Exhibit 99.B.23(d)(2)

                             SUB-ADVISORY AGREEMENT

          Sub-Advisory Agreement made as of [month] [day], 2003 (the
"Agreement") between McMorgan & Company LLC, a Delaware limited liability
company (the "Manager"), on behalf of McMorgan Funds (the "Trust") and certain
of its series as set forth in Schedule A, as amended from time to time (each, a
"Fund," and collectively, the "Funds"), and New York Life Investment Management
LLC, a Delaware limited liability company (the "Subadviser").

          WHEREAS, the Manager has entered into a Management Agreement, dated
October 15, 2003, and in the future, may enter into other such agreements with
the Trust (collectively, the "Management Agreement") with the Trust, an open-end
management investment company registered under the Investment Company Act of
1940, as amended (the "1940 Act"); and

          WHEREAS, under the Management Agreement, the Manager has agreed to
provide certain investment advisory and related administrative services to each
Fund; and

          WHEREAS, the Management Agreement permits the Manager to delegate
certain of its investment advisory duties under the Management Agreement to a
subadviser; and

          WHEREAS, the Manager desires to retain the Subadviser to furnish
certain investment advisory services with respect to each Fund as set forth in
Schedule A and the Subadviser is willing to furnish such services; and

          NOW, THEREFORE, the parties hereto agree as follows:

          1.   Appointment. The Manager hereby appoints the Subadviser as an
investment subadviser with respect to each Fund for the period and on the terms
set forth in this Agreement. The Subadviser accepts that appointment and agrees
to render the services herein set forth, for the compensation herein provided.

          2.   Duties as Subadviser. Subject to the supervision of the Board of
Trustees of the Trust and the Manager, the Subadviser shall manage the
investment operations of each Fund and the composition of the portfolio of each
Fund, including the purchase, retention and disposition of securities therein,
in accordance with the investment objectives, policies and restrictions of each
Fund, as specified in the currently effective Prospectus (as hereinafter
defined) and subject to the following understandings:

               (a)  The Subadviser shall provide supervision of each Fund's
investments and determine from time to time what investments or securities will
be purchased, retained, sold or lent by each Fund, and what portion of each
Fund's assets will be invested or held uninvested as cash.

               (b)  The Subadviser shall use its best judgment in the
performance of its duties under this Agreement.

               (c)  The Subadviser, in the performance of its duties and
obligations under this Agreement, shall act in conformity with the Declaration
of Trust, By-Laws and Prospectus (each as hereinafter defined) of the Trust and
with the instructions and directions of the Board of Trustees and the Manager
and will conform to and comply with the requirements of the 1940 Act and all
other applicable federal and state laws and regulations.

               (d)  The Subadviser shall determine the securities to be
purchased or sold by each Fund and will place orders pursuant to its
determination with or through such persons, brokers or dealers (including NYLIFE
Securities Inc.) in conformity with the policy with respect to brokerage as set
forth in the Trust's Registration Statement and Prospectus (each as hereinafter
defined) or as the Board of Trustees may direct from time to time. It is
recognized that, in providing a Fund with investment supervision or the placing
of orders for portfolio transactions, the Subadviser will give primary
consideration to securing the most favorable price and efficient execution.
Consistent with this policy, the Subadviser may consider the financial
responsibility, research and investment information and other services provided
by brokers or dealers who may effect or be a party to any such transaction or
other transactions to which other clients of the Subadviser may be a party. It
is understood that none of the Funds, the Trust, the Manager nor the Subadviser
has adopted a formula for allocation of a Fund's investment transaction
business. It is also understood that it is desirable for each Fund that the
Subadviser have access to supplemental investment and market research and
security and economic analyses provided by certain brokers who may execute
brokerage transactions at a higher cost to a Fund than may result when
allocating brokerage to other brokers on the basis of seeking the most favorable
price and efficient execution. Therefore, the Subadviser is authorized to place
orders for the purchase and sale of securities for each Fund with such certain
brokers, subject to review by the Trust's Board of Trustees from time to time
with respect to the extent and continuation of this practice. It is understood
that the services provided by such brokers may be useful to the Subadviser in
connection with its services to other clients.





                    On occasions when the Subadviser deems the purchase or sale
of a security to be in the best interest of one or more of the Funds as well as
other clients, the Subadviser, to the extent permitted by applicable laws and
regulations, may, but shall be under no obligation to, aggregate the securities
to be so sold or purchased in order to obtain the most favorable price or lower
brokerage commissions and efficient execution. In such event, allocation of the
securities so purchased or sold, as well as expenses incurred in the
transaction, will be made by the Subadviser in the manner it considers to be the
most equitable and consistent with its fiduciary obligations to the Funds and to
such other clients.

               (e)  The Subadviser shall maintain all books and records with
respect to the Fund's securities transactions required by sub-paragraphs (b)(5),
(6), (9) and (10) and paragraph (f) of Rule 31a-1 under the 1940 Act and any
other books and records required to be maintained by it under the 1940 Act and
the rules thereunder and shall render to the Manager and to the Trust's Trustees
such periodic and special reports as the Manager or the Trustees may reasonably
request.

               (f)  The Subadviser shall provide each Fund's Custodian on each
business day with information relating to the execution of all portfolio
transactions pursuant to standing instructions.

          3.   Subadviser Personnel. The Subadviser shall authorize and permit
any of its directors, officers and employees who may be elected or appointed as
Trustees or officers of the Trust to serve in the capacities in which they are
elected or appointed. Services to be furnished by the Subadviser under this
Agreement may be furnished through the medium of any of such directors,
officers, or employees.

          4.   Books and Records. The Subadviser shall keep the Funds' books and
records required to be maintained by it, pursuant to paragraph 2 hereof. The
Subadviser agrees that all records which it maintains for a Fund are the
property of that Fund, and it will surrender promptly to that Fund any of such
records upon the Fund's request. The Subadviser further agrees to preserve for
the periods prescribed by Rule 31a-2 as promulgated by the Securities and
Exchange Commission (the "Commission") under the 1940 Act any such records as
are required to be maintained by the Subadviser pursuant to paragraph 2 hereof.

          5.   Services Not Exclusive. The services furnished by the Subadviser
hereunder are not to be deemed exclusive and the Subadviser shall be free to
furnish similar or different services to others so long as its services under
this Agreement are not impaired thereby.

          6.   Documents. The Manager has delivered to the Subadviser copies of
each of the following documents and will deliver to it all future amendments and
supplements, if any:

               (a)  Certificate of the Trust, filed with the Secretary of the
State of Delaware (such Articles of Incorporation, as in effect on the date
hereof and as amended from time to time, is herein called the "Trust
Instrument");

               (b)  By-Laws of the Trust (such By-Laws, as in effect on the date
hereof and as amended from time to time, are herein called the "By-Laws");

               (c)  Certified Resolutions of the Board of Trustees of the Trust
authorizing the appointment of the Subadviser and approving the form of this
Agreement;





               (d)  Written Instrument to Establish and Designate Separate
Series of Shares;

               (e)  Registration Statement under the 1940 Act and the Securities
Act of 1933, as amended, on Form N-lA (the "Registration Statement"), as filed
with the Commission relating to each Fund and each Fund's Shares and all
amendments thereto;

               (f)  Notification of Registration of the Trust under the 1940 Act
on Form N-8A as filed with the Commission and all amendments thereto; and

               (g)  Each Prospectus and Statement of Additional Information of
the Trust (such Prospectus and Statement of Additional Information, as currently
in effect and as amended or supplemented from time to time, being herein called
collectively the "Prospectus").

          7.   Expenses. During the term of this Agreement, the Subadviser will
bear all expenses incurred by it in connection with its services under this
Agreement. The Subadviser shall not be responsible for any expenses incurred by
the Trust, any Fund or the Manager.

          8.   Compensation. For the services provided and the expenses assumed
by the Subadviser pursuant to this Agreement, the Manager, not the Trust or any
Fund, will pay to the Subadviser a fee, computed daily and payable monthly, at
an annual rate, as set forth on Schedule A, of the average daily net assets of
the Fund.

          9.   Standard of Care. Subject to the applicable law, the Subadviser
shall not be liable for any error of judgment or for any loss suffered by a Fund
in connection with the matters to which this Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on its part in
the performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement.

          10.  Duration and Termination. This Agreement shall continue in effect
with respect to each Fund for a period of one year from the effective date
hereof, except with respect to any series of the Trust added to Schedule A of
this Agreement after November 1, 2003, for an initial period of two years from
the date that such series is added, and thereafter only so long as such
continuance is specifically approved at least annually with respect to that Fund
in conformity with the requirements of the 1940 Act and the Rules thereunder.
Notwithstanding the foregoing, this Agreement may be terminated: (a) with
respect to any Fund, at any time without penalty upon the vote of a majority of
the Trust's Trustees or by vote of the majority of the Fund's outstanding voting
securities, upon sixty (60) days' written notice to the Subadviser, (b) by the
Manager at any time without penalty upon sixty (60) days' written notice to the
Subadviser or immediately upon material breach by the Subadviser or immediately
if, in the reasonable judgment of the Manager, the Subadviser becomes unable to
discharge its duties and obligations under this Agreement, or (c) by the
Subadviser at any time without penalty, upon sixty (60) days' written notice to
each applicable Fund. This Sub-Advisory Agreement will also terminate
automatically in the event of its assignment (as defined in the 1940 Act) or the
assignment or termination of the Management Agreement.

          11.  Other Business. Nothing in this Agreement shall limit or restrict
the right of any of the Subadviser's directors, officers, or employees who may
also be a Trustee, officer, or employee of the Trust to engage in any other
business or to devote his or her time and attention in part to the management or
other aspects of any business, whether of a similar or dissimilar nature, nor
limit or restrict the Subadviser's right to engage in any other business or to
render services of any kind to any other corporation, trust, firm, individual or
association.

          12.  Amendment. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought. No material amendment of this Agreement shall be
effective until approved (i) by a vote of a majority of those Trustees of the
Trust who are not parties to this Agreement or interested persons of any such
party, and (ii) by a vote of a majority of the relevant Fund's outstanding
voting securities (unless in the case of (ii), the Trust receives a Commission
order or no-action letter permitting it to modify the Agreement without such
vote).

          13.  Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California.





          14.  Notice. Any notice or other communication required to be given
pursuant to this Agreement shall be deemed duly given if delivered or mailed by
registered mail, postage prepaid, (1) to the Manager at One Bush Street, Suite
800, San Francisco, California 94104; or (2) to the Subadviser at 169 Lackawanna
Avenue, Parsippany, New Jersey 07054.

          15.  Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. As used in this Agreement, the terms "majority of the
outstanding voting securities," "affiliated person," "interested person,"
"assignment," "broker," "investment adviser," "net assets," "sale," "sell" and
"security" shall have the same meaning as such terms have in the 1940 Act. Where
the effect of a requirement of the federal securities laws reflected in any
provision of this Agreement is made less restrictive by a rule, regulation or
order of the Commission, whether of special or general application, such
provision shall be deemed to incorporate the effect of such rule, regulation or
order. This Agreement may be signed in counterpart.





          IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.

                               NEW YORK LIFE INVESTMENT MANAGEMENT LLC

                               By:      ____________________________________
                               Name:             Stephen C. Roussin
                               Title:            President and Chief Operating
                                                  Officer

                               McMORGAN AND COMPANY LLC

                               By:      ____________________________________
                               Name:             Robert Barron
                               Title:            Chief Executive Officer





                                   SCHEDULE A

             FUND                                           ANNUAL RATE*

             High Yield Fund                        50% of the net advisory fee
                                                       earned by the Advisor.

             *    of each Fund's average daily net assets