<PAGE>
[Logo] wm
GroupofFunds
strategic asset
MANAGEMENT PORTFOLIOS
[Graphic Omitted]
THE DIFFERENCE IS EXPERIENCE
Annual Report
for the year ended October 31, 2000
<PAGE>
WM Strategic Asset
MANAGEMENT PORTFOLIOS
strategic growth portfolio
conservative growth portfolio
balanced portfolio
conservative balanced portfolio
flexible income portfolio
contents
message from the president ............. 1
is the market becoming more volatile? .. 2
individual fund reviews ................ 5
statements of assets and liabilities ... 16
statements of operations ............... 17
statements of changes in net assets .... 18
statements of changes in net
assets - capital stock activity ........ 20
financial highlights ................... 22
portfolio of investments ............... 26
notes to financial statements .......... 29
independent auditor's report ........... 34
tax information (unaudited) ............ 35
<PAGE>
[Photo of William G. Papesh]
Dear Shareholder,
Looking at the performance of U.S. equity markets over the past year, volatility
certainly has been the underlying theme. We have witnessed daily fluctuations of
the Dow Jones Industrial Average (DJIA) that seem larger than many of us can
ever remember. In fact, these fluctuations have been greater this year than in
any year during the 1990s.(1) The important thing to keep in mind, however, is
that volatility is a natural part of investing. If you build a well-diversified
investment portfolio while maintaining a long-term perspective, you can
potentially lower your risk and be less concerned with market volatility over
the short term.
Diversification is the key to controlling market volatility. The old adage
"don't put all your eggs in one basket," certainly rings true when it comes to
investing. It also represents the basis of mutual fund investing. Mutual funds
are able to hold a large number of securities, allowing them to achieve a level
of diversification that would otherwise be difficult for individual investors to
attain on their own. At the WM Group of Funds, we take the concept of
diversification a step further. We have built a fund family that is predicated
on the investment tenets of diversification and risk management. Whether you've
invested in one or more of our 18 individual mutual funds or our five actively
managed Strategic Asset Management Portfolios, your long-term assets are being
managed with a focus on some degree of diversification and/or asset allocation.
The WM Group of Funds utilizes multiple levels of diversification. We offer a
comprehensive family of funds that is representative of the major asset classes
or investment categories. We also give you access to different investment
styles, such as growth or momentum investing and value investing. Over the past
year, we have rounded out our equity fund offerings by introducing the WM Mid
Cap Stock Fund and repositioning the WM Equity Income Fund into larger-cap,
traditional dividend-producing value holdings. Our newest fund, the WM Mid Cap
Stock Fund represents an important segment of the investment arena, mid-sized
companies, and underscores another level of diversification -- company size. In
addition, our fixed-income funds provide investment choices segmented by type of
issuer, maturity, and yield potential.
Another unique feature of the WM Group of Funds family is the structure of its
portfolio management team. All mutual funds have an investment advisor that
oversees the day-to-day investment management of the Funds. Our investment
advisor, WM Advisors, Inc., has created an environment that allows additional
managers and management companies to leverage their strengths in one fund
family, giving you access to multiple managers and management styles.
In addition to the investment advisor, a very important aspect of mutual fund
investing is the Board of Trustees. As mandated by the Investment Company Act of
1940, all mutual funds are required to have a board structure that looks out for
the best interest of you, the shareholder. They are responsible for protecting
the interests of fund investors as well as overseeing general fund operations.
It is important to note that 11 of the 14 Board members are not directly
affiliated with WM Advisors, which offers objective leadership to the process.
In the coming pages of this report, we highlight the members of the WM Board of
Trustees and provide some insight into how they assist in the overall management
of your investment assets. I also wanted to express my personal appreciation to
the WM Trustees, who have helped shape and grow the fund family, ever mindful of
the interests of all shareholders.
Thank you for your continued support and trust in the WM Group of Funds. For
more than 60 years, and through various economic and market cycles, we have been
dedicated to helping you build your investment wealth. Please take the time to
review the following pages that highlight the important facets of the
performance of your investments and the financial markets during the past year,
as well as recognizing the value and importance of your WM Group of Funds' Board
of Trustees. I again want to take the opportunity to stress the benefit of
having regular meetings with your Financial Advisor to ensure that you are
positioned to meet your long-term investment objectives.
Sincerely,
/s/ William G. Papesh
William G. Papesh
President
(1) As measured by the standard deviation of the closing prices of the DJIA.
<PAGE>
diversification
"Diversification is
the key to investing
in volatile markets"
IS THE MARKET BECOMING
MORE VOLATILE AND WHAT
CAN BE DONE ABOUT IT?
VOLATILE MARKETS
The daily price fluctuations of the Dow Jones Industrial Average (DJIA) have
increased significantly thus far in 2000. As you can see from the chart below,
the volatility has increased substantially compared to the 1990s. Even more
dramatic, the daily volatility of the technology-heavy Nasdaq Index was more
than double that of the already high levels of the DJIA during the same period.
Rapid and dramatic price changes have become almost a daily event. Higher
short-term interest rates, unrealistic equity valuations, and rising oil prices
all contributed to this volatile environment. This volatility can be
disconcerting for investors, especially for those who have not diversified their
portfolios.
Diversification is the key to investing in volatile markets; a portfolio that is
diversified in multiple asset classes is less subject to risk and volatility as
compared to an investment in one particular asset class. Diversification can be
a powerful tool in helping investors manage risk and meet their long-term
investment goals.
DAILY MARKET VOLATILITY*
1990s 0.89%
2000 1.32%
* Source: Dow Jones Industrial Average. Volatility is measured by the standard
deviation. Results for 2000 are through October 31.
DIVERSIFIED PORTFOLIOS
Diversification is the process of combining different types of asset classes or
investment categories in one portfolio. For instance, a portfolio that is
invested in stocks, bonds, and cash will be less subject to market fluctuations
than one that is invested only in stocks. While this is a simplified look at
diversification, in practice, we can actually take this a step further. For
instance, it is also possible to reduce risk by adding what is normally
considered a "risky" asset into a portfolio. Historically speaking, by adding a
portion of international stocks into a domestic equity portfolio, risk can
actually be reduced. This process is called asset allocation -- in other words
the decision of where and to what degree you diversify your assets. The example
to the right demonstrates how diversified portfolios have the potential not only
to reduce risk, but also to generate additional returns.
PERFORMANCE DISPARITY
In addition to being more volatile than any year in the 1990s, the past 12
months have produced significantly varied results from different types of
investment categories. From the strong performance exhibited by mid-sized
companies to the negative returns of stocks from emerging market countries,
investment results from the past year reinforce the need for a diversified
portfolio. Diversification enables an investor to participate in market upswings
-- mid-cap stocks for example -- while minimizing risk should one portion of the
market stumble, such as the technology sector in 2000.
INVESTMENT PERFORMANCE
FOR THE ONE-YEAR PERIOD ENDED OCTOBER 31, 2000
Mid-Cap Stocks 31.6%
Small-Cap Stocks 17.4%
Gov't. Bonds 8.0%
Large-Cap Stocks 6.1%
Corporate Bonds 5.5%
Inflation 3.6%
High Yield Bonds -1.6%
Foreign Stocks -2.7%
Emerging Markets -10.1%
Source: Ibbotson Associates. The following indices were used: Mid-cap Stocks
(S&P 400 Midcap Index), Small-cap Stocks (Russell 2000), Gov't. Bonds (Lehman
Brothers Government Bond Index), Large-cap Stocks (S&P 500), Corporate Bonds (LB
Credit Bond Index), Inflation (CPI), High Yield Bonds (LB High Yield Bond
Index), Foreign Stocks (MSCI EAFE Index), Emerging Market Stocks (S&P/IFCI
Emerging Composite). Individuals cannot invest directly in an index.
International investments can carry greater risks including currency, liquidity,
and political risks.
DIVERSIFIED PORTFOLIOS CAN ENHANCE RETURNS AND REDUCE RISK
DIVERSIFIED PORTFOLIO
AVERAGE ANNUAL RETURN: 13.3%
RISK: 9.8%
Bonds 35%
Large-Cap Stocks 20%
Cash 10%
Small-Cap Stocks 15%
Foreign Stocks 20%
50% STOCKS/50% BONDS
AVERAGE ANNUAL RETURN: 12.7%
RISK: 10.0%
Large-Cap Stocks 50%
Bonds 50%
Source: Ibbotson Associates. Represents 25 year period ended 10-31-00.
Diversified Portfolio is allocated as follows: Bonds 35% (Lehman Brothers
Gov't./Credit), Stocks 20% (S&P 500), Cash 10% (30-day T-Bill), Small-Cap Stocks
15% (Ibbotson Small Cap Index), Foreign Stocks 20% (MSCI Europe). 50/50
Portfolio: 50% S&P 500, 50% LB Gov't./Credit. Risk is measured by standard
deviation.
<PAGE>
MEET WITH YOUR FINANCIAL ADVISOR
At the WM Group of Funds, we continually stress the importance of meeting with
your Financial Advisor to discuss your long-term goals and objectives. This is
especially important when it comes to diversification and asset allocation. It
is important to discuss you and your family's changing needs as you invest both
now and for retirement. As your goals change, so should your investment
strategy. Your Financial Advisor can help you devise a strategy that allows your
investment portfolio to stay in line with your short-term and long-term needs.
YOUR BOARD OF TRUSTEES
The Investment Company Act of 1940 mandated a board structure for mutual funds
that is unique compared to other types of companies. Shareholders of a mutual
fund have a team of professionals working for them whose goal is to protect
their interests. The WM Group of Funds' Board of Trustees has been chosen by
shareholders to do just that. They meet quarterly to enact policies for
investment advisory functionality, discuss fund-specific policies, and oversee
fund management to ensure that performance remains in line with investment
objectives.
The WM Group of Funds' Board of Trustees has been selected for their knowledge
in both the business and investment worlds. With experience in a wide array of
fields and backgrounds, they are well prepared to look out for your best
interests. Some of the professions of the WM Group of Funds' board members
include a lawyer, a doctor, an accountant, a university professor and an
investment banker. Other professions range from an investment manager and a
public relations executive to leaders of a charitable foundation and a
consulting firm. Additionally, four of our board members are former or current
presidents of their respective organizations, specifically a major
telecommunications company, a venture capital company, an industrial firm and a
university. The President of WM Advisors is also a member of the Board. The
Board plays an extremely important role at the WM Group of Funds and has been
chosen to leverage their wide scope of expertise to serve the best interests of
all WM Group of Funds shareholders.
[Photo of Board of Trustees]
WM Group of Funds' Board of Trustees
Back Row (left to right): Wayne L. Attwood, M.D.; Carrol R. McGinnis;
Richard C. Yancey; Jay Rockey; Michael K. Murphy; William G. Papesh;
Arthur H. Bernstein, Esq.
Front Row (seated left to right): David E. Anderson; Morton O. Schapiro;
Kristianne Blake; Daniel L. Pavelich; Alfred E. Osborne, Jr., Ph.D.;
Anne V. Farrell; Edmond R. Davis, Esq.
Special thanks to John English (not pictured) for more than six years of
dedicated service as a Board member.
<PAGE>
individual portfolio reviews
TO OUR ASSET
ALLOCATION CLIENTS
Welcome to the Strategic Asset Management Portfolios.
We are pleased to provide you with an overview of our five asset allocation
portfolios, each designed to meet your individual investment needs.
This report includes performance reviews and highlights
of the investment strategies incorporated during the
twelve-month period ended October 31, 2000.
UNDERSTANDING THE ENCLOSED CHARTS AND PERFORMANCE
In order to help you understand the Strategic Asset Management (SAM) Portfolios'
investment performance, we have included the following discussions along with
graphs that compare the Portfolios' performance with certain capital market
benchmarks. The benchmarks are a blended mix of capital market indices intended
to represent a proxy for Portfolio performance. Descriptions of the indices used
are as follows:
o The INFLATION INDEX is a measurement of the change in domestic prices and is
measured by the Consumer Price Index for all urban consumers.
o The LEHMAN BROTHERS AGGREGATE BOND INDEX is an all-inclusive bond index which
contains government, corporate, mortgage and asset-backed securities.
o The STANDARD & POOR'S 500 COMPOSITE INDEX is a capitalization-weighted index
of 500 stocks designed to measure performance of the broad domestic economy
and all economic sectors.
o The RUSSELL 3000 INDEX is comprised of the 3,000 largest U.S. companies based
on total market capitalization, which represents approximately 98% of the
investable U.S. equity market.
Generally, an index represents the market value of an unmanaged group of
securities, regarded by investors as representative of a particular market. An
index does not reflect any asset-based charges for investment management or
other expenses. Index results on the following pages include changes in value
and the reinvestment of dividends. Total return is used to measure a Portfolio's
performance and reflects both changes in the value of the Portfolio's shares as
well as any income dividend and/or capital gain distributions made by the
Portfolio during the period. Past performance is not a guarantee of future
results. A mutual fund's share price and investment return will vary with market
conditions, and the principal value of an investment when you sell your shares
may be more or less than the original cost.
The 30-day Securities and Exchange Commission (SEC) yield is the yield
calculated pursuant to a standard formula required by the SEC for performance
advertisement purposes and does not imply any endorsement or recommendation by
the SEC.
Yield indicates the investment income per share as a percentage of the ending
offering price, whereas total return includes both net investment income and
changes in the value of the shares as a percentage of the initial investment.
WM ADVISORS' ASSET ALLOCATION TEAM
RANDY YOAKUM
Senior Portfolio Manager
Chief Investment Officer
WM Advisors, Inc.
Randy Yoakum is a Chartered Financial Analyst with more than 16 years of
investment management experience. He holds a B.B.A. from Pacific Lutheran
University and an M.B.A. from Arizona State University. Accomplished in the
field of asset management, Mr. Yoakum was instrumental in developing the
investment policies at WM Advisors from 1987 to 1994, as well as after rejoining
the company in 1999. He currently serves as chairman of the Investment
Committee, Equity Investment Team, and the Asset Allocation Team, as well as
acting as lead portfolio manager of the WM Growth & Income Fund. He has
extensive experience in the field of asset allocation, having served as Chairman
and Senior Portfolio Manager for an asset allocation product at his previous
employer, D.A. Davidson & Co. (DADCO). In addition to acting as Chief Investment
Officer and chairing the Investment Policy Committee at DADCO, he was also
responsible for overseeing the research staff for the Trust Company, Investment
Management Firm, and the Brokerage Division. Prior to that, Mr. Yoakum served as
Senior Vice President and Chief Equity Officer at Boatman's Trust Company, where
he was responsible for all equity and balanced investment analysis, asset
allocation, research, portfolio management, and trading. He managed over 100
investment professionals as well as $25 billion in assets. His other duties at
Boatman's included senior portfolio management of the Asset Allocation
Portfolios, as well as chairing the Equity Investment Group and managing the
high profile equity and balanced portfolios.
Most recently Mr. Yoakum has been building the research staff for WM Advisors in
Seattle: adding several analysts for both the equity and fixed-income teams, as
well as two dedicated senior analysts for WM Group of Funds' asset allocation
product. Both analysts have significant experience and background with asset
allocation products.
Charles Averill is a Chartered Financial Analyst and a Senior Quantitative
Analyst, having been with WM Advisors for 10 years. He holds a B.A. in
Economics from Reed College and an M.A. in Economics from Princeton
University. Before joining the team at WM Advisors in 1990, Mr. Averill
worked as an assistant economics professor and a news editor.
Michael Meighan is the most recent addition to the asset allocation team at
WM Advisors. Mr. Meighan is a Chartered Financial Analyst candidate and holds
a B.S. from Santa Clara and an M.B.A. from Gonzaga University. He was
previously employed with Randy Yoakum at DADCO as a portfolio manager and
Senior Analyst for its asset allocation product. His responsibilities
included all managed investment products and the creation, analysis and
maintenance of the supervised recommended list of mutual funds for the firm.
Mr. Meighan also developed policy for the firm as a member of both the DADCO
Investment Policy Committee and the Davidson Trust Company Investment
Committee.
GARY POKRZYWINSKI
Senior Portfolio Manager
Chairman of the Fixed Income Investment Team
WM Advisors, Inc.
Gary Porkrzwinski also assists the asset allocation team. He is responsible for
helping to develop the outlook and policy for the fixed-income assets within the
Portfolios. Mr. Pokerzywinski is a Chartered Financial Analyst and currently
manages the WM Income and WM High Yield Funds.
<PAGE>
strategic growth portfolio
growth of a $10,000 investment(1)
(class A shares)+
Fund
(Class A
Fund Shares not
(Class A adjusted
shares; not for the
adjusted maximum Capital Russell
for sales 5.5% sales Market 3000
charge) charge) Benchmark(2) Index(3) Inflation(4)
--------------------------------------------------------------------------------
Inception
5/31/00
$10,000 $ 9,450 $10,000 $10,000 $10,000
10,375 9,805 10,219 10,000 10,289
10,908 10,308 10,523 10,040 10,703
10,992 10,387 10,561 10,080 10,798
11,291 10,670 10,970 10,113 11,217
10,951 10,349 10,949 10,147 11,120
11,346 10,722 11,399 10,167 11,614
11,657 11,015 11,605 10,187 11,803
Jan 96 11,849 11,197 11,972 10,187 12,146
12,208 11,536 12,055 10,214 12,324
12,530 11,840 12,150 10,234 12,448
12,886 12,177 12,304 10,268 12,684
13,146 12,423 12,588 10,261 13,009
12,799 12,095 12,651 10,254 12,967
11,893 11,238 12,148 10,314 12,288
12,444 11,760 12,377 10,347 12,660
12,982 12,268 13,025 10,401 13,349
12,824 12,118 13,375 10,442 13,593
13,455 12,715 14,312 10,461 14,551
13,358 12,623 14,046 10,468 14,377
Jan 97 13,730 12,975 14,835 10,488 15,172
13,537 12,792 14,947 10,508 15,188
12,919 12,209 14,371 10,541 14,502
13,177 12,452 15,165 10,575 15,217
14,038 13,266 16,017 10,595 16,256
14,489 13,692 16,679 10,595 16,932
15,441 14,592 17,916 10,629 18,260
14,862 14,044 17,004 10,662 17,518
15,569 14,713 17,867 10,689 18,512
14,914 14,094 17,356 10,701 17,890
14,966 14,143 18,087 10,695 18,575
14,981 14,157 18,386 10,708 18,946
Jan 98 15,159 14,325 18,593 10,728 19,143
16,325 15,427 19,798 10,748 20,512
17,094 16,154 20,717 10,769 21,530
17,326 16,373 20,916 10,788 21,741
16,819 15,894 20,612 10,808 21,204
17,367 16,412 21,383 10,821 21,920
16,955 16,023 21,183 10,834 21,521
14,266 13,482 18,461 10,847 18,224
15,158 14,324 19,568 10,860 19,467
16,008 15,128 20,990 10,886 20,945
16,942 16,010 22,147 10,886 22,226
18,370 17,359 23,303 10,880 23,639
Jan 99 19,472 18,401 24,196 10,906 24,442
18,897 17,858 23,477 10,919 23,576
20,031 18,930 24,336 10,953 24,441
21,043 19,886 25,192 11,032 25,544
20,348 19,229 24,634 11,032 25,059
21,557 20,371 25,857 11,032 26,325
21,009 19,854 25,119 11,065 25,527
20,994 19,840 25,006 11,092 25,237
21,194 20,028 24,418 11,145 24,592
22,340 21,112 25,818 11,165 26,134
23,777 22,469 26,290 11,172 26,866
26,540 25,080 27,671 11,172 28,580
Jan 00 25,988 24,558 26,411 11,198 27,460
27,628 26,108 25,993 11,265 27,714
28,843 27,257 28,316 11,357 29,885
27,329 25,826 27,541 11,364 28,832
26,539 25,080 27,031 11,371 28,022
27,327 25,824 27,686 11,437 28,852
26,729 25,259 27,322 11,457 28,342
28,480 26,913 28,889 11,464 30,444
27,392 25,885 27,535 11,477 29,065
Oct 00 26,997 25,512 27,448 11,514 28,652
+ The performance of the Class B shares was different from that shown above for
the Class A shares, based on the difference in sales charges and fees paid by
Class B shareholders.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS AS OF 10/31/00(1)
CLASS A SHARES 1 YEAR 5 YEAR SINCE INCEPTION
(May 31, 1995)
<S> <C> <C> <C>
Fund (not adjusted for sales charge) 20.84% 19.82% 20.15%
----------------------------------------------------------------------------------------------------
Fund (adjusted for maximum 5.5% sales charge) 14.20% 18.49% 18.90%
----------------------------------------------------------------------------------------------------
Capital Market Benchmark(2) 6.31% 20.18% 20.49%(2)
----------------------------------------------------------------------------------------------------
<CAPTION>
CLASS B SHARES 1 YEAR 5 YEAR SINCE INCEPTION
(May 31, 1995)
<S> <C> <C> <C>
Fund (not adjusted for contingent deferred sales charge) 19.95% 18.96% 19.30%
----------------------------------------------------------------------------------------------------
Fund (adjusted for maximum contingent deferred sales charge) 14.95% 18.86% 19.30%
----------------------------------------------------------------------------------------------------
Capital Market Benchmark(2) 6.31% 20.18% 20.49%(2)
----------------------------------------------------------------------------------------------------
(1) All performance shown prior to the November 1, 1996 asset conversion date (the date on which the
majority of existing SAM clients voluntarily exchanged into the new SAM Portfolios) for the Sierra
Asset Management Portfolios represents the performance of the Sierra Asset Management Account
("SAM Account"), a discretionary asset allocation service that invested in the Sierra Trust Funds.
The SAM Account was not registered as an investment company under the Investment Company Act of
1940 ("Act") and, therefore, was not subject to certain restrictions that the Act imposes. If the
SAM Account had been registered under the Act, its performance may have differed significantly.
The Portfolio's performance would have been lower had the Advisor not waived a portion of its fees
or reimbursed certain other expenses, and the Fund's custodian had not allowed its fees to be
reduced by credits. Past performance does not guarantee future results.
(2) The Strategic Growth Portfolio's benchmark is a capital market index that is intended to represent
a relevant proxy for market and Portfolio performance. The benchmark allocation is: 90% Standard &
Poor's 500 Composite Index and 10% Lehman Brothers Aggregate Bond Index. The returns shown for the
Portfolio assume reinvestment of all dividends and distributions by the shareholder. For
comparative purposes, the benchmark's performance is shown as of the Portfolio's inception date
not from the inception of the index.
(3) The Russell 3000 Index is a broad-based index and is intended to represent the majority of the U.S
equity market.
(4) Inflation is measured by the Consumer Price Index for all urban consumers.
(5) Annual rate of inflation: 2.54%. Source: Ibbotson Associates.
</TABLE>
PERFORMANCE REVIEW
The SAM STRATEGIC GROWTH PORTFOLIO (Class A shares) returned 20.84% (not
adjusted for sales charge) for the 12-month period ended October 31, 2000. While
being managed in an effort to reduce volatility relative to single asset-class
equity investments, the Portfolio significantly outperformed its benchmark
index, as well as the S&P 500 Index, which posted a return of 6.09%. Long-term
results have been favorable, providing a strong premium over inflation. Over the
past five years, the Portfolio has averaged 19.82% (not adjusted for sales
charge) per year, or 17.28% above the rate of inflation.(5)
ECONOMIC/MARKET REVIEW
The 12-month period under review was marked by increased volatility in the
equity markets. The strong equity performance that was witnessed in late 1999
and during the first part of 2000 reversed, particularly in the higher-growth
technology holdings that had led markets for the most of the late 1990s. The
tech-heavy NASDAQ Index peaked in March and then retreated, wiping out earlier
gains.
During the period, the Federal Reserve continued to notch up short-term interest
rates in an effort to quell inflation and slow growth while investors began to
take notice of some of the lofty prices of many equities. The economic slowdown
made investors question the sustainability of very high earnings growth rates
for much of the technology sector and the high valuations (prices relative to
earnings) that many of these stocks carried. Additional factors contributing to
market volatility were significantly higher oil prices and a very strong dollar
that drove up prices of U.S. goods for foreign consumers. Although overall
economic growth continues, some of the effects of higher interest rates have
taken their desired effect.
Economic stability also remains, evidenced by strong productivity, healthy
consumer spending, low unemployment, and subdued inflation. The shift in market
sentiment was positive for some sectors as many traditional value holdings
gained favor when money flowed out of growth momentum stocks. The second half of
the period significantly favored value stocks, especially mid-sized companies.
The period closed with strong performance from the utility, financial, and
health care sectors.
Fixed-income markets were negatively affected by rising short-term interest
rates, but closed out the year on a positive note when long-term rates fell in
response to evidence of an economic slowdown. For the 12-month period,
short-term rates increased significantly by 100 basis points (1%), and yields
closed out the year inverted (when short-term rates are higher than long-term
rates). Central banks around the globe also increased interest rates in an
effort to stem inflationary pressures as well as support their currencies. As a
result, global markets were also volatile during the period. While European
equity markets reported slightly positive performance for the year, markets in
the Pacific Region and in many emerging countries were quite weak.
INVESTMENT STRATEGY
The STRATEGIC GROWTH PORTFOLIO is diversified in eight funds, representing six
major asset classes. The combination of asset classes increases our ability to
manage risk over a long-term investment horizon. The benefits of a diversified
portfolio were clearly evident during the 12-month period ended October 31,
2000, as domestic equity market leadership shifted out of large-cap growth
technology into some more traditional value positions. Because the Portfolio is
diversified in both of these areas, shareholders were able to participate in the
rally as well as benefit from reduced volatility. The overall investment
strategy for the period was to:
o Broaden equity diversification into small- and mid-cap positions.
o Reduce positions in higher-valued growth technology holdings early in the
period in favor of value stocks found in the finance and health care sectors.
o Introduce two new funds into the Portfolio - the WM MID CAP STOCK FUND and the
WM EQUITY INCOME FUND - to broaden equity diversification in mid-cap and value
positions.
o Add a position in corporate bonds to manage risk and to take advantage of
falling interest rates in the second half of the period.
REVIEW OF PORTFOLIO ALLOCATIONS
We took advantage of the rally in growth stocks early in the period and were
able to realize some significant gains from the WM GROWTH FUND. We shifted
assets out of the large-cap growth sector and into some broader areas of the
market, adding to the WM SMALL CAP STOCK FUND and initiating a position in both
the WM MID CAP STOCK FUND and the WM EQUITY INCOME FUND. These moves benefited
overall Portfolio performance, as the mid-cap value sector was one of the
strongest performing areas during the second half of the year, and the WM MID
CAP STOCK FUND was the best performer of all the WM Funds since its inception in
March 2000. On a secular basis, this also worked to reduce technology positions
in favor of financial and health care holdings, which were more attractively
valued. The sector positioning also contributed to the strong relative
performance during the second half of the period, as technology stocks retreated
considerably. Despite volatile performance, we maintained the Portfolio's
exposure to international equities (13%) to diversify holdings.
Throughout the course of the past 12 months, we slightly increased our positions
in fixed-income securities (11%), favoring longer-term corporate holdings while
reducing cash positions. We feel that given the slower growth domestic
environment, the fixed-income positions could aid performance as well as manage
risk.
OUTLOOK
The economy seems to be slowing, with growth continuing at a more sustainable
rate. International currency markets may slow overall global growth as foreign
banks are forced to raise interest rates to support their currencies. We will
continue to increase diversification in an effort to manage risk while taking
advantage of positions in value stocks and fixed-income holdings, which could be
attractive in a slower-growth environment.
It seems that the Federal Reserve may not need to intervene as the effects of
prior interest-rate moves take their desired effect. The Fed members will likely
weigh the economic slowdown against possible inflationary and wealth effects
when deciding possible interest-rate policies in 2001. We are watching both
corporate and consumer debt levels as possible indicators of future growth -- if
debt levels get too high and credit tightens, a further economic slowdown could
develop. Overall, our long-term outlook remains positive, as we believe
productivity enhancements will help continue the low global inflationary
environment, benefiting both stock and bond markets.
portfolio allocation
as of October 31, 2000++
Growth & Income Fund 33%
Growth Fund 20%
Mid Cap Stock Fund 11%
Small Cap Stock Fund 9%
International Growth Fund 9%
Growth Fund of the Northwest 8%
High Yield Fund 5%
Equity Income Fund 5%
asset class diversification
as of October 31, 2000++
Large-Cap Stocks 43%
Mid-Cap Stocks 21%
Foreign Stocks 13%
Small-Cap Stocks 12%
Cash Equivalents 5%
Corporate Bonds 5%
Other Bonds 1%
Note: as a percentage of investment company securities
++ may not feflect current allocation
<PAGE>
conservative growth portfolio
GROWTH OF A $10,000 INVESTMENT(1)
(class A shares)+
Fund
(Class A
Fund Shares not
(Class A adjusted
shares; not for the
adjusted maximum Capital Russell
for sales 5.5% sales Market 3000
charge) charge) Benchmark(2) Index(3) Inflation(4)
--------------------------------------------------------------------------------
$10,000 $ 9,450 $10,000 $10,000 $10,000
10,223 9,661 10,515 10,023 10,687
10,349 9,779 10,766 10,077 11,016
Jan 91 10,697 10,109 11,139 10,115 11,569
11,257 10,638 11,726 10,208 12,437
11,270 10,650 11,946 10,294 12,804
11,381 10,755 12,008 10,356 12,817
11,639 10,999 12,388 10,379 13,347
11,192 10,577 11,990 10,379 12,739
11,573 10,936 12,433 10,441 13,340
11,756 11,110 12,718 10,457 13,697
11,881 11,227 12,650 10,472 13,541
12,133 11,466 12,810 10,488 13,767
11,868 11,215 12,483 10,520 13,240
12,718 12,018 13,594 10,550 14,724
Jan 92 12,868 12,160 13,361 10,566 14,624
12,979 12,265 13,507 10,597 14,819
12,549 11,859 13,299 10,643 14,491
12,597 11,904 13,598 10,659 14,784
12,894 12,185 13,727 10,690 14,883
12,721 12,021 13,644 10,698 14,615
12,834 12,128 14,113 10,714 15,219
12,909 12,199 13,956 10,752 14,890
12,866 12,159 14,118 10,807 15,089
12,813 12,108 14,097 10,822 15,239
13,109 12,388 14,431 10,837 15,865
13,285 12,555 14,632 10,876 16,149
Jan 93 13,468 12,727 14,791 10,899 16,307
13,727 12,972 15,009 10,930 16,413
14,126 13,350 15,253 10,960 16,824
14,214 13,433 15,024 10,999 16,378
14,541 13,741 15,314 11,014 16,848
14,545 13,745 15,432 11,006 16,957
14,648 13,842 15,408 11,060 16,929
15,271 14,431 15,900 11,099 17,587
15,314 14,472 15,830 11,138 17,585
15,623 14,764 16,073 11,169 17,837
15,236 14,398 15,926 11,185 17,562
15,754 14,887 16,089 11,200 17,906
Jan 94 16,333 15,434 16,531 11,200 18,454
15,990 15,110 16,132 11,232 18,008
15,349 14,504 15,522 11,255 17,221
15,404 14,556 15,626 11,301 17,417
15,251 14,412 15,804 11,309 17,609
14,910 14,090 15,520 11,309 17,126
15,350 14,505 15,972 11,340 17,657
15,768 14,901 16,433 11,378 18,427
15,517 14,664 16,083 11,417 18,034
15,756 14,890 16,337 11,433 18,332
15,217 14,380 15,906 11,441 17,663
15,207 14,371 16,102 11,480 17,937
Jan 95 15,144 14,311 16,490 11,511 18,329
15,387 14,541 17,056 11,557 19,077
15,621 14,762 17,441 11,588 19,552
15,918 15,043 17,869 11,596 20,063
16,285 15,389 18,571 11,611 20,791
16,801 15,877 18,917 11,611 21,392
17,562 16,596 19,345 11,658 22,252
17,723 16,748 19,452 11,704 22,450
18,136 17,139 20,079 11,743 23,321
17,692 16,719 20,108 11,782 23,120
18,188 17,188 20,818 11,805 24,147
18,651 17,626 21,175 11,829 24,540
Jan 96 18,915 17,875 21,727 11,829 25,252
19,459 18,388 21,760 11,860 25,623
19,872 18,779 21,860 11,883 25,879
20,382 19,261 22,048 11,923 26,371
20,709 19,570 22,433 11,914 27,046
20,324 19,206 22,588 11,906 26,960
19,066 18,017 21,903 11,976 25,547
19,838 18,747 22,216 12,015 26,321
20,533 19,403 23,206 12,077 27,753
20,243 19,130 23,806 12,124 28,261
20,863 19,715 25,193 12,147 30,253
20,752 19,611 24,777 12,154 29,890
Jan 97 20,997 19,842 25,877 12,178 31,543
20,690 19,552 26,043 12,201 31,578
19,854 18,762 25,198 12,240 30,151
20,180 19,070 26,365 12,279 31,637
21,443 20,264 27,573 12,302 33,798
22,136 20,918 28,532 12,302 35,204
23,256 21,977 30,349 12,342 37,964
22,379 21,148 29,090 12,380 36,422
23,418 22,130 30,335 12,411 38,488
22,481 21,244 29,758 12,426 37,194
22,461 21,225 30,763 12,418 38,619
22,544 21,304 31,227 12,433 39,391
Jan 98 22,803 21,549 31,589 12,457 39,801
24,247 22,913 33,176 12,480 42,647
25,238 23,850 34,400 12,504 44,762
25,561 24,155 34,695 12,527 45,201
24,938 23,566 34,377 12,549 44,084
25,499 24,096 35,442 12,564 45,574
25,004 23,629 35,200 12,579 44,745
21,386 20,210 31,810 12,594 37,890
22,440 21,206 33,459 12,610 40,474
23,625 22,326 35,311 12,640 43,546
24,981 23,607 36,870 12,640 46,210
26,792 25,319 38,390 12,633 49,147
Jan 99 28,148 26,600 39,596 12,663 50,816
27,410 25,903 38,526 12,679 49,016
29,050 27,452 39,669 12,717 50,815
30,429 28,756 40,782 12,810 53,108
29,526 27,902 40,001 12,810 52,099
31,118 29,406 41,516 12,810 54,732
30,551 28,871 40,557 12,848 53,073
30,478 28,802 40,410 12,879 52,469
30,767 29,075 39,775 12,941 51,128
32,257 30,482 41,581 12,964 54,335
34,082 32,208 42,172 12,972 55,856
37,586 35,519 43,850 12,972 59,420
Jan 00 36,695 34,677 42,264 13,003 57,091
38,523 36,404 41,858 13,080 57,620
40,275 38,060 44,890 13,188 62,134
38,596 36,473 43,905 13,195 59,945
37,608 35,539 43,268 13,203 58,261
38,499 36,382 44,285 13,280 59,986
37,856 35,774 43,921 13,303 58,925
40,006 37,806 46,022 13,311 63,295
38,770 36,638 44,409 13,326 60,429
Oct 00 38,352 36,242 44,365 13,369 59,571
Period: 10/31/90 - 10/31/00
+ The performance of the Class B shares was different from that shown above for
the Class A shares, based on the difference in sales charges and fees paid by
Class B shareholders.
<TABLE>
AVERAGE ANNUAL TOTAL RETURNS AS OF 10/31/00(1)
CLASS A SHARES
<CAPTION>
CLASS A SHARES 1 YEAR 5 YEAR 10 YEAR
<S> <C> <C> <C>
Fund (not adjusted for sales charge) 18.89% 16.74% 14.38%
----------------------------------------------------------------------------------------------------
Fund (adjusted for maximum 5.5% sales charge) 12.36% 15.43% 13.74%
----------------------------------------------------------------------------------------------------
Capital Market Benchmark(2) 6.70% 17.15% 16.07%(2)
----------------------------------------------------------------------------------------------------
CLASS B SHARES 1 YEAR 5 YEAR SINCE INCEPTION
July 1, 1994
<S> <C> <C> <C>
Fund (not adjusted for contingent deferred sales charge) 18.07% 15.75% 15.13%
----------------------------------------------------------------------------------------------------
Fund (adjusted for maximum contingent deferred sales charge) 13.07% 15.64% 15.13%
----------------------------------------------------------------------------------------------------
Capital Market Benchmark(2) 6.70% 17.15% 18.04%(2)
----------------------------------------------------------------------------------------------------
(1) All performance shown prior to the November 1, 1996 asset conversion date (the date on which the
majority of existing SAM clients voluntarily exchanged into the new SAM Portfolios) for the Sierra
Asset Management Portfolios represents the performance of the Sierra Asset Management Account
("SAM Account"), a discretionary asset allocation service that invested in the Sierra Trust Funds.
The SAM Account was not registered as an investment company under the Investment Company Act of
1940 ("Act") and, therefore, was not subject to certain restrictions that the Act imposes. If the
SAM Account had been registered under the Act, its performance may have differed significantly.
The Portfolio's performance would have been lower had the Advisor not waived a portion of its fees
or reimbursed certain other expenses, and the Fund's custodian had not allowed its fees to be
reduced by credits. Past performance does not guarantee future results.
(2) The Conservative Growth Portfolio's benchmark is a capital market index that is intended to
represent a relevant proxy for market and Portfolio performance. The benchmark allocation is: 70%
Standard & Poor's 500 Composite Index and 30% Lehman Brothers Aggregate Bond Index. The returns
shown for the Portfolio assume reinvestment of all dividends and distributions by the shareholder.
For comparative purposes, the benchmark's performance is shown for the ten-year period or the
inception of the particular Portfolio class of shares.
(3) The Russell 3000 Index is a broad-based index and is intended to represent the majority of the
U.S. equity market.
(4) Inflation is measured by the Consumer Price Index for all urban consumers.
(5) Annual rate of inflation: 2.70%. Source: Ibbotson Associates.
</TABLE>
PERFORMANCE REVIEW
The SAM CONSERVATIVE GROWTH PORTFOLIO (Class A shares) returned 18.89% (not
adjusted for sales charge) for the 12-month period ended October 31, 2000. While
being managed in an effort to reduce volatility relative to single asset-class
investments, the Portfolio significantly outperformed its benchmark index, as
well as the S&P 500 Index, which posted a return of 6.09%. Long-term results
have been favorable, providing a strong premium over inflation. Over the past
ten years, the Portfolio has averaged 14.38% per year (not adjusted for sales
charge), or 11.68% above the rate of inflation.(5)
ECONOMIC/MARKET REVIEW
The 12-month period under review was marked by increased volatility in the
equity markets. The strong equity performance that was witnessed in late 1999
and during the first part of 2000 reversed, particularly in the higher-growth
technology holdings that had led markets for the most of the late 1990s. The
tech-heavy NASDAQ Index peaked in March and then retreated, wiping out earlier
gains.
During the period, the Federal Reserve continued to notch up short-term interest
rates in an effort to quell inflation and slow growth while investors began to
take notice of some of the lofty prices of many equities. The economic slowdown
made investors question the sustainability of very high earnings growth rates
for much of the technology sector and the high valuations (prices relative to
earnings) that many of these stocks carried. Additional factors contributing to
market volatility were significantly higher oil prices and a very strong dollar
that drove up prices of U.S. goods for foreign consumers. Although overall
economic growth continues, some of the effects of higher interest rates have
taken their desired effect. Economic stability also remains, evidenced by strong
productivity, healthy consumer spending, low unemployment, and subdued
inflation. The shift in market sentiment was positive for some sectors as many
traditional value holdings gained favor when money flowed out of growth momentum
stocks. The second half of the period significantly favored value stocks,
especially mid-sized companies. The period closed with strong performance from
the utility, financial, and health care sectors.
Fixed-income markets were negatively affected by rising short-term interest
rates, but closed out the year on a positive note when long-term rates fell in
response to evidence of an economic slowdown. For the 12-month period,
short-term rates increased significantly by 100 basis points (1%), and yields
closed out the year inverted (short-term rates higher than long-term rates). The
drop in longer-term yields helped the performance of many government bonds
during the reporting period. Corporate positions also provided positive results,
but not quite as strong as government bonds and mortgages. Central banks around
the globe also increased interest rates in an effort to stem inflationary
pressures as well as support their currencies. As a result, global markets were
also volatile during the period. While European equity markets reported slightly
positive performance for the year, markets in the Pacific Region and in many
emerging countries were quite weak.
INVESTMENT STRATEGY
The CONSERVATIVE GROWTH PORTFOLIO is diversified in 10 funds, representing eight
major asset classes. The combination of asset classes increases our ability to
manage risk over a long-term investment horizon. The benefits of a diversified
portfolio were clearly evident during the 12-month period ended October 31,
2000, as domestic equity market leadership shifted out of large-cap growth
technology into some more traditional value positions. Because the Portfolio is
diversified in both of these areas, shareholders were able to participate in the
rally as well as benefit from reduced volatility.
The overall investment strategy for the period was to:
o Broaden equity diversification into small- and mid-cap positions.
o Reduce positions in higher-valued growth technology holdings early in the
period in favor of value stocks found in the finance and health care sectors.
o Introduce two new funds into the Portfolio - the WM MID CAP STOCK FUND and the
WM EQUITY INCOME FUND - to broaden equity diversification in mid-cap and value
positions.
o Increase positions in corporate bonds and longer-term issues to take advantage
of falling interest rates in the second half of the period.
REVIEW OF PORTFOLIO ALLOCATIONS
We took advantage of the rally in growth stocks early in the period and were
able to realize some significant gains from the WM GROWTH FUND. We shifted
assets out of the large-cap growth sector and into some broader areas of the
market, adding to the WM SMALL CAP STOCK FUND and initiating a position in the
WM MID CAP STOCK FUND. These moves benefited overall Portfolio performance, as
the mid-cap value sector was one of the strongest performing areas during the
second half of the year, and the WM MID CAP STOCK FUND was the best performer of
all the WM Funds since its inception in March 2000. On a secular basis, this
also worked to reduce technology positions in favor of financial and health care
holdings, which were more attractively valued. The sector positioning also
contributed to the strong relative performance during the second half of the
period, as technology stocks retreated considerably. In an effort to manage
risk, we reduced exposure to international equities, adding to positions in
traditional domestic value holdings found in the WM EQUITY INCOME FUND.
Throughout the course of the past 12 months, we slightly increased our positions
in fixed-income securities (25%), favoring longer-term corporate holdings. We
feel that given the slower growth domestic environment, the fixed-income
positions could aid performance as well as manage risk.
OUTLOOK
The economy seems to be slowing and should continue to grow at a more
sustainable rate. International currency markets may slow overall global growth
as foreign banks are forced to raise interest rates to support their currencies.
We will continue to increase diversification in an effort to manage risk while
taking advantage of positions in value stocks and fixed-income holdings, which
could be attractive in a slower-growth environment.
It seems that the Federal Reserve may not need to intervene as the effects of
prior interest-rate moves take their desired effect. The Fed members will likely
weigh the economic slowdown against possible inflationary and wealth effects
when deciding possible interest-rate policies in 2001. We are watching both
corporate and consumer debt levels as possible indicators of future growth -- if
debt levels get too high and credit tightens, a further economic slowdown could
develop. Overall, our long-term outlook remains positive, as we believe
productivity enhancements will help continue the low global inflationary
environment, benefiting both stock and bond markets.
portfolio allocation
as of October 31, 2000++
Growth & Income Fund 31%
Growth Fund 19%
Income Fund 10%
Mid Cap Stock Fund 7%
International Growth Fund 7%
Small Cap Stock Fund 6%
Growth Fund of the Northwest 6%
High Yield Fund 5%
U.S. Government Securities Fund 5%
Equity Income Fund 4%
asset class diversification
as of October 31, 2000++
Large-Cap Stocks 39%
Mid-Cap Stocks 17%
Corporate Bonds 11%
Foreign Stocks 10%
Small-Cap Stocks 9%
Mortgage-Backed 7%
Cash Equivalents 5%
Other Bonds 1%
Treasuries 1%
Note: as a percentage of investment company securities
++ may not reflect current allocation
<PAGE>
balanced portfolio
GROWTH OF A $10,000 INVESTMENT(1)
(class A shares)
Fund
(Class A
Fund Shares not
(Class A adjusted Lehman
shares; not for the Brothers
adjusted maximum Capital Russell Aggregate
for sales 5.5% sales Market 3000 Bond
charge) charge) Benchmark(2) Inflation(5) Index(3) Index(4)
-------------------------------------------------------------------------------
$10,000 $ 9,450 $10,000 $10,000 $10,000 $10,000
10,121 9,565 10,430 10,023 10,687 10,215
10,242 9,679 10,654 10,077 11,016 10,374
Jan 91 10,514 9,936 10,955 10,115 11,569 10,503
10,929 10,328 11,394 10,208 12,437 10,592
10,830 10,235 11,569 10,294 12,804 10,665
10,949 10,347 11,648 10,356 12,817 10,781
11,114 10,503 11,931 10,379 13,347 10,843
10,830 10,235 11,655 10,379 12,739 10,838
11,125 10,513 12,009 10,441 13,340 10,988
11,289 10,668 12,280 10,457 13,697 11,226
11,408 10,781 12,303 10,472 13,541 11,454
11,525 10,891 12,454 10,488 13,767 11,581
11,364 10,739 12,260 10,520 13,240 11,687
12,025 11,364 13,143 10,550 14,724 12,034
Jan 92 11,949 11,292 12,931 10,566 14,624 11,871
11,994 11,335 13,056 10,597 14,819 11,948
11,715 11,071 12,891 10,643 14,491 11,881
11,814 11,164 13,125 10,659 14,784 11,966
12,085 11,420 13,285 10,690 14,883 12,193
11,983 11,324 13,280 10,698 14,615 12,361
12,074 11,410 13,683 10,714 15,219 12,613
12,196 11,525 13,614 10,752 14,890 12,740
12,142 11,474 13,773 10,807 15,089 12,892
11,983 11,324 13,707 10,822 15,239 12,721
12,181 11,511 13,939 10,837 15,865 12,723
12,321 11,644 14,141 10,876 16,149 12,925
Jan 93 12,478 11,791 14,328 10,899 16,307 13,174
12,701 12,002 14,550 10,930 16,413 13,404
13,042 12,325 14,737 10,960 16,824 13,460
13,223 12,495 14,608 10,999 16,378 13,555
13,459 12,719 14,815 11,014 16,848 13,572
13,485 12,744 14,974 11,006 16,957 13,818
13,601 12,852 14,981 11,060 16,929 13,897
14,034 13,262 15,398 11,099 17,587 14,140
14,069 13,295 15,361 11,138 17,585 14,178
14,299 13,512 15,546 11,169 17,837 14,230
13,962 13,194 15,407 11,185 17,562 14,110
14,318 13,530 15,543 11,200 17,906 14,186
Jan 94 14,789 13,975 15,908 11,200 18,454 14,377
14,485 13,688 15,555 11,232 18,008 14,127
13,921 13,155 15,025 11,255 17,221 13,778
13,871 13,108 15,062 11,301 17,417 13,668
13,729 12,974 15,184 11,309 17,609 13,667
13,465 12,724 14,980 11,309 17,126 13,636
13,876 13,113 15,377 11,340 17,657 13,908
14,163 13,384 15,699 11,378 18,427 13,925
13,892 13,128 15,395 11,417 18,034 13,720
14,046 13,273 15,564 11,433 18,332 13,707
13,652 12,901 15,261 11,441 17,663 13,677
13,656 12,905 15,425 11,480 17,937 13,772
Jan 95 13,704 12,951 15,778 11,511 18,329 14,044
13,986 13,217 16,272 11,557 19,077 14,379
14,164 13,385 16,563 11,588 19,552 14,466
14,454 13,659 16,920 11,596 20,063 14,669
14,915 14,094 17,581 11,611 20,791 15,237
15,156 14,323 17,852 11,611 21,392 15,348
15,606 14,748 18,130 11,658 22,252 15,314
15,764 14,897 18,264 11,704 22,450 15,499
16,044 15,161 18,735 11,743 23,321 15,650
15,900 15,026 18,824 11,782 23,120 15,853
16,333 15,435 19,379 11,805 24,147 16,091
16,624 15,710 19,694 11,829 24,540 16,316
Jan 96 16,826 15,900 20,098 11,829 25,252 16,424
16,942 16,011 20,020 11,860 25,623 16,138
17,014 16,078 20,046 11,883 25,879 16,025
17,269 16,319 20,137 11,923 26,371 15,935
17,395 16,438 20,376 11,914 27,046 15,904
17,253 16,304 20,555 11,906 26,960 16,117
16,677 15,760 20,125 11,976 25,547 16,160
17,004 16,069 20,321 12,015 26,321 16,133
17,502 16,540 21,069 12,077 27,753 16,413
17,570 16,604 21,592 12,124 28,261 16,778
18,159 17,160 22,596 12,147 30,253 17,065
18,037 17,045 22,269 12,154 29,890 16,906
Jan 97 18,333 17,325 22,995 12,178 31,543 16,958
18,260 17,256 23,117 12,201 31,578 17,001
17,783 16,805 22,508 12,240 30,151 16,812
18,132 17,135 23,349 12,279 31,637 17,064
18,893 17,854 24,176 12,302 33,798 17,226
19,322 18,259 24,859 12,302 35,204 17,431
20,298 19,182 26,182 12,342 37,964 17,902
19,650 18,570 25,343 12,380 36,422 17,750
20,311 19,194 26,224 12,411 38,488 18,013
19,716 18,631 25,977 12,426 37,194 18,274
19,741 18,655 26,638 12,418 38,619 18,358
19,877 18,784 27,001 12,433 39,391 18,543
Jan 98 20,126 19,019 27,324 12,457 39,801 18,781
21,072 19,913 28,298 12,480 42,647 18,765
21,744 20,548 29,071 12,504 44,762 18,829
21,990 20,780 29,293 12,527 45,201 18,927
21,706 20,512 29,180 12,549 44,084 19,107
22,086 20,871 29,897 12,564 45,574 19,269
21,858 20,656 29,769 12,579 44,745 19,310
19,579 18,502 27,859 12,594 37,890 19,625
20,217 19,105 29,077 12,610 40,474 20,084
21,017 19,862 30,183 12,640 43,546 19,977
21,909 20,704 31,184 12,640 46,210 20,091
23,114 21,842 32,129 12,633 49,147 20,152
Jan 99 23,957 22,640 32,915 12,663 50,816 20,295
23,404 22,117 32,115 12,679 49,016 19,939
24,354 23,015 32,846 12,717 50,815 20,049
25,233 23,845 33,535 12,810 53,108 20,113
24,629 23,274 32,992 12,810 52,099 19,936
25,614 24,205 33,854 12,810 54,732 19,873
25,271 23,881 33,255 12,848 53,073 19,789
25,218 23,831 33,164 12,879 52,469 19,779
25,440 24,040 32,902 12,941 51,128 20,009
26,310 24,863 34,004 12,964 54,335 20,083
27,375 25,869 34,348 12,972 55,856 20,081
29,352 27,737 35,277 12,972 59,420 19,984
Jan 00 28,726 27,146 34,333 13,003 57,091 19,918
29,738 28,102 34,216 13,080 57,620 20,159
30,862 29,164 36,115 13,188 62,134 20,425
29,997 28,348 35,519 13,195 59,945 20,366
29,512 27,888 35,146 13,203 58,261 20,356
30,134 28,477 35,945 13,280 59,986 20,779
29,806 28,166 35,827 13,303 58,925 20,968
31,171 29,456 37,200 13,311 63,295 21,273
30,482 28,805 36,335 13,326 60,429 21,407
Oct 00 30,266 28,601 36,378 13,369 59,571 21,548
Period: 10/31/90 - 10/31/00
+ The performance of the Class B shares was different from that shown above for
the Class A shares, based on the difference in sales charges and fees paid by
Class B shareholders.
<TABLE>
AVERAGE ANNUAL TOTAL RETURNS AS OF 10/31/00(1)
<CAPTION>
CLASS A SHARES 1 YEAR 5 YEAR 10 YEAR
<S> <C> <C> <C>
Fund (not adjusted for sales charge) 15.11% 13.86% 11.78%
Fund (adjusted for maximum 5.5% sales charge) 8.79% 12.57% 11.16%
Capital Market Benchmark(2) 6.98% 14.08% 13.78%(2)
<CAPTION>
CLASS B SHARES 1 YEAR 5 YEAR SINCE INCEPTION
July 1, 1994
<S> <C> <C> <C>
Fund (not adjusted for contingent deferred sales charge) 14.26% 12.80% 12.74%
Fund (adjusted for maximum contingent deferred sales charge) 9.26% 12.68% 12.74%
Capital Market Benchmark(2) 6.98% 14.08% 15.04%(2)
(1) All performance shown prior to the November 1, 1996 asset conversion date (the date on which the
majority of existing SAM clients voluntarily exchanged into the new SAM Portfolios) for the Sierra
Asset Management Portfolios represents the performance of the Sierra Asset Management Account
("SAM Account"), a discretionary asset allocation service that invested in the Sierra Trust Funds.
The SAM Account was not registered as an investment company under the Investment Company Act of
1940 ("Act") and, therefore, was not subject to certain restrictions that the Act imposes. If the
SAM Account had been registered under the Act, its performance may have differed significantly.
The Portfolio's performance would have been lower had the Advisor not waived a portion of its fees
or reimbursed certain other expenses, and the Fund's custodian had not allowed its fees to be
reduced by credits. Past performance does not guarantee future results.
(2) The Balanced Portfolio's benchmark is a capital market index that is intended to represent a
relevant proxy for market and Portfolio performance. The benchmark allocation is: 50% Standard &
Poor's 500 Composite Index and 50% Lehman Brothers Aggregate Bond Index. The returns shown for the
Portfolio assume reinvestment of all dividends and distributions by the shareholder. For
comparative purposes, the benchmark's performance is shown for the ten-year period or the
inception of the particular Portfolio Class of shares.
(3) The Russell 3000 Index is a broad-based index and is intended to represent the majority of the
U.S. equity market.
(4) The Lehman Brothers Aggregate Bond Index is a broad-based index intended to represent the
fixed-income market as a whole.
(5) Inflation is measured by the Consumer Price Index for all urban consumers.
(6) Annual rate of inflation: 2.70%. Source: Ibbotson Associates.
</TABLE>
PERFORMANCE REVIEW
The SAM BALANCED PORTFOLIO (Class A shares) returned 15.11% (not adjusted for
sales charge) for the 12-month period ended October 31, 2000. While being
managed in an effort to reduce volatility relative to single asset-class
investments, the Portfolio more than doubled the performance of its benchmark
index. Long-term results have been favorable, providing a premium over
inflation. Over the past ten years, the Portfolio has averaged 11.78% per year
(not adjusted for sales charge) or 9.08% above the rate of inflation.(6)
ECONOMIC/MARKET REVIEW
The 12-month period under review was marked by increased volatility in the
equity markets. The strong equity performance that we witnessed in late 1999 and
during the first part of 2000 reversed, particularly in the higher-growth
technology holdings that had led markets for the most of the late 1990s. The
tech-heavy NASDAQ Index peaked in March and then retreated, wiping out earlier
gains.
During the period, the Federal Reserve continued to notch up short-term interest
rates in an effort to quell inflation and slow growth while investors began to
take notice of some of the lofty prices of many equities. The economic slowdown
made investors question the sustainability of very high earnings growth rates
for much of the technology sector and the high valuations (prices relative to
earnings) that many of these stocks carried. Additional factors contributing to
market volatility were significantly higher oil prices and a very strong dollar
that drove up prices of U.S. goods for foreign consumers. Although overall
economic growth continues, some of the effects of higher interest rates have
taken their desired effect. Economic stability also remains, evidenced by strong
productivity, healthy consumer spending, low unemployment, and subdued
inflation. The shift in market sentiment was positive for some sectors as many
traditional value holdings gained favor when money flowed out of growth momentum
stocks. The second half of the period significantly favored value stocks,
especially mid-sized companies. The period closed with strong performance from
the utility, financial, and health care sectors.
Fixed-income markets were negatively affected by rising short-term interest
rates, but closed out the year on a positive note when long-term rates fell in
response to evidence of an economic slowdown. For the 12-month period,
short-term rates increased significantly by 100 basis points (1%), and yields
closed out the year inverted (short-term rates higher than long-term rates). The
drop in longer-term yields helped the performance of many government bonds
during the second half of the reporting period. Corporate positions also
provided positive results, but not quite as strong as government bonds and
mortgages. Central banks around the globe also increased interest rates in an
effort to stem inflationary pressures as well as support their currencies. As a
result, global markets were also volatile during the period. While European
equity markets reported slightly positive performance for the year, markets in
the Pacific Region and in many emerging countries were quite weak.
INVESTMENT STRATEGY
The BALANCED PORTFOLIO is diversified in 11 funds, representing nine major asset
classes. The combination of asset classes increases our ability to manage risk
over a long-term investment horizon. The benefits of a diversified portfolio
were clearly evident during the 12-month period ended October 31, 2000, as
domestic equity market leadership shifted out of large-cap growth technology
into some more traditional value positions. Because the Portfolio is diversified
in both of these areas, shareholders were able to participate in the rally as
well as benefit from reduced volatility.
The overall investment strategy for the period was to:
o Broaden equity diversification into small- and mid-cap positions.
o Reduce positions in higher-valued growth technology holdings early in the
period in favor of value stocks found in the finance and health care sectors.
o Introduce two new funds into the Portfolio - the WM MID CAP STOCK FUND and the
WM EQUITY INCOME FUND - to broaden equity diversification in mid-cap and value
positions.
o Increase positions in corporate bonds and longer-term issues to take advantage
of falling interest rates in the second half of the period.
REVIEW OF PORTFOLIO ALLOCATIONS
We took advantage of the rally in growth stocks early in the period and were
able to realize some significant gains from the WM GROWTH FUND. We shifted
assets out of the large-cap growth sector and into some broader areas of the
market, adding to the WM SMALL CAP STOCK FUND and initiating a position in the
WM MID CAP STOCK FUND. These moves benefited overall Portfolio performance, as
the mid-cap value sector was one of the strongest performing areas during the
second half of the year, and the WM MID CAP STOCK FUND was the best performer of
all the WM Funds since its inception in March 2000. On a secular basis, this
also worked to reduce technology positions in favor of financial and health care
holdings, which were more attractively valued. The sector positioning also
contributed to the strong relative performance during the second half of the
period, as technology stocks retreated considerably. In an effort to manage
risk, we reduced the Portfolio's exposure to international equities, adding to
positions in traditional domestic value holdings found in the WM EQUITY INCOME
FUND.
Throughout the course of the past 12 months, we slightly increased our positions
in fixed-income securities (45%), favoring longer-term corporate holdings while
reducing short-term bond positions. We feel that given the slower growth
domestic environment, the fixed-income positions could aid performance as well
as manage risk.
OUTLOOK
The economy seems to be slowing and should continue to grow at a more
sustainable rate. International currency markets may slow overall global growth
as foreign banks are forced to raise interest rates to support their currencies.
We will continue to increase diversification in an effort to manage risk while
taking advantage of positions in value stocks and fixed-income holdings, which
could be attractive in a slower-growth environment.
It seems that the Federal Reserve may not need to intervene as the effects of
prior interest-rate moves take their desired effect. The Fed members will likely
weigh the economic slowdown against possible inflationary and wealth effects
when deciding possible interest-rate policies in 2001. We are watching both
corporate and consumer debt levels as possible indicators of future growth -- if
debt levels get too high and credit tightens, a further economic slowdown could
develop. Overall, our long-term outlook remains positive, as we believe
productivity enhancements will help continue the low global inflationary
environment, benefiting both stock and bond markets.
portfolio allocation
as of October 31, 2000++
Growth & Income Fund 25%
U.S. Government Securities Fund 15%
Income Fund 14%
Growth Fund 12%
Short Term Income Fund 7%
Mid Cap Stock Fund 5%
Growth Fund of the Northwest 5%
High Yield Fund 5%
Small Cap Stock Fund 5%
International Growth Fund 4%
Equity Income Fund 3%
asset class diversification
as of October 31, 2000++
Large-Cap Stocks 29%
Mortgage-Backed 18%
Corporate Bonds 17%
Mid-Cap Stocks 12%
Foreign Stocks 7%
Small-Cap Stocks 7%
Cash Equivalents 5%
Treasuries 3%
Note: as a percentage of investment company securities
++ may not reflect current allocation
<PAGE>
conservative balanced portfolio
GROWTH OF A $10,000 INVESTMENT(1)
(class A shares)
Fund
(Class A
Fund Shares not
(Class A adjusted Lehman
shares; not for the Brothers
adjusted maximum Capital Russell Aggregate
for sales 5.5% sales Market 3000 Bond
charge) charge) Benchmark(2) Inflation(5) Index(3) Index(4)
--------------------------------------------------------------------------------
$10,000 $ 9,450 $10,000 $10,000 $10,000 $10,000
10,168 9,609 10,344 10,023 10,687 10,215
10,321 9,753 10,542 10,077 11,016 10,374
Jan 91 10,381 9,810 10,773 10,115 11,569 10,503
10,550 9,969 11,068 10,208 12,437 10,592
10,656 10,070 11,201 10,294 12,804 10,665
10,809 10,214 11,295 10,356 12,817 10,781
10,885 10,287 11,486 10,379 13,347 10,843
10,885 10,287 11,324 10,379 12,739 10,838
11,038 10,431 11,594 10,441 13,340 10,988
11,297 10,676 11,851 10,457 13,697 11,226
11,450 10,820 11,961 10,472 13,541 11,454
11,587 10,950 12,102 10,488 13,767 11,581
11,694 11,050 12,033 10,520 13,240 11,687
12,029 11,368 12,696 10,550 14,724 12,034
Jan 92 11,906 11,252 12,504 10,566 14,624 11,871
11,998 11,338 12,609 10,597 14,819 11,948
11,921 11,266 12,485 10,643 14,491 11,881
11,982 11,323 12,657 10,659 14,784 11,966
12,227 11,554 12,845 10,690 14,883 12,193
12,410 11,727 12,914 10,698 14,615 12,361
12,669 11,973 13,254 10,714 15,219 12,613
12,761 12,059 13,267 10,752 14,890 12,740
12,852 12,146 13,424 10,807 15,089 12,892
12,655 11,959 13,313 10,822 15,239 12,721
12,685 11,987 13,450 10,837 15,865 12,723
12,883 12,174 13,652 10,876 16,149 12,925
Jan 93 13,112 12,391 13,866 10,899 16,307 13,174
13,356 12,621 14,092 10,930 16,413 13,404
13,431 12,693 14,224 10,960 16,824 13,460
13,523 12,779 14,189 10,999 16,378 13,555
13,614 12,866 14,317 11,014 16,848 13,572
13,858 13,096 14,513 11,006 16,957 13,818
13,965 13,197 14,550 11,060 16,929 13,897
14,209 13,428 14,895 11,099 17,587 14,140
14,194 13,413 14,890 11,138 17,585 14,178
14,316 13,529 15,019 11,169 17,837 14,230
14,178 13,399 14,887 11,185 17,562 14,110
14,224 13,442 14,998 11,200 17,906 14,186
Jan 94 14,453 13,658 15,291 11,200 18,454 14,377
14,102 13,326 14,981 11,232 18,008 14,127
13,614 12,865 14,526 11,255 17,221 13,778
13,400 12,663 14,502 11,301 17,417 13,668
13,309 12,577 14,571 11,309 17,609 13,667
13,233 12,505 14,441 11,309 17,126 13,636
13,523 12,779 14,786 11,340 17,657 13,908
13,462 12,722 14,979 11,378 18,427 13,925
13,264 12,535 14,716 11,417 18,034 13,720
13,234 12,506 14,808 11,433 18,332 13,707
13,249 12,521 14,622 11,441 17,663 13,677
13,158 12,434 14,757 11,480 17,937 13,772
Jan 95 13,341 12,607 15,076 11,511 18,329 14,044
13,601 12,853 15,503 11,557 19,077 14,379
13,677 12,925 15,707 11,588 19,552 14,466
13,861 13,098 15,998 11,596 20,063 14,669
14,425 13,631 16,621 11,611 20,791 15,237
14,441 13,646 16,823 11,611 21,392 15,348
14,380 13,589 16,965 11,658 22,252 15,314
14,609 13,805 17,123 11,704 22,450 15,499
14,731 13,921 17,454 11,743 23,321 15,650
14,944 14,123 17,595 11,782 23,120 15,853
15,158 14,324 18,012 11,805 24,147 16,091
15,357 14,512 18,288 11,829 24,540 16,316
Jan 96 15,434 14,585 18,561 11,829 25,252 16,424
15,113 14,281 18,389 11,860 25,623 16,138
14,975 14,152 18,352 11,883 25,879 16,025
14,869 14,051 18,361 11,923 26,371 15,935
14,838 14,022 18,477 11,914 27,046 15,904
14,991 14,166 18,673 11,906 26,960 16,117
15,328 14,485 18,459 11,976 25,547 16,160
15,175 14,340 18,554 12,015 26,321 16,133
15,401 14,554 19,093 12,077 27,753 16,413
15,741 14,875 19,547 12,124 28,261 16,778
15,985 15,106 20,226 12,147 30,253 17,065
15,884 15,011 19,975 12,154 29,890 16,906
Jan 97 15,899 15,024 20,391 12,178 31,543 16,958
15,978 15,099 20,476 12,201 31,578 17,001
15,807 14,938 20,061 12,240 30,151 16,812
15,983 15,104 20,631 12,279 31,637 17,064
16,127 15,240 21,149 12,302 33,798 17,226
16,302 15,406 21,608 12,302 35,204 17,431
16,721 15,802 22,531 12,342 37,964 17,902
16,576 15,664 22,021 12,380 36,422 17,750
16,786 15,863 22,611 12,411 38,488 18,013
17,000 16,065 22,614 12,426 37,194 18,274
17,049 16,111 23,001 12,418 38,619 18,358
17,201 16,255 23,282 12,433 39,391 18,543
Jan 98 17,379 16,424 23,568 12,457 39,801 18,781
17,367 16,412 24,065 12,480 42,647 18,765
17,409 16,451 24,492 12,504 44,762 18,829
17,484 16,522 24,655 12,527 45,201 18,927
17,611 16,643 24,692 12,549 44,084 19,107
17,722 16,748 25,140 12,564 45,574 19,269
17,749 16,773 25,096 12,579 44,745 19,310
17,799 16,820 24,294 12,594 37,890 19,625
18,000 17,010 25,159 12,610 40,474 20,084
17,892 16,908 25,680 12,640 43,546 19,977
18,098 17,102 26,249 12,640 46,210 20,091
18,108 17,112 26,758 12,633 49,147 20,152
Jan 99 18,248 17,244 27,227 12,663 50,816 20,295
18,049 17,056 26,639 12,679 49,016 19,939
18,170 17,171 27,062 12,717 50,815 20,049
18,341 17,332 27,437 12,810 53,108 20,113
18,263 17,259 27,073 12,810 52,099 19,936
18,239 17,236 27,464 12,810 54,732 19,873
18,219 17,217 27,125 12,848 53,073 19,789
18,205 17,203 27,076 12,879 52,469 19,779
18,381 17,370 27,073 12,941 51,128 20,009
18,411 17,398 27,657 12,964 54,335 20,083
18,462 17,447 27,824 12,972 55,856 20,081
18,468 17,452 28,222 12,972 59,420 19,984
Jan 00 18,447 17,433 27,731 13,003 57,091 19,918
18,593 17,571 27,809 13,080 57,620 20,159
18,759 17,727 28,882 13,188 62,134 20,425
18,729 17,699 28,562 13,195 59,945 20,366
18,661 17,635 28,376 13,203 58,261 20,356
18,980 17,936 28,999 13,280 59,986 20,779
19,111 18,060 29,048 13,303 58,925 20,968
19,765 18,678 29,884 13,311 63,295 21,273
19,520 18,446 29,543 13,326 60,429 21,407
Oct 00 19,430 18,361 29,642 13,369 59,571 21,548
Period: 10/31/90 - 10/31/00
+ The performance of the Class B shares was different from that shown above for
the Class A shares, based on the difference in sales charges and fees paid by
Class B shareholders.
<TABLE>
AVERAGE ANNUAL TOTAL RETURNS AS OF 10/31/00(1)
<CAPTION>
CLASS A SHARES 1 YEAR 5 YEAR 10 YEAR
<S> <C> <C> <C>
Fund (not adjusted for sales charge) 5.52% 5.39% 6.87%
Fund (adjusted for maximum 5.5% sales charge) -0.30% 4.20% 6.27%
Capital Market Benchmark(2) 7.18% 11.00% 11.48%(2)
<CAPTION>
CLASS B SHARES 1 YEAR 5 YEAR SINCE INCEPTION
July 1, 1994
<S> <C> <C> <C>
Fund (not adjusted for contingent deferred sales charge) 4.76% 4.24% 5.17%
Fund (adjusted for maximum contingent deferred sales charge) -0.23% 4.08% 5.17%
Capital Market Benchmark(2) 7.18% 11.00% 12.02%(2)
NOTE: AS OF 8/1/00, THE INCOME PORTFOLIO BECAME THE CONSERVATIVE BALANCED PORTFOLIO. THE PORTFOLIO'S
OBJECTIVES AND STRATEGIES HAVE CHANGED, AND THIS INFORMATION SHOULD BE TAKEN INTO CONSIDERATION WHEN
REVIEWING PAST PERFORMANCE.
(1) All performance shown prior to the November 1, 1996, asset conversion date (the date on which the
majority of existing SAM clients voluntarily exchanged into the new SAM Portfolios) for the Sierra
Asset Management Portfolios represents the performance of the Sierra Asset Management Account
("SAM Account"), a discretionary asset allocation service that invested in the Sierra Trust Funds.
The SAM Account was not registered as an investment company under the Investment Company Act of
1940 ("Act") and, therefore, was not subject to certain restrictions that the Act imposes. If the
SAM Account had been registered under the Act, its performance may have differed significantly.
The Portfolio's performance would have been lower had the Advisor not waived a portion of its fees
or reimbursed certain other expenses, and the Fund's custodian had not allowed its fees to be
reduced by credits. Past performance does not guarantee future results.
(2) The Conservative Balanced Portfolio's benchmark is a capital market index that is intended to
represent a relevant proxy for market and Portfolio performance. The benchmark allocation is: 30%
Standard & Poor's 500 Composite Index and 70% Lehman Brothers Aggregate Bond Index. The returns
shown for the Portfolio assume reinvestment of all dividends and distributions by the shareholder.
For comparative purposes, the benchmark's performance is shown for the ten-year period or the
inception of the particular Portfolio Class of shares.
(3) The Russell 3000 Index is a broad-based index and is intended to represent the majority of the
U.S. equity market.
(4) The Lehman Brothers Aggregate Bond Index is a broad-based index intended to represent the U.S.
fixed-income market as a whole.
(5) Inflation is measured by the Consumer Price Index for all urban consumers.
</TABLE>
PERFORMANCE REVIEW
As of August 1, 2000, the SAM INCOME PORTFOLIO was repositioned into the SAM
CONSERVATIVE BALANCED PORTFOLIO to take advantage of the growth potential of
equity investments. Because there was a significant change in investment
objective during the period, performance comparisons may not yet be relevant.
ECONOMIC/MARKET REVIEW
Fixed-income markets were negatively affected by rising short-term interest
rates, but closed out the year on a positive note when long-term rates fell in
response to evidence of an economic slowdown. For the 12-month period,
short-term rates increased significantly by 100 basis points (1%), and yields
closed out the year inverted (short-term rates higher than long-term rates). The
drop in longer-term yields helped the performance of many government bonds
during the second half of the year. Corporate positions also provided positive
results, but not quite as strong as government bonds and mortgages. Central
banks around the globe also increased interest rates in an effort to stem
inflationary pressures as well as support their currencies. As a result, global
markets were volatile during the period. While European equity markets reported
slightly positive performance for the year, markets in the Pacific Region and in
many emerging countries were quite weak.
During the period, the Federal Reserve continued to notch up short-term interest
rates in an effort to quell inflation and slow growth while investors began to
take notice of some of the lofty prices of many equities. The economic slowdown
made investors question the sustainability of very high earnings growth rates
for much of the technology sector and the high valuations (prices relative to
earnings) that many of these stocks carried. Additional factors contributing to
market volatility were significantly higher oil prices and a very strong dollar
that drove up prices of U.S. goods for foreign consumers. Although overall
economic growth continues, some of the effects of higher interest rates have
taken their desired effect. Economic stability also remains, evidenced by strong
productivity, healthy consumer spending, low unemployment, and subdued
inflation. The shift in market sentiment was positive for some sectors as many
traditional value holdings gained favor when money flowed out of growth momentum
stocks. The second half of the period significantly favored value stocks,
especially mid-sized companies. The period closed with strong performance from
the utility, financial, and health care sectors.
INVESTMENT STRATEGY
The CONSERVATIVE BALANCED PORTFOLIO is diversified in 11 funds, representing
nine major asset classes. The combination of asset classes increases our ability
to manage risk over a long-term investment horizon. The benefits of a
diversified portfolio were clearly evident during the reporting period as
domestic equity market leadership shifted out of large-cap growth technology
into some more traditional value positions. Because the Portfolio is diversified
in both of these areas, shareholders were able to participate in the rally as
well as benefit from reduced volatility.
The overall investment strategy for the period was to:
o Reduce positions in cash, mortgages, short-term, and foreign bonds to initiate
a broad position (37%) in equity holdings.
o Diversify equity positions in small-, mid-, and large-cap holdings.
o Maintain large positions in corporate bonds and longer-term issues to take
advantage of falling interest rates in the second half of the period.
o Take advantage of the market favor of value stocks found in the finance and
health care sectors.
REVIEW OF PORTFOLIO ALLOCATIONS
As of August 1, 2000 we initiated a broadly diversified position in seven equity
funds. The equity portion of the portfolio (39%) has assets in small-, mid- and
large-cap holdings as well as both growth and value positions. Performance was
enhanced by the position in the WM MID CAP STOCK FUND, as the mid-cap value
sector was one of the strongest performing areas in recent months. On a secular
basis, we favored financial and health care holdings, which were more
attractively valued. The sector positioning also contributed to the strong
relative performance during the second half of the period, as more traditional
value sectors led the market. To enable these moves, we reduced positions in the
WM SHORT TERM INCOME, WM U.S. GOVERNMENT SECURITIES, AND WM HIGH YIELD FUNDS.
Although equity performance has been volatile recently, we feel that the
long-term growth potential offered by equity investing could help investors
reach their investment goals.
Throughout the course of the past 12 months, we focused our positions in
fixed-income securities on longer-term corporate holdings while reducing
mortgage and short-term bond positions. We feel that given the slower growth
domestic environment, these positions could aid performance as well as manage
risk.
OUTLOOK
The economy seems to be slowing and should continue to grow at a more
sustainable rate. International currency markets may slow overall global growth
as foreign banks are forced to raise interest rates to support their currencies.
We will continue to increase diversification in an effort to manage risk while
taking advantage of positions in value stocks and fixed-income holdings, which
could be attractive in a slower-growth environment.
It seems that the Federal Reserve may not need to intervene as the effects of
prior interest-rate moves take their desired effect. The Fed members will likely
weigh the economic slowdown against possible inflationary and wealth effects
when deciding possible interest-rate policies in 2001. We are watching both
corporate and consumer debt levels as possible indicators of future growth -- if
debt levels get too high and credit tightens, a further economic slowdown could
develop. Overall, our long-term outlook remains positive, as we believe
productivity enhancements will help continue the low global inflationary
environment, benefiting both stock and bond markets.
portfolio allocation
as of October 31, 2000++
Income Fund 25%
U.S. Government Securities Fund 20%
Growth & Income Fund 17%
Short Term Income Fund 9%
Growth Fund 8%
High Yield Fund 6%
Mid Cap Stock Fund 4%
Growth Fund of the Northwest 4%
Small Cap Stock Fund 3%
International Growth Fund 2%
Equity Income Fund 2%
asset class diversification
as of October 31, 2000++
Corporate Bonds 26%
Mortgage-Backed 25%
Large-Cap Stocks 19%
Mid-Cap Stocks 9%
Small-Cap Stocks 5%
Cash Equivalents 5%
Foreign Stocks 4%
Treasuries 4%
Asset Backed 2%
Other Bonds 1%
Note: as a percentage of investment company securities
++ may not reflect current allocation
<PAGE>
flexible income portfolio
GROWTH OF A $10,000 INVESTMENT(1)
(class A shares)+
Fund
(Class A
Fund Shares not
(Class A adjusted
shares; not for the
adjusted maximum Capital Russell
for sales 4.5% sales Market 3000
charge) charge) Benchmark(2) Inflation(4) Index(3)
--------------------------------------------------------------------------------
Inception
3/31/93
$10,000 $ 9,550 $10,000 $10,000 $10,000
9,977 9,528 10,039 10,035 10,070
10,121 9,666 10,077 10,049 10,083
10,255 9,793 10,245 10,042 10,266
10,301 9,838 10,293 10,091 10,324
10,539 10,065 10,494 10,127 10,505
10,562 10,087 10,512 10,162 10,533
10,676 10,195 10,568 10,190 10,572
10,544 10,069 10,477 10,205 10,482
10,643 10,164 10,541 10,219 10,539
Jan 93 10,863 10,374 10,704 10,219 10,681
10,636 10,157 10,508 10,248 10,495
10,302 9,839 10,229 10,269 10,236
10,173 9,715 10,168 10,311 10,154
10,039 9,588 10,184 10,318 10,153
9,907 9,461 10,139 10,318 10,131
10,140 9,684 10,354 10,346 10,332
10,225 9,765 10,407 10,381 10,345
10,093 9,639 10,244 10,417 10,193
10,123 9,667 10,259 10,431 10,184
10,028 9,576 10,201 10,439 10,161
9,994 9,544 10,280 10,474 10,231
Jan 94 10,140 9,684 10,490 10,502 10,434
10,382 9,915 10,755 10,544 10,682
10,483 10,012 10,846 10,573 10,747
10,659 10,180 11,014 10,580 10,898
11,083 10,585 11,441 10,594 11,320
11,177 10,674 11,543 10,594 11,402
11,318 10,808 11,559 10,636 11,377
11,476 10,960 11,688 10,679 11,515
11,645 11,121 11,839 10,714 11,626
11,654 11,129 11,973 10,750 11,778
11,897 11,362 12,188 10,771 11,954
12,090 11,546 12,364 10,793 12,122
Jan 95 12,131 11,585 12,480 10,793 12,202
12,035 11,493 12,296 10,821 11,989
12,026 11,485 12,231 10,842 11,905
12,044 11,502 12,187 10,878 11,839
12,074 11,530 12,196 10,870 11,815
12,120 11,575 12,348 10,863 11,973
12,007 11,467 12,323 10,927 12,006
12,083 11,539 12,331 10,962 11,985
12,343 11,787 12,593 11,019 12,194
12,579 12,013 12,879 11,062 12,465
12,942 12,360 13,175 11,083 12,678
12,874 12,294 13,039 11,090 12,560
Jan 96 13,046 12,459 13,157 11,111 12,599
13,083 12,494 13,197 11,132 12,630
12,896 12,315 13,010 11,167 12,490
13,072 12,484 13,263 11,203 12,677
13,287 12,689 13,458 11,224 12,798
13,438 12,833 13,662 11,224 12,950
13,881 13,257 14,103 11,260 13,300
13,725 13,107 13,917 11,295 13,187
13,963 13,335 14,178 11,323 13,382
13,973 13,344 14,316 11,337 13,576
14,047 13,415 14,441 11,330 13,638
14,193 13,555 14,597 11,344 13,776
Jan 97 14,321 13,677 14,782 11,365 13,952
14,527 13,874 14,878 11,387 13,941
14,700 14,039 14,999 11,409 13,989
14,774 14,109 15,085 11,429 14,061
14,766 14,102 15,188 11,450 14,195
14,924 14,253 15,366 11,463 14,316
14,835 14,167 15,378 11,477 14,346
14,270 13,627 15,382 11,491 14,580
14,651 13,991 15,804 11,505 14,921
14,886 14,217 15,857 11,533 14,842
15,211 14,526 16,035 11,533 14,926
15,505 14,807 16,170 11,526 14,971
Jan 98 15,813 15,101 16,341 11,554 15,077
15,587 14,886 16,033 11,568 14,813
15,853 15,140 16,176 11,603 14,895
16,178 15,450 16,286 11,688 14,943
16,049 15,327 16,118 11,688 14,811
16,216 15,486 16,161 11,688 14,764
16,083 15,359 16,050 11,723 14,702
15,988 15,268 16,035 11,751 14,694
16,053 15,331 16,158 11,807 14,865
16,285 15,552 16,314 11,828 14,920
16,503 15,760 16,346 11,835 14,918
16,844 16,086 16,372 11,835 14,847
Jan 99 16,654 15,905 16,241 11,863 14,798
16,836 16,078 16,387 11,934 14,977
17,268 16,491 16,742 12,032 15,174
17,109 16,340 16,648 12,039 15,130
17,014 16,248 16,606 12,046 15,123
17,294 16,516 16,958 12,117 15,437
17,312 16,533 17,070 12,138 15,578
17,789 16,989 17,399 12,145 15,804
17,693 16,897 17,406 12,159 15,903
Oct 99 17,677 16,882 17,502 12,198 16,008
+ The performance of the Class B shares was different from that shown above for
the Class A shares, based on the difference in sales charges and fees paid by
Class B shareholders.
<TABLE>
AVERAGE ANNUAL TOTAL RETURNS AS OF 10/31/00(1)
<CAPTION>
CLASS A SHARES 1 YEAR 5 YEAR SINCE INCEPTION
(March 31, 1993)
<S> <C> <C> <C>
Fund (not adjusted for sales charge) 8.56% 8.96% 7.96%
Fund (adjusted for maximum 4.5% sales charge) 3.64% 7.96% 7.30%
Capital Market Benchmark(2) 7.28% 7.89% 7.66%(2)
<CAPTION>
CLASS B SHARES 1 YEAR 5 YEAR SINCE INCEPTION
(July 1, 1994)
<S> <C> <C> <C>
Fund (not adjusted for contingent deferred sales charge) 7.76% 7.77% 8.69%
Fund (adjusted for maximum contingent deferred sales charge) 2.76% 7.62% 8.69%
Capital Market Benchmark2 7.28% 7.89% 9.00%(2)
(1) All performance shown prior to the November 1, 1996 asset conversion date (the date on which the
majority of existing SAM clients voluntarily exchanged into the new SAM Portfolios) for the Sierra
Asset Management Portfolios represents the performance of the Sierra Asset Management Account
("SAM Account"), a discretionary asset allocation service that invested in the Sierra Trust Funds.
The SAM Account was not registered as an investment company under the Investment Company Act of
1940 ("Act") and, therefore, was not subject to certain restrictions that the Act imposes. If the
SAM Account had been registered under the Act, its performance may have differed significantly.
The Portfolio's performance would have been lower had the Advisor not waived a portion of its fees
or reimbursed certain other expenses, and the Fund's custodian had not allowed its fees to be
reduced by credits. Past performance does not guarantee future results.
(2) The Flexible Income Portfolio's benchmark is a capital market index that is intended to represent
a relevant proxy for market and Portfolio performance. The benchmark allocation is: 10% Standard &
Poor's 500 Composite Index and 90% Lehman Brothers Aggregate Bond Index. The returns shown for the
Portfolio assume reinvestment of all dividends and distributions by the shareholder. For
comparative purposes, the benchmark's performance is shown as of the Portfolio's share class
inception date not from the inception of the index.
(3) The Lehman Brothers Aggregate Bond Index is a broad-based index intended to represent the U.S.
fixed-income market as a whole.
(4) Inflation is measured by the Consumer Price Index for all urban consumers.
(5) Annual rate of inflation: 2.54%. Source: Ibbotson Associates.
</TABLE>
PERFORMANCE REVIEW
The SAM FLEXIBLE INCOME PORTFOLIO (Class A shares) returned 8.56% (not adjusted
for sales charge) for the 12-month period ended October 31, 2000. While being
managed in an effort to reduce volatility relative to single asset-class
investments, the Portfolio outperformed its benchmark index for the period.
Long-term results have been favorable, providing a premium over inflation. Over
the past five years, the Portfolio has averaged 8.96% per year (not adjusted for
sales charge) or 6.42% above the rate of inflation.(5)
ECONOMIC/MARKET REVIEW
The 12-month period under review was marked by increased volatility in the
equity markets. The strong equity performance that we witnessed in late 1999 and
during the first part of 2000 reversed, particularly in the higher-growth
technology holdings that had led markets for the most of the late 1990s. The
tech-heavy NASDAQ Index peaked in March and then retreated, wiping out earlier
gains.
During the period, the Federal Reserve continued to notch up short-term interest
rates in an effort to quell inflation and slow growth while investors began to
take notice of some of the lofty prices of many equities. The economic slowdown
made investors question the sustainability of very high earnings growth rates
for much of the technology sector and the high valuations (prices relative to
earnings) that many of these stocks carried. Additional factors contributing to
market volatility were significantly higher oil prices and a very strong dollar
that drove up prices of U.S. goods for foreign consumers. Although overall
economic growth continues, some of the effects of higher interest rates have
taken their desired effect. Economic stability also remains, evidenced by strong
productivity, healthy consumer spending, low unemployment, and subdued
inflation. The shift in market sentiment was positive for some sectors as many
traditional value holdings gained favor when money flowed out of growth momentum
stocks. The second half of the period significantly favored value stocks,
especially mid-sized companies. The period closed with strong performance from
the utility, financial, and health care sectors.
Fixed-income markets were negatively affected by rising short-term interest
rates, but closed out the year on a positive note when long-term rates fell in
response to evidence of an economic slowdown. For the 12-month period,
short-term rates increased significantly by 100 basis points (1%), and yields
closed out the year inverted (short-term rates higher than long-term rates). The
drop in longer-term yields helped the performance of many government bonds
during the second half of the reporting period. Corporate positions also
provided positive results, but not quite as strong as government bonds and
mortgages. Central banks around the globe also increased interest rates in an
effort to stem inflationary pressures as well as support their currencies. As a
result, global markets were also volatile during the period. While European
equity markets reported slightly positive performance for the year, markets in
the Pacific Region and in many emerging countries were quite weak.
INVESTMENT STRATEGY
The FLEXIBLE INCOME PORTFOLIO is diversified in 10 funds, representing nine
major asset classes. The combination of asset classes increases our ability to
manage risk over a long-term investment horizon. The benefits of a diversified
portfolio were clearly evident during the 12 month period ended October 31, 2000
as the broad diversification helped to boost performance and manage risk during
a period of heightened volatility.
The overall investment strategy for the period was to:
o Increase positions in corporate bonds and longer-term mortgage-backed issues
to take advantage of falling interest rates in the second half of the period.
o Broaden equity diversification into small- and mid-cap positions.
o Introduce two new equity funds into the Portfolio - the WM MID CAP STOCK FUND
and the WM EQUITY INCOME FUND - to increase equity diversification in multiple
areas and sectors.
REVIEW OF PORTFOLIO ALLOCATIONS
Throughout the course of the past 12 months, we maintained our position in
fixed-income securities (76%), favoring longer-term corporate and mortgage
holdings while reducing short-term bonds and cash. We increased the weighting in
the WM INCOME FUND, which closed the period as our largest fund position.
Performance was boosted by falling interest rates during the second half of the
period, and the mortgage-backed securities found in the WM U.S. GOVERNMENT
SECURITIES FUND performed very well. Looking forward, we feel that given the
slower growth domestic environment, these fixed-income positions could aid
performance as well as manage risk. Performance in the WM HIGH YIELD FUND was
very strong during the first portion of the period, but gave up a little ground
at the close of the period as the high-yield market reacted to a slowing
economy.
We shifted equity assets out of large-cap stocks and into some broader areas of
the market, initiating positions in both the WM SMALL CAP STOCK FUND and the WM
MID CAP STOCK FUND. These moves benefited overall Portfolio performance, as the
mid-cap value sector was one of the strongest performing areas during the second
half of the year, and the WM MID CAP STOCK FUND was the best performer of all
the WM Funds since its inception in March 2000. Overall, we significantly
broadened equity exposure -- the Portfolio is now invested in six equity funds.
OUTLOOK
The economy seems to be slowing and should continue to grow at a more
sustainable rate. International currency markets may slow overall global growth
as foreign banks are forced to raise interest rates to support their currencies.
We will continue to increase diversification in an effort to manage risk while
taking advantage of positions in value stocks and fixed-income holdings, which
could be attractive in a slower-growth environment.
It seems that the Federal Reserve may not need to intervene as the effects of
prior interest-rate moves take their desired effect. The Fed members will likely
weigh the economic slowdown against possible inflationary and wealth effects
when deciding possible interest-rate policies in 2001. We are watching both
corporate and consumer debt levels as possible indicators of future growth -- if
debt levels get too high and credit tightens, a further economic slowdown could
develop. Overall, our long-term outlook remains positive, as we believe
productivity enhancements will help continue the low global inflationary
environment, benefiting both stock and bond markets.
portfolio allocation
as of October 31, 2000++
Income Fund 30%
U.S. Government Securities Fund 25%
Growth & Income Fund 13%
Short Term Income Fund 13%
High Yield Fund 7%
Growth Fund 4%
Mid Cap Stock Fund 3%
Growth Fund of the Northwest 2%
Small Cap Stock Fund 2%
Equity Income Fund 1%
asset class diversification
as of October 31, 2000++
Corporate Bonds 32%
Mortgage-Backed 30%
Large-Cap Stocks 14%
Mid-Cap Stocks 6%
Treasuries 5%
Cash Equivalents 5%
Small-Cap Stocks 3%
Asset Backed 3%
Foreign Stocks 1%
Other Bonds 1%
Note: as a percentage of investment company securities
++ may not reflect current allocation
<PAGE>
<TABLE>
statements of assets and liabilities
WM STRATEGIC ASSET MANAGEMENT PORTFOLIOS
OCTOBER 31, 2000
<CAPTION>
Strategic Conservative Conservative Flexible
Growth Growth Balanced Balanced Income
Portfolio Portfolio Portfolio Portfolio Portfolio
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value
(See portfolio of investments) (a) ............ $505,165,685 $943,888,254 $938,965,596 $ 15,462,722 $205,841,240
Cash ............................................ 142 1,992 381 669 400
Dividends and/or interest receivable ............ 456 431 433 72 106
Receivable for Fund shares sold ................. 3,611,953 6,565,390 6,492,935 112,760 970,779
Receivable for investment securities sold ....... -- -- -- -- 600,000
Unamortized organization costs .................. 5,871 5,871 5,871 5,871 5,871
Prepaid expenses ................................ 4,874 10,490 10,545 291 3,127
------------ ------------ ------------ ------------ ------------
Total Assets ................................ 508,788,981 950,472,428 945,475,761 15,582,385 207,421,523
------------ ------------ ------------ ------------ ------------
LIABILITIES:
Payable for Fund shares redeemed ................ 372,722 1,672,626 1,324,306 43,841 522,040
Payable for investment securities purchased ..... 1,556,000 1,423,000 1,432,000 -- --
Investment advisory fee payable 263,923 500,224 501,589 8,338 112,599
Shareholder servicing and distribution fees payable 319,647 558,102 528,229 9,979 90,911
Dividends payable ............................... -- -- 22,397 4,983 35,403
Accrued legal and audit fees .................... 9,536 14,121 14,472 7,437 8,033
Accrued expenses and other payables ............. 116,214 158,849 149,054 4,265 28,232
------------ ------------ ------------ ------------ ------------
Total Liabilities ........................... 2,638,042 4,326,922 3,972,047 78,843 797,218
------------ ------------ ------------ ------------ ------------
NET ASSETS ...................................... $506,150,939 $946,145,506 $941,503,714 $ 15,503,542 $206,624,305
============ ============ ============ ============ ============
(a) Investments, at cost ........................ $449,359,117 $812,096,317 $863,450,424 $ 15,396,959 $204,135,173
============ ============ ============ ============ ============
NET ASSETS consist of:
Undistributed net investment income/
(accumulated net investment loss) ............. $ (2,752,385) $ 1,240,697 $ 751,301 $ 8,577 $ 78,165
Accumulated net realized gain/(loss) on
investments sold .............................. 10,728,218 25,108,787 26,599,529 (512,652) 664,563
Net unrealized appreciation
of investments ................................ 55,806,568 131,791,937 75,515,172 65,763 1,706,067
Paid-in capital ................................. 442,368,538 788,004,085 838,637,712 15,941,854 204,175,510
------------ ------------ ------------ ------------ ------------
Total Net Assets ............................ $506,150,939 $946,145,506 $941,503,714 $ 15,503,542 $206,624,305
============ ============ ============ ============ ============
NET ASSETS:
Class A Shares .................................. $142,241,418 $341,685,010 $391,654,696 $ 4,557,182 $129,386,149
============ ============ ============ ============ ============
Class B Shares .................................. $363,909,521 $604,460,496 $549,849,018 $ 10,946,360 $ 77,238,156
============ ============ ============ ============ ============
SHARES OUTSTANDING:
Class A Shares .................................. 8,311,258 22,015,801 28,906,84 57,575 11,699,303
============ ============ ============ ============ ============
Class B Shares .................................. 21,727,739 39,835,504 40,619,707 1,099,096 6,983,523
============ ============ ============ ============ ============
CLASS A SHARES:
Net asset value per share of beneficial
interest outstanding* ......................... $ 17.11 $ 15.52 $ 13.55 $ 9.96 $ 11.06
============ ============ ============ ============ ============
Maximum sales charge ............................ 5.50% 5.50% 5.50% 5.50% 4.50%
============ ============ ============ ============ ============
Maximum offering price per share of beneficial
interest outstanding .......................... $ 18.11 $ 16.42 $ 14.34 $ 10.54 $ 11.58
============ ============ ============ ============ ============
CLASS B SHARES:
Net asset value and offering price per share of
beneficial interest outstanding* .............. $ 16.75 $ 15.17 $ 13.54 $ 9.96 $ 11.06
============ ============ ============ ============ ============
* Redemption price per share is equal to net asset value per share less any applicable contingent deferred sales charge.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
statements of operations
WM STRATEGIC ASSET MANAGEMENT PORTFOLIOS
For the Year Ended October 31, 2000
<CAPTION>
Strategic Conservative Conservative Flexible
Growth Growth Balanced Balanced Income
Portfolio Portfolio Portfolio Portfolio Portfolio
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends ....................................... $ 3,041,092 $ 13,408,770 $ 23,804,538 $ 1,117,588 $ 11,569,867
------------ ------------ ------------ ------------ ------------
Interest ........................................ 98,916 138,291 130,666 15,235 72,141
------------ ------------ ------------ ------------ ------------
Total investment income ...................... 3,140,008 13,547,061 23,935,204 1,132,823 11,642,008
------------ ------------ ------------ ------------ ------------
EXPENSES:
Investment advisory fee ......................... 963,168 1,906,136 1,928,395 38,941 498,923
Administration fee .............................. 1,459,589 3,031,162 3,112,203 74,689 917,844
Custodian fees .................................. 4,819 7,557 5,830 2,335 2,864
Legal and audit fees ............................ 25,265 41,323 44,244 10,625 23,038
Amortization of organization costs .............. 9,181 9,181 9,181 9,181 9,181
Registration and filing fees .................... 138,975 173,962 201,578 23,714 80,697
Other ........................................... 192,901 339,620 371,741 14,321 121,222
Shareholder servicing and distribution fees:
Class A Shares ................................ 292,413 788,926 943,397 14,944 391,372
Class B Shares ................................ 2,557,667 4,440,139 3,981,180 115,041 614,155
Transfer agent fees:
Class A Shares ................................ 67,357 140,484 178,453 4,527 87,440
Class B Shares ................................ 147,939 188,743 162,352 5,751 24,851
------------ ------------ ------------ ------------ ------------
Total expenses ............................... 5,859,274 11,067,233 10,938,554 314,069 2,771,587
Fees reduced by credits allowed by the custodian (413) (134) (233) (65) (37)
------------ ------------ ------------ ------------ ------------
Net expenses ................................. 5,858,861 11,067,099 10,938,321 314,004 2,771,550
------------ ------------ ------------ ------------ ------------
NET INVESTMENT INCOME/(LOSS) .................... (2,718,853) 2,479,962 12,996,883 818,819 8,870,458
------------ ------------ ------------ ------------ ------------
NET REALIZED AND UNREALIZED GAIN/(LOSS)
ON INVESTMENTS:
Net realized gain/(loss) on investment transactions 4,562,625 13,895,538 18,918,838 (466,316)
Capital gains distribution received ............. 14,956,979 28,436,281 20,672,848 -- 3,228,614
Net change in unrealized appreciation of investments 24,378,205 50,746,045 35,735,887 453,847 6,154,063
------------ ------------ ------------ ------------ ------------
Net realized and unrealized gain/(loss)
on investments ................................ 43,897,809 93,077,864 75,327,573 (12,469) 8,863,166
------------ ------------ ------------ ------------ ------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ..................... $ 41,178,956 $ 95,557,826 $ 88,324,456 $ 806,350 $ 17,733,624
============ ============ ============ ============ ============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
statements of changes in net assets
WM STRATEGIC ASSET MANAGEMENT PORTFOLIOS
For the Year Ended October 31, 2000
<CAPTION>
Strategic Conservative Conservative Flexible
Growth Growth Balanced Balanced Income
Portfolio Portfolio Portfolio Portfolio Portfolio
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net investment income/(loss) .................... $ (2,718,853) $ 2,479,962 $ 12,996,883 $ 818,819 $ 8,870,458
Net realized gain/(loss) on investment transactions 4,562,625 13,895,538 18,918,838 (466,316) (519,511)
Capital gains distribution received 14,956,979 28,436,281 20,672,848 -- 3,228,614
Net change in unrealized appreciation of investment
transactions .................................. 24,378,205 50,746,045 35,735,887 453,847 6,154,063
------------ ------------ ------------ ------------ ------------
Net increase in net assets resulting from operations 41,178,956 95,557,826 88,324,456 806,350 17,733,624
Distributions to shareholders from:
Net investment income:
Class A Shares .............................. (2,624,422) (8,011,730) (13,955,996) (314,067) (8,075,270)
Class B Shares .............................. (2,558,634) (8,281,856) (9,869,434) (508,336) (2,557,606)
Distributions in excess of net investment income:
Class A Shares .............................. (224,503) -- -- -- --
Class B Shares .............................. (2,527,882) (605,423) -- -- --
Net realized gains on investments:
Class A Shares .............................. -- -- -- (8,180) (531,697)
Class B Shares .............................. -- -- -- (14,457) (146,967)
Distributions in excess of net realized gains on
investments:
Class A Shares .............................. -- -- -- (71) --
Class B Shares .............................. -- -- -- (136) --
Net increase/(decrease) in net assets from Fund
share transactions:
Class A Shares .............................. 54,570,243 53,058,426 21,654,910 (2,725,942) (69,803,458)
Class B Shares .............................. 213,136,971 300,867,781 284,272,158 (2,471,135) 28,780,479
------------ ------------ ------------ ------------ ------------
Net increase/(decrease) in net assets ........... 300,950,729 432,585,024 370,426,094 (5,235,974) (34,600,895)
NET ASSETS:
Beginning of year ............................... 205,200,210 513,560,482 571,077,620 20,739,516 241,225,200
------------ ------------ ------------ ------------ ------------
End of year ..................................... $506,150,939 $946,145,506 $941,503,714 $ 15,503,542 $206,624,305
============ ============ ============ ============ ============
Undistributed net investment income/
(accumulated net investment loss) at end of year $ (2,752,385) $ 1,240,697 $ 751,301 $ 8,577 $ 78,165
============ ============ ============ ============ ============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
statements of changes in net assets (continued)
WM STRATEGIC ASSET MANAGEMENT PORTFOLIOS
For the Year Ended October 31, 1999
<CAPTION>
Strategic Conservative Conservative Flexible
Growth Growth Balanced Balanced Income
Portfolio Portfolio Portfolio Portfolio Portfolio
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net investment income/(loss) .................... $ (937,568) $ 181,191 $ 4,335,214 $ 958,403 $ 3,515,920
Net realized gain/(loss) on investment transactions 201,044 (30,780) 3,638,526 (18,781) 864,625
Capital gain distribution received .............. 3,004,756 9,527,211 5,459,522 12,184 116,398
Net change in unrealized appreciation/
(depreciation) of investment transactions ....... 31,876,169 84,143,303 40,975,531 (558,256) (4,468,412)
------------ ------------ ------------ ------------ ------------
Net increase in net assets resulting from
operations .................................... 34,144,401 93,820,925 54,408,793 393,550 28,531
Distributions to shareholders from:
Net investment income:
Class A Shares .................................. (107,238) (1,038,646) (3,390,680) (447,960) (2,705,301)
Class B Shares .................................. (235,957) (1,236,501) (2,695,097) (517,023) (910,233)
Distributions in excess of net investment income:
Class A Shares .................................. (592,113) (2,709,359) (1,357,621) (5,133) (9,717)
Class B Shares .................................. (1,269,569) (3,596,734) (1,271,937) (7,053) (3,887)
Net realized gains on investments:
Class A Shares .................................. (1,864,169) (8,005,825) (8,213,824) (11,412) (373,109)
Class B Shares .................................. (5,092,714) (13,002,709) (11,040,671) (10,095) (573,961)
Net increase/(decrease) in net assets from Fund
share transactions:
Class A Shares .................................. 48,320,715 125,283,751 229,975,091 (73,395) 189,252,311
Class B Shares .................................. 60,455,368 68,957,442 110,546,761 8,108,750 35,612,391
------------ ------------ ------------ ------------ ------------
Net increase in net assets ...................... 133,758,724 258,472,344 366,960,815 7,430,229 220,317,025
NET ASSETS:
Beginning of year ............................... 71,441,486 255,088,138 204,116,805 13,309,287 20,908,175
------------ ------------ ------------ ------------ ------------
End of year ..................................... $205,200,210 $513,560,482 $571,077,620 $ 20,739,516 $241,225,200
============ ============ ============ ============ ============
Undistributed net investment income at
end of year ................................... $ 1 $ -- $ 205,259 $ 6,008 $ 65,147
============ ============ ============ ============ ============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
statements of changes in net assets -- capital stock activity
WM STRATEGIC ASSET MANAGEMENT PORTFOLIOS
<CAPTION>
STRATEGIC GROWTH PORTFOLIO CONSERVATIVE GROWTH PORTFOLIO BALANCED PORTFOLIO
-------------------------- ----------------------------- ---------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
10/31/00 10/31/99 10/31/00 10/31/99 10/31/00 10/31/99
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
AMOUNT
CLASS A:
Sold .............................. $101,029,748 $ 98,311,574 $121,876,779 $ 36,408,180 $105,244,967 $ 44,514,028
------------ ------------ ------------ ------------ ------------ ------------
Contribution in-kind (Note 1) ..... -- 32,378,262 -- 114,020,652 -- 221,368,654
Issued as reinvestment of dividends 2,834,731 2,539,601 7,912,089 11,559,002 13,665,574 12,792,803
Redeemed .......................... (49,294,236) (84,908,722) (76,730,442) (36,704,083) (97,255,631) (48,700,394)
------------ ------------ ------------ ------------ ------------ ------------
Net increase $ 54,570,243 $ 48,320,715 $ 53,058,426 $125,283,751 $ 21,654,910 $229,975,091
============ ============ ============ ============ ============ ============
CLASS B:
Sold $238,599,495 $181,187,449 $349,476,647 $ 94,691,081 $334,704,351 $137,812,380
Issued as reinvestment of dividends 4,982,680 6,458,074 8,706,458 17,500,095 9,662,928 14,729,178
Redeemed .......................... (30,445,204) (127,190,155) (57,315,324) (43,233,734) (60,095,121) (41,994,797)
------------ ------------ ------------ ------------ ------------ ------------
Net increase ...................... $213,136,971 $ 60,455,368 $300,867,781 $ 68,957,442 $284,272,158 $110,546,761
============ ============ ============ ============ ============ ============
SHARES
CLASS A:
Sold 5,888,344 6,888,775 7,869,558 2,909,519 7,847,946 3,776,656
Contribution in-kind (Note 1) ..... -- 2,214,655 -- 8,509,004 -- 18,056,171
Issued as reinvestment of dividends 171,802 205,455 529,945 1,017,836 1,019,544 1,130,113
Redeemed .......................... (2,859,417) (5,885,943) (4,977,871) (2,959,104) (7,266,399) (4,141,436)
------------ ------------ ------------ ------------ ------------ ------------
Net increase ...................... 3,200,729 3,422,942 3,421,632 9,477,255 1,601,091 18,821,504
============ ============ ============ ============ ============ ============
CLASS B:
Sold 14,179,332 12,957,573 23,062,896 7,693,451 24,930,781 11,686,498
Issued as reinvestment of dividends 306,626 525,313 593,079 1,547,745 720,955 1,296,525
Redeemed .......................... (1,822,664) (8,911,255) (3,791,039) (3,566,510) (4,479,167) (3,575,735)
------------ ------------ ------------ ------------ ------------ ------------
Net increase ...................... 12,663,294 4,571,631 19,864,936 5,674,686 21,172,569 9,407,288
============ ============ ============ ============ ============ ============
<CAPTION>
Conservative Balanced
Portfolio (a) Flexible Income Portfolio
-------------------------- -----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
10/31/00 10/31/99 10/31/00 10/31/99
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
AMOUNT
CLASS A:
Sold .............................. $ 1,514,707 $ 3,483,186 $ 9,997,438 $ 8,898,276
Contribution in-kind (Note 1) ..... -- -- -- 213,729,146
Issued as reinvestment of dividends 194,422 238,112 8,263,296 2,987,879
Redeemed ........................ (4,435,071) (3,794,693) (88,064,192) (36,362,990)
------------ ------------ ------------ ------------
Net increase/(decrease) ........... $ (2,725,942) $ (73,395) $(69,803,458) $189,252,311
============ ============ ============ ============
CLASS B:
Sold .............................. $ 5,689,632 $ 12,710,412 $ 44,960,620 $ 44,201,324
Issued as reinvestment of dividends 434,981 424,051 2,515,173 1,391,288
Redeemed .......................... (8,595,748) (5,025,713) (18,695,314) (9,980,221)
------------ ------------ ------------ ------------
Net increase/(decrease) ........... $ (2,471,135) $ 8,108,750 $ 28,780,479 $ 35,612,391
============ ============ ============ ============
SHARES
CLASS A:
Sold 151,787 344,897 914,318 822,244
Contribution in-kind (Note 1) ..... -- -- -- 19,483,058
Issued as reinvestment of dividends 19,697 23,554 755,118 279,908
Redeemed .......................... (447,969) (376,831) (8,062,541) (3,411,942)
------------ ------------ ------------ ------------
Net increase/(decrease) ........... (276,485) (8,380) (6,393,105) 17,173,268
============ ============ ============ ============
CLASS B:
Sold .............................. 574,388 1,252,218 4,105,476 4,103,474
Issued as reinvestment of dividends 44,064 42,095 229,412 129,523
Redeemed .......................... (871,718) (497,805) (1,708,836) (924,028)
------------ ------------ ------------ ------------
Net increase/(decrease) ........... (253,266) 796,508 2,626,052 3,308,969
============ ============ ============ ============
-------------------
(a) Formerly known as the WM Income Portfolio.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
financial highlights
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
---------------------------------------- ----------------------------------------------------------
NET REALIZED DISTRIBUTIONS
NET AND DIVIDENDS IN EXCESS DISTRIBUTIONS
ASSET VALUE, NET UNREALIZED TOTAL FROM FROM NET OF NET FROM
BEGINNING INVESTMENT GAIN/(LOSS) ON INVESTMENT INVESTMENT INVESTMENT NET REALIZED TOTAL
OF PERIOD INCOME/(LOSS) INVESTMENTS OPERATIONS INCOME INCOME CAPITAL GAINS DISTRIBUTIONS
--------- ------------- ----------- ---------- ------ ------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STRATEGIC GROWTH PORTFOLIO
CLASS A
10/31/00 $14.61 $(0.04)(6) $3.07 $3.03 $(0.49) $(0.04) $ -- $(0.53)
10/31/99 11.67 (0.03)(6) 4.36 4.33 (0.22) (0.19) (0.98) (1.39)
10/31/98(4) 12.66 (0.02)(6) (0.97) (0.99) -- -- -- --
06/30/98 11.26 0.00(6)(7) 2.12 2.12 -- (0.68) (0.04) (0.72)
06/30/97(5) 10.00 (0.02)(6) 1.90 1.88 -- (0.62) (0.00)(7) (0.62)
CLASS B
10/31/00 14.40 (0.16)(6) 3.02 2.86 (0.26) (0.25) -- (0.51)
10/31/99 11.52 (0.13)(6) 4.31 4.18 (0.13) (0.19) (0.98) (1.30)
10/31/98(4) 12.53 (0.05)(6) (0.96) (1.01) -- -- -- --
06/30/98 11.19 (0.09)(6) 2.11 2.02 -- (0.64) (0.04) (0.68)
06/30/97(5) 10.00 (0.10)(6) 1.90 1.80 -- (0.61) (0.00)(7) (0.61)
CONSERVATIVE GROWTH PORTFOLIO
CLASS A
10/31/00 $13.43 $ 0.12(6) $2.40 $2.52 $(0.43) $ -- $ -- $(0.43)
10/31/99 10.97 0.06(6) 3.70 3.76 (0.20) (0.22) (0.88) (1.30)
10/31/98(4) 11.84 0.01 (0.88) (0.87) -- -- -- --
06/30/98 10.86 0.13(6) 1.42 1.55 (0.09) (0.42) (0.06) (0.57)
06/30/97(5) 10.00 0.08(6) 1.32 1.40 (0.08) (0.46) -- (0.54)
CLASS B
10/31/00 13.21 0.00(6)(7) 2.37 2.37 (0.38) (0.03) -- (0.41)
10/31/99 10.85 (0.03)(6) 3.61 3.58 (0.13) (0.21) (0.88) (1.22)
10/31/98(4) 11.74 (0.03) (0.86) (0.89) -- -- --
06/30/98 10.80 0.04(6) 1.43 1.47 (0.08) (0.39) (0.06) (0.53)
06/30/97(5) 10.00 0.01(6) 1.31 1.32 (0.01) (0.51) -- (0.52)
BALANCED PORTFOLIO
CLASS A
10/31/00 $12.22 $ 0.28(6) $1.53 $1.81 $(0.48) $ -- $ -- $(0.48)
10/31/99 11.02 0.19(6) 2.39 2.58 (0.35) (0.09) (0.94) (1.38)
10/31/98(4) 11.63 0.05 (0.61) (0.56) (0.05) -- -- (0.05)
06/30/98 10.95 0.22 1.25 1.47 (0.23) (0.45) (0.11) (0.79)
06/30/97(5) 10.00 0.20(6) 1.27 1.47 (0.20) (0.32) (0.00)(7) (0.52)
CLASS B
10/31/00 12.21 0.18(6) 1.55 1.73 (0.40) -- -- (0.40)
10/31/99 11.02 0.11(6) 2.38 2.49 (0.27) (0.09) (0.94) (1.30)
10/31/98(4) 11.63 0.02 (0.61) (0.59) (0.02) -- -- (0.02)
06/30/98 10.95 0.17 1.22 1.39 (0.20) (0.40) (0.11) (0.71)
06/30/97(5) 10.00 0.14(6) 1.25 1.39 (0.14) (0.30) (0.00)(7) (0.44)
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
---------------------------------------------------------------------------------
RATIO OF
OPERATING
EXPENSES
TO AVERAGE
NET ASSETS
WITHOUT FEE
WAIVERS,
EXPENSES
REIMBURSED
AND/OR FEES
RATIO OF RATIO OF REDUCED BY
OPERATING NET INVESTMENT CREDITS
NET NET ASSETS, EXPENSES TO INCOME/(LOSS) TO PORTFOLIO ALLOWED
ASSET VALUE, END OF PERIOD AVERAGE NET AVERAGE NET TURNOVER BY THE
END OF PERIOD TOTAL RETURN(1) (IN 000'S) ASSETS(2)(3) ASSETS RATE CUSTODIAN(2)
------------- --------------- ---------- ------------ --------------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
STRATEGIC GROWTH PORTFOLIO
CLASS A
10/31/00 $17.11 20.84% $142,241 1.06% (0.21)% 15% 1.06%
10/31/99 14.61 39.55% 74,678 1.07% (0.21)% 20 1.09%
10/31/98(4) 11.67 (7.82)% 19,690 0.95%(9) (0.53)%(9) 10% 1.13%(9)
06/30/98 12.66 20.11% 18,330 0.94% 0.01% 23% 1.08%
06/30/97(5) 11.26 19.33% 14,253 0.90%(9) (0.19)%(9) 33% 1.45%(9)
CLASS B
10/31/00 16.75 19.95% 363,910 1.81% (0.96)% 15% 1.81%
10/31/99 14.40 38.60% 130,522 1.83% (0.97)% 20% 1.85%
10/31/98(4) 11.52 (8.06)% 51,752 1.70%(9) (1.28)%(9) 10% 1.88%(9)
06/30/98 12.53 19.24% 51,173 1.68% (0.74)% 23% 1.83%
06/30/97(5) 11.19 18.48% 35,802 1.65%(9) (0.94)%(9) 33% 2.20%(9)
CONSERVATIVE GROWTH PORTFOLIO
CLASS A
10/31/00 $15.52 18.89% $341,685 1.02% 0.76% 17% 1.02%
10/31/99 13.43 36.54% 249,650 1.02% 0.48% 16% 1.03%
10/31/98(4) 10.97 (7.35)% 100,024 0.95%(9) 0.05%(9) 9% 1.03%(9)
06/30/98 11.84 15.18% 114,946 0.95% 1.17% 28% 1.00%
06/30/97(5) 10.86 14.39% 136,141 0.92%(9) 0.81%(9) 20% 1.17%(9)
CLASS B
10/31/00 15.17 18.07% 604,460 1.77% 0.01% 17% 1.77%
10/31/99 13.21 34.98% 263,911 1.77% (0.27)% 16% 1.78%
10/31/98(4) -- 10.85 (7.58)% 155,064 1.70%(9) (0.70)%(9) 9% 1.78%(9)
06/30/98 11.74 14.44% 169,269 1.70% 0.40% 28% 1.74%
06/30/97(5) 10.80 13.59% 158,697 1.67%(9) 0.06%(9) 20% 1.92%(9)
BALANCED PORTFOLIO
CLASS A
10/31/00 $13.55 15.11% $391,655 1.03% 2.05% 22% 1.03%
10/31/99 12.22 25.16% 333,639 1.03% 1.66% 39% 1.04%
10/31/98(4) 11.02 (4.85)% 93,491 0.95%(9) 1.22%(9) 3% 1.02%(9)
06/30/98 11.63 14.32% 101,726 0.95% 2.14% 29% 1.00%
06/30/97(5) 10.95 15.02% 109,421 0.92%(9) 2.48%(9) 46% 1.17%(9)
CLASS B
10/31/00 13.54 14.26% 549,849 1.77% 1.31% 22% 1.77%
10/31/99 12.21 24.22% 237,438 1.77% 0.92% 39% 1.78%
10/31/98(4) 11.02 (5.09)% 110,626 1.70%(9) 0.47%(9) 3% 1.77%(9)
06/30/98 11.63 13.47% 114,944 1.70% 1.39% 29% 1.75%
06/30/97(5) 10.95 14.23% 99,821 1.67%(9) 1.73%(9) 46% 1.92%(9)
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
financial highlights
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
---------------------------------------- ----------------------------------------------------------
NET DISTRIBUTIONS
REALIZED DISTRIBUTIONS IN EXCESS
NET AND DIVIDENDS IN EXCESS DISTRIBUTIONS FROM NET
ASSET VALUE, NET UNREALIZED TOTAL FROM FROM NET OF NET FROM REALIZED
BEGINNING INVESTMENT GAIN/(LOSS)ON INVESTMENT INVESTMENT INVESTMENT NET REALIZED CAPITAL TOTAL
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME INCOME CAPITAL GAINS GAINS DISTRIBUTIONS
--------- ------------- ----------- ---------- ------ ------ ------------- ----------- -------------
CONSERVATIVE BALANCED PORTFOLIO
CLASS A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10/31/00 $ 9.94 $ 0.51(6) $0.02(8) $0.53 $(0.50) $ -- $(0.01) (0.00)(7) $(0.51)
10/31/99 10.25 0.56 (0.27) 0.29 (0.57) (0.01) (0.02) -- (0.60)
10/31/98(4) 10.34 0.19 (0.09) 0.10 (0.19) -- -- -- (0.19)
06/30/98 10.13 0.64 0.22 0.86 (0.65) (0.00)(7) -- -- (0.65)
06/30/97(5) 10.00 0.58(6) 0.14(8) 0.72 (0.58) (0.01) (0.00)(7) -- (0.59)
CLASS B
10/31/00 9.94 0.44(6) 0.02(8) 0.46 (0.43) -- (0.01) (0.00)(7) (0.44)
10/31/99 10.25 0.50 (0.29) 0.21 (0.49) (0.01) (0.02) -- (0.52)
10/31/98(4) 10.34 0.16 (0.09) 0.07 (0.16) -- -- -- (0.16)
06/30/98 10.13 0.56 0.22 0.78 (0.57) (0.00)(7) -- -- (0.57)
06/30/97(5) 10.00 0.51(6) 0.14(8) 0.65 (0.51) (0.01) (0.00)(7) -- (0.52)
FLEXIBLE INCOME PORTFOLIO
CLASS A
10/31/00 $10.75 $ 0.47(6) $0.42 $0.89 $(0.55) $ -- $(0.03) -- $(0.58)
10/31/99 10.63 0.40(6) 0.57(8) 0.97 (0.48) (0.00)(7) (0.37) -- (0.85)
10/31/98(4) 10.79 0.12 (0.15) (0.03) (0.13) -- -- -- (0.13)
06/30/98 10.57 0.45 0.67 1.12 (0.45) (0.21) (0.24) -- (0.90)
06/30/97(5) 10.00 0.43(6) 0.70 1.13 (0.43) (0.13) (0.00)(7) -- (0.56)
CLASS B --
10/31/00 10.75 0.39(6) 0.42 0.81 (0.47) -- (0.03) (0.50)
10/31/99 10.63 0.33(6) 0.56(8) 0.89 (0.40) (0.00)(7) (0.37) -- (0.77)
10/31/98(4) 10.79 0.10 (0.16) (0.06) (0.10) -- -- -- (0.10)
06/30/98 10.57 0.31 0.73 1.04 (0.37) (0.21) (0.24) -- (0.82)
06/30/97(5) 10.00 0.38(6) 0.68 1.06 (0.38) (0.11) (0.00)(7) -- (0.49)
--
</TABLE>
<PAGE>
<TABLE>
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
---------------------------------------------------------------------------------
<CAPTION>
RATIO OF
OPERATING
EXPENSES
TO AVERAGE
NET ASSETS
WITHOUT FEE
WAIVERS,
EXPENSES
REIMBURSED
AND/OR FEES
RATIO OF RATIO OF REDUCED BY
OPERATING NET INVESTMENT CREDITS
NET NET ASSETS, EXPENSES TO INCOME/(LOSS) TO PORTFOLIO ALLOWED
ASSET VALUE, END OF PERIOD AVERAGE NET AVERAGE NET TURNOVER BY THE
END OF PERIOD TOTAL RETURN(1) (IN 000'S) ASSETS(2)(3) ASSETS RATE CUSTODIAN(2)
------------- --------------- ---------- ------------ --------------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
CONSERVATIVE BALANCED PORTFOLIO
CLASS A
10/31/00 $ 9.96 5.52% $ 4,557 1.32% 5.16% 59% 1.32%
10/31/99 9.94 2.89% 7,297 1.00% 5.57% 51% 1.24%
10/31/98(4) 10.25 0.96% 7,611 0.95%(9) 5.40%(9) 22% 1.53%(9)
06/30/98 10.34 8.71% 7,793 0.95% 6.23% 14% 1.25%
06/30/97(5) 10.13 7.38% 13,410 0.93%(9) 6.09%(9) 56% 1.65%(9)
CLASS B
10/31/00 9.96 4.76% 10,947 2.04% 4.44% 59% 2.04%
10/31/99 9.94 2.05% 13,443 1.74% 4.83% 51% 1.98%
10/31/98(4) 10.25 0.70% 5,698 1.70%(9) 4.65%(9) 22% 2.28%(9)
06/30/98 10.34 7.90% 4,084 1.70% 5.48% 14% 2.01%
06/30/97(5) 10.13 6.63% 4,537 1.68%(9) 5.34%(9) 56% 2.40%(9)
FLEXIBLE INCOME PORTFOLIO
CLASS A
10/31/00 $11.06 8.56% $129,386 1.06% 4.28% 27% 1.06%
10/31/99 10.75 9.39% 194,404 1.00% 3.86% 31% 1.06%
10/31/98(4) 10.63 (0.26)% 9,766 0.95%(9) 3.62%(9) 15% 1.37%(9)
06/30/98 10.79 11.07% 8,808 0.95% 4.07% 24% 1.23%
06/30/97(5) 10.57 11.58% 12,613 0.92%(9) 4.95%(9) 54% 1.67%(9)
CLASS B
10/31/00 11.06 7.76% 77,238 1.80% 3.54% 27% 1.80%
10/31/99 10.75 8.60% 46,821 1.75% 3.11% 31% 1.81%
10/31/98(4) 10.63 (0.51)% 11,142 1.70%(9) 2.87%(9) 15% 2.12%(9)
06/30/98 10.79 10.24% 7,684 1.70% 3.32% 24% 1.98%
06/30/97(5) 10.57 10.80% 7,385 1.67%(9) 4.20%(9) 54% 2.42%(9)
-------------------
(1) Total return is not annualized for the periods less than one year and does not reflect any applicable sales charges. The total
return would have been lower if certain fees had not been waived and/or expenses reimbursed by the investment advisor or if fees
had not been reduced by credits allowed by the custodian.
(2) The Portfolio also will indirectly bear its prorated share of expenses of the Underlying Funds.
(3) Ratio of operating expenses to average net assets includes expenses paid indirectly.
(4) Fiscal year end changed to October 31 from June 30.
(5) The Portfolio's Class A and Class B shares commenced operations on July 25, 1996.
(6) Per share numbers have been calculated using the average shares method.
(7) Amount represents less than $0.01 per share.
(8) The amount shown may not accord with the change in the aggregate gains and losses of portfolio securities due to the timing of
sales and redemptions of Portfolio shares.
(9) Annualized.
See Notes to Financial Statements.
</TABLE>
<PAGE>
portfolios of investments
STRATEGIC GROWTH PORTFOLIO
OCTOBER 31, 2000
SHARES VALUE
------ -----
INVESTMENT COMPANY SECURITIES- 99.3%
1,736,385 WM Equity Income Fund ....................... $ 27,070,247
3,048,792 WM Growth Fund .............................. 101,311,364
1,042,081 WM Growth Fund of the Northwest ............. 37,869,213
6,155,227 WM Growth & Income Fund ..................... 167,175,971
2,940,066 WM High Yield Fund .......................... 24,931,758
4,071,164 WM International Growth Fund ................ 44,782,802
4,161,742 WM Mid Cap Stock Fund ....................... 52,521,187
1,753,067 WM Small Cap Stock Fund ..................... 46,947,143
------------
Total Investment Company
Securities
(Cost $446,803,117) ....................... 502,609,685
------------
PRINCIPAL
AMOUNT
--------------
REPURCHASE AGREEMENT- 0.5%
(Cost $2,556,000)
$ 2,556,000 Agreement with Goldman Sachs
& Company, 6.420% dated
10/31/2000, to be repurchased
at $2,556,456 on 11/01/2000
collaterized by $2,116,779 U.S.
Treasury Bond, 7.875% due 02/15/2021
(Market Value $2,611,065) ................. 2,556,000
------------
TOTAL INVESTMENTS
(Cost $449,359,117*) .............................. 99.8% 505,165,685
OTHER ASSETS AND LIABILITIES
(NET) ............................................. 0.2 985,254
----- ------------
NET ASSETS ........................................... 100.0% $506,150,939
===== ============
----------
* Aggregate cost for federal tax purposes is $449,959,569.
CONSERVATIVE GROWTH PORTFOLIO
OCTOBER 31, 2000
SHARES VALUE
------ -----
INVESTMENT COMPANY SECURITIES- 99.5%
2,521,773 WM Equity Income Fund ....................... $ 39,314,438
5,217,139 WM Growth Fund .............................. 173,365,517
1,602,647 WM Growth Fund of the Northwest ............. 58,240,190
10,868,642 WM Growth & Income Fund ..................... 295,192,312
5,469,084 WM High Yield Fund .......................... 46,377,833
10,722,157 WM Income Fund .............................. 95,534,416
5,450,369 WM International Growth Fund ................ 59,954,065
5,393,501 WM Mid Cap Stock Fund ....................... 68,065,980
2,127,057 WM Small Cap Stock Fund ..................... 56,962,599
4,593,166 WM U.S. Government Securities Fund .......... 48,457,904
------------
Total Investment Company
Securities
(Cost $809,673,317) ........................ 941,465,254
------------
PRINCIPAL
AMOUNT
-------------
REPURCHASE AGREEMENT- 0.3%
(Cost $2,423,000)
$ 2,423,000 Agreement with Goldman Sachs
& Company, 6.420% dated
10/31/2000, to be repurchased
at $2,423,432 on 11/01/2000
collaterized by $2,006,633 U.S.
Treasury Bond, 7.875% due 02/15/2021
(Market Value $2,475,200) ................. 2,423,000
------------
TOTAL INVESTMENTS
(Cost $812,096,317*) .............................. 99.8% 943,888,254
OTHER ASSETS AND LIABILITIES
(NET) ............................................. 0.2 2,257,252
----- ------------
NET ASSETS ........................................... 100.0% $946,145,506
===== ============
----------
* Aggregate cost for federal tax purposes is $813,161,804.
See Notes to Financial Statements.
<PAGE>
portfolios of investments
BALANCED PORTFOLIO
OCTOBER 31, 2000
SHARES VALUE
------ -----
INVESTMENT COMPANY SECURITIES- 99.4%
1,798,041 WM Equity Income Fund ....................... $ 28,031,457
3,448,147 WM Growth Fund .............................. 114,581,913
1,341,197 WM Growth Fund of the Northwest ............. 48,739,081
8,563,950 WM Growth & Income Fund ..................... 232,596,880
5,399,158 WM High Yield Fund .......................... 45,784,860
14,146,353 WM Income Fund .............................. 126,044,003
3,653,392 WM International Growth Fund ................ 40,187,317
3,934,950 WM Mid Cap Stock Fund ....................... 49,659,066
28,397,973 WM Short Term Income Fund ................... 65,031,359
1,578,650 WM Small Cap Stock Fund ..................... 42,276,258
13,611,507 WM U.S. Government Securities Fund .......... 143,601,402
------------
Total Investment Company
Securities
(Cost $861,018,424) ....................... 936,533,596
------------
PRINCIPAL
AMOUNT
-------------
REPURCHASE AGREEMENT- 0.3%
(Cost $2,432,000)
$ 2,432,000 Agreement with Goldman Sachs
& Company, 6.420% dated
10/31/2000, to be repurchased
at $2,432,434 on 11/01/2000
collaterized by $2,014,087 U.S.
Treasury Bond, 7.875% due 02/15/2021
(Market Value $2,484,394) 2,432,000
------------
TOTAL INVESTMENTS
(Cost $863,450,424*) ............................... 9.7% 938,965,596
OTHER ASSETS AND LIABILITIES
(NET) .............................................. 0.3 2,538,118
----- ------------
NET ASSETS ............................................ 100.0% $941,503,714
===== ============
----------------------
* Aggregate cost for federal tax purposes is $864,586,686.
CONSERVATIVE BALANCED PORTFOLIO
OCTOBER 31, 2000
SHARES VALUE
------ -----
INVESTMENT COMPANY SECURITIES- 97.1%
20,438 WM Equity Income Fund ....................... $ 318,634
33,970 WM Growth Fund .............................. 1,128,837
15,696 WM Growth Fund of the Northwest ............. 570,406
96,773 WM Growth & Income Fund ..................... 2,628,362
103,044 WM High Yield Fund .......................... 873,810
423,667 WM Income Fund .............................. 3,774,872
23,423 WM International Growth Fund ................ 257,654
49,902 WM Mid Cap Stock Fund ....................... 629,767
593,677 WM Short Term Income Fund 1,359,520
16,563 WM Small Cap Stock Fund ..................... 443,567
290,928 WM U.S. Government Securities Fund .......... 3,069,293
------------
Total Investment Company
Securities
(Cost $14,988,959) ........................ 15,054,722
------------
PRINCIPAL
AMOUNT
-------------
REPURCHASE AGREEMENT- 2.6%
(Cost $408,000)
$ 408,000 Agreement with Goldman Sachs
& Company, 6.420% dated
10/31/2000, to be repurchased
at $408,073 on 11/01/2000
collaterized by $337,890 U.S.
Treasury Bond, 7.875% due 02/15/2021
(Market Value $416,790) ................... 408,000
------------
TOTAL INVESTMENTS
(Cost $15,396,959*) ............................... 99.7% 15,462,722
OTHER ASSETS AND LIABILITIES
(NET) ............................................. 0.3 40,820
----- -------------
NET ASSETS ........................................... 100.0% $ 15,503,542
===== ============
----------
* Aggregate cost for federal tax purposes is $15,537,022.
See Notes to Financial Statements.
<PAGE>
portfolio of investments
FLEXIBLE INCOME PORTFOLIO
OCTOBER 31, 2000
SHARES VALUE
------ -----
INVESTMENT COMPANY SECURITIES - 99.3%
110,341 WM Equity Income Fund ....................... $ 1,720,216
260,730 WM Growth Fund .............................. 8,664,064
97,086 WM Growth Fund of the Northwest ............. 3,528,089
1,017,882 WM Growth & Income Fund ..................... 27,645,671
1,595,571 WM High Yield Fund .......................... 13,530,446
6,905,533 WM Income Fund .............................. 61,528,300
460,811 WM Mid Cap Stock Fund ....................... 5,815,434
11,897,869 WM Short Term Income Fund ................... 27,246,119
130,663 WM Small Cap Stock Fund ..................... 3,499,147
4,934,858 WM U.S. Government Securities Fund .......... 52,062,754
------------
Total Investment Company
Securities
(Cost $203,534,173) ........................ 205,240,240
------------
PRINCIPAL
AMOUNT
-------------
REPURCHASE AGREEMENT- 0.3%
(Cost $601,000)
$ 601,000 Agreement with Goldman Sachs
& Company, 6.420% dated
10/31/2000, to be repurchased
at $601,107 on 11/01/2000
collaterized by $497,725 U.S.
Treasury Bond, 7.875% due 02/15/2021
(Market Value $613,948) ................... 601,000
------------
TOTAL INVESTMENTS
(Cost $204,135,173*) ............................... 99.6% 205,841,240
OTHER ASSETS AND LIABILITIES
(NET) .............................................. 0.4 783,065
----- -----------
NET ASSETS ............................................ 100.0% $206,624,305
===== ============
----------
* Aggregate cost for federal tax purposes is $204,456,283.
See Notes to Financial Statements.
<PAGE>
notes to financial statements
WM STRATEGIC ASSET MANAGEMENT PORTFOLIOS
1. ORGANIZATION AND BUSINESS
WM Strategic Asset Management Portfolios, LLC (the "LLC") was organized under
the laws of the Commonwealth of Massachusetts on March 12, 1999 as a business
entity commonly known as a "Limited Liability Company." The LLC is registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end management investment company. The LLC offers five portfolios; the
Strategic Growth and the Conservative Growth Portfolios (the "Equity
Portfolios"), and the Balanced, the Conservative Balanced (formerly known as the
"Income Portfolio") and the Flexible Income Portfolios (the "Fixed Income
Portfolios") (each a "Portfolio" and collectively, the "Portfolios"). On July
16, 1999, the Griffin Portfolio Builder Accounts (asset allocation accounts that
were invested in certain Funds in the WM Group of Funds) contributed all of
their assets in kind to the LLC in a tax-free exchange for shares of Portfolios
with similar objectives. Each of the Portfolios offers two classes of shares:
Class A shares and Class B shares. Class A shares are subject to an initial
sales charge at the time of purchase. Certain Class A shares purchased without
an initial sales charge may be subject to a contingent deferred sales charge
("CDSC") if redeemed within two years of purchase. Class B shares are not
subject to an initial sales charge. Class B shares are subject to a CDSC if
redeemed within five years from the date of purchase.
Each of the Portfolios invests, within certain percentage ranges, in Class I
shares of certain underlying funds in the WM Group of Funds (collectively, the
"Underlying Funds"). Each Portfolio typically allocates its assets, within
determined percentage ranges, among the Underlying Funds. The percentages
reflect the extent to which each Portfolio can invest in the particular market
segment represented by each Underlying Fund, and the varying degrees of
potential investment risk and reward represented by each Portfolio's investments
in those market segments and their corresponding Underlying Funds. WM Advisors,
Inc. (the "Advisor" or "WM Advisors"), a wholly-owned subsidiary of Washington
Mutual, Inc. ("Washington Mutual"), a publicly owned financial services company,
serves as investment advisor to the Portfolio. The Advisor may alter these
percentage ranges when it deems appropriate. The assets of each Portfolio will
be allocated among the Underlying Funds in accordance with its investment
objective based on the Advisor's outlook for the economy, the financial markets
and the relative market valuations of the Underlying Funds. In addition, in
order to meet liquidity needs or for temporary defensive purposes, each
Portfolio may invest its assets directly in cash, stock or bond index futures,
options, money market securities and certain short-term debt instruments.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts and disclosures in
the financial statements. Actual results could differ from those estimates. The
following is a summary of significant accounting policies consistently followed
by the Portfolios in the preparation of their financial statements.
PORTFOLIO VALUATION:
Investments in the Underlying Funds are valued at net asset value per Class I
share of the respective Underlying Funds determined as of the close of the New
York Stock Exchange on each valuation date. Short-term debt securities that
mature in 60 days or less at the time of purchase are valued at amortized cost.
REPURCHASE AGREEMENTS:
Each Portfolio may engage in repurchase agreement transactions. A repurchase
agreement is a purchase of an underlying debt obligation subject to an agreement
by the seller to repurchase the obligation at an agreed upon price and time. The
value of the collateral is at all times at least equal to the total amount of
the repurchase obligation. In the event of counterparty default, the Portfolio
would seek to use the collateral to offset losses incurred. There is potential
loss in the event the Portfolio is delayed or prevented from exercising its
right to dispose of the collateral securities, including the risk of a possible
decline in the value of the underlying securities during the period while the
Portfolio seeks to assert its rights. WM Advisors, acting under the supervision
of the Board of Trustees, reviews the value of the collateral and the
creditworthiness of those banks and dealers with whom each Portfolio enters into
repurchase agreements.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME:
Securities transactions are recorded as of the trade date (the date the order to
buy or sell is executed). Realized gains and losses from securities sold are
recorded on the identified cost basis. Interest income is recorded on the
accrual basis and consists of interest accrued and, if applicable, discount
accreted less premiums amortized. Dividend income is recorded on the ex-dividend
date. Each Portfolio's investment income and realized and unrealized gains and
losses are allocated among the Portfolio's classes of shares based upon the
relative average net assets of each class.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income of the Balanced Portfolio, Conservative
Balanced Portfolio and Flexible Income Portfolio are declared daily and paid
monthly. Dividends from the net investment income of the Conservative Growth
Portfolio are declared and paid quarterly. Dividends from the net investment
income of the Strategic Growth Portfolio are declared and paid semi-annually.
Distributions of any net long-term capital gains earned by a Portfolio are made
annually. Distributions of any net short-term capital gains earned by a
Portfolio are distributed no less frequently than annually at the discretion of
the Board of Trustees. Additional distributions of net investment income and
capital gains for each Portfolio may be made at the discretion of the Board of
Trustees in order to avoid the application of a 4% non-deductible excise tax on
certain undistributed amounts of ordinary income and capital gains. Income
distributions and capital gain distributions are determined in accordance with
income tax regulations, which may differ from accounting principles generally
accepted in the United States of America. These differences are primarily due to
differing treatments of income and gains on various investment securities held
by the Portfolios, organizational costs, dividends payable, redesignated
distributions and differing characterization of distributions made by each
Portfolio as a whole. Net investment income per share calculations in the
financial highlights for the year ended October 31, 2000 exclude these
adjustments:
<TABLE>
<CAPTION>
INCREASE/
INCREASE (DECREASE)
INCREASE/ UNDISTRIBUTED ACCUMULATED
(DECREASE) NET INVESTMENT NET REALIZED
PAID-IN CAPITAL INCOME/(LOSS) GAIN/(LOSS)
--------------- ------------- -------------
<S> <C> <C> <C>
Strategic Growth Portfolio ......... $289,026 $ 7,901,908 $ (8,190,934)
Conservative Growth Portfolio ...... 491,713 15,659,744 (16,151,457)
Balanced Portfolio ................. 481,306 11,374,589 (11,855,895)
Conservative Balanced Portfolio .... (6,360) 6,153 207
Flexible Income Portfolio .......... 154,291 1,775,436 (1,929,727)
</TABLE>
FEDERAL INCOME TAXES:
It is each Portfolio's policy to qualify as a regulated investment company by
complying with the requirements of the Internal Revenue Code of 1986, as
amended, applicable to regulated investment companies and by, among other
things, distributing substantially all of its taxable and tax-exempt earnings to
its shareholders. Therefore, no Federal income tax provision is required.
EXPENSES:
General expenses of the LLC are allocated to all the Portfolios based upon the
relative net assets of each Portfolio except printing and postage expenses,
which are allocated to all the Portfolios based upon the relative number of
shareholder accounts of each Portfolio. In addition, the Portfolios will
indirectly bear their prorated share of expenses of the Underlying Funds.
Operating expenses directly attributable to a class of shares are charged to the
operations of that class of shares. Expenses of each Portfolio not directly
attributable to the operations of any class of shares are prorated among the
classes to which the expenses relate based on the relative average net assets of
each class of shares.
3. INVESTMENT ADVISORY AND OTHER TRANSACTIONS
WM Advisors serves as investment advisor to the LLC. As investment advisor to
the Portfolios, WM Advisors provides its proprietary asset allocation services
to the Portfolios, formulates the Portfolios' investment policies, analyzes
economic and market trends, exercises investment discretion over the assets of
the Portfolios and monitors the allocation of each Portfolio's assets and each
Portfolio's performance. For its investment advisory services to the Portfolios,
beginning September 1, 2000, WM Advisors is entitled to a monthly fee at an
annual rate of 0.65% of each Portfolio's average daily net assets. Prior to
September 1, 2000, WM Advisors was entitled to a monthly fee, at an annual rate
of 0.15% of each Portfolio's average daily net assets. Beginning September 1,
2000, WM Shareholder Services, Inc., an indirect wholly-owned subsidiary of
Washington Mutual, serves as administrator to the Portfolios at no additional
fee. Prior to September 1, 2000, a fee of 0.50% of average daily net assets of
each Portfolio was asserted for administration services.
WM Shareholder Services, Inc. (the "Transfer Agent") serves as the transfer and
shareholder servicing agent of the Portfolios. Shareholder servicing fees were
paid to the Transfer Agent for services incidental to issuance and transfer of
shares, maintaining shareholder lists, and issuing and mailing distributions and
reports. The authorized monthly shareholder servicing fee is $1.35 per account
for both Class A and Class B shareholder accounts.
Custodian fees for certain Portfolios have been reduced by credits allowed by
the custodian for uninvested cash balances. These Portfolios could have invested
this cash in income producing investments. Fees reduced by credits allowed by
the custodian for the year ended October 31, 2000 are shown separately in the
Statements of Operations.
4. TRUSTEES' FEES
No director, officer or employee of Washington Mutual or its subsidiaries
receives any compensation from the LLC for serving as an officer or Trustee of
the LLC. The LLC, together with other Trusts advised by WM Advisors, Inc., pays
each Trustee who is not a director, officer or employee of Washington Mutual or
its subsidiaries, $18,000 per annum plus $3,000 per board meeting attended in
person and $1,000 per board meeting attended by telephone. The Lead Trustee
receives an additional $6,000 per annum. Trustees are also reimbursed for travel
and out-of-pocket expenses. The Chairman of each committee receives an
additional $500 per committee meeting attended.
Pursuant to an exemptive order granted by the Securities and Exchange
Commission, the LLC's eligible Trustees may participate in a deferred
compensation plan (the "Plan") which may be terminated at any time. Under the
Plan, Trustees may elect to defer receipt of all or a portion of their fees
which, in accordance with the Plan, are invested in mutual fund shares. Upon
termination of the Plan, Trustees who have deferred accounts under the Plan will
be paid benefits no later than the time the payments would otherwise have been
made without regard to such termination. All benefits provided under these plans
are funded and any payments to plan participants are paid solely out of the
LLC's assets.
5. DISTRIBUTION PLANS
WM Funds Distributor, Inc. (the "Distributor"), a registered broker-dealer and
an indirect wholly-owned subsidiary of Washington Mutual, serves as distributor
for Class A and B shares of the Portfolios. For the year ended October 31, 2000,
the Distributor and WM Financial Services, Inc. ("WMFS") received $6,106,334 and
$35,888, respectively, representing commissions (front end sales charges) on
Class A shares. In addition, the Distributor and WMFS received $36,938,631 and
$104,826, respectively, representing CDSC Fees from Class B shares.
Each of the Portfolios has adopted two distribution plans, pursuant to Rule
12b-1 under the 1940 Act, one for the Class A shares ("Class A Plan") and one
for the Class B shares ("Class B Plan"). Under the Class A and Class B Plans,
the Distributor is to be paid a shareholder service fee at an annual rate of
0.25% of the average daily net assets of each class of shares. In addition,
under the Class B Plan, the Distributor is to be paid an annual distribution fee
of up to 0.75% of the average daily net assets of the Class B shares of each
Portfolio for activities primarily intended to result in the sale of Class B
shares for the Portfolios.
6. PURCHASES AND SALES OF SECURITIES 7.
The aggregate cost of purchases and proceeds from sales of securities, excluding
U.S. Government and short-term investments, for the year ended October 31, 2000
were as follows:
NAME OF PORTFOLIO PURCHASES SALES
----------------- --------- -----
Strategic Growth Portfolio $325,813,020 $ 56,156,764
Conservative Growth Portfolio 498,399,981 130,905,981
Balanced Portfolio 484,633,922 166,538,403
Conservative Balanced Portfolio 10,183,829 15,274,611
Flexible Income Portfolio 57,691,772 99,220,862
At October 31, 2000, aggregate gross unrealized appreciation for all Underlying
Funds in which there was an excess of value over tax cost and aggregate gross
unrealized depreciation for all Underlying Funds in which there was an excess of
tax cost over value were as follows:
TAX BASIS TAX BASIS
UNREALIZED UNREALIZED
NAME OF PORTFOLIO APPRECIATION DEPRECIATION
----------------- ------------ ------------
Strategic Growth Portfolio $ 61,112,278 $5,906,162
Conservative Growth Portfolio 136,302,648 5,576,198
Balanced Portfolio 79,850,008 5,471,098
Conservative Balanced Portfolio 118,803 193,103
Flexible Income Portfolio 3,978,805 2,595,848
7. SHARES OF BENEFICIAL INTEREST
The LLC may issue an unlimited number of shares of beneficial interest, each
without par value.
8. ORGANIZATION COSTS
Expenses incurred in connection with the organization of the Portfolios,
including the fees and expenses of registering and qualifying its shares for
distribution under federal and state securities regulations, are being amortized
on a straight-line basis over a period of five years from commencement of
operations of each Portfolio, respectively. In the event any of the initial
shares of a Portfolio are redeemed by any holder thereof during the amortization
period, the proceeds of such redemptions will be reduced by an amount equal to
the pro-rata portion of unamortized deferred organizational expenses in the same
proportion as the number of shares being redeemed bears to the number of initial
shares of such Portfolio outstanding at the time of such redemption.
9. CAPITAL LOSS CARRYFORWARDS
At October 31, 2000, the following Portfolio had available for Federal income
tax purposes unused capital losses as follows:
EXPIRING
IN 2008
--------
Conservative Balanced Portfolio $372,589
10. RISK FACTORS OF THE PORTFOLIOS
Investing in the Underlying Funds through the Portfolios involves certain
additional expenses and tax results that would not be present in a direct
investment in the Underlying Funds. For example, under certain circumstances, an
Underlying Fund may determine to make payment of a redemption request by a
Portfolio wholly or partly by a distribution in kind of securities from its
portfolio, instead of cash, in accordance with the rules of the Securities and
Exchange Commission. In such cases, the Portfolios may hold securities
distributed by an Underlying Fund until the Advisor determines that it is
appropriate to dispose of such securities.
Certain Underlying Funds may invest a portion of their assets in foreign
securities; enter into forward foreign currency transactions; lend their
portfolio securities; enter into stock index, interest rate and currency futures
contracts, and options on such contracts; enter into interest rate swaps or
purchase or sell interest rate caps or floors; engage in other types of options
transactions; make short sales; purchase zero coupon and payment-in-kind bonds;
engage in repurchase or reverse repurchase agreements; purchase and sell
"when-issued" securities and engage in "delayed-delivery" transactions; and
engage in various other investment practices each with inherent risks.The
Strategic Growth Portfolio can invest as much as 50% of its total assets in the
WM Growth Fund, 50% of its total assets in the WM Small Cap Stock Fund and 25%
of its total assets in the WM High Yield Fund, each of which Underlying Funds
may invest as much as 35% (100% in the case of the High Yield Fund) of its total
assets in lower-rated bonds. Securities rated below investment grade generally
involve greater price volatility and risk of principal and income and may be
less liquid than higher rated securities.
The Srategic Growth Portfolio may invest as much as 50% of its total assets in
the WM Growth or WM Small Cap Stock Funds, each of which may invest up to 25% of
its total assets in foreign equity securities and as much as 5% of its total
assets in securities in developing or emerging markets countries. The Strategic
Growth Portfolio may invest as much as 50% of its total assets in the WM
International Growth Fund, which invests primarily in the foreign equity
securities, and may invest as much as 30% of its total assets in securities in
developing or emerging market countries. These investments will subject the
Portfolio to risks associated with investing in foreign securities, including
those resulting from adverse political and economic developments and the
possible imposition of currency exchange restrictions or other foreign laws or
restrictions.
The officers and Trustees, the Advisor, the Distributor and Transfer Agent of
the Portfolios serve in the same capacity for the Underlying Funds. Conflicts
may arise as these persons and companies seek to fulfill their fiduciary
responsibilities to both the Portfolios and the Underlying Funds.
From time to time, one or more of the Underlying Funds used for investment by a
Portfolio may experience relatively large investments or redemptions due to
reallocations or rebalancings by the Portfolios. These transactions will affect
the Underlying Funds, since the Underlying Funds that experience redemptions as
a result of the reallocations or rebalancings may have to sell portfolio
securities and the Underlying Funds that receive additional cash will have to
invest such cash. While it is impossible to predict the overall impact of these
transactions over time, there could be adverse effects on portfolio management
to the extent that the Underlying Funds may be required to sell securities or
invest cash at times when they would not otherwise do so. These transactions
could also have tax consequences if sales of securities resulted in gains and
could also increase transaction costs. The Advisor is committed to minimizing
such impact on the underlying Funds to the extent it is consistent with pursuing
the investment objectives of the Portfolios. The Advisor may nevertheless face
conflicts in fulfilling its responsibilities. The Advisor will, at all times,
monitor the impact on the underlying Funds of transactions by the Portfolios.
<PAGE>
independent auditors' report
To the Trustees and Shareholders of
WM Stategic Asset Management Portfolios
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of WM Strategic Growth Portfolio, WM Conservative
Growth Portfolio, WM Balanced Portfolio, WM Conservative Balanced Portfolio
(formerly known as WM Income Portfolio) and WM Flexible Income Portfolio
(collectively, the "Portfolios") as of October 31, 2000, the related statements
of operations for the year then ended, the statements of changes in net assets
for the years ended October 31, 2000 and 1999 and the financial highlights for
each of the years ended October 31, 2000 and 1999 and the period ended October
31, 1998. These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits. The financial highlights of the Portfolio's for the periods ended June
30, 1998 and prior were audited by other auditors whose report, dated August 14,
1998, expressed an unqualified opinion on those financial highlights.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements and financial highlights. Our procedures
included confirmation of securities owned at October 31, 2000, by correspondence
with the custodian and transfer agent; where replies were not received, we
performed other auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of the aforementioned
Portfolios at October 31, 2000, the results of their operations, changes in
their net assets and their financial highlights for the respective stated
periods in conformity with accounting principles generally accepted in the
United States of America.
Deloitte & Touche LLP
San Francisco, California
December 8, 2000
<PAGE>
tax information (unaudited)
WM STRATEGIC ASSET MANAGEMENT PORTFOLIOS
YEAR ENDED OCTOBER 31, 2000
The following tax information represents fiscal year end disclosures of various
tax benefits passed through to shareholders at calendar year end.
Of the distributions made by the following Portfolio, the corresponding
percentage represents the amount of each distribution which will qualify for the
dividends received deduction available to corporate shareholders.
NAME OF PORTFOLIO
-----------------
Conservative Balanced Portfolio 1.82%
The above percentage may differ from those cited elsewhere in this report due to
differences in the calculation of income and capital gains for Securities and
Exchange Commission (book) purposes and Internal Revenue Service (tax) purposes.
<PAGE>
This Annual Report is published for the general information
of the shareholders of the WM Group of Funds. It is
authorized for distribution to prospective investors only
when preceded or accompanied by a current WM Group of Funds
prospectus. A mutual fundshare price and investment return
will vary with market conditions, and the principal value of
an investment when you sell your shares may be more or less
than the original cost.
The WM Group of Funds are not insured by the FDIC. They are
not deposits or obligations of, nor are they guaranteed by,
any bank. These securities are subject to investment risk,
including possible loss of principal amount invested.
Distributed by
WM Funds Distributor, Inc.
Member NASD
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