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[Logo] Wm
GROUP of FUNDS
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SEMI-ANNUAL Report
for the period ended April 30, 1998
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MESSAGE from THE president .............................................1
SIX months IN review and our OUTLOOK for 1998 ..........................2
INDIVIDUAL fund REVIEWS ................................................5
STATEMENTS of ASSETS and LIABILITIES ..................................20
STATEMENTS of OPERATIONS ..............................................24
STATEMENTS of CHANGES in NET assets ...................................26
STATEMENTS of CHANGES in NET assets - capital stock ACTIVITY ..........30
FINANCIAL highlights ..................................................36
PORTFOLIO of INVESTMENTS ..............................................53
NOTES to FINANCIAL statements .........................................80
[Logo] Wm
GROUP of FUNDS
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SHAREHOLDERS
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DEAR shareholder:
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[Photo of William G. Papesh]
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We are pleased to bring you the WM Group of Funds semi-annual report for the
period ended April 30, 1998.
The equity market continued to set record highs during the first four months of
1998, with the Dow Jones Industrial Average breaking through the 9000 mark. And
as share prices have risen on Wall Street, so has investors' interest in -- and
reliance on -- stock and stock mutual funds as the building blocks of retirement
portfolios and other investment strategies.
If you've been invested in equity funds during the last several years, you've
likely noticed some impressive gains in your portfolio. During the three years
ended April 30, 1998, the stock market posted an average annual return of 32%,
as measured by Standard & Poor's Composite Index (S&P 500).* This is far above
the longer-term average of 10-12% a year.
As part of a diversified portfolio, stocks play an important role in long-term
investing. Historically, they have offered investors the opportunity of earning
returns significantly higher than the rate of inflation. Yet you will want to be
careful about being overly optimistic in your expectations, and to remember also
that ups and downs are a normal part of the market cycle.
Because market turbulence is part and parcel of stock investing, I'd like to
remind you to look at the returns of any investment relative to its potential
volatility. Although stocks have historically provided higher average annual
returns than most other investment classes, they also carry greater risk of
volatility. One way to help reduce volatility in your portfolio while still
pursuing opportunities for growth is to allocate your investments among several
appropriate asset classes. For example, during the 20-year period ended December
31, 1997, stocks returned 17% annually on average, compared with 10% for
long-term government bonds. Allocating 70% of a portfolio to stocks and 30% to
bonds during that period would have resulted in a slightly lower average return
of 15% per year, but with a 20% reduction in volatility relative to an all-stock
portfolio.*
The mirror image holds true for bond investors, as well. Allocating a small
percentage of the portfolio to stocks can actually help reduce overall
volatility. That's because bond prices often react differently to changes in the
economy than do prices of stocks.
With the complexities of today's global markets, building a properly diversified
portfolio is increasingly difficult. WM Group of Funds offers investors a broad
range of professionally managed diversification solutions, including our family
of 18 mutual funds and the STRATEGIC ASSET MANAGEMENT (SAM) PORTFOLIOS, which
use active asset allocation to help investors manage risk and are designed to
achieve specific investment objectives.
The tradition at the WM Group of Funds began in 1939 with the creation of the
BOND & STOCK FUND, one of the first 50 mutual funds in the country. For nearly
60 years the organization has built a reputation in the mutual fund industry for
performance, integrity and commitment to client services. Today, we manage
approximately $5 billion in assets and serve almost 230,000 shareholder
accounts.
Working with your Financial Representative, you can also create a custom
allocation from the full array mutual funds in the WM Group of Funds.
Together with the WM STRATEGIC ASSET MANAGER, A TAX-DEFERRED VARIABLE annuity,
the WM Group offers you a diversity of asset classes and investment vehicles
through which you can pursue your financial goals. Thank you for your continued
confidence in us.
Sincerely,
/s/ William G. Papesh
William G. Papesh
President
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* Source: Standard & Poor's. Stocks are represented by Standard & Poor's
Composite Index of 500 Stocks, an unmanaged index of common stocks generally
representative of the U.S. stock market. Individuals cannot invest directly in
any index. Past performance is no guarantee of future results.
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OUTLOOK
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SIX months IN review
AND our OUTLOOK for 1998
STRONG FUNDAMENTALS
CONTINUE TO DRIVE
FINANCIAL MARKETS
The bull market has continued apace during the six months ended April 30, 1998,
with stocks rising 22%1. Among the strongest performers were utilities,
financial services companies and communications firms.
Underlying this strength are sound fundamentals in the economic picture.
A low-inflation environment is generally good for financial markets, and
inflation has been falling rather than rising. That, in turn, has helped keep
interest rates in check despite a growing economy.
Yields on long-term government bonds hovered around 6% during the early part of
1998. But in April, following news that labor costs had risen less than
expected, bond yields fell again through the psychologically important 6% level.
CONSUMERS SPUR GROWTH
Paradoxically, personal incomes have risen even though companies' labor costs
have shown only small increases. Real (after inflation) personal income rose
2.9% in 1997 and is expected to rise about 3.9% in 1998. One way companies have
managed to control costs without sacrificing wage increases is through more
efficient use of technology. U.S. businesses have continued to post significant
gains in productivity, helping them remain cost-competitive even in a tight
labor market.
DOW JONES INDUSTRIAL AVERAGE
SIX MONTHS ENDED 4-30-98
Oct 31, 1997 7,442
Nov 7, 1997 7,581
Nov 14, 1997 7,572
Nov 21, 1997 7,881
Nov 28, 1997 7,823
Dec 5, 1997 8,149
Dec 12, 1997 7,838
Dec 19, 1997 7,756
Dec 26, 1997 7,679
Jan 2, 1998 7,965
Jan 9, 1998 7,580
Jan 16, 1998 7,753
Jan 23, 1998 7,700
Jan 30, 1998 7,906
Feb 6, 1998 8,189
Feb 13, 1998 8,370
Feb 20, 1998 8,413
Feb 27, 1998 8,545
Mar 6, 1998 8,569
Mar 13, 1998 8,602
Mar 20, 1998 8,906
Mar 27, 1998 8,796
Apr 3, 1998 8,983
Apr 10, 1998 8,994
Apr 17, 1998 9,167
Apr 24, 1998 9,064
Apr 30, 1998 9,063
Source: Bloomberg Business News.
Note: The Dow Jones Industrial Average is an index of 30 stocks and is sometimes
used to measure the overall U.S. equity market. Individuals cannot invest
directly in an index.
YIELD ON THE 30-YEAR TREASURY BOND
SIX MONTHS ENDED 4-30-98
Oct 31, 1997 6.15%
Nov 7, 1997 6.16%
Nov 14, 1997 6.11%
Nov 21, 1997 6.03%
Nov 28, 1997 6.05%
Dec 5, 1997 6.08%
Dec 12, 1997 5.92%
Dec 19, 1997 5.92%
Dec 26, 1997 5.90%
Jan 2, 1998 5.84%
Jan 9, 1998 5.73%
Jan 16, 1998 5.81%
Jan 23, 1998 5.97%
Jan 30, 1998 5.80%
Feb 6, 1998 5.92%
Feb 13, 1998 5.85%
Feb 20, 1998 5.87%
Feb 27, 1998 5.92%
Mar 6, 1998 6.02%
Mar 13, 1998 5.89%
Mar 20, 1998 5.88%
Mar 27, 1998 5.96%
Apr 3, 1998 5.79%
Apr 10, 1998 5.88%
Apr 17, 1998 5.88%
Apr 24, 1998 5.95%
Apr 30, 1998 5.95%
Source: Bloomberg Business News.
Note: Represents yield on the 30-year Treasury Bond which is sometimes used to
characterize the overall bond market.
The increase in personal incomes has contributed to a boost in consumer
spending, helping to sustain economic growth in the 3-4% range. During the first
quarter gross domestic product (GDP) rose at an annual rate of 4.7%, largely
driven by consumer rather than business or government spending.
In fact, government spending has actually been declining, which is another
bright spot for the economy. The current fiscal year, ending September 30, 1998,
is likely to see a budget surplus for the first time in nearly 30 years.
POTENTIAL TROUBLE SPOTS FOLLOW
WEAKNESS IN ASIA
Nevertheless, there are several potential weak spots in the economy which could
have a negative impact on the markets, and which investors will want to watch
closely.
One factor is that short-term interest rates remain unusually high relative to
inflation. The Federal Reserve, which influences short-term rates, has
maintained a steady policy during the last year even as inflation has fallen. As
a result, rates on three-month Treasuries have remained at about 5%, while
inflation has fallen to 1.4%.
In administering interest-rate policy, members of the Federal Reserve's Open
Market Committee look to potential future inflation -- so the current stance may
indicate that they believe the strength of the economy could trigger higher
inflation in coming months.
Another area of potential concern is the rising trade deficit, due largely to a
slowdown in exports to Asian markets. Remember Asia's bout of severe market
volatility and the financial crisis it sparked late last year? Many newly
industrialized Asian markets remain in turmoil while Japan, the second-largest
export market for the U.S., remains in an economic slump.
The impact of the Asian crisis on American companies, particularly those in the
technology sector, is more favorable for companies that import goods from Asia
than those who export to the region. Dell Computer, for example, reported that
lower-cost Asian components have allowed them to reduce prices and spur sales.
Digital Equipment, on the other hand, said that it lost substantial business
when Asian orders were canceled as a result of the sharp slowdown in economic
activity in that region.
THE YEAR 2000 PROBLEM
At the stroke of midnight on New Year's Eve, 1999, some computer systems could
become seriously confused. They may miscalculate critical data, delete vital
files, or simply not turn on, all because the computer's internal calendars and
clocks may not recognize the year 2000.
This computer system problem that has come to be popularly known as the Year
2000 Problem, The Millennium Bug -- or simply Y2K -- grows out of the habit of
abbreviating years to their last two digits. Many systems may not be able to
decide correctly when a year 00 should be interpreted as 1900, and when it
should be seen as 2000.
Aside from being an enormous inconvenience, the Y2K problem could have
significant market repercussions for individual stocks as well as the overall
markets. Services of companies which have already prepared for the millennium,
or which have capabilities to assist other companies in preventing future
problems, are in line to receive the lion's share of government and corporate
capital spending on technology.
The Clinton Administration has budgeted $3.9 billion in fiscal 1999 to upgrade
the federal government's computers. Worldwide, a survey by Giga Information
Group estimated that companies will spend $300 billion to fix systems with Y2K
problems.
INTERNATIONAL INVESTMENTS POST GAINS
On the international front, many investors in developed international markets
saw significant gains over the last six months. Led by European stock markets,
Morgan Stanley Capital International's EAFE index posted a 15% gain.2 Overall,
emerging international markets posted modest gains.3
Looking ahead, the outlook for international investment remains favorable. The
Organization for Economic Cooperation and Development predicts that Western
Europe's GDP will match that of the United States' for 1998, forecast at 2.7%
growth. A major longer-term factor is the planned introduction of a single
currency -- the Euro -- in 1999. As of May, 1998, 11 European countries have
indicated that they will adopt the Euro as their common currency.
A DIVERSITY OF OPPORTUNITIES
Today's economic and market environment may offer diverse opportunities in
domestic stock and fixed-income investments as well as investments in foreign
markets.
The WM Group of Funds offers a diverse array of professionally managed
investments including mutual funds, annuities, and professionally allocated
investments through the STRATEGIC ASSET MANAGEMENT (SAM) PORTFOLIOS. For more
information about how your portfolio can be positioned to potentially benefit
from multiple market opportunities, please speak to your Financial
Representative.
1 Source: The Wall Street Journal, May 1, 1998. Stocks are represented by
Standard & Poor's Composite Index of 500 stocks, an unmanaged index generally
representative of the U.S. stock market. Past performance cannot guarantee
future results.
2 Source: Morgan Stanley Capital International. The EAFE index is an unmanaged
index of 22 developed foreign stock markets. Past performance cannot guarantee
future results.
3 International investing has additional risks, including currency fluctuation.
PERFORMANCE AROUND THE GLOBE
SIX MONTHS ENDED 4-30-98
Europe ..................................................... 29.25%
North America .............................................. 22.43%
Nordic Countries ........................................... 20.51%
Pacific .................................................... -8.54%
Far East ................................................... -9.91%
World ...................................................... 19.07%
Sources: Morgan Stanley Capital International. Each region is represented by the
corresponding MSCI Index in U.S. Dollars. There are additional risks associated
with international investing, including currency fluctuations.
ASSET CLASS RESULTS
SIX MONTHS ENDED 4-30-98
T-Bills .................................................... 2.61%
Corporate Bonds ............................................ 3.55%
Mortgage-Backed ............................................ 3.48%
Corporate High-Yield Bonds ................................. 5.68%
Small Company Stocks ....................................... 11.88%
Large Company Stocks ....................................... 22.50%
International Stocks ....................................... 15.59%
Sources: S&P, Lehman Brothers, Russell, & Morgan Stanley. T-bills represent
90-day U.S. Treasury bills; corporate bonds are represented by Lehman Brothers
Corporate Bond Index; mortgage-backed bonds are represented by Lehman Brothers
Mortgage-Backed Bond Index; corporate high-yield bonds are represented by the
Lehman Brothers High Yield Corporate Bond Index; small company stocks are
represented by the Russell 2000 Index; large company stocks are represented by
S&P 500 Composite Index; and international stocks are represented by MSCI EAFE
Index. Indices represent unmanaged performance. T-bills are generally considered
the safest securities because they are short-term and offer a fixed yield at
maturity, which is guaranteed by the U.S. government. Government bonds are
riskier than T-bills because of the longer maturities. An investor would
typically purchase stocks for long-term growth of capital. However, stocks are
often subject to significant price fluctuations and therefore an investor may
have a gain or loss in principal when the shares are sold. This chart is not
intended to represent the performance of any mutual fund.
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REVIEWS
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INDIVIDUAL fund REVIEWS
WM ADVISORS, INC. is the investment advisor to the WM Group of Funds, and has
general oversight responsibility for the advisory services provided to the
Funds. These services include formulating the Funds' investment policies,
analyzing economic trends that affect the Funds, and directing and evaluating
the investment services provided by the Sub-Advisors and the individual
Portfolio Managers of each Fund. WM Advisors supervises the Portfolio Managers'
day-to-day management of the Funds in the WM Group of Funds family to ensure
that the policies and guidelines are met, and to determine appropriate
investment performance measures.
UNDERSTANDING THE ENCLOSED CHARTS AND PERFORMANCE FIGURES
In order to help you understand the WM Funds' investment performance, we have
included the following discussions along with graphs that compare the Funds'
performance with certain market indices. Descriptions of these indices are
provided next to the individual graphs on the following pages.
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. Total return is used to measure a Fund's performance and
reflects both changes in the value of the price of the Fund's shares as well as
any income dividend and/or capital gain distributions made by the Fund 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 SEC yield is computed by dividing net investment income per share
over the one-month period ended April 30, 1998, by the maximum offering price on
that date, and annualizing the result.
Yield indicates the investment income per share as a percentage of the 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. The 30-day
SEC yield is the yield calculated pursuant to a standard formula required by the
Securities and Exchange Commission ("SEC") for performance advertisement
purposes, and does not imply any endorsement or recommendation by the SEC.
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TO our SHAREHOLDERS:
We are pleased to provide you with an overview of the following Funds in the WM
Group of Funds family for the six-month period ended April 30, 1998. To help you
better understand the professional investment management available to you as a
WM Group of Funds' shareholder, we have also included biographies highlighting
the investment professionals managing your funds.
Money Markets
High Yield
U.S. Government
Income
Tax-Exempt
Bond & Stock
Growth & Income
Northwest
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MONEY MARKET
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MONEY market FUNDS
PORTFOLIO MANAGER
Audrey Quaye has over five years investment experience, is a Certified Public
Accountant, holds an MBA, and has been with WM Advisors, Inc. since 1996. Ms.
Quaye manages the Money Market Fund and the Tax-Exempt Money Market Fund.
ECONOMIC CONDITIONS AFFECTING FUND PERFORMANCE
During the six-month period ended April 30, 1998, financial markets experienced
the peak of the Asian economic crisis. As currencies and markets collapsed
across that region, investors moved assets to high-quality, domestic holdings
and a strong rally in the U.S. bond market ensued. The U.S. economy remained
healthy and strong during the period, although the pace of growth moderated in
some regions due to a slowdown in manufacturing and export activity. Consumer
confidence was high, the housing market flourished in the low interest rate
environment, and the unemployment rate declined to a 28-year low of 4.3%.
Inflation remained very tame throughout 1997 and into the early part of 1998. As
a result, the Federal Reserve left rates unchanged at its March 31, 1998
meeting. The strength of the U.S. economy was balanced by the slowdown in Asian
activity and did not translate into overall price pressures. The result for the
short-term market was that the benchmark 90-day U.S. Treasury bill yield
declined from a high of 5.48% in December 1997, to 4.98% on April 30, 1998.
Average tax-free daily money market yields also declined from 3.60% in January
1998, to 1.75% in February 1998, and then rose to 4.20% at April 30, 1998. The
volatility was primarily due to change in supply and demand conditions in the
tax-free market.
ECONOMIC AND INTEREST RATE OUTLOOK
We expect inflation to remain tame and we anticipate a gradual slowdown in the
U.S economy as exports to Asia continue to decline and cheaper imports from Asia
push down domestic price levels. We also expect the slowdown in the economy to
reduce the risk of inflation, resulting in the possibility for lower interest
rates. However, if the effect of the Asian economic crisis is not as strong as
projected, or if employment costs continue to rise, then an increase in
inflation and interest rates is possible. Nevertheless, we do not anticipate Fed
rate move in the near future.
PORTFOLIO STRATEGY
Effective March 23, 1998, Sierra money market assets merged with, and into, the
WM Money Market Fund. The Fund's net assets at April 30, 1998, totaled $452.4
million. One effect of the merger was an increase in the Fund's exposure to U.S.
Government and Agency obligations. In addition, in an attempt to lower overall
risk in the portfolio, we reduced the Fund's exposure to the banking and foreign
sectors. We also extended the Portfolio's weighted average maturity in view of
our interest rate outlook.
The WM Tax-Exempt Money Market Fund's net assets at April 30, 1998, totaled
$27.34 million. During the period, we reduced the Fund's exposure to the more
volatile daily variable rate securities when short-term interest rates declined
significantly. However, the Portfolio's weighted average maturity did not change
significantly.
PORTFOLIOS' PERFORMANCE1
At April 30, 1998, the seven-day simple yield for Class A shares of the WM Money
Market Fund was 4.90%, or 5.02% on a compounded annual basis. The Fund had a
weighted average maturity of 84 days.
The seven-day simple yield for Class A shares of the WM Tax-Exempt Money Market
Fund was 3.64%, or 3.71% on a compounded annual basis. The Fund had a weighted
average maturity of 63 days.
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30 DAY DISTRIBUTION RATES* A SHARES B SHARES
Money Market Fund 4.84% 4.10%
Tax-Exempt Money Market Fund 3.38% 2.52%
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* During the period noted, WM Advisors, Inc. waived a portion of its management
fees and absorbed certain other expenses. Without the waiver and expense
absorption, the yields would have been lower.
1 All yield information represents past performance, which cannot guarantee
future results. Principal is not guaranteed or insured by the U.S. government,
and yields will fluctuate depending on market conditions. There is no assurance
that the portfolios will maintain their $1.00 per share net asset value.
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HIGH YIELD
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HIGH yield FUND
PORTFOLIO MANAGER
The High Yield Fund is managed by a fixed- income team led by Senior Portfolio
Manager Gary Pokrzywinski, who has over 12 years of asset management experience
and has been with WM Advisors, Inc. for more than 5 years. Mr. Pokrzywinski is a
Chartered Financial Analyst and holds a Business Degree from the University of
Wisconsin.
WHEN WAS THE FUND ESTABLISHED AND WHAT IS ITS OBJECTIVE?
The Fund was established in mid-April with the objective of providing high
current income.
WHAT IS OUR INTERMEDIATE- AND LONG-TERM OUTLOOK FOR THE FUND?
The Fund seeks to invest in industries that have positive competitive
characteristics--looking for good businesses that have competitive advantages.
The management team will then scrutinize the companies' ability to service their
debt based on factors relative to their particular industry. Similar to equity
analysis, the high yield managers use these factors--such as competitive
advantages and cash flows--as a basis to determine the relative valuations of
each investment. The goal is to find securities at a discount to this relative
value.
The majority of the Fund will be invested in securities rated "BB" and "B"1.
However, in an effort to differentiate itself from competitive funds, the WM
Fund will invest in the following sectors:
o high-yield corporate
o convertible debt
o preferred stock
o foreign securities2
o REITs
o non-rated issues
Although these sectors may involve additional credit and default risks, they can
also provide the potential for higher yields.
The initial strategy of the Fund will be to concentrate on less cyclical
industries such as Health Care. We also strive to find companies that are
currently out of favor, but have strong long-term fundamentals. At present, we
have found values in some computer related issues and select foreign (U.S.
Dollar denominated) issues.2
WHAT IS OUR OVERALL ECONOMIC OUTLOOK FOR THE NEXT 12 MONTHS?
Over the next twelve months we expect the economy to exhibit moderate growth.
The effects of the fallout in Asia should help keep growth and inflation under
control. Global price competition and the higher levels of imports into the
United States should lend to this scenario. Overall, there continues to be world
wide structural forces at work (fiscal austerity, demographics, excess
capacity) which should keep inflation under control for the next 3-5 years. In
this environment, corporate credit quality should continue to improve at a
modest pace as companies are able to grow and flourish.
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HIGH yield FUND portfolio COMPOSITION
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Industrial Bonds ........................................... 44%
Foreign Bonds2 ............................................. 10%
Yankee Bonds ............................................... 3%
Treasury Notes ............................................. 20%
Preferred Stock ............................................ 7%
CMOs ....................................................... 4%
Cash & Other ............................................... 12%
1 As rated by Standard & Poor's
2 There are additional risks associated with international investing, including
currency fluctuations.
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FIXED-INCOME
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U.S. government SECURITIES
PORTFOLIO MANAGER
The U.S. Government Securities Fund is managed by a fixed income team led by
Senior Portfolio Manager Gary Pokrzywinski, who has over 12 years of asset
management experience and has been with WM Advisors, Inc. for more than 5 years.
Mr. Pokrzywinski is a Chartered Financial Analyst and holds a Business Degree
from the University of Wisconsin.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE PAST 6 MONTHS?
The fixed-income market benefited from low inflation and an overall "flight to
quality" stemming from the Asian economic crisis. Many investors worldwide moved
assets from volatile global regions to U.S. government securities. The yield on
the 30-year Treasury dropped to a record low in January of 1998 and closed the
period under 6%. Given this positive economic backdrop, the U.S. Government
Securities Fund's Class A shares total return for the six months ended 4/30/98
was 3.40% (-1.26% adjusted for the maximum sales charge).
The large percentage of mortgage-backed securities in the Fund produced a
relatively high level of income for shareholders. The Class A share SEC Yield
for the 30-days ended April 30, for the Fund was 6.27% (5.77% for Class B
shares). Additionally, because the Fund has an intermediate maturity profile,
the Net Asset Value (NAV or price per share) increased as the general level of
interest rates declined for the period.
WHAT MARKET CONDITIONS AFFECTED THE FUND'S PERFORMANCE DURING THE PERIOD, AND
WHAT INVESTMENT TECHNIQUES WERE USED TO ADDRESS THOSE CONDITIONS?
Interest rates dropped marginally during the six-month period, which had
positive effects on the Fund and its total return performance. Because of the
drop in interest rates, mortgage-backed securities tended to underperform other
sectors as investors were nervous about the prospects for increased prepayments.
Lower rates provided an environment conducive to prepayments as refinancing
increased significantly in the early part of January. After rates stabilized and
prepayment expectations waned, the performance of mortgage-backed securities
gained strength relative to other bond sectors as rates then moved within a
trading range. If interest rates remain relatively stable, as seen during these
months, mortgages tend to perform relatively well. In addition, the Fund took
advantage of some low prices of mortgage-backed investments to increase its
overall investment in the sector.
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT HAVE HAD A
SIGNIFICANT IMPACT ON FUND PERFORMANCE?
Due to the merger with the Sierra U.S. Government Fund and the related inflows
of assets, as well as our outlook for mortgage-backed securities, the Fund
increased its exposure to this sector. Although management's overall outlook
remains the same, the Fund's average maturity and duration--a measurement of
price sensitivity to changes in interest rates, declined slightly in the period.
The Fund remains focused on securities that are non-callable and have a low
probability, we believe, of being prepaid.
WHAT IS OUR INTERMEDIATE- AND LONG-TERM OUTLOOK FOR THE FUND?
The long-term strategy of the Fund is to have a significant percentage of its
holdings in mortgage-backed securities. Over a complete cycle of interest rates,
mortgage securities should continue to provide a high level of income. The Fund
will maintain its intermediate maturity structure since we believe that type of
structure typically offers the best risk/reward profile on the yield curve (the
distribution of yields ranging from short to long maturities). An intermediate
maturity structure will also provide value given the current outlook for a
continuation of the secular decline of interest rates.
WHAT IS OUR OVERALL ECONOMIC OUTLOOK FOR THE NEXT 12 MONTHS?
Over the next twelve months we expect the economy to exhibit moderate growth.
The effects of these events in Asia should help keep growth and inflation under
control. Global price competition and the higher levels of imports into the
United States should lend to this scenario. Overall, there continues to be
worldwide structural forces at work (fiscal austerity, demographics, excess
capacity) which should keep inflation under control for the next 3-5 years.
GROWTH OF A $10,000 INVESTMENT (CLASS A SHARES)
Fund (adjusted
Fund (not for the Lehman Brothers
adjusted for maximum 4.5% Government
sales charge) sales charge) Bond Index Inflation
Apr 88 10,000 9,550 10,000 10,000
9,925 9,479 9,929 10,034
10,152 9,695 10,148 10,077
10,107 9,652 10,079 10,119
10,113 9,658 10,100 10,162
10,293 9,830 10,320 10,230
10,484 10,012 10,501 10,264
10,353 9,887 10,377 10,272
10,328 9,863 10,417 10,289
Jan 89 10,452 9,982 10,549 10,341
10,392 9,924 10,464 10,383
10,398 9,931 10,528 10,444
10,621 10,143 10,753 10,511
10,890 10,400 11,007 10,571
Jun 11,194 10,690 11,374 10,597
11,408 10,895 11,614 10,622
11,255 10,748 11,419 10,639
11,292 10,784 11,468 10,673
11,534 11,015 11,765 10,724
11,651 11,127 11,879 10,750
11,702 11,175 11,900 10,767
Jan 90 11,589 11,068 11,731 10,878
11,671 11,146 11,754 10,929
11,650 11,126 11,752 10,990
11,568 11,048 11,648 11,007
11,870 11,336 11,973 11,032
Jun 12,004 11,464 12,162 11,092
12,200 11,651 12,318 11,134
12,129 11,583 12,147 11,237
12,227 11,677 12,264 11,331
12,362 11,805 12,463 11,399
12,620 12,053 12,740 11,424
12,808 12,232 12,938 11,424
Jan 91 12,958 12,375 13,076 11,493
13,040 12,453 13,151 11,510
13,126 12,536 13,218 11,527
13,240 12,644 13,363 11,544
13,341 12,740 13,415 11,579
Jun 13,336 12,736 13,396 11,613
13,503 12,896 13,556 11,630
13,763 13,144 13,870 11,664
14,036 13,405 14,162 11,715
14,207 13,568 14,286 11,733
14,335 13,690 14,429 11,767
14,693 14,032 14,921 11,775
Jan 92 14,440 13,790 14,688 11,793
14,568 13,913 14,746 11,835
14,491 13,839 14,660 11,895
14,605 13,948 14,752 11,912
14,862 14,194 15,025 11,929
Jun 15,050 14,373 15,240 11,972
15,253 14,566 15,624 11,997
15,398 14,705 15,770 12,030
15,544 14,845 15,992 12,064
15,358 14,667 15,762 12,106
15,343 14,652 15,735 12,123
15,592 14,891 15,999 12,115
Jan 93 15,873 15,159 16,340 12,174
16,066 15,343 16,667 12,217
16,126 15,401 16,722 12,259
16,229 15,499 16,850 12,294
16,271 15,539 16,832 12,311
Jun 16,539 15,795 17,206 12,328
16,623 15,875 17,311 12,328
16,859 16,100 17,697 12,363
16,867 16,108 17,764 12,389
16,937 16,175 17,831 12,440
16,757 16,003 17,635 12,448
16,858 16,100 17,704 12,448
Jan 94 17,065 16,298 17,947 12,482
16,722 15,970 17,566 12,524
16,237 15,507 17,171 12,567
16,050 15,327 17,035 12,584
16,068 15,345 17,013 12,593
Jun 15,975 15,256 16,974 12,636
16,300 15,566 17,286 12,670
16,303 15,569 17,290 12,721
15,980 15,261 17,046 12,755
15,903 15,187 17,034 12,764
15,876 15,161 17,003 12,781
16,030 15,309 17,107 12,781
Jan 95 16,401 15,663 17,425 12,832
16,823 16,066 17,800 12,883
16,947 16,184 17,912 12,926
17,187 16,413 18,147 12,968
17,939 17,131 18,878 12,994
Jun 18,044 17,232 19,023 13,020
17,944 17,137 18,953 13,020
18,172 17,355 19,175 13,054
18,348 17,522 19,359 13,080
18,613 17,775 19,653 13,123
18,879 18,029 19,960 13,114
19,148 18,286 20,243 13,105
Jan 96 19,257 18,390 20,366 13,182
18,816 17,969 19,951 13,225
18,625 17,787 19,785 13,293
18,502 17,669 19,659 13,345
18,451 17,621 19,625 13,371
Jun 18,689 17,848 19,879 13,379
18,728 17,886 19,928 13,404
18,659 17,819 19,884 13,429
18,995 18,140 20,214 13,472
19,462 18,586 20,659 13,515
19,895 19,000 21,019 13,541
19,623 18,740 20,804 13,541
Jan 97 19,664 18,779 20,827 13,585
19,685 18,800 20,856 13,627
19,406 18,533 20,635 13,661
19,753 18,864 20,932 13,677
19,932 19,035 21,112 13,669
Jun 20,185 19,277 21,349 13,685
20,807 19,871 21,955 13,702
20,558 19,633 21,738 13,728
20,892 19,952 22,064 13,762
21,248 20,292 22,446 13,796
21,328 20,369 22,560 13,788
21,569 20,599 22,797 13,801
Jan 98 21,809 20,827 23,139 13,801
21,787 20,807 23,076 13,809
21,837 20,854 23,141 13,809
Apr 98 21,968 20,980 23,245 13,843
The performance of the Class B shares and Class S shares was different than
that indicated by the lines shown above for the Class A shares, based on the
difference in sales loads and fees paid by Class B and Class S shareholders.
++ Represents inflation
The Lehman Brothers Government Bond Index is an unmanaged index of all U.S.
government bonds. The Consumer Price Index is a measurement of inflation for
all urban consumers (CPI-U). The Index assumes reinvestment of all
dividends/distributions, and does not reflect any asset-based charges for
investment management or other expenses. Past investment performance does not
guarantee future performance. The returns shown for the Fund assume reinvestment
of all dividends/distributions by the shareholder.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 4/30/98 1 YEAR 5 YEAR 10 YEAR
CLASS A SHARES
Fund (not adjusted for sales charge) 11.21% 6.24% 8.19%
Fund (adjusted for the maximum
4.5% sales charge) 6.17% 5.27% 7.69%
Lehman Brothers Government Bond Index 11.05% 6.65% 8.80%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 4/30/98 1 YEAR 5 YEAR SINCE INCEPTION
CLASS B SHARES March 1994
Fund (not adjusted for sales charge) 10.27% N/A 6.78%
Fund (adjusted for the maximum
contingent deferred sales charge) 5.27% N/A 6.38%
Lehman Brothers Government Bond Index 11.05% N/A 7.70%
- --------------------------------------------------------------------------------
Class S share total return (not annualized) from the inception date of March 23,
1998 through April 30, 1998 was 0.31%, -4.68% adjusted for the maximum CDSC.
- --------------------------------------------------------------------------------
U.S. government SECURITIES portfolio COMPOSITION*
FHLMC ...................................................... 34%
GNMA ....................................................... 27%
FNMA ....................................................... 6%
GNMA II .................................................... 3%
CMOs ....................................................... 6%
U.S. Treasury Notes ........................................ 13%
U.S. Treasury Bonds ........................................ 11%
* Percent of net assets
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<PAGE>
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FIXED-INCOME
- --------------------------------------------------------------------------------
INCOME fund
PORTFOLIO MANAGER
The Income Fund is managed by a fixed-income team led by Senior Portfolio
Manager Gary Pokrzywinski, who has over 12 years of asset management experience
and has been with WM Advisors, Inc. for more than 5 years. Mr. Pokrzywinski is a
Chartered Financial Analyst and holds a Business Degree from the University of
Wisconsin.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE PAST 6 MONTHS?
The fixed-income market benefited from low inflation and an overall "flight to
quality" stemming from the Asian economic crisis. Many investors worldwide moved
assets from volatile global regions to U.S. domestic securities. The yield on
the 30-year Treasury dropped to a record low in January of 1998 and closed the
period under 6%. Given this positive economic backdrop, the Income Fund's
performance for the six months ended April 30, 1998 was 3.24% (-1.41% adjusted
for the maximum sales charge).
The large percentage of corporate and mortgage bond holdings in the Fund
produced a high level of current income during the period. The Fund's Class A
share SEC yield for the 30 days ended April 30 was 6.15% (5.66% for Class B
shares). However, some of this income was offset by a general industry-wide
price underperformance of corporate securities and a few specific fund holdings
that underperformed relative to the overall market. Conversely, the
intermediate-maturity profile of securities in the Fund provided positive
results as interest rates dropped and prices correspondingly increased. The
high-yield component of the portfolio also provided strong results for the
period as that sector tended to outperform other fixed-income sectors. Overall,
Fund performance was consistent with the growth levels of the domestic economy
and the overall results experienced by fixed-income investments in general.
WHAT MARKET CONDITIONS AFFECTED THE FUND'S PERFORMANCE DURING THE PERIOD, AND
WHAT INVESTMENT TECHNIQUES WERE USED TO ADDRESS THOSE CONDITIONS?
Because of its intermediate maturity and duration--a measurement of sensitivity
to interest rate changes--the Fund performance generally cycles with market
rates. After a significant decline in rates during November and December of
1997, interest rates stabilized and traded in a relatively small range during
the first four months of 1998. Although volatility did exist, as economic
uncertainty and inflation prospects were digested by the market, the overall
effect was positive for the period.
As some corporate holdings lost relative value in the period, the Fund took
advantage of the lower prices of corporate securities and increased the
percentage of the portfolio allocated to this sector.
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT HAVE HAD A
SIGNIFICANT IMPACT ON FUND PERFORMANCE?
Although there were no major structural changes in the overall portfolio and its
management, the inflow of assets from the merger with Sierra Corporate Income
Fund changed the make-up of the Fund to some extent. There is now a larger
percentage of assets in corporate holdings in an attempt to boost overall yield.
However, the broad aspects of average quality, average maturity and sector
allocation did not change significantly. The Fund remains positioned with an
intermediate average maturity of around 11 years and an average quality of bond
issues at A-.1
Internal credit research of individual corporate securities is one of the
primary ways the Fund's management seeks to add value to its shareholders. Each
company is scrutinized and its business prospects are analyzed in an attempt to
find value relative to the overall market.
WHAT IS OUR INTERMEDIATE- AND LONG-TERM OUTLOOK FOR THE FUND?
We expect the Fund to continue to invest a large percentage of assets in
corporate securities, and to a lesser extent, mortgage-backed and Treasury
securities. Shifts in these sectors will occur dependent upon our overall
outlook for the business cycle. The Fund will continue to position investments
at the longer end of the intermediate maturity range to take advantage of the
prospects of continued market declines in interest rates. The current inflation
environment supports this outlook as global price pressures remain very weak
and real returns (inflation adjusted) remain strong.
WHAT IS OUR OVERALL ECONOMIC OUTLOOK FOR THE NEXT 12 MONTHS?
Over the next twelve months we expect the economy to exhibit moderate growth.
The effects of the fallout in Asia should help keep growth and inflation under
control. Global price competition and higher levels of imports into the United
States supports this scenario. Overall, there continues to be worldwide
structural forces at work (fiscal austerity, demographics, excess capacity)
which should keep inflation under control for the next 3-5 years. In this
environment, corporate credit quality should continue to improve at a modest
pace as companies are able to grow and flourish.
GROWTH OF A $10,000 INVESTMENT (CLASS A SHARES)
Fund (adjusted
Fund (not for the Lehman Brothers
adjusted for maximum 4.5% Government/
sales charge) sales charge) Corporate Index Inflation
Apr 88 10,000 9,550 10,000 10,000
10,033 9,581 9,933 10,034
10,177 9,719 10,157 10,077
10,187 9,729 10,100 10,119
10,196 9,737 10,126 10,162
10,322 9,858 10,348 10,230
10,401 9,933 10,531 10,264
10,364 9,898 10,412 10,272
10,361 9,895 10,447 10,289
Jan 89 10,453 9,983 10,586 10,341
10,460 9,989 10,506 10,383
10,467 9,996 10,562 10,444
10,620 10,142 10,786 10,511
10,776 10,291 11,052 10,571
Jun 10,843 10,355 11,412 10,597
11,003 10,508 11,649 10,622
10,933 10,441 11,469 10,639
11,001 10,506 11,519 10,673
11,082 10,584 11,811 10,724
11,120 10,620 11,917 10,750
11,061 10,563 11,935 10,767
Jan 90 10,979 10,485 11,771 10,878
10,996 10,501 11,797 10,929
10,998 10,504 11,798 10,990
10,965 10,472 11,690 11,007
11,212 10,707 12,029 11,032
Jun 11,395 10,883 12,224 11,092
11,485 10,968 12,375 11,134
11,375 10,863 12,196 11,237
11,477 10,960 12,297 11,331
11,609 11,086 12,461 11,399
11,821 11,289 12,732 11,424
11,969 11,430 12,925 11,424
Jan 91 12,089 11,545 13,069 11,493
12,242 11,691 13,182 11,510
12,389 11,831 13,273 11,527
12,551 11,987 13,425 11,544
12,606 12,039 13,488 11,579
Jun 12,618 12,051 13,474 11,613
12,762 12,187 13,643 11,630
13,030 12,444 13,957 11,664
13,305 12,706 14,249 11,715
13,513 12,905 14,376 11,733
13,627 13,014 14,519 11,767
14,039 13,407 15,009 11,775
Jan 92 13,860 13,236 14,787 11,793
13,926 13,300 14,865 11,835
13,885 13,260 14,783 11,895
13,984 13,354 14,872 11,912
14,215 13,575 15,160 11,929
Jun 14,461 13,810 15,383 11,972
14,758 14,094 15,777 11,997
14,942 14,270 15,917 12,030
15,110 14,430 16,134 12,064
14,868 14,199 15,887 12,106
14,837 14,169 15,873 12,123
15,075 14,397 16,146 12,115
Jan 93 15,381 14,689 16,498 12,174
15,682 14,976 16,841 12,217
15,771 15,061 16,898 12,259
15,892 15,177 17,028 12,294
15,930 15,213 17,020 12,311
Jun 16,173 15,445 17,406 12,328
16,297 15,564 17,518 12,328
16,648 15,898 17,920 12,363
16,770 16,016 17,983 12,389
16,861 16,102 18,057 12,440
16,613 15,865 17,853 12,448
16,706 15,955 17,931 12,448
Jan 94 16,991 16,226 18,200 12,482
16,568 15,822 17,804 12,524
16,047 15,325 17,367 12,567
15,897 15,181 17,223 12,584
15,840 15,127 17,192 12,593
Jun 15,819 15,107 17,153 12,636
16,116 15,391 17,496 12,670
16,135 15,409 17,503 12,721
15,855 15,142 17,238 12,755
15,799 15,088 17,219 12,764
15,780 15,069 17,188 12,781
15,900 15,185 17,302 12,781
Jan 95 16,188 15,460 17,634 12,832
16,586 15,840 18,043 12,883
16,723 15,971 18,164 12,926
17,013 16,248 18,417 12,968
17,917 17,110 19,188 12,994
Jun 18,068 17,255 19,342 13,020
17,945 17,138 19,266 13,020
18,203 17,384 19,513 13,054
18,440 17,610 19,712 13,080
18,681 17,840 20,002 13,123
18,985 18,130 20,332 13,114
19,331 18,461 20,631 13,105
Jan 96 19,471 18,595 20,759 13,182
18,952 18,099 20,318 13,225
18,788 17,942 20,148 13,293
18,659 17,820 20,009 13,345
18,637 17,799 19,975 13,371
Jun 18,864 18,015 20,242 13,379
18,903 18,052 20,289 13,404
18,902 18,051 20,240 13,429
19,264 18,397 20,601 13,472
19,782 18,892 21,081 13,515
20,237 19,326 21,468 13,541
20,000 19,100 21,230 13,541
Jan 97 20,064 19,161 21,256 13,585
20,099 19,195 21,300 13,627
19,836 18,944 21,047 13,661
20,123 19,217 21,354 13,677
20,396 19,479 21,553 13,669
Jun 20,752 19,819 21,811 13,685
21,520 20,551 22,479 13,702
21,228 20,273 22,227 13,728
21,592 20,620 22,576 13,762
21,937 20,950 22,937 13,796
22,030 21,038 23,059 13,788
22,102 21,108 23,301 13,801
Jan 98 22,312 21,308 23,629 13,801
22,399 21,391 23,582 13,809
22,572 21,556 23,655 13,809
Apr 98 22,646 21,627 23,773 13,843
+The performance of the Class B shares and Class S shares was different than
that indicated by the lines shown above for the Class A shares, based on the
difference in sales loads and fees paid by Class B and Class S shareholders.
++ Represents inflation
Index total returns were calculated from 4/30/88 to 4/30/98. The Lehman Brothers
Government/Corporate Index is unmanaged and represents all government and
corporate bonds. The Consumer Price Index is a measurement of inflation for all
urban consumers (CPI-U). The Index assumes reinvestment of all
dividends/distributions, and does not reflect any asset-based charges for
investment management or other expenses. Past investment performance does not
guarantee future performance. The returns shown for the Fund assume reinvestment
of all dividends/distributions by the shareholder.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 4/30/98 1 YEAR 5 YEAR 10 YEAR
CLASS A SHARES
Fund (not adjusted for sales charge) 12.55% 7.34% 8.52%
Fund (adjusted for the maximum
4.5% sales charge) 7.54% 6.35% 8.02%
Lehman Brothers Government/Corporate Index 11.33% 6.90% 9.05%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 4/30/98 1 YEAR 5 YEAR SINCE INCEPTION
CLASS B SHARES March 1994
Fund (not adjusted for sales charge) 11.63% N/A 7.86%
Fund (adjusted for the maximum
contingent deferred sales charge) 6.63% N/A 7.47%
Lehman Brothers Government/Corporate Index 11.33% N/A 7.99%
- --------------------------------------------------------------------------------
Class S share total return (not annualized) from the inception date of March 23,
1998 through April 30, 1998 was -0.09%, -5.06% adjusted for the maximum CDSC.
- --------------------------------------------------------------------------------
INCOME fund PORTFOLIO composition
- --------------------------------------------------------------------------------
Industrial ................................................. 57%
Financial .................................................. 13%
Yankee Bonds ............................................... 9%
Electric ................................................... 6%
Government Agency and Agency Backed ........................ 6%
CMOs ....................................................... 2%
Treasuries ................................................. 4%
Preferred Stock ............................................ 2%
Cash & Other ............................................... 1%
1 As rated by Standard & Poor's
<PAGE>
- --------------------------------------------------------------------------------
MUNICIPALS
- --------------------------------------------------------------------------------
TAX-EXEMPT bond FUND
PORTFOLIO MANAGER
Brian Placzek of WM Advisors, Inc. is the portfolio manager for the Tax-Exempt
Bond Fund. Mr. Placzek is a Chartered Financial Analyst and has been with WM
Advisors, Inc. for over seven years.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE PAST 6 MONTHS?
The past six months has been a dramatic period for fixed-income investors and
for shareholders of the Tax-Exempt Bond Fund. During the period, interest rates
in the Treasury market declined. As 1997 closed, long-term Treasury yields
experienced significant reductions. A slowdown in growth stemming from the Asian
crisis and low global inflation helped push rates lower. Conversely, municipal
yields ended the period higher. This divergence may lay the foundation for
better relative performance by municipals going forward.
The merger of Sierra National Municipal Fund resulted in a large inflow of
assets, but did not change the style or strategy of the Fund. Overall, the
Fund's total return for Class A shares appreciated 2.37% (-2.24% adjusted for
the maximum sales charge) during the period.
WHAT MARKET CONDITIONS AFFECTED THE FUND'S PERFORMANCE DURING THE PERIOD, AND
WHAT INVESTMENT TECHNIQUES WERE USED TO ADDRESS THOSE CONDITIONS?
In late 1997, a lack of inflation (falling to the lowest levels since the
1960s), helped pull bond yields down. This was compounded by the explosion of
the Asian crisis, which culminated with fears that South Korea would default on
its debt at the beginning of 1998. U.S. bond yields benefited from a general
"flight to quality" and from a belief that the collapse in Asia would slow our
strong economy. This slowing could help keep inflation under control. Bond
investors reacted favorably, pushing the yield on the 30-year Treasury bond to
an all-time low of 5.69%.
The panic in Asia eased somewhat after January. Concerns then revived about the
strength of the domestic economy. Confronted with record home sales, soaring
consumer confidence, and unemployment at a 28-year low, market participants
worried about the potential for an increase in inflation. Bond yields rose from
their January lows, but finished the period lower, with the yield on the 30-year
Treasury closing under 6%.
Municipal bonds, however, performed poorly over the same period. Like
Treasuries, municipal bond yields attained their period lows in January when AAA
rated 30-year municipal bond yields fell to 4.88%1. However, yields on municipal
bonds ended the period generally higher. This had a negative impact on Fund
performance relative to taxable investments.
The poor performance of municipal bonds can be attributed to lower levels of
demand coupled with an onslaught of supply. Cash flows into municipal bond funds
have been generally weak, but the supply side has driven performance. There has
been a high degree of issuance from municipalities. As rates declined,
municipalities issued new bonds to refinance existing bonds at the lower rates.
Furthermore, whereas federal government issuance has declined, new money
issuance (bonds not issued to refinance bonds) by municipalities rose about 27%
during the first part of 1998 (relative to 1997).
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT HAVE HAD A
SIGNIFICANT IMPACT ON FUND PERFORMANCE?
The overall look of the Fund changed slightly after the merger with the Sierra
National Municipal Fund. Heavy sector investments in either Fund, such as
hospitals in the Sierra Fund or utilities in the Composite Fund, were offset by
under-representation in its counterpart. Generally, the combination of the two
created a fund that is typical of the industry average. It is noteworthy that
the credit quality remains in the AA category, and we intend to maintain that
average.1 A change for former Composite shareholders who are individuals has
been the addition of bonds subject to the Alternative Minimum Tax (AMT).2 Such
bonds comprise about 15% of the overall assets in the Fund. AMT bonds can offer
a higher yield than other bonds from a given issuer. Depending on an individual
shareholder's circumstances, AMT treatment may or may not give rise to
individual tax liabilities.
WHAT IS OUR INTERMEDIATE- AND LONG-TERM OUTLOOK FOR THE FUND?
Although the performance of municipal bonds has been poor relative to
Treasuries, it may have established a basis for strong relative performance
going forward. Municipal bond yields relative to treasuries are now at their
cheapest level since the "Flat Tax Scare" of 1995. The months of June and July
are normally periods of high municipal turnover, when maturities, bond calls,
and coupon payments place a great deal of cash in the hands of investors. This
can then incite demand in the market as reinvestment increases.
We plan to continue to focus investment into bonds that we believe have a low
probability of being called. We intend to maintain our concentration in high
quality bonds, with over one-third of the portfolio invested in insured bonds,
and over two-thirds of the portfolio in AA or better rated securities.1
WHAT IS OUR OVERALL ECONOMIC OUTLOOK FOR THE NEXT 12 MONTHS?
Current low levels of inflation are positive for all fixed-income investors.
Given the effects of the Asian crisis and the corresponding global price
competition, this trend should continue. More specifically, in the municipal
market, the combination of municipal bonds "on sale," and municipal investors
with an inflow of cash may be the right mix to prompt municipal bonds to
outperform Treasury bonds in the coming months.
1 As rated by Standard & Poor's
2 A portion of the Fund's income may be subject to some state and/or local tax.
In addition, exempt-interest dividends from the Fund will generally increase a
corporate shareholder's exposure to AMT liability.
GROWTH OF A $10,000 INVESTMENT (CLASS A SHARES)
Fund (adjusted
Fund (not for the Lehman Brothers
adjusted for maximum 4.5% Municipal
sales charge) sales charge) Index Inflation
Apr 88 10,000 9,550 10,000 10,000
10,006 9,556 9,971 10,034
10,167 9,710 10,117 10,077
10,217 9,757 10,182 10,119
10,224 9,764 10,191 10,162
10,385 9,918 10,376 10,230
10,533 10,059 10,559 10,264
10,478 10,006 10,461 10,272
10,598 10,121 10,568 10,289
Jan 89 10,762 10,278 10,787 10,341
10,692 10,211 10,664 10,383
10,681 10,200 10,638 10,444
10,879 10,389 10,890 10,511
11,032 10,536 11,117 10,571
Jun 11,124 10,624 11,268 10,597
11,234 10,728 11,421 10,622
11,144 10,643 11,310 10,639
11,129 10,628 11,276 10,673
11,209 10,705 11,413 10,724
11,365 10,854 11,613 10,750
11,454 10,939 11,708 10,767
Jan 90 11,344 10,834 11,653 10,878
11,466 10,950 11,757 10,929
11,451 10,936 11,760 10,990
11,319 10,810 11,676 11,007
11,613 11,091 11,930 11,032
Jun 11,742 11,214 12,035 11,092
11,890 11,355 12,212 11,134
11,674 11,148 12,035 11,237
11,721 11,194 12,042 11,331
11,888 11,353 12,260 11,399
12,189 11,640 12,507 11,424
12,223 11,673 12,562 11,424
Jan 91 12,354 11,798 12,730 11,493
12,431 11,872 12,841 11,510
12,464 11,903 12,846 11,527
12,564 11,999 13,017 11,544
12,683 12,112 13,133 11,579
Jun 12,660 12,090 13,119 11,613
12,850 12,272 13,279 11,630
13,006 12,421 13,455 11,664
13,178 12,585 13,630 11,715
13,299 12,701 13,752 11,733
13,293 12,695 13,791 11,767
13,612 13,000 14,087 11,775
Jan 92 13,624 13,010 14,120 11,793
13,593 12,981 14,124 11,835
13,603 12,991 14,130 11,895
13,723 13,105 14,255 11,912
13,882 13,257 14,424 11,929
Jun 14,134 13,498 14,666 11,972
14,690 14,029 15,106 11,997
14,453 13,803 14,958 12,030
14,461 13,810 15,055 12,064
14,260 13,618 14,908 12,106
14,613 13,955 15,174 12,123
14,838 14,170 15,329 12,115
Jan 93 15,004 14,328 15,507 12,174
15,556 14,856 16,068 12,217
15,429 14,735 15,898 12,259
15,574 14,873 16,059 12,294
15,620 14,917 16,149 12,311
Jun 15,966 15,247 16,418 12,328
15,912 15,196 16,440 12,328
16,322 15,588 16,781 12,363
16,549 15,804 16,973 12,389
16,595 15,848 17,005 12,440
16,333 15,598 16,855 12,448
16,699 15,947 17,211 12,448
Jan 94 16,891 16,131 17,407 12,482
16,389 15,652 16,956 12,524
15,642 14,938 16,266 12,567
15,709 15,002 16,405 12,584
15,864 15,150 16,547 12,593
Jun 15,740 15,032 16,446 12,636
16,045 15,323 16,747 12,670
16,074 15,350 16,806 12,721
15,777 15,067 16,559 12,755
15,482 14,785 16,264 12,764
15,163 14,480 15,970 12,781
15,607 14,905 16,321 12,781
Jan 95 16,097 15,373 16,788 12,832
16,626 15,878 17,276 12,883
16,745 15,991 17,475 12,926
16,749 15,995 17,496 12,968
17,334 16,554 18,054 12,994
Jun 17,157 16,385 17,897 13,020
17,296 16,518 18,067 13,020
17,459 16,673 18,297 13,054
17,552 16,762 18,412 13,080
17,852 17,049 18,679 13,123
18,221 17,401 18,989 13,114
18,456 17,626 19,171 13,105
Jan 96 18,554 17,719 19,317 13,182
18,369 17,543 19,185 13,225
18,074 17,260 18,940 13,293
17,960 17,152 18,887 13,345
17,964 17,156 18,879 13,371
Jun 18,129 17,314 19,085 13,379
18,297 17,474 19,259 13,404
18,301 17,478 19,255 13,429
18,519 17,685 19,524 13,472
18,692 17,851 19,744 13,515
19,008 18,153 20,104 13,541
18,922 18,070 20,019 13,541
Jan 97 18,929 18,077 20,057 13,585
19,098 18,239 20,242 13,627
18,837 17,989 19,973 13,661
18,964 18,111 20,140 13,677
19,242 18,376 20,442 13,669
Jun 19,418 18,544 20,660 13,685
20,018 19,117 21,232 13,702
19,747 18,859 21,033 13,728
19,948 19,050 21,283 13,762
20,077 19,174 21,419 13,796
20,182 19,273 21,546 13,788
20,549 19,624 21,860 13,801
Jan 98 20,734 19,801 22,085 13,801
20,682 19,751 22,092 13,809
20,694 19,763 22,112 13,809
Apr 98 20,552 19,627 22,012 13,843
+The performance of the Class B shares and Class S shares was different than
that indicated by the lines shown above for the Class A shares, based on the
difference in sales loads and fees paid by Class B and Class S shareholders.
++ Represents inflation
The Lehman Brothers Municipal Bond Index is unmanaged and includes all
investment grade municipal bond issues. The Consumer Price Index is a
measurement of inflation for all urban consumers (CPI-U). The Index assumes
reinvestment of all dividends/distributions, and does not reflect any
asset-based charges for investment management or other expenses. Past investment
performance does not guarantee future performance. The returns shown for the
Fund assume reinvestment of all dividends/distributions by the shareholder.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 4/30/98 1 YEAR 5 YEAR 10 YEAR
CLASS A SHARES
Fund (not adjusted for sales charge) 8.36% 5.70% 7.47%
Fund (adjusted for the maximum 4.5%
sales charge) 3.48% 4.73% 6.97%
Lehman Brothers Municipal Index 9.30% 6.51% 8.21%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 4/30/98 1 YEAR 5 YEAR SINCE INCEPTION
CLASS B SHARES March 1994
Fund (not adjusted for sales charge) 7.47% N/A 5.85%
Fund (adjusted for the maximum
contingent deferred sales charge) 2.47% N/A 5.44%
Lehman Brothers Municipal Index 9.30% N/A 7.69%
- --------------------------------------------------------------------------------
Class S share total return (not annulized) from the inception date of March 23,
1998 through April 30, 1998 was -0.79%, -5.73% adjusted for the maximum CDSC.
- --------------------------------------------------------------------------------
TAX-EXEMPT bond PORTFOLIO composition*
- --------------------------------------------------------------------------------
AAA ........................................................ 39%
AA ......................................................... 26%
A .......................................................... 17%
BBB ........................................................ 14%
BB & B ..................................................... 1%
Cash ....................................................... 2%
Not Rated .................................................. 1%
* Percent of net assets
<PAGE>
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EQUITY FUNDS
- --------------------------------------------------------------------------------
BOND & STOCK fund
PORTFOLIO MANAGER
Jeffrey D. Huffman, Senior Portfolio Manager of WM Advisors, Inc. has been the
lead manager for the Bond & Stock Fund since January 1995. Mr. Huffman is a
Chartered Financial Analyst, holds an MBA, and has over 12 years of investment
management experience.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE PAST 6 MONTHS?
The impressive bull run continued. Stocks advanced throughout the period ended
April 30, 1998, with the biggest gains achieved by the largest companies found
in the S&P 500 Index. The Bond & Stock Fund participated in this strong
performance, and although it under performed the Index, it advanced nearly 10%
for Class A shares in the past six months (9.78%, or 3.74% adjusted for the
maximum sales charge).+ The Fund is invests in part in large, income-producing
holdings which headlined the appreciation of the market. The fixed-income
markets also reported positive performance as interest rates fell throughout
late 1997; low global inflation was a decisive factor in the rate decline. The
yield on the bell-weather 30-year Treasury bond hit a record low in January of
1998 and closed the period under 6%. Falling interest rates boosted the price of
bonds and therefore had a positive impact on the performance of the Bond & Stock
Fund.
WHAT MARKET CONDITIONS AFFECTED THE FUND'S PERFORMANCE DURING THE PERIOD, AND
WHAT INVESTMENT TECHNIQUES WERE USED TO ADDRESS THOSE CONDITIONS?
The U.S. economy is remarkably healthy. The consumer is in good shape, housing
is strong, unemployment is at a record bottom, and inflation is very low. The
Asian economic crisis seems to have slowed the economy enough to keep growth at
a more moderate pace and hold back price inflation. The lack of price pressures
has enabled interest rates to decline and confidence in the economy to continue
to build. This positive economic backdrop has allowed corporations to report
solid growth in earnings, which in turn has led to higher stock prices. In
addition, low interest rates allow companies to grow and expand with a reduced
cost of capital. We maintained our bullish outlook throughout the period and
shareholders have participated in the advance of both fixed-income and equity
markets.
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT HAVE HAD A
SIGNIFICANT IMPACT ON FUND
PERFORMANCE?
We maintained two-thirds of assets in equity securities; which include common
stocks, convertibles, and real estate investment trusts (REITs). Because of the
advance in domestic equity markets, this strategy has provided positive results.
Even with the strong performance in recent years, we continued to find stocks at
good prices that we believe represented prudent value investments. This strategy
can be illustrated by examining the telecommunications industry. Our outlook
for the sector was very positive and we therefore owned several telephone
stocks. The companies included: AT&T, Ameritech, Frontier Corp., Southern New
England Telecomm, and Sprint. During the period ended April 30, 1998, these
stocks were strong performers, outpacing the general market by a substantial
margin and rewarding shareholders of the Bond & Stock Fund. However, not all
sectors were strong performers. In early 1998, we became concerned with the
flood of new issues of REITs. Issuance peaked in late 1997, and although we
reduced our holdings (to less than 5% of the overall portfolio), we did not
entirely avoid their underperformance in early 1998.
In the bond portfolio, our average maturity was positioned to take advantage of
the decline in interest rates in late 1997. This strategy had a positive impact
on Fund performance. In February, we saw rates hit our intermediate target and
therefore shortened the average maturity of the portfolio. This was done in an
attempt to reduce the overall risk of the portfolio.
WHAT IS OUR INTERMEDIATE- AND LONG-TERM OUTLOOK FOR THE FUND?
We continue our core strategy of seeking out high quality companies whose stocks
trade in the market at prices significantly less than our estimate of their
underlying value. The Fund attempts to provide a broadly diversified portfolio
of high quality investments designed to meet the long-term objectives of most
investors. A diversified portfolio can temper volatility and lower portfolio
risk as different types of assets may (asset classes) react differently to
changing market conditions. We feel that the portfolio is positioned to take
advantage of these changing market conditions and to provide the investment
vehicle to meet your investment goals.
WHAT IS OUR OVERALL ECONOMIC OUTLOOK FOR THE NEXT 12 MONTHS?
We expect the pace of the economy to slow as we move deeper into 1998. A
slowdown should result in a further decline in interest rates and increased
concern over the sustainability of corporate earnings. The effects of such a
scenario will be positive to both bonds and interest rate-sensitive stocks. The
overall equity market appears to be fairly valued at current prices but stock
selection will become increasingly important in the future.
GROWTH OF A $10,000 INVESTMENT (CLASS A SHARES)
Fund (adjusted
Fund (not for the Lehman Brothers
adjusted for maximum 5.5% Government/ S&P 500
sales charge) sales charge) Corporate Index Index Inflation
10,000 9,450 10,000 10,000 10,000
9,888 9,345 9,933 10,078 10,034
10,315 9,748 10,157 10,546 10,077
10,336 9,767 10,100 10,503 10,119
10,202 9,641 10,126 10,156 10,162
10,449 9,875 10,348 10,586 10,230
10,678 10,091 10,531 10,875 10,264
10,522 9,944 10,412 10,721 10,272
10,585 10,003 10,447 10,915 10,289
10,988 10,384 10,586 11,704 10,341
10,935 10,334 10,506 11,413 10,383
10,999 10,394 10,562 11,682 10,444
11,246 10,627 10,786 12,285 10,511
11,568 10,932 11,052 12,779 10,571
11,665 11,023 11,412 12,710 10,597
12,120 11,454 11,649 13,851 10,622
12,175 11,505 11,469 14,118 10,639
12,110 11,444 11,519 14,063 10,673
11,990 11,330 11,811 13,736 10,724
11,913 11,258 11,917 14,021 10,750
11,890 11,236 11,935 14,352 10,767
11,494 10,861 11,771 13,389 10,878
11,550 10,915 11,797 13,562 10,929
11,663 11,021 11,798 13,919 10,990
11,376 10,751 11,690 13,575 11,007
12,007 11,346 12,029 14,898 11,032
12,029 11,367 12,224 14,794 11,092
11,994 11,334 12,375 14,747 11,134
11,298 10,677 12,196 13,415 11,237
11,052 10,444 12,297 12,755 11,331
11,123 10,511 12,461 12,708 11,399
11,640 11,000 12,732 13,526 11,424
11,899 11,245 12,925 13,897 11,424
12,305 11,628 13,069 14,511 11,493
12,902 12,192 13,182 15,550 11,510
13,081 12,362 13,273 15,920 11,527
13,275 12,544 13,425 15,965 11,544
13,589 12,841 13,488 16,648 11,579
13,334 12,601 13,474 15,887 11,613
13,481 12,739 13,643 16,631 11,630
13,676 12,924 13,957 17,022 11,664
13,775 13,017 14,249 16,742 11,715
13,837 13,076 14,376 16,967 11,733
13,614 12,865 14,519 16,281 11,767
14,488 13,691 15,009 18,142 11,775
14,435 13,641 14,787 17,805 11,793
14,553 13,753 14,865 18,033 11,835
14,493 13,696 14,783 17,679 11,895
14,824 14,008 14,872 18,194 11,912
14,903 14,084 15,160 18,292 11,929
14,891 14,072 15,383 18,027 11,972
15,359 14,514 15,777 18,753 11,997
15,279 14,439 15,917 18,374 12,030
15,454 14,604 16,134 18,586 12,064
15,238 14,400 15,887 18,653 12,106
15,589 14,732 15,873 19,281 12,123
15,921 15,045 16,146 19,534 12,115
16,059 15,176 16,498 19,676 12,174
16,266 15,371 16,841 19,942 12,217
16,570 15,658 16,898 20,371 12,259
16,430 15,527 17,028 19,872 12,294
16,598 15,685 17,020 20,408 12,311
16,655 15,739 17,406 20,476 12,328
16,683 15,765 17,518 20,379 12,328
17,204 16,257 17,920 21,156 12,363
17,154 16,211 17,983 20,999 12,389
17,367 16,412 18,057 21,426 12,440
17,126 16,184 17,853 21,224 12,448
17,396 16,440 17,931 21,485 12,448
17,890 16,906 18,200 22,205 12,482
17,469 16,508 17,804 21,605 12,524
16,781 15,858 17,367 20,666 12,567
16,884 15,955 17,223 20,934 12,584
16,972 16,038 17,192 21,276 12,593
16,649 15,733 17,153 20,750 12,636
17,078 16,139 17,496 21,437 12,670
17,507 16,544 17,503 22,309 12,721
17,137 16,194 17,238 21,772 12,755
17,211 16,265 17,219 22,270 12,764
16,838 15,912 17,188 21,453 12,781
17,026 16,089 17,302 21,766 12,781
17,315 16,363 17,634 22,332 12,832
17,833 16,852 18,043 23,199 12,883
18,266 17,262 18,164 23,885 12,926
18,727 17,697 18,417 24,580 12,968
19,373 18,308 19,188 25,551 12,994
19,765 18,678 19,342 26,152 13,020
20,168 19,059 19,266 27,022 13,020
20,370 19,250 19,513 27,095 13,054
21,015 19,859 19,712 28,231 13,080
21,093 19,933 20,002 28,132 13,123
21,735 20,539 20,332 29,370 13,114
22,334 21,106 20,631 29,913 13,105
22,965 21,702 20,759 30,942 13,182
22,868 21,611 20,318 31,239 13,225
22,907 21,647 20,148 31,539 13,293
23,054 21,786 20,009 32,003 13,345
23,397 22,110 19,975 32,828 13,371
23,536 22,242 20,242 32,963 13,379
22,927 21,666 20,289 31,496 13,404
23,240 21,962 20,240 32,164 13,429
24,064 22,740 20,601 33,971 13,472
24,396 23,054 21,081 34,902 13,515
25,507 24,104 21,468 37,551 13,541
25,372 23,976 21,230 36,815 13,541
25,997 24,567 21,256 39,102 13,585
26,282 24,837 21,300 39,418 13,627
25,813 24,394 21,047 37,778 13,661
26,281 24,836 21,354 40,034 13,677
27,451 25,942 21,553 42,492 13,669
28,278 26,723 21,811 44,387 13,685
29,657 28,025 22,479 47,911 13,702
28,695 27,117 22,227 45,247 13,728
29,856 28,214 22,576 47,727 13,762
29,472 27,851 22,937 46,133 13,796
30,130 28,472 23,059 48,269 13,788
30,419 28,746 23,301 49,099 13,801
30,419 28,746 23,629 49,642 13,801
31,502 29,769 23,582 53,220 13,809
32,138 30,370 23,655 55,943 13,809
32,353 30,574 23,773 56,506 13,843
+The performance of the Class B shares was different than that indicated by the
lines shown above for the Class A shares, based on the difference in sales loads
and fees paid by Class B shareholders.
++ Represents inflation
The Standard & Poor's Composite Index of 500 Stocks (S&P 500) represents an
unmanaged weighted index of 500 companies. The Lehman Brothers
Government/Corporate Index is unmanaged and represents all U.S. government and
corporate bonds. The Consumer Price Index is a measurement of inflation for all
urban consumers (CPI-U). The indices assume reinvestment of all
dividends/distributions, and do not reflect any asset-based charges for
investment management or other expenses. Past performance does not guarantee
future performance. The returns shown for the Fund assume reinvestment of all
dividends/distributions by the shareholder.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 4/30/98 1 YEAR 5 YEAR 10 YEAR
CLASS A SHARES
Fund (not adjusted for sales charge) 23.10% 14.51% 12.46%
Fund (adjusted for the maximum 5.5%
sales charge) 16.33% 13.22% 11.82%
Lehman Brothers Government/Corporate
Index 11.33% 6.90% 9.05%
S&P 500 Index 41.15% 23.25% 18.91%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 4/30/98 1 YEAR 5 YEAR SINCE INCEPTION
CLASS B SHARES March 1994
Fund (not adjusted for sales charge) 22.20% N/A 16.45%
Fund (adjusted for the maximum
contingent deferred sales charge) 17.23% N/A 16.14%
Lehman Brothers Government/Corporate
Index 11.33% N/A 7.99%
S&P 500 Index 41.15% N/A 27.93%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BOND & STOCK fund PORTFOLIO composition
- --------------------------------------------------------------------------------
Treasuries & Agencies ...................................... 15%
Mortgage-Backed ............................................ 7%
Corporate Bonds ............................................ 9%
Common Stocks .............................................. 57%
Convertible Bonds .......................................... 4%
Convertible Preferred Stocks ............................... 7%
Other ...................................................... 1%
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
EQUITY FUNDS
- --------------------------------------------------------------------------------
GROWTH & INCOME fund
PORTFOLIO MANAGER
Philip M. Foreman, Senior Portfolio Manager of WM Advisors, Inc. has managed the
Growth & Income Fund since joining the Firm in November, 1991. Mr. Foreman is
both a Chartered Financial Analyst and a Certified Financial Planner, holds an
MBA, and has over 12 years of experience in the investment industry.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE PAST 6 MONTHS?
The period was dominated by strong fundamental performance. Markets advanced on
positive economic news and continued strength in earnings. This was especially
evident in the larger-capitalized companies that dominate the Growth & Income
Fund's portfolio. Although it underperformed relative to the S&P 500, the Fund's
Class A shares total return appreciated 15.42% (9.07% adjusted for the maximum
sales charge) for the period ended April 30, 1998.+
Another trend in domestic equity markets was that of mergers and acquisitions.
Three of our holdings were bought out at substantial premiums to their previous
trading prices and subsequently rewarded our shareholders: Zurn Industries,
Greentree Financial and Waste Management. Also, some mega-cap securities
benefited from a "flight to quality" and lack of Asian market exposure (GE,
Merck and Abbott Labs are examples) during the period. The "flight to quality"
transpired as many worldwide investors poured money into more predictable,
large, U.S. corporations after the debacle in the Asian economies.
WHAT MARKET CONDITIONS AFFECTED THE FUND'S PERFORMANCE DURING THE PERIOD, AND
WHAT INVESTMENT TECHNIQUES WERE USED TO ADDRESS THOSE CONDITIONS?
Heavy flow of money into large-cap index issues characterized the period.
Larger-company stocks performed better than almost all other classes of
equities. This was driven by economic conditions that produced low interest
rates, slowing economic growth from Asian countries, and record levels of
mergers and acquisitions. We believe most of the holdings in the Fund may
benefit from moderate economic growth conditions as earnings are able to grow
with low inflation and lower costs of capital. The Fund avoided commodity and
basic industry issues during the period, as low cost Asian imports could
negatively impact their profitability. The Fund also owned a number of good
performing franchise businesses that have proved to be attractive for takeovers
in today's business environment.
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT HAVE HAD A
SIGNIFICANT IMPACT ON FUND PERFORMANCE?
Due to its underweight in retail stocks, the Fund did not fully participate in
the appreciation of this sector. We were, and still are, concerned by the lack
of competitive advantage and barriers to entry in the industry. During the
period, the Fund was overweighted in software at the expense of computer
hardware and semiconductors. This proved to be beneficial, as software sales
held up much better than mainframe computers and chips. This can be attributed
to the lack of Asian competitors who, in these other sectors, greatly increased
their exports into the United States after the currency crisis.
WHAT IS OUR INTERMEDIATE- AND LONG-TERM OUTLOOK FOR THE FUND?
We continue to believe that we have a portfolio of good businesses that are
trading at attractive prices. We still are finding plenty of companies to buy
that we believe are "on sale," despite the high level of the overall market. We
will maintain our overall value approach, focusing on businesses which are
unique and we expect to generate sustainable cash flows and profitability. Our
outlook calls for slowing economic growth, good money flows, and a continuation
of mergers and acquisitions. All these factors provide a healthy environment for
holdings of the Growth & Income Fund.
WHAT IS OUR OVERALL ECONOMIC OUTLOOK FOR THE NEXT 12 MONTHS?
We see slowing corporate profits from the basic industry, commodity, and
computer hardware/semiconductor sectors of the market place. Low cost Asian
imports stemming from the currency crisis in these countries should keep prices
and inflation low. Low global inflation should help maintain interest rates at
flat to slightly lower levels, which should be very positive for stocks. Despite
the possible volatility in certain industries, we maintain our positive
long-term outlook for the equity markets and believe that current conditions
continue to provide a strong backdrop for equity investment.
GROWTH OF A $10,000 INVESTMENT (CLASS A SHARES)
Fund (adjusted
Fund (not for the
adjusted for maximum 5.5% S&P 500
sales charge) sales charge) Index Inflation
Apr 88 10,000 9,450 10,000 10,000
9,912 9,367 10,078 10,034
10,332 9,764 10,546 10,077
10,371 9,800 10,503 10,119
10,179 9,619 10,156 10,162
10,487 9,910 10,586 10,230
10,800 10,206 10,875 10,264
10,596 10,013 10,721 10,272
10,723 10,133 10,915 10,289
Jan 89 11,283 10,663 11,704 10,341
11,254 10,635 11,413 10,383
11,343 10,719 11,682 10,444
11,630 10,990 12,285 10,511
11,966 11,308 12,779 10,571
Jun 11,887 11,233 12,710 10,597
12,465 11,779 13,851 10,622
12,674 11,977 14,118 10,639
12,526 11,837 14,063 10,673
12,205 11,533 13,736 10,724
12,014 11,353 14,021 10,750
12,021 11,360 14,352 10,767
Jan 90 11,446 10,817 13,389 10,878
11,555 10,919 13,562 10,929
11,717 11,073 13,919 10,990
11,268 10,649 13,575 11,007
12,111 11,445 14,898 11,032
Jun 12,011 11,350 14,794 11,092
11,857 11,204 14,747 11,134
10,776 10,183 13,415 11,237
10,243 9,680 12,755 11,331
10,221 9,659 12,708 11,399
10,945 10,343 13,526 11,424
11,302 10,680 13,897 11,424
Jan 91 11,908 11,253 14,511 11,493
12,772 12,070 15,550 11,510
13,042 12,324 15,920 11,527
13,211 12,485 15,965 11,544
13,675 12,922 16,648 11,579
Jun 13,289 12,558 15,887 11,613
13,517 12,773 16,631 11,630
13,653 12,902 17,022 11,664
13,608 12,860 16,742 11,715
13,562 12,816 16,967 11,733
13,128 12,406 16,281 11,767
14,397 13,605 18,142 11,775
Jan 92 14,446 13,651 17,805 11,793
14,677 13,870 18,033 11,835
14,567 13,765 17,679 11,895
14,971 14,148 18,194 11,912
15,008 14,183 18,292 11,929
Jun 14,776 13,963 18,027 11,972
15,294 14,453 18,753 11,997
14,936 14,115 18,374 12,030
15,196 14,360 18,586 12,064
14,911 14,091 18,653 12,106
15,568 14,712 19,281 12,123
15,980 15,101 19,534 12,115
Jan 93 16,057 15,174 19,676 12,174
15,993 15,113 19,942 12,217
16,383 15,482 20,371 12,259
16,075 15,191 19,872 12,294
16,421 15,518 20,408 12,311
Jun 16,313 15,416 20,476 12,328
16,223 15,330 20,379 12,328
16,661 15,744 21,156 12,363
16,377 15,476 20,999 12,389
16,558 15,648 21,426 12,440
16,455 15,550 21,224 12,448
17,067 16,128 21,485 12,448
Jan 94 17,836 16,855 22,205 12,482
17,556 16,591 21,605 12,524
16,861 15,934 20,666 12,567
17,058 16,120 20,934 12,584
17,282 16,332 21,276 12,593
Jun 16,924 15,993 20,750 12,636
17,474 16,513 21,437 12,670
18,178 17,179 22,309 12,721
17,777 16,799 21,772 12,755
17,975 16,986 22,270 12,764
17,451 16,491 21,453 12,781
17,505 16,542 21,766 12,781
Jan 95 17,784 16,805 22,332 12,832
18,386 17,374 23,199 12,883
18,921 17,881 23,885 12,926
19,378 18,312 24,580 12,968
19,864 18,772 25,551 12,994
Jun 20,255 19,141 26,152 13,020
20,979 19,826 27,022 13,020
21,142 19,979 27,095 13,054
21,860 20,657 28,231 13,080
21,726 20,531 28,132 13,123
22,616 21,372 29,370 13,114
23,303 22,021 29,913 13,105
Jan 96 23,967 22,648 30,942 13,182
24,291 22,955 31,239 13,225
24,522 23,173 31,539 13,293
25,095 23,714 32,003 13,345
25,636 24,226 32,828 13,371
Jun 25,668 24,256 32,963 13,379
24,379 23,039 31,496 13,404
25,109 23,728 32,164 13,429
26,560 25,100 33,971 13,472
26,856 25,379 34,902 13,515
28,817 27,232 37,551 13,541
28,494 26,927 36,815 13,541
Jan 97 29,847 28,205 39,102 13,585
30,014 28,363 39,418 13,627
28,976 27,382 37,778 13,661
30,047 28,394 40,034 13,677
32,039 30,277 42,492 13,669
Jun 33,679 31,827 44,387 13,685
36,212 34,220 47,911 13,702
34,602 32,698 45,247 13,728
36,556 34,545 47,727 13,762
35,246 33,308 46,133 13,796
36,321 34,324 48,269 13,788
36,906 34,876 49,099 13,801
Jan 98 36,290 34,294 49,642 13,801
39,066 36,917 53,220 13,809
40,511 38,283 55,943 13,809
Apr 98 40,682 38,444 56,506 13,843
+The performance of the Class B shares and Class S shares was different than
that indicated by the lines shown above for the Class A shares, based on the
difference in sales loads and fees paid by Class B and Class S shareholders.
++ Represents inflation
The Standard & Poor's 500 Composite Index (S&P 500) represents an unmanaged
weighted index of 500 companies. The Consumer Price Index is a measurement of
inflation for all urban consumers (CPI-U). The index assumes reinvestment of all
dividends/distributions, and does not reflect any asset-based charges for
investment management or other expenses. Past investment performance does not
guarantee future performance. The returns shown for the Fund assume reinvestment
of all dividends/distributions by the shareholder.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 4/30/98 1 YEAR 5 YEAR 10 YEAR
CLASS A SHARES
Fund (not adjusted for sales charge) 35.39% 20.41% 14.99%
Fund (adjusted for the maximum 5.5%
sales charge) 27.94% 19.05% 14.34%
S&P 500 Index 41.15% 23.25% 18.91%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 4/30/98 1 YEAR 5 YEAR SINCE INCEPTION
CLASS B SHARES March 1994
Fund (not adjusted for sales charge) 34.50% N/A 23.08%
Fund (adjusted for the maximum
contingent deferred sales charge) 29.50% N/A 22.83%
S&P 500 Index 41.15% N/A 27.93%
- --------------------------------------------------------------------------------
Class S share total return (not annualized) from the inception date of March 23,
1998 through April 30, 1998 was 0.56%, -4.44% adjusted for the maximum CDSC.
- --------------------------------------------------------------------------------
GROWTH & INCOME fund PORTFOLIO composition*
- --------------------------------------------------------------------------------
Financials ................................................. 18%
Consumer ................................................... 16%
Capital Goods .............................................. 12%
Technology ................................................. 15%
Healthcare ................................................. 12%
REITs ...................................................... 3%
Transportation ............................................. 2%
Utilities .................................................. 7%
Media/Telecom .............................................. 10%
Convertible & Preferred .................................... 5%
*differences from Financials are a result of a consolidation of industries or
sectors
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
EQUITY FUNDS
- --------------------------------------------------------------------------------
NORTHWEST fund
PORTFOLIO MANAGER
David Simpson Senior Portfolio Manager of WM Advisors, Inc., has managed the
Northwest Fund since March 1993. He is a Chartered Financial Analyst, holds an
MBA, and has over 11 years of continuous investment experience.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE PAST 6 MONTHS?
Equity performance was strong for the period. A healthy domestic economy,
continued productivity improvements, and low levels of inflation helped push
stock markets higher. The Northwest Fund's Class A Shares rose 12.11% (5.94%
adjusted for the maximum sales charge) in the six-month period ended April 30,
1998.+ Although the performance was strong, the Fund underperformed relative to
its benchmark, the S&P 500 Index, which returned 22.5% over the same period. The
Fund has significant exposure to smaller technology companies which were
adversely affected by concerns over the influence of the Asian currency crisis
and by a slowing market for personal computers. Of the ten worst performing
stocks in the Fund, nine were technology companies. Of the ten best performing
stocks, Microsoft was the only technology company.
WHAT MARKET CONDITIONS AFFECTED THE FUND'S PERFORMANCE DURING THE PERIOD, AND
WHAT INVESTMENT TECHNIQUES WERE USED TO ADDRESS THOSE CONDITIONS?
The S&P 500 performed better than the Fund due to the large capitalization
growth stocks that dominate its composition. These stocks have been favored by
investors because they are viewed as more insulated from the troubles in Asia
and as more liquid. This phenomenon has been termed a "flight to quality" when
the inflow of assets is concentrated in these largest corporations. As these
troubles subside, we expect technology stocks and smaller stocks to rebound.
Technology stocks tend to be very volatile, but long-term prospects for the
industry are very good. Our concentrations in these stocks have provided
shareholders with very good long-run results. We have used weakness in this
sector as an opportunity to add to positions of companies in which we have a
high degree of confidence in their long-run prospects.
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT HAVE HAD A
SIGNIFICANT IMPACT ON FUND PERFORMANCE?
While we have not made significant shifts in the holdings or sectors of the
Fund, we have made some minor enhancements in the last six months. We trimmed
our exposure to retail stocks as some of these stocks began to look rather
expensive. We are holding modestly more cash as we are seeing fewer compelling
values in this market. However, we are constantly scouting and scouring the
markets for such opportunities.
WHAT IS OUR INTERMEDIATE- AND LONG-TERM OUTLOOK FOR THE FUND?
We continue to believe that investing in high quality companies located or doing
business in the Northwest will serve our shareholders well over the long run.
Although we sense that the market is rather fully valued, we believe
shareholders with a long-term investment horizon will be rewarded.
WHAT IS OUR OVERALL ECONOMIC OUTLOOK FOR THE NEXT 12 MONTHS?
The Northwest economy continues to be very strong, although there are signs that
growth may be slowing from its recent torrid pace. The region has some
dependence on Asia and exports have slowed due to the impact of unfavorable
currency exchange rates. On the other hand, imports are flooding the Northwest
ports as Asian goods are much cheaper on a currency-adjusted basis. Boeing is
maintaining a high level of employment as it struggles to efficiently produce
aircraft faster than ever before. Microsoft continues to grow its employment
base which provides excellent support for the region's economy. While some
slowing of the Northwest's economy is to be expected, we do not see a recession
on the horizon. Because the Fund is invested in many companies with national or
global markets, investors are cautioned not to view the Fund as a proxy for only
the Northwest economy.
GROWTH OF A $10,000 INVESTMENT (CLASS A SHARES)
Fund (adjusted
Fund (not for the
adjusted for maximum 5.5% S&P 500
sales charge) sales charge) Index Inflation
Apr 88 10,000 9,450 10,000 10,000
10,022 9,470 10,078 10,034
10,830 10,235 10,546 10,077
10,469 9,893 10,503 10,119
10,303 9,736 10,156 10,162
10,910 10,310 10,586 10,230
10,932 10,331 10,875 10,264
10,686 10,098 10,721 10,272
10,831 10,235 10,915 10,289
Jan 89 11,709 11,065 11,704 10,341
11,723 11,078 11,413 10,383
12,000 11,340 11,682 10,444
12,963 12,250 12,285 10,511
13,539 12,795 12,779 10,571
Jun 13,079 12,360 12,710 10,597
13,992 13,223 13,851 10,622
14,817 14,002 14,118 10,639
15,146 14,313 14,063 10,673
14,883 14,065 13,736 10,724
14,993 14,168 14,021 10,750
14,947 14,125 14,352 10,767
Jan 90 13,952 13,185 13,389 10,878
14,472 13,676 13,562 10,929
15,569 14,713 13,919 10,990
15,020 14,194 13,575 11,007
16,808 15,883 14,898 11,032
Jun 16,866 15,939 14,794 11,092
16,353 15,453 14,747 11,134
14,070 13,296 13,415 11,237
12,909 12,199 12,755 11,331
12,401 11,719 12,708 11,399
13,982 13,213 13,526 11,424
14,784 13,971 13,897 11,424
Jan 91 16,678 15,761 14,511 11,493
17,939 16,952 15,550 11,510
18,624 17,600 15,920 11,527
19,112 18,060 15,965 11,544
20,189 19,079 16,648 11,579
Jun 18,845 17,808 15,887 11,613
19,710 18,626 16,631 11,630
20,479 19,352 17,022 11,664
20,021 18,919 16,742 11,715
19,902 18,808 16,967 11,733
19,125 18,073 16,281 11,767
21,273 20,103 18,142 11,775
Jan 92 22,305 21,078 17,805 11,793
22,641 21,396 18,033 11,835
21,901 20,696 17,679 11,895
20,876 19,728 18,194 11,912
20,666 19,530 18,292 11,929
Jun 19,941 18,844 18,027 11,972
20,121 19,014 18,753 11,997
19,566 18,490 18,374 12,030
20,301 19,184 18,586 12,064
21,051 19,893 18,653 12,106
21,965 20,757 19,281 12,123
22,026 20,815 19,534 12,115
Jan 93 22,146 20,928 19,676 12,174
21,440 20,261 19,942 12,217
22,274 21,049 20,371 12,259
21,703 20,509 19,872 12,294
22,229 21,007 20,408 12,311
Jun 21,635 20,445 20,476 12,328
20,822 19,677 20,379 12,328
21,666 20,474 21,156 12,363
21,161 19,997 20,999 12,389
21,855 20,653 21,426 12,440
22,292 21,066 21,224 12,448
22,575 21,333 21,485 12,448
Jan 94 23,265 21,985 22,205 12,482
23,579 22,282 21,605 12,524
22,723 21,473 20,666 12,567
22,628 21,384 20,934 12,584
22,958 21,696 21,276 12,593
Jun 22,244 21,020 20,750 12,636
22,385 21,154 21,437 12,670
23,627 22,328 22,309 12,721
22,707 21,458 21,772 12,755
22,503 21,265 22,270 12,764
22,125 20,908 21,453 12,781
22,255 21,031 21,766 12,781
Jan 95 22,144 20,926 22,332 12,832
22,933 21,672 23,199 12,883
23,709 22,405 23,885 12,926
24,388 23,046 24,580 12,968
24,404 23,061 25,551 12,994
Jun 25,829 24,409 26,152 13,020
26,745 25,274 27,022 13,020
27,140 25,648 27,095 13,054
28,141 26,593 28,231 13,080
27,508 25,995 28,132 13,123
27,888 26,354 29,370 13,114
28,156 26,608 29,913 13,105
Jan 96 28,028 26,487 30,942 13,182
28,684 27,106 31,239 13,225
29,348 27,734 31,539 13,293
31,492 29,760 32,003 13,345
32,340 30,562 32,828 13,371
Jun 30,980 29,276 32,963 13,379
28,884 27,295 31,496 13,404
30,692 29,004 32,164 13,429
31,572 29,836 33,971 13,472
31,508 29,775 34,902 13,515
33,685 31,832 37,551 13,541
34,509 32,611 36,815 13,541
Jan 97 36,669 34,652 39,102 13,585
36,581 34,569 39,418 13,627
35,141 33,208 37,778 13,661
36,370 34,370 40,034 13,677
40,234 38,021 42,492 13,669
Jun 42,096 39,780 44,387 13,685
44,976 42,502 47,911 13,702
44,344 41,905 45,247 13,728
48,031 45,390 47,727 13,762
45,520 43,017 46,133 13,796
46,663 44,096 48,269 13,788
45,855 43,333 49,099 13,801
Jan 98 45,938 43,411 49,642 13,801
50,077 47,323 53,220 13,809
50,798 48,004 55,943 13,809
Apr 98 51,032 48,225 56,506 13,843
+The performance of the Class B shares was different than that indicated by the
lines shown above for the Class A shares, based on the difference in sales loads
and fees paid by Class B shareholders.
++ Represents inflation
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 4/30/98 1 YEAR 5 YEAR 10 YEAR
CLASS A SHARES
Fund (not adjusted for sales charge) 40.31% 18.65% 17.70%
Fund (adjusted for the maximum 5.5%
sales charge) 32.57% 17.31% 17.04%
S&P 500 Index 41.15% 23.25% 18.91%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 4/30/98 1 YEAR 5 YEAR SINCE INCEPTION
CLASS B SHARES March 1994
Fund (not adjusted for sales charge) 39.11% N/A 21.00%
Fund (adjusted for the maximum
contingent deferred sales charge) 34.11% N/A 20.73%
S&P 500 Index 41.15% N/A 27.93%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NORTHWEST fund PORTFOLIO composition*
- --------------------------------------------------------------------------------
Financials ................................................. 11%
Consumer ................................................... 15%
Capital Goods .............................................. 13%
Technology ................................................. 30%
Healthcare ................................................. 12%
REITs ...................................................... 2%
Transportation ............................................. 5%
Utilities .................................................. 1%
Media/Telecom .............................................. 5%
Cash & Other ............................................... 6%
*differences from Financials are a result of a consolidation of industries
or sectors
- --------------------------------------------------------------------------------
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
WM GROUP OF FUNDS
APRIL 30, 1998 (UNAUDITED)
TAX-EXEMPT U.S.
MONEY MONEY GOVERNMENT
MARKET MARKET SECURITIES
FUND FUND FUND
------------ ----------- ------------
ASSETS:
Investments, at value (Note 2)
See portfolios of investments (a) $462,721,142 $28,730,172 $465,802,730
Cash ................................ 2,784,902 211,908 315,010
Receivable for dollar roll fee income
(Notes 2 and 6) ................... -- -- 2,406
Dividends and/or interest receivable 1,753,805 274,864 3,877,005
Receivable for Fund shares sold ..... 1,992,430 138,756 310,533
Receivable for investment securities
sold .............................. -- -- --
Prepaid expenses and other assets ... 91,280 15,887 19,656
------------ ----------- ------------
Total Assets .................... 469,343,559 29,371,587 470,327,340
------------ ----------- ------------
LIABILITIES:
Payable for dollar roll transactions
(Notes 2 and 6) ................... -- -- 6,114,042
Variation margin payable (Note 2) ... -- -- 114,844
Reverse repurchase agreements (Notes
2 and 6) .......................... -- -- 80,498,224
Payable for Fund shares redeemed .... 6,317,015 230,658 925,923
Payable for investment securities
purchased ......................... 10,000,000 1,691,103 --
Investment advisory fee payable (Note
3) ................................ 175,564 10,620 162,374
Shareholder servicing and
distribution fees payable (Notes 3
and 5) ............................ 77,111 2,284 120,598
Dividends payable ................... 12,673 79,434 879,523
Accrued legal and audit fees ........ 4,800 5,235 5,335
Accrued Trustees' fees and expenses
(Note 4) .......................... 2,101 5,182 2,101
Accrued registration and filing fees
payable ........................... 813 136 --
Due to Custodian .................... -- -- --
Accrued expenses and other payables . 336,491 5,172 244,271
------------ ----------- ------------
Total Liabilities .............. 16,926,568 2,029,824 89,067,235
------------ ----------- ------------
NET ASSETS .......................... $452,416,991 $27,341,763 $381,260,105
============ =========== ============
- ----------------
(a) Investments, at cost (Note 2) ... $462,721,142 $28,730,172 $455,652,011
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
HIGH TAX-EXEMPT BOND & GROWTH &
INCOME YIELD BOND STOCK INCOME NORTHWEST
FUND FUND FUND FUND FUND FUND
- -------------------- --------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
$ 259,977,644 $ 10,560,294 $ 326,874,303 $ 385,239,089 $ 851,615,589 $ 344,654,301
130,468 646 -- -- 97,112 24,616
-- -- -- -- -- --
4,338,150 115,222 5,397,398 2,603,290 575,668 92,454
483,097 -- 66,816 1,618,154 1,803,374 1,025,522
-- 27,004 -- 5,198,834 4,056,290 436,168
158,036 -- 37,997 24,841 55,086 19,451
-------------- ------------- -------------- -------------- -------------- --------------
265,087,395 10,703,166 332,376,514 394,684,208 858,203,119 346,252,512
-------------- ------------- -------------- -------------- -------------- --------------
-- -- -- -- -- --
-- -- -- -- -- --
-- -- -- -- -- --
1,290,359 -- 815,566 477,693 1,427,330 467,830
278,663 642,433 509 1,598,899 8,118,105 2,460,744
187,543 3,939 138,740 185,716 507,092 174,951
108,328 1,576 29,231 147,741 147,766 130,915
551,524 27,004 459,121 -- 14,192 --
4,133 560 2,128 8,765 15,000 8,295
2,101 300 2,101 5,182 4,556 5,182
5,502 400 5,502 18,839 67,000 9,551
-- -- 53,829 393,202 -- 9,522
134,618 1,416 169,156 47,066 425,671 75,149
-------------- ------------- -------------- -------------- -------------- --------------
2,562,771 677,628 1,675,883 2,883,103 10,726,712 3,342,139
-------------- ------------- -------------- -------------- -------------- --------------
$ 262,524,624 $ 10,025,538 $ 330,700,631 $ 391,801,105 $ 847,476,407 $ 342,910,373
============== ============= ============== ============== ============== ==============
$241,889,183 $10,593,696 $296,840,517 $323,380,495 $666,050,403 $219,994,602
</TABLE>
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES (continued)
WM GROUP OF FUNDS
APRIL 30, 1998 (UNAUDITED)
TAX-EXEMPT U.S.
MONEY MONEY GOVERNMENT
MARKET MARKET SECURITIES
FUND FUND FUND
------------- ------------ -------------
NET ASSETS CONSIST OF:
Undistributed net investment
income/(accumulated net
investment
loss/distributions in excess of
net investment income) ......... $ -- $ -- $ 41,000
Accumulated net realized gain/
(loss) on investments sold,
futures contracts, closed
written options, forward foreign
currency contracts and foreign
currency transactions .......... 24,896 -- (7,136,028)
Net unrealized appreciation/
(depreciation) of investments,
foreign currency, written
options, futures contracts,
forward foreign currency
contracts and other assets and
liabilities .................... -- -- 10,153,451
Paid-in capital .................. 452,392,095 27,341,763 378,201,682
------------ ----------- ------------
Total Net Assets ............. $452,416,991 $27,341,763 $381,260,105
============ =========== ============
NET ASSETS:
Class A Shares ................... $354,347,547 $27,329,668 $294,038,697
============ =========== ============
Class B Shares ................... $ 3,216,131 $ 12,095 $ 22,081,393
============ =========== ============
Class S Shares ................... $ 7,020,240 $ -- $ 6,748,647
============ =========== ============
Class I Shares ................... $ 87,833,073 $ -- $ 58,391,368
============ =========== ============
SHARES OUTSTANDING:
Class A Shares ................... 354,328,956 27,329,668 27,148,122
============ =========== ============
Class B Shares ................... 3,215,931 12,095 2,039,590
============ =========== ============
Class S Shares ................... 7,019,731 -- 622,636
============ =========== ============
Class I Shares ................... 87,827,477 -- 5,386,588
============ =========== ============
CLASS A SHARES:
Net asset value per share of
beneficial interest outstanding* $1.00 $1.00 $10.83
============ =========== ============
Maximum sales charge ............. -- -- 4.50%
============ =========== ============
Maximum offering price per share
of beneficial interest
outstanding .................... -- -- $11.34
============ =========== ============
CLASS B SHARES:
Net asset value and offering price
per share of beneficial interest
outstanding* ................... $1.00 $1.00 $10.83
============ =========== ============
CLASS S SHARES:
Net asset value and offering price
per share of beneficial interest
outstanding* ................... $1.00 -- $10.84
============ =========== ============
CLASS I SHARES:
Net asset value, offering and
redemption price per share of
beneficial
interest outstanding ........... $1.00 -- $10.84
============ =========== ============
- ----------------
* Redemption price per share is equal to Net Asset Value less any applicable
contingent deferred sales charge.
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
HIGH TAX-EXEMPT BOND & GROWTH &
INCOME YIELD BOND STOCK INCOME NORTHWEST
FUND FUND FUND FUND FUND FUND
- -------------------- --------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
$ -- $ (1,490) $ (1,632) $ 801,729 $ (139,329) $ (636,141)
(9,939,629) -- 784,442 5,455,326 14,101,909 2,994,443
18,088,461 (33,402) 30,033,786 61,858,594 185,565,186 124,659,699
254,375,792 10,060,430 299,884,035 323,685,456 647,948,641 215,892,372
-------------- ------------- ------------ ------------ ------------ ------------
$ 262,524,624 $ 10,025,538 $330,700,631 $391,801,105 $847,476,407 $342,910,373
============== ============= ============ ============ ============ ============
$ 223,059,662 $ 10,025,538 $316,112,406 $323,373,499 $515,796,138 $286,978,679
============== ============= ============ ============ ============ ============
$ 31,311,087 -- $ 14,585,662 $ 68,427,606 $118,479,313 $ 55,931,694
============== ============= ============ ============ ============ ============
$ 1,778,697 -- $ 1,409 -- $ 15,138,449 --
============== ============= ============ ============ ============ ============
$ 6,375,178 -- $ 1,154 -- $198,062,507 --
============== ============= ============ ============ ============ ============
23,445,893 1,006,058 39,703,825 21,539,314 23,965,982 11,962,841
============== ============= ============ ============ ============ ============
3,287,948 -- 1,831,801 4,572,366 5,552,497 2,406,818
============== ============= ============ ============ ============ ============
186,812 -- 177 -- 708,785 --
============== ============= ============ ============ ============ ============
670,315 -- 145 -- 9,182,243 --
============== ============= ============ ============ ============ ============
$9.51 $9.97 $7.96 $15.01 $21.52 $23.99
============== ============= ============ ============ ============ ============
4.50% 4.50% 4.50% 5.50% 5.50% 5.50%
============== ============= ============ ============ ============ ============
$9.96 $10.43 $8.34 $15.89 $22.77 $25.39
============== ============= ============ ============ ============ ============
$9.52 -- $7.96 $14.97 $21.34 $23.24
============== ============= ============ ============ ============ ============
$9.52 -- $7.96 -- $21.36 --
============== ============= ============ ============ ============ ============
$9.51 -- $7.96 -- $21.57 --
============== ============= ============ ============ ============ ============
</TABLE>
See Notes to Financial Statements.
<PAGE>
STATEMENTS of OPERATIONS
WM GROUP OF FUNDS
FOR THE PERIOD ENDED APRIL 30, 1998 (UNAUDITED)
TAX-EXEMPT U.S.
MONEY MONEY GOVERNMENT
MARKET MARKET SECURITIES
FUND FUND FUND
----------- -------- -----------
INVESTMENT INCOME:
Dividends ........................... $ -- $ -- $ --
Interest ............................ 6,246,427 367,152 4,835,822
Fee income (Note 6) ................. -- -- 69,825
---------- -------- -----------
Total investment income ......... 6,246,427 367,152 4,905,647
---------- -------- -----------
EXPENSES:
Investment advisory fee (Note 3) .... 492,639 45,025 428,132
Custodian fees ...................... 26,286 2,683 9,279
Legal and audit fees ................ 4,800 4,993 5,335
Trustees' fees and expenses (Note 4) 2,101 4,823 2,101
Registration and filing fees ........ 813 4,694 --
Other ............................... 180,293 6,589 --
---------- -------- -----------
Subtotal ........................ 706,932 68,807 444,847
Shareholder servicing and
distribution fees (Notes 3 and 5):
Class A Shares .................... 67,066 6,787 172,323
Class B Shares .................... 4,165 56 35,009
Class S Shares .................... 9,451 -- 9,666
Interest expense (Note 6) ........... -- -- 188,227
Fees waived and/or expenses absorbed
by investment advisor (Note 3) .... -- (19,515) (35,103)
---------- -------- -----------
Subtotal ........................ 787,614 56,135 814,969
Fees reduced by credits allowed by
the custodian (Note 3) ............ (17,619) (705) (690)
---------- -------- -----------
Net expenses .................... 769,995 55,430 814,279
---------- -------- -----------
NET INVESTMENT INCOME/(LOSS) ........ 5,476,432 311,722 4,091,368
---------- -------- -----------
NET REALIZED AND UNREALIZED GAIN/(LOSS)
ON INVESTMENTS (Notes 2 and 6):
Realized gain/(loss) from security
transactions ...................... 24,896 -- 192,670
Net unrealized appreciation/
(depreciation) of:
Securities ........................ -- -- 6,701,181
Futures contracts ................. -- -- 2,732
---------- -------- -----------
Net Realized and Unrealized Gain/
(Loss) on Investments ............. 24,896 -- 6,896,583
---------- -------- -----------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ........ $5,501,328 $311,722 $10,987,951
========== ======== ===========
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
HIGH TAX-EXEMPT BOND & GROWTH &
INCOME YIELD BOND STOCK INCOME NORTHWEST
FUND FUND FUND FUND FUND FUND
- ------------------- ----------- --------------- --------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
$ 26,728 $ -- $ -- $ 2,796,001 $ 3,125,551 $ 1,274,914
3,700,523 33,706 4,682,293 4,609,419 61,677 286,278
-- -- -- -- -- --
----------- --------- ----------- ----------- ------------ -------------
3,727,251 33,706 4,682,293 7,405,420 3,187,228 1,561,192
----------- --------- ----------- ----------- ------------ -------------
308,288 3,939 398,621 1,076,223 1,454,583 974,008
8,562 600 8,427 22,035 81,674 21,127
4,133 560 2,128 10,467 15,700 9,436
2,101 300 2,101 5,691 11,600 5,691
5,502 400 5,502 43,602 67,000 33,297
21,942 817 965 72,615 371,262 93,487
----------- --------- ----------- ----------- ------------ -------------
350,528 6,616 417,744 1,230,633 2,001,819 1,137,046
135,987 1,576 191,079 358,183 241,491 398,167
62,743 -- 34,623 303,814 192,380 274,875
2,412 -- 2 -- 19,027 --
-- -- -- -- -- --
-- -- -- -- -- (33,830)
----------- --------- ----------- ----------- ------------ -------------
551,670 8,192 643,448 1,892,630 2,454,717 1,776,258
(731) -- (596) (2,274) (5,633) (1,773)
----------- --------- ----------- ----------- ------------ -------------
550,939 8,192 642,852 1,890,356 2,449,084 1,774,485
----------- --------- ----------- ----------- ------------ -------------
3,176,312 25,514 4,039,441 5,515,064 738,144 (213,293)
----------- --------- ----------- ----------- ------------ -------------
3,598,084 -- 784,442 22,276,914 29,807,768 18,919,945
14,279,432 (33,402) 10,844,992 6,706,135 99,087,021 17,195,483
-- -- -- -- -- --
----------- --------- ----------- ----------- ------------ -------------
17,877,516 (33,402) 11,629,434 28,983,049 128,894,789 36,115,428
----------- --------- ----------- ----------- ------------ -------------
$21,053,828 $ (7,888) $15,668,875 $34,498,113 $129,632,933 $ 35,902,135
=========== ========= =========== =========== ============ =============
</TABLE>
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
WM GROUP OF FUNDS
FOR THE PERIOD ENDED APRIL 30, 1998 (UNAUDITED)
TAX-EXEMPT U.S.
MONEY MONEY GOVERNMENT
MARKET MARKET SECURITIES
FUND FUND FUND
------------ ----------- ------------
Net investment income/(loss) ..... $ 5,476,432 $ 311,722 $ 4,091,368
Net realized gain/(loss) on
investments sold, forward
foreign currency contracts,
foreign currency transactions,
futures contracts and closed
written options during period .. 24,896 -- 192,670
Net unrealized appreciation/
(depreciation) of investments,
forward foreign currency contracts,
foreign currency, futures
contracts, written options and
other assets and liabilities
during the period .............. -- -- 6,703,913
------------ ----------- ------------
Net increase/(decrease) in net
assets resulting from operations 5,501,328 311,722 10,987,951
Distributions to shareholders from:
Net investment income:
Class A Shares ................. (4,937,374) (311,636) (3,352,353)
Class B Shares ................. (15,767) (86) (164,042)
Class S Shares ................. (32,373) -- (42,513)
Class I Shares ................. (490,918) -- (491,460)
Net realized gains on investments:
Class A Shares ................. -- -- --
Class B Shares ................. -- -- --
Class S Shares ................. -- -- --
Class I Shares ................. -- -- --
Net increase/(decrease) in net assets from Fund share transactions:
Class A Shares ................. 93,451,458 (4,804,802) 182,381,483
Class B Shares ................. 2,745,319 295 18,327,590
Class S Shares ................. 7,019,731 -- 6,575,129
Class I Shares ................. 87,827,477 -- 56,632,993
------------ ----------- ------------
Net increase/(decrease) in net
assets ......................... 191,068,881 (4,804,507) 270,854,778
NET ASSETS:
Beginning of period .............. 261,348,110 32,146,270 110,405,327
------------ ----------- ------------
End of period .................... $452,416,991 $27,341,763 $381,260,105
============ =========== ============
Undistributed net investment
income/(accumulated net
investment
loss/distributions in excess of
net investment income) at
end of period .................. $ -- $ -- $ 41,000
============ =========== ============
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
HIGH TAX-EXEMPT BOND & GROWTH &
INCOME YIELD BOND STOCK INCOME NORTHWEST
FUND FUND FUND FUND FUND FUND
- -------------------- --------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
$ 3,176,312 $ 25,514 $ 4,039,441 $ 5,515,064 $ 738,144 $ (213,293)
3,598,084 -- 784,442 22,276,914 29,807,768 18,919,945
14,279,432 (33,402) 10,844,992 6,706,135 99,087,021 17,195,483
------------ ----------- ------------ ------------ ------------ ------------
21,053,828 (7,888) 15,668,875 34,498,113 129,632,933 35,902,135
(2,786,143) (27,004) (3,897,568) (5,200,259) (907,211) --
(328,189) -- (143,491) (707,497) (1,201) --
(11,691) -- (7) -- -- --
(50,289) -- (7) -- -- --
-- -- -- (45,087,221) (35,388,845) (48,929,353)
-- -- -- (7,625,351) (6,501,859) (8,318,160)
-- -- -- -- -- --
-- -- -- -- -- --
129,975,222 10,060,430 116,886,333 37,128,265 174,358,606 48,255,537
19,768,595 -- 6,053,716 25,221,304 58,387,544 19,465,530
1,601,658 -- 1,272 -- 12,098,695 --
5,746,243 -- 1,043 -- 165,875,387 --
------------ ----------- ------------ ------------ ------------ ------------
174,969,234 10,025,538 134,570,166 38,227,354 497,554,049 46,375,689
87,555,390 -- 196,130,465 353,573,751 349,922,358 296,534,684
------------ ----------- ------------ ------------ ------------ ------------
$262,524,624 $10,025,538 $330,700,631 $391,801,105 $847,476,407 $342,910,373
============ =========== ============ ============ ============ ============
$ -- $ (1,490) $ (1,632) $ 801,655 $ (139,329) $ (636,141)
============ =========== ============ ============ ============ ============
</TABLE>
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
WM GROUP OF FUNDS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
TAX-EXEMPT U.S.
MONEY MONEY GOVERNMENT TAX-EXEMPT
MARKET MARKET SECURITIES INCOME BOND
FUND FUND FUND FUND FUND
------------ ----------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
Net investment income .......... $ 12,584,944 $ 1,009,403 $ 7,263,894 $ 5,669,177 $ 9,648,920
Net realized gain/(loss) on
investments sold, forward
foreign currency contracts,
foreign currency transactions,
futures contracts and closed
written options during the
year ......................... -- -- (493,856) 1,059,244 2,286,826
Net unrealized
appreciation of investments,
forward foreign currency
contracts, foreign currency,
futures contracts, written
options and other assets and
liabilities during the year .. -- -- 4,371,425 1,919,907 4,270,931
------------ ----------- ------------ ------------- ------------
Net increase in net assets
resulting from operations ...... 12,584,944 1,009,403 11,141,463 8,648,328 16,206,677
Distributions to shareholders from:
Net investment income:
Class A Shares ............... (12,575,604) (1,009,190) (7,110,859) (5,227,656) (9,381,180)
Class B Shares ............... (9,340) (213) (153,035) (441,521) (267,740)
Net realized gains on investments:
Class A Shares ............... -- -- -- -- (283,504)
Class B Shares ............... -- -- -- -- (11,875)
Net increase/(decrease) in net assets from Fund share transactions:
Class A Shares ............... 31,522,179 160,533 (34,875,593) (11,496,316) (21,611,179)
Class B Shares ............... 353,674 9,595 281,357 2,293,277 2,607,483
------------ ----------- ------------ ------------- ------------
Net increase/(decrease) in
net assets ................... 31,875,853 170,128 (30,716,667) (6,223,888) (12,741,318)
NET ASSETS:
Beginning of year .............. 229,472,257 31,976,142 141,121,994 93,779,278 208,871,783
------------ ----------- ------------ ------------- ------------
End of year .................... $261,348,110 $32,146,270 $110,405,327 $ 87,555,390 $196,130,465
============ =========== ============ ============= ============
</TABLE>
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
WM GROUP OF FUNDS
FOR THE YEAR ENDED OCTOBER 31, 1997
BOND & GROWTH &
STOCK INCOME NORTHWEST
FUND FUND FUND
------------ ------------ ------------
Net investment income/(loss) .... $ 10,303,999 $ 1,436,047 $ (424,294)
Net realized gain on investments
sold, forward foreign currency
contracts, foreign currency
transactions, futures contracts
and closed written options
during year ................... 36,021,498 26,629,017 41,408,116
Net unrealized appreciation/
(depreciation) of investments,
forward foreign currency
contracts, foreign currency,
futures contracts, written
options and other assets and
liabilities during the year ... 12,620,413 37,406,069 45,605,120
------------ ------------ ------------
Net increase in net assets
resulting from operations ..... 58,945,910 65,471,133 86,588,942
Distributions to shareholders from:
Net investment income:
Class A Shares ................ (9,565,088) (1,646,567) --
Class B Shares ................ (866,492) (33,995) --
Net realized gains on investments:
Class A Shares ................ (16,337,631) (12,746,652) (16,815,468)
Class B Shares ................ (1,513,284) (1,708,904) (1,448,706)
Net increase in net assets from
Fund share transactions:
Class A Shares ................ 24,198,233 79,235,236 18,342,906
Class B Shares ................ 21,054,537 20,170,211 18,507,592
------------ ------------ ------------
Net increase in net assets ...... 75,916,185 148,740,462 105,175,266
NET ASSETS:
Beginning of year ............... 277,657,566 201,181,896 191,359,418
------------ ------------ ------------
End of year ..................... $353,573,751 $349,922,358 $296,534,684
============ ============ ============
Undistributed net investment
income/(accumulated net
investment loss) at end of year $ 1,194,421 $ 30,939 $ (422,848)
============ ============ ===========
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS -- CAPITAL STOCK ACTIVITY
WM GROUP OF FUNDS
FOR THE PERIOD ENDED APRIL 30, 1998 (UNAUDITED)
TAX-EXEMPT U.S.
MONEY MONEY GOVERNMENT
MARKET MARKET SECURITIES
FUND(a)(i) FUND(b)(i) FUND(c)(i)
------------ ----------- ------------
AMOUNT
CLASS A:
Sold ........................... $292,352,311 $14,028,985 $ 2,637,187
Issued in exchange for Class A
shares ....................... 86,308,379 -- 199,804,185
Issued in exchange for Class A
shares of the
Sierra U.S. Government Money
Fund ......................... 21,242,345 -- --
Issued as reinvestment of
dividends ...................... 4,059,450 309,707 2,289,693
Redeemed ....................... (310,511,027) (19,143,494) (22,349,582)
------------ ----------- ------------
Net increase/(decrease) ........ $ 93,451,458 $(4,804,802) $182,381,483
============ =========== ============
CLASS B:
Sold ........................... $ 1,620,465 $ 1,004 $ 1,849,983
Issued in exchange for Class B
shares ....................... 1,089,407 -- 17,545,619
Issued in exchange for Class B
shares of the
Sierra U.S. Government Money
Fund ......................... 915,101 -- --
Issued as reinvestment of
dividends ...................... 13,240 83 113,765
Redeemed ....................... (892,894) (792) (1,181,777)
------------ ----------- ------------
Net increase ................... $ 2,745,319 $ 295 $ 18,327,590
============ =========== ============
CLASS S:
Sold ........................... $ 519,401 -- $ 33,366
Issued in exchange for Class S
shares ....................... 6,970,804 -- 7,569,635
Issued in exchange for Class S
shares of the
Sierra U.S. Government Money
Fund ......................... 499,760 -- --
Issued as reinvestment of
dividends ...................... 8,210 -- 39,711
Redeemed ....................... (978,444) -- (1,067,583)
------------ ------------
Net increase ................... $ 7,019,731 -- $ 6,575,129
============ ============
CLASS I:
Sold ........................... $ 5,682,156 -- $ 35,236
Issued in exchange for Class I
shares ....................... 76,706,647 -- 77,055,299
Issued in exchange for Class I
shares of the
Sierra U.S. Government Money
Fund ......................... 13,331,744 -- --
Issued as reinvestment of
dividends ...................... 19,491 -- --
Redeemed ....................... (7,912,561) -- (20,457,542)
------------ ------------
Net increase ................... $ 87,827,477 -- $ 56,632,993
============ ============
- ----------------
(a) Formerly, Composite Cash Management Money Market Portfolio. On March 20,
1998 shares were issued in exchange for the Sierra Global Money Fund and the
Sierra U.S. Government Money Fund.
(b) Formerly, Composite Cash Management Tax-Exempt Portfolio.
(c) Formerly, Composite U.S. Government Securities, Inc. On March 20, 1998
shares were issued in exchange for the Sierra Trust U.S. Government Fund.
(d) Formerly, Composite Income Fund, Inc. On March 20, 1998 shares were issued
in exchange for the Sierra Trust Corporate Income Fund.
(e) Formerly, Composite Tax-Exempt Bond Fund, Inc. On March 20, 1998 shares were
issued in exchange for the Sierra Trust National Municipal Fund.
(f) Formerly, Composite Bond & Stock Fund, Inc.
(g) Formerly, Composite Growth & Income Fund. On March 20, 1998 shares were
issued in exchange for the Sierra Trust Growth and Income Fund.
(h) Formerly, Composite Northwest Fund, Inc.
(i) Fiscal year end changed to October 31. Prior to this, the fiscal year end
was December 31. The numbers reflected are for the period January 1, 1998
through April 30, 1998.
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
HIGH TAX-EXEMPT BOND & GROWTH &
INCOME YIELD BOND STOCK INCOME NORTHWEST
FUND}D{(i) FUND FUND(d)(i) FUND(f) FUND(g) FUND(h)
- -------------------- --------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
$ 5,461,089 $10,060,430 $ 2,796,750 $ 23,341,268 $ 57,152,315 $ 28,530,700
142,588,808 -- 131,911,067 -- 158,740,743 --
-- -- -- -- -- --
1,615,259 -- 2,458,611 48,829,597 35,257,665 48,141,885
(19,689,934) -- (20,280,095) (35,042,600) (76,792,117) (28,417,047)
------------ ----------- ------------ ------------- ------------ -------------
$129,975,222 $10,060,430 $116,886,333 $ 37,128,265 $174,358,606 $ 48,255,538
============ =========== ============ ============= ============ =============
$ 3,701,361 -- $ 1,469,208 $ 20,717,685 $ 17,127,606 $ 13,681,041
17,326,196 -- 5,255,068 -- 40,265,726 --
-- -- -- -- -- --
208,415 -- 95,257 8,204,390 6,447,498 8,274,120
(1,467,377) -- (765,817) (3,700,771) (5,453,286) (2,489,631)
------------ ------------ ------------- ------------ -------------
$ 19,768,595 -- $ 6,053,716 $ 25,221,304 $ 58,387,544 $ 19,465,530
============ ============ ============= ============ =============
$ 11,416 -- $ 7 -- $ 964,181 --
1,686,388 -- 1,265 -- 11,890,222 --
-- -- -- -- -- --
9,416 -- -- -- -- --
(105,562) -- -- -- (755,708) --
------------ ------------ ------------
$ 1,601,658 -- $ 1,272 -- $ 12,098,695 --
============ ============ ============
$ -- -- $ 8 -- $ 11,926,879 --
6,001,602 -- 1,035 -- 156,826,637 --
-- -- -- -- -- --
-- -- -- -- -- --
(255,359) -- -- -- (2,878,129) --
------------ ------------ ------------
$ 5,746,243 -- $ 1,043 -- $165,875,387 --
============ ============ ============
</TABLE>
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS -- CAPITAL STOCK ACTIVITY
WM GROUP OF FUNDS
FOR THE PERIOD ENDED APRIL 30, 1998 (UNAUDITED)
TAX-EXEMPT U.S.
MONEY MONEY GOVERNMENT
MARKET MARKET SECURITIES
FUND(a)(i) FUND(b)(i) FUND(c)(i)
------------ ----------- ------------
SHARES
CLASS A:
Sold ........................... 292,352,311 14,028,985 243,208
Issued in exchange for Class A
shares ....................... 86,308,379 -- 18,833,600
Issued in exchange for Class A
shares of the
Sierra U.S. Government Money
Fund ......................... 21,242,345 -- --
Issued as reinvestment of
dividends ...................... 4,059,450 309,707 211,102
Redeemed ....................... (310,511,027) (19,143,494) (2,017,316)
------------ ----------- ----------
Net increase/(decrease) ........ 93,451,458 (4,804,802) 17,270,594
============ =========== ==========
CLASS B:
Sold ........................... 1,620,465 1,004 170,587
Issued in exchange for Class B
shares ....................... 1,089,407 -- 1,655,309
Issued in exchange for Class B
shares of the
Sierra U.S. Government Money
Fund ......................... 915,101 -- --
Issued as reinvestment of
dividends ...................... 13,240 83 10,495
Redeemed ....................... (892,894) (792) (106,069)
------------ ----------- ----------
Net increase/(decrease) ........ 2,745,319 295 1,730,322
============ =========== ==========
CLASS S:
Sold ........................... 519,401 -- 3,080
Issued in exchange for Class S
shares ....................... 6,970,804 -- 714,499
Issued in exchange for Class S
shares of the
Sierra U.S. Government Money
Fund ......................... 499,760 -- --
Issued as reinvestment of
dividends ...................... 8,210 -- 3,665
Redeemed ....................... (978,444) -- (98,608)
------------ ----------
Net increase/(decrease) ........ 7,019,731 -- 622,636
============ ==========
CLASS I:
Sold ........................... 5,682,156 -- 3,256
Issued in exchange for Class I
shares ....................... 76,706,647 -- 7,273,265
Issued in exchange for Class I
shares of the
Sierra U.S. Government Money
Fund ......................... 13,331,744 -- --
Issued as reinvestment of
dividends ...................... 19,491 -- --
Redeemed ....................... (7,912,561) -- (1,889,933)
------------ ----------
Net increase/(decrease) ........ 87,827,477 -- 5,386,588
============ ==========
- ----------------
(a) Formerly, Composite Cash Management Money Market Portfolio. On March 20,
1998 shares were issued in exchange for the Sierra Global Money Fund and the
Sierra U.S. Government Money Fund.
(b) Formerly, Composite Cash Management Tax-Exempt Portfolio.
(c) Formerly, Composite U.S. Government Securities, Inc. On March 20, 1998
shares were issued in exchange for the Sierra Trust U.S. Government Fund.
(d) Formerly, Composite Income Fund, Inc. On March 20, 1998 shares were issued
in exchange for the Sierra Trust Corporate Income Fund.
(e) Formerly, Composite Tax-Exempt Bond Fund, Inc. On March 20, 1998 shares were
issued in exchange for the Sierra Trust National Municipal Fund.
(f) Formerly, Composite Bond & Stock Fund, Inc.
(g) Formerly, Composite Growth & Income Fund. On March 20, 1998 shares were
issued in exchange for the Sierra Trust Growth and Income Fund.
(h) Formerly, Composite Northwest Fund, Inc.
(i) Fiscal year end changed to October 31. Prior to this, the fiscal year end
was December 31. The numbers reflected are for the period January 1, 1998
through April 30, 1998.
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
HIGH TAX-EXEMPT BOND & GROWTH &
INCOME YIELD BOND STOCK INCOME NORTHWEST
FUND}D{(i) FUND FUND(d)(i) FUND(f) FUND(g) FUND(h)
- -------------------- --------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
570,479 1,006,058 241,150 1,544,221 3,764,263 1,190,264
16,561,879 -- 18,330,460 -- 8,901,693 --
-- -- -- -- -- --
169,755 -- 292,169 3,274,481 605,029 2,054,110
(2,069,426) -- (2,413,410) (2,310,122) (3,583,465) (1,193,594)
---------- --------- ---------- --------- --------- ---------
15,232,687 1,006,058 16,450,369 2,508,580 9,687,520 2,050,780
========== ========= ========== ========= ========= =========
390,376 -- 179,370 1,375,274 1,025,088 588,431
2,009,654 -- 730,248 -- 2,281,424 --
-- -- -- -- -- --
21,771 -- 11,853 549,594 116,619 362,689
(154,675) -- (92,462) (245,021) (268,272) (107,882)
---------- ---------- --------- --------- ---------
2,267,126 -- 829,009 1,679,847 3,154,859 843,238
========== ========== ========= ========= =========
1,216 -- 2 -- 43,993 --
195,664 -- 175 -- 700,170 --
-- -- -- -- -- --
984 -- -- -- -- --
(11,052) -- -- -- (35,378) --
---------- ---------- ---------
186,812 -- 177 -- 708,785 --
========== ========== =========
-- -- 1 -- 537,602 --
697,179 -- 144 -- 8,777,545 --
-- -- -- -- -- --
-- -- -- -- -- --
(26,864) -- -- -- (132,904) --
---------- ---------- ---------
670,315 -- 145 -- 9,182,243 --
========== ========== =========
</TABLE>
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS -- CAPITAL STOCK ACTIVITY
WM GROUP OF FUNDS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
TAX-EXEMPT U.S.
MONEY MONEY GOVERNMENT TAX-EXEMPT
MARKET MARKET SECURITIES INCOME BOND
FUND FUND FUND FUND FUND
---------------- --------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
AMOUNT
CLASS A:
Sold ........ $631,834,628 $55,194,481 $ 4,447,940 $ 11,286,277 $ 9,139,630
Issued as
reinvestment
of dividends 12,427,917 1,003,218 5,145,658 3,823,083 7,486,759
Redeemed .... (612,740,366) (56,037,166) (44,469,191) (26,605,676) (38,237,568)
------------ ----------- ------------ ------------- ------------
Net increase/
(decrease) .. $ 31,522,179 $ 160,533 $(34,875,593) $ (11,496,316) $(21,611,179)
============ =========== ============ ============= ============
CLASS B:
Sold ........ $ 916,714 $ 12,980 $ 864,913 $ 4,354,889 $ 3,133,343
Issued as
reinvestment
of dividends 9,036 188 123,880 374,440 218,328
Redeemed .... (572,076) (3,573) (707,436) (2,436,052) (744,188)
------------ ----------- ------------ ------------- ------------
Net increase $ 353,674 $ 9,595 $ 281,357 $ 2,293,277 $ 2,607,483
============ =========== ============ ============= ============
SHARES
CLASS A:
Sold ........ 631,834,628 55,194,481 424,259 1,212,967 1,161,023
Issued as
reinvestment
of dividends 12,427,917 1,003,218 489,525 413,335 951,410
Redeemed .... (612,740,366) (56,037,166) (4,240,473) (2,880,356) (4,861,387)
------------ ----------- ------------ ------------- ------------
Net increase/
(decrease) .. 31,522,179 160,533 (3,326,689) (1,254,054) (2,748,954)
============ =========== ============ ============= ============
CLASS B:
Sold ........ 916,714 12,980 81,465 467,109 398,272
Issued as
reinvestment
of dividends 9,036 188 11,762 40,332 27,480
Redeemed .... (572,076) (3,573) (67,110) (263,592) (95,335)
------------ ----------- ------------ ------------- ------------
Net increase 353,674 9,595 26,117 243,849 330,417
============ =========== ============ ============= ============
</TABLE>
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS -- CAPITAL STOCK ACTIVITY
WM GROUP OF FUNDS
FOR THE YEAR ENDED OCTOBER 31, 1997
BOND & GROWTH &
STOCK INCOME NORTHWEST
FUND FUND FUND
------------ ------------ ------------
AMOUNT
CLASS A:
Sold .......................... $ 52,484,804 $106,141,702 37,595,728
Issued as reinvestment of
dividends ..................... 24,871,733 13,852,602 16,535,329
Redeemed ...................... (53,158,304) (40,759,068) (35,788,151)
------------ ------------ ------------
Net increase .................. $ 24,198,233 $ 79,235,236 $ 18,342,906
============ ============ ============
CLASS B:
Sold .......................... $ 22,935,586 $ 22,289,439 $ 19,318,236
Issued as reinvestment of
dividends ..................... 2,352,873 1,737,586 1,445,397
Redeemed ...................... (4,233,922) (3,856,814) (2,256,041)
------------ ------------ ------------
Net increase .................. $ 21,054,537 $ 20,170,211 $ 18,507,592
============ ============ ============
SHARES
CLASS A:
Sold .......................... 3,423,606 5,205,714 1,637,573
Issued as reinvestment of
dividends ..................... 1,697,502 798,609 855,423
Redeemed ...................... (3,452,180) (2,059,919) (1,553,311)
------------ ------------ ------------
Net increase .................. 1,668,928 3,944,404 939,685
============ ============ ============
CLASS B:
Sold .......................... 1,491,572 1,165,851 836,203
Issued as reinvestment of
dividends ..................... 160,463 101,631 74,775
Redeemed ...................... (274,187) (201,009) (100,926)
------------ ------------ ------------
Net increase .................. 1,377,848 1,066,473 810,052
============ ============ ============
See Notes to Financial Statements.
<PAGE>
FINANCIAL HIGHLIGHTS
MONEY MARKET FUND(a)
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
CLASS A SHARES
------------------------------------------------------------------------------------------------------------------
PERIOD
ENDED YEAR YEAR YEAR YEAR YEAR
04/30/98(b)(c) ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
-------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Net asset
value,
beginning of
period ...... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net realized
and
unrealized
gain/(loss)
on
investments . 0.0000# -- -- -- -- --
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income ...... 0.0163 0.0493 0.0476 0.0519 0.0341 0.0238
------ ------ ------ ------ ------ ------
Total from
investment
operations .. 0.0163 0.0493 0.0476 0.0519 0.0341 0.0238
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from
net investment
income ...... (0.0163) (0.0493) (0.0476) (0.0519) (0.0341) (0.0238)
------ ------ ------ ------ ------ ------
Total
distributions (0.0163) (0.0493) (0.0476) (0.0519) (0.0341) (0.0238)
------ ------ ------ ------ ------ ------
Net asset
value, end of
period ...... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ====== ======
TOTAL RETURN+ 1.64% 5.04% 4.88% 5.33% 3.47% 2.41%
====== ====== ====== ====== ====== ======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets,
end of period
(in 000's) .. $354,348 $260,877 $229,355 $171,225 $125,651 $135,187
Ratio of
operating
expenses to
average net
assets ...... 0.69%* 0.75% 0.79% 0.92% 0.95% 0.97%
Ratio of net
investment
income to
average net
assets ...... 4.85%* 4.93% 4.77% 5.19% 3.39% 2.38%
Ratio of
operating
expenses to
average net
assets
without fee
waivers and/
or expense
reimbursements 0.69%* 0.83% 0.89% 1.04% 1.04% 1.03%
- ----------------
* Annualized.
+ Total return represents aggregate total return for the periods indicated. The total returns would have been lower if certain
fees had not been waived and/or expenses absorbed by the investment advisor.
# Amount represents less than $0.0001 per share.
(a) Formerly, Composite Cash Management Money Market Portfolio.
(b) On March 20, 1998, Composite Research & Management Co., the Fund's investment advisor, was renamed WM Advisors, Inc.
(c) Fiscal year end changed to October 31. Prior to this, the fiscal year end was December 31.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
MONEY MARKET FUND(a)
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
CLASS S CLASS I
CLASS B SHARES SHARES SHARES
---------------------------------------------------------------------------- ----------- -------------
PERIOD PERIOD PERIOD
ENDED YEAR YEAR YEAR PERIOD ENDED ENDED
04/30/98(b)(c) ENDED ENDED ENDED ENDED 04/30/98(d) 04/30/98(d)
(UNAUDITED) 12/31/97 12/31/96 12/31/95 12/31/94}D{ (UNAUDITED) (UNAUDITED)
---------------- ----------- ----- ----------- ------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period . $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.0136 0.0407 0.0384 0.0421 0.0184 0.0045 0.0054
Net realized and
unrealized gain/
(loss) on investments 0.0000# -- -- -- -- 0.0000# 0.0000#
------ ------ ------ ------ ------ ------ ------
Total from investment
operations .......... 0.0136 0.0407 0.0384 0.0421 0.0184 0.0045 0.0054
------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net
investment income ... (0.0136) (0.0407) (0.0384) (0.0421) (0.0184) (0.0045) (0.0054)
------ ------ ------ ------ ------ ------ ------
Total distributions .. (0.0136) (0.0407) (0.0384) (0.0421) (0.0184) (0.0045) (0.0054)
------ ------ ------ ------ ------ ------ ------
Net asset value, end
of period ........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ====== ====== ======
TOTAL RETURN+ 1.36% 4.15% 3.91% 4.30% 2.78% 0.45% 0.54%
====== ====== ====== ====== ====== ====== ======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of
period (in 000's) ... $3,216 $471 $117 $74 $11 $7,020 $87,833
Ratio of operating
expenses to average
net assets .......... 1.71%* 1.59% 1.69% 1.94% 1.93%* 1.89%* 0.63%*
Ratio of net
investment income to
average net assets .. 3.83%* 4.15% 3.87% 4.19% 3.29%* 3.65%* 4.92%*
Ratio of operating
expenses to average
net assets
without fee waivers
and/or expense
reimbursements ...... 1.71%* 1.80% 1.90% 2.10% 2.62%* 1.89%* 0.63%*
- ----------------
* Annualized.
+ Total return represents aggregate total return for the periods indicated. The total returns would have been lower if certain
fees had not been waived and/or expenses absorbed by the investment advisor.
# Amount represents less than $0.0001 per share.
(a) Formerly, Composite Cash Management Money Market Portfolio.
(b) On March 20, 1998, Composite Research & Management Co., the Fund's investment advisor, was renamed WM Advisors, Inc.
(c) Fiscal year end changed to October 31. Prior to this, the fiscal year end was December 31.
(d) On May 2, 1994 the Fund commenced selling Class B Shares. Those shares in existence prior to May 2, 1994 were designated as
Class A shares.
(e) On March 23, 1998 the Fund commenced selling Class S and Class I shares.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
TAX-EXEMPT MONEY MARKET FUND(a)
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
CLASS A SHARES
------------------------------------------------------------------------------------------------------------------
PERIOD
ENDED YEAR YEAR YEAR YEAR YEAR
04/30/98(b)(c) ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
-------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Net asset
value,
beginning of
period ...... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income ...... 0.0102 0.0314 0.0301 0.0339 0.0235 0.0203
Net realized
and
unrealized
gain/(loss)
on investments . -- -- -- 0.0054 -- --
------ ------ ------ ------ ------ ------
Total from
investment
operations .. 0.0102 0.0314 0.0301 0.0393 0.0235 0.0203
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from
net
investment
income ...... (0.0102) (0.0314) (0.0301) (0.0339) (0.0235) (0.0203)
Distributions
from net
realized gains -- -- -- (0.0054) -- --
------ ------ ------ ------ ------ ------
Total
distributions (0.0102) (0.0314) (0.0301) (0.0393) (0.0235) (0.0203)
------ ------ ------ ------ ------ ------
Net asset value,
end of period .. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ====== ======
TOTAL RETURN+ 1.02% 3.18% 3.05% 4.01% 2.37% 2.06%
====== ====== ====== ====== ====== ======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets,
end of period
(in 000's) .. $27,330 $32,134 $31,974 $30,988 $33,612 $34,513
Ratio of
operating
expenses to
average net
assets ...... 0.59%* 0.57% 0.57% 0.61% 0.60% 0.50%
Ratio of net
investment
income to
average net
assets ...... 3.09%* 3.14% 3.01% 3.39% 2.33% 2.03%
Ratio of
operating
expenses to
average net
assets
without fee
waivers and/
or expense
reimbursements . 0.78%* 0.71% 0.72% 0.81% 0.76% 0.77%
- ----------------
* Annualized.
+ Total return represents aggregate total return for the periods indicated. The total returns would have been lower if certain
fees had not been waived and/or expenses absorbed by the investment advisor.
(a) Formerly, Composite Cash Management Tax-Exempt Portfolio.
(b) On March 20, 1998, Composite Research & Management Co., the Fund's investment advisor, was renamed WM Advisors, Inc.
(c) Fiscal year end changed to October 31. Prior to this, the fiscal year end was December 31.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
TAX-EXEMPT MONEY MARKET FUND(a)
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
CLASS B SHARES
--------------------------------------------------------------------------------------------------------
PERIOD
ENDED YEAR YEAR YEAR PERIOD
04/30/98(b)(c) ENDED ENDED ENDED ENDED
(UNAUDITED) 12/31/97 12/31/96 12/31/95 12/31/94}D{
-------- ----- ----- ----- ------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .. 0.0072 0.0223 0.0199 0.0226 0.0097
Net realized and
unrealized gain/(loss)
on investments ........ -- -- -- 0.0054 --
------ ------ ------ ------ ------
Total from investment
operations ............ 0.0072 0.0223 0.0199 0.0280 0.0097
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net
investment income ..... (0.0072) (0.0223) (0.0199) (0.0226) (0.0097)
Distributions from net
realized gains ........ -- -- -- (0.0054) --
------ ------ ------ ------ ------
Total distributions .... (0.0072) (0.0223) (0.0199) (0.0280) (0.0097)
------ ------ ------ ------ ------
Net asset value, end of
period ................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ======
TOTAL RETURN+ 0.54% 2.26% 2.01% 2.83% 1.45%
====== ====== ====== ====== ======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of
period (in 000's) ..... $12 $12 $2 $1 $1
Ratio of operating
expenses to average net
assets ................ 1.94%* 1.50% 1.53% 1.73% 1.66%*
Ratio of net investment
income to average net
assets ................ 1.70%* 2.32% 1.99% 2.12% 1.38%*
Ratio of operating
expenses to average net
assets without fee
waivers and/or expense
reimbursements ........ 2.14%* 2.27% 4.22% 3.66% 3.61%*
- ----------------
* Annualized.
+ Total return represents aggregate total return for the periods indicated. The total returns would have been lower if certain
fees had not been waived and/or expenses absorbed by the investment advisor.
(a) Formerly, Composite Cash Management Tax-Exempt Portfolio.
(b) On March 20, 1998, Composite Research & Management Co., the Fund's investment advisor, was renamed WM Advisors, Inc.
(c) Fiscal year end changed to October 31. Prior to this, the fiscal year end was December 31.
(d) On May 2, 1994 the Fund commenced selling Class B Shares. Those shares in existence prior to May 2, 1994 were designated as
Class A shares.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
U.S. GOVERNMENT SECURITIES FUND(a)
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
CLASS A SHARES
------------------------------------------------------------------------------------------------------------------
PERIOD
ENDED YEAR YEAR YEAR YEAR YEAR
04/30/98(b)(c) ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
----------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset
value,
beginning of
period ...... $10.84 $10.46 $10.84 $ 9.64 $10.79 $10.63
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income ...... 0.21 0.62 0.63 0.63 0.63 0.69
Net realized
and
unrealized
gain/(loss)
on investments . (0.01) 0.38 (0.38) 1.20 (1.15) 0.16
------ ------ ------ ------ ------ ------
Total from
investment
operations .. 0.20 1.00 0.25 1.83 (0.52) 0.85
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from
net investment
income ...... (0.21) (0.62) (0.63) (0.63) (0.63) (0.69)
------ ------ ------ ------ ------ ------
Total
distributions (0.21) (0.62) (0.63) (0.63) (0.63) (0.69)
------ ------ ------ ------ ------ ------
Net asset
value, end of
period ...... $10.83 $10.84 $10.46 $10.84 $ 9.64 $10.79
====== ====== ====== ====== ====== ======
TOTAL RETURN+ 1.84% 9.92% 2.48% 19.45% (4.91)% 8.12%
====== ====== ====== ====== ====== ======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets,
end of period
(in 000's) .. $294,039 $107,054 $138,159 $177,310 $188,068 $268,112
Ratio of
operating
expenses to
average net
assets ...... 0.90%* 1.05% 0.97% 1.01% 0.97% 0.99%
Ratio of net
investment
income to
average net
assets ...... 5.98%* 5.92% 6.01% 6.08% 6.19% 6.29%
Portfolio
turnover rate 4% 6% 16% 8% 34% 51%
Ratio of
operating
expenses to
average net
assets
including
interest
expense ..... 1.18%* -- -- -- -- --
- ----------------
* Annualized.
+ Total return represents aggregate total return for the periods indicated and does not reflect any applicable sales charges.
The total returns would have been lower if certain fees had not been waived and/or expenses absorbed by the investment
advisor.
(a) Formerly, Composite U.S. Government Securities Inc.
(b) On March 20, 1998, Composite Research & Management Co., the Fund's investment advisor, was renamed WM Advisors, Inc.
(c) Fiscal year end changed to October 31. Prior to this, the fiscal year end was December 31.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
U.S. GOVERNMENT SECURITIES FUND(a)
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
CLASS S CLASS I
CLASS B SHARES SHARES SHARES
----------------------------------------------------------------------------- ----------- -------------
PERIOD PERIOD PERIOD
ENDED YEAR YEAR YEAR PERIOD ENDED ENDED
04/30/98(b)(c) ENDED ENDED ENDED ENDED 04/30/98(e) 04/30/98(e)
(UNAUDITED) 12/31/97 12/31/96 12/31/95 12/31/94(d) (UNAUDITED) (UNAUDITED)
---------------- ------- -------- -------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period . $10.84 $10.46 $10.84 $ 9.64 $10.24 $10.86 $10.86
------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.18 0.54 0.54 0.54 0.41 0.06 0.08
Net realized and
unrealized gain/
(loss) on investments (0.01) 0.38 (0.38) 1.20 (0.60) (0.02) (0.02)
------ ------ ------ ------ ------ ------ ------
Total from investment
operations .......... 0.17 0.92 0.16 1.74 (0.19) 0.04 0.06
------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net
investment income ... (0.18) (0.54) (0.54) (0.54) (0.41) (0.06) (0.08)
------ ------ ------ ------ ------ ------ ------
Total distributions .. (0.18) (0.54) (0.54) (0.54) (0.41) (0.06) (0.08)
------ ------ ------ ------ ------ ------ ------
Net asset value, end
of period ........... $10.83 $10.84 $10.46 $10.84 $ 9.64 $10.84 $10.84
====== ====== ====== ====== ====== ====== ======
TOTAL RETURN+ 1.54% 9.03% 1.58% 18.48% (1.86)% 0.31% 0.42%
====== ====== ====== ====== ====== ====== ======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of
period (in 000's) ... $22,081 $3,352 $2,963 $2,206 $1,063 $6,749 $58,391
Ratio of operating
expenses to average
net assets .......... 1.69%* 1.84% 1.85% 1.84% 1.76%* 1.77%* 0.60%*
Ratio of net
investment income to
average net assets .. 5.20%* 5.08% 5.14% 5.20% 5.43%* 5.24%* 6.29%*
Portfolio turnover
rate ................ 4% 6% 16% 8% 34% 4% 4%
Ratio of operating
expenses to average
net assets including
interest expense .... 1.96%* -- -- -- -- 2.05%* 0.87%*
- ----------------
* Annualized.
+ Total return represents aggregate total return for the periods indicated. The total returns would have been lower if certain
fees had not been waived and/or expenses absorbed by the investment advisor.
(a) Formerly, Composite U.S. Government Securities, Inc.
(b) On March 20, 1998, Composite Research & Management Co., the Fund's investment advisor, was renamed WM Advisors, Inc.
(c) Fiscal year end changed to October 31. Prior to this, the fiscal year end was December 31.
(d) On March 30, 1994 the Fund commenced selling Class B shares. Those shares in existence prior to March 30, 1994 were designated
as Class A shares.
(e) On March 23, 1998 the Fund commenced selling Class S and Class I shares.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
INCOME FUND(a)
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
CLASS A SHARES
------------------------------------------------------------------------------------------------------------------
PERIOD
ENDED YEAR YEAR YEAR YEAR YEAR
04/30/98(b)(c) ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period ...... $ 9.48 $ 9.15 $ 9.44 $ 8.29 $ 9.33 $ 8.99
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income ...... 0.20 0.60 0.59 0.59 0.60 0.61
Net realized
and unrealized
gain/(loss)
on investments . 0.03 0.33 (0.29) 1.15 (1.04) 0.34
------ ------ ------ ------ ------ ------
Total from
investment
operations .. 0.23 0.93 0.30 1.74 (0.44) 0.95
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from
net investment
income ...... (0.20) (0.60) (0.59) (0.59) (0.60) (0.61)
------ ------ ------ ------ ------ ------
Total
distributions (0.20) (0.60) (0.59) (0.59) (0.60) (0.61)
------ ------ ------ ------ ------ ------
Net asset
value, end of
period ...... $ 9.51 $ 9.48 $ 9.15 $ 9.44 $ 8.29 $ 9.33
====== ====== ====== ====== ====== ======
TOTAL RETURN+ 2.47% 10.51% 3.46% 21.58% (4.82)% 10.82%
====== ====== ====== ====== ====== ======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets,
end of period
(in 000's) .. $223,060 $77,864 $86,657 $97,534 $88,102 $104,876
Ratio of
operating
expenses to
average net
assets ...... 1.02%* 1.08% 1.03% 1.08% 1.04% 1.08%
Ratio of net
investment
income to
average net
assets ...... 6.50%* 6.47% 6.52% 6.59% 6.83% 6.58%
Portfolio
turnover rate 36% 27% 42% 43% 26% 51%
- ----------------
* Annualized.
+ Total return represents aggregate total return for the periods indicated and does not reflect any applicable sales charges.
(a) Formerly, Composite Income Fund, Inc.
(b) On March 20, 1998, Composite Research & Management Co., the Fund's investment advisor, was renamed WM Advisors, Inc.
(c) Fiscal year end changed to October 31. Prior to this, the fiscal year end was December 31.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
INCOME FUND(a)
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
CLASS S CLASS I
CLASS B SHARES SHARES SHARES
----------------------------------------------------------------------------- ----------- -------------
PERIOD PERIOD PERIOD
ENDED YEAR YEAR YEAR PERIOD ENDED ENDED
04/30/98(b)(c) ENDED ENDED ENDED ENDED 04/30/98(e) 04/30/98(e)
(UNAUDITED) 12/31/97 12/31/96 12/31/95 12/31/94(d) (UNAUDITED) (UNAUDITED)
---------------- ----------- -------- -------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period . $ 9.49 $ 9.17 $ 9.46 $ 8.30 $ 8.85 $ 9.58 $ 9.57
------ ------ ------ ------ ------ ------ ------
VINCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.18 0.53 0.52 0.51 0.40 0.06 0.07
Net realized and
unrealized gain/
(loss) on investments 0.03 0.32 (0.29) 1.16 (0.55) (0.06) (0.06)
------ ------ ------ ------ ------ ------ ------
Total from investment
operations .......... 0.21 0.85 0.23 1.67 (0.15) -- 0.01
----- ----- ----- ----- ----- ----- -----
LESS DISTRIBUTIONS:
Dividends from net
investment income ... (0.18) (0.53) (0.52) (0.51) (0.40) (0.06) (0.07)
------ ------ ------ ------ ------ ------ ------
Total distributions .. (0.18) (0.53) (0.52) (0.51) (0.40) (0.06) (0.07)
------ ------ ------ ------ ------ ------ ------
Net asset value, end
of period ........... $ 9.52 $ 9.49 $ 9.17 $ 9.46 $ 8.30 $ 9.52 $ 9.51
====== ====== ====== ====== ====== ====== ======
TOTAL RETURN+ 2.18% 9.51% 2.59% 20.70% (1.67)% (0.09)% 0.03%
====== ====== ====== ====== ====== ====== ======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of
period (in 000's) ... $31,311 $9,691 $7,122 $4,452 $2,299 $1,779 $6,375
Ratio of operating
expenses to average
net assets .......... 1.79%* 1.86% 1.89% 1.91% 1.80%* 1.88%* 0.70%*
Ratio of net
investment income to
average net assets .. 5.73%* 5.65% 5.69% 5.73% 6.25%* 5.64%* 6.82%*
Portfolio turnover
rate ................ 36% 27% 42% 43% 26% 36% 36%
- ----------------
* Annualized.
+ Total return represents aggregate total return for the periods indicated.
(a) Formerly, Composite Income Fund, Inc.
(b) On March 20, 1998, Composite Research & Management Co., the Fund's investment advisor, was renamed WM Advisors, Inc.
(c) Fiscal year end changed to October 31. Prior to this, the fiscal year end was December 31.
(d) On March 30, 1994 the Fund commenced selling Class B Shares. Those shares in existence prior to March 30, 1994 were designated
as Class A shares.
(e) On March 23, 1998 the Fund commenced selling Class S and Class I shares.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
HIGH YIELD FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT THE PERIOD.
CLASS A SHARES
--------------
PERIOD
ENDED
04/30/98(a)
(UNAUDITED)
--------
Net asset value, beginning of period ..................... $10.00
------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .................................... 0.03
Net realized and unrealized loss on investments .......... (0.03)
------
Total from investment operations ......................... --
------
LESS DISTRIBUTIONS:
Dividends from net investment income ..................... (0.03)
------
Total distributions ...................................... (0.03)
------
Net asset value, end of period ........................... $ 9.97
======
TOTAL RETURN+ (0.03)%
======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ..................... $10,026
Ratio of operating expenses to average net assets ........ 1.30%*
Ratio of net investment income to average net assets ..... 4.05%*
Portfolio turnover rate .................................. 0%
- ----------------
* Annualized.
+ Total return represents aggregate total return for the periods indicated and
does not reflect any applicable sales charges.
(a) The Fund commenced operations on April 8, 1998.
<PAGE>
FINANCIAL HIGHLIGHTS
TAX-EXEMPT BOND FUND(a)
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
CLASS A SHARES
---------------------------------------------------------------------
PERIOD
ENDED YEAR YEAR YEAR YEAR YEAR
04/30/98(b)(c) ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.09 $ 7.83 $ 8.02 $ 7.13 $ 8.04 $ 7.58
--------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .............. 0.13 0.38 0.38 0.38 0.39 0.40
Net realized and unrealized
gain/(loss) on investments ........ (0.13) 0.27 (0.19) 0.89 (0.91) 0.54
--------- --------- --------- --------- --------- ---------
Total from investment operations ... 0.00 0.65 0.19 1.27 (0.52) 0.94
--------- --------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income (0.13) (0.38) (0.38) (0.38) (0.39) (0.40)
Distributions from net realized
gains ............................. -- (0.01) -- -- -- (0.08)
--------- --------- --------- --------- --------- ---------
Total distributions ................ (0.13) (0.39) (0.38) (0.38) (0.39) (0.48)
--------- --------- --------- --------- --------- ---------
Net asset value, end of period ..... $ 7.96 $ 8.09 $ 7.83 $ 8.02 $ 7.13 $ 8.04
========= ========= ========= ========= ========= =========
TOTAL RETURN+ ...................... 0.01% 8.59% 2.52% 18.25% (6.53)% 12.54%
========= ========= ========= ========= ========= =========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period
(in 000's) ........................ $ 316,112 $ 188,021 $ 203,606 $ 230,055 $ 215,438 $ 259,045
Ratio of operating expenses to
average net assets ................ 0.77%* 0.80% 0.75% 0.81% 0.79% 0.81%
Ratio of net investment income to
average net assets ................ 5.09%* 4.84% 4.90% 5.03% 5.23% 4.97%
Portfolio turnover rate ............ 2% 21% 22% 8% 12% 19%
- ----------------
* Annualized.
+ Total return represents aggregate total return for the periods indicated and does not reflect any applicable sales charges.
(a) Formerly, Composite Tax-Exempt Bond Fund, Inc.
(b) On March 20, 1998, Composite Research & Management Co., the Fund's investment advisor, was renamed WM Advisors, Inc.
(c) Fiscal year end changed to October 31. Prior to this, the fiscal year end was December 31.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
TAX-EXEMPT BOND FUND(a)
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
CLASS S CLASS I
CLASS B SHARES SHARES SHARES
-------------------------------------------------------------------- ---------- ---------
PERIOD PERIOD PERIOD
ENDED YEAR YEAR YEAR PERIOD ENDED ENDED
04/30/98(b)(c) ENDED ENDED ENDED ENDED 04/30/98(e)04/30/98(e)
(UNAUDITED) 12/31/97 12/31/96 12/31/95 12/31/94(D) (UNAUDITED)(UNAUDITED)
--------- --------- --------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.09 $ 7.83 $ 8.02 $ 7.13 $ 7.49 $ 8.06 $ 8.06
--------- --------- --------- --------- --------- --------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .............. 0.11 0.32 0.31 0.32 0.25 0.04 0.05
Net realized and unrealized gain/
(loss) on investments ............. (0.13) 0.27 (0.19) 0.89 (0.36) (0.10) (0.10)
--------- --------- --------- --------- --------- --------- --------
Total from investment operations ... (0.02) 0.59 0.12 1.21 (0.11) (0.06) (0.05)
--------- --------- --------- --------- --------- --------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income (0.11) (0.32) (0.31) (0.32) (0.25) (0.04) (0.05)
Distributions from net
realized gains .................... -- (0.01) -- -- -- -- --
--------- --------- --------- --------- --------- --------- --------
Total distributions ................ (0.11) (0.33) (0.31) (0.32) (0.25) (0.04) (0.05)
--------- --------- --------- --------- --------- --------- --------
Net asset value, end of period ..... $ 7.96 $ 8.09 $ 7.83 $ 8.02 $ 7.13 $ 7.96 $ 7.96
========= ========= ========= ========= ========= ========= ========
TOTAL RETURN+ ...................... (0.27)% 7.71% 1.61% 17.30% (1.46)% (0.79)% (0.63)%
========= ========= ========= ========= ========= ========= ========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 14,586 $ 8,110 $ 5,266 $ 2,682 $ 1,258 $ 1 $ 1
Ratio of operating expenses to
average net assets ................ 1.52%* 1.62% 1.65% 1.62% 1.58%* 1.52%* 0.52%*
Ratio of net investment income to
average net assets ................ 4.34%* 4.00% 4.01% 4.18% 4.53%* 4.34%* 5.34%*
Portfolio turnover rate ............ 2% 21% 22% 8% 12% 2% 2%
- ----------------
* Annualized.
+ Total return represents aggregate total return for the periods indicated.
(a) Formerly, Composite Tax-Exempt Bond Fund, Inc.
(b) On March 20, 1998, Composite Research & Management Co., the Fund's investment advisor, was renamed WM Advisors, Inc.
(c) Fiscal year end changed to October 31. Prior to this, the fiscal year end was December 31.
(d) On March 30, 1994 the Fund commenced selling Class B shares. Those shares in existence prior to March 30, 1994 were designated
as Class A shares.
(e) On March 23, 1998 the Fund commenced selling Class S and Class I shares.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
BOND & STOCK FUND(a)
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
CLASS A SHARES
---------------------------------------------------------------------
PERIOD
ENDED YEAR YEAR YEAR YEAR YEAR
04/30/98(b) ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 10/31/97 10/31/96 10/31/95 10/31/94 10/31/93
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 16.13 $ 14.71 $ 13.48 $ 11.53 $ 12.23 $ 11.27
--------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .............. 0.59 0.50 0.52 0.50 0.46 0.48
Net realized and unrealized
gain/(loss) on investments ........ 1.22 2.37 1.53 2.02 (0.57) 1.06
--------- --------- --------- --------- --------- ---------
Total from investment operations ... 1.81 2.87 2.05 2.52 (0.11) 1.54
--------- --------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment
income ............................ (0.61) (0.51) (0.50) (0.49) (0.44) (0.46)
Distributions from net realized
gains ............................. (2.32) (0.94) (0.32) (0.08) (0.15) (0.12)
--------- --------- --------- --------- --------- ---------
Total distributions ................ (2.93) (1.45) (0.82) (0.57) (0.59) (0.58)
--------- --------- --------- --------- --------- ---------
Net asset value, end of period ..... $ 15.01 $ 16.13 $ 14.71 $ 13.48 $ 11.53 $ 12.23
========= ========= ========= ========= ========= =========
TOTAL RETURN+ ...................... 9.78% 20.81% 15.66% 22.55% (0.90)% 13.99%
========= ========= ========= ========= ========= =========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 323,373 $ 307,018 $ 255,414 $ 208,592 $ 191,615 $ 180,281
Ratio of operating expenses to
average net assets ................ 0.88%* 0.99% 0.98% 1.02% 1.06% 1.13%
Ratio of net investment income to
average net assets ................ 3.06%* 3.31% 3.68% 3.98% 3.97% 4.01%
Portfolio turnover rate ............ 54% 54% 46% 32% 25% 19%
Average commission paid(c) ......... $ 0.0525 $ 0.0561 $ 0.0632 -- -- --
- ----------------
* Annualized.
+ Total return represents aggregate total return for the periods indicated and does not reflect any applicable sales charges.
(a) Formerly, Composite Bond & Stock Fund, Inc.
(b) On March 20, 1998, Composite Research & Management Co., the Fund's investment advisor, was renamed WM Advisors, Inc.
(c) Average commission rate paid per share of securities purchased and sold by the Fund as required by amended disclosure
requirements effective for fiscal years beginning on or after September 1, 1995.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
BOND & STOCK FUND(a)
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
CLASS B SHARES
-----------------------------------------------------------------
PERIOD
ENDED YEAR YEAR YEAR PERIOD
04/30/98(b) ENDED ENDED ENDED ENDED
(UNAUDITED) 10/31/97 10/31/96 10/31/95 10/31/94(c)
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of peroid ............... $ 16.10 $ 14.69 $ 13.47 $ 11.51 $ 11.49
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .............................. 0.46 0.39 0.41 0.39 0.18
Net realized and unrealized
gain/(loss) on investments ........................ 1.20 2.36 1.53 2.03 0.04
------- ------- ------- ------- -------
Total from investment operations ................... 1.66 2.75 1.94 2.42 0.22
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income ............... (0.47) (0.40) (0.40) (0.38) (0.20)
Distributions from net realized gains .............. (2.32) (0.94) (0.32) (0.08) --
------- ------- ------- ------- -------
Total distributions ................................ (2.79) (1.34) (0.72) (0.46) (0.20)
------- ------- ------- ------- -------
Net asset value, end of period ..................... $ 14.97 $ 16.10 $ 14.69 $ 13.47 $ 11.51
======= ======= ======= ======= =======
TOTAL RETURN+ ...................................... 9.33% 19.86% 14.73% 21.60% 1.94%
======= ======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ............... $68,428 $46,556 $22,243 $ 7,372 $ 3,362
Ratio of operating expenses to average net assets .. 1.77%* 1.79% 1.86% 1.84% 1.77%*
Ratio of net investment income to average net assets 2.25%* 2.48% 2.80% 3.10% 3.22%*
Portfolio turnover rate ............................ 54% 54% 46% 32% 25%
Average commission paid(d) ......................... $0.0525 $0.0561 $0.0632 -- --
- ----------------
* Annualized.
+ Total return represents aggregate total return for the periods indicated.
(a) Formerly, Composite Bond & Stock Fund, Inc.
(b) On March 20, 1998, Composite Research & Management Co., the Fund's investment advisor, was renamed WM Advisors, Inc.
(c) On March 30, 1994 the Fund commenced selling Class B shares. Those shares in existence prior to March 30, 1994 were designated
as Class A shares.
(d) Average commission rate paid per share of securities purchased and sold by the Fund as required by amended disclosure
requirements effective for fiscal years beginning on or after September 1, 1995.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
GROWTH & INCOME FUND(a)
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
CLASS A SHARES
------------------------------------------------------------------------
PERIOD
ENDED YEAR YEAR YEAR YEAR YEAR
04/30/98(b) ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 10/31/97 10/31/96 10/31/95 10/31/94 10/31/93
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 21.01 $ 17.26 $ 14.65 $ 12.71 $ 12.81 $ 12.02
--------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .............. 0.04 0.12 0.20 0.22 0.18 0.21
Net realized and unrealized
gain/(loss) on investments ........ 3.00 4.98 3.16 2.31 0.85 1.10
--------- --------- --------- --------- --------- ---------
Total from investment operations ... 3.04 5.10 3.36 2.53 1.03 1.31
--------- --------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment
income ............................ (0.06) (0.14) (0.21) (0.19) (0.18) (0.21)
Distributions from net realized
gains ............................. (2.47) (1.21) (0.54) (0.40) (0.95) (0.31)
--------- --------- --------- --------- --------- ---------
Total distributions ................ (2.53) (1.35) (0.75) (0.59) (1.13) (0.52)
--------- --------- --------- --------- --------- ---------
Net asset value, end of period ..... $ 21.52 $ 21.01 $ 17.26 $ 14.65 $ 12.71 $ 12.81
========= ========= ========= ========= ========= =========
TOTAL RETURN+ ...................... 15.42% 31.24% 23.61% 20.87% 8.55% 11.06%
========= ========= ========= ========= ========= =========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 515,796 $ 299,928 $ 178,331 $ 130,630 $ 102,837 $ 95,229
Ratio of operating expenses to
average net assets ................ 1.99%* 1.05% 1.03% 1.07% 1.10% 1.17%
Ratio of net investment income to
average net assets ................ 0.69%* 0.66% 1.26% 1.62% 1.45% 1.67%
Portfolio turnover rate ............ 44% 71% 52% 39% 34% 54%
Average commission paid(c) ......... $ 0.0572 $ 0.0581 $ 0.0654 -- -- --
- ----------------
* Annualized.
+ Total return represents aggregate total return for the periods indicated and does not reflect any applicable sales charges.
(a) Formerly, Composite Growth & Income Fund.
(b) On March 20, 1998, Composite Research & Management Co., the Fund's investment advisor, was renamed WM Advisors, Inc.
(c) Average commission rate paid per share of securities purchased and sold by the Fund as required by amended disclosure
requirements effective for fiscal years beginning on or after September 1, 1995.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
GROWTH & INCOME FUND(a)
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
CLASS S CLASS I
CLASS B SHARES SHARES SHARES
-------------------------------------------------------------------------- ------------- -------------
PERIOD PERIOD PERIOD
ENDED YEAR YEAR YEAR PERIOD ENDED ENDED
04/30/98(b) ENDED ENDED ENDED ENDED 04/30/98(d) 04/30/98(d)
(UNAUDITED) 10/31/97 10/31/96 10/31/95 10/31/94(c) (UNAUDITED) (UNAUDITED)
-------------- ----- ----- ----------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period . $20.85 $17.17 $14.59 $12.68 $12.00 $21.26 $21.45
------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.00# (0.02) 0.06 0.11 0.05 0.00# 0.03
Net realized and
unrealized gain/
(loss) on investments 2.96 4.93 3.14 2.31 0.69 0.10 0.09
------ ------ ------ ------ ------ ------ ------
Total from investment
operations .......... 2.96 4.91 3.20 2.42 0.74 0.10 0.12
------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net
investment income ... -- (0.02) (0.08) (0.11) (0.06) -- --
Distributions from net
realized gains ...... (2.47) (1.21) (0.54) (0.40) -- -- --
------ ------ ------ ------ ------ ------ ------
Total distributions .. (2.47) (1.23) (0.62) (0.51) (0.06) -- --
------ ------ ------ ------ ------ ------ ------
Net asset value, end
of period ........... $21.34 $20.85 $17.17 $14.59 $12.68 $21.36 $21.57
====== ====== ====== ====== ====== ====== ======
TOTAL RETURN+ 15.06% 30.20% 22.55% 19.95% 6.14% 0.56% 0.70%
====== ====== ====== ====== ====== ====== ======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of
period (in 000's) ... $118,479 $49,994 $22,851 $8,871 $2,082 $15,138 $198,063
Ratio of operating
expenses to average
net assets .......... 2.81%* 1.88% 1.94% 1.91% 1.85%* 2.78%* 1.68%*
Ratio of net
investment income to
average net assets .. (0.13)%* (0.19)% 0.34% 0.69% 0.65%* (0.10)%* 1.00%*
Portfolio turnover
rate ................ 44% 71% 52% 39% 34% 44% 44%
Average commission
paid(e) ............. $0.0572 $0.0581 $0.0654 -- -- $0.0572 $0.0572
- ----------------
* Annualized.
+ Total return represents aggregate total return for the periods indicated.
# Amount represents less than $0.01 per share.
(a) Formerly, Composite Growth & Income Fund.
(b) On March 20, 1998, Composite Research & Management Co., the Fund's investment advisor, was renamed WM Advisors, Inc.
(c) On March 30, 1994 the Fund commenced selling Class B shares. Those shares in existence prior to March 30, 1994 were designated
as Class A shares.
(d) On March 23, 1998 the Fund commenced selling Class S and Class I shares.
(e) Average commission rate paid per share of securities purchased and sold by the Fund as required by amended disclosure
requirements effective for fiscal years beginning on or after September 1, 1995.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
NORTHWEST FUND(a)
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
CLASS A SHARES
---------------------------------------------------------------------
PERIOD
ENDED YEAR YEAR YEAR YEAR YEAR
04/30/98(b) ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 10/31/97 10/31/96 10/31/95 10/31/94 10/31/93
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 25.92 $ 19.69 $ 17.40 $ 14.30 $ 14.50 $ 14.04
--------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .............. 0.00# (0.02) 0.03 0.07 0.08 0.07
Net realized and unrealized
gain/(loss) on investments ........ 2.84 8.13 2.47 3.10 0.35 0.46
--------- --------- --------- --------- --------- ---------
Total from investment operations ... 2.84 8.11 2.50 3.17 0.43 0.53
--------- --------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment
income ............................ -- -- (0.03) (0.07) (0.08) (0.07)
Distributions from net realized
gains ............................. (4.77) (1.88) (0.18) -- (0.55) --
--------- --------- --------- --------- --------- ---------
Total distributions ................ (4.77) (1.88) (0.21) (0.07) (0.63) (0.07)
--------- --------- --------- --------- --------- ---------
Net asset value, end of period ..... $ 23.99 $ 25.92 $ 19.69 $ 17.40 $ 14.30 $ 14.50
========= ========= ========= ========= ========= =========
TOTAL RETURN+ ...................... 12.11% 44.47% 14.54% 22.24% 2.97% 3.82%
========= ========= ========= ========= ========= =========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 286,979 $ 256,908 $ 176,706 $ 157,953 $ 152,622 $ 168,840
Ratio of operating expenses to
average net assets ................ 1.01%* 1.05% 1.08% 1.10% 1.09% 1.09%
Ratio of net investment income to
average net assets ................ (0.01)%* (0.08)% 0.16% 0.44% 0.51% 0.48%
Portfolio turnover rate ............ 42% 37% 42% 9% 11% 8%
Average commission paid(c) ......... $ 0.0514 $ 0.0557 $ 0.0665 -- -- --
- ---------
* Annualized.
+ Total return represents aggregate total return for the periods indicated and does not reflect any applicable sales charge.
# Amount represents less than $0.01 per share.
(a) Formerly, Composite Northwest Fund, Inc.
(b) On March 20, 1998, Composite Research & Management Co., the Fund's investment advisor, was renamed WM Advisors, Inc.
(c) Average commission rate paid per share of securities purchased and sold by the Fund as required by amended disclosure
requirements effective for fiscal years beginning on or after September 1, 1995.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
NORTHWEST FUND(a)
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
CLASS B SHARES
-----------------------------------------------------------------------------------------------------
PERIOD
ENDED YEAR YEAR YEAR PERIOD
04/30/98(b) ENDED ENDED ENDED ENDED
(UNAUDITED) 10/31/97 10/31/96 10/31/95 10/31/94(c)
---------- -------- ------------ ------------ --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period ......................................... $ 25.34 $ 19.45 $ 17.31 $ 14.28 $ 14.42
---------- -------- ------------ ------------ --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .............................. (0.01) (0.08) (0.08) (0.05) (0.02)
Net realized and unrealized
gain/(loss) on investments ........................ 2.68 7.85 2.40 3.08 (0.12)
---------- -------- ------------ ------------ --------
Total from investment operations ................... 2.67 7.77 2.32 3.03 (0.14)
---------- -------- ------------ ------------ --------
LESS DISTRIBUTIONS:
Dividends from net investment income ............... -- -- -- -- --
Distributions from net realized gains .............. (4.77) (1.88) (0.18) -- --
---------- -------- ------------ ------------ --------
Total distributions ................................ (4.77) (1.88) (0.18) -- --
---------- -------- ------------ ------------ --------
Net asset value, end of period ..................... $ 23.24 $ 25.34 $ 19.45 $ 17.31 $ 14.28
========== ======== ============ ============ ========
TOTAL RETURN+ ...................................... 11.66% 43.17% 13.54% 21.25% (0.97)%
========== ======== ============ ============ ========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ............... $ 55,932 $ 39,627 $ 14,653 $ 7,083 $ 3,102
Ratio of operating expenses
to average net assets ............................. 1.91%* 1.91% 1.98% 1.95% 1.96%*
Ratio of net investment
income to average net assets ...................... (0.90)%* (0.96)% (0.76)% (0.45)% (0.39)%*
Portfolio turnover rate ............................ 42% 37% 42% 9% 11%
Average commission paid(d) ......................... $ 0.0514 $ 0.0557 $ 0.0665 -- --
- ----------------
* Annualized.
+ Total return represents aggregate total return for the periods indicated.
(a) Formerly, Composite Northwest Fund, Inc.
(b) On March 20, 1998, Composite Research & Management Co., the Fund's investment advisor, was renamed WM Advisors, Inc.
(c) On March 30, 1994 the Fund commenced selling Class B shares. Those shares in existence prior to March 30, 1994 were designated
as Class A shares.
(d) Average commission rate paid per share of securities purchased and sold by the Fund as required by amended disclosure
requirements effective for fiscal years beginning on or after September 1, 1995.
</TABLE>
<PAGE>
PORTFOLIO of INVESTMENTS
<TABLE>
MONEY MARKET FUND
APRIL 30, 1998 (UNAUDITED)
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
------ --------
<S> <C> <C>
COMMERCIAL PAPER - 64.4%
American Honda Finance Corporation:
$ 7,000,000 5.520% due 05/15/1998 ................................. $ 6,984,973
6,500,000 5.500% due 05/21/1998 ................................. 6,480,139
7,500,000 Bear Sterns Companies Inc.,
5.550% due 05/08/1998 ................................. 7,491,906
5,000,000 Beneficial Corporation,
5.520% due 06/16/1998 ................................. 4,964,733
3,700,000 British Gas Capital Inc.,
5.520% due 08/24/1998 ................................. 3,634,747
7,500,000 Caisse D'Amortissement de la ette Sociale (CADES),
5.450% due 08/03/1998 ................................. 7,393,256
7,500,000 Caterpillar Financial Services Inc.,
5.520% due 05/14/1998 ................................. 7,485,050
Chrysler Financial Corporation:
5,000,000 5.510% due 05/18/1998 ................................. 4,986,990
7,500,000 5.530% due 06/11/1998 ................................. 7,452,765
2,000,000 Columbia University,
5.530% due 05/08/1998 ................................. 1,997,849
5,000,000 Dean Witter Discover & Company,
6.000% due 08/10/1998 ................................. 5,001,083
5,000,000 Deere & Company,
5.500% due 05/15/1998 ................................. 4,989,306
Den Norske Stats Oljeselskap A/S:
5,000,000 5.500% due 05/18/1998 ................................. 4,987,014
7,500,000 5.520% due 06/04/1998 ................................. 7,460,900
Ford Motor Credit Company:
3,500,000 5.510% due 05/13/1998 ................................. 3,493,572
4,900,000 5.500% due 05/20/1998 ................................. 4,885,776
5,000,000 General Electric Capital Corporation,
5.500% due 05/14/1998 ................................. 4,990,069
General Electric Company:
5,000,000 5.530% due 05/18/1998 ................................. 4,986,943
8,000,000 5.380% due 08/19/1998 ................................. 7,866,725
General Motors Acceptance Corporation:
5,000,000 5.510% due 05/08/1998 ................................. 4,994,643
5,000,000 5.510% due 05/18/1998 ................................. 4,986,990
10,000,000 Goldman Sachs & Company,
5.510% due 05/15/1998 ................................. 9,978,592
8,000,000 Halifax Building Society,
5.690% due 05/15/1998 ................................. 7,982,308
5,000,000 Hitachi America Limited,
5.520% due 05/13/1998 ................................. 4,990,800
12,000,000 Household Finance Corporation,
5.520% due 05/22/1998 ................................. 11,961,378
7,500,000 IBM Credit Corporation,
5.500% due 05/14/1998 ................................. 7,485,104
International Lease Finance Corporation:
3,000,000 5.520% due 05/06/1998 ................................. 2,997,700
4,234,000 6.500% due 07/15/1998 ................................. 4,240,722
5,000,000 John Deere Capital Corporation,
5.500% due 05/22/1998 ................................. 4,983,958
5,000,000 Merrill Lynch & Company Inc.,
5.500% due 06/15/1998 ................................. 4,965,313
7,500,000 Monsanto Company,
5.500% due 05/14/1998 ................................. 7,485,104
7,500,000 Morgan Stanley, Dean Witter, Discover,
5.500% due 05/27/1998 ................................. 7,470,208
Sears Roebuck Acceptance Corporation:
5,000,000 5.520% due 05/20/1998 ................................. 4,985,433
7,500,000 5.540% due 06/15/1998 ................................. 7,448,063
Sharp Electronics Corporation:
5,000,000 5.570% due 05/06/1998 ................................. 4,996,132
5,000,000 5.550% due 05/14/1998 ................................. 4,989,979
5,000,000 Societe Generale North America, Inc.,
5.510% due 05/27/1998 ................................. 4,980,103
Toshiba International:
1,800,000 5.550% due 05/07/1998 ................................. 1,798,335
5,000,000 5.550% due 05/26/1998 ................................. 4,980,729
Toyota Motor Credit Corporation:
4,080,000 5.550% due 05/01/1998 ................................. 4,080,000
5,000,000 5.500% due 05/18/1998 ................................. 4,987,014
3,500,000 5.500% due 05/21/1998 ................................. 3,489,306
10,500,000 5.510% due 05/29/1998 ................................. 10,454,982
8,700,000 Trident Capital Inc.,
5.660% due 06/12/1998+++ .............................. 8,642,589
Weyerhauser Real Estate Company:
5,000,000 5.550% due 05/04/1998 ................................. 5,000,000
5,000,000 5.500% due 05/22/1998 ................................. 4,983,958
8,700,000 Windmill Funding Corporation,
5.090% due 05/15/1998+++ .............................. 8,626,231
7,500,000 Xerox Corporation,
5.500% due 05/21/1998 ................................. 7,477,083
7,500,000 Xerox Credit Corporation,
5.510% due 06/12/1998 ................................. 7,451,788
------------
Total Commercial Paper
(Cost $291,428,341) ................................... 291,428,341
------------
MEDIUM TERM NOTES - 14.1%
3,000,000 Bank of America, Note,
5.630% due 02/26/1999 ................................. 2,999,046
5,000,000 Bank Boston NA,
5.500% due 10/06/1998++ ............................... 4,998,826
9,000,000 Bayerische Landesbank Girozentrale,
5.490% due 06/26/1998++ ............................... 8,998,903
Bear Sterns Companies Inc.:
5,000,000 5.626% due 10/15/1998++ ............................... 5,000,000
5,000,000 5.950% due 10/15/1998++ ............................... 5,000,000
1,000,000 Caterpillar Financial Services Inc.,
6.770% due 03/15/1999 ................................. 1,009,444
3,000,000 General Electric Capital Corporation,
5.000% due 09/10/1998 ................................. 2,992,001
1,000,000 General Motors Acceptance Corporation,
6.150% due 05/11/1998 ................................. 1,000,052
2,883,000 International Lease Finance Corporation,
6.220% due 10/01/1998 ................................. 2,888,364
9,000,000 Keybank National,
5.550% due 07/31/1998++ ............................... 8,998,444
4,000,000 Keystone Group, Sr. Note, (Pre-Refunded),
9.750% due 09/01/2003 ................................. 4,210,980
Merrill Lynch & Company, Inc.:
5,000,000 5.606% due 07/28/1998++ ............................... 5,000,000
2,000,000 5.638% due 08/03/1998++ ............................... 2,000,000
1,000,000 5.905% due 10/21/1998 ................................. 1,000,112
5,000,000 5.790% due 04/28/1999 ................................. 5,000,000
2,500,000 Toyota Motor Credit Corporation,
5.875% due 06/26/1998 ................................. 2,500,539
------------
Total Medium Term Notes
(Cost $63,596,711) .................................... 63,596,711
------------
CERTIFICATES OF DEPOSIT - 3.3%
Bankers Trust New York Corporation:
5,000,000 5.970% due 08/28/1998 ................................. 4,999,844
5,000,000 5.940% due 09/10/1998 ................................. 4,998,946
5,000,000 PNC Bank National,
5.625% due 06/05/1998 ................................. 5,000,230
------------
Total Certificates of Deposit
(Cost $14,999,020) .................................... 14,999,020
------------
CERTIFICATES OF DEPOSIT (YANKEE) - 6.8%
2,000,000 Bank of Nova Scotia,
5.675% due 03/04/1999 ................................. 1,999,433
3,000,000 Barclays Bank PLC,
5.940% due 06/19/1998 ................................. 2,999,135
7,000,000 Credit Anstalt NU YC,
5.890% due 11/17/1998 ................................. 7,005,355
7,000,000 Credit Suisse First Boston, NY,
5.740% due 01/07/1999 ................................. 7,000,000
5,000,000 Societe Generale, New York,
5.665% due 03/23/1999 ................................. 4,997,101
5,000,000 Swiss Bank,
5.825% due 04/29/1999 ................................. 4,998,765
2,000,000 Swiss Bank Corporation, New York,
5.820% due 06/04/1998 ................................. 2,000,424
------------
Total Certificates of Deposit (Yankee)
(Cost $31,000,213) .................................... 31,000,213
------------
MUNICIPAL BOND - 1.8%
5,000,000 Texas State, Veterans Land Board,
Taxable Bonds,
5.700% due 12/01/1998 ................................. 4,999,394
3,000,000 Everett Clinic PS,
5.670% due 12/01/2018+ ................................ 3,000,000
------------
Total Municipal Bonds (Cost $7,999,394) 7,999,394
------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 10.5%
FEDERAL HOME LOAN BANK (FHLB) - 6.1%
3,000,000 5.645% due 10/02/1998 ................................... 2,997,606
1,500,000 5.605% due 01/29/1999 ................................... 1,500,000
2,500,000 5.625% due 03/02/1999 ................................... 2,500,000
5,000,000 5.605% due 03/12/1999 ................................... 4,999,461
3,000,000 5.650% due 03/12/1999 ................................... 3,000,000
2,000,000 5.625% due 03/16/1999 ................................... 2,000,000
3,000,000 5.700% due 03/17/1999 ................................... 3,000,000
7,500,000 5.750% due 04/27/1999 ................................... 7,500,000
------------
Total FHLBs (Cost $27,497,067) .......................... 27,497,067
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA) - 2.8%
1,000,000 Discount Note,
5.410% due 06/17/1998 ................................. 992,773
7,500,000 Discount Note,
5.530% due 03/11/1999 ................................. 7,492,375
2,000,000 Floating Rate Note,
5.538% due 10/20/1998++ ............................... 1,999,586
2,000,000 Floating Rate Note,
5.588% due 11/04/1998++ ............................... 1,999,273
------------
Total FNMAs (Cost $12,484,007) .......................... 12,484,007
------------
FEDERAL FARM CREDIT BANK - 1.1%
5,000,000 5.510% due 08/03/1998
(Cost $5,000,000) ..................................... 5,000,000
------------
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC) - 0.5%
2,529,000 Discount Note,
5.430% due 05/28/1998
(Cost $2,518,389) ..................................... 2,518,389
------------
Total U.S. Government Agency Obligations (Cost
$47,499,463) .......................................... 47,499,463
------------
REPURCHASE AGREEMENT - 1.4%
6,198,000 Agreement with Goldman Sachs, 5.300% dated 04/30/1998, to
be repurchased at $6,198,912 on 05/01/1998,
collateralized by $6,161,746 U.S. Treasury Note, 6.500%
due 08/15/2005 (Market Value $6,518,153) (Cost
$6,198,000) ........................................... 6,198,000
------------
TOTAL INVESTMENTS (COST $462,721,142*) 102.3% 462,721,142
OTHER ASSETS AND LIABILITIES (NET) ............................ (2.3) (10,304,151)
----- ------------
NET ASSETS .................................................... 100.0% $452,416,991
===== ============
- --------------
* Aggregate cost for federal tax purposes.
+ Variable rate securities payable upon not more than seven calendar days' notice. The
interest rate shown reflects the rate currently in effect.
++ Floating rate security whose interest rate is reset periodically based on an index.
+++ Securities exempt from registration under section 4(2) of the Securities Act of 1933,
as amended. These securities may be resold to qualified institutional buyers. At April
30, 1998, these securities amounted to $17,268,820, 3.82% of net assets.
See Notes to Financial Statements.
</TABLE>
<PAGE>
PORTFOLIO of INVESTMENTS
<TABLE>
TAX-EXEMPT MONEY MARKET FUND
APRIL 30, 1998 (UNAUDITED)
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
------ --------
STATE AND MUNICIPAL SECURITIES - 104.5%
ALABAMA - 3.6%
<S> <C> <C>
$ 500,000 Alabama State Special Care Authority Facilities Financing
(Montgomery Hospital Depreciable Assets), Series 1985,
4.100%, due 04/01/2015+ ................................ $ 500,000
500,000 Athens, AL, Industrial Development Board (Coilplus, Inc.
Project), Series 1984,
4.750%, due 09/19/1999+ ................................ 500,000
----------
1,000,000
----------
ARIZONA - 2.9%
300,000 Arizona State Health Facilities Authority Revenue (Pooled
Loan Program), Series 1985,
4.100%, due 10/01/2015+ ................................ 300,000
500,000 Tempe, AZ, Unified High School District Unlimited Tax Note,
14.350%, due 07/01/1998 ................................ 508,457
----------
808,457
----------
CALIFORNIA - 6.8%
500,000 Auburn, CA, Unified School District, 1997 Tax and Revenue
Anticipation Notes,
4.250%, due 10/13/1998 ................................. 500,932
300,000 Los Angeles Regional Airport (American Airlines/LA
International), Series E,
3.950%, due 12/01/2024+ ................................ 300,000
100,000 Los Angeles Regional Airport (American Airlines/LA
International), Series G,
3.950%, due 12/01/2024+ ................................ 100,000
200,000 Los Angeles Regional Improvement Corporation Sublease
Revenue (LA International), LAX2,
3.950%, due 12/01/2025+ ................................ 200,000
245,000 Monterey County, CA, Natividad Medical Center, Series E,
4.000%, due 08/01/1998 ................................. 245,182
500,000 Oxnard, CA, School District 1997 Tax and Revenue
Anticipation Notes,
4.500%, due 08/13/1998 ................................. 500,891
----------
1,847,005
----------
COLORADO - 0.8%
210,000 University of Northern Colorado, Refunding Revenue Bonds
(Auxiliary Facilities System) Series A,
3.500%, due 06/01/1998 ................................. 210,000
----------
DISTRICT OF COLUMBIA - 5.5%
1,500,000 District of Columbia Revenue Bonds, Georgetown University,
Series B
3.750%, due 04/01/1999 ................................. 1,500,000
----------
GEORGIA - 1.5%
200,000 Albany/Dougherty County Hospital Authority, GA, Hospital
Revenue Anticipation Certificates, Series 1990A,
6.700%, due 09/01/1998. ................................ 201,834
200,000 Georgia State Unlimited General Obligation Bonds, Series C,
4.500%, due 08/01/1998 ................................. 200,328
----------
402,162
----------
ILLINOIS - 8.0%
400,000 Chicago O'Hare International Airport General Airport
Second Lien Revenue Bonds, 1984 Series B,
4.100%, due 01/01/2015+ ................................ 400,000
200,000 Illinois Development, Uhlich Children's Home Project,
4.150%, due 04/01/2007+ ................................ 200,000
400,000 Illinois Health Facilities Authority, (Bensenville Home
Society), Series 1989A,
4.050%, due 02/15/2019+ ................................ 400,000
800,000 Illinois State Health Facilities Authority (Hospital
Sisters Services), Series 1985E,
3.700%, due 12/01/2015+ ................................ 800,000
200,000 Illinois Unlimited Tax General Obligation Bonds, Series of
February 1997,
4.750%, due 08/01/1998 ................................ 200,545
200,000 Sauget Illinois Pollution Control Revenue Bonds, Monsanto
Company Project,
4.200%, due 09/01/2014+,++ ............................. 200,000
----------
2,200,545
----------
INDIANA - 6.4%
500,000 Indiana State Office Building Commission Capital Complex
Revenue Bonds, (Indiana Government Center - State Office
Building I), Series 1988,
7.750%, due 07/1/2009,
Pre-refunded at 102 .................................... 512,980
300,000 Indiana State Development Authority, Education Facilities
Project Revenue Bonds (Lutheran High School),
4.250%, due 10/01/2017+ ................................ 300,000
500,000 Indianapolis Industrial Economic Development Revenue
Bonds, Visiting Nurse Service Foundation,
4.200%, due 03/01/2013+ ................................ 500,000
410,000 Lafayette Indiana Redevelopment Authority Economic
Development Lease Rental,
7.100%, due 02/01/2009,
Pre-refunded at 102 .................................... 428,227
----------
1,741,207
----------
KENTUCKY - 2.6%
500,000 Kentucky Infrastructure Authority, Governmental Agencies
(BANS), Series B,
4.150%, due 06/30/1998+ ................................ 500,000
200,000 Kentucky Infrastructure Authority, Governmental Agencies
(BANS) Series A, 4.150%, due 06/30/1998+ ............... 200,000
----------
700,000
----------
MASSACHUSETTS - 0.4%
100,000 Massachusetts State Housing, Residential Development, FNMA
Collateral Series A,
5.600%, due 11/15/1998 ................................. 100,948
----------
MARYLAND - 3.3%
250,000 Howard County, MD, Metropolitan District Bonds, 1989
Series A,
7.400%, due 02/15/2009,
Pre-refunded at 101 .................................... 258,104
150,000 Washington Suburban Sanitary District, General
Construction,
7.000%, due 12/01/1999,
Pre-refunded at 102 .................................... 155,804
500,000 Washington Suburban Sanitary District, (Sewage Disposal
Bonds of 1994)
5.750%, due 06/01/1998 ................................. 500,759
----------
914,667
----------
MICHIGAN - 4.9%
300,000 Michigan State Hospital Finance Authority (Equipment Loan
Program Bonds),
4.150%, due 12/01/2023+ ................................ 300,000
300,000 Michigan State Hospital Finance Authority (Equipment Loan
Program Bonds), Series A,
4.150%, due 12/01/2023+ ................................ 300,000
300,000 Michigan State Job Development Authority Revenue (East
Lansing Residence),
3.850%, due 12/01/2014+ ................................ 300,000
200,000 Michigan State Job Development Authority Revenue (Kentwood
Residence),
3.850%, due 11/01/2014+ ................................ 200,000
250,000 Reed City, Michigan, Public School District, Unlimited Tax
General Obligation Bonds,
5.400%, due 05/01/1998 ................................. 250,000
----------
1,350,000
----------
MISSOURI - 1.5%
400,000 Missouri Environmental Improvement and Energy Resources
Authority, Pollution Control Revenue Bonds (Monsanto
Company),
4.200%, due 06/01/2023+ ................................ 400,000
----------
NORTH CAROLINA - 0.7%
200,000 Cumberland County NC Industrial Facility & Pollution
Control, (Monsanto Company Project),
4.100%, due 06/01/2012+ ................................ 200,000
----------
NORTH DAKOTA - 0.5%
125,000 Grand Forks, ND, Sales Tax Revenue Bonds, Aurora Project,
Series A,
3.900%, due 12/15/1998 ................................. 125,074
----------
NEW JERSEY - 1.3%
250,000 New Jersey Housing and Mortgage Finance Agency,
(Multifamily 250,000 Housing Revenue Bonds) 1995 Series A,
4.150%, due 05/01/1998 ................................. 250,000
100,000 New Jersey State Transportation Trust Fund, Series A,
5.000%, due 12/15/1998 ................................. 100,757
----------
350,757
----------
NEW YORK - 2.7%
300,000 Jefferson County, N.Y., Industrial Development Agency,
Watertown-Carthage TV,
3.600%, due 12/01/2012+ ................................ 300,000
300,000 New York, N.Y. Series B, Subseries B4,
3.900%, due 08/15/2023+ ................................ 300,000
130,000 Shenendehowa Central School District, N.Y. Clifton Park,
5.300%, due 08/15/1998 ................................. 130,610
----------
730,610
----------
OHIO - 3.1%
100,000 Columbus, OH, Limited General Obligation Bonds, Series A,
3.600%, due 05/15/1998 ................................. 100,000
100,000 Columbus Ohio, Unlimited General Obligation Bonds, Series 1,
3.900%, due 06/01/2016+ ................................ 100,000
145,000 Little Miami, OH, Local School District, Unlimited Tax
General Obligation Bonds,
3.600%, due 12/01/1998 ................................. 145,000
505,000 Toledo, OH, Limited Tax General Obligation Bonds, Various
Purpose Improvement Bonds, Series 1997,
3.900%, due 12/01/1998 ................................. 505,223
----------
850,223
----------
OREGON - 6.0%
100,000 Klamath Falls, OR, Electric Revenue Bonds, Salt Caves
Hydroelectric, Series C,
3.800%, due 05/01/2023
(Mandatory Put Bonds) .................................. 100,000
500,000 Oregon State, Series 73E,
4.150%, due 12/01/2016+ ................................ 500,000
200,000 Portland, OR, Limited Tax Improvement Bonds, 1995 Series A,
8.000%, due 06/01/1998 ................................. 200,699
350,000 Portland, OR, Water System Revenue Bonds, Series 1995,
4.100%, due 08/01/1998 ................................. 350,250
500,000 Washington County, OR, School District #48J (Beaverton),
Unlimited Tax General Obligation,
7.400%, due 06/01/1998,
Pre-refunded at 100 .................................... 501,301
----------
1,652,250
----------
PENNSYLVANIA - 0.4%
100,000 Pennsylvania State Unlimited Tax General Obligation Bonds,
Second Series A, 1988,
6.800%, due 05/15/1998 ................................. 100,111
----------
RHODE ISLAND - 0.9%
250,000 Providence, RI, Unlimited Tax General Obligation
Refunding Bonds,
6.100%, due 09/01/1998 ................................. 251,833
----------
TENNESSEE - 4.3%
570,000 Hendersonville Industrial Development Board, Multifamily
Housing Revenue Bonds (Windsor Park),
4.150%, due 02/15/2028+ ................................ 570,000
600,000 Metro Government, Nashville/Davidson County, TN,
Industrial Development Multifamily Housing Revenue
Bonds, (Chimneytop II),
4.3750%, due 09/01/2006+ ............................... 600,000
----------
1,170,000
----------
TEXAS - 9.5%
500,000 Austin County, TX, Industrial Development Corporation
(Justin Industries, Inc. Project),
4.050%, due 12/01/2014+,++ ............................. 500,000
500,000 Brazos River, TX, Pollution Control Revenue Refunding
Bonds (Monsanto Company Project),
4.200%, due 11/01/2000+,++ ............................. 500,000
400,000 Harris County, TX, Health Facility (Sisters of Charity),
Series C,
4.125%, due 07/01/2023+ ................................ 400,000
190,000 Judson, TX, Independent School District, Unlimited Tax
General Obligation Bonds,
3.800%, due 02/01/1999 ................................. 190,000
600,000 Lower Neches Valley, TX, Industrial Development
Corporation, Pollution Control Revenue Bonds (Neches
River Treatment Corporation Project), Series 1994A,
4.100%, due 02/01/2004
(Guaranteed By Mobil Corp.)+,++ ........................ 600,000
420,000 Pflugerville, TX, Independent School District, Unlimited
Tax, School Building and Refunding Bonds,
4.250%, due 08/15/1998 ................................. 420,533
----------
2,610,533
----------
UTAH - 4.1%
620,000 Cache County, UT, School District, (General Obligation
School Building Bonds), Series 1997,
4.000%, due 06/15/1998 ................................. 620,107
250,000 Ogden City, UT, Unlimited General Obligation Bonds,
4.200%, due 12/15/1998 ................................. 250,600
250,000 Utah State Board of Regents Refunding Hospital Revenue
Bonds (University of Utah), Series 1997,
4.750%, due 08/01/1987 ................................. 250,583
----------
1,121,290
----------
VIRGINIA - 0.4%
100,000 Virginia Public Building Authority (State Building Revenue
Refunding Bonds), Series 1992B,
5.200%, due 08/01/1998 ................................. 100,319
WASHINGTON - 16.8%
185,000 King & Snohomish Counties, WA, School District No. 417
(Northshore), Unlimited Tax, General Obligation Bonds,
3.600%, due 06/01/1998 ................................. 185,000
115,000 Mason County, WA, Public Utility District No. 003,
Electric Revenue Bonds,
3.750%, due 12/01/1998 ................................. 115,000
1,000,000 Richland, WA, Golf Enterprise Revenue Bonds, 1996,
4.300%, due 12/01/2021+ ................................ 1,000,000
500,000 Seattle, WA, Water System Revenue Bonds,
4.400%, due 06/01/1998 ................................. 500,328
1,430,000 Seattle, WA, Housing Authority Low Income Housing
Assistance Revenue, (Bayview Manor Project), Series B,
4.200%, due 05/01/2019+ ................................ 1,430,000
500,000 Seattle, WA, Unlimited Tax, General Obligation Bonds,
Series A,
4.500%, due 09/01/1998 ................................. 501,545
300,000 Seattle, WA, Unlimited Tax, General Obligation Refunding
Bonds, Series A,
4.500%, due 03/01/1999 ................................. 301,435
100,000 State of Washington, Unlimited Tax, General Obligation
Refunding Bonds, Series R-93B,
4.400%, due 10/01/1998 ................................. 100,218
300,000 Washington State, Unlimited Tax, General Obligation Bonds,
Series R-89A,
7.500%, due 09/01/2003,
Pre-refunded at 100 .................................... 303,602
160,000 Washington State, Unlimited Tax, General Obligation Bonds,
7.400%, due 12/01/1998,
Pre-refunded at 100 .................................... 163,362
----------
4,600,490
----------
WISCONSIN - 5.6%
220,000 Wisconsin Health and Education Facilities Authority,
Revenue Bonds, (Waukesha Memorial Hospital),
Series 1995A,
4.300%, due 08/15/1998 ................................. 220,216
200,000 Wisconsin, Unlimited Tax General Obligation Bonds, 1986,
Series C,
5.250%, due 05/01/1998 ................................. 200,000
900,000 Wisconsin State, Health and Educational Facilities
Authority Facilities Revenue Bonds, (SSM Health Care
Project), Series 1990A,
4.400%, due 06/01/2006+ ................................ 900,000
200,000 Wisconsin State, Health Facilities Authority, (Hospital
Sisters Obligation), Series G,
4.125%, due 12/01/2001+ ................................ 200,000
----------
1,520,216
----------
Total State and Municipal Securities
(Cost $28,558,697) ..................................... 28,558,697
----------
INVESTMENT COMPANY SECURITY - 0.6%
$ 171,475 Nuveen Tax-Exempt Money Market Fund, 3.420% (Cost
$171,475) .............................................. $ 171,475
-------------
TOTAL INVESTMENTS (COST $28,730,172*) 105.1% 28,730,172
OTHER ASSETS NET OF LIABILITIES ............................... (5.1) (1,388,409)
----- -------------
NET ASSETS .................................................... 100.0% $ 27,341,763
===== =============
- --------------
* Aggregate cost for federal tax purposes.
+ Floating rate security. The interest rate shown reflects the rate currently in effect.
++ Obligations of various corporations and are not supported by other third party credit
agreements.
See Notes to Financial Statements.
</TABLE>
<PAGE>
PORTFOLIO of INVESTMENTS
<TABLE>
U.S. GOVERNMENT SECURITIES FUND
APRIL 30, 1998 (UNAUDITED)
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
------ --------
U.S. GOVERNMENT AGENCY MORTAGE-BACKED
SECURITIES - 85.0%
FEDERAL HOME LOAN MORTGAGE CORPORATION
(FHLMC) - 41.9%
<S> <C> <C>
$21,632,862 6.500% due 02/01/2011-02/01/2028 ........................ $ 21,739,953
1,909,896 7.000% due 07/01/2024-02/01/2026 ........................ 1,935,561
59,809,141 7.500% due 01/01/2007-03/01/2013 ........................ 61,663,037
962,942 8.750% due 01/01/2013 ................................... 1,010,058
1,614,792 9.000% due 12/01/2008-08/01/2022 ........................ 1,706,633
677,141 9.500% due 06/01/2016-05/01/2017 ........................ 720,944
1,769,573 15 Year Converted GOLD,
7.500% due 05/01/2003 ................................. 1,824,320
GOLD:
247,057 6.500% due 04/01/2027 ................................. 245,127
63,854,459 7.500% due 07/01/2002-04/01/2013 ...................... 65,839,108
3,179,841 8.500% due 04/01/2019 ................................. 3,322,934
-------------
Total FHLMCs (Cost $159,117,193) ........................ 160,007,675
-------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(GNMA) - 33.4%
4,706,279 6.000% due 04/20/2026 ................................... 4,529,794
13,999,033 6.500% due 08/15/2023-03/15/2024 ........................ 13,889,700
15,791,208 7.000% due 07/15/2008-08/15/2023 ........................ 16,019,161
67,479,707 7.500% due 12/15/2022-12/15/2023 ........................ 69,405,254
1,380,873 8.000% due 04/15/2022 ................................... 1,433,954
1,525,813 8.500% due 05/15/2022 ................................... 1,610,210
6,868,536 9.000% due 10/15/2008-06/15/2022 ........................ 7,362,212
6,237,702 9.500% due 04/15/2016-09/15/2020 ........................ 6,754,265
15,734 11.500% due 07/15/2015 .................................. 17,705
40,496 13.500% due 09/15/2014-12/15/2014 ....................... 46,951
17,580 14.000% due 06/15/2011 .................................. 20,426
6,000,000 30 Year TBA,
13.500% due 12/17/2020 ................................ 6,076,878
-------------
Total GNMAs (Cost $124,748,684) ......................... 127,166,510
-------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(FNMA) - 6.7%
34,304 5.500% due 02/01/2009 ................................... 33,146
2,230,000 6.000% due 08/25/2007 ................................... 2,224,392
4,476,046 7.000% due 06/01/2010-05/01/2012 ........................ 4,562,769
1,950,000 7.500% due 08/25/2001 ................................... 2,003,598
4,499,374 8.000% due 05/01/2022-01/01/2025 ........................ 4,665,289
707,927 8.500% due 02/01/2023-09/01/2025 ........................ 740,447
437,908 9.000% due 06/01/2016-06/01/2021 ........................ 463,635
825,342 13.500% due 12/15/2014 .................................. 835,539
12,445,920 STRIP,
Zero Coupon due 10/01/2025 ............................ 10,056,602
-------------
Total FNMAs (Cost $23,997,385) .......................... 25,585,417
-------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION II
(GNMA II) - 3.0%
1,036,681 9.500% due 02/20/2017-03/20/2021 ........................ 1,113,461
Adjustable Rate Mortgage (ARM):
8,596,869 7.000% due 03/20/2022-12/20/2022+ ..................... 8,829,878
1,507,395 7.375% due 05/20/2022+ ................................ 1,554,501
-------------
Total GNMA IIs (Cost $10,851,800) ....................... 11,497,840
-------------
Total U.S. Government Agency Mortgage-Backed Securities
(Cost $318,715,062) ................................... 324,257,442
-------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 7.2%
Federal National Mortgage Association (FNMA)
REMIC, Pass-through certificates:
4,000,000 Trust 89-18, Class-C,
9.500% due 04/25/2004 ................................. 4,245,664
1,493,811 Trust 92-83, Class X,
7.000% due 02/25/2022 ................................. 1,493,391
5,255,853 Trust 93-162, Class E,
6.000% due 08/25/2023 ................................. 5,113,388
2,527,000 Federal Home Loan Mortgage Corp., Series 1288, Class HA,
5.500% due 11/15/2020 ................................. 2,479,505
8,500,000 Federal Home Loan Mortgage Corp.,
6.850% due 07/25/2018 ................................. 8,555,803
4,900,000 Merrill Lynch Trust,
6.500% due 08/25/2015 ................................. 4,908,036
683,251 Mortgage Capital Trust,
9.250% due 06/01/2017 ................................. 692,283
-------------
Total Collateralized Mortgage Obligations (Cost
$25,650,724) .......................................... 27,488,070
-------------
U.S. TREASURY OBLIGATIONS - 29.3%
U.S. TREASURY NOTES - 16.3%
21,400,000 6.375% due 09/30/2001 ................................... 21,868,144
400,000 6.250% due 06/30/2002 ................................... 408,375
2,000,000 5.750% due 08/15/2003 ................................... 2,006,252
30,000,000 7.000% due 07/15/2006** ................................. 32,400,027
4,750,000 6.500% due 10/15/2006 ................................... 4,981,567
350,000 6.250% due 02/15/2007 ................................... 361,922
-------------
Total U.S. Treasury Notes
(Cost $60,274,781) .................................... 62,026,287
-------------
U.S. TREASURY BONDS - 13.0%
12,000,000 7.250% due 05/15/2016 ................................... 13,631,255
6,500,000 7.500% due 11/15/2016** ................................. 7,562,346
3,250,000 7.250% due 08/15/2022 ................................... 3,746,642
15,195,000 6.250% due 08/15/2023 ................................... 15,636,611
1,500,000 6.000% due 02/15/2026 ................................... 1,496,719
1,888,000 6.625% due 02/15/2027 ................................... 2,045,531
5,285,000 6.125% due 11/15/2027 ................................... 5,413,827
-------------
Total U.S. Treasury Bonds
(Cost $48,513,443) .................................... 49,532,931
-------------
Total U.S. Treasury Obligations
(Cost $108,788,224) ................................... 111,559,218
-------------
REPURCHASE AGREEMENT - 0.7%
2,498,000 Agreement with Goldman Sachs, 5.300% dated 04/30/1998, to
be repurchased at $2,498,368 on 05/01/1998,
collateralized by $2,430,053 U.S. Treasury Note, 6.500%
due 08/15/2005 (Market Value $2,570,612) (Cost
$2,498,000) ........................................... 2,498,000
-------------
TOTAL INVESTMENTS (COST $455,652,011*)......................... 122.2% 465,802,730
OTHER ASSETS AND LIABILITIES (NET) ............................ (22.2) (84,542,625)
----- ------------
NET ASSETS .................................................... 100.0% $381,260,105
===== ============
- --------------
* Aggregate cost for federal tax purposes.
** A portion or all of these securities are pledged as collateral for futures contracts
and dollar roll transactions.
+ Variable rate security. The interest rate shown reflects the rate currently in effect.
NUMBER OF UNREALIZED
CONTRACTS APPRECIATION
--------- ------------
FUTURES CONTRACTS - SHORT POSITION
75 U.S. Treasury Bond, Thirty Year,
June 1998 ............................................. $ 2,732
============
</TABLE>
- ------------------------------------------------------------------
GLOSSARY OF TERMS
GOLD -- Payments are on an accelerated 45-day
payment cycle instead of 75-day payment
cycle
REMIC -- Real Estate Mortgage Investment Conduit
STRIP -- Separate trading of registered interest and
principal of securities
- ------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
PORTFOLIO of INVESTMENTS
<TABLE>
INCOME FUND
APRIL 30, 1998 (UNAUDITED)
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
------ --------
CORPORATE BONDS AND NOTES - 85.2%
INDUSTRIAL - 56.9%
<S> <C> <C>
$1,500,000 Aetna Services Inc.,
7.625% due 08/15/26 .................................... $ 1,563,468
1,500,000 American Home Products Corporation, Deb.,
7.250% due 03/01/2023 .................................. 1,594,342
1,000,000 AMR Corporation, Deb.,
9.750% due 03/15/2000 .................................. 1,063,763
250,000 Battle Mountain Gold Company,
6.000% due 01/04/2005 .................................. 200,000
1,500,000 Burlington Northern, Note,
8.750% due 02/25/2022 .................................. 1,839,246
1,600,000 Burlington Resources, Deb.,
9.125% due 10/01/2021 .................................. 2,043,692
1,000,000 CII Financial, Conv.,
7.500% due 09/15/2001 .................................. 961,250
Conagra Inc., Sr. Note:
750,000 9.750% due 03/01/2021 ................................... 970,221
500,000 6.700% due 08/01/2027 ................................... 520,368
3,030,000 Conrail Inc., Deb.,
9.750% due 06/15/2020 ................................... 3,974,804
2,000,000 Corporate Express Inc.,
4.500% due 07/01/2000 ................................... 1,817,500
Crane Company, Note:
1,000,000 7.250% due 06/15/1999 ................................... 1,013,379
500,000 8.500% due 03/15/2004 ................................... 553,854
2,000,000 Dart & Kraft finance NV,
7.750% due 11/30/1998 ................................... 2,022,514
5,000,000 du Pont (E.I.) de Nemours &
Company, Deb.,
8.250% due 01/15/2022 ................................... 5,435,429
250,000 Equimar Shipholdings,
9.875% due 07/01/2007 ................................... 235,625
3,000,000 FHP International Corporation, Sr. Note,
7.000% due 09/15/2003 ................................... 3,073,236
1,000,000 Fleming Companies, Inc., MTN, Note,
5.770% due 08/06/1998 ................................... 997,596
2,000,000 Ford Holdings, Inc., Deb.,
9.375% due 03/01/2020 ................................... 2,561,148
3,750,000 Ford Motor Company, Deb.,
8.875% due 01/15/2022 ................................... 4,597,395
8,000,000 General Motors Corporation, Deb.,
9.400% due 07/15/2021 ................................... 10,472,566
850,000 Golden Books Publishing, Sr. Note,
7.650% due 09/15/2002 ................................... 818,125
2,500,000 HIH Capital Ltd., Conv.,
7.500% due 09/25/2006 ................................... 1,975,000
1,400,000 Integrated Device Technology Inc., Conv.
Sub. Note,
5.500% due 06/01/2002 ................................... 1,225,000
6,000,000 James River Corporation, Deb.,
9.250% due 11/15/2021 ................................... 7,418,105
1,000,000 Jackson Products Inc.,
9.500% due 04/15/2005 ................................... 1,012,500
Loral Corporation, Deb.:
1,000,000 8.375% due 06/15/2024 ................................... 1,181,220
1,000,000 7.625% due 06/15/2025 ................................... 1,087,832
1,800,000 Medical Care International (Columbia),
Conv. Sub. Deb.,
6.750% due 10/01/2006 ................................... 1,644,750
8,700,000 Occidental Petroleum Corporation, Sr. Deb.,
11.125% due 08/01/2010 .................................. 11,786,836
6,500,000 Ogden Corporation, Deb.,
9.250% due 03/01/2022 ................................... 8,181,575
2,500,000 Panhandle Eastern Pipe Line Company, Deb.,
8.625% due 04/15/2025 ................................... 2,781,497
5,950,000 Phillips Petroleum Company, Deb.,
9.180% due 09/15/2021 ................................... 6,659,536
6,860,000 Praxair, Inc., Deb.,
8.700% due 07/15/2022 ................................... 7,468,159
750,000 Raytheon Company, First Mortgage, Deb.,
7.200% due 08/15/2027 ................................... 778,394
500,000 Riviera Holdings Corporation,
10.000% due 08/15/2004 .................................. 502,500
1,400,000 Riviera Holdings Corporation, DFSD,
First Mortgage,
11.000% due 12/31/2002 .................................. 1,470,000
1,500,000 SoftKey International, Conv., Sr. Note,
5.500% due 11/01/2000 ................................... 1,438,125
4,675,000 Spectrum Holobyt, Microprose Inc.,
Conv. Sub. Note,
6.500% due 09/15/2002 ................................... 3,132,250
2,290,000 Ssangyong Oil Refining, Conv. Deb.,
3.750% due 12/31/2008 ................................... 1,912,150
1,500,000 Tatneft Finance,
9.000% due 10/29/2002 ................................... 1,357,500
7,800,000 Textron Inc., Deb.,
8.750% due 07/01/2022 ................................... 8,578,580
8,260,000 Time Warner Inc., Deb.,
9.150% due 02/01/2023 ................................... 10,162,920
United Air Lines Inc.:
5,000,000 Equipment Trust certificates,
10.850% due 07/05/2014 .................................. 6,467,815
Pass-through certificates:
3,000,000 9.080% due 10/26/2015 ................................... 3,563,730
5,500,000 9.560% due 10/19/2018 ................................... 6,801,630
300,000 US West Capital Funding, Inc.,
6.950% due 01/15/2037 ................................... 315,901
1,200,000 Veterinary Centers of America, Conv.
Sub. Deb.,
5.250% due 05/01/2006 ................................... 1,032,000
1,000,000 V.F. Corporation, Note,
9.500% due 05/01/2001 ................................... 1,094,796
------------
149,359,822
------------
FINANCIAL - 9.5%
9,000,000 Barclays North American Capital Corporation, Capital Note,
9.750% due 05/15/2021 ................................... 10,202,597
2,000,000 Continental Corporation,
7.250% due 03/01/2003 ................................... 2,047,932
500,000 Developers Diversified Realty, MTN, Sr. Note,
6.580% due 02/06/2001 ................................... 502,686
Franchise Finance Corporation,
900,000 7.000% due 11/30/2000, Sr. Note ......................... 909,999
1,100,000 7.875% due 11/30/2005, Sr. Note ......................... 1,165,896
3,000,000 7.070% due 01/15/2008 MTN, Note ......................... 3,000,000
1,000,000 GATX Leasing Corporation, MTN,
10.000% due 03/21/2001 .................................. 1,102,656
1,250,000 Kemper Corporation, Note,
6.875% due 09/15/2003 ................................... 1,276,929
3,750,000 MBI Metrobank Finance Ltd., Conv. Bond, Zero coupon
due 12/18/2001 .......................................... 2,400,000
2,500,000 Superior Financial Acquisition Corporation, Sr. Note,
8.650% due 04/01/2003 ................................... 2,486,915
------------
25,095,610
------------
YANKEE (U.S. DOLLAR DENOMINATED) - 9.0%
1,000,000 Alberta Province,
9.250% due 04/01/2000 ................................... 1,061,880
8,500,000 Petro-Canada, Deb.,
9.250% due 10/15/2021 ................................... 10,778,340
500,000 Peregrine Investment Finance,
4.500% due 12/01/2000 ................................... 52,500
1,650,000 Republic of Korea, Unsub.,
8.875% due 04/15/2008 ................................... 1,622,722
1,750,000 SB Treasury Company,
9.400% due 12/29/2049 ................................... 1,779,713
1,500,000 Tokai PFD Capital Company,
9.980% due 12/29/2049 ................................... 1,481,865
500,000 Total Access Communications,
2.000% due 05/31/2006 ................................... 412,500
5,750,000 Trans-Canada Pipeline Corporation, Deb.,
8.500% due 03/20/2023 ................................... 6,331,095
------------
23,520,615
------------
ELECTRIC - 6.1%
5,000,000 Mississippi Power & Light Company,
First and Refundable Mortgage,
8.650% due 01/15/2023 ................................... 5,322,835
Niagara Mohawk Power, Deb.:
1,000,000 9.750% due 11/01/2005 ................................... 1,180,716
1,430,000 8.770% due 10/01/2018 ................................... 1,520,046
2,000,000 Philadelphia Electric Company,
First and Refundable Mortgage,
8.250% due 09/01/2022 ................................... 2,109,502
Texas Utilities Electric Company,
First Mortgage:
1,200,000 9.500% due 08/01/1999 ................................... 1,243,335
1,200,000 8.875% due 02/01/2022 ................................... 1,318,724
3,000,000 8.750% due 11/01/2023 ................................... 3,264,849
------------
15,960,007
------------
BANKS - 3.7%
400,000 Banc One Corporation, Sub. Note,
10.000% due 08/15/2010 .................................. $513,336
1,000,000 Bank of New York, Sub. Note,
7.875% due 11/15/2002 ................................... 1,064,942
1,000,000 Barnett Banks, Florida, Inc., Sub. Note,
10.875% due 03/15/2003 .................................. 1,188,190
1,100,000 First Interstate Bancorp, Sub. Note,
9.125% due 02/01/2004 ................................... 1,244,802
1,000,000 First Nationwide Bank, Sub. Deb.,
10.000% due 10/01/2006 .................................. 1,199,370
200,000 First State Banc, Conv. Sub. Deb.,
7.500% due 04/30/2017 ................................... 294,500
1,000,000 Manufacturers and Trade Trust Company, Sub. Note,
8.125% due 12/01/2002 ................................... 1,065,839
1,000,000 Mellon Financial Company, Sub. Deb.,
9.750% due 06/15/2001 ................................... 1,102,678
500,000 Mercantile Bank, Sub. Note,
7.625% due 10/15/2002 ................................... 526,370
1,000,000 Norwest Bancorp, Sub. Deb.,
6.650% due 10/15/2023 ................................... 978,293
500,000 Summit Bancorp, Sub. Notes,
8.625% due 12/10/2002 ................................... 545,577
------------
9,723,897
------------
Total Corporate Bonds and Notes
(Cost $213,679,444) ..................................... 223,659,951
------------
MORTGAGE-BACKED SECURITIES - 8.2%
GOVERNMENT AGENCY - 3.9%
Government National Mortgage Association
(GNMA)Commitment to Purchase:
181,726 9.000% due 12/01/2004 ................................... 189,960
1,399,007 7.000% due 07/15/2023 ................................... 1,417,376
718,135 6.500% due 08/15/2023 ................................... 712,527
1,972,532 6.500% due 12/15/2023 ................................... 1,957,126
2,382,790 6.000% due 02/15/2024 ................................... 2,309,066
1,961,789 6.500% due 03/15/2024 ................................... 1,946,467
1,723,504 6.500% due 07/15/2024 ................................... 1,717,401
------------
10,249,923
------------
GOVERNMENT AGENCY BACKED - 2.5%
Federal Home Loan Mortgage Corporation (FHLMC)
Commitment to Purchase:
386,241 8.750% due 06/15/2005 ................................... 391,457
1,000,000 7.500% due 07/15/2020 ................................... 1,013,998
GOLD:
1,438,160 #C00362,
9.000% due 06/01/2024 ................................... 1,519,956
727,003 #C80253,
9.000% due 01/01/2025 ................................... 768,351
2,886,671 Weyerhauser 1982-C FHA Putable,
7.430% due 06/01/2022 ................................... 2,946,881
------------
6,640,643
------------
COLLATERALIZED MORTGAGE OBLIGATIONS (CMO) - 1.8%
1,750,000 Donaldson, Lufkin & Jenrette, Acceptance
Corporation, 1993-MF17,
7.350% due 12/18/2003 ................................... 1,789,979
1,403,751 Donaldson, Lufkin & Jenrette, Acceptance
Corporation, 1995-Q10,
8.3534% due 01/25/2026 .................................. 1,305,489
851,443 Resolution Trust Corporation, 1991-M2, A-2,
7.5062% due 09/25/2020 .................................. 724,659
850,000 Ryland Mortgage Securities Corporation, 1992-12A,
6.500% due 09/25/2023 ................................... 837,305
------------
4,657,432
------------
Total Mortgage-Backed Securities
(Cost $13,762,390) ...................................... 21,547,998
------------
U.S. TREASURY OBLIGATIONS - 3.5%
U.S. TREASURY BONDS - 2.9%
2,500,000 6.250% due 08/15/2023 ................................... 2,572,657
5,000,000 6.125% due 11/15/2027 ................................... 5,121,880
------------
7,694,537
------------
U.S. TREASURY NOTES - 0.6%
1,000,000 9.000% due 05/15/1998 ................................... 1,001,876
500,000 6.375% due 03/31/2001 ................................... 509,844
------------
1,511,720
------------
Total U.S. Treasury Obligations
(Cost $8,971,867) ....................................... 9,206,257
------------
SHARES
------
PREFERRED STOCK - 1.6%
2,000 California Federal Bank, Series B ......................... 217,813
15,100 First Industrial Realty Trust, Series A ................... 396,375
28,000 Microsoft Corporation, Conv ............................... 2,607,500
15,000 Penncorp Financial Group .................................. 903,750
------------
Total Preferred Stock
(Cost $4,037,482) ....................................... 4,125,438
------------
REPURCHASE AGREEMENT - 0.5%
$1,438,000 Agreement with Goldman Sachs, 5.300% dated 04/30/1998, to
be repurchased at $1,438,212 on 05/01/1998,
collateralized by $1,398,886 U.S. Treasury Note, 6.500%
due 08/15/2005 (Market Value $1,479,800) (Cost
$1,438,000) ............................................. $ 1,438,000
------------
TOTAL INVESTMENTS (COST $241,889,183*) 99.0% $259,977,644
OTHER ASSETS AND LIABILITIES (NET) ............................ 1.0 2,546,980
----- ------------
NET ASSETS .................................................... 100.0% $262,524,624
===== ============
- --------------
* Aggregate cost for federal tax purposes.
</TABLE>
- ------------------------------------------------------------------
GLOSSARY OF TERMS
GOLD -- Payments are on an accelerated 45-day
payment cycle instead of 75-day payment
cycle
MTN -- Medium Term Note
- ------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
PORTFOLIO of INVESTMENTS
<TABLE>
HIGH YIELD FUND
APRIL 30, 1998 (UNAUDITED)
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
------ --------
CORPORATE BONDS AND NOTES - 57.5%
INDUSTRIAL - 44.2%
<S> <C> <C>
$ 350,000 Corporate Express Inc., Conv., Note,
4.500% due 07/01/2000 .................................... $ 318,062
350,000 DSC Communications Corporation, Conv. Sub. Note,
7.000% due 08/01/2004 ................................... 325,500
250,000 Dura Pharmaceuticals, Conv. Note,
3.500% due 07/15/2002 .................................... 212,188
300,000 DVI Inc.,
9.875% due 02/01/2004 .................................... 316,875
250,000 Equimar Shipholdings,
9.875% due 07/01/2007 .................................... 235,625
250,000 Fleming Companies, Inc.,
10.675% due 12/15/2001 ................................... 267,187
350,000 HIH Capital Ltd., Conv. Note,
7.500% due 09/25/2006 .................................... 276,500
350,000 Integrated Device Technology Inc., Conv. Sub. Note,
5.500% due 06/01/2002 .................................... 306,250
300,000 Jackson Products Inc.,
9.500% due 04/15/2005 .................................... 303,750
200,000 Medical Care International (Columbia), Conv. Sub. Note,
6.750% due 10/01/2006 .................................... 182,750
225,000 Physician Resource Group, Conv. Sub. Deb.,
6.000% due 12/01/2001 .................................... 139,781
250,000 Riviera Holdings Corporation,
10.000% due 08/15/2004 ................................... 251,250
250,000 Sinclair Broadcast Group, Sr. Sub. Note,
8.750% due 12/15/2007 .................................... 254,375
350,000 SoftKey International, Conv., Sr. Note,
5.500% due 11/01/2000 .................................... 335,563
400,000 Spectrum Holobyt, Microprose Inc., Conv. Sub. Note,
6.500% due 09/15/2002 .................................... 268,000
265,000 Ssangyong Oil Refining,
3.750% due 12/31/2008 .................................... 221,275
250,000 Veterinary Centers of America, Conv. Sub. Deb.,
5.250% due 05/01/2006 .................................... 215,000
------------
4,429,931
------------
FORIEGN BANKS (U.S. DOLLAR DENOMINATED) - 9.9%
600,000 MBI Metrobank Finance Ltd., Conv. Note,
Zero coupon, due 12/18/2001 .............................. 384,000
350,000 SB Treasury Company,
9.400% due 12/29/2049 .................................... 355,943
250,000 Tokai PFD Capital Company,
9.980% due 12/29/2049 .................................... 246,977
------------
986,920
------------
YANKEE (U.S. DOLLAR DENOMINATED) - 3.4%
350,000 Republic of Korea, Unsub.,
8.875% due 04/15/2008 .................................... 344,214
------------
Total Corporate Bonds and Notes
(Cost $5,799,252) ........................................ 5,761,065
------------
U.S. TREASURY NOTE - 19.8%
2,000,000 8.750% due 12/15/2007 (Cost $1,990,519) .................... 1,986,876
------------
SHARES
------
PREFERRED STOCKS - 7.0%
7,000 California Federal Bank, Series A .......................... 189,000
4,500 Cendant Corporation, Conv.,
7.500% due 02/16/2001 .................................... 185,344
5,500 Penncorp Financial Group ................................... 331,375
------------
Total Preferred Stocks (Cost $696,750) ..................... 705,719
------------
PRINCIPAL
AMOUNT
------
COLLATERALIZED MORTGAGE OBLIGATION - 4.0%
$ 432,273 Donaldson, Lufkin & Jenrette, Acceptance Corporation,
1995-Q10,
8.3534% due 01/25/2026 (Cost $404,175) ................... 403,634
------------
REPURCHASE AGREEMENT - 17.0%
1,703,000 Agreement with Goldman Sachs, 5.300% dated 04/30/1998, to be
repurchased at $1,703,251 on 05/01/1998, collateralized by
$1,656,667 U.S. Treasury Note, 6.500% due 08/15/2003
(Market Value $1,752,503) (Cost $1,703,000) 1,703,000
------------
TOTAL INVESTMENTS (COST $10,593,696*) ......................... 105.3% 10,560,294
OTHER ASSETS AND LIABILITIES (NET) ............................ (5.3) (534,756)
----- ------------
NET ASSETS .................................................... 100.0% $ 10,025,538
===== ============
- --------------
* Aggregate cost for federal tax purposes.
</TABLE>
See Notes to Financial Statements.
<PAGE>
PORTFOLIO of INVESTMENTS
<TABLE>
TAX-EXEMPT BOND FUND
APRIL 30, 1998 (UNAUDITED)
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
------ --------
MUNICIPAL BONDS AND NOTES - 96.9%
ALABAMA - 1.6%
<S> <C> <C>
$ 4,000,000 Courtland, Industrial Development Board of Solid Waste,
(Champion International Corporation Project), Disposal
Revenue, AMT,
7.750% due 01/01/2020 .................................. $ 4,244,680
1,000,000 Mobile, Industrial Development Board, Solid Waste
Disposal Revenue,
6.950% due 01/01/2020 .................................. 1,109,880
------------
5,354,560
------------
ALASKA - 0.4%
1,235,000 Anchorage Alaska Electric Utility, (MBIA Insured),
6.500% due 12/01/2013 .................................. 1,439,701
------------
ARIZONA - 2.9%
Salt River Project Agricultural Improvement & Power
District:
3,000,000 Series A,
5.750% due 01/01/2009 .................................. 3,263,040
5,000,000 Series C,
6.250% due 01/01/2019 .................................. 5,344,100
740,000 Tucson, Airport Authority Inc., Supplemental Facilities
Revenue, AMT,
8.700% due 09/01/2019 .................................. 822,621
------------
9,429,761
------------
CALIFORNIA - 8.0%
15,000,000 Anaheim, California, Public Financing Authority Lease,
Capital Appreciation, Subordinated Public Improvements,
Project-C, (FSA Insured),
Zero coupon due 09/01/2034 ............................. 2,102,850
5,000,000 California State General Obligation, (FGIC Insured),
5.625% due 10/01/2023 .................................. 5,120,550
1,250,000 California State Public Works Board Lease, Department of
Corrections, State Prison, Series E,
5.500% due 06/01/2015 .................................. 1,305,050
2,000,000 Center Unified School District, California, Capital
Appreciation-Series C, (MBIA Insured), GO,
Zero coupon, due 09/01/2018 ............................ 675,420
2,000,000 Foothill/Eastern Corridor Agency, California, Toll Road,
Sr. Lien-Series A,
5.000% due 01/01/2035 .................................. 1,839,960
550,000 Los Angeles, Regional Airport Improvement, Series A, AMT,
6.700% due 01/01/2022 .................................. 586,872
3,000,000 Orange County Recovery, Certificate of Participation,
Series A, (MBIA Insured),
6.000% due 07/01/2026 .................................. 3,204,570
1,173,000 Sacramento, California, Certificate of Participation,
Centrex System Lease, Series A,
5.550% due 09/15/2004 .................................. 1,178,478
5,000,000 San Francisco, California, City & County Airport
Commission, International Airport, Second Series-Issue
12-B, (FGIC Insured),
5.625% due 05/01/2021 .................................. 5,107,950
5,000,000 San Joaquin Hills, California, Transportation Corridor,
Agency Toll Road,
5.000% due 01/01/2033 .................................. 4,628,850
800,000 Simi Valley, California, Unified School District,
Certificate of Participation, Refunding & Capital
Improvement Projects, (AMBAC Insured),
5.250% due 08/01/2022 .................................. 804,312
------------
26,554,862
------------
COLORADO - 5.5%
2,225,000 Colorado Springs, Utilities System Revenue, Prerefunded,
6.750% due 11/15/2021 .................................. 2,447,878
2,775,000 Colorado Springs, Utilities System, Series C, Unrefunded,
6.750% due 11/15/2021 .................................. 3,010,376
Denver City and County, Airport Revenue, AMT:
Series A, Prerefunded:
530,000 8.875% due 11/15/2012 .................................. 618,070
95,000 8.500% due 11/15/2023 .................................. 106,587
165,000 8.000% due 11/15/2025 .................................. 183,155
Series A, Unrefunded:
1,470,000 8.875% due 11/15/2012 .................................. 1,682,591
1,045,000 8.500% due 11/15/2023 .................................. 1,154,976
1,835,000 8.000% due 11/15/2025 .................................. 2,004,095
1,920,000 Series C,
6.600% due 11/15/2004 .................................. 2,080,838
4,500,000 Meridian Metropolitan District, GO,
7.500% due 12/01/2011 .................................. 4,890,240
------------
18,178,806
------------
CONNECTICUT - 0.7%
995,000 Mashantucket Western Pequot Tribe, Special Revenue, Series
A, Prerefunded,
6.500% due 09/01/2005++ ................................ 1,112,490
1,005,000 Mashantucket Western Pequot Tribe, Special Revenue, Series
A, Unrefunded,
6.500% due 09/01/2005++ ................................ 1,106,254
------------
2,218,744
------------
DISTRICT OF COLUMBIA - 0.9%
990,000 District of Columbia, COP,
6.875% due 01/01/2003 .................................. 1,034,114
1,500,000 Metropolitan District, Washington D.C., Airport Authority,
General Airport Revenue, Series A, AMT, (MBIA Insured),
6.625% due 10/01/2019 .................................. 1,629,600
------------
2,663,714
------------
FLORIDA - 4.1%
22,520,000 Dade County, Guaranteed Entitlement Revenue, Capital
Appreciation, Series A, (MBIA Insured),
Zero coupon due 02/01/2018 ............................. 7,381,606
425,000 Dade County, Seaport Authority, Refunding, (MBIA Insured),
6.500% due 10/01/2008 .................................. 487,624
5,000,000 Orlando Utilities Commission, Water & Electric,
6.000% due 10/01/2010 .................................. 5,591,050
------------
13,460,280
------------
GEORGIA - 6.8%
1,000,000 Atlanta, Airport Facilities Revenue, AMT,
7.250% due 01/01/2017 .................................. 1,079,800
6,000,000 Georgia Municipal Electric Authority Power, Series Z,
(MBIA Insured),
5.500% due 01/01/2020 .................................. 6,231,900
5,000,000 Georgia State, Series B, GO,
6.300% due 03/01/2009 .................................. 5,711,700
Monroe, PCR, (Oglethorpe Power Company):
5,000,000 6.700% due 01/01/2009 .................................. 5,724,800
3,410,000 6.750% due 01/01/2010 .................................. 3,934,080
------------
22,682,280
------------
HAWAII - 2.6%
5,555,000 Hawaii State, Series BW, GO,
6.400% due 03/01/2009 .................................. 6,281,150
2,000,000 Honolulu, Hawaii City & County, Series A, GO,
6.000% due 01/01/2012 .................................. 2,192,020
------------
8,473,170
------------
IDAHO - 0.7%
2,000,000 Idaho Health Facilities Authority Revenue, (Inverse
Floater), Escrowed to Maturity,
7.820% due 02/15/2021+ ................................. 2,384,540
------------
ILLINOIS - 15.7%
3,665,000 Chicago Gas Supply (People Gas),
6.875% due 03/01/2015 .................................. 3,994,740
Chicago, O'Hare Airport Supplemental Facilities, AMT:
700,000 American Airlines, Special Series A,
7.875% due 11/01/2025 .................................. 761,936
6,000,000 International Term, (MBIA Insured),
6.750% due 01/01/2012 .................................. 6,451,800
United Air Lines:
615,000 8.400% due 05/01/2004 .................................. 662,380
775,000 8.950% due 05/01/2018 .................................. 870,255
150,000 Special Series B,
8.500% due 05/01/2018 .................................. 162,996
4,000,000 Chicago Wastewater Transmission Revenue, Prerefunded,
6.750% due 11/15/2020 .................................. 4,326,760
Cook County, Community High School, Number 217, (AMBAC
Insured):
1,090,000 6.400% due 12/01/2003 .................................. 1,161,918
1,130,000 6.500% due 12/01/2004 .................................. 1,208,264
1,370,000 6.600% due 12/01/2005 .................................. 1,469,394
Cook County, School District, Number 026, (MBIA Insured):
1,445,000 Zero coupon due 12/01/2003 ............................. 1,118,372
1,020,000 Zero coupon due 12/01/2004 ............................. 751,628
Illinois Health Facilities Authority Revenue:
210,000 Glenoak Medical Center, Series D, Pre-refunded,
9.500% due 11/15/2015 .................................. 240,603
260,000 Glenoak Medical Center, Series D, Escrowed to Maturity,
9.500% due 11/15/2015 .................................. 302,338
4,570,000 Hindsdale Hospital, Series B, Escrowed to Maturity,
9.000% due 11/15/2015 .................................. 5,208,658
300,000 Riverside Senior Living Center Project, Prerefunded,
7.500% due 11/01/2020 .................................. 328,734
3,000,000 Rush Presbyterian - St. Luke's Medical, Residual
Interest Bond, (MBIA Insured),
9.615% due 10/01/2024+ ................................. 3,517,500
1,230,000 Servantcor, Series A, Prerefunded,
8.000% due 08/15/2021 .................................. 1,386,112
5,000,000 Sister Services Hospital, Residual Interest Bond,
(MBIA Insured),
9.267% due 06/19/2015+ ................................. 5,912,500
365,000 Illinois Housing Development Authority, Series A, AMT,
7.350% due 08/01/2010 .................................. 384,122
5,000,000 Illinois State Sales Tax Revenue, Series N, Prerefunded,
7.000% due 06/15/2020 .................................. 5,487,150
Metropolitan Pier and Exposition Authority Dedicated State
Tax, (FGIC Insured):
4,000,000 Zero coupon due 06/15/2008 ............................. 2,440,480
6,000,000 Zero coupon due 06/15/2009 ............................. 3,459,960
------------
51,608,600
------------
INDIANA - 2.6%
6,000,000 Indiana Municipal Power Agency, Series A, (MBIA Insured),
6.125% due 01/01/2013 .................................. 6,721,920
2,000,000 Indianapolis, Public Improvement Board, Series D, (LOC INB
National Bank),
6.500% due 02/01/2022 .................................. 2,003,520
------------
8,725,440
------------
KENTUCKY - 1.1%
3,000,000 Jefferson County, Hospital Revenue, Residual Interest
Bond, (MBIA Insured),
8.607% due 10/01/2008+ ................................. 3,506,250
------------
LOUISIANA - 0.1%
1,500,000 Louisiana Public Facility Authority Revenue, Series B, ETM,
Zero coupon due 12/01/2019 ............................. 473,370
------------
MARYLAND - 1.9%
5,000,000 Mayor & City Council of Baltimore Port Facility (DuPont),
6.500% due 10/01/2011 .................................. 5,439,750
930,000 State of Maryland, Community Development Administration,
Department of Housing Revenue, Single Family
Project, AMT,
7.450% due 04/01/2032 .................................. 979,671
------------
6,419,421
------------
MASSACHUSETTS - 1.4%
750,000 Commonwealth of Massachusetts, GO, Consolidated Loan,
Series A, Prerefunded,
7.625% due 06/01/2008 .................................. 836,130
Commonwealth of Massachusetts, Health and Educational
Facilities Authority Revenue:
500,000 Framingham Union Hospital, Series B,
8.500% due 07/01/2010 .................................. 553,725
2,000,000 Saint Memorial Medical Center, Series A,
6.000% due 10/01/2023 .................................. 2,002,240
250,000 Commonwealth of Massachusetts, GO,
Pre-refunded,
7.500% due 12/01/2007 .................................. 275,210
1,000,000 Plymouth County, COP, Series A,
7.000% due 04/01/2022 .................................. 1,115,140
------------
4,782,445
------------
MICHIGAN - 0.6%
1,500,000 Michigan State Hospital Finance Authority Revenue, Detroit
Medical, Series A, Prerefunded,
7.500% due 08/15/2011 .................................. 1,673,040
------------
MISSISSIPPI - 3.3%
Lowndes County, Solid Waste Disposal, PCR, Residual
Interest Bond, (Weyerhauser Company):
4,000,000 6.800% due 04/01/2022 .................................. 4,796,840
5,000,000 8.200% due 04/01/2022 .................................. 5,888,550
200,000 Warren County, Solid Waste Disposal Revenue,
(International Paper Project), Series A, AMT,
7.700% due 11/15/2009 .................................. 212,102
------------
10,897,492
------------
MISSOURI - 1.3%
1,000,000 Missouri State, Health and Educational Facilities
Authority Revenue, Bethesda Eye Institute, Prerefunded,
6.800% due 11/01/2016 .................................. 1,098,100
3,000,000 St. Louis, Parking Facilities Revenue, Prerefunded,
6.625% due 12/15/2021 .................................. 3,311,250
------------
4,409,350
------------
MONTANA - 0.3%
1,000,000 Forsyth, PCR, Series B, AMT, Puget Sound Power & Light,
(AMBAC Insured),
7.250% due 08/01/2021 .................................. 1,090,640
------------
NEBRASKA - 3.5%
1,000,000 Douglas County, Hospital Authority Revenue, Alegent
Health, Immanuel Medical Center,
5.250% due 09/01/2021 .................................. 982,760
600,000 Nebraska Investment Finance Authority, Single Family
Housing Revenue, Residual Interest Bond, AMT, (GNMA
Insured),
9.159% due 09/15/2024+ ................................. 670,500
Omaha Public Power District Electric:
7,000,000 Series B, Escrowed to Maturity,
6.150% due 02/01/2012 .................................. 7,823,970
2,000,000 Series C,
5.500% due 02/01/2014 .................................. 2,107,960
------------
11,585,190
------------
NEVADA - 1.3%
4,000,000 Clark County, IDR, Series A, Nevada Power Company, AMT,
(FGIC Insured),
6.700% due 06/01/2022 .................................. 4,324,480
------------
NEW MEXICO - 1.3%
1,000,000 Bernalillo County New Mexico, Gross Receipts of Tax Revenue,
5.250% due 04/01/2027 .................................. 1,013,400
1,500,000 Lordsburg Pollution Control (Phelps Dodge),
6.500% due 04/01/2013 .................................. 1,639,365
1,500,000 Santa Fe County, New Mexico, Correctional System, (FSA
Insured),
6.000% due 02/01/2027 .................................. 1,682,730
------------
4,335,495
------------
NEW YORK - 1.8%
1,265,000 Metropolitan Transportation Authority, Service Contract
Transportation Facilities, Series 7,
4.750% due 07/01/2019 .................................. 1,145,635
New York, GO, Unrefunded:
1,000,000 Series B, (FSA Insured),
7.000% due 06/01/2014 .................................. 1,083,410
160,000 8.250% due 11/15/2018 .................................. 180,197
1,000,000 New York, NY, Series B, (FGIC Insured),
6.000% due 08/01/2007 .................................. 1,091,850
New York State Medical Care Facilities Finance Agency
Revenue:
170,000 Prerefunded,
7.750% due 08/15/2011 .................................. 188,705
105,000 Refunded,
7.750% due 08/15/2011 .................................. 115,266
2,000,000 New York State Housing Finance Agency Revenue, Multi-
family Housing, Second Mortgage, Series F, AMT,
6.625% due 08/15/2012 .................................. 2,122,540
------------
5,927,603
------------
NORTH CAROLINA - 1.7%
5,000,000 North Carolina, Eastern Municipal Power Agency, Power
Systems Revenue, Series A,
5.700% due 01/01/2013 .................................. 5,701,200
------------
NORTH DAKOTA - 1.4%
4,370,000 Mercer County, Pollution Control (Otter Trail Power),
6.900% due 02/01/2019 .................................. 4,676,774
------------
OHIO - 0.4%
1,240,000 Lorain County, Hospital Revenue, Series B, Humility of
Mary Health Care, Escrowed to Maturity,
7.200% due 12/15/2011 .................................. 1,381,596
------------
OKLAHOMA - 0.7%
1,810,000 Oklahoma, Housing and Finance Authority, Single Family
Revenue, Series B, AMT, (GNMA Insured),
7.997% due 08/01/2018 .................................. 2,080,921
200,000 Tulsa, Municipal Airport Revenue, American Airlines
Project, AMT,
7.600% due 12/01/2030 .................................. 218,634
------------
2,299,555
------------
OREGON - 2.0%
6,230,000 Washington County, Oregon, (Criminal Justice Facilities),
Prerefunded,
6.000% due 12/01/2012 .................................. 6,766,528
------------
PENNSYLVANIA - 5.0%
Allegheny County, Hospital Development Revenue, (Ohio
Valley General Hospital):
700,000 5.100% due 04/01/2001 .................................. 708,575
735,000 5.300% due 04/01/2002 .................................. 750,192
625,000 5.400% due 04/01/2003 .................................. 641,644
Beaver County, IDR, PCR, (Edison Project), Series A:
300,000 7.750% due 09/01/2024 .................................. 315,015
3,675,000 (FGIC Insured),
7.000% due 06/01/2021 .................................. 3,975,358
600,000 Lehigh County, General Purpose Authority, Muhlenberg
Hospital Center, Series A, Prerefunded,
8.100% due 07/15/2010 .................................. 640,794
500,000 McKean County, Hospital Authority Revenue, Bradford
Hospital, Pottstown Memorial Medical Center,
8.875% due 10/01/2020 .................................. 560,100
1,250,000 Montgomery County, Higher Education Revenue,
6.875% due 11/15/2020 .................................. 1,343,425
3,000,000 Pennsylvania State Higher Education Revenue, Student Loan,
Residual Interest Bond, AMT, (AMBAC Insured),
9.368% due 09/01/2026+ ................................. 3,450,000
1,890,000 Pennsylvania State Higher Educational Facilities
Authority, Series B, Prerefunded,
7.250% due 03/01/2005 .................................. 2,073,651
1,000,000 Philadelphia, Municipal Authority Revenue, Series B, (FGIC
Insured), Prerefunded,
7.125% due 11/15/2018 .................................. 1,110,990
1,000,000 Philadelphia, Water and Sewer Revenue, Prerefunded,
7.500% due 08/01/2010 .................................. 1,115,270
------------
16,685,014
------------
RHODE ISLAND - 0.7%
2,000,000 Rhode Island State Health and Education Revenue, Residual
Interest Bond, (FGIC Insured), Escrowed to Maturity,
9.715% due 08/15/2021+ ................................. 2,377,500
------------
TEXAS - 2.3%
415,000 Brazos, Higher Educational Facilities Authority, Series
C-2, AMT,
7.100% due 11/01/2004 .................................. 457,674
1,290,000 Crowley, Texas Independent School District, (FGIC
Insured), GO,
Zero coupon, due 08/01/2016 ............................ 486,898
5,000,000 Dallas-Fort Worth International Airport, (Facility
Improvement Corporate Revenue), (American Airlines,
Inc.), AMT,
7.500% due 11/01/2025 .................................. 5,395,000
574,000 Texas State, Higher Education Coordinating Board, Student
Loan, AMT,
7.700% due 10/01/2025 .................................. 615,678
500,000 West Side Calhoun County, Solid Waste Revenue Bond, (Union
Carbide Project), AMT,
8.200% due 03/15/2021 .................................. 552,905
------------
7,508,155
------------
VERMONT - 0.1%
Vermont Housing Finance Agency, Single Family,
Series 1, AMT:
140,000 6.800% due 05/01/2025 .................................. 145,702
220,000 8.150% due 05/01/2025 .................................. 232,375
------------
378,077
------------
WASHINGTON - 10.4%
4,500,000 King County Washington School District #415 Kent,
Series C, GO,
6.300% due 12/01/2008 .................................. 5,080,815
950,000 Port Anacortes Washington Revenue,
Series A,
5.125% due 09/01/2009 .................................. 935,665
2,750,000 Snohomish County, School District #2, Everett General
Obligation, Series B, Prerefunded,
7.200% due 12/01/2010 .................................. 2,980,698
University of Washington Revenue Bond, (MBIA Insured):
3,400,000 Prerefunded,
7.000% due 12/01/2021 .................................. 3,766,894
785,000 Unrefunded,
7.000% due 12/01/2021 .................................. 859,104
3,500,000 Washington Public Power Supply System, Nuclear Project #2
Revenue, Series C, Prerefunded,
7.625% due 07/01/2010 .................................. 3,859,730
7,570,000 Washington State, Series B, GO,
5.000% due 05/01/2017 .................................. 7,335,330
4,900,000 Washington State, Series B, AT-7, GO,
6.400% due 06/01/2017 .................................. 5,687,479
Washington State Health Care Facilities Authority, Fred
Hutchinson Cancer Center, LOC:
1,750,000 7.200% due 01/01/2007 .................................. 1,899,923
1,750,000 7.375% due 01/01/2018 .................................. 1,905,225
------------
34,310,863
------------
WEST VIRGINIA - 1.1%
2,500,000 Harrison County, Solid Waste Disposal, (Monongahela
Power), Series A, AMT,
6.875% due 04/15/2022 .................................. 2,707,025
150,000 Kanawha County, IDR, (Union Carbide Project),
Series A, AMT,
8.000% due 08/01/2020 .................................. 161,918
750,000 South Charleston, IDR, (Union Carbide Project),
Series A, AMT,
8.000% due 08/01/2020 .................................. 807,420
------------
3,676,363
------------
WISCONSIN - 0.7%
1,000,000 Madison, IDR, (Madison Gas & Electric Company),
(Project A), AMT,
6.750% due 04/01/2027 .................................. 1,069,520
1,000,000 Wisconsin Health & Education Facility Authority,
Refunding, Waukesha Memorial Hospital, Series A,
(AMBAC Insured),
7.125% due 08/15/2007 .................................. 1,080,520
------------
2,150,040
------------
Total Municipal Bonds and Notes
(Cost $290,477,113) .................................... 320,510,899
------------
INVESTMENT COMPANY SECURITY - 1.9%
6,363,404 Nuveen Tax Exempt Money Market Fund
(Cost $6,363,404) ...................................... 6,363,404
------------
TOTAL INVESTMENTS (COST $296,840,517*) ........................ 98.8% 326,874,303
OTHER ASSETS AND LIABILITIES (NET) ............................ 1.2 3,826,328
----- ------------
NET ASSETS .................................................... 100.0% $330,700,631
===== ============
- --------------
* Aggregate cost for federal tax purposes.
+ Floating rate note. The interest rate shown reflects the rate currently in effect.
++ Security exempt from registration under Rule 144A of the Securities Act of 1933. These
securities may be resold in transactions exempt from registration, normally to
qualified institutional buyers.
Tax-Exempt Bond Fund had the following insurance concentrations greater than 10% at
April 30, 1998 (as a percentage of net assets):
MBIA 16.5%
</TABLE>
- ------------------------------------------------------------------
GLOSSARY OF TERMS
AMBAC -- American Municipal Bond Assurance Corporation
AMT -- Alternative Minimum Tax
COP -- Certificates of Participation
ETM -- Escrowed to Maturity
FGIC -- Federal Guaranty Insurance Corporation
FSA -- Financial Security Assurance
GNMA -- Government National Mortgage Association
GO -- General Obligation Bonds
IDR -- Industrial Development Revenue
LOC -- Letter of Credit
MBIA -- Municipal Bond Investors Assurance
PCR -- Pollution Control Revenue
- ------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
PORTFOLIO of INVESTMENTS
<TABLE>
BOND & STOCK FUND
APRIL 30, 1998 (UNAUDITED)
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
------ --------
FIXED INCOME SECURITIES - 30.9%
U.S. TREASURY AND AGENCY OBLIGATIONS - 14.9%
<S> <C> <C>
$ 2,000,000 Federal National Mortgage Association,
8.250% due 12/18/2000 .................................. $ 2,119,516
3,000,000 U.S. Treasury Bond,
7.500% due 11/15/2016 .................................. 3,490,314
9,000,000 U.S. Treasury Bond,
6.250% due 08/15/2023 .................................. 9,261,567
8,250,000 U.S. Treasury Bond,
6.500% due 11/15/2026 .................................. 8,788,832
1,000,000 U.S. Treasury Note,
6.375% due 08/15/2002 .................................. 1,026,251
2,500,000 U.S. Treasury Note,
5.250% due 07/31/1998 .................................. 2,501,565
4,000,000 U.S. Treasury Note,
5.500% due 02/28/1999 .................................. 4,000,004
2,250,000 U.S. Treasury Note,
6.375% due 03/31/2001 .................................. 2,294,298
2,000,000 U.S. Treasury Note,
6.250% due 04/30/2001 .................................. 2,034,376
5,600,000 U.S. Treasury Note,
5.875% due 10/31/1998 .................................. 5,612,253
10,700,000 U.S. Treasury Note,
5.875% due 11/15/1999 .................................. 10,743,474
4,800,000 U.S. Treasury Note,
5.875% due 09/30/2002 .................................. 4,836,005
4,000,000 U.S. Treasury Bond,
zero coupon due 08/15/2012 ............................. 1,704,040
------------
Total U.S. Treasury & Agency Obligations (Cost
$56,170,439) ........................................... 58,412,495
------------
MORTGAGE BACKED SECURITIES - 6.7%
GOVERNMENT AGENCY - 4.7%
1,104,283 Federal National Mortgage Association,
8.000% due 12/01/2026 .................................. 1,145,004
451,782 Government National Mortgage Association,
10.000% due 08/15/2019 ................................. 498,316
5,056,806 Government National Mortgage Association,
7.000% due 12/15/2025 - 03/15/2028 ..................... 5,123,816
8,794,197 Government National Mortgage Association,
6.500% due 01/15/2024 - 05/15/2026 ..................... 8,725,515
915,853 Government National Mortgage Association,
6.000% due 01/15/2026 - 02/15/2026 ..................... 887,517
2,249,686 Government National Mortgage Association-II Arm,
7.000% due 01/20/2023 .................................. 2,307,214
------------
18,687,382
------------
COLLATERALIZED MORTGAGE OBLIGATIONS -
GOVERNMENT AGENCY BACKED - 1.2%
1,000,000 Federal Home Loan Mortgage Corporation -
CMO PAC-1(11) 1311H,
7.500% due 07/15/2020 .................................. 1,014,623
2,000,000 Federal Home Loan Mortgage Corporation - GNMA PAC-1(11) 2E,
6.850% due 07/25/2018 .................................. 2,014,380
1,510,302 Weyerhaeuser 1982-C FHA Putable,
7.430% due 06/01/2022 .................................. 1,541,805
------------
4,570,808
------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 0.8%
1,250,000 DLJ Mortgage Acceptance Corp., 1993-M17,
7.350% due 12/18/2003 .................................. 1,279,337
102,887 Merrill Lynch Mortgage Investors Inc., 1988-P,
10.050% due 12/15/2008 ................................. 109,604
851,733 Resolution Trust Corporation, 1991-M2, A-2,
7.122% due 09/25/2020 .................................. 724,906
1,000,000 Ryland Mortgage Securities Corporation, 1992 -12A - 1D,
6.500% due 09/25/2023 .................................. 985,690
------------
3,099,537
------------
Total Mortgage Backed Securities
(Cost $25,516,849) ..................................... 26,357,727
------------
CORPORATE BONDS - 9.3%
1,500,000 Aetna Services, Inc.,
7.625% due 08/15/2026 .................................. 1,563,468
1,250,000 American Home,
7.250% due 03/01/2023 .................................. 1,328,619
1,000,000 Bank of New York,
7.875% due 11/15/2002 .................................. 1,064,942
1,200,000 Burlington Northern,
8.750% due 02/25/2022 .................................. 1,471,397
1,000,000 Coastal Corporation,
9.625% due 05/15/2012 .................................. 1,265,075
750,000 Conagra, Inc.,
9.750% due 03/01/2021 .................................. 970,221
1,000,000 Conagra, Inc.,
6.700% due 08/01/2027 .................................. 1,040,737
1,000,000 Continental Corporation,
7.250% due 03/01/2003 .................................. 1,023,966
1,000,000 Dart & Kraft Finance,
7.750% due 11/30/1998 .................................. 1,011,257
500,000 Developers Diversified Realty,
6.580% due 02/06/2001 .................................. 502,686
2,000,000 FHP International,
7.000% due 09/15/2003 .................................. 2,048,824
1,250,000 First Nationwide,
10.000% due 10/01/2006 ................................. 1,499,213
1,000,000 Franchise Finance Corp. of America,
7.000% due 11/30/2000 .................................. 1,011,110
1,000,000 Franchise Finance Corp. of America,
7.875% due 11/30/2005 .................................. 1,059,906
1,000,000 Golden Books Publishing,
7.650% due 09/15/2002 .................................. 962,500
2,000,000 Loral Corporation,
7.625% due 06/15/2025 .................................. 2,175,664
1,000,000 Medpartners, Inc.,
7.375% due 10/01/2006 .................................. 871,660
1,000,000 Mercantile Bank,
7.625% due 10/15/2002 .................................. 1,052,740
1,100,000 Niagara Mohawk Power,
9.500% due 06/01/2000 .................................. 1,161,921
985,000 Niagara Mohawk Power,
8.770% due 01/01/2018 .................................. 1,047,024
1,000,000 Price/Costco, Inc.,
7.125% due 06/15/2005 .................................. 1,041,933
500,000 Public Service Company of New Hampshire,
9.170% due 05/15/1998 .................................. 500,366
1,750,000 Raytheon Company,
7.200% due 08/15/2027 .................................. 1,816,253
1,250,000 Riviera Holdings Corporation,
11.000% due 12/31/2002 ................................. 1,312,500
1,500,000 Superior Financial Corporation,
8.650% due 04/01/2003 .................................. 1,492,149
500,000 Summit Bancorp,
8.625% due 12/10/2002 .................................. 545,578
110,000 System Energy Resources,
11.375% due 09/01/2016 ................................. 117,796
1,000,000 Tenet Healthcare Corporation,
7.875% due 01/15/2003 .................................. 1,023,750
2,000,000 Time Warner, Inc.,
9.150% due 02/01/2023 .................................. 2,460,756
1,000,000 U.S. West Capital Funding, Inc.,
6.950% due 01/15/2037 .................................. 1,053,003
1,000,000 Westinghouse Electric Corporation,
7.875% due 09/01/2023 .................................. 1,005,412
------------
Total Corporate Bonds
(Cost $34,843,790) ..................................... 36,502,426
------------
Total Fixed Income Securities
(Cost $116,531,078) .................................... 121,272,648
------------
SHARES
------
EQUITY SECURITIES - 67.4%
COMMON STOCKS - 56.5%
AEROSPACE/DEFENSE - 2.5%
50,000 General Dynamics Corporation ............................. 2,112,500
40,000 Northrop Grumman Corporation ............................. 4,227,500
58,300 Raytheon Company, Class B ................................ 3,304,881
------------
9,644,881
------------
BANKS/SAVINGS & LOANS - 4.1%
25,000 Chase Manhattan Corporation .............................. 3,464,063
30,000 Citicorp ................................................. 4,515,000
55,500 Mellon Bank Corporation .................................. 3,996,000
10,500 Wells Fargo & Company .................................... 3,869,250
------------
15,844,313
------------
BASIC INDUSTRY - 1.8%
50,000 Boise Cascade Corporation ................................ 1,878,125
40,000 Phelps Dodge Corporation ................................. 2,685,000
52,000 Rayonier, Inc. ........................................... 2,606,500
------------
7,169,625
------------
CAPITAL GOODS - 0.9%
67,500 Crane Company ............................................ 3,632,344
------------
COMPUTER SOFTWARE - 3.2%
86,000 Adobe Systems, Inc. ...................................... 4,305,375
72,700 Autodesk, Inc. ........................................... 3,416,900
85,000 Computer Associates International, Inc. .................. 4,977,813
------------
12,700,088
------------
COMPUTER SYSTEMS - 3.6%
200,000 Cabletron Systems* ....................................... 2,650,000
95,000 Electronic Data Systems Corporation ...................... 4,085,000
79,000 Hewlett-Packard Company .................................. 5,949,688
12,500 International Business Machines Corporation .............. 1,448,438
------------
14,133,126
------------
CONSUMER CYCLICALS - 1.5%
75,000 Nike, Inc., Class B ...................................... 3,581,250
175,000 Stride Rite Corporation .................................. 2,198,438
------------
5,779,688
------------
CONSUMER DURABLES - 0.6%
35,000 Eastman Kodak Company .................................... 2,526,562
------------
CONSUMER STAPLES - 6.4%
55,000 Dole Food Company ........................................ 2,471,562
96,000 Phillip Morris Companies, Inc. ........................... 3,582,000
88,500 RJR Nabisco Holdings Corporation ......................... 2,461,406
42,000 Ralston Purina ........................................... 4,452,000
40,000 Sara Lee Corporation ..................................... 2,382,500
100,000 Supervalu, Inc. .......................................... 4,368,750
91,500 UST, Inc. ................................................ 2,521,969
40,000 Unilever Group ........................................... 2,985,000
------------
25,225,187
------------
ELECTRONICS - 3.2%
110,000 AMP, Inc. ................................................ 4,324,375
63,000 Motorola, Inc. ........................................... 3,504,375
105,000 Tektronix, Inc. .......................................... 4,515,000
------------
12,343,750
------------
FINANCIAL SERVICES - 3.1%
48,000 Federal National Mortgage Association .................... 2,874,000
130,000 Green Tree Financial Corporation ......................... 5,297,500
95,000 Liberty Financial Companies .............................. 3,805,937
------------
11,977,437
------------
HEALTHCARE PRODUCTS - 3.7%
55,000 Abbott Laboratories ...................................... 4,021,875
75,000 Baxter International, Inc. ............................... 4,157,812
45,000 Becton Dickinson & Company ............................... 3,133,125
45,000 Johnson & Johnson ........................................ 3,211,875
------------
14,524,687
------------
HEALTHCARE SERVICES - 2.2%
56,000 Aetna, Inc. .............................................. 4,525,500
125,000 Columbia/HCA Healthcare Corporation ...................... 4,117,187
------------
8,642,687
------------
INSURANCE - 2.4%
15,000 American International Group, Inc. ....................... 1,973,437
15,000 General Re Corporation ................................... 3,353,438
64,000 Penncorp Financial Group ................................. 1,664,000
100,000 TIG Holdings, Inc. ....................................... 2,406,250
------------
9,397,125
------------
MEDIA - 2.2%
110,000 Seagram Company, Ltd. .................................... 4,695,625
71,000 Viacom, Inc., Class A+ ................................... 4,100,250
------------
8,795,875
------------
OILS & GAS - 3.8%
56,500 Amerada Hess Corporation ................................. 3,248,750
76,500 Ashland, Inc. ............................................ 4,044,938
43,000 Occidental Petroleum Corporation ......................... 1,265,812
37,500 Pennzoil Co. ............................................. 2,402,344
115,000 YPF S.A.-Sponsored ADR ................................... 4,010,625
------------
14,972,469
------------
REAL ESTATE INVESTMENT TRUSTS - 5.0%
83,500 American General Hospitality
Corporation ............................................ 2,092,719
47,300 Arden Realty, Inc. ....................................... 1,327,356
60,000 Boston Properties, Inc. .................................. 1,983,750
72,500 CarrAmerica Realty Corporation ........................... 2,120,625
83,500 Duke Realty Investments, Inc. ............................ 1,988,344
33,700 Essex Property Trust, Inc. ............................... 1,112,100
55,000 Health Care Property Investors, Inc. ..................... 1,856,250
80,000 Mid Atlantic Realty Trust ................................ 1,120,000
80,000 Patriot American Hospitality, Inc. ....................... 2,020,000
80,000 Security Capital Pacific Trust ........................... 1,790,000
4,211 Security Capital Pacific Trust Warrants+ ................. 11,843
155,000 Taubman Centers, Inc. .................................... 2,102,188
------------
19,525,175
------------
RETAIL SALES - 2.3%
110,000 Dillards, Inc. Class A ................................... 4,028,750
145,000 Limited, Inc. ............................................ 4,866,562
------------
8,895,312
------------
UTILITIES - TELECOMMUNICATIONS - 4.0%
79,900 Alltel Corporation ....................................... 3,415,725
120,000 Frontier Corporation ..................................... 3,592,500
63,300 Southern New England Telecommunications .................. 4,431,000
58,000 Sprint Corporation ....................................... 3,962,125
10,750 360 Communications Company+ .............................. 328,547
------------
15,729,897
------------
Total Common Stocks
(Cost $167,481,626) .................................... 221,460,228
------------
PRINCIPAL
AMOUNT
------
CONVERTIBLE BONDS - 4.1%
$ 1,300,000 Alberto-Culver Corporation,
5.500% due 06/30/2005 .................................. 2,153,125
1,080,000 CII Financial,
7.500% due 09/15/2001 .................................. 1,038,150
2,000,000 Corporate Express, Inc.,
4.500% due 07/01/2000 .................................. 1,817,500
2,000,000 Federated Department Stores,
5.000% due 10/01/2003 .................................. 2,970,000
1,000,000 First State Bancorp,
7.500% due 04/30/2017 .................................. 1,472,500
2,700,000 Healthsouth Co.,
3.250% due 04/01/2003 .................................. 2,777,625
600,000 Jumbosports, Inc.,
4.250% due 11/01/2000 .................................. 226,500
1,750,000 Rockefeller Center Property Trust,
zero coupon due 12/31/2000 ............................. 1,356,250
2,000,000 Tel-Save Holdings, Inc.,
5.000% due 12/15/2004 .................................. 2,125,000
------------
Total Convertible Corporate Bonds
(Cost $15,523,093) ..................................... 15,936,650
------------
CONVERTIBLE PREFERRED STOCKS - 6.8%
SHARES
------
100,000 Cendant Corporation,
1.300% Series .......................................... 3,500,000
35,000 Golden Books Financial Trust,
8.750% Series .......................................... 1,938,125
32,000 Lehman Brothers Holdings,
5.000% Series CSCO ..................................... 2,208,000
30,000 Loral Space & Communication,
6.000% Series++ ........................................ 2,527,500
175,000 Medpartners, Inc.,
6.500% Series .......................................... 2,307,813
14,200 Microsoft Corporation,
$2.196 Series A ........................................ 1,322,375
50,000 Nextlink Communications,
6.500% Series++ ........................................ 2,356,250
100,000 Pacificare Holding Preferred,
$1.00 Series A ......................................... 2,762,500
35,000 Penncorp Financial Group,
$3.375 Series .......................................... 2,108,750
40,000 Sinclair Broadcasting Group,
6.000% Series .......................................... 2,600,000
16,100 TCI Pacific Communications,
5.000% Series .......................................... 2,938,250
------------
Total Convertible Preferred Stock
(Cost $23,844,698) ..................................... 26,569,563
------------
Total Equity Securities
(Cost $206,849,417) .................................... 263,966,441
------------
TOTAL INVESTMENTS (COST $323,380,495*) ........................ 98.3% 385,239,089
OTHER ASSETS NET OF LIABILITIES ............................... 1.7 6,562,016
----- ------------
NET ASSETS .................................................... 100.0% $391,801,105
===== ============
- --------------
* Aggregate cost for federal cost purposes.
+ Non-income producing security.
++ Security exempt from registration under Rule 144A of the Securities Act of 1933. These
securities may be resold in transactions exempt from registration, normally to
qualified institutional buyers.
</TABLE>
See Notes to Financial Statements.
<PAGE>
PORTFOLIO of INVESTMENTS
<TABLE>
GROWTH & INCOME FUND
APRIL 30, 1998 (UNAUDITED)
<CAPTION>
VALUE
SHARES (NOTE 2)
------ --------
COMMON STOCKS - 94.2%
<S> <C> <C>
CONSUMER STAPLES - 9.3%
39,150 Alberto Culver Company, Class A ........................... $ 1,047,263
157,800 Anheuser-Busch Companies Inc .............................. 7,229,213
87,300 Campbell Soup Company ..................................... 4,479,581
34,700 General Mills Inc ......................................... 2,344,419
121,900 Kimberly Clark Corporation ................................ 6,186,425
436,600 Kimberly Clark De Mexico, ADR ............................. 10,715,608
230,000 PepsiCo Inc ............................................... 9,128,125
170,000 Philip Morris Companies Inc ............................... 6,343,125
90,000 Procter & Gamble Company .................................. 7,396,875
88,400 Ralston Purina Company .................................... 9,370,400
97,000 Sara Lee Corporation ...................................... 5,777,563
117,200 Unilever NV ............................................... 8,746,050
------------
78,764,647
------------
HEALTH CARE PRODUCTS - 8.4%
150,100 Abbott Laboratories ....................................... 10,976,063
100,000 ALZA Corporation+ ......................................... 4,793,750
40,000 American Home Products Corporation ........................ 3,725,000
95,600 Bristol-Myers Squibb Company .............................. 10,121,650
146,550 Johnson & Johnson ......................................... 10,460,006
117,000 Merck & Company, Inc ...................................... 14,098,500
80,000 Perkin Elmer Corporation .................................. 5,470,000
60,000 Warner Lambert Company .................................... 11,351,250
------------
70,996,219
------------
FINANCIAL SERVICES - 7.8%
63,900 AMBAC Financial Group Inc ................................. 3,622,331
24,300 Capital One Financial Corporation ......................... 2,334,319
208,000 Federal Home Loan Mortgage Corporation .................... 9,633,000
144,400 Federal National Mortgage Association ..................... 8,645,950
267,850 Green Tree Financial Corporation .......................... 10,914,888
68,650 Heller Financial Inc ...................................... 1,853,550
227,950 Liberty Financial Companies ............................... 9,132,247
69,600 Marsh and McLennan Companies, Inc ......................... 6,342,300
90,000 Providian Financial Corporation ........................... 5,416,875
137,499 Travelers Group Inc ....................................... 8,413,220
------------
66,308,680
------------
UTILITIES - 7.1%
49,472 British Petroleum ADR ..................................... 4,675,058
222,900 Enron Corporation ......................................... 10,963,894
143,660 Exxon Corporation ......................................... 10,478,201
97,400 Mobil Corporation ......................................... 7,694,600
103,800 Pennzoil Company .......................................... 6,649,687
145,600 Royal Dutch Petroleum ..................................... 8,235,500
333,700 Tosco Corporation ......................................... 11,888,062
------------
60,585,002
------------
BANKS/SAVING & LOANS - 6.4%
62,800 Bank of New York Company Inc .............................. 3,709,125
57,400 Citicorp. ................................................. 8,638,700
240,000 First Union Corporation ................................... 14,490,000
92,500 KeyCorp. .................................................. 3,671,094
74,000 Mellon Bank Corporation ................................... 5,328,000
159,924 Norwest Corporation ....................................... 6,346,984
240,000 Prime Bancshares Inc ...................................... 6,420,000
15,025 Wells Fargo & Company ..................................... 5,536,713
------------
54,140,616
------------
COMPUTER SOFTWARE - 6.0%
124,700 Adobe Systems Inc.+ ....................................... 6,242,794
385,950 Barra Inc ................................................. 9,262,800
67,000 Computer Associates International Inc ..................... 3,923,687
259,000 First Data Corporation .................................... 8,773,625
173,000 Microsoft Corporation ..................................... 15,591,624
260,000 Oracle Corporation+ ....................................... 6,727,500
------------
50,522,030
------------
MEDIA - 5.1%
194,800 Dun & Bradstreet Corporation .............................. 6,915,400
119,600 Lee Enterprises Inc ....................................... 3,744,975
205,000 Seagram Company Limited ................................... 8,750,938
765,601 Tele-Communications TCI Ventures Group .................... 12,488,866
191,075 Viacom Inc., Class A ...................................... 11,034,581
------------
42,934,760
------------
BASIC INDUSTRY - 4.9%
102,900 Albemarle Corporation ..................................... 2,559,638
267,100 Allegheny Teledyne Inc .................................... 6,777,650
94,165 Commscope Inc.+ ........................................... 1,530,186
62,100 du Pont (E.I.) de Nemours & Company ....................... 4,521,656
614,000 Waste Management Inc ...................................... 20,569,000
98,600 Weyerhaeuser Company ...................................... 5,681,825
------------
41,639,955
------------
UTILITIES/TELECOMMUNICATIONS - 4.6%
120,900 Comcast Corporation-Special Class A ....................... 4,329,731
182,900 SBC Communications Inc .................................... 7,578,919
249,600 Sprint Corporation ........................................ 17,050,800
230,000 WorldCom Inc.+ ............................................ 9,839,687
------------
38,799,137
------------
CAPITAL GOODS - 4.4%
135,700 Allied Signal Inc ......................................... 5,945,355
80,000 Cooper Industries Inc ..................................... 5,350,000
81,450 Crane Company ............................................. 4,383,028
297,848 Donaldson Company Inc ..................................... 7,557,893
153,000 International Game Technology ............................. 4,255,313
180,001 Tyco International Limited ................................ 9,810,031
------------
37,301,620
------------
COMPUTER/SYSTEMS - 4.3%
235,800 Bay Networks Inc.+ ........................................ 5,526,563
120,800 Cabletron Systems, Inc.+ .................................. 1,600,600
97,250 Cisco Systems Inc.+ ....................................... 7,123,563
193,500 EMC Corporation+ .......................................... 8,925,189
62,000 Hewlett-Packard Company ................................... 4,669,375
71,600 International Business Machines Corporation ............... 8,296,650
------------
36,141,940
------------
HEALTH CARE SERVICES - 4.0%
183,750 Columbia HCA Healthcare Corporation ....................... 6,052,266
341,500 Humana Inc.+ .............................................. 9,220,500
97,400 Manor Care Inc ............................................ 3,415,087
275,000 Medpartners Inc ........................................... 2,818,750
123,033 Pacificare Health Systems-A ............................... 8,643,068
20,000 Pacificare Health Systems-B ............................... 1,432,500
35,000 United Healthcare Corporation ............................. 2,458,750
------------
34,040,921
------------
AEROSPACE/DEFENSE - 2.8%
50,000 Boeing Company ............................................ 2,503,125
71,719 Lockheed Martin Corporation ............................... 7,987,704
127,900 Northrop Grumman Corporation .............................. 13,517,431
------------
24,008,260
------------
REAL ESTATE INVESTMENT TRUSTS (REITS) - 2.5%
117,500 CCA Prison Realty Trust ................................... 4,163,906
90,000 Corrections Corporation of America ........................ 2,497,500
83,199 Equity Office Properties Trust+ ........................... 2,365,974
136,600 Health Care Property Investors Inc ........................ 4,610,250
152,900 Starwood Hotel & Resort ................................... 7,673,669
------------
21,311,299
------------
ELECTRONICS/SEMICONDUCTORS - 2.3%
337,425 General Semiconductor, Inc ................................ 4,618,505
180,800 Intel Corporation ......................................... 14,610,900
------------
19,229,405
------------
BUSINESS SERVICES - 2.1%
257,829 Cendant Corporation ....................................... 6,445,725
110,000 Cognizant Corporation ..................................... 5,658,125
200,733 ACNielson Corporation ..................................... 5,620,524
------------
17,724,374
------------
CONSUMER DURABLES - 2.1%
50,800 Goodyear Tire & Rubber Company ............................ 3,556,000
29,500 Miller Industries, Inc .................................... 226,781
161,900 Sony Corporation, ADR ..................................... 13,751,381
------------
17,534,162
------------
ELECTRICAL EQUIPMENT - 1.9%
116,850 Emerson Electric Company .................................. 7,434,581
106,000 General Electric Company .................................. 9,023,250
------------
16,457,831
------------
TRANSPORTATION - 1.9%
219,200 Expeditors International of Washington Inc. 9,316,000
130,100 Union Pacific Corporation ................................. 7,122,975
------------
16,438,975
------------
RETAIL SALES - 1.9%
84,600 Federated Department Stores, Inc.+ ........................ 4,177,125
311,500 Intimate Brands Inc ....................................... 9,033,500
51,000 Wal-Mart Stores Inc ....................................... 2,578,688
------------
15,789,313
------------
INSURANCE - 1.7%
77,598 American International Group, Inc.+ ....................... 10,208,987
161,400 Penncorp Financial Group Inc .............................. 4,196,400
------------
14,405,387
------------
LODGING - 1.4%
523,515 Choice Hotels International Inc ........................... 8,965,194
374,505 Sunburst Hospitality Corporation .......................... 3,019,447
------------
11,984,641
------------
CONSUMER CYCLICAL - 1.3%
252,400 Zurn Industries Inc ....................................... 10,884,750
------------
Total Common Stocks (Cost $614,473,087) 797,943,924
------------
PREFERRED STOCKS - 4.6%
36,000 Cendant Corporation, Conv. Pfd.,
7.500% due 02/16/2001 ................................... 1,482,750
110,000 Loral Space & Communication, 3.000% ....................... 9,267,500
220,500 Medpartners Inc.-"TAPS" ................................... 2,907,844
135,000 Nextlink Communications, Conv. Pfd.,
6.500% due 03/31/2010 ................................... 6,361,875
128,900 Pacificare Health Systems-Pfd ............................. 3,560,863
158,100 Penncorp Financial Group, $3.375, Series .................. 9,525,525
94,600 Sinclair Broadcast Group .................................. 6,149,000
------------
Total Preferred Stock (Cost $39,260,357) .................. 39,255,357
------------
PRINCIPAL
AMOUNT
------
CONVERTIBLE NOTES - 0.7%
$ 580,000 Alberto-Culver Corporation
5.500% due 06/30/2005 ................................... 960,625
2,662,000 Berkshire Hathaway, Conv. Sr. Note,
1.000% due 12/03/2001 ................................... 4,934,683
1,000 Lehman Brothers Holdings,
5.000% due 02/26/2001 ................................... 69,000
------------
Total Convertible Notes (Cost $3,864,959) ................. 5,964,308
------------
REPURCHASE AGREEMENT - 1.0%
$ 8,452,000 Agreement with Goldman Sachs, 5.300% dated 04/30/1998, to
be repurchased at $8,453,244 on 05/01/1998,
collateralized by $8,222,101 U.S. Treasury Note, 6.500%
due 08/15/2005 (Market Value $8,697,682) (Cost
$8,452,000) ............................................. $ 8,452,000
------------
TOTAL INVESTMENTS (COST $666,050,403*) ........................ 100.5% 851,615,589
OTHER ASSETS AND LIABILITIES (NET) ............................ (0.5) (4,139,182)
----- ------------
NET ASSETS .................................................... 100.0% $847,476,407
===== ============
- --------------
* Aggregate cost for federal tax purposes.
+ Non-income producing security.
</TABLE>
- ------------------------------------------------------------------
GLOSSARY OF TERMS
ADR -- American Depositary Receipt
- ------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
PORTFOLIO of INVESTMENTS
<TABLE>
NORTHWEST FUND
APRIL 30, 1998 (UNAUDITED)
<CAPTION>
VALUE
SHARES (NOTE 2)
------ --------
COMMON STOCKS - 93.3%
AEROSPACE & DEFENSE - 3.8%
<S> <C> <C>
182,074 Boeing Company ........................................... $ 9,115,080
66,075 Precision Castparts Corporation .......................... 4,104,909
------------
13,219,989
------------
BANKS/SAVINGS & LOANS - 8.1%
163,800 First Savings Bank of Washington
Bancorp, Inc. .......................................... 4,350,938
27,947 Horizon Financial Corporation ............................ 496,059
76,700 Interwest Bancorp, Inc. .................................. 3,408,356
74,800 Key Corp ................................................. 2,968,625
159,300 Sterling Financial Corporation+ .......................... 4,181,625
58,556 US Bancorp ............................................... 7,436,612
176,206 Washington Federal, Inc. ................................. 4,955,794
------------
27,798,009
------------
BASIC INDUSTRY - 7.8%
149,817 Allegheny Teledyne, Inc. ................................. 3,801,606
45,633 Boise Cascade Corporation ................................ 1,714,089
71,800 Morrison Knudsen Corporation+ ............................ 857,113
170,200 Oregon Steel Mills, Inc. ................................. 4,042,250
242,500 Schnitzer Steel Industries Inc., Class A ................. 6,426,250
89,800 Weyerhaeuser Company ..................................... 5,174,725
121,600 Willamette Industries, Inc. .............................. 4,719,600
------------
26,735,633
------------
BUSINESS SERVICES - 1.0%
258,600 Barrett Business Services, Inc.+ ......................... 3,394,125
------------
CAPITAL GOODS - 1.8%
195,500 Greenbrier Companies, Inc. ............................... 3,567,875
42,920 PACCAR, Inc. ............................................. 2,548,375
------------
6,116,250
------------
CONSUMER CYCLICALS - 0.9%
67,100 Nike, Inc. Class B ....................................... 3,204,025
------------
CONSUMER DURABLES - 1.2%
147,050 Monaco Coach Corporation+ ................................ 4,227,688
------------
CONSUMER STAPLES - 2.4%
168,800 Albertson's, Inc. ........................................ 8,440,000
------------
COMPUTER SOFTWARE - 10.3%
125,800 Adobe Systems, Inc. ...................................... 6,297,862
497,000 Mentor Graphics Corporation+ ............................. 5,218,500
172,300 Microsoft Corporation+ ................................... 15,528,538
215,700 Orcad, Inc.+ ............................................. 2,157,000
32,400 Visio Corporation+ ....................................... 1,603,800
287,200 Wall Data, Inc.+ ......................................... 4,415,700
------------
35,221,400
------------
COMPUTER SYSTEMS - 5.7%
590,100 In Focus Systems, Inc.+ .................................. 5,089,613
312,550 Radisys Corporation+ ..................................... 8,516,987
298,000 Sequent Computer Systems, Inc.+ .......................... 5,848,250
------------
19,454,850
------------
ELECTRICAL EQUIPMENT - 1.5%
91,044 Fluke Corporation ........................................ 2,890,647
157,700 Merix Corporation+ ....................................... 2,217,656
------------
5,108,303
------------
ELECTRONICS/GENERAL - 7.2%
169,500 Electro Scientific Industries, Inc.+ ..................... 6,441,000
360,100 FEI Company+ ............................................. 3,488,469
156,800 Flir Systems, Inc.+ ...................................... 3,234,000
197,700 Innova Corporation+ ...................................... 3,385,612
193,500 Tektronix, Inc. .......................................... 8,320,500
------------
24,869,581
------------
ELECTRONICS-SEMICONDUCTORS/COMPONENTS - 4.8%
47,500 Intel Corporation ........................................ 3,838,594
77,500 Lattice Semiconductor Corporation+ ....................... 3,535,938
122,300 Micron Technology, Inc.+ ................................. 3,798,943
225,250 Triquint Semiconductor, Inc.+ ............................ 5,152,594
------------
16,326,069
------------
HEALTHCARE PRODUCTS - 8.7%
121,900 Advanced Technology Laboratories, Inc.+ .................. 5,896,912
407,600 Corixa Corporation+ ...................................... 2,955,100
427,250 Icos Corporation+ ........................................ 6,301,938
103,300 Immunex Corporation+ ..................................... 7,088,962
502,000 Neorx Corporation+ ....................................... 2,353,125
87,600 Pathogenesis Corporation+ ................................ 3,471,150
220,233 Sonosight, Inc.+ ......................................... 1,803,158
------------
29,870,345
------------
HEALTHCARE SERVICES - 3.0%
182,060 Foundation Health Systems, Inc. Class A+ ................. 5,268,361
67,800 Pacificare Health Systems, Inc. Class B+ ................. 4,856,175
------------
10,124,536
------------
INSURANCE - 1.8%
124,800 Safeco Corporation ....................................... 6,232,200
------------
LODGING & RESTAURANTS - 2.4%
204,500 Cavanaugh's Hospitality Corporation+ ..................... 3,208,094
103,200 Starbucks Corporation+ ................................... 4,966,500
------------
8,174,594
------------
MEDIA - 1.0%
105,300 Lee Enterprises, Inc. .................................... 3,297,206
------------
REAL ESTATE INVESTMENT TRUSTS - 1.6%
168,900 Pacific Gulf Properties, Inc. ............................ 3,715,800
64,300 Shurgard Storage Centers, Inc. ........................... 1,808,438
------------
5,524,238
------------
RETAIL SALES - 8.2%
358,200 Building Materials Holding Corporation+ .................. 5,193,900
159,125 Costco Companies, Inc.+ .................................. 8,891,109
246,697 Fred Meyer Inc., Class A+ ................................ 11,070,527
645,800 Multiple Zones Int'l, Inc.+ .............................. 2,179,575
9,400 Nordstrom, Inc. .......................................... 615,113
------------
27,950,224
------------
TRANSPORTATION SERVICES - 5.3%
136,900 Airborne Freight Corporation ............................. 5,424,663
88,460 Alaska Air Group, Inc.+ .................................. 4,964,818
180,100 Expeditors International of Washington, Inc. ............. 7,654,250
------------
18,043,731
------------
UTILITIES - GAS AND ELECTRIC - 1.1%
79,616 Enron Corporation ........................................ 3,916,112
------------
UTILITIES - TELECOMMUNICATIONS - 3.7%
202,200 General Communication, Inc.+ ............................. 1,428,038
362,800 Metro One Telecommunications+ ............................ 4,739,074
115,100 Nextel Communications, Inc. Class A+ ..................... 3,301,931
163,700 Western Wireless Corporation, Class A+ ................... 3,192,150
------------
12,661,193
------------
TOTAL COMMON STOCKS (COST $195,250,602) ............................... 319,910,301
------------
PRINCIPAL VALUE
AMOUNT (NOTE 2)
------ --------
REPURCHASE AGREEMENT - 7.2%
$24,744,000 Agreement with Goldman Sachs, 5.300% dated 04/30/1998, to
be repurchased at $24,747,643 on 05/01/1998,
collateralized by $24,745,000 U.S. Treasury Note, 6.500%
due 05/15/2005 (Market Value $26,173,680) (Cost
$24,744,000) ........................................... $ 24,744,000
------------
TOTAL INVESTMENTS (COST $219,994,602*) ........................ 100.5% 344,654,301
OTHER ASSETS LESS LIABILITIES ................................. (0.5) (1,743,928)
----- ------------
NET ASSETS .................................................... 100.0% $342,910,373
===== ============
- --------------
* Aggregate cost for federal tax purposes.
+ Non-income producing security.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (unaudited)
WM GROUP OF FUNDS
1. ORGANIZATION AND BUSINESS
WM Trust I (the "Trust") was organized under the laws of the Commonwealth of
Massachusetts on September 19, 1997 as a business entity commonly known as a
"Massachusetts business trust." The Trust is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end management
investment company. The Trust offers nine managed investment funds: the Money
Market and Tax-Exempt Money Market Funds (the "Money Funds"); the U.S.
Government Securities, Income and High Yield Funds (the "Fixed Income Funds");
the Tax-Exempt Bond Fund; the Bond & Stock, Growth & Income, and Northwest Funds
(the "Equity Funds").
Each of the Funds consists of four classes of shares, Class A shares, Class B
shares, Class S shares and Class I shares. Class A shares of the Funds are
subject to an initial sales charge at the time of purchase. Certain Class A
shares of the Funds purchased without an initial sales charge may be subject to
a contingent deferred sales charge ("CDSC") if redeemed within one year or two
years of purchase, depending on the circumstances. Class B shares and Class S
shares are not subject to an initial sales charge. Class B shares and Class S
shares are subject to a CDSC if redeemed within five years of purchase. Class I
shares are sold exclusively to the various investment portfolios of WM Group of
Funds and are not available for direct purchase by investors. Class I shares are
not subject to an initial sales charge or CDSC, but are subject to other annual
operating expenses of the Funds.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in accordance with generally accepted
accounting principles 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 Funds in the
preparation of their financial statements.
PORTFOLIO VALUATION:
A security that is primarily traded on a United States ("U.S.") or foreign
exchange (including securities traded through the NASDAQ National Market System)
is valued at the last sale price on that exchange or, if there were no sales
during the day, at the mean of the current day's bid and asked prices. Portfolio
securities that are primarily traded on foreign exchanges are generally valued
at the most recent closing values of such securities on their respective
exchanges, except when an occurrence subsequent to the time a value was so
established is likely to have changed the value, then the fair value of those
securities will be determined in good faith through consideration of other
factors by or under the direction of the Board of Trustees or its delegates.
Over-the-counter securities that are not traded through the NASDAQ National
Market System and securities listed or traded on certain foreign exchanges whose
operations are similar to the U.S. over-the-counter market, are valued on the
basis of the mean of the current day's bid and asked prices at the close of
business on each day. Investments in U.S. Government securities (other than
short-term securities) are valued at the average of the quoted bid and asked
prices in the over-the-counter market. The current market value of an option is
the last price on the principal exchange on which such option is traded or, in
the absence of a sale, is the mean between the last bid and offering price. The
value of a futures contract equals the unrealized gain or loss on the contract,
which is determined by marking the contract to the current settlement price for
a like contract acquired on the day on which the futures contract is being
valued. A settlement price may not be issued if the market makes a limited move
with respect to the security or index underlying the futures contract. In such
event, the futures contract will be valued at a fair market value to be
determined by or under the direction of the Board of Trustees. Short-term
investments that mature in 60 days or less are valued at amortized cost; such
investments denominated in foreign currencies are stated at amortized cost as
determined in the foreign currency, translated to U.S. dollars at the current
day's exchange rate.
Corporate debt securities and debt securities of U.S. issuers (other than U.S.
Government securities and short-term investments), including municipal
securities, are valued by an independent pricing service which utilizes market
quotations and transactions, quotations from dealers and various relationships
among securities in determining value. If not valued by a pricing service, such
securities are valued at prices obtained from independent brokers. Investments
with prices that cannot be readily obtained, if any, are carried at fair value
as determined in good faith under consistently applied procedures established by
and under the supervision of the Board of Trustees.
REPURCHASE AGREEMENTS:
Each Fund may engage in repurchase agreement transactions. Under the terms of a
typical repurchase agreement, the Fund through its custodian takes possession of
an underlying debt obligation subject to an obligation of the seller to
repurchase, and the Fund to resell, the obligation at an agreed upon price and
time, thereby determining the yield during the Fund's holding period. The value
of the collateral is at least 102% at all times to the total amount of the
repurchase obligation, including interest. In the event of counterparty default,
the Fund would seek to use the collateral to offset losses incurred. There is
potential loss to the Fund in the event the Fund 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 Fund seeks to assert its rights. WM Advisors, Inc. (the
"Advisor" or "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 which each Fund enters into repurchase agreements to
evaluate potential risks.
REVERSE REPURCHASE AGREEMENTS:
Each Fund may engage in reverse repurchase agreements. Reverse repurchase
agreements are the same as repurchase agreements except that, in this instance,
the Funds would assume the role of seller/borrower in the transaction. The Funds
may use reverse repurchase agreements to borrow short term funds. The value of
the reverse repurchase agreements that the Funds have committed to sell are
reflected in the Funds' Statements of Assets and Liabilities. The Funds will
segregate with the Trust's custodian liquid assets that at all times are in an
amount equal to their obligations under reverse repurchase agreements. Reverse
repurchase agreements involve the risks that the market value of the securities
sold by the Funds may decline below the repurchase price of the securities and,
if the proceeds from the reverse repurchase agreement are invested in
securities, that the market value of the securities bought may decline below the
repurchase price of the securities sold.
FUTURES CONTRACTS:
The Fixed Income Funds, Tax-Exempt Bond Fund and Equity Funds may engage in
futures transactions. The Funds may use futures contracts to manage their
exposure to the stock and bond markets and to fluctuations in interest rates and
currency values. The underlying value of a futures contract is incorporated
within the unrealized appreciation/(depreciation) shown in the Portfolio of
Investments under the caption "Futures Contracts." This amount reflects each
contract's exposure to the underlying instrument at April 30, 1998. Buying
futures contracts tends to increase the Fund's exposure to the underlying
instrument. Selling futures contracts tends to either decrease the Fund's
exposure to the underlying instrument, or to hedge other Fund investments.
Upon entering into a futures contract, the Fund is required to deposit with the
broker an amount of cash or cash equivalents equal to a certain percentage of
the contract amount. This is known as the "initial margin." Subsequent payments
("variation margin") are made or received by the Fund each day, depending on the
daily fluctuation of the value of the contract. The daily changes in contract
value are recorded as unrealized gains or losses and the Fund recognizes a
realized gain or loss when the contract is closed. Futures contracts are valued
at the settlement price established by the board of trade or exchange on which
they are traded.
There are several risks in connection with the use of futures contracts as a
hedging device. Futures contracts involve, to varying degrees, risk of loss in
excess of the futures variation margin reflected in the Statements of Assets and
Liabilities. The change in the value of futures contracts primarily corresponds
with the value of their underlying instruments, which may not correlate with the
change in the value of the hedged instruments. In addition, there is the risk
that the Fund may not be able to enter into a closing transaction because of an
illiquid secondary market.
FOREIGN CURRENCIES:
The books and records of the Funds are maintained in U.S. dollars. Foreign
currencies, investments and other assets and liabilities are translated into
U.S. dollars at the exchange rates prevailing at the end of the period, and
purchases and sales of investment securities, income and expenses are translated
on the respective dates of such transactions. It is not practicable to isolate
that portion of the results of operations arising as a result of changes in the
foreign exchange rates from the portion that arises from changes in market
prices of investments during the period. Accordingly, all such changes have been
reflected as net gains/(losses) from security transactions in the Statements of
Operations.
Unrealized gains and losses, not relating to securities, which result from
changes in foreign currency exchange rates have been included in unrealized
appreciation/(depreciation) of foreign currency and other assets and
liabilities. Unrealized gains and losses of securities, which result from
changes in foreign currency exchange rates as well as changes in market prices
of securities, have been included in unrealized appreciation/(depreciation) of
securities. Net realized foreign currency gains and losses include foreign
currency gains and losses resulting from changes in exchange rates between trade
date and settlement date on investment securities transactions, gains and losses
on foreign currency transactions and the difference between the amounts of
interest and dividends recorded on the books of the Funds and the amount
actually received. The portion of foreign currency gains and losses related to
fluctuation in exchange rates between the initial purchase trade date and
subsequent sale trade date is included in realized gains/(losses) from security
transactions.
DOLLAR ROLL TRANSACTIONS:
The U.S. Government Securities Fund and the Income Fund, in order to seek a high
level of current income, may enter into dollar roll transactions with financial
institutions to take advantage of opportunities in the mortgage market. The
value of the dollar roll transactions are reflected in the Funds' Statements of
Assets and Liabilities. A dollar roll transaction involves a sale by the Funds
of securities that they hold with an agreement by the Funds to repurchase
similar securities at an agreed upon price and date. The securities repurchased
will bear the same interest as those sold, but generally will be collateralized
at time of delivery by different pools of mortgages with different prepayment
histories than those securities sold. The Funds are paid a fee for entering into
a dollar roll transaction, that is accrued as income over the life of the dollar
roll contract. During the period between the sale and repurchase, the Funds will
not be entitled to receive interest and principal payments on the securities
sold. Management anticipates that the proceeds of the sale will be invested in
additional instruments for the Funds, and the income from these investments,
together with any additional fee income received on the dollar roll transaction
will generate income for the Funds exceeding the interest that would have been
earned on the securities sold. Dollar roll transactions involve the risk that
the market value of the securities sold by the Funds may decline below the
repurchase price of those similar securities which the Fund is obligated to
purchase or that the return earned by the Fund with the proceeds of a dollar
roll may not exceed transaction costs.
INDEXED SECURITIES:
Each of the Funds other than the Money Funds may invest in indexed securities
whose value is linked either directly or inversely to changes in foreign
currencies, interest rates, commodities, inflation, indices, or other reference
instruments. Indexed securities may be more volatile than the reference
instrument itself, but any loss is limited to the amount of the original
investment.
ILLIQUID INVESTMENTS:
Up to 15% of the assets of each Non-Money Fund, and up to 10% of the net assets
of each Money Fund, may be invested in securities that are not readily
marketable, including: (1) repurchase agreements with maturities greater than
seven calendar days; (2) time deposits maturing in more than seven calendar
days; (3) to the extent a liquid secondary market does not exist for the
instruments, futures contracts and options thereon; (4) certain over-the-counter
options; (5) certain variable rate demand notes having a demand period of more
than seven days; and (6) securities, the disposition of which are restricted
under Federal securities laws, excluding certain Rule 144A securities, as
defined below.
Illiquid securities generally cannot be sold or disposed of in the ordinary
course of business within seven days at approximately the value at which the
Funds have valued the investments. This may have an adverse effect on the Fund's
ability to dispose of particular illiquid securities at fair market value and
may limit the Fund's ability to obtain accurate market quotations for purposes
of valuing the securities and calculating the net asset value of shares of the
Fund. The Funds may also purchase securities that are not registered under the
Securities Act of 1933, as amended (the "Act"), but that can be sold to
qualified institutional buyers in accordance with Rule 144A under the Act ("Rule
144A Securities"). Rule 144A Securities generally may be resold only to other
qualified institutional buyers. If a particular investment in Rule 144A
Securities is not determined to be liquid under the guidelines established by
the Board of Trustees, that investment will be included within the 15%/10%
limitation, as applicable, on investment in illiquid securities.
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
earned less premiums amortized. Dividend income is recorded on the ex-dividend
date, except that certain dividends from foreign securities are recorded as soon
as the Funds are informed of the ex-dividend date. Each Fund's investment income
and realized and unrealized gains and losses are allocated among the classes of
that Fund based upon the relative average net assets of each class.
Securities purchased or sold on a when-issued or delayed-delivery basis may be
settled a month or more after the trade date; interest income is not accrued
until settlement date. Each Fund instructs the custodian to segregate liquid
assets of the Fund with a current value at least equal to the amount of its
when-issued purchase commitments.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income of the Fixed Income Funds, the Tax-Exempt
Bond Fund and the Money Funds are declared daily and paid monthly. Dividends
from the net investment income of the Bond & Stock and Growth & Income Funds are
declared and paid quarterly. Dividends from the net investment income of the
Northwest Fund are declared and paid annually. Distributions of any net
long-term capital gains earned by a Fund are made annually. Distributions of any
net short-term capital gains earned by a Fund 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 Fund 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 generally accepted accounting principles. These differences are
primarily due to differing treatments of income and gains on various investment
securities held by the Funds, timing differences, organizational costs,
dividends payable, redesignated distributions and differing characterization of
distributions made by each Fund as a whole.
FEDERAL INCOME TAXES:
It is each Fund'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 net
investment income to its shareholders. Therefore, no Federal income tax
provision is required.
EXPENSES:
General expenses of the Trust are allocated to all the Funds based upon relative
net assets of each Fund. Operating expenses directly attributable to a class of
shares are charged to the operations of that class of shares. Expenses of each
Fund 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.
OTHER:
The Income Fund may purchase floating rate, inverse floating rate and variable
rate obligations, including municipal securities and participation interests
therein. Floating rate obligations have an interest rate that changes whenever
there is a change in the external interest rate, while variable rate obligations
provide for a specified periodic adjustment in the interest rate. The interest
rate on an inverse floating rate obligation (an "inverse floater") can be
expected to move in the opposite direction from the market rate of interest to
which the inverse floater is indexed. The Income Fund may also purchase
mortgage-backed securities that are floating rate, inverse floating rate and
variable rate obligations. Although variable rate demand notes are frequently
not rated by credit rating agencies, unrated notes purchased by the Fund will be
of comparable quality at the time of purchase to rated instruments that may be
purchased by such Fund, as determined by the Advisor. The absence of such an
active secondary market, however, could make it difficult for the Fund to
dispose of a particular variable rate demand note in the event the issuer of the
note defaulted on its payment obligations, and the Fund could, for this or other
reasons, suffer a loss to the extent of the default.
An inverse floater may be considered to be leveraged to the extent that its
interest rate varies by a magnitude that exceeds the magnitude of the change in
the index rate of interest. The higher degree of leverage inherent in inverse
floaters is associated with greater volatility in their market values.
Accordingly, the duration of an inverse floater may exceed its stated final
maturity.
3. INVESTMENT ADVISORY AND OTHER TRANSACTIONS
As of March 20, 1998, WM Advisors, an indirect wholly-owned subsidiary of
Washington Mutual, Inc. ("Washington Mutual"), a publicly owned financial
services company, serves as investment advisor to the Trust.
The Advisor is entitled to a monthly fee, in arrears, based on a percentage of
the average daily net assets of each Fund during the month at annual rates as
follows:
FEES ON ASSETS FEES ON ASSETS
UP TO EXCEEDING
$1 BILLION $1 BILLION
---------- ----------
The Money Funds .................. .45% .40%
FEES ON ASSETS FEES ON ASSETS
UP TO EXCEEDING
$250 MILLION $250 MILLION
------------ ------------
Tax-Exempt Bond Fund ............. .50% .40%
The Fixed-Income Funds ........... .625% .50%
Growth & Income Fund ............. .625% .50%
Bond & Stock Fund ................ .625% .50%
FEES ON ASSETS FEES ON ASSETS
UP TO EXCEEDING
$500 MILLION $500 MILLION
------------ ------------
Northwest Fund ................... .625% .50%
The Advisor has agreed to waive a portion of its management fees for the period
ended April 30, 1998. Fees waived by the Advisor for the period ended April 30,
1998 are as follows:
NAME OF FUND FEES WAIVED
------------ -----------
U.S. Government Securities Fund ................................ $35,103
Northwest Fund ................................................. 33,830
Tax-Exempt Money Market Fund ................................... 19,515
WM Shareholder Services, Inc. (the "Transfer Agent"), an indirect wholly owned
subsidiary of Washington Mutual serves as the transfer and shareholder servicing
agent of the Funds. 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 fees are as follows:
CLASS A CLASS B & S
------- -----------
The Money Market Funds ........................ $1.85 $1.95
The Fixed Income Funds ........................ 1.45 1.55
The Equity Funds .............................. 1.25 1.35
Custodian fees for certain Funds have been reduced by credits allowed by the
custodian for the period ended April 30, 1998 as follows:
CREDITS ALLOWED
NAME OF FUND BY THE CUSTODIAN
------------ ----------------
Money Market Fund ........................... $17,619
Tax-Exempt Money Market Fund ................. 705
U.S. Government Securities Fund .............. 454
Income Fund .................................. 481
Tax-Exempt Bond Fund ......................... 392
Bond & Stock Fund ............................ 2,274
Growth & Income Fund ......................... 4,357
Northwest Fund ............................... 1,773
4. TRUSTEES' FEES
No director, officer or employee of Washington Mutual or its subsidiaries
receives any compensation from the Trust for serving as an officer or Trustee of
the Trust. The Trust, 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 and reimbursement for
travel and out-of-pocket expenses. The Chairman of each committee receives $500
per committee meeting attended.
Pursuant to an exemptive order granted by the Securities and Exchange
Commission, the Trust'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 that 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 Trust's assets.
5. DISTRIBUTION PLANS
WM Funds Distributor, Inc., (the "Distributor"), an indirect wholly-owned
subsidiary of Washington Mutual, serves as distributor for Class A shares, Class
B shares and Class S shares of the Funds. On March 20, 1998, the Distributor's
name changed from Composite Funds Distributor, Inc. ("CFDI"). For the period
April 30, 1998, the Distributor received $833,971 representing commissions
(sales charges) on Class A shares. For the period April 30, 1998, the
Distributor received $134,749 in contingent deferred sales charges from Class B
and S shares.
Each of the Funds has adopted three distribution plans, pursuant to Rule 12b-1
under the 1940 Act, applicable to Class A, Class B and Class S shares of the
Fund (each, a "Rule 12b-1 Plan"), respectively. There are no 12b-1 Plans
applicable to Class I shares of the Funds. Under the applicable Rule 12b-1
Plans, the Distributor receives a service fee at an annual rate of 0.25% of the
average daily net assets of each class. In addition, the Distributor is paid a
fee as compensation in connection with the offering and sale of Class B and
Class S shares at an annual rate of 0.75% of the average daily net assets of
such shares. These fees may be used to cover the expenses of the Distributor
primarily intended to result in the sale of such shares, including payments to
the Distributor's representatives or others for selling shares. Because the
Distributor may retain any amount of its fee that is not so expended, the Rule
12b-1 Plans are characterized by the SEC as "compensation- type" plans. The
service fee is paid by the Fund to the Distributor, which in turn, pays a
portion of the service fee to broker/dealers, that sell Class B shares and Class
S shares and provide services, such as, accepting telephone inquiries and
transaction requests and processing correspondences, new account applications
and subsequent purchases by check, for the shareholders. Under their terms each
of the Class A Plan, Class B Plan and Class S Plan shall remain in effect from
year to year, provided such continuance is approved annually by vote of the
Board of Trustees, including a majority of those Trustees who are not
"interested persons" of the Trust, as defined in the 1940 Act, and who have no
direct or indirect financial interest in the operation of such distribution
plans, or any agreements related to such plans, respectively.
6. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, excluding
U.S. Government and short-term investments, for the period ended April 30, 1998
were as follows:
NAME OF FUND PURCHASES SALES
------------ ---------- -----------
Income Fund ................................ $ 27,420,814 $ 28,829,672
High Yield Fund ............................ 6,894,104 --
Tax-Exempt Bond Fund ....................... 3,846,120 20,276,970
Bond & Stock Fund .......................... 100,382,972 70,330,637
Growth & Income Fund ....................... 163,905,454 169,806,146
Northwest Fund ............................. 63,436,275 48,994,296
The aggregate cost of purchases and proceeds from sales of U.S. Government
securities, excluding short-term investments, for the period ended April 30,
1998 were as follows:
NAME OF FUND PURCHASES SALES
------------ ---------- -----------
U.S. Government Securities Fund ............ $3,346,801 $50,054,567
Income Fund ................................ 5,171,875 13,025,038
High Yield Fund ............................ 1,990,469 --
Bond & Stock Fund .......................... 6,282,109 5,504,665
At April 30, 1998, aggregate gross unrealized appreciation for all securities in
which there is an excess of value over tax cost and aggregate gross unrealized
depreciation for all securities in which there is an excess of tax cost over
value were as follows:
TAX BASIS TAX BASIS
UNREALIZED UNREALIZED
NAME OF FUND APPRECIATION DEPRECIATION
------------ ------------ ------------
U.S. Government Securities Fund ............ $ 10,719,384 $ 568,665
Income Fund ................................ 19,330,685 1,242,224
High Yield Fund ............................ 56,818 90,220
Tax-Exempt Bond Fund ....................... 30,078,264 44,478
Bond & Stock Fund .......................... 66,599,466 4,740,873
Growth & Income Fund ....................... 200,142,552 14,577,366
Northwest Fund ............................. 132,387,652 7,727,952
Information regarding dollar roll transactions by the U.S. Government Securities
Fund is as follows:
U.S. GOVERNMENT
DOLLAR ROLL TRANSACTIONS: SECURITIES FUND
- ------------------------ ---------------
Maximum amount outstanding during the period ............... $ 6,091,875
Average amount outstanding during the period* .............. $ 2,076,592
Average monthly shares outstanding during the period ....... 23,307,589
Average debt per share outstanding during the period ....... $.09
- --------------
* The average amount outstanding during the period was calculated by adding the
borrowings at the end of each day and dividing the sum by the number of days
in the year ended April 30, 1998.
Fee income earned for the period ended April 30, 1998 by the U.S. Government
Securities Fund for dollar roll transactions aggregated $69,825.
Information regarding reverse repurchase agreement transactions by the U.S.
Government Securities Fund is as follows:
<TABLE>
<CAPTION>
REVERSE REPURCHASE AGREEMENTS:
FACE MARKET
VALUE VALUE
----- ------
<S> <C> <C> <C>
$80,309,997 Reverse Repurchase Agreement with Merrill Lynch Capital Inc.,
5.625% dated 4/16/98, to be repurchased at $80,698,999 on 5/18/
98, collateralized by $82,302,010 Federal Home Loan Mortgage
Corp., 7.50% due 1/1/07 - 3/1/13 ................................ $80,309,997
Maximum amount outstanding during the period .............................................. $80,309,997
Average amount outstanding during the period* ............................................. $11,377,250
Average monthly shares outstanding during the period ...................................... 23,307,589
Average debt per share outstanding during the period ...................................... $0.49
- --------------
* The average amount outstanding during the period was calculated by summing borrowings at the end of each day
and dividing the sum by the number of days in the period ended April 30, 1998.
</TABLE>
The interest rate was 5.63% during the period. Interest paid for the period
ended April 30, 1998, on borrowings by the Fund under reverse repurchase
agreements, aggregated $188,227.
7. ORGANIZATION COSTS
Expenses incurred in connection with the organization of the Funds, 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 Fund, respectively. In the event any of the initial shares of a Fund 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
Fund outstanding at the time of such redemption.
8. GEOGRAPHIC AND INDUSTRY CONCENTRATION
The High Yield and Income Funds may invest in securities of foreign companies
and foreign governments, and the Equity Funds may invest in such securities if
they are U.S. dollar-denominated. There are certain risks involved in investing
in foreign securities that are in addition to the usual risks inherent in
domestic investments. These risks include those resulting from future adverse
political and economic developments and the possible imposition of currency
exchange blockages or other foreign governmental laws or restrictions.
The High Yield Fund invests in securities offering high current income which
generally will be in the lower rating categories of recognized securities These
securities generally involve more credit risk than securities in the higher
rating categories. In addition, the trading market for high yield securities may
be relatively less liquid than the market for higher-rated securities.
The Northwest Fund intends to invest at least 65% of its total net assets in
companies whose principal executive offices are located in the Northwest states
of Alaska, Idaho, Montana, Oregon and Washington. Because the Fund concentrates
its investments in companies located in the Northwest, the Fund could be
adversely impacted by economic trends within the five state area.
9. REORGANIZATION
Each Acquiring Fund, as listed below, acquired the assets and certain
liabilities of the Acquired Fund, also listed below, in a tax-free exchange for
shares of the Acquiring Fund, pursuant to a plan of reorganization approved by
the Acquired Fund's shareholders. Total shares issued by the Acquiring Fund, the
value of the shares issued by the Acquiring Fund, the total net assets of the
Acquired Fund and the Acquiring Fund and any unrealized
appreciation/(depreciation) included in the Acquired Fund's total net assets at
the acquisition date are as follows:
<TABLE>
<CAPTION>
TOTAL NET ACQUIRED
SHARES VALUE OF TOTAL NET TOTAL NET ASSETS OF FUND
ISSUED BY SHARES ISSUED ASSETS OF ASSETS OF ACQUIRING UNREALIZED
ACQUIRING BY ACQUIRING ACQUIRED ACQUIRING FUND AFTER APPRECIATION/
ACQUIRING FUND ACQUIRED FUND DATE FUND FUND FUND FUND ACQUISITION (DEPRECIATION)
- ---------------- ------------------ ------- ----------- -------------- ------------ ------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C>
WM Money Sierra Global
Market Fund Money Fund 3/20/98 171,075,237 $171,075,237 $171,075,237 $259,445,317 $466,509,504 --
WM Money Sierra U.S.
Market Fund Government
Money Fund 3/20/98 35,988,950 $ 35,988,950 $ 35,988,950 $259,445,317 $466,509,504 --
WM U.S. Sierra U.S.
Government Government
Securities Fund Fund 3/20/98 28,476,673 $301,974,738 $301,974,738 $106,773,157 $408,747,895 $ 7,854,832
WM Income Fund Sierra Income
Fund 3/20/98 19,464,376 $167,602,994 $167,602,994 $ 88,584,176 $256,187,100 $18,713,298
WM Tax-Exempt Sierra National
Bond Fund Municipal Fund 3/20/98 19,061,027 $137,168,435 $137,168,435 $192,595,001 $329,763,436 $16,463,451
WM Growth & Sierra Growth and
Income Fund Income Fund 3/20/98 20,660,832 $367,723,328 $367,723,328 $393,036,999 $760,760,327 $74,885,030
</TABLE>
SHAREHOLDER MEETING RESULTS
A special meeting of the Funds' shareholders was held on December 23, 1997, with
adjournments to January 9, 1998 and February 20, 1998. Each matter voted upon at
the meetings is set forth below. Votes recorded for the proposals approved on
December 23, 1997 by shareholders of each of the Money Market Fund, Tax-Exempt
Money Market Fund, Income Fund, Tax-Exempt Bond Fund and U.S. Government
Securities Fund were included in their respective annual reports dated December
31, 1997.
1. The shareholders of each Fund were asked to approve the reorganization of
each Fund into separate series of a Massachusetts Business Trust. The
proposal was approved on February 20, 1998:
SHARES SHARES
VOTED VOTED
"FOR" "AGAINST" ABSTAINED
------ --------- ---------
Bond & Stock Fund ....................... 15,674,617 532,478 1,122,489
Growth & Income Fund .................... 11,671,543 401,821 582,034
Northwest Fund .......................... 7,655,651 390,318 465,269
U.S. Government Securities Fund ......... 7,069,635 263,019 620,048
Income Fund ............................. 6,624,154 175,309 468,425
Tax-Exempt Bond Fund .................... 17,548,249 697,978 1,166,685
Money Market Fund ....................... 179,269,640 11,103,453 14,828,051
Tax-Exempt Money Market Fund ............ 20,890,022 811,223 2,231,324
2. The shareholders of each Fund elected the following thirteen trustees on
December 23, 1997:
<TABLE>
<CAPTION>
BOND & STOCK FUND GROWTH & INCOME FUND NORTHWEST FUND
-------------------------- ------------------------- --------------------------
SHARES SHARES SHARES
SHARES WITHHOLDING SHARES WITHHOLDING SHARES WITHHOLDING
VOTED AUTHORITY VOTED AUTHORITY VOTED AUTHORITY
"FOR" TO VOTE "FOR" TO VOTE "FOR" TO VOTE
---------- ------- ---------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
David E.Anderson ........ 14,532,839 658,140 11,243,827 490,386 6,629,332 408,905
Wayne L.Attwood, M.D .... 14,552,700 638,279 11,249,965 484,249 6,639,258 398,979
Arthur H. Bernstein ..... 14,530,997 659,982 11,244,868 489,345 6,630,995 407,242
Kristianne Blake ........ 14,552,284 638,694 11,249,829 485,205 6,639,481 398,756
Edmond R. Davis ......... 14,534,056 656,923 11,243,169 491,865 6,631,872 406,365
John W. English ......... 14,534,732 656,247 11,247,409 487,625 6,628,920 409,318
Anne V. Farrell ......... 14,552,390 638,588 11,250,975 484,059 6,639,481 398,756
Michael K. Murphy ....... 14,554,957 636,022 11,249,562 483,442 6,639,922 398,315
Alfred E. Osborne, Jr ... 14,538,725 652,254 11,247,339 487,695 6,635,110 403,127
William G. Papesh ....... 14,554,957 636,022 11,249,562 483,442 6,639,441 398,797
Daniel Pavelich ......... 14,553,762 637,217 11,251,108 483,926 6,639,481 398,756
Jay Rockey .............. 14,551,988 638,991 11,248,450 484,553 6,638,024 400,213
Richard C. Yancey ....... 14,551,875 639,104 11,248,278 484,726 6,637,337 400,900
</TABLE>
3. The shareholders of each Fund approved an amended Investment Management
Agreement on December 23, 1997:
SHARES SHARES
VOTED VOTED
"FOR" "AGAINST" ABSTAINED
---------- ------- ---------
Bond & Stock Fund ....................... 13,575,628 420,337 1,195,013
Growth & Income Fund .................... 10,685,741 388,169 660,304
Northwest Fund .......................... 6,152,505 337,400 548,333
4. The shareholders of each Fund approved an amended Distribution Plan of the
Fund for its Class A shares on December 23, 1997 except for Class B
shareholders of Northwest Fund and Tax-Exempt Money Market Fund who approved
the proposal on February 20, 1998:
SHARES SHARES
VOTED VOTED
"FOR" "AGAINST" ABSTAINED
---------- ------- ---------
Bond & Stock Fund - Class A ............. 11,692,893 396,961 1,173,720
Bond & Stock Fund - Class B ............. 1,442,505 53,639 194,470
Growth & Income Fund - Class A .......... 9,455,500 308,720 608,951
Growth & Income Fund - Class B .......... 1,020,812 59,600 134,649
Northwest Fund - Class A ................ 5,446,234 276,467 540,121
Northwest Fund - Class B ................ 825,903 50,691 80,669
Tax-Exempt Money Market Fund - Class B .. 11,527 0 0
5. The shareholders of each Fund approved certain amendments to its existing
fundamental investment restrictions on December 23, 1997. Shareholders
authorized each of the following Funds to invest in Rule 144A Securities:
SHARES SHARES
VOTED VOTED
"FOR" "AGAINST" ABSTAINED
---------- ------- ---------
Bond & Stock Fund ....................... 13,135,398 450,600 1,368,190
Growth & Income Fund .................... 10,476,312 368,320 743,600
Northwest Fund .......................... 6,077,667 266,182 621,251
<PAGE>
This Semi-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 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 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 risks, including possible
loss of principal amount invested.
Distributed by
WM Funds Distributor, Inc.
Member NASD
- --------------------------------------------------------------------------------
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GROUP of FUNDS U.S. Postage
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- --------------------------------------------------------------------------------
WMGA127M (6/98)
