - 100.3%
(Cost $13,915,408)				19,434,993
Liabilities in Excess of Other Assets - (0.3)%				(56,877	)

TOTAL NET ASSETS - 100.0%			$	19,378,116

(a)	Non-income producing security.

(b)	Security issued by non-U.S. incorporated company.

(c)	The rate quoted is the annualized seven-day yield of the fund at period end.

The accompanying notes are an integral part of these financial statements.

LKCM EQUITY FUND

SCHEDULEOF INVESTMENTS

December 31, 2017


COMMON STOCKS - 94.3%	Shares		Value
Aerospace & Defense - 2.7%
Honeywell International Inc.		60,000	$	9,201,600

Banks - 9.1%
Bank of America Corporation		385,000		11,365,200
Comerica Incorporated		126,000		10,938,060
Cullen/Frost Bankers, Inc.		65,000		6,152,250
Glacier Bancorp, Inc.		60,000		2,363,400

				30,818,910

Beverages - 2.6%
The Coca-Cola Company		65,000		2,982,200
PepsiCo, Inc.		49,000		5,876,080

				8,858,280

Biotechnology - 2.0%
Amgen Inc.		40,000		6,956,000

Chemicals - 7.0%
DowDuPont Inc.		83,330		5,934,763
Ecolab Inc.		30,000		4,025,400
FMC Corporation		80,000		7,572,800
Monsanto Company		55,000		6,422,900

				23,955,863

Commercial Services & Supplies - 2.0%
Waste Connections, Inc. (b)		97,500		6,916,650

Communication Equipment - 0.7%
Alarm.com Holdings, Inc. (a)		62,000		2,340,500

Computers & Peripherals - 2.1%
Apple Inc.		42,500		7,192,275

Construction Materials - 1.3%
Martin Marietta Materials, Inc.		20,000		4,420,800

Containers & Packaging - 1.6%
Ball Corporation		140,000		5,299,000

Diversified Financials - 3.2%
JPMorgan Chase & Co.		102,000		10,907,880

Electrical Equipment & Instruments - 2.9%
Franklin Electric Co., Inc.		85,000		3,901,500
Roper Technologies, Inc.		23,000		5,957,000

				9,858,500

Electronic Equipment & Instruments - 2.9%
Littelfuse, Inc.		18,000		3,560,760
National Instruments Corporation		55,000		2,289,650
Trimble Navigation Limited (a)		100,000		4,064,000

				9,914,410

Health Care Equipment & Supplies - 6.4%
Danaher Corporation		75,000		6,961,500
PerkinElmer, Inc.		100,000		7,312,000
Thermo Fisher Scientific Inc.		40,000		7,595,200

				21,868,700

Household Durables - 1.0%
Newell Brands, Inc.		113,817		3,516,945


COMMON STOCKS	Shares		Value
Household Products - 1.8%
Kimberly-Clark Corporation		50,000	$	6,033,000

Internet & Catalog Retail - 2.8%
Amazon.com, Inc. (a)		8,000		9,355,760

Internet Software & Services - 5.7%
Akamai Technologies, Inc. (a)		90,000		5,853,600
Alphabet, Inc. - Class A (a)		7,000		7,373,800
Facebook, Inc. - Class A (a)		35,000		6,176,100

				19,403,500

IT Consulting & Services - 1.6%
PayPal Holdings, Inc. (a)		75,000		5,521,500

Machinery - 5.2%
Generac Holdings, Inc. (a)		108,000		5,348,160
The Toro Company		74,000		4,827,020
Valmont Industries, Inc.		45,000		7,463,250

				17,638,430

Marine - 0.9%
Kirby Corporation (a)		45,000		3,006,000

Media - 1.9%
Time Warner Inc.		70,000		6,402,900

Oil & Gas & Consumable Fuels - 7.4%
Cabot Oil & Gas Corporation		170,000		4,862,000
ConocoPhillips		62,000		3,403,180
EOG Resources, Inc.		65,000		7,014,150
Occidental Petroleum Corporation		100,000		7,366,000
Range Resources Corporation		140,000		2,388,400

				25,033,730

Personal Products - 1.1%
The Estee Lauder Companies Inc. - Class A		30,000		3,817,200

Pharmaceuticals - 7.1%
AbbVie Inc.		65,000		6,286,150
Johnson & Johnson		38,000		5,309,360
Merck & Co., Inc.		80,000		4,501,600
Pfizer Inc.		115,000		4,165,300
Zoetis Inc.		53,500		3,854,140

				24,116,550

Road & Rail - 1.2%
Kansas City Southern		40,000		4,208,800

Software - 4.8%
Adobe Systems Incorporated (a)		45,000		7,885,800
Microsoft Corporation		100,000		8,554,000

				16,439,800

Specialty Retail - 3.1%
The Home Depot, Inc.		40,000		7,581,200
Tiffany & Co.		30,000		3,118,500

				10,699,700

The accompanying notes are an integral part of these financial statements.

LKCM EQUITY FUND

SCHEDULEOF INVESTMENTS, CONTINUED

December 31, 2017


COMMON STOCKS	Shares		Value
Textiles, Apparel & Luxury Goods - 2.2%
V.F. Corporation		100,000	$	7,400,000

TOTAL COMMON STOCKS
(Cost $179,643,028)				321,103,183


SHORT-TERM INVESTMENTS - 5.5%
Money Market Funds - 5.5%
Invesco Short-Term Investments Trust - Government & Agency Portfolio - Institutional Shares, 1.21% (c)		18,734,415		18,734,415

TOTAL SHORT-TERM INVESTMENTS
(Cost $18,734,415)				18,734,415

Total Investments - 99.8%
(Cost $198,377,443)				339,837,598
Other Assets in Excess of Liabilities - 0.2%				763,756

TOTAL NET ASSETS - 100.0%			$	340,601,354

(a)	Non-income producing security.

(b)	Security issued by non-U.S. incorporated company.

(c)	The rate quoted is the annualized seven-day yield of the fund at period end.

The accompanying notes are an integral part of these financial statements.

LKCM BALANCED FUND

SCHEDULEOF INVESTMENTS

December 31, 2017


COMMON STOCKS - 66.9%	Shares		Value
Aerospace & Defense - 1.6%
Honeywell International Inc.		5,100	$	782,136
Rockwell Collins, Inc.		4,300		583,166

				1,365,302

Banks - 5.9%
Bank of America Corporation		38,500		1,136,520
Comerica Incorporated		10,100		876,781
Cullen/Frost Bankers, Inc.		5,900		558,435
SunTrust Banks, Inc.		11,500		742,785
Wells Fargo & Company		12,471		756,616
Zions Bancorporation		17,500		889,525

				4,960,662

Beverages - 1.8%
The Coca-Cola Company		17,600		807,488
PepsiCo, Inc.		5,800		695,536

				1,503,024

Biotechnology - 1.7%
Celgene Corporation (a)		6,700		699,212
Charles River Laboratories International, Inc. (a)		6,800		744,260

				1,443,472

Capital Markets - 1.3%
SEI Investments Company		14,500		1,041,970

Chemicals - 6.8%
Air Products and Chemicals, Inc.		5,100		836,808
DowDuPont Inc.		16,076		1,144,933
Ecolab Inc.		4,800		644,064
FMC Corporation		11,200		1,060,192
GCP Applied Technologies Inc. (a)		16,000		510,400
Monsanto Company		5,600		653,968
Praxair, Inc.		5,500		850,740

				5,701,105

Commercial Services & Supplies - 0.8%
Waste Management, Inc.		7,900		681,770

Computers & Peripherals - 1.5%
Apple Inc.		7,150		1,209,994

Construction Materials - 1.0%
Martin Marietta Materials, Inc.		3,900		862,056

Containers & Packaging - 0.4%
Ball Corporation		8,800		333,080

Diversified Financials - 2.1%
JPMorgan Chase & Co.		8,400		898,296
Moody’s Corporation		6,000		885,660

				1,783,956

Diversified Telecommunication Services - 0.9%
AT&T Inc.		8,232		320,060
Verizon Communications Inc.		8,641		457,368

				777,428


COMMON STOCKS	Shares		Value
Electronic Equipment & Instruments - 1.3%
National Instruments Corporation		7,500	$	312,225
Trimble Navigation Limited (a)		18,200		739,648

				1,051,873

Food & Drug Retailing - 1.5%
Walgreens Boots Alliance, Inc.		11,400		827,868
Wal-Mart Stores, Inc.		4,100		404,875

				1,232,743

Food Products - 1.6%
Hormel Foods Corporation		13,900		505,821
Mondelez International Inc. - Class A		19,800		847,440

				1,353,261

Health Care Equipment & Supplies - 3.7%
Danaher Corporation		9,600		891,072
Medtronic, PLC (b)		7,600		613,700
PerkinElmer, Inc.		11,600		848,192
Thermo Fisher Scientific, Inc.		3,700		702,556

				3,055,520

Household Durables - 1.4%
Newell Brands, Inc.		15,509		479,228
Whirlpool Corporation		3,900		657,696

				1,136,924

Household Products - 2.4%
Colgate-Palmolive Company		11,600		875,220
Kimberly-Clark Corporation		6,600		796,356
The Procter & Gamble Company		3,500		321,580

				1,993,156

Industrial Conglomerates - 0.3%
General Electric Company		13,700		239,065

Insurance - 0.5%
MetLife, Inc.		8,000		404,480

Internet & Catalog Retail - 1.8%
Amazon.com, Inc. (a)		700		818,629
Expedia, Inc.		5,500		658,735

				1,477,364

Internet Software & Services - 2.9%
Akamai Technologies, Inc. (a)		12,500		813,000
Alphabet, Inc. - Class A (a)		250		263,350
Alphabet, Inc. - Class C (a)		500		523,200
Facebook, Inc. - Class A (a)		4,600		811,716

				2,411,266

IT Consulting & Services - 2.6%
Alliance Data Systems Corporation		2,800		709,744
PayPal Holdings, Inc. (a)		11,400		839,268
Visa Inc. - Class A		5,600		638,512

				2,187,524

Machinery - 0.8%
Fortive Corporation		9,100		658,385

The accompanying notes are an integral part of these financial statements.

LKCM BALANCED FUND

SCHEDULEOF INVESTMENTS, CONTINUED

December 31, 2017


COMMON STOCKS	Shares		Value
Media - 2.1%
CBS Corporation - Class B		3,600	$	212,400
The Walt Disney Company		6,700		720,317
Time Warner Inc.		9,400		859,818

				1,792,535

Oil & Gas & Consumable Fuels - 5.6%
Anadarko Petroleum Corporation		9,500		509,580
Cabot Oil & Gas Corporation		23,200		663,520
Chevron Corporation		5,795		725,476
ConocoPhillips		11,400		625,746
EOG Resources, Inc.		6,000		647,460
Exxon Mobil Corporation		6,727		562,646
Pioneer Natural Resources Company		2,600		449,410
WPX Energy Inc. (a)		35,000		492,450

				4,676,288

Pharmaceuticals - 5.0%
Abbott Laboratories		16,000		913,120
AbbVie Inc.		11,000		1,063,810
Merck & Co., Inc.		8,900		500,803
Pfizer Inc.		17,100		619,362
Zoetis Inc		14,400		1,037,376

				4,134,471

Real Estate Investment Trusts - 0.5%
American Tower Corporation		3,200		456,544

Road & Rail - 0.5%
Union Pacific Corporation		3,000		402,300

Software - 4.3%
Adobe Systems Incorporated (a)		4,300		753,532
Citrix Systems, Inc. (a)		4,000		352,000
Microsoft Corporation		11,000		940,940
Oracle Corporation		15,400		728,112
RealPage, Inc. (a)		18,500		819,550

				3,594,134

Specialty Retail - 1.4%
The Home Depot, Inc.		4,300		814,979
O’Reilly Automotive, Inc. (a)		1,400		336,756

				1,151,735

Textiles, Apparel & Luxury Goods - 0.9%
NIKE, Inc. - Class B		11,600		725,580

TOTAL COMMON STOCKS
(Cost $37,811,183)				55,798,967


CORPORATE BONDS - 29.2%	Principal Amount
Aerospace & Defense - 0.3%
Rockwell Collins, Inc.
3.700%, 12/15/2023
Callable 09/15/2023	$	250,000		259,634


CORPORATE BONDS	Principal Amount		Value
Air Freight & Logistics - 1.2%
FedEx Corp.
2.700%, 04/15/2023	$	425,000	$	423,662
United Parcel Service, Inc.
2.450%, 10/01/2022		600,000		598,956

				1,022,618

Banks - 2.7%
Bank of America Corporation:
2.625%, 10/19/2020		400,000		403,521
2.625%, 04/19/2021		150,000		150,836
BB&T Corporation
2.250%, 02/01/2019
Callable 01/02/2019		115,000		115,215
Comerica Incorporated
2.125%, 05/23/2019
Callable 04/23/2019		435,000		433,371
The Bank of New York Mellon Corporation:
2.450%, 11/27/2020
Callable 10/27/2020		350,000		351,445
2.500%, 04/15/2021
Callable 03/15/2021		200,000		200,542
Wells Fargo & Company:
2.150%, 01/15/2019		200,000		200,352
2.125%, 04/22/2019		150,000		150,005
Wells Fargo Bank, National Association
1.750%, 05/24/2019		250,000		248,662

				2,253,949

Beverages - 0.5%
PepsiCo, Inc.
3.000%, 08/25/2021		415,000		424,244

Biotechnology - 1.3%
Amgen Inc.:
2.200%, 05/22/2019
Callable 04/22/2019		100,000		100,053
2.125%, 05/01/2020
Callable 04/01/2020		100,000		99,524
2.700%, 05/01/2022
Callable 03/01/2022		325,000		324,984
Celgene Corporation
3.625%, 05/15/2024
Callable 02/15/2024		250,000		257,462
Gilead Sciences, Inc.
2.050%, 04/01/2019		335,000		335,054

				1,117,077

Chemicals - 0.3%
Ecolab Inc.
2.000%, 01/14/2019		250,000		249,648

Communications Equipment - 1.0%
Cisco Systems, Inc.:
2.125%, 03/01/2019		250,000		250,324
2.200%, 02/28/2021		275,000		274,252

The accompanying notes are an integral part of these financial statements.

LKCM BALANCED FUND

SCHEDULEOF INVESTMENTS, CONTINUED

December 31, 2017


CORPORATE BONDS	Principal Amount		Value
Communications Equipment - 1.0%, Continued
QUALCOMM Incorporated
2.250%, 05/20/2020	$	350,000	$	347,421

				871,997

Computers & Peripherals - 1.0%
Apple Inc.
2.850%, 05/06/2021		500,000		508,264
International Business Machines Corporation
2.250%, 02/19/2021		350,000		349,138

				857,402

Consumer Finance - 0.4%
American Express Credit Corporation
2.600%, 09/14/2020
Callable 08/14/2020		300,000		301,632

Diversified Financials - 0.8%
JPMorgan Chase & Co.:
2.400%, 06/07/2021
Callable 05/07/2021		400,000		398,048
3.375%, 05/01/2023		225,000		228,870

				626,918

Diversified Telecommunication Services - 1.4%
AT&T Inc.
2.450%, 06/30/2020
Callable 05/30/2020		725,000		724,642
Verizon Communications Inc.:
3.000%, 11/01/2021
Callable 09/01/2021		250,000		253,013
2.450%, 11/01/2022
Callable 08/01/2022		200,000		196,266

				1,173,921

Electrical Equipment & Instruments - 1.4%
Emerson Electric Co.:
2.625%, 02/15/2023
Callable 11/15/2022		400,000		399,302
3.150%, 06/01/2025
Callable 03/01/2025		200,000		203,297
Rockwell Automation Inc.
2.050%, 03/01/2020
Callable 02/01/2020		288,000		286,122
Roper Technologies, Inc.
2.800%, 12/15/2021
Callable 11/15/2021		300,000		300,802

				1,189,523

Food & Drug Retailing - 1.9%
Costco Wholesale Corporation
2.250%, 02/15/2022		400,000		397,994
CVS Health Corporation:
2.250%, 12/05/2018
Callable 11/05/2018		175,000		175,268
2.125%, 06/01/2021
Callable 05/01/2021		400,000		390,682


CORPORATE BONDS	Principal Amount		Value
Food & Drug Retailing - 1.9%, Continued
Walgreens Boots Alliance, Inc.:
3.300%, 11/18/2021
Callable 09/18/2021	$	325,000	$	330,712
3.800%, 11/18/2024
Callable 08/18/2024		250,000		255,686

				1,550,342

Health Care Equipment & Supplies - 1.6%
Danaher Corporation
2.400%, 09/15/2020
Callable 08/15/2020		400,000		401,660
Medtronic, Inc.
2.500%, 03/15/2020		300,000		301,872
Thermo Fisher Scientific, Inc.
3.150%, 01/15/2023
Callable 10/15/2022		600,000		608,167

				1,311,699

Hotels, Restaurants & Leisure - 0.4%
McDonald’s Corporation:
2.750%, 12/09/2020
Callable 11/09/2020		200,000		202,213
3.625%, 05/20/2021		100,000		103,828

				306,041

Household Durables - 0.9%
Newell Brands, Inc.:
2.150%, 10/15/2018		400,000		400,444
3.150%, 04/01/2021
Callable 03/01/2021		350,000		354,181

				754,625

Industrial Conglomerates - 0.6%
General Electric Company
2.700%, 10/09/2022		500,000		499,568

Insurance - 0.5%
Berkshire Hathaway Inc.
2.200%, 03/15/2021
Callable 02/15/2021		425,000		423,862

Internet & Catalog Retail - 0.6%
Amazon.com, Inc.
3.300%, 12/05/2021
Callable 10/05/2021		495,000		511,630

Internet Software & Services - 0.3%
Alphabet, Inc.
3.375%, 02/25/2024		200,000		208,673

Media - 0.8%
The Walt Disney Company
2.300%, 02/12/2021		420,000		419,621
Time Warner Inc.
3.400%, 06/15/2022		250,000		255,159

				674,780

The accompanying notes are an integral part of these financial statements.

LKCM BALANCED FUND

SCHEDULEOF INVESTMENTS, CONTINUED

December 31, 2017


CORPORATE BONDS	Principal Amount		Value
Oil & Gas & Consumable Fuels - 3.9%
Chevron Corporation
2.411%, 03/03/2022
Callable 01/03/2022	$	500,000	$	499,787
ConocoPhillips Company
2.400%, 12/15/2022
Callable 09/15/2022		490,000		484,865
Enterprise Products Operating LLC
2.850%, 04/15/2021
Callable 03/15/2021		500,000		504,555
EOG Resources, Inc.:
2.450%, 04/01/2020
Callable 03/01/2020		200,000		200,677
2.625%, 03/15/2023
Callable 12/15/2022		300,000		296,916
Exxon Mobil Corporation
2.222%, 03/01/2021
Callable 02/01/2021		325,000		324,420
Kinder Morgan Energy Partners, L.P.
3.950%, 09/01/2022
Callable 06/01/2022		400,000		413,226
Occidental Petroleum Corporation
2.600%, 04/15/2022
Callable 03/15/2022		500,000		501,374

				3,225,820

Pharmaceuticals - 1.6%
Abbott Laboratories:
2.000%, 03/15/2020		250,000		248,066
3.400%, 11/30/2023
Callable 09/30/2023		350,000		356,518
AbbVie Inc.:
2.000%, 11/06/2018		134,000		133,971
2.500%, 05/14/2020
Callable 04/14/2020		425,000		426,545
Merck & Co., Inc.
2.350%, 02/10/2022		195,000		194,852

				1,359,952

Real Estate Investment Trusts - 0.6%
American Tower Corporation:
3.400%, 02/15/2019		400,000		404,643
2.800%, 06/01/2020
Callable 05/01/2020		100,000		100,679

				505,322

Road & Rail - 0.7%
Burlington Northern Santa Fe, LLC
3.000%, 03/15/2023
Callable 12/15/2022		600,000		611,681

Semiconductor Equipment & Products - 0.6%
Texas Instruments Incorporated
2.750%, 03/12/2021
Callable 02/12/2021		470,000		476,432


CORPORATE BONDS	Principal Amount		Value
Software - 1.2%
Microsoft Corporation
2.375%, 02/12/2022
Callable 01/12/2022	$	400,000	$	399,584
Oracle Corporation:
2.375%, 01/15/2019		125,000		125,541
2.800%, 07/08/2021		425,000		431,465

				956,590

Specialty Retail - 0.7%
The Home Depot, Inc.:
2.000%, 06/15/2019
Callable 05/15/2019		325,000		325,203
2.625%, 06/01/2022
Callable 05/01/2022		290,000		291,796

				616,999

TOTAL CORPORATE BONDS
(Cost $24,492,396)				24,342,579


SHORT-TERM INVESTMENT - 1.9%	Shares
Money Market Funds - 1.9%
Invesco Short-Term Investments Trust - Government & Agency Portfolio -Institutional Shares, 1.21% (c)		1,606,121		1,606,121

TOTAL SHORT-TERM INVESTMENT
(Cost $1,606,121)				1,606,121

Total Investments - 98.0%
(Cost $63,909,700)				81,747,667
Other Assets in Excess of Liabilities - 2.0%				1,682,046

TOTAL NET ASSETS - 100.0%			$	83,429,713

(a)	Non-income producing security.

(b)	Security issued by non-U.S. incorporated company.

(c)	The rate quoted is the annualized seven-day yield of the fund at period end.

The accompanying notes are an integral part of these financial statements.

LKCM FIXED INCOME FUND

SCHEDULEOF INVESTMENTS

December 31, 2017


CORPORATE BONDS - 71.8%	Principal Amount		Value
Aerospace & Defense - 0.8%
Rockwell Collins, Inc.
3.700%, 12/15/2023
Callable 09/15/2023	$	1,750,000	$	1,817,436

Air Freight & Logistics - 1.0%
FedEx Corp.
3.250%, 04/01/2026
Callable 01/01/2026		2,500,000		2,523,477

Banks - 6.5%
Bank of America Corporation:
2.728% (3 Month LIBOR USD + 1.070%), 03/22/2018 (a)		2,000,000		2,003,834
2.625%, 10/19/2020		2,600,000		2,622,885
BB&T Corporation
2.158% (3 Month LIBOR USD + 0.570%), 06/15/2020 (a)		2,000,000		2,012,135
Comerica Incorporated
2.125%, 05/23/2019
Callable 04/23/2019		1,000,000		996,256
Wells Fargo & Company:
1.993% (3 Month LIBOR USD + 0.630%), 04/23/2018 (a)		2,500,000		2,503,533
2.125%, 04/22/2019		4,000,000		4,000,138
4.125%, 08/15/2023		2,000,000		2,110,690

				16,249,471

Beverages - 1.8%
Anheuser-Busch InBev Finance Inc.
1.900%, 02/01/2019		4,537,000		4,528,794

Biotechnology - 4.1%
Amgen Inc.
2.200%, 05/22/2019
Callable 04/22/2019		5,312,000		5,314,777
Celgene Corporation
3.625%, 05/15/2024
Callable 02/15/2024		4,750,000		4,891,783

				10,206,560

Capital Markets - 2.4%
Morgan Stanley (a):
2.647% (3 Month LIBOR USD + 1.280%), 04/25/2018		2,500,000		2,508,282
2.215% (3 Month LIBOR USD + 0.850%), 01/24/2019		3,500,000		3,518,791

				6,027,073

Chemicals - 1.5%
Ecolab Inc.:
1.550%, 01/12/2018		2,725,000		2,724,714
2.375%, 08/10/2022
Callable 07/10/2022		1,000,000		989,884

				3,714,598

Communications Equipment - 0.3%
Cisco Systems, Inc.
4.950%, 02/15/2019		700,000		722,823


CORPORATE BONDS	Principal Amount		Value
Computers & Peripherals - 1.3%
Apple Inc.
2.400%, 05/03/2023	$	3,250,000	$	3,218,955

Consumer Finance - 3.4%
American Express Company:
2.036% (3 Month LIBOR USD + 0.590%), 05/22/2018 (a)		3,533,000		3,537,811
3.000%, 10/30/2024
Callable 09/29/2024		2,000,000		1,999,745
American Express Credit Corporation
2.375%, 05/26/2020
Callable 04/25/2020		3,000,000		2,997,565

				8,535,121

Consumer Services - 1.0%
The Western Union Company
3.650%, 08/22/2018		2,500,000		2,522,842

Containers & Packaging - 2.2%
Ball Corporation:
5.000%, 03/15/2022		2,000,000		2,142,500
5.250%, 07/01/2025		3,000,000		3,273,750

				5,416,250

Diversified Financials - 3.4%
JPMorgan Chase & Co.:
2.267% (3 Month LIBOR USD + 0.900%), 01/25/2018 (a)		3,000,000		3,001,464
3.375%, 05/01/2023		2,000,000		2,034,404
2.700%, 05/18/2023
Callable 03/18/2023		3,500,000		3,479,647

				8,515,515

Diversified Telecommunication Services - 6.7%
AT&T Inc.:
2.372% (3 Month LIBOR USD + 0.910%), 11/27/2018 (a)		3,000,000		3,018,319
2.375%, 11/27/2018		4,500,000		4,514,793
2.206% (3 Month LIBOR USD + 0.670%), 03/11/2019 (a)		1,500,000		1,507,810
CenturyLink, Inc.:
6.150%, 09/15/2019		1,402,000		1,454,575
5.800%, 03/15/2022		2,500,000		2,457,875
Verizon Communications Inc.:
3.324% (3 Month LIBOR USD + 1.750%), 09/14/2018 (a)		2,000,000		2,022,165
2.450%, 11/01/2022
Callable 08/01/2022		1,750,000		1,717,325

				16,692,862

Electrical Equipment & Instruments - 3.0%
Emerson Electric Co.:
2.625%, 12/01/2021
Callable 11/01/2021		950,000		958,286
3.150%, 06/01/2025
Callable 03/01/2025		5,000,000		5,082,423

The accompanying notes are an integral part of these financial statements.

LKCM FIXED INCOME FUND

SCHEDULEOF INVESTMENTS, CONTINUED

December 31, 2017


CORPORATE BONDS	Principal Amount		Value
Electrical Equipment & Instruments - 3.0%, Continued
Rockwell Automation, Inc.
2.875%, 03/01/2025
Callable 12/01/2024	$	1,440,000	$	1,421,382

				7,462,091

Food & Drug Retailing - 2.7%
CVS Health Corporation
4.125%, 05/15/2021
Callable 02/15/2021		2,000,000		2,079,559
Walgreens Boots Alliance, Inc.
3.800%, 11/18/2024
Callable 08/18/2024		4,375,000		4,474,502

				6,554,061

Health Care Equipment & Supplies - 6.3%
Danaher Corporation:
2.400%, 09/15/2020
Callable 08/15/2020		2,000,000		2,008,300
3.350%, 09/15/2025
Callable 06/15/2025		5,500,000		5,691,059
PerkinElmer, Inc.
5.000%, 11/15/2021
Callable 08/15/2021		1,094,000		1,180,451
Thermo Fisher Scientific, Inc.:
4.150%, 02/01/2024
Callable 11/01/2023		4,500,000		4,779,581
2.950%, 09/19/2026
Callable 06/19/2026		2,000,000		1,947,117

				15,606,508

Household Durables - 1.3%
Newell Brands, Inc.
3.150%, 04/01/2021
Callable 03/01/2021		3,150,000		3,187,626

Household Products - 0.4%
The Procter & Gamble Company
8.000%, 09/01/2024		775,000		1,006,456

Industrial Conglomerates - 0.4%
General Electric Company
2.100%, 12/11/2019		1,050,000		1,047,306

Internet & Catalog Retail - 2.8%
Amazon.com, Inc.:
2.600%, 12/05/2019
Callable 11/05/2019		2,000,000		2,021,311
2.500%, 11/29/2022
Callable 08/29/2022		5,000,000		5,003,173

				7,024,484

Internet Software & Services - 1.2%
Alphabet, Inc.
3.375%, 02/25/2024		2,850,000		2,973,583


CORPORATE BONDS	Principal Amount		Value
Multiline Retail - 1.9%
Family Dollar Stores, Inc.
5.000%, 02/01/2021	$	4,500,000	$	4,792,500

Oil & Gas & Consumable Fuels - 6.8%
Chevron Corporation
2.411%, 03/03/2022
Callable 01/03/2022		1,450,000		1,449,383
Enterprise Products Operating LLC:
1.650%, 05/07/2018		1,250,000		1,248,440
3.750%, 02/15/2025
Callable 11/15/2024		2,000,000		2,065,305
Kinder Morgan Energy Partners, L.P.
4.250%, 09/01/2024
Callable 06/01/2024		3,000,000		3,111,389
Occidental Petroleum Corporation
2.600%, 04/15/2022
Callable 03/15/2022		3,125,000		3,133,586
Range Resources Corporation
5.000%, 08/15/2022
Callable 05/15/2022		5,850,000		5,850,000

				16,858,103

Pharmaceuticals - 0.4%
Allergan, Inc.
1.350%, 03/15/2018		1,017,000		1,015,765

Real Estate Investment Trusts - 3.7%
American Tower Corporation:
3.400%, 02/15/2019		1,585,000		1,603,397
5.050%, 09/01/2020		1,250,000		1,326,185
3.500%, 01/31/2023		3,500,000		3,582,897
5.000%, 02/15/2024		2,500,000		2,742,049

				9,254,528

Road & Rail - 3.0%
Burlington Northern Santa Fe, LLC
3.000%, 03/15/2023
Callable 12/15/2022		3,300,000		3,364,244
Union Pacific Corporation
2.250%, 06/19/2020
Callable 05/19/2020		4,125,000		4,131,583

				7,495,827

Software & Services - 1.0%
Sabre GLBL Inc. (b)
5.375%, 04/15/2023
Callable 04/15/2018		2,500,000		2,587,500

Specialty Retail - 0.5%
O’Reilly Automotive, Inc.
4.875%, 01/14/2021
Callable 10/14/2020		1,128,000		1,198,621

TOTAL CORPORATE BONDS
(Cost $177,745,377)				178,756,736

The accompanying notes are an integral part of these financial statements.

LKCM FIXED INCOME FUND

SCHEDULEOF INVESTMENTS, CONTINUED

December 31, 2017


U.S. GOVERNMENT ISSUES - 8.6%	Principal Amount		Value
U.S. Treasury Inflation Indexed Bonds - 1.5%
0.625%, 01/15/2024	$	3,699,990	$	3,765,883

U.S. Treasury Notes - 7.1%
1.000%, 03/15/2018		1,000,000		999,318
1.000%, 08/15/2018		2,000,000		1,992,148
1.250%, 10/31/2019		2,000,000		1,977,812
2.000%, 07/31/2020		2,000,000		2,003,633
2.000%, 02/15/2023		2,000,000		1,979,844
2.000%, 02/15/2025		3,000,000		2,933,145
2.000%, 08/15/2025		2,000,000		1,950,195
1.625%, 02/15/2026		4,000,000		3,778,203

				17,614,298

TOTAL U.S. GOVERNMENT ISSUES
(Cost $21,730,785)				21,380,181


U.S. GOVERNMENT SPONSORED ENTITIES - 13.9%
Fannie Mae - 2.3%
1.500%, 07/28/2021 (c)
Callable 1/28/2018		2,000,000		1,992,206
1.000%, 10/26/2021 (c)
Callable 1/26/2018		1,040,000		1,028,135
1.500%, 05/17/2024 (c)
Callable 2/17/2018		2,800,000		2,756,709

				5,777,050

Federal Home Loan Banks - 3.9%
1.000%, 01/30/2019 (c)
Callable 01/30/2018		2,000,000		1,999,112
1.550%, 10/19/2020 (c)
Callable 10/19/2018		2,500,000		2,478,710
1.625%, 08/15/2022 (c)
Callable 02/15/2018		2,500,000		2,487,300
2.000%, 08/24/2022
Callable 08/24/2018		2,700,000		2,645,781

				9,610,903

Freddie Mac - 7.7%
1.375%, 08/25/2021 (c)
Callable 2/25/2018		1,650,000		1,619,294
1.500%, 08/25/2021 (c)
Callable 2/25/2018		1,600,000		1,557,819
2.375%, 01/13/2022		2,000,000		2,019,142
2.200%, 07/27/2022
Callable 7/25/2018		1,225,000		1,212,614
1.625%, 09/29/2022 (c)
Callable 3/29/2018		2,500,000		2,477,675
2.000%, 12/14/2022
Callable 12/14/2018		2,000,000		1,996,996
1.250%, 06/30/2023 (c)
Callable 3/30/2018		1,500,000		1,480,939
1.000%, 10/27/2023 (c)
Callable 1/27/2018		4,500,000		4,461,408


U.S. GOVERNMENT SPONSORED ENTITIES	Principal Amount		Value
Freddie Mac - 7.7%, Continued
2.000%, 05/23/2031 (c)
Callable 1/23/2018	$	2,500,000	$	2,428,845

				19,254,732

TOTAL U.S. GOVERNMENT SPONSORED ENTITIES
(Cost $35,058,580)				34,642,685


SHORT-TERM INVESTMENTS - 5.0%
Corporate Bonds - 4.1%
AbbVie Inc.
1.800%, 05/14/2018		1,500,000		1,499,402
Bank of America Corporation
2.050%, 12/07/2018		5,000,000		4,999,255
Enterprise Products Operating LLC
1.650%, 05/07/2018		370,000		369,538
Roper Technologies, Inc.
2.050%, 10/01/2018		1,250,000		1,250,098
Thermo Fisher Scientific, Inc.
2.150%, 12/14/2018		2,000,000		2,003,213

				10,121,506


	Shares
Money Market Funds - 0.9%
Invesco Short-Term Investments Trust - Government & Agency Portfolio - Institutional Shares, 1.21% (d)		2,340,220		2,340,220

TOTAL SHORT-TERM INVESTMENTS
(Cost $12,434,532)				12,461,726

Total Investments - 99.3%
(Cost $246,969,274)				247,241,328
Other Assets in Excess of Liabilities - 0.7%				1,734,476

TOTAL NET ASSETS - 100.0%			$	248,975,804

(a)	Floating rate.

(b)	Rule 144A security. Resale to the public may require registration or may extend only to qualified institutional buyers. The fair market value of the Rule 144A securities was $2,587,500 representing 1.0% of the Fund’s total net assets.

(c)	Step-up bond that pays an initial coupon rate for the first period and then a higher coupon rate for the following periods. Rate as of period end.

(d)	The rate quoted is the annualized seven-day yield of the fund at period end.

The accompanying notes are an integral part of these financial statements.

STATEMENTOF ASSETSAND LIABILITIES

December 31, 2017


	LKCM Small Cap Equity Fund			LKCM Small-Mid Cap Equity Fund		LKCM Equity Fund			LKCM Balanced Fund		LKCM Fixed Income Fund

Assets:
Investments, at value*	$	202,140,175		$	19,434,993	$	339,837,598		$	81,747,667	$	247,241,328
Cash		105,724			—		—			8,881		9,375
Receivable for Fund shares sold		70,570			2,850		979,171			1,594,470		335,926
Dividends and interest receivable		62,888			8,367		364,050			205,201		1,714,215
Receivable for investment advisory fees (Note B)		—			1,542		—			—		—
Other assets		32,022			8,261		30,461			10,597		28,038

Total assets		202,411,379			19,456,013		341,211,280			83,566,816		249,328,882

Liabilities:
Payable for Fund shares redeemed		297,403			47,213		37,153			3,400		123,209
Payable for investment advisory fees (Note B)		338,736			—		433,381			88,552		121,432
Payable for accounting and transfer agent fees and expenses		33,957			13,802		31,797			15,206		26,280
Payable for professional fees		28,961			6,883		36,437			11,960		28,681
Payable for administrative fees		28,769			6,822		45,154			11,067		34,029
Payable for trustees’ fees		6,578			660		8,757			1,954		6,714
Payable for custody fees and expenses		3,993			1,049		5,446			1,480		4,296
Payable for distribution expense (Note B)		1,720			—		—			—		—
Accrued expenses and other liabilities		8,782			1,468		11,801			3,484		8,437

Total liabilities		748,899			77,897		609,926			137,103		353,078

Net assets	$	201,662,480		$	19,378,116	$	340,601,354		$	83,429,713	$	248,975,804

Net assets consist of:
Paid in capital	$	134,737,599		$	13,665,290	$	199,157,927		$	65,585,307	$	248,703,750
Accumulated net investment income		—			—		6,125			6,439		—
Accumulated net realized gain (loss) on investments		(5,680	)		193,241		(22,853	)		—		—
Net unrealized appreciation on investments		66,930,561			5,519,585		141,460,155			17,837,967		272,054

Net assets	$	201,662,480		$	19,378,116	$	340,601,354		$	83,429,713	$	248,975,804


INSTITUTIONAL CLASS
Net assets	$	201,138,688		$	19,378,116	$	340,601,354		$	83,429,713	$	248,975,804
Shares of beneficial interest outstanding (unlimited shares of no par value authorized)		10,909,110			1,828,651		13,091,599			3,761,634		23,313,111
Net asset value per share (offering and redemption price)	$	18.44		$	10.60	$	26.02		$	22.18	$	10.68


ADVISER CLASS**
Net assets	$	523,792
Shares of beneficial interest outstanding (unlimited shares of no par value authorized)		30,573
Net asset value per share (offering and redemption price)	$	17.13


* Cost of Investments	$	135,209,614		$	13,915,408	$	198,377,443		$	63,909,700	$	246,969,274

**	Currently, Adviser Class shares are authorized only for the Small Cap Equity, Small-Mid Cap Equity and Equity Funds and are offered only by the Small Cap Equity Fund.

The accompanying notes are an integral part of these financial statements.

STATEMENTOF OPERATIONS

For the Year Ended December 31, 2017


	LKCM Small Cap Equity Fund			LKCM Small-Mid Cap Equity Fund			LKCM Equity Fund			LKCM Balanced Fund			LKCM Fixed Income Fund

Investment Income:
Dividends*	$	1,885,401		$	160,437		$	4,596,310		$	789,250		$	31
Interest		21,122			3,995			110,348			507,460			5,890,718

Total income		1,906,523			164,432			4,706,658			1,296,710			5,890,749


Expenses:
Investment advisory fees (Note B)		1,742,893			150,338			2,219,100			482,451			1,196,135
Distribution expense – Adviser Class (Note B)		2,580			—			—			—			—
Accounting and transfer agent fees and expenses		226,049			84,359			234,511			98,016			190,992
Administrative fees		183,328			39,834			257,020			62,077			193,029
Trustees’ fees		95,835			13,758			78,301			16,293			60,784
Professional fees		90,406			11,834			116,884			30,946			89,382
Federal and state registration		65,754			34,746			48,885			23,194			47,100
Custody fees and expenses		32,366			6,609			32,646			8,493			24,884
Reports to shareholders		18,420			2,531			20,444			6,245			14,003
Other		100,985			9,321			128,451			30,272			95,095

Total expenses		2,558,616			353,330			3,136,242			757,987			1,911,404
Less, expense waiver and/or reimbursement (Note B)		(232,179	)		(152,879	)		(600,128	)		(164,201	)		(715,269	)

Net expenses		2,326,437			200,451			2,536,114			593,786			1,196,135

Net investment income (loss)		(419,914	)		(36,019	)		2,170,544			702,924			4,694,614


Realized and Unrealized Gain (Loss) on Investments:
Net realized gain on investments		41,104,589			2,497,041			13,289,318			2,549,252			231,170
Net change in unrealized appreciation/depreciation on investments		(4,585,084	)		1,824,006			46,722,416			5,751,978			144,349


Net realized and unrealized gain on investments		36,519,505			4,321,047			60,011,734			8,301,230			375,519


Net Increase in Net Assets Resulting from Operations	$	36,099,591		$	4,285,028		$	62,182,278		$	9,004,154		$	5,070,133


* Net of foreign taxes withheld	$	—		$	—		$	7,313		$	—		$	—

The accompanying notes are an integral part of these financial statements.

STATEMENTSOF CHANGESIN NET ASSETS


	LKCM Small Cap Equity Fund						LKCM Small-Mid Cap Equity Fund

	Year Ended December 31, 2017			Year Ended December 31, 2016			Year Ended December 31, 2017			Year Ended December 31, 2016
Operations:
Net investment loss	$	(419,914	)	$	(598,113	)	$	(36,019	)	$	(334,381	)
Net realized gain on investments		41,104,589			70,583,659			2,497,041			11,090,117
Net change in unrealized appreciation/depreciation on investments		(4,585,084	)		(39,738,947	)		1,824,006			(46,140,964	)

Net increase (decrease) in net assets resulting from operations		36,099,591			30,246,599			4,285,028			(35,385,228	)


Dividends and Distributions to Institutional Class Shareholders:
Net realized gain on investments		(33,953,609	)		(38,274,319	)		(2,141,026	)		(3,253,405	)


Dividends and Distributions to Adviser Class Shareholders:
Net realized gain on investments		(91,957	)		(394,215	)


Net decrease in net assets resulting from Fund share transactions (Note C)		(83,606,173	)		(285,382,856	)		(3,184,769	)		(272,896,350	)


Total decrease in net assets		(81,552,148	)		(293,804,791	)		(1,040,767	)		(311,534,983	)

Net Assets:
Beginning of period		283,214,628			577,019,419			20,418,883			331,953,866

End of period*	$	201,662,480		$	283,214,628		$	19,378,116		$	20,418,883

The accompanying notes are an integral part of these financial statements.

STATEMENTSOF CHANGESIN NET ASSETS


	LKCM Equity Fund						LKCM Balanced Fund

	Year Ended December 31, 2017			Year Ended December 31, 2016			Year Ended December 31, 2017			Year Ended December 31, 2016
Operations:
Net investment income	$	2,170,544		$	2,366,551		$	702,924		$	480,955
Net realized gain on investments		13,289,318			17,224,785			2,549,252			2,620,580
Net change in unrealized appreciation/depreciation on investments		46,722,416			9,232,988			5,751,978			1,723,988

Net increase in net assets resulting from operations		62,182,278			28,824,324			9,004,154			4,825,523


Dividends and Distributions to Shareholders:
Net investment income		(2,175,595	)		(2,355,272	)		(700,479	)		(477,045	)
Net realized gain on investments		(13,688,012	)		(15,387,855	)		(2,524,332	)		(2,493,726	)

		(15,863,607	)		(17,743,127	)		(3,224,811	)		(2,970,771	)


Net increase (decrease) in net assets resulting from from Fund share transactions (Note C)		7,774,360			(5,772,597	)		14,458,317			22,184,169


Total increase in net assets		54,093,031			5,308,600			20,237,660			24,038,921

Net Assets:
Beginning of period		286,508,323			281,199,723			63,192,053			39,153,132

End of period*	$	340,601,354		$	286,508,323		$	83,429,713		$	63,192,053


* Including accumulated net investment income of	$	6,125		$	11,279		$	6,439		$	3,994

The accompanying notes are an integral part of these financial statements.

STATEMENTSOF CHANGESIN NET ASSETS


	LKCM Fixed Income Fund

	Year Ended December 31, 2017			Year Ended December 31, 2016
Operations:
Net investment income	$	4,694,614		$	4,580,895
Net realized gain on investments		231,170			332,465
Net change in unrealized appreciation/depreciation on investments		144,349			2,637,335

Net increase in net assets resulting from operations		5,070,133			7,550,695


Dividends and Distributions to Shareholders:
Net investment income		(4,704,142	)		(4,585,763	)
Net realized gain on investments		(239,922	)		(93,558	)

		(4,944,064	)		(4,679,321	)


Net increase in net assets resulting from Fund share transactions (Note C)		21,987,467			25,150,031


Total increase in net assets		22,113,536			28,021,405

Net Assets:
Beginning of period		226,862,268			198,840,863

End of period*	$	248,975,804		$	226,862,268

The accompanying notes are an integral part of these financial statements.

FINANCIAL HIGHLIGHTS

SELECTED DATAFOR EACH SHAREOF CAPITAL STOCK OUTSTANDING


	LKCM Small Cap Equity Fund – Institutional Class

	Year Ended December 31, 2017			Year Ended December 31, 2016			Year Ended December 31, 2015			Year Ended December 31, 2014			Year Ended December 31, 2013
Net Asset Value – Beginning of Period	$	18.82		$	19.86		$	24.05		$	28.33		$	22.69

Net investment income (loss)		(0.04	)⁽¹⁾		(0.03	)⁽¹⁾		0.01			(0.06	)⁽¹⁾		(0.06	)⁽²⁾
Net realized and unrealized gain (loss) on investments		3.27			1.88			(1.29	)		(0.77	)		8.02

Total from investment operations		3.23			1.85			(1.28	)		(0.83	)		7.96

Dividends from net investment income		—			—			(0.01	)		—			—
Distributions from net realized gains		(3.61	)		(2.89	)		(2.90	)		(3.45	)		(2.32	)

Total dividends and distributions		(3.61	)		(2.89	)		(2.91	)		(3.45	)		(2.32	)

Net Asset Value – End of Period	$	18.44		$	18.82		$	19.86		$	24.05		$	28.33

Total Return		17.04%			9.27%			-5.58%			-3.11%			35.11%

Ratios and Supplemental Data:
Net assets, end of period (thousands)	$	201,139		$	281,790		$	568,421		$	840,631		$	1,047,607
Ratio of expenses to average net assets:
Before expense waiver and/or reimbursement		1.10%			1.05%	⁽⁴⁾		0.97%			0.94%			0.95%
After expense waiver and/or reimbursement		1.00%			1.00%			0.97%			0.94%			0.95%
Ratio of net investment income (loss) to average net assets:
Before expense waiver and/or reimbursement		(0.28)%			(0.18)%	⁽⁴⁾		0.05%			(0.21)%			(0.23)%
After expense waiver and/or reimbursement		(0.18)%			(0.13)%			0.05%			(0.21)%			(0.23)%
Portfolio turnover rate⁽³⁾		42%			50%			62%			60%			47%

⁽¹⁾	Net investment income (loss) per share represents net investment income (loss) divided by the average shares outstanding throughout the period.

⁽²⁾	Net investment loss per share is calculated using the ending balance of undistributed net investment loss prior to considerations of adjustments for permanent book and tax differences.

⁽³⁾	Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.

⁽⁴⁾

The ratio has been adjusted from the previously reported amount of 0.95% for the ratio of expenses to average net assets before expense waiver and/or reimbursement and (0.08%) for the ratio of net investment income (loss) to average net assets before expense waiver and/or reimbursement due to an immaterial error.


	LKCM Small Cap Equity Fund – Adviser Class

	Year Ended December 31, 2017			Year Ended December 31, 2016			Year Ended December 31, 2015			Year Ended December 31, 2014			Year Ended December 31, 2013
Net Asset Value – Beginning of Period	$	17.76		$	18.93		$	23.11		$	27.43		$	22.07

Net investment loss		(0.08	)⁽¹⁾		(0.07	)⁽¹⁾		(0.05	)		(0.12	)⁽¹⁾		(0.13	)⁽²⁾
Net realized and unrealized gain (loss) on investments		3.06			1.79			(1.23	)		(0.75	)		7.81

Total from investment operations		2.98			1.72			(1.28	)		(0.87	)		7.68

Distributions from net realized gains		(3.61	)		(2.89	)		(2.90	)		(3.45	)		(2.32	)

Net Asset Value – End of Period	$	17.13		$	17.76		$	18.93		$	23.11		$	27.43

Total Return		16.70%			8.99%			-5.81%			-3.35%			34.81%

Ratios and Supplemental Data:
Net assets, end of period (thousands)	$	524		$	1,425		$	8,598		$	14,665		$	41,153
Ratio of expenses to average net assets:
Before expense waiver and/or reimbursement		1.35%			1.30%	⁽⁴⁾		1.22%			1.19%			1.20%
After expense waiver and/or reimbursement		1.25%			1.25%			1.22%			1.19%			1.20%
Ratio of net investment loss to average net assets:
Before expense waiver and/or reimbursement		(0.53)%			(0.43)%	⁽⁴⁾		(0.20)%			(0.46)%			(0.48)%
After expense waiver and/or reimbursement		(0.43)%			(0.38)%			(0.20)%			(0.46)%			(0.48)%
Portfolio turnover rate⁽³⁾		42%			50%			62%			60%			47%

⁽¹⁾	Net investment loss per share represents net investment income (loss) divided by the average shares outstanding throughout the period.

⁽²⁾	Net investment loss per share is calculated using the ending balance of undistributed net investment loss prior to considerations of adjustments for permanent book and tax differences.

⁽³⁾	Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued.

⁽⁴⁾

The ratio has been adjusted from the previously reported amount of 1.20% for the ratio of expenses to average net assets before expense waiver and/or reimbursement and (0.33%) for the ratio of net investment income (loss) to average net assets before expense waiver and/or reimbursement due to an immaterial error.

The accompanying notes are an integral part of these financial statements.

FINANCIAL HIGHLIGHTS

SELECTED DATAFOR EACH SHAREOF CAPITAL STOCK OUTSTANDING


	LKCM Small-Mid Cap Equity Fund

	Year Ended December 31, 2017			Year Ended December 31, 2016			Year Ended December 31, 2015			Year Ended December 31, 2014			Year Ended December 31, 2013
Net Asset Value – Beginning of Period	$	9.56		$	11.15		$	12.10		$	12.97		$	9.68

Net investment loss		(0.01	)⁽¹⁾		(0.05	)⁽¹⁾		(0.06	)⁽²⁾		(0.08	)⁽¹⁾		(0.06	)⁽²⁾
Net realized and unrealized gain (loss) on investments		2.32			0.19			(0.10	)		(0.48	)		3.35

Total from investment operations		2.31			0.14			(0.16	)		(0.56	)		3.29

Distributions from net realized gains		(1.27	)		(1.73	)		(0.79	)		(0.31	)		—

Net Asset Value – End of Period	$	10.60		$	9.56		$	11.15		$	12.10		$	12.97

Total Return		24.13%			1.17%			-1.41%			-4.39%			33.99%

Ratios and Supplemental Data:
Net assets, end of period (thousands)	$	19,378		$	20,419		$	331,954		$	391,668		$	366,423
Ratio of expenses to average net assets:
Before expense waiver and/or reimbursement		1.76%			1.23%			1.14%			1.20%			1.18%
After expense waiver and/or reimbursement		1.00%			1.00%			1.00%			1.00%			1.00%
Ratio of net investment loss to average net assets:
Before expense waiver and/or reimbursement		(0.94)%			(0.68)%			(0.63)%			(0.82)%			(0.77)%
After expense waiver and/or reimbursement		(0.18)%			(0.45)%			(0.49)%			(0.62)%			(0.59)%
Portfolio turnover rate		63%			80%			70%			72%			49%

⁽¹⁾	Net investment loss per share represents net investment loss divided by the average shares outstanding throughout the period.

⁽²⁾	Net investment loss per share is calculated using the ending balance of undistributed net investment loss prior to considerations of adjustments for permanent book and tax differences.


	LKCM Equity Fund

	Year Ended December 31, 2017			Year Ended December 31, 2016			Year Ended December 31, 2015			Year Ended December 31, 2014			Year Ended December 31, 2013⁽¹⁾
Net Asset Value – Beginning of Period	$	22.42		$	21.40		$	22.81		$	22.44		$	17.62

Net investment income		0.17			0.19	⁽²⁾		0.18	⁽²⁾		0.17	⁽³⁾		0.14	⁽²⁾
Net realized and unrealized gain (loss) on investments		4.69			2.32			(0.98	)		1.28			5.27

Total from investment operations		4.86			2.51			(0.80	)		1.45			5.41

Dividends from net investment income		(0.17	)		(0.20	)		(0.20	)		(0.16	)		(0.12	)
Distributions from net realized gains		(1.09	)		(1.29	)		(0.41	)		(0.92	)		(0.47	)

Total dividends and distributions		(1.26	)		(1.49	)		(0.61	)		(1.08	)		(0.59	)

Net Asset Value – End of Period	$	26.02		$	22.42		$	21.40		$	22.81		$	22.44

Total Return		21.69%			11.66%			-3.54%			6.40%			30.74%

Ratios and Supplemental Data:
Net assets, end of period (thousands)	$	340,601		$	286,508		$	281,200		$	333,692		$	323,932
Ratio of expenses to average net assets:
Before expense waiver and/or reimbursement		0.99%			0.98%			0.93%			0.92%			0.93%
After expense waiver and/or reimbursement		0.80%			0.80%			0.80%			0.80%			0.80%
Ratio of net investment income to average net assets:
Before expense waiver and/or reimbursement		0.50%			0.69%			0.68%			0.59%			0.53%
After expense waiver and/or reimbursement		0.69%			0.87%			0.81%			0.71%			0.66%
Portfolio turnover rate		11%			16%			13%			14%			17%

⁽¹⁾	On May 10, 2013, the Armstrong Fund was reorganized into the LKCM Equity Fund. Activity after May 10, 2013 reflects the Funds’ combined operations.

⁽²⁾	Net investment income per share represents net investment income divided by the average shares outstanding throughout the period.

⁽³⁾	Net investment income per share is calculated using the ending balance of undistributed net investment income prior to considerations of adjustments for permanent book and tax differences.

The accompanying notes are an integral part of these financial statements.

FINANCIAL HIGHLIGHTS

SELECTED DATAFOR EACH SHAREOF CAPITAL STOCK OUTSTANDING


	LKCM Balanced Fund

	Year Ended December 31, 2017			Year Ended December 31, 2016			Year Ended December 31, 2015			Year Ended December 31, 2014			Year Ended December 31, 2013
Net Asset Value – Beginning of Period	$	20.46		$	19.60		$	20.10		$	19.63		$	16.11

Net investment income		0.20			0.20	⁽¹⁾		0.19			0.24			0.17
Net realized and unrealized gain (loss) on investments		2.43			1.69			(0.00	)⁽²⁾		0.94			3.55

Total from investment operations		2.63			1.89			0.19			1.18			3.72

Dividends from net investment income		(0.20	)		(0.18	)		(0.19	)		(0.24	)		(0.17	)
Distributions from net realized gains		(0.71	)		(0.85	)		(0.50	)		(0.47	)		(0.03	)

Total dividends and distributions		(0.91	)		(1.03	)		(0.69	)		(0.71	)		(0.20	)

Net Asset Value – End of Period	$	22.18		$	20.46		$	19.60		$	20.10		$	19.63

Total Return		12.88%			9.70%			0.91%			5.99%			23.18%

Ratios and Supplemental Data:
Net assets, end of period (thousands)	$	83,430		$	63,192		$	39,153		$	37,028		$	35,332
Ratio of expenses to average net assets:
Before expense waiver and/or reimbursement		1.02%			1.03%			1.02%			0.99%			1.04%
After expense waiver and/or reimbursement		0.80%			0.80%			0.80%			0.80%			0.80%
Ratio of net investment income to average net assets:
Before expense waiver and/or reimbursement		0.73%			0.73%			0.73%			1.02%			0.72%
After expense waiver and/or reimbursement		0.95%			0.96%			0.95%			1.21%			0.96%
Portfolio turnover rate		15%			16%			16%			20%			10%

⁽¹⁾	Net investment income per share represents net investment income divided by the average shares outstanding throughout the period.

⁽²⁾	Less than $(0.005).


	LKCM Fixed Income Fund

	Year Ended December 31, 2017			Year Ended December 31, 2016			Year Ended December 31, 2015			Year Ended December 31, 2014			Year Ended December 31, 2013
Net Asset Value – Beginning of Period	$	10.67		$	10.50		$	10.82		$	10.91		$	11.23

Net investment income		0.21			0.23			0.25	⁽¹⁾		0.22			0.27
Net realized and unrealized gain (loss) on investments		0.02			0.17			(0.28	)		(0.03	)		(0.26	)

Total from investment operations		0.23			0.40			(0.03	)		0.19			0.01

Dividends from net investment income		(0.21	)		(0.23	)		(0.26	)		(0.22	)		(0.27	)
Distributions from net realized gains		(0.01	)		(0.00	)⁽²⁾		(0.03	)		(0.06	)		(0.06	)

Total dividends and distributions		(0.22	)		(0.23	)		(0.29	)		(0.28	)		(0.33	)

Net Asset Value – End of Period	$	10.68		$	10.67		$	10.50		$	10.82		$	10.91

Total Return		2.15%			3.83%			-0.27%			1.72%			0.07%

Ratios and Supplemental Data:
Net assets, end of period (thousands)	$	248,976		$	226,862		$	198,841		$	222,704		$	221,104
Ratio of expenses to average net assets:
Before expense waiver and/or reimbursement		0.80%			0.78%			0.73%	⁽³⁾		0.70%			0.72%
After expense waiver and/or reimbursement		0.50%			0.50%			0.56%	⁽³⁾		0.65%			0.65%
Ratio of net investment income to average net assets:
Before expense waiver and/or reimbursement		1.66%			1.86%			2.18%	⁽³⁾		1.92%			2.34%
After expense waiver and/or reimbursement		1.96%			2.14%			2.35%	⁽³⁾		1.97%			2.41%
Portfolio turnover rate		28%			59%			29%			46%			30%

⁽¹⁾	Net investment income per share represents net investment income divided by the average shares outstanding during the period.

⁽²⁾	Less than $(0.005).

⁽³⁾	Effective May 22, 2015, the Adviser contractually agreed to lower the expense cap for the Fund from 0.65% to 0.50% of the Fund’s average daily net assets.

The accompanying notes are an integral part of these financial statements.

LKCM FUNDS

NOTESTOTHE FINANCIAL STATEMENTS

A. Organization and Significant Accounting Policies: LKCM Funds (the “Trust”) is registered under the Investment Company Act of 1940 (“1940 Act”) as an open-end, management investment company. The Trust was organized as a Delaware statutory trust on February 10, 1994 and consist of six diversified series as of December 31, 2017, five of which are presented herein and include the LKCM Small Cap Equity Fund, LKCM Small-Mid Cap Equity Fund, LKCM Equity Fund, LKCM Balanced Fund and LKCM Fixed Income Fund (collectively, the “Funds”). The assets of the Funds are invested in separate, independently managed portfolios. Investment operations of the Funds began on July 14, 1994 (LKCM Small Cap Equity Fund—Institutional Class Shares), January 3, 1996 (LKCM Equity Fund—Institutional Class Shares), December 30, 1997 (LKCM Balanced Fund and LKCM Fixed Income Fund), and May 2, 2011 (LKCM Small-Mid Cap Equity Fund—Institutional and Adviser Class Shares). The LKCM Small Cap Equity Fund and the LKCM Equity Fund created a second class of shares, Adviser Class Shares, and renamed the initial class as Institutional Class Shares on May 1, 2003. The LKCM Small Cap Equity Fund—Adviser Class Shares were initially sold on June 5, 2003 and are subject to expenses pursuant to the Rule 12b-1 plan described in Note B. The Adviser Class Shares of the LKCM Equity Fund and LKCM Small-Mid Cap Equity Fund have not yet commenced operations. Each Fund charges a 1% redemption fee for redemptions on Fund shares held for less than 30 days, unless otherwise determined by a Fund in its discretion.

The LKCM Small Cap Equity Fund seeks to maximize long-term capital appreciation by investing under normal circumstances at least 80% of its net assets (plus any borrowings for investment purposes) in equity securities of smaller companies (those with market capitalizations at the time of investment between $600 million and $4.5 billion) which Luther King Capital Management Corporation (the “Adviser”) believes are likely to have above-average growth in revenue and/or earnings and potential for above-average capital appreciation. The LKCM Small-Mid Cap Equity Fund seeks to maximize long-term capital appreciation by investing under normal circumstances at least 80% of its net assets (plus any borrowings for investment purposes) in equity securities of small-mid capitalization companies (those with market capitalizations at the time of investment between $1.25 billion and $10 billion) which the Adviser believes are likely to have above-average growth in revenue and/or earnings and potential for above average capital appreciation. The LKCM Equity Fund seeks to maximize long-term capital appreciation by investing under normal circumstances at least 80% of its net assets (plus any borrowings for investment purposes) in equity securities of companies which the Adviser believes are likely to have above-average growth in revenue and/or earnings, above-average returns on shareholders’ equity, potential for above-average capital appreciation and/or companies that the Adviser believes have attractive relative valuations. The LKCM Balanced Fund seeks current income and long-term capital appreciation by investing primarily in a portfolio of equity and fixed income securities with at least 25% of the Fund’s total assets invested in fixed income securities under normal circumstances. The LKCM Fixed Income Fund seeks current income by investing under normal circumstances at least 80% of its net assets (plus any borrowings for investment purposes) in a portfolio of investment grade corporate and U.S. government fixed income securities.

The following is a summary of significant accounting policies followed by the Funds in preparation of the financial statements. The Funds are investment companies and, accordingly, follow the investment company accounting and reporting guidance of the Financial Accounting Standards Board Accounting Standards Codification Topic 946, Investment Companies.

1. Security Valuation: Equity securities listed or traded on a U.S. securities exchange for which market quotations are readily available are valued at the last quoted sale price on the exchange on which the security is primarily traded. Nasdaq Global Market securities are valued at the Nasdaq Official Closing Price (“NOCP”). Unlisted U.S. securities and listed U.S. securities not traded on a particular valuation date are valued at the mean of the most recent quoted bid and ask price on the relevant exchanges or markets. Equity securities listed on a foreign exchange for which market quotations are readily available are valued at the last quoted sales price on the exchange on which the security is primarily traded. Debt securities are normally valued at the mean of the closing bid and ask price and/or by using a combination of broker quotations or evaluated prices provided by an independent pricing service. Other assets and securities for which no market or broker quotations or evaluated prices are readily available (including restricted securities) are valued in good faith at fair value using guidelines approved by the Board of Trustees. The Board has adopted specific guidelines and procedures for valuing portfolio securities and delegated their implementation to the Adviser. The guidelines and procedures authorize the Adviser to make determinations regarding the fair value of a portfolio security and to report such determinations to the Board of Trustees. The Funds may use prices provided by independent pricing services to assist in the fair valuation of the Funds’ portfolio securities.

The Trust has adopted accounting standards which establish an authoritative definition of fair value and set out a hierarchy for measuring fair value. These standards require additional disclosures about the various inputs and valuation techniques used to develop the measurements of fair value and a discussion of changes in valuation techniques and related inputs during the period. These standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy is organized into three levels based upon the assumptions (referred to as “inputs”) used in pricing the asset or liability. These standards state that “observable inputs” reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from independent sources and “unobservable inputs” reflect an entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability. These inputs are summarized in the three broad levels listed below.


Level 1	–	Quoted unadjusted prices for identical instruments in active markets to which the Trust has access at the date of measurement.
Level 2	–	Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 2 inputs are those in markets for which there are few transactions, the prices are not current, little public information exists or instances where prices vary substantially over time or among brokered market makers.
Level 3	–	Model derived valuations in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are those inputs that reflect the Trust’s own assumptions that market participants would use to price the asset or liability based on the best available information.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. As of December 31, 2017, the Funds’ assets carried at fair value were classified as follows:


LKCM Small Cap Equity Fund
Description	Level 1		Level 2		Level 3		Total
Common Stocks	$	201,560,754	$	—	$	—	$	201,560,754
Money Market Fund		579,421		—		—		579,421

Total Investments*	$	202,140,175	$	—	$	—	$	202,140,175


LKCM Small-Mid Cap Equity Fund
Description	Level 1		Level 2		Level 3		Total
Common Stocks	$	19,378,609	$	—	$	—	$	19,378,609
Money Market Fund		56,384		—		—		56,384

Total Investments*	$	19,434,993	$	—	$	—	$	19,434,993


LKCM Equity Fund
Description	Level 1		Level 2		Level 3		Total
Common Stocks	$	321,103,183	$	—	$	—	$	321,103,183
Money Market Fund		18,734,415		—		—		18,734,415

Total Investments*	$	339,837,598	$	—	$	—	$	339,837,598


LKCM Balanced Fund
Description	Level 1		Level 2		Level 3		Total
Common Stocks	$	55,798,967	$	—	$	—	$	55,798,967
Corporate Bonds		—		24,342,579		—		24,342,579
Money Market Fund		1,606,121		—		—		1,606,121

Total Investments*	$	57,405,088	$	24,342,579	$	—	$	81,747,667


LKCM Fixed Income Fund
Description	Level 1		Level 2		Level 3		Total
Corporate Bonds	$	—	$	188,878,242	$	—	$	188,878,242
U.S. Government Sponsored Entities		—		34,642,685		—		34,642,685
U.S. Government Issues		—		21,380,181		—		21,380,181
Money Market Fund		2,340,220		—		—		2,340,220

Total Investments*	$	2,340,220	$	244,901,108	$	—	$	247,241,328

Additional information regarding the industry classifications of these investments is disclosed in the Schedule of Investments.

There were no transfers into or out of Level 1, Level 2 or Level 3 fair value measurements during the reporting period. Transfers between levels are recognized at the end of the reporting period.

2. Federal Income Taxes: The Funds have elected to be treated as “regulated investment companies” under Subchapter M of the Internal Revenue Code and each Fund intends to distribute all of its investment company net taxable income and net capital gains to shareholders. Therefore, no federal income tax provision is recorded.

3. Distributions to Shareholders: The LKCM Small Cap Equity Fund, LKCM Small-Mid Cap Equity Fund and LKCM Equity Fund generally intend to pay dividends and distribute net capital, if any, at least on an annual basis. The LKCM Balanced Fund and LKCM Fixed Income Fund generally intend to pay dividends on a quarterly basis and distribute net capital, if any, at least on an annual basis.

4. Foreign Securities: Investing in securities of foreign companies and foreign governments involves special risks and considerations not typically associated with investing in securities of U.S. issuers. These risks include devaluation of currencies and future adverse political and economic developments. Moreover, securities of many foreign companies and foreign governments and their markets may be less liquid and their prices more volatile than those of securities of comparable U.S. companies and securities of the U.S. government.

5. Expense Allocation: Expenses incurred by the Funds are allocated among the Funds based upon (i) relative average net assets, (ii) a specific identification basis as incurred, or (iii) evenly among the Funds, depending on the nature of the expense. Expenses that are directly attributable to a class of shares, such as Rule 12b-1 distribution fees, are charged to that class. For multi-class Funds, income, unrealized and realized gains/losses are generally allocated between each Fund’s classes in proportion to its respective net assets.

6. Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

7. Guarantees and Indemnifications: In the normal course of business, the Funds enter into contracts with service providers that contain general indemnification clauses. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims against the Funds that have not yet occurred. Based on experience, the Funds expect the risk of loss to be remote.

8. Security Transactions and Investment Income: Security and shareholder transactions are recorded on the trade date. Realized gains and losses on sales of investments are calculated on the identified cost basis. Dividend income and dividends and distributions to shareholders are recorded on the ex-dividend date. Withholding taxes on foreign dividends have been provided for in accordance with the Funds’ understanding of the applicable jurisdiction’s tax rules and rates. Interest income is recognized on the accrual basis. All discounts and premiums are amortized based on the effective interest method for tax and financial reporting purposes. The Funds may hold the securities of real estate investment trusts (“REITs”). Distributions from such investments may include income, capital gains and return of capital.

9. Other: Generally accepted accounting principles require that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or net asset values per share.

Accordingly, at December 31, 2017, reclassifications were recorded as follows:


	LKCM Small Cap Equity Fund			LKCM Small-Mid Cap Equity Fund			LKCM Equity Fund			LKCM Balanced Fund			LKCM Fixed Income Fund
Accumulated net investment income (loss)	$	419,914		$	36,019		$	(103	)	$	—		$	9,528
Accumulated net realized gain		(10,545,732	)		(385,171	)		(509,745	)		(75,402	)		(50,663	)
Paid in capital		10,125,818			349,152			509,848			75,402			41,135

10. Restricted and Illiquid Securities: The Funds are permitted to invest in securities that are subject to legal or contractual restrictions on resale including investments considered by the Funds to be illiquid. Restricted securities generally may be resold in transactions exempt from registration. Illiquid investments are investments that cannot be sold or disposed of within seven days in the ordinary course of business at approximately the prices at which they are valued. A security may be considered illiquid if it lacks a readily available market or if its valuation has not changed for a certain period of time. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at the current valuation may be difficult.

11. Recent Accounting Pronouncements: In October 2016, the U.S. Securities and Exchange Commission adopted new rules and amended existing rules (together, “final rules”) intended to modernize the reporting and disclosure of information by registered investment companies. In part, the final rules amend Regulation S-X and require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other amendments. The compliance date for the final rules was August 1, 2017. These updates have no impact on the Funds’ net assets or results of operations.

In March 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2017-08 which changes the amortization period for a callable debt security from the maturity date to the earliest call date. The ASU is effective for annual periods beginning after December 15, 2018, and interim periods within those annual periods. At this time, management is evaluating the implications of these changes on the financial statements.

B. Investment Advisory and Other Agreements: The Adviser serves as the investment adviser to the Funds under an Investment Advisory Agreement (the “Agreement”). The Adviser receives a fee, computed daily and payable quarterly, at the annual rates presented below as applied to each Fund’s average daily net assets. The Adviser has contractually agreed to waive all or a portion of its

management fee and/or reimburse expenses of the Funds through May 1, 2018 in order to limit each Fund’s operating expenses to the annual cap rates presented below. This expense limitation excludes interest, taxes, brokerage commissions, indirect fees and expenses relating to investments in other investment companies, including money market funds, and extraordinary expenses. For the year ended December 31, 2017, the Adviser waived the following management fees to meet its expense cap obligations:


	LKCM Small Cap Equity Fund			LKCM Small-Mid Cap Equity Fund		LKCM Equity Fund		LKCM Balanced Fund		LKCM Fixed Income Fund
Annual Management Fee Rate		0.75%			0.75%		0.70%		0.65%		0.50%
Annual Cap on Expenses		1.00%	^(Inst.)		1.00%		0.80%		0.80%		0.50%
		1.25%	^(Adviser)
Fees Waived in 2017		$232,179			$152,879		$600,128		$164,201		$715,269

U.S. Bancorp Fund Services, LLC serves as transfer agent and administrator for the Trust and serves as accounting services agent for the Trust. U.S. Bank, N.A. serves as custodian for the Funds.

Distribution services are performed pursuant to a distribution contract with Quasar Distributors, LLC, the Trust’s principal underwriter.

The Small Cap Equity Fund, Small-Mid Cap Equity Fund and Equity Fund have adopted a Rule 12b-1 plan under which the Adviser Class of each Fund may pay an annualized rate of up to 1.00% of its average daily net assets for distribution and other services. However, the Board of Trustees has currently only authorized an annualized fee of 0.25% of each Fund’s average daily net assets. For the year ended December 31, 2017, fees incurred by the Small Cap Equity Fund pursuant to the 12b-1 Plan were $2,580. The Adviser Class shares of the Equity Fund and the Small-Mid Cap Equity Fund have not yet commenced operations. The Funds have also adopted an Institutional Class Distribution Plan, under which each Fund may pay an annualized rate of up to 0.75% of its average daily net assets for distribution and other services. Currently, the Board of Trustees has not authorized payments under this plan and, as a result, the Funds currently neither accrue nor pay any fees under the plan.

C. Fund Shares: At December 31, 2017, there was an unlimited number of shares of beneficial interest, no par value, authorized. The following table summarizes the activity in shares of each Fund:


LKCM Small Cap Equity Fund
	Year Ended December 31, 2017						Year Ended December 31, 2016
	Institutional Class						Institutional Class
	Shares			Amount			Shares			Amount
Shares sold		598,963		$	11,823,528			1,612,765		$	30,288,236
Shares issued to shareholders in reinvestment of distributions		1,603,959			29,785,514			1,783,620			33,692,595
Shares redeemed		(6,263,343	)		(124,254,603	)		(17,051,055	)		(342,725,953	)
Redemption fee					405						1,460

Net decrease		(4,060,421	)	$	(82,645,156	)		(13,654,670	)	$	(278,743,662	)

Shares Outstanding:
Beginning of period		14,969,531						28,624,201

End of period		10,909,110						14,969,531


	Year Ended December 31, 2017						Year Ended December 31, 2016
	Adviser Class						Adviser Class
	Shares			Amount			Shares			Amount

Shares sold		10,948		$	201,415			23,322		$	430,731
Shares issued to shareholders in reinvestment of distributions		4,941			85,287			21,149			376,656
Shares redeemed		(65,546	)		(1,247,757	)		(418,403	)		(7,446,581	)
Redemption fee					38						—

Net decrease		(49,657	)	$	(961,017	)		(373,932	)	$	(6,639,194	)

Shares Outstanding:
Beginning of period		80,230						454,162

End of period		30,573						80,230

Total Net Decrease				$	(83,606,173	)				$	(285,382,856	)


LKCM Small-Mid Cap Equity Fund
	Year Ended December 31, 2017						Year Ended December 31, 2016
	Shares			Amount			Shares			Amount
Shares sold		41,018		$	419,890			824,429		$	8,405,928
Shares issued to shareholders in reinvestment of distributions		191,420			2,038,623			315,244			3,026,346
Shares redeemed		(538,797	)		(5,643,282	)		(28,784,437	)		(284,328,924	)
Redemption fee					—						300

Net decrease		(306,359	)	$	(3,184,769	)		(27,644,764	)	$	(272,896,350	)

Shares Outstanding:
Beginning of period		2,135,010						29,779,774

End of period		1,828,651						2,135,010


LKCM Equity Fund
	Year Ended December 31, 2017						Year Ended December 31, 2016
	Shares			Amount			Shares			Amount
Shares sold		1,035,601		$	24,847,728			873,854		$	19,663,219
Shares issued to shareholders in reinvestment of distributions		591,475			15,455,230			764,353			17,205,579
Shares redeemed		(1,315,094	)		(32,528,607	)		(1,999,145	)		(42,641,469	)
Redemption fee					9						74

Net increase (decrease)		311,982		$	7,774,360			(360,938	)	$	(5,772,597	)

Shares Outstanding:
Beginning of period		12,779,617						13,140,555

End of period		13,091,599						12,779,617


LKCM Balanced Fund
	Year Ended December 31, 2017						Year Ended December 31, 2016
	Shares			Amount			Shares			Amount
Shares sold		813,071		$	17,440,089			1,299,893		$	26,392,805
Shares issued to shareholders in reinvestment of distributions		140,839			3,117,892			139,950			2,865,400
Shares redeemed		(281,572	)		(6,099,690	)		(348,607	)		(7,074,136	)
Redemption fee					26						100

Net increase		672,338		$	14,458,317			1,091,236		$	22,184,169

Shares Outstanding:
Beginning of period		3,089,296						1,998,060

End of period		3,761,634						3,089,296


LKCM Fixed Income Fund
	Year Ended December 31, 2017						Year Ended December 31, 2016
	Shares			Amount			Shares			Amount
Shares sold		3,874,860		$	41,668,069			3,283,450		$	35,330,302
Shares issued to shareholders in reinvestment of distributions		444,230			4,756,374			405,849			4,366,386
Shares redeemed		(2,276,905	)		(24,437,044	)		(1,350,992	)		(14,546,657	)
Redemption fee					68						—

Net increase		2,042,185		$	21,987,467			2,338,307		$	25,150,031

Shares Outstanding:
Beginning of period		21,270,926						18,932,619

End of period		23,313,111						21,270,926

D. Security Transactions: Purchases and sales of investment securities, other than short-term investments, for the year ended December 31, 2017 were as follows:


	Purchases				Sales
	U.S. Government		Other		U.S. Government		Other
LKCM Small Cap Equity Fund	$	—	$	96,564,321	$	—	$	214,989,216
LKCM Small-Mid Cap Equity Fund		—		12,255,095		—		17,573,270
LKCM Equity Fund		—		31,824,768		—		45,347,224
LKCM Balanced Fund		—		21,279,050		—		10,562,678
LKCM Fixed Income Fund		29,684,114		58,179,971		39,606,947		25,281,092

E. Tax Information: At December 31, 2017, the components of accumulated earnings (losses) on a tax basis were as follows:


	LKCM Small Cap Equity Fund			LKCM Small-Mid Cap Equity Fund			LKCM Equity Fund			LKCM Balanced Fund			LKCM Fixed Income Fund
Cost of Investments	$	135,215,294		$	13,915,408		$	198,377,443		$	63,909,700		$	246,969,274

Gross Unrealized Appreciation	$	67,581,337		$	5,524,827		$	143,554,392		$	18,605,086		$	1,983,819
Gross Unrealized Depreciation		(656,456	)		(5,242	)		(2,094,237	)		(767,119	)		(1,711,765	)

Net Unrealized Appreciation	$	66,924,881		$	5,519,585		$	141,460,155		$	17,837,967		$	272,054

Undistributed Ordinary Income		—			—			6,125			6,439			—
Undistributed Long-Term Capital Gain		—			193,937			2,432			—			—

Total Distributable Earnings	$	—		$	193,937		$	8,557		$	6,439		$	—

Other Accumulated Losses	$	—		$	(696	)	$	(25,285	)	$	—		$	—

Total Accumulated Gains	$	66,924,881		$	5,712,826		$	141,443,427		$	17,844,406		$	272,054

The difference between book-basis and tax-basis unrealized appreciation, if any, is attributable primarily to the tax deferral of losses on wash sales.

To the extent the Funds realize future net capital gains, taxable distributions will be reduced by any unused capital loss carryforwards as permitted by the Internal Revenue Code. The Funds currently have no capital loss carryforwards.

At December 31, 2017, the LKCM Equity Fund deferred, on a tax basis, post-October capital losses of $25,285.

The tax components of dividends paid during the periods shown below were as follows:


	Year Ended December 31, 2017				Year Ended December 31, 2016
	Ordinary Income		Long-Term Capital Gains		Ordinary Income		Long-Term Capital Gains
LKCM Small Cap Equity Fund	$	424,898	$	33,620,668	$	—	$	38,668,534
LKCM Small-Mid Cap Equity Fund		—		2,141,026		—		3,253,405
LKCM Equity Fund		2,564,467		13,299,140		2,355,272		15,387,855
LKCM Balanced Fund		700,479		2,524,332		477,045		2,493,726
LKCM Fixed Income Fund		4,758,543		185,521		4,624,444		54,877

The Funds designated as long-term capital gain dividend, pursuant to Internal Revenue Code Section 852(b)(3), the amount necessary to reduce earnings and profits of the Funds related to net capital gain to zero for the tax years ended December 31, 2017 and 2016. The Funds designated earnings and profits distributed to shareholders upon the redemption of shares during 2017 and 2016 in determining undistributed net capital gains as of December 31, 2017 and 2016.

The Trust has adopted financial reporting rules regarding recognition and measurement of tax positions taken or expected to be taken on a tax return. The Trust has reviewed all open tax years and major jurisdictions and concluded that there is no impact on the Funds’ financial position or results of operations. Tax years that remain open to examination by major tax jurisdictions include tax years ended December 31, 2014 through December 31, 2017. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on tax returns as of December 31, 2017. The Funds are not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. If applicable, the Funds would recognize interest accrued related to unrecognized tax benefits in “interest expense” and penalties in “other expense” on the statement of operations.

F. Subsequent Events: In preparing these financial statements, the Trust has evaluated events after December 31, 2017 and determined that there were no significant subsequent events that would require adjustment to or additional disclosure in these financial statements.

REPORTOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and Board of Trustees of LKCM Funds

Opinion on the Financial Statements and Financial Highlights

We have audited the accompanying statements of assets and liabilities of LKCM Funds (the “Funds”) comprising the LKCM Small Cap Equity Fund, LKCM Equity Fund, LKCM Balanced Fund, LKCM Fixed Income Fund, and LKCM Small-Mid Cap Equity Fund, including the schedules of investments, as of December 31, 2017, 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, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of each of the portfolios constituting the LKCM Funds as of December 31, 2017, and 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 five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. 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, whether due to error or fraud. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of December 31, 2017, by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion.

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Milwaukee, Wisconsin

February 27, 2018

We have served as the auditor of one or more LKCM Funds since 2007.

LKCM FUNDS

ADDITIONAL INFORMATION

December 31, 2017

Availability of Proxy Voting Information: A description of the policies and procedures that the Funds use to determine how to vote proxies relating to their portfolio securities, as well as information regarding how the Funds voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, is available without charge, upon request, by calling toll-free 1-800-688-LKCM or on the SEC website at http://www.sec.gov.

The actual voting records relating to portfolio securities during the twelve month period ended June 30 (as filed with the SEC on Form N-PX) are available without charge, upon request, by calling the Funds toll free at 1-800-688-LKCM or by accessing the SEC’s website at www.sec.gov.

Availability of Quarterly Portfolio Schedule: The Funds are required to file complete schedules of portfolio holdings with the SEC for the first and third fiscal quarters on Form N-Q. Once filed, the Funds’ Form N-Q is available without charge upon request on the SEC’s website (http://www.sec.gov) and is also available by calling 1-800-688-LKCM. You can also review and copy the Funds’ Form N-Q by visiting the SEC’s Public Reference Room in Washington, DC (information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330).

Information about the Funds’ Trustees and Officers:

The business and affairs of the Funds are managed under the direction of the Funds’ Board of Trustees. Information pertaining to the Trustees of the Funds is set forth below. The Statement of Additional Information includes additional information about the Funds’ Trustees and officers and is available, without charge, upon request by calling 1-800-688-LKCM.


Name, Address and Age	Position(s) Held with the Trust	Term of Office & Length of Time Served⁽¹⁾	Principal Occupation During Past Five Years	Number of Portfolios in Fund Complex Overseen by Trustee	Other Directorships Held by Trustee
Disinterested Trustees:
H. Kirk Downey 301 Commerce Street Suite 1600 Fort Worth, TX 76102 Year of Birth: 1942	Chairman of the Board of Trustees Trustee	Since 2005 Since 1994	President and CEO, Texas Systems, LLC and CEO, Texas learning systems LLC since 1999 (education companies); Dean, M.J. Neeley School of Business, Texas Christian University Business School from 1987 to 1999.	6	AZZ Incorporated
Earle A. Shields, Jr. 301 Commerce Street Suite 1600 Fort Worth, TX 76102 Year of Birth: 1920	Trustee	Since 1994	Consultant; formerly Consultant for NASDAQ Corp. and Vice President, Merrill Lynch & Co., Inc.	6	None
Richard J. Howell 301 Commerce Street Suite 1600 Fort Worth, TX 76102 Year of Birth: 1942	Trustee Chairman of the Audit and Compliance Committee	Since 2005 Since 2008	CPA; Adjunct Faculty at SMU Cox School of Business from 2004 to 2009; Consulting Services, since 2002; Audit Partner, Arthur Andersen LLP from 1974 to 2002.	6	Red Robin Gourmet Burgers, Inc.
Larry J. Lockwood 301 Commerce Street Suite 1600 Fort Worth, TX 76102 Year of Birth: 1953	Trustee	Since 2013	C.R. Williams Professor of Finance, Stan Block Endowed Chair in Finance, Department of Finance, Neeley School of Business, Texas Christian University since 1994.	6	None
Interested Trustees:
J. Luther King, Jr.⁽²⁾ 301 Commerce Street Suite 1600 Fort Worth, TX 76102 Year of Birth: 1940	Trustee, President and Chief Executive Officer	Since 1994	Chairman, President and Director, Luther King Capital Management Corporation since 1979.	6	Tyler Technologies, Inc.
Steve R. Purvis⁽²⁾ 301 Commerce Street Suite 1600 Fort Worth, TX 76102 Year of Birth: 1964	Trustee Vice President	Since 2013 Since 2000	Principal, Luther King Capital Management Corporation since 2004, Vice President and Portfolio Manager Luther King Capital Management Corporation since 1996.	6	AZZ Incorporated

⁽¹⁾	Each Trustee holds office during the lifetime of the Trust until that individual resigns, retires or is otherwise removed or replaced.

⁽²⁾	Messrs. King and Purvis are each considered an “interested person” of the Trust (as defined in the 1940 Act) because of their affiliation with the Adviser.

Information about the Funds’ Trustees and Officers, Continued


Name, Address and Age	Position(s) Held with the Trust	Term of Office & Length of Time Served	Principal Occupation During Past Five Years
Principal Officers:
J. Luther King, Jr.⁽¹⁾ 301 Commerce Street Suite 1600 Fort Worth, TX 76102 Year of Birth: 1940	Trustee, President and Chief Executive Officer	Since 1994	Chairman, President and Director, Luther King Capital Management Corporation since 1979.
Steven R. Purvis⁽¹⁾ 301 Commerce Street Suite 1600 Fort Worth, TX 76102 Year of Birth: 1964	Trustee Vice President	Since 2013 Since 2000	Principal, Luther King Capital Management Corporation since 2004, Vice President and Portfolio Manager, Luther King Capital Management Corporation since 1996.
Paul W. Greenwell 301 Commerce Street Suite 1600 Fort Worth, TX 76102 Year of Birth: 1950	Vice President	Since 1996	Principal, Luther King Capital Management Corporation since 1986, Vice President and Portfolio Manager, Luther King Capital Management Corporation since 1983.
Richard Lenart 301 Commerce Street Suite 1600 Fort Worth, TX 76102 Year of Birth: 1966	Secretary and Treasurer	Since 2006	Luther King Capital Management Corporation since 2005.
Jacob D. Smith 301 Commerce Street Suite 1600 Fort Worth, TX 76102 Year of Birth: 1974	Chief Financial Officer Chief Compliance Officer	Since 2010 Since 2006	General Counsel and Chief Compliance Officer, Luther King Capital Management Corporation since 2006; Principal, Luther King Capital Management Corporation since 2013.

⁽¹⁾	Messrs. King and Purvis are each considered an “interested person” of the Trust (as defined in the 1940 Act) because of their affiliation with the Adviser.

LKCM FUNDS

PRIVACY NOTICE

Our Commitment to Your Privacy

At LKCM Funds, we are committed to safeguarding the confidentiality and privacy of nonpublic personal information about our current and former shareholders. This privacy notice describes the policies and procedures we have implemented to protect the privacy of your nonpublic personal information as well as the sources through which we may obtain nonpublic personal information about you.

How We Protect Your Nonpublic Personal Information

Protecting your nonpublic personal information is an important priority at LKCM Funds. Accordingly, we have implemented policies and procedures designed to safeguard your nonpublic personal information, such as your tax identification number, account and investment history, account numbers, account balances and nonpublic contact information, from unauthorized access. Pursuant to these policies and procedures, we maintain various physical, technological, and administrative safeguards to protect the security and confidentiality of your nonpublic personal information, and we adapt these safeguards to respond to evolving technological and other standards.

We do not disclose nonpublic personal information about you to outside firms, organizations or individuals except as authorized by you or your representatives or as required or permitted by law. We may disclose nonpublic personal information about you to nonaffiliated third parties, such as custodians, brokers, auditors, accountants, and systems and administrative service providers, in connection with the services we provide to you or on your behalf. When we provide nonpublic personal information about you to nonaffiliated third parties for these purposes, we expect them to safeguard your nonpublic personal information, use your nonpublic personal information only for the intended purposes and otherwise abide by applicable law.

How We Obtain Your Nonpublic Personal Information

We collect nonpublic personal information about you from various sources, including documents, new account applications and other information that you or your representatives, custodians, attorneys, accountants or similar parties provide to us, communications that we have with you or your representatives, custodians, attorneys, accountants or similar parties, and documents and other information related to your accounts or investment experience with us.

Please do not hesitate to contact Jacob D. Smith, our Chief Compliance Officer, if you have any questions regarding the measures we have implemented to protect the privacy of your nonpublic personal information.

U.S. Bancorp Fund Services, LLC

P.O. Box 701

Milwaukee, WI 53201-0701

LKCM FUNDS

P.O. Box 701

Milwaukee, WI 53201-0701


Officers and Trustees
J. Luther King, Jr., CFA, CIC	H. Kirk Downey	Larry J. Lockwood
Trustee, President and Chief Executive Officer	Chairman of the Board	Trustee

Paul W. Greenwell	Richard J. Howell	Richard Lenart
Vice President	Trustee	Secretary & Treasurer

Steven R. Purvis, CFA	Earle A. Shields, Jr.	Jacob D. Smith
Trustee, Vice President	Trustee	Chief Financial Officer
		Chief Compliance Officer
Investment Adviser
Luther King Capital Management Corporation
301 Commerce Street, Suite 1600
Fort Worth, TX 76102
Administrator, Transfer Agent, Dividend Paying Agent & Shareholder Servicing Agent
U.S. Bancorp Fund Services, LLC
P.O. Box 701
Milwaukee, WI 53201-0701
Custodian
U.S. Bank, N.A.
1555 N. River Center Drive, Suite 302
Milwaukee, WI 53212
Independent Registered Public Accounting Firm
Deloitte & Touche LLP
555 E. Wells St., Suite 1400
Milwaukee, WI 53202
Distributor
Quasar Distributors, LLC
777 East Wisconsin Avenue, Floor 6
Milwaukee, WI 53202

LOGO

LKCM Aquinas Catholic Equity Fund

Annual Report

December 31, 2017

Dear Fellow Shareholders:

We report the following performance information for the LKCM Aquinas Catholic Equity Fund for the indicated periods ended December 31, 2017:


Funds	Inception Dates		NAV @ 12/31/17		Net Expense Ratio, *		Gross Expense Ratio**		One Year Total Return Ended 12/31/17			Five Year Average Annualized Return Ended 12/31/17			Ten Year Average Annualized Return Ended 12/31/17			Avg. Annual Total Return Since Incept.***

LKCM Aquinas Catholic Equity Fund⁽¹⁾		7/11/05		$17.19		1.00%		1.44%		20.79%			11.92%			6.79%			7.59%
S&P 500^® Index⁽²⁾										21.83	%		15.79	%		8.50	%		8.81	%

Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. Current performance of the Fund may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling 1-800-423-6369. The Fund imposes a 1.00% redemption fee on shares held less than 30 days. If reflected, the fee would reduce performance shown.

Luther King Capital Management Corporation, the Fund’s investment adviser, has contractually agreed to waive all or a portion of its management fee and/or reimburse expenses of the Fund to maintain the expense ratio designated in the Fund’s current prospectus through May 1, 2018. This expense limitation excludes interest, taxes, brokerage commissions, indirect fees and expenses relating to investments in other investment companies, including money market funds, and extraordinary expenses. Investment performance reflects fee waivers, if any, in effect during the relevant period. In the absence of such waivers, total return would be reduced. Investment performance is based upon the net expense ratio. LKCM waived management fees and/or reimbursed expenses for the Fund during the fiscal year ended December 31, 2017.

**	Expense ratios above are as of May 1, 2017, as reported in the Fund’s current prospectus. Expense ratios reported for other periods in the financial highlights of this report may differ.

***

The assets of the Aquinas Value Fund, Aquinas Growth Fund and Aquinas Small-Cap Fund were acquired by the LKCM Aquinas Value Fund, LKCM Aquinas Growth Fund and LKCM Aquinas Small Cap Fund, respectively, on July 11, 2005. Due to the change in adviser and investment technique, performance is being quoted for the period after the merger. As further described below, the LKCM Aquinas Small Cap Fund and LKCM Aquinas Growth Fund were reorganized into the LKCM Aquinas Value Fund effective upon the close of business on July 29, 2016, after which the LKCM Aquinas Value Fund’s name, investment strategies and expenses changed to those of the LKCM Aquinas Catholic Equity Fund. The performance shown prior to August 1, 2016 is that of the LKCM Aquinas Value Fund.

(1)

Effective upon the close of business on July 29, 2016, the LKCM Aquinas Small Cap Fund and the LKCM Aquinas Growth Fund reorganized into the LKCM Aquinas Value Fund (the “Reorganizations”). Immediately after the Reorganizations were completed, the LKCM Aquinas Value Fund changed its name to the LKCM Aquinas Catholic Equity Fund and its investment strategies and expenses, including the expense limitation agreement, changed to the investment strategies and expenses, including the expense limitation agreement, of the LKCM Aquinas Catholic Equity Fund. The Fund’s performance prior to August 1, 2016 reflects the Fund’s prior investment strategies.

(2)	The S&P 500^® Index is an unmanaged capitalization-weighted index of 500 selected stocks that is generally considered representative of the performance of large capitalization companies in the U.S. stock market.

Note: The indices defined above are not available for direct investment and the index performance therefore does not include fees, expenses or taxes.

2017 Review

A year ago investors were attempting to understand the implications of President-elect Donald Trump’s agenda of tax reform, lighter regulation, and infrastructure spending to spur economic growth and create jobs. Initial investor optimism eroded in March as the failure to repeal and replace Obamacare, a Republican-controlled Congress’ multi-year objective, cast doubt on the potential for the White House to accomplish other legislative agenda items, chiefly tax reform. Despite the legislative set back, three interest rate hikes by the Federal Reserve Board, and trade policy concerns, healthy corporate profit growth following two years of stagnation propelled the equity market to a record high in 2017. The S&P 500^® Index rose 21.83% for the year ended December 31, 2017, driven by higher earnings growth and expanded earnings multiples. The market advance was broad-based and persistent. Nine of the eleven equity market sectors recorded a positive return for the year, led by the Information Technology sector. In addition, the S&P 500^® Index rose during each month of the year – a first for the index. We believe the strong equity market performance reflected the continued improvement of economic data, particularly related to manufacturing, housing, and jobs.

Despite significant strength in broad equity market indices over the past year, we believe equity market internals were less impressive. First, the S&P 500^® Index, which is market-capitalization weighted, outperformed the S&P 500^® Equal Weight Index, an equal-weighted version of the S&P 500^® Index, by 2.9% during the year. We believe this market characteristic is often associated with undistinguished market performance. Second, the performance of small capitalization stocks, as measured by the Russell 2000^® Index, trailed the S&P 500^® Index, which is generally comprised of large capitalization stocks, by approximately 7.2% for the year. We believe the performance of the equity market in 2017 was also remarkable for its lack of daily volatility. There were only seven trading days in 2017 when the S&P 500^® Index changed by greater than 1% but less than 2%. Moreover, the last year in which the equity markets, as measured by the S&P 500^® Index, recorded no daily moves greater than 2% was 2005.

discounting the potential for rising inflation and further interest rate hikes by the Federal Reserve Board. The peak in the 10-Year Treasury yield coincided with investor concern regarding the White House agenda following the failure of Congress and the Administration to revamp health care regulation. In addition, geopolitical tension with regard to Syria and North Korea was rising and the U.S. dollar continued to weaken. On the heels of the 0.25% interest rate increase by the Federal Reserve Board in March, the Federal Reserve Board raised rates an additional 0.25% in June and December. The short end of the yield curve rose dramatically, partially in reaction to an increased pace of interest rate hikes. The yield on the 2-Year Treasury reached a nine-year high by late October and finished the year yielding 1.89%. The result was a dramatic flattening of the yield curve, or the difference in yields between the 2-Year Treasury and the 10-Year Treasury. In our view, a flattening of the yield curve has historically been viewed as a harbinger of slowing economic growth and rising recession risk. We believe that this traditional reading of a flattening yield curve is less applicable in today’s environment where long yields are weighed down by ultra-low global bond yields, particularly in the Eurozone. Finally, due to the sharp rise in the 2-Year Treasury yield during 2017 we believe it is competitive with the dividend yield on the S&P 500^® Index for the first time since 2008.

2018 Outlook

LKCM Aquinas Catholic Equity Fund

The LKCM Aquinas Catholic Fund advanced 20.79% for the year ended December 31, 2017 compared to the 21.83% return for the Fund’s benchmark, the S&P 500^® Index. The Fund finished the year very strong with an 8.40% return for the fourth quarter of 2017, well above the S&P 500^® Index return of 6.64% for the quarter. The Fund benefited from solid sector allocation decisions throughout the year relative to the benchmark, which was offset slightly by stock selection decisions relative to the benchmark. For 2017, the Fund’s relative performance benefited from an overweight position in the Information Technology and Materials sectors and an underweight position in the Real Estate, Telecom, Utilities, and Consumer Staples sectors, while the Fund’s overweight position in the Energy sector detracted from relative performance. Stock selection in the Industrials and Energy sectors contributed to the Fund’s relative performance, while stock selection in the Financials and Consumer Discretionary sectors detracted from the Fund’s relative performance.

The equity market trended higher as the year progressed, following the expectation of an improving economy with strong earnings gains as evidenced by the outperformance of the highly economically sensitive Information Technology and Materials sectors and the limited positive performance from the Consumer Staples, Telecom and Utilities sectors. We believe our emphasis on companies that pay higher effective tax rates, and which should therefore benefit from the passing of the recent tax legislation, also proved beneficial to the Fund’s performance.

Entering 2018, we believe the Fund is well-positioned given its intended emphasis on companies that have financial flexibility resulting from solid balance sheets and which we believe should benefit from an improved operating environment expected from the anticipated economic lift resulting from the recent tax legislation. We believe that many of the Fund’s portfolio holdings should also benefit from the repatriation of cash formerly held overseas in response to the recent tax legislation.

Our outlook is for continued global growth, which we believe will drive strong corporate earnings, likely higher interest rate levels, and possibly increased inflation. We expect that anticipated corporate earnings increases will likely offset any compression in price-earnings multiples. In the event corporate earnings gains do not develop as we expect or inflation causes interest rates to increase more than we expect, we believe the stock market advance may pause or even reverse somewhat pending more clarity around economic growth.

LOGO

J. Luther King, Jr., CFA, CIC

February 3, 2018

The information provided herein represents the opinion of J. Luther King, Jr., CFA, CIC and is not intended to be a forecast of future events, a guarantee of future results, nor investment advice.

Please refer to the Schedule of Investments found on pages 9-10 of the report for more information on Fund holdings. Fund holdings and sector allocations are subject to change and are not recommendations to buy or sell any securities.

Mutual fund investing involves risk. Principal loss is possible. Past performance is not a guarantee of future results. Small and medium capitalization funds typically carry additional risks, since smaller companies generally have a higher risk of failure, and, historically, their stocks have experienced a greater degree of market volatility than stocks on average. These risks are discussed in the Fund’s summary and statutory prospectuses. Since the Fund practices socially responsible investing within the framework provided by the United States Conference of Catholic Bishop’s Socially Responsible Investing Guidelines, the Fund may forego a profitable investment opportunity or sell a security when it may be disadvantageous to do so.

Price/earnings ratio is the market price of a company share divided by the earnings per share of the company.

Dividend yield is a dividend expressed as a percentage of current share price.

The Russell 2000^® Index is an unmanaged index consisting of the 2,000 smallest companies in the Russell 3000^® Index.

Must be preceded or accompanied by a prospectus.

Quasar Distributors, LLC, distributor.

PERFORMANCE:

The following information illustrates the historical performance of LKCM Aquinas Catholic Equity Fund as of December 31, 2017 compared to the Fund’s benchmark and peer group indices.

Performance data quoted represents past performance; past performance does not guarantee future results. The graph and table reflect the reinvestment of dividends and other distributions, if any, but do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling 1-800-423-6369. Returns would have been lower if LKCM had not waived a portion of its management fee and/or reimbursed certain expenses of the Fund. Please see Note B to the Notes to the Financial Statements for specific information regarding management fee waiver and/or expense reimbursement arrangements for the Fund.

AVERAGE ANNUAL TOTAL RETURN (Periods Ended December 31, 2017)⁽¹⁾


	Past 1 Year		Past 5 Years⁽²⁾		Past 10 Years⁽²⁾		Since Inception⁽²⁾⁽³⁾
LKCM Aquinas Catholic Equity Fund		20.79%		11.92%		6.79%		7.59%
S&P 500^® Index		21.83%		15.79%		8.50%		8.81%
Lipper Large-Cap Core Funds Index		20.90%		14.63%		7.58%		8.22%

⁽¹⁾

Effective upon the close of business on July 29, 2016, the LKCM Aquinas Small Cap Fund and the LKCM Aquinas Growth Fund reorganized into the LKCM Aquinas Value Fund (the “Reorganizations”). At the time the Reorganizations were completed, the LKCM Aquinas Value Fund changed its name to the LKCM Aquinas Catholic Equity Fund (“Equity Fund”) and its investment strategies and expenses, including the expense limitation agreement, changed to the investment strategies and expenses, including the expense limitation agreement, of the Equity Fund. The Fund’s performance prior to August 1, 2016 reflects the Fund’s prior investment strategies.

⁽²⁾	Annualized.

⁽³⁾

The assets of the Aquinas Value Fund, Aquinas Growth Fund and Aquinas Small-Cap Fund were acquired by the LKCM Aquinas Value Fund, LKCM Aquinas Growth Fund and LKCM Aquinas Small Cap Fund, respectively, on July 11, 2005. At the time of the reorganization, the Adviser also changed from Aquinas Investment Advisers, Inc. to Luther King Capital Management Corporation. Due to the change in adviser and investment technique, performance is being quoted for the period after the merger. As stated above, the LKCM Aquinas Growth Fund and LKCM Aquinas Small-Cap Fund were reorganized into the LKCM Aquinas Value Fund effective upon the close of business on July 29, 2016, after which the LKCM Aquinas Value Fund’s name, investment strategies and expenses changed to those of the Equity Fund. The performance shown prior to August 1, 2016, is that of the LKCM Aquinas Value Fund.

A HYPOTHETICAL $10,000 INVESTMENT IN LKCM AQUINAS CATHOLIC EQUITY FUND

(for the ten years ended December 31, 2017)

LOGO

The Lipper Large-Cap Core Funds Index is an unmanaged index generally considered representative of large cap core mutual funds tracked by Lipper, Inc.

LKCM Aquinas Catholic Equity Fund Expense Example — December 31, 2017

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (7/1/17 - 12/31/17).

ACTUAL EXPENSES

The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. Although the Fund charges no sales load, you will be assessed fees for outgoing wire transfers, returned checks and stop payment orders at prevailing rates charged by U.S. Bancorp Fund Services, LLC, the Fund’s transfer agent. If you request that a redemption be made by wire transfer, currently a $15 fee is charged by the Fund’s transfer agent. You will be charged a redemption fee equal to 1.00% of the net amount of the redemption if you redeem your shares of the Fund within 30 days of purchase, unless otherwise determined by the Fund in its discretion. To the extent the Fund invests in shares of other investment companies as part of its investment strategy, you will indirectly bear your proportionate share of any fees and expenses charged by the underlying funds in which the Fund invests in addition to the expenses of the Fund. Actual expenses of the underlying funds are expected to vary among the various underlying funds. These expenses are not included in the example below. The example below includes management fees, registration fees and other expenses. However, the example below does not include portfolio trading commissions and related expenses and other extraordinary expenses as determined under generally accepted accounting principles.

HYPOTHETICAL EXAMPLES FOR COMPARISON PURPOSES

The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactions costs were included, your costs would have been higher.


	LKCM Aquinas Catholic Equity Fund
	Beginning Account Value 7/1/17		Ending Account Value 12/31/17		Expenses Paid During Period* 7/1/17–12/31/17
Actual	$	1,000.00	$	1,111.20	$	5.32
Hypothetical (5% return before expense)	$	1,000.00	$	1,020.16	$	5.09

*	Expenses are equal to the Fund’s annualized net expense ratio of 1.00%, multiplied by the average account value over the period, multiplied by 184/365 to reflect the one-half year period.

ALLOCATION OF PORTFOLIO HOLDINGS — LKCM Aquinas Catholic Equity Fund — December 31, 2017

Percentages represent market value as a percentage of total investments.

LKCM Aquinas Catholic Equity Fund

LOGO

LKCM AQUINAS CATHOLIC EQUITY FUND

SCHEDULEOF INVESTMENTS

December 31, 2017


COMMON STOCKS - 98.9%	Shares		Value
Aerospace & Defense - 3.2%
Honeywell International Inc.		15,000	$	2,300,400

Auto Components - 1.8%
The Goodyear Tire & Rubber Company		40,000		1,292,400

Banks - 10.1%
Comerica Incorporated		20,000		1,736,200
Cullen/Frost Bankers, Inc.		10,000		946,500
SunTrust Banks, Inc.		33,000		2,131,470
Zions Bancorporation		46,000		2,338,180

				7,152,350

Beverages - 1.9%
PepsiCo, Inc.		11,000		1,319,120

Chemicals - 4.7%
DowDuPont Inc.		17,500		1,246,350
Ecolab Inc.		8,500		1,140,530
FMC Corporation		10,000		946,600

				3,333,480

Computers & Peripherals - 2.5%
Apple Inc.		10,500		1,776,915

Construction Materials - 2.0%
Martin Marietta Materials, Inc.		6,500		1,436,760

Containers & Packaging - 0.4%
Ball Corporation		8,500		321,725

Diversified Financials - 1.5%
JPMorgan Chase & Co.		10,000		1,069,400

Electrical Equipment & Instruments - 3.3%
Roper Technologies, Inc.		9,000		2,331,000

Electronic Equipment & Instruments - 3.1%
FLIR Systems, Inc.		24,500		1,142,190
Trimble Navigation Limited (a)		27,000		1,097,280

				2,239,470

Energy Equipment & Services - 2.7%
Halliburton Company		21,500		1,050,705
Schlumberger Limited (b)		12,400		835,636

				1,886,341

Food Products - 2.6%
The Kraft Heinz Company		9,700		754,272
Mondelez International Inc. - Class A		25,000		1,070,000

				1,824,272

Health Care Equipment & Supplies - 1.9%
DENTSPLY SIRONA Inc.		20,000		1,316,600

Household Durables - 1.5%
Whirlpool Corporation		6,500		1,096,160

Household Products - 1.1%
Colgate-Palmolive Company		10,000		754,500


COMMON STOCKS	Shares		Value
Insurance - 5.0%
MetLife, Inc.		32,500	$	1,643,200
Prudential Financial, Inc.		16,700		1,920,166

				3,563,366

Internet & Catalog Retail - 2.5%
Amazon.com, Inc. (a)		1,500		1,754,205

Internet Software & Services - 9.9%
Akamai Technologies, Inc. (a)		35,000		2,276,400
Alphabet, Inc. - Class A (a)		2,200		2,317,480
Alphabet, Inc. - Class C (a)		802		839,213
Facebook, Inc. - Class A (a)		9,000		1,588,140

				7,021,233

IT Consulting & Services - 5.4%
Alliance Data Systems Corporation		4,500		1,140,660
PayPal Holdings, Inc. (a)		36,500		2,687,130

				3,827,790

Machinery - 1.5%
Barnes Group Inc.		10,000		632,700
Illinois Tool Works Inc.		2,500		417,125

				1,049,825

Media - 1.1%
Viacom Inc. - Class B		25,000		770,250

Multiline Retail - 2.2%
Burlington Stores, Inc. (a)		1,615		198,693
Dollar Tree, Inc. (a)		10,000		1,073,100
Kohl’s Corporation		5,500		298,265

				1,570,058

Oil & Gas & Consumable Fuels - 8.2%
Cabot Oil & Gas Corporation		40,000		1,144,000
Chevron Corporation		7,000		876,330
ConocoPhillips		17,500		960,575
EOG Resources, Inc.		13,000		1,402,830
Occidental Petroleum Corporation		20,000		1,473,200

				5,856,935

Pharmaceuticals - 3.6%
Abbott Laboratories		22,500		1,284,075
Zoetis Inc.		17,500		1,260,700

				2,544,775

Professional Services - 1.5%
Verisk Analytics, Inc. (a)		11,000		1,056,000

Software - 8.5%
Adobe Systems Incorporated (a)		13,000		2,278,120
Microsoft Corporation		13,625		1,165,483
Oracle Corporation		27,500		1,300,200
RealPage, Inc. (a)		30,000		1,329,000

				6,072,803

The accompanying notes are an integral part of these financial statements.

LKCM AQUINAS CATHOLIC EQUITY FUND

SCHEDULEOF INVESTMENTS, CONTINUED

December 31, 2017


COMMON STOCKS	Shares		Value
Specialty Retail - 5.2%
The Home Depot, Inc.		9,000	$	1,705,770
Party City Holdco Inc. (a)		55,000		767,250
Tiffany & Co.		12,000		1,247,400

				3,720,420

TOTAL COMMON STOCKS
(Cost $39,568,024)				70,258,553


SHORT-TERM INVESTMENTS - 2.3%
Money Market Funds - 2.3%
Invesco Short-Term Investments Trust - Government & Agency Portfolio -Institutional Shares, 1.21% (c)		1,650,623		1,650,623

TOTAL SHORT-TERM INVESTMENTS
(Cost $1,650,623)				1,650,623

Total Investments - 101.2%
(Cost $41,218,647)				71,909,176
Liabilities in Excess of Other Assets - (1.2)%				(851,672	)

TOTAL NET ASSETS - 100.0%			$	71,057,504

(a)	Non-income producing security.

(b)	Security issued by non-U.S. incorporated company.

(c)	The rate quoted is the annualized seven-day yield of the fund at period end.

The accompanying notes are an integral part of these financial statements.

STATEMENTOF ASSETSAND LIABILITIES

December 31, 2017


LKCM Aquinas Catholic Equity Fund

Assets:
Investments, at value*	$	71,909,176
Receivable for Fund shares sold		41,389
Dividends and interest receivable		49,872
Other assets		16,717

Total assets		72,017,154

Liabilities:
Payable for Fund shares redeemed		799,795
Payable for investment advisory fees (Note B)		80,547
Payable for distribution expense (Note B)		29,652
Payable for Trustees’ fees		1,742
Payable for custody fees and expenses		1,170
Accrued expenses and other liabilities		46,744

Total liabilities		959,650

Net Assets	$	71,057,504

Net Assets Consist of:
Paid in capital	$	40,309,956
Accumulated net investment income		11,597
Accumulated net realized gain on securities		45,422
Net unrealized appreciation on investments		30,690,529

Net Assets	$	71,057,504

Net Assets	$	71,057,504
Shares of beneficial interest outstanding (unlimited shares of no par value authorized)		4,134,669
Net asset value per share (offering and redemption price)	$	17.19


* Cost of Investments	$	41,218,647

The accompanying notes are an integral part of these financial statements.

STATEMENTOF OPERATIONS

For the Year Ended December 31, 2017


LKCM Aquinas Catholic Equity Fund

Investment Income:
Dividends	$	816,994
Interest		10,665

Total income		827,659


Expenses:
Investment advisory fees (Note B)		579,021
Distribution expense (Note B)		64,336
Accounting and transfer agent fees and expenses		81,435
Administrative fees		53,240
Federal and state registration		29,102
Reports to shareholders		38,111
Professional fees		27,879
Trustees’ fees		15,294
Custody fees and expenses		7,516
Other		25,756

Total expenses		921,690
Less, expense waiver and/or reimbursement (Note B)		(278,333	)

Net expenses		643,357

Net investment income		184,302


Realized and Unrealized Gain on Investments:
Net realized gain on investments		5,621,042
Net change in unrealized appreciation/depreciation on investments		6,425,935


Net Realized and Unrealized Gain on Investments		12,046,977


Net Increase in Net Assets Resulting from Operations	$	12,231,279

The accompanying notes are an integral part of these financial statements.

STATEMENTSOF CHANGESIN NET ASSETS


LKCM Aquinas Catholic Equity Fund

	Year Ended December 31, 2017			Year Ended December 31, 2016
Operations:
Net investment income	$	184,302		$	141,476
Net realized gain on investments		5,621,042			6,453,107
Net change in unrealized appreciation/depreciation on investments		6,425,935			(2,295,797	)

Net increase in net assets resulting from operations		12,231,279			4,298,786


Dividends and Distributions to Shareholders:
Net investment income		(177,185	)		(143,116	)
Net realized gain on investments		(5,325,615	)		(4,515,471	)

		(5,502,800	)		(4,658,587	)


Net increase in net assets resulting from Fund share transactions (Note C)		1,331,772			18,489,064


Total increase in net assets		8,060,251			18,129,263

Net Assets:
Beginning of period		62,997,253			44,867,990

End of period*	$	71,057,504		$	62,997,253


* Including accumulated net investment income of	$	11,597		$	4,480

The accompanying notes are an integral part of these financial statements.

FINANCIAL HIGHLIGHTS

SELECTED DATAFOR EACH SHAREOF CAPITAL STOCK OUTSTANDING


	LKCM Aquinas Catholic Equity Fund

	Year Ended December 31, 2017			Year Ended December 31, 2016⁽¹⁾			Year Ended December 31, 2015			Year Ended December 31, 2014			Year Ended December 31, 2013
Net Asset Value – Beginning of Period	$	15.40		$	15.17		$	16.87		$	17.99		$	14.18

Net investment income		0.05			0.04			0.03			0.17	⁽²⁾		0.04	⁽³⁾
Net realized and unrealized gain (loss) on investments		3.16			1.41			(0.56	)		0.34			4.72

Total from investment operations		3.21			1.45			(0.53	)		0.51			4.76

Dividends from net investment income		(0.05	)		(0.04	)		(0.04	)		(0.19	)		(0.04	)
Distributions from net realized gains		(1.37	)		(1.18	)		(1.13	)		(1.44	)		(0.91	)

Total dividends and distributions		(1.42	)		(1.22	)		(1.17	)		(1.63	)		(0.95	)

Net Asset Value – End of Period	$	17.19		$	15.40		$	15.17		$	16.87		$	17.99

Total Return		20.79%			9.52%			-3.28%			2.73%			33.60%

Ratios and Supplemental Data:
Net assets, end of period (thousands)	$	71,058		$	62,997		$	44,868		$	52,652		$	59,061
Ratio of expenses to average net assets:
Before expense waiver and/or reimbursement		1.43%			1.66%			1.55%			1.49%			1.52%
After expense waiver and/or reimbursement ⁽⁴⁾		1.00%			1.23%			1.50%			1.49%			1.50%
Ratio of net investment income to average net assets:
Before expense waiver and/or reimbursement		(0.14)%			(0.15)%			0.14%			0.95%			0.21%
After expense waiver and/or reimbursement ⁽⁴⁾		0.29%			0.28%			0.19%			0.95%			0.23%
Portfolio turnover rate		18%			18%			11%			23%			9%

⁽¹⁾

Effective upon the close of business on July 29, 2016, the LKCM Aquinas Growth Fund and the LKCM Aquinas Small Cap Fund were reorganized into the LKCM Aquinas Value Fund and the Fund was renamed the LKCM Aquinas Catholic Equity Fund. Activity after July 29, 2016 reflects the Funds’ combined operations.

⁽²⁾	Net investment income per share represents net investment income divided by the average shares outstanding throughout the period.

⁽³⁾	Net investment income per share is calculated using the ending balance of accumulated net investment income prior to considerations of adjustments for permanent book and tax differences.

⁽⁴⁾	Effective August 1, 2016, the Fund’s investment adviser contractually agreed to lower the expense cap for the Fund from 1.50% to 1.00% of the Fund’s average daily net assets and the fees charged under the Fund’s Rule 12b-1 plan changed from 0.25% per annum to 0.10% per annum as of August 1, 2016.

The accompanying notes are an integral part of these financial statements.

LKCM FUNDS

NOTESTOTHE FINANCIAL STATEMENTS

A. Organization and Significant Accounting Policies: LKCM Funds (the “Trust”) is registered under the Investment Company Act of 1940 (“1940 Act”) as an open-end, management investment company. The Trust was organized as a Delaware statutory trust on February 10, 1994 and consisted of six diversified series as of December 31, 2017, one of which is presented herein: the LKCM Aquinas Catholic Equity Fund (the “Fund”). On July 11, 2005, the LKCM Aquinas Funds acquired the assets and assumed the liabilities of the Aquinas Funds. Effective upon the close of business on July 29, 2016, the LKCM Aquinas Small Cap Fund and the LKCM Aquinas Growth Fund reorganized into the LKCM Aquinas Value Fund, which changed its name immediately thereafter to the LKCM Aquinas Catholic Equity Fund and its investment strategies and expenses, including the expense limitation agreement, changed to the investment strategies and expenses, including the expense limitation agreement, of the LKCM Aquinas Catholic Equity Fund. The Fund is subject to expenses pursuant to the Rule 12b-1 plan described in Note B. The Fund charges a 1% redemption fee for redemptions of Fund shares held for less than 30 days, unless otherwise determined by the Fund in its discretion.

The LKCM Aquinas Catholic Equity Fund seeks to maximize long-term capital appreciation, while incorporating Catholic values investing principles in the investment process. The LKCM Aquinas Catholic Equity Fund seeks to achieve its investment objective by investing under normal circumstances at least 80% of its net assets (plus any borrowings for investment purposes) in equity securities of companies that Luther King Capital Management Corporation (the “Adviser”) believes are likely to have above-average growth in revenue and/or earnings, above-average returns on shareholders’ equity, potential for above-average capital appreciation, and/or companies the Adviser believes have attractive relative valuations.

The Fund practices socially responsible investing within the framework provided by the United States Conference of Catholic Bishops’ Socially Responsible Investing Guidelines (the “Guidelines”). The Fund’s investment approach incorporates the Guidelines through a combination of screening portfolio companies based on criteria set forth in the Guidelines, dialogue with companies whose policies and practices may conflict with the Guidelines, and/or potentially excluding from the Fund’s portfolio the securities of those companies that are unwilling to alter their policies and practices over a reasonable period of time. The Adviser monitors companies selected for the Fund for policies on various issues contemplated by the Guidelines. If the Fund invests in a company whose policies and practices are inconsistent with the Guidelines, the Adviser may attempt to influence the company, sell the company’s securities or otherwise exclude future investments in such company.

The following is a summary of significant accounting policies followed by the Fund in preparation of the financial statements. The Fund is an investment company and, accordingly, follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board Accounting Standards Codification Topic 946, Investment Companies.

1. Security Valuation: Equity securities listed or traded on a U.S. securities exchange for which market quotations are readily available are valued at the last quoted sale price on the exchange on which the security is primarily traded. Nasdaq Global Market securities are valued at the Nasdaq Official Closing Price (“NOCP”). Unlisted U.S. securities and listed U.S. securities not traded on a particular valuation date are valued at the mean of the most recent quoted bid and ask price on the relevant exchanges or markets. Equity securities listed on a foreign exchange for which market quotations are readily available are valued at the last quoted sales price on the exchange on which the security is primarily traded. Debt securities are normally valued at the mean of the closing bid and ask price and/or by using a combination of broker quotations or evaluated prices provided by an independent pricing service. Other assets and securities for which no market or broker quotations or evaluated prices are readily available (including restricted securities) are valued in good faith at fair value using guidelines approved by the Board of Trustees. The Board has adopted specific guidelines and procedures for valuing portfolio securities and delegated their implementation to the Adviser. The guidelines and procedures authorize the Adviser to make determinations regarding the fair value of a portfolio security and to report such determinations to the Board of Trustees. The Fund may use prices provided by independent pricing services to assist in the fair valuation of the Fund’s portfolio securities.


Level 1		–		Quoted unadjusted prices for identical instruments in active markets to which the Trust has access at the date of measurement.


Level 2	–	Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 2 inputs are those in markets for which there are few transactions, the prices are not current, little public information exists or instances where prices vary substantially over time or among brokered market makers.
Level 3	–	Model derived valuations in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are those inputs that reflect the Trust’s own assumptions that market participants would use to price the asset or liability based on the best available information.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. As of December 31, 2017, the Fund’s assets carried at fair value were classified as follows:


LKCM Aquinas Catholic Equity Fund
Description	Level 1		Level 2		Level 3		Total
Common Stocks	$	70,258,553	$	—	$	—	$	70,258,553
Money Market Fund		1,650,623		—		—		1,650,623

Total Investments*	$	71,909,176	$	—	$	—	$	71,909,176

Additional information regarding the industry classifications of these investments is disclosed in the Schedule of Investments.

There were no transfers into or out of Level 1, Level 2 or Level 3 fair value measurements during the reporting period. Transfers between levels are recognized at the end of the reporting period.

2. Federal Income Taxes: The Fund has elected to be treated as a “regulated investment company” under Subchapter M of the Internal Revenue Code and the Fund intends to distribute all of its investment company net taxable income and net capital gains to shareholders. Therefore, no federal income tax provision is recorded.

3. Distributions to Shareholders: The Fund generally intends to pay dividends and distribute net capital gain distributions, if any, at least on an annual basis.

5. Expense Allocation: Expenses incurred by the Funds in the Trust are allocated among the Funds based upon (i) relative average net assets, (ii) a specific identification basis as incurred, or (iii) evenly among the Funds, depending on the nature of the expense.

7. Guarantees and Indemnifications: In the normal course of business, the Fund enters into contracts with service providers that contain general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims against the Fund that have not yet occurred. Based on experience, the Fund expects the risk of loss to be remote.

8. Security Transactions and Investment Income: Security and shareholder transactions are recorded on the trade date. Realized gains and losses on sales of investments are calculated on the identified cost basis. Dividend income and dividends and distributions to shareholders are recorded on the ex-dividend date. Withholding taxes on foreign dividends have been provided for in accordance with the Fund’s understanding of the applicable jurisdiction’s tax rules and rates. Interest income is recognized on the accrual basis. All discounts and premiums are amortized based on the effective interest method for tax and financial reporting purposes. The Fund may hold the securities of real estate investment trusts (“REITs”). Distributions from such investments may include income, capital gains and return of capital.

Accordingly, at December 31, 2017, reclassifications were recorded as follows for the Fund:


Accumulated net realized gain	($495,871	)
Paid in capital	495,871

10. Restricted and Illiquid Securities: The Fund is permitted to invest in securities that are subject to legal or contractual restrictions on resale including investments considered by the Fund to be illiquid. Restricted securities generally may be resold in transactions exempt from registration. Illiquid investments are investments that cannot be sold or disposed of within seven days in the ordinary course of business at approximately the prices at which they are valued. A security may be considered illiquid if it lacks a readily available market or if its valuation has not changed for a certain period of time. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at the current valuation may be difficult.

In March 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2017-08 which changes the amortization period for a callable debt security from the maturity date to the earliest call date. The ASU is effective for annual periods beginning after December 15, 2018, and interim periods within those annual periods. These changes will have no impact on the financial statements.

B. Investment Advisory and Other Agreements: The Adviser serves as the investment adviser to the Fund under an Investment Advisory Agreement (the “Agreement”). The Adviser receives a fee, computed daily and payable quarterly, at the annual rate presented below as applied to the Fund’s average daily net assets. The Adviser has contractually agreed to waive all or a portion of its management fee and/or reimburse expenses of the Fund through May 1, 2018 in order to limit the Fund’s operating expenses to the annual cap rate identified below. This expense limitation excludes interest, taxes, brokerage commissions, indirect fees and expenses relating to investments in other investment companies, including money market funds, and extraordinary expenses. For the year ended December 31, 2017, the Adviser waived the following management fees and/or reimbursed expenses to meet its expense cap obligations for the Fund:


Annual Management Fee Rate		0.90%
Annual Cap on Expenses		1.00%
Fees Waived and/or Expenses Reimbursed in 2017	$	278,333

U.S. Bancorp Fund Services, LLC serves as transfer agent and administrator for the Fund and serves as accounting services agent for the Fund. U.S. Bank, N.A. serves as custodian for the Fund.

Distribution services are performed pursuant to a distribution contract with Quasar Distributors, LLC, the Trust’s principal underwriter.

The Trust has adopted a Rule 12b-1 plan for the LKCM Aquinas Catholic Equity Fund, under which the Fund may pay an annualized rate of up to 1.00% of its average daily net assets for distribution and other services. However, the Board of Trustees has currently only authorized an annual fee of 0.10% of the average daily net assets for the Fund. Prior to August 1, 2016, the Fund assessed an annual fee of 0.25% of the average daily net assets for the Fund. For the year ended December 31, 2017, fees incurred by the Fund pursuant to the 12b-1 Plan were $64,336.

C. Fund Shares: At December 31, 2017, there was an unlimited number of shares of beneficial interest, no par value, authorized. The following table summarizes the activity in shares of the Fund:


	Year Ended December 31, 2017						Year Ended December 31, 2016
	Shares			Amount			Shares			Amount
Shares sold		574,803		$	10,003,218			351,526		$	5,532,178
Proceeds from reorganization		—			—			2,009,091			32,242,631
Shares issued to shareholders in reinvestment of distributions		300,904			5,193,603			276,810			4,282,251
Shares redeemed		(830,500	)		(13,865,336	)		(1,505,175	)		(23,568,183	)
Redemption fee					287						187

Net increase		45,207		$	1,331,772			1,132,252		$	18,489,064

Shares Outstanding:
Beginning of period		4,089,462						2,957,210

End of period		4,134,669						4,089,462

D. Security Transactions: Purchases and sales of investment securities, other than short-term investments, for the Fund for the year ended December 31, 2017 were as follows:


Purchases				Sales
U.S. Government		Other		U.S. Government		Other
$	—	$	11,666,698	$	—	$	16,380,499

E. Tax Information: At December 31, 2017, the components of accumulated earnings (losses) on a tax basis for the Fund were as follows:


Cost of Investments	$	41,218,647

Gross Unrealized Appreciation	$	31,044,333
Gross Unrealized Depreciation		(353,804	)

Net Unrealized Appreciation	$	30,690,529

Undistributed Ordinary Income		11,597
Undistributed Long-Term Capital Gain		45,422

Total Distributable Earnings	$	57,019

Total Accumulated Gains	$	30,747,548

The difference between book-basis and tax-basis unrealized appreciation, if any, is attributable primarily to the tax deferral of losses on wash sales.

To the extent the Fund realizes future net capital gains, taxable distributions will be reduced by any unused capital loss carryforwards as permitted by the Internal Revenue Code. The Fund currently has no capital loss carryforwards.

The tax components of dividends paid during the periods shown below for the Fund were as follows:


Year Ended December 31, 2017				Year Ended December 31, 2016
Ordinary Income		Long-Term Capital Gains		Ordinary Income		Long-Term Capital Gains
$	177,185	$	5,325,615	$	256,303	$	4,402,284

The Fund designated as long-term capital gain dividend, pursuant to Internal Revenue Code Section 852(b)(3), the amount necessary to reduce earnings and profits of the Fund related to net capital gain to zero for the tax years ended December 31, 2017 and 2016. The Fund designated earnings and profits distributed to shareholders upon the redemption of shares during 2017 and 2016 in determining undistributed net capital gains as of December 31, 2017 and 2016.

The Trust has adopted financial reporting rules regarding recognition and measurement of tax positions taken or expected to be taken on a tax return. The Trust has reviewed all open tax years and major jurisdictions and concluded that there is no impact on the Fund’s financial position or results of operations. Tax years that remain open to examination by major tax jurisdictions include tax years ended December 31, 2014 through December 31, 2017. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on tax returns as of December 31, 2017. The Fund is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. If applicable, the Fund would recognize interest accrued related to unrecognized tax benefits in “interest expense” and penalties in “other expense” on the statement of operations.

F. Subsequent Events: In preparing these financial statements, the Trust has evaluated events after December 31, 2017 and determined that there were no significant subsequent events that would require adjustment to or additional disclosure in these financial statements.

REPORTOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and Board of Trustees of LKCM Funds

Opinion on the Financial Statements and Financial Highlights

We have audited the accompanying statement of assets and liabilities, including the schedule of investments of LKCM Aquinas Catholic Equity Fund, one of the series constituting the LKCM Funds (the “Fund”), as of December 31, 2017, the related statement 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, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of December 31, 2017, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. 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, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.

LOGO

Milwaukee, Wisconsin

February 27, 2018

We have served as the auditor of one or more LKCM Funds since 2007.

LKCM FUNDS

ADDITIONAL INFORMATION

December 31, 2017

Availability of Proxy Voting Information: A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to its portfolio securities, as well as information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, is available without charge, upon request, by calling toll-free 1-800-423-6369 or on the SEC website at http://www.sec.gov.

The actual voting records relating to portfolio securities during the twelve month period ended June 30 (as filed with the SEC on Form N-PX) are available without charge, upon request, by calling the Fund toll free at 1-800-423-6369 or by accessing the SEC’s website at www.sec.gov.

Availability of Quarterly Portfolio Schedule: The Fund is required to file complete schedules of portfolio holdings with the SEC for the first and third fiscal quarters on Form N-Q. Once filed, the Fund’s Form N-Q is available without charge upon request on the SEC’s website (http://www.sec.gov) and is also available by calling 1-800-423-6369. You can also review and copy the Fund’s Form N-Q by visiting the SEC’s Public Reference Room in Washington, DC (information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330).

Information about the Fund’s Trustees and Officers:

The business and affairs of the Fund are managed under the direction of the Fund’s Board of Trustees. Information pertaining to the Trustees of the Fund is set forth below. The Statement of Additional Information includes additional information about the Fund’s Trustees and officers and is available, without charge, upon request by calling 1-800-423-6369.


Name, Address and Age	Position(s) Held with the Trust	Term of Office & Length of Time Served⁽¹⁾	Principal Occupation During Past Five Years	Number of Portfolios in Fund Complex Overseen by Trustee	Other Directorships Held by Trustee
Disinterested Trustees:
H. Kirk Downey 301 Commerce Street Suite 1600 Fort Worth, TX 76102 Year of Birth: 1942	Chairman of the Board of Trustees Trustee	Since 2005 Since 1994	President and CEO, Texas Systems, LLC and CEO, Texas learning systems LLC since 1999 (education companies); Dean, M.J. Neeley School of Business, Texas Christian University Business School from 1987 to 1999.	6	AZZ Incorporated
Earle A. Shields, Jr. 301 Commerce Street Suite 1600 Fort Worth, TX 76102 Year of Birth: 1920	Trustee	Since 1994	Consultant; formerly Consultant for NASDAQ Corp. and Vice President, Merrill Lynch & Co., Inc.	6	None
Richard J. Howell 301 Commerce Street Suite 1600 Fort Worth, TX 76102 Year of Birth: 1942	Trustee Chairman of the Audit and Compliance Committee	Since 2005 Since 2008	CPA; Adjunct Faculty at SMU Cox School of Business from 2004 to 2009; Consulting Services, since 2002; Audit Partner, Arthur Andersen LLP from 1974 to 2002.	6	Red Robin Gourmet Burgers, Inc.
Larry J. Lockwood 301 Commerce Street Suite 1600 Fort Worth, TX 76102 Year of Birth: 1953	Trustee	Since 2013	C.R. Williams Professor of Finance, Stan Block Endowed Chair in Finance, Department of Finance, Neeley School of Business, Texas Christian University since 1994.	6	None
Interested Trustees:
J. Luther King, Jr.⁽²⁾ 301 Commerce Street Suite 1600 Fort Worth, TX 76102 Year of Birth: 1940	Trustee, President and Chief Executive Officer	Since 1994	Chairman, President and Director, Luther King Capital Management Corporation since 1979.	6	Tyler Technologies, Inc.
Steve R. Purvis⁽²⁾ 301 Commerce Street Suite 1600 Fort Worth, TX 76102 Year of Birth: 1964	Trustee Vice President	Since 2013 Since 2000	Principal, Luther King Capital Management Corporation since 2004, Vice President and Portfolio Manager, Luther King Capital Management Corporation since 1996.	6	AZZ Incorporated

⁽¹⁾	Each Trustee holds office during the lifetime of the Trust until that individual resigns, retires or is otherwise removed or replaced.

⁽²⁾	Messrs. King and Purvis are each considered an “interested person” of the Trust (as defined in the 1940 Act) because of their affiliation with the Adviser.

Information about the Fund’s Trustees and Officers, Continued


Name, Address and Age	Position(s) Held with the Trust	Term of Office & Length of Time Served	Principal Occupation During Past Five Years
Principal Officers:
J. Luther King, Jr.⁽¹⁾ 301 Commerce Street Suite 1600 Fort Worth, TX 76102 Year of Birth: 1940	Trustee, President and Chief Executive Officer	Since 1994	Chairman, President and Director, Luther King Capital Management Corporation since 1979.
Steven R. Purvis⁽¹⁾ 301 Commerce Street Suite 1600 Fort Worth, TX 76102 Year of Birth: 1964	Trustee Vice President	Since 2013 Since 2000	Principal, Luther King Capital Management Corporation since 2004, Vice President and Portfolio Manager, Luther King Capital Management Corporation since 1996.
Paul W. Greenwell 301 Commerce Street Suite 1600 Fort Worth, TX 76102 Year of Birth: 1950	Vice President	Since 1996	Principal, Luther King Capital Management Corporation since 1986, Vice President and Portfolio Manager, Luther King Capital Management Corporation since 1983.
Richard Lenart 301 Commerce Street Suite 1600 Fort Worth, TX 76102 Year of Birth: 1966	Secretary and Treasurer	Since 2006	Luther King Capital Management Corporation since 2005.
Jacob D. Smith 301 Commerce Street Suite 1600 Fort Worth, TX 76102 Year of Birth: 1974	Chief Financial Officer Chief Compliance Officer	Since 2010 Since 2006	General Counsel and Chief Compliance Officer, Luther King Capital Management Corporation since 2006; Principal, Luther King Capital Management Corporation since 2013.

⁽¹⁾	Messrs. King and Purvis are each considered an “interested person” of the Trust (as defined in the 1940 Act) because of their affiliation with the Adviser.

LKCM FUNDS

PRIVACY NOTICE

Our Commitment to Your Privacy

How We Protect Your Nonpublic Personal Information

How We Obtain Your Nonpublic Personal Information

U.S. Bancorp Fund Services, LLC

P.O. Box 701

Milwaukee, WI 53201-0701

LKCM FUNDS

P.O. Box 701

Milwaukee, WI 53201-0701


Officers and Trustees
J. Luther King, Jr., CFA, CIC	H. Kirk Downey	Larry J. Lockwood
Trustee, President and Chief Executive Officer	Chairman of the Board	Trustee

Paul W. Greenwell	Richard J. Howell	Richard Lenart
Vice President	Trustee	Secretary & Treasurer

Steven R. Purvis, CFA	Earle A. Shields, Jr.	Jacob D. Smith
Trustee, Vice President	Trustee	Chief Financial Officer
		Chief Compliance Officer
Investment Adviser
Luther King Capital Management Corporation
301 Commerce Street, Suite 1600
Fort Worth, TX 76102
Administrator, Transfer Agent, Dividend Paying Agent & Shareholder Servicing Agent
U.S. Bancorp Fund Services, LLC
P.O. Box 701
Milwaukee, WI 53201-0701
Custodian
U.S. Bank, N.A.
1555 N. River Center Drive, Suite 302
Milwaukee, WI 53212
Independent Registered Public Accounting Firm
Deloitte & Touche LLP
555 E. Wells St., Suite 1400
Milwaukee, WI 53202
Distributor
Quasar Distributors, LLC
777 East Wisconsin Avenue, Floor 6
Milwaukee, WI 53202

Item 2.

Code of Ethics.

The registrant has adopted a code of ethics that applies to the registrant’s principal executive officer and principal financial officer. The registrant has not made any amendments to its code of ethics during the period covered by this report. The registrant has not granted any waivers from any provisions of the code of ethics during the period covered by this report.

A copy of the registrant’s Code of Ethics is filed herewith.

Item 3.

Audit Committee Financial Expert.

The registrant’s board of trustees has determined that there is at least one audit committee financial expert serving on its audit committee. Richard J. Howell is the “audit committee financial expert” and is considered to be “independent” as each term is defined in Item 3 of Form N-CSR.

Item 4.

Principal Accountant Fees and Services.

The registrant has engaged its principal accountant to perform audit services, audit-related services, tax services and other services during the past two fiscal years. “Audit services” refer to performing an audit of the registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years. “Audit-related services” refer to the assurance and related services by the principal accountant that are reasonably related to the performance of the audit. “Tax services” refer to professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning. The following table details the aggregate fees billed or expected to be billed for each of the last two fiscal years for audit fees, audit-related fees, tax fees and other fees by the principal accountant.


	FYE 12/31/2017		FYE 12/31/2016
Audit Fees	$	130,100	$	130,300
Audit-Related Fees	$	0	$	14,600
Tax Fees	$	27,450	$	37,716
All Other Fees	$	0	$	0

The audit committee has adopted pre-approval policies and procedures that require the audit committee to pre-approve all audit and non-audit services of the registrant, including services provided to any entity affiliated with the registrant.

The percentage of fees billed by Deloitte & Touche LLP applicable to non-audit services pursuant to waiver of pre-approval requirement were as follows:


	FYE 12/31/2017			FYE 12/31/2016
Audit-Related Fees		0	%		0	%
Tax Fees		0	%		0	%
All Other Fees		0	%		0	%

All of the principal accountant’s hours spent on auditing the registrant’s financial statements were attributed to work performed by full-time permanent employees of the principal accountant.

The following table indicates the non-audit fees billed or expected to be billed by the registrant’s accountant for services to the registrant and to the registrant’s investment adviser (including any entity controlling, controlled by, or under common control with the adviser) for the last two years. The audit committee of the board of trustees has considered whether the provision of non-audit services that were rendered to the registrant’s investment adviser is compatible with maintaining the principal accountant’s independence and has concluded that the provision of such non-audit services by the accountant has not compromised the accountant’s independence.


Non-Audit Related Fees	FYE 12/31/2017		FYE 12/31/2016
Registrant	$	27,450	$	37,716
Registrant’s Investment Adviser	$	0	$	0

Item 5.

Audit Committee of Listed Registrants.

Not applicable to registrants who are not listed issuers (as defined in Rule 10A-3 under the Securities Exchange Act of 1934).

Item 6.

Investments.

(a)

Schedule of Investments is included as part of the report to shareholders filed under Item 1 of this Form.

(b)

Not applicable.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable to open-end investment companies.

Item 8.

Portfolio Managers of Closed-End Management Investment Companies.

Not applicable to open-end investment companies.

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

Not applicable to open-end investment companies.

Item 10.

Submission of Matters to a Vote of Security Holders.

There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant’s board of trustees.

Item 11.

Controls and Procedures.

(a) The registrant’s Chief Executive Officer and Chief Financial Officer have reviewed the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “Act”)) as of a date within 90 days of the filing of this report, as required by Rule 30a-3(b) under the Act and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934. Based on their review, such officers have concluded that the disclosure controls and procedures are reasonably designed to ensure that information required to be disclosed in this report is recorded, processed, summarized and reported within the required time periods and that information required to be disclosed by the registrant in reports that it files or submits on Form N-CSR is accumulated and communicated to the registrant’s management, including its principal executive and financial officers, as appropriate to allow timely decisions regarding required disclosure.

(b) There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 12.

Exhibits.

(a)

(1) Any code of ethics or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy Item 2 requirements through filing an exhibit. Filed herewith.

(2) A separate certification for each principal executive and principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.

(3) Any written solicitation to purchase securities under Rule 23c-1 under the Act sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons. Not applicable to open-end investment companies.

(b)

Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Furnished herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


(Registrant) LKCM Funds

By (Signature and Title		/s/ J. Luther King, Jr.
		J. Luther King, Jr., President

Date March 8, 2018

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


By (Signature and Title)		/s/ J. Luther King, Jr.
		J. Luther King, Jr., President

Date March 8, 2018

By (Signature and Title)		/s/ Jacob D. Smith
		Jacob D. Smith, Chief Financial Officer

Date March 8, 2018

LKCM Funds N-CSRCertified annual shareholder report (management investment company)